INFORMATION SYSTEM for BUSINESS (ISB)

Tutorial #01: AN INTRODUCTION

The subject ofINFORMATION SYSTEM for BUSINESS (ISB) or Management

Information System (MIS) has different meaning for different people. The concept of MIS
has evolved over a period of last two decades or so. The initial management information
systems were built to process transactional data of an organization and to produce regular
reports. The reports were not targeted and individuals picked the required data from the report.
The information systems evolved further and produced different reports according to
requirements. Instead of user looking through the report for required data, the system
generated a report in a suitable format that created an impact on its user and provoked an
action, a decision or an investigation. Today, an information system has evolved to the stage
where they handle databases and facilitate decision-making. Accordingly, definition of MIS has
also evolved. There are many closely related definitions in use. The terms MIS is synonymously
used with terms the Information System (IS), the Information and Decision System and the
Computer based Information System.
The MIS is defined as an integrated system of man and machine for providing the information
to support the operations, the management, and the decision-making function in the
organization.
The above definition emphasizes an association between MIS and decision-making. An
application software that processes data, which is not used for decision-making, cannot be
called an MIS. For instance, a computer-aided design system is not an MIS.
An MIS deals with information that is systematically and routinely collected in accordance with
a well-defined set of rules. In other words, data collection is a planned activity for which
resources are allocated and rules are defined.
The information provided by an MIS assists managers in planning, organizing, staffing,
coordinating, directing and controlling the operations of an organization. The management
experts have viewed these steps as Management Control system. The following figure shows
relationship between operations, planning and control.

An MIS must have the following features:

1. It must be capable of handling voluminous data. The data as well as transactions must
be validated.
2. It must be able to perform operations on the data irrespective of the complexity of the
operations. Often time multi-dimensional analysis is required
3. In MIS should facilitate quick search and retrieval of information. An MIS must support
mass storage of data and information.

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 4. The information must be communicated to the recipient in time. Moreover, the
communicated information must be relevant.
INFORMATION FROM DATA
Data is raw material with which we start and information is the finished product.
For example, look at the following links:
1234 5000.00
2345 7000.00
3456 4500.00
2571 8000.00
You would agree that the above lines contain data. But in the present form, the above
data is useless. Let me now put the data in the proper context as follows:

The data is now usable and we can process it to extract information such as the amount
withdrawn from account number 1234 is 5000.00. We can consolidate the data and extract the
information that 24500.00 Rs. were withdrawn on 25/2/04.

Data refers to raw facts and figures without any context or interpretation or labels. It can be in
the form of numbers, symbol, character, word, codes, graphs, text, images, audio, or any other
representation.

Characteristics of Raw Data

• Raw and Unprocessed: Data is raw and unorganized facts and figures. It lacks context,
meaning, and relevance until it undergoes processing.
• Data is neutral and unbiased. It does not carry any inherent interpretation or
value.
• Data can be universal and applicable across different contexts. For instance, the
number "5" remains "5" irrespective of the subject matter.
• Discrete Elements: Data exists in individual units, such as numbers, text characters, or
images, which can be collected and stored.
• Low Context: Data, on its own, does not provide insights or understanding. It requires
further processing and organization or structure to become useful.

DATA LIFE CYCLE

(Reference: https://online.hbs.edu/blog/post/data-life-cycle)

The data life cycle is often described as a cycle because the lessons learned and insights
gleaned from one data project typically inform the next. In this way, the final step of the process
feeds back into the first.
No two data projects are identical; each brings its own challenges, opportunities, and potential
solutions that impact its trajectory. Nearly all data projects, however, follow the same basic life
cycle from start to finish.

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This life cycle can be split into eight common stages, steps, or phases. These eight steps
outlined here offer an effective framework for thinking about a data project’s life cycle:
1. Generation: Every sale, purchase, hire, communication, interaction - everything
generates data. Given the proper attention, this data can often lead to powerful insights
that allow you to better serve your customers and become more effective in your role.

