Introduction to Information System (IS)

Information system is an integrated set of components for collecting,  storing, knowledge,  processing data for delivering information, and digital products. Business firms and other organizations rely on information systems to carry out and manage their operations, interact with their customers and suppliers, and compete in the marketplace.  To reach their potential customers with targeted messages over the Web, to process financial accounts, and to manage their human resources corporations use information systems. Governments deploy information systems to provide services cost-effectively to citizens. Digital goods such as electronic books  and software, and online services, such as auctions and social networking, are delivered with information systems. Individuals rely on information systems, generally Interner-based, for conducting much of their personal lives: for socializing, study, shopping, banking, and entertainment.

The 5 components  in  a computer-based information system:

1. Hardware
The hardware refers to machinery. This category includes the computer, which is often referred to as the central processing unit (CPU), and all of its support equipments.There are input and output devices, storage devices and communications devices among the support equipments.

2. Software
Software refers to computer programs and the manuals that support them. Computer programs within the hardware parts of the system are machine-readable instructions that direct the circuitry to function in ways that produce useful information from data. Programs are generally stored on some input / output medium, often a disk or tape.

3. Data
 Data are facts to produce useful information facts that are used by programs. Like programs, data are generally stored in machine-readable form on disk, pendrive or tape until the computer needs them.

4. Procedures  

Procedures are the policies that govern the operation of a computer system. The common analogy used to illustrate the role of procedures in a system is "Procedures are to people what software is to hardware".

5. People
 If it is to be useful, every system needs people. Probably the component that most influence the success or failure of information systems is people which is often the most over-looked element of the system.

Types of Information System

1. Transaction Processing Systems

Transaction processing System is an information system that captures and processes generated data during day-to-day transactions in an organization.  A transaction is a business activity such as a deposit, payment, order and reservation.

2. Office Support System

An information system that uses hardware, software and networks to facilitate communications among employees and enhance work flow. Office information system, or also known as office automation is an employees perform tasks electronically using computers and other electronic devices, instead of manually.  With an office support system, for example, a registration department might post the class schedule on the Internet and e-mail students when the schedule is updated.  In a manual system, the registration department would mail the schedule to each student’s  house after making the photocopy.

 3. Management Information Systems

 Managers soon realized that the computers’ capability of performing rapid calculations and data comparisons could produce meaningful information for management after a while using  computers as ideal routine transaction processing.  Management information systems then evolved out of transaction processing systems.  A management information system, or MIS , is an information system that generates accurate, timely and organized information so managers and other users can make decisions, solve problems, supervise activities, and track progress and sometimes is called a management reporting system (MRS) as it generates reports on a regular basis.

4. Decision Support Systems

When a decision-making situation arises, an information system designed to help users reach a decision.  A variety of DSSs exist to help with a range of decisions. 

5. Executive Information System

For those who have less expertise, information system captures and stores the knowledge of human experts and then imitates human reasoning and decision-making processes.  Executive information systems are composed of two main components: 

1)  a knowledge base

·       A knowledge base is the combined subject knowledge and experiences of the human experts.

2)   inference rules 

·       The inference rules are a set of logical judgments applied to the knowledge base each time a user describes a situation to the expert system.

Transaction Processing System (TPS)

TPS occurs in a government organization, a service firm, and a manufacturing firm.

Transaction is any business event that generates data worth being captured and stored in a database warehouse.

Properties in TPS:

• Atomicity: the transaction starts and each step must be completed or it will be undone.
• Consistency: data is agreed upon, remains in a consistent state and is accounted for.
• Isolation: treats each transaction separately and keeps data from each transaction separate.
• Durability: the data should continue to exist.

Various types of transaction occur in organizations each day such as a service sold, a payroll check generated, a person hired, and a product manufactured. TPS are inputs for business operations, functional area information systems, and business intelligence systems. Examples of business operations are customer relationship management, knowledge management, and e-commerce.

Problems and issues in TPS:

• Errors resulting from overlapping updates may occur when multiple peoples or application programs can access the database at the same time. Example of error is the results of one of one of the updates are lost.
• Inconsistencies may arise from any failure of any component at any time when a transaction involves more than one computer.
• Eg: error that occurs at some point in an ATM withdrawal
• The customer receive cash although the bank's computer indicates that he did not.
• The customer did not receive cash although the bank's computer indicates that he did.
• TPS must be reversible if error ever occur during transactions. It is also necessary when a purchased item is returned.
• Preserving an audit trail is also important and may be legally required for certain transactions.

Organizations spend a lot of money on expensive mainframe computers to avoid errors and downtime during transaction, record results accurately and securely, and maintain privacy and security. Dependable and reliable computers with the capacity to handle the organization's transaction processing loads are needed for firms to efficiently handle data both in high volumes and during large variations in volume (peak times). Organizations do a process called source data automation which they automate TPS data entry as frequently as they can because of the large volumes of data involved.

Types of TPS:

• Batch processing, as transaction occur, data are collected and placed in groups or batches. Batch processing takes place for transaction that are not able to be easily stored and updated due to the amount and type of data used. Next, the system prepares and process the batches periodically. Example of transaction that uses batch processing is payment using cheque that involves large amount of money.

• Online transaction processing (OLTP), also known as Real time processing, where business transactions are processed online as soon as they occur. Example of OLTP is the Bank ATM, which have user input that requires immediate feedback.

Transaction Processing System (TPS) in Bank Islam

Bank Islam, instituted  in 1983, is Malaysia’s first Shariah-based institution. Started off providing traditional financing, savings and investment types of products for individual customers, the range of Bank Islam’s Shariah-based financial products, services and business solutions has developed to the fast-changing financial needs of customers from all categories including those related to micro financing, wealth management, capital market, treasury and structured products.

TPS that can be found at Bank Islam are Automated Teller Machines (ATM), Cash Deposit Machines (CDM) and Cheques Deposit Machines. ATM allows customers to withdraw cash, CDM allow customers to bank in cash and Cheques Deposit Machines accept cheques deposits at any time. These machines offer banking services to customers 24 hours. The maintenance and monitoring of these machines are handled by the bank's personnel. All transactions performed are transmitted directly into the bank's database and will appear in a series of reports and journal roll for verification and balancing by officer in charge.

The primary banking operations involve deposits and credits. Deposits operations that are manage by operations department, is the business of taking deposits and withdrawals. Credit operation that are manage by credit departments, is the business of lending moneys to consumers or companies. However, today the business scope of a bank has expanded into a more wide landscape. Remittances, insurance, foreign currency exchange and investment consultations are among the modern day services provided by banks. The picture below is a flow chart of how a transaction of withdrawals of money occurs at ATM machine.