Data processing in Industrial systems Course Notes 1- 3 weeks

DATA PROCESSING IN INDUSTRIAL SYSTEMS

Associate Prof.Dr. Ufuk Cebeci

INTRODUCTION to INFORMATION SYSTEMS in BUSINESS

Why Information Systems Are ImportantWhy study information systems and information technology? That’s the same as

asking why anyone should study accounting, finance, operations management, marketing, human resource management, or any other major business function. Information systems and technologies have become a vital component of successful businesses and organizations. They thus constitute an essential field of study in business administration and management. That’s why most business majors must take a course in information systems. Since you probably intend to be a manager, entrepreneur, or business professional, it is just as important to have a basic understanding of information systems as it is to understand any other functional area in business.

Information System Resources And TechnologiesAn information system is an organized combination of people, hardware, software,

communications networks, and data resources that collects, transforms, and disseminates information in an organization. People have relied on information systems to communicate with each other using a variety of physical devices (hardware), information processing instructions and procedures (software), communications channels (networks), and stored data (data resources) since the dawn of civilization.

Today’s end users rely on many types of information systems (IS). They might include simple manual (paper-and-pencil) hardware devices and informal (word-of-mouth) communications channels.

An End User PerspectiveAnyone who uses an information system or the information it produces is an end

user. This usually applies to most people in an organization, as distinguished from the smaller number of people who are information system specialists, such as systems analysts or professional computer programmers. A managerial end user is a manager, entrepreneur, or managerial-level professional who personally uses information systems. So most managers are managerial end users. This course is for potential managerial end users like you and other students of business administration, engineering and management.

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Definition. A stakeholder in the architecture of a system is an individual, team, organization, or classes thereof, having an interest in the realization of the system.

An Enterprise PerspectiveToday’s internetworked information systems play a vital role in the business

success of an enterprise. For example, the Internet and Internet-like internal networks, or intranets, and external interorganizational networks, called extranets, can provide the information infrastructure a business needs for efficient operations, effective management, and competitive advantage.

A Global Information SocietyWe are living in an emerging global information society, with a global economy that

is increasingly dependent on the creation, management, and distribution of information resources over interconnected global networks like the Internet. So information is a basic

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resource in today’s society. People in many nations no longer live in agricultural societies, composed primarily of farmers, or even industrial societies, where a majority of the workforce consists of factory workers. Instead, much of the workforce in many nations consists of workers in service occupations or knowledge workers, that is, people who spend most of their time communicating and collaborating in teams and workgroups and creating, using, and distributing information. Knowledge workers include executives, managers, and supervisors; professionals such as accountants, engineers, scientists, stockbrokers, and teachers; and staff personnel such as secretaries and clerical office personnel.

Success And Failure With ITIt is important that you realize that information technology and information

systems can be mismanaged and misapplied so that they create both technological and business failure.

Why Information Technology Development Projects Succeed Or FailTop five reasons for success: Top five reasons for failure: - User involvement - Lack of user input (GARBAGE IN GARBAGE OUT

- Executive management support - Incomplete requirements and specifications- Clear statement of requirements - Changing requirements and specifications- Proper planning - Lack of executive support- Realistic expectations - Technological incompetencedilbert-talks-it-failure.gifThe Fundamental Roles Of Information Systems

Information systems perform three vital roles in any type of organization:- Support of business operations- Support of managerial decision making- Support of strategic competitive advantage

The Increasing Value Of Information TechnologyToday’s managers need all the help they can get. Their firms are being buffered on

all sides by strong, frequently shifting winds of change. Organizations’ strategic objectives (chosen markets, product strategy, expected outcomes) and their business processes (such as research and development, production, cash-flow management, and order fulfillment)

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are undergoing significant and volatile changes, placing great pressure on firms and their managers.

The rapid pace of change in today’s business environment has made information systems and information technology vital components that help keep an enterprise on target to meet its business goals. Information technology has become an indispensable ingredient in several strategic thrusts that businesses have initiated to meet the challenge of change. These include the internetworking of computing, internetworking the enterprise, globalization, business process reengineering, and using information technology for competitive advantage. They are just some of the major reasons why today’s businesses need information technology.

The Internetworking Of ComputingThe internetworking of computing is one of the most important trends in

information technology. From the smallest microcomputer to the largest mainframe, computers are being networked, or interconnected by the Internet, intranets, and other telecommunications networks. This networked distribution of computer power throughout an organization most frequently takes the form of a client/server approach, with networks of end user microcomputers (clients) and network servers tied together to share processing, software, and databases. In some client/server systems, midrange computers or mainframes may act as superservers.

