Systems vs.

Procedures
Procedure is a defined set of instructions aimed at describing how to
proceed in achieving a pre-defined milestone/target.

Systems have collection of predefined procedures related to each

other in a sequenced logical manner in order to collectively achieve
the desired results.

The system & procedures in all kinds of environment are subject to

internal controls and checks that are necessary to ensure the
effectiveness of the same.

6.1 Purpose of Systems & Procedures

The basic purpose behind setting up systems and procedures is to
make available information when required. But when procedures
are organized in a logical manner to form systems, the value of
information as an output of a system enhances.

When technology is added to the system, scope of a system

changes to include hardware, software and designs linked together
in accordance with the procedures contained in that system to give
6.2 Data & Information
Before defining what information systems are? I would like to once
again differentiate between data and information.
Data represents facts of any kind. Information is the processed form
of data being verified and substantiated from various sources.
Example
100,000 is a figure which by itself does not add to the knowledge
But
When we say 100,000 sales orders, it does add to our knowledge,
hence is information.
6.3 Data & Information
Generation of relevant information is the objective of every
information system. Now we would move fwd with the definition &
necessity of information systems.
What are Information Systems?
Interrelated components working together to collect, process, store
and disseminate information to support decision making,
coordination control, analysis and visualization in an organization.
6.4 Manual Vs Computerized Information Systems
As advancement was made in every field of life, manual
information systems were converted to computerized systems. In
manual environment, the concept of transformation was difficult to
apply, since input of data into records was by itself the output
which also included simple computations.
Concept of control mechanism grew stronger as computerized
information systems emerged. Now the concept of Information
system exists with the usage and benefits of Computers as an
inevitable part.
6.5 What is Computer based Information System (CBIS)?
CBIS is an Information System that uses computer &
telecommunications technology to perform its intended tasks. In
CBIS, Information technology (IT) becomes a subset of the
Information system.
The terms Information System (IS) and Computer Based Information
System (CBIS) with the extensive use of computers in almost every
field renders it inevitable to think of an IS as CBIS.
6.6 Why Information Systems?
In modern age, there has been felt a growing need for the use of
information systems. Let’s take a look at
what factors increased the importance of efficient information
systems.
6.7 Emerging Global Economies
High level of foreign trade has resulted in imports and exports which
require inter linkage for smooth coordination. Core business
functions (manufacturing, finance and customer support) have been
distributed in different countries Coordination.
6.8 Transforming Industrial Economies
Industrial economies have started merging as knowledge-and-
information-based economies. Manufacturing activities being shifted
to low wage countries. More opportunities are available in education,
health care, banks, insurance firms and law firms. More knowledge
and information intense products are being created. Higher
commitment expected from customer e.g. overnight package
delivery, world wide reservation systems.
6.9 Transformed Business Enterprise
The structure of business enterprise have also changed, initially the
organizations used to be Hierarchical, Centralized, Structured
following a Fixed Set of SOP’s. However, now the organizations are
moving towards more Flatter, Decentralized and Flexible structures.
Information Technology makes it convenient and efficient to promote
this new culture.
6.10 Emerging Digital Firms
Firms where all significant business process and relationships with
customers and suppliers and employees are digitally enabled and key
corporate assets are managed through digital firms. This results in
rapid response with more flexibility to survive and getting more
7.1 What are Systems?
A system is a group of elements that are integrated with the common
purpose of achieving an objective. Example
Purchase & Sales System
7.2 Components of a system
Following are the important components of the system.
• Input elements: Raw Data input to the computer system
• Process : Computation, analysis, application of any
model
• Output elements: Results of computation or analysis
• Control mechanism: Comparison of actual with expected
• Feedback system: Corrective action
• Objectives: Expected/Ideal output
7.3 Types of Systems
7.3.1 Open-Loop System
The determinant factor is in an open loop system is that the
information from the system not used for control purpose.
• The output is not coupled to the input for measurement.
• Hence the components of open loop system do not include control
and feedback mechanism due to non-existence of internally defined
objectives. That is,
o Input
o Process
o Output
Example
An information system that automatically generates report on
regular basis and are not used to monitor input or activities.
7.3.2 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
• Has the ability to control the output due to existence of
Control Mechanism
• Feedback System
• Objectives
Example
Budgetary control system in a company by which
o The results are communicated through feedback system
o Results are compared with the objectives/budget through controls
mechanism
7.3.3 Open Systems
• A system that is connected to its environment by means of resource
flows is called an open system.
• The environment exerts influence on the system and the system also
influences the environment.
Example
• Business is a system where management decisions are influenced by
or have an influence on suppliers, customers, society as a whole.
• Computerized system of a manufacturing entity, that takes influence
from the society.

7.3.4 Closed Systems

• A system that is not connected with its environment
• Neither environment exerts any influence on the system nor does
system influence the environment.
Examples
• An information system designed to control data in a research
laboratory is a closed system.
• An information system designed to record highly sensitive
information is a closed system so as
• To accept no input for amendment
• To give no output for disclosure
Objective of Having Systems
• To subject a predefined amount of input (tangible, intangible) to
predefined set of instructions in order to achieve an expected quality
and amount of output.
• Effective and efficient utilization of resources
7.4 Level of Planning
There are three levels
• Strategic
• Tactical / Functional
• Operational
Strategic Planning
Is the formulation, evaluation and selection of strategies for the
purpose of preparing a long-term plan of action to attain objectives.
Tactical/Functional Planning
Is the process by which managers assure the resources are obtained
and used effectively and efficiently in the accomplishment of the
organization’s objectives?
Operational Planning
Functional Strategic Planning
Commitment by Firm’s executives requires strategic planning for the
following functional areas.
o Manufacturing resources
o Financial resources
o Human resources
o Marketing Resources
o Information Resources
7.5 Strategic Planning for Information Resources (SPIR)
When a firm embraces SPIR the strategic plans for information services
and the firm are developed concurrently. Business strategy and IT
related strategy should go hand in hand. The IT related strategy
should be driven by business strategy and the former should support
the achievement what’s being mentioned in the latter.
Any inconsistencies or deviations between the two should be removed
and avoided. The investment in IT is costly and inflexible. Such
investment is also monitored and controlled by the IT strategy. Hence
any investment not supporting the business strategy would be futile.
Example
Business strategy
Modify inventory system to fulfill orders quickly through relocating
system to warehouse and efficient shelf picking.
IS strategy
To identify information resources needed for the successful
implementation of business strategy.
Information Value Chain
Raw information is transformed at various points and value is added
before passing onwards. Every step of processing should make the
information stored more valuable.
Example
When customer order received, data punched into computerized
system, which updates order list, customer records and store room
records. When order has been served, customer orders are filed into
records.