Information Systems (Lecture 1)

Information Systems

Abdisalam Issa-Salwe

Faculty of Professional StudiesThames Valley University

Paper 2.1

2Abdisalam Issa-Salwe, Thames Valley University

Part 1: Managing information systems

Part 2: Designing information systems

Part 3: Evaluating information systems


Content 1: Managing information systems

¡ Align information systems with business objectives,

¡ Identify business opportunities provided by information systems,

¡ Organise and structure information systems delivery, account for information systems delivery,

¡ Define the costs and benefits of information systems development, establish security and recovery plans.


Content 2: Designing information systems

¡ Define the systems development process,

¡ Plan information systems development, ¡ Identify and record user requirements, ¡ Define and specify user requirements, ¡ Acquire information systems solutions to

meet user requirements, ¡ Implement information systems to meet

user requirements.


Content 3: Designing information systems

¡ Test and install information systems, ¡ Evaluate information systems delivery, ¡ Monitor information systems development, ¡ Review and report on information systems

performance, ¡ Rectify and improve information systems

performance, ¡ Establish legal and other implications of

information systems


Learning Objectives (Paper 2.1)On completion of this paper candidates should

be able to:¡ Explain how to effectively use information systems and

information systems resources in an organisation¡ Identify and apply methods of accounting for information

systems delivery and projects¡ Participate in the definition and specification of user

requirements¡ Describe how an appropriate solution to specified user

requirements should be selected¡ Explain how an information systems project may be

planned, monitored and controlled¡ Describe the systems development process and its

implications


Part 1:Managing Information Systems

Lecture 1

Information Systems and

Business Strategy


Learning aim

¡ Explain an approach that an organisation may follow to formulate its strategic business objectives

¡ Discuss how information systems may be used to assist in achieving these objectives

¡ Distinguish between a business strategy and an information systems strategy

¡ Identify responsibility for the ownership of the IS strategy


Information System (IS)

¡ A system is a set of interacting components that operate together to accomplish a purpose.

¡ A set of interrelated elements or components that collect (input), manipulate (process), and disseminate (output) data and information and provide a feedback mechanism to meet an objective.

¡ Information Systems (IS) consist of technology tools and systems that help to acquire, sustain, and proliferate information.


Definition of Information Systems¡ An organised method of transforming data into

information that can be used for decision making. (wps.prenhall.com/ca_ph_ebert_busess_3/0,6518,224378-,00.html)

¡ The general term for computer systems in an organisation that provide information about its business operations. (www.iib.qld.gov.au/itcareers/talk.asp)

¡ A structured, interacting, complex of persons, machines, and procedures designed to produce information which is collected from both internal and external sources for use as a basis for decision-making in specific contract/procurement activities. (www.projectauditors.com/Dictionary/I.html).


Definition of Information Systems (cont…)

¡ The function within a business organisation that facilitates data processing and enables the resulting information to be made available to employees who need it. Also known as information technology. (www.minnesotamutual.com/news/glossary_pages/glossary_i.html)

¡ the entire infrastructure, organisation, personnel, and components that collect, process, store, transmit, display, disseminate, and act on information (www.155.217.58.58/cgi-bin/atdl.dll/fm/100-6/glossary.htm)


Why IS is important to organisations?

¡ Understand the role and relevance of an information system aids decision making.

¡ Identifying and evaluating appropriate information systems.

¡ Managing the process of information gathering, processing, storage and retrieval

¡ Managers make decisions using the information available to them at the time.


Life-blood of the organisation


Organisational Information Requirement

Organisations require information for various purposes:

¡ Information for planning¡ Information for controlling¡ Information for recording

transactions¡ Information for performance

measurement¡ Information for decision making


Organisational Information Requirement (cont…)

¡ Planning: Planning requires a knowledge of the available resources, possible time-scales and the likely outcome under alternative scenarios.

¡ Controlling: Information is required to assess whether it is proceeding as planned or whether there is some unexpected deviation from the plan. It may consequently be necessary to take some form of corrective action.