2. Collection: Not all of the data that’s generated every day is collected or used. It’s up to
your data team to identify what information should be captured and the best means for
doing so, and what data is unnecessary or irrelevant to the project at hand. You can
collect data in a variety of ways, including:
i) Forms: Web forms, client or customer intake forms, vendor forms, and human
resources applications are some of the most common ways businesses generate
data.
ii) Surveys: Surveys can be an effective way to gather vast amounts of information from
a large number of respondents.
iii) Interviews: Interviews and focus groups conducted with customers, users, or job
applicants offer opportunities to gather qualitative and subjective data that may be
difficult to capture through other means.
iv) Direct Observation: Observing how a customer interacts with your website,
application, or product can be an effective way to gather data that may not be
offered through the methods above.
v) It’s important to note that many organizations take a broad approach to data
collection, capturing as much data as possible from each interaction and storing it
for potential use. While drawing from this supply is certainly an option, it’s always
important to start by creating a plan to capture the data you know is critical to your
project.

3. Processing: Once data has been collected, it must be processed. Data processing can
refer to various activities, including:
a. Data wrangling, in which a data set is cleaned and transformed from its raw form
into something more accessible and usable. This is also known as data cleaning,
data munging, or data remediation.
b. Data compression, in which data is transformed into a format that can be more
efficiently stored.
c. Data encryption, in which data is translated into another form of code to protect
it from privacy concerns.
d. Even the simple act of taking a printed form and digitizing it can be considered
a form of data processing.

4. Storage: After data has been collected and

processed, it must be stored for future use. This
is most commonly achieved through the creation
of databases or datasets. These datasets may
then be stored in the cloud, on servers, or using
another form of physical storage like a hard
drive, CD, cassette, or floppy disk.
When determining how to best store data for
your organization, it’s important to build in a
certain level of redundancy to ensure that a copy
of your data will be protected and accessible,
even if the original source becomes corrupted or
compromised.

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 5. Management: Data management, also called database management, involves organizing,
storing, and retrieving data as necessary over the life of a data project. While referred
to here as a “step,” it’s an ongoing process that takes place from the beginning through
the end of a project. Data management includes everything from storage and encryption
to implementing access logs and changelogs that track who has accessed data and what
changes they may have made.

6. Analysis: Data analysis refers to processes that attempt to glean meaningful insights
from raw data. Analysts and data scientists use different tools and strategies to conduct
these analyses. Some of the more commonly used methods include statistical modeling,
algorithms, artificial intelligence, data mining, and machine learning.
Exactly who performs an analysis depends on the specific challenge being addressed,
as well as the size of your organization’s data team. Business analysts, data analysts,
and data scientists can all play a role.

7. Visualization: Data visualization refers to the process of creating graphical

representations of your information, typically through the use of one or more
visualization tools. Visualizing data makes it easier to quickly communicate your analysis
to a wider audience both inside and outside your organization. The form your
visualization takes depends on the data you’re working with, as well as the story you
want to communicate.

8. Interpretation: Finally, the interpretation phase of the data life cycle provides the
opportunity to make sense of your analysis and visualization. Beyond simply presenting
the data, this is when you investigate it through the lens of your expertise and
understanding. Your interpretation may not only include a description or explanation of
what the data shows but, more importantly, what the implications may be.

We can think of data having their own life cycle namely, data generation, data manipulation,
transmission of data (and communication of information) and storing/retrieving and
reproduction data. The generation of data could take place internally and/or externally. This
data has to be captured at source of its origin, by recording of data from an event or occurrence
in some from such as sales slips, personnel forms, purchase order etc.
The randomly accumulated data has to sorted and classified to reveal appropriate information.
For example, sales data can be classified product-wise, territory-wise, salesperson-wise etc.
Such a classification will give the sales data more meaning. Sometimes aggregation or synthesis
of many pieces of data to structure a meaningful whole or complete report is often required.

INFORMATION
In simple terms, information is defined as the processed form of statistical data. It is important
to note that information and data are different to connote. But they are interrelated. The raw
data collected about any phenomenon may be used to generate the required information.
While processing the data for the information, one needs to keep the following in mind:

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 1. Data should be ACCURATE
2. Data should be RELEVANT
3. Data should be COMPLETE
4. Data should be TIME SENSITIVE.

