Basic Concepts 1 1

Unit 1: Basic Concepts Overview:
Data, DP, Information, System, IS
•Data & Data Processing (DP)

•Information & Info Processing (IP)
•Managerial Levels & Info Needs
•Information Classification/ Categorization
•Information Utility, Value, Quality, Cost
•Factors affecting Info Value & Quality
•Knowledge, KB & KBM- Quick Look
•System & Information System (IS)
•Subsystems & their inter-linkages
•Types of Information Systems
•System Efficiency; System Maintenance
Presentation content & material developed for exclusive use by V. Mohan. All rights reserved. No unauthorised copying or usage permitted. 1
Data & Data Processing (DP)
1. DATA, strictly speaking, refers to RAW DATA: facts & figures, a stream/ collection/
combination of numbers, digits, letters symbols, images, videos etc., relating to people,
places, events or things. It must be captured, stored & maintained appropriately, since its
the core input for PROCESSES which transform it through various techniques into
INFORMATION, based on which decisions are made & actions are taken.
Examples:
i. Customer details (name, age, address$.)
ii. Payment details (amount, cheque no. & date, payee$.)
iii. Product details (part no., name, price, expiry date$.)
iv. Material issue details (part no., quantity, issue date, to whom issued$..)
v. Customer order details (Order no., date, items ordered & quantities, order value$..)
vi. Supplier details (code, name, address, items supplied$..)
vii. Purchase order details (no., date, supplier, items & quantities$.)
viii. Attendance record (employee code, date, time in, time out$.)
2. However, the term Data is also used to refer to raw data that has undergone one or more
stages of processing and then stored, to be used as input for a subsequent process.
Strictly speaking, such processed data is actually information. Referred to as data from a
process perspective, since it is INPUT to another process, retrieved from storage.
Data & Data Processing (DP)
3. DATA PROCESSING (DP): Conversion of Data (Raw Data or Processed Data) retrieved
from storage, along with other specific run-time inputs (if applicable), into Information,
through a Process consisting of a sequence of steps or Process Flow, with a clearly
defined activity/ algorithm/ logic for each step:
4. MASTER DATA: Raw Data which identifies a specific entity (person, place, thing..).
Reference Data that’s quite static, doesn’t change frequently.
5. TRANSACTION DATA: Raw Data which gets generated all the time, due to
transactions or dealings between two entities (company & customer, employee &
company, supplier & company, etc.) Multiple transactions can occur with the same entity
and hence many transaction data records can link to the same master data record. For
example: multiple orders from same customer, multiple supplies from same supplier, etc.
Information; Info Processing (IP)
1. “Processed Data” or the output of DP. Raw Data or prior processed data is converted
through a process into Information- “something meaningful for specific person(s), relating
to taking some decisions & actions to:
• complete a pending task
• correcting/ improving a situation/ status in the upcoming (near) future
• Improve medium/ long term scenarios/ prospects/ performance
2. Information is a vital resource in general, and in particular, for a business. Provides

“meaning” to raw data through one or more operations/ techniques/ algorithms such as
sort, collate, compute, compare, analyze, predict/ forecast etc. Improves representation of
the status of a process/ task/ function/ situation etc., for those responsible for performing/
monitoring/ enhancing them. Generates awareness about a problem to be resolved or
situation to be addressed and thereby carries some “value”.
3. Information is the primary input or the “intelligence” for decision-making. A person

(worker/ supervisor/ manager), with timely, relevant, sufficiently accurate and properly
formatted & presented information can take faster, better, more confident, certain &
“objective” decisions (rather than subjective or gut-feel driven), by applying specific
decision-making techniques and/ or his/ her Knowledge, Experience & Wisdom.
Information; Info Processing (IP)
4. The activities relating to working on (processing) Information (the input) and reaching
decisions & actions (the output) is often called INFORMATION PROCESSING (IP).
5. Some examples of “Information”:

