Module 1: Information System

in Business
3rd Semester BBA
SOADU
 Contents of this Module
• System Concept
• Structure of a System
• Components of a System
• Information System (IS) & its Components
• Role of IS in Business
• Types of IS
• Management Information System (MIS):
Definition, Nature & Scope
• Characteristics of MIS
• MIS classification and its functions
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 Concept of a System
• The word system is derived from the
Greek word “systema” which means the
organized relationship among the
functioning units.

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 Definition
• A system is an orderly grouping of
independent components linked together
according to plan to achieve a specific
objective.
• System is integrated collection of the
components which satisfy functions
necessary to achieve the system goals and
which have relationship to one another that
defines structure of the system.
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 Definition Continued.....
• A system is an organized collection of
parts (or subsystems) that are highly
integrated to accomplish an overall goal
(Effective and Efficient).

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 Examples of System
• Computer System
• Educational System
• Organization as a System
• Automobile as a System
• Fan as a System
• Political System
• Accounting System

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 Automobile System

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 Characteristics of a System
• Organization\Order
• Interaction
• Interdependence
• Integration
• Central objective or Purpose

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 Generic Structure of a System

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 Organization as a System

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 Components of a System
• Input
• Processor / Transformation Process
• Output
• Feedback & Control
• Environment
• Boundaries

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 Input
• It is defined as the energizing or start up
component on which system operates.
• Inputs may include raw material, data,
physical source, human resources,
knowledge, capital, technology,
equipments, facilities or any energy to
decide the nature of output.
• Example: Organization as a System

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 Processor / Transformation Process
• It is defined as the activity that makes
possible the transformation of input to output.
• When data is processed through computer it
is processed through logical steps
(Programs).
• Processing involves calculating, comparing,
tabulating, analyzing, sorting, converting,
summarizing, and other techniques to give
the desired output.
• Example: Organization as a System
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 Output
• It is end result of the operation. In other
words it is the purpose or the main
objective for which the system is designed.
• Output can be in form of products,
services, improved technology, new
information which enable the managers to
take informed decisions, etc.
• Example: Organization as a System

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 Feedback & Control
• In order to improve the performance of any
system feedback control mechanism can
be used as a tool or device to control or
modify the input of the system after
analysing the output properly.
• Example: Feedback from the Clients,
Vendors, and even the Employees.

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 Boundary & Environment
• Every system has its limits that determine the
sphere of influence & control is called as
Boundary of the system.
• Everything within the designated space is called
system & everything outside it is environment.
• Flow from environment to the system is its input
while a flow from system to its environment is
the output. Boundary of the system may exist
physically or conceptually.
• Stakeholders such as customers, owners,
employees, financial institutions, government
form the part of the environment.
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 Information System (IS)
• Information
• System

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 Definition 1
• Information System is a combination of
hardware, software, policies, process,
data and telecommunications networks
that people build and use to collect,
create, and distribute useful information,
typically in an organizational settings for
improved decision making.

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 Definition 2
• Information systems are interrelated
components working together to collect,
process, store, and disseminate
information to support decision making,
coordination, control, analysis, and
visualization in an organization.

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 Objectives of IS
• Operational excellence
• New products, services, and business models
• Customer and supplier intimacy
• Improved decision making
• Competitive advantage
• Survival 

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 Examples of IS
• Point-of-Sale (POS) at retail shop
• Online Banking System
• Handheld device for electricity bill
generation.
• Online Reservation System
• Navigation System on the car
• Toll Management System (RFID)
• Online Order Processing
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 Components of IS
• Hardware
• Software
• Networking & Telecommunications
• Data & Database
• People / Human Resources
• Process / Procedures

