Information Systems

Laboratory
 Books
• Management Information Systems: Managing the
Digital Firm, Laudon and Laudon, Pearson
• Management Information Systems, James O'Brien,
TMH

Mamata Jenamani, Department of IE&M

 Data and Information
• By information we mean data that have been
shaped into a form that is meaningful and
useful to human beings. Data, in contrast, are
streams of raw facts representing events
occurring in organizations or the physical
environment before they have been organized
and arranged into a form that people can
understand and use.
 http://www.contentquo.com/blog/3-steps-to-data-driven-quality-approach/
http://www.systems-thinking.org/dikw/dikw.htm

http://www.allthingy.com/data-information-knowledge-wisdom/
 What is a system
• A system is a set of interacting or interdependent component parts
forming a complex/intricate whole. Every system is delineated by its
spatial and temporal boundaries, surrounded and influenced by its
environment, described by its structure and purpose and expressed in
its functioning.
• The term system may also refer to a set of rules that governs
structure or behavior. Alternatively, and usually in the context of
complex social systems, the term is used to describe the set of rules
that govern structure or behavior.
 What is an Information System
• An information system can be defined technically as
a set of interrelated components that collect (or
retrieve), process, store, and distribute information
to support decision making and control in an
organization.
• In addition to supporting decision making,
coordination, and control, information systems may
also help managers and workers analyze problems,
visualize complex subjects, and create new products.
 Three activities of any information system

• Input: Captures raw data from organization or

external environment
• Processing: Converts raw data into meaningful
form
• Output: Transfers processed information to
people or activities that use it
– feedback, is output returned to appropriate members of
the organization to help them evaluate or correct the
input stage
An information system can be any organized
combination of people, hardware, software,
communication networks, and data resources that
collect, transform, disseminate information in an
organization.

People

Software Hardware
Information System
Resource

Data Networks
 Information System Vis-à-vis Business
Organization
• A Business Organization is an example of an
organizational system where economic resources (inputs)
are transformed by various business processes
(processing) into goods and services (output).

• Information systems provide feedback on the operations

of the system to management for the direction and
maintenance of the system (control) as it exchanges
inputs and outputs with its environment
 Value Chain
Firm Infrastructure
Human Resource Development
Support
Activities Technology Development

Procurement

Inbound Operations Outbound Marketing Service

Logistics Logistics and Sales

Primary Business Processes

Mamata Jenamani, Department of IE&M

 Value Delivery Network (Supply Chain)

Order

DuPont Milliken Levi’s Sears Customer

(Fibers) (Fibric) (Apparel) (Retail)

Delivery

Mamata Jenamani, Department of IE&M

 Community Competitors
Government Agencies
Control
Management

Customers
Feedback

Information Systems

Economic Business Goods and

Resources Processes Services:

People, Market Products

Stock holders
Money. Develop Services
Suppliers

Material, Produce Payments

Land, Deliver Contributions
Facilities, Support Information
Energy, Others Other effects
Information

Financial Institutions Labor Unions

 Business Processes
and Information Systems

• Business processes:
• Workflows of material, information, knowledge
• Sets of activities, steps
• May be tied to functional area or be cross-
functional
• Businesses: Can be seen as collection of business
processes
 Business Processes
and Information Systems
• Examples of functional business processes
– Manufacturing and production
• Assembling the product
– Sales and marketing
• Identifying customers
– Finance and accounting
• Creating financial statements
– Human resources
• Hiring employees
Business Process Example

The Order Fulfillment Process

 Levels in a firm
• Senior management makes long-range strategic decisions
about products and services as well as ensures financial
performance of the firm.
• Middle management carries out the programs and plans of
senior management
• operational management is responsible for monitoring the
daily activities
• Knowledge workers, such as engineers, scientists, or
architects, design products or services and create new
knowledge for the firm,
• data workers, such as secretaries or clerks, assist with
scheduling and communications at all levels of the firm.
• Production or service workers actually produce the
product and deliver the service
 Types of Business Information
Systems
• Transaction processing systems
– Perform and record daily routine transactions necessary to
conduct business
• Examples: sales order entry, payroll, shipping
– Allow managers to monitor status of operations and
relations with external environment
– Serve operational levels
– Serve predefined, structured goals and decision making
 A Payroll TPS

A TPS for payroll processing captures employee payment transaction data (such as a time card). System
outputs include online and hard-copy reports for management and employee paychecks.
 Types of Business Information
Systems
• Management information systems
– Serve middle management
– Provide reports on firm’s current performance,
based on data from TPS
– Provide answers to routine questions with
predefined procedure for answering them
– Typically have little analytic capability
 How Management Information Systems Obtain Their Data from the
Organization’s TPS

In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS
reporting system at the end of the time period. Managers gain access to the organizational data through
the MIS, which provides them with the appropriate reports.
Sample MIS Report
 Types of Business Information
Systems
• Decision support systems
– Serve middle management
– Support nonroutine decision making
• Example: What is impact on production schedule if December
sales doubled?
– Often use external information as well from TPS and MIS
– Model driven DSS
– Data driven DSS
 Voyage-Estimating Decision Support System

Given a customer delivery schedule and an offered freight rate, which vessel should be
assigned at what rate to maximize profits? What is the optimal speed at which a particular
vessel can optimize its profit and still meet its delivery schedule? What is the optimal loading
pattern for a ship bound for the U.S. West Coast from Malaysia?
 Types of Business Information
Systems
• Executive support systems
– Support senior management
– Address nonroutine decisions requiring judgment, evaluation, and
insight
– There is no agreed upon procedure on arriving at the solution
– Incorporate data about external events (e.g. new tax laws or
competitors) as well as summarized information from internal MIS and
DSS
– Example: ESS that provides minute-to-minute view of firm’s financial
performance as measured by working capital, accounts receivable,
accounts payable, cash flow, and inventory
 Model of an Executive
Support System

ESS typically answers the questions like - In what business should we be? What are the
competitors doing? What new acquisitions would protect us from cyclical business swings? Which
units should we sell to raise cash for acquisitions?
• Systems from a constituency perspective
– Transaction processing systems: supporting operational
level employees
– Management information systems and decision-
support systems: supporting managers
– Executive support systems: supporting executives
• Relationship of systems to one another
– TPS: Major source of data for other systems
– ESS: Recipient of data from lower-level systems
– Data may be exchanged between systems
– In reality, most businesses’ systems only loosely
integrated
 Information System in the Enterprise
• Enterprise wide information system
– Connecting all the business processes within the
organization
– Enterprise resource planning system
– Single software
• Across enterprise information system
– Connecting to stakeholders
– Connecting to business processes of other
organizations
 Enterprise Systems

Enterprise systems integrate the key business processes of an entire firm into a single
software system that enables information to flow seamlessly throughout the organization.
These systems focus primarily on internal processes but may include transactions with
customers and vendors.
 Information systems for connecting and
managing external stakeholders Investors/
Government

Organizational
Website

Supply chain management

E-procurement

Customer Relations
Management

E-marketing E-selling and distribution