Globalization And Information TechnologyAs we mentioned earlier, many companies are in the process of globalization; that

is, becoming internetworked global enterprises. For example, businesses are expending into global markets for their products and services, using global production facilities to manufacture or assemble products, raising money in global capital markets, forming alliances with global partners, and battling with global competitors for customers from all over the globe. Managing and accomplishing these strategic changes would be impossible without the Internet, intranets, and other global computing and telecommunications networks that are the central nervous system of today’s global companies.

Business Process ReengineeringWhen IT substitutes for human effort, it automates a task or process.When IT augmetns human effort, it informates a task or process.When IT restructures, it transforms a set of tasks or process.Businesses have used information technology for many years to automate business

processes and support the analysis and presentation of information for managerial decision making. However, business process reengineering (BPR) is an example of how information technology is being used to restructure work by transforming business processes. A business process is any set of activities designed to produce a specified output for a customer or market. The new product development process and the customer order fulfillment process are typical examples.

How Information Technology Can Help Reengineer Business Processes:• Old rule: Managers make all decisions.

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Information technology: Decision support tools (database access, modeling software)

New rule: Decision making is part of everyone’s job.• Old rule: Only experts can perform complex work.

Information technology: Expert systemsNew rule: A generalist can do the work of an expert.

• Old rule: Information can appear in only one place at one time.Information technology: Shared databases via the Internet, intranet, and extranets.New rule: Information can appear simultaneously in as many places as needed.

• Old rule: Field personnel need offices where they can receive, store, retrieve, and transmit information.Information technology: Internet/intranet, Web sites and portable computersNew rule: Field personnel can send and receive information wherever they are.

How Information Technology Reengineered Business Process At Several Levels Of A Business:

IT Initiative Process Changed Business BenefitSalesperson Laptop Sales Sales Increased

Call System Call SalesMarketing Team Web Site Product Product Greater Customer

Database Distribution SatisfactionBusiness Unit Product Marketing Improved

Management Channel CompetitiveSystem Communications Position

Competitive Advantage with IT• Cost strategies: Using information technology to help you become a low-cost

producer, lower your customers’ or suppliers’ costs, or increase the costs your competitors must pay to remain in the industry. For example, using computer-aided manufacturing systems to lower production costs. Or creating Internet Web sites for electronic commerce to lower marketing costs.

• Differentiation strategies: Developing ways to use information technology to differentiate your company’s products or services from your competitors’ so your customers perceive your products or services as having unique features or benefits. For example, providing fast and complete customer support services via an Internet Web site. Or using targeted marketing systems to offer individual customers the products and services that appeal to them.Purple cow

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Examples of the use of competitive strategies to confront each of the competitive forces facing a company. Information technology can support and enable such strategies.

Customers Suppliers Competitors New Entrants SubstitutesStrategic Attact new Lock in Lock out Create MakeObjectives customers suppliers by competitors barriers to substitution

and lock in creating by locking in entry into unattractivepresent switching customers the industrycustomers costs and suppliersby creatingswitchingcostsCustomers Suppliers Competitors New Entrants Substitutes

Cost Offer lower Help Undercut Make entry Make substitutionLeadership prices suppliers competitor investment economically Strategy lower costs prices unattractive unfeasibleDifferentiation Provide Help Toughen Complicate Provide featuresStrategy better suppliers competition entry of substitutes

quality, improve with unique decisionfeatures, and services featuresservice

Innovation Provide new Develop Provide Enter ProduceStrategy products and unique unmatched businesses substitutes

services to supply products of potentialnew markets services or and services entrants

alliances with suppliers

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(mass customization)

Examples of how companies used information technology to implement strategies for competitive advantage

Strategy Company Strategic Information System Business BenefitCost Leadership Levitz Centralized Buying Cut Purchasing

CostsFurniture Medical Care Monitoring Cut Medical Costs Metropolitan Machine Tool Control Cut Manufacturing Life Costs Deere & Company

Differentiation Navistar Portable Computer-Based Increase in MarketCustomer Needs Analysis Share

Setco Computer Aided Job Estimation Increase in Market Industries Share

Innovation Merrill Customer Cash Management Market LeadershipLynch Bank Accounts

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Federal Online Package Tracking and Market LeadershipExpress Flight ManagementMcKesson Customer Order Entry and Market LeadershipCorp. Merchandising