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 Hardware
• This is the physical technology that works with
information. Hardware can be as small as a smart-
phone that fits in a pocket or as large as
a supercomputer that fills a building.
• Hardware also includes the peripheral devices that
work with computers, such as keyboards, external
disk drives, and routers.
• With the rise of the Internet of things, in which
anything from home appliances to cars to clothes
will be able to receive and transmit data, sensors
that interact with computers are permeating the
human environment.
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 Software
• The hardware needs to know what to do, and
that is the role of software. Software can be
divided into two types: system software and
application software.
• The primary piece of system software is
the operating system, such as Windows or iOS,
which manages the hardware’s operation.
• Application software is designed for specific
tasks, such as handling a spreadsheet, creating
a document, or designing a Web page.
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 Networking / Telecommunications
• This component connects the hardware together
to form a network. Connections can be through
wires, such as Ethernet cables or fibre optics, or
wireless, such as through Wi-Fi.
• A network can be designed to tie together
computers in a specific area, such as an office
or a school, through a local area network (LAN).
If computers are more dispersed, the network is
called a wide area network (WAN).
• The Internet itself can be considered a network
of networks.
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 Data & Database
• Data are the raw facts and figures that are
unorganized that are and later processed to
generate information.
• A database is an organized collection of
structured information, or data, typically stored
electronically in a computer system.
• A database is usually controlled by a database
management system (DBMS). Together, the
data and the DBMS, along with the applications
that are associated with them, are referred to as
a database system, often shortened to just
database.
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 People / HR
• It is associated with the manpower required to run
and manage the system. People are the end user of
the information system, end-user use information
produced for their own purpose, the main purpose of
the information system is to benefit the end user.
• The end user can be accountants, engineers,
salespersons, customers, students, clerks, or
managers etc.
• People are also responsible to develop and operate
information systems. They include systems
analysts, computer operators, computer
programmers, database administrators, CIO, and
other clerical IS personnel.
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 Process / Procedures
• Procedures, which are operating
instructions for the people, who will use an
information system.
• Examples are instructions for filling out a
paper form or using a particular software
package.
• Another example: Start up procedure for a
POS at a retail shop.

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 Role of IS in Business
• Information Storage and Analysis
• Business Operations
• Monitoring & Control
• Decision Making

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 Information Storage & Analysis
• Information systems store, update and even
analyze the information, which the company
can then use to pinpoint solutions to current
or future problems.
• Furthermore, these systems can integrate
data from various sources, inside and outside
the company, keeping the company up to
date with internal performance and external
opportunities and threats.
• Example: Stock Market
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 Business Operations
• A business information system carries out specific
functions in support of operations, including payroll
processing, preparing and storing company
documents, credit card processing, transaction
processing at retail store, online ticket reservation
system, etc.
• If the organization operates a manufacturing line,
the information system can schedule tasks and
processes while keeping quality records.
• In supporting operations, the information system can
increase efficiency and improve employee
productivity (servicing more number of customer in a
specified time).
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 Monitoring & Control
• Monitoring and controlling the activities of employees is
a core function of information systems. This is especially
true of financial transactions in which management has a
duty to prevent fraud and theft.
• In this role, the security of the information system is
critical, as managers rely on it to track payments
received from customers and invoices from suppliers.
• The system imposes its control functions by allowing
only authorized employees to log in and access the
relevant functions. For example, only a few employees
may be authorized to generate a company check. In
addition to limiting who can perform such functions, the
system keeps track of who logged in and carried out the
task.
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 Example
• Inventory Monitoring & Control system at a
medicine warehouse, let us say Medplus.
• This system keeps tracks of all the
medicines in the warehouse and send a
control message to the manager if the
stock of a particular medicine is under the
critical level.

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 Decision Making
• A most fundamental role for information systems
is management support in making decisions.
• Managers can get all the information they need
about company activities from the system.
Complete, accurate information means
management decisions are more effective.
• An organization’s management team uses
information systems to formulate strategic plans
and make decisions for the organization's
longevity and prosperity.

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 Example
• Decision to grant loan to a customer is based on
the Decision Support System developed by the
banking industry.
• This system facilitates the bank managers and
support them in making the right decision of
disbursing the loan to the customer.
• Decision to start a manufacturing plant for EVs.
DSS will help the managers to take the informed
decision. 75% chances of success.

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 Types of IS
• Transaction Processing System (TPS)
• Management Information System (MIS)
• Decision Support System (DSS)
• Office Automation System (OAS)
• Executive Information System (EIS)
• Geographic Information System (GIS)
• Expert System (ES)
• Enterprise Resource Planning (ERP)
• Knowledge Management System (KMS)

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 Levels of Management
• Operational Level or Lower Level
• Tactical Level or Middle Level
• Strategic Level or Top Level

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 IS at different levels of Management

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 Functions at different levels

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 Transaction Processing System (TPS)
• A transaction process system (TPS) is an
information processing system for business
transactions involving the collection, modification
and retrieval of all transaction data.
Characteristics of a TPS include performance,
reliability and consistency.
• Example: POS transactions, Online reservation
transactions, banking transactions, ATM, Internet
banking transactions, Insurance premium
payment transactions, etc.

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 Types of TPS
• Batch Processing System
• Real-Time Processing System
• These types will be discussed in detail
later in Module 4

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Management Information System (MIS)
• A Management Information System (MIS) is a
computerized information system organized and
programmed in such a way that it produces
regular reports on operations for the middle level
of management in a company. It is usually also
possible to obtain special reports from the
system easily.
• Management Information Systems abbreviated
as MIS, are used to guide tactic managers to
make semi-structured decisions. The output
from the transaction processing system is used
as input to the MIS system.
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 MIS Report
• MIS report can be described as a system
that provides important information for the
management of your company.
• MIS collaborates with people, technology,
and business processes within an
organization. It also describes how the
relationship with other organizations and
people affect your company.

