class system concept

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What is a 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: Input involves capturing and assembling elements that enter the system to beprocessed.

Example: Raw materials, Energy, Data and Human effort must be secured andorganized for processing.

Processing: It involves transformation processes that convert input into output.Example: A manufacturing process, the human breathing process or Mathematicalcalculations.

Output: It involves transferring elements that have been produced by a transformationprocess to their ultimate destination.

Example: Finished products, Human services and Management information must betransmitted to their human users.



What is an Information System?

An information system is an organized combination of people, hardware, software,

communication networks and data resources that collects, transforms anddisseminates information in an organization.

Information System

People

Data

Software

Hardware

Networks



F undamental Roles of an Information System: An Information System performs three vital roles in any type of organization.

Support of business operations.Support of managerial decision making.Support of strategic competitive advantages.

Components/Resources of an Information System:People: They are required for the operations of all information systems.

End users Anyone else who uses information systems.

IS specialists Who develop and operate information systems.eg.- Programmers, Systems analysts

Hardware: It includes all physical devices and materials used in informationprocessing. It includes machines (computers, data media)

Machines Computers, Video Monitors, Magnetic Diskdrives, Printers, Optical Scanners.Media F loppy disks, magnetic tapes, Optical Disks, paper

forms



Software : It includes all sets of information processing instructions.Programs O/S programs, Spreadsheet programs, Wordprocessing programs, Payroll programs.Procedures Data entry procedures, error correctionprocedures, Paycheck distribution procedures.

Data: It is a collection of raw facts and figures which constitute avaluable organizational resources.eg. Product descriptions, Customer records, Employee details

Data resources of an Information System are typically organized into:Databases that hold processed and organized data.Knowledge bases that hold knowledge in a variety of formssuch as facts, rules and case examples about successfulbusiness practices.

Network: It is a collection of interrelated autonomous computers.Internets, Intranets and extranets have become essential tothe successful operations of all types of organizations.

Therefore we need Communication media, communicationprocessors, network access and control software.



Types of Information System: An information system can be classified conceptually as either operations or

management information systems.Operation management system can be classified into three categories such as

a) Transaction Processing Systemb) Process Control Systemc) Enterprise Collaboration System

Transaction Processing System:

It records and processes data resulting from business transactions.The examples are the systems that process sales, purchases and inventory

changes. The results of such processing are used to update customer,inventory and other organizational databases. These databases thenprovide the data resources that can be processed and used bymanagement information systems, decision support systems andexecutive information systems.



Process Control System:

Operation support systems also make routine decisions that control operationalprocesses.

Process control systems monitor and control physical processes.eg. A petroleum refinery uses electronic sensors linked to computers to

continually monitor chemical processes. The computers monitor a chemicalprocess, capture and process data detected by sensors and make instant adjustments to appropriate refinery processes.

Enterprise Collaboration Systems:

These are the information systems that use a variety of information

technologies to help people work together- to communicate ideas, shareresources and coordinate cooperative work.The goal of enterprise collaboration systems is to use information technology to

enhance the productivity and creativity of teams and workgroups in themodern business enterprise.



M anagement Support System:When information systems focus on providing information and support for

effective decision making by managers, they are called managementsupport systems.

It can be classified into following categories.

A> Management Information SystemB> Decision Support System

C> Executive Information System

M anagement Information System:It is the most common form of management support system. It provides

managerial end users with information products on demand or periodically in

a predefined report format that support much of their day-to-day decisionmaking needs. It provides a variety of reports and displays to managers. Thecontents of these information products are specified in advance bymanagers so that they contain information about internal operations fromdatabases that have been updated by transaction processing systems.



Decision Support Systems:These are the interactive, computer-based information systems that use

decision models and specialized databases to assist the decision ±makingprocesses of managerial end users.

It differs from TPS which focus on processing the data generated by businesstransaction processing system.

It also differ from management information system, which focus on providingmanagers with prespecified report form that can be used to help them makemore effective, structured type of decisions.

Executive Information SystemThese 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 andreports produced manually as well as by computer systems. Other sourcesof executive information are meetings, telephone calls and social activities.

