UNIT I

INFORMATION SYSTEMS
 Any business, big or small, must have a system in place to
collect, process, store and share data. Companies use modern technology to
streamline and automate these operations. Information systems are now playing
a crucial role in data processing and decision making. When used
correctly, they can positively impact an organization's overall performance and
revenue.
Information System (IS)
At the most basic level, an information system (IS) is a set of
components that work together to manage data processing and storage. Its role
is to support the key aspects of running an organization, such as
communication, record-keeping, decision making, data analysis and
more. Companies use this information to improve their business operations,
make strategic decisions and gain a competitive edge.
Information systems typically include a combination of software,
hardware and telecommunication networks
 Definition Of Information Systems :
□ “An information system (IS) can be any organized combination of people,
hardware, software, communications networks, and data resources that
stores and retrieves, transforms, and disseminates information in an
organization.”
□ The Information system can be defined as a collection of software,
hardware, and telecommunications network that people develop and use
to gather, create, and distribute useful data, mainly in organizational
settings.
□ In other words, an information system means a collection of interrelated
components which work together to gather, process, store, and break
down the information to help decision making.
□ "Information system is set of people, information technology,
and business process in order to achieve a business objective."
Concept Of Information System:
• Information system has been defined in terms of two
perspectives: one relating to its function; the other relating
to its structure.
• From a functional perspective; an information system is a
technologically implemented medium for the purpose of
recording, storing, and disseminating linguistic expressions as
well as for the supporting of inference making.
• From a structural perspective; an information system
consists of a collection of people, processes, data, models,
technology and partly formalized language, forming a
cohesive structure which serves some organizational purpose
or function.
 Components of Information Systems

► It has Five components –

1. Hardware
2. Software
3. Data
4. Network
5. People and Procedures
1. Hardware – This is the physical component of the technology. It includes
computers, hard disks, keyboards, iPads, etc. The impact of the use of hardware on
the environment is a huge concern today. Nowadays, storage services are offered
from the cloud, which can be accessed from telecommunications networks.

2. Software – Software can be of two types, system software and application

software. The system software is an operating system that manages the hardware,
program files, and other resources while offering the user to control the PC using
GUI. Application software is designed to manage particular tasks by the users. In
short, system software makes the hardware usable while application software
handles specific tasks. An example of system software is Microsoft windows, and
an example of application software is Microsoft Excel.
3. Data – Data is a collection of facts and is useless by themselves, but when
collected and organized together, it can be very powerful for business
operations. Businesses collect all the data and use it to make decisions that can
be analyzed for the effectiveness of the business operations.

4.Network– Telecommunication is used to connect with the computer system

or other devices to disseminate information. The network can be established
using wired or wireless modes. Wired technologies include fiber optics and
coaxial cable, while wireless technologies include radio waves and
microwaves.
5.People and procedures – Qualified people are a vital component of any
information system. Technical personnel include development and
operations
managers,administrators,
database business analysts, systemscomputer
programmers, analysts security
and designers,
specialists,
and computer
operators. In addition, all workers in an organization must be trained to utilize
the capabilities of information systems as fully as possible.
Procedures for using, operating, and maintaining an information system are
part of its documentation. For example, procedures need to be established to
run a payroll program, including when to run it, who is authorized to run it,
and who has access to the output.
Types of Information System:
For the last twenty years, different kinds of information systems are developed for different
purposes, depending on the need of the business . In today’s business world, there are varieties
of information systems such as transaction processing systems (TPS), office automation
systems (OAS), management information systems (MIS), decision support system (DSS), and
executive information systems (EIS), Expert System (ES) etc . Each plays a different role in
organizational hierarchy and management operations. This study attempts
to explain the role of each type of information systems in business organizations.

