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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
2
Introduction & Definition
• The term system is defined as an orderly
arrangement of a set of interrelated and
interdependant elements that operate
collectively to accomplish some common
purpose or goal. Eg. Human Body – head, heart,
hands, legs, etc.
• System can be described by specifying it’s parts,
the way in which they are related and the goals
which they are expected to achieve
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
3
Types of System
Conceptual System or Model
E.g. Theology : Ideas of God
and Relationship with
humans
Tangible elements operate
together to accomplish an
objective. E.G. Circulatory
System, Computer System
Interacts freely with its
environment by taking input
and returning output E.g.
Business Organisations
No interaction with
environment and no changes
due to change in invironment.
E.g. Digital Watch System
Data collection, manipulation,
maintenance and final
reporting are absolutely by
human efforts
Computers or
microprocessors carry out all
above tasks. No business is
ever 100% automated, some
parts are necessarily manual.
Operates in a predicable
manner and intereaction
between parts is lnown with
certainlity. E.g. A correct
computer program.
Operates in probabilistic
manner and degree of error is
always attached to prediction
of what “the system will do”
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
6
Entropy
Presenting or offsetting an increase in entropy
requires inputs of matter and energy to repair,
replenish and maintain the system : Negative Entropy
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
7
Manual & Automated Systems
• Manual Systems: Data Collection,
manipulation, maintenance and final reporting
done by human efforts.
• Automated Systems: Computers or
microprocessors carry out all the tasks
mentioned above.
• Why use computers?
– Handling huge volumes
– Storing enormous data
– Quick and Accurate processing
– Quick retrieval of information
– Quick transportation of info to distant places
– Availability of software tools for quick decision making
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
8
Deterministic & Probabilistic
Systems
• Deterministic: Operates in predictable
manner – interaction among parts known
with certainity. E.g. Correct computer
program performing exactly according to
instructions.
• Probabilistic: Probable behaviour –
degree of error always attached to
prediction of what system will do.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
10
General model of a System
• Input is the data flowing into the system from outside.
• Processing is the action of manipulating the input into a more
useful form.
• Output is the information flowing out of a system.
• Storage is the means of holding the information.
• Feedback occurs when the outcome has an influence on the input.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
12
Subsystem
• Subsystem is a part of a larger system – delineated by
it’s boundaries.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
13
Characteristics of Subsystems
• Decomposition Complex system is easier to
understand when broken into subsystems.
• Simplification Organizing subsystems to
reduce number of interconnections.
• Decoupling Close coordination between tightly
connected subsystems, e.g. inventory and
production.
– Inventories, buffer or waiting lines
– Slack and flexible resources
– Standards
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
15
System Stress & Change
• Living or artificial systems like organizational
systems, information systems change because
they undergo stress.
• Supra-System exerts stress on system which
changes to accommodate, else it becomes
pathological – it will decay and terminate.
• Supra-System enforces compliances through
control over supply of resources and information
input to system
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
17
What is Information?
• Information David
and Olson:
“Information is data
that has been
processed into a
form that is
meaningful to the
recipient and is of
real or perceived
value in current or
progressive
decision.”
• Attributes:
– Availability
– Purpose
– Mode and Format
– Decay
– Rate
– Frequency
– Completeness
– Reliability
– Cost benefit analysis
– Validity
– Quality
– Transparency
– Value of Information
– Adequacy
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
18
Types of Information
• Internal Information: Generated from the operations of the
organization at various functional areas. Always pertains to various
operational units within organization, e.g. Production figures, Sales
figures.
• External Information: Collected from external environment of
business organization e.g Government policies, competition,
economic status, market share.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
19
Factors on which Information
depends
• Operational Function: grouping or clustering of several functional
units on the basis of related activities into sub-systems.
• Types of Decision-making:
– Programmed Decisions: decisions made on problems and situations
by reference to predetermined set of precedents, techniques and rules.
– Non-Programmed Decisions: decisions made on situations and
problems which are novel and non-repititive about which there is not
much knowledge and information is available.
• Level of management Activity
– Strategic or Top level: Concerned with developing of organizational mission,
objectives and strategies – Strategic Decisions
– Tactical or Middle level: Managers plan, organize, lead and control activities of
other managers. Tactical Decisions
– Operational or Supervisory level: Lowest level where managers coordinate the
work of others who are not themselves managers. Operational Decisions
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
20
Components of Computer Based
Information Systems (CBIS)
• Hardware: Machinery including the computer
itself and all it’s support devices.
• Software: Computer programs and the manuals
(if any).
• Data: Facts used by programs to produce useful
information
• Procedures: Policies that govern the operation
of a computer system.
• People:People are probably the main
components that influence the success or failure
of information systems the most.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
22
CBIS - Areas of Applications
• Finance and Accounting: Ensure financial viability of
the organization, enforce financial discipline and plan
and monitor the financial budget.
• Marketing and Sales: To maximize sales and ensure
customer satisfaction.
• Production or Manufacturing: Optimally deploy man,
machine and material to maximize production or service.
• Inventory / Stores Management: Keeping track of
material at stores. Regulate minimum and maximum
levels of stock, optimize re-order quantity, facilitate
queries about stock like ABC Analysis, Total Inventory
Value.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
23
Types of Information Systems
• Operational Support Systems (OSS)
• Management Support Systems (MSS)
• Office Automation Systems (OAS)
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
24
Operations Support Systems (OSS)
• Object is to improve the operational
efficiency of the enterprise.
• Consists of three components
– Transaction Processing Systems
– Management Information Systems
– Enterprise Resource Planning Systems
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
25
Transaction Processing System
(TPS)
• Information system that manipulates data from
business transactions. E.g. Sales, purchase,
production, delivery, payments or receipts – to
be organized and manipulated to generate
various products for external use.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
26
Management Information Systems
(MIS)
• To assist managers in decision making and
problem solving. Uses results produced by TPS
in addition to other sources, if need be. Can be
developed further as understanding of recurring
decisions improves.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
27
Characteristics of an effective MIS
• Management Oriented: Starts from an appraisal of management needs
and overall business objectives.
• Management Directed: Management should actively direct system’s
development efforts.
• Integrated: All functional and operational information sub-system should be
tied together into one entity.
• Common Data Flows: Use of common input, processing and output
procedures and media whenever required.
• Heavy Planning Element: MIS usually takes 3-5 years and sometimes
longer to be established.
• Sub-System Concept: Should be broken down into digestible sub-systems
that can be implemented one at a time.
• Common Database: Database is the mortar that holds the functional
systems together. It is a “Super-File” that consolidates and integrates data
records formerly stored in many seperate data files.
• Computerized: Can be implemented without the use of computers, but
computers increase the effectiveness of the system.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
28
MIS Misconceptions
• Use of Computers: Not true, MIS computer
based, but computer is just a tool.
• More Data = More Information: It is not the
quantity of data, but it’s relevance that is
important.
• Accuracy of vital importance: Accuracy is
relevant, but not an absolute ideal for decision
making. Estimation should be fairly correct.
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111)
(ahmedabadfca@live.in)
29
Enterprise Resource Planning
(ERP)
• One of the latest high end solutions that seek to
streamline and integrate operation processes
and information flows in an organization to
synergize MEN, MONEY, MACHINE,
MATERIALS and MARKET.