Data is unprocessed raw information.

Data is normally stored in a database

or a file. Information is the result of
processing, manipulating and
organizing data in a way that adds to
the knowledge of the person receiving
it.
A system is a group of interrelated
components, with clearly defined
boundary, working together towards a
common goal by accepting inputs and
producing outputs in an organized
transformation process.
Input involves capturing and
assembling elements that enter the
system to be processed. For example
raw materials, energy, data, and labour
must be secured and organized for
processing.
Processing involves transformation
processes that convert input into
output. Examples are manufacturing
process, mathematical calculation etc.
Output involves transferring elements
that have been produced by a
transformation process to their ultimate
destination. For example finished
products, management information
transferred to the end users.
A manufacturing system accepts raw
materials as input produces finished
goods as output. An information
system is a system that accepts
resources (data) as input and processes
them into products (information) as
output. A business organisation is also
a system where economic resources
are transformed various business
processes into goods and services.
 Our basic IS model shows that an
information system consists of five
major resources:
2. People

3. Hardware

4. Software

5. Data and

6. Networks.
End users (clients) are people who use an
information system or the information it
produces. They can be customers, sales
person, engineers etc.
IS specialists are people who develop and
operate information systems. They include
systems analysts, software developers,
system operators and other managerial,
technical and clerical personnel.
Hardware resources:
They include all physical devices and
materials used in information
processing. It includes not only
machines such as computers and their
peripherals but also data media such
as tangible objects on which data is
recorded, that is right from sheets of
paper to magnetic or optical disks etc.
Software resources:
The concept of software resources
includes all sets of information
processing instructions. It includes not
only the sets of operation instructions
called programs, which direct and
control computer hardware, but also
the sets of information processing
instructions called procedures that
people need.
Data can take many forms, like
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 photographic and video images,
and audio data, the human voice and
other sounds are also important forms
The data resources of information
systems are typically organized, stored
and accessed by variety of data
resource management technologies
into:
Databases that hold processed and
organized data
 Knowledge bases that hold knowledge
in a variety of forms such as facts, rules
and case examples about successful
business practices
Network Resources:
Telecommunications technologies and
networks like internet, intranets and
extranets are essential for the success
of electronic business and commerce.
Telecommunications networks consist
of computers, communication
processors and other devices
interconnected by communications
media and controlled by
communications software.
Input of Data Resources:
Input typically takes the form of data entry
activities such as recording and editing. Once
entered, data may be transferred into a
machine-readable medium such a magnetic
disk until needed for processing.
Processing of Data into Information:
Data are subjected to processing activities
such as calculating, comparing, sorting,
classifying and summarizing. These activities
organise, analyse, and manipulate data thus
converting them into information for end
users.
Output of Information products:
Information in various forms is
transmitted to end users and made
available to them in the output activity. The
goal of information systems is the
production of appropriate information
products for end users. Common
information products include messages,
reports, forms, and graphic images, which
may be provided by video displays, audio
responses, paper products and multimedia.
Storage of Data Resources:
Storage is a basic system component of
information systems. Storage is the
information system activity in which data
and information are retained in an
organised manner for later use.
Control of system performance:
An important information system activity
is the control of system performance. An
information system should produce
feedback about its input, processing, and
output and storage activities. This
feedback must be monitored and
evaluated to determine if the system is
meeting established performance
standards. Then appropriate system
activities must be adjusted so that proper
information products are produced for end
Transaction Processing System
Management Information System
Decision Support Systems
 A Transaction Processing System (TPS)
is a type of information system that
collects, stores, modifies and retrieves
the data transactions of an enterprise.
A transaction is any event that passes
the ACID test in which data is
generated or modified before storage
in an information system
Rapid Processing- TPS systems are designed to process
transactions virtually instantly to ensure that data is
available to the processes that require it.
Reliability- designed to incorporate comprehensive
safeguards and disaster recovery systems. These
measures keep the failure rate well within tolerance
levels.
Standardization- Transactions must be processed in the
same way each time to maximise efficiency. To ensure
this, TPS interfaces are designed to acquire identical data
for each transaction, regardless of the customer.
Controlled Access- TPS must be restricted to only
those employees who require their use. Restricted access
to the system ensures that employees who lack the skills
and ability to control it cannot influence the transaction
process
Batch Processing
Real Time Processing
Batch processing is a resource-saving
transaction type that stores data for
processing at pre-defined times. Batch
processing is useful for enterprises that
need to process large amounts of data
using limited resources.
 Credit card transactions, for which the
transactions are processed monthly
rather than in real time. Credit card
transactions need only be processed
once a month in order to produce a
statement for the customer, so batch
processing saves IT resources from
having to process each transaction
individually.
In many circumstances the primary
factor is speed. For example, when a
bank customer withdraws a sum of
money from his or her account it is vital
that the transaction be processed and
the account balance updated as soon
as possible, allowing both the bank and
customer to keep track of funds.
 It is basically concerned with
processing data into information, which
is then communicated to the various
Departments in an organization for
appropriate decision-making.
 
