Information System

University Degree Business and Administrative studies

Question 1

Briefly describe the attributes of a good information and state the general purpose of using an information in a business organisation.
Explain the types of info and its characteristics based on the level of management. Give examples where necesseing.
Describe five types of information system used by business organisation.

Question 2

Write a brief report as to why companies are opting for the use of computerised systems and its advantages to a business organisation state real life example if possible.
Explain the types of systems available and provide an example each stating the input, process and output of each syatem specified.

Answer

Question 1

Characteristic of Information

Accuracy refers to whether information is accurate or inaccurate. Information is accurate if it represents a fact or situation as it really is. Inaccurate information can result from errors in the collecting, processing, or reporting activities involved in producing and transmitting it. However, if users are unaware that it is inaccurate and they use it in decision making, then it is information to them. This is one of the problems with the generation and distribution of information within organizations. In most cases the user of the information is not the same persons who collected, processed, and distributed it. Users assume that what they have received is accurate information. It is therefore the responsibility of the provider to ensure its accuracy.

Completeness refers to how thorough or inclusive a set of information is. It tells everything you need to know about a situation. Because of the complexity of most business decision-making situations, it is virtually impossible to attain a complete set of information. The aim is to acquire the most complete set possible.

Cost-effectiveness refers to the relationship between the benefit to be derived from using information and the cost of producing it. If the cost is more than the benefit, the information is not cost-effective and is usually not produced.

User-targeted refer to information should be summarized and presented together with relevant ratios or percentages.

Relevance refers to whether information is needed and useful in a particular situation. If it is needed, then the information is relevant. However, relevance is not a static attribute. What is relevant for a chief executive officer may not be relevant for a purchasing clerk, and vice versa. In addition, what is relevant today may not be relevant tomorrow in making the same decision.

Authoritative, also known as verifiability, refers to the ability to check the accuracy and completeness of information. Without authoritative it is not possible to determine accuracy, thus bringing into question the information’s usefulness. The term audit trail is used to indicate that summarized information can be traced back to its original sources to verify its accuracy.

Timeless refers to two conditions: Is the information available when it is needed, and is it outdated when it is received or when it is to be used? If the information is not available when needed or if it is outdated by the time it is used, then it has little or no value in decision making, problem solving, or control activities. Outdated information may also be counterproductive or worse than no information at all.

Easy to use information should be clearly presented, not excessively long, and sent using the right medium and communication channel (e-mail, telephone, report etc).

Uses of Information

Planning

Planning requires knowledge of the available resources, possible time-scales and the likely outcome under alternative scenarios. Information is required that helps decision making, and how to implement decisions taken.

Controlling

Once a plan is implemented, its actual performance must be controlled. Information is required to assess whether it is proceeding as planned or whether there is some unexpected deviation from plan. It may consequently be necessary to take some form of corrective action.

Recording transactions

Information about each transaction or event is required. Reasons include:

Documentation of transactions can be used as evidence in a case of dispute.
There may be a legal requirement to record transactions, for example for accounting and audit purposes.
Operational information can be built up, allowing control action to be taken.

Performance measurement

Just as individual operations need to be controlled, so overall performance must be measured. Comparisons against budget or plan are able to be made. This may involve the collection of information on, for example, costs, revenues, volumes, time-scale and profitability.

Decision making

Strategic planning, management control and operational control may be seen as a hierarchy of planning and control decisions.

Management Levels

Management is divided into three basic levels: strategic (top-level) managers, tactical (middle-level) managers, and operational (low-level) managers. Although all three levels of management work toward organizational goals and are involved to varying degrees in all five of the management functions, each level requires different types of information.

Strategic (top-level) managers

Strategic (top-level) managers make decisions involving the long-range, or strategic, goals of organizations. Their job is to make strategic decisions. Strategic decisions ...

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Decision making

Strategic planning, management control and operational control may be seen as a hierarchy of planning and control decisions.