¡ Recording Transactions: Information about each transaction or event is required, i.e. (a) for documentation of transactions, (b) record transactions, for example for accounting, audit and Tax purposes, and (c) permit the necessary controlling action to be taken.

¡ Performance measurement: Comparisons against budget or the business plan are able to be undertaken.

Organisational Information Requirement (cont …)


Organisational Information Requirement (cont…)

¡ Decision making: Just as decision making can be analysed into three levels, so information necessary to make decisions within an organisation can be analysed in the same way.


About Business Strategy

¡ Organisation has a limited set of resources (e.g. time, people, money, physical resources) and they must decide how to use those resources.

¡ Strategy is deciding what the organisation is going to do and how it will use its resources

¡ A business system is a collection of people, machines and methods organised to accomplish a set of specific functions.


About Business Strategy? (cont…)¡ Contributing to the establishment of the

organisation's long term business objectives e.g. identifying and evaluating external factors which may impact on the organisation

¡ Identifying and appraising the organisation's skills and resources

¡ Identifying and defining business options; evaluating these options, performing risk assessments and recommending strategies for adoption

¡ Analyzing market and competitive developments in relation to marketing strategy

¡ Advising managers on critical economic and financial developments(CIMA Practical Experience Guidelines from January

2003)


Examples of Strategies

¡ Strategy 1: Manufacture equipment with the money and use the building and the people to manufacture widgets.

¡ Strategy 2: Outsource the production of widgets and use the people and building to be widget distributor - or perhaps a widget store.

¡ Strategy 3: Sell the patent to a larger firm, sell the building, fire the employees and retire!


Computer-Based Information Systems (cont…)

¡ Telecommunications: ¡ Electronic transmission of signals for

communications, and enables organisations to link computer systems into effective networks

¡ Networks: Used to connect computers and computer equipment

¡ Internet: ¡ The world’s largest

¡ Intranet: ¡ A network of networks that uses Internet technology

within an organisation¡ People:

¡ The most important elements in most Computer-Based Information Systems

¡ Procedures: ¡ Strategies, policies, methods, and rules for using

Computer-Based Information Systems


Definitions of information

¡ Data that has been interpreted, translated, or transformed to reveal the underlying meaning; (www.nrcan.gc.ca/cfs-scf/science/prodserv/kmglossary_e.html)

¡ Data that have been processed and presented in a form suitable for human interpretation, often with the purpose of revealing trends or patterns. (www.gtscompanies.com/glosscomp.html


The making of information


Implications of information management in organisations

¡ It has the potential to contribute to the achievements of organisations

¡ It has different purposes in different organisations. These purposes will be influenced by the organisation's goals as well as by its culture and its stance on information.

¡ It is practiced in a political, social and cultural context which shapes both what information management does and how it does it.


Developing IS/IT strategy

¡ Once key strategic issues have been identified, they feed into business objectives, particularly marketing objectives.

¡ SWOT analysis can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis.


Strategic Information Systems

¡ Strategic information systemsl computer systems at any level of an

organisation that change the goals, processes, products, services, or environmental relationships to help the organisation gain a competitive advantage

¡ Information considered as a resource, much like capital and labor

¡ IT-critical competitive strategies: Customer lock-in, customer lock-out, new business entry


Strategic Information Systems (cont…)

¡ What do managers need to know about organisations in order to build and use information systems successfully?

¡ What impact do information systems have on organisations?

¡ How do information systems support the activities of managers in organisations?

¡ How can businesses use information systems for competitive advantage?

¡ Why is it so difficult to build successful information systems, including systems that promote competitive advantage?


SWOT Analysis¡ SWOT analysis is an important tool for

auditing the overall strategic position of a business and its environment.

¡ SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats


¡ Strengths and weaknesses are Internal factors:

¡ For example, a strength could be your specialist marketing expertise. A weakness could be the lack of a new product.

¡ Opportunities and threats are external factors.