1. Transaction Processing System (TPS)

2. Management Information System (MIS)
3. Decision Support System (DSS)
4. Executive Support Systems(ESS)
1. Transaction Processing System (TPS):
• Transactions are defined as any activity or event that affects the company, and
include things like deposits, withdrawals, shipping, billing customers, order
entry, and placing orders.
• The term "transaction processing system" refers to an information system that
processes data are originating from business transactions.
• Transaction processing is essential to helping businesses perform daily
operations.
• The primary purpose of a transaction processing system is to offer transactions
to update records and produce reports required for storekeeping.
• Examples of transaction processing systems are Stock control systems, Payroll
systems, Bill systems.
2. Management Information System (MIS):
• Middle managers handle much of the administrative chores for day-to-day
routines and performance monitoring, ensuring that all the work is
aligned with the organization's needs. That's why MIS is such a valuable
tool.
• Management Information Systems are specially designed to help middle
managers and supervisors make decisions, plan, and control the workflow.
• The MIS pulls transactional data from various Transactional Processing
Systems, compiles the information, and presents it in reports and displays.
• In MIS, there are various kinds of reports generated. Few reports are a kind
of summary report, ad-hoc reports, exception report, and on-demand
report.
• Additionally, these reports can be produced monthly, quarterly, or
annually, although MIS can have more immediate reports (e.g., hourly,
3. Decision Support System (DSS):
• The DSS is a management-level, interactive computer-based information
system that helps managers to make decisions.
• The Decision Support System specifically gives middle managers the
information necessary to make informed, intelligent decisions.
• Decision Support Systems use different decision models to analyze or
summarize large pieces of data into an easy-to-use form that makes it
easier for managers to compare and analyze information.
• Often, these summaries come in the form of charts and tables.
4. Executive support system (ESS):
• ESS helps top management make decisions.
• ESS uses graphics and data from many sources through an interface that
senior managers easily understand.
• ESS is designed to integrate data from the external environment, such as
new taxes or competitor data, and integrate aggregate data from MIS and
DSS.
• ESSs filter, synthesize and track critical data. Particular attention is given
to displaying this data because it contributes to the rapid assimilation of
these top management figures.
• Increasingly, these systems include business intelligence analysis tools to
identify key trends and forecasts.
 Role of Information Systems in
Information system (IS) and information technology (IT) are two
Organizations
different things but closely interlinked. The system is developed with the help of
the technology. For example, excel is a technology while the financial statements
produced with its help is the system.
1. Decision making

In an organization or business the managers need to make decisions

all the time. The decision must be backed by quality judgment of the situation and
its implications. Data collected, compiled and presented in a simple way helps
managers understand the position of the organization and take appropriate
decisions. For example the final report of a company shows the companies
sources of funds and it applications for return. If there is more source of funds
available then the manger has to find good investment opportunities. Similarly
restaurants can see the most ordered dish and beverage which helps the manger to
promote it more.
2. Operations management

Information system is used to manage every day operation in an

organization such as employee monthly salary, taxes,
attendance, leave records, record income and expenses,
receivables, procuring goods and inventory management to
name a few. For example software used by IME money transfer
helps people to send money from one place to another,
department stores such as Bhatbhateni, big mart use software to
track their stock and keep record of daily transactions.
3. Customer interactions

IS also helps in customer interaction. Few forms of customer interactions based

on IS that use like ATM machines, recharge card in mobiles, monthly bill or
registering complains in the Nepal Telecom etc. Thus the implication of the use
of IS for customer interaction is gaining more popularity. With online shopping
in amezon, flipkart etc. are some of the more successful organizations that have
used IS for customer interactions.

4. Collaboration on teams

IS has made the world a smaller place. With connectivity available

communication has increased a lot. People can conduct meeting from different
countries through skype. Friends and family members can keep in contact
through Facebook, celebrities and even head of states can reach out to the
general people through the use of Twitter. IS has made this possible.
5. Strategic initiatives

IS helps in taking strategic initiatives for competition in the market. For example
here in Nepal, NCELL a private company had to face NTC(Private Mobile
Operator company in Nepal), owned by the government, as a competitor. It was
very difficult to get a sim from NTC. People waited in line whole day to get a
sim card. NCELL provided sim cards in every small cyber shops. In addition
various facilities This increased its hold in the telecommunication market.

6. Individual productivity

Productivity is highly increased by IS but the user should be able to understand

its effectiveness. For example excel is very useful for accountants and finance
personnel but there are a lot of features in it. If people do not understand these
they cannot make full use of it.
Challenges of Information Systems:
 Information Systems and
Management Strategy Case Studies