Fundamental information system concepts

System
A system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process. Such a system has three basic interacting components or functions. Input Involves capturing and assembling elements that enter the system to be processed. For example: raw materials, energy, data and human effort must be secured and organized for processing. Processing Involves transformation processes that convert input into output. Examples are a manufacturing process. Output Involves transferring elements that have been produced by a transformation process to their ultimate destination. For example: finished products The system concept can be made more useful by including two additional components i.e. Feedback and Control. Feed back Feedback is data about the performance of a system . for example , data about sales performance is feedback to a sales manager. Control Involves monitoring and evaluation feedback to determine whether a system is moving toward the achievement of its goal. The control function then makes necessary adjustments to a systems input and processing components to ensure that it produces proper output. For example: a sales manager exercises control when he or she reassigns sales persons to new sales territories after evaluating feedback about their sales performance. Feedback is frequently included as part of the concept of the control function because it is such a necessary part of its operation.

Information System
An information system is an organized combination of people, hardware, software, communications networks and data resources that collects, transforms and distributes information in an organization. Information systems play a vital role in the business success of an enterprise. Information system can provide the information a business needs for efficient operations, effective management and competitive advantage.

Roles of information systems

Information systems play three important roles in any organization. i. ii. iii. Support of business operations Support of managerial decision making Support of strategic competitive advantage

As an example to explain these roles , let us consider a retail store example. As a consumer we have to deal regularly with the information systems that support business operations at the many retail stores. Most retail stores now use computer-based information systems to help them record customer purchases, keep track of inventory, pay employees, buy new merchandise and evaluate sales trends. Store operations would halt without the support of such information systems. Information systems also help store managers make better decisions and attempt to gain a strategic competitive advantage. For example, decisions on what lines of items need to be added or discontinued, or what kind of investment they require, are typically made after an analysis provided by computer-based information systems. This not only supports the decision making of store managers but also helps them look for ways to gain advantage over other retailers in the competition for customers. For example, the store managers might decide to install computerized touch-screen catalogue ordering system in all of stores.

Role of Information technology in businesses

Information technology is reshaping the basics of business. Customer service, operations, products and marketing strategies and distribution are entirely dependent on information technology. Information technology and its expense have become an

everyday part of business life. The advancement in information technology has made it an important component of businesses. Information technology has become an integral component in several strategic steps which businesses have initiated to meet the challenges of change. These include i. ii. iii. iv. Globalization Business process re-engineering Agile competition Competitive advantage

Globalization
Many companies are in the process of becoming global enterprise. For example, businesses are expanding into global markets for their products and services, using global production facilities to manufacture products, raising money in global capital markets, forming alliances with global partners and battling with global competitors for customers from all over the globe. Managing and accomplishing these strategic changes would be impossible without the global computing and telecommunications networks that are the central to todays global companies.

Business process re-engineering

Information technology has been used by businesses for many years to automate tasks. From automated bookkeeping to automated manufacturing. More recently businesses have used computer-based information systems to support the analysis, interpretation and presentation of data to support business decision making. Business process re-engineering is an example of how information technology is being used to restructure work by transforming business processes.

Agile competition
Agile competition is the ability of a company to profitably operate in a competitive environment of unpredictable changes in customer opportunities. Agile companies heavily depend on information technology to give themselves the information processing capability to treat masses of customers as individuals. Developments in computer hardware, software and telecommunications networking technologies are making it possible for groups of companies to coordinate their geographically distributed capabilities into virtual corporations.

Competitive advantage
Using information technology for globalization, business process re-engineering and agile competition frequently results in the development of information systems that help give a company a competitive advantage in the marketplace. These strategic information systems use information technology to develop products, service, processes and capabilities that give a business a strategic advantage over the competitive forces it faces in its industry.

Components of information systems

An information system consists of four main resources (components): People, hardware, software, data. People People are required for the operation of all information systems. These people include end users and IS specialists. End users End users are people who use an information system or the information it produces. They can be accountants, salespersons, engineers, customers or managers. IS specialist IS specialist are people who develop and operate information systems. They include systems analysts, programmers, computer operations and other managerial, technical, and clerical IS personnel. System analysts design information systems based on the information requirements of end users, programmers prepare computer programs based on the specifications of systems analysts and computer operators operate computer systems.

