Lecture 3

1. Lecture 3

2. To be covered • The Role of IS in Business • The important attributes of information quality. • What are the types of Information System (IS) within an organization. • Levels of organization. • The role of each types of IS in organization.

3. Do you think using IS in Business important? Why?

4. The Role of IS in Business • Businesses make use of information systems so that accurate and up-to-date information will be available when it is required. • Since it is not always possible to predict what information will be needed at some future date, most organizations use computers to record and store the details of all their business transactions. When a query arises, or a standard business report must be produced, this raw data can be retrieved and manipulated to produce the required information. • For example : a customer may enquire whether an item is in stock, or financial statements must be produced for shareholders.

5. What characteristics of information products make them valuable and useful to Business?

6. information quality • Information that is outdated, inaccurate, or hard to understand is not very meaningful, useful, or valuable to you or other business professionals. • People need information of high quality. • It is useful to think of information as having the three dimensions of time, content, and form.

7. information quality

8. So what kind of IS do we need?

9. There are a number of different application programs are used within a single business or organizations . • For example, the methods and calculations used in processing the employee payroll are very different from those used for managing stock control or for preparing a balance sheet. Therefore , there are different types (Classification ) of IS applications that are used within a business and an organization.

10. Classification of Information Systems Information systems generally are classified into five categories:  • Office information systems (OIS), • Transaction processing systems (TPS), • Management information systems (MIS), • Decision support systems (DSS), • Expert systems( ES).   The following sections present each of these information systems

11. 1- Office information systems (OIS) • An office information system, or OIS , is an information system that uses hardware, software and networks to enhance work flow and facilitate communications among employees.   • Also described as office automation; employees perform tasks electronically using computers and other electronic devices, instead of manually.   • With an office information system, for example, a registration department might post the class schedule on the Internet and e-mail students when the schedule is updated.  In a manual system, the registration department would photocopy the schedule and mail it to each student’s house.

12. 1- Office information systems (OIS) • An office information system supports a range of business office activities such as • creating and distributing graphics and/or documents, • sending messages, • scheduling, and accounting.   • All levels of users from executive management to non-management employees utilize and benefit from the features of an OIS. • The software in OIS are used to support these activities include • Word processing, Spreadsheets, Databases, presentation graphics, E-mail, Web browsers, Web page authoring, personal information management,.

13. 2-Transaction Processing Systems (TPS) • A transaction processing system (TPS) is an information system that captures and processes data generated during an organization’s day-to-day transactions. •  A transaction is a business activity such as a deposit, payment, order ,reservation , invoicing ,issuing of stock , booking airline tickets, purchasing goods or services. • Support simple processing of large amount of structured data

14. 2-Transaction Processing Systems A Payroll Transaction Processing System (Example) Principles of Information Systems, Eighth Edition

15. Payroll system example

16. 2-Transaction Processing Systems (TPS) Clerical staff typically perform the activities associated with transaction processing, which include the following: • Recording a business activity such as a student’s registration, a customer’s order, an employee’s timecard or a client’s payment. • Confirming an action or triggering a response, such as printing a student’s schedule, sending a thank-you note to a customer, generating an employee’s paycheck or issuing a receipt to a client. • Maintaining data, which involves adding new data, changing existing data, or removing unwanted data.

17. 2-Transaction Processing Systems (TPS) More examples of TPS

18. Architecture of a transaction processing system using the basic systems model

19. 2-Transaction Processing Systems (TPS) • As computers became more powerful, system developers built online transaction processing systems.  With online transaction processing (OLTP) the computer processes transactions as they are entered.   • For example ,when you register for classes, your school probably uses OLTP.  The registration administrative assistant  enters your desired schedule and the computer immediately prints your statement of classes.

20. 3- Management Information Systems (MIS) • A management information system, is an information system that generates accurate, timely and organized information so managers can make decisions, solve problems, supervise activities, and track progress.   • Or, it is a System that use the data generated by the TPS to help lower and middle managers in their decision making.

21. 3-Management Information Systems (MIS) • For example :To process a sales order, the transaction processing system records the sale, updates the customer’s account balance, and makes a deduction from inventory.  Using this information, the related management information system can produce reports that recap daily sales activities; list customers with past due account balances; graph slow or fast selling products; and highlight inventory items that need reordering.

