Industrial Information System

(IENG4052)

Chapter 1
Introduction to Information Management
 1. Introduction to Information management
• What is Management Information System?

It is an integrated user-machine system for providing information to support the

operations, management analysis, and decision making functions in an organization.
• What is Management?

It is a process involving planning, organizing, staffing, directing and controlling human

efforts to achieve stated objectives in an organization.
 Information System
Data, Information & System

◦ Data
 A “given,” or fact; a number, a statement, or a picture
 Represents something in the real world

 The raw materials in the production of information

◦ Information
 Data that have meaning within a context
 Data in relationships

 Data after manipulation

o System:
A group of components that work together for a specified purpose.
 Components-products (hardware, software), processes, people, information,
techniques, facilities, services and other support elements.
 Together–integration of many……………
 Purpose–is achieved by implementing many functions

System can be classified into two main components:

-A/ Open system: a kind of system which has a clear interaction with its environment
-B/ Closed system: a kind of system which does not have interaction with its
environment. This type of system is very rare in a real world situation.
 Every system is composed of subsystems.
 Information System

 An information system is a set of interrelated components that collect,

manipulate, store data and disseminate information and provide a
feedback mechanism to monitor performance.
 It is also An organized combination of people, hardware, software,
communications networks, and data resources that collects data,
transforms it, and disseminates information.
General Information Systems Diagram
 Information System Activities

1. Input of Data Resources

2. Process Data into Information
3. Output of Information
1. Input of Data Resources

• Data entry
• Editing

• Source documents
– Formal record of a transaction

• User interface
– How users interact with information system
– Optical scanning; menu; stimuli; fill in blanks
2. Process Data into Information

 Calculate

 Compare
 Sort
 Classify
 Summarize

The quality of the data must be maintained by a continual process of

correcting and updating activities
3. Output of Information
 Transmit information to users

E.g. Display; paper; audio

 Storage of data

– Data are retained in an organized manner

E.g. Fields; records; files; data bases

 Feedback must be monitored and evaluated to determine if the
information system is meeting established performance standards
Information System Opportunities

Increase worker productivity

Enhance decision making
Improve team collaboration
Create business partnerships and alliances
Enhance global competitiveness
Support corporate strategy
Improve quality of goods and services
Rapidly changing technology
 What is Information Management?

• Information Management is very critical for effective planning and

efficient management of any organization.
• Information collected, stored and analyzed under the Management
Information System (MIS) can be directly utilized by the management
for both day-to-day operations and for planning.
 …Cont’d
• Information used by the management obtained from both internal and external
sources.
Internal Information:- operation of the company

External Information:- Competitors background, consumer behavior, economic and social

factor, government legislation.
• Information is collected in many ways such as through conversations and
interpersonal networking, trade reviews, conferences and meetings, and browsing
internettim.
 Elements of MIS
1.Hardware e.g. Computer Equipment
2.Software e.g. Computer Programs

3.Control/procedure
4.Databases :- An organized collections of facts

5.People
6.Telecommunications and Networks
 Elements of MIS
• 1. Hardware:

– Consists of computer equipment used to perform input,

processing, and output activities
• 2. Software:

– Consists of the computer programs that govern the operation of

the computer
• 3. Database:

– Organized collection of facts and information, typically

consisting of two or more related data files
 CONT….

4. Telecommunications, networks, and the Internet:

– The electronic transmission of signals for communications

Networks: -Connect computers and equipment to enable electronic communication

Internet: -World’s largest computer network, consisting of thousands of interconnected

networks, all freely exchanging information
Intranet:-Internal network that allows people within an organization to exchange
information and work on projects.
Extranet:-Network that allows selected outsiders, such as business partners and
customers, to access authorized resources of a company’s intranet.
 Cont…

• 5. People:
– The most important element in most computer-based
information systems
• 6. Procedures:
– Include strategies, policies, methods, and rules for using the
CBIS
 Basics of Information System Processing

Data
storage

INPUT PROCESSING OUTPUT

 Types of Data
• Alphanumeric Data: this represents numbers, letters, and other
characters
• Image Data: this represents graphic images, and pictures
• Audio Data: this represents sounds, noise or tones
• Video Data: this represents moving images or pictures.
 Tasks in MIS
 1. Data Capturing: MIS capture data from various internal and external
sources of organization.
 Data capturing may be manual or through computer terminals.