Data Information Communication
Decisions
 
MIS plays a vital role in ensuring that
an appropriate data is collected from
various sources, processed and sent
to the needy destinations, fulfills the
information needs of an individual, a
group and the management
functionaries at all levels. MIS
satisfy’s these needs through a
variety of systems such as query,
analysis, modeling and decision
support systems. The figure given
below explains the working of MIS
 A business transaction can be any
business event like a payment or receipt
of purchase etc. When a transaction takes
place it is first processed through TPS
with the help of operational databases.
An operational database is a database
containing up-to-date modifiable data.
From the TPS the transactions move to
MIS, which draws inputs from internal and
external sources and then stores the
updated transaction (output) in
application databases to be used either
for internal distribution through intranet
or for other systems like the Decision
Support systems, Executive support
Drill down Reports
Scheduled reports
Key-indicator report
Demand report
Exception report
Drill down Reports:
These are reports that move from summary
information to the detailed data that
created it. For example, adding totals from
all the orders for a year creates gross sales
for the year. Drilling down would identify the
types of products that were most popular
Scheduled reports:
Produced periodically, or on a schedule
(daily, weekly, monthly)
Key-indicator report:
It summarizes the previous day’s critical
activities. Typically available at the
beginning of each day
Demand report:
Gives certain information at a manager’s
request
Exception report:
To provide managerial end users with
information products that support much of
their day to day decision making needs.
To provide variety of reports to the
management
To retrieve information about internal
operations from databases that has been
updated by TPS
To obtain data about the business
environment from external sources so as
to process them to serve the managers in
A decision support system (DSS) is a
computer program application that analyzes
business data and presents it so that users
can make business decisions more easily.
Typical information that a decision support
application might gather and present would
be:
Comparative sales figures between one
week and the next
Projected revenue figures based on new
product sales assumptions
The consequences of different decision
alternatives, given past experience in a
context that is described
A decision support system may present
Also referred to as EIS that is Executive
Information System. Executive Support
System (ESS) is a reporting tool
(software) that allows you to turn your
organization's data into useful
summarized reports. These reports are
generally used by executive level
managers for quick access to reports
coming from all company levels and
departments such as billing, cost
accounting, staffing, scheduling, and
more.
 In addition to providing quick access
to organized data from departments,
some Executive Support System
tools also provide analysis tools that
predicts’ a series of performance
outcomes over time using the input
data. This type of ESS is useful to
executives as it provides possible
outcomes and quick reference to
statistics needed for decision-
making.
Data Information
Knowledge Action
It facilitates everyday information
processing tasks in offices and business
organizations. It provides effective
ways to process personal and
organizational business data, to
perform calculations and to create
documents.
Word processing
A spreadsheet
A presentation tool
A database
A schedule
Considering that organizations
require increased communication,
today, office automation is no longer
limited to simply capturing
handwritten notes. In particular, it
also includes the following activities:
Exchange of information
Management of administrative
documents
Handling of numerical data
Meeting planning and management
of work schedules
INFORMATION SYSTEM LEVELS:
 