Hardware Hardware includes all physical devices and materials used in information processing. It includes machines as well as data media. So it means it includes computers and tangible objects which are used to record data. Examples of hardware in computer-based information systems are: Computer systems, which consists of central processing units and a variety of interconnected peripheral devices. Examples are large mainframes, mini and micro computers.

Computer peripherals, which are devices such as a keyboard or electronic mouse for input of data and commands, a video screen or printer for output of information and optical disks for storage of data resources. Telecommunications network, which consists of computers, communications processors and other devices interconnected by a variety of telecommunications media to provide computing power throughout an organization. Software

The software includes all sets of information processing instructions. It includes not only the sets of operating instructions called programs, which direct and control computer hardware, but also the sets of information processing instructions needed by people, called procedures. Software includes system software, application software and procedures.
Data

Data constitute a valuable organizational resource. Data is collection of facts and figures. Data can take many forms, including traditional alphanumeric data, composed of numbers and alphabetical and other characters that describe business transactions and other events and entities.

Classification of information systems

Information systems perform important operational and managerial support roles in businesses and other organizations. Therefore, several types of information systems can be classified conceptually as either operations or management support systems. Operations support systems Information systems have always been needed to process data generated by and used in business operations. Such operation support systems produce a variety of information products for internal and external use. The role of a business firms operations support systems is to efficiently process business transactions, control industrial processes, support office communications and productivity and update corporate databases.

Transaction processing systems

Major category of operations support systems is transaction processing systems(TPS). Transaction processing systems record and process data resulting from business transactions. Typical examples are information systems that that process sales, purchases and inventory changes. The results of such processing are used to update customer, inventory and other organizational databases. Transaction processing systems process transactions in two ways i. ii. Batch processing Real time processing

In batch processing transactions data is accumulated over a period of time and processed periodically. In real time processing, data is processed immediately after a transaction occurs.

Process control systems

In process control systems, decisions adjusting a physical production process are automatically made by computers. For example, petroleum refineries and assembly lines of automated factories use such systems. Process control systems monitor a physical process, capture and process data detected by sensors, and make real time adjustments to a process.

Office automation systems

Another major role of operations support systems is the transformation of traditional manual office methods. Office automation systems collect, process, store and transmit information in the form of electronic office communications. These automated systems rely on text processing, telecommunications and other information systems technologies to enhance office communications and productivity. For example, a business may use word processing for office correspondence, electronic mail to send and receive electronic messages and teleconferencing to hold electronic meetings.

Management support systems

When information systems provide information and support for effective decision making by managers, they can be called management support systems.

Providing information and support for management decision making by all levels of management is a complex task. Different types of information systems needed to support managerial end-user responsibilities are:

Management information systems

Management information systems (MIS) are the most common form of management support systems. They provide managerial end users with information products that support much of their day-to-day decision-making needs. Management information systems provide a variety of reports and displays to management. The contents of these information products are specified in advance by managers so that they contain information that managers need. Management information systems retrieve information about internal operations from database that have been updated by transaction processing systems. They also obtain data about the business environment from external source. Information products provided to managers include displays and reports that can be furnished (1) on demand, (2) periodically, according to a predetermined schedule.

Decision Support Systems

Decision support systems (DSS) are a natural progression from information reporting systems and transaction processing systems. Decision support systems are interactive, computer-based information systems that use decision models and specialized database to assist the decision making process of managerial end users.

Executive information systems

Executive information systems (EIS) are management information systems tailored to the strategic information needs of top management. Top executives get the information they need from many sources, including letters, memos, periodicals, and reports produced manually as well as by computer systems. Other sources of executive information are meetings, telephone calls, and social activities. Thus, much of a top executives information comes from non-computer services. Computer generated information has not played a primary role in meeting many top executives information needs.