Management

Information system
UNIT II: FOUNDATION OF
INFORMATION SYSTEM

BBA-BI 5th semester

EEMC

Instructor : Ganesh Thapa

CHAPTER OUTLINE
 Data, information and knowledge
 Information system ( characteristics, needs,
fundamental resources, potential risk, types)
 MIS(definition, objective, characteristics,
applications, benefits, limitations, Approaches of
MIS development
 System development life cycle
DATA
 Data are raw facts about physical phenomena
or business transactions
 Symbols representing quantities, actions or
objects
Types of data:
 Alphanumeric-numbers, alphabets, and other
characters
 Text: sentences
 Image: graphic shapes and figures
 Audio: voice and other sounds
 Video: picture and its movements with sounds

*
INFORMATION
 Information is data that has been
processed into meaningful and useful
context for end users
 Example:
 Sales data is names, quantities, and dollar amounts
 Sales information is amount of sales by product type,
sales territory, or salesperson
 Processing includes
calculating ,comparing, sorting, classifying and
summarizing
DATA VERSUS INFORMATION
Data Information
DATA VS. INFORMATION
 Data: 57911
 Information:
 19/5/17 The date of your final exam.

 Rs 17,915 The average starting salary of an BBA

pass outs.
DATA VS. INFORMATION
Information
Data
SIRIUS SATELLITE RADIO INC.
 6.34
 6.45 $7.20
 6.39 $7.00
 6.62 $6.80
6.57
Stock Price


$6.60
 6.64
$6.40
 6.71
$6.20
 6.82
 7.12 $6.00

 7.06 $5.80
1 2 3 4 5 6 7 8 9 10
Last 10 Days
DATA  INFORMATION  KNOWLEDGE
Data
Summarizing the data
Data Processing

Averaging the data

Selecting part of the data

Graphing the data

Adding context

Adding value

Information
DATA  INFORMATION  KNOWLEDGE
Information

How is the info tied to outcomes?

Are there any patterns in the info?

What info is relevant to the problem?

How does this info effect the system?

What is the best way to use the info?

How can we add more value to the info?

Knowledge
DATA, INFORMATION, AND KNOWLEDGE
• Data: raw facts
• Information: collection of facts organized in such a
way that they have value beyond the facts
themselves
• Knowledge: awareness and understanding of a set
of information and ways that information can be
made useful to support a specific task or reach a
decision
 THE CHARACTERISTICS OF INFORMATION
SYSTEM

 Accurate -Information should be precise and free from error.

 Relevant -Information should be fit to the purpose for which it
is required
 Complete -Information should contain all the details required
by the user
 Concise -Information should be to the point and just enough –
no more, no less.
 Reliable -Information should be from a valid and trusted
source with verifiable facts.
 Accessible -Information should be easy to obtain or access at
any time to meet their needs.
 Timely - Information should be available when it is needed.
 Cost-effective- When the value of information exceeds the cost
of producing it. It is not worthwhile to spend money on
information that even cannot recover its costs.
DIFFERENCE BETWEEN DATA AND INFORMATION
S.N Data Information
.
1. Derived from plural form of Derived from latin word informare
datum (latin word) which which means to instruct.
means to give.
2. Data is a raw fact. Information is the outcome derived
after processing the data
3. May or may not be meaningful Is always meaningful
4. Input to any system may be Output after processing within a
treated as data system is information
5. Understanding is difficult Easily understandable
6. Data is random in order Information is in order
7. Eg; statistics, numbers, Eg: reports, knowledge
characters, images
WHAT IS A SYSTEM?
 A set of interrelated components
 With a clearly defined boundary
 Working together
 To achieve a common set of objectives
 By accepting input and producing
output on organized transformation
process.
SYSTEM CONCEPTS (CONTINUED)