Top Mgmt Middle Mgmt
Lower Mgmt
Operational Mgmt
 At the operational level, known as
functional level, routine production or
clerical operations are performed.
Operational systems provide little
feedback directly to the employees. For
e.g., the materials clerk receives a
material requisition, fills the requisition
and files a report of action taken. The
records of transactions occurring at the
operational level constitute data that,
when collected, organized and processed
becomes the basis for higher level
 Lower management performs
supervisory functions. For e.g., the
supervisor cross checks the material
requisition form submitted by the
material clerk at the operational level
and takes corrective actions.
 Middle management functions are
known to be tactical in nature. This
level is responsible for planning,
allocation and control of resources
necessary to accomplish the
organizational goals. Authority is
delegated to the supervisory level
and performance is measured. Top
management functions are strategic
in nature. These include
establishment of the goals, long
range planning, product
INFORMATION GENERATORS:
Information systems are developed
in a company to meet not only its
internal reporting needs but also the
external reporting needs that arise
from its general business
environment. The internal
information needs are represented
by the nine functional business
systems. Externally generated needs
are represented by nine agencies.
BUSINESS INFORMATION SYSTEM:
Business Information System supports
the functional areas of business
(marketing, production/operations,
accounting, finance, and human
resource management) through a wide
variety of computer-based operational
and management information systems.
Other wise called as Cross Functional
Information systems as they are
integrated combinations of business
information systems, thus sharing
information resources across the
functional units of an organization.
Let’s now briefly study the application
of MIS across the functional units of an
organisation.
It is an Information System that
supports planning, control, and
transaction processing required for the
accomplishment of marketing
activities, such as sales management,
advertising and promotion
A dynamic collaborative process of
creating, purchasing, and improving
products and services that builds close
relationships between business and its
customers, using variety of services on
the Internet, intranets and extranets.
The marketing materials can be put on
customers’ or prospectus’ computer
screens using either Push or Pull
technologies.
Pull Marketing
It relies on the customer to access the
services of the internet using the Web
browser. For e.g., A customer would
use the browser to find and read or
download multimedia marketing
material from a company’s web site.
Push Marketing
It relies primarily on software called
Web broadcasters or net broadcasters.
For e.g., Softwares such as PointCast,
Backweb, and Castanet automatically
transmits a variety of information from
the web or other sources to the
Step-1 Segment and identify potential customers
(Initial market research done by reaching
relevant groups-WWW servers, newsgroups)

Step-2 Create promotional, advertising, and educational

material
(WWW page with multimedia effects-audio and
video)
Step-3 Put the material on the customer’s computer
screens
Push-based marketing-direct marketing using
Web broadcasters, newsgroups and E-mail
Pull-based marketing- indirect marketing(static)-
www pages
Step-4 Interacting with customers
Dialogue with the customer, interactive
discussion among customer about various
features offering endorsements, testimonials,
questions/answers.

Step-5 Learning from customer

Incorporating feedback from customers in
advertising, marketing strategy identifying new
markets, using experience in new product
development

