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nirmal shrestha Information System Technologies and Data Analytics

CHAPTER 2

INFORMATION SYSTEM TECHNOLOGIES AND DATA ANALYTICS

Data are facts or figures in a raw, unprocessed format. Data consists of numbers, letters, symbols, raw
facts, events and transactions, which have been recorded but not yet processed into a form that is suitable
for making decisions.
To become useful to a decision maker, data must be transformed into information.

Information is data that has been processed in such a way that it has a meaning to the person who
receives it. This person may then use this information to improve the quality of decision-making.

Characteristics of good information

The information produced by a system should have the following characteristics (identified by the
acronym ACCURATE):
Accurate – sufficiently accurate to be relied upon
Complete – managers should be given all the information they need
Cost effective – the value of information should exceed the cost of producing it
Understandable – information needs to be clearly presented and displayed
Relevant – the information should be relevant to its purpose
Accessible – accessible in an appropriate way, e.g. by email, report
Timely – in sufficient time for decisions to be made
Easy to use – the information should be clear and easy to use

Data processing is the conversion of data into information, perhaps by classifying, sorting or producing
total figures. The conversion process may be manual or automated. In general, data may be transformed
into information by:
– bringing related pieces of data together
– summarizing data
– basic processing of data
– tabulation and diagrammatic techniques
– statistical analysis
– financial analysis

Types of information
Internal information External information
Examples include: Examples include:
- accounting records - accounting records
- personnel and payroll - competitor information,
- information e.g. prices and product ranges
- timesheets - customer information, e.g. with regards to their needs
- production information - supplier information, e.g. prices, quality, delivery terms

Types of Data:
Secondary data: data not directly collected from the source by the user.
Primary data: market research – is more tailored to the user's exact needs.

Information Technology (IT) describes any equipment concerned with the capture, storage, transmission
or presentation of information. The IT is the supporting hardware that provides the infrastructure to run
the information systems.

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Information Systems (IS) refer to the provision and management of information to support the running
of the organisation.
Information systems are also seen as a valuable strategic source which can help an organisation gain
competitive advantage, e.g. those instances where the information system:
– links the organisation to customers or suppliers
– creates effective integration of the use of information in a value-adding process
– enables the organisation to develop, produce, market and deliver new products and/or services based
on information
– gives senior management information to help develop and implement strategy.

Role of Information Systems:

Organisations require information in order to:
1. Record transactions
2. Make decisions
3. For planning purposes
4. For performance measurement
5. For control

Cost of Information:
Direct search costs
 Cost of a marketing research survey
 Subscriptions to online information, surveys etc
Indirect access costs
 Time spent by employees on unsuccessful searches for information
 Time spent on sifting through possibly inaccurate data to extract useful facts.
Management costs
 Recording, processing and dissemination of external information
Infrastructure costs
 Installation and maintenance of systems – communication, internet etc. to facilitate flow of
information.
Time theft
 Wasted time caused by abuse of internet and email access facilities
 Information overload

The value of information

- Collecting and processing information for use by managers has a cost.
- The value of the information to the business must be greater than the cost. In other words, the
benefits of the new IS should be greater than its cost. If this is the case, the new IS is worth
implementing.

Benefits of Information:
- Enhanced efficiency and capacity – e.g. resulting in labour savings.
- Better quality of information – information may be more ‘ACCURATE’.
- Better access to information – e.g. by means of an Intranet.
- Improved sharing of information – e.g. through the creation of a database.
- Improved communication – e.g. through the introduction of an email system.
- Better decision making and customer service.

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Systems architecture and data flows

Network:
A network should facilitate the transfer of information between different parts of the business. Eg:
LAN, WAN.

Internet:
Internet is a global computer network providing a variety of information and communication facilities,
consisting of interconnected networks using standardized communication protocols.

Intranet:
An intranet is an internal network used to share information.
This is a private network contained within an organisation. It allows company information and computing
resources to be shared among employees.
Organisation members use networked computers to access information held on a server.
The firewall surrounding an intranet fends off unauthorized access from outside the organisation.

Extranet:
An extranet is a collaborative network which uses internet technology to join organisations, for example
to link businesses with their suppliers.
This is a private, secure extension of an Intranet. It allows the organisation to share information with
suppliers, customers and other business partners.

Wireless and hand-held technology:

Wireless technology refers to technology that allows us to communicate without using cables or wires.
WiFi (wireless fidelity) facilitates the mobile use of laptop computers and handheld devices.

Cloud computing
Cloud computing is the practice of using a network of remote servers hosted on the Internet to store,
manage, and process data, rather than a local server or a personal computer. Cloud computing allows on-
demand access to data.

Advantages and Disadvantage of Cloud Computing:

Advantages Disadvantages
 Limitless flexibility to different databases  Security and privacy
 Better reliability and physical security  Control of data
 Enhanced collaboration enabling users to work  Data mining
together  Data storage location/legislation
 Accessibility of data anywhere/redundancy  Unavailability of certain functionalities
 Unlimited data storage  Likelihood of hacking
 Faster access and processing  Compatibility of infrastructure
 Reduced IT maintenance and cost  Integration with other systems
 Business Continuity and Disaster Recovery  Software licensing
 Automatic Software upgrade  Technical issues
 Reduced cost (hardware, software, electricity,  Quality and speed of internet access
occupancy, staff)

Direct data capture

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Direct data capture means data is input into the computer through a reader. It is the collection of data for a
particular purpose.
Some methods of data capture are:

Additional methods:
- Bar codes are used to check out items at supermarket tills, to track stocks in a warehouse, to process
the borrowing and returning of books in a library or to track passenger luggage of an airline
- Magnetic strip cards are used to withdraw money at ATMs and to pay goods by credit cards.
- Voice recognizer is the software that understands spoken commands.

