Basic Concepts

Unit 1: Basic Concepts Overview:
Data, DP, Information, System, IS

Data & Data Processing (DP)
Information & Info Processing (IP)
Managerial Levels & Info Needs
Information Classification/ Categorization
Information Utility, Value, Quality, Cost
Factors affecting Info Value & Quality
Knowledge, KB & KBM- Quick Look
System & Information System (IS)
Subsystems & their inter-linkages
Types of Information Systems
System Efficiency; System Maintenance
Presentation content & material developed for exclusive use by V. Mohan. All rights reserved. No unauthorised copying or usage permitted.

1. DATA, strictly speaking, refers to RAW DATA: facts & figures, a stream/ collection/
combination of numbers, digits, letters symbols, images, videos etc., relating to people,
places, events or things. It must be captured, stored & maintained appropriately, since its
the core input for PROCESSES which transform it through various techniques into
INFORMATION, based on which decisions are made & actions are taken.
Examples:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
Customer details (name, age, address$.)

Payment details (amount, cheque no. & date, payee$.)
Product details (part no., name, price, expiry date$.)
Material issue details (part no., quantity, issue date, to whom issued$..)
Customer order details (Order no., date, items ordered & quantities, order value$..)
Supplier details (code, name, address, items supplied$..)
Purchase order details (no., date, supplier, items & quantities$.)
Attendance record (employee code, date, time in, time out$.)
2. However, the term Data is also used to refer to raw data that has undergone one or more
stages of processing and then stored, to be used as input for a subsequent process.
Strictly speaking, such processed data is actually information. Referred to as data from a
process perspective, since it is INPUT to another process, retrieved from storage.

3. DATA PROCESSING (DP): Conversion of Data (Raw Data or Processed Data) retrieved
from storage, along with other specific run-time inputs (if applicable), into Information,
through a Process consisting of a sequence of steps or Process Flow, with a clearly
defined activity/ algorithm/ logic for each step:
4. MASTER DATA: Raw Data which identifies a specific entity (person, place, thing..).
Reference Data thats quite static, doesnt change frequently.
5. TRANSACTION DATA: Raw Data which gets generated all the time, due to
transactions or dealings between two entities (company & customer, employee &
company, supplier & company, etc.) Multiple transactions can occur with the same entity
and hence many transaction data records can link to the same master data record. For
example: multiple orders from same customer, multiple supplies from same supplier, etc.
Information; Info Processing (IP)

1. Processed Data or the output of DP. Raw Data or prior processed data is converted
through a process into Information- something meaningful for specific person(s), relating
to taking some decisions & actions to:
complete a pending task

correcting/ improving a situation/ status in the upcoming (near) future
Improve medium/ long term scenarios/ prospects/ performance
2. Information is a vital resource in general, and in particular, for a business. Provides

meaning to raw data through one or more operations/ techniques/ algorithms such as
sort, collate, compute, compare, analyze, predict/ forecast etc. Improves representation of
the status of a process/ task/ function/ situation etc., for those responsible for performing/
monitoring/ enhancing them. Generates awareness about a problem to be resolved or
situation to be addressed and thereby carries some value.
3. Information is the primary input or the intelligence for decision-making. A person
(worker/ supervisor/ manager), with timely, relevant, sufficiently accurate and properly
formatted & presented information can take faster, better, more confident, certain &
objective decisions (rather than subjective or gut-feel driven), by applying specific
decision-making techniques and/ or his/ her Knowledge, Experience & Wisdom.
Information; Info Processing (IP)

4. The activities relating to working on (processing) Information (the input) and reaching
decisions & actions (the output) is often called INFORMATION PROCESSING (IP).
5. Some examples of Information:
Top 20 customers for 2014-15

Pending deliveries as on <date>
Items below reorder level (generated weekly)
Quarterly sales performance (Target vs. Actual), territory & product wise
Overall performance dashboard for the Firm
Sales performance trends
Economic outlook impact on the organization
Balance Sheet, P&L statement
Outstanding customer complaints as on <date>
Expenses (Monthly): Budget vs. Actual, Department/ Function wise
Average complaint resolution time- trend over past 12 months
Marketing campaign response analysis
Managerial Levels & Info Needs

