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Any business can create a competitive advantage (allow a company to produce goods or
services better or more cheaply than its rivals) by the effective use of Information
Technology

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Input devices facilitate the

introduction of data and
information into the system.
Examples might include a
keyboard, scanner, mouse or
barcode reader.
Output devices facilitate the
extraction of processed
information from the system.
Examples would include a printer,
speaker or screen (visual display
unit). The central processing unit
is the ‘brain’ of the computer that
takes the inputs, processes them
and then outputs the results.

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Computer hardware.
Computer hardware consists of the computers themselves plus all the
peripheral equipment connected to a computer for input, output and storage
of data (such as printers and stand-alone disc drives).
The computers used in IT systems range from the very large supercomputers
to the very small hand-held computers. In many organizations, different
computers are connected to each other to form a network.
The globalisation of the business environment has resulted in much more
widespread use of portable laptop computers.
Laptops can typically be connected to the organisation’s computer network or
to the Internet from remote locations via a data connection such as Wi-Fi or a
phone line. This means, for example, that a manager can access his e-mails or
the organisation’s Intranet system (a system that looks and feels like the
internet but is only available to employees) from anywhere in the world.

Keyboards
Keyboards are the most common input
device and are part of virtually all
computer systems.
Keyboards can be stand-alone and
connected to the computer with a cable
or through a wireless connection, or
they might be integrated into the
computer itself, such as with a laptop or
notebook.

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Touch-sensitive screens and touch pads

A recent trend has been towards integrating the
keyboard into touch-sensitive screens and touch
pads.
These devices involve the user touching an area
of a screen, for example a picture of a keyboard,
to simulate the pressing of a physical key such as
on a regular keyboard.
Examples of touch-sensitive screens include
automated payment booths used to buy train or
bus tickets and bank ATM machines.

Magnetic ink character recognition (MICR)

MICR is a technology used to verify the legitimacy or
originality of paper documents, especially checks.
Special ink, which is sensitive to magnetic fields, is
used in the printing of certain characters on the
original documents.
Magnetic ink character recognition (MICR) requires
the input media to be formed of specially formatted
characters printed in magnetic ink. These characters
are then read automatically using a specialised
reading device called MICR reader.
The most common example of MICR is in the
banking industry with the use of cheques and
deposit slips.

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Optical mark reading (OMR)

Optical mark reader (OMR) reads the presence
or absence of a mark on a paper optically. Light
is directed on to the paper and the reflected
light is analysed for the detection of a mark. If a
mark is there on the surface of the paper, that
area sends back lesser light are to the OMR.
It is used to read multiple choice answers in a
test and the data are transferred to a computer
for processing.
Optical mark reading (OMR) is similar to MICR
in that it is an automated input method.

Scanners and optical character recognition (OCR)

A scanner is a device usually connected to a
computer. Its main function is to scan or take a
picture of the document, digitize the information and
present it on the computer screen.
Optical character recognition (OCR) technology is
a business solution for automating data extraction
from printed or written text from a scanned
document or image file and then converting the text
into a machine-readable form to be used for data
processing like editing or searching.
A scanner merely copies the paper as an image file,
so you cannot copy and paste from the document.
OCR translates a document into an editable format,
and some database programs may be able to accept
input directly from the OCR reader.

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Mouse, trackballs and similar devices

A computer mouse (plural mice, sometimes mouses) is a
hand-held pointing device that detects two-dimensional
motion relative to a surface. This motion is typically
translated into the motion of a pointer on a display, which
allows a smooth control of the graphical user interface of a
computer.
Trackball is common accessory for notebooks and laptops, that works as a replacement
for a mouse. With a similar structure, it has a half inserted ball which the fingers move to
send signals for cursor movement. It is kind of stationary taking very little space. It comes
in a ball, button, and square shape as well.
Mice and trackball devices are hand-operated devices with internal sensors pick up the
motion and convert it into electronic signals which instruct the cursor (pointer) on screen
to move.
Touch sensitive pads and joysticks that similarly control the cursor are also now
commonly found in the centre of the keyboard.
Most current laptops and notebooks incorporate a pad or joystick.

Voice date entry (VDE)

The system makes use of advances in the field of
voice synthesis and speech recognition . It allows
to verbally input data directly into a computer. ...
The audio interaction between the computer and
technician eliminates the need for a keyboard
and video display during computer data input.
One particularly useful application is found in
language translation programs that support
simultaneous translation.
Another example might be in a smartphone
where you can enter commands aurally rather
than by typing, for example with an instruction
such as “Call Office”.

