INFORMATION SYSTEMS IN

ORGANISATIONS

Topic 1.
Mr Moses Serugo / Mr. Ali Balunywa, Mr.
Edrisa Tebandeke, Mr. Bernard Ogut, Mr.
Albert Miwanda, Ms. Nakawoya Fatuma.

BBA III ICT III

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Val IT and slides copyright © 2006 IT Governance Institute. Used with permission.
 Learning Objectives
• To Understand information systems, Information
system activities and Organizations
• To understand the various information systems levels
in organizations and the purpose they serve
• To Evaluate the role played by the major types of
systems in a business and their relationship to each
other
• Describe the information systems supporting the
major business functions: sales and marketing,
manufacturing and production, finance and
accounting, and human resources
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 INFORMATION SYSTEMS
• Data:
• These refer to raw and unorganized facts that describe the
characteristics of an event.

• In its raw state data doesn’t command any meaning and therefore
cannot be used by managers to inform decision making
• Example: An example of data could be sales data which
represents what takes place during a sales transactions such as:
• Date
• Item number
• Quantity ordered
• Customer name
• Shipping details
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 INFORMATION SYSTEMS
• Information:
• This is processed, interpreted and organized data.
• Information commands a lot of meaning when put in useful context.
• Information can thus aid managers in making informed decisions.

• Example: Example: An example of information could be sales

information which represents what takes place during a sales
transactions such as:
• Best selling item
• Worst selling item
• Best Customer
• Worst Item

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 Famous “Beer and Diapers”
Example of Information

What did managers learn? That beer & diapers are often
bought on Thursday and Saturdays. Why?
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 INFORMATION SYSTEMS IN
ORGANISATIONS
• Intelligence :
• Intelligence is interpreted information
• Intelligence combines information to form a
predictive narrative that enables better decision-
making.
• What did managers learn? That beer & diapers
are often bought by men on Thursday and
Saturdays. Why?.......intelligence goes an extra
mile to answer that question
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 INFORMATION SYSTEM
An Information System (IS) can be defined
technically as a set of interrelated components
that collect (or retrieve), process, store, and
distribute information to support decision
making and control in an organization. In
addition to supporting decision making,
coordination, and control, IS may also help
managers and workers to analyze problems,
visualize complex subjects, and create new
products
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 Information Systems Components
Information systems have five key components:
hardware, software, data, processes, and people

People

Processes
Hardware

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Software data
 Information System Components
Hardware
Hardware refers to the physical layer of
the information system. For example,
hardware can include:
•Servers,
•Workstations,
•Networks,
•Telecommunications equipment,
•Fiber-optic cables,
•Mobile devices,
•scanners,
•Digital capture devices, and
Multiple servers provide the power and speed that modern IT
•Other technology-based infrastructure. systems need

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 Information System Components
• Software
Software refers to the programs that
control the hardware and produce the
desired information or results.
Software consists of system software
and application software.
• System software manages the
hardware components.
Examples of system software include:
• Operating system,
• Security software
• Device drivers
• Utility programs that handle specific
tasks such as data backup and disk
management
• Application software consists of
programs that support day-to-day
business functions and provide users
with the information they require.
• Examples of company-wide
applications, include
• Order processing systems,
• Payroll systems,
• Spreadsheets,
• Word processors e.t.c
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 Information System Components
• Application software includes horizontal and vertical
systems.
• A horizontal system is a system, such as an
inventory or payroll application, that can be adapted
for use in many different types of companies.
• A vertical system is designed to meet the unique
requirements of a specific business or industry, such
as a Web-based retailer, a medical practice, or a video
chain.

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 Information System Components
• Data
Data is the raw material that an
information system transforms
into useful information.
• An information system can
store data in various locations,
called tables.
• By linking the tables, the
system can extract specific
information.
• Processes
Describe the tasks & business
functions that users perform to
achieve specific results.
• They are the building blocks of
an IS because they represent
actual day-to-day business
operations.
• To build a successful information
system, analysts must understand
business processes and document
them carefully.
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 Information System Components
• People
People who have an interest in an IS are called stakeholders. They
include:
• The management group responsible for the system,
• The users (sometimes called end users) inside and outside the
company who will interact with the system, and
• IT staff members, such as systems analysts, programmers, and
network administrators who develop and support the system.
• Each stakeholder group has a vital interest in the IS therefore:
• it is essential to understand user requirements and expectations
throughout the development process.

