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CHAPTER 1: INFORMATION AND

DATA
Management Information
system
BBA 5
th
semester
NOC


Instructor :Er. Ganesh Thapa
Chapter 1 Foundations of Information Systems in Business
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DATA
Data are raw facts about physical phenomena or
business transactions
Symbols representing quantities, actions or
objects

Types of data:

Alphanumeric-numbers, alphabets, and other
characters
Text: sentences
Image: graphic shapes and figures
Audio: voice and other sounds
Video: picture and its movements with sounds


INFORMATION
Information is data that has been
processed into meaningful and useful
context for end users
Example:
Sales data is names, quantities, and dollar amounts
Sales information is amount of sales by product type,
sales territory, or salesperson
Processing includes
calculating ,comparing, sorting, classifying and
summarizing
DATA VERSUS INFORMATION

Data Information
DATA VS. INFORMATION
Data: 50814
Information:
5/08/14 The date of your final exam.


Rs 10,854 The average starting salary of an BBA pass
outs.

DATA VS. INFORMATION
Data
6.34
6.45
6.39
6.62
6.57
6.64
6.71
6.82
7.12
7.06

SIRIUS SATELLITE RADIO INC.
$5.80
$6.00
$6.20
$6.40
$6.60
$6.80
$7.00
$7.20
1 2 3 4 5 6 7 8 9 10
Last 10 Days
S
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k

P
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Information
DATA INFORMATION KNOWLEDGE
Data
Information
Adding value
Adding context
Graphing the data
Selecting part of the data
Averaging the data
Summarizing the data
DATA INFORMATION KNOWLEDGE
Information
Knowledge
How can we add more value to the info?
What is the best way to use the info?
How does this info effect the system?
What info is relevant to the problem?
Are there any patterns in the info?
How is the info tied to outcomes?
DIFFERENCE BETWEEN DATA AND INFORMATION
S.N
.
Data Information
1. Derived from plural form of
datum (latin word) which means
to give.
Derived from latin word informare
which means to instruct.
2. Data is a raw fact. Information is the outcome derived
after processing the data
3. May or may not be meaningful Is always meaningful
4. Input to any system may be
treated as data
Output after processing within a
system is information
5. Understanding is difficult Easily understandable
6. Data is random in order Information is in order
7. Eg; statistics, numbers,
characters, images
Eg: reports, knowledge
Information Systems transform data into
useful information.

THE CHARACTERISTICS OF VALUABLE INFORMATION
Table 1.2: Characteristics of Valuable Information
WHAT IS A SYSTEM?
A set of interrelated components
With a clearly defined boundary
Working together
To achieve a common set of objectives
By accepting input and producing output
on organized transformation process.

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BASIC FUNCTIONS OF A SYSTEM
Input
Capturing and assembling elements that enter the
system to be processed
Processing
Transformation process that converts input into output
Output
Transferring transformed elements to their ultimate
destination




Manufacturing
Process




Input of
Raw Materials




Output of
Finished Products
Environment
Other Systems




Control by
Management
Control
Signals
Control
Signals
Feedback
Signals
Feedback
Signals
System Boundary
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A BUSINESS AS A SYSTEM
WHAT IS AN INFORMATION SYSTEM?
Input of
Data
Resources
Processing
Data
Output of
Information
Products
Control of System Performance
Storage of Data Resources
DEFINITION OF INFORMATION SYSTEM
An information system is an
arrangement of people, data, processes,
and interfaces that are integrated for the
purpose of supporting and improving
the day-to-day operations in a business,
as well as fulfilling the problem-solving
and decision-making information needs
of business managers.
WHAT IS AN INFORMATION SYSTEM?
An organized combination of
People
Hardware and software
Communication networks
Data resources
Policies and procedures
This system
Stores, retrieves, transforms, and disseminates
information in an organization
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INFORMATION TECHNOLOGIES
Information Systems
All the components and resources necessary to deliver
information and functions to the organization
Could be paper based
Information Technologies
Information technology is a contemporary term that describes the
combination of computer technology (hardware and software) with
telecommunications technology (data, image, and voice networks).

