Introduction

An information system (IS) is any combination of information technology and people's activities
using that technology to support operations, management, and decision-making. In a very broad
sense, the term information system is frequently used to refer to the interaction between people,
algorithmic processes, data and technology. In this sense, the term is used to refer not only to the
information and communication technology (ICT) an organization uses, but also to the way in
which people interact with this technology in support of business processes

Classification and brief history:

Characterized by a principal technology used to solve the input, processing, output and
communication problems of the time:

A. Premechanical,
B. Mechanical,
C. Electromechanical, and
D. Electronic

A. The Premechanical Age: 3000 B.C. - 1450 A.D.

1. Writing and Alphabets--communication.

First humans communicated only through speaking and picture drawings.

2. Paper and Pens--input technologies.

Sumerians' input technology was a stylus that could scratch marks in wet clay.

3. Books and Libraries: Permanent Storage Devices.

Religious leaders in Mesopotamia kept the earliest "books"

4. The First Numbering Systems.

1. Egyptian system:
 The numbers 1-9 as vertical lines, the number 10 as a U or circle, the
number 100 as a coiled rope, and the number 1,000 as a lotus blossom.
 The First Calculators: The Abacus.
B. The Mechanical Age: 1450 - 1840

1. The First Information Explosion.

1. Johann Gutenberg (Mainz, Germany)
 Invented the movable metal-type printing process in 1450.
2. The development of book indexes and the widespread use of page numbers.
2. The first general purpose "computers"

o Actually people who held the job title "computer: one who works with numbers."
. Slide Rules, the Pascaline and Leibniz's Machine.

C. The Electromechanical Age: 1840 - 1940.

The discovery of ways to harness electricity was the key advance made during this period.
Knowledge and information could now be converted into electrical impulses.

1. The Beginnings of Telecommunication.

1. Voltaic Battery.
 Late 18th century.
2. Telegraph.
 Early 1800s.
3. Morse Code.
 Developed in1835 by Samuel Morse
 Dots and dashes.
4. Telephone and Radio.

1876 Alexander Graham Bell.

 2. Electromechanical Computing
1. Herman Hollerith and IBM.
Herman Hollerith (1860-1929) in 1880
Early punch cards.

D. The Electronic Age: 1940 - Present.

1. The First Generation (1951-1958).

1. Vacuum tubes as their main logic elements.

2. Punch cards to input and externally store data.
3. Rotating magnetic drums for internal storage of data and programs

 Programs written in
 Machine language
 Assembly language
 Requires a compiler
2. The Second Generation (1959-1963).
1. Vacuum tubes replaced by transistors as main logic element.
 AT&T's Bell Laboratories, in the 1940s

 Crystalline mineral materials called semiconductors could be used

in the design of a device called a transistor
3. The Third Generation (1964-1979).

1. Individual transistors were

replaced by integrated
circuits.
2. Magnetic tape and disks
completely replace punch
cards as external storage devices.
3. Magnetic core internal
memories began to give
way to a new form, metal oxide semiconductor (MOS) memory, which,
like integrated circuits, used silicon-backed chips.
 Operating systems
 Advanced programming languages like BASIC developed.
 Which is where Bill Gates and Microsoft got their start in
1975.
 4. The Fourth Generation (1979- Present).

It can be provide GUI as well as latest communication methods and technology

through which communication is very fast and effective.

Role of information technology in information systems:

Information systems are constantly changing and evolving as technology continues to grow.
Very importantly the information systems described below are not mutually exclusive and some
(especially Expert Systems, Management Information Systems and Executive Information
Systems are can be seen as a subset of Decision Support Systems). However these examples are
not the only overlaps and the divions of these information systems will change over time.

At present there are five main types:

 
 Transaction Processing Systems (TPS)
 Decision Support Systems (DSS)
 Expert Information Systems (EIS)
 Management Information Systems (MIS
 Office Automation Systems (OAS)

Transaction Processing System:

A Transaction Processing System or Transaction Processing Monitor is a set of information

which processes a data transaction in a database system that monitors transaction programs (a
special kind of program). The essence of a transaction program is that it manages data that must
be left in a consistent state. E.g. if an electronic payment is made, the amount must be both
withdrawn from one account and added to the other; it cannot complete only one of those steps.
Either both must occur, or neither. In case of a failure preventing transaction completion, the
partially executed transaction must be 'rolled back' by the TPS. While this type of integrity must
be provided also for batch transaction processing, it is particularly important for online
processing: if e.g. an airline seat reservation system is accessed by multiple operators, after an
empty seat inquiry, the seat reservation data must be locked until the reservation is made,
otherwise another user may get the impression a seat is still free while it is actually being booked
at the time. Without proper
transaction monitoring,
double bookings may
occur. Other transaction
monitor functions
include deadlock
detection and resolution
(deadlocks may be
inevitable in certain cases of
cross- dependence on
data), and transaction
logging (in 'journals') for
'forward recovery' in case of massive failures.