 2. Processing of Data: The captured data is processed to convert into

required information. Processing of data is done by such activities as
calculating, sorting, classifying, and summarizing.
 Task...Cont’d
• 3. Storage of Information: MIS stores the processed or unprocessed data for
future use. If any information is not immediately required, it is saved as an
organization record, for later use.
• 4. Diffusion of Information: Information, which is a finished product of MIS,
is disseminated to the users in the organization. It is periodic or online through
computer terminal.
 Characteristics of an Effective MIS
 An effective MIS will provide :-
timely,
accurate,
Economical
Flexible
 Provable
Complete
Secure and
relevant information as needed.
 Cont…

• Accurate: Accurate information is error free. In some cases, inaccurate

information is generated because inaccurate data is fed into the
transformation process (this is commonly called garbage in, garbage out
[GIGO]).
• Complete: Complete information contains all the important facts.
 …Cont’d
• Economical: Information should also be relatively economical to produce.
Decision makers must always balance the value of information with the cost
of producing it.
• Flexible: Flexible information can be used for a variety of purposes. For
example, information on how much inventory is on hand for a particular part
can be used by a sales representative in closing a sale, by a production
manager to determine whether more inventory is needed, and by a financial
executive to determine the total value the company has invested in inventory.
 …Cont’d
• Reliable: Reliable information can be depended on many cases,
the reliability of the information depends on the reliability of the
data collection method and the source of the information.
 …Cont’d

• Simple: Information should also be simple, not overly complex. In fact, too much
information can cause information overload, whereby a decision maker has too much
information and is unable to determine what is really important.
• Timely: Timely information is delivered when it is needed.
• Provable: Information should be provable. This means that you can check it to make
sure it is correct, perhaps by checking many sources for the same information.
 …Cont’d
• Accessible: Information should be easily accessible by authorized users to be
obtained in the right format and at the right time to meet their needs.
• Secure: Information should be secure from access by unauthorized users.
Business Information Management
1. Human Resource Information System
What is Human Resource Management?

Human resource management is the process of bringing people and organization

together so that the goals of each are met.

HRM is also a strategic and comprehensive approach to managing people and the
workplace culture and environment.

Effective HRM enables employees to contribute effectively and productively to

the overall company direction and the accomplishment of the organization's goals
and objectives.
 Human resource information system(HRIS)

Human Resources Information System, is a system that lets you keep track of all your
employees and information about them. It is usually done in a database or, more often, in a
series of inter-related databases.

• These systems include the employee name and contact information and all or some of the
following:
department,
 job title,
grade,
salary,
salary history,
position history
IT For HR Managers:

• It is essential for a Human Resource Manager to have some knowledge on

information technology because everything nowadays is becoming computerized
and especially when it comes to human resource information systems the HR
manager has to be aware about the system well at least for the sake of minor
things like payroll, compensation, etc.

• So information technology plays a vital role for any department & especially HR
Department in any organization.
HRM…Cont’d

Human Capital

Human capital is the collective value of the capabilities, knowledge, skills, life
experiences, and motivation of an organizational workforce. Sometimes human
capital is called intellectual capital to reflect the thinking, knowledge, creativity,
and decision making that people in organizations contribute.

For example, firms with high intellectual capital may have technical and research
employees who create new technology, formulate products that can be patented, or
develop new software for specialized uses.
Business Drivers of Information Systems

Businesses invest in IT to achieve six important business objectives.

1. Operational excellence
2. New products, services, and business models
3. Customer and supplier familiarity
4. Improved decision making
5. Competitive advantage
6. Survival
1. Operational Excellence:

Improved efficiency results in higher profits.

Information systems and technologies help improve efficiency and productivity.

2. New Products, Services, and Business Models:

Information systems and technologies enable firms to create new products,

services, and business models.

Business model: how a company produces, delivers, and sells its products and
services
3. Customer and Supplier Familiarity:
Customers who are served well become repeat customers who purchase more.
• Mandarin Oriental hotel
• Uses IT to foster an intimate relationship with its customers, keeping
track of preferences, and so on
• Close relationships with suppliers result in lower costs.
• JCPenney
• IT to enhance relationship with supplier in Hong Kong
4. Improved Decision Making:

If managers trust on forecasts, best guesses, and luck, they will misallocate
employees, services, and inventory. But it is better to trust on making decision with
the support of information technology

Real-time data improves ability of managers to make decisions.

• Verizon: Web-based digital dashboard to update managers with real-time data

on customer complaints, network performance, and line outages
5. Competitive Advantage:

Often results from achieving previous business objectives

Advantages over competitors:
Charging less for superior products, better performance, and better response to
suppliers and customers
Toyota: uses TPS (Toyota Production System) to achieve high levels of
efficiency and quality
Information Systems Are More than Computers
Dimensions of Information Systems

1. People

• Information systems require skilled people to build, maintain, and use them.

• Employee attitudes affect ability to use systems productively.

Role of managers

• Perceive business challenges.

• Set organizational strategy.

• Allocate human and financial resources.

• Creative work: new products, services.

2.Technology

IT Infrastructure: Foundation or platform that information systems built on

• Computer hardware

• Computer software

• Data management technology

• Networking and telecommunications technology

• Internet and Web, extranets, intranets

• Voice, video communications

2. Marketing Information Systems
Consists of people, equipment, and procedures to gather, sort, analyze, evaluate,
and distribute needed, timely, and accurate information to marketing decision
makers.

It is evident that managers need a wide range of relevant strategic information,
domain knowledge, and assistance with systematic strategic analysis to overcome
their limitations in the process of marketing strategy development.

