Chapter 1

RIFT VALLEY UNIVERSITY
MBA PROGRAM
MANAGEMENT
INFORMATION
SYSTEM
By
Roba Huka (Assistant

Professor and PhD
Scholar)
Chapter One
System Concepts
System, DATA AND INFORMATION
 What is information?
 What is the difference b/n data and Information?
 What is information system

DATA AND INFORMATION
Data are raw facts about physical phenomena or business

Ttransactions
 Example:
Sales data is names, quantities, and dollar amounts
Information
 is data that has been converted into meaningful and
useful context for end users. Information support to achieve desired
objectives: Planning, organizing, decision making
Example:
Sales information is amount of sales by product type, sales territory, or
salesperson
Data, information, knowledge and wisdom
Data is the most basic element of any information

system.

 Data is raw material – recorded, unformatted information,
such as words and numbers.
 Data has no meaning in and of itself.
Information is a representation of reality, which is

processed data. It is also data that have been shaped into
a form that is meaningful and useful to human beings.
……DATA AND INFORMATION
 Knowledge is a body of governing procedures, such as
guidelines or rules, that are used to organize or
manipulate data to make it suitable for a given task.
 Wisdom is accumulated knowledge that goes beyond

knowledge by representing broader, more generalized
rules and schemas/diagrams for understanding a specific
domain/s.
 Wisdom allows you to understand how to apply
concepts
from one domain to new situations or problems.
Data, Information, and Knowledge
Figure The Process of Transforming Data into Information

The Characteristics of Valuable Information (continued)
The Characteristics of Valuable Information (continued)
 System –group of interrelated components working together
towards a common goal by accepting inputs and producing
,
outputs in an organized transformation process
What is an Information Systems?

Information system –set of interrelated components that collect
or retrieve, process, store, and distribute information to support
decision making and control in an organization.
It consists of physical and nonphysical component working

together
An information system (IS) consists of all the
components that work together to process data and
produce information.
Almost all business information systems consist of many

subsystems with sub goals, all contributing to the
organization’s main goal.
Figure: The Components of any Information System

Basic Functions of a System
 Input
 Capturing and assembling elements that enter to the
system to be processed
 Processing
 Transformation process that converts input

into output
 Output
 transformed elements to their
Transferring
ultimate destination
A Business as a System
Information System Resources
 People
Resources
 Specialists
 End users
 Hardware Resources
 Machines
 Media
 Software Resources
 Programs
 Procedures
 Data Resources
 Product customer records, employee files, inventory
descriptions,
databases
 Network Resources
 Communications media, communications processors, network
access and control software
 Information Resources
 Management reports and business documents using text and
graphics displays, audio responses, and paper forms
Business Information Systems
1. Transaction processing systems (TPSs): are the most widely used
information systems.
 Transaction is any business related exchange, such as payment to
employees and sales to customers, sales orders, purchase orders ..
 TPSs is an organized collection of people, procedures, software,

databases, and devices used to perform and record business
transactions
 The predominant function of TPSs is to record data collected at the

boundaries of organizations
 They record many of the transactions that take place inside an
organization.
 TPSs include automatic teller machines(ATM), which record cash
withdrawals, deposits, and transfers; and purchase order systems,
which record purchases.
 A typical example of TPS would be the purchase of gasoline at a
pump, using a credit card.
 The purchase is recorded by the gasoline company and later at the

credit-card-processing bank.
 After these data elements are collected, the IS can automatically

process the data immediately and store it for later access on
demand.
 Transaction processing systems provide most of the data in

organizations for further processing by other ISs.
2. Process Control System (PCS):
 It is a category of OSS (Operational Support System) in which
decision about a physical production process are automatically
made by computer through routine decisions that control
operational process.
 Ex: A petroleum refining center uses electronic sensors which

are linked to the computers to continuously monitor chemical
processes and make instant adjustments that control the
refined process.
3. Enterprise resource planning (ERP)
 An enterprise resource planning (ERP) system is a software
application with a centralized database that can be used to run an
entire company.
 All data in an ERP system is stored in a single, central database.
 Data entered in one part of the company can be immediately
available to other parts of the company.
 An ERP can be used to manage an entire organization’s
operations
 It is the practice of consolidating an enterprise’s planning,
manufacturing, sales and marketing efforts into one management
system.
 It provides information that supports the planning of resources
such as personnel, funds, raw materials, and vehicles.
 It mainly serve managers in monitoring and modifying business
processes as they occur, and not only for planning
 It is a set of integrated programs capable of managing company’s
vital business operations for an entire multisite, global operation.
4. Decision Support and Expert Systems
 A decision support systems (DSS) is an organized collection of
people, procedures, software, databases, and devices that support
problem specific to decision making.
 Its focus is making effective decisions.
 Decision support systems help find the optimal course of action and
answer “What if?” questions.
 “What if we purchase raw materials overseas?
 What if we merge our warehouses?
 How many first-time buyers were gained from our social media
sites?”
 However, it is important to understand that a DSS is only a decision

