Fundamentals of Information System:

Definition of Information System

An Information System (IS) is a structured and organized set of components that work together
to collect, process, store, and disseminate information. These components include hardware,
software, data, processes, and people. The primary goal of an IS is to support decision-making,
coordination, analysis, and control in an organization, enabling it to achieve its objectives
efficiently.

Characteristics of an Information System

1.​ Interconnected Components:

o​ An IS is composed of subsystems (hardware, software, people, and processes) that
are interconnected and interact with each other to achieve specific goals.
2.​ Automation of Processes:
o​ Automates repetitive and routine tasks to increase efficiency and reduce human
errors.
3.​ Data Management:
o​ Facilitates the collection, processing, storage, and retrieval of large volumes of
data. This data is then transformed into meaningful information for
decision-making.
4.​ Decision Support:
o​ Provides timely, relevant, and accurate information to assist in both routine and
strategic decision-making.
5.​ Scalability:
o​ Designed to handle the increasing volume of data and growing needs of the
organization, ensuring adaptability to future changes.
6.​ Security:
o​ Incorporates measures to safeguard data confidentiality, integrity, and availability,
ensuring that sensitive information is protected.
7.​ Feedback Mechanism:
o​ Includes mechanisms to gather feedback from users and system performance to
allow for continuous improvement.
8.​ User-Friendly Interface:
o​ Offers intuitive and easy-to-navigate interfaces to ensure effective user interaction
with the system.
9.​ Integration:
o​ Combines various functions and processes within the organization, enabling
seamless operation and efficient resource utilization.

By combining these characteristics, an Information System serves as a vital tool for modern
organizations to improve operational efficiency, enhance decision-making, and maintain a
competitive edge in their respective industries.

Types of Information
Information plays a vital role in organizations by aiding decision-making, improving processes,
and achieving goals. Here are the main types of information, categorized based on their use and
purpose:

1. Strategic Information

●​ Purpose: Supports top management in making long-term decisions.

●​ Use: Focuses on achieving organizational goals, market positioning, and planning for the
future.
●​ Example:
o​ Analysis of industry trends to decide on entering new markets.
o​ Strategic forecasting of technological advancements and their implications.

2. Tactical Information

●​ Purpose: Assists middle management in resource allocation and operational planning.

●​ Use: Focuses on medium-term decisions and aligning resources with strategic objectives.
●​ Example:
o​ Budgeting for departmental operations.
o​ Developing marketing strategies based on quarterly sales data.

3. Operational Information

●​ Purpose: Aids in day-to-day operations and routine decision-making.

●​ Use: Ensures smooth functioning of basic organizational processes.
●​ Example:
o​ Real-time inventory levels.
o​ Daily employee schedules and shift plans.

4. Descriptive Information

●​ Purpose: Provides data about past and current events.

●​ Use: Focuses on understanding historical or ongoing performance and activities.
●​ Example:
o​ Annual sales reports showing revenue growth.
o​ Data about customer demographics.
5. Predictive Information

●​ Purpose: Forecasts future events and trends based on historical data.

●​ Use: Helps management anticipate changes and prepare for future challenges.
●​ Example:
o​ Forecasting market demand for the next quarter.
o​ Predicting seasonal trends in product sales.

6. Prescriptive Information

●​ Purpose: Recommends actions or solutions based on analytics and simulations.

●​ Use: Offers insights into optimizing processes or solving problems effectively.
●​ Example:
o​ Recommendations for improving supply chain efficiency.
o​ Suggested pricing strategies for new product launches.

7. Real-Time Information

●​ Purpose: Delivers instantaneous updates to support immediate decisions.

●​ Use: Used in situations requiring quick responses or adjustments.
●​ Example:
o​ Stock market updates for financial trading.
o​ Real-time monitoring of production lines in factories.

Summary

Each type of information serves a unique purpose and caters to different levels of management
within an organization. By leveraging strategic, tactical, operational, descriptive, predictive,
prescriptive, and real-time information, businesses can make informed decisions, improve
efficiency, and adapt to changes effectively.

Sub-Systems of an Information System

An Information System (IS) is composed of various subsystems, each performing specialized

functions. These subsystems are interdependent and work together to ensure the IS achieves its
objectives of supporting decision-making, coordination, and operational efficiency. Below are
the main subsystems of an IS:
1. Transaction Processing System (TPS)

●​ Purpose: Handles routine and repetitive transactions in an efficient and accurate manner.
●​ Features:
o​ Processes high volumes of data quickly.
o​ Ensures data accuracy and consistency.
o​ Provides data input to other subsystems like MIS and DSS.
●​ Example:
o​ Point of Sale (POS) systems for retail transactions.
o​ Online booking systems for airlines.

2. Management Information System (MIS)

●​ Purpose: Converts raw data from TPS into structured and summarized reports for middle
management.
●​ Features:
o​ Generates regular reports (e.g., weekly or monthly).
o​ Provides information for monitoring and controlling operations.
●​ Example:
o​ Sales performance dashboards.
o​ Inventory status reports.

3. Decision Support System (DSS)

●​ Purpose: Assists managers in making non-routine and complex decisions using data
analysis, models, and simulations.
●​ Features:
o​ Supports "what-if" scenarios and forecasting.
o​ Integrates data from various sources for in-depth analysis.
●​ Example:
o​ Risk analysis tools for investments.
o​ Supply chain optimization systems.

