Unit 3: Management Information System (BBA 305)

Unit – III
Syllabus
Unit – III: Information &System: Information concepts, Information: A quality product classification of the
information, Methods of data & information collection, Value of information, MIS &System concept, MIS &
System analysis ,Computer System Design.

INFORMATION & SYSTEMS:

INFORMATION CONCEPTS-
The word information is used commonly in our day to day working. In MIS, information has a precise
meaning and it is different from data. The information has a value in decision making while data does
not have. Information brings clarity and creates an intelligent human response in the mind. In MIS a
clear distinction is made between data and information. Data is like raw materials while the information
is equivalent to the finished goods produced after processing the raw material. Information has certain
characteristics. These are: Information
 Improves representation of an entity
 Updates the level of knowledge.
 Has a surprise value.
 Reduces uncertainty.
 Aids in decision making.

The quality of information could be called good or bad depending on the mix of these characteristics.
Devis and Olson defines information as a data that has been processed into a form that is meaningful to
the recipient and is of real or perceived value in the current or the prospective actions or decisions of the
recipient. Data is defined as groups of non-random symbols in the form of text, images or voice
representing quantities, actions and objects. Whether an entity is a data or information, it must be
transferred through communication from the Source. to the Destination without loss of content.

The above model of communication is used in the MIS. The MIS is equivalent to the transmitter which
provides information and sends through reports (channel) to the various receivers, which is decoded or
interpreted by the receiver at the destination. The poor quality of information due to various factors
would create confusion and misunderstanding, which is equivalent to a Noise and a Destortion in the
communication model. A good MIS communicates the information without a noise and a distortion to
the user.

Information Presentation
Presentation of the information is an art. The data may be collected in the best possible manner and
processed analytically, bringing lot of value in the information; however, if it is not presented properly,
it may fail to communicate anything of value to the receiver. The degree of communication is affected
by the methods of transmission, the manner of information handling and the limitations and constraints
of a receiver as the information processor and the organization as the information user.

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The methods used for improving communication are summarization and message routing. The concept
of summarization is used to provide information which is needed in the form and content.

The principle behind summarization is that too much information causes noises and distortions, i.e.,
confusion, misunderstanding and missing the purpose. The summarization suppresses the noise and the
distortions.
Another method of improving the degree of communication is through message routing. The principle
here is to distribute information to all those who are accountable for the subsequent actions or decisions
in any manner. That is if the information is generated with a certain purpose for a primary user, then
such information may have secondary purposes to some other users in the organization. This is achieved
by sending the copies of the reports or documents to all the concerned people or users. The principle of
the message routing achieves the spread of information to the appropriate quarters.

Knowledge is a power and an intelligent person in the organization can misuse this power to achieve
personal goals undermining the functional and organizational goals. This tendency should be curbed.
Further, the decision maker may call for the information on the grounds that, just in case required, he
should readily have it. Apart from the misuse of information, it has an impact on the cost of information
processing. In order to curb the misuse of information, a control is exercised on the content of
information and its distribution.

Bias in information
While choosing the appropriate method of communicating information a care has to be taken to see that
is not biased. For example, while using the techniques of classification or filtering the information, it
should not happen that certain information gets eliminated or does not get classified. That is, a deliberate
bias in covering certain information is to be avoided. This bias enters because people try to block
sensitive information which affects them. To overcome this problem, a formal structure of organization
should be adopted and the type of information and its receiver should be decided by the top
management.

Many a times the data and the information are suppressed but the inferences are informed, with no or
little possibility of verification or rethinking. In this case one who draws inferences may have a bias in
the process of collection, processing and presentation of data and information. Though the deliberate
enforcement of the inference on the receiver avoids a possibility of the multiple inferences, but in this
case processor.s bias is forced on the receiver. For example, organizations have departments like
Corporate Planning, Market Research, R and D, HRD and so on, which collect the data and analyze it
for the company and communicate the inferences. In all these cases personal bias, organizational bias
and management bias may be reflected in the entire process of collection processing, and
communication inference.

The presentation of the information will generate a bias and may influence the user. For example, if the
information is presented in an alphabetical order and if it is lengthy, the first few information entities
will get more attention. If the information is presented with a criteria of exception, the choice of
exception and deviation from the exception creates a bias by design itself. For a quick grasp, the
information is presented in a graphical form. The choice of scale, the graphic size and the colour
introduced a bias in the reader.s mind.

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The base, which may creep in inadvertently because of the information system design, can be tackled by
making the design flexible, so far as reporting is concerned. Allow
the manager or the decision maker to choose his classification or filtering criteria, the scope of
information, the method of analysis and the presentation of inference. However, somewhere balance
needs to be maintained between the flexibility of the design and the cost, and its benefits to the
managers. Disregarding the bias in information, it must have certain attributes to increase its utility.

Redundancy is the repetition of the parts or messages in order to circumvent the distortions or the
transmission errors. The redundancy, therefore, sometimes is considered as an essential feature to ensure
that the information is received and digested. In MIS the redundancy of data and information, therefore,
is inevitable on a limited scale. Its use is to be made carefully so that the reports are not crowded with
information.

