It is the combination of Information Technology and people using it to carry out operations and management. In a large sense it is frequently used with in people to process data and technology. It is also refer to Information and Communication Technology (ICT), which is used in organization, where people work with this to support business processes.
There is a clear different between information system, ICT and business process. IT is completely different from information system, information system consist of ICT component. Information system helps to control the performance of business process.
Information system is a special type of work system, which produces products or services for customer, where human and machines perform work using ICT and resources. Information system purpose is to process information.
Information system is a system which represents data and process as a form of social memory. Information system supports human decision making and action.
What is the role of Information Systems in today’s competitive business environment on Strategic, Operational and Tactical level?
IS (Information system) supports business processes and operations:
IS helps managers to execute their daily activities and functions properly, for example, in bank, creation of accounts, statement generation etc take place; and IS helps managers control such activities with greater accuracy and in a timely manner with the help of software.
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IS supports decision making for managers and employees:
IS takes data as input and then processes it to generate information; simply defined as Input ƒ¨ Process ƒ¨ Information. This information is used by the managers for the improvement of their organizations, for example, existing historical data about customers in bank can be analyzed by IS and important information can be generated like bad customers and good customers, etc. This information can be used by managers while deciding whether to approve loan for new customers or not
IS supports in making strategic decision for competitive advantage:
By analyzing data collected from different sources, IS can provide valuable information such as which items to launch in which location; so that the company can have advantage over their competitors using this information. IS can also help business houses; in carrying out their business processes differently than their competitors.
IS promises Operational excellence: In order to achieve higher profitability, businesses improve their operations’ efficiency. Managers make use of IS in business operations to achieve higher levels of productivity and efficiency. An excellent example is the use of the RetailLink system at Wal-Mart; this system digitally links every one of the Wal-Mart’s stores with its suppliers; the supplier is monitoring the items and as soon as an item is purchased, the supplier knows that a replacement must be shipped to the shelf.
IS helps create new products, business models and services: In firms, Information system is a crucial tool in creating new services and products and new business models. Business models describe how the companies produce, deliver and sells a product or service to be successful. An example is Apple Inc; it transformed an old business model which was based on its iPod technology platform that included iPod, iPhone and the iTunes music service.
IS helps monitor & increase Supplier/Customer intimacy: When a customer is served well by a business, he usually responds by returning and purchasing more from the business; this raises the profits and revenues of the business. The more the business engages its suppliers, the better the suppliers are able to provide vital inputs; which in turn lowers costs. An example is the high-end hotel, Manhattan’s ‘The Mandarin Oriental’ and other such high-end hotels; they illustrate the use of IS and technology to achieve better customer intimacy. They track guests’ preferences using computers, such as their preferred television programs, check-in times and room temperatures.
IS helps making better decisions: Many managers operate in an information bank and they never have the relevant information at the right moment to make a learned decision; poor outcomes like these loose customers and raise costs. Managers can use real time data while making decisions; IS allow managers to use real-time data from the marketplace while making decisions. An example is the Verizon Corporation, which uses a Web-based digital dashboard that gives managers accurate real-time information on customer complains and network performances. By using this information, managers can rapidly inform customers of the repair work, assign repair resources to the involved areas, and restore service promptly.
Competitive advantage: When the firms achieve the business objectives, for example, customer intimacy, operational excellence, improved decision making, new services, products and business models, than it is most like that they have achieved a competitive advantage already. Accomplishing these things finer than their objects, responding to suppliers and customers in real time, charging less for premium products all add up to higher sales and profits. An example is the Toyota Production System which mainly focuses on organizing work to make continuous improvements, eliminating waste; Toyota Production System is based on what the customers actually ordered.
How are Information Systems transforming the functional areas of organizations?
Computers are used for almost any task. We check email with it, watch media, bank and more. Information is the life of organization, damaged or lost data can cause financial loss, law suits, etc. Information system contains hardware, software, data, applications, communication and people. It helps an organization to manage and secure its critical corporate, customer and employee data. Information system improves work process and gives lot of other benefits. An example is the Transaction Processing System (TPS) which is used in one functional area of a business; it process routine transactions more accurately and efficiently. TPS has many sub-species which are directly linked to their respective functional areas, for example, there is Finance and Accounting Systems for the functional areas of accounts and finance, Human Resource System for the Human Resource area, etc.
