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Changing Environment And Its Impact On Business Information Technology Essay

Paper Type: Free Essay Subject: Information Technology
Wordcount: 3690 words Published: 1st Jan 2015

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With the emergence of internet, business organization of 20th century has undergone structural, cultural and qualitative change, the way business is done and a new organization structure has emerged known as E business enterprise. E business enterprise enables employees, professionals, terms, groups, vendors, customers to perform business operations through electronic exchange of data and information anywhere at any time. The business operations are performed through E communication and collaboration initiatives. Therefore, E business enterprise has a global market, reach, source and global competition. Due to extensive use of technology, the enterprise is now called a digital firm. The business process are conducted through enterprise software like ERP (Enterprise Resource Planning), SCM (Supply Chain Management) and CRM (Customer Relationship Management) supported by data warehouse, decision support system, knowledge management and content management system.

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Information Technology (IT) consists of computer hardware, software, data and storage technology, and networks along with the human resources required to operate the technology. The managers and employees directly interact with these systems, it is important for the company now and in the future that the information architecture and IT infrastructure meet the business requirements of the company and that the systems can work together where needed.

An Information System (IS) as interrelated components that work together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization.

An Inofrmation System (IS) can be any organised combination of people, hardware, software, communication networks, and data resources that stores and retrieves, transforms and disseminates information in an organization

The Field of Information Systems encompasses many complex technologies abstract behavioral concepts, and specialized application in countless business and nonbusiness areas. The figure beside Illustrates a useful conceptual framework that organizes the knowledge presented in the text and outlines what you need to know about information system.

For Detailed Information Students are requested to refer MIS by James A O’Brien Page 6 & 7

This framework Outlines the Major areas of Information

Systems Knowledge needed by business professionals

The Three Major roles of the business applications of information systems. Information system provides an organization with support for business processes and operations, decision making, and competitive advantage

Support Business Process and Operations: As a consumer, you regularly encounter information system that supports the business process and operations at the many retail stores where you shop. For example most retail stores now use computer based information system to help them record customer purchases, keep track of inventory, pay employees, buy new merchandise, and evaluate sales trends. Store operations would grind to a halt without the support of such information system

Support Decision Making: Information System also help store managers and other business professionals make better decision. For Example, decisions on what lines of merchandise need to be added or discontinued, or on what kind of investment they require, are typically made after an analysis provide by computer based information systems. This not only supports the decision making of stores managers, buyers and other, but also helps them look for ways to gain an advantage over other retailers in the competition for customers.

Support Competitive Advantage: Gaining a strategic advantage over competitors requires innovative application of information technologies. For example, store management might make a decision to install touch screen kiosks in all of their stores, with link to their e-commerce web site for online shopping. This might attract new customers and build customer loyalty because of the case of shopping and buying merchandise provide by such information system. Thus, strategic information systems can help provide products and services that give a business a comparative advantage over its competitors.


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Data: Streams of raw facts representing events such as business transactions

Information: Clusters of facts those are meaningful and useful to human beings in the processes such as making decisions

The Features / Attributes / Characteristics of Information

Improves representation of an entity

Updates the level of Knowledge

Has a surprise value

Reduces uncertainty

Aids in decision making

Three activities in an information system produce the information that organizations need to make decision, control operations, analyze problem and create new products or services. These activities are input, processing and output. Input Captures or collects raw data from within the organization of from its external environment. Processing converts this raw input into a meaningful form. Output transfers the processed information to the people who will use it or to the activities for activities for which it will be used. Information system also require feedback, which is output that is returned to appropriate members of the organization to help them evaluate or correct the input stageD:Ken ppt -Rituch2imageslaudonf01-03.gif


The information can be classified in a number of ways provide to a better understanding. John Dearden of Harvard University classifies information in the following manner.

Action Versus No-action Information

Recurring Versus Non-recurring information

Internal Versus External Information

Planning Information

Control Information

Knowledge Information

Organizational Information

Database information

Functional or Operational information

Action Versus No-action Information: The information which induces action is called as action information. The information which communicates only the status of a situation is a no-action information. ‘No stock’ report calling a purchase action is an action information but the stock ledger showing the store transactions and the stock balance is a No-action information.

Recurring versus non recurring information: The information generated at regular intervals is recurring information. The monthly sales reports, the stock statements, the trial balance, etc are recurring information. The financial analysis or the report on the market research study is non recurring information.

Internal versus External information: the information generated through the internal sources of the organization is termed as an internal information, while the information generated through the government reports, the industry surveys, etc is termed as an external information, as the sources of the data are outside the organization.

Planning information: certain standards, norms and specification are used in the planning of any activity. Hence, such information is called the planning information. The time standards, the operational standards, the design standards are the examples of the planning information.