Characteristics of Information :
The parameters of a good quality are difficult to determine, however, the information can be termed as
of a good quality if it meets the norms of impartiality, validity, reliability, consistency and age. The
quality of information has another dimension of utility from the users point of view. The users being
many, this is difficult to control. Therefore, if one can develop information with due regards to these
parameters, one can easily control the outgoing quality of the information with the probable exception of
the satisfaction at the users end.

Following are the essential characteristic features :

(i) Timeliness : Timeliness means that information must reach the recipients within the prescribed
timeframes. For effective decision-making, information must reach the decision-maker at the right time,
i.e. recipients must get information when they need it. Delays destroys the value of information. The
characteristic of timeliness, to be effective, should also include up-to-date, i.e. current information.

(ii) Accuracy : Information should be accurate. It means that information should be free from mistakes,
errors &, clear Accuracy also means that the information is free from bias. Wrong information given to
management would result in wrong decisions. As managers decisions are based on the information
supplied in MIS reports, all managers need accurate information.

(iii) Relevance : Information is said to be relevant if it answers especially for the recipient what, why,
where, when, who and why? In other words, the MIS should serve reports to managers which is useful
and the information helps them to make decisions..

(iv) Adequacy : Adequacy means information must be sufficient in quantity, i.e. MIS must provide
reports containing information which is required in the deciding processes of decision-making. The
report should not give inadequate or for that matter, more than adequate information, which may create a
difficult situation for the decision-maker. Whereas inadequacy of information leads to crises,
information overload results in chaos.

(v) Completeness : The information which is given to a manager must be complete and should meet all
his needs. Incomplete information may result in wrong decisions and thus may prove costly to the
organization.

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(vi) Explicitness : A report is said to be of good quality if it does not require further analysis by the
recipients for decision making.

(Vii) Impartiality: Impartial information contains no bias and has been collected without any distorted
view of the situation. The partiality creeps in, if the data is collected with a preconceived view, a
prejudice, and a pre-determined objective or a certain motive.

(viii)Validity: The validity of the information relates to the purpose of the information. In other words,
it is the answer to the question-dose the information meet the purpose of decision making for which it is
being collected? The validity also depends on how the information is used. Since the information and
the purpose need not have one to one correspondence, the tendency to use it in a particular situation may
make the information invalid. For example, if the quality of the manufactured product is deteriorating
and it is decided to select the causes of poor quality, then one must collect all the possible causes which
may affect the quality. Quality is a function of the raw material, the process of manufacture, the tools
applied, the measures of the quality assessment, the attitude of the people towards the control of quality.
However, if the information collected talks only about raw materials and the process of manufacture,
then this information is not sufficient and hence it is not valid for all the decisions which are required to
control the quality.

(ix) Reliability: It is connected to the representation and the accuracy of what is being described. For
example, if the organization collects the information on the product acceptance in the selected market
segment, the size of the sample and the method of selection of the sample will decide the reliability. If
the sample is small, the information may not give the correct and a complete picture and hence it is not
reliable. The reliability is also affected from the right source.

(x)Consistency:The information is termed as inconsistent if it is derived form a data which dose not
have a consistent pattern of period. Somewhere, the information must relate to a consistent base or a
pattern. For example, you have collected the information on the quantity of production for the last
twelve months to fix the production norms. If in this twelve months period, the factory has worked with
variable shift production, the production statistics of the twelve months for comparison is inconsistent
due to per shift production. The consistency can be brought in by rationalizing the data to per shift
production per month. The regularity in providing the information also helps in assessing the
consistency in the information.

(xi)Age: If the information is old, it is not useful today. The currency of the information makes all the
difference to the users. If the information is old then it does not meet any characteristics of the
information viz., the update of knowledge, the element of surprise and the reduction of uncertainty, and
the representation. Maintaining these parameters at a high degree always poses a number of problems.
These problems are in the management of the operations, the sources, the data processing
and the systems in the organization. A failure to maintain the parameters to a high degree affects the
value of the information to the decision maker.

Types of Information

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Classification of Information: The information can be classified in a number of ways provide to better
understanding. Jhon Dearden of Harvard University classifies information in the following manner :

(1) Action Verses No-Action Information : The information which induces action is called action
information. ‘No stock‘report calling a purchase action is an action information. The information which
communicates only the status is No-Action Information. The stock balance is no-action information.

(2) Recurring Verses No-Recurring Information : The information generated at regular intervals is
recurring information. The monthly sales reports, the stock statement, the trial balance, etc are
recurring information. The financial analysis or the report on the market research study is norecurring
information.

(3) Internal and external information : The information generated through the internal sources of the
organization is termed as Internal Information, while the information generated through the govt.
reports, the industry survey etc., termed as External Information, as the sources of the data are outside
the organization.

The information can also be classified, in terms of its application :

(i) Planning Information : Certain standard norms and specifications are used in planning of any
activity. Hence such information is called the Planning Information. e. g. Time standard, design
standard.

(ii) Control Information : Reporting the status of an activity through a feedback mechanism is called
the Controlling Information. When such information shows a deviation from the goal or the objective, it
will induce a decision or an action leading to control.

(iii) Knowledge Information : A collection of information through the library records and the research
studies to build up a knowledge base as an information is known as Knowledge Information.

