MANAGEMENT
INFORMATION
SYSTEM
UNIT - 1
LEARNING OBJECTIVES
Understand the concept of a system and how it relates to information system.
Explain why knowledge of information systems is important for business
professionals, and identify five areas of information systems knowledge that they
need.
Give examples to illustrate how the business applications of information systems
can support a firm’s business process, managerial decision making, and strategies
for competitive advantage.
Provide examples of several major types of information systems.
Why we need to study Information
Systems?
It is integrated into our daily business activities as accounting, finance, operation
management, marketing, human resource management or any other major business function.
It is a vital components of successful business and organizations.
To be a manager, entrepreneur, or business professional, it is just important to have a basic
understanding of information systems as it is to understand any other functional area in
business.
Information technologies, including Internet-based information systems, are playing vital
and expanding role in business.
Information technology helps to improve the efficiency and effectiveness of their business
process, managerial decision making and work group collaborations.
Its benefit occurs irrespective of its usage as e-commerce transactions, customer support
processes, etc.
Difference between Information System and
Information Technology
Information Technology Information System
IT is the study, design, implementation, IS refers to an entire set of information:
support or management of data within an not only the technology involved, but the
information system people & processes as well
Information System
In simple form, a system is a set of interrelated components with a clearly defined
boundary, working together to achieve a common set of objectives.
An information System can be any organized combination of people, hardware,
software, communication networks, data resources, and policies and procedures
that stores, retrieves, transforms and disseminates information in an organization.
Variety of physical devices – hardware
Information processing instructions and procedures – software
Communication channels – networks
Stored data – data resources
Information Systems without computer
We have been using information systems since the dawn of civilization. Some examples are
Smoke signals for communication – pattern of smoke transmitted valuable information to
others who were too far to see or hear the sender
Card catalogs in a library – allows readers to locate a particular book by its title, author
name, subject etc.
Your book bag, day planner, notebooks and file folders – help you to organize the inputs
provided to you via handouts, lectures, presentations and discussion.
Cash Register – tracks product sold, the time of sale, inventory levels etc.
Paper based accounting ledger – to record daily transaction
Framework that outlines major areas of IS
Framework that outlines major areas of IS
Foundation Concepts – fundamental behavioral, technical, business, and managerial concepts
about the components.
Information Technologies – major concepts, developments, and management issues in
information technology – that is hardware, software, networks, data management and many
Internet based technologies.
Business Applications – major uses of information systems for the operations, management and
competitive advantage.
Development Processes – how business professionals and information specialists plan, develop,
and implement information systems to meet business opportunities.
Management Challenges – challenges of effectively and ethically managing information
technology at the end-user, enterprise, and global levels of business.
Fundamental Roles of IS in Business
Support of business processes and operations
Support of decision making by employees and managers
Support of strategies for competitive advantage
Fundamental Roles of IS in Business
Support of business processes and
operations
As a consumer, you regularly encounter
information systems that support the
business processes and operations at
the many retail stores where you shop.
For example, most retail stores now use
computer-based information systems to
help their employees record customer
purchases, keep track of inventory, pay
employees, buy new merchandise, and
evaluate sales trends.
Store operations would grind to a halt
without the support of such information
systems.
Fundamental Roles of IS in Business
Support of decision making by
employees and managers
Information systems also help store
managers and other business professionals
make better decisions.
For example, decisions about what lines of
merchandise need to be added or
discontinued and what kind of investments
they require are typically made after an
analysis provided by computer-based
information systems.
This function not only supports the
decision making of store managers,
buyers, and others, but also helps them
look for ways to gain an advantage over
other retailers in the competition for
customers.
Fundamental Roles of IS in Business
Support of strategies for
competitive advantage
Gaining a strategic advantage over
competitors requires the innovative
application of information technologies.
For example, store management might
make a decision to install touch-screen
kiosks in all stores, with links to the e-
commerce Web site for online shopping.
This offering might attract new customers
and build customer loyalty because of the
ease of shopping and buying merchandise
provided by such information systems.
Thus, strategic information systems can
help provide products and services that
give a business a comparative advantage
over its competitors.
Trends in Information Systems
Until 1960’s 1960’s – 1970’s 1970’s – 1980’s
Transaction Processing Processing data into useful, But this MIS were not
informative reports. meeting the decision making
Record Keeping
needs of management.