• Top 20 customers for 2014-15
• Pending deliveries as on <date>
• Items below reorder level (generated weekly)
• Quarterly sales performance (Target vs. Actual), territory & product wise
• Overall performance dashboard for the Firm
• Sales performance trends
• Economic outlook impact on the organization
• Balance Sheet, P&L statement
• Outstanding customer complaints as on <date>
• Expenses (Monthly): Budget vs. Actual, Department/ Function wise
• Average complaint resolution time- trend over past 12 months
• Marketing campaign response analysis
Managerial Levels & Info Needs
Information, when viewed on the basis of its essential purpose, type of
decisions & the managerial level(s) that it generally facilitates, falls into 3
categories/ levels- Operational, Tactical & Planning/ Strategic:
• Extent of “external”
Strategic Information
Overall performance monitor; Information for Top
information”.
medium/ long term planning & strategizing. Mgt. • Integration of data/
information across
functions & from various
Tactical Information sources.
Periodic performance (Budget Vs. Middle &
Actual) & Status measurements, to • Difficulty & complexity of
Senior
control various business functions data collection & analysis
Mgt.
& improve their future working. • Time frame for data
collation & analysis
Operational Information
• Decision Time frame
Information to control day- Lower Mgt.
(short/ medium/ long term),
to-day tasks & operations, (Supervisors/
(day-to-day functioning of complexity, unstructured
1st Level Managers)
the business). nature, person dependence
Managerial Levels & Info Needs
Though the 3 levels of Information are closely linked to the 3 Managerial
levels in the classical Management Pyramid, there is some overlap:
Classification of Information
Information can be categorized in various ways, using different classification parameters:
Basis of Classification Information Types/ Categories
1. Managerial Level Operational Info, Tactical Info, Planning & Strategic Info
2. Source (Origin) Internal Info: Derived from data generated by the Firm’s operations. Historical & fairly
static, enables effective management.
External Info: Derived from data gather from various sources outside the Firm. Further
classified into Competition Info (SWOT, market share & performance trends, new initiatives
& activities/ plans, changes in competition set, etc.) and Environmental Info (Govt. policies,
Tech. trends & changes, Economic trends, growth & diversification opportunities, etc.
3. Generation frequency Recurring Info: generated at clearly defined time intervals- weekly, monthly, quarterly…
Non-recurring Info: generated adhoc for specific need, no frequency or even recurrence
4. Consequence Action Info: fairly immediate decisions/ actions required by the receiver.
Non-Action Info: providing awareness/ update, no associated action as such from receiver
5. Future availability Documentary Info: written, stored & retrieved. Available when needed, once generated.
Non-Documentary Info: temporal display, Oral communication.
Info Utility, Quality, Value & Cost
• Since it facilitates faster & better decision making, Information is considered as “having
utility / value / worthiness. This can often be quantified by estimating time & cost savings,
profits generated, etc., due to the Info generated and resultant sound decisions/ actions.
• Information Quality is closely linked to its utility/ value/ worthiness. Info Quality is bad, if its
utility is low & it is high if the Info is considered highly useful, valuable & worthy.
• Information is never free, though it may appear to be so! Generating information involves
expenditure on H/w, S/w, networking, data collection & validation, personnel, administration
& management, etc. All this is “Information Cost”.
• Following points are very important to note:
1. Info utility/ quality/ value/ worthiness is defined by the concerned receiver(s) and not by those
generating & providing it, the equipment/ resources being state-of-the-art, latest & best, etc.. The
user’s opinion is what matters!
2. There’s always a trade-off between Info Value/ Utility and Info Cost. At some point, increasing the
quality/ utility/ value of info renders the cost prohibitive and hence, the organisation (management)
has to cap the same as acceptable/ sufficient. Accordingly, the capability of the info user also
comes into play- the decision-making skill with the info quality that the organisation is able to
provider, based on the info cost that can be afforded.
Factors affecting Info Val./Qual.
Information attributes are various parameters associated with generated
Information, that collectively determine its Utility/ Quality/ Value to the receiver(s):
Scope (Level of detail) Timeliness &

Frequency
Information Attributes
Accuracy & Presentation &
governing its Utility/
Reliability Access Flexibility
Quality/ Value
Validity & Impartiality

