Information System – Characteristics, Need and Resources

A structured framework known as an Information System (IS) gathers, organizes, stores, and disseminates data to facilitate coordination, analysis, control, and decision-making within a company. It combines processes, people, and technology to efficiently manage data.

Data

Unit of information in raw or unorganized forms (such as alphabets, numbers, or symbols) that refers to, or represent, conditions, ideas, or objects is Data.

Raw facts are called data that represents object, idea, place and other things.
(Organization hold data for the purpose of applying it, or there would be no reason to hold it).
E.G. no of students in BBA 6th semester is Data. The attendance whereas is information.

Data Life Cycle

It goes through four stages:

• Data origination: Generated from variety of source like day to day activities of transaction level of management.
  Includes Employee hiring, Ordering supplies, selling, payments.
• Processing and immediate Use: Processed to get information to meet the immediate needs of the decision maker.
  Processing technique like Statistical analysis, Classification, Categorization.
  Use of Information technologies for support.
• Ready access storage: Data are stored on Secondary storage like disc or magnetic tape. Allowed to use data when needed. Sometimes a type of data can be used to determine another type of data. E.g. sales data determine sales commission
• Data Destruction: Data that are no longer needed are identified routinely and removed from storage. Retention of data for indefinite period is costly and unnecessary for most of the enterprise.

Data Processing

Operations performed on a given set of data to extract the required information in an appropriate form such as diagrams, reports, or tables is Data Processing.
Data processing is generally the collection and manipulation of items of data to produce meaningful information.

Data processing may involve various processes, including:

• Validation – Ensuring that supplied data is correct and relevant.
• Sorting – Arranging items in some sequence and/or in different sets.
• Summarization – Reducing detail data to its main points.
• Aggregation – Combining multiple pieces of data.
• Analysis – The collection, organization, analysis, interpretation and presentation of data.
• Reporting – List detail or summary data or computed information.
• Classification – Separates data into various categories.

Data Processing Methods

Manual Data Processing

Definition

Data is processed entirely by humans without the use of machines or computers.
Examples: Ledger bookkeeping, handwritten reports, tallying votes manually.

Advantages

• Low cost for small tasks.
• No dependency on machines or electricity.

Disadvantages:

• Time-consuming and inefficient for large datasets.
• Prone to human error.

Mechanical Data Processing

Definition

Data is processed using mechanical devices, such as calculators or typewriters, without electronic systems.
Examples: Using a mechanical calculator for mathematical operations or typewriters for report creation.

Advantages

• Faster and more accurate than manual processing.
• Reliable for simple tasks.

Disadvantages:

• Limited functionality compared to electronic systems.
• Slower than modern computing methods.

Electronic Data Processing (EDP)

Definition

Data is processed using computers and electronic devices. It is the most advanced and widely used method today.
Examples: Database management, online transactions, data analysis using software.

Advantages

• Fast and highly efficient.
• Handles large and complex datasets.
• Real-time processing capabilities.

Disadvantages:

• Expensive setup and maintenance.
• Requires technical expertise.

Types of Data Processing

Batch Processing

• Known as serial, sequential, offline or stacked processing.
• Different jobs of different users are stacked or queued in their receiving order and when batch of jobs is completed, they are given for processing.
• Lower processing cost per transaction.
• Credit Card bills are transacted at the end of month, electricity and sales bills, Stock bills

Online Processing

• Direct or random access processing. A job is processed at the same time it is received.
• Features rapid and random input of transaction and immediate and direct access to record content when needed.
• E.G. Bar code reading, E- commerce website

Real Time Processing

• This processing method is used when it is essential that the input request is dealt with quickly enough so as to be able to control an output properly. The is called the ‘latency’.
• Designed to allow to use the data as they become available.
• Receiving and processing of transaction is performed simultaneously and no delay in processing of job.
• Traffic lights, Heart rate monitoring, Aircraft control

Multi Processing and Multi Programming

• Multiprocessing is the use of two or more central processing units (CPUs) within a single computer system.
• The main objective is to increase the throughout by distributing the processing load.
• Speeds up the processing of the job, improves the efficiency of peripherals, and if a CPU break down others can take the JOB.
• When two or more than two task are concurrently processed by CPU it is multi programming.
• CPU is not busy with only one program and doesn’t remain idle.

Time Sharing

• Allows to use same CPU resources simultaneously by dividing CPU time to all the user on the schedule basis.
• Multiple users access same CPU through terminals.
• Used by mainframes and mini computers.
• E.G. Bank’s ATM

Information

• Collection of raw data that has been verified to be accurate and timely, is specific and organized for a purpose is known as information.
• In order to be of any commercial value, data must become information.
• The primary purpose of information is to facilitate decision making, coordination and control and planning.
• We can capture data in information, and then move it about so that other people can access it at different times.

