Chapter 2

Information system
Subtitle
 Learning Objectives
Upon successful completion of this chapter, you will be able to:
✓Define what is Information System
✓ Distinguish between Data & Information
✓Discuss different types of information System
✓ Why information system is important to an organization?
✓ know the components of information system
✓Understand what is data processing
✓ Explain the process that are involve in data processing.
 Introduction
According to Buckingham(1987) says Information System handles the
flow and maintenance of information that supports a business or
some other operation. It contains information about significant
people, places and things within the organization or in the
environment surrounding it.

• Information is derived from meaningful interpretation of

data. Data consists of the raw facts representing events occurring in
the organization before they are organized into an understandable
and useful form for humans.
 Information System
• Information systems are combinations of hardware, software, and
telecommunications networks that people build and use to collect,
create, and distribute useful data in an organization.
• For many companies, IS, is the name of the department responsible
for computers, networking and data management.

• An information system is any organized system for the collection,

organization, storage and communication of information.
• A set of interrelated components that collect, manipulate, and
forecast data and information and provide feedback to meet an
objective
Data and Information
What is data?
• Data are raw facts or observations that are considered to have
little or no value until they have been processed and transformed
into information.
• Example definitions:
(a) a series of non-random symbols, numbers, values or
words;
(b) a series of facts obtained by observation or research and
recorded;
(c) a collection of non-random facts;
(d) the record of an event or fact.
 Information
What is information?
Information: Data that have been processed so that they are
meaningful.
• Information is data that has been processed in such a way as to
be meaningful to the person who receives it.
• It is the set of data that has been organized for direct utilization
of mankind, as Information helps human beings in their decision
making process. Examples are: Time Table, Merit List, Report
card, Headed tables, printed documents, pay slips.
 4 Types of Information Systems
1. Transaction Processing System (TPS)
2. Management Information system (MIS)
3. Decision Support System (DSS)
4. Executive Support system (ESS)
 Transaction Processing System (TPS)
A transaction processing system provides a way to collect, process,
store, display modify or cancel transactions.
• Most of these systems allow multiple transactions to take place
simultaneously. The data that this system collects is usually stored
in databases which can be used to produce reports such as billing,
wages, inventory summaries, manufacturing schedules, or check
registers.
 Two types of transaction processing
Batch transaction processing:
• This is information that is gathered and stored but not processed
immediately . Examples: Invoice and cheques in a bank system or a
payroll system may process all the time cards every two weeks to
determine employee earnings and produce paychecks.

Real time transaction processing:

• This is a transaction which is processed immediately and the
operator has access to on-line database. i.e withdrawing from a
bank Account or buying goods using credit card
Management Information system (MIS)
• A management information system is an information system that
uses the data collected by the transaction processing system and
uses this data to create reports in a way that managers can use it
to make routine business decisions in response to problems.
• Converts raw data from transaction processing system into
meaningful form
• Some of the reports that this information system creates are
summary, exception and ad hoc reports. All this is done to
increase the efficiency of managerial activity.
Decision Support System (DSS)
• Decision support system helps make decisions by working and
analyzing data that can generate statistical projections and data
models.
• This system gives support rather than replacing a managers
judgement while improving the quality of a managers decision. A
DSS helps solve problems while using external data.
• A DSS helps a manger “do the right thing”
Information and Decision Support Systems
(continued)
Executive Information system (ESS)
• Also known as an Executive support system (ESS), is a type of
management information system that facilitates and supports
senior executive information and decision-making needs.
• It provides easy access to internal and external information
relevant to organizational goals.
 Other types of information system
• Customer relationship management system
• Business intelligence system
• Knowledge management system
• Office automation system
• Enterprise resource planning
• Artificial Intelligence
• Geographic information system
• Data Warehouse
• Global information system
Information system is important to an
organization
1. Communication
Information systems can make this process more efficiently by
allowing managers to communicate rapidly.
Email is quick and effective communication, that managers can
uses even more efficiently by storing documents in folders that
they share with the employees who need the information.
2. Operations
businesses can constantly improve their efficiency of their
operations in order to achieve higher profitability. They can do this
by constantly having the correct amount of stock in store so
consumers can always get want they want.
3. Decisions
The company information system can help make better decisions by
delivering all the information you need and by modelling the results
of your decision.
Decision help choosing a course of action from several sources and
carrying out the corresponding task.
When you have accurate decision, up – to- date information, you
can make the choice with confidence.
4. Records
The company needs records of all its activities for financial and
regulatory purposes as well as for finding the courses of the
problem and taking corrective action.
The information system stores documents and revision histories,
communication records and operational data.
Components of information system
 Components of information system continue….
• Input, Processing, Output, Feedback
Input: the activity of gathering and capturing raw data
• Whatever goes into the computer

Processing: converting or transforming data into useful outputs

Output: production of useful information, usually in the form of
documents and reports.
• Anything that comes out of a computer
Feedback: output that is used to make changes to input or
processing activities
• Use for estimating future sales
Data Processing
• Data processing refers to the process of transforming raw data
into meaningful output i.e. information.
• Data processing can be done manually using pen and paper.
Mechanically using simple devices like typewriters or
electronically using modern data processing tools such as
computers.
• Is the Manipulation of data by a computer. It includes the
conversion of raw data to machine-readable form, flow of data
through the CPU and memory to output devices, and
transformation of output.
Steps of Data processing process
1. Conversion – is process of converting data to another format
2. Validation - data entered into the computer is subjected to validity
checks by a computer program before being processed to reduce
errors as the input.
3. sorting - in case the data needs to be arranged in a predefined
order, it is first sorted before processing
4. Summarization – Data is well detailed to its main points
5. Aggregation – It combine multiple pieces of data together
6. Analysis – the process where data is collected, organized, and
presented in such way that the organization understand it
7. Reporting – list detail or summary data or computed information
•End of Chapter