Management Information Systems

Chapter 1 Information System Concepts

Discussion: The analogy of Nervous System in
Humans and Information Systems In
Organisations
What makes humans different from other
Animals?
 Information System Concepts
Chapter objectives:
1. Understand the concept of a system and how it
relates to information systems and to business
organizations
2. Explain why knowledge of information systems is
important for business professionals and identify five
areas of information systems knowledge they need.
3. illustrate how the business applications of
information systems can support a firm’s business
processes, managerial decision making, and
strategies for competitive advantage.
 Chapter One
Introduction to Information Systems
 Information as organizational resources:
 Organizational resources: Material, financial,
human (Physical resources) and informational
resources (conceptual resource).
 Managers manage the physical resources and the
performance of their organizations using the
conceptual resource
 A manager, at any level of the organization,
needs information to make decisions and to
control organizational resources.
 Therefore, information resource needs proper
management attention as the other resources.
Introduction to Information Systems
 Why Information Systems (IS)?
 Today it is widely recognized that information systems
knowledge is essential for managers, because most
organizations need information systems to survive and
prosper.
 Information systems can help companies extend their reach
to faraway locations, offer new products and services,
reshape jobs and work flows, and perhaps profoundly
change the way they conduct business.
 Why IS matters? capital management, Foundation of
doing business, Productivity, Strategic opportunity and
advantage.
Introduction to Information
Systems
 Why IT now?
 The Internet and Technology Convergence: Internet and
WWW created. Now organizations struggle with such issues as how
to design and develop a Web site
 Transformation of the Business Enterprise: Technology, to a
large extent, has driven organizations to change the way they
operate and that includes the way they manage.
 Globalization: global economy is being made real by
technology, and that's why it's so important that you
understand how to use information systems technology

Rise of the Information Economy: In a knowledge- and
information-based economy, knowledge and information are
key ingredients in creating wealth.

Emergence of the Digital Firm: successful digital
firms view information technology as the "core of
the business and the primary management tool."
 Introduction to Information
Systems
 The Challenge of Information Systems: Key Management
Issues:
 The Information Systems Investment Challenge: Managers overlook
the costs associated with the non-technical side of technology.
 The Strategic Business Challenge: Companies spend thousands of
dollars on hardware and software only to find that most of the technology
actually goes unused.
 The Globalization Challenge: A good management information system
meets both domestic and foreign opportunities and challenges.
 The Information Technology Infrastructure Challenge: Core
competencies and goals drive the technology, instead of the technology
driving the rest of the company.
 The Responsibility and Control Challenge: Humans do drive and
control the technology, and as a manager, you shouldn't lose sight of that
fact.
Reasons why managers have interest in ICT

Three important reasons for interest in ICT

Competitive advantage: The need to process large
volume of external and internal information to cope up
with changes in their environment.
Organizational decision making: ICT has
improved the capacity of organizations in handling and
processing large volume of data that helped managers
operational and strategic decisions
Support of organizational processes and
operations: The use of ICT in linking the internal
processes; and link their operations with that of
customers, suppliers and other stakeholders
IS Knowledge Framework for
Business Professionals
In this model Information systems are characterized by:
Business applications – where IS are used for operations,
management and competitive advantage
Information Technology (IT) – including hardware, software
and the issues managers have in managing IT
Foundational concepts – “fundamental behavioral, technical,
business and managerial concepts” regarding the roles and
concepts of IS
Management Challenges – the ability to effectively and ethically
manage Information and IT for users and the enterprise
 Development processes – the processes required to develop an IS
 System‘s Concepts

 A System is defined as a set of interrelated

components, with a clearly defined boundary, working
together to achieve a common set of objectives by
accepting inputs and producing outputs in an
organized transformation process .
Basic Functions are Inputs, Processing and Outputs

Additional Elements: Feedback and Control

Other Characteristics: Environment, Interface, Open

System, Adaptive System

 System‘s Concepts

 Systems can be classified from the perspective of

their
i. Originality:
 natural systems
 artificial systems
II. Tangibility
 Abstract systems
 Physical systems
III. Interaction with the environment
Closed systems, relatively closed systems

Open Systems
Systems concepts continued

Deterministic vs. Stochastic Systems

 Deterministic systems: if the behaviour of a system is
predictable in detail e.g. solar system
 Stochastic systems: systems difficult to predict their
behaviours. Behaviours can be affected by random or
stochastic inputs. Systems that involve people.
 Characteristics of open systems

 Environment; No system is seen outside the context

of its environment
 Subsystem: Any system has lower level systems,
called subsystems that perform different functions
 boundary can be purpose, scope objective, mission,
etc, that serves as a boundary to separate a system
from its environment and other systems
 interface: occur at the boundary in the form of taking
inputs from, and delivering outputs to, the environment
.
 Characteristics of open systems

 Input a system needs raw materials, labour,

energy, information etc. as input.
 Process: a series or parallel activities taken by
a system/or subsystems to combine different inputs
and to produce new product /service.
 Output: A product of a system that can be input to
other systems or consumed as end product.
 Synergy: Tells unity of purpose, coordination of
activities, etc which give higher value product than
the value of the inputs.
 Equifinality: there are a lot of alternatives that can
lead to the same end result or objective.
Characteristics of open
systems
 Coupling: the extent of linkage between the
subsystems.
 Loose coupling means that subsystems are not

closely linked
 close coupling means that subsystems are

highly dependent on each other.