And all this possible by use of modern information technology

Decision Support Systems:

A decision support systems (DSS) is a computer-based information system that supports business
or organizational decision-making activities. DSSs serve the management, operations, and
planning levels of an organization and help to make decisions, which may be rapidly changing
and not easily specified in advance.
DSSs include knowledge-based systems. A properly designed DSS is an interactive software-
based system intended to help decision makers compile useful information from a combination
of raw data, documents, personal knowledge, or business models to identify and solve problems
and make decisions.

Typical information that a decision support application might gather and present are:

 inventories of information assets (including legacy and relational data sources, cubes,
data warehouses, and data marts),
 comparative sales figures between one period and the next,
 projected revenue figures based on product sales assumptions.

Management Information Systems:

A management information system (MIS) is a system or process that provides information

needed to manage organizations effectively. Management information systems are regarded to be
a subset of the overall internal controls procedures in a business, which cover the application of
people, documents, technologies, and procedures used by management accountants to solve
business problems such as costing a product, service or a business-wide strategy. Management
information systems are distinct from regular information systems in that they are used to
analyze other information systems applied in operational activities in the organization.
Offics Automation system:

Office automation refers to the varied computer machinery and software used to digitally create,
collect, store, manipulate, and relay office information needed for accomplishing basic tasks and
goals. Raw data storage, electronic transfer, and the management of electronic business
information comprise the basic activities of an office automation system. [1] Office automation
helps in optimizing or automating existing office procedures.

The backbone of office automation is a LAN, which allows users to transmit data, mail and even
voice across the network. All office functions, including dictation, typing, filing, copying, fax,
Telex, microfilm and records management, telephone and telephone switchboard operations, fall
into this category. Office automation was a popular term in the 1970s and 1980s as the desktop
computer exploded onto the scene

Role of ISs in Business Functions

First we have to be clear what exactly the business functions are…

Business Functions:

Series of logically related activities or tasks (such as planning, production, sales) performed
together to produce a defined set of results, also called business processes.

There are three types of business processes/functions:

1. Management processes

 The processes that govern the operation of a system. Typical management

processes include "Corporate Governance" and "Strategic Management".
2. Operational processes

 Processes that constitute the core business and create the primary value stream.
Typical operational processes are Purchasing, Manufacturing, Advertising and
Marketing, and Sales.

3. Supporting processes

 Which support the core processes, Examples include Accounting, Recruitment,

Call center, Technical support.

A business process begins with a mission objective and ends with achievement of the
business objective. Process-oriented organizations break down the barriers of structural
departments and try to avoid functional silos.

A business process can be decomposed into several sub-processes, which have their own
attributes, but also contribute to achieving the goal of the super-process. The analysis of
business processes typically includes the mapping of processes and sub-processes down to
activity level.

Business Processes are designed to add value for the customer and should not include
unnecessary activities. The outcome of a well designed business process is increased
effectiveness (value for the customer) and increased efficiency (less costs for the company).

Business Processes are designed to add value for the customer and should not include
unnecessary activities. The outcome of a well designed business process is increased
effectiveness (value for the customer) and increased efficiency (less costs for the company).
Business functions may also be categorized into internal and external functions as illustrated in
the following figure

Information Systems for Business Functions

Supporting Business Functions in an Enterprise with Information

The principal business functions in a business firm are:

1. Marketing and sales

2. Production

3. Accounting and finance

4. Human resources

Marketing Information Systems

Marketing activities are directed toward planning, promoting, and selling goods and services to
satisfy the needs of customers and the objectives of the organization.

Marketing information systems support decision making regarding the marketing mix. These
include:
 1. Product

2. Price

3. Place

4. Promotion

Sources of Data and Information for Marketing: Boundary-Spanning and Transaction

Processing Subsystems

A marketing information system relies on external information to a far greater degree than other
organizational information systems. It includes two subsystems designed for boundary spanning
- bringing into the firm data and information about the marketplace.

The objective of marketing research is to collect data on the actual customers and the potential
customers, known as prospects. The identification of the needs of the customer is a fundamental
starting point for total quality management (TQM). Electronic commerce on the WEB makes it
easy to compile statistics on actual buyer behavior.