Consistency (Lack of Bias)
Presentation of Info- Criticality
• Organisations today are highly technology driven, along with vast increase in use of remote
access & mobile devices. Accordingly, approaches to presenting Info to users & methods/ media
adopted by users to access Info have undergone massive changes in the past 10-15 years.
• Improper presentation of info can erode its value completely, even if its based on high
data accuracy & excellent analysis. If a user is unable to get required information when most
needed and/ or cannot comprehend it, he/she simply stops trying to access it again through the
system! Obviously undesirable & unproductive!
Appropriate Summarization/ Appropriate mix of multiple

Abstraction/ Filtering/ Sorting communication channels
such as e-mail, SMS, Web &
Proper & Mobile Access, etc.
Drill-Down facility for more Effective
detail, if required Information
Presentation Proper Routing/ Distribution:
Clearly identify other
Appropriate use of graphs, recipients who may also
images, colours & fonts require the Information
Data Vs. Information
These terms are often mixed up! For instance, a manager says “Give me sales “data”, or “Is the Invoice
“information” entered into the system”? Though inferences in both cases are correct, its important to
understand that the two terms are different . And of course, avoid using them synonymously!
DATA INFORMATION
Is the Input- a collection of numbers, text, images, Is the Output- results of a set of relevant data,
voice, etc., representing identifiers, quantities, processed generally through various mathematical
objects, status, etc. Data is raw facts & figures, like & statistical methods, till it carries some “meaning,
“raw material” to a specific person; is like a finished product.
By itself, data carries no value or intelligence. Information has value for the recipient, enables
Doesn’t mean its unimportant. Data accuracy & assessment of a situation & appropriate decisions/
credibility is critical. Remember: GIGO! actions to be taken, with knowledge & experience.
Often, processed data, which is information for a Depending upon the recipient, Information can
recipient, can be data for further processing! One pass through a number of stages, with output
way to understand this is to think about semi- information from one stage serving as data for the
finished products. next, to generate information for another recipient.
In strict terms, Data refers to “Raw Data”- what Information may often seem like data, based on the
naturally emerges from business transactions, or is frame of reference, But its not raw data, since it
targeted & gathered from various external sources. has emerged after some processing of raw data.
Knowledge Base & KBM
• Just as the terms Data & Information are often used interchangeably, the terms Information &
Knowledge are also interchanged frequently. Many consider Knowledge & Information as quite
synonymous & this is not entirely incorrect. Information can be looked at as a form of knowledge
or contributor to knowledge.
• Knowledge is actually “the ability to view/ analyze Information by applying background/ context
and/or rules/ norms, assess the status, identify problems/ issues/ tasks and conclude them with
appropriate decisions & actions”. Intelligence, Experience, Wisdom & Judgement of a person are
obvious contributors to overall Knowledge, apart from the “intelligence” provided by Information.
• In recent years, the concept of Knowledge Base has emerged, in addition to Database &
Information Base. Establishing a KB involves appropriate methods & processes to capture, store,
maintain & share of the wealth of Knowledge existing within an Organisation, in various
employees who take important decisions. Previous experiences can also be captured in the KB
(decisions taken & associated outcomes, overall decision rating etc.).
• Knowledge Base Management (KBM) or creation & maintenance of a good KB can provide
significant productivity benefits- more sound decisions through less staff, decision-making
delegated to lower skilled staff, etc. There’s reduction in person dependence for decisions and
new decision makers can fall back on the KB for guidance in decision making. KBM is closely
linked with the areas of Artificial Intelligence (AI), Expert Systems, etc.
Info System (IS) & System Engg.
1. SYSTEM is generally defined as “A set of elements working in a coordinated &
controlled manner, to accomplish certain pre-determined objective(s)/ goal(s)”.
An ICT (IT) System or IS, in a business organisation can therefore be considered as:
A coordinated & controlled set of Computing devices (IT Hardware such as PCs,
Servers, etc.), Communications Devices & Infrastructure (Routers, Switches, LAN,
WAN, Internet, etc.), Codified Processes, Procedures & Rules (IT Software) & People
(Users, Systems Analysts, Developers, Testers, Implementers & Maintainers), to achieve
defined Objectives/ Goals:
a) Capture, organisation, storage & maintenance of relevant data
b) Executing business operations & related tasks efficiently & effectively
c) Data processing, for generation & presentation of Information at all levels
d) Information Processing & Decision making support; Knowledge Base Maintenance.
2. SYSTEM ENGINEERING refers to the entire process of “putting a desired System in

