Yuvraj Bachhawat’s CA Final - ISCA 2.

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Academy Ch. 2 – Information System Concepts

Chapter 2-Information Systems Concepts:

Information System Concepts

Introduction System Information

(Part 1) (Part 2) (Part 3)

Information System Underlying IT Technologies

(Part 4) (Part 5)

 Part 1-Introduction:
 An information system is termed as system that comprises of people, computer systems, data,
network that helps to collect, store, analyze data to produce the desired information for the
functioning, betterment & expansion of business.
 Information system supports an organization’s:
 Business processes and operations &
 Business decision-making.
 Information systems play a vital role in the enterprise collaboration & management and also
facilitate E-commerce operations.
 Information System helps to gain edge in the competitive environment.
 Different levels of management require different types of information systems to generate
information for various purposes such as:
Level of Management Need for Information
Senior level management For planning and decision making.
Middle level management For monitoring and controlling business activities.
Lower level management For performing day-to-day activities easily & speedily.
 Thus different types of information systems are required at different levels of management
within the same enterprise to provide required information to respective management.

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Academy Ch. 2 – Information System Concepts

 Part 2-System:

Part 2-System

2.1) -Definition 2.2) - General Model 2.3) - Classification

2.1) Definition of System:

 A system is a group of inter connected components working towards the accomplishment of a
common goal by accepting inputs and producing outputs through an ordered transformation
process.
 Example: Business is a system because it contains input (people, machine, money, materials
etc.), which are processed by means of different processes (production, marketing, finance etc.)
and produces output (services and goods).

2.2) General Model of a system:

 A system generally consists of input, processing, storage and output.

Storage

Input Processing Output

1) Input is the data entering the system.

2) Processing is the manipulation of the input data.
3) Output is the information flowing out of a system.
4) Storage refers to the holding of information for current or future use.

2.3) Classification of System:

2.3) - Types of System

A) - Working B) - Interactive C) - Degree of Human D) - Elements

Behaviour Intervention

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Academy Ch. 2 – Information System Concepts

A) Working/Output
1) Deterministic System:
 A Deterministic system operates in a predictable manner.
 Example: Correct Computer program which performs exactly according to set of instructions.
2) Probabilistic System:
 A Probabilistic system can be described in terms of probable behaviour & a certain degree of
error is always attached to the prediction of systems doing.
 Example: Demand Forecasting System.

B) Interactive behaviour
1) Open systems:
 An Open system:
 Interacts freely with other systems in its environment.
 Changes itself with change in environment.
 Has longer life span as compared to closed system.
 Is complex to maintain as compared to closed system.
 Example: Business system
2) Closed system:
 A Closed system:
 Does not interact with the environment.
 Does not change with change in environment.
 Has shorter life span as compared to open system.
 Is easy to maintain as compared to open system.
 Example: ‘Throw-away’ type sealed digital watch

C) Degree of Human intervention

1) Manual System :
 In manual system data collection, manipulation, maintenance & final reporting is done by
human efforts.
2) Automated System:
 In Automated Systems data collection, manipulation, maintenance and final reporting are
carried by computers.

D) On the basis of Elements

1) Abstract System:
 Abstract System:
 Is also known as Conceptual System or Model.
 Is an orderly arrangement of interdependent ideas.
 Example: System of Theology (orderly arrangement of ideas about god and religion).
2) Physical System:
 Physical system is a set of tangible elements which operate together to accomplish an objective.
 Example: Physical System: Computer system.

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Academy Ch. 2 – Information System Concepts

 Part 3- Information:

Part 3-Information

3.1) - Definition 3.2) - Attributes 3.3) - Information as a Key

Business Asset & its Relation
to Business Objectives

3.1) Definition of Information:

 Information means processed data.
 Information may be represented in the form of text, graph, pictures, voice, videos etc.
 Data is facts or values of results, and information is the relations between data.
 Information products produced by an information system can be represented by number of
ways e.g. paper reports, visual displays, graphics images, audio responses.
 Example:
 In spread sheet student name, roll number and marks obtained in science and arts subjects
represents data whereas the graph that shows the percentage of students acquire more than
80% in science subjects and 65% in arts subjects represents information.
 Let us take another example “85”, “Ira”, “scored”, “Maths”, “in”, “marks” itself represents
data but it conveys information when we write sentence “Ira scored marks in Maths = 85”
which is obtained after manipulating the data.

3.2) Attributes of Information:

1) Availability:
 Availability is a very important aspect of information.
 Information is useless if it is not available at the time of need.
2) Purpose / Objective:
 Information must have purpose when transmitted, otherwise it is simply data.
 The basic purpose of information is to inform, evaluate, persuade which helps in decision
making, identify & solve problems, planning, controlling, etc.
3) Mode and format:
a) Mode:
 The mode of communicating information should be in such a way that it can be easily
understood by the people.
 Mode may be in the form of voice, text & combination of these two.
b) Format
 Format should be simple, relevant and should highlight important points so that it assists in
decision making and problem solving.
 Different formats can be used according to the type of information. E.g. diagrams, graphs.

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Academy Ch. 2 – Information System Concepts

4) Current/Updated:
 Value of information usually decays with time and usage, so it should be refreshed from time to
time.
 Example: Cricket match scorecard on internet
5) Rate:
 Rate of transmission is represented by the time required to understand a particular situation.
 Useful information is the one which is transmitted at a rate which matches with the rate, at
which the recipient wants to receive.
6) Frequency:
 The frequency with which information is transmitted or received affects its value.
 Example: Weekly reports of sales shows little change as compared to the quarterly and
contribute less for assessing salesman capability.
7) Completeness:
 The information provided should be complete and adequate because only complete information
can be used in policy making.
 Example: Position of student in a class can be found only after having the information of the
marks of all students and the total number of students in a class.
8) Reliability:
 It is a measure of failure or success of using information for decision-making.
 If information leads to correct decision on many occasions, we say the information is reliable.
9) Validity:
 It measures the closeness of the information to the purpose which it purports to serve.
 Example: Experience of employee supports in evaluating his performance.
10) Quality:
 Quality refers to the correctness of information.
11) Value of information:
 It is defined as difference between the value of the change in decision behaviour caused by the
information and the cost of the information.

