THE COPPERBELT UNIVERSITY

SCHOOL OF INFORMATION AND COMMUNICATION TECHNOLOGY

DEPARTMENT OF COMPUTER SCIENCE
Data Processing

Unit 8: Information Systems

Introduction
In the previous units, the focus was on learning about parts of the computer, networking of
computers and, the Internet. In this unit, the focus is on the use of the computer and the
telecommunication technology to generate information for businesses and organizations. An
Information system is an organized combination of people, hardware, software,
communication network, and data resources that perform collection of data, process it and
transform it to provide information, in an organization. The information required from the
information systems at different levels of the organization hierarchy is different in nature, like
operational information, management information, or information that supports the decision-
making process. Information systems are vital for the functioning of businesses and
organizations. This unit discusses the information systems, and their categorization to provide
support at different levels of the organization.
Information System (IS)
A system is a set of components that work together to achieve a common goal. A system accepts
input, processes it, and produces an output.

A system is composed of one or more subsystems. A system may be a closed system or an open
system. A closed system is a standalone system that does not interact with other systems. An
open system interacts with other systems.
Information System (IS) is a set of inter-related components that:
i. Collect data
ii. Manipulate data
iii. Disseminate data and information
iv. Provide feedback to meet an objective.
An information system uses resources like people, hardware, software, data, and networks to
perform input, processing, output, storage, and control activities. Some examples of IS are
ATMs, railway reservation system, and movie ticket reservation systems.
Components of Information System
An IS consists of four main components
i. Input
ii. Process,
iii. Output
iv. Feedback
Information systems are needed both by the people and the business organizations. People need
information system for entertainment and enlightenment. Organizations require information
systems to support decision making, coordination, problem solving and control. Information
systems may also help to analyse problems, and to create new products.
Characteristics of IS
Like any other system, ISs have characteristics. There are seven characteristics of Information
System and these include:
• Environment is anything outside the system.
• Boundary separates the system from environment. Any part within boundary is the
system and outside boundary is the environment.
• Input is the data from environment to the system. The system uses the input.
• Output is the information from the system to the environment. The system uses input
to generate output.
• Components are the subparts of the system.
• Interrelationships are the associations between components of a system.
• Interface is a mechanism for interaction between different components of the system.

The performance of Information System is measured by its efficiency and effectiveness.

Efficiency is a measure of what is produced divided by what is consumed. Effectiveness is the
extent to which a system attains its goals.
The role of the Information System is expanding and evolving continuously. In 1950s–1960s,
the focus was on data processing. Management reporting and decision support was provided
during 1960s–1970s and 1970s–1980s, respectively. 1980–1990s saw it being also used for
strategic and end user support. Lately in 1990s–2000s, there is a shift towards global
internetworking.
An information system can be manual and computerized. Here, we shall focus on the
computerized information system or the Computer-based Information System.
Computer-Based Information System (CBIS)
Computer-Based Information System (CBIS) use computer and telecommunication technology
for the generation of information. CBIS uses hardware, software, databases,
telecommunications, people, and procedures for the collection, manipulation, storage, and
processing of data into information. They take raw data as input, process it, and produce
information as output. The components of a CBIS include the following:
• Hardware - computer devices like keyboard, monitor, processor, and printer, used for
performing the input, processing, and output activities.
• Software - computer programs that govern the operation of the computer.
• Database - an organized collection of data, consisting of two or more related data files.
• People - those who work with the CBIS. People are the most important element in most
CBIS.
• Procedures - strategies, policies, methods, and rules for using the CBIS.
• Telecommunication, Network, and Internet—Telecommunication and network is used
for connecting the computers and computer devices in a building, city, country, or
across the world to enable electronic communication.
Internet is the world’s largest computer network, which is an interconnection of networks.
World Wide Web (WWW) is a system with universally accepted standards for storing,
retrieving, formatting, and displaying information in a networked environment. The Internet
and WWW have had a tremendous impact on the role IS play in organizations. They are
responsible for the increased connectivity and collaboration within and outside the
organization. They have helped in transforming the structure of an organization, scope of
operations, reporting and control mechanisms, work practices, and services.