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Barcodes and QR (quick response) codes, EPOS

▪ Barcodes are the groups of black and white marks
with variable spacing and thickness found on product
labels such as those at the supermarket.
▪ Each code is unique and can be read automatically by
an electronic barcode reader.
▪ QR codes are matrix, or two-dimensional, barcodes.
Originally popular in the automotive industry they
have seen a recent rise in popularity elsewhere given
their fast readability and greater storage capacity
than standard barcodes.

Electronic Point of Sale.

▪ EPOS stands for electronic point
of sale which is normally
integrated with barcode readers.
▪ EPOS allows credit and debit
cards to be read for instant
payment for goods.
▪ A recent development of EPOS
has seen the growth of
technology that supports mobile
phones being used in a similar
way to credit and debit cards. A
phone signal rather than the
magnetic strip on a credit card is
used to identify the purchaser.

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Digital cameras
Digital cameras can be found in the form of
stand-alone units or they may be integrated
into other technology such as smartphones and
tablet computers.
Digital cameras capture images and videos in
digital form and allow easy transfer to a
computer where they can be manipulated by
software.
Digital cameras are used in many situations
whether it is for the development of marketing
material, recording of crime scenes by the
police, or by an auditor on a year-end inventory
count.

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Output Devices

▪ An output device is the part of a computer system that receives the processed
data from the computer and presents it in some way.
▪ Output devices are distinct from input devices which are the parts of the
computer that provide data and instructions. However, technology has advanced
to the stage where some devices are a combination of both input and output such
as a touch-sensitive screen.

Computer Devices

Input Devices Output Devices Hybrid Devices

▪ Keyboards ▪ Printers
▪ Mouse ▪ Monitors
▪ Scanners ▪ Headphones

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Storage Devices

CPU is the brain of the computer taking inputs from various devices such as keyboards,
mice and scanners then outputting to devices such as speakers, printers and monitors.
However, computers need somewhere to store all the data such as music, videos,
pictures, documents, spreadsheets, presentations, emails and so on.

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Storage

Primary Secondary
▪ Main memory such as ▪ External memory
RAM ▪ Used to store and retrieve
▪ Hold data that are data on long term basis.
currently in use ▪ Non Volatile
▪ Volatile memory ▪ Data is not directly accessed
▪ Data is directly accessed by CPU.
by CPU ▪ Accessing data from
▪ Accessing data from secondary memory is slower.
primary memory is faster. ▪ Data is intact when device
▪ Data is lost when device loose power.
loses power ▪ Examples
▪ Examples, RAM and cache HDD,CD,DVD,Floppy disk and
memory flash drive

Primary storage
(internal memory)
Internal temporary store directly accessible by the CPU that allows it to process data.
Volatile by nature as it is erased when power is turned off. Much smaller than
secondary or tertiary storage but much quicker to access (as it has no mechanical
parts). Examples include RAM and ROM plus the CPU’s cache memory (temporary
store of instructions repeatedly required to run programs – typically up to 2MB
(megabytes) in size).

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Secondary storage
(external memory)
Secondary storage is used for data not currently being processed but which may
need to be accessed at a later stage, for example the operating system, documents,
music files and emails.
Non-volatile as data remains intact even when powered off.
Examples include:
▪ Flash memory (USB flash drives or keys)
▪ Floppy disks
▪ CD
▪ DVD
▪ Blu-ray drive
▪ Magnetic tape
▪ Cloud drive

Tertiary storage

▪ Tertiary storage comprises high-capacity data archives designed to incorporate vast

numbers of removable media.
▪ The removable media are normally not stored in suitable drives but held in specially
arranged retention slots or shelves in an offline state.
▪ Tertiary storage typically involves a robotic mechanism that mounts (inserts) and
dismounts removable mass storage media into a storage device. Often used for archiving
rarely accessed information as it is much slower than secondary storage.
▪ A tertiary storage platform may be perceived as a specialized type of NAS that uses
additional robotic mechanisms to transfer media between their long-term storage
locations and available drives without human intervention.