Control information: Reporting the status of an activity through a feedback mechanism is called the control information. When such information shows a deviation from the goal or the objective, it will induce a decision or an action leading to control.

Knowledge Information: A collection of information through the library reports and the research studies to build up a knowledge base as an information source for decision making is known as knowledge information. Such a collection is not directly connected to decision making, but the need of knowledge is perceived as a power or a strength of the organization.

Organization Information: When the information is used y everybody in the organization, it is called as organization information.

Database Information: When the information has a multiple use and application, it is called the database information

Functional or the operational information: When the information is used in the operations of a business it is called functional or the operational information.

Module 2

Transaction processing systems (TPS) are basic business systems that serve the operational level of the organization by recording the daily routine transactions required to conduct business, such as payroll and sales receipts. Transactional Processing system is a computerized system that performs and records the daily routine transactions necessary to conduct business. Examples of TPS are order entry system, cheque processing system, accounts receivable systems, accounts payable systems and ticket reservation systems. These systems help any company to conduct operations and keep track of its activities. TPS was first developed in the year 1950s in accounting departments of major corporations. It is the oldest type of information system and can be called as the work horse of the information system industry for the last 50 years.D:Ken ppt -Rituch2imageslaudonf02-02.gif

The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization. How many parts are in inventory? What happened to Mr. William’s payment? To answer these kind of questions, information generally must be easily available, current, and accurate. At the operational level, tasks resources, and goals are predefined and highly structured. The decision to grant credit to a customer, for instance, is made by a lower level supervisor according to predefined criteria. All that must be determined is whether the customer meets the criteria


The figure illustrated beside is transaction processing system.

Managers need TPS to monitor the status of internal operations and the firm’s the external environment. TPS are also major producers of information for the other types of system

TPS are often so central to a business that TPS failure for few hours can lead to a firm’s demise and perhaps that of other firms linked to it. Imagine what would the airlines do without their computerized reservation system?

Transaction processing is the set of procedures for handling the transactions.

Common Activities in transaction processing include:






Types of Functional categories of TPS Systems

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Management Information System

The MIS has More than one Definition, some of which are given below:

The MIS is defined as a system which provides information support for decision making in the organization.

The MIS is defined as an integrated system of man and machine for providing the information to support the operations, the management and the decision making function in the organization.

The MIS is defined as a system based on the database of the organization evolved for the purpose of providing information to the people in the organization.

The MIS is defined as a computer based information system.

It serve middle managers’ interests by providing current and historical performance information to aid in planning, controlling, and decision making at the management level. MIS typically compress TPS data to present regular reports on the company’s basic operations.

Middle Management needs systems to help with monitoring, controlling, decision making, and administrative activities. The principal question addressed by such systems is this: Are things working well?

In any organization, small or big, a major portion of the time goes in data collection processing, documenting and communication it to the people. Hence, a major portion of the overheads goes into this kind of unproductive work in the organization. Every individual in an organization is continuously looking for some information which is needed to perform his / her task. Hence, the information is people oriented and it varies with the nature of the people in t he organization.

Role of the Management Information System.

The system ensures that an appropriate data is collected for the various sources, processed and sent further to all the need destinations.

The system is expected to fulfill the information needs of an individual, a group of individuals, the management functionaries: the managers and the top management.

The MIS satisfies the diverse needs through a variety of systems such as query systems, analysis system, modeling systems and decision support system

MIS helps in strategic planning , management control, operational control and transactional processing

The MIS helps the clerical personnel in the transaction processing and answers their queries on the data pertaining to the transaction, that status of a particular record and references on a variety of documents

The MIS plays the role of information generation, communication, problem identification and helps in the process of decision making. The MIS, therefore, plays a vital role in the management, administration and operations of an organization.

Decision Support systemH:mis10eimagesimg02_08.jpg

DSS is an interactive computer based system which facilitates the solution of unstructured problem.

Scott Morton Defined Decision Support system as Interactive computer based systems, which help decision makers utilize data and models to solve unstructured problem

It supports non routine decision making for middle management. They focus on problems that are unique and rapidly changing, for which the procedure for arriving at a solution may not be fully predefined in advance. They try answering questions such as these: what would be the impact on production scheduled if we were to double sales in the month of December? What would happen to our return on investment if a factory schedule were delayed for six months?

