Introduction to Information Systems

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Introduction to
Information
Systems

LEARNING OBJECTIVES
By the end of this topic, you should be able to:
1. List two impacts of information technology on business operations;
2. List the definition of information system and its five components in
writing;
3. List six categories of information systems; and
4. Identify the individuals involved in information systems.

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INTRODUCTION

In this age of information, almost all fields of endeavour such as education,
manufacturing, research, games, entertainment, and business treat information
systems as a need. Indeed, every activity in our daily life today requires people to
get involved in the use of information systems.
Have you ever used an ATM to withdraw money or to buy goods at a large
supermarket? In both cases, you are indirectly using the facilities offered by an
information system.
What is a system? A system is simply a group of activities and elements, which
have been arranged to achieve a certain objective. An information system is a
combination of hardware, software and telecommunication systems, which can
support business operations to increase productivity, and help managers make
decisions.

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INTRODUCTION TO INFORMATION SYSTEMS

In this age, the success of a business depends on the information system. Many
organisations today use information systems to offer services with greater
satisfaction to customers, to access a wider range of information, to handle
business changes at a greater speed, and to increase the productivity of workers.
Based on a number of researches, an effective information system should be able
to exceed customer expectations and fulfil business needs.

1.1

MODELLING THE BUSINESS PROCESS

Many companies today use information as a basis to increase productivity,
producing quality products, providing quality services, creating customer
confidence, and making timely decisions.
As such, information technology has become the prime reason for the success
and failure of a company to compete in business. This illustrates the impact of
information technology on business operations today. As a result, designing an
information system of high quality is important so that organisations can
compete successfully in the global market.
Information systems experts need to understand the business operation of a
company before they can design a comprehensive system. Every business
situation is likely to be different. As an example, business transactions at a
supermarket, bank, and hotel require information systems that are different and
unique.
A systems analyst applies a technique called Business Process Modelling to
represent companyÊs operations and information requirements. A systems
analyst works in an information technology based department. This person is
responsible for planning, analysing and implementing information systems.

Figure 1.1: Computers in business

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INTRODUCTION TO INFORMATION SYSTEMS

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ACTIVITY 1.1
In your opinion, what are the impacts of Information Technology on
the operation of an educational institution like OUM?

1.1.1

Business Profile, Model and Process

In trying to understand the operation of a certain company, a system analyst
needs to develop a business profile and consider a number of business models.
This could be explained briefly as shown in Figure 1.2 below.

Figure 1.2: General duties of a system analyst

Business profile covers ownership, structure, and management of the company,
together with its customers and suppliers; while a business model can take the
form of a brick-and-mortar type, a virtual store, and so on. They can be as
detailed as these, or can just be in brief forms.
Business Process explains a certain process, activity, and the results expected. It is
basically a way of doing business, which begins with the customer and ends with
the customer. Customers can either be external or internal. Figure 1.3 illustrates a
business process for "Student Registration".

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INTRODUCTION TO INFORMATION SYSTEMS

Figure 1.3: A business process

The above business process has a beginning and an end, three sub-processes and
a result. When a company tries to simplify operations, or tries to decrease
operational cost, or increase value to customers, the company is said to be
involved in business process re-engineering (BPR). In testing your understanding
of the BPR topic, please answer the following exercise questions:

ACTIVITY 1.2
1. Explain the meaning of:
(i)

Business profile:

(ii)

Business model:

(iii) Business process:
2. List the business activities when you apply to study at OUM. (State
the process, sub-process and result).

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1.2 INFORMATION SYSTEM COMPONENTS
A system is a set of related components, which can process input to produce a
certain output. Every system requires a form of data input. For example, an ATM
machine accepts data when you enter the PIN number. A washing machine
accepts data when you select the start buttons. They process the inputs and
produce their respective outputs.
In an information system, input data consist of facts and figures, which form the
systemÊs raw material. Information is data that has been usefully processed.
However, an information system does not only contain data and information.
There are also other elements inside the system, which are related and are in
support of one another. The presence of these related elements makes
information more useful ă whereby, it can be made available, can be processed,
distributed, manipulated, saved, and so on. This combination gives rise to a
system, which is orderly and as such it is called an "Information System".

Figure 1.4: Information system components

The activity of converting data into information is called a process. An
information system contains FIVE main components ă the hardware, software,
data, process and human, as shown in Figure 1.5 below:

Figure 1.5: Components of an information system

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Hardware

Hardware is the physical embodiment of an information system. It is one of
the main elements which creates the information system cycle.
Information system's hardware refers to all types of hardware and the media
used for input, processing, managing, distributing and saving information
that are being used in an organisation. Examples of the hardware are the
physical computers, networks, communication equipment, scanners, digital
drives, and so on.
Basic hardware for a certain computer consists of four main elements as
shown in Figure 1.6 below.

