Information Systems 1A (INSY5111) - LU 1: An Overview of Information Systems

About The Instructor

  • Ayokunle Damilola FAMILUA (PhD).
  • Academic Qualifications:
    • BEng (Hons) in Electrical & Electronics Engineering
    • MSc Eng. in Electrical Engineering (Telecommunications)
    • Ph.D. in Electrical Engineering (Telecommunications)
  • Industrial/Teaching Experience:
    • About 3 years of Industrial Experience in Electrical Systems Design & Construction & Telecoms.
    • 13-Years Teaching Undergrad Courses.
    • Technical Instructor – Online Based Conversational Artificial Intelligence Course.
  • Research Outputs:
    • 20 Peer-Reviewed Conference and Journal Publications.
    • 1 Book Chapter.
    • 1 Book under review – Wiley.
  • Admin & Management Experience:
    • System/Network Administrator CeTAS Lab – Wits University.
    • Laboratory Manager CeTAS Lab – Wits University.
  • Professional Engagement:
    • Senior Member IEEE, SAIEE.
    • Chair: IEEE Young Professionals South Africa Section (Pretoria)
    • Scholarly Reviewer for Several International Journal and Conferences.

Expectations from Students

  • Be a Diligent Lifelong Learner
    • Understand that ICT is an evolving field and requires out-of-class learning to be up-to-date with emerging technologies.
  • Create a Growth Mindset
    • Be open-minded, diligent, and consistent in putting in the effort required to be successful in this course.
  • Be Practically Oriented
    • Learn theoretical frameworks and concepts of Information Systems, practical and experiential learning is vital.
  • Understand that Innovation is Key
    • Learn theories of Web Development concepts and use the knowledge and skills gained to innovatively solve societal challenges (e.g., UBER, Airbnb, FACEBOOK).
  • Be Open Minded and Embrace Critical Thinking
    • Think outside the box.
    • Be a creative thinker.
    • Objectively analyze and evaluate concepts.
    • Be a problem solver.
  • Teamwork and collaboration
    • Work with colleagues to brainstorm, discuss, understand concepts, and solve problems.
    • Teach your colleagues.
    • Never be too shy or proud to ask colleagues questions to clarify confusion about a concept.
  • Time Management
    • Manage your time well.
  • Course Pilot
    • Actively participate through questions and answers, in-class demonstrations, brainstorming, discussions, problem-based learning, and real-world problem analysis.

LU1 Objectives

  • Discuss common applications of computers and information systems.
  • Explain the differences between computer literacy and information literacy.
  • Discuss the differences between data and information.
  • Define transaction processing systems.
  • Define management information systems.
  • Describe the four major components of an information system.
  • Explain the importance and applications of information systems in functional areas of an organization.
  • Discuss how information technologies are used to gain a competitive advantage.

Class Activity – Ice Task 1: Internet of Me Exercise

  • The Internet of Me (IoM) has generated significant excitement in the South African business landscape (Familua 2024).
  • Activity 1: Before the exploration of the information provided in this Learning Unit and other relevant sources, craft a half-page paper outlining five business applications specific to South Africa for this innovative platform.
  • Activity 2: Additionally, explore the legal and social issues associated with the Internet of Me within the South African context.
  • Reference: Familua Ayokunle “Internet of Me Review: A South African Case Study”, IEEE Access, volume 20, no: 5, 2024

Role of Computers & Information Systems

  • In Academia:
    • Utilizing Office suite software to taking online classes.
    • Managing Assessment Submissions.
    • Grading Assessments and Exams.
    • Generating Reports (Academic Transcripts).
  • In Retail Industry:
    • Streamline processes in grocery stores through point-of-sale (POS) systems.
    • Managing inventory.
    • Automating stock reordering.
  • In Banks:
    • Generating account statements.
    • Running ATMs.
    • Facilitating online banking activities.
  • In Modern Workplace (Remote Work):
    • Individuals working from home frequently use their devices like smartphones, laptops, tablets, and their wireless internet connections to access work applications.
  • Information Technology & Information Systems Are Used Interchangeably
    • These technologies provide means for connectivity, knowledge sharing, and improved productivity but also bring about challenges of security and personal information vulnerabilities (Bigdoli, 2022).
  • Internet - A Hub of Activities
    • Shopping.
    • Learning.
    • Working.
    • Socializing (Social Networking Sites) enables global connectivity.
    • Social Media also serve as a medium for businesses to provide information, support, marketing, and customer engagement at a reduced cost (Bigdoli, 2022).

