Computer based business system

Business refers to industry and commerce. A business information system is a set of manual or computerized components for gathering, storing and processing business data and converting such data into useful, decision oriented information.

A computer based business system involves six independent elements:

1. Hardware
2. Software
3. People
4. Procedures
5. Data
6. Information

All six elements interact to convert data into information. These elements are explained as follows:

1. Hardware means computer equipment or machines, which we can touch and feel.

2. Software means instructions or programs, that instruct a computer on how to process data.

3. People may be programmers, managers or the users who work on the computer resources in                 accomplishing their daily tasks.

4. Data means raw facts or figures, which need to be processed using computer hardware and                   software.

5. Information means processed data. For example, the students' marks in an examination are data but     the average of such marks is useful to a teacher when assigning grades,then it becomes                         information.

6. Procedures are the rules that govern the activities.




Systems are of the following types:

1. Physical System
2. Abstract System
3. Open System
4. Closed System
5. Deterministic and Probabilistic System
6. Information System




Physical System

Physical Systems are tangible or visible systems, which means that Tangible systems can be seen, touched and even counted. Physical systems may operate statically or dynamically. For example, a steel filling cabinet is a static physical system. An air conditioning unit is a dynamic physical system which responds to the environment and starts or stops operating depending on the temperature.


Abstract System

Abstract systems are conceptual or non physical entities. Such systems just invoke abstract conceptualization of physical situations. For example, a model is an abstract system as it is a conceptualization and a representation. Another example of an abstract system is an algorithm or an equation. Abstract models are often used to understand physical systems, their components and interrelationships.


Open System

An Open System is a system that interacts freely with it's environment, taking input and returning output. When the environment changes, an open system must also change in order to adapt itself to the environment. Otherwise the system would be labelled as outdated. For example, our body dydtem, education system, business system and all other systems which take input and return output come in the category of open systems.

To achieve it's goals, the open system has to interact with the environment that lies outside the boundaries of the system.

Information systems are open systems since they accept inputs from the environment, and produce output.

A good dynamic open system is a system that continues to function properly and usefully with the passage of time even as the environment changes. It is such system that the process of systems analysis and design aims at. Characteristics of good dynamic open systems are:

1. Open Systems reach a steady state of equilibrium when they function properly. They are able to           adjust themselves and regulate themselves.
2. Open systems resist entropy by modifying their processes or by seeking new input to return to the       steady state. In other words, these systems resist growing disorder and loss of energy over time.
3. Open systems have a useful process cycle and produce useful output.
4. Open systems use focused specialized functions and greater differentiation between their                     components.
5. Open systems are clear about the goal and may achieve the goal using any of the alternative paths       and courses of action.



Closed Systems

A closed system is a system that is cut off from it's environment and does not interact with it, which means a closed system is isolated from it's environment and remains unaffected by the changes in the environment. Closed systems are very rare. In our daily life, we will be mostly dealing with open system.



Deterministic and Probabilistic Systems

Systems can also be classified as deterministic or probabilistic. A deterministic system operates in a predictable manner. If one knows the state of the system at a given point of time then it is a deterministic system. However, if one can predict the next state without error, then it is probabilistic. The economic forecasting is probabilistic. Similarly, in an inventory system, average demand, lead time etc. are probabilistic. In a computer system the outputs are deterministic.



Information System

A Information system is a system which provides information for decision making and / or control of the organization. Information is a material or non material entity which reduces uncertainty about a situation or about an event. Fe example, information that the weather will be fine tomorrow reduces our uncertainty about if the football game will be played or not. Organizations use information system to process transactions, reduce costs and generate revenue. For example, banks use information systems to process customer cheques and produce statements.

Elements of a system

A system is an ordinary arrangement of it's components. The different components of a system work within a boundary. Boundary establishes the limits of  a system, separating the system from other systems. All the sub systems of the main system work within this boundary to achieve the pre determined objectives.