Figure 1.6: Basic hardware of a computer

To understand in greater detail on the functions and examples of the
computer hardware, you can refer to Table 1.1 below.
Table 1.1: Functions of the Basic Hardware of a Computer
Type of
Hardware

Functions
input

Examples

Input

Giving data
system.

Processing

Operating
system.

Output

Can display results or output
which are generated from the
computer system.

Screen, microphone and printer.

Storage

For storing data inside the
computer.

Hard disk, floppy disk, CD-ROM
and magnetic tape.

the

to

the

computer

Keyboard, mouse, pointer, screen,
touch ball and scanner.
Central processing
memory.

unit

and

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Computers can be turned into useful tools if you know how to exploit them. To
enable computers to function more effectively and to diversify their functions,
you need the communication network to connect several computers together.
The network provides the hardware support to enable communication to be
established among each other. The communication network includes modems,
hubs, cables and other devices.




Software
Software consists of two categories ă the system software and the application
software.
-

System Software controls the computer and contains the operating
system and device drivers, which can communicate with the hardware. It
can also modify data into a new form, prevent viruses and make copies.

-

Application Software contains programs which can help users and
enable companies to perform business functions. Users can increase
productivity with the presence of application software such as
spreadsheets, word processing, ordering systems, and accounts
receivable.

Data
Data refers to the raw facts on any thing or entities like student names,
courses and marks. The raw data that has not yet been provided can be
processed to become more useful information.
Information is an organised, meaningful and useful interpretation of data ă
such as a companyÊs performances or a student's academic performance.
Information systems change data into information, which is useful and
capable of giving a certain meaning to its users.
Figure 1.7 below shows an example to represent data and information:
Data

Name

Information

Salary (RM)

No. of employees = 5

Kassim

4,300.00

Jamilah

2,000.00

Muthu

2,500.00

Highest Salary = 4300.00

Mary

4,000.00

Lowest Salary = 1900.00

Lai Mooi

1,900.00

Process

Average Salary = 2940.00
Total Salary = 14700.00

Figure 1.7: Differences between data and information

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Based on the example in the above figure, we can understand that records
inside every attribute under the DATA item do not give any specific
meaning. Every data or record here is a raw fact. After going through
processes such as addition, ordering, combining, manipulating and so on,
many kinds of information can be produced. The information generated is
not limited to a certain form. It can be interpreted in many ways according to
the needs and wills of customers.


Process
Process or procedure explains the activities carried out by users,
managers and staff. Process is important for supporting a certain business
model available as written documents or as reference materials on-line.

Process is a guide consisting of orderly steps, which need to be
followed and implemented in order to get a certain decision on a
certain matter.
The procedure for using a certain matter is very wide and very important
to ensure that it can be implemented with success. All the information
system components contain management and implementation procedures
on their own, and they are different from each other.


Human
The main objective of an information system is to provide invaluable
information to managers and users, whether inside or outside the company.
Users can be broken up into three categories, which are:
-

End-Users, consisting of the staff, customers, suppliers and others
who communicate with the information system.

-

Internal Users, including the managers,
representatives and corporate officers.

-

External Users, consisting of the customers who use the companyÊs
system for performing transactions, suppliers who use the system for
planning sales, and the staff who use the system outside office hours.

technicians,

sales

The success or failure of an information system depends on whether the
system that has been developed can fulfil the user's requirements, and the
users feel satisfied with the results and the system's operation. A successful
system requires integrated efforts from information technology experts
such as the system analysts, programmers and the information technology
managers so as to fulfil business needs and to support company's
objectives.

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So, what have you been doing so far? Do you understand what is contained
inside the information system's components? Now, try to answer the
following question.

ACTIVITY 1.3
1. Circle the words, which are the main components of an
information system.
Hardware
Users
Process

Software
Purchaser
Data

Network
Company
Information

System
Humanware

2. Give examples of data and information.

1.3

INFORMATION SYSTEM CATEGORIES

Now there are several approaches to solving a certain problem. There are also
several types of information systems, which are developed to overcome specific
problems, besides trying to fulfil the user's requests in general. In a large
organisation, solving business problems such as the management of staff salaries,
processing of business data and others is normally done by the use of large
computers with internal and external networks.
Every type of information system has a role to play. If you look at the functions
and the scope of usage, information systems can be divided into six main
categories such as those provided in Figure 1.8 below.

Figure 1.8: Categories of information system

To understand the six main categories of information systems, Table 1.2 gives the
explanation for each category.