 Feedback and control: monitoring the internal and
external situation and taking action based on the
information
• entropy vs equilibrium.
Introduction to Information
Systems
o Data, information, knowledge and
wisdom
 Data is the most basic element of any information
system.
 Data is raw material – recorded, unformatted
information, such as words and numbers.
 Data has no meaning in and of itself.
 Information is a representation of reality, which is
processed data. It is also data that have been
shaped into a form that is meaningful and useful to
human beings.
 Value of Information from the
perspective of a manager
 Time dimension
 Timeliness
 Currency:
 Frequency
 Content dimension:
 Accuracy: Relationship between accuracy and cost.
 Relevancy
 Conciseness:
 Completeness:
 Form dimension:
 Clarity
 Presentation
 Media
Introduction to Information
Systems
Data and Information

Raw data from a supermarket checkout counter can be processed and organized to produce meaningful
information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a
specific store or sales territory.
Introduction to Information
Systems
 Knowledge is a body of governing procedures,
such as guidelines or rules, that are used to
organize or manipulate data to make it suitable for
a given task.
 Wisdom is accumulated knowledge that goes
beyond knowledge by representing broader, more
generalized rules and schemas for understanding
a specific domain/s.
 Wisdom allows you to understand how to apply
concepts from one domain to new situations or
problems.
 The General Systems Model

 Physical Systems transforms input resources such as

personnel, capital, raw materials/components, equipment
and information into products and services
 A conceptual system is a system that uses conceptual
resources information & data to produce conceptual
outputs such as decisions and instructions
 Open loop systems: open systems without feedback
control
 Closed loop systems: open systems with feedback
control
 The physical and conceptual system together form the
general systems model of an organization.
 The General System‘s Model of
Business
Environment
Management (conceptual) Objective
System

Management
Decision Informatio
(Control
Mechanism) n

Decision Information Data/

Decision
System Info-
ration
Data Data
Data

Physical System
Physical
Input Physical
Transformation
Output
Process

Environment
Introduction to Information
Systems
 Information Systems Defined.
 An information system can be defined technically as
a set of interrelated components that collect (or
retrieve), process, store, and distribute information
to support decision making, coordination, and
control in an organization.
 In addition to supporting decision making,
coordination, and control, information systems may
also help managers and workers analyze problems,
visualize complex subjects, and create new
products.
 Information System

 IT is hardware, software, networking and data

management
 In theory, IS could be paper based; But we will focus on
Computer-Based Information Systems (CBIS)
 Computer Based Information Systems (CBIS):
Information systems that rely on computer hardware and
software for processing and dissemination of information.
 Management Information System: a group of
interrelated components that work together to capture,
store, process, and control data resources; to produce
information as output that support planning, decision
making and operational activities in an organisation (Bocij,
Greasley and Hickie; 2008)
Information systems model
Introduction to Information
Systems
 The IPO Concept of Information
Systems
 Input
 Captures or collects raw data from within the organization or
from its external environment.
 Processing
 Converts this raw input into a meaningful form.
 Output
 Transfers the processed information to the people who will use
it or to the activities for which it will be used.
 Feedback
 Output that is returned to appropriate members of the
organization to help them evaluate or correct the input stage.
Introduction to Information
Systems
 Most important is the feedback process.

o The hardware (input and output) and the software

(processing) receive the most attention
o But when the “Persware” angle is added with good
feedback, the information literacy begins.
Introduction to Information
Systems
 Elements/Components/Resources
of an Information System
 People
 Hardware
 Software
 Data
 Telecommunication Networks
Introduction to Information
Systems
 Information Systems: Business
Perspective
 Information Systems from a business
perspective, are a part of a series of value-adding
activities for acquiring, transforming and
distributing information that managers can use to
improve decision making, enhance organizational
performance and ultimately increase firm
profitability
 Dimensions of Information Systems:
Organizations, Management, and Technology.
Introduction to Information
Systems
Introduction to Information
Systems
 Interdependence between Organizations and
Information Systems

There is a growing interdependence between a firm’s information systems and its business capabilities. Changes in
strategy, rules, and business processes increasingly require changes in hardware, software, databases, and
telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.
Introduction to Information
Systems
 Frameworks of Information
Systems
 Because an organization has various levels, there should be
information systems designed to support and facilitate each
level.
 Likewise, because there are various functions within an
organization, there should be information systems designed to
perform these functions.
 Additionally, because there are different interests, specialties
and levels in an organization, there are different kinds of
systems.
 No single system can provide all the information an organization
needs. Therefore, the proper framework/s for the kinds and
types of information systems must be designed and developed
to ensure the required benefits are derived from them.
 Project One
1.Informative presentations on IT infrastructure:
 Hardware
 Software

 Telecommunications and Networking

 File Management and Databases

 Internet and WWW

 Students are asked to prepare informative slides and

present their work to the rest of the class.
 Project 2
2. Project on Functional and Integrated Information
Systems
 Sales and Marketing Systems

 Manufacturing and Production Systems

 Finance and Accounting Systems

 Human Resources Systems

 Enterprise Information Systems:

 Enterprise Systems
 Supply Chain Management Systems
 Customer Relationship Management Systems
 Knowledge Management Systems
 Students are asked to do research on these functional and integrated
information systems in a business company and present their findings to
the rest of the class.
 Project paper: Minimum of 15 pages.