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Information technology has significantly expanded the
power and potential of most information systems.


COMPONENTS OF AN INFORMATION SYSTEM
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INFORMATION SYSTEM RESOURCES
People Resources
Specialists
End users
Hardware Resources
Machines
Media
Software Resources
Programs
Procedures
Data Resources
Product descriptions, customer records, employee files, inventory
databases
Network Resources
Communications media, communications processors, network
access and control software
Information Resources
Management reports and business documents using text and
graphics displays, audio responses, and paper forms
PEOPLE RESOURCES:
Includes human resources essential for successful
operation of information system
End users :people who uses an information
system or information produced by IS.
Knowledge workers: works by communicating,
collaborating in teams and creating using and
distributing information
IS specialist: people who develop and operate
information system
System analyst, software developer, system
operators

HARDWARE RESOURCES
Includes all physical devices and materials used in
information processing
Tangibles machines as well as intangible data
media
Computer peripherals: Input and output devices
Computer systems: consists of central
processing units containing microprocessors.
E.g. handheld devices, laptop tablet or
desktops micro computer systems

SOFTWARE RESOURCES
Includes all sets of information processing
instructions
Both programs and procedures
Programs: sets of operating instructions which
direct and control hardware
Procedures: sets of information processing
instructions
Example: System software, application software
and procedures
Even information systems that do not use
computers have software resources . Do you
agree?
DATA RESOURCES

oDatabases: hold processed and organized
data
oKnowledge bases : holds knowledge in
the forms of facts, rules and examples
about successful business practices

NETWORK RESOURCES

Includes telecommunication technologies and
networks
Communication media: twisted wire, coaxial, optical
fibers, microwaves, wireless technologies
Network infrastructure: modems , routers switches
Chapter 1 Foundations of Information Systems in Business
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PURPOSES OF INFORMATION SYSTEMS
Chapter 1 Foundations of Information Systems in Business
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TYPES OF INFORMATION SYSTEMS
Operations Support Systems
Efficiently process business transactions
Control industrial processes
Support communication and collaboration
Update corporate databases
Management Support Systems
Provide information as reports and displays
Give direct computer support to managers during
decision-making

Chapter 1 Foundations of Information Systems in Business
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TYPES OF OSS
Transaction Processing Systems
Record and process business transactions
Example: sales processing, inventory systems, accounting
systems
Process Control Systems
Monitor and control physical processes
Example: using sensors to monitor chemical processes in a
petroleum refinery
Enterprise Collaboration Systems
Enhance team and workgroup communication
Example: email, video conferencing
Chapter 1 Foundations of Information Systems in Business
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TWO WAYS TO PROCESS TRANSACTIONS
Batch Processing
Accumulate transactions over time and process periodically
Example: a bank processes all checks received in a batch at
night
Online Processing
Process transactions immediately
Example: a bank processes an ATM withdrawal immediately
Chapter 1 Foundations of Information Systems in Business
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MANAGEMENT SUPPORT SYSTEMS
What do they do?
Provide information and support for effective decision
making by managers
Management information systems
Decision support systems
Executive information systems
Chapter 1 Foundations of Information Systems in Business
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TYPES OF MANAGEMENT SUPPORT SYSTEMS
Management Information Systems (MIS)
Reports and displays
Example: daily sales analysis reports
Decision Support Systems (DSS)
Interactive and ad hoc support
Example: a what-if analysis to determine where to spend
advertising dollars
Executive Information Systems (EIS)
Critical information for executives and managers
Example: easy access to actions of competitors
Chapter 1 Foundations of Information Systems in Business
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OTHER INFORMATION SYSTEMS
Expert Systems - provide expert advice
Example: credit application advisor
Knowledge Management Systems - support creation,
organization, and dissemination of business knowledge
throughout company
Example: intranet access to best business practices
Strategic Information Systems - help get a strategic advantage
over customer
Example: shipment tracking, e-commerce Web systems
Functional Business Systems - focus on operational and
managerial applications of basic business functions
Example: accounting, finance, or marketing
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WHAT SHOULD BUSINESS PROFESSIONALS
KNOW?
MANAGEMENT CHALLENGES OF THE E-BUSINESS ENTERPRISE
Business Strategies
Business Processes
Business Needs
Customer Relationships
Business Partners
Suppliers
Business Customers
Ethical Considerations
Potential Risks?
Potential Laws?
Possible Responses?
IS Human Resources
IS Development
IT Infrastructure
IS Performance
Organization Structure
and Culture
User Acceptance
Chapter 1 Foundations of Information Systems in Business
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ROLES OF IT
Vital component of successful businesses
Helps businesses expand and compete
Improves efficiency and effectiveness of
business processes
o Efficiency in terms of minimizing cost and time
o Effectiveness in meeting business strategies,
enabling business process ,enhancing structure and
culture
Facilitates managerial decision making and workgroup
collaboration
MAJOR ROLES OF INFORMATION SYSTEMS
Support of
Strategic
Advantage
Support of
Managerial
Decision Making
Support of
Business Operations
IMPORTANCE OF IT
1. Strategy for gaining a competitive edge
2. Increasing revenues
3. Reducing costs
4. Improving profits
5. Improving quality
6. Creating new opportunities