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Information technology Information system

Information technology describes the Information system describes
application of computers and complementary networks of software and
telecommunications equipment to store, hardware that people and organizations
retrieve, transmit and manipulate data. use to collect, filter, process, create and
The term is typically associated with distribute data and information.
computers and computer networks. Within organisations, information systems
However, the full definition includes other support operations, management and
information distribution technology such decision making.
as television, telephone and radio. The term ‘information system’ is broader
than ‘information technology’ as it
incorporates the way in which people
interact with the technology in support of
business processes, as well as the
information and communication
technology (hardware and software) itself.

System
a set of interacting components that operate together to accomplish a
purpose
Business system
a collection of people, machines and methods organised to accomplish a set
of specific functions
Information system
all systems and procedures involved in the collection, storage, production and
distribution of information
Information technology
the equipment used to capture, store, transmit and present information

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Elements of a system
The elements of a system include:
Goals
Inputs
Processes
Outputs
The environment
Boundary (this limits the system from its
environment)

Closed systems Open systems

▪ The environment has no effect ▪ Do interact therefore the
on the system and the system environment will affect the
has no effect on the system and the system will
environment. affect the environment.
▪ Examples in the real world are ▪ All businesses, social and
rare and business examples even information systems are
rarer; one useful example is that examples of open systems.
of a scientific experiment.

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Deterministic system
A deterministic system is a system in which a given initial state or
condition will always produce the same results.
▪ Use predetermined rules
▪ Therefore have predicted operations
▪ Giving predictable outputs
▪ Examples include machines and computer programs
▪ These systems will follow a standard and often have a rule book.

Probabilistic System
A probabilistic system is one in which the occurrence of events cannot be
perfectly predicted. Though the behavior of such a system can be
described in terms of probability, a certain degree of error is always
attached to the prediction of the behavior of the system.
▪ Assign a probability to future events
▪ Their behaviour is less easy to predict
▪ Most businesses are examples of probabilistic systems
▪ When a business sales forecasts it will try to predict sales based on
past evidence.
▪ In effect the business tries to change before the event has occurred.

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Self organising or cybernetic systems

▪ Most complex type of system
▪ Continually changing
▪ Adapts to the environment
▪ Example trade union negotiations
▪ These types of systems are the least likely to be computerised
▪ Rely heavily on interaction from people

Control Systems

Closed loop control has inbuilt control Open loop control systems do not have
very much like a thermostat in a heating inbuilt control as it comes from the
system, they are not responsive to outside the system - no thermostat.
changes in the environment. A business example would be the whole
A business example which has inbuilt organisation.
control is a stock or a credit control system Open control systems are responsive to
where the system automatically checks the environment and they often involve
responses. interaction from users.
Closed loop control is most suitable for the
type of system which is stable. Systems
which exist in a relatively dynamic
environment are not suitable for this type
of control.

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The elements of a control system include.

▪ input, process, output
▪ sensor - measures the output from the system and determines a new value
▪ comparator - compares the new value with that of the standard
▪ standard - the predetermined limit set within the system
▪ effector - effects the feedback into the system can be positive or negative.

KEY ELEMENTS OF INFORMATION SYSTEMS

The key elements of IS are as follows:
▪ Data (raw, unorganized data processed into meaningful and useful information
for specific use)
▪ Database (an electronic filing system to collect and organize data and
information)
▪ Database Management System – DBMS (a software to enter, store, organize,
select, and retrieve data in a database)
▪ Networks
▪ Integration (provides an holistic view of data and information available within an
organization under different areas and functions)
▪ Security and Privacy

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Data
Data are a set of values of qualitative or quantitative variables about one
or more persons or objects. It can exist in various forms: as numbers or
text recorded on paper, as bits or bytes stored in electronic memory, or as
facts living in a person's mind.
Business data is all the information that is related to a company, such as
sales data, customer contact information, and even website traffic
statistics. Such data is processed into meaningful and useful information,
which is then used for specific purposes, such as business analysis, control,
and decision-making.

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Database
A database is an organized collection of structured information, or data,
typically stored electronically in a computer system.
Database is an electronic filing system that collects and organizes data and
information.
It is the core of business information systems. Key users tap into databases
to access the information they need, whether for placing inventory orders,
scheduling production, or preparing long-range forecasts. For example, a
customer database containing name, address, payment method, products
ordered, price, order history, and similar data provides information to
many departments. Big size companies use very large databases called data
warehouses and data marts.

