March 5, 2016

An Introduction to Information Systems - Summary of Stair and Reynolds Book Chapter

An information system (IS) is a set of interrelated components that collect , manipulate  and disseminate data and information and provide a feedback mechanism to meet an objective.

Information concepts

Data versus information

Data consists of  raw facts. They have little value on their own.

Information is a collection of  facts organised in such a way that they have additional value beyond the value of facts themselves.

The type of information created depends on the relationships defined among the data.
Process = tasks performed to achieve an outcome. (Turning data into information).
Knowledge = awareness & understanding of how to make information useful.
Information += data made useful through the application of knowledge.

Characteristics of valuable information:

Relevant - Info must be applicable.
Economical - Balance info value with production costs.
Accurate - Info without errors.
Complete - Contains all the important facts.
Timely - Info is delivered when needed.
Simple - Information that is concise and not overloaded.
Flexible - Info can be used for many purposes (by managers, sales people, etc…)
Reliable - Info can be depended on. Reliability depends on the source of information.
Verifiable - Info can be checked.
Accessible - Info should be obtained in the right format at the right time.
Secure - Info should be secure from unauthorised users.
The value of information
Measuring value: Additional profit minus the cost of the information.

System and modeling concepts

System = a set of components that interact to accomplish goals.
System components = inputs, processing mechanisms, outputs and feedback.
Knowledge is needed to define relationships among inputs and to organise elements.

System components and concepts

System boundary = the limits of the system.
The system boundary defines the system and distinguishes it from everything else, whereas
the system configuration refers to the organisation of system elements.

System types:

Temporary - Exists for a short time.
Permanent - Exists for a long time.
Open - Interacts with environment.
Closed - No interaction with environment.
Adaptive - Can change in response to changes in the environment.
Nonadaptive - Can’t change in response to changes in the environment.
Dynamic - Undergoes rapid and constant change.
Stable - Undergoes little change.
Simple - Few components, with straightforward interaction.
Complex - Many elements, highly interconnected.

System performance and standards

1. Efficiency = doing things right (with minimum waste / effort).
= A measure of what is produced divided by what is consumed. (0-100%)
2. Effectiveness = doing the right thing (getting the desired result).
= A measure of the extent to which a system achieves its goals.
Divide goals actually achieved by stated goals.
System performance standard = a specific objective of the system.
E.g. The objective of baking no more than 100 loaves of bread a day.

Once standards are established, performance is measured and compared with the standard.

System Variables and Parameters

System variable = something that can be controlled by the decision maker (like product price)
System parameter = something that can’t be controlled (like the cost of raw materials).

Modeling a system

Model = an abstraction used to represent reality to help you understand real-world situations.
Many contain assumptions (e.g. length of working time), which should be realistic, and users
must be aware of them.

1. Narrative: Verbal and written descriptions (reports, documents, conversations).
2. Physical: Tangible representation of reality (scale models, E.g. prototype of a new cinema).
3. Schematic: Graphic representation of reality (graphs, charts, diagrams, pictures).
4. Mathematical: Arithmetic representation of reality (logical models used in business).

What is an Information system?

Input, processing, output, and feedback

1 Input = capturing raw data, manually or automatically.
2 Processing = converting data into useful outputs, manually or with computers.
3 Output = producing useful information in the form of documents or reports.
Computer output: printers and display screens.
Manual output: handwritten documents and reports.
4 Feedback = output that is used to make changes to input or processing.
Errors might make it necessary to correct input or change a process.
If output indicates low inventory levels, this feedback can be used to order more.
Reactive approach - The feedback system alerts the manager of the problem.
Proactive approach - The system predicts future events to avoid problems (= forecasting).

Manual & computerised information systems

Computerising a manual information system doesn’t guarantee improved performance,
because if it is flawed, computerising it might magnify the impact of the flaws.

Computer-Based Information Systems (CBIS)

Technology infrastructure (hardware, software, databases, telecommunications, people,
procedures) forms the foundation of each CBIS.

1 Hardware = computer equipment used to perform input, processing and output activities.

2 Software = programs that operate the computer.

3 Databases = organised collection of facts and information. (= Very valuable to a CBIS)

4 Telecommunications
Telecommunications enables organisations to carry out tasks through computer networks.
Extranet = a network that allows selected outsiders to access authorised intranet resources.
(You’re using an extranet when you track a parcel).

5 People
IS personnel = people who manage, run, program, and maintain the system
Users can also be IS personnel.
People are the most important element in most CBISs.

