Information System & Business applications

UNIT 2
Information System
&
Business applications

Data vs. Information
1) Data:
a) Raw facts
b) Distinct pieces of information, usually formatted
in a special way
2) Information:
a) A collection of facts organized in such a way that
they have additional value beyond the value of
the facts themselves.
Introduction to Information System

Introduction to Information System

Classification to Information System

Transaction Processing Systems (TPS)
Computerized system that performs and records the daily
routine transactions necessary to conduct the business; these
systems serve the operational level of the organization
• TYPE: Operational-level
• INPUTS: transactions, events
• PROCESSING: updating; e.g. stock levels)
• OUTPUTS: detailed reports
• USERS: operations personnel, supervisors
• DECISION-MAKING: highly structured. (sale of products)
EXAMPLE: payroll, accounts payable, point of sale (P.O.S.)

TPS payroll system
Transaction Processing Systems (TPS)

Management information systems(MIS)
• Information system
at the management
level of an
organization that
serves the functions
of planning,
controlling, and
decision making by
providing routine
summary and
exception reports.

Management information systems(MIS)
Characteristics of Management information Systems
1. MIS support structured decisions at the operational and management
control levels. However, they are also useful for planning purposes, semi-
structured problems, of senior management staff.
2. MIS are generally reporting and control oriented. They are designed to
report on existing operations, sales , production costs…, and therefore to
help provide day-to-day control of operations.
3. MIS rely an existing corporate data-and data flows.
4. MIS have little analytical capability.
5. MIS generally aid in decision making using past and present data.
6. MIS are relatively inflexible.
7. MIS have an internal rather than an external orientation.

Differences between the TPS and the MIS
Transaction Processing
Systems (TPS)
– Support operation
– Management and
control
– Routine, normal
operations
– structured
Management Information
Systems (MIS)
– Provide decision-making
support for routine,
structured decisions
– Closely linked to and fed
by TPS
– Structure and semi-
structure

• An EIS is a type of Management Information
System intended to facilitate & support the
information and Decision – Making needs of senior
executives.
• Its main focus was on meeting the strategic
information needs of Top Management.
• The main goal of the EIS system was to provide an
immediate & an easy access to the critical
information in an organization to the top
executives.

• Most of EIS use Graphical User Interface &
graphics displays that can be customized according
to the needs of top executives.
• It is commonly considered as a specialized form of
Decision Support System (DSS).
• They offer strong reporting and drill – down
capabilities.
• EIS provides critical information from a wide
variety of internal and external sources in easy – to
– use displays to executives and managers.

• E.g. top executives may use touch screen terminals to
instantly view text and graphics displays that highlight
key areas of organizational and competitive
performance.
• EIS are IS that combine many of the features of MIS
& DSSs. It is also called EIS or Executive Support
System.
• In general, EIS are enterprise – wide DSS that help
top – level executives analyze, compare & highlight
trends in important variables so that they can monitor
performance & identify opportunities & problems.

Components of Information System:
 Morley and Parker (2010) define information system as a discipline
that is formed from elements of business and computer science and is
developing to form a separate area of scientific study.
 It has been stated that ―healthcare information systems and
healthcare processes are closely entwined with one another. Health
care processes require the use of data and information and they also
produce or create information‖ (Wager et al, 2009, p.65)

Components of Information System:

Information System Infrastructure & Architecture
Infrastructure:
• Physical facilities, hardware, software, databases
services, and management that support all computing
resources in an organization
• Five major components of infrastructure
– computer hardware
– general-purpose software
– networks and communication facilities
– database
– information management personnel
• Tells how specific computing resources are arranged,
operated, and managed

Architecture:
 a high-level map or plan of the information requirements
 a manner in which these requirements will be satisfied
 a guide for current IT operations
 a blueprint for future IT directions
 meets the organization’s strategic business needs
 must tie together the information requirements, the
infrastructure, and the applications
 similar to the conceptual planning of a house

New Architectures:
 client/server architecture
» several computers share resources and are able to
communicate with many other computers
» a client - a computer such as a PC attached to the network,
which is used to access shared network resources
» a server - a machine that is attached to the same network and
provides clients with these services
» purpose : optimize the use of computer resources

New Architectures:
• Enterprise wide Architectures
 access to data, applications, services, and real-time
flows of data in different LANs or databases
 use client/server architecture to create a cohesive,
flexible, and powerful computing environment
 provide total integration of departmental and
corporate IS resources
 increase the availability of information and thereby
maximize the value of an organization

New Architectures:
• Internet-based Architectures
 based on the concepts of client/server architecture
and enterprise wide computing
 the Internet is the basis for a network connection
from the outside world to the company, as well as
with the organization’s web site
 organization’s internal private Internet (intranet) -
useful for distributing information throughout the
organization

Role of Information systems in Business Today

Perspective on Information systems
 An information system is a set of interrelated components
that collect or retrieve, process, store, and distribute
information to support decision making and control in an
organization. Information systems can also be used to
analyse problems, visualize complex subjects, and create
new products.
 Information is data, or raw facts, shaped into useful form
for humans.

