lecture note for Unit 1: Information Systems and Its Applications

Unit 1: Information Systems and Its Applications

1.1 Data, Information, Knowledge, and Wisdom

Introduction
Information is a key resource in today’s world, enabling individuals and organizations to
make decisions and solve problems. Understanding the flow from data to information,
knowledge, and finally wisdom is essential for effectively utilizing information systems.
1.1.1 Data
Definition: Data is raw, unprocessed facts that do not convey any specific meaning on
their own. It is the foundation for creating information.
Types of Data:
 Text: Words and letters, e.g., names, places.
 Numbers: Numerical values, e.g., sales figures, ages.
 Images: Visual representations like photos, diagrams.
Example: The number "100" alone is data; it could represent someone's weight, a
grade, or a price, but without context, it is just a raw fact.
1.1.2 Information
Definition: Information is processed data that has been organized or structured to be
meaningful. It answers questions like who, what, where, when, and how.
Importance: Information helps individuals and organizations make decisions and take
actions based on meaningful data.
Example: "The sales for Product X increased by 20% last month." This is information
derived from processing raw sales data.
Forms of Representation:
 Tables: Organizes data into rows and columns for easy understanding.
 Graphs/Charts: Visual representations (e.g., bar charts, pie charts) used to
identify patterns and trends.
1.1.3 Knowledge
Definition: Knowledge is understanding gained by processing and applying information.
It involves interpreting information and using it to solve problems or make decisions.
Example: Knowing that during summer, sales of ice cream increase based on previous
sales reports. This knowledge allows businesses to prepare better for the upcoming
season.
How Knowledge is Acquired:
 Experience: Learning by doing or observing.
 Education: Gaining knowledge through study or training.
 Discussion: Sharing information and insights with others.
1.1.4 Wisdom
Definition: Wisdom is the ability to make sound judgments and decisions based on
knowledge. It is the highest form of understanding, involving the practical application of
knowledge in real-life situations.
Example: A CEO uses market trends (knowledge) to make strategic business decisions
(wisdom) that steer the company toward long-term growth.
Characteristics:
 Good Judgment: Knowing when and how to act based on experience.
 Foresight: Anticipating future outcomes and making decisions accordingly.
1.1.5 Differences Between Data, Information, Knowledge, and Wisdom
The relationship between these four elements forms a hierarchy:
 Data: Raw facts (e.g., 500 units).
 Information: Processed data (e.g., 500 units sold in June).
 Knowledge: Understanding gained from information (e.g., June is the best month
for product sales).
 Wisdom: The ability to make wise decisions based on knowledge (e.g., stocking
more units in June due to past sales trends).

1.2 Introduction to Information Systems (IS)

1.2.1 What is an Information System (IS)?
Definition: An Information System is a set of interrelated components that collect,
process, store, and disseminate data and information. Information systems help
organizations and individuals achieve their goals by supporting decision-making and
improving efficiency.
Example: A school information system might track student attendance, grades, and
performance to help teachers and administrators make informed decisions.
1.2.2 Components of an Information System
1. Hardware: Physical devices like computers, servers, printers, and storage
devices. These are responsible for inputting, processing, and outputting data.
Example: A server storing a company’s sales data.
2. Software: Programs and applications that control hardware and process data.
There are two main types:
 System Software: Operating systems like Windows or macOS that
manage hardware.
 Application Software: Programs like word processors, databases, or
specialized software for managing information (e.g., Excel, Google
Docs).
3. Data: The core of an information system, data is the raw material that the
system processes to create information.
Example: A supermarket’s daily sales figures.
4. People: Users and operators of the system who input, process, and interpret
data. This includes end users (e.g., employees) and technical staff (e.g., system
administrators).
Example: A teacher entering student grades into the school’s information system.
5. Procedures: The policies and rules that govern how the system is used.
Procedures ensure the correct, secure, and efficient use of the system.
Example: A company policy on how to enter and access customer data.