Information System

• Information system is a system that accepts interrelated data process them logically and generate some meaningful information.
• Modern IS uses computer based system like Input device, Processing device, networking system, database application and output devices.
• An information system is a set of electronic component that collect analyze and disseminate data and information to meet an objective.

Characteristics of Information System (IS)

• Good information is that which is used and which creates values. Experience and research shows that good information has numerous qualities.
• Availability/ Accessibility: Information should be easy to obtain and access. Eg. Telephone directory, Internet, Centralized computer system.
• Accuracy: Information should be accurate enough for the use. 100% accurate result is usually unrealistic and expensive to produce on time.
• Reliability/ Objectivity: Reliability deals with the truth of information or the objectivity with which it is presented. One can only use information that is reliable.
• Relevance/ Appropriateness: Information should be relevant to the purpose for which it is required. It must be suitable. What is relevant to one manager may not be relevant to another.
• Completeness: Information should contain all the information required by the user, otherwise it may not be useful as the basis for making decision.
• Level of details/ Conciseness: Information should be in short enough form to allow for its examination and use. There should be no extraneous information.
• Presentation: The presentation of information is important to the user. The presentation should be visually attractive and convey the correct amount of detail.
• Timing: Information should be on time for the purpose of that it is required. Information received too late will be irrelevant.
• Value of information: The relatively important information for decision making can increase or decrease value of an organization. The information should be available on time, within cost and be legally obtained.
• Cost of information: Information which is available within the cost levels may vary depending upon the situation. If the cost are too high to obtain information, an organization may decide to take slightly less comprehensive information elsewhere

Need of Information System (IS) in Business

Modern businesses need an information system (IS) to manage, organize, and analyze data in order to improve productivity and decision-making. Businesses require an IS for the main reasons listed below:

Better Decision-Making

IS helps managers make well-informed decisions by offering real-time data, analytics, and reports.
Analytics that are both predictive and prescriptive can identify patterns and recommend the best course of action.

Increased Productivity and Efficiency

Reduces errors and manual labor by automating repetitive procedures.
simplifies processes, allowing for quicker task completion.

Improved Interaction and Cooperation

Enables smooth communication between teams, departments, and locations.
Interdepartmental cooperation is enhanced by tools such as Enterprise Resource Planning (ERP) platforms and Customer Relationship Management (CRM) systems.

Accessibility and Data Management

Consistency and ease of retrieval are guaranteed by centralized data storage.
helps companies better manage, organize, and safeguard their data.

Cutting Expenses

Lowers labor expenses by automating repetitious operations.
aids in the removal of inefficiencies and the optimization of resource allocation.

Relationship Management with Customers

CRM systems are among the tools that improve customer involvement and service.
keeps track of client history, preferences, and feedback to provide individualized services.

An edge over competitors

Gives information about consumer behavior, market trends, and rivalry.
helps companies stay ahead of the curve by fostering innovation and rapid change adaptation.

Fundamental Resources of Information System (IS)

The main components are people, hardware, software, data and network.

Human Resource (People)

• Primary purpose of IS is to provide valuable information to manager and users within and outside company.
• People are required for the operation of all information system.
• Users sometimes called as end user include employees, customer, vendors and others who interact with information system.
• External users include customers who track their orders on the company’s web site, suppliers who use a customer system to plan their manufacturing schedule, employee who login to company intranet from home to check mails.
• Successful IS requires the effort of skilled professionals, such as system analyst, programmers and IT managers

Hardware

• Hardware refers to the physical layer of the information system.
• Hardware includes computers, networks, communications equipment, scanner, digital capture devices and other technology- based infrastructure.

Software

• It includes all the set of information processing instructions.
• Software consists of system software with utilities and application software.
• System software controls the computer and include the operating system, device drivers and utilities that handle task such as data conversion, virus protection, backup.
• Either the hardware manufacturer provides the system software or the company purchase it fro the vendor.
• Application software consists of the program that supports users and enables companies to carry out business functions

Data

• Data is a valuable organization resources.
• The data resources must be managed effectively to benefit all end users in an organization.
• An information system transforms data into meaningful information.

Network resources

• System that interconnects multiple user and system components for sharing the resources is called networking.
• Telecommunication network consists of computers, communication, processors and other communication software.
• Network resources include communication media like Twisted pair cable, Fiber optic cable, Microwave, cellular, satellite and people , Hardware, software, people, data.

Potential Risk of Information System (IS)

• Risk is the potential harm that may arise from some current process or from some future events.
• Risk management is the process of understanding and responding to factor that may lead to failure in the confidentiality, integrity and availability of Information system.
• A threat, in the context of computer security, refers to anything that has the potential to cause serious harm to a computer system. A threat is something that may or may not happen, but has the potential to cause serious damage. Threats can lead to attacks on computer systems, networks and more.

