Evolution of IS

• When discussing the evolution of information

systems we’ll look at the changes in the levels of
management, decision-making and information
systems that enhance the value of information.

• Each kind of information System has reasons for its

development and its replacement; By understanding
the above ,one can easily identify the benefits and
limitations of each type of information system.
 Electronic Data processing (EDP)
Systems
• Until the 1960s, the role of most information systems
was simple. They were mainly used for electronic data
processing (EDP) purposes such as transactions
processing, record-keeping and accounting.
• EDP is often defined as the use of computers in
recording, classifying, manipulating, and summarizing
data.
• It is also called transaction processing systems (TPS),
automatic data processing, or information processing.
 • Transaction processing systems – these
process data resulting from business
transactions, update operational databases,
and produce business documents. Examples:
sales and inventory processing and accounting
systems.
Why Electronic Data processing
Management information systems
• In the 1960s, another role was added to the use
of computers: the processing of data into useful
informative reports. The concept of management
information systems (MIS) was born.
• This new role focused on developing business
applications that provided managerial end users
with predefined management reports that would
give managers the information they needed for
decision-making purposes.
• Management information systems – provide
information in the form of pre-specified
reports and displays to support business
decision making.
• Examples: sales analysis, production
performance and cost trend reporting
systems.
Why Management information systems
were developed
 Decision support systems
• By the 1970s, these pre-defined management
reports were not sufficient to meet many of the
decision-making needs of management.
• In order to satisfy such needs, the concept of
decision support systems (DSS) was born.
• The new role for information systems was to
provide managerial end users with ad hoc and
interactive support of their decision-making
processes.
 • Decision support systems – provide
interactive ad hoc support for the decision-
making processes of managers and other
business professionals. Examples: product
pricing, profitability forecasting and risk
analysis systems.
• In the 1980s, the introduction of microcomputers into the
workplace ushered in a new era, which led to a profound
effect on organizations.
• The rapid development of microcomputer processing
power (e.g. Intel’s Pentium microprocessor), application
software packages (e.g. Microsoft Office), and
telecommunication networks gave birth to the
phenomenon of end user computing.
• End users could now use their own computing resources
to support their job requirements instead of waiting for
the indirect support of a centralized corporate information
services department.
 Executive information systems
• It became evident that most top executives
did not directly use either the MIS reports or
the analytical modelling capabilities of DSS, so
the concept of executive Information systems
(EIS) was developed
 • Executive information systems – provide
critical information from MIS, DSS and other
sources, tailored to the information needs of
executives.
• Examples: systems for easy access to analysis
of business performance, actions of all
competitors, and economic developments to
support strategic planning.
 Expert systems &Knowledge management
systems
• Breakthroughs occurred in the development and
application of artificial intelligence (AI) techniques to
business information systems.
• With less need for human intervention, knowledge
workers could be freed up to handle more complex tasks.
• Expert systems (ES) and other knowledge management
systems (KMS) also forged a new role for information
systems.
• ES can serve as consultants to users by providing expert
advice in limited subject areas.
• Expert systems – knowledge-based systems
that provide expert advice and act as expert
consultants to users.
Examples: credit application advisor, process
monitor, and diagnostic maintenance systems.
 • Knowledge management systems –
knowledge-based systems that support the
creation, organization and dissemination of
business knowledge within the enterprise.
Examples: intranet access to best business
practices, sales proposal strategies and
customer problem resolution systems.
Enterprise Resource Planning (ERP) systems

• The mid- to late 1990s saw the revolutionary emergence of

enterprise resource planning (ERP) systems.

• ERPs have a strategic information system that integrates all

facets of a firm, including its planning, manufacturing, sales,
resource management, customer relations, inventory control,
order tracking, financial management, human resources and
marketing – virtually every business function.

• The primary advantage of these ERP systems lies in their

common interface for all computer-based organizational
functions and their tight integration and data sharing needed
for flexible strategic decision making.
 The move to E- Commerce
• The rapid growth of the Internet, intranets,
extranets and other interconnected global
networks in the 1990s dramatically changed the
capabilities of information systems in business.
• Internet-based ,web-enabled enterprises ,global
electronic business and commerce systems are a
common place in the operations and
management of today’s business enterprises.
 The move to E- Commerce
• Today’s information systems are still doing the same basic things
that they began doing over 50 years ago. They still need to
process transactions, keep records, provide management with
useful and informative reports, and provide support to the
accounting systems and processes of the organization.
• However, what has changed is that systems now provide a much
higher level of integration of system functions across
applications, greater connectivity across both similar and
dissimilar system components, and the ability to reallocate
critical computing tasks such as data storage, processing, and
presentation to take maximum advantage of business and
strategic opportunities.
 The move to E- Commerce
• With increasing capabilities, future systems will focus on
increasing both the speed and reach of Information
systems to provide even tighter integration combined with
greater flexibility.
• The Internet and related technologies and applications
have changed the way businesses operate ,the way people
work and how information systems support business
processes, decision-making and competitive advantage.
• Today many businesses are using Internet technologies to
web-enable business processes and to create innovative e-
business applications.
IS as used in Levels of management decision-
making
• Information systems can support a variety of
management decision-making levels
• These include the three levels of management
activity: strategic management, tactical
management and operational management.
 (i) Strategic management

• It is typical for a board of directors and an

executive committee of the CEO and top
executives to develop the overall organization
goals, strategies, policies and objectives as part
of a strategic planning process.
• They also monitor the strategic performance of
the organization and its overall direction in the
political, economic and competitive business
environment.
 (ii) Tactical management

• Increasingly, business professionals in self-directed

teams as well as business unit managers develop
short- and medium-range plans, schedules and
budgets and specify the policies, procedures and
business objectives for their subunits of the
company.
• They also allocate resources and monitor the
performance of their organizational sub-units,
including departments, divisions, process teams and
other workgroups.
 (iii) Operational management

• The members of self-directed teams or

operating managers develop short range plans
such as weekly production schedules.
• They direct the use of resources and the
performance of tasks according to procedures,
and within budgets and schedules they
establish for the teams and other workgroups
of the organization.
 Information systems that enhance value of
information
• (i) Data warehouse (DW)
• A data warehouse stores data that has been extracted
from the various operational, external and other
databases of an organization.
• It is a central source of the data that has been
cleaned, transformed and catalogued so that it can be
used by managers and other business professionals
for data mining, online analytical processing and other
forms of business analysis, market research and
decision support.
 (ii) Data mining (DM)

• Data mining is a major use of DW databases and the static data

they contain.
• In data mining, the data in a DW is analyzed to reveal hidden
patterns and trends in historical business activity.
• This can be used to help managers make decisions about
strategic changes in business operations to gain competitive
advantages in the marketplace.
• DM software analyzes the vast stores of historical business data
that has been prepared for analysis in corporate DW and tries
to discover patterns, trends, and correlations hidden in the data
that can help a company improve its business performance.
• Data mining – analyzes the vast amounts of
historical data that has been prepared for
analysis in data warehouses.
 (iii) Online analytical processing (OLAP)

• Online analytical processing enables managers and analysts

to interactively examine and manipulate large amounts of
detailed and consolidated data from many perspectives.
• OLAP involves analyzing complex relationships among
thousands or even millions of data items stored in data
marts, DW and other multi-dimensional databases to
discover patterns, trends and exceptional conditions.
• An OLAP session takes place online in real time, with rapid
responses to a manager’s or analyst’s queries, so that their
analytical or decision-making process is undisturbed.
• Online analytical processing – interactively
analyzes complex relationships among large
amounts of data stored in multidimensional
databases.