The components that make up any system work within a system boundary. It separates the system from it's environment.

Everything outside the system's boundary is it's environment. The environment is the source of external elements affecting the system and it also determines how the system must function. For example, the environment of an education system consists of the legislature, guidelines, funding agencies, prospective students and news media. The environment of a business organization compromises the vendors, competitors, rules and regulations of the country in which it is functioning and the prospective customers. A system has to interact and exchange data, information etc. with it's environment.

A system takes input from it's environment in order to function and returns output to it's environment as a result of it's functioning. For example, our body system takes in food, oxygen and water as input and gives energy as output.



Elements of a system

A simple way of looking at a system is:

1. Input
2. Process
3. Output

A system's objectives are expressed in terms of the outputs it needs to produce. It feeds inputs, which are processed to generate the outputs.

The input are the data, i.e raw facts which are processed while the output i.e information are the outcome of the process. In addition to the above components, two more components play an important role. These are:

1. Control
2. Feedback


Control:

A system is guided by the control which means each system should have the element control, which makes the system to operate within tolerable performance levels. For example the normal temperature of the human body is 98.5 degrees Fahrenheit. When there is a slight deviation in this temperature there is imbalance in the health condition. If this is a continuous phenomenon there is possibility of risk to life.

 The above example demonstrates the importance of control in a health system. The acceptable levels of performance are called standards against which the actual performances are to be compared.

Control of the system is the decision maker that controls the activities of accepting input, processing and producing the output.



Feedback:

Feedback is information on how well a system is performing and it is essential for systems modifications.

System may use feedback for control. Th information generated by comparing results with acceptable level of performance (standard) and informing the control elements of the difference is termed as feedback.

Every system uses a basic control model consisting of:

1. A standard for acceptable performance.
2. A method of measuring actual performance.
3. A means for comparing actual performance against standard.
4. A method for feedback.

In feedback control, the output is fed back to input and/or to the control. The feeding back of he output allows it to be measured against some standards and making adjustments in the processing accordingly.

Real life business sub systems

In everyday life, we come across a number of systems such as the transportation system, telephone system, accounting system, production system, business system, computer system etc. A system may consist of interrelated departments or functions which are called sub systems. Each system can be a sub system of a larger system. For example business system may have the following sub systems:

1. Production
2. Sales and Marketing
3. Personnel
4. Material
5. Finance

Each of the above sub systems has limited use as  single independent unit. Only when these sub systems are properly coordinated, the larger system can function effectively and properly.

Common business applications are concerned with the various functions that business needs to perform. Major areas of such applications are finance, purchases, sales and marketing, stocks, production, internal administration and payroll etc.



1. Production

The goal of production management is to optimally deploy human resources, machines and materials to maximize production of goods by the organization. Production units have a limited number of resources available, for example machines. It is important to schedule jobs to be done among these available machines to ensure that all required jobs get done in the required time with available resources. Production management systems are mainly used for this purpose.



2. Sales and Marketing

The goal of this sub system is to maximize sales and ensure customer satisfaction. The sales department may use an order processing system to keep track of the orders. An order processing system helps in handling orders and keeping track of the orders received and their status. It can be used to generate the bills for orders dispatched, or to view the order yet to be processed or generate a report on pending bills etc.

There may be a sales management system which can properly analyze sales data by category such as by region, product, sales person etc. It can also be used for computing and distributing dealers' and salespersons' commissions.

Marketing Systems are also an important type of business application. These systems maintain a marketing database and are also used to direct the marketing effort. It may also be used for marketing forecasts.



3. Personnel

The major goal of Personnel management is to make best use of the available human resources in the organization. Manpower is an important resource and personnel systems are used to keep track of this resource. Skills databases are maintained where data on each employee is maintained, with details like qualifications, training, experience, interests, etc. For allocating manpower to any activity, the skills database may be checked to obtain the list of suitable persons and check their availability. These systems also keep track of current work allocations and of the time when a person will be released from current allocation.

