Beruflich Dokumente
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UNIT I
Lesson 1 Introduction to Information Systems
Learning Objectives
1.1 Introduction
As a consumer, you have instant access to millions of pieces of data. With a few clicks
of the mouse button, you can find anything from current stock prices and video clips of current
movies. You can get product descriptions, pictures, and prices from thousands of companies
across India and around the world. Trying to sell services and products? You can purchase
demographic, economic, consumer buying pattern, and market-analysis data. Your firm will
have internal financial, marketing, production, and employee data for past years. This
tremendous amount of data provides opportunities to managers and consumers who know
how to obtain it and analyze it to make better decisions.
The speed with which Information Technology (IT) and Information Systems (IS) are
changing our lives is amazing. Only 50 years ago communication was almost limited to the
telephone, the first word processors came out in the mid-sixties and the fax entered our
offices in the 1970's. Today information systems are everywhere; from supermarkets to
airline reservations, libraries and banking operations they have become part of our daily
lives.
The first step in learning how to apply information technology to solve problems is to
get a broader picture of what is meant by the term information system. You probably have
some experience with using computers and various software packages. Yet, computers are
only one component of an information system. A computer information system (CIS)
consists of related components like hardware, software, people, procedures, and collections of
data. The term information technology (IT) represents the various types of hardware and
software used in an information system, including computers and networking equipment. The
goal of Information System is to enable managers to make better decisions by providing
quality information.
The physical equipment used in computing is called hardware. The set of instructions
that controls the hardware is known as software. In the early days of computers, the people
directly involved in are tended to be programmers, design analysts, and a few external users.
Today, almost everyone in the firm is involved with the information system. Procedures are
instructions that help people use the systems. They include items such as user manuals,
documentation, and procedures to ensure that backups are made regularly. Databases are
collections of related data that can be retrieved easily and processed by the computers. As you
will see in the cases throughout our book, all of these components are vital to
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Timeliness: Information must reach the user in a timely manner, just when it is needed;
not too early, because by the time it is used it would be out-of-date; not too late
because the user will not be able to incorporate it into his/her decision-making.
Appropriateness: Information must be relevant to the person who is using it. It must
be within the sphere of his/her activities so that it can be used to reduce uncertainty in
his/her decision-making.
Accuracy: Accuracy costs. We don't always need 100% accurate information so long
as we know the degree of accuracy it represents (eg: + or - 5%). (Remember the value
of information).
Conciseness: Information should always contain the minimum amount of detail that is
appropriate for the user. Too much detail causes information overload.
Frequency: Frequency is related to timeliness. Too often the information presented is
linked to the calendar (end of the week, beginning of the month); its frequency should
be synchronized with the timing of the decision making of the user.
Understandability: The format and presentation of information are very important.
Some people prefer tabular information, whereas others may need it in a graphical
form. Also the use of colors enhances the understandability of what is presented.
Relevant: It pertains to the particular problem. What data is relevant depends on the
decision-making model used. E.g. university admissions officials may choose to
consider the results of some high-school test irrelevant, if they believe that it does not
improve the chances of some applicant later becoming a successful student.
Complete: All the relevant parts are included. E.g. marketing data about household
incomes may lead to bad decisions, if not accompanied by consumption habits of the
target population.
Current: Decisions are often based on the latest information available
Economical: The costs of gathering information should be justified by the overall benefits
Input
Processing
Output
Feedback
Control
Let me explain the concept of system with an example. The following example will
give you better understanding about System.
Example: Sales Force Automation System (SFAS)
Suppose you are a regional manager who supervises 100 salespersons in Mumbai. Your
company's headquarters are located in Chennai. Your performance is daily evaluated by the
headquarters. You are compared with managers in other regions such as Delhi, Kolkata etc.
Your company publishes various books: encyclopedia, children's books, etc.
In short, the headquarters are not interested in each salesperson's performance. All
they care about is your performance, i.e. the regional sales results.
In order to save your job, you have to keep increasing sales. You have to motivate,
encourage, help, and discipline salespeople in Mumbai, if they perform, your job is secured. If
they don't perform, you will be fired.