DBMS
DBMS is a software called a database management system, which is used to quickly and
easily enter, store, organize, select, and retrieve data in a database.
DBMS software primarily functions as an interface between the end user and the
database, simultaneously managing the data, the database engine, and the database
schema in order to facilitate the organization and manipulation of data. There are
different types of databases and DBMS available depending upon the needs of a business
organization.
The main types of DBMS are:
▪ Hierarchical database
▪ Network database
▪ Relational database
▪ Object-Oriented database
Popular DBMS examples include cloud-based database management systems, in-memory
database management systems (IMDBMS), columnar database management systems
(CDBMS), and NoSQL in DBMS.

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Networks
Most businesses use networks to deliver information to employees, suppliers,
and customers. A computer network is a group of two or more computer
systems linked together by communications channels to share data and
information. Today’s networks often link thousands of users and can transmit
audio and video as well as data. The best-known computer network is the
internet.
Computer networks support a vast range of uses including:
▪ The world wide web (internet)
▪ Sharing software applications such as databases and Worksheets
▪ Email
▪ Sharing devices such as printers, fax machines and scanners
▪ Online booking systems
▪ Instant messaging
▪ Internet-based communication such as Skype

The way in which the components of

System architectures a computer system such as printers,
PCs and storage devices are linked
together and how they interact.

Centralised Decentralised
architecture architectures

A centralised architecture Decentralised architectures spread

involves all processing the processing power throughout
being performed on a the organisation at several different
single central computer locations.
This is typical of the modern
workplace given the significant
processing power of modern PCs.

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Client-server computing:
The term server highlights the role of the machine in the client–server scheme, where
the clients are the workstations using the storage.
Client-server computing describes one level of interaction found between computers in
systems architecture.
The client is the application that runs on a personal computer or workstation. It relies on
a server that manages network resources or performs special tasks such as storing files,
managing one or more printers, or processing database queries. Any user on the
network can access the server’s capabilities.
A server is a machine that is dedicated to providing a particular function or service
requested by a client within a network system.
Servers can range in power from ‘top-end’ super servers, capable of driving thousands
of network users, to ‘lowend’ servers which are typically a powerful personal computer
(PC). Different types of servers might include file servers, network servers, print servers,
e-mail servers and fax servers.

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File Server Network Server

A file server is a computer responsible for A network server is a computer that
the storage and management of provides various shared resources to
data files so that other computers on the workstations and other servers on a
same network can access the files. computer network.
File servers manage the data files that are Network servers route messages from
accessible to users of the network. All the terminals and other equipment in the
shared data files for the system are held network to other parts of the network. In
on a file server or are accessible through other words, network servers manage
a file server. and control the routing of messages
A file server is not intended to perform within computer networks.
computational tasks, and does not run
programs on behalf of its clients.

LAN WAN
▪ A local area network (LAN) is a collection ▪ A wide area network (WAN) is a large
of devices connected together in one computer network that connects groups of
physical location, such as a building, computers over large distances.
office, or home. A LAN can be small or ▪ A WAN connects computers at different
large, ranging from a home network with sites via telecommunications media such
one user to an enterprise network with as phone lines, satellites, and microwaves.
thousands of users and devices in an ▪ A modem connects the computer or a
office or school. terminal to the telephone line and
▪ A LAN offers a more cost-effective way to transmits data almost instantly, in less than
link computers than linking terminals to a a second.
mainframe computer. ▪ The internet is essentially a worldwide
▪ LANs can be set up with wired or wireless WAN.
connections. ▪ Several forms of WANs are intranets,
virtual private networks (VPN), and
extranets. WANs can be set up with wired
or wireless connections.

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A LAN’s distinguishing features. A WAN’s distinguishing features.

▪ Due to its localised nature, the data ▪ Data transfer speeds are much lower
transfer speeds are high than with LANs due to the greater
▪ Typically owned, controlled and distance that information must travel.
managed by one person or a single ▪ WANs exist under collective or
organization distributed ownership and management
▪ Low cost maintenance covering long distances.
▪ Relatively low data transmission errors ▪ Setup costs are typically higher due to
▪ One LAN can be connected to another the need to connect to remote areas.
LAN over any distance via telephone Furthermore, maintaining a WAN is
lines and radio waves more difficult (and expensive) than
maintaining a LAN due to its wider
coverage.
▪ In contrast to LANs, the data
transmission error rate tends to be
significantly higher.

An intranet is a private network An extranet is a private network, too.

contained within an enterprise that is It works similarly to a company
used to securely share company intranet; however an extranet allows
information and computing resources access to authorized users from
among employees. outside the company. These external
Intranet is a tool for sharing users may include suppliers and
information throughout the partners.
organization. Whereas Extranet is a tool for sharing
information between the internal
members and external members.

