The features and functions of information systems

Tools

What is the difference between a computer with data and an information system? The distinction is much as it would be if we defined the difference between data and information.

In reality, information systems are made up of a number of components. Which components a particular information system has will depend on what the system is supposed to do.

Many information systems are built on databases. This is because in order to have data analysed to convert into information, you need to have it stored electronically. In most cases this will be in a database, although on occasions you will see a spreadsheet used instead (because spreadsheets also have limited database functionality).

Key terms

A database is a collection of records that have been organised in a logical way.

From the example below, you will see that each column of information (known as a field) will hold a different piece of like information for a number of students. Each row will hold a different record.

 

 

 

 

 

 

If we were to add a subsequent record, the (Autonumber) in the first field would increment (increase) to 4.

Databases that are structured in this way form the basis for most information systems, and other software can be used to manipulate, interrogate or make judgements about this data. This is essentially what an information system does.

 

Artificial intelligence and expert systems

Artificial intelligence is a huge developmental area at present, where scientists attempt to program machines that can mimic human thought processes, and react accordingly. Robots that can learn are a good example.

Let's think about this in real terms. The RoboMow Robotic Lawnmower is an intelligent lawnmower that, once set up, can cut your grass without any human intervention.

In this instance, the sensors help the machine to mimic thought processes and react accordingly and so the lawnmower will only mow the grass where there is in fact grass, staying away from objects such as bushes and borders.

Another example of an expert system is NHS Direct. This service is designed as a first port of call for patients and their families when they have urgent queries regarding medical conditions. It is a medical diagnosis tool. This is how it works:

1. The patient, or a member of the family, calls the designated phone number.
   
2. The phone is answered by a trained nurse who runs through a series of set questions.
   
3. Depending on the answer that each caller gives, the next question is activated.
   

The expert system is effectively rule based (forming a decision tree), and it depends on how each condition is resolved as to the action the system then takes.

 

 

 

 

 

 

 

 

 

 

 

Other professionals will also use industry-related expert systems – for example engineers, geologists and chemists will use such software.

The main advantage of these systems is firstly they can be easily updated and secondly that relatively inexperienced professionals can use them effectively. Expert systems, particularly, will be based on the concepts of a database.

Internet

With the significant growth in recent years of e-commerce (doing business online), many organisations rely on websites, supported by databases, to manage and record their business transactions. In fact, some organisations trade solely online. Many companies with high street outlets have created websites as an additional means of selling their goods and services. The following company, however, began with a website and now has a shop as well.

The images used with the kind permission of The Spice of Life (www.spiceoflife.co.uk) This is a small business that trades in the herbs and spices used in traditional curries and other associated dishes.

 

Once the user selects a category, all products available are listed. Customers can browse the various categories and choose to buy products.

If the user wishes to buy, for example, a Bengal Balti mix, they will key in the quantity they require and then click on the buy button. When they have selected all the items they want to buy, the checkout button will then take them to their shopping cart where they can arrange for payment and delivery.

Essentially, all the products that the company stocks are recorded in a database. The data stored is manipulated by server-side software so that it can be accessed and displayed via the internet.

Once input, customer details will usually be stored in another part of the database. Some websites also store payment information, so that the customer has less to key in on subsequent visits to the site.

Subsequently, the database content can be used by the business to provide management information on, for example, stock movement and customer buying trends, and may well enable the organisation to predict times of high sales turnover (which will in itself assist in the planning of manufacturing).

Others (e.g. data-mining systems)

In order to enable organisations to use their data effectively, possible even after a trading year has ended, software has been developed to enable them to do this. Two examples of such software are:

• Data-mining software systems such as Statistica created by StatSoft (www.statsoft.com) or RandomForests developed and released by Salford Systems (www.salford-systems.com/randomforests.php)
  
• Data warehousing systems such as Enterprise Data Warehousing from Kalido (www.kalido.com) or Master Data Management from the SAS Institute Inc. (www.sas.com).
  

But what does this software do?

Data-mining

Data-mining software provides specific types of functionality that are not usually available in regular software, without intervention and activity from the user.

In order to identify that there was a problem with the data, it required the user firstly to make a chart, then to interpret whether there was anything exceptional about it.

Data-mining software can not only identify unusual events, but has drill-down functionality so that the data can be investigated at lower and lower levels until the exception is found and can be understood.

 

Typical data-mining software has:

• Number crunching and statistical functionality not usually found in software like Microsoft Access
  
• Ability to analyse sublevels in the data
  
• Report-writing functionality
  
• The ability to be used with most database software
  

Data-warehousing

In order that historical data is available after the trading year has finished, data can be deposited into data-warehousing software.

The data must be:

• Well organised (often by subject or theme)
  
• Stored in a way that is non-volatile (cannot be deleted or overwritten by mistake)
  

Once the data is stored in the warehousing software, data-mining or other analytical tools can be used to interrogate the data and make comparisons.

Information systems examples

In general terms, the information produced by information systems is used in the following activities:

• Planning
  
• Decision making
  
• Controlling operations
  
• Forecasting the future
  

Realistically, these activities will be undertaken in all functional areas of an organisation. Here are some examples of the sorts of information that can be extracted from a good information system. Also shown is the business reason why an organisation would want the information.

