Introduction to information system

1. Fundamental Of Information Systems
By:
Instructor Teshome .G
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2. Outline
 Introduction to Information System
 Meaning and role of Information
 What is a System?
 What is subsystem ?
 Characteristics of a System
 System Concepts
 Types of Information System
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3. Chapter -1
Introduction to Information System
What is Information System (IS) ?
An information system is a set of interrelated
components that collect (or retrieve), manipulate
(process), store, and distribute information to support
management decision making and control in an
organization.
An information system (IS) is an arrangement of
people, data, processes, and information technology
that interact to collect, process, store, and provide
as output the information needed to support an
organization.
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4. Cont.
 Information System basic concepts data,
information, knowledge, wisdom. because these
concepts are very important in understanding and
developing an information system.
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Data: is raw or (unprocessed) facts about people, objects,
events in an organization.
 are streams of raw facts representing events occurring in
organizations.
 Data is the words, numbers, graphics that are entered into
the computer by the user to describe people, events, and
things.
 Data can be seen as resources that must be effectively
managed to benefit all end users in an organization.
 Data is valuable organizational resources.
 Data is Not used for decision making
 E g. employee’s name, salary, and number of hours
worked in a week , inventory part numbers , or sales
order.
Data, Information, knowledge,
wisdom and Information Systems

6. Information:
 Information is very important part of any business,
which helps the managers to take decisions.
 Information is data that have been converted into a
meaningful and useful context for specific end users.
 Data that is organized and arranged to transfer
meaningful message that is used as an input to
develop a system.
 A collection of facts organized in such a way that they
have additional value beyond the value of the facts
themselves. Example, the amount of sales by product
types, sales territory or sales person.
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7.  Data can be represented in different form
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The process of transforming data into information is called
data processing.

8. Cont.
• Knowledge: An 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
– Source of knowledge reasoning and experience
• Wisdom:
– wisdom is knowledge applied in action
– knowledge converted to business rule or principle
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9. Information System activities
Three activities in an information system
produce the information that organizations
need to make decisions, control operations,
analyze problems, and create new products
or services.
These activities are input, processing, and
output.
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10. – Input of Data Resources:
– The activity of gathering and capturing raw data
– Data about business transactions and other events must be
captured and prepared for processing by the input activity
– Input typically takes the form of data entry activities such as
recording and editing.
– Process:
– Converting or transforming data into useful outputs
– Data are typically subjected to processing activities, such as
calculating, comparing, sorting, classifying, and
summarizing.
– These activities organize, analyze, and manipulate data, thus
converting them into information for end users.
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11. Cont.
• Output :
– transfers the processed information to the people who will use it or to
the activities for which it will be used.
– Production of useful information, usually in the form of documents and reports
• Storage of Data Resources:
• Storage is the information system activity in which data are retained in
an organized manner for later use.
• Feedback: Control of System Performance
– An information system should produce feedback about its input,
processing, output, and storage activities.
– This feedback must be monitored and evaluated to determine if the
system is meeting established performance standards.
– Feedback: Information from the system that is used to make
changes to input or processing activities
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12. Characteristics of Information
 Following are the essential characteristic of Information :
 Timeliness : For effective decision-making, information must
reach the decision-maker at the right time, i.e. recipients must
get information when they need it.
 Delays destroys the value of information.
 Accuracy :Information should be accurate. It means that
information should be free from mistakes, errors &, clear.
 Wrong information given to management would result in
wrong decisions.
 Adequacy : Information must be sufficient in quantity,
Inadequacy of information leads to crises, information overload
results in chaos.
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13. Cont.
 Completeness : The information which is given to a
manager must be complete and should meet all his needs.
 Incomplete information may result in wrong decisions
 Explicitness : self explanatory , A report is said to be of
good quality if it does not require further analysis by the
recipients for decision making.
 Impartiality: Impartial information contains no bias and
has been collected without any misleading view of the
situation.
 Validity: The validity of the information relates to the purpose of
the information. In other words, it is the answer to the question-dose
the information meet the purpose of decision making for which it is
being collected?
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14. Cont.
 For example, if the quality of the manufactured product is
deteriorating and it is decided to select the causes of poor
quality, then one must collect all the possible causes which
may affect the quality. Quality is a function of the raw
material, the process of manufacture, the tools applied, the
measures of the quality assessment, the attitude of the
people towards the control of quality.
 However, if the information collected talks only about raw
materials and the process of manufacture, then this
information is not sufficient and hence it is not valid for all the
decisions which are required to control the quality
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 A collection of parts that work together to achieve a
common goal/task/objective
 System is an organized collection of parts (or
subsystems) that are highly integrated to accomplish
an overall goal.
 a group of interrelated or interacting elements forming a
unified whole.
 A set of objects and relationships among the objects
viewed as a whole and designed to achieve a
particular purpose.
 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.
What is a System?

