MANAGEMENT INFORMATION SYSTEM

Chapter One
Fundamentals of Information Systems and
their Relationship in Business Applications

Lecture 1: Fundamentals of Information Systems

Technology is configured intosystems that help to

manageinformation to improveorganizational
performance

Ketema A. Gemeda (PhD)

[email protected]

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 Fundamentals of Information Systems
 Data vs. Information
 Data: data are streams of raw facts, figures, group of symbols,
events occurring in organizations or in the physical
environment
– It is a collection of raw figures that represent features or
details about people, objects, places or events.
 Information: is data shaped into meaningful form.
– It is a collection of meaningful facts and figures that can
be used as a base for guidance and decision making.
– Data to be an Information: it has to be SMART (Simple
Meaningful Accurate Reliable and Time bounded).

Information -
Data Processed Meaning

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 Fundamentals of Information Systems
 Think of the data that is created when you buy a product from a
retailer. These include:
– Time and date of transaction (e.g. 10:05 Tuesday 04 September 2018)
– Transaction value (e.g. 55.00 Birr)
– Facts about what was bought (e.g. hairdryer, cosmetics pack, shaving
foam) and how much was bought (quantities)
– How payment was made (e.g. credit card, credit card number and
code)
– Who recorded the sale (Employee Name)

 Raw data from a supermarket checkout counter can be

processed and organized to produce meaningful information
such as the total unit sales of dish detergent or the total sales
revenue from dish detergent for a specific store or sales
territory.

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 Fundamentals of Information Systems
Data and Information

Distinction between data and information

Data Information
1. It is a stored facts. 1. It is a presented facts
2. It is technology based 2. It is business based
3. It is gathered from various sources 3. It is generated form of data
4. It is unprocessed. 5. It is processed
5. Not useful for decision making 6. Useful for decision making

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 Fundamentals of Information Systems
 Knowledge
– Facts which exist only in the mind of beholder
– Complex structures in human memory.
– Memorization with understanding
– Derived from processing factual knowledge
– Circumstance or condition of catching truth or fact through
reasoning
– Different information and principles acquired by mankind,
which has a declarative nature
– It is the collection of information, and the ability to change
such information into action.
– It is related to the different techniques used by other people
in the past or being used at the present to solve scientific
and social problems.

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 Fundamentals of Information Systems
 Types of knowledge
 Explicit Knowledge:
– Articulated in a formal language and easily transmitted among
individuals both synchronously and asynchronously
– Codified in book, manuals, picture, and video
– Can be transferred easily with the help of electronic tools
– Disadvantage: it is difficult to handle theabundant volume of
information
 Tacit Knowledge:
– Expertise and experience not formally documented
– A personal knowledge embedded in individual experience
involving such intangibles like personal belief instinct,
perspective and value.
– Transferred through face to face communication, revealed at
the time of informal discussions
– More difficult to capture and diffuse
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 Data, Information, Knowledge- Relationships
Data Domain of
(Letters, numbers, graphics… Technology
Representing reality and knowledge)

Knowledge
Information (Complex cognitive entity;
(Data understood, cause-effect theories,
meaning) vocabularies/conceptual maps,
know-how, experience)

Domain of business Domain of Human Brain

 Most of work in modern organizations is about data, knowledge and
information.
 Occupational groups:
– Clerks: manipulate data
– Managers: interpret data in reports & elsewhere to get informed for
managing.
– Professionals: use knowledge to analyze & resolve professional
problems & advance knowledge. 7
Data, Information, Knowledge, and
Wisdom

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 Information and Human Evolution
 The three parts of human evolution
1. Agrarian Society
2. Industrial Society
3. Information Society
 The evolution and characteristics of the information age

Agricultural Age Industrial Age Information Age

Time period Pre-1800s 1800 to 1957 1957 to present

Majority of Farmers Factory workers Knowledge

workers workers

Partnership People and land People and People and people

machines

Principal tool Hand tools Machines Information

Technology
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 Information Society
 The characteristics of information age
 The information age is distinguished from previous ages on
the basis of five characteristics.
– The rise of an information based society.
– Businesses depend on information technology to get
their work done.
– Work processes are transformed to increase productivity.
– Success is largely determined by the effectiveness with
which information technology is used.
– Information technology is embedded in many products
and services.