4. Enterprise Systems

●​ Purpose: Integrates core business processes across departments to improve coordination

and efficiency.
●​ Features:
o​ Provides a unified platform for business operations.
o​ Enhances data sharing and communication across the organization.
 ●​ Example:
o​ Enterprise Resource Planning (ERP) systems like SAP and Oracle.
o​ Customer Relationship Management (CRM) systems like Salesforce.

5. Knowledge Management System (KMS)

●​ Purpose: Facilitates the collection, organization, sharing, and analysis of knowledge

within an organization.
●​ Features:
o​ Stores organizational knowledge and best practices.
o​ Encourages collaboration and learning.
●​ Example:
o​ Intranet-based knowledge repositories.
o​ Document management systems like Microsoft SharePoint.

6. Expert System (ES)

●​ Purpose: Mimics human expertise to provide solutions to specialized or complex

problems.
●​ Features:
o​ Uses artificial intelligence and rule-based systems.
o​ Provides reasoning and recommendations.
●​ Example:
o​ Medical diagnosis systems.
o​ Fraud detection systems in banking.

7. Executive Information System (EIS)

●​ Purpose: Provides high-level summaries and visualizations of key performance

indicators (KPIs) for senior management.
●​ Features:
o​ Delivers real-time data and dashboards.
o​ Focuses on strategic planning and performance monitoring.
●​ Example:
o​ Balanced Scorecard systems.
o​ Financial forecasting dashboards.

8. Geographic Information System (GIS)

 ●​ Purpose: Captures, stores, analyzes, and visualizes geographic or spatial data.
●​ Features:
o​ Maps and analyzes spatial relationships.
o​ Supports location-based decision-making.
●​ Example:
o​ Urban planning systems.
o​ Logistics and delivery route optimization tools.

Summary

Each subsystem of an Information System plays a distinct role in achieving the overall goals of
the organization. From handling transactions to supporting complex decision-making and
integrating business processes, these subsystems work together to provide a comprehensive
platform for organizational efficiency and effectiveness.

Systems Approach to Problem Solving

The systems approach to problem solving is a structured method that views problems as parts of
an interconnected system. Instead of addressing individual components in isolation, this
approach considers the relationships, interdependencies, and impacts on the entire system. It
ensures comprehensive solutions that are sustainable and aligned with organizational goals.

Key Principles of the Systems Approach

1.​ Holistic Perspective:

o​ Focuses on the whole system rather than isolated parts to understand how
components interact and influence each other.
2.​ Interdependence:
o​ Recognizes that changes in one part of the system affect other parts.
3.​ Feedback Loops:
o​ Incorporates mechanisms to monitor the outcomes and refine solutions based on
feedback.
4.​ Goal Orientation:
o​ Ensures that the problem-solving process aligns with organizational objectives.
5.​ Flexibility and Adaptability:
o​ Accounts for dynamic and changing environments, ensuring solutions remain
effective over time.

Steps in the Systems Approach to Problem Solving

 1.​ Problem Identification:
o​ Clearly define the problem, its scope, and its impact on the organization.
o​ Example: Identifying delays in supply chain delivery.
2.​ System Analysis:
o​ Analyze the current system to understand its components, workflows, and
inefficiencies.
o​ Example: Examining logistics processes to identify bottlenecks.
3.​ System Design:
o​ Develop a blueprint for a new or improved system, specifying objectives,
resources, and processes.
o​ Example: Designing a new logistics tracking system with automated updates.
4.​ System Development:
o​ Build or implement the proposed solution using appropriate technologies and
methodologies.
o​ Example: Developing software for real-time shipment tracking.
5.​ System Testing and Evaluation:
o​ Verify that the system functions as intended and meets the defined requirements.
o​ Example: Testing the logistics system for accuracy and responsiveness.
6.​ System Implementation:
o​ Deploy the solution in the operational environment, accompanied by training and
support.
o​ Example: Rolling out the tracking system across the supply chain network.
7.​ System Maintenance and Feedback:
o​ Continuously monitor the system\u2019s performance, address issues, and adapt
to changing needs.
o​ Example: Updating the tracking system to include predictive delivery times.

Benefits of the Systems Approach

1.​ Comprehensive Solutions:

o​ Ensures all aspects of the problem are addressed, reducing the risk of unforeseen
consequences.
2.​ Improved Efficiency:
o​ Optimizes processes and resource utilization by addressing system-wide
inefficiencies.
3.​ Adaptability:
o​ Prepares organizations for future challenges and changes in the environment.
4.​ Enhanced Decision-Making:
o​ Provides a deeper understanding of interrelationships, enabling informed
decisions.

Example: Applying the Systems Approach

Scenario: A manufacturing company faces delays in product delivery.

1.​ Problem Identification: Delays are impacting customer satisfaction and increasing costs.
2.​ System Analysis: Investigate the supply chain, including inventory, production
schedules, and logistics.
3.​ System Design: Propose a solution that integrates automated inventory management and
real-time tracking.
4.​ System Development: Develop and test the required software and hardware.
5.​ Implementation: Train employees and implement the new system across all
departments.
6.​ Maintenance: Regularly update the system and refine processes based on feedback.

This structured approach ensures the problem is resolved effectively and sustainably.

Summary

The systems approach to problem solving is essential for addressing complex organizational
issues. By considering the entire system and its interdependencies, this method provides
sustainable solutions that align with strategic objectives, adapt to changes, and improve overall
efficiency.