(iv)Organization Information : When the information is used by everybody in the organization, it is

called Organization Information. Employee and payroll Information is used by a number of people in an
organization.

(v) Functional/ Operational Information : When the information is used in the operation of a business
it is called Functional/Operational Information.

(vi) Database Information : When the information has multiple use and application, it is called as
database information. Material specification or supplier information is stored for multiple users.

Difference between Data Processing and Information Processing

Data Processing : Data Processing is a process that converts data into information or knowledge. The
processing is usually assumed to be automated and running on a computer. Because data are most useful
when well-presented and actually informative, data-processing systems are often referred to as
information systems to emphasize their practicality. Nevertheless, both terms are roughly synonymous,
performing similar conversions; data-processing systems typically manipulate raw data into information,
and likewise information systems typically take raw data as input to produce information as output. Data
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processing is that a business has collected numerous data concerning an aspect of its operations and that
this multitude of data must be presented in meaningful, easy-to-access presentations for the managers
who must then use that information to increase revenue or to decrease cost. That conversion and
presentation of data as information is typically performed by a data-processing application.

Information Processing : Information processing is the change or processing of information in any

manner detectable by an observer. Information processing may more specifically be defined in terms by
Claude E. Shannon as the conversion of latent information into manifest information. Latent and
manifest information is defined through the terms of equivocation, remaining uncertainty, what value
the sender has actually chosen, dissipation uncertainty of the sender what the receiver has actually
received and transformation saved effort of questioning - equivocation minus dissipation. Practical
Information Processing can be described as a cycle, where data which may have no inherent meaning to
the observer is converted into information, which does have meaning to the observer.
INFORMATION A QUALITY PRODUCT
Information is a product of data processing. The quality of information is high if it creates the
managerial impact leading to attention, decision and action. The quality of the information can be
measured in four dimensions:
Utility.
Satisfaction.
Errors.
Bias.

Utility dimension has 4 facets: the firm, the time, access and the possession. If the information is
represented in the form manager requires then its utility increases. If the information is available when
needed then the utility is optimized. If the information is easily and quickly accessible through the
online process, its utility gets efficient technology. If the information is possessed by the manager who
needs it then its utility is highest. To increase the utility the cost factor should be increased.

Satisfaction Since the information is available to many users in system the subjectiveness would vary.
The degree of satisfaction could determine the quality of information. If the organization has high
degree of satisfaction then the information can be available at all the levels to the manager.

Errors Errors occur because of various reasons such as incorrect data measurement, incorrect data
collection, failure in data processing, incomplete data, poor application of data and control system and
deliberate biasing. To clear the errors it is necessary to follow the methods of system analysis & design.

Bias Procedure of communicating the information should be such that the system is able to detect the
degree and the nature of the bias and correct information accordingly.

PARAMETERS OF QUALITY
The users being many, the information is difficult to control. Following parameters are used to control
the quality of the information.
 Impartiality: Impartial information contains no bias and has been collected without any
distorted view of the system.
 Validity: The validity of the information creates to the purpose of the system or the scope of the
information. It also dependent on how it is used.
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 Reliability: It is connected to the representation and the accuracy of what is being described in
the information.
 Consistency: The information is termed as inconsistent if it derived from a data which does not
have a consistent pattern of the period.
 Age: If the information is too old, it will not be useful in today‘s system. The currency of
information makes all the differences to the user. If the information is old, it doesn‘t provide any
characteristic as the update of knowledge, the element of surprise, representation and the
reduction of uncertainty.

The different methods for Data Collection

Methods of Data and Information Collection:
Several methods are available for the collection of data. The choice of method will have an impact on
the quality of information. Similarly the design of data collection method also decides the quality of data
and information. The methods of data collection and processing become a part of the MIS. An
awareness of these methods is essential to the manager. Further, he should also understand the potential
problems of bias, currency, and the fact versus the opinion in the various types of methods. The
observation, the experiment, the survey and the subjective estimation are the methods chosen for data
collection and information about a specific problem, while the remaining methods are chosen to collect
data on a routine basis without any particular problem whatsoever.
Following are the methods of data collection :
i) Observation
ii) Experiment
iii) Survey
iv) Subjective Estimation
v) Transaction Processing
vi) Purchase from Outside
vii) Publication
viii) Government Agencies

Methods of Data and Information Collection :

The specific methods analysts use for collecting data about requirements are called fact – finding
techniques. These include the interview, questionnaire, record inspections (on – site review) and
observation. Analysts usually employ more that one of these techniques to help ensure an accurate and
comprehensive investigation.

1 )Interview
Analysts use interviews to collect information from individuals or from groups. The respondents are
generally current users of the existing system or potential users of the proposed system. In some
instances, the respondents may be managers or employees who provide data for the proposed system or
who will be affected by it. Although some analysts prefer the interview to other fact – finding
techniques, it is not always the best source of application data. Because of the time required for

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interviewing, other methods must also be used to gather the information needed to conduct an
investigation.

It is important to remember that respondents and analysts converse during an interview – the
respondents are not being interrogated. Interviews provide analysts with opportunities for gathering
information form respondents who have been chosen for their knowledge of the system under study.
This method is frequently the best source of qualitative information (opinions, policies, and subjective
descriptions of activities and problems). Other fact finding methods are likely to be more useful for
collecting quantitative data (numbers, frequencies, and quantities).