 

Types of information	Functional area	Business use
Sales performance (e.g. comparing one sales area against another, comparing one years sales against another, comparing the sales of particular products across a number of years or financial quarters)	Marketing	Being able to react to business opportunities and threats will be dependent on the ability of an organisation to fully understand the environment in which it operates – when information is compared, any anomalies will be highlighted and investigated so that the company can understand why a particular event occurred.
Competitors (e.g. prices, delivery, terms and conditions)	Marketing	Knowing the pricing information of competitors will help an organisation to set its own prices.
Development (e.g. new products or services)	Marketing	Information about how the technological developments in the real world will help an organisation plan its own development strategies.
Financial costs (e.g. budgets and targets)	Financial	Setting budgets is essential to ensure that no area of the organisation spends more money than it should. Similarly, setting targets enables functional areas of a business to know what is expected of them.
Investment returns	Financial	Any money invested by the organisation should be monitored – for example, an organisation could have invested in new production machinery and it needs to establish whether the investment was worthwhile (has production throughput increased?).
Financial performance (e.g. profit and loss)	Financial	The organisation overall needs to know how profitable it is – this will help it to plan its expenditure, expansion and possible investment.
Staffing (records)	Human resources	The organisation must hold extensive information on its employees – in addition to standard information such as personal details, next of kin, bank details. They must know which functional area individual staff belongs to and how many staff overall work in each part of the organisation.
Professional development	Human resources	The needs of each area must be met by the staff that work in that area – if those needs change, then the organisation must endeavour to develop the staff accordingly through training programs

 

Management information systems (MISs)

Essentially, an MIS is a system that is designed to help executives to manage an organisation, by giving them sufficient information to help them control the overall direction and the day-to-day activities.

Features

While the key elements of an MIS can be seen in later in this document, it might be appropriate at this stage to explain that all information systems are said to have a behaviour – this behaviour is defined by the level of predictability the system is said to have.

Lucey (2000: 38) defines a series of information system behaviours, of which the following are the most notable.

Deterministic

This is where the exact outputs of the system can be predicted because the inputs are known in advance: e.g. a manufacturing process where a number of predetermined inputs go into the system so that a particular product can be output.

Probablistic

By using prior knowledge about the system, the likely outputs can be predicted: e.g. the overall number of hours of downtime on a piece of production machinery can be estimated on previous breakdown history, but the actual hours that will be experienced (it could be higher or lower than previously) will not be known in advance.

Self-organising

These systems are by nature reactive – the inputs are unknown and unpredictable and the potential outputs will be variable and also unpredictable: e.g. a social work department may have a series of 'routine responses' for given situations, but the response actually taken will need to be adapted to accommodate factors not necessarily known in advance.

Benefits

The business benefits of information systems have already been stated repeatedly, but as an overview, these systems provide information that is:

• Up to date
  
• Timely
  
• Accurate
  
• Reliable
  
• Valid
  
• Fit for purpose
  
• Accessible
  
• Cost-effective
  

 

The additional benefit is that the information can be backed up with relative ease to ensure that recovery from organisational disaster is more likely.

Effectiveness criteria (e.g. accuracy, sustainablilty, timelines, confidence)

How effective an information system is will be determined by a number of factors, some of which are measurable and others which are subjective. The same system could be used by two competing companies and one might say the system is effective while another might disagree.

Measurable criteria include:

• Accuracy – this is easy to measure – where the outputs are correct or incorrect. It is not unusual for organisations to have checked the outputs of systems by other means, such as using a calculator!
  
• Sustainablilty – the system is said to be sustainable if the quality of the outputs from the system can be maintained on an ongoing basis.
  
• Timelines – the system need to be able to respond with appropriate outputs at the right time (information that is produced too late is clearly not very useful).
  

 

Subjective criteria include:

• Confidence – this is difficult to measure and will largely depend on the personal judgements of the individuals using the information output by the system – if the user's experiences have been largely positive, they will be said to have confidence in the system.
  

 

Key elements of information systems

In order to be an effective information system, the following key elements should be in place:

• Data – data must first be introduced to the system as inputs, before it can be processed and output as useful information. This data will be generated by all functional parts of an organisation, as well as being received into the system from outside the company.
  
• People – staff must have the right skills to enable them to get the best out of an information system.
  
• Hardware – the computer hardware must be capable of running the software and handling the volumes of data that are put through the system. Large volumes of data being interrogated (searched through) by a computer system that is old and slow will cause significant frustration to users.
  
• Software – the software that is installed must have the features and functionality to produce the information required by the organisation. In some instances staff using the software must have relevant training.
  
• Telecommunications – if information output from the system is required in multiple locations, the telecommunications infrastructure must be in place to enable the data to be distributed.
  

 

Information systems functions

In basic terms, the functions of an information system are simple:

• Capture and store inputs
  
• Process them
  
• Output them
  

 

Input and storage, processing and output

The diagram below is a good representation of the nature and source of inputs, typical processing functions and potential outputs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A typical information processing system

Control and feedback loops and closed and open systems

The functionality of information systems can be defined as being close or open.

The definition will define how the system interacts with the environment in which it exists.

A closed system:

• is largely isolated from its environment
  
• any reaction will be totally predictable and probably automated
  
• does not influence the external environment in any way
  

 

A refrigerator or central heating system is an example of a closed system.

The refrigerator cools when triggered to do so by a sensor. When the correct temperature has been reached, the machine switches off.

A central heating system is triggered by a thermostat and timer. The timer ensures that the system becomes active at certain times each day, and that the radiators are heated if the temperature is lower than a set value.

In actual fact this is an example of a control and feedback loop. The system constantly repeats the same sequences, activated by the system triggers.

An open system:

• fully capable if interacting with its environment
  
• will receive inputs and other influences from the environment
  
• will pass back outputs and influences to its environment
  
• is capable of handling unexpected events because it is constantly monitoring and anticipating the environment
  

Example:

Most functional areas of organisations are effectively open systems, because they interact with the other functional areas around them, and also with factors even outside the organisation. Take the example of the marketing function in an organisation:

• they investigate the market having contact with the public
  
• they have to react to legislative changes
  
• they must respond to changes in user needs
  

they must respond to developments in technology

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