Republic of the Philippines

CAVITE STATE UNIVERSITY

General Trias City Campus
General Trias City, Cavite
☏ (046) 509-4148
www.cvsu.edu.ph

BSHM23: APPLIED BUSINESS TOOLS

AND TECHNOLOGIES

MODULE TITLE : Applied Business Tools and Technologies

“Foundation of Information System” ( Week 6 & 7 )

This module contains skills, knowledge and performance outcomes required to

understand and operate relevant IT systems that are used in the hotel and restaurant
industries. Topics covered include folio systems for front office ; POS systems from F&B
operations as well as other reservation, finance, housekeeping, marketing and public
relation.

MODULE CONTENT

1. Data Processing
2. Characteristics of Information System
3. Definition of Information System

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4. 5 Components of IS
5. Roles of Information System
6. Potential risks for Information System
7. Securing Information System
8. Types of Information System
1. TPS
2. MIS
3. DSS
4. ESS

SUMMARY OF LEARNING OUTCOMES

After completion of the Chapter , Students should be able to;
1. Understand the various business processes and know the importance of users or
customers and technology;
2. Familiarized on the processes of organizations and the key role that information
systems play;
3. Differentiate the difference between the 4 types of IS; and
4. Enumerate and define the components as IS made of.

INTRODUCTION

Information is an augmentation in knowledge. It adds to the general structure of

concepts and facts that people know. Information depends on the context and the
recipient's general knowledge for its importance. Information systems has emerged as a
discipline that is concerned with the design, construction and use of artefacts based on
information technology (IT) (Weber, 1987). Information systems are extremely critical for
the expansion and survival of business organizations in a competitive world. All sectors
of the industry are entirely dependent on these for the management of important
information and data. Small organizations to large, powerful businesses such as high
street banks and central and local government need assistance of information systems
to control their data. An information system is a software system to capture, convey,
store, retrieve, manipulate, or exhibit information, thus supporting people, organizations,
or other software systems. Basically, Information systems capture data from the
organization (internal data) and its environment (external data). They store the database
items over an extensive period of time. When particular information is required, the
suitable data items are manipulated as necessary, and the user receives the resulting
information. Depending on the type of information system, the information output may
take the form of a query response, decision outcome, expert-system advice, transaction
document, or a report. Prescribed information systems rely on procedures for collecting,
storing, manipulating, and accessing data in order to obtain information.

Chapter III
FOUNDATION OF INFORMATION
SYSTEM
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Data Processing
Data processing is, generally, "the collection and manipulation of items of data
to produce meaningful information." In this sense it can be considered a subset
of information processing, "the change (processing) of information in any manner
detectable by an observer." 
Data processing is the conversion of data into usable and desired form. This
conversion or “processing” is carried out using a predefined sequence of operations
either manually or automatically. Most of the data processing is done by using
computers and thus done automatically. The output or “processed” data can be obtained
in different forms like image, graph, table, vector file, audio, charts or any other desired
format depending on the software or method of data processing used.

Six Primary Stage of Data Processing

1. Data collection
2. Storage of data
3. Sorting of data
4. Processing of data
5. Data analysis
6. Data presentation and conclusions

Methods of Data Processing

● Manual data processing: In this method data is processed manually without the
use of a machine, tool or electronic device. 
● Mechanical data processing – Data processing is done by use of a mechanical
device or very simple electronic devices like calculators and typewriters.
● Electronic data processing – This is the modern technique to process data.
The fastest and best available method with the highest reliability and accuracy.

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Characteristics of Information System
● Understandable
Since information is already in a summarized form, it must be understood by
the receiver so that he will interpret it correctly. He must be able to decode any
abbreviations, shorthand notations or any other acronyms contained in the
information.
● Relevant
Information is good only if it is relevant. This means that it should be pertinent
and meaningful to the decision maker and should be in his area of
responsibility.
● Complete
It should contain all the facts that are necessary for the decision maker to
satisfactorily solve the problem at hand using such information.
● Available
Information may be useless if it is not readily accessible in the desired form,
when it is needed. Advances in technology have made information more
accessible today than ever before.
● Reliable
The information should be counted on to be trustworthy. It should be accurate,
consistent with facts and verifiable. Inadequate or incorrect information
generally leads to decisions of poor quality.
● Concise
Too much information is a big burden on management and cannot be
processed in time and accurately due to “bounded rationality”.. Accordingly,
information should be to the point and just enough – no more, no less.
● Timely
Information must be delivered at the right time and the right place to the right
person.
● Cost-effective
The information is not desirable if the solution is more costly than the problem.
The cost of gathering data and processing it into information must be weighed
against the benefits derived from using such information.

Definition of Information System

“Information systems (IS) is the study of complementary networks of hardware and
software that people and organizations use to collect, filter, process, create, and
distribute data.”
The main object of an information system is to provide information to its users.
Information systems vary according to the type of users who use the system.