FUNDAMENTALS of INFORMATION SYSTEMS

Fundamental Information System Concepts System concepts underlie the field of information systems. That’s why this section

shows you how generic system concepts apply to business firms and the components and activities of information systems. Understanding system concepts will help you understand many other concepts in technology, applications, development, and management of information systems that we will cover in this text. For example, system concepts help you understand:

• That computer networks are systems of information processing components.• That business uses of computer networks are really interconnected business

information systems.• That developing ways to use computer networks in business includes designing the

basic components of information systems.• That managing information technology emphasizes the quality, business value, and

security of an organization’s information systems.As we will see in this chapter, the AMS Knowledge Center is one of many types of

information systems, whose basic system components include:• people, hardware, software, data, and network resources,• which support input, processing, output, storage and control activities,• that produce a variety of information products for end users like Andrew Jewell

and Susan Hanley.And as we will see in several chapters of this text, knowledge management systems

can help many companies do a better job of capturing new business knowledge, disseminating it within their organizations, and building it into new products and services.

System ConceptsWhat is a system? A system can be simply defined as a group of interrelated or

interacting elements forming a unified whole. Many examples of systems can be found in the physical and biological sciences, in modern technology, and in human society. Thus, we can talk of the physical system of the sun and its planets, the biological system of the human body, the technological system of an oil rafinery, and the socioeconomic system of a business organization. However, the following generic system concept provides a more appropriate framework for describing information systems:

A system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process. Such a system (sometimes called a dynamic system) has three basic interacting components or functions:

• Input involves capturing and assembling elements that enter the system to be processed. For example, raw materials, energy, data, and human effort must be secured and organized for processing.

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• Processing involves transformation processes that convert input into output. Examples are a manufacturing process, the human breathing process, or mathematical calculations.

• Output involves transferring elements that have been produced by a transformation process to their ultimate destination. For example, finished products, human services, and management information must be transmitted to their human users.

SYSTEM

INPUT OUTPUTINPUT

DATA INFORMATION

MANAGEMENT INFORMATION SYSTEM

Feedback And ControlThe system concept becomes even more useful by including two additional

components: feedback and control. A system with feedback and control components is sometimes called a cybernetic system, that is, a self-monitoring, self-regulating system.

• Feedback is data about the performance of a system. For example, data about sales performance is feedback to a sales manager.

• Control involves monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal. The control function then makes necessary adjustments to a system’s input and processing components to ensure that it produces proper output. For example, a sales manager exercises control when he or she reassigns salespersons to new sales territories after evaluating feedback about their sales performance.

Components Of An Information System• People, hardware, software, data, and networks are the five basic resources of

information systems.• People resources include end users and IS specialists, hardware resources consist of

machines and media, software resources include both programs and procedures, data resources can include data and knowledge bases, and network resources include communications media and networks.

• Data resources are transformed by information processing activities into a variety of information products for end users.

• Information processing consists of input, processing, output, storage, and control activities.

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PROCESS

Information System ResourcesOur basic IS model shows that an information system consists of five major

resources;people, hardware, software, data, and networks. Let’s briefly discuss several basic concepts and examples of the roles these resources play as the fundamental components of information systems. You should be able to recognize these five components at work in any type of information system you encounter in the real world.

People ResourcesPeople are required for the operation of all information systems. These people

resources include end users and IS specialists.• End users (also called users or clients) are people who use an information system or

the information it produces. They can be accountants, salespersons, engineers, clerks, customers, or managers. Most of us are information system end users.

• IS specialists are people who develop and operate information systems. They include systems analysts, programmers, computer operators, and other managerial, technical, and clerical IS personnel. Briefly, systems analysts design information systems based on the information requirements of end users, programmers prepare computer programs based on the specifications of systems analysts, and computer operators operate large computer systems.

Examples Of Information System Resources And Products

People ResourcesSpecialists – systems analysts (INDUSTRIAL ENGINEERS ARE PREFERRED for THIS JOB TITLE), programmers, computer operators.End Users – anyone else who uses information systems.Hardware ResourcesMachines – computers, video monitors, magnetic disk drives, printers, optical scanners, barcode readers, barcode printers, 3D printers.Media – USB, DVD, CD, floppy disks, magnetic tape, optical disks, plastic cards, paper forms.First computer in the world

[email protected] Software ResourcesPrograms – operating system programs, spreadsheet programs, word processing programs, payroll programs.Procedures – data entry procedures, error correction procedures, paycheck distribution procedures.Data ResourcesProduct descriptions, customer records, employee files, inventory databases.Network ResourcesCommunications media, communications processors, network access and control software.Information Products

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Management reports and business documents using text and graphics displays, audio responses, and paper forms.