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Academy Ch. 2 – Information System Concepts

3.3) Information as a Key Business Asset and its Relation to Business Objectives and
Processes:
 Information is a strategic resource that helps enterprises in achieving their long term goals.
 In today’s competitive and unpredictable business environment, only those enterprises survive
which have complete information & knowledge of customer buying habits & market strategy.
 Information management enhances an organization ability to achieve its mission by meeting
challenges of competition, timely performance etc.
 Role of Information in Business:
 In order to survive and grow it becomes mandatory to have complete information of customer
buying habits, market strategy for any enterprise.
 Timeliness, accurate, meaningful information enhances an organization ability to improve
performance, accomplish mission and survive competition.
 The information can be categorized on the basis of its requirement by:
 Top level management  Lower level management
 Middle level management

1) Top level Management:

 The top management generally comprise of:
 Owners/shareholders  Chairman
 Board of Directors  Managing Director
 Top management requires Strategic information that helps them in making strategy in terms of :
 Establishment of new plant  Targets of products i.e. customers,
 Scope of products  Location of new plant.
 Launching of new product
 The information about the customers buying habits helps top managers to decide the launching
of new products.
2) Middle level Management:
 The middle management comprise of:
 Heads of functions departments e.g. purchase manager, production manager.
 Divisional sectional officers working under these functional heads.
 Middle management requires tactical information that helps in implementing decisions taken
by the top management.
 Tactical information is used for short term planning whereas strategy information is used for
long term planning.
3) Lower level Management:
 Lower management comprises of:
 Superintendents  Supervisor
 The lower management requires operational information, for day-to-day activities.
 The operational information mainly comprises of information about:
 Stock on hand
 Information about customer order pending

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Academy Ch. 2 – Information System Concepts

 Part 4-Information Systems Concepts:

Part 4- Information System Concepts

4.1) - Computer Based 4.2) - Types of Information 4.3) - Application of Information

Information System System Systems in Enterprise
Processes

4.4) - Importance of Information System from 4.5) - Business Applications of IT/ Impact
Strategic & Operational perspective of IT on IS for different sectors

4.1) Computer based information system:

4.1) - Computer Based Information System

A) - Definition B) - Components C) - CBIS/IS Model D) - Characteristics E) - Applications

A) Definition:
 A computer based Information system is a combination of people, IT and business processes
that helps management in taking important decisions to carry out the business successfully.

B) Components of CBIS/ Information System:

1) People includes IT professionals (system administrator, programmers) & end users.
2) Hardware means the physical components of the computers.
3) Software means the system software (operating systems e.g. UNIX, WINDOWS etc.), application
software (Tally) and Utility software (Virus scanners, Disk Defragmenters).
4) Data is the raw fact. Data may be alphanumeric, text, image, video, audio, and other forms.
5) Network means communication media (internet).

C) An information system model:

 Three basics activities of an information system that helps enterprise in making decisions,
control operations, analyze problems and create new products or services are:
1) Input -Data is collected from an organization or from external environments.
2) Processing-Inputs are then converted into information by manipulation of collected data.
3) Output-Then information is stored for future use or communicated to user.
 Apart from these activities, information system also needs feedback, which occurs when the
outcome has an influence on the input.

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Academy Ch. 2 – Information System Concepts

 Functions of information system:

INPUT (Business Processing (Software, Output (Solution to

problems in the form of Programs, People, problem is in the form
data, information, Equipment storage) of reports, graphics,
instructions) calculations)

Controls Feedback
(Decision Makers)

D) Some of the important characteristics of Computer Based Information Systems are given as
follows:
a) All systems work for predetermined objectives & the system is developed accordingly.
b) A system has a number of interrelated & interdependent subsystems or components.
No subsystem can function in isolation; it depends on other subsystems for its inputs.
c) The way a subsystem works with another subsystem is called interaction. The different
subsystems interact with each other to achieve the goal of the system.
d) If one subsystem or component of a system fails; in most of the cases, the whole system does
not work. However, it depends on ‘how the subsystems are interrelated’.
e) The work done by individual subsystems is integrated to achieve the central goal of the system.

E) Major areas of computer based applications are given as follows:

1) Finance and Accounting:
 Goal of this subsystem is to:
 Ensure financial viability of the organization
 Enforce financial discipline
 Plan & monitor the financial budget
 It also helps:
 Forecasting revenues
 Using of funds
 Managing other financial resources
 Sub-application areas in finance and accounting are:
 Accounts receivable/payable  Investment management
 Asset accounting  Cash management
2) Marketing and Sales:
 The objective of this subsystem is to
 Maximize sales
 Ensure customer satisfaction.

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Academy Ch. 2 – Information System Concepts

 Marketing system facilitates the helps to:

 Advertise the products.
 Procure orders
 Create new customers
 Sales system helps to:
 Keep status and track of orders
 Generate bills for the orders executed
 Strategies for rendering services during warranty period
 Analyzing the sales data
 Compute commissions for dealers or salesmen.
3) Production or Manufacturing:
 The objective of this subsystem is to optimally deploy man, machine and material to maximize
production or service.
 The system helps to:
 Generates material requirement & production schedules
 Monitor the product quality,
 Plans for replacement or overhauling (repairing) the machinery
4) Inventory /Stores Management:
 The objective of this system is to keeping track of materials in the stores.
 The system helps to :
 Regulate the maximum and minimum level of stocks,
 Raise alarm at danger level stock of any material
 Give timely alert for re-ordering of materials with optimal re-order quantity
 The system facilitate various queries like:
 Total inventory value at any time,
 Identification of important items in terms stock value (ABC analysis),
 Identification of most frequently moving items (XYZ analysis) etc.
5) Human Resource Management:
 Objectives of this subsystem:
 Effective and efficient utilization of manpower
 Dispute free environment
 To ensure timely services & smooth sailing of business
 This system helps to:
 Keep track of employees’ output or efficiency.
 Keep track of leave records.
 Allocate manpower to right activity at the time of need using skill database (details of
qualification, training, experience etc) maintained by it.
 An HRM system may have the following modules:
 Personnel administration
 Recruitment management
 Salary administration
 Promotion management

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Academy Ch. 2 – Information System Concepts

4.2) Types of information systems:

4.2)-Types of Information systems

A) - Operational Level B) - Management level C) - Strategic level D) - Knowledge level E) - Specialized

Systems System Systems Systems Systems

A.1) - Transaction B.1) - Management C.1) –Executive D.1) - Office E.1) - Expert
Processing Information Information Automation System
System System System System

B.2) - Decision Support D.2) - Knowledge E.2) - Cross

System Management Functional
Systems I.S.

E.3) - Core
Banking
System

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Academy Ch. 2 – Information System Concepts

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Academy Ch. 2 – Information System Concepts

A ) Operational-Level Systems/ Operational Support systems (OSS):

 The main objective of Operational Level System is to improve the operational efficiency of the
enterprise.
 Its role is to:
 Effectively process business transactions
 Effectively control industrial processes
 Support enterprise communications & collaborations
 Update corporate database
 Operations support systems support managers in tracking elementary activities like:
 Tracking customer orders
 Invoice tracking etc.
 OSS can be further categorised as follows:
 Transaction Processing Systems (TPS)

A.1) Transaction Processing System:

A.1) - Transaction Processing
System System

I) - Definition II) - Activities III) - Components IV) - Features

I) Definition:
 Transaction Processing System (TPS) at the lowest level of management is an information system
that records and manipulates data from business transactions into usable information.
 Any business activity such as sales, purchase, production, delivery, payments or receipts involves
transaction and these transactions are to be organised and manipulated to generate various
information products for external use.
 A TPS may follow:
 Periodic data preparation and batch processing or
 On-line processing
II) Activities of TPS :
 Capturing data to organize in files or databases.
 Processing of files/databases using application software.
 Generating information in the form of reports.
 Processing of queries from various quarters of the organization.
III) TPS Components:
III) - Components

1) 1)- Inputs 2) - Processing 3) - Storage 4) - Output

Note: The components or elements are part of both manual and computerised systems.

