Information Systems for Business PDF

Information Systems for Business Unit – 08 Information System Semester-06 Bachelors of Business Administration  Information Systems for Business...

Information Systems for Business Unit – 08 Information System Semester-06 Bachelors of Business Administration  Information Systems for Business JGI x UNIT INFORMATION SYSTEM Names of Sub-Unit - Kinds of Networks,,Types of Information system,,General Decision-Making Concepts,,Steps for Decision Making Procedure, ,Transaction Processing System Overview - Information systems are vital in today's digital age, encompassing various networks and types. Decision-making concepts guide effective processes, while Transaction Processing Systems ensure smooth operations. Understanding these components is crucial for navigating the dynamic landscape of information systems and making informed decisions. Learning Objectives  Identify and explain different kinds of networks.  Describe various types of information systems and their functionalities.  Understand general decision-making concepts.  Outline the steps involved in the decision-making procedure. 2 UNIT 08: Information System Learning Outcomes Upon completing this course, participants will  Demonstrate knowledge of network structures and their applications.  Classify information systems based on their purposes and functions.  Apply decision-making concepts to real-world scenarios.  Execute the steps involved in a decision-making procedure. Pre-Unit Preparatory Material  "Introduction to Information Systems" by R. Kelly Rainer Jr. and Brad Prince.  "Decision Making and Problem Solving Strategies" by John Adair. Table of topics 8.1 Kinds of Networks 8.2 Types of Information Systems: 8.3 General Decision-Making Concepts: 8.4 Transaction Processing System (TPS): 3  Information Systems for Business JGI 8.1 Kinds of Networks 1. Local Area Network (LAN):  Definition: A LAN is a network that spans a small geographic area, like an office, building, or campus. It connects computers and devices, enabling efficient data and resource sharing.  Characteristics: High data transfer rates, low latency, and typically confined to a single location. 2. Wide Area Network (WAN):  Definition: WAN covers a larger geographical area, connecting LANs over long distances. It uses various technologies like leased lines, satellites, and public networks.  Characteristics: Slower data transfer rates compared to LANs but allows connectivity between distant locations. 3. Metropolitan Area Network (MAN):  Definition: MANs cover a larger geographic area than LANs but are smaller than WANs, typically serving a city or a large campus.  Characteristics: Offers a balance between LAN and WAN, providing moderate data transfer rates for interconnected organizations. 4. Wireless Networks:  Definition: These networks use wireless communication technologies like Wi- Fi, Bluetooth, or cellular networks to connect devices without physical cables.  Characteristics: Enhanced mobility, flexibility, and accessibility, making them suitable for various applications. 5. Personal Area Network (PAN):  Definition: PANs are small networks designed for personal devices, connecting them over a short range, typically within the range of an individual person.  Characteristics: Examples include Bluetooth connections, allowing devices like smartphones and laptops to communicate in close proximity. 6. Intranet:  Definition: An intranet is a private network within an organization that uses internet technologies to share information, resources, and collaboration tools among its members.  Characteristics: Enhances internal communication and collaboration while maintaining security and privacy. 4 UNIT 08: Information System 7. Extranet:  Definition: Similar to an intranet, an extranet extends network access to external partners or stakeholders, allowing controlled access to specific resources.  Characteristics: Facilitates collaboration between an organization and its external entities in a secure manner. 8. Virtual Private Network (VPN):  Definition: VPNs create secure and encrypted connections over a public network (usually the internet), enabling remote users to access the organization's private network securely.  Characteristics: Ensures data privacy and security for remote access, commonly used for telecommuting or connecting branch offices. Understanding these networks is crucial for designing efficient and secure information systems tailored to organizational needs and objectives. 8.2 Types of Information Systems: 1. Transaction Processing System (TPS):  Purpose: Captures and processes transactions in real-time, ensuring the day- to-day operations of an organization run smoothly.  Example: Point of Sale (POS) systems in retail. 2. Management Information System (MIS):  Purpose: Provides middle-level managers with summarized, structured information for decision-making and monitoring organizational performance.  Example: Monthly sales reports. 3. Decision Support System (DSS):  Purpose: Assists in complex decision-making processes by analyzing data, providing insights, and supporting scenario analysis.  Example: Financial modeling tools for investment decisions. 4. Executive Information System (EIS):  Purpose: Offers strategic information to top-level executives for long-term planning and decision-making.  Example: Dashboards showing key performance indicators. 5. Knowledge Management System (KMS):  Purpose: Facilitates the creation, organization, and dissemination of knowledge within an organization. 