|
|
|
|
|
|
Lesson#8
|
What are Systems
|
|
|
|
What are Systems?
A system is a group of elements that are integrated with the
common purpose of achieving an objective.
Organization having common goal for the achievement are
functionally interactive units. All systems
have inputs, outputs, and feedback, and maintain a basic level
of equilibrium. For example, in the human
body the heart functions to support the circulatory system,
which is vital to the survival of the entire
body.
Example
Purchase System
A simple example can be given of a purchase and sales system. In
a typical purchase system information
related to purchase of materials is kept, for instance,
Orders for the purchase
of various materials
Status of deliveries
received against specific orders
Changes in the order
quantity, time, day or other information
Quality inspection
reports and whether they need to be communicated to the supplier
Updated status report
of stock
Issues made out of the
stock
All and more of information is required to be linked and
provided in an organized way.
8.1 Components of a system
Every system comprises of basic components which in a
coordination formulate a system. These are as
follows.
•
Input elements
The information entered into a system. For instance raw data
input to the computer system.
•
Process
Any specific treatment defined in the system to be performed on
the data entered into the system, for
instance, computation, analysis, application of any model
.
•
Output elements
The results given by the system after the process has been
performed on the data being input to the
system.
•
Control
mechanism
Every system is expected to generate some sort of standardized
output. Hence actual output needs to be
compared with what it is supposed to generate. This comparison
of actual with expected output is done
with the help of control mechanism.
•
Feedback system
Once the control mechanism has been devised, it needs to a
reporting mechanism, which should
respond with a corrective action, if required.
•
Objectives
We just mentioned that a control mechanism should compare actual
output with expected/Ideal output.
But before this is being done, there needs to be a list of
specific objectives which define expected output.
8.2 Types of Systems
•
Open System
24
•
Closed System
•
Open loop System
•
Closed loop system
Systems
Every system that is constructed is expected to generate some
sort of output based upon the information
fed into it. The output is expected to be used to evaluate
system performance – whether the output
complies with stated objectives of the system and generate
instruction to change input to improve/change
output. In this manner the system helps in
establishing/re-defining:
•
Objectives-What needs to
be achieved
•
Control Mechanism –
Output Vs. Expected
•
Feed back – Corrective
Action
Types of System
The first issue therefore is to define the environment where the
systems are required to be operated and the
second issue is to describe the system itself. Let us look at
some examples.
•
Book Store
Open system – any and everyone is allowed to view and purchase
the books available.
•
School
Closed system – entry to the is restricted to the
students only.
Thus in an open system we refer to the connection it has to its
environment by means of inflows and
outflows of resources between the environment and organization.
When we refer to a closed system we talk
of a system that is dependant on internal resources and data for
decision making rather than external
environment.
•
Example:
THE BOOK STORE may have:
•
An Open loop – if
customer feedback is not taken for the purchase of books for the store OR
•
A Closed loop – if
Customer feedback/interest is taken into account when selecting the books to
be purchased and displayed in the store.
The SCHOOL may have:
•
An Open loop – if
students’ feedback is not taken for the kind of books to be stocked in the
.
•
A Closed loop – if
students’ interest is the determinant criteria for the kind of books that are to
be carried out in the .
For many years the computer profession and business have formed
a partnership which operated under
what can be termed as open-loop architecture. Advances in data
warehouse technology and the Internet
have enabled what can be termed as closed-loop architecture for
the comprehensive usage in business of
computers.
8.3 Open Loop System
In open-loop architecture, business decisions made by management
have an impact in the marketplace,
25
and the impact of that decision is measured only indirectly by
the company's computer systems. For
example, if a bank decides to raise interest rates, the results
of the decision impact the lenders, the
present and future borrowers. The results are measured
indirectly as loan applications increase or
decrease. Another example can be given of an insurance company
which decides to offer a new kind of
insurance. The market expresses its approval or disapproval by
buying or not buying the new insurance
offering.
By measuring the response within the open-loop architecture, the
marketplace response is quantified. In
every case of an open-loop business / computer architecture, the
impact of the corporate decision is felt
indirectly through the reactions of the marketplace and is
measured indirectly by the computer systems
that are used by the company. Such interactions between the
decision process and the measurement of
the effectiveness of the decisions made can be called an
open-loop decision environment. In an openloop
decision environment, there is no direct relationship between a
corporate decision and a
consequence, although there certainly is an indirect
relationship. A big challenge in an open-loop
business/computer architecture is that of measuring the
consequences of the decisions made by the
company. This is due to the fact is that there is a time lag
between the time the corporate decision has
been made and the time when the marketplace gives its verdict on
the decision.
Another difficulty is that in an open-loop environment, there
may be factors other than the decision
made by corporate management affecting the results achieved in
the marketplace. Trying to measure
precisely the effect of management's decisions is an imprecise
science at best. Trying to quantify the
impact of management's decisions in an open-loop environment is
difficult in every case. For Example
take the case of a soft-drinks company. It has no idea of the
identity of its ultimate consumer. They deal
through distributors who for them is the final customer and not
the man on the street who actually
buys the soft drink from the retailer. The feedback on the
product, pricing or any other matter related
to the product would be provided by the distributor and not the
final consumer. Open-loop decision
making is for mass marketing companies. Companies that really
don't know who their customers are
employ open-loop decision making.
