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Lecture 3

E business

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Lecture 3

E business

Uploaded by

Jastini Segeteti
Copyright
© © All Rights Reserved
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THE INSTITUTE OF FINANCE MANAGEMENT (IFM)

MWANZA CAMPUS
e-Business
ITU 08509
Lecture Three
INFORMATION SYSTEM WITH LEVELS OF MANAGERS
SERVES
What is an Information System?

An information system (IS) is any organized system for the collection, organization,
storage and communication of information. More specifically, it is the study of
complementary networks that people and organizations use
to collect, filter, process, create and distribute data. In other words an information
system (IS) is a group of components that interact to produce information.

Note: A computer Information System is a system composed of people, data,


procedures, software and hardware that processes or interprets information.

The six components that must come together in orders to produce an information
system are:

1. Hardware: Hardware is the physical part that performing computing operations


when refers to computer. This category includes the computer itself, which is often
referred to as the central processing unit (CPU), and all of its support equipment.
Among the support equipment are input and output devices, storage devices and
communications devices.

2. Software: The term software refers set of instructions or block of codes that
instructs hardware (like computer) what to do and how to do. Note: if we talk about
our daily uses, then software and program can be used interchangeably. But there is
a huge difference in between software and program in technical language.

3. Data: Data are facts that are used by programs to produce useful information. Like
programs, data are generally stored in machine-readable form on disk or tape until
the computer needs them. Note: Data is the bridge between hardware and people.
This means that the data we collect is only data, until we involve people. At that
point, data is now information.

4. Procedures: Procedures are the policies that govern the operation of a computer
system. Procedures are to people what software is to hardware is a common analogy
that is used to illustrate the role of procedures in a system.

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5. People: Every system needs people if it is to be useful. Often the most over-looked
element of the system is the people, probably the component that most influence the
success or failure of information systems. This includes not only the users, but those
who operate and service the computers, those who maintain the data, and those who
support the network of computers.

6. Feedback: it is another component of the IS, that defines that an IS may be


provided with a feedback (Although this component isn't necessary to function).

TYPES OF INFORMATION SYSTEM (IS)

Most organizations are hierarchical; the way in which the different classes of information
systems are categorized tends to follow the hierarchy. This is often described as "the
pyramid model" because the way in which the systems are arranged mirrors the nature of
the tasks found at various different levels in the organization.

While there are several different versions of the pyramid model, the most common is
probably a four level model based on the people who use the systems. Basing the
classification on the people who use the information system means that many of the other
characteristics such as the nature of the task and informational requirements are taken into
account more or less automatically.

Four level pyramid model based on the different levels of hierarchy in the organization

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A comparison of different kinds of Information Systems
Using the four level pyramid model above, we can now compare how the information
systems in our model differ from each other.

 TRANSACTION PROCESSING SYSTEMS


What is a Transaction Processing System? - Transaction Processing System is
operational-level systems at the bottom of the pyramid. They are usually operated
directly by shop floor workers or front line staff, which provide the key data required
to support the management of operations. In other words is a computerized system
that performs and records daily routine transactions necessary to the conduct of the
business.

Functions of a TPS
TPS is ultimately for process data and records daily routine transactions necessary to the
conduct of the business.

Some examples of TPS


o Payroll systems
o Order processing systems
o Reservation systems
o Stock control systems
o Systems for payments and funds transfers

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The role of TPS
o Produce information for other systems
o Cross boundaries (internal and external)
o Used by operational personnel + supervisory levels
o Efficiency oriented

 MANAGEMENT INFORMATION SYSTEMS


What is a Management Information System? - For historical reasons, many of
the different types of Information Systems found in commercial organizations are
referred to as "Management Information Systems". However, within our pyramid
model, Management Information Systems are management-level systems that are
used by middle managers to help ensure the smooth running of the organization in
the short to medium term. The highly structured information provided by these
systems allows managers to evaluate an organization's performance by comparing
current with previous outputs.

Functions of a MIS
MIS are built on the data provided by the TPS. In other words, MIS provide the summary of
what had being captured in TPS.

Some examples of MIS


o Sales management systems
o Inventory control systems
o Budgeting systems
o Management Reporting Systems (MRS)
o Personnel (HRM) systems

The role of MIS


o Based on internal information flows
o Support relatively structured decisions
o Inflexible and have little analytical capacity
o Used by lower and middle managerial levels
o Deals with the past and present rather than the future
o Efficiency oriented?

 DECISION SUPPORT SYSTEMS


What is a Decision Support System? - A Decision Support System can be seen as
knowledge based system, used by senior managers, which facilitates the creation of
knowledge and allow its integration into the organization. These systems are often
used to analyze existing structured information and allow managers to project the
potential effects of their decisions into the future. Such systems are usually
interactive and are used to solve ill structured problems. They offer access to
databases, analytical tools, allow "what if" simulations, and may support the
exchange of information within the organization.

Functions of a DSS

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DSS manipulate and build upon the information from a MIS and/or TPS to generate insights
and new information.

Some examples of DSS


o Group Decision Support Systems (GDSS)
o Computer Supported Co-operative work (CSCW)
o Logistics systems
o Financial Planning systems
o Spreadsheet Models?

The role of DSS


o Support ill- structured or semi-structured decisions
o Have analytical and/or modelling capacity
o Used by more senior managerial levels
o Are concerned with predicting the future
o Are effectiveness oriented?

 EXECUTIVE SUPPORT SYSTEMS (ESS)


What is an ESS? - Executive Information Systems are strategic-level information
systems that are found at the top of the Pyramid. They help executives and senior
managers analyze the environment in which the organization operates, to identify
long-term trends, and to plan appropriate courses of action. The information in such
systems is often weakly structured and comes from both internal and external
sources. Executive Information System are designed to be operated directly by
executives without the need for intermediaries and easily tailored to the preferences
of the individual using them.

Functions of an ESS
EIS organizes and presents data and information from both external data sources and
internal MIS or TPS in order to support and extend the inherent capabilities of senior
executives.

Some examples of ESS


Executive Information Systems tend to be highly individualized and are often custom made
for a particular client group; however, a number of off-the-shelf EIS packages do exist and
many enterprise level systems offer a customizable EIS module.
The role of ESS
o Are concerned with ease of use
o Are concerned with predicting the future
o Are effectiveness oriented
o Are highly flexible
o Support unstructured decisions
o Use internal and external data sources
o Used only at the most senior management levels

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Note: TPS generally feed all other systems. MIS generally indicate when a DSS is needed
and provide input for them. ESS takes all internal data but usually only summary data from
MIS and DSS level.

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