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Academy Ch. 2 – Information System Concepts

1) Inputs:
 Source documents, such as customer orders, sales slips, invoices, purchase orders, are the
physical evidence of inputs into the TPS.
2) Processing:
 Processing involves use of journals and registers to provide a permanent and chronological
record of inputs.
 Journals are used to record financial accounting transactions (E.g. sales journal), and
Registers are used to record other types of data not directly related to accounting.
3) Storage :
 Ledgers and files provide storage of captured and processed data on both manual and
computerized systems.
 Following records of final account provide summaries of a firm’s financial accounting
transactions:
 The General Ledger
 The Accounts/vouchers Payable Ledgers
 The Accounts Receivable Ledgers
4) Outputs :
 Any document generated in the system is output.
 The trial balance lists the balances of all accounts & tests the accuracy of record keeping.
 Financial reports summarize the results of transaction processing & express these results in
accordance with the principles of financial reporting.

IV) Features of TPS

i) Automation of basic operations:
 TPS aims at automating basic day to day operations of a business enterprise and plays a
critical role in the day to day functioning of enterprise.
 Any failure in the TPS for a short period of time can play havoc with the functioning of the
enterprise.
ii) Source of input for other systems:
 TPS is the basic source internal information for other information systems.
iii) Benefits are easily measurable :
 TPS reduces the workload of the people associated with the operations and improves their
efficiency by automating some of the operations.
 Most of these benefits are tangible and easily measurable.
iv) Large Volume of data:
 TPS is transaction oriented and handles huge volume of data, thus requires greater storage
capacity.
 Their primary objective is to ensure that the data regarding the economic events in the
enterprises are captured quickly and correctly.

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Academy Ch. 2 – Information System Concepts

B) Management Level Systems/ Management Support Systems :

 MSS supports managers in monitoring & effective decision making by providing relevant &
required information at the right time to the right people.
 It provides periodic reports rather than instant information on operations.
 Example: A college control system gives report on:
 The number of leaves availed by the staff,
 Salary paid to the staff,
 Funds generated by the fees etc.
 This type of systems mainly answer “what if” questions.
 These types of questions can be answered only after getting new data from outside the
organization, as well as data from inside.
 MSS are categorized into two types:
 Management Information System
 Decision Support Systems

B.1) Management Information Systems (MIS):

 MIS enables management at different levels in decision making & problem solving in contrast
to TPS, which is operation oriented.
 MIS use results produced by the TPS, but they may also use other information.
 MIS output is available in the form of reports, tables, graphs and charts or in presentation
format using some tools
 These reports and displays can be made available on demand, periodically or whenever
exceptional conditions occurred.

B.1) – Management Information system

I) - Definition II) - Characteristics III) - Misconceptions IV) - Prerequisites

V) - Evaluation VI) - Constraints VII) - Limitations

I) Definition:
 “An integrated user-machine system designed for providing information to support:
 Operational control,
 Management control and
 Decision making functions in an organization”
 MIS is a computer based system that provides flexible and speedy access to accurate data.
 MIS enables management at different levels to take strategic or tactical management
decisions to fullfill the organisational goals.

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Academy Ch. 2 – Information System Concepts

II) Characteristics of an effective MIS:

1) Management Oriented:
 It means that development of the information system should start from an appraisal of
management needs and overall business objectives.
2) Management Directed :
 Information System should be developed under the direction of management
 For systems effectiveness management should devote sufficient time from designing the
system till its review to ensure that implemented system meets the desired specifications.
3) Integrated:
 All the functional and operational information sub-system should be integrated into one entity
as an integrated Information system has the capability of generating more meaningful
information to management.
4) Common Data Flows:
 It means the use of common input, processing and output procedures and media whenever
required to eliminate duplication in data collection, simplification of operation and producing
an efficient information system.
5) Common Database:
 Database is defined as a "super-file" which consolidates and integrates data records formerly
stored in many separate data files.
 Common database eliminates the necessity of duplication in data storage, updating, deletion
and protection.
6) Computerized:
 Though MIS can be implemented without using a computer, the use of computers increases the
effectiveness of the system by improving accuracy and consistency in processing data.
7)Heavy Planning Element :
 An MIS usually takes 3 to 5 years and sometimes even longer period to get established firmly
within a company; therefore a MIS designer should keep in view future objectives and
requirements of information.
8)Sub System Concept :
 Even though the information system is viewed as a single entity, it must be broken down into
sub-systems which can be implemented one at a time by developing a phasing plan to enable
easy development & implementation.

III) Misconceptions about MIS

1) The study of MIS is about use of computers.
2) Any computer based information system is a MIS.
3) Any reporting system is MIS.
4) MIS is a bunch of technologies
5) More data in generated reports refers more information to managers.
6) MIS is a management technique.

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Academy Ch. 2 – Information System Concepts

IV) Pre-requisites of an Effective MIS

1) Database:
 Database is collection of files, which is collection of records and records are nothing but
collection of data.
 Characteristics of database are as follows :
 It is user–oriented.
 It is capable of being used as a common data source to various users.
 It helps in avoiding duplication of efforts in storage & retrieval of data and information.
 It is available to authorized persons only.
 It is controlled by authority, known as Data Base Management System.
2) Qualified system and management staff :
The organizational management should comprise of following two categories of officers:
a) Systems and Computer experts:
 They are those who develop and maintain MIS.
 They should be expert of their subject area and should understand management concepts for
understanding management’s problem.
 They should be clear about decision making process & information requirements.
b) Management experts:
 They are those who help in designing of MIS and actually use MIS.
 They should understand clearly the concepts and operations of a computer.
 This basic knowledge of computers will be useful to place them in a comfortable position,
while working with systems technicians in designing or otherwise of the information system.
3) Support of Top Management:
For MIS to be effective, it should receive full support of top management.
The reasons for this are as follows:
 Any implementation which does not receive the support of top management:
 Will not be effectively controlled,
 Tends to get lesser priority &
 May be delayed or abandoned.
 Moreover to design and implement MIS large amount of resources are required and such
resources cannot be allocated without the support and consent of top management.
 To gain the support of top management, the officers should place before top management all
the supporting facts and state clearly the benefits, which will accrue from it.
4) Control and Maintenance of MIS:
a) Controls:
 Controls of MIS means that system operates as it was designed to operate.
 Management should devise checks for the information system control.
Maintenance:
 There are times when the need for improvements to the system will be discovered.
 Formal methods for changing and documenting changes are referred as maintenance.

