Information Society and KM

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Information SystemsSchool of Business and Law

Tasnuva Rahman 1ID: 0757DADA1109

Executive Summary

An information society is a society in which the creation, distribution, diffusion, uses,

integration and manipulation of information is a significant economic, political, and cultural

activity. (Beniger, James R. 1986)

To run an organization the management requires different types of information. Senior

managers use the information to make business plans when the middle management uses to

monitor and control business activities. To carry out the operational duties the employees

require information. For this reason the businesses must have several information systems

operating at the same time in the organization.

To reduce the pressure of human brain and workload and to maintain organized information

system, following 6 types of systems is implemented in todays businesses: Executive

support System, Management Information Systems, Decision-Support Systems, Knowledge

Management Systems, Transaction Processing System and Office Automation System.

In this report I have highlighted the potential advantages and disadvantages of information

systems when implemented in a corporate setting.


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Table of Contents

Introduction...................................................................................... .............................03

Information Systems........................................................................ .............................04

1. Executive Support System.................................................................................05

2. Management Information Systems.......................................... .......................... 06

3. Decision-Support Systems...................................................... ........................... 08

4. Knowledge Management Systems.....................................................................09

5. Transaction Processing System.........................................................................11

6. Office Automation System....................................................................... .........12

Conclusion................................................................................................................... .14

References....................................................................................................... ..............15

Bibliography................................................................................................................. 15


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Introduction

The concept of the information society was developed by the economist Fritz Machlup when

he began studying the effect of patents on research in 1933 and culminated in the

breakthrough study "The production and distribution of knowledge in the United States" in

1962. In 1973, United States sociologist Daniel Bell introduced the notion information

society in his book The Coming of Post-Industrial Society where he formulates that the

main axis of this society will be theoretical knowledge and warns that knowledge-based

services will be transformed into the central structure of the new economy and of an

information-led society where ideologies will end up being superfluous. This expression

reappears strongly in the 90s, within the context of the development of the World Wide Web

and ICTs.

Information society is a Post-industrial society in which information technology (IT) is

transforming every aspect of cultural, political, and social life and which is based on

the production and distribution of information. It is characterized by the

y Pervasive influence of IT on home, work, and recreational aspects of

the individuals daily routine.

y Stratification into new classes those who are information-rich and those who are

information-poor.y Loosening of the nation state's hold on the lives of individuals and the rise of highly

sophisticated criminals who can steal identities and vast sums of money through

information related (cyber) crime. [1]

There are several different ideas about knowledge management. Knowledge Management is

about systems and technologies, people and learning organisations, processes, methods and

techniques, managing knowledge assets, or may be about holistic initiative across the entire

organisation. [2]

"Knowledge Management is the discipline of enabling individuals, teams and entire

organisations to collectively and systematically create, share and apply knowledge, to better

achieve their objectives" (Ron Young, CEO/CKO Knowledge Associates International)


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Know l nagemen t oul e an integra l par t of every know ledge workers da ily

respons i iliti es.

In todays comp lex marke t t e informa tion requ iremen ts are increas ing w it divers ity.

Higher Managemen t needs info to make the company managemen t plann ing. Middlemanagemen t requ ires comprehens ive informa tion to con trol and mon itor bus iness ac tivities.

Emp loyee does the opera tiona l roles in the company and they requ ire info to con tinue their

da ily tasks. For this reasons the organ i ation mus t have severa l informa tion sys tems

opera ting s imultaneous ly. There are 6 types of Informa tion Sys tems and they are : Execu tive

suppor t Sys tem, Managemen t Informa tion Sys tems, Dec ision-Suppor t Sys tems, Know ledge

Managemen t Sys tems, Transac tion Process ing Sys tem and Off ice Au toma tion Sys tem.

nformat ion Systems

Organ i ations can be d ivided into 4 leve ls and 5 major func tiona l areas.

F i 1:

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The leve ls are s trategic, managemen t, know ledge, and opera tiona land the areas are sa les and

marke ting, manufac tur ing, f inance, accoun ting, and human resources.


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The six type of system is distributed to serve 4 the levels. Following is the figure to describe

the serving area and level of 6 types of systems.