Information System is different form other system because its purpose is to monitor and document the operations of other systems, we can also call it target system. For example, production activities would be the target system for a production scheduling information system, human resources would be the target system of a human resource information system. Every reactive system has a sub system called Information system, whose purpose is to monitor and control system.
There are many, many types of Information systems, but the most common ones are these:
Transaction Processing System (TPS); Decision Support System (DSS); Management Information System (MIS); Office Automation System (OAS); Executive Information System (EIS) and Data Warehouses (DW).
Transaction Processing System (TPS): TPS is a basic business system and it handles the tracking and processing of transactions. A transaction is simply an event which is of interest to the organization, for example, a railway booking system in which Booking, Cancellation, etc are all transactions; or a sale at a store. TPS is very useful and has many functions and it
Serves the most elementary day-to-day activities of an organization.
Is very often crucial to the survival of the organization
Usually has high volumes of output and input
Needs to be fault-tolerant
Supports the operational level of the business
Supplies data for higher-level management decisions
Can have strategic consequences, for example, airline reservation system
Deals with well-structured processes.
A Transaction processing system has many sub-species, some of which are:
Sales and Marketing Systems: These are systems that support the sales and marketing functions by easing the movement of services and goods from producers to customers. For example, a Store’s sale system would automatically record and total purchase transactions and print out a packing list; this would improve customer service and maintain customer data.
Manufacturing and Production systems: These systems supply data to operate, control and monitor the production processes, such as shipping, receiving, purchasing, scheduling, engineering, resource management, quality control, etc. For example, a system in factory that measures samples of products and gets information from that; then statistically analyses the samples and shows when the operators should take corrective action.
Human Resource System: These systems deal with performance evaluation, compensation, placement, career development and recruitment of the firm’s employees. Examples of HRS include training and skills, applicant tracking, personnel record keeping, positions, benefits.
Finance & Accounting System: These systems maintain records which concern the flow of funds in the firm and they also produce financial statements, such as income statements and balance sheets. E.g for General Ledger; Budgeting, Billing: Cost Accounting, Accounts Payable/ Receivable; Funds management systems, payroll. These systems were among the earliest to be computerized. Examples of Financial systems are loan management, cash management, securities trading and check processing.
Management Information Systems (MIS): They assist lower management in problem solving and making decisions. MIS usually takes data from the transaction processing system and summarizes it into a series of management reports which are to be used by the middle management and operational supervisors. MIS is a set of information processing functions and queries should be handled by it as quickly as they arrive. Database is an important element of MIS. MIS simply provides managers with feedback on daily operations; it also provides information and support for effective decision making. An example of MIS is an annual budgeting system.
Decision Support System (DSS): DSS provides information, models or analysis tools to the senior managers and strategic management staff to help them make decisions. DSS are used for support of unstructured decisions and they are for analytical work mainly, for example, creating of “what-if” models using spreadsheets & databases. An example job for a Decision Support System would be a 6 year operating plan.
Office Automation Systems (OAS): They are used to improve the productivity of employees who need to process data information & for reducing “paper warfare”. For example, Microsoft Office XP improves the productivity of employees working in an office or system that allow employees to work from home or whilst on the move. OAS software tools are often integrated and are designed for easy operations (for example, a graph from a spreadsheet can be imported in the Word Processor).
Executive Information System (EIS): Also known as Executive Support System (ESS) and it provides information to the executives in a readily accessible, interactive format. EIS (or ESS) usually allow summary of the entire organization and also allows drilling down to specific levels of detail. EIS also use data which is produced by ground level Transaction Processing System so the executives can gain an overview of the entire organization. EIS require extensive staff to operate and are very expensive to run and are used by top level (strategic) management.
Data Warehouses System: A Data Warehouse is a place where data is stored analysis, security and archival purposes. A data warehouse is usually either a single computer or a giant computer system formed by tying many computers together. Besides storing large amount of data, they must also possess the systems in place that would make it easy to access the data and use in day-to-day operations. It is also sometimes referred to be a major role player in DSS, or Decision Support System.