¡ For example, an opportunity could be a developing distribution channel such as the Internet, or changing consumer lifestyles that potentially increase demand for a company's products. A threat could be a new competitor in an important existing market or a technological change that makes existing products potentially obsolete

SWOT Analysis (Cont…)


SWOT Analysis (cont…)

Strength¡ your specialist marketing expertise. ¡ a new, innovative product or service¡ location of your business¡ quality processes and procedures ¡ any other aspect of your business that adds

value to your product or service.



Weakness could be:¡ lack of marketing expertise¡ undifferentiated products and service (i.e. in

relation to your competitors)¡ location of your business¡ poor quality goods or services¡ damaged reputation



Opportunity could be:¡ a developing market such as the Internet. ¡ mergers, joint ventures or strategic alliances¡ moving into new market segments that offer

improved profits¡ a new international market¡ a market vacated by an ineffective competitor



Threat could be:¡ a new competitor in your home market¡ price wars with competitors¡ a competitor has a new, innovative product or

service¡ competitors have superior access to channels

of distribution¡ taxation is introduced on your product or

service


Critical Success Factors (CSF)

¡ A small number of easily identifiable operational goals

¡ Shaped by industry, manager, environment

¡ Believed to assure firm’s success¡ Used to determine organization’s

information requirements


CSF example

¡ Regional integration¡ Improved monitoring of regulations¡ Efficient use of resources

¡ Excellent health care

Not for profit

¡ Automotive industry: lstylinglquality dealer system lcost control

¡ Energy standards

¡ Earnings per share¡ Return on investment¡ Market share¡ New product

Profit concern

CSFGoalsExample


Process of Decisi on Making

¡ Strategic Decision Making: Determines long-term objectives, resources, and policies

¡ Management Control: Monitors effective or efficient usage of resources and performance of operational units


Process of Decision Making (cont…)

¡ Operational control: Determines how to perform specific tasks set by strategic and middle-management decision makers

¡ Knowledge-level decision making: Evaluates new ideas for products, services, ways to communicate new knowledge, ways to distribute information


Decisions

¡ Types of management decision:¡Structured:

l Repetitive, routine, procedure have been agreed to deal with them.

¡Unstructured:l Judgement, insight and evaluation is

necessary to deal with them.

¡ They are usually important decisions that affect the future of the organisation, there are no set procedures.


Structured or Un structured

¡ In which town will the new branch be located?

¡ How many extra staff do we hire for the Xmas period?

¡ What can be done about an employee who has had too many sick days off after being warned about their attendance.

¡ Should the stores adopt their own store card?


Operational Control

Management Control

StrategicPlanning

Transaction Processing

Recognised by RobertAnthony in the 1960’s

Types of information


Types of information (cont…)¡ Strategic information: Strategic information is

concerned with the whole organisation and is relevant to the long term operational success.

¡ It is derived from both internal and external sources and is summarised at a high level.

¡ Tactical information: Tactical information is concerned with activities or departments and is relevant to the short and medium term.

¡ It is primarily generated internally (but may have a limited external component)...Tactical information data is based upon quantitative measures and is prepared routinely and regularly.

¡ Operational information: Operational information is concerned with specific tasks and is relevant to the immediate term.

¡ It is derived from internal sources and is largely quantitative, detailed since it involves the processing of raw data) and is prepared very frequently.


Qualities of Information¡ Obtaining more information about what is

likely to happen may reduce the uncertainty about the future outcome from taking a decision. Information can be categorised upon its prediction reliability.

¡ perfect information is information that is guaranteed to predict the future with 100% accuracy.

¡ Imperfect information is information which cannot be guaranteed to be completely accurate: Almost all information is therefore imperfect - but may still be very useful.


Qualities of Information (cont…)¡ Accurate

¡ Complete

¡ Cost-beneficial

¡ User-targeted¡ Relevant

¡ Authoritative¡ Timely

¡ Easy to use

¡ Accurate: figures should add up, the degree of rounding should be appropriate, there should be no typing errors, items should be allocated to the correct category, assumptions should be stated for uncertain information.

¡ Complete: the information should include everything it needs to include.

¡ Cost-beneficial: i.e. benefits from using the data should outweigh the costs of obtaining it.

¡ User-targeted: i.e. senior managers need summaries, junior managers need more detail.