Figure 1.3: Components of a System

A BUSINESS AS A SYSTEM

*
WHAT IS AN INFORMATION SYSTEM?
Control of System Performance

Input of Output of
Processing
Data Information
Data
Resources Products

Storage of Data Resources

DEFINITION OF INFORMATION SYSTEM

An information system is an arrangement of

people, data, processes, and interfaces that are
integrated for the purpose of supporting and
improving the day-to-day operations in a business,
as well as fulfilling the problem-solving and
decision-making information needs of business
managers.
A set of interrelated components that
collect, manipulate, and disseminate data
and information, and provide feedback to
meet an objective
WHAT IS AN INFORMATION SYSTEM?
 An organized combination of…
 People
 Hardware and software
 Communication networks
 Data resources
 Policies and procedures
 This system…
 Stores, retrieves, transforms, and disseminates
information in an organization
 THE CHARACTERISTICS OF INFORMATION
SYSTEM

 Accurate -Information should be precise and free from error.

 Relevant -Information should be fit to the purpose for which it
is required
 Complete -Information should contain all the details required
by the user
 Concise -Information should be to the point and just enough –
no more, no less.
 Reliable -Information should be from a valid and trusted
source with verifiable facts.
 Accessible -Information should be easy to obtain or access at
any time to meet their needs.
 Timely - Information should be available when it is needed.
 Cost-effective- When the value of information exceeds the cost
of producing it. It is not worthwhile to spend money on
information that even cannot recover its costs.
NEED OF INFORMATION SYSTEM
 Vital component of successful businesses
 Helps businesses expand and compete
 Improves efficiency and effectiveness of
business processes
o Efficiency in terms of minimizing cost and time
o Effectiveness in meeting business strategies,
enabling business process ,enhancing structure
and culture
 Facilitates managerial decision making and
workgroup collaboration

Chapter 1 Foundations of Information Systems in Business

*
MAJOR ROLES OF INFORMATION SYSTEMS

Support of
Strategic
Advantage

Support of
Managerial
Decision Making

Support of
Business Operations
 USE OF IT FOR STRATEGIC ADVANTAGE
 A company can survive and succeed in the long run only if it
successfully develops strategies to confront five competitive
forces that shape the structure of competition in its industry.
In Michael Porter’s classic model of competition, any business
that wants to survive and succeed must effectively develop
and implement strategies to counter
NEED OF INFORMATION SYSTEM
1. Strategy for gaining a competitive edge
2. Increasing revenues
3. Reducing costs
4. Improving profits
5. Improving quality
6. Creating new opportunities
7. Speed of performance
8. Multi-tasking
9. Entrepreneurs
10. Communication
11. Decisions
12. Operations

-
FUNDAMENTAL RESOURCES OF AN
INFORMATION SYSTEM
INFORMATION SYSTEM RESOURCES
 People Resources
 Specialists
 End users
 Hardware Resources
 Machines
 Media
 Software Resources
 Programs
 Procedures
 Data Resources
 Product descriptions, customer records, employee files,
inventory databases
 Network Resources
 Communications media, communications processors, network
access and control software
 Information Resources
 Management reports and business documents using text and
graphics displays, audio responses, and paper forms
*
PEOPLE RESOURCES:
 Includes human resources essential for successful
operation of information system
 End users :people who uses an information
system or information produced by IS.
Knowledge workers: works by communicating,
collaborating in teams and creating using and
distributing information
 IS specialist: people who develop and operate
information system
System analyst, software developer, system
operators
HARDWARE RESOURCES
 Includes all physical devices and materials used
in information processing
 Tangibles machines as well as intangible data
media
 Computer peripherals: Input and output
devices
 Computer systems: consists of central
processing units containing microprocessors.
E.g. handheld devices, laptop tablet or
desktops micro computer systems
SOFTWARE RESOURCES
 Includes all sets of information processing
instructions
 Both programs and procedures

 Programs: sets of operating instructions which

direct and control hardware
 Procedures: sets of information processing
instructions
 Example: System software, application software
and procedures
Even information systems that do not use
computers have software resources . Do you
agree?
NETWORK RESOURCES