Management Levels

Strategic (top-level) managers

Strategic (top-level) managers make decisions involving the long-range, or strategic, goals of organizations. Their job is to make strategic decisions. Strategic decisions are complex decision rarely based on predetermined routine procedures, involving the subjective judgment of the decision maker. Strategic means that, of the five major management functions, top-level managers spend most of their time planning and organizing.

Strategic information is used to plan the objectives of the organization, and to assess whether the objectives are being met in practice. Such information includes overall
profitability, the profitability of different segments of the business, future market prospects, the availability and cost of raising new funds, total cash needs, total manning levels and capital equipment needs.

Characteristics of Strategic information are:

• Derived from both internal and external sources

• Summarized at a high level

• Relevant to the long term

• Concerned with the whole organization

• Often prepared on an 'ad hoc' basis

• Both quantitative and qualitative

• Uncertain, requiring assumptions to be made regarding the future

Tactical (middle-level) managers

Middle-level managers implement the goals of the organization. Their job is to oversee the supervisors and to make tactical decisions. A tactical decision is a decision that must be made without a base of clearly defined informational procedures, perhaps requiring detailed analysis and computations.

Tactical (middle-level) managers divide their time among all five functions of management. They are concerned with short-term, tactical decisions directed toward accomplishing the organizational goals established by the top-level managers. Middle-level managers work on budgets, schedules, and performance evaluations and need information that is fairly detailed to permit them to compare present and past results and make adjustments where necessary. Middle-level managers require mainly internal information but also use some external information. A tactical manager for an automotive company might decide how long to advertise a new car on television in a particular state. Many organizations are using computerization to reduce the number of tactical managers and cut costs.

Tactical information is used to decide how the resources of the business should be
employed, and to monitor how they are being and have been employed. Such information
includes productivity measurements (output per hour) budgetary control or variance
analysis reports, and cash flow forecasts, staffing levels and profit results within a particular department of the organization, labour turnover statistics within a department and short-term purchasing requirements.

Characteristics of Tactical information are:

• Primarily generated internally (but may have a limited external component)

• Summarized at a relatively low level

• Relevant to the short- and medium-terms

• Concerned with activities or departments

• Prepared routinely and regularly

• Based on quantitative measures

Operational (low-level) managers

Lower-level managers, or supervisory managers, manage or monitor non-management employees. Their job is to make operational decisions. An operational decision is a predictable decision that can be made by following a well-defined set of routine produces.

Operational (low-level) managers are directly involved with the day-to-day operations of business. They are responsible for seeing that the tactical decisions of middle-level managers are implemented by personnel at the operations level. The information of operational managers must be detailed, current, and focused. It comes from such sources as inventory lists, historical records, and procedures manuals. An operational manager for an automotive company might decide to use a newer and less expensive method for cleaning paint-nozzle jets.

Operational information is used to ensure that specific operational tasks are planned and carried out as intended. In a payroll office, for example, operational information would include the hours worked by each employee and the rate of pay per hour.

Characteristics of Operational information are:

• Derived from internal sources

• Detailed, being the processing of raw data

• Relevant to the immediate term

• Task-specific

• Prepared very frequently

• Largely quantitative

Types of Information System

Executive Support System

An executive support system (ESS) is a decision support system for senior-level executive, who make decisions that affect an entire company. An executive has the responsibility of sitting long-range planning goals and a strategic course for an organization for the years ahead. An information system that caters specifically to the special information needs of executives, such as managerial planning, monitoring, and analysis.

An ESS incorporates large volumes of data and information gathered from the external environment of an organization. That information is used in conjunction with the information generated by MIS within functional areas of the organization to accommodate the specialized information needs of executives.

An ESS plays a vital role in summarizing and controlling the volume of information that an executive must read. An executive assigns values to the various sources of information from which data for an ESS are drawn in order to place emphasis on sources deemed most important.

Characteristics of executive support system:

Easy to use.
Flexible and adaptable.
Good graphical user interface.
Good modeling and analysis tools.
Interactive.
Quick and responsive.

Management Information System

Management Information System (MIS) can be defined as a set of formal business systems designed to provide information for an organization. Whether or not such a system is called a MIS, every company has one. Even managers who make hunch-based decisions are operating with some sort of information system- one based on their experience. The kind of MIS we are concerned with here includes one or more computers as components. Information serves no purpose until it gets to its users. Timeliness is important, and the computer can act quickly to produce information.

