M1 illustrate the information flow between different functional areas

Internal Information Flows

Information inside a business flows between departments, information can flow Upwards, Downwards or Across (Laterally).

If information flows upwards then the workers at the bottom level of the company will be providing data to higher levels such as the research department, this department will then turn sales data into information about how products are performing. It could also be lower departments providing reports and work to higher departments.

Downwards information flow will be higher departments giving information to lower departments. For example the Administration department giving employees working procedures manuals.

If information flows laterally across a business this is departments sharing information or employees inside a department sharing information with each other, such as ideas and reports, for example if an employee is unsure on what to do with a specific idea then they can contact other employees in the same department who deal with the same information as they do for guidance and assistance. This lateral information flow allows for information to be passed between employees in the same department, or between departments on the same hierarchical level.

Internal Flows to External Bodies

Businesses will give information to other businesses. The business will need to communicate with suppliers; the Purchasing department will give the businesses supplier information about stock they want to order. 

Information Flow Diagram

If a business deals with trading goods and services then they will have several information flows, an example below is the information flow inside the business and with an external body, it will show which departments communicate with each other and how this information flow links to the customer and external bodies.

For example in the diagram (above) you can see that all departments have an information line to the Administration department, this is the highest department. Information from the lower departments flow up to the Administration and information flows down from Administration. You can also see that there are information flows between departments, this is the Lateral information flow, departments will share and transfer information with each other. You can also see which departments have an information flow with the External Body (Supplier).

On the right diagram you can see that the Administration and Sales departments have an information flow, this flow would transfer information such as sales reports.

Strategic

This involves the long term plan for an organization, with a focus on the long term. It sets the goals for the organisation such as X number of new branches. It is effectively the end goal for the foreseeable future of an organisation.

Tactical

This involves the short term plan for an organization; it is aimed at a short time in the future, a year or two ahead of the present. It is used to set out how an organisation will achieve its Strategic goals.

For example deciding in which areas to open the new branches first, this decision should be based on research such as areas where a new branch would do well and not in an area that already has several similar organisations within the same industry. The aim of a Tactical plan is to help towards a Strategic plan.

Operational

This involves the immediate plan for an organization or branch of an organization; the timeframe for this would be from a week to several months, it could be something like increasing the sales of a all branches to raise profits or hiring X number of new employees to deal with increased demand in an individual branch. The aim of an Operational plan is to work towards the Tactical plan.

P5 identify the information systems used in a specified organisation

Transformation of data into information

The process of turning data into information starts with the collection of data, then storage, then processing, then retrieval, then presentation.

Collecting data starts by gathering data from where it’s generated such as measurements or available and makes sure it’s valid for use.

Storing data is done by putting the data on some form of storage media such as a server or a hard drive; it’s kept stored for long periods of time until it is used.

Processing data is done by taking data which is input and turning it into information ready to be presented as output.

Retrieving data is simply taking the information from the storage media.

Presentation is displaying the information in a format the user can understand such as text or graphics, a hard copy will also usually be printed.  

Types of information systems

Marketing Systems-Sales Performance

This was one of the first areas in IT to adopt information systems, it’s used to identify where business sales are going up and down. It’s also used to see how well one stores sales react to a promotion or special offer before applying it to any other stores. It’s also used to analyse the effect of product prises, profits/losses and rival competition.

Financial Systems-Costs and Investments

Information systems are needed to provide employees an easier way to manage income and revenue, but once in use can also be used to focus on costs and expenditure which expands the need for the information systems as they have a greater use.

They can be used to identify trends and patterns that affect the business or may have been affected by the businesses actions.

It can also be used to monitor and identify the effect of a financial investment, large purchase, new revenue or expenditure.

Human Resources (HR)-Staffing and Professional Development

Human Resources need information systems to aid them in the vast amount of analysis they need to do as part of their job. Information systems can aid human resources in deciding how many staff they need at certain times of the day depending on key times in the day. It helps to identify skill shortages, training needs and staff turnover.

Analysing the skills of staff can support the business in making decisions about promotions, training and career development opportunities.

