Chapter 1: Introduction

1. Information System:
Information System is a combination of information technology (such as hardware,
software, infrastructure and people) to organize a facilitate planning, control,
coordination and decision making in an organization. In other terms Information system
is frequently used to refer to the interaction between people, processes, data and technology.
(2 Mark)

A Component of information system is used to collect, manipulate, store and publish data and
information and provide a feedback to meet an objective. The feedback mechanism helps
organization to achieve their goals.

[Feedback is the information(output) sent to an entity (individual or a group) about its

prior behaviour so that the entity may adjust its current and future behaviour to
achieve the needed result. Feedback occurs when an environment reacts to an action
or behaviour.]

1.1 Data and Information:

 Data is raw or unprocessed information that has been translated into a form to move or
process. For example, an employee’s name, an employee's age, an employee's gender and
number of hours worked in a week.
Individually, it means not much. Data themselves are fairly useless, but when these
data are processed, organized and arrange in a meaningful manner, they becomes useful
and can be named as Information.

Types of Data:
Types Represented By
Alpha Numeric Data Numbers, Latters and Other Characters
Image Data Graphic Image and Picture
Audio Data Sound, Noise and Tones
Video Data Movies, Images and Picture

 Information, on the other hand, is processed data that has meaning. It is anything that is
communicated. For example, if a program takes the above data and processes it, now the
results take meaning. Example: A 25 year employee worked for 70 hours in a week.

 Data Vs information: (2 Mark)

Data consists of raw facts, such as an employee’s name and number of hours worked
in a week, inventory part numbers and sales orders. Several types of data can be
used to represent these facts. When these are organized or arranged in a meaningful
manner, they become information.

Information is collection of facts organized in such a way that they have additional
value beyond the value of the facts themselves. E.g. a particular manager might find
the knowledge of total monthly sales more suited to his purpose than the number of
sales for individual sales representatives.

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 Chapter 1: Introduction

Data represents real world things, as we have stated data, simply raw facts have little
value beyond its existence.

The type of information created depends on the relationships defined among existing
data.

Turning data into information is a process or a set of logically related tasks performed
to achieve a define outcome.

The process of defining relationships among data to create useful information requires
knowledge. Knowledge is awareness & understanding of a set of information & ways
that information can be made useful to support a specific task or reach to a decision.

Data Information
1. Data is Collection of Raw Materials, Data represented in tabular, Graphical
Raw Facts, any Figure, any Number, or any other meaningful form then it is
etc. known as information
2. Ex. Ledger Document Ex. Balance Sheet and Annual Sheet
3. Data is not meaningful Information is meaningful
4. Data is not useful for decision making Information is useful for decision
making
5. Data is divided in two form there Information is not divided in any form
1) Manual Data
2) Computerized Data

 The Process of Transforming Data into Information: -

1.2 Characteristic of Valuable Data/ Information : (2 – 6 Mark)

To be Valuable to managers and decision makers, the information should have following
characteristics.

1. Accurate (GIGO : Garbage in - Garbage Out):

Accurate information is error free. In some cases, inaccurate information is
generated because incorrect data is fed into the transformation process.
2. Complete
Complete information contains all the important facts. E.g. an investment report
that does not include all-important costs is not complete.

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3. Economical
Information should also be relatively economical to produce decision makers must
always balance the value of information with the cost of producing it.

4. Flexible
Flexible information can be used for a verity & purposes. E.g. information on how much
inventory is on hand for a particular part can be used by a sales representative in closing sale.

5. Reliable
Reliable information can be depended on in many cases, the reliability & information
depends on the reliability & the data collection method.

6. Relevant
Relevant information is important to the decision maker. Information that lumber prices
might drop may not be relevant to a computer chip manufacture.

7. Simple
Information should also be simple, not overly complex, sophisticated & detailed
information may not be needed. Infect, too much information can cause information
overload.

8. Timely
Timely information is delivered where it is needed. Knowing last week’s whether
conditions will not help when trying to decide what coat to wear today.

9. Verifiable
Information should be verifiable. This means that you can check it to make sure it is
correct, perhaps by checking many sources for the same information

10. Accessible
Information should be easily accessible by authorized user to be obtained in the right
format and at the right time meet their needs.

11. Secure
Information should be secure from access by unauthorized users.

 Value of Information:
The Value of information is directly linked to how it helps to decisions makers to achieve
their organization Goals.
e.g The value of Information might be measured in time required to make decision or in
increased profits of the company.

 Consider a market forecast that predicts high demands for a new Product. If we use this
information to develop a new product & the company makes an additional profits of Rs.
10,000/- then the value of this information is Rs. 10,000/- the Cost of Information.

1.3 What is an Information System? Or Component of Information System. (2 – 6 Mark)

An information system is a set of interrelated components that collect (input),
manipulate (process) and disseminate (output) data & information & provide a
feedback mechanism to meet an objective.

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 Chapter 1: Introduction

INPUT, PROCESSING, OUTPUT & FEEDBACK:

[fig: The Component of an Information System]

Input:
In information system, input is the activity of gathering and capturing raw data. In
producing paycheck, e.g. the number of hours worked for every employee must be collected before
paycheck can be calculated or printed.
In a university grading system, student grades must be obtained from instructions before a total
summary of grades for the semester or quarter can be compiled and sent to the appropriate
students.