This method of fact – finding can be especially helpful for gathering information from individuals who
do not communicate effectively in writing or who may not have the time to complete questionnaires.
Interviews allow analysts to discover areas of misunderstanding, unrealistic expectations, and even
indications of resistance to the proposed system.

Interviews can be either structured or unstructured:

Unstructured interviews, using a question – and – answer format, are appropriate when analysts want
to acquire general information about a system. This format encourages respondents to share their
feelings, ideas, and beliefs.

Structured interviews use standardized questions in either an open response or closed – response
format. The former allows respondents to answer in their own words; the latter uses a set of prescribed
answers.
Each approach has advantages and disadvantages. The success of an interview depends on the skill or
the interviewer and on his or her preparation for the interview. Analysts also need to be sensitive to the
kinds of difficulties that some respondents create during interviews and know how to deal with potential
problems. They need to consider not only the information that is acquired during an interview, but also
its significance. It is important to have adequate verification of data through other data collection
methods.

2 ) Questionnaire
The use of questionnaires allows analysts to collect information about various aspects of a system from a
large number of persons. The use of standardized question formats can yield more reliable data than
other fact – finding techniques, and the wide distribution ensures greater anonymity for respondents,
which can lead to more honest responses. However, this method does not allow analysts to observe the
expressions or reactions or respondents. In addition, response may be limited, since completing
questionnaires may not have high priority among the respondents.

Analysts often use open – ended questionnaires to learn about feeling, opinions, and general
experiences or to explore a process or problem.

Closed questionnaires control the frame of reference by presenting respondents with specific responses
form which to choose. This format is appropriate for electing factual information.

The high cost of developing and distributing questionnaires demands that analysts carefully consider the
objective of the questionnaire and determine what structure will be most useful to the study and most

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easily understood by the respondents. Questionnaires should also be tested and, if necessary, modified
before being printed and distributed.
As with interviewees, recipients, of questionnaires would be selected for the information they can
provide. The analysts should ensure that the respondents, background and experiences qualify them to
answer the questions.

3 )Record Review
Many kinds of records and reports can provide analysts with valuable information about organizations
and operations. In record reviews, analysts examine information that has been recorded about the system
and user. Record inspection can be performed at the beginning of the study, as an introduction, or later
in the study, as a basis for comparing, actual operations with the records indicate should be happening.
Records include written policy manuals, regulations and standard operating procedures used by most
organizations and a guide for managers and employees. They do not show what activities are actually
occurring, where the decision – making power lies, or how tasks are performed. However, they can help
analysts understand the system by familiarizing them with what operations must be supported and with
formal relations within the organization.

4 ) Observation
Observation allows analysts to gain information they cannot obtain by any other fact – finding method.
Through observation, analysts can obtain firsthand information about how activities are carried out. This
method is most useful when analysts need to actually observe how documents are handled, how
processes are carried out, observers know what to look for and how to assess the significance of what
they observe.

Value of Information
Dimensions of Information : There are three most common dimensions of information for MIS :
(i) Economic Dimension : Economic dimension of information refers to the cost of information and its
benefits. Generation of information costs money. Measuring cost and benefit of information is difficult
because of intangible characteristic of information.

Cost of Information : Cost of information may include: Cost of acquiring data, Cost of maintaining
data, Cost of generating information and Cost of communication information. Cost related to the
response time require to generate information and communicating it. Thus, for system with low
response time, the cost is high. The cost is depends on accuracy, speed of generation etc.

Value of Information : Information has a cost for its acquisition and maintenance. Thus before a
particular piece of information is acquired, decision maker must know its value. The information has a
perceived value in terms of decision making. The decision maker feels more secured when additional
information is received in case of decision making under uncertainty or risk.

Perfect Information : The information is called a Perfect Information, if it wipes out uncertainty or
risk completely. However, perfect information is a myth. The value of information is the value of the
change in decision behavior because of the information. The change in the behaviour due to new
information is measured to determine the benefit from its use. To arrive at the value of information, the
cost incurred to get this information is deducted from the benefit.

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Value of information = Cost to get information-benefit

Given a set of possible decisions, a decision maker will select one on the basis of the available
information. If the new information causes a change in the decision, then the value of information is the
difference in the value between outcome of the old decision and that of new decision, less the cost
obtaining the new information. The value of the additional information making the existing information
perfect (VPI) is:
VPI = (V2 - V1) - (C2 - C1)
Where V is the value of the information and C is the cost of obtaining the information. V1 and C1 relate
to one set of information V2, C2 relate to the new set.
In MIS, the concept of the value of information is used to find out the benefit of perfect information and
if the value is significantly high, the system should provide it. If the value is insignificant, it would not
be worth collecting the additional information.

(ii) Business Dimension : Different types of information are required by managers at different levels of
the management hierarchy. The information needs of managers at strategic planning level are altogether
different that those of operational control managers. It is because of the fact that managers at different
levels are required to perform different functions in an organization.

(iii) Technical Dimension : This dimension of information refers to the technical aspects of the
database. It includes the capacity of database, response time, security, validity, data interrelationship etc.