How you identify the major support systems, and relate them to managerial functions?
Support systems are Office Automation, Decisions Support Systems, Management Information system and TPS.
Management Information system (MIS) generally takes the data from TPS (Transaction processing system) and summarizes it into a series of management reports, which are used by operational supervisors and also by the middle management.
Decision-Support Systems are designed to help management make decisions, when there is uncertainty about the possible outcome. DSS gather relevant information with the help of tools and techniques and analyze the options and alternatives. DSS often create “what-if” models with the use of databases and spreadsheets.
Knowledge Management Systems (KMS) helps business create and share information. This helps employees who creates and shares knowledge and expertise, which is shared in organization to create further commercial opportunities. KMS allows efficient categorization and distribution of knowledge. For example knowledge might be in word documents, spreadsheets, power point or internet etc, to share KMS would use collaboration system like intranet.
Transaction Processing Systems (TPS) process routine transaction accurately and efficiently; and businesses may have many TPS, for example
Invoices are sent to customers using the Billing systems
Systems that calculate monthly and weekly payroll and tax payments
Calculations of raw materials using Production and purchasing systems
Using Stock control systems to process of all movement within the businesses
Office Automation Systems (OAP) improves the productivity of the employees that process data information. For example, Microsoft Office XP improves productivity of employees that work in an office or system that enable employees to work on the move or from home.
Describe the tools and techniques provided by the Information Systems department and its relationship with end-users to solve the specific problems?
The Information system department provides many different tools and techniques to solve problems and the main ones are:
Data Warehouses: Their main purpose is to establish a data storehouse that makes operational data accessible in a form which is readily acceptable for analytical processing activities like Decision Support or EIS. Data Warehouses have many different characteristics such as Organization (data are organized), Time Variant (data kept for 5-10 years so it can be used for forecasting and comparisons), Non-Volatility (data are not updated once it has been entered in the warehouse), Consistency (data are coded in a consistent manner) and Client/Server (the data warehouse provides the end user an easy access to the data by using the clients/servers).
How it solves problems:
The Data in the warehouses is organized for less confusion;
The Data is stored for a long time, allows for forecasts and comparisons;
Takes raw data and codes it in a consistent matter for easy analysis
Provides the end user an easy access to its data
The data warehouse uses a relational structure
The data are located in one place, allows data to be reached quickly
Web browsers can be used to allow end users to reach data easily
Data Mining: the process of analyzing data from different views and then summarizing it into useful information. Such information could be used to cut costs, raise revenue or both. For years, companies have used very powerful computers to sift through large volumes of supermarket scanner data and analyze market research reports. Data Mining is currently being used in areas like Retailing and Sales, Banking, Insurance, Airlines, Health Care, Computer Software & Hardware, etc.
How it solves problems:
Data mining automates the process of discovering predictive information in very large databases;
Data mining tools identify previous hidden patterns in just one step
Can operate on unprocessed or even unstructured information.
Text & Web Mining: Text mining is the application of data mining to less structured text files. Web Mining are mining tools which can be used to analyze large amounts of data on the Web (like what customers are doing on the Internet).
How it solves problems:
Groups documents by common themes, making them easier to locate & sort
Finds the hidden content of documents and also additional useful relationships
Geographic Information System (GIS): this is a computer-based system which is used for capturing, checking, storing, manipulating, integrating and displaying data using digitalized maps.
How it solves problems:
Every digital object or record has an identified geographical location
Branch performances can be monitored, analyzed and compared
Volume and traffic patterns of business activities can be monitored
Geographical area served by each Bank branch can be observed, to plan if new banks are needed or not.
Data Visualization: This is the presentation of data by technologies like digital images, graphical user interface, 3-d presentations and animations, geographical information systems, virtual reality, multidimensional graphs & tables.
How it solves problems:
Presents many different kinds of data into a common, understandable way for better & more accurate analysis; reduces errors too.
On-Line Analytic Processing: this is the technology that allows users of multidimensional databases to generate on-line comparative summaries of data and other analytical enquiries; OLAP can also be integrated into corporate databases systems.