Computer of Computing Device

  • Any machine or device capable of executing a variety of applications.
  • A computer can be considered a system as it performs the following functions:
    • Input
    • Processing
    • Output
    • Feedback and Control
  • Computer or Computing Devices Aid Internet Connection

Information System Defined

  • Information systems can be considered a set of components (systems) that work together to collect, process, store, and distribute data, information, and knowledge to support the management of an organization (The IIE, 2019).
  • All systems perform input, processing, output, feedback, and control functions, but INFORMATION SYSTEMS are explicitly there to support the management of an organization.
  • Core Role of Information Systems:
    • Increasing the speed of service delivery.
    • Record stock levels and if necessary, automatically order more stock to replenish stock levels.
    • Generate reports that can assist management in making decisions.

Four Major Components of an Information System

  • Data
  • Databases
  • Processes
  • Information

Data Demystified

  • Refers to the input to the system (whatever the user types into the system).
    • Example: If a receptionist at a doctor’s office needs to enter the name of a patient into the appointment scheduling system, the patient’s name will be considered data.
  • Information systems should collect data from internal and external sources.
    • Internal sources of data can include sales records and personnel records (Bidgoli, 2022).
    • External sources of data can include sources such as customers and competitors (Bidgoli, 2022).

Data (Time Orientation)

  • Historical data is used to assess performance e.g., generating a sales report for the previous year will reveal how effective a sales strategy was.
  • Current data will reveal insights into the current operations of an organization e.g., if the company’s servers keep on crashing, a report of current bandwidth usage might reveal a possible reason for the servers crashing.
  • Future data consists of predictions about the future performance or position of an organization.

Data (Different Forms of Data)

  • Aggregated Form data is grouped. Aggregated data is useful for summary reports such as when a manager needs to determine how many, in total, of each item within a specific category has been sold.
  • Disaggregated Form: An example of disaggregated data would be a phone bill that shows each call made by a person on a separate line along with that specific call’s cost.

Data Is Never Collected At Random

  • To determine what data should be collected, an organization should determine what output the system should produce e.g., if an information system is to produce a statement of results for a student, the marks for each module need to be captured for the results to be displayed.

Databases

  • Database: shared, integrated computer structure that stores a collection of:
    • End-user data: raw facts of interest to end user
    • Metadata: data about data
      • Provides description of data characteristics and relationships in data
      • Complements and expands the value of data
  • Database Management system (DBMS): collection of programs
    • Manages structure and controls access to data
  • DATABASE: is an organized collection of structured information, or data, typically stored electronically in a computer system. (Oracle, 2020)
  • Database Management System (DBMS) is software designed to store, retrieve, define, and manage data in a database.” (OmniSci, Inc., 2019)
  • The DBMS manages the interaction between the end user and the database

Processes Demystified

  • The component of an information system that truly demonstrates the purpose of the information system as this is the component that will generate the information that will enable management to make sound business decisions

Information Demystified

  • Represents the output produced by the information system after processing has been concluded.
  • Data and Information cannot be used interchangeably as they are different.
  • For information to be useful and valuable, it needs to possess the following characteristics.
  • Data on its own does not support decision-making, whereas information supports decision-making.

Characteristics of Information

  • Accessible: Should be easily accessible by authorized end-users to meet their needs.
  • Accurate: Should be error-free. Inaccurate information results from inaccurate data being fed into the transformation process.
  • Complete: Must contain all the important facts
  • Economical: Information should be relatively economical to produce. Decision-makers must always balance the value of information with the cost of producing it
  • Reliable: Information that one can rely on or depend on.
  • Secure: Free from unauthorized access
  • Simple: Must be simple and not overly complex
  • Timely: Timely information is delivered when it is needed. Knowing last week’s weather conditions will not help when trying to decide what to wear today.
  • Verifiable: Can be checked to ensure it is correct, often by checking the source of information.

