Learning Outcomes Discuss the roles of information workers and computers in the information economy. Describe the social responsibilities of information workers and organisations. Describe the components of a system. Describe an Information System and explain its components and characteristics. Explain how transaction-processing systems are used to support business processes. Discuss how computers are used to support automated manufacturing and design.
Three Monumental ChangesPrehistoric people were mostly nomadic hunters and gatherers. The Agricultural Economy The transformation to an agricultural economy took place over several centuries around 10,000 years ago. The result was a society in which most people lived and worked on farms, exchanging goods and services in nearby towns. The agricultural age lasted until about a century ago, when technological advances triggered what has become known as an industrial revolution.
The Industrial Economy By the end of the nineteenth century, the world was dominated by an industrial economy in which more people worked in urban factories than on farms. Increasingly, more wealth was in the hands of fewer people. As towns grew into cities, crime, pollution, and other urban problems grew with them.
The Information Economy Twentieth-century information technology produced what‘s been called a second industrial revolution, as people turned from factory work to information-related work. In today‘s information economy (sometimes called a post-industrial economy), clerical workers out number factory workers, and most people earn their living working with words, numbers, and ideas. Instead of planting corn or making shoes, most of us shuffle bits in one form or another. Technology was central to each of these transformations. The agricultural economy grew from the plow, machines sparked the industrial revolution, and the information age is so dependent on computers that it‘s often called the computer age.
System A system is a set of interrelated parts that work together to accomplish a purpose. To accomplish its purpose, a system performs three basic functions: input, processing, and output. A system has two additional functions: feedback and control. Every system has a boundary that defines its limits; anything outside the system‘s boundary is part of the system‘s environment. A system can be a part, or a subsystem, of a larger system.
Example A manufacturing system accepts raw materials as input and produces finished goods as output. An Information System accepts resources (data) as input and processes them into products (information) as output. A business is a system where economic resources are transformed by various system processes into goods and services.
Business Organizations as Systems A business organization is a system. It consists of many subsystems, such as departments, divisions, process teams and other workgroups. Organizations are designed for the purpose of creating products and services for customers.
INFORMATION SYSTEMS An information system is a set of interrelated parts that work together to produce, store, distribute, and use information products and services. It uses people, hardware, data and procedures for input, processing, output, storage, and control activities to produce valuable information for users. We are now ready to apply the system concepts we have leant to understand how information system works. How does an information system accept input and process them into information? What system components are involved?
People People are required for the operation of all information system. As a group, these people are referred to as information system users or end users. They can be accountants, salesperson, clerks, engineers, or customers. The structure and design of an information system is defined by another group of people— the system designers.
Another group of people in the organization;managers decides how money, time, and otherresources should be allocated to design,implement, and maintain the organizationsinformation systems.Tasks Tasks can be categorized into four areas: tasks related to communication among people in the organization, tasks related to making decisions within the organization, tasks related to the operations of the organization, and tasks related to strategic management of the organization.
Information As a commodity, information refers to facts, statistics, or other data that are valuable or useful to a person for accomplishing a task. These valuable pieces of information are organized and represented in some physical or digital form.
Organisation A business or other organization can be defined by its purpose, the tasks or activities that it performs, and its structure. Environment The global, competitive business environment presents problems and opportunities that a business organization must cope with to thrive.
INFORMATION TECHNOLOGY In the context of business, these technologies perform five information functions: Acquisition is a process of capturing data about an event that is important to the organization. Processing is an activity that manipulates and organizes information in ways that adds value to the information so it is useful to users. Storage and retrieval is an activity that systematically accumulates information for later use and then locates the stored information when needed.
Presentation is the process of showing information in a format and medium useful to the user. Transmission is the process of sending and distributing data and information to various locations.
BENEFITS OF INFORMATION SYSTEMSA firm can reap the following benefits:High-quality information.Access to information.Utilization of information.Perform organizational work efficiently.Better communication and decision-making.Better products and services forcustomers.
INFORMATION SYSTEMS FOR BUSINESSTRANSACTIONSA transaction is an event that occurs in any of theprimary activities of the company. A transactionprocessing system (TPS) is a firm‘s basic accountingand record-keeping system that keeps track ofroutine daily transactions necessary to conductbusiness. Transaction processing systems typicallyinvolve large amounts of data stored in largedatabases; they require high processing speeds tomanipulate large volumes of data. A transactionprocessing system must ensure a high level ofaccuracy and security of the data.
The Transaction Processing CycleTransaction processing is a cyclical process with fivesteps:Entering the data. This involves online data entry ortranscribing paper source documents. Data entry canalso use electronic data interchange (EDI) toelectronically exchange business transactions.
Processing the data. Data can be processed in two ways: batch processing or real-time processing. Storing and updating the data. This step involves storing the transaction data in database files. Many large organizations use data warehousing software to create and maintain very large databases containing data on all aspects of the company.
Document and report preparation. A transaction processing system produces several types of action documents and reports. An action document initiates an action by the recipient or verifies for the recipient that a transaction has occurred. User inquiry. Managers and other workers can use a database query language to ask questions and retrieve information about any transaction activity.
Example Payroll System to handle employee savings plan deductions An employee provides input by completing a deduction form. A human resources representative submits the completed form to the payroll department, which enters the deduction. The system performs processing and produces output, including a paycheck deduction, a report to the employee on check stub, and a credit to the employee‘s account.
Enterprise Resource Planning Transaction processing systems exist in all functional areas of a business. Each subsystem is itself a transaction processing system. The subsystems exchange information; the output of one subsystem is the input to another subsystem. Many managers in organizations look for ways to create cross- functional information systems by re-engineering, or combining and integrating, two or more transaction processing systems. This approach of creating information systems to support an organizations operational business processes is referred to as enterprise resource planning (ERP).
AUTOMATED INFORMATION SYSTEMS FOR DESIGN AND MANUFACTURING Computer-Aided Design (CAD) Product designers and engineers use computer- aided design (CAD) with computer workstations and software to draw product or process designs on the screen. CAD is used in a wide variety of industries, but a prime example of the importance of CAD is its use in the design of the Boeing 777, the first commercial aeroplane to be designed entirely with CAD software.
Computer-Aided Manufacturing (CAM) Computers and other information technology are used to automate the manufacturing process with computer-aided manufacturing (CAM). The software in a CAM system retrieves the design specifications of the product from the CAD database; controls specific tools, machines, and robots on the factory floor to manufacture the product; and monitors the overall physical process of manufacturing the product.
Computer-Integrated Manufacturing (CIM) Computer-integrated manufacturing (CIM) is a concept, or management philosophy, emphasizing the co-ordination of CAD and CAM systems along with other information systems in the company.