Information Systems (Lecture 1)


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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.

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Information Systems (Lecture 1)

  1. 1. Paper 2.1 Information Systems Abdisalam Issa-Salwe Faculty of Professional Studies Thames Valley University
  2. 2. Part 1: Managing information systems Part 2: Designing information systems Part 3: Evaluating information systems Abdisalam Issa-Salwe, Thames Valley University 2
  3. 3. 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. Abdisalam Issa-Salwe, Thames Valley University 3
  4. 4. 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. Abdisalam Issa-Salwe, Thames Valley University 4
  5. 5. 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 Abdisalam Issa-Salwe, Thames Valley University 5
  6. 6. 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 Abdisalam Issa-Salwe, Thames Valley University 6
  7. 7. Lecture 1 Part 1: Managing Information Systems Information Systems and Business Strategy Abdisalam Issa-Salwe, Thames Valley University 7
  8. 8. 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 Abdisalam Issa-Salwe, Thames Valley University 8
  9. 9. 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. Abdisalam Issa-Salwe, Thames Valley University 9
  10. 10. Definition of Informati on Systems An organised method of transforming data into ¡ information that can be used for decision making. (,6518 ,224378-,00.html) The general term for computer systems in an ¡ organisation that provide information about its business operations. ( 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. ( Abdisalam Issa-Salwe, Thames Valley University 10
  11. 11. 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. ( ry_pages/glossary_i.html) the entire infrastructure, organisation, ¡ personnel, and components that collect, process, store, transmit, display, disseminate, and act on information (www. bin/atdl.dll/fm/100-6/glossary.htm) Abdisalam Issa-Salwe, Thames Valley University 11
  12. 12. 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. Abdisalam Issa-Salwe, Thames Valley University 12
  13. 13. Life-blood of the organi sation Abdisalam Issa-Salwe, Thames Valley University 13
  14. 14. 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 ¡ Abdisalam Issa-Salwe, Thames Valley University 14
  15. 15. 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. Abdisalam Issa-Salwe, Thames Valley University 15
  16. 16. Organisational Information Requirement (cont ) 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. Abdisalam Issa-Salwe, Thames Valley University 16
  17. 17. 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. Abdisalam Issa-Salwe, Thames Valley University 17
  18. 18. About Business Strateg y 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. Abdisalam Issa-Salwe, Thames Valley University 18
  19. 19. 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) Abdisalam Issa-Salwe, Thames Valley University 19
  20. 20. 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! Abdisalam Issa-Salwe, Thames Valley University 20
  21. 21. 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 Abdisalam Issa-Salwe, Thames Valley University 21
  22. 22. Definitions of information Data that has been interpreted, ¡ translated, or transformed to reveal the underlying meaning; ( 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. ( Abdisalam Issa-Salwe, Thames Valley University 22
  23. 23. The making of information Abdisalam Issa-Salwe, Thames Valley University 23
  24. 24. 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. Abdisalam Issa-Salwe, Thames Valley University 24
  25. 25. 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. Abdisalam Issa-Salwe, Thames Valley University 25
  26. 26. Strategic Information Systems Strategic information systems ¡ computer systems at any level of an l 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 Abdisalam Issa-Salwe, Thames Valley University 26
  27. 27. 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? Abdisalam Issa-Salwe, Thames Valley University 27
  28. 28. SWOT Anal ysis 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 Abdisalam Issa-Salwe, Thames Valley University 28
  29. 29. SWOT Anal ysis (Cont ) 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 Abdisalam Issa-Salwe, Thames Valley University 29
  30. 30. Abdisalam Issa-Salwe, Thames Valley University 30
  31. 31. SWOT Anal ysis (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. Abdisalam Issa-Salwe, Thames Valley University 31
  32. 32. SWOT Anal ysis (cont ) 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 Abdisalam Issa-Salwe, Thames Valley University 32
