Friday, April 10, 2009

Introduction to Information Systems

For any system to be considered an Information System, it should have following four components.

- Hardware
- Software
- People
- Data

Example: Online Banking, Cell phones.

A system is a combination of many interrelated units/components that work together to achieve a common purpose.

Information System:
Set of interrelated components (Resources), i.e. Hardware, Software, People and Data.

- They create and use information
- Store information ( entering data in a data base or simply saving a file)
- Transform information (converting data into meaningful information, organizing and analyzing data)
- Disseminate information (sharing and spreading of information)

Decision Making:
- Day to day strategic decisions
- Decision Levels:
1) Strategic level decisions

2) Tactical Level decisions

3) Operational level decisions

Operational Level:
- Structured decisions: Predefined, preformatted and routine decisions. For example, pay roll system, accounting entry, attendance policy
- Short term decision making (daily, weekly, monthly targets)
- Detailed and Internal Information (for example a store manager requires detailed sales report. Sales reports are generated to see the progress and decline for particular level. Managers look for problems and identify them through the reports)
- Keeping record
- Keeping track of Progress
- Information System used: MRS(management reporting system) & MIS(management information system)

Tactical/Middle level:
- Semi structured decisions (advertising campaign, marketing plan, budgeting, hiring and firing, performance appraisal)
- Trend analysis and forecast. Analytical modeling software and systems are needed ( mathematical, financial and statistical modeling )
- Short term to middle term decisions.
- Ad hoc decision making i.e. as and when required. Ad hoc decisions are situational.
- Internal and External information
- Information has to be external as well, because they need to know what competitors are doing.
- Filtered and Critical information (instead of detailed information on sales, only key information is needed like reasons for decline in sales)
- Information system used: DSS (decision support system). It helps to make decisions.
- Different ways of getting external information e.g. corporate spies

Strategic Level:
- Unstructured decisions (mission statement, new products, mergers and acquisitions, lay offs, diversification and outsourcing)
- Very critical and filtered information ( external and internal sources)
- Expert systems: Systems that are used to make preliminary decisions. They use information to make the decisions
- Information system used: ESS (executive support system)/ EIS (executive information system). They give short, graphic, trend or comparison systems.
- There is a thin line between strategic and tactical level. (when decisions can’t be made at tactical level, they forward it to strategic level)

Role of Information Systems:

1) Support Business Operations:
(ATM machines, Barcode readers, tracking system, automated system at petrol pumps). Automated means using IS to automate business activities or process.
- Cost and time efficient
- Store and secure information

2) Provides Support for decision making:
(It keeps record of how many people were absent and helps in making conclusions). An analytical system that helps in decision making would fit here.
- Performance appraisal
- Decisions are made at all the three strategic level, i.e. Strategic, tactical and operational

3) Support of its strategies for competitive advantage:
- Organizations use IS to achieve competitive advantage. It requires innovative applications of information technology. It can be direct or indirect. Direct when a better service or product is provided to the customers. Indirect, when an organization improves its internal environment. All systems implemented by an organization to give strategic advantage are strategic information systems.

Global Information Society
- End Users
- Specialists
- Knowledge Users

Following are the different concepts of how Information systems have changed the way companies work:

1) Globalization:
- global production facilities
- global customer/markets
- global investments
- global competitors
- global alliances

2) Business Process Reengineering (BPR)

3) Agile Competition

Five strategies used by competitors:
- Low cost strategy
- Innovation
- Differentiation
- Expansion/Growth
- Alliance

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