1.2.3 Importance of Information Systems

Efficiency: Automating processes and reducing manual labor, which speeds up
operations and improves productivity.
Decision Support: Providing timely, accurate information to help managers make
informed decisions.
Communication: Facilitating communication and collaboration between different parts
of the organization.
1.2.4 Types of Information Systems
1. Transaction Processing Systems (TPS):
Purpose: Handle routine transactions such as sales, purchases, and payroll. They are
essential for day-to-day operations.
Example: A point-of-sale (POS) system in a store that records every sale.
2. Management Information Systems (MIS):
Purpose: Provide managers with regular reports based on data from TPS to help them
control and monitor operations.
Example: A monthly sales report showing the total number of items sold.
3. Decision Support Systems (DSS):
Purpose: Help managers make complex decisions by analyzing large amounts of data
and generating recommendations.
Example: A DSS that helps a company decide where to open a new store based on
customer data and demographics.
4. Executive Information Systems (EIS):
Purpose: Provide top executives with high-level data and insights that are essential for
strategic decision-making.
Example: A dashboard that shows financial performance indicators and key trends.

1.3 Applications of Information Systems

1.3.1 E-Government
Definition: The use of information systems by governments to provide services to
citizens electronically, making processes more efficient, transparent, and accessible.
Examples:
Online Services: Paying taxes, applying for licenses, or renewing identification cards
through government portals.
Ethiopia’s E-Government: Platforms such as the Ministry of Health’s portal provide
health-related services and information to citizens.
Benefits:
Efficiency: Citizens can access services anytime, anywhere, reducing the need for
physical visits to government offices.
Cost Reduction: Digital services reduce paperwork and administrative costs.
Transparency: Improved transparency in government processes, reducing corruption.
1.3.2 E-Banking
Definition: E-banking involves delivering banking services through electronic platforms
like mobile apps, websites, and ATMs.
Examples:
ATM Services: Allow customers to withdraw cash, check balances, and transfer money.
Internet Banking: Enables customers to perform transactions like bill payments, fund
transfers, and viewing account balances online.
Mobile Banking: Banking services available through smartphones, offering
convenience and real-time access.
Benefits:
 24/7 Access: Customers can perform transactions anytime, without visiting a
bank.
 Lower Costs: Reduces the need for physical bank branches and staff.
 Faster Transactions: Immediate processing of payments and transfers.

1.3.3 E-Learning
Definition: E-learning is the delivery of educational content and experiences through
digital platforms, allowing students to learn at their own pace and access a wide range
of resources.
Features:
  Online Courses: Courses provided through platforms like Coursera, Khan
Academy, or Moodle.
 Interactive Content: Use of multimedia elements like video lectures, quizzes,
and discussions.
Benefits:
Flexibility: Students can access materials at any time, allowing for self-paced learning.
Reduced Costs: E-learning eliminates the need for physical classrooms and textbooks,
lowering the cost of education.
1.3.4 E-Commerce
Definition: E-commerce is the buying and selling of goods and services over the
Internet, allowing businesses and consumers to interact in an online marketplace.
How It Works:
 Customers browse products, place orders, and make payments online. The
goods are then delivered to their homes.
Examples: Amazon, Alibaba, and local e-commerce platforms.
Benefits:
Convenience: Customers can shop from home, saving time and effort.
Global Reach: Businesses can sell products to customers worldwide, expanding their
market.
Cost Savings: Online stores reduce the need for physical locations, lowering
overhead costs and allowing for more competitive pricing.

1.3.5 Telemedicine
Definition: Telemedicine involves the use of telecommunications technology to provide
healthcare services remotely. Patients and healthcare providers communicate through
video calls, phone calls, or messaging platforms, eliminating the need for in-person
visits.
How It Works:
  Patients consult with doctors remotely using online platforms.
 Doctors diagnose and prescribe treatments via the internet.
Examples: Patients in rural areas consulting specialists in urban hospitals without
traveling.
Benefits:
Increased Access: People in remote or underserved areas can access healthcare
services.
Cost Efficiency: Telemedicine reduces the need for travel and hospital visits, saving
both time and money.
Convenience: Patients can receive care from the comfort of their homes.
1.3.6 Teleconferencing
Definition: Teleconferencing is the use of communication technologies to hold meetings
with participants in different locations. It can be conducted through audio-only or video
formats.
Types:
1. Audio Conferencing: Voice communication via telephones or internet-based
systems.
Example: Conference calls among business teams.
2. Video Conferencing: Meetings where participants can see and hear each
other via video.
Example: Platforms like Zoom, Microsoft Teams, and Google Meet.

