Information systems in modern organizations

1. INFORMATION SYSTEMS IN MODERN
ORGANIZATIONS
Infromation sysytem (IS) is integration of following elements
1. Procedure
2. Resources and
3. People

2. “An Information system can be any organised
combination of people, hardware, software,
Communication networks and data resources that store
and retrieves, transforms and disseminate information
in the organization.”
-James A O’ Brien

3. NEED FOR INFORMATION SYSTEM
1. Meeting Global Challenges
2. Capturing Opportunities in the market
3. Supporting Corporate Strategy
4. Linking Departments, with Different Functions
5. Enhancing workers productivity
6. Increasing Quality of goods & services

5. Information System Resources
1. People Resources
People are required for the operation of all information systems. These people
resources include end users and IS specialists.
End users (also called users or clients) are people who use an information
system or the information it produces. They can be accountants, salespersons,
engineers, clerks, customers, or managers. Most of us are information system
end users.
IS Specialists are people who develop and operate information systems. They
include systems analysts, programmers, computer operators, and other
managerial technical, and clerical IS personnel. Briefly, systems analysts design
information systems based on the information requirements of end uses,
programmers prepare computer programs based on the specifications of
systems analysts, and computer operators operate large computer systems.

6. 2. Hardware Resources
The concept of Hardware resources includes all physical devices and materials
used in information processing. Specially, it includes not only machines, such
as computers and other equipment, but also all data media, that is, all tangible
objects on which data is recorded, from sheets of paper to magnetic disks.
Example of hardware in computer-based information systems are:
Computer systems, which consist of central processing units containing
microprocessors, and variety of interconnected peripheral devices. Examples
are microcomputer systems, midrange computer systems, and large mainframe
computer systems.
Computer peripherals, which are devices such as a keyboard or electronic
mouse for input of data and commands, a video screen or printer for output of
information, and magnetic or optical disks for storage of data resources.

7. 3. Software Resources
System Software, such as an operating system program, which con
controls and supports the operations of a computer system.
Application Software, which are programs that direct processing for a
particular use of computers by end users. Examples are a sales analysis
program, a payroll program, and a work processing program.
Procedures, which are operating instructions for the people who will use
an information system. Examples are instructions for filling out a paper
form or using a software package.

8. 4. Data Resources
Data is more than the raw material of information systems. The concept of
data resources has been broadened by managers and information systems
professionals. They realize that data constitutes a valuable organization
resource. Thus, you should view data as data resources that must be
managed effectively to benefit all end users in an organization.
Data can take many forms, including traditional alphanumeric data,
composed of numbers and alphabetical and other characters that describe
business transactions and other events and entities. Text data, consisting of
sentences and paragraphs used in written communications; image data, such
as graphic shapes and figures; and audio data, the human voice and other
sounds, are also important forms of data.

9. The data resources of information systems are typically organized into:
Database that hold processed and organized data.
Knowledge bases that hold knowledge in variety of forms such as facts, rules,
and case examples about successful business practices.
For example, data about sales transactions may be accumulated and stored in a
sales database for subsequent processing that yields daily, weekly, and monthly
sales analysis reports for management. Knowledge bases are used by knowledge
management systems and expert systems to share knowledge and give expert
advice on specific subjects.

10. TYPES OF INFORMATION SYSYTEMS

11. 1. Transaction Processing Systems
Every firm needs to process transactions in order to perform its daily
business operations. A transaction refers to any event or activity that
affects the organization. Depending on the organization’s business,
transactions may differ from one organization to another. In a
manufacturing unit, for example, transactions include order entry,
receipt of goods, shipping, etc., while in a bank, transactions include
deposits and withdrawals, cashing of cheques, etc.
However, some transactions, including placing orders, billing
customers, hiring employees, employee record keeping, etc., are
common to all organizations. To support the processing of business
transactions, transaction processing systems (TPS) are used in
organizations.

12. 2. Management Information Systems
Management information systems are specially developed to support the
planning, controlling, and decision-making functions of middle
managers. A management information system (MIS) extracts transaction
data from underlying TPSs, compiles them, and produces information
products in the form of reports, displays, or responses.
These information products provide information that conforms to the
decision-making needs of managers and supervisors. Management
information systems use simple routines like summaries and
comparisons which enable managers to take decisions for which the
procedure of reaching a solution has been specified in advance.

