Information System Concepts

2 INFORMATION SYSTEM CONCEPTS

2.1 DATA

Data – Raw facts about an organization and its business transactions

Data is groups of non – random symbols which represent quantities, actions, objects etc   

·         In IS data items are formed from characters that may be alphabetical, numeric or special symbols

·         Data processing involves collecting and organizing the data items / symbols for the purpose of converting them into data structures and databases.

·         Data relevant to the processing of Information and decision making may also be in the form of text, images or voice. For effective processing of data resources are necessary such as human personnel, facilities and equipment.

2.1.2 INFORMATION

Information – data that has been processed into a form that is meaningful to the recipient and is of real / perceived value in the current / prospective actions and decisions.

Information is organized ideas or facts obtained through processing data in a purposeful intelligence and can be used in decision making

The relation of data and Information is that of raw materials to finished products in the sense that an IS processes data into information, diagrammatically

• Information is data structured and organized to be useful in making a decision or performing some task. The information resources are reusable, don’t lose value and may indeed gain value through credibility added by its use. The value of information become meaningful in the context of decision, since if there were no current / future choices or decisions then information would be unnecessary.

Quality of information

The aspects of information in terms of the perceptions of the decision maker are:-

·         Utility – evaluating info in terms of utilities / applications that may facilitate or retard info use and includes form, time, place and possession utility

·         Satisfaction – degree to which a decision maker is satisfied with the output of the informal IS

·         Errors and bias – errors causes variation of info, where improvement in quality is more important than an increase in the quantity of info. Bias is caused by individual’s ability to exercise discretion in info presentation

 

2.1.3 KNOWLEDGE

Knowledge implies “understanding” of information

Example from book: company analyzes its recruiting data and concludes that recruits from school X tend to have good outcomes only if their GPA’s are at least 3.0. In future, based on this “knowledge”, they screen applicants from school X by their GPA’s, only interviewing those with at least a 3.0 GPA. One common kind of knowledge representation in computers is called “artificial intelligence” (AI). It got a lot of hype in the 1980’s, and then went somewhat out of fashion, but it is still growing gradually. We will not discuss it much, and stick to “information” instead.

2.1.4 INFORMATION SYSTEMS

Definition of some basic terms - The ways that organizations Store, Move, Organize, Manipulate or process their information

     • Components that implement information systems – in other words, Information Technology

Hardware – physical tools: computer and network hardware, but also low-tech things like pens and paper

·         Software – (changeable) instructions for the hardware

·         People – the users of the systems having relevant knowledge

·         Procedures – instructions for the people

·         Data/databases – programs and storage facilities for data / information

Information systems existed before computers and networks – they just used relatively simple hardware that usually didn’t need software (at least as we know it today). Strictly speaking, this course is about “CBIS” (Computer Based Information Systems). Because of the present ubiquity of such systems, we usually leave the “CB” to be implicit.

 Impact of computer and network hardware and related software/services

·         Can perform numerical computations and other data processing much more quickly, accurately, and cheaply than people

·         Can communicate very quickly and accurately

·         Can store large amounts of information quickly and cheaply; retrieval can often be very rapid

·         Can automate tasks and processes that previously required human labor (various degrees possible, of course)

·         Information doesn’t have to be “stuck” with particular things, locations, or people

2.1.5 INFORMATION ARCHITECTURE

Information architecture is the particular way an organization has arranged its information systems: for example, a particular network of computers running particular software supports the marketing organization, while another network of computers running different software supports the production facilities, etc.

2.1.6 INFORMATION INFRASTRUCTURE

Information infrastructure consists of the hardware and software that support the information architecture, plus the personnel and services dedicated primarily to maintaining and developing that hardware and software.

2.1.7 APPLICATION PROGRAMS

The Application and Application Programs are somewhat fuzzy terms, but typically denote computer software and databases supporting a particular task or group of tasks.

·         Example from book: HR uses one application to screen job applicants and another to monitor employee turnover

·         A classic business IT problem: applications that don’t communicate with one another (effectively)

2.2 CLASSIFICATIONS OF SYSTEM

Classification of systems can be done in many ways.

2.2.1 PHYSICAL OR ABSTRACT SYSTEM

Physical systems are tangible entities that we can feel and touch. These may be static or dynamic in nature. For example, take a computer center. Desks and chairs are the static parts, which assist in the working of the center. Static parts don't change. The dynamic systems are constantly changing. Computer systems are dynamic system. Programs, data, and applications can change according to the user's needs. Abstract systems are conceptual. These are not physical entities. They may be formulas, representation or model of a real system.

2.2.2 OPEN AND CLOSED SYSTEM

Systems interact with their environment to achieve their targets. Things that are not part of the system are environmental elements for the system. Depending upon the interaction with the environment, systems can be divided into two categories, open and closed.

·         Open systems: Systems that interact with their environment. Practically most of the systems are open systems. An open system has many interfaces with its environment. It can also adapt to changing environmental conditions. It can receive inputs from, and delivers output to the outside of system. An information system is an example of this category.

