Study Notes on Business Information Systems

Introduction to Business Information Systems

  • VT OMNES WWYM SINT
    Strathmore University

Learning Outcomes

  • The learning outcomes from the first topic include the following:

    • 1.0 Define business information systems

    • 2.0 Characteristics of Valuable business Information

    • 3.0 Why Business information systems are essential to business

    • 4.0 Components of a business information system

    • 5.0 Types of Business Information Systems

    • 6.0 The functions of different types of business information systems

    • 7.0 How different business information systems serve different levels within an organization

1.0 What is Business Information Systems?

  • A business information system is defined as:

    • Verbatim Definition: "A group of interrelated components that work collectively to carry out input, processing, output, storage and control actions in order to convert data into information."

  • Purpose and Use:

    • This information can support the following organizational activities:

    • Forecasting

    • Planning

    • Control

    • Coordination

    • Decision Making

    • Operational Activities

The Business Environment & Business Information Systems

  • Influences:

    • All business organizations operate within an environment that affects their operations. An example includes:

    • Legislation: Controls some of the organization's activities.

  • Data Collection:

    • Business information systems collect data from the business environment and convert this data into usable information for effective management.

Components of the Business Environment

  • Figure 1.3: The business environment of an organization and the main factors influencing it includes:

    • Technology

    • Suppliers

    • Weather

    • Economic factors

    • Employee relations

    • Organization

    • Competitors

    • Legislation

    • Location

    • Customers

    • Public opinion

    • Physical environment

    • General environment

    • Specific environment

Data vs. Information

  • Definitions:

    • Data: A collection of nonrandom facts recorded by observation or research.

    • Information: Data that has been processed/transformed so that it is meaningful.

  • Process: Business information systems seek to collect business data from the business environment and convert this into business information for managerial use.

2.0 Characteristics of Valuable Business Information

  • 1. Accessible: Information should be easily accessible by authorized users in the right format and at the right time.

  • 2. Accurate: Information should be error-free; inaccuracies can occur due to incorrect data input into the transformation process.

  • 3. Complete: Information must contain all important facts without excess detail.

  • 4. Timely: Information should be provided when needed; e.g., last week's weather conditions may not assist in today's decisions.

  • 5. Economical: Information production should be cost-effective, balancing the value of information with the production cost.

  • 6. Flexible: Information should be adaptable for multiple uses, e.g., inventory data serves various organizational roles.

  • 7. Relevant: Information must be pertinent to decision-makers' requirements.

  • 8. Secure: Protection against unauthorized access is essential.

  • 9. Reliable: Dependability of information is crucial; reliability is influenced by data collection methods and sources.

  • 10. Simple: Simplicity in information is key; complexity can lead to information overload affecting decision-making.

  • 11. Verifiable: Information should be confirmable through multiple sources, ensuring accuracy.

Components of Business Information Systems

  • Utilization of IT:

    • Modern organizations use extensive information technology in business information systems, focusing on Computer-based systems.

  • Key Components:

    • 1. Hardware: Machinery aiding data input, processing, storage, and output.

    • 2. People: Users and personnel managing, running, programming, and maintaining the system.

    • 3. Software: Computer programs governing computer operations, enabling various tasks.

    • 4. Procedures: Strategies, policies, methods, and rules governing the use and maintenance of information systems.

    • 5. Telecommunications, Networks, and the Internet: Includes electronic signal transmission facilitating organizational processes.

    • 6. Databases: Organized collections of related facts and information.

5.0 Types of Business Information Systems

  • Various types of business information systems include:

    • 1. Transaction Processing Systems (TPS)

    • 2. Customer Relationship Management Systems (CRM)

    • 3. Supply Chain Management Systems (SCM)

    • 4. Executive Support Systems (ESS)

    • 5. Management Information Systems (MIS)

    • 6. Decision Support Systems (DSS)

    • 7. Electronic Business (E-business) systems

    • 8. Enterprise Resource Planning (ERP) systems

    • 9. Knowledge Management Systems

Value Addition of Business Information Systems

  • 1. Improving quality and reduced costs:

    • Example: Monitoring machinery to notify operators when performance falls outside acceptable limits to maintain quality and reduce waste.

  • 2. Improving efficiency:

    • Example: Timely information enabling just-in-time manufacturing requires up-to-date data on inventory locations.

  • 3. Sharing knowledge:

    • Example: CPA firms using information systems for sharing best practices and enabling communication among offices, allowing access to expertise.

  • 4. Improving supply chain efficiency and effectiveness:

    • Example: Allowing customers direct access to inventories reduces costs and increases customer retention.

  • 5. Improving internal control structure:

    • An Accounting Information System (AIS) with proper controls defends against fraud and system failures.

  • 6. Improving decision making:

    • Enhanced decision-making capabilities arise from the use of appropriate information systems.

Detailed Types of Business Information Systems

  • 1. Transaction Processing Systems (TPS):

    • Defined as an organized collection of components used to record completed business transactions, including:

    • Revenue system

    • Purchasing system

    • HR Management/Payroll system

    • Production system

    • General Ledger & Reporting system

  • 2. Customer Relationship Management Systems (CRM):

    • Designed to manage customer relationships effectively to identify, acquire, and retain customers.

  • 3. Supply Chain Management Systems (SCM):

    • Aims to manage relationships within the supply chain, including suppliers and distribution networks, focusing on cost-effectiveness and operational efficiency.

  • 4. Executive Support Systems (ESS):

    • Specialized systems to assist top-level executives in strategic decision making, including hardware, software, data, procedures, and people. Sometimes referred to as Executive Information Systems (EIS).

  • 5. Management Information Systems (MIS):

    • An organized collection to provide routine information to managers and decision-makers, supporting operational efficiency across various business functions.

  • 6. Decision Support Systems (DSS):

    • Support problem-specific decision making, focusing on effectiveness rather than efficiency, helping managers to make the right decisions.

  • 7. Electronic Business (E-business) Systems:

    • Utilize Web technology for transaction and communication efficiency; includes e-commerce systems facilitating online sales.

  • 8. Enterprise Resource Planning (ERP) Systems:

    • Combines all business information systems under one system with ERP software such as Microsoft Dynamics, Sage, and Quickbooks.

  • 9. Knowledge Management Systems:

    • Systems that enhance the way businesses operate, utilizing AI, expert systems, and virtual reality technologies for improved process and knowledge flow.

Expert Business Information Systems Diagram

  • Key Technologies in Expert Systems Include:

    • Expert systems

    • Robotics

    • Artificial Intelligence

    • Vision systems for processing visual input

    • Learning systems adapting based on previous data

    • Natural language processing

    • Neural networks supporting deep learning applications

Conclusion

  • Questions and Further Discussion:

    • Thank you!

    • Open for any questions regarding Business Information Systems.