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VPN (virtual private network) is a technology that encrypts your internet traffic on
unsecured networks to protect your online identity, hide your IP address, and shield
your online data from third parties. VPNs use real-time encryption and send your
internet data through a secure virtual tunnel to minimize the possibility of anyone
tracking what you do online.
What does a VPN do?
VPNs hide your IP address and physical location while encrypting your internet traffic
so that no one can tell who you are, where you are, or what you're doing online. ...
VPNs aren't just for desktops or laptops — you can set up a VPN on your iPhone, iPad,
or Android phone.

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Integration.
▪ Companies are discovering that they can’t operate well with a series
of separate information systems geared to solving specific
departmental problems.
▪ It takes a team effort to integrate the systems described and involves
employees throughout the firm. Company-wide enterprise resource
planning (ERP) systems that bring together human resources,
operations, and technology are becoming an integral part of business
strategy. So is managing the collective knowledge contained in an
organization, using data warehouses and other technology tools.
▪ An integrated IT system describes the scenario where all modules of
the system are linked and function together as a system in a
coordinated fashion.

Examples of Integration
▪ Accounts payable control
▪ Accounts receivable control
▪ Accruals and prepayments
▪ Bank and cash
▪ Inventory
▪ Purchases
▪ Sales

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Advantages of integrated systems Disadvantages of integrated systems

▪ Offers a more complete view ▪ Greater risk that if one module
▪ Enables better informed fails the whole system could fail
decisions ▪ More complex and prone to error
▪ Should ultimately lead to a ▪ More expensive than standalone
more efficient operation systems
▪ Lead to greater customer ▪ May require a greater level of
satisfaction and hence support as the system is likely to
profitability need to be bespoke (tailored)
specifically to the organisation

Security and Privacy.

Unauthorized access into a company’s computer systems can be
expensive, and not just in monetary terms but as a reputational risk.
The costliest(higest) categories of threats include worms, viruses, and
Trojan horses; computer theft; financial fraud; and unauthorized network
access.
Computer crooks are becoming more sophisticated all the time, finding
new ways to get into ultra-secure sites. Whereas early cybercrooks were
typically amateur hackers working alone, the new ones are more
professional and often work in gangs to commit large-scale internet
crimes for large financial rewards.
The internet, where criminals can hide behind anonymous screen names,
has increased the stakes and expanded the realm of opportunities to
commit identity theft and similar crimes. Working remotely also increase
cyber security concerns.

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TYPES OF INFORMATION SYSTEMS

Information system collect and store the company’s key data and produce
the information for users (e.g., managers) need for analysis, control, and
decision-making.
Types of IS
▪ Transaction Processing System (TPS)
▪ Management Support System (MSS)
▪ Decision Support System (DSS)
▪ Executive Information System (EIS)
▪ Expert System (ES)
▪ Office automation systems to improve the flow of communication.

Transaction Processing System (TPS)

TPS is the starting point of an integrated information system. The TPS
receives raw data from internal and external sources and prepares these
data for storage in a database similar to a microcomputer database but
vastly larger.
all the company’s key data are stored in a single huge database that
becomes the company’s central information resource.
The DBMS tracks the data and allows users to query the database for the
information they need.
TPS automate routine and tedious back-office processes such as
accounting, order processing, and financial reporting. They reduce clerical
expenses and provide basic operational information quickly. Data could be
entered manually by a person keying the information in. Some systems are
more advanced and support technology-based data entry such as optical
character recognition or magnetic ink character recognition.

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Data entry describes any of the techniques used to initially record data into
a system. A few examples of data include:
Sales information
Purchase information
New employee details
Updates to existing employee details
There are following two ways database can be updated
(i) Batch processing, and
(ii) Online, or real-time processing.

Batch processing:
▪ Batch processing is the collection of a group of similar transactions
over a period of time, and their processing at a single time as a
batch.
▪ This is an efficient method to update the database periodically for
applications such as monthly payroll processing.
▪ This type of processing has been associated with mainframe
centralised type systems.
▪ The method has been reduced in importance with the development
of more advanced types of processing.
▪ It still remains an important form of processing as many systems
used now, are based on batch processed systems.

