Information Systems – 2021

Almost all business programs require students to take a course in information systems. But what does that word actually mean? An information system is a network of connected and coordinated components that work together to transform input into information.

Information systems are used by businesses and other organizations to carry out and manage operations, connect with consumers and suppliers, and compete in the marketplace. Interorganizational supply chains and electronic markets are managed using information systems. Corporations, for example, utilize information systems to handle financial records, manage human resources, and reach out to potential consumers through online marketing.

Information Systems: Definitions

The word “information system” has been defined from two perspectives: one pertaining to its purpose and the other to its structure. An information system, from a functional standpoint, is a technologically developed medium for recording, storing, and distributing language expressions, as well as enabling inference making. An information system is a combination of people, processes, data, models, technology, and partially codified language that forms a coherent structure that supports some organizational goal or function.

The functional definition has the advantage of focusing on what real users do with the information system while utilizing it from a conceptual standpoint. They collaborate with specialists to address a specific problem. The structural definition states unequivocally that IS are socio-technical systems, i.e., systems composed of persons, behavioral rules, and conceptual and technological artifacts.

Technically, an information system is a collection of interconnected components that gather (or retrieve), process, store, and disseminate information to enable decision-making and control in an organization. Information systems may help managers and employees understand issues, visualize complicated subjects, and generate new products in addition to assisting with decision making, coordination, and control.

Computer-Based Information System

A computer-based information system (CBIS) is an information system that performs part or all of its intended activities using computer technology. A system of this type might be as simple as a personal computer and software. Alternatively, it might consist of several thousand computers of various sizes, as well as hundreds of printers, plotters, and other devices, as well as communication networks (wired and wireless) and databases. In most situations, an information system incorporates humans as well. The following are the fundamental components of information systems. Note that not every system includes all these components.

Components of information systems

Computer hardware and software, telecommunications, databases and data warehouses, human resources, and processes are the primary components of information systems. Information technology (IT) is comprised of hardware, software, and telecommunications, and it is increasingly embedded in the operations and administration of businesses.

Computer hardware

Computers are now owned or leased by even the smallest businesses and many families throughout the world. People may have numerous computers in the form of smartphones, tablets, and other wearable gadgets. Large enterprises frequently use distributed computer systems, which range from powerful parallel-processing servers in data centers to widely scattered personal computers and mobile devices that are incorporated into organizational information systems. Sensors are increasingly being distributed throughout the physical and biological environments to collect data and, in many cases, to control devices known as actuators.

The hardware of information systems is comprised of these components, as well as auxiliary equipment such as magnetic or solid-state storage disks, input-output devices, and telecommunications gear. Hardware costs have continuously and rapidly reduced while processing speed and storage capacity have dramatically improved. Moore’s law has been driving this evolution: the power of the microprocessors at the heart of computer devices has been doubling every 18 to 24 months. However, designers are concerned about the usage of electricity in hardware and its environmental impact. Computer and storage services are increasingly being supplied from the cloud—from shared infrastructure.

Computer software

Computer software is divided into two categories: system software and application software. The operating system is the most important piece of system software. It controls the hardware, data and program files, and other system resources, as well as providing a way for the user to operate the computer, often through a graphical user interface (GUI). Application software is a type of program that is meant to perform specific activities for users. Smartphone applications have become a popular way for people to access information systems.

Other examples include general-purpose application suites including spreadsheet and word-processing programs, as well as “vertical” applications that service a specialized business segment, such as one that plans, routes, and records package deliveries for an overnight carrier. Larger organizations utilize licensed programs built and maintained by specialist software businesses, modifying them to fit their unique needs, and build additional applications in-house or through outsourcing. Companies may also utilize cloud-based applications supplied as software-as-a-service (SaaS) over the Internet. Proprietary software, which is available from and supported by its sellers, is being challenged by open-source software, which is freely available on the Web for use and modification under a license that ensures its future availability.


Telecommunications are used to link, or network, computer systems as well as portable and wearable devices and to convey data. Connections are made via either wired or wireless media. Coaxial cable and fiber optics are examples of wired technology. Mobile computing is supported by wireless technologies, which are primarily based on the transmission of microwaves and radio waves.

With computing devices integrated into a wide range of physical items, pervasive information systems have emerged. Sensors such as radio frequency identification devices (RFIDs), for example, can be connected to items moving through the supply chain to track their position and check their condition. Wireless sensor networks that are linked to the Internet can generate huge volumes of data that can be utilized to boost productivity or monitor the environment.

Databases and data warehouses

Many information systems are primarily mechanisms for delivering data from databases. A database is a collection of interconnected data that is arranged in such a way that individual records or groups of information may be accessed to fulfill certain criteria. Employee records and product catalogs are common examples of databases. Databases help an organization’s operations and management activities. Data warehouses store archive data that has been gathered over time and maybe mined for information in order to create and sell new goods, better service existing consumers, or reach out to prospective new customers.

Anyone who has ever used a credit card to make a transaction, whether in person, by mail, or online, is included in such data collectors. Massive gathering and processing of quantitative, or structured, data, as well as textual material frequently acquired on the Internet, has evolved into a wide endeavor known as “big data.” Decisions based on facts revealed by big data can yield several benefits.

