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V-LRN� VIRTUAL LEARNING NETWORK

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Block – 1

Unit - 1

Information Technology : An Overview

Information Systems For Managers

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Topics to be covered

1.1 Introduction

1.2 Objectives

1.3 Definitions of IT

1.4 Types of IT Systems

1.5 Business Perspective of IT

1.6 Internet and its Business Applications

1.7 Computer Aided Decision Making

1.8 Summary

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Introduction

  • Information Technology has become a major facilitator of business activities. It is also a catalyst of fundamental changes in the structure, operations and management of organizations. IT can be used to
    • Perform high-speed, high-volume, numeric computations.
    • Provide fast, accurate and inexpensive communication within and between organizations.

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Introduction (Contd.)

    • Store huge amounts of data in an easy-to-access yet small space and allow quick and easy access.
    • Automate semiautomatic business processes and manually done tasks.

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Definitions of IT

  • Information has also been defined as data that have been put into a meaningful and useful context and communicated to a recipient who uses it to make decisions.
  • Information involves the communication and reception of intelligence or knowledge.
  • It apprises and notifies; surprises and stimulates, reduces uncertainty, reveals additional alternatives or helps eliminate irrelevant or poor ones, and influences individuals and stimulates them to action.

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Definitions of IT (Contd.)

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Definitions of IT (Contd.)

  • The information must be received by the recipient within the required time frame and the information must be free from errors.

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Types of Information System

  • There are various types of information systems as listed below.
    • Transaction Processing Systems (TPS)
      • A TPS is used primarily for record keeping which is required in any organization to conduct the business. Examples of TPS are sales order entry, payroll, and shipping records etc. TPS is used for periodic report generation in a scheduled manner. TPS is also used for producing reports on demand as well as exception reports.

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Types of Information System (Contd.)

    • Executive Information System (EIS)
      • An Executive Information System is also called Executive Support System. Senior managers of an organization use the EIS.
      • Therefore, it must be easy to use so that executives can use it without any assistance. EIS can do trend analysis, exception reporting and have drill down capabilities. EIS has on-line analysis tools and they access a broad range of internal and external data.

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Types of Information System (Contd.)

    • Decision Support System (DSS)
      • DSS serves the management of an organization. A DSS has sophisticated data analysis tools, which support and assist all aspects of problem specific decision-making.
      • DSS may use data from external sources such as current stock prices to enhance decision-making.

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Types of Information System (Contd.)

Components of Decision Support System

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Types of Information System (Contd.)

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Types of Information System (Contd.)

      • DSS is used when the problem is complex and the information needed to make the best decision is difficult to obtain and use.

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      • DSS is developed with the help of decision makers. DSS helps in decision-making process and does not make any decision.

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Types of Information System (Contd.)

    • Management Information Systems (MIS)
      • MIS provides the management routine summary of basic operations of the organization.
      • The basic operations are recorded by the TPS of the organization and MIS consolidâtes the data on sales, production etc.
      • MIS provides routine information to managers and decision makers.

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Types of Information System (Contd.)

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Types of Information System (Contd.)

      • The main objective behind installing an MIS in the organization is to increase operational efficiency. MIS may support marketing, production, finance etc.

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Types of Information System (Contd.)

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Types of Information System (Contd.)

    • Work Flow System
      • A workflow system is a rule based management system that directs, coordinates, and
      • monitors execution of an interrelated set of tasks arranged to form a business
      • process. A workflow system is also known as a document image management
      • system. For example, a workflow system is used by banks for loan sanction process.

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Types of Information System (Contd.)

  • An applicant fills out an electronic application form for a bank loan at a bank’s website.
  • The application is then upload to the bank loan officer’s site.
  • The loan officer conducts an interview and fills his feedback and passes the application form to the credit check unit.
  • The credit unit checks the credit limit and fills in the details. The application is now complete and a final decision is made.

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Types of Information System (Contd.)

    • Enterprise Resource Planning (ERP)
      • ERP system is a set of integrated programs capable of managing a company’s vital business operations for an entire multi-site, global organization.
    • Expert Systems
      • The system has the ability to make suggestions and act like an expert in a particular field.
      • An expert system has an extensive knowledge base.

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Types of Information System (Contd.)

Components of an Expert System

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Types of Information System (Contd.)

Communication between Expert System, Knowledge Engineer and Human Expert

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Business Perspective of IT

  • The impact of IT on a business has been tremendous.
  • One of the advantages of IT systems for a business is the cost-performance ratio, which is better in case of computers.
  • The labor cost increases every year but the cost of computer does not increase.

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Business Perspective of IT(Contd.)

The IT has been used in every business and for every function of a business. Some of the applications are as follows.