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Table 1.2: Information System Categories
System
Category
Transaction
Processing
System

Management
Information
System

Explanation


Better known as TPS and is one of the first systems to be
automated.



Can access and record information about all transactions related to
the organisation.



Transactions occur whenever there exist activities involving sales
order processing, accounts receivable, accounts payable, inventory
and ordering as well as payroll.



These transactions involve credit and debit in the companyÊs ledger
account.



The output from this transaction is the account statement, which is
used to generate financial reports.



TPS now uses the latest technology which uses the E-commerce
concept. This is a new challenge in the field of transaction
processing which begins to shift to the on-line transaction
processing system.



This system will take the information that has been extracted from
TPS and generate reports which are required by the management
for planning and controlling a company's business.



This system is capable of fulfilling the needs of management in
acquiring the information that:

(a) is brief and useful.
(b) can be obtained and processed at the right time to make a
decision.
Executive
Information
System



A decision support system specifically used by the executive
management in making strategic decisions.



It is a tool that provides online access directly to the relevant
information, in the format that is useful and can be browsed.



Relevant information is timely, precise and useful in business
aspects, according to the interest of certain managers.



Useful format, and can be browsed easily; will mean that the
system has been specially built for the use of individuals who have
little time to spare, are less skilful in using the keyboard and less
experienced with computers.



This system can be surfed easily so that managers can identify
strategic issues and can then explore information for getting the
sources about those issues.

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Decision
Support
System

Office
Information
System

Expert System

INTRODUCTION TO INFORMATION SYSTEMS

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It is also an information system that combines the features of
information reporting system and decision support system. It
focuses on fulfilling the strategic information needs of the top
management.



The main focus of this information system is for the effectiveness of
the manager in analysing the information and making a decision.



It is used for handling decisions that are not structured, i.e.
decisions which are made when an emergency happens.



This system uses a database management system, query language,
financial modelling, electronic spread sheet, statistical analysis
program, report generator or graphic software for supplying the
information needed.



Office automation is wider than word processing and form
processing.



This information system covers activities in the office, which can
improve work flow and communication among workers, whether
inside or outside the office.



The focus of this system is on the collection of information for who
ever needs it.



The functions of this system are word processing, e-mails, work
group programming, work group scheduling, facsimili processing,
e-document, imaging and management of work flow.



It is a program that produces a decision which is almost similar to
decisions made by an expert in a certain discipline.



This information system can imitate the way humans think and
consider in making a decision.



An expert system will combine the use of knowledge, facts and
techniques to make a decision.



An expert can always give a certain decision which is accurate as
well as ensuring maximum benefit to all the people concerned.
Unfortunately, the sources for expert services are limited.



Realising the high value of knowledge and the expertise owned by
the expert, researchers have tried to transfer and save in the
computers the knowledge and expertise owned by the experts.



Through this work, the expert system is made.

How are you now? Are you clear with the above explanation? To test your
understanding, try to answer the questions below without referring to any of the
given notes.

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ACTIVITY 1.4
1. List the six main categories of an information system.
2. For each of the following problems, suggest an appropriate
information system category:

Problem
(i)

Information System
Category

Customers do registration,
rental and return of videos at a
shop which provides video
rental services.

(ii) Determination of disease types
contracted by patients who
come to a clinic for treatment.
(iii) Determining whether a staff is
qualified to be given a
scholarship for further study at
a higher level.

1.4

INDIVIDUALS IN THE INFORMATION
SYSTEM

To handle an information system's project, we need to have a systematic work
plan. An information system's architecture provides a work plan, which is
unique, whereby various individuals with different objectives can manage and
see the building blocks of an information system.

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Figure 1.9: Individuals in information system

If you intend to develop an information system, the individuals involved in the
development will see the system from a different perspective. These individuals
can be categorised into four groups:
(a)

Systems Owner
The systems owner bears the cost of system development and maintenance. He has
the right over the system, determines the interest over the system and determines
the policies over its use. The system owner is also responsible for system
justification and system acceptance. In certain situations, the system owner is also a
system user.
System owners always think of the return value, which can be obtained by
developing the information system. This return is valued from various aspects such
as:


What are the benefits of the system?



What are the mission and objectives?



What is the cost of developing the system?



What is the cost of operating the system?



Can the investment pay back the capital?

What are the benefits that can be measured from the system?

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(b)

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Systems User
The system user is an individual who
uses the system for producing
something, or uses the system to help
him in his daily jobs. Directly, users
are the ones who get the benefits from
the system that has been developed.
Besides being the initiators for the new
information system request, users also
determine:
Ć

The problems to be solved;

Ć

Opportunities to be exploited;

Ć

The needs to be fulfilled;

Ć

Business constraints to be
overcome by the system; and

Ć

Whether the information system
that has been developed is easy
or difficult to use.