Input can take many forms. In an information system designed to produce paychecks, e.g.
Employee time card is take as an input. Companies are keeping track of employee’s attendance by a
fingerprint, so here fingers are using as input.

Input can be manual or automated process. A scanner at a store that reads bar codes and enter its
details like name, price, manufacture and expire dates into a computer is a type of automated input
process. On the other hand, employee it-self enter product name and price is called manual input.

Processing:
In information system, processing involves converting or transforming data into useful
output. Processing can involve making calculating, making comparisons and taking alternate action,
and storing data for future use.

Processing can be done manually or with the assistance of computers. In payroll, the number of
hours each employee worked must be converted into net pay. The required processing can first
involve multiplying the number of hours worked are greater than 40hours, overtime pay may also be
determined. Then deductions are subtracted from gross pay to get net pay. For example, federal and
state taxes can be withheld or subtracted from gross pay; many employees have health and life
insurance, savings plans and other deductions that must also be subtracted from gross pay to arrive
at net pay.

Output:
In information system, output involves producing useful information, usually in the form of
documents & reports. Output can include paychecks for employee. Reports for managers and
information supplied to stockholders, banks, government agencies and other groups. In some cases
output from one system can become input for another.

For example, output from a system that processes sales orders can be used as an input to control
other systems or devices. Special computer software and hardware is used to create the original
design and rapidly revise it. Once the last design mock-up is approved, the design software creates a
bill of materials that goes to manufacturing to produce the order.

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Output can be produced in a variety of ways. For a computer, monitors and printers are common
output devices. Output can also be a manual process involving handwritten reports and documents.

Feedback
In information systems, feedback is output that is used to make changes to input or
processing activities. For example, errors or problems might make it necessary to correct input data
or change a process.

Consider a payroll example. Perhaps the number of hours an employee worked was entered into a
computer as 400 hours instead of 40hours. Most information systems check to make sure that data
falls within certain predetermined ranges. For number of hours worked, the range might be from 0
to 100 hours. It is unlikely that an employee would work more than 100 hours for any given week. In
this case, the information system would determine that 400hours a week is out of range and provide
feedback such as an error report.

The feedback is used to check and correct the input on the number of hours worked to 40. If
undetected, this error would result in a high net pay printed on the paycheck

Manual and Computerized System: ( 7 Mark )

Or (Different Type of Information System) .

Manual Information System: - In manual information system some investment analysts manually
draw charts and trend lines to help them make investment decision. Tracking data on stock prices
over the last few months or years, these analysts develop patterns on graph paper that help them
determine what stock prices are likely to do in the next few days or weeks. Some investors have
made millions o dollars using manual stock analysis information system.

Many information systems begin as manual system and become computerized. E.g. postal service
sorts mail. At one time most letters were visually scanned by postal employees to determine the ZIP
code and were than manually placed in an appropriate bin. Today the bar-coded address on letters
passing through the postal system are read electronically & automatically routed to appropriate bin
via conveyors.

Computer Based Information System (CBIS) (6 Mark): - A computer based information system is a
single set of hardware, software, database, telecommunication, people and procedures that are
configured to collect, manipulate, store and process data into information. A business technology
infrastructure includes all the hardware, software, database, telecommunication, people and
procedures that are configured to collect, manipulate, store and process data into information.

Hardware: -Hardware consists of computer equipment’s used to perform input processing and
output activities. Input devices include keyboards, automatic scanning devices, equipment that can
read magnetic ink and many other devices. Processing device include CPU and main memory. There
are many output devices like printers and computer screen.

Software: -Software is the computer programs that govern the operation of the computer. This
program allows the computer to provide managers with information to increase profits reduce cost
and provide better customer service. There are two types of software:-
1) System Software: -System software controls basic computer operation such as start
up.

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2) Application Software: -Application software allows specific task to be accomplished

such as word.

Database: -A database is an organized collection of facts and information. An organized database

contains facts & information on customers, employees, inventory, competitor’s sales information
and much more. Host managers and executives believe a database is one of the most valuable &
important parts of a computer based information system.
Telecommunication, Network and Internet: Telecommunication is the electric transmission of
signals for communication and enables organization to carry out their processes and tasks through
effective computer networks. Networks are used to connect computers and computer equipment in
a building, around the country or around the world to enable communications. The Internet is the
world’s largest computer network, actually consisting of thousands of interconnected networks, all
freely exchanging information.

People: -People are the most important element in most computer based information system.
Information system personnel include all the people who manage, run program and maintain the
system. Users are any people who use information system to get results.

Procedures: -Procedures include the strategies, polices, methods and rules for using a computer
based information system. E.g. some procedure describes when each program is to be run or
executed. Other describes who can have access to facts in the database. Other procedure describes
what is to be done in case of disaster.

Some Important Definitions:

Master File: it is a data file containing relatively permanent information which is utilized as
reference and is usually updated periodically.

Transaction File: It is a data file which contains relatively transient (Transaction) data to be
processed in combination with Master File.

System Configuration: It is the way in which a system & its elements are organized or arranged.

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