Information, when viewed on the basis of its essential purpose and the
managerial level(s)/ type of decision-making that it facilitates, falls into 3
categories: Operational, Tactical & Planning/ Strategic:
Strategic Information
Overall performance monitor; medium/
long term planning & strategizing, etc.
Top
Mgt.
Tactical Information
Extent of external
information.
Integration of data/
information across functions
& from various sources.
Processing complexity
Middle &
Senior
Mgt.
Periodic performance monitoring &

control of various functions/
departments (Budget Vs. Actual)
Unstructured & less

programmable nature of
information.
Time frame for data collation
& analysis
Operational Information
Day-to-day functioning
control of the business
1st
Lower Mgt.
(Supervisors/
Level Managers)
Decision Time frame (short/

medium/ long term),
complexity, unstructured
nature, person dependence
Classification of Information
Information can be categorized in various ways, using different classification parameters:
Basis of Classification
Information Types/ Categories
1. Managerial Level
Operational Info, Tactical Info, Planning & Strategic Info
2. Source (Origin)
Internal Info: Derived from data generated by the Firms operations. Historical & fairly
static, enables effective management.
External Info: Derived from data gather from various sources outside the Firm. Further
classified into Competition Info (SWOT, market share & performance trends, new initiatives
& activities/ plans, changes in competition set, etc.) and Environmental Info (Govt. policies,
Tech. trends & changes, Economic trends, growth & diversification opportunities, etc.
3. Generation frequency
Recurring Info: generated at clearly defined time intervals- weekly, monthly, quarterly
Non-recurring Info: generated adhoc for specific need, no frequency or even recurrence
4. Consequence
Action Info: fairly immediate decisions/ actions required by the receiver.

Non-Action Info: providing awareness/ update, no associated action as such from receiver
5. Future availability
Documentary Info: written, stored & retrieved. Available when needed, once generated.
Non-Documentary Info: temporal display, Oral communication.
Info Utility, Quality, Value & Cost
Since it facilitates faster & better decision making, Information is considered as having
utility / value / worthiness. This can often be quantified by estimating time & cost savings,
profits generated, etc., due to the Info generated and resultant sound decisions/ actions.
Information Quality is closely linked to its utility/ value/ worthiness. Info Quality is bad, if its
utility is low & it is high if the Info is considered highly useful, valuable & worthy.
Information is never free, though it may appear to be so! Generating information involves
expenditure on H/w, S/w, networking, data collection & validation, personnel, administration
& management, etc. All this is Information Cost.
Following points are very important to note:

1.
Info utility/ quality/ value/ worthiness is defined by the concerned receiver(s) and not by those
generating & providing it, the equipment/ resources being state-of-the-art, latest & best, etc.. The
users opinion is what matters!
2.
Theres always a trade-off between Info Value/ Utility and Info Cost. At some point, increasing the
quality/ utility/ value of info renders the cost prohibitive and hence, the organisation (management)
has to cap the same as acceptable/ sufficient. Accordingly, the capability of the info user also
comes into play- the decision-making skill with the info quality that the organisation is able to
provider, based on the info cost that can be afforded.
Factors affecting Info Val./Qual.

Information attributes are various parameters associated with generated
Information, that collectively determine its Utility/ Quality/ Value to the receiver(s):
Scope (Level of detail)
Accuracy &
Reliability
Timeliness &
Frequency
Information Attributes
governing its Utility/
Quality/ Value
Validity &
Consistency
Presentation &
Access Flexibility
Impartiality
(Lack of Bias)
Presentation of Info- Criticality
Organisations today are highly technology driven, along with vast increase in use of remote
access & mobile devices. Accordingly, approaches to presenting Info to users & methods/ media
adopted by users to access Info have undergone massive changes in the past 10-15 years.
Improper presentation of info can erode its value completely, even if its based on high
data accuracy & excellent analysis. If a user is unable to get required information when most
needed and/ or cannot comprehend it, he/she simply stops trying to access it again through the
system! Obviously undesirable & unproductive!
Appropriate Summarization/
Abstraction/ Filtering/ Sorting
Drill-Down facility for more

detail, if required
Proper &
Effective
Information
Presentation
Appropriate use of graphs,

images, colours & fonts
Appropriate mix of multiple

communication channels
such as e-mail, SMS, Web &
Mobile Access, etc.
Proper Routing/ Distribution:

Clearly identify other
recipients who may also
require the Information
10
Data Vs. Information

These terms are often mixed up! For instance, a manager says Give me sales data, or Is the Invoice
information entered into the system? Though inferences in both cases are correct, its important to
understand that the two terms are different . And of course, avoid using them synonymously!
DATA
INFORMATION
Is the Input- a collection of numbers, text, images,

voice, etc., representing identifiers, quantities,
objects, status, etc. Data is raw facts & figures, like
raw material
Is the Output- results of a set of relevant data,

processed generally through various mathematical
& statistical methods, till it carries some meaning,
to a specific person; is like a finished product.
By itself, data carries no value or intelligence.