F igure 2 ( Serving )

evels for 6 Systems [8]

1.

Executive Support Systems:An Executive Support System (ESS) is designed to help the senior management of an

organization by providing easy access to internal and external data for making strategic

decisions. ESS gathers, analyse and facilitate to summarise the key internal and external

information to use in the business for meeting the strategic goal of the organization.

Senior managers main job is to do planning and making ma jor decisions of the organization

which takes a lot of time. Their job is to set performance targets, performance evaluation, and

to check the external environment for opportunities and threats of the business routinely. Thesenior management need relevant, timely, easily understood information for accomplishing

this task. ESS provides ready access to strategic information to the higher management and

also the information is customized to their needs and presented in a convenient format. ESS

can distinguish between vital and seldom-used data, and track different key critical activities


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for executives. Simply touching a screen ESS can provide highlights in graphical form of

critical area of corporate performance like revenue trends.

The advantages of ESS are as follows:

y Filters data for management

y Offers efficiency to decision makersy Improves to tracking information

There are some disadvantages of ESS as well:

y Difficult to keep current data

y May lead to less reliable and insecure data

y Too detailed Oriented

y Small companies may encounter excessive costs for implementation

We can think of ESS like a cockpit of an aircraft where the pilot can access and control all

the functions of the plane. ESS generally uses lots of data analysis and modelling techniques

for example: "what-if analysis to help strategic decision making.

2 . Management Information Systems: A management information system (MIS) is mainly deals with the internal sources of

information. A MIS extracts data from a database (usually from the TPS) to compile reports,

such as sales analyses, inventory-level reports, and financial statements, to help managers

make their everyday decisions. The type and form of the report varies and depends on a

particular managers requirement. MIS reports are generally used by the middle management

of the organization and sometime by the operational supervisors also.

To use the computer efficiently and development of computerized management system the

concept of MIS was introduced. The MIS applications and its uses are vital for two main

reasons:

y MIS works like a systems framework or backbone for organizing computer

applications for business. The applications are integrated, interrelated and not

independent job processing computer based information systems.

y MIS focuses on the electronics information processing of the management department

in an organization. The target of MIS is to process data that are generated by the

business operations.


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MIS can be viewed as an integrated man machine systems. MIS supplies information to

support the management for planning and control functions of the organization. MIS has the

following function:

y MIS collects and stores and then evaluates information scientifically and by routine.y Supports the managerial business planning and organization control decisions.y MIS architecture is build with files, hardware, and software and operations research

models.

F igure 3 0 MIS 1

rchitecture [3]

MIS lets the managers to compare the analysis and results that helps them to identify

problems and opportunities for establishment of the company goals. MIS is actually an

integrated collection of information system functions, each supporting particular areas.

The advantages of implementing MIS in an organization are:

y Facilitates Planning: The increased size and complexity of organizations makes it difficultfor managers to monitor the work site personally. MIS provides relevant information for

sound decision making and that improves the quality of plans.

y Encourages Decentralization: When there is a system for monitoring operations at lower

levels decentralization of authority can occur. For measuring performance and making

necessary changes in the organizational plans and procedures MIS plays a vital role.


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y Minimizes Information Overload: When managers are flooded with detailed facts MIS

avoids the confusion by summarizing the larger amount of data.

y Makes Control Easier: MIS provides a serving link between managerial planning and

control which eases the task of controlling the organizational activities.

y Brings Co-ordination: MIS connects all decision centres in the organization and supportintegration of specialized activities by keeping each department aware of the problem and

requirements of other departments.

y MIS assembles, process, stores, retrieves, evaluates and disseminates the information.

There are some disadvantages of MIS as well:

y Allocation of budgets for MIS upgrades, modifications and other revisions can be quite

critical for some organizations.

y Key functionalities might get affected and benefits might not be realized consistently if

budgets are not allocated uniformly or as per immediate requirements.

y Integration issues with legacy systems can affect the quality of output and vital business

intelligence reports.