16. Cont.
The system is usually made up of many smaller systems, or
subsystems. Example, an organization is made up of many
administrative and management functions, products,
services, groups &individuals.
Example:
 Solar system
 Transport system
 Computer system
 Physical system of the sun and its planets
 Biological system of the human body
 Technological system of an oil refinery
 Socioeconomic system of a business
organization
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 A subsystem is simply a system within a system.
 Example: Automobile is a system composed of
subsystems:
 Engine system
 Body system
 Fran/frame system
 Each of these subsystem is composed of sub-sub
{systems.
 Engine system: carburetor system, generator
system, fuel system, and so son. . . .
What is subsystem ?

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Characteristics of a System
 Components: irreducible part or an aggregate of parts , also
called as a subsystem
 Interrelated Components:. The function of one component is
tied to the functions of the others. Output from one is input for
another, the dependence of a part on one or more other parts.
 Boundary: limits of a system, separating it from other systems.
Components within the boundary can be changed whereas
systems outside the boundary cannot be changed.
 Purpose: All components work together to achieve the overall
purpose of the system
 Environment: everything outside the system's boundary that
influences and / or interacts the system
 Interfaces: The points at which the system meets its
environment. Example two typical business systems that
interface with each other are inventory control and
purchasing.
 Input: System takes input from its environment

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Cont…
 Output: System returns output to its environment as a
result of its functioning to achieve the purpose
 Constraints: limits to what the system can do (capacity,
speed, and capability)
Important System Concepts
 Decomposition: The process of breaking down a system
into smaller components
 Allows the systems analyst to:
 Break a system into small, manageable
subsystems
 Focus on one area at a time
 Concentrate on component specific to one group
of users
 Build different components at independent times

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Cont…
 Modularity:
 Process of dividing a system into modules of a
relatively uniform size
 Modules simplify system design
 Coupling:
 Subsystems that are dependent upon each other are
coupled
 Inter relationship between modules/system
components
 Cohesion:
 Extent to which a subsystem performs a single
function
 The modules internal relationship strength(Intra
relationship)

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Cohesion and Coupling
 Cohesion and Coupling are degrees of module dependency.
Coupling vs Cohesion
 Cohesion is a measure of the internal strength of a module
 Coupling is a measure of the extent of information
interchange between modules.

22. When a system is part of a larger system, the larger system is the
super system.
• Physical system: The business firm is a physical system,
composed of physical resources
• Conceptual system: It’s a system that uses conceptual
resources-information and data- to represent a physical
system.
Example:
The Computer is a physical system, but the data and
information stored in it can be viewed as a conceptual
system.
What is a Super System?

23. The Importance of a System View
A systems view regards business operations as systems
embedded within a larger environmental setting. It’s an
abstract way of thinking, but it has potential value to the
manager.
The systems view:
– reduces complexity
– requires good objectives
– emphasizes working together
– acknowledges interconnections
– values feedback
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What is Information System?
 Information System can be defined as an organized
combination of resources and activities that collect,
process, store and disseminate information.
 Resources include people, hardware, software,
communications networks and data resources
 Activities consist of input, processing, output, storage,
and control activities
Major components of an Information system
 Hardware
 Software
 Data resources
 Communication network
 People
Meaning and role of Information system

25. Component of IS 25

26. Cont.
People resources
• Specialists--- systems analysts, software developers,
systems operators.
• End users--- Anyone else who uses information systems
(managers, customers, engineers, accountants, and so
on
Software resources.
• Programs—Operating systems programs, spreadsheet
programs, word processing programs, payroll programs.
• Procedures—data entry procedures, error correcting
procedures, paycheck distribution procedures.
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27. Data resources
• Product description, customer records, employee files, inventory
database.
Network resources.
• Communication media, communication processors, network
access and control software
• Communication media refers to twisted-pair wire, coaxial cable,
fiber-optic cable, microwave, cellular and satellite wireless
technologies.
Hard ware resources.
• Machines—computers, video monitors, magnetic disk drivers,
printers, optical scanners.
• Media – floppy disk, magnetic tape, optical disk, plastic card,
paper forms.
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28. Types of information
 There are various types of information system. IS can be classified as:
formal, informal, and computer based.
 Formal Information System:
 It deals with the flow of information from top management to
lower management.
 Based on organizational chart
 Information flows in the form of memos, instructions, etc. But
feedback can be given from lower authorities to top management.
 Informal Information systems:
• Informal systems are employee based. These are made to solve the
day to day work related problems.
 Computer-Based Information Systems: This class of systems depends
on the use of computer for managing business applications.
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Types of Information System

