COPPERBELT UNIVERSITY

SCHOOL OF INFORMATION AND COMMUNICATION TECHNOLOGY

CS 120
UNIT 13: INFORMATION SYSTEMS
Introduction
In the previous units, the focus was on learning about parts of the computer, networking of
computers and, the Internet. In this unit, the focus is on the use of the computer and the
telecommunication technology to generate information for businesses and organizations.
Information system is an organized combination of people, hardware, software, communication
network, and data resources that perform collection of data, process it and transform it to provide
information, in an organization. The information required from the information systems at
different levels of the organization hierarchy is different in nature, like operational information,
management information, or information that supports the decision making process.

Information systems are vital for the functioning of businesses and organizations. This unit
discusses the information systems, and their categorization to provide support at different levels
of the organization.

Data, Information and Knowledge

Data are raw facts. Data is isolated values which by themselves do not have much significance.
Data may be numbers, letters or characters, image represented as graphic images and pictures,
audio or video. It represents something in the real world. Data forms the raw material for the
production of information. Data is not organized and does not convey a meaning. For example, the
data elements like ‘24th’, ‘Oct’, 2012’, ‘Kitwe’, and ‘Independence Day’ just represent values.

Information is processed, manipulated, and interpreted data. It is the collection of data organized
in such a way that they have value beyond the data itself. Information is created by defining and
organizing relationships among data. For example, ‘The Independence Day celebrations will be
held in Kitwe on the 24th October, 2012”. The processed data gives us information which can be
used for different purposes.

Knowledge is an inference or conclusion drawn from the information. For example, a person from
Mongu who wishes to go to Kitwe can use the information ‘The Independence Day celebrations
will be held in Kitwe on the 24th October, 2012” to enhance his knowledge so that this person can
plan his trip to Kitwe accordingly.

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Characteristics of Information
Information that is meaningful for the people and the organization must have certain
characteristics. The characteristics of the information are listed as follows—

 Accurate: Information must not contain any errors. It must be accurate.

 Accessible: Authorized users should be able to access the information whenever required.
 Complete: Information must contain all important and related data.
 Economical: Information should be economical to produce both in terms of time and cost.
 Format: Information should be available in the desired format.
 Flexible: Information should be flexible enough to be used for different purposes.
 Reliable: Information is dependable and is generated using correct data.
 Relevant: Information must be relevant so that it can be used by the organization.
 Secure: Unauthorized users should not be able to access the information. Access is allowed
only to authorized individuals.
 Simple: Information must be easily understandable and usable. Complex information is
difficult to use and may not serve its purpose.
 Timely: Information must be available when it is needed. Late or outdated information is
of no use.
 Verifiable: There should be a means to cross check the available information.

The information having the above characteristics is valuable and is used by the organization for
achieving its goals. The organization may use the information for different purposes like decision
making, managing the organization etc.

Information System (IS)

A system is a set of components that work together to achieve a common goal. A system accepts
input, processes it, and produces an output (Figure below). A system is composed of one or more
subsystems. A system may be a closed system or an open system. A closed system is a stand-alone
system that does not interact with other systems. An open system interacts with other systems.

Figure – System

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Information System (IS) is a set of inter-related components that (1) collect data, (2) manipulate
data, (3) disseminate data and information, and (4) provide feedback to meet an objective. An
information system uses resources like people, hardware, software, data, and networks to perform
input, processing, output, storage, and control activities. Some examples of IS are ATMs, railway
reservation system, and movie ticket reservation systems.

Components of Information System: An IS consists of four main components—Input, Process,

Output, and Feedback (Figure below). Input is the activity of gathering and capturing raw data. A
process converts or transforms data into useful output. During processing, the input data is
manipulated into information using mathematical, statistical, and other tools. Output is the
generation and presentation of useful information, usually in the form of documents and reports.
Feedback is an output that is used to make changes to the input, or the processing activities.

Figure – Components of Information System

Information systems are needed both by the people and the business organizations. People need
information system for entertainment and enlightenment. Organizations require information
systems to support decision making, coordination, problem solving and control. Information
systems may also help to analyze problems, and to create new products.

Characteristics of IS: Like any other system, ISs have seven characteristics

Characteristics of Information System

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  Environment is anything outside the system.
 Boundary separates the system from environment. Any part within boundary is the system
and outside boundary is the environment.
 Input is the data from environment to the system. The system uses the input.
 Output is the information from the system to the environment. The system uses input to
generate output.
 Components are the subparts of the system.
 Interrelationships are the associations between components of a system.
 Interface is a mechanism for interaction between different components of the system.

