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Business Informatics Lec 2 Introduction This course is designed for students aimed to acquire broad understanding of information systems and their role in business environment and want to develop an interdisciplinary approach to management of IT projects that will prepare them for a successful career.System will have the following basic interacting components (functions): o Inputs and Outputs: A major objective of a system is toproduce an output that has value to its user.It isthe decision-making subsystem that controls the pattern of activities governing input, processing, and output.A system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process.Processors may modify the input totally or partially, depending on the specifications of the output.Introduction The term information technology (IT) represents the various types of hardware and software used in an information system, including computers and networking equipment.o Processing: It is the element of a system that involvesthe actual transformation of input into output.o Feedback: Feedback measures output against astandard in some form of procedure that includes communication and control.Introduction Informatics aims to integrate business administration and computer science into one field.System will have the following basic interacting components (functions): o Control: The control elements guide the system.Negative feedback generally provides the controller with information for action.To get a good output, inputs to system must be appropriate.It is the operational component of a system.Feedback may be positive or negative, routine or informational.Positive feedback reinforces the performance of the system.What is a System?What is a System?What is a System?It is routine in nature.What is a System?

Business Informatics
Lec 2
Introduction
This course is designed for students aimed to acquire broad
understanding of information systems and their role in
business environment and want to develop an
interdisciplinary approach to management of IT projects
that will prepare them for a successful career.
Introduction
Informatics aims to integrate business
administration and computer science into one
field.
Introduction
The term information technology (IT) represents the various types of hardware and software used in an information system, including computers and networking equipment.
What is a System?
A system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process.
What is a System?
System will have the following basic interacting components (functions):
•
Inputs and Outputs: A major objective of a system is toproduce an output that has value to its user. To get a good output, inputs to system must be appropriate.
•
Processing: It is the element of a system that involvesthe actual transformation of input into output. It is the operational component of a system. Processors may modify the input totally or partially, depending on the specifications of the output.
What is a System?
System will have the following basic interacting components (functions):
•
Control: The control elements guide the system. It isthe decision-making subsystem that controls the pattern of activities governing input, processing, and output.
•
Feedback: Feedback measures output against astandard in some form of procedure that includes communication and control. Feedback may be positive or negative, routine or informational. Positive feedback reinforces the performance of the system. It is routine in nature. Negative feedback generally provides the controller with information for action.
What is a System?
System will have the following basic interacting components (functions):
Environment: The environment is the “supra-system”within which an organization operates. It is the source of external elements that impinge on the system. In fact, it often determines how a system must function.
Boundaries and Interfaces: A system should be definedby its boundaries-the limitsthat identify its components, processes, and interrelationships when it interfaces with another system.
What is a System?
What is an Information System?
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An information system is essentially made up of fivecomponents hardware resources, software resources, database management,network resources, andpeople. These five components integrate to perform input, processing, output,feedback, andcontrol.
What is an Information System?
Information systems contain information about significant people, places, and things within the organization or in the environment surrounding it.
Three activities in an information system produce theinformation that organizations need to make decisions, control operations, analyze problems, and create new products or services. These activitiesare input, processing, and output. Inputcaptures or collects raw data from
What is an Information System?
the organization or from its external environment. Processing converts this raw input into a more meaningfulform.
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Output transfers the processed information to the peoplewho will use it or to the activities for which it will be used. Information systems also require feedback, which is output that is returned to appropriate members of the organization to help them evaluate or correct the input stage.
What is an Information System?
Components of an IS
In an organization, information systems consist of the following components. These components will formulate a system, which will help us to gather the required information for making decision in various levels of management.
Data -Input that the system takes to produce information
Hardware -Computer itself and its peripheral equipment:input, output, storage devices; includes data communication equipment
Software -Sets of instructions that tell the computer how toinput, process, output and store data
Components of an IS
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Communication networks -Hardware and softwarespecializing in transmission and reception of electronic data.
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People -IS professionals who design, construct, operate andmaintain IS. And end users who use the information system. People are the most important component in most computer-based information systems.
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Procedures are the strategies, policies, methods and rules forusing computer-based information systems.
Components of an IS
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The components of an information system work together to provide quality information by
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Collecting the Information
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Processing the Information
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Storing the Information
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Retrieving the Information
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Disseminating or Sharing the Information
Functions of the information system
Data capture and collection
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This function consists of capturing both external (related to the environment) and internal (generated within the company) information and sending it through the communication system to the entities within the information system responsible for organizing it to avoid duplication and useless information (noise).
Functions of the information system
Information processing
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The purpose of information processing is to transform the stored data into useful information that will be meaningful to the person who requires it. This is a key function of all information systems.
