Intro to Information Systems

Introduction to Information Systems

• Information Technology (IT) and Information Systems (IS) are rapidly changing lives
• Communication was mainly limited to telephones 50 years ago
• Word processors emerged in the mid-1960s
• Fax machines became common in offices in the 1970s
• Information systems are now widespread and part of everyday life, found in scenarios such as supermarkets, airline reservations, libraries and banking
• A Computer Information System (CIS) includes hardware, software, people, procedures, and data collections
• Information Technology (IT) involves the hardware and software used in an information system including computers and networking
• The goal of an Information System is to help managers make well-informed decisions through quality data

Data, Information, Knowledge, and Wisdom

• A retail store aiming to boost sales uses data such as past 36 months sales, advertising costs, and customer feedback
• This data requires organizing and analyzing to become useful for decision making
• Managers might use economic and marketing models to forecast patterns and determine relationships between advertising expenses and sales
• Equations, charts, and tables can clarify data relationships to inform decision on how to proceed
• Knowledge is needed to analyze data and make decisions
• Education and experience creates knowledge in humans
• Managers are able to determine which data to collect, which models to apply and how to analyze results for making better decisions
• In some scenarios, this knowledge is transferred to expert systems
• Wisdom is the ability to learn from experience and adapt, enabling managers to spot trends, identify problems, and develop new analysis techniques

Data versus Information

• Data is considered raw material
• Analyzed, summarized or processed data turns into information if the user understands it
• Data includes the words, numbers, and graphics entered into a computer to describe things, events, and people
• Information uses words, numbers, and graphics displayed or printed for decision-making
• Information is often the result of data processing
• Data handling incurs costs without directly adding value
• Value is achieved when information is used to enhance decision-making

Characteristics of Information

• Timeliness: Information must be available when needed, not too early or too late
• Appropriateness: Information must be relevant to the user's activities to reduce uncertainty when making decisions
• Accuracy: Information should be unbiased and error-free
• Information is more reliable in a written and direct form, rather than verbal or indirect
• Conciseness: Information should have only the necessary details to avoid overload
• Frequency: Information frequency should align with the user's decision-making timeline
• Understandability: The format and presentation of information affects understandability, such as using tables, graphs and colours
• Relevance: Data should be related to the problem, based on the decision-making model used
• Completeness: All relevant data points are included, such as sales figures and marketing data
• Current: Decisions should be based on the most up-to-date information
• Cost-beneficial: Analyse the information’s potential benefits against the costs of obtaining it
• Comprehension: Transforms data into information which adds value
• User preferences affect understanding; some prefer graphs, others prefer narratives or presentations

Factors that Intervene in Understanding Information

• Previous knowledge: Comprehension relies on memory and the received message
• Environmental factors: Group pressure, available time, and trust in the system influence comprehension
• Language: Information is codified in signs or messages

Sources of Information

• Internal information concerns the company's internal environment
• External information concerns the company's external environment
• Internal data provides management knowledge of the company’s functioning and objective achievement
• Statistical analyses (sales, production) and surveys can be sources of internal information
• Surveys and interviews with company members can provide information on workers' motivation levels
• Adaptation to the external environment is key for a company’s success
• The external environment includes several groups that can influence the company’s fulfillment of its objectives

Groups with which a Company Interacts

• Customers: marketing, sales, and customer satisfaction
• Distributors: marketing and logistics
• Competitors: market penetration, innovations, and product quality
• Suppliers: transaction conditions
• Trade unions: salaries and employment stability
• Shareholders: company performance
• Financial institutions: financial conditions and investment opportunities
• Government: legal and political developments

What is a System?

• A system is a group of connected parts that work together to achieve a goal
• It receives inputs and creates outputs through an organized process
• Inputs and Outputs: The output from system should produce value to the user, with system inputs needing to be appropriate
• Processing converts input into output, modifying the input to meet the specifications of the output
• Control elements guide the system and make decisions for input, processing, and output
• Feedback measures output against standards, including control and communication
• Environment: The system functions within a broader environment that affects performance
• Boundaries and Interfaces: A system defines its limits in components, processes, and interactions with other systems

Types of Systems

• Physical systems are tangible and may be static or dynamic
• Abstract systems are nonphysical or and conceptual
• Abstract Systems may have formulas of relationships among sets of variables or models
• Open systems interact with their environment, receiving inputs and delivering outputs
• Closed systems are isolated from environmental influences
• Deterministic systems have perfectly predictable events
• Probabilistic systems have events that are not perfectly predicted

What is an Information System?

• An information system is a set of interrelated parts that collect/retrieve, process, store, and share information for decision-making and control
• It is made of resources such as hardware, software, database management, network, including people
• These components integrate to perform input, processing, output, feedback, and control
• Information systems contain information about significant people, places, and things within the organization and its environment
• Three activities are used to produce the required information organizations need, they are input, processing, and output
• Input: captures the collection of raw data
• Processing: converts raw data into meaningful information
• Output: transfers processed information to people or processes
• Feedback: allows evaluation and correction of input

A Business Perspective on Information Systems

• A Business system serves as an organizational and management solution to an environmental challenge
• Managers and firms use information technology and systems for the real economic value they provide
• The returns on investing in an information system must be superior to that of other investments such as buildings or machines

Components of an Information System

• Components include: data, hardware, software, communication networks, people, and procedures
• Data: The input used by the system to create information
• Hardware: Consists of the computer and its related equipment for input, output, and storage
• Software: Instructions that tell the computer how to manage input, processing, output, and data storage
• Communication networks: Special hardware and software transmit and receive electronic data
• People: IS professionals design, build, operate, and maintain IS while end-users use the information system
• Procedures: Strategies and rules for using computer-based information systems

How the Components of an Information System Operate

• Collecting the information
• Processing the information
• Storing the information
• Retrieving the information
• Disseminating or sharing the information

Functions of the Information System

• Data capture and collection involves capturing external and internal data
• The data is sent to entities within the system responsible for organization and avoiding duplicate data
• Storage allows classifying data and is stored according to a particular classifying criterion
• Use a traditional filing system or a computer processed database for storing
• Information processing Transforms data into valuable data needed for the user
• The system disseminates information so it reaches each user and is shared with other people within the company

Information System Types

• Organizations are typically divided into 3 levels of operations; High Upper, Middle and Operational Management
• Information needs vary at each level, so the information systems vary
• Operational Management Level:
  • Involves day-to-day business tasks
  • Users include cashiers, bank tellers, customer care, etc
  • Decisions are highly structured, following set rules
• Tactical Management Level:
  • Dominated by middle managers, supervisors, and department heads
  • The use of semi-structured decision making, guided by guidelines with subjective judgment
• Strategy management level:
  • Senior level makes unstructured decisions
  • Information gathered is from tactical managers and external data
• Transaction Processing Systems (TPS) are used for day-to-day business transaction records
• It answers the day to day questions
• Operational managers are the users
• Examples of these are Point of Sale Systems, Payroll systems, Stock Control systems, Airline booking systems)
• Management Information Systems (MIS) takes output from a transaction processing system
• The input is analyzed using basic algorithms to produce reports that can be used by tactical managers
• Decision Support Systems (DSS) helps senior management make difficult decisions
• Financial Planning and Bank Loan examples
• Artificial Intelligence Techniques can mimic human expertise in businesses such as Amazon, Facebook and Google