Although DSS are internal information from TPS and MIS they often bring in information from external sources, such as current stock prices or product prices of competitors. These systems use a variety of models to analyze data, or they condense large amounts of data into a form in which decision makers can analyze them. DSS

Characteristics of DSS

Ability to support the solution of complex problem

Fast response to unexpected situations that result in changed inputs

Designed to help support decisions that are formulated as semi structured, complex problems

May be constructed to support one time decisions

DSS is typically designed for either a particular decision maker or a group of decision makers

Allows the decision makers to interact in a natural manner due to careful design of the interface

It is a way to organize information intended for use in decision making

Ability to quickly and objectively try different strategies under different configurations

Other Characteristics:

Cost Savings

Improving managerial effectiveness

Extensive range of support to management

Support of individual / group

Graphic Display

Designed and run managers; incorporated data and models

Attributes of Decision Support system

Flexibility: The system are flexible so that any semi structured or unstructured decision making sitation can be tackled with ease and speed

Simple models: The systems use simple models of decision making. The only change is that a different set of information is sought for the use of different models. The choice of a model depends upon the complexity of decision making

Database: the decision support system needs database(s). The system calls for several inputs from database(s) from decision making. The use of information being common, input to the system is from the database

Types of Decision Support System

Status inquiry system: The number of decisions in the operational management and some at the middle management are such that they are based on one or two aspects of a decision making situations. It does not call for any elaborate computations, analysis, choice, etc. for decision making. If the status is known, the decision is automatic, i.e., the status and solution is unique relation

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Data analysis system: These Decision systems are based on comparative analysis, and use of a formula or an algorithm. But these processes are not structured and, therefore vary. The cash flow analysis, the inventory analysis and the personal inventory system are examples of the analysis systems. The use of simple data processing tools and business roles are required to develop this system.

Information analysis system: In this system, the data is analyzed and information reports are generated. The reports might be having exceptions as a feature. The decision makers use these reports for assessment of the situation for decision making. The sales analysis, the accounts receivable systems, the market research analysis, the MRP systems are examples of the systems.

Accounting System: These systems are not necessarily required for decision making but they are desirable to keep track of the major aspects of the business or a function. The contents of these systems are more data processing leading to formal reporting, with exceptions, if necessary. These systems account items such as cash, inventory, personnel and so on and relate it to a norm or norms developed by the management, for control and decision

Model based systems: These systems are simulation model or optimization models for decisions making. These decisions, generally, are one time and infrequent and provide general guidelines for operation or management, the product mix decision, the material mix, the job scheduling rules, and the resource or asset or facilities planning systems are the examples.

Executive Support System

These are management information systems tailored to benefit the strategic information needs of the top management / senior executive. ESS summarizes and presents data at the highest levels of aggregation. Usually, they involve presenting reports in standard formats and they often involve graphics.

ESS is the newest of the five categories of MIS. They have had the least acceptance of the five types. The reason being that most executives started their careers prior to widespread use of computer.

Executive Support systems provide critical information from a wide variety of internal and external sources in easy to use displays to executives and managers. For example, top executive may use touch screen terminals to instantly view text and graphics displays that highlight key areas of organizational and competitive performance

What are the characteristics of MIS? How do MIS differ from TPS? From DSS?

MIS supports the management level by providing routine summary reports and exception reports for various purposes, including planning, controlling, and decision making. Examples include sales and profit per customer and per region, relocation summary and analysis, inventory control, capital investment analysis, and even a report on students who were here in the autumn but did not to return in the spring. MIS differs from TPS in that MIS deals with summarized and compressed data from the TPS and sometimes analysis of that summarized data.

Decision-support systems provide material for analysis for the solution of semi-structured problems, which often are unique or rapidly changing. Typically, they provide the ability to do “what if” analysis. While MIS have an internal orientation, DSS will often use data from external sources, as well as data from TPS and MIS. DSS supports “right now” analysis rather than the long-term structured analysis of MIS. MIS are generally not flexible and provide little analytical capabilities. In contrast, DSS are designed for analytical purposes and are flexible.

What are the characteristics of DSS? How do they differ from those of ESS?

DSS provide sophisticated analytical models and data analysis tools to support semi structured and unstructured decision-making activities. DSS use data from TPS, MIS, and external sources, provide more analytical power than other systems, combine data, and are interactive. ESS support senior managers with unstructured strategic-level decision making. They may be less analytical than DSS with less use of models such as linear programming or forecasting. However, they often rely on external data and rely heavily on graphics.

Describe the relationship between TPS, office systems, KWS, MIS, DSS, and ESS.

The various types of systems in the organization exchange data with one another. TPS are a major source of data for other systems, especially MIS and DSS. TPS are operational-level systems that collect transaction data. Examples of these are payroll or order processing that track the flow of the daily routine transactions that are necessary to conduct business. TPS provide data that are required by office systems, KWS, MIS and DSS, although these systems may also use other data. KWS and office systems not only use data from TPS but also from MIS. DSS not only use data from TPS but also from KWS, office systems, and MIS. MIS rely heavily on data from TPS but also use data from KWS and office systems. ESS obtains most of their internal data from MIS and DSS.


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