¡ Relevant: i.e. omit any data which is irrelevant for a decision.

¡ Authoritative: i.e. sources of information should be a reliable.

¡ Timely: i.e. the information should be available when it is needed

¡ Easy to use: i.e. information should be concise, clearly presented and sent using the correct medium and communication.


Types of information systems

¡ Transaction processing system (TPS):

¡ Office automation system (OAS)¡ Management information system

(MIS)¡ Executive information system (EIS):¡ Decision support system (DSS):¡ Knowledge Work Systems (KWS):


Transaction processing system (TPS):

¡ A TPS collects and stores information about transactions, and controls some aspects of transactions. A transaction is an event of interest to the organisation. It is a basic business system.

¡Serves the most elementary day-to-day activities of an organisation;

¡Supplies data for higher-level management decisions.

¡Can have strategic consequences (i.e. airline reservation system)

¡Usually has high volumes of input and output


Office automation system (OAS)

¡ OAS provides individuals effective ways to process personal and organisational data, perform calculations, and create documents.e.g. word processing, spreadsheets, file managers, personal calendars, presentation packages

¡ used for increasing personal productivity. They reduce "paper warfare".

¡ OAS software tools are often integrated (e.g. Word processor can import a graph from a spreadsheet) and designed for easy operation.


Management information system (MIS)

¡ converts TPS data into information for monitoring performance and managing an organisation. Transactions recorded in a TPS are analysed and reported by an MIS. They have large quantities of input data and they produce summary reports as output. Used by middle managers. An example is an annual budgeting system.


Executive information system (EIS)

¡ Also known as an Executive Support System (ESS), it provides executives information in a readily accessible, interactive format. They are an MIS for executive use. An EIS/ESS usually allows summary over the entire organisation and also allows drilling down to specific levels of detail.

¡ Used by top level (strategic) management. They are designed to the individual. They let the CEO of an organisation tie in to all levels of the organisation. They are very expensive to run and require extensive staff support to operate.


Decision support syst em (DSS)

¡ Helps strategic management staff (often senior managers) make decisions by providing information, models, or analysis tools. For support of semi-structured and unstructured decisions (structured decisions can be automated).

¡ Used for analytical work, rather than general office support.

¡ They are flexible, adaptable and quick. ¡ Their inputs are aggregate data, and they

produce projections.


Knowledge Work Systems (KWS)

¡ KWS are used by technical staff. KWS use modelling functions to convert design specifications into graphical designs.

¡ They may include computer-aided design/manufacture (CAD/CAM).


Operational-level Systems

¡ Support operational managers by keeping track of the elementary activities and transactions of the organisation. The principle purpose of systems at this level is to answer routine questions and track the flow of transactions through the organisation. Covers things such as sales, receipts, cash deposits, payroll, credit decisions, flow of materials.


Knowledge-level Systems

l Support knowledge and data workers in an organisation. The purpose of these systems is to help the organisation discover, organise and integrate new and existing knowledge into the business, and to help control the flow of paperwork. These systems, specially in the form of collaboration tools, workstations, and office systems, are the fastest growing applications in business today.


Management-level Systemsl Designed to serve the the monitoring,

controlling, decision-making, and administrative activities of middle managers. These typically provide periodic reports rather than instant information on operations. Some of these systems support non-routine decision-making, focusing on less-structured decisions for which information requirements are not always clear. This will often require information from out with the organisation, as well as from normal operational-level data.


Strategic-level Systems

¡ Help senior management tackle and address strategic issues and long-term trends, both within the organisation and in the external environment. Principal concern is matching organisational capability to changes, and opportunities, occurring in the medium to long term (i.e. 5 - 10 years) in the external environment.


Reference¡ BPP, Information Systems, Study Text, Paper 2.1,

BPP Professional Education, United Kingdom.¡ Lachlan M. MacKinnon, Information: Types of

Information System Systems, http://www.macs.hw.ac.uk/~lachlan/dbislectures/lectures/types.ppt,

Information Systems (Lecture 1)

Education

Transcript of Information Systems (Lecture 1)