Management Information Systems (MIS)-Decision Support

This system helps to make decisions, the input query and response is already pre-defined. This system is effective in supporting management asking repetitive questions, it helps to track, analyse and make decisions on the day-to-day running of the business. They’re simply systems that have all complexity hidden away from the user to provide a comfortable environment. Answers and analysis are often presented as graphs and tables for ease of use but can be exporting to other office applications. The system can only provide effective support if the data entered into it is accurate and consistent.

Features

An MIS is used as a decision support system where the input query and response is always pre-determined; it’s used to ask the same question repeatedly but about different subjects. For example listing the top 5 stores with the highest profit for the last month, this can then be compared to the previous month which would highlight flagship stores.

Benefits

An MIS can be easily used by senior management as any complexity is hidden meaning the MIS can be easily used. Answers are often presented in tables and graphics and can be imported into a spreadsheet. An MIS provides answers very quickly which saves time.

Effectiveness

For an MIS to be effective it must be as accurate as any other source of information, sustainable and available to use at any given time, must have consistent timelines so that all MIS systems operate effectively, must give the user confidence to use the MIS and trust the information it outputs, any faults found in the data, processes or systems must be fixed and the customer must be reassured that the fault is fixed and won’t occur again to keep customer confidenc

P4 describe the features and functions of information systems

Features of information systems
Data	Data needs to be inputted into an information system so it can be managed and processed. Once processed the end product is information, this is the output. Data is generated by all departments and functions of a business but also received via external sources. Data must be accurate or else the output information will be wrong.
People	People are involved in obtaining data and processing it to create information for specific purposes relevant to the business. Staff need to have the correct training and skills to get the most out of information systems and make them effective employees.
Hardware	The hardware used in information systems must be capable of the software used in the business as well as handle the mass amount of data and information processed through it and stored on it. The hardware must be up to date to enable fast capture, storage and use of data.
Software	Software used by the business and its staff must have the correct features and functionality needed to produce and use information created by the business. It must also have the correct features to enable staff to correctly and efficiently do their job such as analysing and processing data and reports.
Telecommunications	Any output information produced will need to be shared around the business as it will be used for different purposes. Telecommunications need to be effective to ensure that data and information is transferred and distributed to the correct destinations after processing.
Functions of information systems	Information systems perform functions such as gathering input data, storing it, processing it and then producing output information. They also control this information flow as well as the feedback loop. There are also open and closed systems.
Input	Input with an information system has 2 different sections. Detailed data that is stored and processed creates the output. The user must specify to the system what sort of analysis they want the system to do.
Storage	Data should be stored at the most detailed level possible. IT departments may choose to store data of various summaries and should regularly backup data to avoid losing important data due to errors, these backups should also be stored in a geographically separate location to avoid a disaster (fire or flood etc…) affecting both the original data storage and the backup data storage.
Processing	This process is the function that transforms data into information.  Simple processing would be simply adding up the number of items sold by the business by a variable, such as the store location, the product or the time or date. Complex processing is the function of a computer performing calculations and making assumptions about any missing data to create the information from the data available.
Output	Output can be in 2 separate forms, graphical and textual. Graphical is often used to view information on a larger scale and presented as charts, graphs, diagrams and pictures. Textual is used to view the information on a smaller and more detailed scale, to do this it’s presented as charters, text or numbers.
Control and feedback loops	Control/Feedback loop is what happens to output once it has been processed and produced. The system repeats the same sequence depending on the output of the last loop, it has an effect on the input of the next data to information loop.
Closed and open systems	Information systems can be defined as open or closed systems, the difference being how they reacts and interacts to their environments. Open systems fully interact with its environment and can handle unexpected events because it monitors the environment, meaning it can adapt the output depending on circumstances. Closed systems are vastly separated and secluded from their environment meaning they don’t interact with it much. Any interaction will be planned and predicted beforehand or even as an automated process. It operates via triggers and acts according to events. They do not have an effect on external environments. An example of a closed system would be a payroll calculator that is automatic and is triggered by an event, such as payroll day.