place” – from Conceptualization to Implementation & Maintenance.
Since the term (“jargon”) was 1st introduced by IT firms & professionals, Systems
Engineering is most often used in connection to ICT (IT) Systems.
System- Basic & Control Models
1. Basic System Model; Parts of a System:
INPUTS PROCESSES OUTPUTS
The 3 parts of a System (IPO) get defined based on its objectives/ goals. They define
the Boundary or Scope of that System & valid/ invalid expectations from that System.
Every System operates in a specific Environment, which influences the
conceptualization & design of that System.
A System designer/ implementer must put in place a Filter or “Quality Control” to
ensure that the System functions in sync with its Environment.
System- Basic & Control Models
INPUTS PROCESSES OUTPUTS

Measure
Necessary
Corrections Sensor
Expectation
Compare
Feedback
Corrector Assessor
An example from IT Systems (MIS):
Monthly Sales Grouping, Summation, Sales Performance

Data & Targets Achievement computations, etc. Reports
Check
Remove input data S/w changes
errors & validate & Bug fixes Generated figures &
report formats
Accuracy & desired
Compare report formats
Identify cause(s) Communication to
relevant person(s) Mismatches, if any
for each mismatch
Subsystems & Inter-linkages
• Any System is defined by its objective(s)
& the resultant scope/ boundary. If the OVERALL BUSINESS IT SYSTEM OR IS
System scope is at a very broad/ macro
MARKETING SYSTEM
level, it can be unmanageable! For - Campaign Management
instance, the concept of an overall IT - Pricing • Structure shown is
system catering to all the functions of a - Marketing Research representative & can
SALES SYSTEM vary, based on the
business is perfectly valid, but very - Opportunity Management
difficult to understand as a single entity. - Order Entry/ Approval / Acceptance business organisation.
- Sales Performance
• Accordingly, a conceived System must MANUFACTURING SYSTEM
• 2nd level Subsystems
always be broken down into multiple - Work Orders & Scheduling shown within each 1st
- Maintenance level, are partial. There
levels of Subsystems (also commonly
- Plant Management
called Systems). The boundary of a Sub- FIN. & ACCOUNTS SYSTEM will be more of them.
- Ledger maintenance
System is limited/ specific and its - Cash Flow management • Each 2nd level Subsys.
understanding & implementation is more - Invoicing can be broken into 3rd
focussed and manageable. MATERIALS SYSTEM level & further into 4th
- Procurement
• The number of subsystem levels defined, - Inventory Control level & so on, as
depends on the extent of clarity & scope - Receipts Accounting & Bill Passing appropriate from an IT
HR/ PERSONNEL SYSTEM
limitation desired at lowest subsystem - Payroll system development
level. Obviously, overdoing this defeats - Performance Appraisal perspective.
- Training & Skills Development
the very purpose of defining & so on:
Subsystems!
Subsystems & Inter-linkages
Sequential & Matrix Subsystems:
• A subsystem is Sequential when it doesn’t communicate or interface with any subsystem other than the
preceding (if any) & succeeding subsystem at the same level. Its output is the input to the succeeding one
(if any). Lower the level of a subsystem, the more sequential it tends to be.
Examples: Employee Attendance capture Salary Computation Payslip generation
Ledger Maintenance Trial Balance
Supplier Bill validation Computing Amount Payable Cheque & Voucher Preparation
• A subsystem is Matrix when it communicates or interfaces with other subsystems, by receiving input(s)
and/ or passing output(s). Subsystems at the higher / highest levels are generally Matrix, as can be seen
below, for the 1st level subsystems in a typical overall system called Business Organisation:
MATERIALS MGT.
MARKETING CUST. SUPP.
SALES FIN. & ACCOUNTS
HR/ PERSONNEL MANUFACTURING
Information Systems (IS) Types
Info Systems support various functions/ departments and all the processes, tasks and
decisions that happen within. There are many types of IS, considering that there exist many
categories of business processes, specialities and levels within an organisation. Following is a
good classification of IS:
INFORMATION SYSTEMS (IS)
OPERATIONS SUPPORT SYSTEMS (OSS) MANAGEMENT SUPPORT SYSTEMS (MSS)
Transaction Office Knowledge Management Decision Executive

