Chapter 6

Fundamentals of Information Systems

 Meaning and role of Information

 Information is very important part of any business, which

helps the managers to take decisions.
 There are lots of data available in the business, at every time a
transaction takes place (Ex. a sale), some data is recorded. It
could be recorded on paper or in a computer system.
 Meaning and role of Information

The difference between data and information

Data are raw (unprocessed) facts about people, objects, and
events in an organization (Ex. all the sales orders for the year)
 An Information is data that have been processed and presented
in a form suitable for human interpretation. (How many of each
product were ordered in each month, may be shown on a graph)
 Characteristics of Valuable Information

-Accessible -Flexible -Simple - Economical

-Accurate -Relevant -Timely - Secure
-Complete -Reliable -Verifiable
 Valuable Information can help people and their
organizations perform tasks more efficiently and effectively.
Information System (IS) is a set of interrelated elements

that:
 Collect (Input)
 Manipulate (Process)
 Store
 Disseminate (Output) data and information
 Provide a corrective reaction (feedback mechanism) to meet an
objective.
 Systems definition and concept

Definition 1:
System is a group of components that work together in
coordination to achieve a common goal.
E.g. Breathing System has components like nose, mouth,
lung, heart … and these components work together to
achieve a common goal, that is, to enable humans to live.
Computer System has components like hardware and
software. These components work together to achieve a
common goal, that is, data processing (converting raw data to
information).
 Systems definition and concept
Definition 2:
A System is an interrelated set of business procedures (or
components) used within one business unit, working together
for some purpose. The system takes input from outside,
processes it, and sends the resulting output back to its
environment.

For E.g. An inventory system in the materials department keeps

track of the raw materials supply.
 Con’d

Definition 3:
A system can also defined as collections of people using
information technology and processes that define how people
carry out their work. The system also includes informal
interactions that take place in an organization Ex. emails,
phone calls.

Definition 4:
A system is an interrelated set component with an identifiable
boundary working together for some purpose. The system takes
input from outside, processes it, and sends the resulting output
back to its environment.
 Characteristics of a system
A System has nine (9) characteristics:
1. Components: A component is either an irreducible part or an
aggregate of parts, also called a subsystem. If a system is properly
designed one can repair or upgrade the system by changing
individual components without having to make changes throughout
the entire system
2. Interrelated Components: The function of one component is
tied to the functions of the others. Output from one is input for
another, the dependence of a part on one or more other parts.
3. Boundary: A system has boundary, within which all of its
components are contained and which establishes the limits of a
system, separating it from other systems. Components within the
boundary can be changed whereas systems outside the boundary
cannot be changed.
 Con’d
4. Purpose: All components work together to achieve the overall
purpose of the system.
5. Environment: A system exists within an environment, everything
outside the system’s boundary that influences and/or interacts the
system.
6. Interfaces: The points at which the system meets its environment
and there are also interfaces between subsystems.
7. Input: System takes input from its environment in order to
function.
8. Output: System returns output to its environment as a result of its
functioning to achieve the purpose. Output from individual subsystems
may be inputs to other subsystems.
9. Constraints: There are limits to what the system can do (capacity,
speed and capability), some of these constraints are imposed inside the
system and others are imposed by the environment.
Con’d
 Important Concepts of Systems

Based on its interaction with the environment, we can classify a

system in to two.
Open Systems – interact with the environment freely, taking

inputs and returning outputs. As the environment changes the

open system must adapt to the changes or suffer the
consequences
Closed Systems – Does not interact with the environment;

changes in the environment and adaptability are not issues for a

closed system. All business information systems are open and in
order to understand a system and its relationships to their
information systems to the organization.
 Important Concepts of Systems
Decomposition
The process of breaking down a system into smaller components

Allows the systems analyst to:

 Break a system into small, manageable subsystems

 Focus on one area at a time

 Concentrate on component pertinent to one group of users

 Build different components at independent times

Modularity

Process of dividing a system into modules of a relatively uniform size

Modules simplify system design

Coupling

Subsystems that are dependent upon each other are coupled

Cohesion

Extent to which a subsystem performs a single function

 Bad Systems

 A system is said to be bad when one of the following issues

are existed:
Fail to meet requirements

 Poor performance

 Poor reliability

 Lack of usability

 Example difficulties:
 Not to schedule

 Not to budget

 Runaway = 100% over budget or schedule

 Reasons for Failure

Complexity
Shifting requirements

Bad estimation

Bad management

New technology

Must tackle complexity by, for example:

Structure partitioning of problem

Organized interaction of parts

Ensure you achieve the task

Systems are subject to the need for continuing change

 Introduction to Information Systems

Information systems, according to Whitten and Bentley, is an

arrangement of people, data, processes, information presentation,
and information technology that interact to support and improve
day to day operations in a business (data processing) as well as
support the problem solving and decision-making needs of
management and users (information services).