Step-6 Online customer service

Fast, friendly solutions to customer problems
SFA were originally meant to improve sales
force productivity and encourage salespeople to
document and communicate their field
activities. But today they are becoming
increasingly focused on cultivating customer
relationships and improving customer
satisfaction. Sales Force Automation Systems
(SFA), typically a part of a company’s customer
relationship management system, is a system
that automatically records all the stages in a
sales process. SFA includes a contact
management system which tracks all contact
that has been made with a given customer, the
purpose of the contact, and any follow up that
might be required. This ensures that sales
efforts are not duplicated, reducing the risk of
irritating customers.
 SFA also includes a sales lead
tracking system, which lists potential
customers through paid phone lists,
or customers of related products.
Other elements of an SFA system can
include sales forecasting, order
management and product
knowledge. More developed SFA
systems have features where
customers can actually model the
product to meet their required needs
through online product building
systems
Marketing Managers try to maximize sales at
the lowest possible costs for advertising and
promotion. Marketing information systems use
market research information and promotion
models to help:
Select media and promotional methods
Allocate financial resources
Control and evaluate results of various
advertising and promotion campaigns
Targeted marketing has become an important
tool in developing advertising and promotion
strategies for a company’s electronic WEB
sites.
 Sales manager must plan, monitor, and
support the performance of the
salespeople in their organizations. So in
most firms, computer based systems
produce sales analysis reports that
analyze sales by product, product line,
customer, type of customer, salesperson,
and sales territory. Such reports help
marketing managers monitor sales
performance of products and salespeople
and help them develop sales support
programs to improve sales results.
Market Research information systems
provide marketing intelligence to help
managers make better marketing forecasts
and develop more effective marketing
strategies. Marketing information system
help researchers to collect, analyze, and
maintain an enormous amount of
information on a wide variety of market
variables that are subject to continual
change. This includes information on
customers, prospects, consumers, and
competitors. Data can be gathered from
many sources, including a company’s
databases, data marts and data warehouse,
www sites. Then a variety of statistical
software tools can help managers analyze
CRM is a combination of policies,
processes, and strategies implemented
by an organization to unify its customer
interactions and provide a means to
track customer information. It involves
the use of technology in attracting new
and profitable customers, while forming
tighter bonds with existing ones.
Front office operations — Direct interaction with
customers, e.g. face to face meetings, phone calls, e-
mail, online services etc.
 
Back office operations — Operations that ultimately
affect the activities of the front office (e.g., billing,
maintenance, planning, marketing, advertising,
finance, manufacturing, etc)
 
Business relationships — Interaction with other
companies and partners, such as suppliers/vendors
and retail outlets/distributors, industry networks
(lobbying groups, trade associations) This external
network supports front and back office activities.
 
Analysis — Key CRM data can be analyzed in order to
plan target-marketing campaigns, conceive business
strategies, and judge the success of CRM activities
(e.g., market share, number and types of customers,
Product Managers need information to
plan and control the performance of
specific products, product lines, and
brands. Computer-based models may
be used to evaluate the performances
of current products and the prospects
for success of proposed products.
They support production/operations
function of an organization. Information
systems used for operations
management and transaction
processing, support firms in planning,
monitoring, & controlling inventories,
purchases & the flow of goods and
services.
To simplify production processes,
product designs and factory organization
as a vital foundation to automation and
integration
To automate production processes and
the business functions that support them
with computers, machines and (possibly)
robots
To integrate all production and support
processes using computer networks,
cross-functional business software and
other information technologies
 Combines material requirement
planning with other manufacturing-
related activities to plan the
manufacturing process such as:
Shop activity control and purchasing
Source of demand
Customer order entry and forecasting
Support functions such as financial
management, sales analysis, and data
collection
Engineering System:
Engineering information systems aid
engineers in designing new products
and simulate operations with the help
of Computer aided designs, Computer
aided engineering etc
Human Resource Information Systems support,
Planning to meet the personnel needs of the
business
Development of employees to their full potential
Control of personal policies and programs
Recruitment
Job placement
Performance appraisals
Employee benefits analysis
Training and development
Health, safety, & security
HRM and the Internet
Allows companies to process most
common HRM applications over their
intranets
Allows companies to provide around-
the-clock services to their employees
Allows companies to disseminate
valuable information faster
Allows employees to perform HRM
tasks online
Accounting Information System:
An accounting information system (AIS) is
the system of records a business keeps to
maintain its accounting system. This
includes the purchase, sales, and other
financial processes of the business. The
purpose of AIS is to accumulate data and
provide decision makers (investors,
creditors, and managers) with information.
While this was previously a paper-based
process, most businesses now use
accounting software. In an electronic
financial accounting system, the steps in
the accounting cycle are dependent upon
the system itself. For example, some
systems allow direct journal posting to the
 Order processing:
Captures & processes customer orders
and produces data needed for sales
analysis and inventory control
Inventory Control:
Helps provide high-quality service while
minimizing investment in inventory &
inventory carrying costs
Accounts Receivable:
Keeps records of amounts owed by
customers from data generated by
customer purchases and payments
 Accounts Payable:
Keeps track of data concerning purchases
from, and payments to suppliers
Payroll:
Receives and maintains data from
employee time cards and other work
records
General Ledger:
Consolidates data received from accounts
receivable, accounts payable, payroll, &
other accounting information systems
It is a system that accumulates and analyzes
financial data in order to make good financial
management decisions in running the
business. The basic objective of the financial
information system is to meet the firm's
financial obligations as they come due, using
the minimal amount of financial resources
consistent with an established margin of
safety. Outputs generated by the system
include accounting reports, operating and
capital budgets, working capital reports, cash
flow forecast, and various What-If Analysis
reports. The evaluation of financial data may
be performed through ratio analysis, trend
evaluation, and financial planning modeling.
 It involves the following steps,
Estimate the monthly cash outflows
both operating and capital expenditures
 