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Academy Ch. 2 – Information System Concepts

V) Evaluation of MIS:
 Evaluation of MIS is done to ensure that it is capable of meeting the information requirements
of its executives in future as well.
 The evaluation of MIS should take into account the following points:
a) Examining whether enough flexibility exists in the system, to cope with any expected or
unexpected information requirement in future.
b) Ascertaining the views of users and the designers about the capabilities and deficiencies
of the system.
c) Guiding the appropriate authority about steps to be taken to maintain effectiveness of MIS.

VI) Constraints in operating a MIS:

1) Constraint - Non-availability of experts, who can diagnose the objectives of the organization and
provide a desired direction for installing and operating system.
Solution - This problem may be overcome by grooming internal staff, which should be preceded
by proper selection and training.
2) Constraint - Experts usually face the problem of selecting the sub-system of MIS to be installed
and operated upon.
Solution - The criteria, which should guide the experts, depend upon the need and importance of
a function for which MIS can be installed first.
3) Constraint - Non-availability of cooperation from staff is a crucial problem.
Solution - Lecturers, films etc should be organised showing the utility of the system. Staff should
also be involved in the development and implementation of the system.
4) Constraint-Due to varied objectives of business concerns, the approach adopted by experts for
designing and implementing MIS is a non-standardized one.

VII) Limitations of MIS :

1) The quality of the output of MIS depends on quality of inputs and processes.
2) MIS is not a substitute for effective management i.e. it cannot replace managerial decision
making.
3) MIS is not flexible enough to quickly update itself in fast changing & complex environment.
4) MIS ignores non-quantitative factors like morale and attitude of members of organization.
5) MIS is less useful for making non-programmed decisions.
6) Effectiveness of MIS is reduced where the culture of hoarding information and not sharing with
other holds exists.
7) Effectiveness of MIS is reduced due to frequent changes in top management, organizational
structure etc.

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Academy Ch. 2 – Information System Concepts

B.2) Decision Support System (DSS):

B.2) – Decision Support System

I) - Definition II) - Characteristics III) - Components

IV) - Difference between DSS & MIS V) - Examples

I) Definition:
 DSS is a type of CIS that supports organizational decision-making activities.
 DSS is a system that provides tools to managers to assist them in solving semi-structured and
unstructured problems in their own, somewhat personalized, way.
 DSS supports the human decision-making process, rather than a means to replace it.
 DSS is not intended to make decisions for managers, but rather to provide managers with a set
of capabilities that enable them to generate the information required by them in making
decisions.
II) Characteristics of DSS:
1) This supports decision making and occurs at all levels of management.
2) It should be flexible and adaptable according to manager and environment.
3) DSS focuses on decision rather than data and information.
4) DSS should be user-friendly.
5) It should be easy to use i.e. knowledge of computer programming should not be a prerequisite to
generate reports that help in decision making.
6) DSS can be used for structured problems.
7) DSS should be extensible and evolve over time.
8) The impact of DSS should be on decision where the manager’s judgment is essential.

III) Components of DSS:

III) - Components

2) 1)- User 2) - Database 3) - Planning Language 4) - Model Base

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1) The user :
 Users of DSS are usually managers with unstructured semi-structured problem.
 Users should have a thorough understanding of the problem and the factors to be considered in
finding a solution.
 Manager and staff specialist (analyst) are the two broad classes of users.
a) Manager:
 These are the users who have basic computer knowledge and want the DSS to be very user
friendly.
 The manager may be at any level of authority in the organization.
b) Staff Specialist (Analysts):
 These are the people who are more detail oriented and willing to use complex system in
their day to day work.
2) Databases:
 Decision Support Systems include one or more databases that contain both routine and non-
routine data from both internal and external sources.
 External sources include data about the operating environment surrounding an org.
For example- data about economic conditions, market demand for the organization’s
goods or services, and industry competition.
 Internal sources are generated generally in the normal course of operations.
For example- data from the financial and managerial accounting systems such as account,
transaction, and planning data.
 Implementation of Database:
Database is implemented at three levels as listed below:
a) Physical level :
 It involves implementation of the database on hard disk i.e. storage of data in the hard disk.
 The management of storage and access is controlled by operating system.
b) Logical Level:
 It deals with the nature of data stored, the scheme (arrangement) of the data.
 Storage is logically divided into various tables having rows and columns.
 It is designed by professional programmers, who have complete knowledge of DBMS.
c) External level:
 In external level schema is divided into smaller units known as sub-schemas and given to the
managers each sub-schema containing all relevant data needed by one manager.
3) Planning languages:
 The planning language in DSS allows the user to maintain a dialogue with the model base.
 Two types of planning Languages that are commonly used in DSS are:
a) General-purpose planning languages:
 GPPL allow users to perform many routine tasks like retrieving various data from a database or
performing statistical analyses.
 These languages enable user to tackle a broad range of budgeting, forecasting problems.
 The languages in most electronic spread sheets are good example of GPPL.

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b) Special-purpose planning languages:

 SPPL are more limited in what they can do, but they usually do certain jobs better than GPPL.
 E.g. SAS- Statistical Analysis Software, SPSS-Special Purpose Statistical Software
4) Model Base:
 Planning language in a DSS allows user to maintain dialogue with the model base.
 Model base is the “brain” of DSS because it performs data manipulations and computations
with the data provided to it by the user and the database.
 Model base performs various mathematical functions like Regression analysis, Time series
analysis, linear programming, financial computations etc.

IV) Examples of Decision Support Systems in Accounting :

1) Cost Accounting System :
 Cost accounting system helps various enterprises to calculate product costs for individual
procedures or services.
 For example: One health care organisation can apply DSS applications in productivity, cost
accounting, nursing staff scheduling etc to improve its management decision making.
2) Capital Budgeting System:
 Companies require new tools to evaluate high-technology investment decisions.
 DSS can be designed to support capital budgeting decisions considering financial, non financial,
quantitative and qualitative factors in their decision making.
3) Budget Variance Analysis System:
 DSS is used to generate monthly variance reports for division comptroller.
 The system allows these comptrollers to graph, view & analyse budget variances as well as
create additional one to five year budget projection using the forecasting tools.
 DSS thus helps the comptrollers create & control budgets.
4) General Decision Support System:
 Some planning languages used in Decision Support Systems are general purpose and therefore
have the ability to analyze many different types of problems.
 User inputs data and the DSS then asks the user to answer questions about specific problems to
make use of this type of decision support system.

V) Difference between DSS and traditional MIS: Major difference between the DSS and the
traditional MIS are shown in following Table:

Dimension DSS Traditional MIS

Philosophy Providing integrated tools, data, and Providing structured information
languages to end users to end users
Orientation External orientation Internal orientation
Flexibility Highly flexible Relatively inflexible
Analytical capability More analytical capability Little analytical capability
System analysis Emphasis on tools to be used in Emphasis on information
decision process requirement analysis

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C) Strategic Level Systems:

 Strategic Level System supports the senior level management to tackle and address
strategic issues and long term trends, both inside organization and the outside world.
 It answers questions like what products should be launched to increase the profit and
capture the market.
 A principle area is tracking changes in the external conditions (market sector, employment
levels, share prices, etc.) and matching these with the internal conditions of the
organization.