IS or CBIS is transforming the way businesses are done nowadays. Communication tools like
cell phones, e-mail, online conferencing, and international teleconferencing over the Internet
have all become essential tools of a business. E-commerce, e-banking, e-governance, e
learning, Internet advertising, and social media marketing have all seen an increasing usage. In
this unit, when we refer to Information Systems, we are talking about the Computer-Based
Information System.
Need for Efficient Information System
In today’s world, information systems are indispensable to businesses, industries, and
organizations, to meet the future challenges. Organizations need ISs to meet the information
needs of its employees. More and more business organizations are using information systems
to improve the way they conduct business, as discussed below:
• IS, for many businesses, provide an opportunity to do business in a new way and thus
gain huge profits and market shares.
• ISs facilitate the acquisition, transformation, and distribution of information. ISs can
improve decision making, enhance organizational performance, and help increase
profitability.
• The use of information systems to add value to the organization can also give an
organization a competitive advantage. It provides significant, long-term benefit to a
company over its competition. ISs are used for strategic planning in a competitive
world. It allows changing the structure, creating of new services, and improving upon
the existing services.
• Damaged or lost data can cause disruptions in normal business activities leading to
financial losses, law suits, etc. ISs help an organization to better manage and secure its
critical data.
• ISs also improve integration and the work processes.
For an organization, ISs impact the way business is carried out. Organizations need to have an
efficient IS to improve and manage their function, performance, and productivity. Briefly
summarized, ISs are important for business today due to the need for operational excellence,
new products, services and business models, improved decision making, competitive
advantage, and the most important, survival.
Categories of Information System
An organization structure can be shown as a pyramid which is divided both horizontally and
vertically. Horizontally, the divisions represent the different functional areas of the
organization, like sales, marketing, accounting, human resource, and manufacturing.
Vertically, the divisions are made according to the operational level of the organization,
hierarchically from the base of the pyramid to the top, i.e. operations at low level, middle level,
and top level (Figure below). Information systems provide support at all the levels of the
organization and in the different functional areas.
Major application categories of the information systems on the basis of the support provided
by them at the different levels of the operations hierarchy are as follows:
i. Operations Support System processes data generated by business operations, and is
required for the low-level operations. The categories of operations support system are:
a. Transaction Processing System (TPS), and
b. Office Automation System (OAS).
ii. Management Support System provides information and support needed for decision
making by the managers at middle level and top level of the organization. Major
categories of management support systems are:
a. Management Information System (MIS)
b. Decision Support System (DSS), and
c. Executive Information System (EIS).
In addition to the above information systems, there is specialized information systems like
a. Expert Systems,
b. Enterprise Resource Planning (ERP), and
c. Electronic commerce (E-commerce) system.
Operations Support Systems
The operations support system provides information about the day-to-day activities of the
organization. They support the operations of the organization, by keeping track of the resources
and the transactions. For example, in a banking operation, the operations support system are
used to keep track of current balance of the customer; in a manufacturing unit, it helps to keep
track of the inventory of the items; and, in a sales unit, it keeps track of the number of units of
each item sold. Thus, transaction processing is the main function of the operations support
system.
Transaction Processing System (TPS)
Transaction is a basic level of activity that is performed during the business operations. It is
the business-related exchange of payments to employees, sales to customers, and payments to
suppliers. Examples of transactions are - withdrawal of money from a bank, booking a ticket
for an airline, selling of goods to the customer etc. TPS is an organized collection of people,
procedures, software, databases, and devices used for recording the business transactions. TPSs
are essential parts of any business organization. TPSs are used for routine, repetitive, and
ordinary business transactions, and transactions that are critical to the daily function of the
business. TPS records the business transactions and generates the documents related to the
transaction. For example, daily routine transactions for sales orders from customers, bank