Training databases are used to keep track of training courses available, faculty to be employed for each, which courses have been conducted and who have attended it. This is useful in scheduling and conducting training courses and for interfacing with skills database.

Administrative functions like keeping track of leave records, or handling other related functions like payroll and provident funds are also done using computer systems. Payroll systems compute and generate the pay slips, pay register, and related reports like the provident fund report etc.




4. Material

The main goal of Materials sub system is to get readily available materials needed by the organization and to keep optimal level of stocks of items. A common system used is the inventory system which is used to generate reports like the lists of items, stock in hand for each item, item on order from a particular vendor, vendor database etc.




5. Finance

The main goal of Finance sub system is to ensure financial viability of the organization, enforce financial discipline and plan and monitor the financial budget. A typical and commonly found business application is financial accounting. The financial accounting system is used for all the accounting needs. The chart of accounts is set up and all the financial transactions are entered into it regularly. The system is used for generation of various financial books and ledgers and reports like cash book, bank book, sales register, purchase register, journal ledgers and sub ledgers, trial balance, profit and loss statement, accounts payable, accounts receivable, balance sheet and schedules etc.

The Accounts Payable sub system keep track of payments that need to be made. When any business concern buys materials from suppliers on credit , it owes them money. The account payable cycle starts with the initiation of the purchase order, followed by receipt of goods and ends with the dispatch of the cheques to the supplier. Handling the full purchase cycle, along with printing of purchase orders and keeping track of what is received and what is pending , is also often handled as a system by itself, the purchase order system. Such a system also maintains a supplier database.

Another important sub system in accounting is the Accounting Receivable sub systems. Most companies extend credit to their customers. This necessitates keeping track of the accounts owed to it and following up on the receivables. Improper follow up may result in delayed or even missed receipts and severely affect credit sales. This sub system's task is to prepare bills and report the receivables for follow up.

Definition and concepts of a System

We come across the word system almost everyday. We all have had our training in the educational system, our body is a biological system, we are governed by the political system and as consumers or sellers we are bound to the economical system. But what does actually the word "system" mean? The word "system" is derived from the Greek word "systema". It is an organized combination of resources working together to convert inputs to useful outputs. In other words, a System can be defined as an organized grouping of interdependent functioning units or components, linked together according to a plan, to achieve a specific objective.

In the broadest sense a System is simply a set of components that interact to accomplish some goal. For example, we experience physical sensation by means of complex nervous system. Nervous system is a set of parts including our brain, spinal cord, nerves and special sensitive cells under our skin that work together to make us feel hot, cold, itchy and so on.

Doing business is also a system with it's components being marketing, manufacture, sales, research, shipping, accounting and personnel. All these components work together to create a profit that benefits the business organization. Each of these components may be by itself a system. The accounting department, for example, may consist of accounts payable, accounts receivable, billing, auditing and so on.

Every business system depends on more or less abstract entity called an Information System. The Information System is a means by which data/ information from one person or department to another can pass. Information System serves all the systems of a business, linking the different components in such a way that they effectively work towards the same purpose, namely making business organization to earn more profit.



Characteristics of a System:

All systems exhibit some common characteristics.

                                                 

                                           

                                              An illustration of a System

These are as follows:

1. All systems have predetermined objectives. For example, the education system has the objective of converting our young brain into qualified civilized mind, and our biological system has the objective of converting the food, oxygen, water and other inputs into life supporting elements.

2. All systems consists of interrelated and interdependent elements or components. For example, our biological system contains bones, organs and different biochemicals. Similarly, a business system consists of organizational structures, people and other equipment working together to earn profit.

3. A system can further be divided into "Sub Systems", each one of which contains it's own interacting elements. For example, a business system can be sub divided into production , marketing, accounting and finance Sub Systems.

4. The Sub Systems can be further sub divided. For example, accounting sub system contains sub system of inventory control, payroll, accounts receivable and accounts payable.