Marketing research software supports statistical analysis of data. It enables the firm to correlate
buyer behavior with very detailed geographic variables, demographic variables, and
psychographic variables.

Marketing (competitive) intelligence is responsible for the gathering and interpretation of data
regarding the firm's competitors, and for the dissemination of the competitive information to the
appropriate users. Most of the competitor information comes from corporate annual reports,
media-tracking services, and from reports purchased from external providers, including on-line
database services. The Internet has become a major source of competitive intelligence.

Marketing Mix Subsystems

The marketing mix subsystems support decision making regarding product introduction, pricing,
promotion (advertising and personal selling), and distribution. These decisions are integrated into
the sales forecast and marketing plans against which the ongoing sales results are compared.

Marketing mix subsystems include:

1. Product subsystem

2. Place subsystem

3. Promotion subsystem

4. Price subsystem
 5. Sales forecasting

Product Subsystem

The product subsystem helps to plan the introduction of new products. Continually bringing new
products to market is vital in today's competitive environment of rapid change. The product
subsystem should support balancing the degree of risk in the overall new-product portfolio, with
more aggressive competitors assuming higher degrees of risk for a potentially higher payoff.

Although decisions regarding the introduction of new products are unstructured, information
systems support this process in several ways:

1. Professional support systems assist designers in their knowledge work

2. DSSs are used to evaluate proposed new products

3. With a DSS, a marketing manager can score the desirability of a new product.

4. Electronic meeting systems help bring the expertise of people dispersed in space and time to
bear on the problem

5. Information derived from marketing intelligence and research is vital in evaluating new
product ideas.

Place Subsystem

The place subsystem assists the decision makers in making the product available to the customer
at the right place at the right time. The place subsystem helps plan the distribution channels for
the product and track their performance.

The use of information technology has dramatically increased the availability of information on
product movement in the distribution channel. Examples include:

1. Bar-coded Universal Product Code (UPC)

2. Point-of-sale (POS) scanning

3. Electronic data interchange (EDI)

4. Supports just-in-time product delivery and customized delivery

Promotion Subsystem

The promotion subsystem is often the most elaborate in the marketing information system, since
it supports both personal selling and advertising. Media selection packages assist in selecting a
mix of avenues to persuade the potential purchaser, including direct mail, television, print media,
and the electronic media such as the Internet and the WEB in particular. The effectiveness of the
selected media mix is monitored and its composition is continually adjusted.

Database marketing relies on the accumulation and use of extensive databases to segment
potential customers and reach tem with personalized promotional information.

The role of telemarketing, marketing over the telephone, has increased. Telemarketing calls are
well supported by information technology.

Sales management is thoroughly supported with information technology. Customer profitability

analysis help identify high-profit and high-growth customers and target marketing efforts in
order to retain and develop these accounts.

Sales force automation, involves equipping salespeople with portable computers tied into the
corporate information systems. This gives the salespeople instantaneous access to information
and frees them from the reporting paperwork. This increases selling time and the level of
performance. Access to corporate databases is sometimes accompanied by access to corporate
expertise, either by being able to contact the experts or by using expert systems that help specify
the product meeting customer requirements.

Price Subsystem

Pricing decisions find a degree of support from DSSs and access to databases that contain
industry prices. These highly unstructured decisions are made in pursuit of the companys pricing
objectives. General strategies range from profit maximization to forgoing a part of the profit in
order to increase a market share.

Information systems provide an opportunity to finely segment customer groups, and charge
different prices depending on the combination of products and services provided, as well as the
circumstances of the sale transaction.

Sales Forecasting

Based on the planned marketing mix and outstanding orders, sales are forecast and a full
marketing plan is developed. Sale forecasting is an area where any quantitative methods
employed must be tempered with human insight and experience. The actual sales will depend to
a large degree on the dynamics of the environment.

Qualitative techniques are generally used for environmental forecasting - an attempt to predict
the social, economic, legal, and technological environment in which the company will try to
realize its plans. Sales forecasting uses numerous techniques, which include:

1. Group decision making techniques are used to elicit broad expert opinion

2. Scenario analysis in which each scenario in this process is a plausible future environment
3. Extrapolation of trends and cycles through a time-series analysis.

Manufacturing Information Systems

Global competitive pressures of the information society have been highly pronounced in
manufacturing and have radically changed it. The new marketplace calls for manufacturing that
are:

1. Lean - highly efficient, using fewer input resources in production through better engineering
and through production processes that rely on low inventories and result in less waste.