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Organizational Levels Vs The Different Types of
Information Systems

• Many people work in an organisation.

STRATEGIC LEVEL However, these people do not work at
the same level.
• They work and operate at different
MANAGEMENT LEVEL
positions. Hierarchy of these
managerial positions is called Levels
of Management.
KNOWLEDGE LEVEL
• There are four basic levels of
management in any organization. Top
OPERATIONAL LEVEL
level management is in charge of
administration. Middle level
management is tasked with executor
task. Knowledge level and Lower
level managers are tasked with
supervision and line management

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 Operational Level
• This is the lowest level in the organizational hierarchy.
• It is the biggest in the sense that it has the majority of the
employees in the organization.
• Employees at operational level of management deal with
large volumes of data which is normally generated from
within the organization.
• The large volumes of data come from transactions that
occur on a routine and repetitive basis
• This level of management consists of lower level managers
such as team leaders or supervisors who oversee and direct
the operative employees.

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 Operational Level
• The lower-level managers are the first line of managers as they feature at the
base of operations.
• They are essential personnel that communicates the fundamental problems of
the firm to the higher levels.
• They are the intermediary, they solve issues amidst the workers and are
responsible for the maintenance of appropriate relationships within the
organization.

• This management level is made up of the for example; foreman,

• the line boss,
• the shift boss,
• the section chief,
• the head nurse,
• superintendents, and sergeants
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 Operational Level
• This trend, called empowerment, gives
employees more responsibility and accountability.

• Many companies find that empowerment

improves employee motivation and increases
customer satisfaction.

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 KNOWLEDGE LEVEL
• This level of management consists of knowledge workers.

• Knowledge workers are people often members of a recognized

profession, like engineers, doctors, lawyers, accountants e.t.c.
• Their jobs consist primarily of creating new information and
knowledge. They perform processes such as
• Creating knowledge,

• Discovering and codifying knowledge,

• Sharing knowledge, and

• Distributing knowledge.

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 KNOWLEDGE LEVEL
• Knowledge workers perform three key roles that are critical to the
organization and to the managers who work within the organization:
• Keeping the organization current in knowledge
•
• Serving as internal consultants regarding knowledge
•
• Acting as change agents

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 MIDDLE LEVEL
• Below the top management level, companies have a layer of
middle managers .
• They are subordinates of the top-level management and are
responsible for the organization and direction of the low-
level management.
• They account to the top-level management for the
activities of their departments.
• Whatever information that middle managers work with
comes from the lower level management
• Therefore, middle managers need more detailed information
than top managers, but somewhat less than supervisors who
oversee day-to-day operations.
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 MIDDLE LEVEL
The primary functions of the middle-level management in
the organization include the following:
•Employment and training of the lower levels.
•Communicators between the top level and the lower level as
they transfer information, reports, and other data of the
enterprise to the top-level.
•Carry out the plans of the organization according to policies
and directives laid down by the top-level management.
•Organize the division or departmental activities.
•Inspire or create motivation for junior managers to improve
their efficiency
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 STRATEGIC LEVEL
• It consists of board of directors, chief executive or
managing director.
• The top management is the ultimate source of
authority and it manages goals and policies for an
enterprise.
• It devotes more time on planning and coordinating
functions.
• Top managers develop long-range plans, called
strategic plans, which define the company’s overall
mission and goals.
• To plot a future course, top managers ask questions
such as:
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 STRATEGIC LEVEL
• How much should the company invest in information technology?
• How much will Internet sales grow in the next five years?
• Should the company build new factories or contract out the
production functions?
• Strategic planning affects the company’s future survival and
growth.
• To develop a strategic plan, top managers also need information
from outside the company, such as
• Economic forecasts,
• Technology trends,
• Competitive threats
• Government issues
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 STRATEGIC LEVEL
The role of the top management can be summarized as follows -
•Top management lays down the objectives and broad policies of the
enterprise.
•It issues necessary instructions for preparation of department budgets,
procedures, schedules etc.
•It prepares strategic plans & policies for the enterprise.
•It appoints the executive for middle level i.e. departmental managers.
•It controls & coordinates the activities of all the departments.
•It is also responsible for maintaining a contact with the outside world.
•It provides guidance and direction.
•The top management is also responsible towards the shareholders for the
performance of the enterprise.

