Information Systems 2022013 edition

Chapter One

Information Systems in Perspective

INTRODUCTION

As a student you make use of office programs such as Ms Word to complete assignments, as a consumer you use information systems to get information on your outstanding account balance at a retail store, or perhaps you make use of cell phone banking to keep you up to date on all of your banking transactions. Let us look at information systems and what it means for a worker. Information systems have not only impacted on our daily lives but have also changed the way we work.

According to www.good.com an information technology website, more than 80% of people interviewed in the USA work over- time from home that is these people continue or complete their work after hours. How do they accomplish this? The answer lies in the fact that many companies use e-mail as their preferred communication tool and e-mail combined with a laptop makes for a good mobile office.

Even more interesting is the use of smart phones for work purposes, today any mid- range smart phone can send and receive email, view and edit office documents and provide quick access to the internet.

So what are the implications of all the examples provided above for you, a future information worker? As a future knowledge worker, that is someone who works with data, information processing and other services, your knowledge of information systems will lead to you working efficiently and more productively, regardless of what profession you choose.

1.1 THE INFORMATION AGE

The development of the Modern Information Age made possible by the Digital Revolution and the Internet has brought major changes to the market place and to society as a whole, according to Lee, L.H (http://savingtheworldeconomy.blogspot.com/2011/08/job-creation-in-modern-information-age.html) the increases in efficiency and application capabilities resulting from the introduction of personal computers in the early 1980s have made possible the development and spread of a multitude of digital devices and realized the digital revolution. It has created many new businesses and jobs in the manufacturing and technology sectors of the market. It has also made possible the development and expansion of IT and computer networking technology.

This development of modern information accessibility has led to immense economic growth in the IT and Internet sectors around the world, beginning with the popularization of the Internet in 1996.

However, the so-called dot-com economy between 1997 and 2001 failed to make profits or enlarge economic gains and, thereafter, engendered a bubble economy. Moreover, this improved communication capability has not been utilised to its fullest potential in other sectors of the market, mostly the real market, and for some reasons, employment conditions in the real market have been steadily and seriously worsened.

1.2 The importance of

information systems Management information systems as defined by

Sachenko. A (Foundations of Information Systems in Business, www.scribd.com) is an understanding of the effective and responsible use and management of information systems is important for managers and other business knowledge workers in today’s global information society. Information systems and technologies have become a vital component of successful business organisations. Information systems constitute an essential field of study in business administration and management, as they are considered a major functional area in business operations.

1.2.1 What you need to know

Managerial end users need to know how information systems can be employed successfully in a business environment. The important question for any business end user or manager is: What do you need to know in order to help manage the hardware, software, data, and network resources of your business, so they are used for the strategic success of your company?

Managers or business professionals are not required to know the complex technologies, abstract behavioural concepts, or the specialized applications involved in the field of information systems

Figure 1.2 above illustrates a useful

conceptual framework that outlines what a

manager or business professional needs to

know about information systems. It

emphasizes five areas of knowledge:

Foundation Concepts

Information Technologies

Business Applications

Development Processes

Management Challenges

What is an Information

System? An information system (IS) can be any organized

combination of people, hardware, software, communications networks, and data resources that collect, transforms, and disseminate information in an organisation.

Business professionals rely on many types of information systems that use a variety of information technologies.

For example:

Manual (paper-and-pencil) information systems- Informal (word-of-mouth) information systems- Formal (written procedures) information systems- Computer-based information systems (IS) use hardware, software, the Internet, and other telecommunications networks, computer-based data resource management techniques, and other forms of information technologies(IT) to transform data resources into a variety of information products for consumers and business professionals.

1.2.3 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. A system (sometimes called a Dynamic system) has three basic interacting components or functions.

These include:

Input: involves capturing and assembling elements that enter the system to be processed.

Processing: involves transformation processes that convert input into output.

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

Feedback and Control: Two additional components of the system concept include feedback and control. A system with feedback and control components is sometimes called a cybernetic system, that is, a self-monitoring, self-regulating system. Feedback is data about the performance of a system. Control involves monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goals. The control function then makes necessary adjustments to a system's input and processing components to ensure that it produces proper output.

1.2.4 System Concepts System concepts underlie the field of information systems. Understanding

system concepts will help you understand many other concepts in the technology, applications, development, and management of information systems. System concepts help you understand:

Technology

That computer networks are systems of information processing components that uses a variety of hardware, software, data and telecommunication technologies.

Applications

That electronic business and commerce involves interconnected business information systems.

Development

That developing ways to use information technology n business includes designing the basic components of information systems.

Management

That managing information technology emphasizes the quality, strategic business value, and security of an organisation’s information systems.