C.1) Executive Information System:

C.1) – Executive Information System

I) - Definition II) - Purpose III) - Characteristics

IV) – Executive Decision Making V) - Contents VI) - Diff betn EIS & TPS

I) Definitions:
 It is sometimes referred to as an Executive Support System (ESS).
 EIS is a tool that provides direct on line access to relevant information in a useful and navigable
(guiding) format. Relevant information is timely, accurate and actionable information about the
aspects of business that are of particular interest to senior management.

II) Purpose of EIS:

1) To support managerial learning about an organisation, its work processes, its interaction with
the external environment.
2) To provide timely access to required information.
3) Direct attention of management to specific problem areas of organisation.

III) Characteristics of EIS:

1) EIS is a CBIS that serves the information need of top executives.
2) EIS enables users to extract summary data and model (simplify) complex problems without the
need to learn statistical formulas or high computing skills.
3) EIS provides rapid access to timely information and direct access to management reports.
4) EIS is capable of accessing both internal and external data.
5) EIS provides extensive online analysis tool like trend analysis, market conditions.
6) EIS can easily be given a DSS support for decision making.

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IV) The Executive Decision-Making Environment:

 Often executives make decisions based on a vision they have regarding “what it will take to
make their enterprise successful”.
 To a large extent executives rely much more on their own intuition rather than on the
sophisticated analytical skills.
 The intuitive character of executive decision making is reflected strongly in the types of
information found most useful to the executives.
 Characteristics of the types of information used in executive decision making are:
1) Future orientation:
 Strategic-planning decisions are made in order to shape future events, therefore information
also contains a future orientation like:
 How will future technologies affect what the company is currently doing?
 What will the government do next?
 How will the competitors do next?
 What products will consumers demand five years from now?
2) High degree of uncertainty:
 Executives work in a decision space that is often characterized by a lack of precedent (i.e.
no previous event can be referred for advice)
 Moreover, high degree of uncertainty is involved as information is future oriented.
3) Lack of structure:
 Executive makes decision normally for unstructured problems.
 Also it is not obvious, “which data are required” or”how to weigh available data” when
reaching a decision.
4) Informal Source:
 Executives also rely on informal source for key information.
 Informal sources may include lunch with a colleague, television etc
5) Low level of detail:
 Most important executive decisions are made by observing broad trends (i.e. awareness of the
large overview) rather than detailing the tiny items.

V) Contents of EIS:
 A general answer to the question of what data is appropriate for inclusion in EIS is “whatever is
interesting to executives.”
 EIS implementation begins with just a few measures that are clearly of interest to senior
management and then expand in response to questions asked by those managers as they use the
system.
 While the above indicates that selection of data for inclusion in an EIS is difficult, there are
several guidelines that help to make that assessment.

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 A practical set of principles to guide the design of measures and indicators to be included in an
EIS is presented below:
1) EIS measures:
 Must be easy to understand and collect i.e. data should be collected naturally as part of the
process of work.
 Must be based on a balanced view of the organization's objective i.e. consider areas of
productivity, resource management, quality and customer service.
 Must encourage management & staff to share ownership of the org's objectives.
 Must evolve to meet the changing needs of the organization.

2) Performance indicators:
 Must reflect everyone's contribution in a fair and consistent manner.
 Must promote both team-work and friendly competition.
3) EIS information must be available to everyone in the organization
 The objective is to provide everyone with useful information about the organization's
performance.
 Information that must remain confidential should not be part of the EIS.

VI) Difference between EIS and Traditional Information Systems:

Basis Executive Information system Transaction processing system

Level of management For Top Executives For lower staff

Nature of Reporting Specific issues/problems Status reporting

Nature of Access Online tools and analysis Offline status reporting
Information Sources More external less internal Internal
Drill down facility Available Not available
Information format Text with graphics Tabular
Nature of interface User-friendly Computer-operator generated

D) Knowledge Level Systems:

 These systems support discovery, processing and storage of knowledge and data
workers.
 These support the business to integrate new knowledge into the business and control the
flow of paperwork and enable group working.
 Knowledge Level Systems are categorized into two types:
 Office Automation System
 Knowledge Management System

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D.1) Office Automation Systems (OAS):

 Application of computers to handle the office activities is termed as office automation.
 Office Automation System (OAS) are among the newest and most rapidly expanding
computer based information systems.
 Different office activities can be broadly grouped into the following types of operations:
1) Document Capture:
 Documents originating from outside sources like incoming mails, notes etc need to be preserved.
2) Document Creation:
 This consists of preparation of documents, dictation, editing of texts.
3) Receipts and Distribution:
 This basically includes distribution of correspondence to designated recipients.
4) Filling, Search, Retrieval and Follow up:
 This is related to filling, indexing, searching of documents, which takes up significant time.
5) Calculations:
 These include the usual calculator functions.
6) Recording Utilization of Resources:
 This includes record keeping in respect to specific resources utilized by office personnel.

 Benefits of Office Automation Systems:

1) Office Automation Systems improve communication within an organization and between
organizations.
2) Office Automation Systems ensure accuracy of information and smooth flow of communication.
3) Office Automation Systems reduce the costs of office communication both in terms of time
spent by executives and cost of communication links.
4) Office Automation Systems reduce the cycle time between preparation of messages and receipt
of messages at the recipients’ end.
 Categories of computer based office automation system are as follows:
 Text Processors and related systems
 Electronic document management systems
 Electronic message communication systems
 Teleconferencing and videoconferencing systems
I) Text Processing Systems:
 Text processing systems are the most commonly used components of the OAS as large
proportion of the office communication takes place in writing using words of a natural language.
 Text processing systems automate the process of development of documents such as letters,
reports, memos etc.
 They permit use of standard stored information to produce personalised document.
 Such automation reduces keying effort and minimizes the chances of errors in the document.
 The text processor may be simple word processing systems or desktop publishing systems.
 The desktop publishing systems are often supported with laser printers, inkjet printers, scanners
and other such devices for producing good quality documents.

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II) Electronic Document Management Systems

 The computer based document management systems capture the information contained in
documents, store for future reference and make them available to users as and when required.
 These systems are linked to the office automation systems such as text processors, EMCS etc.
 Advantages of Electronic Document management system:
(i) These systems are very useful:
 In remote access of documents that is almost impossible with manual document
management systems,
 In the case of internal communication
(ii) Location of the executive becomes irrelevant for access to documents.