USE OF IT FOR STRATEGIC ADVANTAGE
A company can survive and succeed in the long run only if it
successfully develops strategies to confront five competitive
forces that shape the structure of competition in its industry. In
Michael Porters classic model of competition, any business that
wants to survive and succeed must effectively develop and
implement strategies to counter

USES OF INFORMATION (IN ORGANIZATION)
1. Accounting: it helps to create, maintains and processes and
retrieves quantitative data related to the amount of
profit/loss, cash flow, inventory control, payroll etc
2. Finance: data related to capital structure, number of
outstanding shareholders, the maturity dates of debits and
treasury stocks
3. Personnel: data related to service contracts, benefits,
income rate
4. Public relations: union contract, scholarships, donations
USES CONTD..
5. Sales: data related to total sales, forecasted sales, actual
sales, performance reports
6. Market research: data related to market potentials,
consumer behavior and competitive circumstances
7. production: data related to utilization, scheduling priority, no
of machine equipments
8. purchasing: data related to flow or raw materials, machinery,
equipment and office supplies
USES OF INFORMATION (OUTSIDE ORGANIZATION)
Varieties of external information users seek reliable
data from the firm
1. government: require reports for income tax and
regulations
2. Auditors: for validity of the financial statements,
3. Shareholders and perspective investors: data
related to earning ratio, future expansion
4. Customer: warranty periods

COST AND VALUE OF INFORMATION
Cost:
Every organisation and business needs information in
order to operate.
Even if they collect, collate and produce the information
themselves, there is always going to be a cost -
information is never free.
The four main costs involved in producing any
information are:
Hardware
Software
Consumables
Manpower



Hardware
Original cost of hardware
Replacement of hardware
Maintenance of hardware
Storage of information
Manpower
Cost of labour
Training
Consumables
The cost of paper, toners
and cartridges are known as
'consumables' and all count
towards the costs of
producing information.

Software
Initial purchase of software
Upgrading software
Licences
Support costs

Cost of
Information
COST AND VALUE OF INFORMATION
The value of information is measured in terms of
benefits to the organization. The benefits may be
tangible that can be easily quantified.
Eg: 10% increase in sales is a tangible benefit
which corresponds to Rs. 100000. If the cost of the
information that led to this additional profit is Rs.
20000, then the value of information is Rs. 80000.
COST AND VALUE CONTD..
Sometimes benefits may be intangible and cannot be easily
quantified. For example, information may help consumers to
connect to a company better.
Values of information can be measured with these methods:
Cost benefit analysis
Returns on investment (ROI)
Earning growth
Market share
Customer awareness and satisfaction
1. COST BENEFIT ANALYSIS
It is difficult to estimate the cost of IT by general
user. There are direct cost and indirect or
implementation of IT and information generation
Direct cost: hardware cost, software cost,
installation cost, training cost etc.
Indirect cost: employee motivation, losses in
productivity, migration of dependability
Benefit includes reduce manufacturing cost,
reduced invention cost time, better quality control,
increase sales, higher employee performance etc.