FUNCTIONS OF AN INFORMATION SYSTEM
An information system contains information about an organization and its surrounding
environment. Three basic activities—input, processing, and output—produce the
information organizations need. Feedback is output returned to appropriate people or
activities in the organization to evaluate and refine the input. Environmental actors,
such as customers, suppliers, competitors, stockholders, and regulatory agencies,
interact with the organization and its information systems.
It is important to distinguish information systems, which are designed to produce
information and solve organizational problems, from the computer technology and
software that is typically used to create and manage information systems.
Computer literacy focuses primarily on knowledge of information technology.
Information systems literacy, the understanding of information systems, includes a
behavioural and technical approach to understanding the broader organization,
management, and information technology dimension of systems and their power to
provide solutions. The field of management information systems (MIS) tries to achieve
this broader information systems literacy.

INFORMATION SYSTEMS ARE MORE THAN COMPUTERS
Using information systems effectively requires an understanding of the
organization, management, and information technology shaping the systems.
An information system creates value for the firm as an organizational and
management solution to challenges posed by the environment.
The dimensions of information systems include organizations, management,
and information technology.
The key elements of an organization are its people, structure, business
processes, politics, and culture. An organization coordinates work through a
structured hierarchy and formal standard operating procedures. Managerial,
professional, and technical employees form the upper levels of the
organization's hierarchy while lower levels consist of operational personnel.

Senior management makes long-range strategic decisions and ensures
the firm's financial performance. Middle management carries out the
plans of senior management and operational management monitors the
firm's daily activities. Knowledge workers such as engineers and
scientists design products and create and distribute new knowledge for
the organization. Data workers such as secretaries process the
organization's paperwork. Production or service workers produce the
products or services.
Experts are employed for the major business functions: the specialized
tasks performed by organizations, which consist of sales and marketing,
manufacturing and production, finance and accounting, and human
resources.
An organization coordinates work through its hierarchy and business
processes. These processes may be documented and formal, or
informal, unwritten work processes, such as how to handle a telephone
call.

Each organization has a unique culture, or fundamental set of
assumptions, values, and ways of doing things, that are accepted by
most of its members. Parts of an organization's culture can be found in
its information systems. For example, UPS's organizational focus on
customer service can be found in the package tracking system available
to customers. Information systems may also reflect the organizational
politics or conflicts that result from differing views and opinions in an
organization.
Information systems are also a key component in the ability of
management to make sense of the challenges facing a company and in
management's ability to create new products and services, manage the
company, and even re-create the organization from time to time.

Information technology is one of the many tools used by management to
cope with change. A firm's information technology (IT) infrastructure is a
technology platform or foundation on which a firm can build its
information systems. IT infrastructure consists of:
Computer hardware: The physical equipment and computing devices
used for input, storage, processing, output, and telecommunications.
Computer software: The detailed, preprogramed instructions that control
and coordinate the computer hardware components
Data management software: The software governing the organization of
data on physical storage media
Networking and telecommunications technology: Hardware and software
used to link the various pieces of hardware and transfer data from one
physical location to another; a computer network links two or more
computers together to share data, such as files, images, sounds, video, or
share resources, such as a printer.

The Internet is the world's largest and most widely used network. The
Internet is a global network that uses universal technology standards to
connect many private and public networks. The universal standards and
technologies used in the Internet are also used in systems and networks
within the firm. Intranets are internal corporate networks based on
Internet technology, and extranets are corporate networks extended to
authorized users outside of the firm.
The World Wide Web is a service provided by the Internet that uses
universally accepted standards for storing, retrieving, formatting, and
displaying information in a page format on the Internet. Web pages
contain text, graphics, animations, sound, and video and are linked to
other Web pages. The Web can serve as the foundation for new kinds
of information systems such as UPS's Web-based package tracking
system

From a business perspective, an information system is an important
instrument for creating value for the firm. Information systems enable
the firm to increase its revenue or decrease its costs by providing
information that helps managers make better decisions or that improves
the execution of business processes.
Every business has an information value chain in which raw data is
systematically acquired and then transformed through various stages
that add value to that information. The value of an information system
to a business, as well as the decision to invest in any new information
system, is, in large part, determined by the extent to which the system
will lead to better management decisions, more efficient business
processes, and higher firm profitability.

THE BUSINESS INFORMATION VALUE CHAIN
The business perspective calls attention to the organizational and
managerial nature of information systems. An information system
represents an organizational and management solution based on
information technology to a challenge or problem posed by the
environment.
Some firms achieve better results from their information systems than
others. Studies of returns from information technology investments
show that there is considerable variation in the returns firms receive.
Reasons for lower return on investment include failure to adopt the
right business model that suits the new technology or seeking to
preserve an old business model that is doomed by new technology.

Software and Hardware Platform
to Improve Business Performance
Communication:
Cell phones have become small business necessities for
owners and employees. These devices are lifelines for staying
in touch when on the road and responding to customer
inquiries in a timely manner. Smartphones raise the bar with
access to the Internet, email and business applications in a
small hand held device. Email, text messaging and social
networking are other advances in communication that keep
small businesses connected to their customer bases and
improve internal communication within the company.