The performance of Information System is measured by its efficiency and effectiveness. Efficiency
is a measure of what is produced divided by what is consumed. Effectiveness is the extent to which
a system attains its goals.

The role of the Information System is expanding and evolving continuously. In 1950s–1960s, the
focus was on data processing. Management reporting and decision support was provided during
1960s–1970s and 1970s–1980s, respectively. 1980–1990s saw it being also used for strategic and
end user support. Lately in 1990s–2000s, there is a shift towards global internetworking.

An information system can be manual and computerized. Here, we shall focus on the computerized
information system or the Computer-based Information System.

Computer-Based Information System (CBIS)

Computer-Based Information System (CBIS) use computer and telecommunication technology for
the generation of information. CBIS uses hardware, software, databases, telecommunications,
people, and procedures for the collection, manipulation, storage, and processing of data into
information. They take raw data as input, process it, and produce information as output.

The components of a CBIS (Figure below) include the following:

 Hardware—computer devices like keyboard, monitor, processor, and printer, used for
performing the input, processing, and output activities.
 Software—computer programs that govern the operation of the computer.
 Database—an organized collection of data, consisting of two or more related data files.
 People—those who work with the CBIS. People are the most important element in most
CBIS.
 Procedures—strategies, policies, methods, and rules for using the CBIS.
 Telecommunication, Network, and Internet—Telecommunication and network is used for
connecting the computers and computer devices in a building, city, country, or across the
world to enable electronic communication.

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 Internet is the world’s largest computer network, which is an interconnection of networks.
World Wide Web (WWW) is a system with universally accepted standards for storing,
retrieving, formatting, and displaying information in a networked environment. The
Internet and WWW have had a tremendous impact on the role IS play in organizations.
They are responsible for the increased connectivity and collaboration within and outside
the organization. They have helped in transforming the structure of an organization, scope
of operations, reporting and control mechanisms, work practices, and services.

Figure – Computer Based Information System

IS or CBIS is transforming the way businesses are done nowadays. Communication tools like cell
phones, e-mail, online conferencing, and international teleconferencing over the Internet have all
become essential tools of a business. E-commerce, e-banking, e-governance, e-learning, Internet
advertising, and social media marketing have all seen an increasing usage.

In this unit, when we refer to Information Systems, we are talking about the Computer-Based
Information System.

Need for Efficient Information System

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In today’s world, information systems are indispensable to businesses, industries, and
organizations, to meet the future challenges. Organizations need ISs to meet the information needs
of its employees. More and more business organizations are using information systems to improve
the way they conduct business, as discussed below:

 IS, for many businesses, provide an opportunity to do business in a new way and thus gain
huge profits and market shares.
 ISs facilitate the acquisition, transformation, and distribution of information. ISs can
improve decision making, enhance organizational performance, and help increase
profitability.
 The use of information systems to add value to the organization can also give an
organization a competitive advantage. It provides significant, long-term benefit to a
company over its competition. ISs are used for strategic planning in a competitive world.
It allows changing the structure, creating of new services, and improving upon the existing
services.
 Damaged or lost data can cause disruptions in normal business activities leading to
financial losses, law suits, etc. ISs help an organization to better manage and secure its
critical data.
 ISs also improve integration and the work processes.

For an organization, ISs impact the way business is carried out. Organizations need to have an
efficient IS to improve and manage their function, performance, and productivity. Briefly
summarized, ISs are important for business today due to the need for operational excellence, new
products, services and business models, improved decision making, competitive advantage, and
the most important—survival.

Categories of Information System

An organization structure can be shown as a pyramid which is divided both horizontally and
vertically. Vertically, the divisions represent the different functional areas of the organization, like
sales, marketing, accounting, human resource, and manufacturing. Horizontally, the divisions are
made according to the operational level of the organization, hierarchically from the base of the
pyramid to the top, i.e. operations at low level, middle level, and top level (Figure below).
Information systems provide support at all the levels of the organization and in the different
functional areas.

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 Figure – Information System Categories

Major application categories of the information systems on the basis of the support provided by
them at the different levels of the operations hierarchy are as follows:

 Operations Support System processes data generated by business operations, and is

required for the low-level operations. The categories of operations support system are:
o Transaction Processing System (TPS), and
o Office Automation System (OAS).
 Management Support System provides information and support needed for decision
making by the managers at middle level and top level of the organization. Major categories
of management support systems are:
o Management Information System (MIS),
o Decision Support System (DSS), and
o Executive Information System (EIS).