13. Generally, the format of reports produced by MIS is pre-specified.
A typical MIS report is a summary report, such as a report on the
quarterly sales made by each sales representative of the
organization. Another type of management information system
report is an; for example, exception report that specifies the
exception conditions the sales made by some sales
representative is far below than expected.
Usually, management information systems are used to produce
reports on a monthly, quarterly, or yearly basis. However, if
managers want to view the daily or hourly data, MIS enables
them to do so. In addition, they provide managers online access
to the current performance as well as past records of the
organization.

14. 3. Decision Support Systems
A decision support system (DSS) is an interactive computer-based
information system that, like MIS, also serves at the management level of
an organization. However, in contrast to MIS, it processes information to
support the decision-making process of managers.
It provides middle managers with the information that enables them to
make intelligent decisions. A decision support system in a bank, for
example, enables a manager to analyze the changing trends in deposits
and loans in order to ascertain the yearly targets.
Decision support systems are designed for every manager to execute a
specific managerial task or problem. Generally, they help managers to
make semi-structured decisions, the solution to which can be arrived at
logically. However, sometimes, they can also help in making complex
decisions. To support such decisions, they use the information generated
by OASs and TPSs.

15. 4. Executive Support Systems
An executive support system (ESS) – an extension of MIS – is a
computer-based information system that helps in decision-making at the
top level of an organization. The decisions taken with the help of an
executive support system are non-routine decisions that affect the entire
organization and, thus, require judgment and sight.
As compared to DSSs, ESSs offer more general computing capabilities,
better telecommunications, and efficient display options. They use
advanced graphics software to display critical information in the form of
charts or graphs that help senior executives to solve a wide range of
problems.

16. To make effective decisions, they use summarized internal data
from MIS and DSS as well as data from external sources about
events like new tax laws, new competitors, etc. They filter,
compress, and track data of high importance and make it available
to the strategic-level managers.
Executive support systems help to monitor performance, track
activities of competitors, identify opportunities, and forecast trends.
They also assist senior managers in answering the following
question:
• What business should we do?
• How are our competitors doing the business?
• Which units can be sold and which new units are to be bought?

17. 5. Knowledge Management Systems
A knowledge management system is a type of information system
that stores information for building knowledge for users. This can help
in achieving collaboration between different departments.
Companies make use of Knowledge Management Systems to
properly organize the documentation, FAQs, and other such
information concerning them. The KMS also makes all the
documented company information easily accessible to its staff and
customers, albeit in specified degrees.
Documents such as business policies, training material, and generic
customer queries can be assembled in one place and be accessed at
all times.
A KMS ensures that the business-specific abilities of the staff are
integrated throughout the organization and helps employees to
understand the available information better.

18. 6. Office Automation Systems
Office Automation Systems offer a way for data to move from one system to
another without any manual work or human intervention.
In the digital age, office automation systems facilitate data transportation by
bundling huge amounts of data in an ordered manner and shipping them.
The lack of manual efforts makes OAS a technique that mitigates errors,
speeds up business processes and ensures their reliability.
The OAS also makes certain that every process activity is visible to the
management. Thanks to this, businesses can actively figure out and
eliminate any bottlenecks associated with a business process.
The automation in OAS makes it possible to look at the data processing
path. Using this, businesses can stay updated with tasks and predict future
data processing.
OAS can be utilized daily in printing documents, automating emails, and
enhancing communication within an organization.

19. ROLE OF INFORMATION SYSTEMS:
• Information systems provides the base on which the present day
businesses are run.
• The companies are able to operate in the global arena with the help of
the IT.
• The relationship with the employees, suppliers and customers are also
being maintained with the help of IT
Information Systems are being used by the businesses nowadays to attain
the six major goals
 Operational Excellence
 Customer/Supplier Intimacy
 Improved Decision making
 Competitive advantage
 New products, Services and Business models
 Day – to –Day survival

20. INFORMATION TECHNOLOGY:
The branch of technology devoted to:
(a)The study and application of data and the
processing thereof; i.e., the automatic acquisition,
storage, manipulation, including transformation,
management, movement, control, display,
interchange, transmission or reception of data and
(b) The development and use of hardware, software
and procedures associated with this processing.