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Main types of information systems
1. Transaction Processing System (TP)

2. Office Automation Systems (OAS)

3. Management Information System (MIS)

4. Decision Support System (DSS)

5. Strategic Information System (SIS) or

(EES)
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 Transaction processing system
Transaction Processing System
•Transaction is an event that affects the organisation.They could include basic business operations
such as;
• customer orders,
• purchase orders,
• invoices, and payroll checks in an organization
•Transaction processing cycle includes:
•Recording,
•Processing,
•Updating,
•Outputting & reporting
•TP systems process data generated by day-to-day business operations.
•They are the foundation for the other systems
• Examples :
•Customer order processing,
•Accounts receivable,
•Point of sales
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 Simplified View of a TPS
Data Input Processing
Document
and
Reports

Documents
Internal Transactions •Pick list
•Shipped Orders •Checks to vendors
•Purchase Orders •Receiving notices
•Employee Time Cards Databases •Paychecks
Operational Reports
External Transactions •Finished goods status
•Customer Orders •Raw Materials
•Vender Invoices •Inventory status
•Customer payments •Packing materials
•Spare parts 27
 Transaction processing system
TP systems typically involve large amounts of data.
•This is because they perform a series of tasks whenever a
specific transaction occurs.
•For example a TP system
•Verifies customer data,
•Checks the customer’s credit status,
•Posts the invoice to the accounts receivable system,
•Checks to ensure that the item is in stock,
•Adjusts inventory data to reflect a sale, and
•Updates the sales activity file.
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 Types of TPS
• Batch processing
• All transactions are
accumulated over a period
of time and processed as a
single unit.
• Typical periods: daily,
weekly,
• biweekly, monthly, etc.
• Examples
• Payroll
• Billing Transactions
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 Types of TPS
On-Line Transaction Processing (OLTP)
• All transactions are processed immediately, without delay.
• Also called Real-time transaction processing.

Airline Hotel Car

Reservations Reservations Rentals

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 Types of TPS
• On-Line Delayed Transaction Processing
• All transactions are entered into the computer when they
occur, but are processed at a later time.

Catalog Orders Deposits

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 TPS SUMMARY

• A TPS records and processes detailed data necessary to

update records about the business operations of an
organization.
 Office Automation systems
• Office Automation: refers to a method of using a wide range of computer-
and machine-aided tasks to help improve productivity and create easier
ways to do business. Different types of automation are commonly used in
different types of industries.
• Office automation Systems: Refers to the varied computer machinery and
software used to digitally create, collect, store, manipulate, and relay office
information needed for accomplishing basic tasks such as;
• Communication
• Information storage
• Meetings
• Collaboration
• Transfer of information……e.t.c
• Such tasks were previously performed manually

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 Backbone of Office Automation
systems
• Office automation systems are configured to a
computer network and this therefore means that at the
heart of OAS is often a local area network (LAN).
• The LAN allows users to transmit data, voice, mail,
and images across the network to any destination.
• The destination could be within the local office on the
LAN, or in another country or continent, through a
connecting network.
• An OAS makes office work more efficient and
increases productivity.

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 Functions Integrated by an
Office Automation System
1. Electronic publishing: This involves the use of electronic publishing office
automation systems to;
• Create,
• Edit,
• Revise,
• Store, and
• Print documents such as letters, memos, reports, catalogs,
newsletters and manuscripts.
Such Electronic Publishing Office Automation Systems include;
• Word processing software such Microsoft Word, WordPerfect, Google
Docs, Apple Text Edit, Libre Office e.t.c
• Desktop publishing software such as Microsoft publisher, Quark Xpress,
Serif page plus e.t.c
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 Functions Integrated by an Office
Automation System
2. Electronic Collaboration: This involves the use electronic meeting and
collaborative systems to enable teams of co-workers share information, update
schedules and plans, and cooperate on projects regardless of geographic
distance.
Such Electronic collaboration systems include;
• Electronic meeting systems (EMS): An electronic meeting system (EMS) is a
software platform that provides a digital meeting space for group
collaboration, problem-solving, and providing feedback, among other features.
EMS can help companies to cut down on travel costs by making participation
easier because everything is accessible from wherever the worker is located.
• Collaborative work systems (CWS): This is a software that unites employees or
people that are working on a similar task. It could be the exact same task, and
the system helps unite them to complete their task and achieve whatever goal
that task sets out to do. It is basically a multi user program, meaning that more
than one person could use it. GroupWise, offered by Novell, is a popular
example of groupware.
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 Functions Integrated by an
Office Automation System
• Teleconferencing systems: This technology (also
known as Video Conferencing) allows people in
multiple locations to interact and work
collaboratively using real-time sound and images.
Teleconferencing requires special-purpose meeting
rooms with cameras, video display monitors, and
audio microphones and speakers.