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Information systems differ in their business needs.
Also depending upon different levels in organization
information systems differ.
Major information systems are
 Transaction Processing Systems (TPS)
 Management Information System (MIS)
 Decision Support Systems (DSS)
 Expert System and Artificial Intelligence (ES &AI)

31. Cont.
 The information needs are different at
different organizational levels.
 Accordingly the information can be
categorized as:
 strategic information,
 managerial information and
 operational information.
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33. Cont.
• Strategic information is the information
needed by top most management for long
term decision making.
For example
• The trends in revenues earned by the
organization are required by the top
management for setting the policies of the
organization.
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34. Cont.
• This information is not required by the
lower levels in the organization. The
information systems that provide these
kinds of information are known as Decision
Support Systems.
• The second category of information
required by the middle management is
known as managerial information.
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35. Cont.
 The information required at this level is
used for making short term decisions and
plans for the organization.
 Information like sales analysis for the past
quarter or yearly production details etc.
 Management information system (MIS)
caters to such information needs of the
organization.
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36. Cont.
• The third category of information is relating to
the daily or short term information needs of
the organization such as attendance records
of the employees.
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37. cont.
• This kind of information is required at the
operational level for carrying out the day-
to-day operational activities. Due to its
capabilities to provide information for
processing transaction of the organization,
the information system is known as
Transaction Processing System or Data
Processing System.
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38. Cont.
• Examples of information provided by such
systems are processing of orders, posting of
entries in bank, evaluating overdue
purchaser orders etc.
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Transaction Processing Systems (TPS)
 Is Information systems that were developed
to process large amounts of data for
routine/habitual business transaction
 A transaction processing system is a computerized
system that performs and records the daily routine
transactions necessary to conduct business, such
as sales order entry, hotel reservations, payroll,
employee record keeping, and shipping.
 It provide speed and accuracy, and can be
programmed to follow routines functions of the
organization.

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 The principal purpose of systems at this level is
to answer routine questions and to track the
flow of transactions through the organization.
 What happened to Mr. Smith’s payment? To
answer these kinds of questions, information
generally must be easily available, current, and
accurate.
 The analysis and design of a TPS requires to
focus on the firm’s current procedures for
processing transactions. How the organization
track, capture, process and output data?

41. Cont.
 The goal of TPS development is to improve
transaction processing by speeding it up, using
fewer people, improving efficiency and
accuracy, integrating it with other
organizational information systems, or
providing information not previously available.
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42.  Sales & Marketing Systems: Sales management,
promotion, pricing
 Manufacturing & Production Systems:
Scheduling, purchasing, shipping, receiving,
engineering, operations
• Human Resources Systems
 Personnel records, benefits,
compensation, labour relations, training
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Typical TPS-Applications:

43. Cont.
• Finance & Accounting Systems
General ledger,accounts receivable,
accounts payable, budgeting
• Other Types (e.g., University)
 Admissions, grade records, course
records
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:
 Transactions are verified and
accepted/rejected
 Validated transactions are stored for later
aggregation and operations
 Report may be produced to provide
summarization of the transactions
 Reporting provides summaries of transactions
(ex. daily, weekly)
In TPS