Processing Automation Management Information Support Information
Systems (TPS) Systems (OAS) Systems (KMS) Systems (MIS) Systems (DSS) Systems (EIS)
Captures all master Communications & Apps that capture Also known as Applications that Provides monitoring
& transaction data productivity apps knowledge/ expertise Traditional MIS. analyze information, & strategic info for
from all functions, such as MS-Office, of individuals, for Extracts information evaluate & compare Top Mgt., in user
completes them & e-mail, OA, stand delegation of decision- for lower & middle alternative decisions friendly, graphics
generates all the alone apps, etc. making tasks to “non- level managers, from and suggest most intensive and highly
business-related experts”. Can be seen TPS, for proper suitable one, if reqd. flexible manner.
documents as a type of DSS. control of operations.
System Efficiency, Effectiveness
1. System Performance is governed by 2 distinct factors: System Efficiency & System
Effectiveness. Though often mixed up with each other, the factors are quite different in
meaning.
2. System Efficiency: Refers to how well the system uses Inputs & Resources to generate
its Outputs. Even when a System functions AS DESIRED, it may not have the best
possible efficiency in terms of using best technology & s/w coding, minimum possible
storage/ memory & other resources. Efficiency is determined by the quantum of Inputs
consumed by the systems for its outputs or what’s generally called O/I ratio. Higher the
O/I, greater the efficiency.
3. System Effectiveness: Refers to how well the system meets its goals/ objectives; delivers
the right outputs in terms of timeliness, accuracy, reliability, presentation form & format,
etc. An ineffective system is an “out of control” situation requiring significant correction
before the system degenerates into an “unused” & discarded one! Effectiveness must be
the focus area & it defines a minimum/ threshold efficiency level for the System!
4. In summary:
• System Efficiency indicates its “Productivity”; Effectiveness indicates its “Goodness”.
• For best user utility & usage, a System must be Effective & “Efficient enough”!
System Maintenance
1. Often, System Engg. projects are considered concluded when initial implementation is complete. The
truth is that lot of real challenges come up post-implementation! System Engg. is always an ongoing
project, though its “intensity” may not be constant post-implementation.
2. Every system, after running for a while, tends to “decay”, in terms of increasing inefficiency &
ineffectiveness. User requirements & system goals change periodically, certain reports become
irrelevant/ redundant, functional process flows change, etc. Decay is like “Entropy” which always
increases with time.
3. System Maintenance is the process through which a System is brought back into equilibrium
periodically, after some decay. Ideally, every System must be accompanied by a post-implementation
maintenance procedure or routine, which can consist of one of more of the following being done at
defined time intervals:
System Review/ Audit, including user meetings to assess current utility/ satisfaction/ usage.
Audit check using test data; running System under audit trail
Capturing changes in information requirements, process flows, data storage, etc.
Updating/ Upgrading the System as required.
4. A significant challenge in System Engg. is to design & develop Systems that are flexible & easily
maintained/ modified. Besides using hardware, s/w technology and coding techniques from a “longer-
term perspective, capturing of possible future directions of the function/ organisation/ system in the
initial system analysis stage is also critical.

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Unit 1: Basic Concepts Overview:

Data, DP, Information, System, IS

•Data & Data Processing (DP)

2. Information is a vital resource in general, and in particular, for a business. Provides

3. Information is the primary input or the “intelligence” for decision-making. A person

5. Some examples of “Information”:

Basis of Classification Information Types/ Categories

Scope (Level of detail) Timeliness &

Validity & Impartiality

Appropriate Summarization/ Appropriate mix of multiple

2. SYSTEM ENGINEERING refers to the entire process of “putting a desired System in

INPUTS PROCESSES OUTPUTS

INPUTS PROCESSES OUTPUTS

An example from IT Systems (MIS):

Monthly Sales Grouping, Summation, Sales Performance

SALES FIN. & ACCOUNTS

HR/ PERSONNEL MANUFACTURING

OPERATIONS SUPPORT SYSTEMS (OSS) MANAGEMENT SUPPORT SYSTEMS (MSS)

Transaction Office Knowledge Management Decision Executive

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