 Includes telecommunication technologies and

networks
 Communication media: twisted wire, coaxial,
optical fibers, microwaves, wireless technologies
 Network infrastructure: modems , routers
switches
DATA RESOURCES

oDatabases: hold processed and

organized data
oKnowledge bases : holds knowledge in
the forms of facts, rules and examples
about successful business practices
TYPES OF INFORMATION SYSTEMS

Chapter 1 Foundations of Information Systems in Business

*
 Systems Applications in the Organization

Decisions Management Levels Information Systems

Unstructured Senior ESS

Strategic Management
DSS
Knowledge and
GIS, CAD/CAM,
Tactical Data Worker
OAS
Middle
Management MIS

Lower
TPS
Management
Technical
(Operational)
Buy Make Sell Keep
Functions
Structured Track
Transaction Processing Systems

 Business transactions are events that serve the mission of the business.
 Transaction processing systems are information system
applications that capture and process data about (or for)
business transactions. They are sometimes called data
processing systems.
Transaction processing systems can either:
 respond to business transactions (such as orders, time cards, or payments)
 initiate transactions (such as invoices, paychecks, or receipts) – possibly
both
 can respond to both external events (such as processing orders from
customers) or internal events (such as generating production orders for the
shop floor).
A third type of transaction processing system, data maintenance, provides for
routine updates to stored data. For example, a system must provide for the ability
to add and delete CUSTOMERs and PRODUCTs, as well as to change specific
facts such as CUSTOMER ADDRESS and PRODUCT PRICE.
 Management Information Systems

 Management Information Systems supplement transaction processing systems

with management reports required to plan, monitor, and control business
operations.
 A management information system (MIS) is an information system
application that provides for management-oriented reporting, usually
in a predetermined, fixed format.
Management information systems can present detailed information, summary
information, and exception information.
 Detailed information is use for operations management as well as regulatory
requirements (as imposed by the government).
 Summary information consolidates raw data to quickly indicate trends and
possible problems.
 Exception information filters data to report exceptions to some rule or criteria
(such as reporting only those products that are low in inventory).
Decision Support Systems

 Decision Support Systems are concerned with providing useful

information to support the decision process.
 A decision support system (DSS) is an information system
application that provides its users with decision-oriented
information whenever a decision making situation arises. When
applied to executive managers, these systems are sometimes
called executive information systems.
 A DSS is designed to support unstructured decisions.

 DSS is based on the reality that the information needed to

support unstructured decisions has already been captured by
transaction processing and management information systems.
The DSS provides the decision maker with tools to access that
information and analyze it for the purpose of making a decision.
Executive Support Systems

• An executive support system is a special type of

decision support system, and like a decision
support system, an executive support system is
designed to support higher-level decision making
in the organization.
• The decision support system provides a verity of
modeling and analysis tools to enable user to
thoroughly analyzed problems.
• Executive support system prevents structured
information about aspects of the organization that
executives consider important.
• It is for asking right question and decision support
system is to answer questions.
Executive Support Systems

• In some levels executive support system is also

known as Executive Information System.
• An executive support system can also be used by
individuals further down in the organizational
structure.
• Once targeted at the top-level executive decision
makers. Executive support systems are now
marketed for & used by employees at other
levels in the organization.
• In the traditional view, executive support system
gives top executives a means of tracking critical
success factors.
EXPERT SYSTEMS
 An expert system is…
 A computer application that performs a task
that would otherwise be performed by a
human expert
 gives the computer the ability to make
suggestions and to act like an expert in a
particular field
 Examples: diagnose human illnesses, make
financial forecasts, schedule routes for delivery
vehicles
 Expert systems typically include
“artificial intelligence” (next slide)
 ARTIFICIAL INTELLIGENCE

