Data and Information

Data- Streams of raw facts representing events

occurring in organizations or the physical

environment before they have been organized and
arranged into a form that people can understand
and use.
Information- Data have been shaped into a form

that is meaningful and useful to human beings.

Characteristics of Information
Relevance: The contents of a report or document

must serve a purpose. Irrelevancies detract

attention from the true message of the report
and may result in incorrect decisions or actions
Timeliness: The age of information is a critical
factor in determining its usefulness. Information
must not be older than the time period of action
it supports.
Accuracy: Information must be free from material
errors.
Completeness: No piece of information essential
to a decision or task should be missing.

Summarization: Lower level managers tend to need

information that is highly detailed. As information

flows upward through the organization to top
management , it becomes more summarized.
Reliability: It is connected to the representation and
the accuracy of what is being described. The
reliability is also affected if the data is not collected
from the right source.
Validity: It relates to the purpose of the information
.The tendency to use it in particular situation may
make the information invalid.
Age and Impartiality: If the information is old ,it may
not be of use in the present context and also it
should be without any distorted view of the situation

Cost benefit analysis: The benefits that are

derived from the information must justify the cost

incurred in procuring information. The managerial
statements may be classified into
Essential statements
Necessary statements
Normal statements
Extra statements

The essential statements cannot be discontinued

irrespective of the cost of preparing them. The
necessary statements may have a high cost but may
be discontinued only in a very stringent
circumstances. The normal statements can be
discontinued if the cost are high. The extra
statements can only be prepared only if benefits are
substantially higher than the cost of preparing them

Value of Information
Value of Information is related to the person

who uses it
When he/she uses it and for what he/she uses
it.
There is no absolute value of Information
Same information can have different value for
different people at different points in time

Mathematical Definition
Information may be defined as a function of the

probability of occurrence of an event

Consider an event E with probability of occurrence
p.
Information is of greater value if the probability of
its occurrence is closer to 0 than 1 .
Shannon has defined it mathematically as
h(p)=-log(p),where 0<p<=1

Information Systems
An

information System can be defined

technically
as
a
set
of
interrelated
components that collect, process ,store and
distribute information to support decision
making ,coordination to support decision
making and control in an organization .
Three activities in an information system
produce the information that organizations
need to make decisions, control operations
,analyze problems and create new products
and services.

Information Systems
These activities are: Input: It captures or collects raw data from within

the organization or from external environment.

Processing: It converts the raw input into
meaningful form.
Output: It transfers the processed information to
the people who will use it or to the activities for
which it will be used.
Feedback: Information systems also require
feedback which is the output that is returned to
appropriate members of an organization to help
them evaluate or correct the Input stage

Information System

Strategic Business Objectives of

Information Systems
Business firms invest heavily in information systems to
achieve six strategic business objectives
Operational
Excellence:-Information systems and
technologies are some of the most important tools
available to managers for achieving higher levels of
efficiency and productivity in business operations.
New Products ,Services and Business Models:-A
Business model describes how a company produces
,delivers and sells a product or service to create
wealth. Information systems and technologies are a
major enabling tools for firms to create new products
and services as well as entirely new business models.

Customer

and Supplier Intimacy:-To know

customers and suppliers is a central problem
for businesses. By knowing customers and by
servicing them better customers generally
respond by returning and purchasing more
thus raising revenues and profits. Similarly the
more a business engages its suppliers ,the
better the suppliers can provide vital inputs.
Improved
Decision
Making:-Information
systems and technologies have made it
possible for managers to use real time data
from the marketplace when making decisions.

Competitive Advantage:-Doing things better

,charging less from customers for superior

products and responding to customers and
suppliers in real time all add up to higher sales
and higher profits giving your firm competitive
advantage.
Survival:-Business firms also invest in
information systems because they become the
necessities of doing business. Many forms of
legislations impose significant information
retention and reporting requirements on
business firms. Firms turn to information
systems and technologies to provide the
capability to respond to these requirements.

Dimensions of Information Systems

Information systems encompasses an understanding of the
Organization:-Organizations have structure that is composed of different
levels and specialties which reveal a clear cut division of labor.

Senior management :It makes a long range strategic decisions

Middle level management :It carries out the programs and plans of senior
management .These comprises of Knowledge workers such as scientists,
engineers, designers etc.
Operational Management: It consist of production or service workers that
actually produce the products and delivers the services. It also consist of data
workers such as secretaries ,clerks etc.

Management:- Managements jobs is to make sense out of the many

situations faced by organizations, make decisions and formulate action

plans to solve organizational problems
Information Technology:-The information technology infrastructure such as
hardware, software ,data management technology, networking and
telecommunication technology provides the platform on which the firm
can build its specific information systems.

An information system creates value for the firm

as an organizational and management solution to
challenges posed by the environment.

Contemporary approaches to
Information systems
Study of Information systems is a

multidisciplinary field.
In general the field can be divided into
technical and behavioral approaches.
Technical Approach:- The technical approach to

information systems emphasizes mathematical

models to study information systems ,as well as
the physical technology and formal capabilities
of these systems .The disciplines that
contribute to the technical approach are
Computer science ,Management Science and
Operations Research.