(i)

Internal User
Employees who work in the
company to develop the
information system. Internal users
constitute the highest percentage
among those who use the said
system. They include the support
and administrative staff, the
technical and professional staff,
supervisors, the management and
the executives.

(ii)

Mobile User
Mobile users are the users who
often do jobs outside the company.
Examples of these users are
salesmen and sales representatives.
They often do jobs that require
travelling from place to place,
meeting customers, buyers and so
on. Organisations which have users
of this kind often have complex
information system designs
because the system that is
developed needs to accommodate
the information needed by users of
this kind. In fulfilling the
information needs of mobile users,
the information should be
accessible wherever they are.

Compared to the system owner, the
system users are not so interested in
the cost and benefits of the system.
They often emphasise the business
needs inside the system. System users
can be divided into three main
categories: internet, external and
mobile users.

Therefore, the information system
that has been developed should
provide a telecommunications
environment and the network to
enable information stored in the
database to be accessible by users.
(iii)

External User
The information system can now
connect the system to other
individuals as users of the system.
Due to global competition,
businesses are redesigned to enable
connectivity with other
organisations, partners, suppliers,

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customers and end users.
As an example, you need not fill up
any form to apply for entry into
OUM. With the information system
provided by OUM, you just need to
go to the OUM website, fill up the
application form online, and send
the form online. Now, the facility is
provided, but in future it may be
necessary to change our way of life.
(c)

Systems Designer
Systems designers are experts in the technical field who would design a system for
fulfilling the needs of users. They are responsible for manipulating the needs of
business users and the constraints in technical solutions. They design computer
files, databases, input, output, screen, networks, and programs that can fulfil the
needs of system users. They are also responsible for integrating the technical
solutions into the daily business environment.

As shown in Figure 1.10, every individual named above is responsible for one
element inside the information system work plan. Every element has a
perspective of its own, or a view that is different towards information
technology.
Systems designers understand the technological environment better when compared to
systems owners and systems users. They always provide alternatives and design systems
based on technological constraints at that time. Now, systems designers give more
attention to technical experts such as:
Ć

Database designers who provide focus on the data;

Ć

Programmers and software engineers who provide focus on the process;

Ć

Systems integrators who provide focus on the system interfaces; and

Ć

Telecommunication and network experts who provide focus on the geographic
locations.

(d)

Systems Developer
Systems developers are the experts in the technical field who would develop, test
and produce a system, which can operate successfully. They build the system
components based on the design specifications of the system designers. In many
situations, system designers are the system developers. They use technology to
develop information systems.
Among the individuals who get involved directly in information system
development, you maybe ask what is the role of the systems analyst? In actual fact,
the systems analysts are really acting as facilitators for information systems
development. The system analyst has the expertise that is owned by all the above

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individuals. They should feel comfortable with the views of all the individuals
mentioned above. For the systems owners and users, the systems analyst should
develop and update their views. The duty of the systems analyst is to ensure that
the technical knowledge of systems designers and developers are consistent with
the current business needs.

Figure 1.10: Information systemÊs perspective

Will you become one of the individuals in the information system development
process, one day? Before this becomes a reality, try to understand the information
systemÊs perspective, which has been explained above, and then try to answer
the questions below.

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ACTIVITY 1.5
You are working in an information system-based company. You
have been asked to develop an information system for use in a
hospital
with
functions
involving
patient
registration,
appointments, patient information, pharmacy and the payment
division. Determine who are the system owner, system user, system
designer and system developer?
(i)

System Owner:

(ii)

System User:

(iii) System designer:
(iv) System Developer:



Every organisation needs to be aware and conscious of development,
especially in the fields of computing and information technology, to ensure
that they would not be left behind and fail in the competition to move
forward.



To compete in business, the management needs to provide the necessary
infrastructure so that the information technology environment can be
developed. This includes the provision of the information system
components.



To realise information systems in business, an information system expert
needs to model a business process, i.e. to determine what are the business
activities for an organisation, and what are the processes involved in the
implementation activity. With this kind of specification, a new information
system can be developed.



Information systems play a very important role in the management aspect of
an organisation. By looking at the functions and the scope of its use, an
information system can be divided into two main support systems, i.e.
Operation Support System and Management Support System.

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In the development of information systems, there exist a number of categories
of individuals who get involved directly, whereby they see their roles in
different perspectives.

Systems Owner

Systems Designer

Systems User

Systems Developer

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