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Chapter- 2Information System Concepts
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What is Information?
• Information means processed Data• Data is facts or values of
results, and
information is the relations between data and other
relations
• Information relates to description, definition, or perspective
(what, who, when, where).
• Information is essential :• It adds knowledge, • helps in
decision making, • analyzing the future and • taking action in
time
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Information
• Processed data is called Information• Most computers today are
used for Info. Gathering• Various tools available to summarize and
present the data• Huge databases are maintained• Eg: online
marketing companies etc
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Characteristics of Information
• Availability - Timeliness• Purpose – Ultimate reason• Mode and
format – Written / Verbal • Decay – Cricket Score card• Rate –
Online movies • Frequency – Weekly vs QTD vs YTD• Completeness –
Raymond!
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Characteristics of Information
• Reliability – confidence• Validity – Temperature • Quality –
haste is waste• Transparency – Realistic• Economical – Cost of
information < Value• Adequacy – To take desired actions
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What is a System?
• An orderly arrangement of a set • of interrelated and
interdependent elements • that operate collectively to accomplish •
some common purpose or goal
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Eg: Human Digestive SystemStarts with the right hand and ends
with……
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Classification of Systems
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Classification of Systems –Element based
Abstract / Conceptual• Arrangement of
interdependent ideas or constructs (theories)
• Eg: Theology – Idea of God• Eg: Satisfaction you get after
passing ISCA etc
Physical• A set of tangible elements
operating together
• Eg: Transport System• Eg: Computer System
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Classification of Systems –Interactive Behaviour
Open System• Interacts freely with its
environment by taking input and returning output
• Independent & self contained• Gets feedback• Eg: Business
/ IS System
Closed System• Does not interact with the
environment nor changes with the change in envt.
• Insulated
• Does not get feedback• Eg: Wall Clock
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Any Example ?
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Entropy
• Problem in the system• System will not be able to render the
required service• It is the quantitative measure of disorder in a
system• May be due to life span of system or decay due non
utilization or
unexpected disturbances
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Negative Entropy
• Negative Entropy is required to put the system back to use!•
Open system requires more entropy than closed systems – Why?
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Ex -1: Cycle tyre got puncturedSoln: Vulcanizing the Tyre
Ex -2: Software not working properlySoln: ??
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Classification of Systems –Degree of Human Intervention
Manual• Physically done by humans• Not much of System
intervention
Automated• Computers / Technology
used to complete the task• 100 % Automation not
possible practically
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Eg: Consider preparing Accounts prior to introducing Tally /
SAP
Classification of Systems –Working / Output
Deterministic System• Operates in a predictable
manner• No flexibility• Anticipation without any
errorsEg: computer Program
Probabilistic System• Cannot be exactly
predicted• Probable behaviour• Degree of error attached
with the predictionEg: Following Traffic Rules
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Other Concepts
• System Boundary• The limits within which the System operates•
Features that define and delineate a system
form the boundary• Eg: Automobile – body of the vehicle, tyres
etc
• System Environment• External world outside the system
boundary
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Examples ???
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Other Concepts
• Subsystem• Part of a larger system• Each system is composed of
subsystems, which in turn are made up of other subsystems, • The
interconnections and interactions between the subsystems are termed
Interfaces• Interfaces occur at the boundary and take the form of
inputs and outputs
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System
Sub- System 1 Sub- System 2Interface
Other Concepts
• Supra-System • entity formed by a system and other equivalent
systems with which it interacts• Sub-system is a part of a
supra-system
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LBM Ltd
Finance Marketing HR R&D
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Characteristics of Subsystems
• Decomposition• Decentralized or divided into smaller
Subsystems• Will happen till smallest division is of manageable
size• Done by specifying the boundaries for each• Eg:
Classification of Departments based on function
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Example Payroll
Personnel pay-roll records
Payroll data entry and validation
Salaried payroll processing
Payroll reports for management
Payroll reports for government (TDS filing) 20
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Characteristics of Subsystems
• Simplification• Mainly to reduce the number of
interconnections by grouping common attributes
• Decoupling• Two different subsystems are connected very
tightly• Very closely linked / coordination• JIT Production – Raw
Material – Production directly
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System Stress
• Stress indicates the pressure given on system• Due to excess
usage • If unchecked might collapse / decay• Utilizing more than
capacity• Eg: Servers during results time / IRCTC tatkal ticket
booking time
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Components of IS
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CBIS – Computer based IS
• Computer plays a major role with following as major
components:• Hardware – physical components• Software – programs •
Data – raw facts and figures• Procedure – step by step mechanism•
People – users, programmers, analysts etc
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Characteristics of CBIS
1. Work for predetermined objectives 2. Many interrelated and
interdependent subsystems - cannot function in isolation3. If one
subsystem / component fails, in most cases the whole system does
not work4. subsystem works with another subsystem is called
interaction5. Work done by individual subsystems is integrated to
achieve the central goal of the system
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Application of CBIS
• Finance & Accounts:• Working Capital Mgmt• Capital
Budgeting• Tax Planning• Payroll
• Production:• Inventory• Product Planning – CAD
• Production:• Inventory / R&D
• Marketing:• Sales Management• Order Processing
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Information requirements depend on:
1. Operational function• Every Function / Department has its
own
requirement
2. Type of decision making• Programmed / Structured Decisions -
made on
problems and situations by reference to a predetermined set of
precedents, procedures, techniques and rules