deposits and bank withdrawals. TPS automates handling of the data for the business activities
and transactions. The goal of TPS is to increase transaction processing speed, enhance
productivity, and simplify the processes.
TPS gathers all the input necessary for other types of systems. It provides the basic input to the
company’s database. A transaction generates data, which is recorded by the transaction
processing system. This data forms the input for the generation of the other information
systems, like MIS, DSS and EIS. For example, based on the daily transactions, a monthly sales
report for middle management and marketing information for senior managers is generated. In
an organization, there are different functional areas like manufacturing, human resource,
accounts, finance, administration, sales, and marketing. The TPS information systems are
developed for and used by people in the different functional areas. Examples of TPS are Payroll
TPS, Sales TPS, and Marketing TPS.
Office Automation System (OAS)
OAS supports automation of the tasks in an office. It supports general office work for handling
and managing documents. It facilitates communication, both within the office, and, between
the office and its environment. It provides support for the traditional office operations like
managing the documents, sending messages for interaction, arranging and conducting
meetings, scheduling of the projects etc. OAS allows use of text processing systems like word
processors and desktop publishing system, to enable the creation of professional documents
with graphics and special layout features. Spreadsheets, presentation packages like
PowerPoint, personal database systems, and, notetaking systems like appointment book,
notepad and calendar, are parts of an OAS. OAS includes the communication systems required
for transmitting the messages, documents, images, video or voice. For this, it uses the network
and the Internet. It incorporates the e-mail facility, voice mail, teleconferencing capabilities,
accessing web sites etc.
Management Support Systems
The purpose of the management support system is to assist the managers at different levels in
an organization, in the controlling and the management of the business. Management support
systems provide different kinds of reports, such as summary report, sales report, and customer
balance report. They also assist the managers in the decision-making process by generating
projected reports like projected sales report etc. Management support systems also provide
information to the executives related to the overall operations of the organization, the overall
growth, profits, its performance etc. Moreover, for any of the reports, it also provides a detailed
report specifying its internal details, if required.
Management Information System(MIS)
MIS is a collection of people, procedures, software, databases, and devices that provides
information to managers and decision makers. MIS provides information to the managers to
help them make informed decisions. MIS supports the managers in the decision-making
process and enhances their productivity and performance. For example, MIS may generate
information related to the sales of a product in a month and the inventory status during that
month. It can also monitor the performance and maintain coordination between the different
functional areas, like purchase and accounts payable, in an organization.
MIS works with the transaction processing system. MIS uses the data generated from TPS as
input, and converts them into meaningful aggregate form. MIS generates different kinds of
reports like summary report, exception report, and detailed report. Summaries are for the high-
level management and give statistical information to the managers. Exception reports provide
information about the activities that are different from the normal functioning. Detailed reports
generally provide operational level reports. The different kinds of MIS reports are either
scheduled to be generated at fixed intervals of time, may be event-driven and generated when
an event occurs, or may be generated in an ad-hoc manner, for a particular query. Scheduled
reports are periodic reports that are generated weekly, monthly, or quarterly. Ad-hoc reports
are generated on-demand, whenever information is required by the managers.
MIS can also generate customized reports, where managers can select from different data,
sorting options, and display choices. The focus of MIS is operational efficiency. The reports
generated by the MIS helps the managers in controlling the operations of the organization and
in the decision-making process.
Decision Support System (DSS)
DSS is a collection of people, procedures, software, databases, and devices that supports
problem-specific decision making. DSS support the middle level managers in the decision-
making process. They supplement the decision-making power of the manager with the
information technology. DSS facilitate decision making by applying mathematical or logical
models and interactions to solve problems. For examples, a large number of mathematical and
logical calculations are required to be performed on data which may be more than million in