2. Agile - fit for time-based competition. Both the new product design and order fulfilment are
drastically shortened.

3. Flexible - able to adjust the product to a customer's preferences rapidly and cost effectively.

4. Managed for quality - by measuring quality throughout the production process and following
world standards, manufacturers treat quality as a necessity and not a high-price option.

Structure of Manufacturing Information Systems

Information technology must play a vital role in the design and manufacturing processes.
Manufacturing information systems are among the most difficult both to develop and to
implement.

TPSs are embedded in the production process or in other company processes. The data provided
by the transaction processing systems are used by management support subsystems, which are
tightly integrated and interdependent.

Manufacturing information subsystems include:

1. Product design and engineering

2. Product scheduling

3. Quality control

4. Facilities planning, production costing, logistics and inventory subsystems

Product Design and Engineering

Product design and engineering are widely supported today by computer-aided design (CAD)
and computer-aided engineering (CAE) systems. CAD systems assist the designer with
automatic calculations and display of surfaces while storing the design information in databases.
The produced designs are subject to processing with CAE systems to ensure their quality, safety,
manufacturability, and cost-effectiveness. CAD/CAE systems increasingly eliminate paperwork
from the design process, while speeding up the process itself. As well, the combined techniques
of CAD/CAE and rapid prototyping cut time to market.

Product Scheduling

Production scheduling is the heart of the manufacturing information system. This complex
subsystem has to ensure that an appropriate combination of human, machinery, and material
resources will be provided at an appropriate time in order to manufacture the goods.

Production scheduling and the ancillary processes are today frequently controlled with a
manufacturing resource planning system as the main informational tool. This elaborate
software converts the sales forecast for the plants products into a detailed production plan and
further into a master schedule of production.

Computer integrated manufacturing (CIM) is a strategy through which a manufacturer takes

control of the entire manufacturing process. The process starts with CAD and CAE and
continues on the factory floor where robots and numerically controlled machinery are installed -
and thus computer-aided manufacturing (CAM) is implemented. A manufacturing system
based on this concept can turn out very small batches of a particular product as cost-effectively
as a traditional production line can turn out millions of identical products. A full-fledged CIM is
extremely difficult to implement; indeed, many firms have failed in their attempts to do so.

Quality Control

The quality control subsystem of a manufacturing information system relies on the data collected
on the shop floor by the sensors embedded in the process control systems.

Total quality management (TQM) is a management technique for continuously improving the
performance of all members and units of a firm to ensure customer satisfaction. In particular, the
principles of TQM state that quality comes from improving the design and manufacturing
process, rather than Ainspecting out@ defective products. The foundation of quality is also
understanding and reducing variation in the overall manufacturing process.

Facilities Planning, Production Costing, Logistics and Inventory Subsystems

Among the higher-level decision making supported by manufacturing information systems are
facilities planning - locating the sites for manufacturing plants, deciding on their production
capacities, and laying out the plant floors.

Manufacturing management requires a cost control program, relying on the information systems.
Among the informational outputs of the production costing subsystem are labor and equipment
productivity reports, performance of plants as cost centers, and schedules for equipment
maintenance and replacement.

Managing the raw-materials, packaging, and the work in progress inventory is a responsibility of
the manufacturing function. In some cases, inventory management is combined with the general
logistics systems, which plan and control the arrival of purchased goods into the firm as well as
shipments to the customers.

Accounting and Financial Information Systems

The financial function of the enterprise consists in taking stock of the flows of money and other
assets into and out of an organization, ensuring that its available resources are properly used and
that the organization is financially fit. The components of the accounting system include:

1. Accounts receivable records

2. Accounts payable records

3. Payroll records

4. Inventory control records

5. General ledgers

Financial information systems rely on external sources, such as on-line databases and custom
produced reports, particularly in the areas of financial forecasting and funds management. The
essential functions that financial information systems perform include:

1. Financial forecasting and planning

2. Financial control

3. Funds management

4. Internal auditing

Financial Forecasting

Financial forecasting is the process of predicting the inflows of funds into the company and the
outflows of funds from it for a long term into the future. Outflows of funds must be balanced
over the long term with the inflows. With the globalization of business, the function of financial
forecasting has become more complex, since the activities in multiple national markets have to
be consolidated, taking into consideration the vagaries of multiple national currencies. Scenario
analysis is frequently employed in order to prepare the firm for various contingencies.