22. More example: where TPS data are used for MIS applications Because it generates reports on a regular basis, a management information system sometimes is called a management reporting system (MRS).

23. 3-Management Information Systems (MIS) • Management information systems provide a variety of information products to managers. Four major reporting alternatives • Periodic Scheduled Reports. This traditional form of providing information to managers uses a prespecified format designed to provide managers with information on a regular basis. Typical examples of such periodic scheduled reports are daily or weekly sales analysis reports and monthly financial statements.

24. 3- Management Information Systems (MIS) • Exception Reports. In some cases, reports are produced only when exceptional conditions occur. In other cases, reports are produced periodically but contain information only about these exceptional conditions. • For example, a credit manager Can be provided with a report that contains only information on customers who have exceeded their credit limits. • Exception reporting reduces information Overload Instead of overwhelming decision makers with periodic detailed reports of business activity.

25. 3- Management Information Systems (MIS) • Demand Reports and Responses. Information is available whenever a manager demands it. • For example, Web browsers, DBMS query languages, and report generators enable managers at PC workstations to get immediate responses or to find and obtain customized reports as a result of their requests for the information they need. Thus, managers do not have to wait for periodic reports to arrive as scheduled

26. 3- Management Information Systems (MIS) • Push Reporting. Information is pushed to a manager’s networked workstation. Thus, many companies are using webcasting software to broadcast selectively reports and other information to the networked PCs of managers and specialists over their corporate intranets

27. 4- Decision Support System(DSS) • A decision support system (DSS) is an information system ( interactive computer-based systems and subsystems ) designed to help higher managers to reach a decision when a decision-making situation arises • For example: A sales manager might need to determine how high to set yearly sales quotas based on increased sales and lowered product costs. Decision support systems help provide information to support such decisions.

28. 4- Decision Support System(DSS) A decision support system uses data from internal and/or external sources. • Internal sources of data might include for examplesales, manufacturing, inventory, or financial data from an organization’s database.  • External sources could include for example interest rates, population trends, and costs of new housing construction or raw material pricing.  •  Users of a DSS, often managers, can manipulate the data used in the DSS to help with decisions.

29. Types of DSS • Communication-driven DSS  • Data-driven DSS  • Document-driven DSS  • Knowledge-driven DSS • Model-driven DSS 

30. Types of DSS : Communication-driven DSS  • Communication-driven DSS . Most communications-driven DSSs are targeted at internal teams, including partners. Its purpose are to help conduct a meeting, or for users to collaborate. The most common technology used to deploy the DSS is a web or client server. Examples: chats and instant messaging software, online collaboration and net-meeting systems.

31. Types of DSS : Data-driven DSS • Data-driven DSS  Most data-driven DSSs are targeted at managers, staff and also product/service suppliers. It is used to query a database or data warehouse to seek specific answers for specific purposes. It is deployed via a main frame system, client/server link, or via the web. Examples: computer-based databases that have a query system to check (including the incorporation of data to add value to existing databases.

32. Types of DSS : Document-driven DSS • Document-driven DSS  Document-driven DSSs are more common, targeted at a broad base of user groups. The purpose of such a DSS is to search web pages and find documents on a specific set of keywords or search terms. The usual technology used to set up such DSSs are via the web or a client/server system.

33. Types of DSS :Knowledge-driven DSS • Knowledge-driven DSS:  Knowledge-driven DSSs or 'knowledgebase' as they are known, are a catch-all category covering a broad range of systems covering users within the organization setting it up, but may also include others interacting with the organization - for example, consumers of a business. • It is essentially used to provide management advice or to choose products/services. • The typical deployment technology used to set up such systems could be silent/server systems, the web, or software running on stand-alone PCs.

34. Types of DSS : Model-driven DSS  • Model-driven DSS  Model-driven DSSs are complex systems that help analyze decisions or choose between different options. These are used by managers and staff members of a business, or people who interact with the organization, for a number of purposes depending on how the model is set up - scheduling, decision analyses etc. These DSSs can be deployed via software/hardware in stand-alone PCs, client/server systems, or the web.