MIS & System Concept:

DEFINING A SYSTEM
A collection of components that work together to realize some objectives forms a system. Basically
there are three major components in every system, namely input, processing and output.

In a system the different components are connected with each other and they are interdependent. For
example, human body represents a complete natural system. We are also bound by many national
systems such as political system, economic system, educational system and so forth. The objective of the
system demands that some output is produced as a result of processing the suitable inputs. A well-
designed system also includes an additional element referred to as „control‟ that provides a feedback to
achieve desired objectives of the system.

Term system is derived from the Greek word „Systema‟ which means an organized relationship among
functioning units or components.

Definition of System :
"A system is an orderly grouping of interdependent components linked together according to a plan to
achieve a specific objective".

Characteristics of a System:
• Organization
• Interaction
• Interdependence
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• Integration
• Central Objective

i) Organization-It implies structure and order.

ii) Interaction-It refers to manner in which each component functions with other components of the
system.
iii)Interdependence-Units/parts are dependent on each other.
iv)Integration-The parts of a system work together within the system even though each part performs a
unique function.
v)Central Objective-Objective may be real or stated. All the components work together to achieve that
particular objective.

Elements of a System

In most cases, systems analysts operate in a dynamic environment where change is a way of life. The
environment may be a business firm, a business application, or a computer system. To reconstruct a
system, the following key elements must be considered:
1. Outputs and inputs.
2. Processor(s).
3. Control.
4. Feedback.
5. Environment.
6. Boundaries and interface.

1 ) Outputs and Inputs : A major objective of a system is to produce an output that has value to its
user. Whatever the nature of the output (goods, services, or information), it must be in line with the
expectations of the intended user. Inputs are the elements (material, human resources, and information)
that enter the system for processing. Output is the outcome of processing. A system feeds on input to
produce output in much the same way that a business brings in human, financial, and material resources
to produce goods and services. It is important to point out here that determining the output is a first step
in specifying the nature, amount, and regularity of the input needed to operate a system. For example, in
systems analysis, the first concern is to determine the user‟s requirements of a proposed computer
system – that is, specification of the output that the computer is expected to provide for meeting user
requirements.

2) Processor(s) : The processor is the element of a system that involves the actual transformation of
input into output. It is the operational component of a system. Processors may modify the input totally or
partially, depending on the specifications of the output. This means that as the output specifications
change so does the processing. In some cases, input is also modified to enable the processor to handle
the transformation.

3) Control : The control element guides the system. It is the decision – making subsystem that controls
the pattern of activities governing input, processing, and output. In an organizational context,
management as a decision – making body controls the inflow, handling and outflow of activities that
affect the welfare of the business. In a computer system, the operating system and accompanying
software influence the behaviour of the system. Output specifications determine what and how much
input is needed to keep the system in balance.
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In systems analysis, knowing the attitudes of the individual who controls the area for which a computer
is being considered can make a difference between the success and failure of the installation.
Management support is required for securing control and supporting the objective of the proposed
change.

4 )Feedback: Control in a dynamic system is achieved by feedback. Feedback measures output against a
standard in some form of cybernetic procedure that includes communication and control. Output
information is fed back to the input and / or to management (Controller) for deliberation. After the
output is compared against performance standards, changes can result in the input or processing and
consequently, the output.

Feedback may be positive or negative, routing or informational. Positive feedback reinforces the
performance of the system. It is routine in nature. Negative feedback generally provides the controller
with information for action. In systems analysis, feedback is important in different ways. During
analysis, the user may be told that the problems in a given application verify the initial concerns and
justify the need for change.
Another form of feedback comes after the system is implemented. The user informs the analyst about
the performance of the new installation. This feedback often results in enhancements to meet the user‟s
requirements.

5) Environment
The environment is the “suprasystem” within which an organization operates. It is the source of external
elements that impinge on the system. In fact, it often determines how a system must function. For
example, the organization‟s environment, consisting of vendors, competitors, and others, may provide
constraints and, consequently, influence the actual performance of the business.

6 ) Boundaries and interface

A system should be defined by its boundaries – the limits that identify its components, processes and
interrelationship when it interfaces with another system. For example, a teller system in a commercial
bank is restricted to the deposits, withdrawals and related activities of customers checking and savings
accounts. It may exclude mortgage foreclosures, trust activities, and the like.

Each system has boundaries that determine its sphere of influence and control. For example, in an
integrated banking – wide computer system design, a customer who has a mortgage and a checking
account with the same bank may write a check through the “teller system” to pay the premium that is
later processed by the “mortgage loan system.” Recently, system design has been successful in allowing
the automatic transfer of funds form a bank account to pay bills and other obligations to creditors,
regardless of distance or location. This means that in systems analysis, knowledge of the boundaries of a
givensystem is crucial in determining the nature of its interface with other systems for successful design.

Types of systems
The frame of reference within which one views a system is related to the use of the systems approach for
analysis. Systems have been classified in different ways.
Common classifications are:
(1) physical or abstract,
(2) open or closed, and
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(3) “man –made” information systems.