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Advantages Disadvantages
▪ Relatively easy to develop. ▪ Often delays between when a
▪ Less processing power is transaction is made and when the
required as deals with master file is updated and the
similar updates. output generated.
▪ Checks in place as part of ▪ Management information is often
the systems run. incomplete due to out of date data.
▪ Less hardware required, ▪ Often master files kept off line
therefore cheaper. therefore access may not always be
available.

Online processing.
Online processing refers to equipment that operates under control of the
central computer but typically from a different location through some kind
of terminal.
Examples include:
▪ An ATM machine for a bank – the ATM is linked to the bank’s central
computer system and updates the user’s account immediately
▪ Flight booking system at a travel agency If a service is no longer online
(available) it is described as being offline.
When a system is offline its services are no longer available. You may have
experienced something similar when browsing the internet.
For example when you have a Wi-Fi connection your web-browser is
considered to be ‘online’ and will update. However, if there is no Wi-Fi
signal and hence no connection the browser is considered to be ‘offline’. In
this case you will not be able to download any new information.

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Real-time processing.
Real time processing is the processing of individual transactions as they
occur without the need for batching them together.
This type of processing allows the user to update the master files
immediately. It is an expansive method to update the database in real-time
for applications such as airline’s information system.

Advantages Disadvantages
▪ Information more up to date ▪ Increase in expense as the
therefore providing better system becomes more complex
management information. to run and to develop.
▪ Increased ability for data to ▪ Increased hardware capacity
be online. which increases costs.

Management Support System (MSS)

▪ MSS use the internal master database to perform high-level analyses that help
managers make better decisions.
▪ At the first level of an MSS is an information-reporting system, which uses summary
data collected by the TPS to produce both regularly scheduled and special reports. The
level of detail would depend on the user.
▪ MSS includes other specialized tools for decision-making like centralized database such
as Data Warehouse.
▪ Companies use data warehouses to gather, secure, and analyse data for many
purposes, including customer relationship management systems, fraud detection,
product-line analysis, and corporate asset management.
▪ Retailers might wish to identify customer demographic characteristics and shopping
patterns to improve direct mailing responses.
▪ Banks can more easily spot credit-card fraud, as well as analyse customer usage
patterns.
▪ A management information system digests inputted data (distinct pieces of
information such as facts, numbers and words) and processes it into useful
information.

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A management information system is characterized as follows:

▪ Supports structured decisions
▪ Reports on existing operations
▪ Little analytical capability and is relatively inflexible
▪ Internal focus
▪ Generate regular reports and typically would allow online access to a
wide range of users
▪ Incorporate both current and historical information

Decision Support System (DSS)

A DSS is a set of related computer programs and data required to assist
with the analysis and decision-making within an organization. DSS were
initially developed to overcome the rigid nature of management
information systems.
DSS help businesses by providing quantitative data and predictive models
that aid problem-solving and decision making.
A DSS helps managers make decisions using interactive computer models
that describe real-world processes.
The DSS also uses data from the internal database but looks for specific
data that relate to the problems at hand.

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It is a tool for answering “what if” questions about what would happen if
the manager made certain changes.
In simple cases, a manager can create a spreadsheet and try changing
some of the numbers. For instance, a manager could create a spreadsheet
to show the amount of overtime required if the number of workers
increases or decreases. With models, the manager enters into the
computer the values that describe a particular situation, and the program
computes the results.
Marketing executives at a furniture company could run DSS models that
use sales data and demographic assumptions to develop forecasts of the
types of furniture that would appeal to the fastest-growing population
groups.

The characteristics of decision support systems.

▪ DSS assists managers at the tactical level when they are required to
make intelligent guesses
▪ A DSS uses formula and equations to enable mathematical modelling
▪ DSS are real-time systems enabling managers to solve problems
through queries and modelling
▪ User inputs queries and variables for the model through a user
interface
▪ Contains a natural language interpreter for querying the system
▪ The user interface is integrated with data management and modelling
software from the key components
▪ Spreadsheet packages can become the tool for the development of a
decision support system.

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Executive Information System (EIS)

▪ An EIS, similar to a DSS, is customized for an individual executive.
▪ These systems provide specific information for strategic decisions.
▪ For example, a CEO’s EIS may include special spreadsheets that present
financial data comparing the company to its principal competitors and
graphs showing current economic and industry trends.
▪ An EIS incorporates both internal and external data and tends to be
more forward-looking rather than backword-looking.
▪ EIS typically emphasize graphical displays and simple user interfaces with
a ‘high-level’ executive summary styled dash-board.
▪ Executives can then drill-down into various components of the
dashboard to extract more detailed information if required.