3 . D ecision-Support Systems: Decision-support systems (DSS) is a system that is specifically designed and implemented in

business to help the management make decisions in such critical situations where there isuncertainty or confusion about the probable outcomes. DSS uses tools and techniques to help

gather related data and explore the options and the alternative options. DSS usually creates

what-if" models using complex spreadsheet and databases.

F igure 4 2 Decision Support System [4]


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There are three fundamental components of a DSS Architecture:

User Interface Database (External or Internal) Model (Decision Context and User Criteria)

DSS components may be classified as:y Inputs: Factors, numbers, and characteristics to analyzey User Knowledge and Expertise: Inputs requiring manual analysis by the user y Outputs: Transformed data from which DSS "decisions" are generatedy Decisions: Results generated by the DSS based on user criteria

DSS uses four analysing techniques. (James A. O Brien 1999)

1. What-If Analysis.

2. Goal-Seeking Analysis.

3. Optimization Analysis.

4. Sensitivity Analysis.

Advantages of DSS: [9]

y Productivity is increased.y Increase the flexibility in making decisions.y Facilitates the understanding of the problem domain.y Complexity of the problem is reduced.y Considerable amount of cost is reduced in making and implementing the decisions.

Disadvantages of DSS: [9]

There is no definite or exact solution provided by the DSS. Decision making process is totally relying on the capabilities and expertise of decision

maker.

4 . K nowledge Management Systems: Knowledge Management Systems (KMS) in intend to improve the performance of

organization by creating and sharing information. These are generally used in a companywhere employees create new idea, knowledge and expertise that can then be shared by any

other employee in the organisation to create further business opportunities.

KMS is built around systems that allow efficient categorisation and distribution of

knowledge. The knowledge might be contained in word processing documents, spreadsheets,


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PowerPoint presentations, internet pages or whatever and to share that a KMS might use

group collaboration systems like intranet and intranet.

Knowledge Management System can change a company into an efficient and streamlined

organization by leveraging past successes and analysing failures to achieve greater levels of success. An efficient Knowledge Management System can provide:

y Decision Superiority - Ability to make informed decisions

y Risk Management - Continuity of Operations

y Competitive Advantage - Ability to react quicker than the competition

F igure 5 3 Knowledge Management System [6]

Some of the advantages claimed for KM systems are:

1. Sharing of valuable organizational information throughout organisational hierarchy.2. Can avoid re-inventing the wheel, reducing redundant work.3. May reduce training time for new employees4. Retention of Intellectual Property after the employee leaves if such knowledge can be

codified.


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5 . Transaction Processing Systems:

Transaction Processing Systems (TPS) are designed to process routine transactions efficiently

and accurately. Most of an organizations daily activities are recorded and processed by

its transaction processing system . A business might have several TPS. For example:

y Billing systems to send invoices to customersy Production and purchasing systems to calculate raw material requirementsy Stock control systems to process all movements into, within and out of the businessy Systems to calculate the weekly and monthly payroll and tax payments

F igure 6 4 5

Probable TPS 5

rchitecture [5]

TPS receives input data or information and converts into output information intended for

the employees or clients. A financial transaction is an economic event that affects firms

assets for example: sales of goods to customers, purchases of inventory from suppliers,

and salaries paid so employees are all financial transactions. Any other transaction in the

system is called nonfinancial transaction. For example: if the marketing department add

some demographic data to its customer database then that data would be processed by the

organizations TPS but it is not a functional transaction.


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F igure 7 6 7

Transaction Processing Scenario [4]

Above figure illustrates a transaction process scenario where the transaction is a customers

electronic payment of a bill. Here in the system, the output data consist not only of

documents sent to clients but also of information circulated internally in the form of reports

and also the information entered into the database for updating purpose.

The advantage of TPS is that it is really fast and it ensures atomic, consistent, isolated, and

durable transactions.

6 . Office Automation Systems: Office Automation Systems are used to improve the productivity of employees who needs to

process data and information. All the tools and methods that are applied to office activities to

process written, visual, and sound data in a computer-aided manner is part of office

automation system.

To simplify, improve, and automate the organisational activities of a company, (management

of administrative data, synchronisation of meetings etc.) the office automation system is

implemented.