1.Physical or abstract systems

Physical systems are tangible entities that may be static or dynamic in operation. For example, the
physical parts of the computer center are the officers, desks, and chairs that facilitate operation of the
computer. They can be seen and counted; they are static. In contrast, a programmed computer is a
dynamic system. Data, programs, output, and applications change as the user‟s demands or the priority
of the information requested changes. Abstract systems are conceptual or non-physical entities. They
may be as straightforward as formulas of relationships among sets of variables or models – the abstract
conceptualization of physical situations. A model is a representation of a real or a planned system. The
use of models makes it easier for the analyst to visualize relationships in the system under study. The
objective is to point out the significant elements and the key interrelationships of a complex system.

2 Open or Closed Systems

Another classification of systems is based on their degree of independence. An open system has many
interfaces with its environment. It permits interaction across its boundary; it receives inputs from and
delivers outputs to the outside. An information system falls into this category, since it must adapt to the
changing demands of the user. In contrast, a closed system is isolated from environmental influences. In
reality, a completely closed system is rare. In systems analysis, organizations, applications and
computers are invariably open, dynamic systems influenced by their environment.

SYSTEM LIFE CYCLE:

System life cycle is an organizational process of developing and maintaining systems. It helps in
establishing a system project plan, because it gives overall list of processes and sub-processes required
for developing a system.

System development life cycle means combination of various activities. In other words we can say that
various activities put together are referred as system development life cycle. In the System Analysis and
Design terminology, the system development life cycle also means software development life cycle.

Following are the different phases of system development life cycle:

1. Preliminary study
2. Feasibility study
3. Detailed system study
4. System analysis
5. System design
6. Coding
7. Testing
8. Implementation
9. Maintenance

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PHASES OF SYSTEM DEVELOPMENT LIFE CYCLE

(1) Preliminary System Study:

Preliminary system study is the first stage of system development life cycle. This is a brief investigation
of the system under consideration and gives a clear picture of what actually the physical system is? In
practice, the initial system study involves the preparation of a „System Proposal‟ which lists the
Problem Definition, Objectives of the Study, Terms of reference for Study, Constraints, Expected
benefits of the new system, etc. in the light of the user requirements. The system proposal is prepared by
the System Analyst (who studies the system) and places it before the user management. The
management may accept the proposal and the cycle proceeds to the next stage. The management may
also reject the proposal or request some modifications in the proposal. In summary, we would say that
system study phase passes through the following steps:
• problem identification and project initiation
• background analysis
• inference or findings (system proposal)

(2) Feasibility Study:

In case the system proposal is acceptable to the management, thenext phase is to examine the feasibility
of the system. The feasibilitystudy is basically the test of the proposed system in the light of
itsworkability, meeting user‟s requirements, effective use of resourceand of course, the cost
effectiveness. These are categorized as technical,operational, economic and schedule feasibility. The
main goalof feasibility study is not to solve the problem but to achieve thescope. In the process of
feasibility study, the cost and benefits are estimated with greater accuracy to find the Return on
Investment(ROI). This also defines the resources needed to complete the detailed investigation. The
result is a feasibility report submitted tothe management. This may be accepted or accepted with
modificationsor rejected. The system cycle proceeds only if the managementaccepts it.

(3) Detailed System Study:

The detailed investigation of the system is carried out in accordancewith the objectives of the proposed
system. This involves detailedstudy of various operations performed by a system and their
relationshipswithin and outside the system. During this process, dataare collected on the available files,
decision points and transactionshandled by the present system. Interviews, on-site observation
andquestionnaire are the tools used for detailed system study. Usingthe following steps it becomes easy
to draw the exact boundary of the new system under consideration:
• Keeping in view the problems and new requirements
• Workout the pros and cons including new areas of the system

All the data and the findings must be documented in the form of detailed data flow diagrams (DFDs),
data dictionary, logical data structures and miniature specification. The main points to be discussed in
this stage are:
• Specification of what the new system is to accomplish based on the user requirements.
• Functional hierarchy showing the functions to be performed by the new system and their relationship
with each other.
• Functional network, which are similar to function hierarchy but they highlight the functions which are
common to more than one procedure.

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• List of attributes of the entities – these are the data items which need to be held about each entity
(record)

(4) System Analysis:

Systems analysis is a process of collecting factual data, understand the processes involved, identifying
problems and recommending feasible suggestions for improving the system functioning.

This involves studying the business processes, gathering operational data, understand
the information flow, finding out bottlenecks and evolving solutions for overcoming the weaknesses of
the system so as to achieve the organizational goals. System Analysis also includes subdividing of
complex process involving the entire system, identification of data store and manual processes.

The major objectives of systems analysis are to find answers for each business process: What is being
done, How is it being done, Who is doing it, When is he doing it, Why is it being done and How can it
be improved? It is more of a thinking process and involves the creative skills of the System Analyst. It
attempts to give birth to a new efficient system that satisfies the current needs of the user and has scope
for future growth within the organizational constraints. The result of this process is a logical system
design. Systems analysis is an iterative process that continues until a preferred and acceptable solution
emerges.

(5) System Design:

Based on the user requirements and the detailed analysis of the existing system, the new system must be
designed. This is the phase of system designing. It is the most crucial phase in the developments of a
system. The logical system design arrived at as a result of systems analysis is converted into physical
system design. Normally, the design proceeds in two stages:
• Preliminary or General Design
• Structured or Detailed Design

Preliminary or General Design: In the preliminary or general design, the features of the new system
are specified. The costs of implementing these features and the benefits to be derived are estimated. If
the project is still considered to be feasible, we move to the detailed design stage.