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Characteristics of EIS.
▪ Helps senior managers to make unstructured decisions with many
contributing factors such as price fixing
▪ Tends to be very expensive and real-time
▪ Often limited in use to a small number of senior managers within the
business

Expert System (ES)

An expert system is a type of information system that allows a computer to make
suggestions and act as an expert in a specific field, thus performance can be
enhanced.
An ES is a computer program that simulates the judgement and behaviour of a human
or an organization that has expert knowledge and experience in a particular field.
It contains a database of accumulated experience and scenarios as well as a set of rules
for applying the knowledge to each particular situation described by the program.
Examples include legal diagnostics, medical diagnostics, processing a loan application
and on a social level, programs that play chess! An expert system gives managers advice
similar to what they would get from a human consultant.
Artificial intelligence enables computers to reason and learn to solve problems in much
the same way humans do, using what-if reasoning. Although they are expensive and
difficult to create, expert systems are finding their way into more companies as more
applications are found.

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An expert system is a Computer system which has the ability of decision-making like a
human expert. Expert systems are designed to specifically solve complex problems.
In Expert System, Knowledge Acquisition means how to get required domain
knowledge by the expert system.
Improved decision quality, reduce cost, consistency, reliability, speed are the key
benefits of an Expert System.

Expert systems are most effective when the following preconditions exist:
▪ problem is reasonably well-defined
▪ expert can define some rules
▪ problem cannot be solved through conventional transaction processing
systems
▪ expert can be released to focus on more difficult problems
▪ investment is cost-justified

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The advantages gained from using an expert system include:

▪ Allows non-experts to make expert decisions
▪ Fast, accurate and consistent advice
▪ Ability to change input details to explore alternative solutions
▪ Reduction in staff costs - less experts required
▪ Improved allocation of human resources, experts concentrate on more
complex issues
▪ Can become a competitive advantage
▪ Availability potentially 24 hours 365 days per year
▪ Multi-access can deal with many problems at one time.

Disadvantages
▪ High initial capital expenditure
▪ Technical support required
▪ System does not automatically learn; it has to be constantly updated
by experts
▪ User as a non-expert may give inaccurate advice without recognizing
▪ Down time - systems failures effect all users
▪ Reliance - probable reduction in basic skills
▪ Possible user resistance for higher level experts

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Financial Reporting System (FRS)

Financial accounting and reporting involves:
▪ Maintaining a system of accounting records for business transactions
and other items of a financial nature; and
▪ Reporting the financial position and the financial performance of an
entity in a set of ‘financial statements’.
Many businesses operate a system of recording their business transactions in accounting
records. This system, that is the part of all sizes of businesses, is called a book-keeping
system or ledger accounting system and forms the foundation of the financial reporting
system. The information that is recorded in the book-keeping system (ledger records) of
an entity are also analysed and summarised periodically, typically each year, and the
summarised information is presented in financial statements.
Financial statements provide information about the financial position and performance
of the entity.
Financial reporting systems must be reliable, accurate and complete. Access to data
entry should be strictly controlled to authorised personnel only.

Order processing
▪ The order processing system should be capable of recording all orders
accurately and in a timely fashion.
▪ For some businesses such as airlines and hotels the information needs
to be updated immediately, whereas for other businesses an end of
day update may be sufficient.
▪ The system will typically be linked to the inventory control system so
that the sales person can establish whether the organisation is capable
of fulfilling the order received.

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Inventory control system

▪ The objective of the inventory control system is to ensure that the
business maintains an appropriate amount of inventory at all times.
▪ The control system should be able to indicate accurate levels of
inventory for all the lines maintained by a business and trigger the
ordering of replacement inventory when inventory levels fall to a
certain level.

Characteristics of Order processing and inventory control systems

▪ The system can accurately report the current inventory level at any time
▪ A rule should be associated with each item that will trigger a reorder such as
minimum inventory level
▪ The age of the inventory can be tracked. This will assist sales managers in identifying
ageing stock and employing tactics to reduce it. This is particularly important with
perishable inventory (e.g., food and drink) that could have hygiene as well as
commercial considerations to monitor.
▪ The system should be able to highlight shortages
▪ The system should be able to show individual and total cost of items
▪ The system should maintain supplier details
▪ Delivery dates both inwards and outwards must be maintained to enable the
warehouse manager to manage goods movement - inward and despatch
▪ The location of the inventory should be recorded to ensure it can be found easily
and efficiently

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Personnel System
The personnel system exists to support the human resources
management function in performing its duties of maintaining an
appropriate workforce. This involves:
▪ Recruitment
▪ Selection; and
▪ Staff development and appraisal.
The system contains a significant amount of sensitive and confidential
information meaning there must be strict control around maintaining
data security and access to the system.