Examples of Information Systems:-

• Health Information Systems
• Agricultural Information Systems
• School and Woreda net
• Management Information Systems
 Building Blocks of Information Systems

 People: including managers, system users and other system

developers …
 Data: raw facts about organizations and its business
transactions. It is by-product of doing business
 Processes: refers to both automated and manual processes that
combine to manipulate data and produce information.
 Interfaces: refers to how a system interacts with people and
other systems.
 Information Technology (IT): refers to combination of
computer technology (Hardware and Software) with
telecommunications technology (data, image and voice
networks) and- Information and Communication Technology.
 Con’d
 An Information system can exist with or without a computer – or IT
(ICT). But, when Information Technology is used, it significantly
expands the power and potential of most information systems.

Figure: The basic components of a computer-based information system-

People, Processes, Information technology and informal interactions
 Con’d
The Information System includes the following

Hardware – Computers, servers and printers

Software- System software and application software

Documentation and training materials – The materials

created by Systems Analyst to help users to use the software

Specific job roles – The roles associated with the overall

system, such as the people who run the computers and the
software operating.
Controls- which are the parts of the software written to

prevent fraud and theft

People- Who use the software in order to do their job.
Con’d

Figure-: Components of IS Application

 System development life cycle (SDLC)
 The SDLC is a comprehensive tool for solving organizational problems,
particularly these relating to the flow of computer based information
 There are four common SDLC phase are there:-

1) Planning and selection 2) Analysis 3) Design and 4) Implementation and

operation phase
 Systems Planning and Selection

The first phase in the SDLC has two primary activities

Identifying the need for a new or enhanced system
Information needs of the organization are examined and projects to

meet these needs are identified from

- Requests to deal with problems in current procedures
- The desire to perform additional tasks
- The realization that information technology could be used to
improve the organization
Feasibility study is conducted to determine the economic and

organizational impact of the system

The second task is investigating the system and determining the

proposed system’s scope. Then a specific plan for the proposed

project for the team to follow is produced. This Baseline Project Plan
customizes the standardized SDLC and specifies the time and resources
needed for its execution
 Systems Analysis
It has three sub phases,

First sub phase involves the systems analyst to determine the

requirements of the system, i.e., what the users want from a
proposed system
Next, the requirements gathered are structured (DFD, ERD)

according to their interrelationships, eliminating the

redundancies
Third, system analyst has to generate alternative initial

designs to match the requirements, best suited design is

selected for the development after the comparison of all
alternative designs
 Systems Design

 The system analyst converts the description of recommended

solution into logical and physical designs
 Logical design involves in designing the user interface,
databases and compute processes, irrespective of the
programming languages ( Algorithms, input and output forms,
reports, table normalization)
 During the Physical design, the analyst team decides the
programming language, database systems to be used, hardware
platform, operating systems and network environment.
 The final outcome of the design phase is the physical system
specifications, presented in the form such as a diagram or
written report ready to be turned over to programmers and other
system builders for construction.
 Systems Implementation and operation
 In this phase the information system is coded, tested and
installed in the organization, and in which the information
system is systematically repaired and improved
 Planning for both testing and installation is to be done as
early as the project planning and selection phase, because
they both require extensive analysis in order to develop
exactly the right approach.
 This phase also includes the initial training to the users and
documentation of the system documented throughout the life
cycle.
 During operation part, the problems faced by the users
should be solved, and changes and enhancements (new
versions) are to be made as per the users’ desire to reflect
changing business conditions.
 Types of Information Systems

The main types of IS are

Office automation IS
Transaction Processing
Systems
Management Information
Systems
Decision Support Systems
Expert Systems
 Office automation Information Systems
Support the wide range of business office activities that
provide for improved workflow and communications
between workers, regardless of whether or not those workers
are located in the same office.
Is concerned with getting all the relevant information to
those who need it.