Financial forecasts are based on computerized models known as cash-flow models. They range
from rather simple spreadsheet templates to sophisticated models developed for the given
industry and customized for the firm or, in the case of large corporations to specify modeling of
their financial operations. Financial forecasting serves to identify the need for funds and their
sources.
Financial Control

The primary tools of financial control are budgets. A budget specifies the resources committed
to a plan for a given project or time period. Fixed budgets are independent of the level of activity
of the unit for which the budget is drawn up. Flexible budgets commit resources depending on
the level of activity.

Spreadsheet programs are the main budgeting tools. Spreadsheets are the personal productivity
tools in use today in budget preparation.

In the systems-theoretic view, budgets serve as the standard against which managers can
compare the actual results by using information systems. Performance reports are used to
monitor budgets of various managerial levels. A performance report states the actual financial
results achieved by the unit and compares them with the planned results.

Along with budgets and performance reports, financial control employs a number of financial
ratios indicating the performance of the business unit. A widely employed financial ratio is
return on investment (ROI). ROS shows how well a business unit uses its resources. Its value is
obtained by dividing the earnings of the business unit by its total assets.

Funds Management

Financial information systems help to manage the organization's liquid assets, such as cash or
securities, for high yields with the lowest degree of loss risk. Some firms deploy computerized
systems to manage their securities portfolios and automatically generate buy or sell orders.

Internal Auditing

The audit function provides an independent appraisal of an organization's accounting, financial,

and operational procedures and information. All large firms have internal auditors, answerable
only to the audit committee of the board of directors. The staff of the chief financial officer of
the company performs financial and operational audits. During a financial audit, an appraisal is
made of the reliability and integrity of the company's financial information and of the means
used to process it. An operational audit is an appraisal of how well management utilizes
company resources and how well corporate plans are being carried out.

Human Resource Information Systems

A human resource information system (HRIS) supports the human resources function of an
organization with information. The name of this function reflects the recognition that people who
work in a firm are frequently its most valuable resources. The complexity of human resource
management has grown immensely over recent years, primary due to the need to conform with
new laws and regulations.

A HRIS has to ensure the appropriate degree of access to a great variety of internal stakeholders,
including:
1. The employees of the Human Resources department in performance of their duties

2. All the employees of the firm wishing ti inspect their own records

3. All the employees of the firm seeking information regarding open positions or available
benefit plans

4. Employees availing themselves of the computer-assisted training and evaluation opportunities

5. Managers throughout the firm in the process of evaluating their subordinates and making
personnel decisions

6. Corporate executives involved in tactical and strategic planning and control

Transaction Processing Subsystems and Databases of Human Resource Information

Systems

At the heart of HRIS are its databases, which are in some cases integrated into a single human
resource database. The record of each employee in a sophisticated employee database may
contain 150 to 200 data items, including the personal data, educational history and skills,
occupational background, and the history of occupied positions, salary, and performance in the
firm. Richer multimedia databases are not assembled by some firms in order to facilitate fast
formation of compatible teams of people with complementary skills.

Other HRIS databases include:

1. Applicant databases

2. Position inventory

3. Skills inventory

4. Benefit databases

5. External databases

Information Subsystems for Human Resource Management

The information subsystems of HRIS reflect the flow of human resources through the firm, from
planning and recruitment to termination. A sophisticated HRIS includes the following
subsystems:

1. Human resource planning

2. Recruiting and workforce management

3. Compensation and benefits

4. Government reporting and labour relations support

Human Resource Planning

To identify the human resources necessary to accomplish the long-term objectives of a firm, we
need to project the skills, knowledge, and experience of the future employees.

Recruiting and Workforce Management

Based on the long-term resource plan, a recruitment plan is developed. The plan lists the
currently unfilled positions and those expected to become vacant due to turnover.

The life-cycle transitions of the firm's workforce - hiring, promotion and transfer, and
termination - have to be supported with the appropriate information system components.

Compensation and Benefits

Two principal external stakeholders have an abiding interest in the human resource policies of
organizations. These are:

1. Various levels of government

2. Labor unions

Integrating Functional Systems for Superior Organizational Performance

Functional information systems rarely stand alone. This reflects the fact that the functions they
support should, as much as possible, connect with each other seamlessly in order to serve the
firms customers. Customers expect timely order delivery, often on a just-in-time schedule;
quality inspection to their own standards; flexible credit terms; post-delivery service; and often,
participation in the product design process.

Information technology provides vital support for integrating internal business processes, cutting
across functional lines, and for integrating operations with the firm's business partners, its
customers and suppliers.
http://en.wikipedia.org/wiki/Business_process

http://www.umsl.edu/~joshik/msis480/chapt12.htm