6 Procedures
= Strategies, policies, methods and rules for using the CBIS.
A disaster recovery plan is a procedure because it outlines what course of action to take.

Types of business information systems

1. E-commerce (Detailed chapter)

= Business transactions executed electronically between parties.
Business-to-business transactions is the fastest growing segment.

2a. Transaction processing systems (TPS) ( chapter 9)
= People, procedures, software, databases and devices used to record business transactions.
Used for routine, repetitive ordinary business transactions critical to daily functioning.
E.g. Payroll systems: Input = hours & rates, output = pay cheque.

2b. Workflow systems
= Management software that co-ordinates and monitors interrelated tasks.
Primary purpose: To provide tracking, routing… capabilities to improve business processes.

2c. Enterprise resource planning (ERP) (see chapter 9)
= Integrated programs capable of managing a company’s vital business operations.
It must be able to support multiple languages, currencies, and functional areas.
Most ERP systems support the manufacturing and finance business functions.

E.g. A demand forecast is prepared; The ERP checks what is available; Shortcomings are
then manufactured; In the production schedule the ERP checks the raw material inventory;
The ERP purchasing subsystem orders the items required.
Benefits of ERP:
* Support for business functions (human resources, sales, distribution…)
* Providing improved work processes
* Improving access to timely data for operational decision making
* Elimination of costly, inflexible legacy systems
* Creating the opportunity to upgrade technology infrastructure

3a. Management information systems (MIS) ( chapter 10)

= People, procedures, software, databases and devices that provide routine info to managers.
Focus of a MIS: Operational efficiency (doing things right).
MISs typically provide standard reports generated with data & info from the TPS.
(See ‘Outputs of a MIS, ch 10’ for definitions on scheduled, demand, and exception reports)

3b. Decision support systems (DSS)

= People, procedures, software, databases and devices used to support decision making.
Focus of a DSS: Decision-making effectiveness (do the right thing).
Provides immediate assistance in solving complex problems that a MIS can’t.
E.g. To determine the best location to build a new factory.
A DSS operates from a managerial perspective and recognises that different managerial
styles require different systems.
Emphasis: Supporting rather than replacing managerial decision-making.
Essential elements:
Collection of models to support the decision maker (model base),
collection of facts to assist in decision making (database) and
systems and procedures to help decision makers interact with the DSS (user interface).

4a. Artificial intelligence ( chapter 11)
= A field in which the computer system takes on characteristics of human intelligence.
(See chapter 11 for definitions of robotics, vision systems, natural language processing,
learning systems, neural networking, and expert systems).
4b. Virtual reality
The user is immersed in an artificial, 3D world, presented in full scale.
Through immersion, the user can gain deep understanding of the virtual world’s behaviour.
Input devices: head-mounted displays, data gloves, joysticks…
Good medium for communication, entertainment and learning.
Useful applications: training (military), design evaluation, ergonomic studies, treatment of
phobias, and games.
Systems development
= Creating or modifying manual or computerised business systems.
Steps for improving a systems development project:
* Systems investigation (Understand the problem to be solved).
* Systems analysis (Define the problems and opportunities of the existing system).
* Systems design (Determine how the new system will work).
* Systems implementation (Create components and put the new system into operation).
* Systems maintenance and review (Check and modify the system).

Why study information systems?

Computer literacy = knowledge of computer systems and equipment.
Information systems literacy = knowledge of how and why technology is applied in business.
Information systems in the functional areas of business
Finance & accounting - Forecast revenues, manage cash, analyse investments…
Sales & marketing - Product analysis, site analysis, promotion analysis, price analysis…
Manufacturing - Process customer orders, develop schedules, monitor product quality…
CAD - Computer-aided design
CAM - Computer-aided manufacturing
CIM - Computer-integrated manufacturing
Human resource management - Screen applicants, monitor employee productivity…
Legal information systems - Analyse product liability, develop legal documents…
Information systems in industry
Airline industry - Internet auction sites offer discount fares.
Investment firms - Analyse stocks, bonds, options, provide improved service to customers…

Banks - Make sound loans and good investments.
Transportation industry - Schedule trucks to deliver goods at least cost.
Publishing companies - Analyse markets and develop and publish books.
Healthcare organisations - Diagnose illnesses, plan medical treatment, bill patients.
Retail companies - Take customer orders on the Web.
Professional services - Improve speed and quality of services.

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