21. MANAGERIAL CHALLENGES OF IT:
Challenges of Globalisation
Challenge of Insularity
Challenge to Privacy
Challenges of Ethics

22. Strategic Uses of IT in Business
 Information technology plays an important role in delivering value for a business
and supporting organizational transformation. To achieve that, chief information
officers have become key members of board teams developing and delivering
strategic solutions for the business.
 The aim is to make an organization more competitive by aligning business
strategy with IT strategy.

23. Support Innovation
Organizations that want to improve their innovation capabilities and develop new products or
services for the market can use cloud computing to speed up the process. Cloud computing
enables organizations to rent additional IT resources during the development project on a pay-as-
you-go basis, rather than investing in fixed resources. Organizations can use the additional
resources to run pilot programs or speed up development. This provides an important strategic
advantage by enabling the organization to get new products to market quickly, ahead of the
competition.
Improve Responsiveness
Cloud computing enables organizations to scale up their IT resources quickly in response to
changing market conditions. Organizations that offer products and services online may find it
difficult to handle a surge in traffic, which could result in lost business. Adding resources from the
cloud provides a strategic advantage by enabling them to respond to changes in demand,
increase revenue and maintain customer satisfaction.

24. Increase Collaboration
IT solutions that improve collaboration in an organization can provide an important competitive
advantage. Issuing field service teams with smartphones, for example, enables service engineers to
provide a faster, more efficient service to customers. Engineers working on a customer site can set
up voice or video conference calls with product or technical experts at headquarters to discuss and
resolve a complex issue, rather than delaying a repair. Offering customer superior service provides a
strategic advantage by differentiating an organization from competitors.
Enhance Customer Insight
Collecting and analyzing data to gain greater insight into customers’ needs and preferences provides
a strategic advantage. By using powerful analytics software, organizations can develop customized
offers and personalized communications that help to increase customer satisfaction and foster
loyalty.

25. Introduce New Business Models
Organizations can use IT to make strategic changes to their business models. A
company that traditionally sold products through retail outlets might use IT to
develop an e-commerce model that enables it to reach a wider market, reduce its
distribution costs and offer a more convenient service to customers.
Source: Strategic Uses of IT in Business (chron.com)

26. Strategic Information Systems
A Strategic Information System (SIS) is a system to manage
information and assist in strategic decision making. A strategic
information system has been defined as, “The information system to
support or change enterprise’s strategy.” Simply says, a Strategic
Information System is a type of Information System that is aligned
with business strategy and structure. The alignment increases the
capability to respond faster to environmental changes and thus
creates a competitive advantage.
Strategic Information Systems are different from other
comparable management information systems as:
1.They change the way the firm competes.
2.They have an external (outward looking) focus.
3.They are associated with higher project risk.

27.  It is mainly concerned with providing and organization and its
members an assistance to perform the routine tasks efficiently and
effectively.
 One of the major issue before any organization is the challenge of
meeting its goals and objectives. Strategic IS enable such organization
in realizing their goals.
 Strategic Information System (SIS) is a support to the existing system
and helps in achieving a competitive advantage over the organizations
competitors in terms of its objectives.
 A strategic information system is concerned with systems which
contribute significantly to the achievement of an organization’s overall
objectives.
 The body of knowledge is of recent origin and highly dynamic, and the
area has an aura of excitement about it.
The emergence of the key ideas, the process whereby strategic
information systems come into being is assessed, areas of weakness are

28.  Information system is regarded as a tool to provide various services
to different management functions.
 The tools have been developing year by year and the application of
the tool has become more and more diverse. In management it is now
a very power means to manage and control various activities
and decision making process.
 The original idea of automating mechanical processes got quickly
succeeded by the rationalization and integration of systems. In both of
these forms, IS was regarded primarily as an operational support tool,
and secondarily as a service to management.
 Subsequent to the development, it was during the last few years that
an additional potential was discovered. It was found that, in some
cases, information technology (IT) had been critical to the
implementation of an organization’s strategy.

29. An organization’s strategy supported by information system fulfilling
its business objectives came to be known as Strategic Information
System. The strategic information system consists of functions that
involved gathering, maintenance and analysis of data concerning
internal resources, and intelligence about competitors, suppliers,
customers, government and other relevant organizations.
Source: Strategic Information Systems - MBA Knowledge Base
(mbaknol.com)