1.2.5 Other System

Characteristics

A system does not exist in a vacuum; rather, it exists and functions in an environment containing other systems.

Subsystem: A system that is a component of a larger system, where the larger system is its environment.

System Boundary: A system is separated from its environment and other systems by its system boundary.

Interface: Several systems may share the same environment. Some of these systems may be connected to one another by means of a shared boundary, or interface.

Open System: A system that interacts with other systems in its environment is called an open system (connected to its environment by exchanges of inputs and outputs).

An example provided below of an accounting information system:

Example

An accounting firm that is tasked to compile financial statements for its client will first gather data on the client’s finances. This data could be in the form of cash receipts or cheques; this data is referred to as raw data that in its current form the data has little or no use.

The accounting firm then uses an Information System such as Pastel Accounting which accepts data as input, and then processes the data into financial statements, while processing the data, the information system (Pastel) provides the user (Book Keeper) with feedback and control such as checking the information and providing the

Book Keeper with solutions to data capturing problems, after this process the information system then compiles the collected data into output such as an income statement or balance sheet which is then presented to the client.

1.2.6 Business Organisations as

Systems A business organisation is a system. It consists of many

subsystems, such as departments, divisions, process teams and other workgroups. Organisations are designed for the purpose of creating products and services for customers.

1.3 INFORMATION SYSTEMS

We are now ready to apply the system concepts we have leant to understand how information system works. How does an information system accept input and process them in to information? What system components are involved? Discussed below are the major components and activities of information system.

People

People are required for the operation of all information system. As a group, these people are referred to as information system users or end users. They can be accountants, salesperson, clerks, engineers, or customers.

The structure and design of an information system is defined by another group of people—the system designers.

Another group of people in the organisation; managers decides how money, time, and other resources should be allocated to design, implement, and maintain the organisation’s information systems.

Tasks

Tasks can be categorised into four areas: tasks related to communication among people in the organisation, tasks related to making decisions within the organisation, tasks related to the operations of the organisation, and tasks related to strategic management of the organisation.

Information

As a commodity, information refers to facts, statistics, or other data that are valuable or useful to a person for accomplishing a task. These valuable pieces of information are organised and represented in some physical or digital form.

Organisation

A business or other organisation can be

defined by its purpose, the tasks or activities

that it performs, and its structure.

Environment

The global, competitive business environment

presents problems and opportunities that a

business organisation must cope with to

thrive.

1.3.1 Information Technology

In the context of business, these technologies perform five information functions:

Acquisition is a process of capturing data about an event that is important to the organisation.

Processing is an activity that manipulates and organises information in ways that adds value to the information so it is useful to users.

Storage and retrieval is an activity that systematically accumulates information for later use and then locates the stored information when needed.

Presentation is the process of showing information in a format and medium useful to the user.

Transmission is the process of sending and distributing data and information to various locations.

1.3.2 Benefits of Information

Systems A firm can reap the following benefits:

High-quality information.

Access to information.

Utilisation of information.

Perform organisational work efficiently.

Better communication and decision-making.

Better products and services for customers.

1.3.3 Types of Information

Strategic Information

This is information required by managers at the strategic level of management. This type of information is used to develop and act on the long term strategic goals of a business organisation. An example of this kind of strategic information, is should a computer manufacturer enter the mobile phone and tablet pc markets? With tablets and smart phone outselling traditional desktop computers, many computer manufacturers are gearing up and investing heavily in research and development of mobile devices.

Tactical Information

Information in this category usually deals with short term planning and is used by managers at the control or supervisory level. For example a manager could analyse sales forecasts, inflation data, competitor information etc.

Operational Information

Information in this category is usually applied in a short period of time, form a few hours to a few days. This type of information is used by managers at the operational level. For example a warehouse manager might at the end of the day, conduct a stock take to determine whether to place an order for new stock

1.4 INFORMATION SYSTEMS

FOR BUSINESS TRANSACTIONS

A transaction is an event that occurs in any of the primary activities of the company. A transaction processing system (TPS) is a firm’s basic accounting and record-keeping system that keeps track of routine daily transactions necessary to conduct business.

Transaction processing systems typically involve large amounts of data stored in large databases; they require high processing speeds to manipulate large volumes of data. A transaction processing system must ensure a high level of accuracy and security of the data.

1.4.1 The Transaction

Processing Cycle Transaction processing is a cyclical process with five steps:

Entering the data. This involves online data entry or

transcribing paper source documents. Data entry can also use

electronic data interchange (EDI) to electronically

exchange business transactions.

Processing the data. Data can be processed in two ways: batch

processing or real-time processing.