List of Threats

• Accidental disclosure: The unauthorized or by chance release of classified, personal or sensitive information which cause serious disaster in an organization.
• Acts of nature: All type of natural occurrence that may damage or affect the system/ application.
• Alternation of software: An intentional modification, insertion, deletion of operating system or application system programs weather by an authorized user or not.
• Bandwidth usage: The accidental or intentional use of communication bandwidth for other then intended purpose by used application, staff, outsiders.
• Electrical Interference: Interference or fluctuation may occur as the result of a commercial power failure. This may cause denial of service to authorized user or a modification of data.
• Intentional Alteration of data: An intentional modification, insertion, deletion of data weather by an authorized user or not.
• System configuration error: Error in initial installment and upgrade of hardware, software, network and system. Occurs due to illegal version, piracy and corruption.
• Telecommunication Interruption: Failure in telecommunication devices and link the to cause interruption of data transfer.

Types of Information System (TPS,MIS,DSS,ESS)

• Every organization has different level, group of people having different interest and specialist who demand information for their work.
• Typical users are clerk as assistant, an officer, an executive or managers.
• Each of them has specific task and role to play in the management of the business.
• Basically information system is categorized into two different types: Operational support system and management support system which is further subdivided into TPS, MIS. DSS, EIS, ES.

Transaction Processing System (TPS)

• The primary purpose of TPS is to record, process, validate, and store transactions that occurs in various functional areas of business.
• When a department orders office supplies from the purchasing department internal transaction occurs and when a customer order for a product external transaction occurs.
• TPS is the computerized system that that performs and records daily routine transaction necessary to conduct of business.
• These system includes order entry, inventory control, payrolls, accounts payable, account’s revival, general ledger.
• TPS plays vital role in supporting the operation of an organization.
• TPS updates organizational files and databases and produce various information products for internal and external use.
• With TPS every single transaction is overseen and monitored so that the system will recognize if entered data is authentic.
• On organized TPS makes monitoring each and every transaction easier.
• Transaction made will be accurate, secure, organized, recorded and authorized.
• Disaster recovery system for data safety
• With reliable TPS company will success in satisfying its customer and gain more satisfied customer..
• TPS examples range from ATM’s, airlines booking system, online ticketing and many more transaction that include similar technology.
• Any TPS goes through a five stage cycle:
  DATA entry activities, Transaction processing activities, File and data processing, Document and report generation and finally Inquiry processing activities

Management Information System (MIS)

• MIS are designed for providing information to important personnel in the organization.
• Use already processed transaction data and generate information reports after processing data. Example are personnel information system, marketing information system, sales information system.
• The output of MIS takes form of summary report and exception reports. A bank manger gets summary report listing the total amount of deposits and withdraw made.
• Its main purpose is to draw attention of the middle management to any significant difference between actual and performance and excepted performance.
• MIS is an organized collection of people, procedure, software, databases and devices used to provide routine information to the managers and decision makers.
• Management use information may be done best in the context of the management process, which is a cycle consisting following stages:
  Planning, Organizing, Staffing, Coordinating and Controlling.

Decision Support System (DSS)

• Interactive, well integrated systems that provide managers with data, tools and models to facilitate semi structured decisions or tactical decisions.
• It provides the ability to what if analysis.
• DSS are ideally suited for problems like location selection, identifying new products to be marketed, scheduling personnel and analyzing the effect that price increases for resources have on profits.
• A DSS allows manager managers to perform goal seeking which specifies what action a manager should take in order to accomplish a certain goal.
• Individual or Group of individuals (GDSS) can also use them.
• DSS provides Right now analysis than long term structured analysis of MIS.

Executive Support System / Information System (ESS)

• Strategic level of organization used by senior managers to make decisions.
• ESS are forms of data retrieval systems that provides selected and summarized information for senior executives, engaged in long- range planning, crisis management and other strategic decisions.
• It is user friendly interactive system having excellent menus and graphic capabilities.
• ESS works by exception reporting and drilling down to investigate the cause.
• E.G. a director of an organization may be alerted that a particular department is well over budget. The manager would then drill down the data by pursuing lower and lower levels of data.
• ESS includes Sales trend forecasting, budget forecasting and personnel planning.
• ESS incorporates data from external data source such as new tax laws or competitors as well as summarized information from internal MIS and DSS.
• ESS addresses non- routine decisions requiring judgements, evaluation and insight because there is no agreed- on procedure for arriving at a solution.
• ESS provides output as desired by the end user in the form like customizable graphical user interface, exception reports, trend analysis etc.

Difference DSS MIS AND EIS

Frequently Asked Questions (FAQ)

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