• Repetitive in nature• Eg: Ordering Stock when Inventory is
complete
• Non-programmed Decisions – made on new and non- repetitive
• Eg: Sudden change in Govt Policy / Merger etc
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Types of Information Systems
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User Types
# Type Group Served
1 Executive IS SeniorManager
2 MIS / DSS Middle Manager
3 Knowledge Mgmt System / Office Automation
Knowledge and Data Workers
4 TPS Operational Managers
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Name Meaning Types
Management Support
Systems (MSS)
Focus on the managerial uses of information& provide
information to managers for planning and decision making
(more of non- programmed)
Can handle more data
• Decision Support System• Executive Information System• Expert
System
Name Meaning Types
Operations Support
Systems (OSS)
To improve the operational efficiency of the enterprise
• Transaction Processing Systems• Management Information
Systems• Enterprise Resource Planning Systems
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Name Meaning Types
Office Automation
Systems (OAS)
Newest and most rapidly expandingCBIS
Different office activities can be broadly grouped
Eliminates distance, time, paper work etc.
• Text Processing• E-doc Mgmt System• E-mail • Telecon –/ V-Con
etc
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Transaction Processing System (TPS)
• manipulates data from business transactions• lowest level of
management• sales, purchase, production, delivery, payments or
receipts are recorded• Transact record data into useable form
• Eg: Tally
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Capture Data & Organize files Process
Generate Reports
Using query to retrieve data
when required
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Components of TPS
I - InputP - ProcessS - StorageO - Output
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Features
• Large volume of data• Automation of basic operations• Benefits
are easily measurable
• Improves Efficiency• Reduces work load• Faster response
• Source of input for other systems• Provide source of info for
Strategic & Tactical users
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Process Control System (PCS)
• computer is used to control ongoing physical processes•
designed to automatically make decisions, which adjust the
physical
production process• Used to maintain an output within a required
range• Example: assembly lines in automated factories
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Enterprise Collaboration Systems (ECS)
• supports collaboration to communicate ideas, share resources
and co-ordinate cooperative work efforts
• objective is to use IT to enhance the productivity and
creativity of teams in enterprises
• Example: Assume facebook was used productively• Now stop the
assumption!
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Office Automation System (OAS)
• Document Capture• Document Creation • Receipts and
Distribution • Filling, Search, Retrieval and Follow up•
Calculations • Recording Utilization of Resources
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Benefits of OAS
• improve communication within an organization• reduce the cycle
time between preparation of messages and receipt• costs of office
communication comes down• ensure accuracy of information
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Computer Based Office Automation Systems
• Text Processing System• process of development of documents
such as letters, reports, memos etc• word processing systems or
desktop publishing systems• Supported by printers
• Electronic Document Management System (DMS)• DMS capture the
information contained in docs• remote access of documents
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Computer Based Office Automation Systems
• Electronic Message Communication Systems• telephone, mail and
facsimile• Electronic Mail
• Electronic Transmission• Online Development and Editing•
Broadcasting and Rerouting• Integration with other Information
Systems• Portability• Economical
• Facsimile• communication of images of documents over telephone
lines
• Voice Mail – Spoken Message
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Knowledge Management System (KMS)
• Information and Knowledge are the key elements of this
economy. • A firm’s competitive gain depends on its knowledge
processing • i.e. what it knows; how it uses & how fast it can
know something new. • much more influential than the harmony of
land, labour & capital • Its is the process of capturing,
developing, sharing, and effectively
using organizational knowledge
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Types of Knowlege
• Explicit knowledge: • Explicit knowledge is that which can be
formalized easily and as a
consequence is easily available across the organization• Online
tutorials, Policy and procedural manuals
• Tacit knowledge:• Resides in a few often-in just one person
and hasn’t been captured by the
organization or made available to others. • unarticulated and
represented as intuition, perspective, beliefs, and values
that individuals form based on their experiences. • It is
personal, experimental and context-specific. • It is difficult to
document and communicate the tacit knowledge.• For example –
hand-on skills, special know-how, employee experiences
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Management Information Systems (MIS)
• Tool to support operational control, management control and
decision making functions in an organization
• Assist managers in decision making and problem solving• Use
results produced by the TPS• Mainly used by middle & top
level
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Characteristics of MIS
• Management Oriented –• Understanding mgmt requirements
• Management Directed –• Mgmt should Devote time
• Integrated –• All sub-systems should be integrated•
Comprehensive & Holistic Approach
• Common Data Flows• Minimum data processing procedures• Avoid
Human intervention
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Characteristics of MIS
• Heavy Planning –• Takes a good amount of time• Constantly be
updated
• Sub- system –• Split into smaller sub-systems for ease
• Common Database• Avoid duplication & multiple storage
• Computerised• Faster, accurate processing
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Pre-requisites – Pillars of MIS
• Database• User – oriented• avoiding duplication • available to
authorized persons • controlled by a DBA
• Qualified system and management staff• Experts &
Professionals – Training
• Support of Top Management• Everything flows from their
support
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Pre-requisites – Pillars of MIS
• Control & Maintenance• No short cut methods• Document
changes
• Evaluation • Examine flexibility• Ascertain the view of users•
Guiding – timely action
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Limitations of MIS
• Inputs determine the quality of output• Not a substitute for
effective mgmt• not have requisite flexibility• cannot provide
tailor-made information• less useful for making non-programmed
decisions• Frequent changes in top mgmt – lesser effectiveness
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Misconceptions about MIS
• Any computer based information system is a MIS.• Any reporting
system is MIS.• MIS is a management technique.• MIS is a bunch of
technologies.• MIS is an implementation of organizational systems
and procedures.
