Chapter I Information System Concepts

8/3/2019 Chapter I Information System Concepts

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Business Information Systems

Semester I 2011/12

Saint Mary University College

MBA Program

Dr. Tesfaye Debela



Discussion: The analogy of Nervous System in

Humans and Information Systems In

OrganisationsWhat makes humans different from other

Animals?

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Information System Concepts

this part introduces:

• System properties and their application to businessorganisations

•

Compnents of information system,• The relationship of systems and organisations

• Clearly explain the relationship between organization,

management and technology.

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Information as organisational resources

• organisational resources: Material, financial,human (Physical resources) and informationalresources (conceptual resource).

• Managers manage the physical resources and theperformance of their organisations using theconceptual resource

• A manager, at any level of the organization, needsinformation to make decisions and to control

organisational resources.• Therefore, information resource needs proper

management attention as the other resources.

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In management of modern organisations, the interest in ICT resultsfrom three major perspectives.

• to day‘s Business organisations are concerned more on

effectiveness than on efficiency. Hence, organisations process

large volume of external and internal information to cope up

with changes in their environment.

• The growth of computers in processing speed and memory

capacity has increased the capacity of organisations in handling

and processing large volume of data

•

The development in internet technology has enabledorganisations to link their operations and create strategic

alliance with customers , suppliers and other stakeholders

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The Concept of Information

Discussion Point:

The meanings and relationships of Data,

Processing and Information

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Figure 2.1 Simple Information System Model.

Input

(Data)

Processing

(Information

Processor)

Output

(Information)

Data

Storage



The Concept of Information

• 1) Data: -

– Are raw facts which are group of symbols that represent quantities, actions, objects, concepts,etc .

– figures and facts can take different forms such asimages, text, or voice. For example: 10km, orBirr100.

– For processing purposes, data items areorganised into data structures, file structures anddatabases.

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2) Processing:

– processing is changing data from unusable into usable form

– Figure 1.1 shows data is stored and later processed toobtain information for decision purpose. For example, apersonnel section stores the data of employees in personalfiles so that he can use it in the future either for promotion,

termination or any other purpose.3) Information: -

• is defined as a valuable processed data that is meaningful

to the user to make organisational decisions, to take

actions or to fulfill any legal obligations.• data is related to recording historical or current facts, but

information affects our current or future actions.

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Value of Information from the perspective of

a manager:

• Time dimension – Timeliness: availability at the time of need, the right information at the

right time

– Currency: information should be up-to-date,

– Frequency: and should be provided as often as needed

• Content dimension: – Accuracy: Ideally all information should be accurate or free of errors or

bias. Relationship between accuracy and cost. Accounting informationneed 100% accuracy. Long range economic forecasts, statistical reports

can be accepted when the data contains a few errors – Relevancy - Information should pertain to the problem at hand or to a

specific situation.

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Value of Information from the

perspective of a managerContent dimension

– Conciseness: Information should be concise and to the point as muchas possible.

– Completeness : Information that presents a complete picture of aproblem or a solution. Information overload results from too much

information. – Scope

• Form dimension:

– Clarity

– Detail

– Presentation

– Media

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Exercise 1

1. True or False, Why?

a. All unprocessed data are not information.

b. All processed data are information.

3. Differentiate the following three activities:

• Accounting transactions recorded hourly, daily,weekly or monthly in different accounts.

• Annual financial reports produced by the accountingsection

• The variation between the actual performance andbudgeted performance.

4. State the data and information of deploying humanresource on certain project.

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Discussion Points

• How do you understand (define) a system?

• Examples of systems

What is the difference between organisationand systems?

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System‘s Concepts

• A system is defined “as” a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organised transformation process

• natural systems, deal with natural relationshipincluding living systems and non-living system.

• artificial systems, man-made systems such asorganisations, computer systems, factory systems,

etc.• Abstract systems: systems of ideas, beliefs,

theories, etc.

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Types of Systems

• Closed vs Open Systems – closed system: a system that cannot interact with its

environment. In organisations and information processingthere are relatively closed systems , which are having well-controlled inputs and outputs. Examples: Factories,computer systems

– Open Systems : a system that interacts with other systemsin its environment. Interactions between open systems takeplace through exchange of information, material, personnel,finance and energy. All business organisations are open

systems.

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Types of systems continued

• Deterministic vs. Stochastic Systems

– Deterministic systems: if the behaviour of a system is predictable in

detail e.g. solar system

– Stochastic systems: systems difficult to predict their behaviours.

Behaviours can be affected by random or stochastic inputs. Systemsthat involve people.