The goal of computer-based executive information systems is to provide topmanagement with immediate and easy access to selective information aboutkey factors that are critical to accomplishing a firm¶s strategic objectives.



Therefore, EIS are easy to operate and understand. Graphics displays are usedextensively and immediate access to internal and external databases isprovided. EIS provide information about the current status and projectedtrends for key factors selected by top executives.

O ther classification of Information Systems:

Expert Systems are knowledge-based systems that provide expert advice andact as expert consultants to users.

Knowledge management systems are knowledge-based systems thatsupport the creation, organization and dissemination of business knowledgewithin the enterprise.

Strategic information system provides a firm with strategic products, servicesand capabilities for competitive advantages.

Business information systems support the organizational and managerialapplications of the basic business functions of a firm



M anagement Information System ( M IS)

Notes:There is no consensus on the definition of the term µManagement InformationSystem¶.Some authors use the terminology as µInformation Processing System¶ or µInformation and Decision System¶ or µOrganizational Information System¶ or simplyµInformation System¶.

Definition:

A management information system, or M IS, is a computer-based system thatoptimizes the collection, transfer, and presentation of information throughoutan organization by using an integrated structure of databases and informationflow.

A management information system isan integrated user-machine system

for providing informationto support the operations, management, analysis and decision-making functionsin an organization.



The MIS can be described as a pyramid structure in whichI. The bottom layer consists of information for transaction processing, status enquiries, etc.II. The next level consists of information resources in support of day-to-day operations and

control,

III. The third level consists of information system resources to aid in tactical planning anddecision making for management control andIV. The top level consists of information resources to support strategic planning and policy

making by higher levels of management.

MIS for strategic and policyplanning and decision making

Management information for

tactical planning anddecision making

Management information for operational planning anddecision making and control

Transaction processing andinquiry responses



Operational decisions usually involve large-scale processing of internal datasuch as attendance, daily cash flow, sales figures etc. Accuracy and speedare the two most important aspects to be considered while making

operational decisions. Information systems assist in achieving greater accuracy and speed while making operational decisions.

Decisions at tactical level are likely to have a medium long-term impact onthe organization and are made by middle management. These decisionsshould be supported by organizational information. The quality of dataprocessing has a major impact on the profitability of the organization.The examples of decisions taken at the tactical level are budget analysis,vendor rating, staff promotion etc.

Decisions at the strategic level are concerned with long-term business issue

such as diversification, strategic alliances, expansion of capacity etc.Information that is external to the organization influences strategic decisions.



The Decision-Making Pyramid

TOP

MIDDLE

LOWER

Decisions Information

Environment

Internal & External

Internal

Strategic

Tactical

Operational

Strategic > 3 Years Tactical = 1 ± 3 Years

Operational < 1 year



Ch aracteristics of M IS:

These are the desirable characteristics of an MIS:

An MIS supports transaction handling and record keeping.An MIS uses an integrated database and supports a varietyof functional areas.An MIS provides operational-, tactical-, and strategic-levelmanagers with easy access to timely but, for the most,structured information.An MIS is somewhat flexible and can be adapted to meet the

changing information needs of the organization.An MIS can boost system security by limiting access toauthorized personnel.



Characteristics of MIS (contd..):Management oriented: MIS is developed to increase

organizational efficiency. Therefore, they need to focus on therequirements of the managers and the overall objective of theorganization.

Management directed : MIS can be costly and time consuming.Hence, it is important that the top management understandtheir importance in increasing organizational efficiency whichwould lead to quicker implementation.

Integrated systems : MIS is based on five factor± men, money,machines, materials and methods. An MIS is a combination of subsystems. Hence, it is viewed as an integrated system that isa combination of functional and activities subsystems.



haracteristics o MI contd.. :

Common data flow: Activities such as data gathering, storage,retrieval and data capturing are performed only once and datais collected from the original source. By establishing a commondata flow, the system tries to minimize data processing andmaximize output generation. Such integration would help in

building an effective management information system.