Management Information System (MIS) is a set of business systems designed to provide information for decision making. A computerized MIS is meet effective if it is integrated.

The extent of a computerized MIS varies from company to company, but the most effective kinds are those that are integrated. An integrated MIS incorporates all five managerial functions- planning, organizing, staffing, directing, and controlling- throughout the company, from typing to top-executive forecasting. An integrated management computer system uses the computer to solve problems for an entire organization, instead of attacking them piecemeal. Although in many companies the complete integrated system is still only an idea, the functional aspects of MIS are expanding rapidly in many organization.

Characteristics of Management Information System:

A MIS supports the data processing functions of transaction handling and record-keeping.
A MIS uses an integrated database and supports a variety of functional areas.
A MIS provides operational-level manager, tactical-level manager, and strategic-level manager with easy access to timely but, for the most part, structured information.
A MIS is somewhat flexible and can be adapted to meet changing information needs of the organization.
A MIS provides an envelope of system security that limits access to authorized personnel.

Decision Support System

A decision support system (DSS) is an interactive information system, composed of a set of related programs and data that helps users solve semi structured or unstructured user problems.DSS are aimed at assisting managers who are faced with unique decision problems. Often, an important aspect of these decisions is determining what information to consider. Because the difficulty of predicting information needs makes it impossible to predesigned reports, decision support systems must be flexible enough to meet the changing needs of managers. They are a source of information but do not replace the good judgment a manager must have.

DSS contain a set of related programs and data to help with analysis and decision making in an organization. At a minimum, a DSS includes a database relating to the types of decisions being made, the capability to state problems and questions, and modeling software that can test alternative solutions.

Although different levels of management benefit from decision support systems, they are used predominantly by tactical management for creating models to assist in analysis and decision making. A DSS can present several tentative solutions for one problem.

Characteristics of Decision Support System:

A DSS helps the decision maker in the decision-making process.
A DSS is designed to address semi structured and unstructured problems.
A DSS supports decision makers at all levels, but it is most effective at the tactical and strategic levels.
A DSS is an interactive, user-friendly system that can be used by the decision maker with litter or no assistance from a computer professional.
A DSS makes general-purpose models, simulation capabilities, and other analytical tools available to the decision maker.
A DSS can be readily adapted to meet the information requirements of any decision environment.
A DSS can interact with the corporate database.
A DSS is not executed in accordance with a pre-established production schedule.

Transaction Processing System

Transaction processing systems exist to support the operational level of organizations and assist in providing answers to structured routine decisions. The TPS is pivotal to any organization because it is the backbone of day-to-day activities and processing.

A transaction is a business activity or event. Transactions include buying a product such as a shirt at a department store or a service such as cable television from the local cable company. The information system that records and helps manage these transactions is known as a transaction processing system. Certain transaction processing systems are commonly seen in business organizations: account payable, order entry, accounts receivable, inventory control, payroll, and general ledger. These systems are grouped into one broad category- accounting information systems.

Transaction processing systems provide information on past transactions. They perform routine record-keeping functions to provide information for operational management personnel who manage the day-to-day activities of an organization. A TPS performs several functions, including data collection, input validation, and information processing, updating computer records, and output generation.

Office Automation System

Office automation systems are set up to identify and increase levels of efficiency and productivity amongst the workforce. To assist in this role, various tools and software are available to schedule, monitor and improve workforce activities. OAS will enable the workforce to:

communicate more effectively
promote collaborations and group synergy
structure daily tasks and activities
track and schedule appointments and activities
increase productivity by reducing repetitive workload
automate repetitive tasks

Office automation systems can be quite simplistic, drawing upon the functions of application software such as word processors, spreadsheets, database, multimedia and communications software.

Question 2

Salient Features of Computerized Accounting

Fast, Powerful, Simple and Integrated

Computerized accounting is designed to automate and integrate all the business operations, such as sales, finance, purchase, inventory and manufacturing. With Computerized accounting, accurate, up-to-date business information is literally at the fingertips. The Computerized accounting combine with enhanced MIS, Multi-lingual and Data organization capabilities to help the company simplify all the business processes easily and cost-effectively.

