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Information SystemsBasic
Concepts
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The Digital Economy
Refers to an economy
that is based on digital technologies,
including digital communication networks,computers, and software.
Also sometimes called the Internet
economy, the New economy, or the Web
economy.
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Major Business Pressures
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Organizational Framework
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Information Systems
Is an organized set of components for collecting,
transmitting and processing data in order to deliver
information for action
In business firms, this information is necessary
for both operations and management
Todays organizations cannot be operated or
managed effectively without information systems
that are built using a range of information
technologies
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Contd.
Information Systems (IS)
Collect, process, store, analyze, and disseminateinformation for a specific purpose.
Information systems are comprised of
Inputs (data, instructions)
Outputs (reports, calculations)
Feedback mechanisms that controls the operation
An environment that it works within
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SOCIOLOGY
POLITICAL
SCIENCEPSYCHOLOGY
COMPUTER
SCIENCEOPERATIONS
RESEARCH
MANAGEMENT
SCIENCE
TECHNICAL APPROACHES
Approaches to Information Systems
MIS
BEHAVIORAL APPROACHES
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Data and Information
Data
Streams of raw facts representing events suchas business transactions
Information
Clusters of facts that are meaningful and useful
to human beings in the processes such asmaking decisions
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INPUT OUTPUTPROCESS
FEEDBACK
Activities in an Information System
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Capabilities of Information Systems
Fast and accurate data processing, with large capacity
storage and rapid communication between sites
Instantaneous access to information
Means of coordination
Boundary spanning
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Changing Scenario of IS
Electronic commerce
Electronic business
Digital market
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Electronic Commerce
Internet links buyers, sellers
Lower transaction costs
Goods and services advertised, bought,exchanged worldwide
Business-to-business transactions increasing
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Electronic Business
Electronic business
Executing all the firms business processes with
internet technology
Intranet
Business builds private, secure network based on
internet technology
Extranet:
Extension of intranet to authorized external users
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Attributes of Quality Information
Timeliness
Completeness
Conciseness
Relevance
Accuracy
Precision Appropriateness of form
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S t C t
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System Concepts
It is an integrated set of components or entities that
interact to achieve a particular function or goal. Systems have characteristics such as boundaries,
outputs and inputs, methods of converting inputs intooutputs, and system interfaces
They are composed of interrelated and interdependentsubsystems
Every system has a boundary that defines its scope of
activities Systems may consist of numerous subsystems with
elements, interactions and objectives
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Systems and their Environments
The systems environment consists of people,
organizations and other systems that supply data to orreceive data from the system
Open Systems
These are the systems that operate in an externalenvironment and exchange information and material
with that environment
The external environment consists of the activities
external to the system boundary with which the system
can interact
An open system needs to receive feedback to change and to
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Contd.
Closed System It is relatively self-contained and does not exchange
information with its environment
Closed systems do not get the feedback they need fromthe external environment and so tends to deteriorate
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Contd.
System feedback
A system needs feedback that is an indicator of currentperformance rates when compared to a set of standards,
to do its job
With effective feedback, continuing adjustments in the
activities of a system can be made to assure that the
system achieves its goals
Measuring performance against a standard is an
effective control mechanism
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Contd.
Systems Entropy
This corresponds roughly to chaos or disorder- a state
that occurs without maintenance
The process of maintaining a system is a process of
decreasing entropy or increasing orderliness
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Ch i i f I f i S
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Characteristics of Information Systems
Several different
information systems canexist in one organization.
A particular information
system may be composedof several separate
information systems.
Information systems areconnected by means of
electronic networks.
Inter organizational
information systemsinvolve information flow in
two or more organizations.
An enterprise wide system
or inter organizational
information system is
composed of large & small
computers & hardwareconnected by different
types of networks.
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Computer-based Information System
A computer-based information system (CBIS)
is an information system that uses computertechnology to perform some or all of its
intended tasks.
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Components of Information Systems
Hardware is a set ofdevices such as processor,monitor, keyboard, andprinter.
Software is a set ofprograms that enable thehardware to process data.
Database is a collection of
related files, tables,relations, and so on, thatstores data.
Network is a connectingsystem that permits thesharing of resourcesbetween computers.
Procedures are the set ofinstructions about how tocombine the abovecomponents.
People are those individualswho work with the systemor use its output.
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Classifications of Information Systems
Information Systems can be classified according to:
Organizational Structure
Functional Area
Support Provided
System Architecture
Activity Supported
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Classification by Organizational Structure
Departmental information systems
Frequently, an organization uses several application programsin one functional area or department.
Enterprise information systems (EIS).
While a departmental IS is usually related to a functional
area, the collection of all departmental applications when
combined with other functions applications comprises the
enterprise wide information system.
Inter organizational systems.
Some information systems connect several organizations.
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Classification by Functional Area
The Accounting Information System
The Finance Information System
The Manufacturing (operations/production)
Information System
The Marketing Information System
The Human Resources Management InformationSystem
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Evolution of Support Systems
Early 1950s
1960s
Late 1960s
Early 1970s
Transaction processing system
(TPS)
Management information systems(MISs)
Office automation system (OAS)
Decision support system (DSS)
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Evolution of Support Systems (cont.)