Furthermore, external factors such as competitive pressures have impact of IT

adoption in marketing. Most studies in marketing literature suggested that the
current MKIS focus on the operational process of sales and marketing.
Characteristics of MKIS

It is consciously developed master plan for information flow. It is an ongoing

process and operates continuously.

Provides integration and coordination among marketing planners, sales-force and

external environment.

It is future oriented. It anticipates and prevents problems as well as solves marketing
problems. It is both a preventive as well as a curative process in marketing.

Provides scientific base to marketing with help of operations research techniques.

Need for MKIS

Anticipation of consumer demand

To make clear marketing plan

Easily to understand consumer

Significance of analyzing competition

To make easy complexity of marketing

To make on time and informed marketing decision

Components of MKIS

The three major components or divisions of marketing information system are:

1. Internal marketing information

2. Marketing intelligence system

3. Marketing Research system

Marketing Decisions and Communication
…Cont’d
1. Internal marketing information:

The basic information system used by marketing managers is the internal records
system. They include detailed records on orders, sales, prices, inventory levels,
receivable, and payable and so on. By analyzing this information marketing
managers can advert important opportunities and problems.
…Cont’d

2. Marketing intelligence system:

A marketing intelligence system is a set of procedures and sources managers use to

obtain everyday information about developments in the marketing environment.

Marketing managers collect marketing intelligence by:

Reading books, newspapers, and trade publications.

Talking to customers, suppliers, and distributors.

Meeting with other company managers.

 Cont’d

3. Marketing Research system:

Marketing research is the process of collecting information that is concerned with

providing answers to a specific issue. It could be concerned with analyzing a
specific marketing problem related to any aspect of the marketing mix or it may
involve assessing the size and sustainability of an opportunity
3. Manufacturing & Production Information Systems

Manufacturing information systems: support the production/operations function,

which includes all activities concerned with the planning and control of the processes
that produce goods or services.

The production/operations function is concerned with the management of the

operational systems of all business firms. The planning and control information
systems used for operations management and transaction processing support all firms
that must plan, monitor, and control inventories, purchases, and the flow of goods and
services.
4. Accounting and Financial Information Systems

An accounting information system (AIS) is a structure that apply information

system that a business uses to collect, store, manage, process, retrieve and report
its financial data so that it can be used by accountants, consultants, business
analysts, managers, chief financial officers (CFOs), auditors and regulatory and
tax agencies.

In particular, specially trained accountants work with AIS to ensure the highest
level of accuracy in a company's financial transactions and recordkeeping and to
make financial data easily available to those who legitimately need access to it, all
while keeping data intact and secure.
Components of an Accounting Information System

Accounting information systems generally consist of six main parts: people,

procedures and instructions, data, software, information technology infrastructure
and internal controls.
1.People
The people in accounting information system(AIS) are simply the system users.
Professionals who may need to use an organization's AIS include accountants,
consultants, business analysts, managers, chief financial officers and auditors. With
well-designed AIS, everyone within an organization who is authorized to do so can
access the same system and get the same information.

AIS also simplify getting information to people outside of the organization when
necessary. For example, consultants might use the information in AIS to analyze the
effectiveness of the company's pricing structure by looking at cost data, sales data
and revenue.
2. Procedure and Instructions
The procedure and instructions of an AIS are the methods it uses for collecting,
storing, retrieving and processing data.

These methods will be both manual and automated, and the data can come from
both internal sources (e.g., employees) and external sources (e.g., customers' online
orders). Procedures and instructions will be coded into AIS software.

To store information, AIS must have a database structure such as structured query
language (SQL), a computer language commonly used for databases.
3. Data
The data contained in an AIS is all the financial information pertinent to the organization's
business practices. Any business data that impacts the company’s finances should go into
AIS. The data included in AIS will depend on the nature of the business, but it may consist
of the following:
sales orders
customer billing statements
sales analysis reports
purchase requisitions
check registers
inventory data
payroll information
tax informatio
4. Software
The software component of AIS is the computer programs used to store, retrieve,
process and analyze the company's financial data. Quality, reliability and security are
key components of effective AIS software. Managers rely on the information it
outputs to make decisions for the company, and they need high-quality information to
make sound decisions.

AIS software programs can be customized to meet the unique needs of different types
of businesses. If an existing program does not meet a company's needs, software can
also be developed in-house with substantial input from end users or can be developed
by a third-party company specifically for the organization. The system could even be
outsourced to a specialized company.
5. Information Technology Infrastructure 
 Information technology infrastructure is just a elaborate name for the hardware used to
operate the accounting information system. Most of these hardware items are things a
business would need to have anyway they include
 servers,
 personal computers,
 printers,
 Software/tools
 surge protectors,
 routers,
 storage media and etc.,
 Assignment I
1. Briefly explain the importance of information system for business organization. Give
example.

2. Describe the components of Information system resources.

3. What are the main role of information system/IT, in order to make effective
management system?

4. Briefly explain the difference between system management and system development
software.

5. Write at least 5 types of software for general purpose and specific purpose
applications software in industrial information system.