Components of a Personnel System

Recruitment Redundancy
▪ Highlighting internal job ▪ Planning and executing
vacancies that are available to voluntary redundancy programs
existing staff ▪ Planning and executing
▪ Running external recruitment compulsory redundancies and
campaigns and tracking their ensuring legal requirements
cost effectiveness
Personnel management and control
▪ Maintaining contract of employment details
such as salary, holiday entitlement and duties
▪ Family and medical contact details
▪ Employment history
▪ Training records

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Personnel management and control

▪ Maintaining contract of employment details such as salary, holiday
entitlement and duties
▪ Family and medical contact details
▪ Employment history
▪ Training records
▪ Training plan
▪ Qualifications and skills
▪ Amount of holiday accrued and taken
▪ Sick leave accrued and taken plus authorised absences such as bereavements
▪ Unauthorized absence
▪ Time off in lieu
▪ Disciplinary record
▪ Bonus and pay history
▪ Other rewards and commendations
▪ Annual appraisal
▪ Goals and objectives
▪ Formal checks such as references

Personnel management reporting

Management will benefit from seeing graph trends and summary reports to help
with making decisions on headcount. These might include:
▪ Benefits report
▪ Headcount (employee numbers) report
▪ Pay details and total wage expense
▪ Gender and diversity mix information
▪ Age profiling
▪ Tenure profiling
▪ Absence analysis

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Enterprise Resource Planning (ERP)

ERP is a cross-functional system driven by an integrated suite of software modules
supporting the basic internal processes of a business.
The system incorporates a real-time view of core business processes such as:
▪ Order processing
▪ Inventory management
Productions Business resources ERP systems track business resources such as:
▪ Cash
▪ Raw materials
▪ Production capacity
Personnel Commitments ERP systems also track the status of commitments such as:
▪ Purchase orders
▪ Employee costs
▪ Customer orders
Tracking is permanently updated irrespective of the department that entered the
information – hence the term ‘enterprise’

Levels of Management

Operational Level Middle Level Senior Level

▪ Performing day to day ▪ Generally oversee the ▪ Concerned with the
business transactions. activities of the long-term planning of
▪ They have defined rules operational the organization.
that guides them while management. ▪ They take unstructured,
making structured ▪ They take tactical, strategic decisions. They
decisions. unstructured decisions use information from
▪ Examples - cashiers at a partly based on set tactical managers and
point of sale, bank guidelines and external data to guide
tellers, nurses in a judgmental calls them when making
hospital, customer care strategic decisions.
staff Credit manager in a bank can check the credit limit and payments history
of a customer and decide to raise the credit limit. The decision is partly
structured (payments history) and partly unstructured (his discretion)

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Types of Information

Strategic information Tactical information Operational information

▪ Relates to long-term ▪ Assists managers in ▪ Relates to the day to day

decision making (over a making short-term activities of an
3-5 year) tactical decisions like organisation like
▪ Useful to senior ▪ establishing a fee to ▪ Daily sales reports
management and quote on a particular ▪ Daily production reports
Directors for order ▪ Latest inventory levels
establishing the overall ▪ whether to offer ▪ Details of customer
strategy of the discounts on a complaints
business. particular product to
▪ Include internal, help lower excess
external, competitors, inventory
market and the general ▪ whether to switch
business environment. suppliers

Levels of Management Nature of Decision-making Types of IS

Senior Level Strategic management EIS

Middle Level Tactical management MIS, DSS

Operational Level Operational management TPS

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Uses of information Description

Planning Help to establish appropriate resources, time scales and
forecast alternative outcomes
Controlling Ensure processes are implemented as planned
Recording transactions Information systems are used to record transactions
throughout a business e.g. sales, purchases, errors, returns,
customer complaints and quality control inspections, deposits
and cash movements
Performance Compare actual versus planned (budgeted) activity to identify
measurement variances from planned activity and take corrective action as
necessary
Decision making Information systems are used to help managers make all kinds
of decisions such as volume (e.g. purchases and production),
price, whether to make a component internally or buy it from a
supplier, whether to switch suppliers.

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