The branch of computer science concerned with making computers

behave like humans. The term was coined in 1956 by John
McCarthy
at the Massachusetts Institute of Technology. Artificial intelligence
includes
 games playing: programming computers to play games such as
chess and checkers
 expert systems : programming computers to make decisions in real-life
situations (for example, some expert systems help doctors diagnose
diseases based on symptoms)
 natural language : programming computers to understand natural
human languages
 POTENTIAL RISK OF IS

-Potential harm that may arises from some current

process or future event.
-From IT security perspective,Risk management is the
process of understanding and responding to factor
that leads to a failure in the confidentiality,
Integrity and availability.
POTENTIAL RISK OF IS
 POTENTIAL RISK OF IS

In computer security, a vulnerability is a weakness which allows an

attacker to reduce a system's information assurance. Vulnerability is the
intersection of three elements: a system susceptibility or flaw, attacker access
to the flaw, and attacker capability to exploit the flaw.
 POTENTIAL RISK OF IS

Vulnerability Example :

- Not clearly Defined contingency(Incident) directives and Procedures.

- Lack of clearly defined and tested plan.

- Lack of training.

- Lack of information backups.

- Lack of information system recovery Procedure.

- Not having alternative communication services.

 POTENTIAL RISK OF IS
Threats
The potential for a threat source to exercise (accidentally
trigger or intentionally exploit) a specific vulnerability.

Threat-Source: Either
(1) intent and method targeted at the intentional exploitation of
a vulnerability or

(2) a situation and method that may accidentally trigger a

vulnerability.

The threat is merely the potential for the exercise of a particular

vulnerability. Threats in themselves are not actions. Threats
must be coupled with threat-sources to become dangerous.
 POTENTIAL RISK OF IS

List of Threats
- Accidental Discloser()
- Acts of Nature(Natural Disaster)
- Alteration of Software(Virus)
- Bandwidth Uses(DDOS Attack)
- Electrical Interferences/ Disruption(DOS, Modification data,
Corrupt Data)
- Intentional Alteration of Data(Insiders, Out sider)
- System Configuration Error(Initial Installation, Upgrading, illegal
software, Version)
- Telecommunication Malfunction/Interruption(Communication
link, unit or component failure)
WHAT IS MANAGEMENT INFORMATION
SYSTEM?
 Management information systems are distinct from regular
information systems in that they are used to analyze other
information systems applied in operational activities in the
organization.

 Management information systems are regarded to be a subset of

the overall internal controls procedures used by management
accountants to solve business problems.

 The information is the blood and MIS is the heart. In the body
the heart plays the role of supplying pure blood to all the
elements of the body including the brain.The MIS plays exactly
the same role in the organization. The system ensures that an
appropriate data is collected from the various sources,
processed, and sent further to all the needy destinations.

50
OBJECTIVE OF MIS
 To fulfill the information needs of an individual, a group of
individuals, the management functionaries: the managers and
the top management.
 To satisfies the diverse needs through a variety of systems such
as Query Systems, Analysis Systems, Modeling Systems and
Decision Support Systems.
 To helps in Strategic Planning, Management Control,
Operational Control and Transaction Processing.
 To support of its business process and operations
 To improve of decision making by its employees and managers
 To implement strategies for competitive advantage-Gaining a
strategic advantage

51
CHARACTERISTICS OF MIS
 Management-oriented: The basic objective of MIS is to
provide information support to the management in the
organization for decision making.
 Management directed: When MIS is management-
oriented, it should be directed by the management
because it is the management who tells their needs and
requirements more effectively than anybody else.
 Integrated: It means a comprehensive or complete view
of all the subsystems in the organization of a company.
 Common data flows: The integration of different
subsystems will lead to a common data flow which will
further help in avoiding duplicacy and redundancy in
data collection, storage and processing.

52
CHARACTERISTICS OF MIS
 System approach: When a problem is seen in 2 sub parts,
then the better solution to the problem is possible.
 Common database: This is the basic feature of MIS to
achieve the objective of using MIS in business
organizations.
 Computerized: MIS can be used without a computer. But
the use of computers increases the effectiveness and the
efficiency of the system.
 User friendly/Flexibility: An MIS should be flexible.