• Finance and Accounting IT has been used for forecasting revenues, determining the best sources and uses of funds and managing cash and other financial resources. IT has also been used to analyze investments and perform

audits.

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Business Perspective of IT(Contd.)

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Business Perspective of IT(Contd.)

  • Sales and Marketing IT has been used to develop new services, which maynot exist without IT.
  • IT has helped management of various organizations to determine the best location for production and distribution facilities.
  • The operational data has been analyzed using IT to determine the best advertising and sales approaches. The product prices have been set using IT to get the highest total revenues. IT has been used for product and price analysis.

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Business Perspective of IT(Contd.)

• Manufacturing IT has been extensively used for processing customer orders, controlling inventory levels, developing production schedules and for monitoring product quality.

  • A whole new discipline— Computer Aided Design and Computer Aided Manufacturing has evolved due to application of IT to design and

manufacturing.

  • Computer Integrated Manufacturing (CIM) dominates the manufacturing sector.

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Business Perspective of IT(Contd.)

  • Human Resource Management Companies are using IT systems for screening applicants and conducting various tests.
  • Project Management A range of software packages are available in the market for managing projects. These software products let the management set the schedules, milestones, facilitate communication among group members, and monitor the project progress. These products help in document and report preparation.

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Business Perspective of IT(Contd.)

  • Data Analysis Investment firms heavily use information systems to analyze stocks, bonds and options to provide better service to their clients

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Business Perspective of IT(Contd.)

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Internet and Its Business Applications

  • The Internet has changed the way business is done. A new business paradigm termed

electronic commerce has come into existence.

  • Consumers are able to shop for goods and services from all over the world in the comfort of their homes. The individuals are able to shop, bank, work, and entertain themselves without leaving their homes.
  • The payments are also made through Internet. The organizations, which provide these services, also use Internet.

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Internet and Its Business Applications (Contd.)

  • These organizations use Internet to conduct electronic meetings, train employees in many different locations simultaneously.
  • The manufactures and corporate houses

directly deal with the producers without going

through the retailers.

  • A large percentage of people are still not part of Internet. However, Internet users are increasing rapidly.

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Business Perspective of IT(Contd.)

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�Internet and Its Business Applications (Contd.)�To be continue…

  • Teleconferencing, video conferencing and screen sharing are some of the other Internet applications. Tele-video conferencing save travel time and travel cost.
  • The ideas can be shared quickly and the information flow is much faster. As a result, the product development time and contract negotiation time have reduced. The customer service has improved due to faster and accurate information availability. Many organizations have been able to draw competitive advantage by using Internet.

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Internet and Its Business Applications (Contd.)

  • Internet has also been used for electronic commerce. In Electronic Commerce (EC), business transactions take place via telecommunication networks.
  • The business transactions may take place between an organization and consumers or between two businesses or organizations.
  • The major benefits to the company include reduced cost, reduced cycle time, and improved customer service.

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Internet and Its Business Applications (Contd.)

List of benefits includes

  • An organization using electronic commerce decreases the cost of creating, processing distributing, storing, and reliving information.
  • EC allows reduced inventories and overheads.
  • EC reduces the time between the payments and receipts of goods and services.

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Computer Aided Decision Making

  • A decision support system (DSS), also called Computer Aided Decision System (CADS), is used when the problem is complex and the information needed to make the best decision is difficult to obtain and use.
  • In an organization, a manager has certain goals, which he tries to achieve through the use of resources. The resources such as people, money, material, and time is always limited.

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Computer Aided Decision Making (Contd.)

  • One of the roles that a manager plays among many others is of decision making.
  • The manager would like to examine various alternatives, which may not be
  • possible in a manual system due to time constraint or due to sheer volume of data.
  • The data may be distributed over various branches of the organization and without the help of Information Technology, it may not be possible to examine the data.

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Computer Aided Decision� Making (Contd.)

  • An information system that helps a manager in making a decision is called a computer-aided decision support system (CADS) or simply decision support system
  • A DSS is designed with the help of decision makers. A DSS aids in decision making process and does not make any decision. A DSS may be used for doing a thorough risk analysis of a project. Such a DSS performs what - if analysis.
  • A DSS consists of a model of the real world, collection of facts- database, and a user interface.

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Summary

  • The terms Information Systems and Information Technology are used synonymously. We learnt the main components of an IT system. We also learnt various types of IT systems that are used in a business.
  • The business applications of IT were discussed in some detail. Internet and E-commerce which is one of the applications of Internet were discussed. Various business models of e-business were also discussed.

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Summary (Contd.)

  • IT has also been used extensively in decision-making systems.
  • These systems do not make any decisions by themselves but they only help the decision maker in analyzing the data.

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