Chapter 1

Introduction to Information systems

The role of information systems is to transform data, the raw facts, into information, that
adds to our knowledge.

Information is an increment in knowledge: it contributes to the general framework of

concepts and facts that we know. Information relies on the context and the recipient's
general knowledge for its significance.

Data are only the raw facts, the material for obtaining information. Information systems
use data stored in computer databases to provide needed information. A database is an
organized collection of interrelated data reflecting a major aspect of a firm's activities.

• Information systems capture data from the organization (internal data) and its
environment (external data).
• They store the database items over an extensive period of time.
• When specific information is needed, the appropriate data items are manipulated
as necessary, and the user receives the resulting information.
• Depending on the type of information system, the information output may take
the form a query response, decision outcome, expert-system advice, transaction
document, or a report.

Formal information systems rely on procedures (established and accepted by

organizational practice) for collecting, storing, manipulating, and accessing data in order
to obtain information.

Attributes of Quality Information

• Timely Available when needed and not outdated when made available
• Complete Includes all the user needs to know about the situation where the
information will be used
• Concise Does not include elements unneeded by the user
• Relevant Has direct bearing on the situation
• Precise Offers quantitative information with a degree of exactness appropriate to
the underlying data
• Form The level of detail, tabular versus graphic display, and quantitative versus
qualitative form are selected in accordance with the situation Internal and
External Information

Most of the data captured by information systems relates to the operations of the
organization itself, serving to produce internal information. But in an increasingly
competitive marketplace, a firm needs to access more and more external information.
Therefore, it is important to note that decision makers need both the internal

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information about their organization and the external information about its
environment.

A firm can succeed only by adapting itself to the demands of its external environment.
The environment is represented by a number of groups that affect the company's ability
to achieve its objectives or that is affected by it. Such groups are called the stakeholders
of a firm, which includes both internal and external stakeholders.

An information system is a specific type of system in general. Information systems are

interrelated components working together to collect, process, store, and disseminate
information to support decision making, coordination, control and analysis in an
organization.

Effectiveness and efficiency

The quality of the system may be evaluated in terms of its effectiveness and efficiency.
Effectiveness measures the extent to which the system meets its objectives. Efficiency is
a measure of resources consumed to produce given outputs. The fewer resources a
system consumes in producing given outputs, the more efficient it is.

Information Systems in the Feedback Loop of an Organization

All organizations exist as part of a larger system. Information systems are used to assist
management by providing feedback on the firm's performance. Feedback refers to the
outputs of a system that are transformed back into inputs in order to control the
system's operation. Information systems are used to compare the data on the actual
performance with the standards developed earlier. Based on the information about the
discrepancies, managers can formulate corrective actions, which are then fed back into
the firm's operations.

Components of Information Systems

• Hardware
• Software
• Databases
• Human resources
• Procedures

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Hardware
Multiple computer systems: microcomputers, minicomputers, mainframes, together with
their peripherals. Computer system components are: a central processor(s), memory
hierarchy, input and output devices.

• Computer processor: The central processor carries out the instructions of a

program, translated into a simple form.
• Memories: Included in a computer system form a hierarchy. They range from the
fast electronic units, such as the main memory, to the slower secondary storage
devices such as magnetic disks.

Software
Computer software falls into two classes: systems software and applications software.

Systems Software: Manage the resources of the computer system and simplifies
programming. An operating system is the principal system software. It manages all the
resources of a computer system and provides an interface through which the system's
user can deploy these resources.

Application Software: Are programs that directly assist end users in doing their work.
They are purchased as ready-to-use packages. Applications software directly assists end
users in doing their work.

Databases
Databases are organized collections of interrelated data used by applications software.
Databases are managed by systems software known as database management systems
(DBMS) and shared by multiple applications.

Telecommunications
Telecommunications are the means of electronic transmission of information over
distances. Today, computer systems are usually interconnected into telecommunications
networks. Various network configurations are possible, depending upon an
organization's need.

Human Resources
Professional information systems personnel include development and maintenance
managers, systems analysts, programmers, and operators, often with highly specialized
skills.

End users are the people who use information systems or their information outputs, that
is, the majority of people in today's organizations. The hallmark of the present stage in
organizational computing is the involvement of end users in the development of
information systems. End-user computing, or control of their information systems by end
users and the development of systems by end users, has become an important
contributor to information systems in organizations.

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Procedures
Procedures are the policies and methods to be followed in using, operating, and
maintaining an information system. Specifications for the use, operation, and
maintenance of information systems, collected in help facilities, user manuals, operator
manuals, and similar documents, frequently delivered in an electronic form.

Types of Information Systems

• Transaction Processing Systems (TPS)
• Management Reporting Systems (MRS)
• Decision Support Systems (DSS)
• Executive Information Systems (ESS)
• Office Information Systems (OIS)
• Professional Support Systems
• Transaction Processing Systems

Transaction processing systems today generally work in on-line mode by immediately

processing a firm's business transactions. A Transaction is an elementary activity
conducted during business operations.

TPS may work either in batch mode, processing accumulated transactions at a single time
later on, or in on-line mode, processing incoming transactions immediately. Today, most
TPS work in the on-line mode.

Management Reporting Systems

The objective of management reporting systems is to provide routine information to
managers. Managers receive performance reports within their specific areas of
responsibility. Generally, these reports provide internal information rather than spanning
corporate boundaries. They report on the past and the present, rather than projecting
the future.

In order to prevent information overloads, managers may resort to using demand or

exception reports. Demand reports are requested when needed. Exception reports are
produced only when preestablished out-of-bounds conditions occur and contain only the
information regarding these conditions.

Decision Support Systems

Decision support systems directly support a decision-making session. These systems
facilitate a dialog between the user, who is considering alternative problem solutions,
and the system that provides built-in models and access to databases. The DSS databases
are often extracts from the general databases of the enterprise or from external
databases.

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Executive Information Systems
Executive information systems support top managers with conveniently displayed
summarized information, customized for them. They make a variety of internal and
external information readily available in a highly summarized and convenient form.

EIS are used to:

• Monitor the performance of the organization
• Assess the business environment
• Develop strategic directions for the company's future

Office Information Systems

The main objective of OIS is to facilitate communication between the members of an
organization and between the organization and its environment.

OIS are used to:

• Help manage documents represented in an electronic format
• Handle messages, such as electronic mail, facsimile, and voice mail
• Facilitate teleconferencing and electronic meetings
• Facilitate the use of the Internet for communication and access to information
• Facilitate the use of task-oriented teams through the use of groupware

Professional Support Systems

Professional support systems help in tasks specific to various professions. As both
organizational and individual experience with information systems grow, more and more
specialized categories of professional support systems emerge.

Expert Systems in Information Systems

Expert systems are system that employs knowledge about its application domain and
uses an inferencing (reason) procedure to solve problems that would otherwise require
human competence or expertise. The essential component of the knowledge base is
heuristics - informal, judgemental elements of knowledge within the expert system's
domain, such as oil exploration or stock valuation. The knowledge base is developed by
working with domain specialists. It is further enhanced as the system is used.

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