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 Functions Integrated by an Office
Automation System
• 3. Electronic Communication: This involves the use of electronic
communication systems to information to electronic signals for transmission
through electronic means such as copper, fiber-optic, or free space.
Such Electronic communication systems include;
• Electronic mail(e-mail): This is a software that allows users to create, send,
and receive messages and files to or from anywhere in the world. Most e-
mail systems let the user do other sophisticated tasks such as filter,
prioritize, or file messages; forward copies of messages to other users;
create and save drafts of messages; send "carbon copies"; and request
automatic confirmation of the delivery of a message.
• Voice mail: This is a telephone answering machine. It digitizes incoming
voice messages and stores them on disk. When the recipient is ready to
listen, the message is converted from its digitized version back to audio, or
sound. Recipients may save messages for future use, delete them, or forward
them to other people.

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 Functions Integrated by an
Office Automation System
• Facsimile (fax): A facsimile or facsimile transmission machine (FAX)
scans a document containing both text and graphics and sends it as
electronic signals over ordinary telephone lines to a receiving fax
machine. This receiving fax recreates the image on paper.

• Desktop videoconferencing: Desktop videoconferencing requires a

network and a desktop computer with special application software (e.g.,
CU-SeeMe) as well as a small camera installed on top of the monitor.
• Images of a computer user from the desktop computer are captured and
sent across the network to the other computers and users that are
participating in the conference.
• This type of videoconferencing simulates face-to-face meetings of
individuals.

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 Functions Integrated by an Office
Automation System
4. Office Management: This involves the use of Computerized systems
that automate these office functions. Office management systems include
electronic office accessories, electronic scheduling, and task
management.
•These systems provide an electronic means of organizing people,
projects, and data. Business dates, appointments, notes, and client
contact information can be created, edited, stored, and retrieved.
•Additionally, automatic reminders about crucial dates and appointments
can be programmed.
•Projects and tasks can be allocated, subdivided, and planned. All of
these actions can either be done individually or for an entire group.
Computerized systems that automate these office functions can
dramatically increase productivity and improve communication within
an organization
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 Knowledge Management Systems
• Knowledge work systems (KWS) support professional workers
such as scientists, engineers, and doctors by aiding them in
their efforts to create new knowledge (often in teams) and by
allowing them to contribute it to their organization or to society
at large.

• The knowledge workers also need to search for knowledge

outside the organization. Thus, knowledge work system must
give easy access to external databases. In addition, knowledge
work systems should have user-friendly interface to help users
to get the required information quickly and easily.
• Some examples of knowledge work systems are computer-
aided design (CAD)systems, virtual reality systems, and
financial workstations.
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 Knowledge Management
Systems/ Expert Systems
• KMS simulate human reasoning
by combining a knowledge base
and inference rules that
determine how the knowledge is
applied.
• A knowledge base consists of a
• The interactive Toshiba Knowledge Base allows users to
large database that allows users search for solutions.
to find information by entering
• After a user enters a symptom, problem, or question,
keywords or questions in normal Toshiba’s knowledge base searches for a solution and
English phrases. displays the results

• Inference rules are logical rules

that identify data patterns and
relationships.

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 Management Information
System
• Deals with summary information from TP
system Exception conditions.
• Generate reports to aid managers in planning
and decision making

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 Decision Support System (DSS)
DSS provide an interactive environment in which decision makers can
quickly manipulate data and models of business operations.
•It allows a user to explore the impact of available options or
decisions.
•It has three parts:
•The first part is composed of a database (which may be extracted
from TPS or MIS).
•The second part consists of mathematical or graphical
models of business processes.
•The third part is made up of a user interface (or dialogue module)
that provides a way for the decision makers to communicate with each
other.

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 Strategic Information System OR
Executive Support System (ESS)
• These systems provide information for executives to use
in strategic planning.
• Some of the information comes from the
organizational databases, but much of the
information comes from external sources:
• News about competitors,
• Stock market reports,
• Economic forecasts, e.t.c.
• Note:
• Most large companies require systems that combine
transaction processing, business support, knowledge
management, and user productivity features
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Organisation levels and IS
requirements

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