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Characteristics of open systems • Environment ; No system is seen outside the context of its

environment• Subsystem: Any system has lower level systems, called subsystems

that perform different functions

• supra-system: a system can be a subsystem of a higher levelsystems

• boundary can be purpose, scope objective, mission, etc, thatserves as boundary to separate a system from its environment andother systems

• interface: occur at the boundary in the form of taking inputs from,and delivering outputs to, the environment .

• Input a system needs raw materials, labour, energy, informationetc. as input.

• Process: a series or parallel activities taken by a system/or subsystemsto combine different inputs and to produce new product /service.

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Characteristics of open systems • Output: A product of a system that can be input to other

systems or consumed as end product.• Synergy: Tells unity of purpose, coordination of activities,

etc which give higher value product than the value of theinputs.

• Equifinality: there are a lot of alternatives that can lead to

the same end result or objective.• Coupling: the extent of linkage between the subsystems.

– Loose coupling means that subsystems are not closely linked and

– close coupling means that systems are highly dependent on eachother.

• Feedback and control: to monitor the internal and external situation and to take action based on the result

• entropy vs equilibrium.

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Feedback control vs self-regulation

• Feedback Control: when a system receives an extra input of decision rules

supplied by human controller (reactive control)

– Positive feedback : Information related to Increases in the discrepancy between the future state and the reference state

• Ex. Rapid sales growth leading to increased production. May cause cash shortage.

– Negative feed back: Information related to decreases in the discrepancy between the future state and the reference state

• Ex: the effort of the system to look for sources of financing the shortage as a result of sales growth

• Self regulations: the rules governing the system are internal, which are

the result of natural evolution. Mostly, features of biological or ecological

system based on the rule of negative feedback.

• Feed-forward control: predicting how changes in uncontrollable inputs

are likely to affect systems behaviour on the desired course, thereby

counteracting the effects of input disturbances. (Proactive control)

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The General Systems Model

• Physical Systems transforms input resources such aspersonnel, capital, raw materials/components, equipment

and information into products and services

• A conceptual system is a system that uses conceptual

resources information & data to produce conceptualoutputs such as decisions and instructions

– Open loop systems

– Closed loop systems

•

The physical and conceptual system together form thegeneral systems model of a business organisation.

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The General System‘s Model of

Business

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Environment

Management (conceptual)

System

E n v i r o n m e n t

Decision

Environment

E n v i r o n m

e n t

Objective

Decision InformationManagement

(ControlMechanism)

Physical System

Transformation

Process

PhysicalInput Physical

Output

DataData Data

Information

System

Data/Info-

rationDecision



Information System and BIS

• Information system is defined as “a set of people,procedure, and resources that collects, transforms anddisseminates information in an organisation.

• Computer Based Information Systems (CBIS): Information

systems that rely on computer hardware and software forprocessing and dissemination of information.

• Business Information System: a group of interrelatedcomponents that work together to capture, store, process,and control of data resources to produce information as

output that support planning, decision making andoperational activities in an organisation (Bocij, Greasleyand Hickie; 2008)

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Discussion points

• Take the Registrar Office of Saint Mary

University College

– What are the elements `(Resources) of IS?

– What are the inputs, processing, output, storage

and control activities of IS

– Break the system into main sub processes

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Information System Resources

• Hardware resources – physical devices andmaterials used in information processing.Computers and calculators, sheets of paper,magnetic disks., filing cabinets and paper trays.

• Software resources – all sets of informationprocessing instructions. Ex. Programs, which arethe sets of operating instruction that direct &control computer hardware; procedures: the sets

of information processing instruction needed bypeople. Manuals, Instructions how to fill a certainapplication form or a material requisition form.

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• People resources – include specialists (peoplewho develop and operate information systems)(Ex.) system analysts, programmers, computeroperators; and end users; accountants,salespersons, engineers, clerks, customers or

managers or all who use an information system orthe product of information system.

• Data Resources – data & information constitutevaluable organisational resources. For example:

supplier’s name, the sales transaction (onaccount/on cash), customer’s name, total sales,total expenditures, etc., are data resources.

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System Analysis

• System Analysis: studying the information problems andinformation needs of an organization and to determine howpeople, organizational procedures data and informationtechnology are optimally integrated to accomplish the

organizations objective. The major activities of systemanalysis:

– breaking a large system into different components of informationprocessing activities,

– Grouping activities into Critical, essential and redundant

–

determining the interface between people and informationtechnology (ergonomics).

– Designing an information system that support organizational operationand management

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Assignment

Case Study: Group Work

• UPS Competes globally with information

Technology page 17 (2006 edition)

Individual Assignment:

• Discuss the systems characteristics of theorganisation in which you work by relatingit to its Supply Chain Management.

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Documents

Chapter I Information System Concepts