number, in order to generate information that helps in the decision-making process.
DSSs are user-friendly and highly interactive. DSS focuses on the decision-making
effectiveness. DSS use data from the TPS and MIS, and, also any new data from external
sources, such as current share prices or prices of competitors. DSS provides comparison of
alternatives and recommendations of a preferred option. DSS provide powerful models and
tools for simulation, optimization etc. to the managers so that they can evaluate from several
alternatives before deciding. For a particular problem, the managers can use DSS to get
outcome of several different scenarios, and then compare them to arrive at the right decision.
Executive Information System (EIS)
EIS provides a generalized computing and communication environment to senior managers to
support strategic decisions. It provides summarized information in a convenient form to the
top-level managers. Unlike DSS, they are not designed to use analytical models for specific
problem solving. EIS is designed to facilitate access to information quickly and effectively, for
the senior managers. EIS is used by the senior managers to identify a problem, an opportunity,
or a trend which affects the organization’s future growth. The middle level managers use DSS
to suggest solutions to the problem or analyse the opportunity. EIS takes data from the TPS,
MIS and allows communication with external sources of information. EIS has menu-driven
user-friendly interfaces, interactive graphics to help visualization of the situation, and
telecommunication links to connect to the external information, if required.
Specialized Information System
Specialized information systems are both for organizational and individual use. The specialized
systems help organizations and individuals achieve their goals.
Expert Systems
Artificial Intelligence (AI) is a collection of people, procedures, hardware, software, data, and
knowledge needed to develop computers that display the characteristics of intelligence. For
certain types of well-defined problems, AI systems can replicate the human decision making.
AI systems mimic the functions of the human brain. Expert system is an applied area of AI. An
expert system is a knowledge-based system having two main components, knowledge base and
inference engine. It uses the knowledge base to store relevant information, data, rules, cases,
and relationships, and, the inference engine gets information and relationships from the
knowledge base, and, provides answers and predictions the way a human expert does. Expert
systems are used in areas where there is a need to capture and preserve irreplaceable human
expertise, provide expertise that is expensive or rare, and to provide expertise needed for
training and development to share the wisdom of human experts with a large number of people.
The expert systems are used to explore new business possibilities, increase overall profitability,
and reduce costs. Expert systems are used to provide information for problems related to
classification, diagnosis, process control, scheduling and planning etc. They are used in
products like antilock braking system, television, plant layout and manufacturing, credit
granting and loan analysis, and stock picking.
Enterprise Resource Planning (ERP)
ERP system is a computer software system that manages and coordinates all the resources,
information, and functions of a business from shared data stores. ERP systems are integrated
programs that manage all business operations. For example, they coordinate the planning,
inventory control, production, and ordering. ERP systems integrate functions such as human
resources, supply chain management, customer relations management, financial,
manufacturing functions, and warehouse management functions. Since ERP systems are
integrated systems, they help to streamline different processes and workflows, allow data to be
easily shared across various departments in an organization, improve the efficiency and
productivity levels, and improves customer service. SAP is an example of ERP system. SAP
stands for Systems, Applications and Products.
Electronic-Commerce (E-Commerce)
E-commerce involves any business transaction executed electronically between parties. It uses
Internet and Web for doing the business. It uses services like e-mail, workflow software tools,
Intranet, and, the e-payment services. E-commerce involves buying and selling of products and
services, electronically. The parties involved in e-commerce may be of the following kinds:
i. Companies and Companies (B2B). A data processing company handling data services
for a company.
ii. Companies and Consumers (B2C).
iii. Consumers and Consumers (C2C). A customer selling goods to another customer, like
in [Link].
Business and the public sector, and, consumers and the public sector. E-commerce web sites
are like on-line market places where you can sell and buy items, and facilitate it by advertising
your product, establishing newsgroups and blogs, posting job-oriented resumes etc.
On-line shopping is a fast-growing segment as consumers are becoming more confident to
use it, with the widespread use of the Internet.