Benefits:
Cost Savings: Eliminates the need for travel, reducing time and expenses.
Increased Collaboration: Enables teams to collaborate in real-time, even from different
geographic locations.
Time Efficiency: Meetings can be held quickly, without the need to physically gather
participants.
1.4 IT for Entrepreneurship
1.4.1 Introduction to IT-based Entrepreneurship
Definition: Entrepreneurship involves the process of starting and running a business.
IT-based entrepreneurship refers to starting businesses that rely heavily on information
technology for operations and service delivery.
Importance of IT for Entrepreneurs: IT offers entrepreneurs new ways to start and run
businesses at a lower cost, with fewer barriers to entry compared to traditional
businesses. It enables access to a global market and the ability to scale quickly.
1.4.2 Types of IT-Based Businesses
1. Online Marketplaces:
Definition: Platforms where buyers and sellers conduct transactions over the internet.
Examples: Amazon, eBay, or local e-commerce platforms.
Benefits: Minimal need for physical infrastructure, wide market reach, and scalability.
2. Mobile Application Development:
Definition: Creating applications that run on smartphones and tablets. These apps
provide a wide range of services, from entertainment to productivity tools.
Examples: Social networking apps (e.g., Facebook), ride-hailing services (e.g., Uber),
mobile payment systems (e.g., PayPal).
Opportunities for Entrepreneurs: Developers can create apps that solve everyday
problems and market them globally through app stores like Google Play or the Apple
App Store.

3. Online Education Platforms:

Definition: E-learning businesses that provide educational content and resources
online.
Examples: Udemy, Coursera, Khan Academy.
Opportunities: Entrepreneurs can create courses on various topics and sell them to
students worldwide. Online education platforms can reach large audiences at relatively
low costs compared to traditional educational institutions.
4. Social Media and Digital Marketing:
Definition: IT-based businesses that focus on managing and marketing products or
services via social media platforms.
Examples: Social media marketing agencies, content creation, and influencer
marketing.
Opportunities: Entrepreneurs can use social media to promote products, build brands,
and reach specific target audiences.
5. Freelance and Remote Work Platforms:
Definition: Websites that connect freelancers (e.g., writers, graphic designers,
developers) with clients who need their services.
Examples: Upwork, Fiverr.
Opportunities: Freelancers can work with clients worldwide without needing a physical
office, offering services from graphic design to programming.

1.4.3 Advantages of IT for Entrepreneurship

Lower Start-up Costs: Many IT-based businesses can be started with minimal capital.
For example, an entrepreneur with a laptop and internet connection can start a blog, an
e-commerce store, or a digital marketing business.
Global Reach: IT allows entrepreneurs to reach customers and clients globally,
expanding their market far beyond local borders.
Scalability: IT-based businesses can scale quickly by leveraging digital platforms. For
example, an online service can grow its user base without the need for additional
physical infrastructure.
Flexibility: Many IT businesses can operate from anywhere, allowing entrepreneurs to
work from home or while traveling.

1.4.4 The Role of IT in Solving Unemployment

Job Creation: IT-based businesses create new job opportunities, especially for young
people with digital skills.
Example: In Ethiopia, startups like RIDE (a taxi-hailing service) have created
thousands of jobs for drivers.
Freelancing Opportunities: IT enables individuals to offer their services as
freelancers, allowing them to earn income without traditional full-time employment.
Example: Freelancers on platforms like Upwork can offer services such as
graphic design, content writing, and web development to clients worldwide.
1.4.5 Example of IT-based Entrepreneurship in Ethiopia
RIDE:
An Ethiopian taxi-hailing service created by entrepreneur Samrawit Fikru. The
service allows users to book taxis via an app and has significantly improved
transportation in Ethiopian cities. RIDE has also created job opportunities for
drivers, improving employment in the region.
Opportunities for Other Entrepreneurs:
Creating similar apps for different sectors (e.g., delivery services, e-learning
platforms, online marketplaces).
Leveraging local knowledge and resources to solve community-specific problems
using IT solutions.
1.4.6 The Future of IT-based Entrepreneurship
Technological Innovation: As technology continues to evolve, new opportunities for IT-
based businesses will emerge. Examples include:
 Artificial Intelligence (AI): Entrepreneurs can use AI to develop new
products or improve existing services, such as chatbots for customer
support or AI-driven personal assistants.
 Blockchain: Blockchain technology can be used to create secure online
transactions and decentralized business models, opening up new
possibilities for digital entrepreneurs.
 Global Connectivity: The rise of 5G networks and improved internet
access will allow even more people to start and run businesses online,
leading to greater innovation and competition in the IT space.