In addition to the above information systems, there is specialized information systems like—

o Expert Systems,
o Enterprise Resource Planning (ERP), and
o Electronic commerce (E-commerce) system.

Operations Support System

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The operations support system provides information about the day-to-day activities of the
organization. They support the operations of the organization, by keeping track of the resources
and the transactions. For example, in a banking operation, the operations support system are used
to keep track of current balance of the customer; in a manufacturing unit, it helps to keep track of
the inventory of the items; and, in a sales unit, it keeps track of the number of units of each item
sold. Thus, transaction processing is the main function of the operations support system.

Transaction Processing System (TPS)

Transaction is a basic level of activity that is performed during the business operations. It is the
business-related exchange of payments to employees, sales to customers, and payments to
suppliers. Examples of transactions are—withdrawal of money from bank, booking ticket for an
airline, selling of goods to the customer etc.

TPS is an organized collection of people, procedures, software, databases, and devices used for
recording the business transactions. TPSs are essential parts of any business organization.

TPSs are used for routine, repetitive, and ordinary business transactions, and transactions that are
critical to the daily function of the business. TPS records the business transactions and generates
the documents related to the transaction. For example, daily routine transactions for sales orders
from customers, bank deposits and bank withdrawals.

TPS automates handling of the data for the business activities and transactions.

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The goal of TPS is to increase transaction processing speed, enhance productivity, and simplify
the processes.

TPS gathers all the input necessary for other types of systems. It provides the basic input to the
company’s database. A transaction generates data, which is recorded by the transaction processing
system. This data forms the input for the generation of the other information systems, like MIS,
DSS and EIS. For example, based on the daily transactions, a monthly sales report for middle
management and marketing information for senior managers is generated.

In an organization, there are different functional areas like manufacturing, human resource,
accounts, finance, administration, sales, and marketing. The TPS information systems are
developed for and used by people in the different functional areas. Examples of TPS are Payroll
TPS, Sales TPS, and Marketing TPS.

Office Automation System (OAS)

OAS supports automation of the tasks in an office. It supports general office work for handling
and managing documents. It facilitates communication, both within the office, and, between the
office and its environment. It provides support for the traditional office operations like managing
the documents, sending messages for interaction, arranging and conducting meetings, scheduling
of the projects etc.

OAS allows use of text processing systems like word processors and desktop publishing system,
to enable the creation of professional documents with graphics and special layout features.

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Spreadsheets, presentation packages like PowerPoint, personal database systems, and, note-taking
systems like appointment book, notepad and calendar, are parts of an OAS.

OAS includes the communication systems required for transmitting the messages, documents,
images, video or voice. For this, it uses the network and the Internet. It incorporates the e-mail
facility, voice mail, teleconferencing capabilities, accessing web sites etc.

Management Support System

The purpose of the management support system is to assist the managers at different levels in an
organization, in the controlling and the management of the business. Management support systems
provide different kinds of reports, such as summary report, sales report, and customer balance
report. They also assist the managers in the decision making process by generating projected
reports like projected sales report etc. Management support systems also provide information to
the executives related to the overall operations of the organization, the overall growth, profits, its
performance etc. Moreover, for any of the reports, it also provides a detailed report specifying its
internal details, if required.

MIS is a collection of people, procedures, software, databases, and devices that provides
information to managers and decision makers.

MIS provides information to the managers to help them make informed decisions. MIS supports
the managers in the decision making process and enhances their productivity and performance.
For example, MIS may generate information related to the sales of a product in a month and the
inventory status during that month. It can also monitor the performance and maintain coordination
between the different functional areas, like purchase and accounts payable, in an organization.

MIS works with the transaction processing system. MIS uses the data generated from TPS as input,
and converts them into meaningful aggregate form.

MIS generates different kinds of reports like summary report, exception report, and detailed report.
Summaries are for the high-level management and give statistical information to the managers.
Exception reports provide information about the activities that are different from the normal
functioning. Detailed reports generally provide operational level reports.

The different kinds of MIS reports are either scheduled to be generated at fixed intervals of time,
may be event-driven and generated when an event occurs, or may be generated in an ad-hoc
manner, for a particular query. Scheduled reports are periodic reports that are generated weekly,
monthly, or quarterly. Ad-hoc reports are generated on-demand, whenever information is required
by the managers.

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MIS can also generate customized reports, where managers can select from different data, sorting
options, and display choices.