Hardware ResourcesThe concept of hardware resources includes all physical devices and materials used

in information processing. Specifically, it includes not only machines, such as computers and other equipment, but also all data media, that is, all tangible objects on which data is recorded, from sheets of paper to magnetic disks. Examples of hardware in computer-based information systems are:

• Computer systems, which consist of central processing units containing microprocessors, and a variety of interconnected peripheral devices. Examples are microcomputer systems, midrange computer systems, and large mainframe computer systems.

• Computer peripherals, which are devices such as a keyboard or electronic mouse for input of data and commands, a video screen or printer for output of information, and magnetic or optical disks for storage of data resources.

Software ResourcesThe concept of software resources includes all sets of information processing

instructions. This generic concept of software includes not only the sets of operating instructions called programs, which direct and control computer hardware, but also the sets of information processing instructions needed by people, called procedures.

It is important to understand that even information systems that don’t use computers have a software resource component. This is true even for the information systems of ancient times, or the manual and machine-supported information systems still used in the world today. They all require software resources in the form of information processing instructions and procedures in order to properly capture, process, and disseminate information to their users.

The following are examples of software resources:• System software, such as an operating system program, which controls and

supports the operations of a computer system. • Application software, which are programs that direct processing for a particular use

of computers by end users. Examples are a sales analysis program, a payroll program, and a word processing program.

• Procedures, which are operating instructions for the people who will use an information system. Examples are instructions for filling out a paper form or using a software package.

Data ResourcesData is more than the raw material of information systems. The concept of data

resources has been broadened by managers and information systems professionals. They realize that data constitutes a valuable organizational resource. Thus, you should view data as data resources that must be managed effectively to benefit all end users in an organization.

Data can take many forms, including traditional alphanumeric data, composed of numbers and alphabetical and other characters that describe business transactions and other events and entities. Text data, consisting of sentences and paragraphs used in

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written communications; image data, such as graphic shapes and figures; and audio data, the human voice and other sounds, are also important forms of data.

The data resources of information systems are typically organized into:• Databases that hold processed and organized data.• Knowledge bases that hold knowledge in a variety of forms such as facts, rules, and

case examples about successful business practices.For example, data about sales transactions may be accumulated and stored in a sales

database for subsequent processing that yields daily, weekly, and monthly sales analysis reports for management. Knowledge bases are used by knowledge management systems and expert systems to share knowledge and give expert advice on specific subjects. We will explore these concepts further in later chapters.

Data versus Information. The word data is the plural of datum, though data commonly represents both singular and plural forms. Data are raw facts or observations, typically about physical phenomena or business transactions. For example, a spacecraft launch or the sale of an automobile would generate a lot of data describing those events. More specifically, data are objective measurements of the attributes (the characteristics) of entities (such as people, places, things, and events).

The Systems Approach

The systems approach to problem solving uses a systems orientation to define problems and opportunities and develop solutions. Studying a problem and formulating a solution involve the following interrelated activities:

1- Recognize and define a problem or opportunity using systems thinking.2- Develop and evaluate alternative systems solutions.3- Select the system solution that best meets your requirements.4- Design the selected system solution.5- Implement and evaluate the success of the designed system.

Let’s now examine each step of the systems approach to problem solving to see how it can help you develop solutions to business problems. Then we will apply the systems approach to a business case study example.

The Systems Approach To Problem SolvingNote the major activities involved in developing system solutions to business

problems. Also note that you can recycle back to a previous step if further work is needed.

MONITO Define - Define the problem or opportunity using

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R the systems thinking.Problem

a ↓↓↓↓↓↓↓n Develop - Develop and evaluate alternative system d Alternative solutions.

SolutionsE ↓↓↓↓↓↓↓V Select - Select the system solution that best meets A the your requirements.L SolutionU ↓↓↓↓↓↓↓A Design - Design the selected system solution to meetT the your requirements.E Solution

↓↓↓↓↓↓↓R Implement - Implement and evaluate the success of the E the designed system.S SolutionULTS

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