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 Stage of Development in Information society
1. Information rich society (1960 &1970s)
– Which is characterized by high production of information
– High diffusion of ICT/IT highly used for production, and high
employment in ICT area.
2. Information based society (1980s - 1990s)
– It can be characterized by 3 points : globalization,
Specialization, and Connectivity.
1. Globalization- aggravated by uni-production, Internet was
access for all public, international telephone
2. Specialization: using of specialized devices
– Specializing on single production
3. Connectivity enable people to communicate
– Computer technology
– Incorporate different network like-( LAN, WAN and MAN)
– Highly aggravated by increase of technology and decrease of
price. 11
 Stage of Development in Information society (…)
3. Information dominated Society (1990s+)
 A society group that highly dominated by: production,
transmission, use of information and ICT
– Information become a commodity (i.e. the introduction of
selling Hardware and Software are a major development.)
– Society become dependent on information
– Information becomes a culture
– Economy is highly dominated by information producing
company

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 Criteria's of Information Society
1. Technological: wide application of information technologies in
office, in factories, at homes and etc.
2. Social: the use of information to improve quality of life, (Society
use information to improve his/ her quality of life among society.)
3. Economic: for economic development information is considered as
a key factor.
– Information as (resources, services, commodity, sources of
added value, employment).
4. Cultural: recognition of cultural values of information, how much
information affect our culture.
5. Political: freedom of using information.
– This freedom includes right to speak, write, and disseminate
information to public.

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 Fundamentals of Information Systems
 System: a group of interrelated components working together
toward a common goal by accepting inputs and producing
outputs in an organized transformation process.
– System elements: Input, Output, Boundary, Subsystem and
Interrelationship
 Information System (IS):
– An IS can be a set of interrelated components that collect (or
retrieve), process, store, and distribute information to support
decision making and control in an organization.
– IS may also help managers and workers analyze problems,
visualize complex subjects, and create new products.
– Support decision making, coordination, and control
– Its mission is to improve the performance of people in
organizations through the use of information technology
– Examples: ATMs, Airline Reservation & Course Registration
Systems
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Industrial Revolution Rap

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 Information Systems Processing
 Information processing can be either manual or computerized
(automated)
 Four steps involved during Information systems processing:
1. Input: captures raw data from organization or external
environment
2. Processing: converts raw data into meaningful form
3. Storage/retrieval: saving data/information for future use
(searching for & finding data/information which resides)
4. Output: transfers processed information to people or activities
that use it
• Feedback: output returned to appropriate members of organization
that help to evaluate or correct input stage.

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 Information Systems Processing
 An IS contains information about an organization and its
surrounding environment
– Information systems processing environmental actors are:
customers, suppliers, competitors, stockholders, and regulatory
agencies, interact with the organization and its IS.
Manual Vs Automated Information Processing
• Manual Information Processing: is processing of information using
paper, pencil, and brain.
• Automated Information Processing is processing of information
with the help of computers. This is much more flexible than the
manual one and a lot faster.
 Computer/Computer program vs. information system
– Computers and software are technical foundation and tools,
similar to the material and tools used to build a house.
– Building a successful Information System is analogy to like
building a ‘House’

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 Information System Components
 Information System (IS)
– Arrangement of people, data, processes, information
presentation and information technology that interact to
support and improve day-to-day operations in a business as well
as support the problem-solving and decision-making needs of
management and users.
 The Five Key components of Information systems are: hardware,
software, data, processes, and people
 Hardware: physical layer of the information system
– It includes: servers, networks, work stations, telecommunication
equipment, cables, input and output devices and many others.

data people

software processes

hardware
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 Information System Components
 Software: the programs which control the hardware and produce the
desired information and results.
 System software manages the hardware components.
– Examples: Operating Systems, Security Software, utility Programs, and
Network Operating System (NOS)
 Application software: the programs that support day-to day business
functions and provide process and manage the information user need.
– Examples: Company-wide applications, called Enterprise applications,
include order processing system, payroll systems, and company
communication network
 Data: is the raw material that an IS transforms into useful information
 Processes: tasks and business functions that users, managers, and IT
staff members perform to achieve specific results
– Processes are the building blocks of an IS
– Processes represent actual day-to-day business operations
 People: includes people who manage, run, program, and maintain the
system.
– Example: IT professionals

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 Dimensions of Information Systems
 An effectively using
information systems
require, understanding:
 Organization
 Management, and
 Information technology
shaping the systems.
 An IS creates value for the
firm as an organizational
and management solution
to challenges posed by the
environment.
 Technology is configured intosystems that
Information Systems help to manageinformation to improve
are more than organizational performance
computers
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 Dimensions of Information Systems
 Organizational dimension of IS:
 Organizations have a structure that is composed of different levels
and specialties.
 Their structures reveal a clear-cut division of labor.
 Hierarchy of authority and their responsibility:
– Senior management: makes long-range strategic decisions
about products, services and ensures financial performance of
the firm.
– Middle management: carries out the programs and plans of
senior management.
– Operational management: responsible for monitoring the daily
activities of the business.
– Knowledge workers: such as engineers, scientists, or architects,
design products or services and create new knowledge for the
firm
– Data workers: such as secretaries or clerks, assist with
scheduling and communications at all levels of the firm.
– Production or service workers: produce the product and deliver
the service

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 Dimensions of Information Systems
 Business organizations are
hierarchies consisting of
three principal of
management levels:
– Senior management
– Middle management
– Operational management.
 Information systems serve
each of these levels.
 Scientists and knowledge
workers often work with
middle management.