5  Information Systems for Business JGI  Example: Intranet-based collaborative platforms. 6. Enterprise Resource Planning (ERP):  Purpose: Integrates various business processes and functions across an organization into a unified system, enhancing efficiency and coordination.  Example: SAP, Oracle ERP systems. 7. Customer Relationship Management (CRM):  Purpose: Manages interactions with current and potential customers, aiming to improve customer satisfaction and loyalty.  Example: Salesforce CRM. 8. Supply Chain Management (SCM):  Purpose: Coordinates and optimizes the flow of products, information, and finances across the entire supply chain.  Example: Inventory management systems. 9. Business Intelligence System (BI):  Purpose: Gathers, analyzes, and presents business data to support better decision-making within an organization.  Example: Tableau, Power BI. 10. Expert Systems:  Purpose: Utilizes knowledge and decision rules to solve specific problems, mimicking human expertise in a particular domain.  Example: Medical diagnosis systems. 11. Geographic Information System (GIS):  Purpose: Integrates, analyzes, and displays spatial data to support decision- making related to geography and location.  Example: Mapping and navigation applications. 12. Office Automation Systems (OAS):  Purpose: Automates routine office tasks, such as document creation, communication, and data management.  Example: Microsoft Office suite. Understanding these types of information systems is crucial for organizations to leverage technology effectively, supporting various business functions and decision-making processes. 6 UNIT 08: Information System 8.3 General Decision-Making Concepts: 1. Decision-Making Process:  Description: Decision-making is a systematic process involving identification of a problem, gathering information, evaluating alternatives, and choosing the best course of action.  Key Components: Problem recognition, information gathering, alternative evaluation, and decision implementation. 2. Rational Decision-Making Model:  Description: Assumes that individuals make decisions by systematically evaluating all possible alternatives, considering all relevant information, and selecting the option with the highest utility.  Critiques: Often not practical due to time constraints and cognitive limitations. 3. Bounded Rationality:  Description: Recognizes that decision-makers have cognitive limitations and make decisions based on limited information, leading to satisficing (choosing a satisfactory option) rather than optimizing.  Example: Managers might settle for a solution that meets minimum criteria rather than searching for the best one. 4. Intuition:  Description: Involves making decisions based on gut feelings, hunches, or tacit knowledge, especially in situations where there is incomplete information.  Application: Common in fast-paced or ambiguous situations where relying on experience and intuition can be effective. 5. Decision Criteria:  Description: The standards or benchmarks used to evaluate and compare different alternatives during the decision-making process.  Examples: Cost, quality, time, feasibility, and strategic alignment. 6. Decision Trees:  Description: Graphical representation of decision-making scenarios, incorporating probabilities and outcomes to help visualize and analyze possible paths.  Application: Useful in complex decision situations with multiple possible outcomes. 7  Information Systems for Business JGI 7. Risk and Uncertainty:  Description: Risk involves known probabilities, while uncertainty involves unknown probabilities. Decision-makers must assess and manage both to make informed choices.  Strategies: Risk mitigation, scenario analysis, and contingency planning. 8. Group Decision-Making:  Description: Involves the collaborative process of making decisions within a group or team, leveraging diverse perspectives and expertise.  Challenges: Groupthink, conflict resolution, and ensuring equal participation. 9. Cognitive Biases:  Description: Systematic patterns of deviation from norm or rationality in judgment, often leading to irrational decisions.  Examples: Confirmation bias, anchoring bias, and overconfidence. 10. Escalation of Commitment:  Description: The tendency to continue investing resources into a failing course of action due to previous investments, even when it becomes clear it is not the best option.  Challenge: Overcoming sunk cost fallacy and objectively assessing ongoing commitment. Understanding these general decision-making concepts helps individuals and organizations navigate the complexities of choices, improving the quality of decisions and outcomes. 8.4 Transaction Processing System (TPS): Definition: A Transaction Processing System (TPS) is a computerized system that facilitates the collection, processing, storage, and retrieval of transactions within an organization. Transactions refer to any business event or activity that generates or modifies data stored in an information system. Key Components: 1. Transaction Capture:  Description: Involves capturing data related to business transactions. This can include sales, purchases, payments, and other operational activities.  Example: Scanning barcodes at a retail checkout. 8 UNIT 08: Information System 2. Transaction Processing:  Description: The system processes transactions in real-time, ensuring that the data is accurate and up-to-date. This phase involves validation, updating databases, and generating relevant outputs.  