Early 1980s Executive information systemsEnterprise information systems (EISs)
Group support systems (GSSs)
Mid- 1980s Expert systems (ES)
Knowledge management systems (KMS)
1990s Artificial Neural Networks (ANNs)
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Interrelated Support Systems
Transaction
Processes
MIS
EIS
DSS
External
Information
Data
Warehouse
Non Computer
Support
Internet, other
Computer Support
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Classification by System Architecture
A mainframe-based system.
A standalone personal computer (PC).
A distributed or a networked computing system
(several variations exist).
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Using Information Technology for
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Using Information Technology for
Competitive Advantage
Industry level effect: - It changes an industrys : Products and services
Production economics
Markets Firm level effect: - It affects key competitive forces:
Buyers
Substitute products
Suppliers
New entrants
Rivals Pro.Nivedita Roy, IBS-Gurgaon
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Contd.
Strategic level: - It supports a firms strategy:
Low-cost leadership
Product differentiation
Market specialization
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Framework for Information System
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Framework for Information System
Operational level:
These are the day-to-day activities of the firm that
involve acquiring and consuming resources
Tactical level:
Managers review operational activities to make
sure goals are met and resources are not wasted
Strategic level:
Strategic planners address problems that involve
long-range analysis and prediction.
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Characteristics of Operational Systems
Repetitiveness
Predictability
Emphasis on the past
Detailed nature
Internal origin
Structured form Great accuracy
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Characteristics of Tactical Systems
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Characteristics of Tactical Systems
Data are summarized, aggregated or analyzed
Variety of reports like summary, exception,
ad-hoc reports are generated
Periodic nature
Unexpected findings
Comparative nature
Summary form Both internal and external sources
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Characteristics of Strategic Planning Systems
Ad-hoc basis: produced regularly or periodically Unexpected information
Predictive nature
Summary form External data
Unstructured format
Subjectivity
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Major types of systems in organizations
Executive Support Systems (ESS)
Decision Support Systems (DSS)
Management Information Systems (MIS) Knowledge Work Systems (KWS)
Office systems
Transaction Processing Systems (TPS)
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Transaction Processing System
These are the basic business systems that serve the
operational level
It is a computerized system that performs and records
the daily routine transactions necessary for the conduct
of the business
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Knowledge Work Systems
Knowledge level
Inputs: design specifications
Processing: modeling
Outputs: designs, graphics Users: technical staff and professionals
Example: engineering work station
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Management Information System
Management level
Inputs: high-volume data
Processing: simple models
Outputs: summary reports Users: middle managers
Example: Annual Budgeting
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Decision Support System (DSS)
Management level
Inputs: low-volume data
Processing: interactive Outputs: decision analysis
Users: professionals, staff
Example: contract cost analysis
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Executive Support System (ESS)
Strategic level
Inputs: aggregate data
Processing: interactive
Outputs: projections Users: senior managers
Example: 5-year operating plan
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Sales and Marketing Systems
Major functions of systems:
Sales management, market research, promotion, pricing,
new products
Major application systems:
Sales order info system, market research system, pricingsystem
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Manufacturing and Production Systems
Major functions of systems:
Scheduling, purchasing, shipping, receiving,
engineering, operations
Major application systems:
Materials resource planning systems, purchaseorder control systems, engineering systems, qualitycontrol systems
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Financing and Accounting Systems
Major functions of systems:
Budgeting, general ledger, billing, cost accounting
Major application systems:
General ledger, accounts receivable, accounts payable,
budgeting, funds management systems
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H R S t
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Human Resource System
Major functions of systems: Personnel records, benefits, compensation, labor
relations, training
Major application systems:
Payroll, employee records, benefit systems, career
path systems, personnel training systems
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E t i A li ti
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Enterprise Applications
Enterprise systems
Supply Chain Management Systems
Customer Relationship Management Systems Knowledge Management Systems
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Supply Chain Management (SCM)
Close linkage and coordination of activities involvedin buying, making, and moving a product
Integrates supplier, manufacturer, distributor, and
customer logistics time Reduces time, redundant effort, and inventory costs
Network of organizations and business processes
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Contd. Helps in procurement of materials, transformation of
raw materials into intermediate and finished
products
Helps in distribution of the finished products tocustomers
Includes reverse logistics - returned items flow in
the reverse direction from the buyer back to theseller
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R l f IS i SCM
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Role of IS in SCM
Decide when, what to produce, store, move
Rapidly communicate orders
Communicate orders, track order status
Check inventory availability, monitor levels
Track shipments
Plan production based on actual demand
Rapidly communicate product design change
Provide product specifications
Share information about defect rates, returns
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Customer Relationship Management
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Customer Relationship Management
Manages all ways used by firms to deal with existing andpotential new customers
Business and technology discipline
Uses information system to coordinate entire businessprocesses of a firm
Provides end-to-end customer care
Provides a unified view of customer across the company
Consolidates customer data from multiple sources andprovides analytical tools for answering questions
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Knowledge Management System
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Knowledge Management System
Creating knowledge
Discovering and codifying knowledge
Sharing knowledge Distributing knowledge