aid, not an absolute alternative to human decision making.
 Expert systems (ESs) give computer the ability to make
suggestions and function like an expert in a particular field.
 Using ESs preserves the knowledge of experts and saves a

company the high cost of employing human experts.
 After gathering expertise from experts and building a program, the

program can be distributed and used repeatedly.
 The expertise resides in the program in the form of a knowledge
base consisting of facts and relationships among the facts.
Elements of Information Systems
•Computer Hardware:
– computer hardware refers to computer systems and other
associated equipment including the communication links
that a modern IT installation may need.
– With the rapid advancement in computer hardware
technology, a large variety of computer systems with
varying sizes, speeds, and functional feature are available.
20
– To be able to determine the hardware resource requirements, it is necessary to
properly assess
• the nature of IT needs,
• the volume of data to be processed,
• sources of data,
• complexity of data analysis and
• impact of other related factors.
– Such an assessment should also make provisions for expected changes in these
factors in the future.
21
– The following list presents computing power from the least
expensive and least powerful to the most expensive and
most powerful.
 Microcomputers (sometimes called personal computers).
 Based on a single tiny silicon chip called a microprocessor that
contains all the essential elements of a computer.
 Desktops
 Portables (like laptop, notebook, and palmtop or handheld computers)
22
– Workstations:
 faster and more powerful than microcomputers,
 workstations are used by engineers, architects, scientists, commercial
artists, and others who heed computers for speedy number crunching
and graphics
23
Minicomputers:
 generally have more speed and power than workstations, but less
than mainframes.
 They can handle several hundred simultaneous users and can run
multiple programs concurrently.
Mainframes:
 are the standards for large business and government agencies,
Supercomputers:
 are the largest and powerful computers.
24
Software
•computer software are sets of inter related computer
programs
•A program is a set of instructions, which enable particular
processes to be performed by a computer.
•Software is lifeline of the IT infrastructure and it makes the
computer hardware function.
•Software determines what the hardware does and makes the
hardware perform.
•Software, thus, is a very important IT resource and must be
carefully selected and properly maintained. 25
Software
•Software, being intangible, sometimes gets a back seat in planning for an IT
infrastructure.
•In fact, improper selection of software may become a major cause of failure
of an IT infrastructure in achieving its objectives.
•There are two types of software:

1. System software: programs that control and coordinate the operation of
the various types of equipment in a computer system.
2. Applications software: programs that allow you to apply the computer
to solve a specific problem or perform a specific task (i.e., word
processing, spreadsheet, graphics, database programs).
26
Operating Procedures
•Formal operating procedures are physical components

because they exist in a physical form such as a manual or
instruction booklet.
•Three major types of procedures are required:
1. User instruction (for users of the application to record data,
employ a terminal to enter or retrieve data, or use the result)
2. Instructions for preparation of input by data preparation
personnel
3. Operating instructions for computer operations personnel 27
Operating Procedures
•The procedures play an important role in the smooth and effective

utilization of information resource.
•They also protect the information resource and maintain its quality.
•Thus, the procedures as element of information system refer to the
instructions to users regarding
– the use of IT infrastructure for normal day-to-day activity
– for handling special situations such as systems failures and
crashes.
– They include user access permissions and disaster recovery
procedures as well. 28
Human resources and the effectiveness of an IT infrastructure
•the effectiveness of an IT infrastructure is a function of the

type of IT personnel available to it.
•In fact, best of computer hardware, software and data may be
spoiled and may cause havoc if the human resources are not
– competent,
– honest or
– reliable.
•Qualities like competence, honesty and reliability are critical

to any work environment. 29
Human resources and the effectiveness of an IT infrastructure
•Human resources include

– computer operators,
– systems analysts,
– programmers,
– data preparation personnel,
– information systems management,
– data administrators,
– etc.
30

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RIFT VALLEY UNIVERSITY

Roba Huka (Assistant

 What is the difference b/n data and Information?

 What is information system

Data are raw facts about physical phenomena or business

Data is the most basic element of any information

 Wisdom is accumulated knowledge that goes beyond

Figure The Process of Transforming Data into Information

What is an Information Systems?

It consists of physical and nonphysical component working

Almost all business information systems consist of many

Figure: The Components of any Information System

 Transformation process that converts input

 TPSs is an organized collection of people, procedures, software,

 The predominant function of TPSs is to record data collected at the

 The purchase is recorded by the gasoline company and later at the

 After these data elements are collected, the IS can automatically

 Transaction processing systems provide most of the data in

 Ex: A petroleum refining center uses electronic sensors which

 However, it is important to understand that a DSS is only a decision

 Using ESs preserves the knowledge of experts and saves a

 After gathering expertise from experts and building a program, the

•There are two types of software:

•Formal operating procedures are physical components

•The procedures play an important role in the smooth and effective

•the effectiveness of an IT infrastructure is a function of the

•Qualities like competence, honesty and reliability are critical

•Human resources include

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