5 Components of IS
The computer age introduced a new element to businesses, universities, and a
multitude of other organizations: a set of components called the information system,
which deals with collecting and organizing data and information. An information system
is described as having five components.
1. Computer hardware
This is the physical technology that works with information. Hardware can be as small as
a smartphone that fits in a pocket or as large as a supercomputer that fills a building.
Hardware also includes the peripheral devices that work with computers, such as
keyboards, external disk drives, and routers. With the rise of the Internet of things, in

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which anything from home appliances to cars to clothes will be able to receive and
transmit data, sensors that interact with computers are permeating the human
environment.
2. Computer software
The hardware needs to know what to do, and that is the role of software. Software can
be divided into two types: system software and application software. The primary piece
of system software is the operating system, such as Windows or iOS, which manages
the hardware’s operation. Application software is designed for specific tasks, such as
handling a spreadsheet, creating a document, or designing a Web page.
3. Telecommunications
This component connects the hardware together to form a network. Connections can be
through wires, such as Ethernet cables or fibre optics, or wireless, such as through Wi-
Fi. A network can be designed to tie together computers in a specific area, such as an
office or a school, through a local area network (LAN). If computers are more dispersed,
the network is called a wide area network (WAN). The Internet itself can be considered a
network of networks.
4. Databases and data warehouses
This component is where the “material” that the other components work with resides. A
database is a place where data is collected and from which it can be retrieved by
querying it using one or more specific criteria. A data warehouse contains all of the data
in whatever form that an organization needs. Databases and data warehouses have
assumed even greater importance in information systems with the emergence of “big
data,” a term for the truly massive amounts of data that can be collected and analyzed.
5. Human resources and procedures
The final, and possibly most important, component of information systems is the human
element: the people that are needed to run the system and the procedures they follow so
that the knowledge in the huge databases and data warehouses can be turned into
learning that can interpret what has happened in the past and guide future action.

Roles of Information System

● Modern technology can significantly boost your company's performance and
productivity.
● With an information system, businesses can save time and money while making
smarter decisions.
● Since this technology is automated and uses complex algorithms, it reduces
human error.
● Employees can focus on the core aspects of a business rather than spending
hours collecting data, filling out paperwork and doing manual analysis.

Potential risks for Information System and Securing Information System

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Operational Management Level
● The operational level is concerned with performing day to day business
transactions of the organization.
● Users at this level use structured decisions.

Tactical Management Level

● This organization level is dominated by middle-level managers, heads of
departments, supervisors, etc. The users at this level usually oversee the
activities of the users at the operational management level.
● Tactical users make semi-structured decisions. The decisions are partly based
on set guidelines and judgmental calls.
● The decision is partly structured in the sense that the tactical manager has to use
existing information to identify a payment history that benefits the organization
and an allowed increase percentage.

Strategic Management Level

● This is the most senior level in an organization.
● The users at this level make unstructured decisions.
● Senior level managers are concerned with the long-term planning of the
organization.
● They use information from tactical managers and external data to guide them
when making unstructured decisions.

Types of Information System

Transaction Processing System (TPS)
● Transaction processing systems are used to record day to day business
transactions of the organization.
● They are used by users at the operational management level.

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 ● The main objective of a transaction processing system is to answer routine
questions such as;
● By recording the day to day business transactions, TPS system provides
answers to the above questions in a timely manner.
● The decisions made by operational managers are routine and highly structured.
● The information produced from the transaction processing system is very
detailed.

Examples of transaction processing systems include;

● Point of Sale Systems – records daily sales
● Payroll systems – processing employees salary, loans management, etc.
● Stock Control systems – keeping track of inventory levels
● Airline booking systems – flights booking management

Management Information System (MIS)

● Management Information Systems (MIS) are used by tactical managers to
monitor the organization's current performance status.
● The output from a transaction processing system is used as input to a
management information system.
● The MIS system analyzes the input with routine algorithms i.e. aggregate,
compare and summarizes the results to produce reports that tactical managers
use to monitor, control and predict future performance.

Examples of management information systems include;

● Sales management systems – they get input from the point of sale system
● Budgeting systems – gives an overview of how much money is spent within the
organization for the short and long terms.
● Human resource management system – overall welfare of the employees, staff
turnover, etc.

Decision Support System (DSS)

● Decision support systems are used by senior management to make non-routine
decisions.
● Decision support systems use input from internal systems (transaction
processing systems and management information systems) and external
systems.
● The main objective of decision support systems is to provide solutions to
problems that are unique and change frequently. Decision support systems
answer questions such as;

Examples of decision support systems include;

● Financial planning systems – it enables managers to evaluate alternative ways of
achieving goals. The objective is to find the optimal way of achieving the goal.
For example, the net profit for a business is calculated using the formula Total
Sales less (Cost of Goods + Expenses). A financial planning system will enable
senior executives to ask what if questions and adjust the values for total sales,
the cost of goods, etc. to see the effect of the decision and on the net profit and
find the most optimal way.
● Bank loan management systems – it is used to verify the credit of the loan
applicant and predict the likelihood of the loan being recovered.

Executive Information System (EIS)

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 ● An Executive Information System (EIS) is also called the Executive Support
System. Senior managers of an organization use the EIS.
● EIS can do trend analysis, exception reporting and have drill-down capabilities.
The results are usually presented in a graphical form tailored to the executive’s
information needs.
● EIS has on-line analysis tools and they access a broad range of internal and
external data.

REFERENCES:
1. Excerpted from “Components of Information Systems”“
https://www.britannica.com/list/5-components-of-information-systems”

ACTIVITY:

Make a sample of Data Processing using the 6 Primary Stages. 30 points

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