Complete Visibility

Computerized accountings giving the company sufficient time to plan, increase the customer base, and enhance customer satisfaction. With Computerized accounting the company will have greater visibility into the day-to-day business operations and access to vital information.

Enhanced User Experience

Computerized accounting allows the company to enter data in a variety of ways which makes work a pleasure. Adapting to the specific business needs is possible.

Accuracy, Speed

Computerized accounting has User-definable templates which provides fast, accurate data entry of the transactions; thereafter all documents and reports can be generated automatically, at the press of a button.

Scalability

Computerized accounting adapts to the current and future needs of the business, irrespective of its size or style.

Power

Computerized accounting has the ability to handle huge volumes of transactions without compromising on speed or efficiency.

For Improved Business Performance

Computerized accounting is a highly integrated application that transforms the business processes with its performance enhancing features which encompass accounting, inventory, reporting and statutory processes. This helps the company access information faster, and takes quicker decisions. Computerized accounting also guarantees real-time optimization of operations and enhanced communication.

Quick Decision Making

Generates real-time, comprehensive MIS reports and ensures access to complete and critical information, instantly.

Complete Reliability

Computerized accounting makes sure that the critical financial information is accurate, controlled and safe from data corruption.

Advantages of Computerized accounting

Automation of tedious clerical jobs
Speed and accuracy
Low cost of packages
Automatic generation of standard reports
Redundant data storage permits efficient generations of some reports
Increase revenue while lowering operating costs and enhancing competitive advantage of the company.
Faster and efficient in processing of information;
Automatic generation of accounting documents like invoices, cheques and statement of account;
With the larger reductions in the cost of hardware and software and availability of user-friendly accounting software package, it is relatively cheaper like maintaining a manual accounting system;
More timely information can be produced;
No more manual processing of the data- all automatically been posted to the various ledgers/accounts and
Many types of useful reports can be generated for management to make decisions

Types of System

An open system is one in which the system’s interaction with the environment is not controlled. Besides having inputs and outputs, an open system has disturbances, or uncontrolled inputs, that affect the processes within the system. Disturbances to the airline system, for example, may include icy runways. That input is capacity of people, process is operated and output is destination.

Well-designed systems minimize the impact of disturbances. Systems designers anticipate the things that can go wrong in the environment and create processes and interfaces to control them. For example, ATM system, that input is accept ATM card, process is read the ATM card and output is pay out money and bills. In accounting information systems, internal controls protect system processes against disturbances from the environment. An inadequate design is one in which designers gave insufficient thought to potential disturbances, thus producing an open system.

A closed system is totally isolated from its environment. There are no external interfaces, the system has no effects outside of its boundaries, and the environment has no effect on the processes within the system.

The closed system is a theoretical rather than a practical concept, because all systems interact with their environment in some way. For example, ABC company shareholders meeting. Any one should not be know their content of meeting, so that closed system do not have input, process and output.

Deterministic systems are predictable systems where the output can be predicted from the input. A deterministic system operates according to a predetermined set of rules. Its future behavior can be predicted exactly if it’s current state and operating characteristics are known. For examples, food industry system. Because that is fully automatic system, so the input is food, process is that food pack into the plastic food bag and output is foodstuff.

Probabilistic systems are where some conditions of the system can be predicted from the previous state but only in terms of probable behavior, and there is always a certain degree of error attached to the prediction of what the system will do.

Most industrial and business systems are regarded as probabilistic and it is to these that most control effort is directed. For example: money exchange, that input is overseas market, process is national treasury and output is amount of money exchange.

Self-organizing systems are those which adapt and react to inputs or stimuli. The method of adaptation is uncertain and the same inputs do not always produce the same responses. Social groups and organizations are within this category.

Most of the computerized stock control systems currently implemented manually, but recent advances in self-organizing database management systems. For example, plantation system, that input is seed, process is manure and water and output is plant.