Structured or Detailed Design: In the detailed design stage, computer oriented work begins in earnest.
At this stage, the design of the system becomes more structured. Structure design is a blue print of a
computer system solution to a given problem having the same components and inter-relationships
among the same components as the original problem. Input, output, databases, forms, codification
schemes and processing specifications are drawn up in detail.
In the design stage, the programming language and the hardware and software platform in which the
new system will run are also decided.
There are several tools and techniques used for describing the system design of the system. These tools
and techniques are:
• Flowchart
• Data flow diagram (DFD)
• Data dictionary
• Structured English
• Decision table

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• Decision tree

Each of the above tools for designing will be discussed in detailed in the next lesson. The system design
involves:
i. Defining precisely the required system output
ii. Determining the data requirement for producing the output
iii. Determining the medium and format of files and databases
iv. Devising processing methods and use of software to produce output
v. Determine the methods of data capture and data input
vi. Designing Input forms
vii. Designing Codification Schemes
viii. Detailed manual procedures
ix. Documenting the Design

(6) Coding:
The system design needs to be implemented to make it a workable system. This demands the coding of
design into computer understandable language, i.e., programming language. This is also called the
programming phase in which the programmer converts the program specifications into computer
instructions, which we refer to as programs. It is an important stage where the defined procedures are
transformed into control specifications by the help of a computer language. The programs coordinate the
data movements and control the entire process in a system. It is generally felt that the programs must be
modular in nature. This helps in fast development, maintenance and future changes, if required.

(7) Testing:
Before actually implementing the new system into operation, a test run of the system is done for
removing the bugs, if any. It is an important phase of a successful system. After codifying the whole
programs of the system, a test plan should be developed and run on a given set of test data. The output
of the test run should match the expected results. Sometimes, system testing is considered a part of
implementation process. Using the test data following test run are carried out:
• Program test
• System test

Program test: When the programs have been coded, compiled and brought to working conditions, they
must be individually tested with the prepared test data. Any undesirable happening must be noted and
debugged (error corrections)

System Test: After carrying out the program test for each of the programs of the system and errors
removed, then system test is done. At this stage the test is done on actual data. The complete system is
executed on the actual data. At each stage of the execution, the results or output of the system is
analysed.

During the result analysis, it may be found that the outputs are not matching the expected output of the
system. In such case, the errors in the particular programs are identified and are fixed and further tested
for the expected output. When it is ensured that the system is running error-free, the users are called with
their own actual data so that the system could be shown running as per their requirements.

(8) Implementation:
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After having the user acceptance of the new system developed, the implementation phase begins.
Implementation is the stage of a project during which theory is turned into practice. The major steps
involved in this phase are:
• Acquisition and Installation of Hardware and Software
• Conversion
• User Training
• Documentation

The hardware and the relevant software required for running the system must be made fully operational
before implementation. The conversion is also one of the most critical and expensive activities in the
system development life cycle. The data from the old system needs to be converted to operate in the new
format of the new system. The database needs to be setup with security and recovery procedures fully
defined.

During this phase, all the programs of the system are loaded onto the user‟s computer. After loading the
system, training of the user starts. Main topics of such type of training are:
• How to execute the package
• How to enter the data
• How to process the data (processing details)
• How to take out the reports

After the users are trained about the computerized system, working has to shift from manual to
computerized working. The process is called „Changeover‟. The following strategies are followed for
changeover of the system.
(i) Direct Changeover: This is the complete replacement of the old
system by the new system. It is a risky approach and requires comprehensive system testing and
training.
(ii) Parallel run: In parallel run both the systems, i.e., computerized and manual, are executed
simultaneously for certain defined period. The same data is processed by both the systems. This strategy
is less risky but more expensive because of the following:
• Manual results can be compared with the results of the computerized system.
• The operational work is doubled.
• Failure of the computerized system at the early stage does not affect the working of the organization,
because the manual system continues to work, as it used to do.

(iii) Pilot run: In this type of run, the new system is run with the data from one or more of the previous
periods for the whole or part of the system. The results are compared with the old system results. It is
less expensive and risky than parallel run approach. This strategy builds the confidence and the errors
are traced easily without affecting the operations.

The documentation of the system is also one of the most important activity in the system development
life cycle. This ensures the continuity of the system. There are generally two types of documentation
prepared for any system. These are:
• User or Operator Documentation
• System Documentation

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The user documentation is a complete description of the system from the users point of view detailing
how to use or operate the system. It also includes the major error messages likely to be encountered by
the users. The system documentation contains the details of system design, programs, their coding,
system flow, data dictionary, process description, etc. This helps to understand the system and permit
changes to be made in the existing system to satisfy new user needs.

(9) Maintenance:
Maintenance is necessary to eliminate errors in the system during its working life and to tune the system
to any variations in its working environments. It has been seen that there are always some errors found
in the systems that must be noted and corrected. It also means the review of the system from time to
time. The review of the system is done for:
• l knowing the full capabilities of the system
• l knowing the required changes or the additional requirements
• l studying the performance.