Case 1
Each morning, you are supposed to submit a daily report to the headquarters. In the
report, you should include the total sales made in Mumbai yesterday, and sub-total of each
category (encyclopedia, children's books, etc.).
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At the end of each day, a salesperson submits his sales record to the Mumbai
regional office.
The record is added to compute the total sales, and also summarized in terms of
book category.
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We talk about the input, processing, output and feedback processes. Most important is
the feedback process; unfortunately it's the one most often overlooked. Just as in the triangle
above, the hardware (input and output) and the software (processing) receive the most
attention. With those two alone, you have computer literacy. But if you don't use the
"persware" side of the triangle to complete the feedback loop, you don't accomplish much.
Add the "persware" angle with good feedback and you have the beginnings of information
literacy.
An information system differs from other kinds of systems in that its objective is to
monitor/document the operations of some other system, which we can call a target system.
An information system cannot exist without such a target system. For example, production
activities would be the target system for a production scheduling system, human resources in
the business operations would be the target system of a human resource information system,
and so on. It is important to recognise that within a vending machine there is a
component/sub-system that can be considered an information system. In some sense, every
reactive system will have a subsystem that can be considered an information system whose
objective is to monitor and control such a reactive system.
A Business Perspective on Information Systems
Using feedback completes the information-processing loop. To be a good Information
Systems manager, however, you must bring into that loop far more than just the computer
data. For instance, your information system reports that you produced 100,000 units last week
with a "throwback" rate of 10%. The feedback loop tells you that the throwback rate has
fallen 2% in the last month. You can say, that's a pretty good improvement. So far, so good.
But if you put that information into a broader context, you're still costing the organization a
huge sum of money because each percentage point on the throwback rate averages Rs.10,000.
And when you bring in available external environmental information, your company is 5%
above the industry norm. Now that's information you can use - to your advantage or
disadvantage!
If you, as a manager, can then take other information from the internal and external
environments to come up with a solution to this problem, you can consider yourself
"information literate."
Organizations
Organizations are funny things. Each one tends to have its own individual personality
and yet share many things in common with other organizations. Look us at some of the
organizations you may be associated with - cricket team, fraternity, health club, or a child's
cricket team. See, organizations exist everywhere and each of them has its own structure, just
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People Resources
o End users o
IS specialists
Hardware Resources
o Machines o
Media
Software Resources
o Program
Operating Systems (OS)
Examples: Windows, Unix, etc.
Application Software
Examples: Excel, Access, MS-Word, etc.
Application software that makes people buy computers
that can run the software.
Example 1: Lotus 1-2-3 (a spreadsheet program): In early
1980s, personal computer market was dominated
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o Procedures:
Operating instructions for the people who will use an information system.
Examples: Instructions for filling out a paper form or using a software
package.
Data Resources:
o Data vs. Information
1. Data:
Raw facts, observations, business transactions
Objective measurements of the attributes (characteristics) of
entities (people, places, things, events, etc.)
Attributes can be last name, first name, gender, etc. for
an entity of "people."
2. Information:
Data that have been converted into a meaningful and useful
context for specific end users.
Processed data placed in a context that gives it value for specific
end users.
1. Its form is aggregated, manipulated, and organized.
2. Its content is analyzed and evaluated.
3. It is placed in a proper context for a human user.
Network Resources:
o Communications media
o Communications processors
o Network access & control software
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National
Company
Individual
National Level
Developed nations have adopted the diffusion of information systems and
technologies as a national policy. There appear to be two approaches at the national level.
Countries like Japan and the United Kingdom have invested in the technical infrastructure
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access information
interprete information
incorporate information in decision making
Managers:
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If you take a look at the above figure you can understand the evolution of Information
Systems in organizations. Technology was considered, well, too technical for the rest of us to
understand. Computers were relegated to the back room with a few technicians running
around in white coats. No one else understood what these people did or how they did it. It
was a different world and actually seemed disconnected from the mainstream operations of
the company.
As the time line indicates, technology and its associated Information Systems are now
integrated throughout the organization. Everyone is concerned about technologys role and
impact on their work activities. End users take on greater responsibilities for the success of
Information Systems and are actually doing a lot of the work that once belonged to the
techies. Even the executive levels of an organization can no longer ignore the technology and
pretend that it belongs to someone else.