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 Types of MIS Reports
• Sales Report
• Budget Report
• Summary Report
• Exception Report
• On-Demand Report
• Financial Report
• Production Report
• Cash Flow & Fund Flow Statement
• Cost Report
• Drill Down Report
• Predictive Report
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Decision Support System (DSS)
• A Decision Support System (DSS) is a computer
program or an application used to improve a
company's decision-making capabilities. It
analyzes large amounts of data and presents an
organization with the best possible options
available.
• Decision support systems bring together data
and knowledge from different areas and sources
to provide users with information beyond the
usual reports and summaries. This is intended to
help people make informed decisions.
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 Examples
• GPS Routing
• ERP Dashboard
• Clinical DSS
• Crop Planning DSS
• Banking DSS

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 Office Automation System (OAS)
• An office automation system is the tool that
enables data to move from one system to
another on its own without human
intervention and inaccuracies.
• These tools help organizations collect,
manage, and analyze securely to accomplish
everyday tasks and processes.
• It optimizes and automates existing business
processes and procedures.
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 Examples of OAS
• E-mails
• Word Processor
• Spreadsheets
• E-calendars
• General purpose Applications
• DTP
• Groupware (for Communications)

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Executive Information System (EIS)
• It is also referred to as Executive Support System
(ESS).
• Executive Information System is commonly
abbreviated as EIS, and it is a management
information system which supports, facilitates, and
makes decisions for senior executives by providing
easy access to both internal and external
information.
• Executive Information System can also be
considered a specialized form of a Decision Support
System. The focus on Executive Information
Systems is on easy to use user interfaces and
graphical displays.
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 Example
• Time Series
• Trend Analysis
• Stock Market Analysis
• Column and Bar Charts
• Bubble charts

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Management Information System (MIS)

• Meaning: MIS is an organized integration

of hardware and software technologies,
data, processes, and human elements.
• It is a software system that focuses on the
management of information technology to
provide efficient and effective strategic
decision making.

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 Definition of MIS
• Definition by G.B. Davis – “Management
Information System (MIS) is an integrated
man/machine system for providing
information to hold up the operations,
management and decision making
functions in an organization.”

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 Definition of MIS
• Definition of Walter I. Kennevan – “A
formal method of collecting timely
information in a presentable form in order
to facilitate effective decision making and
implementation, in order to carry out
organisational operations for the purpose
of achieving the organisational goals.”

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 Objectives / Functions of MIS

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 Characteristics of MIS

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 Classification of MIS
• Financial management information systems
• Manufacturing management information systems
• Marketing management information systems
• Human resources management information
systems 
• Accounting management information systems 
• Logistics management information systems 
• Transportation management information
systems 

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 Financial MIS
• The financial management information
system provides financial information to all
financial managers within an organization
including the chief financial officer.
• The chief financial officer analyzes historical
and current financial activity, projects future
financial needs, and monitors and controls
the use of funds over time using the
information developed by the MIS
department.
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 Manufacturing MIS
• More than any functional area, operations have
been impacted by great advances in technology.
As a result, manufacturing operations have
changed.
• For instance, inventories are provided just in
time so that great amounts of money are not
spent for warehousing huge inventories. In some
instances, raw materials are even processed on
railroad cars waiting to be sent directly to the
factory. Thus there is no need for warehousing.
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 Marketing MIS
• A marketing management information
system supports managerial activity in the
area of product development, distribution,
pricing decisions, promotional
effectiveness, and sales forecasting.
• More than any other functional area,
marketing systems rely on external
sources of data. These sources include
competition and customers, for example.
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 Human Resources MIS
• Human resources management information
systems are concerned with activities related to
workers, managers, and other individuals
employed by the organization. Because the
personnel function relates to all other areas in
business, the human resources management
information system plays a valuable role in
ensuring organizational success.
• Activities performed by the human resources
management information systems include, work-
force analysis and planning, hiring, training, and
job assignments.
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 Assignment
• Accounting management information
systems 
• Logistics management information
systems 
• Transportation management information
systems 

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 References
• https://www.solutionweb.in/what-are-the-charact
eristics-of-a-system-in-mis/
• https://moonwelfarefoundation.blogspot.com/201
8/11/the-three-fundamental-roles-of.html
• https://searchcio.techtarget.com/definition/decisi
on-support-system
• https://www.nationalgeographic.org/encyclopedi
a/geographic-information-system-gis/
• https://www.geektonight.com/what-is-mis/

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