45. Management Information System (MIS)
 A management information system (MIS) is an
information system that provides for management-
oriented reporting based on transaction processing and
operations of the organization.
 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.
 MIS involve three primary resources: technology,
information, and people.
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46. Cont.
 MIS Serves the functions of planning, controlling,
and decision making by providing routine
summary and exception reports.
 It takes relatively raw data available through a TPS
and converts them into a meaningful aggregated
form that mangers need to conduct their
responsibilities
 Developing a MIS calls for a good understanding
of what kind of information managers require and
how managers use information in their jobs
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47. Cont.
• MIS were the original type of management support systems.
• Produce information that support day-to-day decision-making
needs of mangmt.
• Predefined information products.
• Deals with supporting well structured decision situations.
• A decision is considered as structured if there are clear
procedures for making the decision and if all the factors to be
considered in the decision can be readily identified in
advance.
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48. Role Of MIS
 The role of MIS in an organization can be compared to the role of
heart in the body.
 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.
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49. Cont.
 The main aim of MIS is to inform management and help
them make informed decisions about management and
the way the business is run.
 The system is expected to fulfill the information needs of
an individual, a group of individuals, the management
functionaries: the managers and the top management.
 The MIS satisfies the diverse needs through a variety of
systems such as Query Systems, Analysis Systems,
Modeling Systems and Decision Support Systems.
 The MIS helps in Strategic Planning, Management Control,
Operational Control and Transaction Processing.
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50. Benefits of MIS
 It improves personal efficiency.
 It assist problem solving(speed up the
progress of problems solving in an
organization).
 It facilitates interpersonal communication
 It promotes learning or training.
 It increases or7 ganizational control
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51. MIS Reporting Alternatives
 To be useful, a report must include the information that a
user needs.
 From a user’s point of v iew, a report with too little
information is of no value.
 Too much information, however, can make a report
confusing and difficult to understand.
 When designing reports, the essential goal is to match the
report to the user’s specific information needs. Depending
on their job functions, users might need one or more of
the reports described as follow.
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52. MIS-Reporting
–Periodic scheduled reports
 Uses pre-specified format to provide
info. on a regular basis.
 Typical e.g.
 Weekly sales analysis reports
 Monthly financial statements
–Demand reports and responsnesJun UN
 Info. is provided whenever a manage demands it.
 DBMS query languages and report generations allow
this.
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53. Detail report
 A detail report produces one or more lines of output for
each record processed. Each line of output printed is
called a detail line.
 Example: Figure below shows a simple detail report of
employee hours for a chain of retail stores. Notice that
one detail line prints for each employee.
 All the fields in the record do not have to be printed, nor
do the fields have to be printed in the sequence in which
they appear in the record.
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54. A detail report with one printed line per employee.
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55. Exception Reports.
 An exception report displays only those records that meet
a specific condition or conditions
 Exception Reports warn managers when results
from a particular operation exceed or do not meet
the expected standard for the organization.
 An example of an exception report is a list of all
plants that have logged more overtime hours than
expected for a week. Exception reports are useful
when the user wants information only on records that
might require action, but does not need to know the
details.
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56. An exception report that shows information only for employees who worked overtime.
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57. Summary report
 provide management with important totals,
averages, key data, and abstracts on the
activities of the organization.
 example is the list of total weekly sales, by
salesperson, by product, and by sales region.
 Another example a personnel manager might
need to know the total regular and overtime
hours worked by employees in each store. but
might not be interested in the number of hours
worked by each employee.
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58.  For the personnel manager, a summary report such as the one
shown in Figure below, would be useful. Generally, reports used by
individuals at higher levels in the organization include less detail
than reports used by lower-level employees.
A summary report displays totals without showing details.
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 A decision support system (DSS) is a computer-based
information system that supports business or
organizational decision-making activities.
 DSSs serve the management, operations, and planning
levels of an organization and help to make decisions,
which may be rapidly changing and not easily specified
in advance.
 Information system at the management level of an
organization that combines data and sophisticated
analytical models or data analysis tools to support
semi-structured and unstructured decision making
Decision Support Systems
(DSS)

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Cont.
 A decision is considered as unstructured if there are no
clear procedures for making the decision and if not all the
factors to be considered in the decision can be readily
identified in advance.
 A DSS is composed of a:
 Database ( may be extracted from a TPS/MIS)
 Graphical/mathematical models for business process
 User interface that provides a way to communicate
with DSS

61. DSS and MIS Differences are;
MIS focuses on providing managers with
pre-specified information products.
Report on the performance of the organization
More structured problems
DSS focuses on providing information
interactively to
support specific types of decisions by
individual managers.
Semi-structured and unstructured problems
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Expert System and Artificial Intelligence
(ES & AI)
ES & AI
 Add knowledge to knowledge base
 Knowledge representation describes the way an
expert would approach the problem
 It attempts to codify and manipulate knowledge
rather than information, (for example if .. Then
rule)
 Widely implemented application of AI
Is a knowledge-based system (IS) that uses its
knowledge about a specific, complex application
area to act as an expert consultant to end users.

63. Using expert system
 User communication with an ES via an interactive
dialog.
 The ES asks questions ( that an expert would ask) and
the end user supplies the answers.
 The answers are then used to determine which rules
apply and the ES provides a recommendation based
on the rule.
 Knowledge Engineers perform knowledge acquisition;
they are similar with system analyst but are trained to
use different techniques.
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