It is a file structure.• More data in generated reports refers
more information to managers.• Accuracy plays vital role in
reporting
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Constraints in MIS (Internal Weakness)
• Non-availability of experts, who can diagnose the objectives –
what on earth does the Mgmt require?
• What and which all Sub-system to be installed?• Diverse Bizz
Objectives• No cooperation from staff
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Decision Support Systems (DSS)
• supports business and organizational decision-making
activities• Systematic structure helps the mgmt in developing
semi-structures and unstructured solutions• Supports human decision
making instead of replacing• Can be built with a variety of tools –
internal & external data
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Characteristics
• Support semi-structured or unstructured decision-making• Use
of Stimulate Envt• What if analysis• Testing of data
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Characteristics
• Flexibility• Due to unstructured queries – high flexibility –
unlike MIS • Adhoc Reports• focuses on decision rather than
data
• Ease of Learning and Use• User friendly• Support Online Real
Time• Commands using simple English words• mainly for decision
making rather than communicating decisions and training
purposes
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Components of DSS
• Users• Need to understand the problem • Manager - unstructured
or semi-structured problem to solve• Staff Specialist (Analysts) -
people, who are more details oriented and willing to use
complex
system
• Databases • Collection of data from internal / external• Ex:
Internal – Sales Report / Margin or CVP Ananlysis• Ex: External –
Interest Rates / Economic Indicators• Stored in a structural form•
Eg: Marking, sales etc
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Application of DSS
• Costing & Pricing• Margin maintenance• Make or buy
• Capital Budgeting• Lease v/s loan• NPV / PI
• Budgeting & Variance analysis• Graphical view
• General DSS
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Diff between DSS & MIS
DSS• Providing integrated
tools, data, models• Highly flexible• External oriented• More
analytical
capability• Emphasis on tools to be
used in decision process• Interactive
MIS• Providing structured
information• Relatively inflexible• Internal oriented• Lesser
analytical
capability• Emphasis on
information requirement analysis
• Static
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Executive Information Systems (EIS)
• a DSS that is designed to meet the special needs of top-level
managers• extract summary data• provides rapid access to timely
information• extensive online analysis tool like trend analysis,
market condition• capable of accessing both internal and external
data
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Decision Making Envt
• Lack of structure• Unstructured
• High degree of uncertainty• Future orientation
• What next analysis?
• Informal Source• Use of grapevine
• Low level of detail• Decision taken looking at the larger
picture
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Contents of EIS
• whatever is interesting to executives• must be easy to
understand and collect• must be based on a balanced view of the
organization's objective• must encourage management and staff to
share ownership of the
organization's objectives• Meet changing needs
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Office Automation Systems (OAS)
• Help computerize activities to improve efficiency• Storing
& Retrieval – For future use• Document Capture – preserving
Documents – mails, charts• Document Creation - preparation of
documents, dictation, editing of texts • Calculations - calculator
functions like interest calculations, percentage calculations etc•
Text Processing - Mail merge / letter• E-Communication – email /
V-Con / Fax
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Expert Systems
• is highly developed DSS that utilizes knowledge generally
possessed by an expert to share a problem
• Imitate reasoning processes of human and experts• Eg:
providing advice regarding portfolio management
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Business Application
Areas Application
Accounting & finance Tax advice, forecasting
Marketing Customer inquires, discount policies
Manufacturing Scheduling tasks, CPMPersonnel Qualifications
required
General Business Strategies, M&A etc
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Benefits
• Knowledge can be preserved and not lost• Expert labor is
expensive and scarce• Assists inexperienced personnel• Not subject
to emotions, fatigue• Used as a strategic tool in marketing, cost
cutting etc
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Others• Knowledge Management Systems
• Support the conception, association and propagation of
business knowledge within the enterprise.