Doesnt mean its unimportant. Data accuracy &
credibility is critical. Remember: GIGO!
Information has value for the recipient, enables

assessment of a situation & appropriate decisions/
actions to be taken, with knowledge & experience.
Often, processed data, which is information for a

recipient, can be data for further processing! One
way to understand this is to think about semifinished products.
Depending upon the recipient, Information can

pass through a number of stages, with output
information from one stage serving as data for the
next, to generate information for another recipient.
In strict terms, Data refers to Raw Data- what

naturally emerges from business transactions, or is
targeted & gathered from various external sources.
Information may often seem like data, based on the

frame of reference, But its not raw data, since it
has emerged after some processing of raw data.
11
Knowledge Base & KBM
Just as the terms Data & Information are often used interchangeably, the terms Information &
Knowledge are also interchanged frequently. Many consider Knowledge & Information as quite
synonymous & this is not entirely incorrect. Information can be looked at as a form of knowledge
or contributor to knowledge.
Knowledge is actually the ability to view/ analyze Information by applying background/ context
and/or rules/ norms, assess the status, identify problems/ issues/ tasks and conclude them with
appropriate decisions & actions. Intelligence, Experience, Wisdom & Judgement of a person are
obvious contributors to overall Knowledge, apart from the intelligence provided by Information.
In recent years, the concept of Knowledge Base has emerged, in addition to Database &
Information Base. Establishing a KB involves appropriate methods & processes to capture, store,
maintain & share of the wealth of Knowledge existing within an Organisation, in various
employees who take important decisions. Previous experiences can also be captured in the KB
(decisions taken & associated outcomes, overall decision rating etc.).
Knowledge Base Management (KBM) or creation & maintenance of a good KB can provide
significant productivity benefits- more sound decisions through less staff, decision-making
delegated to lower skilled staff, etc. Theres reduction in person dependence for decisions and
new decision makers can fall back on the KB for guidance in decision making. KBM is closely
linked with the areas of Artificial Intelligence (AI), Expert Systems, etc.
12
Info System (IS) & System Engg.

1. SYSTEM is generally defined as A set of elements working in a coordinated &
controlled manner, to accomplish certain pre-determined objective(s)/ goal(s).
An ICT (IT) System or IS, in a business organisation can therefore be considered as:
A coordinated & controlled set of Computing devices (IT Hardware such as PCs,
Servers, etc.), Communications Devices & Infrastructure (Routers, Switches, LAN,
WAN, Internet, etc.), Codified Processes, Procedures & Rules (IT Software) & People
(Users, Systems Analysts, Developers, Testers, Implementers & Maintainers), to achieve
defined Objectives/ Goals:
a) Capture, organisation, storage & maintenance of relevant data
b) Manipulation of data as desired, for generation & presentation of Information
c) Maintaining relevant Information & Knowledge as necessary
2. SYSTEM ENGINEERING refers to the entire process of putting a desired System in
place from Conceptualization to Implementation & Maintenance.
Since the term (jargon) was 1st introduced by IT firms & professionals, Systems
Engineering is most often used in connection to ICT (IT) Systems.
13
System- Basic & Control Models

1. Basic System Model; Parts of a System:
INPUTS
PROCESSES
OUTPUTS
The 3 parts of a System (IPO) get defined based on its objectives/ goals. They define
the Boundary or Scope of that System & valid/ invalid expectations from that System.
Every System operates in a specific Environment, which influences the
conceptualization & design of that System.
A System designer/ implementer must put in place a Filter or Quality Control to
ensure that the System functions in sync with its Environment.
14
System- Basic & Control Models

INPUTS
PROCESSES
Measure
Necessary
Corrections
Corrector
OUTPUTS
Sensor
Feedback
Compare
Expectation
Assessor
An example from IT Systems (MIS):