5. Different components in a system depend on one another to perform their functions. For example, one component may need the input from another component to be able to perform it's function. This characteristics is called interdependence. The Sub Systems of a system are also interdependent. Interdependence among Sub Systems means the input or functioning of one Sub System depends on the output of another Sub System. No Sub System an function in isolation, it depends on other Sub Systems for it's inputs.

6. The way each component of a System functions with the other components of a System is called Interaction. The different Sub Systems of  a System interact with each other to achieve the objective of the System. In a business system, for example, marketing sub system must interact with production sub system and payroll sub system may interact with personnel sub system.

7. Interrelationships and Interdependence must exist among the components. This is referred to as Integration. It is said for a System that the whole is greater than the sum of the parts i.e the components of a System work together to produce an effect which is greater than the sum of the effects of it's components taken separately. The work done by the individual Sub Systems is integrated to achieve the central goal of the System. The goal of individual Sub Systems is of lower priority than the goal of the System as a whole.

Manual and automated systems

The word system does not imply automation. Systems may be manual or automated. Data may be processed manually or by using computers. We use computers as tools to process data because they are powerful and suitable for such a purpose and the underlying concepts of data processing remain the same.

Manual systems use  human beings as the processors. Human beings are valuable processors because human beings can think, analyze and learn. They have the capacity to put together all the information they have and draw inferences. Human beings are irreplaceable processors because of their ability to accept input data and process it based on prior knowledge and experience. Human beings can take decisions based on information.

Human beings have the following disadvantages as information processors:

1. They get tired easily.
    Human beings cannot work for sustained hours without making mistakes.

2. The capacity to accept input is limited.
    Human beings cannot accept input from too many sources at the same time and their speed for             accepting input is low.

3. Even if they know exactly what is to be done, they may make mistakes. Their work becomes               unreliable due to long hours of working.

4. Even under the most ideal working situations, the speed of human being is insufficient for                   processing large amounts of data.

Because of the above limitations, there is need to supplement human beings as information processors, or even replace them at places.

Over the centuries, machines of various types have been invented and used to help out human beings. Machines have been used for performing simple and repetitive tasks which human beings find boring and tiring. Machines are used for performing many activities such as making things or for processing data. Some old means of using simple automation for information processing are abacus, cardboard multiplication calculator, Blaise Pascal's adding machine and tabulating machine etc. Using such devices simplify human work and cuts down repetition, while performing the tasks which are not possible to be done by the humans with such speed and accuracy.

Later, mechanical aids have been supplemented with or replaced by electric and electronic machines. Mechanical devices are slower and bulkier than electronic devices and are subject to mechanical stresses, wear and tear. Electric/ electronic machines use the principles of electrical circuitry and electronics to accept inputs, process them and perform actions or give outputs.

The most popular electronic machine used today for systems is the computer. Whether we use an Optical Mark Reader (OMR) for checking objective type of question papers of a competition or the bank staff uses a machine with a MICR to process written cheques, all these tasks use computers and the various input devices available for use with computers.

Automated systems use computers or microprocessors for their functioning. For storing and processing large volume of data , a computer is used and has many applications like generating electricity bills and phone bills, processing cheques, scientific research and much more.

Whether manual or automated, the basic concept for data processing remains the same:

1. There is some input to feed.
2. The processor knows what to do with the supplied input.
3. It applies the knowledge to process the input.
4. After processing of input the output is produced.

Computers made it possible to carry out processing which would have been either too cumbersome or too time consuming or impossible to do manually.

Programming terminology

Importance of Operating Systems in programming

Hardware of a computer system looks somewhat like what is shown in the figure below:

In most installations there is even larger dollar investment in software than in hardware. Software is a collection of programs or data that are used to perform certain tasks. A program is a sequence of instructions. Programs, sometimes loosely called "code", are places into memory and interpreted (executed) by a processor. While not in use, programs are often stored in some secondary storage device, such as a disk, drum, or a tape.