·         Closed systems: these are systems that do not interact with their environment. Closed systems exist in concept only.

 

2.2.3 MAN MADE INFORMATION SYSTEM

The main purpose of information systems is to manage data for a particular organization. Maintaining files, producing information and reports are a few functions. An information system produces customized information depending upon the needs of the organization. These are usually formal, informal, and computer based.

·         Formal Information Systems: It deals with the flow of information from top management to lower management. 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.

2.3 ORGANIZATIONS AND INFORMATION SYSTEMS

Information systems and organizations have a mutual influence on each other.  Information systems must be aligned with the organization to provide information needed by important groups within the organization.  Meanwhile, organization must be aware of and open itself to the influences of information systems in order to benefit from new technologies.  The interaction between information technology and organizations is very complex and is influenced by a great many mediating factors, including the organization’s structure, standard operating procedures, politics, culture, surrounding environment and management decisions. The illustration below illustrates the two-way relationship between organization and information technology.

2.3.1 DEFINING AN ORGANIZATION

Organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs (technical definition).  This technical definition focuses on three elements of an organization:

·         Capital and labor are primarily production factors provided by the environment.

·         The organization (the firm) transforms these inputs into products and services in a production function.

·         The products and services are consumed by environments in return for supply inputs.

The illustration below shows the relation between these three elements.  In the technical microeconomic definition of the organization, capitol and labor (the primary production factor provided by the environment) are transformed by the firm through the production process into products and services (output to the environment).  The products and services are consumed by

the environment, which supplies additional capital and labor as inputs in the feedback loop.

·         An organization is more stable than an informal group in terms of longevity and routine-ness.  Organizations are formal legal entities, with internal rules and procedures, that must be abide by laws. 

·         Organizations are also social structure because they are a collection of rights, privileges, obligations and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution (behavioral definition).Figure 4.3 below shows the behavioral view of an organization that emphasizes group relationships, values and structures.

 

From the technical view of organization, it encourages organization to focus upon the way inputs are combined into outputs when technology changes are introduced into the company.  The firm is seen as infinitely malleable, with capital and labor substituting for each other quite easily.  Meanwhile, from the behavioral view of organization, it suggests that building new information systems or rebuilding old ones involves much more than a technical rearrangement of machines or workers.

The technical and behavioral definitions of organizations are not contradictory but they complement each other.  The technical definition tells us how many thousands of firms in competitive market combine capital, labor and information technology whereas the behavioral models takes us inside the individual firm to see how that technology affects the inner workings of the organization.

2.3.2 SYSTEM APPLICATIONS IN THE ORGANIZATION

Due to different interests, specialties and levels in an organization, there are different kinds of systems.  No single system can provide all the information an organization needs. Organization and information systems can be divided into strategic, management, knowledge and operational level.  All the above mentioned levels of an organization can be further divided into five functional areas: sales and marketing, manufacturing, accounting, finance and human resources.  The diagram below shows the one way to depict the kinds of systems found in an organization.

 

2.4 DIFFERENT KINDS OF SYSTEMS

Strategic level systems help senior manager with long-term planning.  The principle concern at this level is matching changes in the external environment with existing organizational capabilities.  It supports the long-range planning activities of senior management.  It also helps the senior management to tackle and address strategic issues both in the firm and in the external environment.

Management level systems help middle managers monitor and control.  It typically provides periodic reports rather than instant information on operations.  It supports the monitoring, controlling, decision-making and administrative activities of middle managers.  Some of the management level systems support non-routine decision making where they tend to focus on less-structured decisions for which information requirements are not always clear.

Knowledge level systems help knowledge and data workers design product, distribute information and cope with paperwork.  The main purpose is to help integrate new knowledge into the business and to help the organization control the flow of paperwork.  Knowledge level systems, especially in the form of workstations and office systems are the fastest-growing applications in business today.

Operational level systems help operational manager keep track of the firm’s day-today activities.  The principle purpose is of operational level system is to answer routine questions and to track the flow of transactions through the organization.

2.5 ORGANIZATIONS AND INFORMATION SYSTEMS

Some of the general benefits why organizations adopt information systems are as follow:

·         More efficient operations

·         Save money on costs of processes

·         Reduce work force and increase benefits

·         More innovative than others thus effective

·         A source of competitive advantage over others

·         Become vitally important simply to stay in business

·         Satisfy the ambitious of various groups within an organization

2.5.1 ORGANIZATIONS ADOPTION OF SYSTEMS

The diagram below shows the system development process that includes many considerations other than economic.  The model divides the explanation for why organization adopts systems into two groups:

External environment factors – these are the constraints and opportunities that influence the adoption and design of information systems.  Examples of external constraints would be the rising costs of labor or other resources, the competitive actions of other organizations and changes in government regulations.  Examples of external opportunities include new technologies, new sources of capital, the demise of a competitors or a new government program.

Institutional factors – these are factors internal to the organization that influence the adoption and design of information systems.  They may include values, norms and vital interests that govern matters of strategic importance to the organization.