Monthly Sales
Data & Targets
Grouping, Summation,
Achievement computations, etc.
Remove input data

errors & validate
S/w changes
& Bug fixes
Identify cause(s)
for each mismatch
Communication to
relevant person(s)
Sales Performance
Reports
Check
Generated figures &
report formats
Compare
Accuracy & desired

report formats
Mismatches, if any
15
Subsystems & Inter-linkages

Any System is defined by its objective(s)
& the resultant scope/ boundary. If the
System scope is at a very broad/ macro
level, it can be unmanageable! For
instance, the concept of an overall IT
system catering to all the functions of a
business is perfectly valid, but very
difficult to understand as a single entity.
Accordingly, a conceived System must
always be broken down into multiple
levels of Subsystems (also commonly
called Systems). The boundary of a SubSystem is limited/ specific and its
understanding & implementation is more
focussed and manageable.
The number of subsystem levels defined,
depends on the extent of clarity & scope
limitation desired at lowest subsystem
level. Obviously, overdoing this defeats
the
very
purpose
of
defining
Subsystems!
OVERALL BUSINESS IT SYSTEM OR IS

MARKETING SYSTEM
- Campaign Management
- Pricing
- Marketing Research
SALES SYSTEM
- Opportunity Management
- Order Entry/ Approval / Acceptance
- Sales Performance
MANUFACTURING SYSTEM
- Work Orders & Scheduling
- Maintenance
- Plant Management
FIN. & ACCOUNTS SYSTEM

- Ledger maintenance
- Cash Flow management
- Invoicing
MATERIALS SYSTEM
- Procurement
- Inventory Control
- Receipts Accounting & Bill Passing
HR/ PERSONNEL SYSTEM

- Payroll
- Performance Appraisal
- Training & Skills Development
Structure shown is
representative & can
vary, based on the
business organisation.
2nd level Subsystems
shown within each 1st
level, are partial. There
will be more of them.
Each 2nd level Subsys.
can be broken into 3rd
level & further into 4th
level & so on, as
appropriate from an IT
system development
perspective.
& so on:
16
Subsystems & Inter-linkages

Sequential & Matrix Subsystems:
A subsystem is Sequential when it doesnt communicate or interface with any subsystem other than the
preceding (if any) & succeeding subsystem at the same level. Its output is the input to the succeeding one
(if any). Lower the level of a subsystem, the more sequential it tends to be.
Examples: Employee Attendance capture Salary Computation Payslip generation
Ledger Maintenance Trial Balance
Supplier Bill validation Computing Amount Payable Cheque & Voucher Preparation
A subsystem is Matrix when it communicates or interfaces with other subsystems, by receiving input(s)
and/ or passing output(s). Subsystems at the higher / highest levels are generally Matrix, as can be seen
below, for the 1st level subsystems in a typical overall system called Business Organisation:
MATERIALS MGT.
MARKETING
CUST. SUPP.
FIN. & ACCOUNTS
SALES
HR/ PERSONNEL
MANUFACTURING
17
Information Systems (IS) Types

Info Systems support various functions/ departments and all the processes, tasks and
decisions that happen within. There are many types of IS, considering that there exist many
categories of business processes, specialities and levels within an organisation. Following is a
good classification of IS:
INFORMATION SYSTEMS (IS)
OPERATIONS SUPPORT SYSTEMS (OSS)
MANAGEMENT SUPPORT SYSTEMS (MSS)
Transaction
Office
Knowledge
Processing
Automation
Management
Systems (TPS) Systems (OAS) Systems (KMS)
Management
Information
Systems (MIS)
Decision
Support
Systems (DSS)
Executive
Information
Systems (EIS)
Communications &
productivity apps
such as MS-Office,
e-mail, OA, stand
alone apps, etc.
Also known as
Traditional
MIS.
Extracts information
for lower & middle
level managers, from
TPS, for proper
control of operations.
Applications
that
analyze information,
evaluate & compare
alternative decisions
and suggest most
suitable one, if reqd.
Provides monitoring
& strategic info for
Top Mgt., in user
friendly,
graphics
intensive and highly
flexible manner.
Captures all master