Quality attributes of Information

1. Integrated: Must have a single, enterprise-
wide view.
2. Data Integrity: Information must be accurate
and must conform to business rules.
3. Accessible: Easily accessible with intuitive
access paths, and responsive for analysis.
4. Credible: Every business factors must have
one and only one value.
5. Timely: Information must be available within the stipulated time frame.

Information has been defined as Data that have been put into a meaningful and useful context
and communicated to a recipient who uses it to make decisions it reduces uncertainty, reveals
additional alternatives or helps eliminate irrelevant ones.

Information processing from the raw data can

be represented as information funnel.
Recording of correct information in right time
is one of the important aspects for business
decisions, which requires capturing data
strategically at the sources of its origin using
well planned and laid out ICT infrastructure.
The following schematic chart indicates the
position of the information among other
relevant characteristics like data, knowledge,
and wisdom.

Characteristics of Information
• Processed and Organized: Information
results from processing and organizing
data to make it meaningful and useful.
It is presented in a structured and
coherent manner.
• Subjective: Unlike data, information can be subjective. It is influenced by the perspective
of the observer and the context in which it is used.
• High Context: Information has a higher level of context and relevance compared to raw
data. It provides insights and understanding of a specific topic or situation.
• Actionable: Information is valuable because it helps in decision-making and problem-
solving. It provides knowledge that can be used to take action.
• Summarized: Information is often a summary or aggregation of data. It condenses the
data into a concise and meaningful form.
• Time-sensitive: Information can have an expiration date or relevance over time.
Timeliness is crucial, especially in fast-paced business environments.

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PROCESS OF DATA TRANSFORMATION: Relationship between Raw DATA and INFORMATION
• The relationship between raw data and information lies in the process of data
transformation and organization. Converting raw data into information involves several
key steps:
1. Data Collection: Raw data is collected from various sources, such as
transactions, surveys, sensors, social media, or any other data-generating
process.
2. Data Organization: The collected raw data is organized, categorized, and
structured into a format that is suitable for analysis. This process involves
arranging data into rows, columns, tables, or other data structures.
3. Data Cleaning: Raw data may contain errors, duplicates, or inconsistencies. Data
cleaning involves identifying and correcting these issues to ensure the accuracy
and reliability of the information derived from the data.
4. Data Processing: During data processing, mathematical calculations, statistical
techniques, or other algorithms are applied to the organized data to derive
meaningful insights and patterns.
5. Contextualization: Context is added to the processed data to give it relevance
and significance. This involves interpreting the data within the framework of the
problem or the specific domain of interest.
6. Summarization: The processed data is summarized and presented in a concise
and understandable manner. This could be in the form of charts, graphs, reports,
or any other visualization that makes it easier to grasp the main points.
7. Interpretation: Information requires interpretation to understand the
implications and meaning of the summarized data. Analysts and decision-makers
analyze the information to gain insights and draw conclusions.
8. Actionability: Finally, the information should be actionable, meaning it can be
used to make decisions, solve problems, or take specific actions that can impact
business or other aspects of interest.

Types of Information retrieved from raw data could be classified in different categories as:
1. Facts
2. Assumptions
Here, Facts are the accurate information. The information generated with the assumption of
mathematical models is called reliable information without any uncertainty. The term
information means collection of facts from which business decisions can be drawn. Facts and
figures collected in this connection will enable the company to go for a valid decision.

INFORMATION SYSTEMS IN MANAGEMENT

Defining SYSTEMS
Information handling in an organization should be a systematic process. Generally systems are
created to solve problems. One can think of the systems approach as an organized way of
dealing with a problem. A collection of components that work together to realize some objective
forms a SYSTEM. Basically there are three major components in every system, namely input,
processing, and output

In a system the different components are connected with each other and they are
interdependent.