Estimate the monthly cash inflows
 
Compare inflows and outflows. If
surplus funds exist, then find ways to
use them productively. If there is
shortage, then find ways to reduce
outflows and increase inflows. 
Identify and compare outside funding
sources
 
Establish a system for tracking flow of
funds and measuring the return rate on
The system approach to problem solving uses a
systems orientation to define problems and
opportunities and develop solutions. Studying a
problem and formulating a solution involve the
following interrelated activities.
Recognize and define a problem or opportunity
using systems thinking.
Develop and evaluate alternative system
solutions
Select the system solution that best meets your
requirements
Design the selected system solution to meet your
requirements.
Implement and evaluate the success of the
designed system.
Defining Problems and
Opportunities: Problems can be
defined as basic condition that is
causing undesirable results.
Opportunity is a basic condition that
presents the potential for desirable
results. Symptoms are merely signals
of an underlying cause or problem.
 Example:

Symptom Sales of a company’s products are

declining.

Problem Sales person are losing orders

they cannot get current
information on product prices and
availability.

Opportun We could increase sales

ity significantly if salespersons could
receive instant responses to
requests for prices quotations and
product availability.
Developing Alternative Solutions:
There are usually several different ways
to solve any problem or pursue any
opportunity. Where do alternative
solutions come from?
Experience is a good source
Past history
Advice from others
Recommendations of consultants
Suggestions of expert
Decision support software can be used
to development alternative solution
Evaluating Alternative Solutions:
These alternative solutions must be
evaluated so that the best solution
can be identified. Then evaluation
criteria need to be developed in
order to determine how well each
alternative solution meets these
criteria. Criteria may be ranked or
weighted, based on their importance
in meeting our requirements.
 Example:
Criteria Relative Alternative Relative Alternative Relative
Weights A Score B Score

Sales Data Entry by Sales Sales Data Entry by

Reps Using Laptop Linked to Optical Scanning of Forms
Company Intranet Web Site Mailed to the Data Center
by Sales Reps

• Start-up costs 20 $1 million 12 $100,000 18

• Operating costs
30 $100,000/year 25 $200,000/year 20
• Ease of use
• Accuracy 20 Good 16 Fair 12
• Reliability 20 Excellent 20 Fair 6
Overall score 10 Excellent 10 Excellent 10
100 83 66

Advantages Low operating costs, easy to use, accurate, and Low start-up cost and reliable
reliable