 Behavioral

Approach:-It is concerned with the

behavioral issues that arise in the development and
long term maintenance of information systems. It
mainly consist of Sociology, Economics and
Psychology. Sociologists study information systems
with an eye towards the role of groups
and
organizations in the development of systems and
the effects on the individuals. Economists have
interest in dynamics of digital markets. Psychologist
study how human decision makers perceive and
use formal information. This behavior concentrates
on changes in attitudes ,management and
organizational policy and behavior

Contemporary Approaches to
Information Systems
Technical
Approach
es

Behavioral
Approache
s

Socio-Technical approach to
information systems
No single approach effectively captures the

reality of information systems

Optimal
organizational
performance
is
achieved by jointly optimizing both the social
and technical systems used in production.
Adopting
a
socio-technical
systems
perspective helps to avoid a purely
technological
approach
to
information
systems.

A Socio-Technical Perspective

The Performance of a system is optimized when both the technology

and the organization mutually adjust to one another until a
satisfactory fit is obtained

Business Processes
Every business can be seen as a collection of

business processes.
Business Process refer to the manner in which
work is organized ,coordinated and focused to
produce a valuable product or service.
The performance of a business firm depends
on how well its business processes are
designed and coordinated.
Many business processes are tied to a specific
functional area.

Information Architecture and Information Technology

Infrastructure

Examples of Functional Business

Processes
Functional Area

Business Process

Manufacturing and Production

Assembling the Product

Checking for quality
Producing bills of materials

Sales and Marketing

Identifying customers
Making customers aware of the
product
Selling the product

Finance and Accounting

Paying creditors
Creating financial statements
Managing cash accounts

Human Resources

Hiring Employees
Evaluating employees job
performance
Enrolling employees in benefit
plans

Use of Information Technology to

Enhance Business Processes
Information

systems automate many steps in

business processes that were formerly performed
manually.
It changes the flow of information ,making it
possible for many people to access and share
information making it possible to execute various
tasks simultaneously and eliminating delays in
decision making
It can transform the way business works and derive
new business models.
Various IT tools are used to achieve greater
efficiency ,innovation and customer services.

Types of Information Systems

Functional Systems that operated independently of each

other are becoming a thing of past because they could not

easily share information to support cross functional
business processes.
They are being replaced with large scale cross functional
systems that integrate the activities of related business
processes and organizational units .
A typical business firm will also have different systems
supporting the decision making needs of each of the main
management groups like Operational Management, Middle
Management and Senior Management since each use a
specific type of system to support the decisions they must
make to run a business firm.

Types of Information Systems

Transaction Processing Systems: Operational managers need

systems that keep track of the elementary activities and

transactions of the organization such as sales ,receipt ,cash
deposits ,flow of materials etc.TPS provide this kind of
information.
Management Information Systems: MIS designate a specific
category
of
information
systems
serving
middle
management.MIS provide middle managers with reports on the
organizations current performance. This information is used to
monitor and control the business and predict future
performances.
Decision Support Systems: It supports
non-routine decision
making for middle management. They focus on problems that
are unique and rapidly changing ,for which the procedure for
arriving at a solution may not be fully predefined in advance

Executive Support Systems: They help senior management

to make decisions on strategic issues and long term trends ,

both in the firm and in the external environment.
Enterprise Systems: Also known as Enterprise Resource
Planning (ERP) systems solve this problem by collecting data
from various key business processes and storing the data in
a single central data repository. Thus information that was
previously fragmented in different systems can be easily
shared across the firm to help different parts of the business
work more closely together.
Supply Chain Management Systems: They help business
manage relationships with their suppliers. These systems
help suppliers ,purchasing firms ,distributors and logistic
companies share information about orders, production
,inventory levels and delivery of products and services so
that they can make better decisions about how to organize
and schedule sourcing ,production and distribution.

Customer

Relationship Management Systems: CRM

Systems help firms manage their relationships with their
customers. CRM systems provide information to
coordinate all of the business processes that deal with
customers in marketing and service to optimize revenue
,customer satisfaction and customer retention.
Knowledge Management Systems: KM systems support
processes for acquiring , storing ,distribution and applying
knowledge as well as processes for creating new
knowledge and integrating it into the organization.
Enterprise-Wide Information Systems: Also known as
Collaboration and Communication systems they help
employees to work in global environment since firms have
teams around the globe in different time zones working on
the same problem ,so need for continuous interaction and
communication around the clock has greatly expanded.

Information Systems Department

CIO: Chief Information Officer is a senior manager who

oversees the use of Information technology in the firm.

They are expected to have a strong business as well as
information technology experience.
Information Systems managers: They
leaders of the
teams of programmers and analysts ,project managers,
database specialist etc.
Programmers:
They are highly trained technical
specialists who write the software instructions for
computer systems.
Systems Analyst: Their job is to translate business
problems
and
requirements
into
information
requirements and systems

Chief Knowledge Officer: His/her

responsibility is the
firms knowledge management program .The CKO helps
design programs and systems to find new sources of
knowledge or to make better use of existing knowledge
in organizational and management processes.
Chief Security Officer: CKO is responsible for information
systems security for the firm and is responsible for
enforcing the firms information security policy.
Chief Privacy Officer: CPOs job is responsible for
ensuring that the company complies with existing data
privacy laws
End Users: They are representatives of departments
outside of the information systems group for whom the
applications are developed. They play an important role
in the design and development of information systems.