Heavy planning element: The implementation of an MIS requiremeticulous planning and design and implementation. The

system should be designed such that there is perfectsynchronization among hardware, software, data processing,information presentation and feedback.



Characteristics of MIS (contd..):

Subsystem concept: MIS consists of several subsystems thatinteract with each other and perform specialized tasks thatmay be integrated into the total system.

Common database: It acts as an integrator among the different

functional subsystems in the organization. It permits accessto different tables by different functional subsystems. Sincedata requirements are different for different levels of management, the system supports one or more databases.

Flexibility:MIS should be flexible. So that it can be modified easily.



F unctions of M IS

The three main functions of an MIS are data collection, storageand information presentation.

Data may be primary or secondary. Data may be simple or complex. Data may be internal or external..

Data are stored in a database or in a number of databases if the data are very large.

Standardized report formats are used to represent the data.



F unctions of M IS

Data collection

Data storage & processing

Information presentation



Importance of M IS

Well designed information systems make decision makingmuch easier and faster.Information systems help in categorizing information accordingto requirements at different management levels.

Ensures timely availability of information to the topmanagement to facilitate decision making.MIS being an integrated system eliminates redundancy.Owing to its flexibility, it can be easily modified according to

current requirements.MIS helps in improvement of management processes.



M anagement Reporting Systems

MIS helps in generating a variety of reports that are useful to managers.There are four reporting alternatives available to managers. They areas follows.

Periodic scheduled reports: These reports follow a predeterminedformat and used for providing information to managers on a regular basis. An example of it is the daily sales report.

Exception reports: These reports are not generated on a regular basis..But on exceptional requirements. For example, a report on customerswho have taken an overdraft would need to be prepared if defaulters

are to be traced.

Demand reports and responses: These are alternatively termed asadhoc reports. They are generated as and when the manager requires those. Mangers use queries and report generators for such

reporting.



MANAGEMENT INFORMATION SYSTEMS

Trends in Information Systems (Evolution of IS):The business applications of information systems haveexpanded significantly over the years.1950 s 1960 s: Data Processing: Electronic dataprocessing systems Transaction processing, record-

keeping, and traditional accounting applications.1960 s 1970 s: Management Reporting: Management Information Systems Management reports of prespecified information to support decision making.



1970 s 1980 s: Decision Support: Decision support systems Interactive ad hoc support of the managerial decision-makingprocess.

1980 s 1990 s: Strategic and End User Support:End user computing systems Direct computing support forend user productivity and work group collaboration.

Executive Information System Critical Information for the topmanagement.

Expert System Knowledge-based expert advice for end usersStrategic information systems Strategic products and services forcompetitive advantage.1990 s 2 000 s: Electronic Business and Commerce: Internet-based e-business and e-commerce systems Web-enabled enterprise and global e-business operations and electronic commerce on the Internet, intranets,extranets, and other networks.



Transforming Data Into Information

Data InputsData Inputs Information O utputsInformation O utputs

Capture

M anipulation

Storage

Provision of Accessat User Location

ExternalData

InternalData

Information System

Query Response

Decision O utcome

Expert-System Advice

Transaction Document

Report

Organ izationEnvironment



MANAGEMENT INFORMATIONSYSTEMS

A management information system(MIS) is a system that

captures data about anorganizationstores and maintains the dataprovides meaningful information

for management.



An MIS can be viewed as a setof subsystems that provideinformation for such functionsas:

production

marketinghuman resourcesaccountingfinance



MIS capturesMIS capturesdata about businessdata about businessprocessesprocessesaggregates, summarizes,aggregates, summarizes,and organizes dataand organizes dataproduces information thatproduces information thathelps monitor and controlhelps monitor and controlbusiness processesbusiness processesERP systems integrateERP systems integrate

all aspects of a firm¶sall aspects of a firm¶s



Sales andSales andMarketingMarketing

Sy stemSy stem

FinanceFinanceSy stemSy stem

AccountingAccountingInformationInformation

Sy stemSy stem

HumanHumanResourcesResources

Sy stemSy stem

ProductionProductionSy stemSy stem

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