8.4 Closed Loop System
Feedback is an integral part of the closed loop system. The
corrective action as a response to the output
requires two other components
o
Control Mechanism –
Variance Analysis
o
Objectives – Predefined
expected output from the system
Closed loop system is a system where part of the output is fed
back to the system to initiate control to
change either the activities of the system or input of the
system. In a closed-loop decision environment,
the impact of decisions can be measured very precisely. In a
closed-loop decision environment,
management makes a decision, the computer system singles out
exactly to whom the decision applies
and a direct action is taken as a result of the decision. The
response to the action can then be measured
on a case-by-case basis. The results of the management decision
can be measured quickly and directly.
As an example of a closed- loop decision environment, suppose a
department store can use its data
warehouse to determine who has made purchases of more than Rs.
15000 in the past year. Once that
information is collected, those customers can be offered a
personalized credit card. In such a manner,
management can measure the effect of the decision quickly and
very accurately.
Another example can be given where management selects all
customers who have shown an interest in
James Bond movies. The data about such an interest, is stored in
a database. If those customers are
offered a new James Bond t-shirt at a discount price, the
results of the promotion can be accurately and
quickly calculated.
26
With a closed-loop decision environment, there is the
possibility of having very quick and very accurate
feedback on the decision process. The ability to make this
assessment is very valuable. Let us illustrate the
usage of the systems through an every day example. Take any
international sports event: Olympics, soccer,
cricket, tennis, every event is commercialised. To catch the
interest of every individual, highly integrated
information systems are used. For instance
o
To sell tickets
o
To advertise
o
Sports accessories
o
To set up a system for
commentators to extract information for instant analysis for viewers
o
Comparative Scores
o
Projected Scores
o
Team Performances
o
Match Performances
All of the above requirements are not possible without the
availability of an information system which
serves the information requirements of all the interested in a
timely fashion. The system has to be intelligent
system capable of performing necessary tasks and providing the
requisite output.
8.5 Attributes of an IS/CBIS
The attributes an Information System should have, to be worthy
of being used by an organization for
meeting its information requirements. Although information
requirements may vary from organization to
organization, however common premise is quite the same for many.
•
Efficient Processing,
including query time
•
Large Storage Capacity
•
Reduced information Load
•
Cross-functional
boundaries
•
Competitive Tool
•
Electronic Document
Management/Paper Free environment
Let’s consider each of these one by one.
Efficient Processing
Every transaction affects our records in a number of ways. CBIS
helps in updating every change being
triggered in less time and with less effort.
Large Storage Capacity & Instant Access
Efficient and effective decision making requires two aspects
– Availability of processed corporate data – occurrence of every
event relating to a company affects
policy making and implementation, thus recording and processing
of every data results in huge amount
of information
– Instant access to right chunk of information presented in
comprehensible format – both the above
requirements are easy to handle when a well structured
information system is in place.
Reduced Information Load
With such huge amounts of information available, managers can
feel overloaded, hence taking more time in
27
decision making. CBIS/IS help to tailor loads of information
w.r.t. every manager’s requirements. The way
information is presented can also save time for decision making.
Hence, report formats can be tailored in
accordance with the nature of problem being faced.
Cross-Functional Coordination
There are various functions in an organization that need to be
managed.
o
Manufacturing
o
Purchasing
o
Warehousing
o
Marketing
o
Accounts
o
Finance
o
Human Resource
In every transaction, every department has its own share of
responsibility. Thus uncoordinated effort by
every department won’t help in achieving the successful
completion of transaction and meeting
commitments. CBIS help in keeping an updated record for easy
access by every department in an
organization.
Example
A customer order is received by Sales/Marketing department.
Record for customer profitability and
recovery pattern are also kept by sales dept.
•
Manufacturing requires
•
Customer order in
quantitative terms
•
Raw material
availability for production
•
Time available for
delivery
•
Procurement schedule
•
Accounts require an
intimation the delivery is made along with the sales invoice
•
Customer wants the
status of its/his/her order
Competitive Tool
Businesses invest to earn profits or for other non-profit based
objectives. There seems no point in pouring
in Co.’s hard earned money on IS if they don’t add to the
quality and value of information. Hence CBIS/IS
can and should work to enhance the competitive advantage for the
organization.
Paper Free Environment
•
Information overload
enhances paper work.
•
Maintenance of records
in hard form has always proven to be a cumbersome task.
•
An IS/CBIS should be
efficient enough to properly manage of documents electronically.
•
Customer orders met
through Virtual Private Networks and intranets (to be discussed later).
•
Payments made through
Electronic payment system.
•
Report generation and
record analysis gets convenient and easy.
28
Conclusion
Hence an Information System / Computer Based information system
should help an organization in
achieving the above mentioned goals. If put differently, an
organization should not proceed with the
implementation of an IS unless it helps in achieving the above
goals. |
|
|
|
|
|
|