  33. 33. SWOT Anal ysis (cont ) 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 Abdisalam Issa-Salwe, Thames Valley University 33
  34. 34. SWOT Anal ysis (cont ) 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 Abdisalam Issa-Salwe, Thames Valley University 34
  35. 35. 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 Abdisalam Issa-Salwe, Thames Valley University 35
  36. 36. CSF example Example Goals CSF Profit concern Earnings per share Automotive industry: ¡ ¡ ¡ Return on lstyling investment dealer system lquality control ¡ Market share lcost Energy standards ¡ New product ¡ Not for profit Excellent health Regional integration ¡ ¡ care ¡ Improved monitoring of regulations ¡ Efficient use of resources Abdisalam Issa-Salwe, Thames Valley University 36
  37. 37. 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 Abdisalam Issa-Salwe, Thames Valley University 37
  38. 38. 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 Abdisalam Issa-Salwe, Thames Valley University 38
  39. 39. 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. Abdisalam Issa-Salwe, Thames Valley University 39
  40. 40. 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? Abdisalam Issa-Salwe, Thames Valley University 40
  41. 41. Types of information Recognised by Robert Anthony in the 1960 s Strategic Planning Management Control Operational Control Transaction Processing Abdisalam Issa-Salwe, Thames Valley University 41
  42. 42. 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. Abdisalam Issa-Salwe, Thames Valley University 42
  43. 43. Qualities of Informati on 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. Abdisalam Issa-Salwe, Thames Valley University 43
  44. 44. Qualities of Informati on (cont ) Accurate: figures should add up, the degree of ¡ Accurate 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 ¡ Complete: the information should include ¡ everything it needs to include. Cost-beneficial Cost-beneficial: i.e. benefits from using the ¡ ¡ data should outweigh the costs of obtaining it. User-targeted: i.e. senior managers need ¡ User-targeted summaries, junior managers need more detail. ¡ Relevant: i.e. omit any data which is irrelevant Relevant ¡ ¡ for a decision. Authoritative: i.e. sources of information ¡ should be a reliable. Authoritative ¡ Timely: i.e. the information should be available ¡ Timely when it is needed ¡ Easy to use: i.e. information should be ¡ concise, clearly presented and sent using the Easy to use correct medium and communication. ¡ Abdisalam Issa-Salwe, Thames Valley University 44
  45. 45. 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): ¡ Abdisalam Issa-Salwe, Thames Valley University 45
  46. 46. Transaction processing syst em (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 Abdisalam Issa-Salwe, Thames Valley University 46
  47. 47. Office automati on 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 quot;paper warfarequot;. OAS software tools are often integrated ¡ (e.g. Word processor can import a graph from a spreadsheet) and designed for easy operation. Abdisalam Issa-Salwe, Thames Valley University 47
  48. 48. Management i nformation 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. Abdisalam Issa-Salwe, Thames Valley University 48
  49. 49. Executive information system (EI S) 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. Abdisalam Issa-Salwe, Thames Valley University 49
  50. 50. 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. Abdisalam Issa-Salwe, Thames Valley University 50
  51. 51. 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). Abdisalam Issa-Salwe, Thames Valley University 51
  52. 52. 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. Abdisalam Issa-Salwe, Thames Valley University 52
  53. 53. Knowledge-level Systems Support knowledge and data workers in l 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. Abdisalam Issa-Salwe, Thames Valley University 53
  54. 54. Management -level Systems Designed to serve the the monitoring, l 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. Abdisalam Issa-Salwe, Thames Valley University 54
  55. 55. 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. Abdisalam Issa-Salwe, Thames Valley University 55
  56. 56. Abdisalam Issa-Salwe, Thames Valley University 56
  57. 57. Abdisalam Issa-Salwe, Thames Valley University 57
  58. 58. Reference BPP, Information Systems, Study Text, Paper 2.1, ¡ BPP Professional Education, United Kingdom. Lachlan M. MacKinnon, Information: Types of ¡ Information System Systems, ctures/types.ppt, Abdisalam Issa-Salwe, Thames Valley University 58