Examples of OAS
 Word Processing
 Electronic messages
 Workgroup computing and scheduling
 Fax Processing
Imaging and electronic documents
Workflow management
 Con’d

OAS can be designed to support individuals or workgroups.

Personal Information Systems

 Designed to meet needs of a single user

 Designed to boost an individual’s productivity

Workgroup Information Systems

 Designed to meet needs of a work group

 Designed to boost the group’s productivity

 Transaction Processing Systems (TPS)

 TPS is an information system application that captures and

processes data about business transactions.
 Although, most TPSs have long been computerized, new
opportunities for improvement are being driven by the trend
toward Business Process Redesign (BPR).
 BPR is the study, analysis and redesign of fundamental
business processes to reduce costs and/or improve value
added to the business.
 TPS automates the handling and capture of data about
transactions or business activities.
 Transaction Processing Systems (TPS)

 For each transaction, the system must capture the data, verify
that it is valid transaction and accept or reject it.
 Accepted transactions are stored in the system database.
 Reporting provides summaries of transactions (ex. daily,
weekly)
 The analysis and design of a TPS requires focusing on the
firm’s current procedures for processing transactions.
 Con’d
 The goal of TPS development is to improve transaction
processing by speeding it up, using fewer people, improving
efficiency and accuracy, integrating it with other organizational
information systems, or providing information not previously
available.
 TPS can either:
 Respond to business transactions [External Events] – processing

orders for customers

 Initiate Transactions [Internal Events] – generating production

orders for the shop floor.

 o Or Both.
Con’d
Examples of TPS:
Airline Reservation System

Bank deposit and withdrawal System

Course Registration System

Inventory Procurement System

Order Processing System

Payment Processing System

Payroll System

Supplies Procurement System

 Management Information System (MIS)
 Is an information system application that provides for management-
oriented reporting.
 Usually generated on a predetermined schedule and appear in prearranged
schedule.
 MIS provides essential management reports required to plan, monitor
and control business operations.
 MIS takes the raw data available through a TPS and converts them into a
meaningful aggregated from. It provides reports this information to
managers.
 Developing MIS calls for good understanding of what kind of information
mangers require and how managers use information in their jobs.
 Thus, the System Analyst must develop a good understanding of the
business and the transaction processing systems that provide data for an
MIS.
Con’d
Information can be presented as:
 Detailed Information: used for operation management and

regulatory requirements (imposed by government)

Summary Information: consolidates raw data to quickly indicate

trends and possible problems.

 Exception Information: filters data to report exceptions to some

rule or criteria.
E.g. reporting only those products that are low in inventory
Examples of MIS:
Budget Forecasting and Analysis System
Financial Reporting System
 Inventory Reporting System
Salary Analysis System
Sales Forecasting System
 Decision support System (DSS)

 Provide its users with decision- oriented information

whenever a decision-making situation arises.
o When applied to executive managers, these systems are

sometimes called Executive Information Systems.

 Helps the manager to take decisions by analyzing the data.
 It provides an interactive environment in which decision
maker can quickly manipulate data and models of business
operations
Con’d
DSS has three parts:

I) The first part is composed of a database, extracted

from a TPS or MIS
II)The second part consists of mathematical or
graphical models of business processes.
III) The third part is made up of a user interface that
provides a way for the decision maker to communicate
with the DSS.
 Expert Systems (ES)

Capture and redesign (simulate) the knowledge and expertise of

an expert problem solver or decision maker then simulates the
“thinking” and “actions” of that expert.
Is implemented with Artificial Intelligence technology that
captures, stores and provides access to the reasoning of the
expert.
 An ES is different from other information systems, it replicates
the decision-making process by applying rules to information in
the way that an expert would.
 An ES is developed for a particular area of knowledge or
domain, Ex Medical diagnosis, Weather forecasting, etc.
 The ES asks questions, and the end user supplies the answers,
rules applied on the answers and the ES provides a
recommendation.
 Con’d
 The focus on developing and ES is acquiring the
knowledge of the expert in the particular problem domain.
 Knowledge engineers perform knowledge acquisition.

Example:
 A food manufacturer uses an expert system to preserve the

production expertise of engineers who are nearly retiring.

Questions?