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INFORMATION IN MANAGERIAL FUNCTIONS
With the representation of Antony’s structure, the data available at different functional areas
of management could be presented as follows:

 At operational level, organization gets in contact with public for information

procurement and dissemination. All types of inputs available from various sources are
gathered at this level. The routine office work like maintaining inward register,
maintaining of public relations, understanding the external requirement etc. are mostly
done at this level. Though no decision making process is carried out, proper
accumulation of data has to be done at this level for further processing. Hence it is
sufficient to have a trained manpower that can act as per the computer-assisted
instructions.
 At middle level of management, the input obtained from internal and external sources
of information will be processed for strategic decisions. This level consists of middle
level managers who can contribute significantly for the development of organization.
Different options available for each of the objectives are evaluated carefully using the
scientific tools of analysis and outcomes are reported. The role of middle level decision
process is considered to be very crucial because the output received from this level is
taken as input for tactical decision-making.
 The highest level in this hierarchy is the tactical decisions. This is the decision making
group which should ultimately be supported by the online information. To highlight the

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 information needs of the organization; the sources are classified as internal and external.
In general, the internal data sources for any organization, irrespective of its nature, are
Accounting control, Plans and budgets, Payroll, HR, Inventory, Sales forecasting,
Purchase, Transportation and distribution, Queuing, Operations, R & D etc. Similarly the
external sources could be Economic factors, Environmental factors, Market
trend/constrains, Labor oriented problems etc.

Educating the managers of the companies to understand the information generation, treatment
of information and applications in real decision making is very essential. The task of information
generation, process of information, management of information and timely communication or
dissimilation is interrelated and hence a systematic approach is required. As the business
decisions are based on the available information, adequate care should be taken to have the
right information.

INFORMATION SYSTEM VIEW OF A BUSINESS ENTERPRISE

All the four major areas of management are inter-related. Creating a master database
comprising of the activities of the organization irrespective of the specific area is a must. It
should be possible to retrieve the data for any further information. This kind of approach is
called integrated approach i.e. Single View of the entire Enterprise-wide Information.

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A typical example of role of information systems for the important areas of functional
management at different level of decision-making is shown below:

KNOWLEDGE
• Knowledge is a higher level of understanding that goes beyond raw information.
• It is the assimilation and application of information to solve problems, make decisions,
and gain insights.
• Knowledge involves understanding market trends, customer preferences, cultural
nuances, legal requirements, and other factors that can impact business strategies and
operations.

Information vs. Knowledge

• Information is the processed and organized data that provides specific details and
insights, while Knowledge represents a deeper and broader understanding that goes
beyond the immediate information.
• Knowledge involves the ability to apply information in different contexts and to generate
insights and solutions based on a more profound comprehension of underlying
principles.

Data vs. Information vs. Knowledge (~ important)

Accumulate
Knowledge

Knowledge

Format, Information Interpret,

Data Filter, Results
Summarize Design, Act

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Strategic Role of Information System in Business
Information and Information Technology have become a strategic necessity. The business
environment is no more as stable as it used to be and it has become much more competitive.
It has become mandatory on the part of the organizations to make full use of information with
the help of technology to service. In an organization, information and technology exist in the
form of an information system. Whenever, an external or internal pressure is anticipated or
felt by the organization, information system (IS) helps the organization to plan critical response
activities. The individuals are supported by IS to fulfill their roles. The organizations use IS to
track consumer behavior. A shift is the consumer behavior may trigger a change in the marketing
strategy of an organization in a timely manner. The organization may take proactive measures
rather than firefighting measures.

BUSINESS INTELLIGENCE (BI)

“The ability to apprehend the interrelationships of presented facts in such a way as to guide
action towards a desired goal.”
~Hans Peter Luhn (1958) - A Business Intelligence System
“Concepts and methods to improve business decision making by fact-based support systems.”
~ Howard Dresner (1989) - A Brief History of Decision Support Systems

Definition:
"Business Intelligence (BI) is a set of methodologies, processes, architectures, and technologies
that transform raw data into meaningful and useful information for business analysis purposes.
It involves the collection, integration, analysis, and presentation of data to facilitate better
decision-making and strategic planning within organizations."