Computer Literacy vs. Information Literacy:

  • Computer Literacy
    • What is it?: Computer literacy means being skilled in using productivity software like word processors, spreadsheets, and presentation tools. It involves understanding computer hardware and software, using collaboration tools, and utilizing internet resources.
    • Why is it important?: consider yourself computer literate if you can create engaging presentations, work with spreadsheets, and collaborate with people online. In today’s digital world, having a tech-savvy toolset that makes you efficient and productive is more important than simply understanding how to use the software.
  • Information Literacy
    • What is it?: Information literacy is about understanding the role of information in business intelligence. Business intelligence (BI) is not just data, it is a powerful tool that provides historical, current, and predictive insights into business operations. To put it another way, it's like having a crystal ball to help you make wise business decisions.
    • Why is it important?: being information literate means knowing where data comes from, why it’s collected, and how it can be transformed into valuable business intelligence. Imagine being the one who can turn raw data into a competitive advantage for your organization. That’s the power of information literacy.

Transaction Processing Systems

  • Transaction processing systems (TPS) are a specific type of information system created to perform routine and structured tasks effectively such as automated payroll, inventory control, and record keeping (Bidgoli, 2022).
  • Transaction processing systems (TPS) focus on data collection and processing, resulting in significant cost reductions.

Examples of Transactional Processing System

  • Automated Payroll: It’s the system that automates the printing and sending of payslips, reducing the need for constant human interaction.
  • Grocery Store Inventory: A TPS system that ensures a smooth inventory management process. Without this TPS there will be a need for someone to manually do stocktaking and order required stock, this could lead to massive mistakes.

TPS Operational Processing Types

  • Batch Processing:
    • Transactions are accumulated and processed later as a group or in a batch.
    • Example: consider processing payroll for a large organization, in this case, batch processing allows for the efficient handling of numerous employee transactions collectively, contributing to operational efficiency and cost reduction.
  • On-line/Real-time Transaction Processing (OLTP):
    • Data is processed immediately after being captured.
    • Example: visualize a large supermarket, where stock quantities fluctuate with each sale. Using OLTP at the point-of-sale ensures that each sale triggers an immediate update to stock quantities, maintaining accurate and up-to-date inventory records.

TPS for Competitive Advantage

  • Operational Efficiency: TPS streamlines routine tasks, reducing manual efforts and enhancing operational efficiency. These efficiency gains can lead to quicker response times and improved overall performance
  • Cost Reduction: By automating repetitive tasks, TPS minimizes the need for extensive human involvement, resulting in reduced personnel costs and operational expenses.
  • Real-time Decision Making: TPS provides real-time data processing, enabling organizations to make informed and timely decisions. This quick access to information is crucial in a fast-paced business environment.
  • Accurate and Up-to-date Information: TPS ensures that data is accurately captured and processed, leading to reliable and up-to-date information. This accuracy is essential for making sound business decisions.
  • Enhanced Customer Service: With TPS, organizations can respond to customer needs more efficiently, providing better service and satisfaction. This positive customer experience can be a key differentiator in a competitive market.
  • Adaptability to Market Changes: TPS allows organizations to adapt quickly to market changes by providing the necessary data and processing capabilities. This adaptability is crucial in staying competitive in dynamic industries.

Management Information Systems

  • A Management Information System (MIS) is a powerhouse that integrates hardware, software, data, processes, and human elements to deliver timely, relevant, accurate, and useful information for decision-making (Bidgoli, 2022).
  • A Management Information System (MIS) is mainly designed to serve middle management (The IIE, 2019). An MIS generates its reports from the TPS and is mainly used to improve operational efficiency (The IIE, 2019).

IS and Organization’s Functional Areas

  • Information systems can be designed in such a way that they support the various functional areas of an organization.
  • Functional Area: can be seen as a group of people who perform the same work in an organization.
  • Examples of the functional areas can include Manufacturing, IT, Human Resources (HR), Logistics, etc.

Functional Areas that Leverage on IS for Support

  • Human Resource Information System (HRIS)
    • An HRIS can support the members of the human resources functional area in making the following decisions:
      • Choosing the best job candidate.
      • Scheduling and assigning employees.
      • Predicting future staffing needs.
      • Generating reports and statistics on employee demographics.
  • Logistics Information System (LIS)
    • The Logistics Information System was developed with the aim to reduce the cost of processes involved in the logistics functional area of an organization.
    • Decisions supported by the LIS include:
      • Improving routing and delivery schedules.
      • Selecting the best modes of transportation.
      • Improving budgeting for transportation.
      • Improving shipment planning.
  • Manufacturing Information System (MFIS)
    • The MFIS was developed with the aim of reducing the cost of the manufacturing process and increasing the quality of the products being produced.
    • Decisions supported by the MFIS include:
      • Ordering decisions.
      • Product cost calculations.
      • Space utilization.
      • Decisions related to tenders.
      • Decisions in relation to price changes and discounts.
  • Financial Information System (FIS)
    • An FIS provides timely information to those members in an organization who have to make financial decisions.
    • An FIS can support decisions with regards to:
      • Budget allocations.
      • Capital investment risk management.
      • The monitoring of cost trends.
      • The managing of cash flows
      • Determining portfolio structures.