If a major change to a system is needed, a new project may have to be set up to carry out the change.
The new project will then proceed through all the above life cycle phases.

Types of System
1. • Physical or Abstract System: Physical – These are tangible entities that may be static or dynamic
in operation.For example- parts of a computer center are the desks, chairs etc. that facilitate operation of
the computer. They are static and a programmed computer is dynamic.
• Abstract System – These are conceptual or non physical entities. For example- the abstract
conceptualization of physical situations. A model is a representation of a real or planned system. A
model is used to visualize relationships.
2. Deterministic or Probabilistic System
• Deterministic System – It operates in a predictable manner and the interaction between parts is known
with certainty. For example: Two molecules of hydrogen and one molecule of oxygen makes water.
• Probabilistic System – It shows probable behavior. The exact output is not known. For example:
weather forecasting, mail delivery.

3. Social, Human Machine, Machine System

• Social System- It is made up of people. For example: social clubs, societies

• Human Machine System- When both human and machines are involved to perform a particular a
particular task to achieve a target. For example:- Computer.
• Machine System- Where human interference is neglected. All the tasks are performed by the machine.
Natural and Manufactured
• Natural System- The system which is natural. For example- Solar system, Seasonal System.
• Manufactured System- System made by man is called manufactured system. For example- Rockets,
Dams, Trains. Permanent or Temporary System
• Permanent System- Which persists for long time. For example- policies of business.
• Temporary System- Made for specified time and after that they are dissolved. For example- setting up
DJ system.

4. Adaptive and Non Adaptive System

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• Adaptive System- respond to change in the environment in such a way to improve their performance
and to survive. For example- Human beings, animals.
• Non Adaptive System-The system which doesn‟t respond to the environment. For example- Machines
•Open System – It has many interfaces with its environment. It interacts across its boundaries, it receives
inputs from and delivers outputs to the outside world. It must adapt to the changing demands of the user.
• Closed System – It is isolated from the environmental influences. A completely closed system is rare.

Characteristics of Open Systems

• Input from outside- Open systems are self adjusting and self regulating. When functioning properly
open system reaches a steady state or equilibrium.
• Entropy- Dynamic systems run down over time resulting in loss of energy or entropy.Open systems
resist entropy by seeking new input or modifying the processes to return to a steady state.
• Process, output and cycles- Open system produce useful output and operate in cycles, following a
continuous flow path.
• Differentiation- They have a tendency toward an increasing specialization of functions and a greater
differentiation of their components. For example the role of machines and people tend toward greater
specialization and greater interaction.
• Equifinality- Goals are achieved through differing courses of action and a variety of paths.

5. Man Made Information Systems

• Information System may be defined as a set of devices, procedures, and operating systems designed
around user based criteria to produce information and communicate it to the user for planning, control
and performance.
Formal Information Systems-
• It is based on the organization represented by organization chart.
• The chart is a map of positions and their authority relationships, indicated by boxes and connected by
straight lines.

Categories of Information
• Strategic Information- relates to ling range planning policies that are direct interest to upper
management and for long range goals. For example- population growth, trends in financial investment,
human resources.
• This information is achieved with the aid of DSS.
• Managerial Information- It is of direct use to middle management and department heads for
implementation and control. For example- sales analysis, cash flow projections, and annual financial
statements.
• This information is of use in short and intermediate range planning- i.e. months rather
than years.
• It is maintained with the help of MIS.
• Operational Information- It is short term, daily information used to operate
departments and to enforce the day to day rules and regulations of the business. For example- daily
employee absence sheets, overdue purchase orders, current stock.
• It is established by data processing systems. Informal Information Systems
• It is an employee based system designed to meet personnel and vocational needs and to help solve,
work related problems.
Computer Based Information System
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• It relies on computer for handling business applications.

Computer System Design

System Design
Based on the user requirements and the detailed analysis of the existing system, the new system must be
designed. This is the phase of system designing. It is the most crucial phase in the developments of a
system. The logical system design arrived at as a result of systems analysis is converted into physical
system design. Normally, the design proceeds in two stages:
· Preliminary or General Design
· Structured or Detailed Design
Preliminary or General Design: In the preliminary or general design, the features of the new system
are specified. The costs of implementing these features and the benefits to be derived are estimated. If
the project is still considered to be feasible, we move to the detailed design stage.

Structured or Detailed Design: In the detailed design stage, computer oriented work begins in earnest.
At this stage, the design of the system becomes more structured. Structure design is a blue print of a
computer system solution to a given problem having the same components and inter-relationships
among the same components as the original problem. Input, output, databases, forms, codification
schemes and processing specifications are drawn up in detail. In the design stage, the programming
language and the hardware and software platform in which the new system will run are also decided.
There are several tools and techniques used for describing the system design of the system. These tools
and techniques are:
· Flowchart
· Data flow diagram (DFD)
· Data dictionary
· Structured English
· Decision table
· Decision tree
The system design involves:
1. Defining precisely the required system output
2. Determining the data requirement for producing the output
3. Determining the medium and format of files and databases
4. Devising processing methods and use of software to produce output
5. . Determine the methods of data capture and data input
6. Designing Input forms
7. Designing Codification Schemes
8. Detailed manual procedures
9. Documenting the Design

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