This is how Management
Accounting
Information System (MIS) So the concept of Decision
Electronic Data Processing born. Support Systems (DSS) was
(EDP) applications born.
It focused on developing
business applications. It provides managerial end
users with ad hoc, interactive
It provides reports which
support of their decision
helps to take a managerial
making process.
decision
Example: Checking CIBIL
Example: MS Office, Skype,
score
Browser etc.
Trends in Information Systems
Rapid development of microcomputer processing power, application software packages and tele communication
networks.
End users could use their own computing resources to support their job requirements.
Executive Information System (EIS) was developed.
1980’s
Artificial Intelligence (AI) techniques to business information system.
–
1990’s AI – act on behalf of their owner, system functions that can be adapt themselves on the basis of the immediate
needs of the user, virtually reality applications, advanced robotics, natural language processing etc.
Expert Systems (ES) – Medical Equipment
Knowledge based systems
Trends in Information Systems
Strategic Information Systems (SIS) – it helps a company gain a competitive
advantage in the global market
Mid to late 90’s – Enterprise Resource Planning (ERP) was emerged.
It integrates all facets of a firm like planning, manufacturing, sales, resource
management, customer relations, inventory control, order tracking, financial
1990’s management, human resources, and marketing.
– It uses common interfaces for all computer based organizational functions and
data sharing.
2000’s
Trends in Information Systems
Business Intelligence (BI) – it focused on the gathering and analysis of data and
information that can be used to drive strategic business decisions.
Beginning of 21st century, global e-business, e-commerce were emerged
2000’s
–
2010’s
System Concepts
It underlies all business process, as well as to the extend of our understanding about IS and
IT.
Understanding System concepts will help you understand many other concepts in the
technology, applications, development etc.
It helps to understand
Technology – Computer networks are systems of information processing components that
use hardware, software, data management etc.
Applications – Interconnected business information systems – e-business and e-commerce
Development – Developing -ways to use IT in business
Management – Managing IT emphasizes the quality, strategic business value , etc.
What is a System?
A set of interrelated components, with a clearly defined boundary, working
together to achieve a common set of objectives by accepting inputs and producing
outputs in an organized transformation process.
Example: Human body, Solar System, technological system of oil refinery.
It has three basic functions
Input – enter the elements to be processed
Processing – convert i/p into o/p
Output – transferring elements to their ultimate destination
Feedback and Control
System concept becomes more useful by including two elements:
Feedback – a data about performance of a system
Example: Altitude, direction of an aircraft are feedback to the aircraft’s pilot
Control – involves monitoring and evaluating feedback to determine whether a
system is moving toward the achievement of its goal.
It also makes necessary adjustments to a system’s input and processing
components to ensure that it produces proper output.
Example: Pilot makes minute changes after receiving feedback
Other System Characteristics
System does not exist in a vacuum
It exists and functions in an environment containing other system.
If a system is one of the components of a larger system, then it is called as
subsystem and the larger system is its environment.
Several system may share same environment, these systems may connected to one
another by means of a shared boundary or interface.
a system that interacts with other systems in its environment i.e., exchanges inputs
and outputs with its environment.
A system that has ability to change itself or its environment to survive is called
adaptive system.
General System Concepts
Interrelated Components Defined Boundaries
People Functions
Hardware Modules
Software type of application
Peripherals and Department or end-user
group
Networks
General System Concepts
All the interrelated components work together to achieve a common goal by accepting inputs and
producing outputs in an organized transformation process:
Using raw materials, hiring new people, manufacturing products for sale, and disseminating
information to others.
Information systems make extensive use of feedback and control to improve their effectiveness:
Error messages, dialog boxes, passwords, and user rights management.
Many information systems are designed to change in relation to their environments and are adaptive:
Intelligent software agents, expert systems, and highly specialized decision support systems.
Information systems are systems just like any other system. Their value to the modern organization, however, is
unlike any other system ever created.
Components of Information System
We know that system accepts data
resources as input and process them
into information products as output.
How does information system
accomplish this task?
What system components and
activities are involved ?
