Unit 1. Information System Environment
Information Technology
It consists of all hardware and software that a firm needs to use in order to achieve its business
objectives.
The commercial use of IT entails or encompasses both computer technology and
telecommunication.
Information System
An IS can be defined technically as a set of interrelated components that collect, process, store and
distribute information to support decision-making, coordinating and control in an organization.
Key Concepts
1. DIKW Model
The DIKW model is method with its roots in management, to explain the ways we move
from Data to information, knowledge, and wisdom with a component of actions and
decision.
It looks at various ways of extracting insights and value from all sorts of data: big data,
small data, smart data, fast data, slow data, unstructured data.
The model is quite linear and expresses a logical consequence of steps and stages with
information being contextualized progression of data as it gets more meaning.
Each step-up answer question about the initial data and add values to it.
a) Data: Collection of facts in a raw or unorganized form such as numbers or characters.
It is conceived of symbols or signs, representing stimuli or signals that are of no use
until it is in a usable form. Without context data can mean little. For e.g. 12012012 is
just a sequence of numbers without appropriate importance. The color ‘red’ has little
meaning without context. Data is related with Transaction Processing System.
b) Information: Data given context becomes information. It is a next building-block of
DIKW model. It is the data that has been cleaned of errors and further processed in a
way that makes it easier to measure, visualize and analyze for a specific purpose.
OR
, “Information is defined as organized or structured data which has been processed in
such a way that the information now has a relevance for a specific purpose or context
and is therefore meaningful, valuable, useful and relevant.”
It is inferred from data in the process of asking interrogative questions. For e.g., who,
what, where, when, etc., thereby making data useful.
E.g., Given a context of date, 12012012 becomes 12th Jan 2012. And given the context
of traffic light, red becomes signal. Information is related to Information
Management System.
c) Knowledge: Information given meaning becomes knowledge. Information which is
processed, organized or structured in one way or else as being applied or put into action.
“Knowledge is a fluid mix of framed experience, values, contextual information, expert
insight and grounded intuition that provides an environment and framework for
evaluating and incorporating new experiences and information.”
When we don’t just view information as a description of collected facts, but also
understand how to apply it to achieve our goals, we turn it into knowledge.
E.g. Given meaning to the red signal, it becomes a knowledge that we are driving
towards a traffic signal that has turned red.
Knowledge is the edge that companies have over its competitors. Knowledge is related
to Decision Support System.
d) Wisdom: It is top of the DIKW model. Knowledge given insight becomes wisdom.
“Wisdom is often defined as an evaluated understanding, where in the understanding
their acts as a layer between knowledge and wisdom.”
Wisdom is knowing the right thing to do. It is the knowledge applied in action.
E.g., Stopping when you see a red light is wisdom. Wisdom is related to expert
system.
Note: Data and information are like a look back to the past.
Knowledge and wisdom are associated with what we do now and what we want to
achieve in the future.
,Definition of Information System: Two Perspectives
a) Functional Perspective: “An Information System is a technologically implemented
medium for the purpose of recording, storing and disseminating linguistic expressions as
well as for the supporting of inference making”. Focuses on what actual users do with
IS while using it.
b) Structural Perspective: “An IS consists of people, processes, data, models, technology
and partly formalized language, forming a cohesive structure which serves the
organizational purpose or function”. Make clear that IS are socio-technical system, i.e.,
systems consisting of humans, behavioral rules and conceptual and technical artifacts.
3 activities in IS produce information that organization needs to make decisions, control
operations, analyze problem and create new products/ services.
i) Input: captures raw data from within the organization or from its external environment.
ii) Processing: Conversion of raw input into meaningful form.
iii) Output: Transfers the processed information to people who will use it or activities for
which it will be used.
Components of Information System
a) Hardware: It provides computing power for processing data, networking and printing
capabilities. It speeds up processing of data into information.
It consists of:
Machines- computers, printers and other equipment along with all data media.
, Computer system- variety of inter-connected peripheral devices like micro computer
system, mid-range and large computer system.
b) Software: It includes all set of information processing instructions. It is the program that
runs on hardware. It not just includes programs which direct and control computers but
also the sets of information processing (procedures).
Software broken down into 2 categories:
i) System Software- Operating System, e.g., Windows, MacOS, etc.
ii) Application Software- Specialized software or accomplishing business tasks. E.g.,
Payroll program, Banking system, FOS System, etc.
c) Network Resources: Telecommunication networks like internet, intranet and extranet
essential for the success and all types of organization. Emphasized communication
networks are fundamental resource component of all IS. It consists of computer,
communication media and controlled by communication software.
d) People Resources: Users who use information system to record day-to-day business
transactions.
i) End Users- also known as users or clients are people who use IS or information it
produces>>> most of us are end users. E.g., Accountants, salespersons, engineers,
clerks, customers or managers.
ii) IS Specialist- These are people who develop and operate IS. It includes:
System analyst- Design IS based on the information requirement of end-users.
Programmers- Prepare computer programs based on specification of system
analyst.
Computer analyst- Operate large computer system.
Other managerial, technical and clerical IS personnel.
e) Data resources: These are the raw material of IS. It takes many forms: alpha-numerical
data, numbers, alphabets and other characters. Data resources must be comprehensive, non-
reluctant and well-defined with appropriate structure. Data resource of IS typically
organized into Processed and organized data, i.e., Databases and Knowledge in the form
of facts, rules and case studies.
f) Processes: It is a series of steps undertaken to achieve a desired outcome or goal. IS
becoming more and more integrated with organized process bringing more productivity
and control to processes. Its ultimate goal is to use technology to manage and improve
processes.