& transaction data
from all functions,
completes them &
generates all the
business-related
documents
Apps that capture

knowledge/ expertise
of individuals, for
delegation of decisionmaking tasks to nonexperts. Can be seen
as a type of DSS.
18
System Efficiency, Effectiveness

1. System Performance is governed by 2 distinct factors: System Efficiency & System
Effectiveness. Though often mixed up with each other, the factors are quite different in
meaning.
2. System Efficiency: Refers to how well the system uses Inputs & Resources to generate
its Outputs. Even if a System produces desired outputs, it can be considered inefficient if
found lacking in terms of response time, uses non-optimal technology & s/w coding, uses
excessive storage/ memory, doesnt optimally preserve processed data for the future, etc.
Efficiency is determined by the quantum of Inputs required for desired outputs or whats
generally called Input-Output ratio. Higher I-O ratio = Greater Inefficiency.
3. System Effectiveness: Refers to how well the system provides Desired Output; produces
the right Outputs in terms of accuracy, reliability, presentation form & format, etc. While an
inefficient system which generating desired outputs can find acceptance and may continue
to be used, an ineffective system is an out of control situation requiring significant
correction before the system degenerates into an unused & discarded one!
4. In summary:
System Efficiency indicates its Productivity; Effectiveness indicates its Goodness.
For best user utility & usage, a System must be both Effective & Efficient!
19
System Maintenance
1.
Often, System Engg. projects are considered concluded when initial implementation is complete. The
truth is that lot of real challenges come up post-implementation! System Engg. is always an ongoing
project, though its intensity may not be constant post-implementation.
2.
Every system, after running for a while, tends to decay, in terms of increasing inefficiency &
ineffectiveness. User requirements & system goals change periodically, certain reports become
irrelevant/ redundant, functional process flows change, etc. Decay is like Entropy which always
increases with time.
3.
System Maintenance is the process through which a System is brought back into equilibrium
periodically, after some decay. Ideally, every System must be accompanied by a post-implementation
maintenance procedure or routine, which can consist of one of more of the following being done at
defined time intervals:
System Review/ Audit, including user meetings to assess current utility/ satisfaction/ usage.
Audit check using test data; running System under audit trail
Capturing changes in information requirements, process flows, data storage, etc.
Updating/ Upgrading the System as required.
4.
A significant challenge in System Engg. is to design & develop Systems that are flexible & easily
maintained/ modified. Besides using hardware, s/w technology and coding techniques from a longerterm perspective, capturing of possible future directions of the function/ organisation/ system in the
initial system analysis stage is also critical.
20

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Unit 1: Basic Concepts Overview:

Data, DP, Information, System, IS

Data & Data Processing (DP)

Customer details (name, age, address$.)

Data & Data Processing (DP)

Information; Info Processing (IP)

complete a pending task

2. Information is a vital resource in general, and in particular, for a business. Provides

Information; Info Processing (IP)

5. Some examples of Information:

Top 20 customers for 2014-15

Managerial Levels & Info Needs

Periodic performance monitoring &

Unstructured & less

Decision Time frame (short/

Information Types/ Categories

Operational Info, Tactical Info, Planning & Strategic Info

Action Info: fairly immediate decisions/ actions required by the receiver.

Info Utility, Quality, Value & Cost

Following points are very important to note:

Factors affecting Info Val./Qual.

Presentation of Info- Criticality

Drill-Down facility for more

Appropriate use of graphs,

Appropriate mix of multiple

Proper Routing/ Distribution:

Data Vs. Information

Is the Input- a collection of numbers, text, images,

Is the Output- results of a set of relevant data,

By itself, data carries no value or intelligence.

Information has value for the recipient, enables

Often, processed data, which is information for a

Depending upon the recipient, Information can

In strict terms, Data refers to Raw Data- what

Information may often seem like data, based on the

Knowledge Base & KBM

Info System (IS) & System Engg.

System- Basic & Control Models

System- Basic & Control Models

An example from IT Systems (MIS):

Remove input data

Accuracy & desired

Subsystems & Inter-linkages

OVERALL BUSINESS IT SYSTEM OR IS

FIN. & ACCOUNTS SYSTEM

HR/ PERSONNEL SYSTEM

Subsystems & Inter-linkages

Information Systems (IS) Types

MANAGEMENT SUPPORT SYSTEMS (MSS)

Captures all master

Apps that capture

System Efficiency, Effectiveness

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