 Information as a resource: Information is the major

ingredient of any MIS.

53
CHARACTERISTICS OF MIS
 Timeliness
 Accuracy

 Consistency

 Completeness

 Relevance

 Reliable

54
 APPLICATIONS OF MIS

 Planning
 Recording

 Controlling

 Measuring

 Decision Making

 Analyzing

 Policy Making

 Strategy Forming
 BENEFITS OF MIS

 Facilitates Planning
 Minimizing Information Overload
 MIS Encourage De-Centralized
 Brings Co-ordinations
 Makes Control Easier
 MIS Increases Productivity
 MIS increases the Quality of Decision Making
 MIS improves communication and helps to develop team
work
 MIS can Facilitate Organizational Transformation
 LIMITATIONS OF MIS

 Improper manner of Design doesn't serve management.

 Cant Replace managerial judgment in Decision Making.
 Quality of input directly proportional to quality of input and
process.
 It is not tailor made. Needs to analyze before decision making.
 It doesn't works in Changing and complex environments.
 Takes only quantitative factors in account.
 Less effective while frequently changes top management,
organizational structure, and operation staffs.
 Very Expensive to make efficient.
 Highly Sensitive and requires constant monitoring.
 Lots of time required to construct MIS.
 APPROACH OF MIS DEVELOPMENT

 →Top Down

 → Bottom Up

 → Integrated Approach


BOTTOM UP APPROACH
 The development of information system under
this approach starts from the identification of life
stream systems i.e., the systems which are
essential for the day to day business activities.
 The example of life stream systems includes
payroll, sales order, inventory control and
purchasing etc.
 In time approach, initially the transaction
processing modules are created and later models
for planning, control and strategic planning are
added. The system grows in response to the
increased needs of users.
TOP DOWN APPROACH
 In a top-down approach an overview of the
system is formulated, specifying, but not
detailing, any first-level subsystems. Each
subsystem is then refined in yet greater detail,
sometimes in many additional subsystem levels,
until the entire specification is reduced to base
elements.
INTEGRATIVE APPROACH
 This approach can overcome the limitations of the
above two approaches when used objectively.
Integrative approach permits managers at all levels
to influence the design. Top management identifies
the structure and design of MIS suitable to the
concern.
 This design is further presented to lower level to
suggest changes, additions or deflections and return
the design with their suggestions to the top level for
approval.
 The revised design is down and evaluated by the top
level and sent down again in a modified form for
further consideration, if required. This evaluation,
modification and approval process continues until a
final design is achieved that is satisfactory to all
levels.
 IMPLEMENTATION OF MIS
 Implementation Plan
 Creating Master Schedule
 Setting time line for critical and non-Critical Activities
 Identifying Measure bottle Neck and their solutions
 Communication of the Plan
 Organizing the MIS Department
 Selection and Procurement of Hardware
 Preparation of Vendor
 Preparation of RPF(Request for proposal)
 Request for Bid/proposals
 Evaluation
 Selection
 Procurement of Software
 Creating Database
 Training Users
 Creating Physical Infrastructure
 Transition of the new System
 Developing Information System
 MEASURING SUCCESS OF AN MIS

 Efficiency
 Minimize cost, time and use of information resources
 Effectiveness
 Support business strategies
 Enable business processes
 Enhance organizational structure and culture
 Increase the customer and business value
SYSTEM DEVELOPMENT LIFE CYCLE

 Large ISs that address structured problems, such

as accounting and payroll systems and enterprise
software applications, are usually conceived,
planned, developed, and maintained within a
framework called the systems development
life cycle (SDLC).
 The approach is also called “waterfall”
development, because it consists of several
distinct phases that are followed methodically,
and the developers complete the phases
sequentially.
 *
*