Marketing
Technology has freed small businesses from the restrictions of
prints ads when it comes to reaching new and existing
customers. Internet marketing ranges from a simple
informational website, to advertising on search engines, to
online product sales. Email marketing is an effective and low
cost method to reach a large group of people with a newsletter,
coupons or business updates. Mobile marketing is a relatively
new frontier that reaches people through text messaging,
advertising on mobile applications and offering branded
applications that tie customers into what is happening with the
business in a fun and entertaining way.

Productivity
Small businesses need to wring every ounce of productivity out
of their operations and technology tools help employees get
tasks done more quickly. This may range from printing out
marketing materials to providing customer service through
email or online chat. The key is to keep employees focused
when using technology and to use it appropriately with the goal
of saving time. Sometimes, a phone call may be more efficient
and productive than an email. Provide employees with the
right hardware and updated software to keep them working at
peak proficiency.

Customer Service
Technology brings businesses closer to customers. Businesses
use email to answer questions, offer online chat to help
customers that are visiting the business website, and equip call
centres with the latest phone equipment that makes customer
service agents more efficient. Give customers a choice of ways
to contact the company. Technology is powerful, but keep the
people element in mind and don't skimp on training
employees in effective customer service techniques and the
proper use of the technology.

Telecommuting
Many small businesses now offer telecommuting and flex time
as benefits. Colleagues can stay in touch from different
locations, and when working different hours, by using email,
online collaboration tools and mobile computing devices.
When in the office, workers can share digital documents,
convey information through presentations and create training
videos to bring new employees up to speed.

Teleconferencing
Teleconferencing over the phone is one of the simplest
conferencing methods, but advancement in recent years have
brought web conferencing to the fore. Web conferencing can
bring together web cams, audio and collaborative online
meeting spaces to create an extremely interactive environment.
Participants can see each other, work together on documents
and recreate the in-person meeting experience no matter
where they are in the world. This is one way that small
businesses can extend their reach to include global customers
and workers.

Management Opportunities Challenges & Solutions

Business Applications: Roles of IT in E – Commerce

Business Applications: Roles of IT in E – Commerce
Why use E – Commerce?

Business Applications: M - Commerce
M-Commerce also called as Mobile Commerce involves the
online transactions through the wireless handheld devices
such as mobile phone, laptop, palmtop, tablet, or any other
personal digital assistant.
It does not require the user to sit at the computer that
is plugged in and perform the commercial transactions.
Through M-Commerce, people can perform several
functions such as pay bills, buy and sell goods and services,
access emails, book movie tickets, make railway reservations,
order books, read and watch the news, etc.

Mobile Commerce from the Customers’ point of view

Difference between E commerce & E business

Services & Applications

Advantages
1) Through M-commerce, the companies can be in regular touch with the
users through the Push Notifications. Any discount, scheme, pay back
benefits can be communicated to the customers through a message to
their mobile phones. E.g. Shoppers Stop always sends a message to its
members about the Season Sale.
2) M-Commerce enables local business to grow by tracking the location of
the potential customer and sharing the information on their mobile
phones. E.g. The educational institutes track down the local students and
give information about the courses offered by them.
3) With the help of M-commerce, the users can pay their mobile bills,
electricity bills, without standing in the long queues. E.g. Mobile
applications such as Paytm, Freerecharge are the online payment
platforms

Advantages
4) M-commerce enables the customers to book movie tickets, railway
tickets, air tickets, event tickets thereby saving a lot of time. E.g. Book
My Show, IRCTC mobile applications offers the online reservation
services.
5) Through M-Commerce, customers can easily access the complete
information about the product or service provider before availing its
services. E.g. Any new restaurant is opened in the city; one can access
about it in detail through mobile.
6) M-Commerce helps the marketer to have a wider reach of potential
customers than he can have by visiting all personally. E.g. Text can be
sent to the mobile phones of many potential customers residing in
different parts of the country Make My trip is the best example.

Disadvantages
1) The Screen of mobile phones is generally small as compared to the
computer screen and, therefore, the display of cellular gadgets may not
influence the user to make the purchase. E.g. Through Flipkart Mobile
Application a customer can see several products, but the user may not
decide on the purchase because of the smaller image of the product and
rather rely on E-commerce i.e. computers for the better view to make a
purchase decision.
2) M-Commerce software is costly as compared to the E-commerce,
many retailers may not go for it, and hence the mobile users may have
fewer options.

Disadvantages
3) Poor connectivity also hampers the M-commerce to flourish.
Sometimes the data is too slow to access the websites through mobile
applications.
4) M-commerce, being the latest technology is struggling with its
applications in terms of its graphics and the content that results in
more reliance on the E-commerce applications.
5) Information shared through the wireless medium have higher
chances of getting hacked. Therefore, people use more of E-
commerce applications to perform the money transactions.

Information System & Business applications

Information System & Business applications

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