The focus of MIS is operational efficiency. The reports generated by the MIS helps the managers
in controlling the operations of the organization and in the decision making process.

Decision Support System (DSS)

DSS is a collection of people, procedures, software, databases, and devices that supports problem-
specific decision making.

DSS support the middle level managers in the decision making process. They supplement the
decision making power of the manager with the information technology.

DSS facilitate decision making by applying mathematical or logical models and interactions to
solve problems. For examples, a large number of mathematical and logical calculations are
required to be performed on data which may be more than million in number, in order to generate
information that helps in the decision making process.

DSSs are user-friendly and highly interactive.

DSS focuses on the decision-making effectiveness.

DSS use data from the TPS and MIS, and, also any new data from external sources, such as current
share prices or prices of competitors.

DSS provides comparison of alternatives and recommendations of a preferred option. DSS provide
powerful models and tools for simulation, optimization etc. to the managers so that they can
evaluate from several alternatives before making a decision. For a particular problem, the
managers can use DSS to get outcome of several different scenarios, and then compare them to
arrive at the right decision.

Executive Information System (EIS)

EIS provides a generalized computing and communication environment to senior managers to
support strategic decisions. It provides summarized information in a convenient form to the top
level managers.

Unlike DSS, they are not designed to use analytical models for specific problem solving. EIS is
designed to facilitate access to information quickly and effectively, for the senior managers.

EIS is used by the senior managers to identify a problem, an opportunity, or a trend which affects
the organization’s future growth. The middle level managers use DSS to suggest solution to the
problem or analyze the opportunity.

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EIS takes data from the TPS, MIS and allows communication with external sources of information.

EIS has menu-driven user-friendly interfaces, interactive graphics to help visualization of the
situation, and telecommunication links to connect to the external information, if required.

Specialized Information System

Specialized information systems are both for organizational and individual use. The specialized
systems help organizations and individuals achieve their goals.

Expert Systems
Artificial Intelligence (AI) system is the people, procedures, hardware, software, data, and
knowledge needed to develop computer that display the characteristics of intelligence. For certain
types of well-defined problems, AI systems can replicate the human decision making. AI systems
mimic the functions of the human brain.

Expert system is an applied area of AI. An expert system is a knowledge- based system having
two main components—knowledge base and inference engine. It uses the knowledge base to store
relevant information, data, rules, cases, and relationships, and, the inference engine gets
information and relationships from the knowledge base, and, provides answers and predictions the
way a human expert does.

Expert systems are used in areas where there is a need to capture and preserve irreplaceable human
expertise, provide expertise that is expensive or rare, and to provide expertise needed for training
and development to share the wisdom of human experts with a large number of people.

The expert systems are used to explore new business possibilities, increase overall profitability,
and reduce costs.

Expert systems are used to provide information for problems related to classification, diagnosis,
process control, scheduling and planning etc. They are used in products like antilock braking
system, television, plant layout and manufacturing, credit granting and loan analysis, and stock
picking.

Enterprise Resource Planning (ERP)

ERP system is a computer software system that manages and coordinates all the resources,
information, and functions of a business from shared data stores.

ERP systems are integrated programs that manage all business operations. For example, they
coordinate the planning, inventory control, production, and ordering.

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ERP systems integrate functions such as human resources, supply chain management, customer
relations management, financial, manufacturing functions, and warehouse management functions.

Since ERP systems are integrated systems, they help to streamline different processes and
workflows, allow data to be easily shared across various departments in an organization, improve
the efficiency and productivity levels, and improves customer service.

SAP is an example of ERP system. SAP stands for Systems, Applications and Products.

Electronic-Commerce (E-Commerce)
E-commerce involves any business transaction executed electronically between parties. It uses
Internet and Web for doing the business. It uses services like e-mail, workflow software tools,
Intranet, and, the e- payment services.

E-commerce involves buying and selling of products and services, electronically.

The parties involved in e-commerce may be of the following kinds:

o Companies and Companies (B2B). A data processing company handling data

services for a company.
o Companies and Consumers (B2C).
o Consumers and Consumers (C2C). A customer selling goods to another customer,
like in e-bay.com.
o Business and the public sector, and, consumers and the public sector.

E-commerce web sites are like on-line market places where you can sell and buy items, and
facilitate it by advertising your product, establishing newsgroups and blogs, posting job-oriented
resumes etc.

The on-line shopping is a fast growing segment as consumers are becoming more confident to use
it, with the widespread use of the Internet.

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