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As the comp lexity of the work of an organ i ation is increas ing in modern wor ld, off ice

automa tion can no longer be limited to cap tur ing handwr itten no tes. In modern bus iness the

off ice au toma tion sys tem includes ac tivities like:

Exchange of informa tion,

Managemen t of adm inistrative documen ts, Hand ling of numer ica l data, and Meeting p lann ing and managemen t of work schedu les.

F iP Q R S 8: Offi T S A Q t U V W ti U X [7]

In a nu tshe ll, the off ice au toma tion is word process ing, e lectron ic ma il, desk top pub lishing,

telecommun ication and documen t image process ing.


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Tasnuva Rahman 1 4 ID: 0757DADA1109

Conclusion

The systems are interdependent or related to each other. For example TPS is a ma jor source

of data for other systems and MIS, DSS and KWS are dependent of TPS. ESS is primarily a

recipient of data from lower-level systems. Data may also be exchanged among systems

serving different functional areas.

F igure 9 Y Interrelationships among Systems. [8]

It is definitely advantageous to have some measure of integration among these systems so

that information can flow easily between different parts of the organization.

Knowledge Management is related to every system. It takes data from TPS and provides

support to MIS and DSS from where the ESS makes the most crucial decisions. We can think

knowledge management as a basement of the company management system.

Todays business uses sophisticated hardware, software and communications technologies

and that makes it difficult to differentiate the system as any individual system. In a nutshell

Knowledge Management is the key of Information Society that unlocks the door of successand opportunities.


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R eferences[1] Business Dictionary, (2009). Information Society [Online] Available:

http://www.businessdictionary.com/definition/information-society.html [Accessed: 18 June 2010]

[2] Knowledge-Management-Online, (2010). Definition [Online] Available: http://www.knowledge-

management-online.com/Definition-of-Knowledge-Management.html [Accessed: 18 June 2010]

[3] Dedhia Ashwin, (2010), Characteristics of MIS. [Online] Available: http://blog.maia-

intelligence.com/2008/04/22/characteristics-of-management-information-system-mis/?mobi

[Accessed: 18 June 2010]

[4] Web-Books (2005) Types of Information System [Online] Available: http://www.web-

books.com/e Library/NC/B0/B66/125MB66.html [Accessed: 18 June 2010]

[5] Subbu.org (2008) N uts and Bolts of Transaction Processing [Online] Available:

http://www.subbu.org/articles/nuts-and-bolts-of-transaction-processing [Accessed: 18 June 2010]

[6] ARES Corporation, (2004) Knowledge Management Solutions [Online] Available:

http://www.arescorporation.com/products.aspx?style=2&%20pict_id=189&menu_id=103&id=10

4 [Accessed: 18 June 2010]

[7] Tech Partners, (2008) O ffice`

utomation [Online] Available: http://www.it-tp.com/dms.html

[Accessed: 18 June 2010]

[8] Heriot Watt University (2005) Key Systema

pplication in O rganization [Lecture Note] Available:

http://www.macs.hw.ac.uk/modules/F24SR1/linksis/lec5.htm [Accessed: 18 June 2010]

[9] About-Knowledge.com (2007) A nalysis Techniques and DSS and Main A dvantages and

Disadvantages of DSS [Online] Available: http://www.about-knowledge.com/analysis-

techniques-and-dss-and-main-advantages-and-disadvantages-of-dss/ [Accessed: 18 June 2010]

BibliographyI. Morey, Daryl; Maybury, Mark; Thuraisingham, Bhavani (2002). Knowledge Management b Classic

and Contemporary Works . Cambridge: MIT Press.

II. OBrien, J (1999). Management Information Systems Managing Information Technology in the

Internetworked Enterprise . Boston: Irwin McGraw-Hill. ISBN 0071123733

III. Thierauf, Robert J. (1991) Executive Information System c A Guide for Senior Management and

MIS Professionals . Quorum Books.IV. Holsapple, C.W., and A. B. Whinston. (1996). Decision Support Systems d A Knowledge-Based

A pproach . St. Paul: West Publishing. ISBN 0-324-03578-0

Documents

Information Society and KM