Information Technology
It consists of all hardware and software that a firm needs to use in order to achieve its business
objectives.
The commercial use of IT entails or encompasses both computer technology and
telecommunication.
Information System
An IS can be defined technically as a set of interrelated components that collect, process, store and
distribute information to support decision-making, coordinating and control in an organization.
Key Concepts
1. DIKW Model
The DIKW model is method with its roots in management, to explain the ways we move
from Data to information, knowledge, and wisdom with a component of actions and
decision.
It looks at various ways of extracting insights and value from all sorts of data: big data,
small data, smart data, fast data, slow data, unstructured data.
The model is quite linear and expresses a logical consequence of steps and stages with
information being contextualized progression of data as it gets more meaning.
Each step-up answer question about the initial data and add values to it.
a) Data: Collection of facts in a raw or unorganized form such as numbers or characters.
It is conceived of symbols or signs, representing stimuli or signals that are of no use
until it is in a usable form. Without context data can mean little. For e.g. 12012012 is
just a sequence of numbers without appropriate importance. The color ‘red’ has little
meaning without context. Data is related with Transaction Processing System.
b) Information: Data given context becomes information. It is a next building-block of
DIKW model. It is the data that has been cleaned of errors and further processed in a
way that makes it easier to measure, visualize and analyze for a specific purpose.
OR
, “Information is defined as organized or structured data which has been processed in
such a way that the information now has a relevance for a specific purpose or context
and is therefore meaningful, valuable, useful and relevant.”
It is inferred from data in the process of asking interrogative questions. For e.g., who,
what, where, when, etc., thereby making data useful.
E.g., Given a context of date, 12012012 becomes 12th Jan 2012. And given the context
of traffic light, red becomes signal. Information is related to Information
Management System.
c) Knowledge: Information given meaning becomes knowledge. Information which is
processed, organized or structured in one way or else as being applied or put into action.
“Knowledge is a fluid mix of framed experience, values, contextual information, expert
insight and grounded intuition that provides an environment and framework for
evaluating and incorporating new experiences and information.”
When we don’t just view information as a description of collected facts, but also
understand how to apply it to achieve our goals, we turn it into knowledge.
E.g. Given meaning to the red signal, it becomes a knowledge that we are driving
towards a traffic signal that has turned red.
Knowledge is the edge that companies have over its competitors. Knowledge is related
to Decision Support System.
d) Wisdom: It is top of the DIKW model. Knowledge given insight becomes wisdom.
“Wisdom is often defined as an evaluated understanding, where in the understanding
their acts as a layer between knowledge and wisdom.”
Wisdom is knowing the right thing to do. It is the knowledge applied in action.
E.g., Stopping when you see a red light is wisdom. Wisdom is related to expert
system.
Note: Data and information are like a look back to the past.
Knowledge and wisdom are associated with what we do now and what we want to
achieve in the future.
,Definition of Information System: Two Perspectives
a) Functional Perspective: “An Information System is a technologically implemented
medium for the purpose of recording, storing and disseminating linguistic expressions as
well as for the supporting of inference making”. Focuses on what actual users do with
IS while using it.
b) Structural Perspective: “An IS consists of people, processes, data, models, technology
and partly formalized language, forming a cohesive structure which serves the
organizational purpose or function”. Make clear that IS are socio-technical system, i.e.,
systems consisting of humans, behavioral rules and conceptual and technical artifacts.
3 activities in IS produce information that organization needs to make decisions, control
operations, analyze problem and create new products/ services.
i) Input: captures raw data from within the organization or from its external environment.
ii) Processing: Conversion of raw input into meaningful form.
iii) Output: Transfers the processed information to people who will use it or activities for
which it will be used.
Components of Information System
a) Hardware: It provides computing power for processing data, networking and printing
capabilities. It speeds up processing of data into information.
It consists of:
Machines- computers, printers and other equipment along with all data media.
, Computer system- variety of inter-connected peripheral devices like micro computer
system, mid-range and large computer system.
b) Software: It includes all set of information processing instructions. It is the program that
runs on hardware. It not just includes programs which direct and control computers but
also the sets of information processing (procedures).
Software broken down into 2 categories:
i) System Software- Operating System, e.g., Windows, MacOS, etc.
ii) Application Software- Specialized software or accomplishing business tasks. E.g.,
Payroll program, Banking system, FOS System, etc.
c) Network Resources: Telecommunication networks like internet, intranet and extranet
essential for the success and all types of organization. Emphasized communication
networks are fundamental resource component of all IS. It consists of computer,
communication media and controlled by communication software.
d) People Resources: Users who use information system to record day-to-day business
transactions.
i) End Users- also known as users or clients are people who use IS or information it
produces>>> most of us are end users. E.g., Accountants, salespersons, engineers,
clerks, customers or managers.
ii) IS Specialist- These are people who develop and operate IS. It includes:
System analyst- Design IS based on the information requirement of end-users.
Programmers- Prepare computer programs based on specification of system
analyst.
Computer analyst- Operate large computer system.
Other managerial, technical and clerical IS personnel.
e) Data resources: These are the raw material of IS. It takes many forms: alpha-numerical
data, numbers, alphabets and other characters. Data resources must be comprehensive, non-
reluctant and well-defined with appropriate structure. Data resource of IS typically
organized into Processed and organized data, i.e., Databases and Knowledge in the form
of facts, rules and case studies.
f) Processes: It is a series of steps undertaken to achieve a desired outcome or goal. IS
becoming more and more integrated with organized process bringing more productivity
and control to processes. Its ultimate goal is to use technology to manage and improve
processes.