How it solves problems:
OLAP facilities allow managers and analysts to monitor the performance of the business or market.
The end-results of OLAP technologies can be very simple (frequency tables, etc) to make the data much easier to understand and analyze.
How the Executives may use any alternative data/ information processing techniques to support the decision making
This is a crucial step in making an effective decision. The more good options that you consider, the more inclusive your final decision will be.
You force yourself to reach deeper and you look at problems via different angles, when you generate alternatives. By using the mindset ‘there must be other solutions out there,’ you have more chance to make the best possible decision. If you haven’t got other reasonable alternatives, then there’s not much of a decision to make!
Below is a summary of some of the important techniques and tools to help teams develop good alternatives.
Brainstorming is possibly the most well known method for generating ideas.
Reverse Brainstorming works in the same manner. But, it works by asking people to brainstorm of how to achieve the opposite result from the one required, and then simply reversing those actions.
The Charette Procedure is a systematic process and it gathers and develops ideas from many stakeholders.
Crawford Slip Writing Technique generates ideas from a large number of people. This method is extremely effective and ensures that ideas from everyone are heard and weighed equally irrespective of the person’s power in the organization.
Explore the Alternatives
You need to evaluate the risks and implications of each choice once you are completely satisfied that you have a good selection of realistic alternatives.
There’s almost always some degree of uncertainty in decision making process that may lead to risks, inevitably. You can determine if the risk is manageable of not simply by evaluating the risks involved with the options.
Risk Analysis allows you to look at risks impartially. It assess threats and evaluates the probability of events taking place using a structured approach their management costs.
You can consider the potential consequences of each of your options
Six Thinking Hats, after viewing the alternatives from 6 different perspectives, you can assess the consequences of a decision.
Impact Analysis, useful technique for brainstorming the ‘unexpected’ outcomes that could mount from a decision.
Choose the Best Alternative
After assessing the different alternatives, the following step is choosing between them. The choice could be very obvious, but if it is not, then the tools below will help:
Grid Analysis (or decision matrix), is a very useful tool for this type of evaluation. It helps bring different factors in the process of decision making in a reliable way, therefore this tool is invaluable.
Paired Comparison Analysis help decide the importance of differing factors and helps you compare factors that are unlike and decide which ones should influence your decision the most.
Decision Trees are useful in deciding between options. These bring the probability of project failure/success in the decision making process and help you lay out the various options available to you.
Information systems are made out of components that can be assembled in many different con¬gurations resulting in a variety of information systems and applications, much as construction materials can be assembled to build different homes. The size and cost of a home depend on the purpose of the building, the availability of money, and constraints such as ecological and environmental legal requirements. Just as there are many different types of houses, so there are many different types of information systems. We classify houses as single-family homes, apartments, townhouses, and cottages. Similarly, it is useful to classify information systems into groups that share similar characteristics. A classi¬cation such as this may help in identifying systems, analyzing them, planning new Information Systems Con¬gurations
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Organizations are made up of components such as divisions, departments, and work units, organized in hierarchical levels. For example, most organizations have functional departments, such as production and accounting, which report to plant management, which report to a division head. The divisions report to the corporate headquarters. Although some organizations have restructured themselves in innovative ways, such as those based on cross-functional teams, today the vast majority of organizations still have a traditional hierarchical structure. Thus, we can ¬nd information systems built for headquarters, for divisions, for the functional departments, for operating units, and even for individual employees. Such systems can stand alone, but usually they are interconnected. Typical information systems that follow the organizational structure are functional (departmental), enterprise-wide, and inter-organizational. These systems are organized in a hierarchy in which each higher-level system consists of several (even many) systems from the level below it. A departmental system supports the functional areas in each company. At a higher level, the enterprise-wide system supports the entire company, and inter-organizational systems connect different companies.
The major functional information systems are organized around the traditional departments- Finance IS Finance IS Accounting IS Accounting IS Human Resources Human Resources Corporate a System Electronic Market Electronic Market Corporate B System Marketing IS Marketing IS Production IS Production IS Administrative IS Administrative IS Corporate C System
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