Storing and updating the data. This step involves storing the

transaction data in database files. Many large organisations use

data warehousing software to create and maintain very

large databases containing data on all aspects of the company.

Document and report preparation. A transaction processing system produces several types of action documents and reports. An action document initiates an action by the recipient or verifies for the recipient that a transaction has occurred.

User inquiry. Managers and other workers can use a database query language to ask questions and retrieve information about any transaction activity.

Example

Point of Sale system to handle a customer return

Assuming a customer bought an item on credit and wants to return the item, the customer provides input by completing a return form. The cashier then captures the completed form on the point of sale system, which then credits the customer’s account. The system performs processing and produces output, including a credit note, and a report to the store manager as to the reasons for the customer returning the item.

Figure 1.3 shows a transaction processing system and how it inter- links with other information systems that a business organisation could be running such as a Management Information System. From the figure above one can see that the TPS

(Transaction Processing Cycle) includes five tasks as discussed previously:

Data Collection

Data Editing

Data Manipulation

Data Storage

Document Production

The diagram also shows the benefits of using a transaction processing system such as capturing data at its source via data automation by using technology such as barcodes ( Think back to your shopping at a store, imagine how long shopping will take if the cashier had to enter each bar code manually instead of using a bar code reader.) which saves time and money and also provides information to other information systems such as a management information system using sales captured from a TPS to produce a sales report.

1.4.2 Enterprise Resource

Planning Transaction processing systems exist in all

functional areas of a business. Each subsystem is itself a transaction processing system. The subsystems exchange information; the output of one subsystem is the input to another subsystem. Organisations constantly look for ways to create cross-functional information systems by reengineering, or combining and integrating, two or more Transaction Processing Systems. This approach of creating information systems to support an organisation’s operational business processes is referred to as enterprise resource planning (ERP).

1.5 AUTOMATED INFORMATION

SYSTEMS FOR DESIGN AND

MANUFACTURING 1.5.1 Computer-Aided Design (CAD)

Product designers and engineers use computer-aided design (CAD) with computer workstations and software to draw product or process designs on the screen. If you learned a subject called technical drawing in school, which involved sitting in front of 3D objects and learning how to turn them into precise 2D drawings on paper—invaluable if you planned to be a draftsman or an architect when you grew up, but a complete waste of time for every aspiring doctor, teacher, scientist, or road-sweeper.

In those days, technical drawing was the best solution to a maddening problem architects and engineers knew only too well: how to communicate the amazing three-dimensional constructions they could visualize in their mind's eye with clarity and precision. Even with three-dimensional drawings (such as orthographic projections), it can still be hard to get across exactly what you have in mind. What if you spent hours drawing your proposed building, airplane, or family car... only for someone to say infuriating things like: "And what does it look like from behind? How would it look from over there?

Computer-aided design (CAD) solves these problems in a particularly subtle way. It doesn't simply involve drawing 2D pictures of buildings on the screen: what you produce with CAD is effectively a computer model of your design. Once that's done, it's easy to rotate your design on-screen or change any aspect of it in a matter of moments. If you want to make a wall twice the size, click a button, drag your mouse here and there, and the computer automatically recalculates how the rest of your model needs to change to fit in.

You can print out three dimensional projections of your model from any angle or you can demonstrate the 3D form to your clients on-screen, allowing them to rotate or play with the model for themselves. Some models even let you walk through them in virtual reality. CAD has revolutionized architecture not simply by removing the drudge of repetitive plan drawing and intricate model making, but by providing a tangible, digital representation of the mind's eye: what you see is—finally—what you get.

1.5.2 Computer-Aided

Manufacturing (CAM)

Computers and other information technology are used to automate the manufacturing process with computer-aided manufacturing (CAM). The software in a CAM system retrieves the design specifications of the product from the CAD database; controls specific tools, machines, and robots on the factory floor to manufacture the product; and monitors the overall physical process of manufacturing the product.

1.5.3 Computer-Integrated Manufacturing (CIM)

Computer-integrated manufacturing (CIM) is a concept, or management philosophy, emphasising the co-ordination of CAD and CAM systems along with other information systems in the company.

1.5.4 Reasons for CAD/CAM Development

According to Elanchezhan, C and Sundar, G (Computer Aided Manufacturing, 10) the main reasons for conversion from manual processes to using CAD and CAM are listed below:

Increased productivity due to less time consumption on analysis, data storage and retrieval.

Easy to modify the plans according to requirements.

Possibility of analysing a wide range of design attributes each more thoroughly before selecting the optimum one.

Common database.

Reduces construction costs as computer can generate 3D models at lower cost.

Quick response to customers by shortening the product development cycle.

Improves communication and efficiency between design and manufacturing departments.

END Of Chapter 1