• Functional Business Information Systems • supports the
operational and managerial
applications of the basic enterprises of an industry.
• Strategic Information Systems • provide an industry strategic
products, services and
capabilities for competitive advantage.
• Cross Functional Information Systems• combines most of
information systems and are
designed to produce information and support decision making for
different levels of management
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Information requirements depend on:
3. Level of management activity
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Strategic / Top Level
Tactical / Middle Level
Operational / Supervisory Level
Turnaround Eg: going for IPO / Merger / Introducing New
Products
Less surrounded by uncertainty
Routine tasks
High flexibility
Moderate flexibility
Very Less
Middle level managers - objective is to win the war, strategic
level is to decide whether to wage a war or not!
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Organizational levels using IS
• Operational Level Systems• operational managers by keeping
track of the
elementary activities• Knowledge Level Systems
• to integrate new knowledge into the business –growing field of
KPOs etc
• Management Level Systems• middle managers in monitoring,
decision-making
and administrative activities – What if analysis• Strategic
Level Systems
• senior level management to tackle and address strategic issues
and long term trends – inside & outside the orgn
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Enterprise Resource Planning (ERP)• fully integrated business
management system • integrates the core processes to provide an
organization a structured
environment • decisions concerning demand, supply, operational,
personnel, finance,
logistics etc. are taken• fully supported by accurate and
reliable real-time information
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What it can Implement?
• Business System• Production• Maintenance• Quality Checks•
Marketing• Finance• HR
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Characteristics of ERP
• Flexible – Diff countries / languages / policies• Modular
& Open – Any module can be attached and detached• Integrated –
Real time reports• Best Business practices – adopts through
benchmarking
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Enterprise Resource Planning (ERP)
• process management software that allows an organization to use
a system of integrated applications
• ERP software integrates all facets of an operation, including
product planning, development, manufacturing, sales and
marketing
• Components• Software – Modules – Finance, HR, Marketing•
Process flow– Interface – integrates – information• Hardware –
Physical Requirement• Customer / Users
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Meaning
• A fully integrated business management system covering
functional areas of an enterprise like Logistics, Production,
Finance, Accounting and Human Resources
• ONE database, ONE application, and ONE user interface for the
entire enterprise,
• Enhances a manufacturer ability to accurately schedule
production, fully utilize capacity, reduce inventory, and meet
promised shipping dates
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Evolution of ERP
• Material Resource
Planning (MRP)
MRP
• Manufacturing Resource Planning
MRP II • Money Resource Planning
MRP III
• Enterprise Resource Planning
ERP
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Characteristics
• Flexibility• respond to the changing needs of an
enterprise
Modular & Open• Any module can be attached or detached
whenever required
Comprehensive: • Able to support variety of organizational
functions and wide range of business organizations.
Beyond The Company : • Not be confined to the organizational
boundaries, connect beyond
Best Business Practices • have a collection of the best business
processes applicable worldwide.
Core Banking System (CBS)
• Anywhere Banking• Examples of core banking products include
Infosys’ Finacle, Nucleus• FinnOne and Oracle's Flexcube
application
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Features
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Impact of IT on IS
• E-business• 24 hour sale, lower cost of doing business• B2B,
B2C, C2C can be done
• Financial Service Sector• Automatic & quick transfers –
large payments
• Wholesaling and Retailing• Logistics Support – Integration of
trade
• Public sectors• Better mainlining of records, quick
analysis
• Others• Reservations to Online classes
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IT tools crucial for business growth
• Business Website• Faster reach and quick updates• Develop
using HTML, XML, ASP.NET etc.
• Internet and Intranet• Connect anywhere to anywhere• Within or
outside the organisation
• Software and Packages• DBMS, Knowledge Discovery databases,
Business
Intelligence tools etc used• Hardware
• Webcam, microphone, Smartphone etc
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Data Mining
• Applied in database analysis and decision support i.e. market
analysis and management by finding patterns
• Helpful in • target marketing, • Customer relation management,
• market basket analysis, • cross selling, • market segmentation, •
risk analysis, • customer retention, • improved underwriting, •
quality control, competitive analysis and• fraud detection
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Applications of DM
• text mining,• web analysis,• customer profiling - it can list
out what types of
customers buy what products by using clustering or
classification,
• Identifying customer requirements - attract new customers
• provide various multidimensional summary reports and
statistical summary information,
• finance planning and asset evaluation83
That’s all Folks!Until we meet again…
Thank You!
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