35. 4- Decision Support System(DSS)’s Components 1. Data Management Subsystem2. Model Management Subsystem3. Knowledge Management Subsystem4. User Interface Subsystem5. The User

36. 4- Decision Support System(DSS)’s Components Data Management Model Management Other Systems Knowledge Management User Interface User DSS Architecture

37. 4.1 The Data Management Subsystem • The Data Management Subsystem Data Management subsystem includes a database that contains relevant data for the situation and managed by software called the Database Management System (DBMS) and can be interconnected with the corporate data warehouse. Usually, the data are stored or accessed via a database Web server. The Capabilities of DBMS in a DSS • Captures/extracts data for inclusion in a DSS database • Updates (adds, deletes, edits, changes) data records and files • Interrelates data from different sources • Retrieves data from the database for queries and reports • Provides comprehensive data security (protection from unauthorized access, recovery capabilities, etc.) • Performs complex data manipulation tasks based on queries • Tracks data use within the DSS • Manages data through a data dictionary

38. 4.2 The Model Management Subsystem Model Management Subsystem is a software package that includes financial, statistical, management science or other quantitative models that provide the system’s analytical capabilities and appropriate software management. • There can be 3 different types of modeling software for DSSs: • Statistical models, • Optimization models, • Forecasting models.

39. 4.2 The Model Management Subsystem : statistical models • Statistical modeling software can be used to help establish relationships such as relating product sales to differences in age, income or other factors between communities. • Ex: SPSS.

40. 4.2 The Model Management Subsystem : optimization models • Optimization models often using Linear Programming (LP) determine the proper mix of products within a given market to maximize profit.

41. 4.2 The Model Management Subsystem : Forecasting models. • The user of this type of model might supply a range of historical data to project future conditions and sales that might result from those conditions. • Companies often use this software to predict the action of competitors.

42. 4.2.1 Major Functions (Capabilities) of the MBMS • Creates models easily and quickly, either from scratch or from existing models or from the building blocks. • Allows users to manipulate the models so they can conduct experiments and sensitivity analyses ranging from “what-if” to goal seeking. • Stores, retrieves, and manages a wide variety of different types of models in a logical and integrated manner. • Accesses and integrates the model building blocks. • Catalogs and displays the directory of models for use by several individuals in the organization. • Interrelates models with appropriate linkages with the database and integrates them within the DSS. • Manages and maintains the model base with management functions analogous to database management: store, access, run, update, link, catalog, and query. • Uses multiple models to support problem solving.

43. 4.3The Knowledge Management Subsystem • Provides expertise in solving complex unstructured and semi-structured problems What models to use, how, interpreting results Reasoning, handling uncertainty, learning from data Expertise provided by an expert system or other intelligent system (AI techniques) • Leads to intelligent DSS • Example: Data mining

44. 4.4The User Interface (Dialog) Subsystem • Includes all communication between a user and the DSS • To most users, the user interface is the system • Major Capabilities will include : • Provides graphical user interface. • Accommodates the user with a variety of input devices. • Presents data with a variety of formats and output devices. • Gives users “help” capabilities, prompting, diagnostic and suggestion routines, or any other flexible support. • Provides interactions with the database and the model base. • Stores input and output data. • Provides color graphics, three-dimensional graphics, and data plotting. • Has windows to allow multiple functions to be displayed concurrently. • Provides training by examples (guiding users through the input and modeling process).

45. Tools used in a DSS • Using a DSS involves different types of analytical modeling activities:

46. The DSS Hierarchy • Suggestion systems • Optimization systems • Representational models • Accounting models • Analysis information systems • Data analysis systems • File drawer systems high Possible Complexity low

47. File Drawer Systems • They are the simplest type of DSS • Can provide access to simple items of information • The values obtained are used straight forwardly to make a decision • Example: • ATM Machine • Discover the account balance before deciding how much to withdraw

48. Data Analysis Systems • Provide access to data • Allow data manipulation capabilities • Example: Airline Reservation system: No more seats available so provide alternative flights you can use the information to make flight plans

49. Analysis Information Systems • Provide access to multiple data sources • Combines data from different sources • Allows data analysis capabilities • Example: Compare growth in revenues to industry average (requires access to many sources)

50. Accounting Models • Use internal accounting data • Provide accounting modeling capabilities • Can not handle uncertainty • Example: Bill of material used in a dressmaking shop Calculate production costs Make pricing decisions