III) Electronic Message Communication Systems:

 Business enterprises have been using a variety of communication systems for sending and
receiving messages.
 These include telephone, mail and facsimile (Fax) etc.
 The computer based message communication systems offer following benefits:
 Reduced time in sending or receiving the message
 Reliability of the message
 Economy in cost of communication
 Components of Message Communication Systems:
The three basic components based message communication systems are:
(1) Electronic Mail:
 Various features of electronic mail are stated below:
a) Electronic transmission:
 The transmission of messages with email is electronic and message delivery is very quick.
 The confirmation of transmission is also quick and the reliability is very high.
b) Online development and editing:
 The email message can be developed and edited online before transmission.
 The online development & editing eliminates the need for use of paper in communication.
c) Broadcasting and Rerouting:
 Email permits sending a message to a large number of target recipients.
 The email could be rerouted to people having direct interest in the message with or without
changing or appending related information to the message.
d) Integration with other Information systems:
 The E-mail has the advantage of being integrated with the other information systems.
e) Portability:
 Email renders the physical location of the recipient and sender irrelevant.
 The email can be accessed from any Personal computer, smart phones etc.
f)Economical:
 The advancements in communication technologies have made Email the most economical
mode for sending &receiving messages.

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(2) Facsimile (Fax):

 Facsimile (Fax) is electronic communication of images of documents over telephone lines.
 The computer based fax technology automates fax communication and permits sharing of fax
facilities.
 It uses special software and fax servers to send and receive fax messages using common
communication resources.
 These servers have the ability to receive fax messages and automatically reroute them to the
intended recipient after viewing it at the central computer.
 Similarly, the managers in an enterprise can leave the fax messages to the server which will
send it to the intended recipient automatically.
(3) Voice Mail:
 Voice mail a variation of the email in which messages are transmitted as digitized voice.
 The recipient of the voice mail has to dial a voice mail service and he can hear the spoken
message in the voice of the sender.
 The secured type of voice mail service may require the recipient to enter identification code
before the access is granted to the stored information.

IV) Teleconferencing and Video-conferencing Systems:

 Teleconferencing is conducting a business meeting involving more than two persons located at
two or more different places.
 The teleconferencing helps in reducing the time and cost of meeting as the participants do not
have to travel to attend the meeting.
 Teleconferencing may be audio or video conferencing with or without use of computer systems.
 The communication links are still quite expensive making the desktop video conferencing useful
only for selected applications.

D.2) Knowledge Management System (KMS)

 The world is moving swiftly in the direction of a knowledge-based system as enterprises
adapt more & more cost- cutting measure.
 There is a paradigm shift from an economy principally concerned by the management of
tangible resources (equipment, machinery, buildings, ....) to an economy in which
renovation and growth are determined by intangible resources and investments
(knowledge, technology, competencies, abilities to innovate....).
 Information and Knowledge are the key elements of this economy.
 A firm’s competitive gain depends on its knowledge processing i.e. what it knows;
how it uses & how fast it can know something new.
 Knowledge Management (KM) is the process of capturing, developing, sharing, and
effectively using organizational knowledge to achieving organizational objectives.
 Knowledge Management Systems (KMS) refers to any kind of IT system that:
 Stores and retrieves knowledge,  Mines repositories for hidden
 Improves collaboration, knowledge,
 Locates knowledge sources,  Captures and uses knowledge

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 There are two broad types of knowledge:

a) Explicit knowledge:
 Explicit knowledge is that which can be formalized easily and as a consequence is easily
available across the organization.
 Explicit knowledge is articulated, and represented as spoken words, written material and
compiled data.
 This type of knowledge is codified, easy to document, transfer and reproduce.
 Example: Online tutorials, Policy and procedural manuals.

b) Tacit knowledge:
 Tacit knowledge resides in a few, often-in just one person and hasn’t been captured by
the organization or made available to others.
 Tacit knowledge is unarticulated and represented as intuition, perspective, beliefs, and
values that individuals form based on their experiences.
 It is personal, experimental and difficult to document and communicate.
 Example: hand-on skills, special know-how, employee experiences.
 It is this tacit knowledge that differentiates between organizations when push comes to
shove, and hence providing the strategic edge to any organization.
E) Specialized Systems:
 Some of the specialized systems are:
 Expert Systems
 Cross Functional Information Systems
 Core Banking Systems

E.1) Expert Systems:

D.1) – Expert System

I) - Definition II) – Business Application III) - Need

IV) -Benefits V) – Pre requisites

I) Definition:
 Expert System is a highly developed DSS that utilizes knowledge generally possessed by an
expert to solve a problem.
 Expert Systems are software systems that imitate the reasoning processes of human experts &
provide decision makers with the type of advice they would normally receive from such expert
systems.
 Expert system works on the principle of artificial intelligence.
 A characteristic of expert systems is the ability to declare or explain the reasoning process that
was used to make decisions.

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II) Some of the business applications of Expert Systems are as follows:

1) Accounting and Finance:
 It provides tax advice & assistance, helping with credit- authorization decisions, providing
investment advice.
2) Marketing:
 It provides establishing sales quotas, responding to customer inquiries, determining discount
policies.
3) Manufacturing:
 It helps in determining whether a process is running correctly, analyzing quality and providing
corrective measures, maintaining facilities, selecting transportation routes.
4) Personnel:
 It is useful in assessing applicant qualifications, giving employees assisting at filling out forms
5) General Business:
 It helps in assisting with project proposals, educating trainees, evaluating performance.

III) Need for Expert Systems:

(1) Expert labour is expensive and scarce.
(2) No matter how bright or knowledgeable certain people are, they often can handle only a few
factors at a time.

IV) Benefits of Expert Systems:

1) Expert Systems preserve knowledge that might be lost through retirement, resignation or death
of an acknowledged company expert.
2) Expert Systems put information into an active-form so it can be summoned almost as a real-life
expert might be summoned.
3) Expert Systems assist novices (a person who is new to inexperienced to a job) in thinking the way
experienced professional do.
4) Expert Systems are not subject to human fallings such as fatigue, being too busy, or being
emotional.
5) Expert Systems can be effectively used as a strategic tool is the areas of marketing products,
cutting costs and improving products.

V) Some of the properties that potential applications should posses to qualify for Expert
System development are as follows:
1) Availability:
 One or more experts are capable of communicating how they go about solving the problems to
which the Expert System will be applied.
2) Complexity:
 Solution of problems requires logical inference processing, which would not be easily handled
by conventional information processing.
3) Domain:
 The domain, or subject area, of the problem is relatively small and limited to a relatively well-
defined problem area.

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4) Expertise:
 Solutions to the problem require the efforts of experts. That is, only a few possess the
knowledge, techniques, and intuition needed.
5) Structure:
 The solution process must be able to cope with ill-structured, uncertain, missing, and
conflicting data, and a dynamic problem-solving situation.

E.2) Cross Functional Information Systems:

 It is also known as integrated information system.
 These are designed to produce information and support decision making for different levels of
management and business functions
 Example: Enterprise Resource Planning (ERP).
 Enterprise Resource Planning

Enterprise Resource Planning

I) - Definition II) - Components III) - Benefits

I) Definition:
 Enterprise resource planning (ERP) is process management software that allows an
organization to use a system of integrated applications to manage the business & automate
many back office functions related to technology, services and human resources.
 ERP software integrates all facets of an operation, including product planning,
development, manufacturing, sales and marketing.
 ERP software is considered an enterprise application as it is designed to be used by
larger businesses and often requires dedicated teams to customize and analyze the data
and to handle upgrades and deployment.