BI: ACTIVITY STACK

BI: KEY ACTIVITIES

• BI encompasses a range of activities, including Data Integration, Data Modeling, Data
Analysis, Reporting, and Data Visualization. By leveraging BI, organizations can gain
valuable insights into their operations, identify trends and patterns, monitor Key
Performance Indicators (KPIs), and make data-driven decisions to drive efficiency,
productivity, and competitive advantage.
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 • Key components of a typical BI system Include Data Warehouses or Data Marts for
storing and organizing data, Extract, Transform, Load (ETL) processes for data
integration, analytics and reporting tools for data analysis and visualization, and
dashboards or interactive reports for presenting the insights to users.
• Overall, BI enables organizations to leverage data as a strategic asset, uncover hidden
opportunities, and address challenges in order to improve performance and achieve their
business goals.

ETL (Extract, Transform and Load)

 ETL, which stands for “extract, transform and load”, is the set of functions combined
into one tool or solution that enables companies to
• “Extract” data from numerous databases, applications and systems,
• “Transform” it as appropriate i.e. shaping the data or adding additional Calculated
Fields and Measures for reporting, and
• “Load” it into another database, a data mart or a data warehouse for analysis, or
send it along to another operational system to support a business process.
 Fully automated extract, transform, and load (ETL) tools simplify the creation,
maintenance, and expansion of data warehouses, data marts, micro marts, and
operational data stores. Example: Microsoft PowerBI

Popular BI Tools: PowerBI, Tableau, Crystal Xcelsius, IBM Cognos, Ab Initio, SAP BI

SUMMARY
Q1. Differentiate among data, information, and knowledge
Data items refer to an elementary description of things, events, activities, and transactions that
are recorded, classified, and stored, but are not organized to convey any specific meaning.
Information is data that have been organized so that they have meaning and value to the
recipient. Knowledge consists of data and/or information that have been organized and
processed to convey understanding, experience, accumulated learning, and expertise as they
apply to a current business problem.

Q2. Differentiate between information technology infrastructure and information technology

architecture.
An organization’s information technology architecture is a high-level map or plan of the
information assets in an organization. The IT architecture integrates the information
requirements of the overall organization and all individual users, the IT infrastructure, and all
applications. An organization’s information technology infrastructure consists of the physical
facilities, IT components, IT services, and IT management that support the entire organization.

Q3. Describe the global, Web-based platform and its relationship to today’s business
environment.
The global, Web-based platform consists of the hardware, software, and communications
technologies that comprise the Internet and the functionality of the World Wide Web. This
platform enables individuals to connect, compute, communicate, compete, and collaborate
everywhere and anywhere, anytime and all the time, and to access limitless amounts of
information, services, and entertainment. This platform operates, without regard to geography,
time, distance, and even language barriers. The Web-based platform has created today’s
business environment, which is global, massively interconnected, intensely competitive,
24/7/365, real-time, rapidly changing, and information intensive.

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Q4. Discuss the relationships among business pressures, organizational responses, and
information systems.
The business environment is the combination of social, legal, economic, physical, and political
factors that affect business activities. Significant changes in any of these factors are likely to
create business pressures. Organizations typically respond to these pressures with activities
supported by IT. These activities include strategic systems, customer focus, make-to-order and
mass customization, and e-business.

TERMINOLOGIES

DATA ITEMS
An elementary description of things, events, activities, and transactions that are
recorded, classified, and stored but are not organized to convey any specific
meaning.

INFORMATION
Data that have been organized so that they have meaning and value to the
recipient

INFORMATION TECHNOLOGY
Technology that relates to any computer-based tool that people use to work
with information and support the information and information processing needs
of an organization.

INFORMATION TECHNOLOGY (IT) ARCHITECTURE

A high-level map or plan of the information assets in an organization.

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INFORMATION TECHNOLOGY (IT) INFRASTRUCTURE
The physical facilities, IT components, IT services, and IT personnel that support
the entire organization.

KNOWLEDGE
Data and/or information that have been organized and processed to convey
understanding, experience, accumulated learning, and expertise as they apply to
a current problem or activity

MANAGEMENT INFORMATION SYSTEMS

Systems that deal with the planning for, development, management, and use of
information technology tools to help people perform all tasks related to
information processing and management.

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