We are constantly bombarded with new tools, new technology, and new methods of
doing business. It almost seems as though just as you master a word processing program, here
comes a whole new program you have to learn from scratch. But the plain fact is that
organizations, especially larger ones, just can't change as fast as the technology. Companies
make huge investments not just in hardware, but in software and persware. Training people,
building new operating procedures around technology, and changing work processes take far
longer than the technological pace will allow.
The introduction of new technology can severely disrupt organizations. Productivity
naturally slips. Learning curves cost time and money. Most system installations or changes
used to affect mainly data workers or production workers. Now they affect every level of the
organization, even the management and strategic levels. Every part of the organization is
involved in the introduction or change of technology and everyone plays a part in its success.
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The figure you see depicts the possibilities of virtual organizations. XYZ and ABC
companies can team up, work on a project, and then go their separate ways. ABC could then
seek out LMN corporation to develop a new technology from which both will gain but which
neither could accomplish on their own. This is happening more and more in technology
companies. In November 1998, America Online purchased Netscape. At the same time AOL
announced a collaboration with Sun Microsystems to develop and deliver enhanced
technology that AOL couldn't produce on its own. A few years ago, virtual organizations were
difficult to develop and even more difficult to manage. New technologies and new
management information systems now make such partnerships easier and more productive
than ever before.
As we'll see in future chapters, new technology allows businesses to reorganize their
workflows, allowing them to become more efficient and to meet new challenges. The
potential for saving money is tremendous, and so are the opportunities to better meet
customer demands.
A few years ago we couldn't imagine having Levi Strauss make a pair of jeans just for
us. It wasn't possible for a gardening company to produce a catalog strictly for our own
backyard. There was no way for an airline reservation company to know your favorite city to
visit and send you special ticket deals for a weekend getaway in a weekly email message. All
that is now possible thanks to the newer management information systems. But with all these
new opportunities come new challenges and problems.
Enterprise Resource Planning, which we'll talk about in other chapters, is only
possible through new and improved technology. Companies are realizing that they can't
afford "islands of information" and must have the means to share information resource across
all boundaries. And speaking of boundaries, most of those are either rearranged or eliminated
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1.12 Summary
Information Literacy is more than just clicking a mouse, pounding the computer
keyboard, or surfing the Web. It's about integrating various elements of an organization,
technical and non-technical, into a successful enterprise. As a successful manager you must
concentrate on all three parts of the Information Systems triangle (hardware, software, and
persware) and integrate them into a single, cohesive system that serves the needs of the
organization, the wants of the customer, and the desires of the employees. The more complex,
the harder to manage, but the greater the payoff.
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Points to Ponder
Business Trends
Changing business environment
Specialization
Management by Methodology and Franchises
Object Orientation
Decentralization and Small Business
Temporary Workers
Internationalization
Service-Oriented Business
Re-engineering
Need for faster responses and flexibility
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Information Technology
Continues to advance at a rapid pace
Rate of advancement has slowed, doubling
every 18 to 24 months
Has played a substantial role in most
organizations
Has altered the concept of time and distance
May have implications for managers
May potentially impact society
ENVIRONMENT
Customers
Suppliers
ORGANIZATION
INFORMATION SYSTEM
INPUT
L
Regu
Agen
atory
cies
FEEDBACK
Stockholders
Competit
Components of an Information
System
Purpose
Information Technology
Content
Communication Technology
Roles
Procedures
ors
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Global Perspective
Business Perspective of IS
Organizations
People
Technology
Review Questions
1. Why is it important to understand the difference between Computer Literacy and
Information Literacy?
2. What are the three elements of an Information System that managers must consider?
3. What are some of the factors managers must consider when considering changes in
technology?
4. What are some of the new roles Information Systems are playing in organizations?
Discussion Questions
Discuss the Benefits of Information Technology in doing successful business across
the world? List down the advantages and disadvantages and explain how IT is giving
competitive edge to companies with an Example.
Application Exercises
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