2. RETURN ON INVESTMENT (ROI)
Another measure of IS value is ROI. It tries to
quantify additional profits that are generated as a
percentage of the investment in IT. For eg: a
manufacturing firm invested 5 lakhs in IS and
additional benefits due to increased sales is 50,000.
ROI=50000/500000*100%=10%
3. EARNING GROWTH
Another measure of IS value is the increase in
earning growth. Let us say an organization
experienced 6% sales growth in year 2000. After
installing IS, the sales growths become 11%.
Assuming that no other factors affected sales 5%
increase in the sale are due to IS.
4. MARKET SHARE













5. Customer Awareness and Satisfaction
Sales
Product A
Product B
Product C
Sales
Product A
Product B
Product C
After use of
IS for product
A
Before use of IS for
product A
FUNCTIONS OF INFORMATION
There are 4 main uses (functions) of information in
organizations.

1. Monitoring and control
2. Decision-making
3. Measuring performance
4. Identifying new business opportunities

o Monitoring and control
Businesses will compare actual performance
against its predicted (budgeted) performance. Then
they will act upon it.
o Decision-making
When managers are ready to make tough choices
(decisions) they need good, accurate and up-to-
date information. If they act without relevant
information it could lead to disaster, and failure.
o Measuring performance
Organizations can compare their sales figures with
their competitors or indeed against their own
previous years.
o Identifying new business opportunities
Organizations are always on the lookout for gaps in
the market. They fill these gaps with suitable
products or services to satisfy customer needs.











Chapter 1 Foundations of Information Systems in Business
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TRENDS IN INFORMATION SYSTEMS
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BUSINESS TRENDS: E-BUSINESS
What is E-Business?
Using Internet technologies to empower
Business processes
Electronic commerce
Collaboration within a company
Collaboration with customers, suppliers, and other business
stakeholders
In essence, an online exchange of value

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HOW E-BUSINESS IS BEING USED
Manufacturing
and
Production
Engineering &
Research
Accounting,
Finance, and
Management
Suppliers and Other Business Partners
Procurement, Distribution, and Logistics
Advertising Sales Customer Service
Consumer and Business Customers
Company
Boundary
Intranets
The Internet
Extranets
E
x
t
r
a
n
e
t
s

INFORMATION SYSTEMS PLAY A VITAL ROLE IN THE
EFFICIENT AND EFFECTIVE OPERATIONS OF E-
BUSINESS, E-COMMERCE AND ENTERPRISE
COLLABORATION.
CHAPTER SUMMARY
WHAT IS MANAGEMENT INFORMATION SYSTEM?
QUESTIONS TILL ASKED
Define data and information. Explain the qualities that
determine the functional viability and cost value of
information.
What is information system? Explain the components
that should be recognized in any information system in
the real world.
Define data and information. Explain role of information
in business organization.
How are information system used at the various levels
of business management?
Explain data and information. What are the main
characteristics of information?
Define MIS? What are the main features of MIS? Write a
brief note to explain the evolution of MIS?

Describe how internet technology can help
business organization.
Explain the difference among the terms data,
information, and knowledge. With appropriate
examples.
Define System. What are basic properties of a
system?
Explain why the term MIS is broader than just the
definition of the term Management. Describe the
major changes taking place in MIS today.
What are four components of information system?
Describe each of them.
Compare and contrast data and information.
Explain, why information systems are important for
business organization?