Levels in a Firm 22
 Dimensions of Information Systems
 Organizational dimension of IS: (Cont….)
 Separation of business functions or specialized tasks performed
by business organizations:
– Sales and Marketing: selling the organization’s products and
services
– Human Resources: attracting, developing, and maintaining the
organization’s labor force; maintaining employee records
– Finance and Accounting: managing the organization’s financial
assets and maintaining the organization’s financial records
– Manufacturing and Production: producing and delivering
products and services
 A common observation is that “Every business is different.”
 Information systems serve each of these business function.
– Sales/marketing: order processing, billing, sales planning, etc.
– Finance/accounting: general ledger, accounts payable, etc.
– Human resources: personnel administration, time and
performance management, payroll, etc.
– Manufacturing/production: purchasing, shipping, etc.
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 Dimensions of Information Systems
 Management dimension of information systems
 Management is the coordination and administration of tasks to
achieve a goal.
 Such administration activities include setting the organization's
strategy and coordinating the efforts of staff to accomplish these
objectives through the application of available resources.
 Its job is to make sense out of the many situations faced by
organizations, make decisions, and formulate action plans to solve
organizational problems.
– Managers perceive business challenges in the environment
– They allocate the human and financial resources to coordinate the
work and achieve success.
– They must exercise responsible leadership
 In addition, managers must act creatively:
– Creation of new products and services
– Occasionally re-creating the organization
 IT can play a powerful role in helping managers design and deliver new
products and services and redirecting and redesigning their
organizations.

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 Dimensions of Information Systems
 Information Technology dimension of information systems
 Computer hardware: physical equipment's
 Computer software: preprogrammed instructions
 Data management technology
 Networking and telecommunications technology
– Networks : links two or more computers
– Internet: connects millions of different networks across the globe
– intranets: are private networks used by corporations
– extranets: are similar to intranets except that they are directed at
external users (like customers and suppliers).
– World Wide Web (WWW): a service provided by the Internet
 IT infrastructure: provides platform that system is built on.
– IT is at the heart of Information Systems.
• While organization and management are important too, it’s the
technology that enables the systems and the organizations and
managers who use the technology.
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 Contemporary Approaches to Information Systems
 The study of ISs is a multidisciplinary field.
 No single theory or perspective dominates
 The study of IS deals with issues and insights contributed from
technical and behavioral disciplines.
 Technical approach
– Emphasizes mathematical based models to study IS
• The Disciplines that contributes:
– Computer science: concerned with establishing theories of
computability, methods of computation, and methods of
efficient data storage and access.
– Management science: emphasizes the development of models
for decision making and management practices.
– Operations research: for optimizing selected parameters of
organizations, such as transportation, inventory control, and
transaction costs.

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 Contemporary Approaches to Information Systems
 Behavioral approach
• Strategic business integration, design, implementation and
utilization has considered in the IS development and
maintenance.
– Sociologists: study ISs with an eye toward how groups and
organizations shape the development of systems.
– Psychologists: study ISs with an interest in how human
decision makers perceive and use formal information.
– Economists: how new ISs change the control and cost
structures within the firm.

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 Contemporary Approaches to Information Systems

 Q: Which of the two major types of approaches find to be most appropriate/

accurate? Why?
 Emphasize that the technical approach does not ignore behavior and the
behavioral approach does not ignore technology, but that they are indeed two
distinct approaches. 28
 Contemporary Approaches to Information Systems
 Management Information Systems(MIS)
– MIS deals with behavioral issues as well as technical
issues surrounding the development, use, and impact of
information systems used by managers and employees in
the firm.
– It focuses on the use of computer-based information
systems in business firms and government agencies.
– Combines computer science, management science,
operations research and practical orientation with
behavioral issues
• MIS is an integrated, user-machine system for providing
information to support operations, management, and
decision-making functions in an organization.

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 Contemporary Approaches to Information Systems
 Sociotechnical view: approach of this course: Laudon & Laudon
(MIS, 2012) text book focuses
• In a sociotechnical perspective: optimal organizational
performance achieved by jointly optimizing both social and
technical systems used in production
• Helps avoid purely technological approach
– This helps to avoid the mistaken idea that information systems
consist of computers or technology alone.
• The critical aspect of this view is the balance between
technological and social/behavioral concerns.
– Example: sometimes a lesser form of technology may be the
best option because it is more suited to the personal needs of
the individual.

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THANK YOU!!

Q&A?

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