Example: Updating inventory levels after a sale. 3. Database:  Description: TPS relies on a centralized database to store transaction data. The database is organized to efficiently manage and retrieve information.  Example: A database storing customer orders, product details, and transaction timestamps. 4. Output Generation:  Description: TPS generates outputs such as receipts, reports, and updated records. These outputs are crucial for decision-making and maintaining accurate records.  Example: Printing a sales receipt for a customer. 5. Feedback:  Description: TPS provides feedback to users regarding the success or failure of a transaction. This ensures that users are aware of the system's status and can take corrective actions if necessary.  Example: Displaying an error message if a transaction cannot be processed. Characteristics: 1. Real-Time Processing:  TPS processes transactions immediately, ensuring that data is current and accurate. This is crucial for operational decision-making and maintaining data integrity. 2. Reliability:  TPS is designed to be highly reliable and available. It must continue functioning even in the face of hardware failures, software errors, or other disruptions. 3. Data Integrity:  TPS ensures the accuracy and consistency of data by validating transactions before they are processed. This includes checks for completeness, accuracy, and conformity to business rules. 4. Batch Processing:  While real-time processing is common, some TPS also support batch processing for handling large volumes of transactions during non-peak hours. 9  Information Systems for Business JGI Applications: 1. Retail:  TPS in retail environments process sales transactions, update inventory levels, and generate sales reports in real-time. 2. Banking:  TPS in banking systems handle transactions like deposits, withdrawals, fund transfers, and loan payments. 3. Airline Reservations:  TPS in airline systems manage ticket bookings, seat reservations, and flight scheduling. 4. Manufacturing:  TPS in manufacturing track production activities, inventory levels, and order processing. Importance: 1. Operational Efficiency:  TPS enhances operational efficiency by automating routine tasks, reducing manual errors, and providing timely information. 2. Data Accuracy:  TPS ensures that transaction data is accurate and consistent, providing a reliable foundation for decision-making and reporting. 3. Customer Satisfaction:  Real-time processing in TPS contributes to improved customer service by enabling quick and accurate responses to inquiries and transactions. Transaction Processing Systems play a critical role in capturing, processing, and managing business transactions, providing a foundation for the effective functioning of an organization. 8.5 Conclusion Understanding information systems is crucial for navigating the complexities of modern organizations. Various networks, including LANs and WANs, form the backbone of communication. Different information systems, such as TPS and MIS, cater to diverse organizational needs. General decision-making concepts guide effective choices, and following a structured decision-making procedure is essential. The Transaction Processing System ensures smooth day-to-day operations. Together, these components empower 10 UNIT 08: Information System organizations to leverage technology for efficient operations, informed decision-making, and strategic advantage in today's dynamic business environment. 8.6 Glossary:  Local Area Network (LAN): A network that connects computers and devices within a limited geographic area, like an office or campus.  Wide Area Network (WAN): A network that spans a larger geographic area, connecting multiple LANs over long distances.  Decision Support System (DSS): An information system designed to assist in decision-making by analyzing data and providing insights.  Bounded Rationality: The concept that decision-makers have cognitive limitations, leading to satisficing rather than optimizing.  Transaction Processing System (TPS): A computerized system that processes and records day-to-day transactions within an organization.  Data Integrity: Ensuring the accuracy and consistency of data in information systems.  Cognitive Biases: Systematic patterns of deviation from rationality in judgment, influencing decision-making.  Feedback: Information provided by a system to users regarding the success or failure of a transaction.  Batch Processing: Processing transactions in groups during non-peak hours rather than in real-time.  Enterprise Resource Planning (ERP): A system that integrates various business processes and functions across an organization. 11  Information Systems for Business JGI Self- Assessment questions Descriptive Questions: 1. How do different types of networks contribute to organizational communication? 2. What role does MIS play in aiding middle-level managers' decision-making processes? 3. Can you provide an example of a cognitive bias that may influence decision-making? 4. How does bounded rationality impact decision-making in real-world scenarios? 5. In what ways can Transaction Processing Systems enhance operational efficiency? Post Unit Reading Material 1. "Types of Information Systems" - Link 2. "Decision-Making Models and Concepts" - Link Topics for Discussion forum 1. Explore the impact of network security on the reliability of information systems. 2. Discuss real-world examples where organizations successfully implemented decision support systems to improve strategic decision-making. 12 UNIT 08: Information System 13