A system may have "prepackaged" programs available to users, e.g in routines to perform square roots, searching, sorting, compiling, assembling and translating. How are these prepackaged routines managed and who keeps track of where they are? Once again it is the operating system.

A lone user facing a formidable system such as the one shown in the figure above might become discouraged. Suppose this lone user is a student from a well known Harvard University who has just learned to program the CPU, and wants to execute a program to add 49 to numbers read from punched cards. How does he do it? Should he also learn how to program the I/O processors? This is obviously too much to expect from a novice. Fortunately, the operating system usually provides routines for the I/O processors and in general the operating system assists in the construction and execution of user programs.

The operating system provides an environment in which particular software packages can execute. An example is a compiler, which is a program that translates a source program, e.g a FORTRAN program, in a high level language to a corresponding machine language program or object program. Most modern compilers interact closely with the operating system both during the compilation of source programs and the execution of the object code. During compilation the compiler needs the operating system to read the source program, print it's listing and punch it's output decks. At execution time the object code produced by compilers such as PL/I requires a sophisticated "run time" environment. ALLOCATE and FREE statements require the assistance of the operating system's memory management facilities. PL/I ON CONDITION need interrupt handlers provided by the operating systems. 

Operating system terminology

Working inside operating system:

A user submits his job to the operating system. A user is anybody that desires work to be done by a computer system. A job is the collection of activities needed to do the work required. A job may be divided into several steps which are collectively called Job steps. Job steps are units of work that must be done sequentially, for example, the three steps of compile, load and execute. Once the operating system accepts a users job , it may create several processes.  A process, or more commonly called a task is a computation that may be done concurrently with other computations. The figure below depicts the relationship between a user, a job, a process and the address space.

Another view of a process is the locus of points of a processor executing a collection of programs. The collection of programs and data that are accessed in a process forms an address space. The figure above depicts two sample address spaces, one for an I/O process and the other for a CPU process.

Note that the actual code for the file system portion of the operating system may be the same for both address spaces. If code is to be shared in this manner, it must be pure, or locks must be set to prevent race conditions. Pure code, sometimes called Reentrant code, is a code that does not modify itself.

The operating system must map the address spaces of processes into physical memory. this task my be assisted by special hardware, for example a paged system, or it may be performed primarily by software, for example a swapping system.

Multi programming is a term given to a system that may be several processes in states of execution at the same time. A process is in a state of execution if the computation has been started but has not been completed or terminated (error completion). A thing to note is that a process may be in a state of execution and not be executing which means some intermediate results have been computed but the processor is not currently working on this process.

Another feature found in most contemporary computer systems is special hardware and instructions used by the operating system. These instructions which are usually not available to the ordinary user, are commonly called Privileged Instructions.  Most contemporary computers have at least two states of execution- a problem state (user state, slave state) and a supervisor state (executive state, master state). In the supervisor state the processor can correctly execute privileged instructions. Obviously one privileged instruction is to change the state of the machine. Others may start the I/O processors , change the protection rights of parts of memory, or change the interrupt status of the machine.

Protection hardware is often used to control access to parts of memory. For example, the operating system may deem certain parts of memory to be not writable. That means a user program may be prohibited from altering the operating system programs.

Interrupt hardware allows the operating system to coordinate operations going on simultaneously. It also allows the non sequential flow of a program. An interrupt is a mechanism by which a processor is forced to take note of an event, in much the same way as we may be interrupted from reading this blog by a friend or relative. Hardware may exist to mask certain interrupts.

We should note here that many computer configurations do not have all these special instructions or hardware. The IBM, for example, has no general masking facilities. On the other hand, many large systems have even more elaborate hardware facilities than referred to here, to assist the operating system, especially the I/O processes. What limitations does the lack of these facilities place on the user or purchaser or what does a user gain from these special features, is a matter for the coming blogs to answer.