Functions of the information system
Storage
The following questions require an answer:
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How should information be stored? By classifying it according to a particular criterion or at different points.
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What type of system should be used to store information? The system can vary from the traditional filing system to a computer processed database. .
Functions of the information system
Distribution and dissemination of information
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Not only must the information system provide the information each user requires, but it must also disseminate information to other people within the company.
Information system types
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A typical organization is divided into operational, middle, and upper level. The information requirements for users at each level differ. Towards that end, there are number of information systems that support each level in an organization.
Strategy Levels and IS Examples
Strategy Levels
Operational management level
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The operational level is concerned with performing day-to-day business transactions of the organization.
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Examples of users at this level of management include cashiers at a point of sale, bank tellers, nurses in a hospital, customer care staff, payroll system etc.
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Users at this level make structured decisions. This means that they have defined rules that guide them while making decisions.
Strategy Levels
Tactical Management Level
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Middle-level managers, heads of departments, supervisors, dominate this organization level. The users at this level usually oversee the activities of the users at the operational management level.
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Tactical users make semi-structured decisions. The decisions are partly based on set guidelines and judgmental calls.
Strategy Levels
Strategic Management Level
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This is the most senior level in an organization. The users at this level make unstructured decisions. Senior level managers are concerned with the long-term planning of the organization. They use information from tactical managers and external data to guide them when making unstructured decisions
Information system types
Transaction Processing Systems (TPS)
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Transaction processing systems are used to record day-to-day business transactions of the organization. Users at the operational management level use them. The main objective of a transaction processing system is to answer routine questions such as;
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How printers were sold today?
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How much inventory do we have at hand?
Information system types
Transaction Processing Systems (TPS)
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The decisions made by operational managers are routine and highly structured.
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The information produced from the transaction processing system is very detailed.
Information system types
Transaction Processing Systems (TPS)
Examples of transaction processing systems include;
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Point of Sale Systems –records daily sales
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Payroll systems –processing employees' salary to make salaries, etc.
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Stock Control systems –keeping track of inventorylevels
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Airline booking systems –flights booking management
Information system types
Management Information Systems (MIS)
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The output from a transaction processing system is used as input to a management information system.
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The MIS system analyzes the input with routine algorithms i.e. aggregate, compare and summarizes the results to produced reports that tactical managers use to monitor, control, and predict future performance.
Information system types
Management Information Systems (MIS)
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For example, input from a point-of-sale system can be used to analyze trends of products that are performing well and those that are not performing well. This information can be used to make future inventory orders i.e. increasing orders for well-performing products and reduce the orders of products that are not performing well.
Information system types
Management Information Systems (MIS)
Examples of management information systems include;
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Sales management systems –they get input from thepoint-of-sale system
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Budgeting systems –gives an overview of how muchmoney is spent within the organization for the short and long terms.
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Human resource management system –overall welfareof the employees, staff turnover, etc.
Information system types
Decision Support Systems (DSS)
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Decision support systems are used by senior management to make non-routine decisions. Decision support systems use input from internal systems (transaction processing systems and management information systems) and external systems.
The main objective of decision support systems is to provide solutions to problems that are unique and change frequently.
Information system types
Decision Support Systems (DSS)
Decision support systems answer questions such as;
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What would be the impact of employees' performance if we double the production lot at the factory?
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What would happen to our sales if a new competitor entered the market
Information system types
Decision Support Systems (DSS)
Examples of decision support systems include;
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Financial planning systems –it enables managers toevaluate alternative ways of achieving goals. The objective is to find the optimal way of achieving the goal. A financial planning system will enable senior executives to ask what if questions and adjust the values for total sales, the cost of goods, etc. to see the effect of the decision and on the net profit and find the most optimal way.
Information system types
Bank loan management systems –it is used to verifythe credit of the loan applicant and predict the likelihood of the loan being recovered.
Information system types
Artificial intelligence techniques in business
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Artificial intelligence systems mimic human expertise to identify patterns in large data sets.
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Companies such as Amazon, Facebook, and Google, etc. use artificial intelligence techniques to identify data that is most relevant to you.
Information system types
Artificial intelligence techniques in business
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Facebook usually makes very accurate predictions of people that you might know or went with to school. They use the data that you provide to them, the data that your friends provide and based on this information make predictions of people that you might know.
Information system types
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Amazon uses artificial intelligence techniques too to suggest products that you should buy also based on what you are currently getting.
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Google also uses artificial intelligence to give you the most relevant search results based on your interactions with Google and your location.
Questions & answers
Resources
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