Privacy and security

Controls
IS are exposed to privacy and security issues.
There are two forms of IT/IS controls that exist to safeguard the privacy and security of data as well as
ensuring complete and accurate processing of data:

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Security and confidential information

A number of procedures can be used to ensure the security of highly confidential information that is not
for external consumption.
 Passwords: to only allow authorized users to input and also to keep a record of who has entered data
 Logical access systems: While physical access control (doors, locks, and so on) is concerned with
the prevention of unauthorized persons gaining access to the hardware, logical access control is
concerned with preventing those who already have access to a terminal or a computer from gaining
access to data or software
 Database controls: the number of queries, or by controlling the overlap between questions
 Firewalls: Systems can have firewalls to prevent unauthorized access into company systems.
Firewalls can be implemented in both hardware and software, or a combination of both
 Personnel security planning: (a) Careful recruitment (b) Job rotation (c) Supervision and
observation by a superior (d) Review of computer usage (eg via systems logs) (e) Enforced vacations
 Anti-virus and anti-spyware software

Information System and Data Analytics

Transaction Processing Systems (TPS):

Transaction Processing Systems (TPS) collect, store, modify and retrieve the transactions of an
organisation.
The important characteristics of a TPS are as follows.
 The processing is controlled as it supports the organisations operations.
 All transactions are recorded in a pre-defined manner or format.
 Provides rapid response to support customer satisfaction.
 Back-up and recovery procedures are in place as organisations rely heavily on TPS.
 Batch transaction processing (BTP) collects transaction data as a group and processes it after a
time delay. Information is entered in batches.
 Real time transaction processing (RTTP) is the immediate processing of data.

Management information systems (MIS):

Management information systems (MIS) convert data from mainly internal sources into information,
which enables managers to make timely and effective decisions for planning and controlling the activities.
MIS have the following characteristics.
 Support structured decisions at operational and management control levels and is internally
focused.
 Designed to report on existing operations rather than analyse data.

Decision Support Systems:

Decision Support Systems are computer–based systems which enable managers to confront ill-structured
problems by direct interaction with data and problem-solving programs.
A decision support system will have the following characteristics:
- To provide support for decision making, especially for semi-structured or unstructured decision
making.
- To provide support for all stages within the decision-making process.
- To provide support for decisions that are inter-dependent as well as for those that are independent.
- To support a variety of decision-making processes.
- To be user friendly.

Executive information systems (EIS):

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Executive information systems (EIS) provide a quick and efficient computing and communication
environment for senior managers to support strategic decisions. Executive information systems draw data
from the MIS and allow communication with external sources of information.
The EIS enables senior management to easily model the entire business by turning its data into useful,
summarized reports.

Expert systems:
Expert Systems (ES) can be used at all levels of management and hold specialist knowledge, e.g. on law
or taxation, and allow non-experts to interrogate them for information, advice and recommended
decisions.
An expert system is a computer program that captures human expertise in a limited domain of knowledge.
Such software uses a knowledge base that consists of facts, concepts and the relationships between them
and uses pattern-matching techniques to solve problems.

Executive resource planning systems (ERP systems) are modular software packages designed to
integrate the key processes in an organisation so that a single system can serve the information needs of
all functional areas.
ERP systems have the principal benefit that the same data can easily be shared between different
departments. ERP systems work in real time.
Benefits of ERP
 Easy access to shared real time information to support decision making.
 A lot of inefficiencies in the way things are done can be removed; as the company restructures its
processes so that multiple departments can work together.
 Standardizing Information and work practices so that the terminology used is similar.

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Customer Relationship Management (CRM) Systems

CRM is an approach to build and sustain long term business with customers. It consists of the processes a
company uses to track and organize its contacts with its current and prospective customers.
CRM software is used to support these processes; information about customers (such as their order
history, personal information – address) and customer interactions can be entered, stored and accessed by
employees in different company departments.
Phase 1 – Phase 2 – Phase 3 – Phase 4 – Extension: Phase 5 - After-
Selection: Acquisition: Retention: sales service
- Segmentation - Promotion - Extranets - Direct email - quick response
- Targeting - Incentives - Personalization - Learning - handle complaints
- Positioning - Services - Community - Onsite Promotions - special offers
- Profiles - Loyalty (Reselling or cross
- Promotions selling)

Big Data:
Big Data is an emerging technology that has implications across all business departments. It involves the
collection and analysis of large amounts of data to find trends, understand customer needs and help
organizations to focus resources more effectively and to make better decisions.
Therefore, big data is the capability to manage a huge volume of disparate data, at the right speed, and
within the right time frame to allow real-time analysis and reaction.
Big data is typically broken down by three characteristics:
 Volume: How much data – scale of information, data storage technology
 Velocity: How fast that data is processed, tweets per minute in tweeter
 Variety: The various types of data – both structured and unstructured
Sometimes fourth characteristic is also used to define big data:
 Veracity: How accurate is that data in predicting business value? Do the results of a big data
analysis make sense?
 Value: Do business derive value from data?
 Variability: How if can be used or formatted?
Big data incorporates all data, including structured data and unstructured data from e-mail, social media,
text streams, and more. This kind of data management requires that companies leverage both their
structured and unstructured data.
Advantages and Disadvantages of Big Data:
Advantages Disadvantages
– Enhanced transparency and quick use of data – Violates the privacy principle
– More accurate and timely decisions – Data can be used to manipulating customers
– Enhanced scalability – May cause social stratification
– Real–time access to data – Not useful in short run
– More timely integration of data – Faces difficulty in parsing and interpreting
– Difficult to handle

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