Disadvantages High start-up cost High operating costs, difficult to use, and not very
accurate
Selecting the Best Solution:
Once all alternative solutions have been
evaluated, you can begin the process of
selecting the best solution. Alternative
solutions can be compared to each
other because they have been
evaluated using the same criteria.
Therefore in the previous example,
Alternative with a low accuracy
evaluation should be rejected.
Therefore, alternative B for sales data
entry is rejected, and alternative A,
the use of laptop computers by sales
representatives, is selected.
Designing and Implementing a Solution:
Once a solution has been selected, it must
be designed and implemented. An
implementation plan specifies the
resources, activities, and timing needed for
proper implementation. Using the above
example, the following items might be
included in the design specifications and
implementation plan for a computer-based
sales support system:
Types and sources of computer hardware,
and software to be acquired for the sales
representatives
Operating procedures for the new sales
support system
Training of sales reps and other personnel
Conversion procedures and timetables for
final implementation
Using the systems approach to develop
information system solution involves a
multistep process called the
Information systems development cycle
(ISDC) also known as the System
Development Life Cycle (SDLC).
1. System Investigation- Feasibility
Studies:
A feasibility study is a preliminary
study which investigates the
information needs of prospective users
and determines the resource
requirements, costs, benefits and
feasibility of a proposed project.
These are the questions that have to be
answered in the systems investigation
stage.
Do we have a business problem (or
opportunity)?
What is causing the problem?
Would a new or improved information
system help solve the problem?
What would be a feasible information
system solution to our problem?
The feasibility study of proposed
system can be evaluated in terms of
Organizational feasibility: It investigates
how well the proposed information system
supports the strategic objectives of the
organization.
Economical feasibility: It is concerned with
whether expected cost savings, increased
revenue, increased profits, reduction in
required investment, and other types of
benefits will exceed the cost of developing and
operating a proposed system.
Technical feasibility: It is concerned with the
acquisition or development of reliable
hardware and software capable of meeting the
needs of a proposed system for the business in
the required time.
Operational feasibility: It is concerned with
the willingness and ability of the management,
2. System Analysis - Functional
Requirements:
System analysis describes what a
system should do to meet the
information needs of users. Functional
Requirements are end user information
requirements that are not tied to the
hardware, software, network, data and
people resources that end users
presently use or might use in the new
system. It includes,
User interface requirements: The
input/output needs of end users that must be
supported by the information system,
including sources, formats, content, volume
and frequency of each type of input and output
Processing requirements: Activities
required to convert input into output. Includes
calculations, decision rules, and other
processing operations, and capacity,
throughput, turnaround time, and response
time needed for processing activities
Storage requirements: Organization,
content, and size of databases, types and
frequency of updating and inquiries, and the
length and rationale for record retention
Control requirements: Accuracy, validity,
safety, security, and adaptability requirements
for system input, processing, and output and
3. System Design – System
specifications:
System Design specifies how the
system will accomplish the objective.
System Design
can be viewed as the design of user
interfaces, data, and processes
System Design
It involves process design of,
User services:
Front-end software that communicates
with users through a graphical user
interface.
Application services:
Software modules that can - enforce
business rule, process information and
manage transactions. Application services
may reside on the client and server.
Data services:
Data is made available to the application
services software for processing. This is
typically accomplished through a
database management system.
 It also involves Prototyping :
The rapid development and testing of
working models, or prototypes, of new
information system applications in an
interactive, iterative process involving both
systems analysts and end users. Prototyping
makes the development process faster and
easier for system analysts, especially for
projects where end user requirements are
hard to define.
Prototyping Process: A typical prototyping-
based systems development process in
business comprises of: Team, Schematic
design, Prototype, Presentation, Feed back,
Team A few end users and IS developers from a team to
develop a business application
Schematic The initial prototype schematic design is developed
Prototype The schematic is converted into a simple point-and
click prototype using prototyping tools.
Presentation A few screens and routine linkages are presented
to users.
Feedback After the team gets feedback from users, the
prototype is reiterated
Reiteration Further presentations and reiterations are made
Consultation Consultations are held with central IT
developers/consultants to identify potential
improvements and conformance to existing
standards of the organization
Completion The prototype is converted into finished application
Acceptance Users review and sign off on their acceptance of
the new systems
Installation The new application software is installed
on network servers