Unit 2: Foundation for Information system for Business

Fifth Semester Management Information Systems Notes


Information systems (IS) are an essential tool for businesses to manage and process data, automate tasks, and make informed decisions. To build a solid foundation for an IS in a business, there are several key components that need to be considered:

  1. Hardware: The hardware component of an IS refers to the physical equipment and devices that are used to process and store data. This includes computers, servers, networking equipment, and other hardware components.

  2. Software: The software component of an IS refers to the programs and applications that are used to process and manage data. This includes operating systems, database management systems, and other software applications that are used to support the business’s operations.

  3. Data: The data component of an IS refers to the information that is collected, stored, and processed by the system. This includes customer data, financial data, inventory information, and any other data that is relevant to the business’s operations.

  4. Procedures: Procedures refer to the rules and guidelines that are used to govern the operation of the IS. This includes policies for data security and access, backup and recovery procedures, and other guidelines that are used to ensure the system operates efficiently and effectively.


In general, a system is a collection of components that work together to achieve a specific goal or objective. This can include hardware, software, data, procedures, and people.

In the context of Management Information Systems (MIS), a system refers to a collection of components that are designed to collect, process, store, and disseminate information within an organization. These systems are typically designed to support decision-making, control, analysis, and visualization of information.

Some examples of systems in MIS include:

  1. Transaction processing systems (TPS): These systems are used to capture and process data related to the day-to-day transactions of the business. This includes data related to sales, inventory, and customer orders.

  2. Management information systems (MIS): These systems are used to provide managers with the information they need to make informed decisions. They typically provide reports, dashboards, and other tools for data analysis and visualization.

  3. Decision support systems (DSS): These systems are designed to support decision-making by providing managers with tools for data analysis and modeling. They are typically used to support strategic decisions related to long-term planning and forecasting.

  4. Enterprise resource planning (ERP) systems: These systems are designed to integrate all of the various functions and processes within an organization, including finance, accounting, human resources, and supply chain management.

Information System and Information Technology

Information System (IS) and Information Technology (IT) are related but distinct concepts.

Information Technology (IT) refers to the hardware, software, and networking infrastructure that is used to process and store data. This includes computers, servers, storage devices, network devices, and other technologies that are used to support information processing and management.

Information System (IS), on the other hand, refers to the collection of people, processes, and technologies that are used to collect, store, process, and disseminate information within an organization. This includes hardware and software components, but also includes the people and procedures that are involved in using and managing the system.

In other words, IT is the technology infrastructure that supports information processing, while IS is the entire system that encompasses both the technology and the people and processes involved in using and managing that technology.

For example, an online retailer might use IT to support its e-commerce platform, including servers, databases, and networking equipment. But the IS would also include the processes and procedures used to manage the online storefront, including inventory management, order fulfillment, and customer service.



Types of Information System(TPS, MIS, DSS) explain in detail

There are several types of Information Systems (IS) that are used within organizations, each with a specific purpose and set of functions. Three of the most common types of IS are:

  1. Transaction Processing System (TPS)
  2. Management Information System (MIS)
  3. Decision Support System (DSS)

Let’s take a closer look at each one of these information systems:

  1. Transaction Processing System (TPS):

A Transaction Processing System (TPS) is an information system that collects, stores, modifies, and retrieves data related to daily transactions of an organization. These transactions can be related to sales, purchases, inventory, and other routine activities. A TPS is designed to automate these transactions and make them more efficient and accurate. It is typically the first type of system implemented in an organization and is used as a foundation for other types of systems.

Examples of TPS include a point of sale system used in a retail store, an online banking system used by a bank, and an order management system used by an e-commerce website.

  1. Management Information System (MIS):

A Management Information System (MIS) is an information system that provides information to support decision-making within an organization. An MIS typically uses data from various sources, such as a TPS, to create reports and other information that can be used by managers to make strategic decisions. MIS reports often provide summary data and can be used to monitor and analyze trends and patterns within an organization.

Examples of MIS include a sales report that shows revenue by product, region, and time period, or a report that shows inventory levels for a specific product.

  1. Decision Support System (DSS):

A Decision Support System (DSS) is an information system that is designed to support decision-making at all levels of an organization. A DSS typically uses advanced analytical tools and models to analyze data and provide insights that can be used to support strategic decisions. DSS tools can be used to analyze complex data sets, create forecasts, and identify trends and patterns that are not easily detected by humans.

Examples of DSS include a financial modeling system used by an investment bank, a customer segmentation tool used by a marketing department, or a supply chain optimization tool used by a logistics team.

In summary, TPS is used to support daily transactions, MIS is used to provide summarized information to support decision-making, and DSS is used to provide advanced analytical tools to support strategic decision-making. These three types of IS work together to provide an organization with the information it needs to operate efficiently and effectively.


Contemporary approaches to information system (Technical approach and behavioral approach)

Contemporary approaches to Information Systems (IS) can be broadly classified into two categories: technical and behavioral approaches. Let’s take a closer look at each of these approaches:
  1. Technical Approach:

The technical approach to IS focuses on the technological aspects of information systems. It emphasizes the development and implementation of new technologies to improve the efficiency and effectiveness of information processing. This approach is grounded in the belief that technology can be used to solve most information-related problems within an organization.

Some key features of the technical approach include:

  • An emphasis on the technical aspects of IS, such as hardware, software, and networking.
  • A focus on automation, standardization, and the use of algorithms to improve information processing.
  • The use of data analytics, artificial intelligence (AI), and machine learning (ML) to process and analyze large volumes of data.
  • An emphasis on developing and implementing new technologies to solve information-related problems.
  1. Behavioral Approach:

The behavioral approach to IS emphasizes the human aspects of information systems. It recognizes that people are an integral part of any information system, and that their behavior and attitudes can significantly impact the effectiveness of the system. This approach focuses on understanding how people interact with information systems and how their behavior can be influenced to improve system performance.

Some key features of the behavioral approach include:

  • An emphasis on the social and psychological aspects of IS, including user behavior, attitudes, and beliefs.
  • A focus on human-computer interaction (HCI) and user-centered design (UCD) to create systems that are easy to use and intuitive.
  • An emphasis on training and education to improve user understanding and acceptance of new technologies.
  • The use of organizational change management (OCM) techniques to manage the transition to new systems and processes.

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