Competitive Advantage

  • A competitive advantage is a long-term, strategic advantage that an organization has over its competitors.
  • Michael Porter (1979, cited in Bidgoli, 2017) identified three strategies for successfully competing in the marketplace.
  • If designed well, Information Technology can support these strategies and in doing so, support an organization in achieving a competitive advantage.

Strategies for Competitive Advantage

  • Cost Leadership Strategy
    • The focus of a cost leadership strategy is on reducing the overall cost of products and services if designed well and used appropriately (Bidgoli, 2021).
    • Ways of reducing cost:
      • Using fewer physical resources: Email Statement vs Printed Statements.
      • Modernizing the workplace: Newer technologies are often more energy efficient which provides organizations with the ability to save on their electricity bill.
      • Support advertising to increase the volume of sales: By harnessing the power of social media to reach a greater number of potential clients, the potential for increasing sales volumes increases. Greater sales volumes can result in a decrease in the production cost per unit.
  • Differentiation Strategy
    • Organizations can create clear differences between their products and services and those of their competitors.
    • Differentiation Strategies:
      • Unique Digital Experience: personalization; omnichannel engagement.
      • Innovative Business Models: platform-based business model; subscription-based business model.
      • Data-Driven Decision-Making: predictive analytics; real-time analytics.
      • Digital Transformation: process automation; digitization of products and services.
      • Cybersecurity and Data Protection: advanced security measure; transparency and trust.
      • Innovative Partnerships and Collaborations: Strategic Partnerships; Ecosystem Development.
  • Focus Strategy
    • A focus strategy is one in which an organization focuses on a specific segment of a market in order to achieve a cost or differentiation strategy (Bidgoli, 2021).
    • Example of Applying this Strategy: Apple Computer’s marketing strategies Case study
    • The strategy to be employed by an organization is determined by analyzing an organization, its position in the marketplace, and how information systems can best support an organization in achieving a competitive advantage (Bidgoli, 2021). To accomplish this, Michael Porter’s Five Forces Model framework can be used (Porter, 1979, cited in Bidgoli, 2021).

Michael Porter’s Five Forces Model Framework for Competitive Advantage

  • Buyer Power
    • Buyer power is high when customers have many products and services they can choose from and conversely, buyer power becomes lower as the number of products and services they can choose from becomes less
  • Supplier Power
    • When buyer power is low, supplier power is high. This means that supplier power is high when customers have fewer options in terms of products and services to choose from.
    • Since the number of internet users is on the increase, users of the Internet have gained access to more information and therefore more options for services and products, thereby increasing their own buying power.
  • Threat of Substitute Products or Services
    • When an organization’s competitors offer similar products and services, there is a significant threat that consumers might purchase the services and products from the competitors.
    • Typically, in this situation, an organization will attempt to offer more services and add more value to the services and products they offer in order to create a clearer distinction between themselves and their competitors.
  • Threat of New Entrants
    • Organizations will attempt to make it as hard as possible for others to duplicate their products and services. If an organization can manage the threat of new entrants successfully, they will keep buyer power low and supplier power high.
    • In order to mitigate the threat of new entrants, organizations will typically employ a focus strategy.
  • Rivalry Among Existing Competitors
    • Rivalry among existing competitors increases as the number of competitors occupying a particular market increases.
    • How do Organizations Manage this Rivalry?
      • Organizations manage this rivalry by offering more value-added services than their competitors.

Using Porter’s Five Forces Model to Achieve Competitive Advantage

  • Identify Opportunities and Threats: Analyze the five forces to identify opportunities and threats in the industry.
  • Develop Strategies to Address Threats: Develop strategies to address threats, such as increasing barriers to entry or improving relationships with suppliers.
  • Develop Strategies to Capitalize on Opportunities: Develop strategies to capitalize on opportunities, such as investing in new technologies or expanding into new markets.
  • Monitor and Adjust: Continuously monitor the five forces and adjust strategies as needed to maintain a competitive advantage.