II) Components of ERP

ERP model is consists of four components which are implemented through a
methodology.
All four components are as follows:
1) Software Component:
 The software component is the component that is most visible part and consists of several
modules such as Finance, Human Resource, Supply Chain Management, Supplier
Relationship Management and Customer Relationship.
2) Process Flow:
 It is the model that illustrates the way how information flows among the different
modules within an ERP system.
 By creating this model makes it easier to understand how ERP work.

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3) Customer mindset:
 By implementing ERP system, the old ways for working which user understand and
comfortable with have to be changed and may lead to users’ resistance.
 In order to lead ERP implementation to succeed, the company needs to eliminate negative
value or belief that users may carry toward utilizing new system.
4) Change Management:
 In ERP implementation, change needs to be managed at several levels - User attitude;
resistance to change; and business process changes.

III) Benefits of ERP:

1) Streamlining processes and workflows with a single integrated system.
2) Reduce redundant data entry and processes and in other hand it shares information across
the department.
3) Establish uniform processes that are based on recognized best business practices.
4) Improved workflow and efficiency.
5) Improved customer satisfaction based on improved on-time delivery, increased quality,
shortened delivery times.
6) Reduced inventory costs resulting from better planning, tracking & forecasting of requirements.
7) Turn collections faster based on better visibility into accounts & fewer billing errors.
8) Provide a consolidated picture of sales, inventory and receivables.

E.3) Core Banking System (CBS)

 Core Banking is a banking services provided by a group of networked bank branches
where customers may access their bank account and perform basic transactions from
any of the member branch offices.
 Normal core banking functions will include transaction accounts, loans, mortgages &
payments.
 Banks make these services available across multiple channels like ATMs, Internet
banking, and branches.
 Most commonly, Core Banking System (CBS) may be defined as a back-end system that
processes daily banking transactions, and posts updates to accounts and other
financial records.
 Core banking functions differ depending on the specific type of bank.
 Examples of core banking products include:
 Infosys’ Finacle,
 Nucleus FinnOne
 Oracle's Flexcube
 Elements of core banking include:
 Making and servicing loans  Calculating interest.
 Opening new accounts  Customer Relationship Management
 Processing cash deposits and (CRM) activities.
withdrawals.  Managing customer accounts.
 Processing payments and cheques.  Maintaining records for all the bank’s
transactions

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4.3) Application of Information Systems in Enterprise Processes

A) Information systems perform following three vital roles in business firms:
1) Support an organization’s business processes and operations:
 This includes operations support systems such as:
 Transaction Processing Systems
 Process Control Systems
2) Support business decision-making:
 This includes systems such as:
 Decision Support Systems
 Executive Information Systems
3) Support strategic competitive advantage:
 This includes systems such as:
 Expert Systems
 Knowledge Management Systems
 Strategic Information Systems
 Functional Business Systems

B) To operate information systems (IS) effectively and efficiently a business manager should have
following knowledge about it:
1) Foundation Concepts:
 It includes fundamental business and managerial concepts.
 For example:
 What are components of a system and their functions?
 What competitive strategies are required?
2) Information Technologies (IT):
 It includes operation, development and management of hardware, software, data
management, networks, and other technologies.
3) Business Applications :
 It includes major uses of IT in business steps i.e. processes, operations, decision making, and
strategic/competitive advantage.
4) Development Processes :
 It comprise how end users and IS specialists develop and execute business/IT solutions to
problems.
5) Management Challenges:
 It includes how the function and IT resources are maintained and utilized to attain top
performance and build the business strategies.

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C) Relationship between Information Technology (IT) and Information System (IS):

 IT can be viewed as a subsystem of information system that includes hardware, software,
databases, networks and other electronic devices.
 IT refers to the technology of production, storage, communication and management of
information using computers.
 IT is used to build IS
 The primary areas where IT enabled tools are used in any organization are:
 Marketing
 Customer Relationship Management
 Supply Chain Management
 Knowledge Management

D) Some of important implications of information system in business are as follows:

1) Information systems help in making right decision at the right time.
2) Information system helps managers in effective & efficient decision-making to achieve the
organizational goal.
3) Good information system may help in generating innovative ideas for solving critical problems.
4) Knowledge gathered though Information system may be utilized by managers in unusual
situations.
5) Based on well-designed Information system, an organization will be able to survive and thrive in
a highly competitive environment.
6) Information system is viewed as a process; it can be integrated to formulate a strategy of action.

4.4) Relative Importance of Information Systems from Strategic and Operational

Perspectives:
 A business strategy is defined as a long term planning for success
 A good business strategy is one that enables company to:
 Satisfy customers
 Use resources efficiently
 Explore business opportunities
 An IS can be large or small depending upon the size of the company & can help in:
 Decision making
 Perform logistical functions (providing real time status of goods)
 Information systems are used in various aspects of business like:
 Customer relationship management
 Marketing strategies
 Communication
 Information System also provides platform to business world where space and time is no more
obstacle.
 Different information systems that serve different organizational levels are:
1) Operational Level Systems:
 This supports operational managers by keeping track of the elementary activities and routine
transactions of the enterprises e.g. sales, payroll, receipts etc.
 E.g.- Sales area uses operational level system to keep track of daily sales figures.

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2) Knowledge Level Systems:

 This system supports the business to integrate new knowledge into the business and control
the flow of paperwork.
 It is the fastest growing application in business today.
3) Management Level Systems:
 It supports middle managers in monitoring, decision-making & administrative activities.
 It provides periodic reports rather than instant information on operations.
 This type of systems mainly answer “what if” questions.
 E.g.- Management level system generate report of the monthly sales by territory.
4) Strategic Level Systems:
 It supports senior level management to address strategic issues & long term trends.
 It answers questions like what products should be launched to capture the market.
 It helps in long term planning.
 E.g.-Strategic level system predicts the sale of the product in coming five years
 Managers should have knowledge of the following:
 Foundation concepts  Development processes
 Information technologies  Management challenges
 Business applications

4.5) The impact of IT on information systems for different sectors is explained below:
1) E-business:
 This is also called electronic business and uses internet technologies for the following:
 Purchasing & Selling
 Production management
 Inventory management
 Logistics
 Support Services and Communication
 The primary components of E-business are :
 Infrastructure (computers, routers, communication media, and programmers),
 Electronic commerce and electronically linked devices and computer aided networks
 The advantages of E-business are as follows:
 24 hour sale
 Lower cost of doing business
 More efficient business relationship
 Eliminate middlemen
 Unlimited market place
 Secure payment systems
 Easier business administration
 Online fast updating
 Only investment is needed in :
 Purchase of space on internet
 Designing & maintenance of website

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 Different types of business can be done:

 B2B (Business to Business)  C2C (Customer to Customer)
 B2C (Business to Customer)  C2B (Customer to Business)
 Thus, we can say that IT has given new definition to business.
2) Financial Service Sector (FSS):
 Every day the financial services sector (banks, life insurance companies):
 Manages large amounts of data &
 Processes enormous numbers of transactions
 IT application helps FSS :
 To operate nationally &
 Have wide networks of regional offices
 The associated substantial client databases are handled via large central mainframe systems.
 Benefits of using internet for offering financial services are:
 FSS are in direct touch with their customers.
 Customers can avail services from anywhere & at anytime.
 Cost in terms of office staff and office building is reduced.
 Examples of activities that customers can do by using internet are:
 Transactions by using internet banking, phone banking
 Deposit or withdraw of money can be done by using ATM, mobile banking.
3) Wholesaling and Retailing:
 IT has become a vital part of retailing.
 Retail business uses IT to carry out basic functions like:
 Buying & Selling items
 Capturing the sales data
 Stock control
 Customer information and Accounting
 The laser scanner used in most grocery supermarkets and superstores to read product bar codes
is an example of modern computer technology.
 By using internet retailers can collect & exchange data between stores, distribution centres,
suppliers and head offices.
 IT can be used in wholesale for supply chain logistics management, planning, space
management, purchasing, re-ordering, and analysis of promotions.
 Data mining and data warehousing applications helps in:
 Analysis of market
 Customer profiles
 Sales trends
4) Public sectors
 Public sectors include services provided by the government mainly hospitals, police stations,
universities etc.
 IT/IS can be used here, to keep records of the cases, respective people involved it, other related
documents and can consult the existing data warehouse or databases to take appropriate
actions.

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5) Others:
 IT is efficiently used in :
 Entertainment industry (games, picture collection etc.)
 Agriculture industry (information is just a mouse click away to the farmers),
 Tour industry (railway, hotel and airline reservations)
 Consultancy

 Part 5-Overview of Underlying IT Technologies:

 Business uses IT to carry out basic functions including systems for:
 Selling and buying items
 Customer information
 Inventory Management
 Decision making
 Accounting etc.
 Some of the IT tools crucial for business growth are discussed as follows:
(1) Business Website:
 By having a website, enterprise becomes reachable to large amount of customers.
 In addition, it can also be used in an advertisement, which is cost effective.
 These websites can be designed by using HTML, XML, ASP.net etc.
(2) Internet and Intranet:
 It is the best source of communication.
 Time and space is no more obstacles for conducting meeting of people from multiple locations,
or with different vendors and companies.
 Intranet is system that permits the electronic exchange of business data within an organization,
mostly between managers and senior staff.
 E-commerce provides business to business, business to customer, customer to customer and
customer to business communication with a click of mouse.
(3) Software and Packages:
 Following tools help in getting information and play important role in decision making that can
boost business in competitive world:
 Database Management System  Data Mining Tools
 Data Warehousing  Knowledge Discovery

 Enterprise Resource Planning (ERP) Packages:

 ERP is one of the latest high-end solutions that integrate operation processes and
information flows in the company to synergize the five major resources of an organization
namely men, money, machine, materials and market.
 ERP can be defined as a system, which is a fully integrated business management system that
integrates the core business & management processes to provide an organization a structured
environment in which decisions concerning demand, supply, operational, personnel, finance,
logistics etc. are fully supported by accurate and reliable real-time information.

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 The objective of ERP is:

 To provide support for adopting best business practices
 To implement these practices with a view towards enhancing productivity
 An ERP System is a multi module software system that integrates all business process and
functions of the entire Enterprise into a single software system, using a single integrated
database.
 Each module is intended to collect, process, and store data of a functional area of the
organization and to integrate with related processes.
 For example, a module may be designed to process purchasing transactions and record all
data about purchase orders. This module must integrate with accounts payable &
inventory, since the vendor must be paid and inventory increased as the purchased goods
arrive.
 Data Mining:
 Data Mining can be applied in database analysis and decision support i.e. market analysis
by finding patterns that are helpful in target marketing, customer relation management,
market basket analysis, market segmentation, competitive analysis.
 Other applications of DM are:
 Customer profiling - it can list out what types of customers buy what products
 Identifying customer requirements- it can identify the most demanding and appropriate
products for different customers
 Provide summary information i.e. various multidimensional summary reports.
 Finance planning and asset evaluation
 Web analysis
 Text Mining

(4) Business Intelligence:

 Business Intelligence (BI) refers to applications and technologies that are used to collect provide
access and analyze data and information about companies operations.
 BI applications are used:
 For Business planning
 As finance and budgeting tools
 To analyze performance or internal operations e.g. EIS
 To store and analyze data e.g. Data warehouses, Data mining, DSS
 To analyze or manage the human resources e.g. customer relationship

(5) Computer Systems, Scanners, Laptop, Printer, Webcam, Smart Phone etc.-
 Webcam, microphone etc. are used in conducting long distance meeting.
 Use of computer systems, printers, scanners increases accuracy, reduce processing times,
enable decisions to be made more quickly and speed up customer service.
 For example: one can charge accurate prices and eliminates the need to apply price labels to
individual items by the use of scanning system.

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Important Questions:
1) Define the following terms briefly:
 Abstract System  Open System  Deterministic System
 Physical System  Closed System  Probabilistic System
2) Discuss important characteristics of Computer based Information Systems in brief.
3) What do you understand by TPS? Briefly discuss the key activities involved in a TPS.
4) What are the principal components of a TPS? Discuss in brief.
5) Explain basic features of a TPS in brief.
6) What do you understand by MIS? Discuss major characteristics of an effective MIS.
7) Briefly discuss major misconceptions about MIS.
8) ‘There are various constraints, which come in the way of operating an MIS’. Explain any four
such constraints in brief.
9) What are major limitations of MIS? Explain in brief.
10) What is Decision Support System (DSS)? Explain the key characteristics of a DSS in brief.
11) Discuss various examples of DSS in Accounting.
12) What is EIS? Explain major characteristics of an EIS.
13) ‘There is a practical set of principles to guide the design of measures and indicators to be
included in an EIS’. Explain those principles in brief.
14) Discuss the difference between EIS and Traditional Information Systems.
15) What is an Expert System? Discuss some of the business implications of Expert Systems.
16) Describe the major benefits of Expert Systems in brief.
17) Discuss some of the important implications of Information Systems in business.
18) What is Information? Briefly discuss its attributes.
19) Explain the components of a DSS in brief.
20) Differentiate between DSS and Traditional MIS.
21) “Decision support systems are widely used as part of an Organization’s Accounting Information
system”. Give examples to support this statement.
22) Briefly describe five major characteristics of the types of information used in Executive Decision
making.
23) Write short notes on the following:
 Text Processing Systems
 Components of Message Communication Systems
 Teleconferencing and Video-conferencing Systems
 Role of information in business
24) Describe the main pre-requisites of a Management Information System, which makes it
an effective management tool.

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