Components of Information System
An information system depends on
the resources of people (End users and IS specialists)
Hardware (machines and media)
Software (programs and procedures)
Data (data and knowledge bases)
Networks (communication media and network support)
to perform input, processing, output, storage, and control activities
that transform data resources into information products.
People Resources
People are the essential ingredient for successful operation of all information systems.
End Users – people who can use an information system or the information it produces.
They can be customers, salesperson, engineers, accountant, clerk, etc.
End users in business are knowledge workers – they spend most of their time communicating
and collaborating in teams and workgroups and creating, using and distributing information.
IS Specialists – they develop and operate information systems.
They include system analysts, software developers, system operators.
System analysts design information system based on the information requirements of end users.
Software developers create computer programs based on the specification of system analyst.
System operators help monitor and operate large computer systems and networks.
Hardware Resources
It includes all physical devices and materials used in information processing.
Not only machines like computer, but also all data media like floppy disk, etc.
Computer Systems – it consists of CPU containing microprocessors and variety
of interconnected peripheral devices like printers, scanners etc.
Computer Peripherals – keyboard, electronic mouse, trackball for input and
printer, video screen for output.
Software Resources
It includes all set of information processing instructions.
Operating instructions – Programs
Set of processing instructions – procedures
System Software - Microsoft Windows, Unix
Application Software - Payroll, sales analysis, inventory track
Procedures - how to use a software package?
Data Resources
Data are more than the raw material for information system.
Previously, data were captured as a result of a common transaction are now
stored, processed, and analyzed using software applications.
Now, it is cash in a wallet – pen drive, CD, etc.
Data – Name, quantities, dollar amounts
Information – sales information, sales territory etc.
Network Resources
Internet, Intranet, extranets are
essential to the successful e-business
and e-commerce operations
Communication Media – twisted
pair wire, coaxial and fiber-optic
cables.
Network Infrastructure – modems,
inter-network processors
Information System Activities
Input of data resources
Processing of data into information
Output of Information products
Storage of data resources
Control of system performance
Information System Activities
Processing of Data into Output of Information Products
Input of Data Resources Information
Data about sales Data received about a Sales manager may
transactions may be purchase can be added to a view a video display to
recorded on source running total of sales check the performance
results
documents such as paper of salesperson
order forms Compared to a standard to
determine eligibility of for
Receiving printout of
Alternatively, sales person a sales discount monthly sales results
fetch the data using optical
scanner device
Classified into product
categories
Summarized information
to sales manager
Information System Activities
Storage of Data Resources Control of system performance
In the form of database Manager may discover that subtotals of
sales amount in a sales report do not add
Pen drive, CD, cloud storage
up to total sales
Finding an error
Types of Information System
Operation Support Systems
It always been needed to process data generated by, and used in , business operations.
It produce a variety of information products for internal and external use.
Transaction Processing System – process data resulting from business transactions, update operational
data bases, and produce business documents. Eg.: sales and inventory processing and accounting.
Batch processing – accumulated over a time and execute periodically
Real-time processing – processed immediately after transaction occurs
Process Control Systems – Monitor and control industrial process. Eg.: petroleum refining, power
generation and steel production system.
Enterprise Collaboration Systems – support team, work group. Eg.: e-mail, chat, video conferencing
Management Support Systems
When IS applications focus on providing information and support for effective
decision making by managers, they are called management support systems.
Management Information Systems – prespecified reports and displays to support
business decision making. Eg.: Sales analysis, production performance.
Decision Support Systems – provide interactive ad hoc support for decision
making process of managers and other business professionals. Eg.:Product pricing,
profitability forecasting.
Executive Information System – provide critical information from MIS, DSS. Eg.:
Ease access to analyses of business performance
Other Classification of Information
Systems
Expert Systems – provide expert advice for operational chores like equipment diagnostics or
managerial decisions such as loan portfolio management.
Knowledge Management System – creation, organization and dissemination of business
knowledge to employees and managers throughout a company.
Functional Business Systems – focus on operational and managerial applications in support of
basics business functions such as accounting or marketing.
Strategic Information Systems – to gain a strategic advantage over its competitors.
Case Study
[Link]
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age&q&f=true
Use this link and go to page no. 48 and page no. 49
You will find the case study in the name of Spark Batteries Ltd.
Read the case and answer the questions asked in it.