Human resources and procedures

Qualified individuals are an essential component of any information system. Development and operations managers, business analysts, systems analysts and designers, database administrators, programmers, computer security professionals, and computer operators are examples of technical people. Furthermore, all employees in a company must be taught to properly exploit the possibilities of information technology. As a result of their usage of the Internet, billions of individuals throughout the world are learning about information systems.

The documentation of an information system includes procedures for utilizing, managing, and maintaining it. To execute a payroll program, for example, processes must be set, including when to run it, who is permitted to run it, and who has access to the output. Data centers are increasingly being administered automatically as part of the autonomous computing project, with processes incorporated in the software that operates such centers.

Classification of Information System

Any particular organization’s information system may be categorized based on how the information is used. As a result, an organization’s information system may be split into two types: operations support systems and management support systems.

Information Systems - 2021

Operations support system

The end user enters data into an organization, which is then processed to produce information products, such as reports, which are used by internal and/or external users. This type of system is known as an operation support system.

The operation support system’s aim is to simplify business transactions, regulate production, assist internal and external communication, and update the organization’s central database. The operation support system is further subdivided into transaction processing, processing control, and corporate collaboration systems.

Transaction Processing System (TPS)

There are several sorts of transactions that occur among departments in a manufacturing company. Sales, Account, Finance, Plant, Engineering, Human Resources, and Marketing are examples of typical organizational departments. Sales orders, sales returns, cash receipts, credit sales; credit slips, material accounting, inventory management, depreciation accounting, and so on.

Batch transaction processing, single transaction processing, and real-time transaction processing are the three types of transactions.

Information Systems - 2021

Process Control System

Certain choices in a manufacturing organization are made by a computer system with no human interaction. In this sort of system, important information is sent into the system in real-time, allowing process control. Process control systems are the name given to this type of system.

Enterprise Collaboration System

In recent years, there has been a greater emphasis placed on team effort or collaboration across different functional teams. An enterprise collaboration system is a system that facilitates collaborative work by enhancing communication and data exchange.

Management Support System

To make an organizational choice, managers need accurate information in a certain manner. A management support system is a system that assists managers in making more informed decisions.

Management information systems, decision support systems, expert systems, and accounting information systems are the four main types of management support systems.

A management information system offers information to managers, therefore easing routine decision-making. A decision support system offers information to managers to aid in the resolution of specific issues.

Difference between Computers and Information Systems

Computers are an essential component of every information system because they enable effective and efficient data processing. An IS, on the other hand, entails far more than simply computers. The successful application of an IS necessitates a knowledge of the company and the environment that the IS supports. For example, in order to create an IS that supports transactions on the New York Stock Exchange, it is required to understand the methods for buying and selling stocks, bonds, options, and so on, as well as all relevant regulatory laws.

It is therefore not adequate to just study about computers while learning about information systems. Computers are simply one component of a much larger system that must be built, managed, and maintained. A city’s public transportation system serves as an analogy. Buses are an important component of the system, but more is required. Designing bus routes, stops, schedules, and so on necessitates a thorough grasp of consumer demand, traffic patterns, local rules, safety standards, and so on. Computers, like buses, are merely one part of a larger system.

Importance of Information Systems to Businesses Today

The relevance of information systems (IS) has grown rapidly, and most organizations have been compelled to implement it in order to maintain their competitive advantage. Nobody nowadays can imagine running a firm without an excellent information system. The implementation of an information system into a business may provide various benefits and aid in the way the organization handles the external and internal procedures that it confronts on a daily basis, as well as decision making for the future. Some of the advantages of an information system are as follows:

Information Systems - 2021

New Products and Services

Any organization seeking to enhance and ensure its future must adopt a broader viewpoint via the use of a well-designed and integrated information system. The information system (IS) facilitates the analysis of independent processes such as information in order to generate useful goods or services and coordinate work operations. As a result, an IS may provide a competitive edge to a firm by studying how it produces, manufactures, and sells its goods or services. This indicates that the emphasis will be on the primary objective ahead.

Information Storage

Every business needs records of its operations in order to identify the source of issues and implement appropriate remedies. When it comes to preserving operational data, communication records, papers, and revision histories, information systems come in useful. Manual data storage will waste a lot of time for the organization, especially when it comes to searching for certain data. A high-quality information system saves data in a comprehensive and complex database, making it easy to discover. With this information, a corporation may assess how certain activities impacted the business and produce cost estimates and predictions.

Easier Decision Making

Without an information system, a company’s decision-making process might consume a significant amount of time and energy. However, using IS makes it easy to give all of the essential information and model the results, which may help you make better judgments. The management team may utilize the information system to choose the best course of action and to complete the duties. When there are multiple viable options, the information system may be utilized to simulate several scenarios by computing important indicators such as costs, sales, and profits. In this manner, you may choose the one that produces the best results.

Behavioral Change

With an information system, employers and workers may interact more quickly and efficiently. While emails are rapid and effective, using information systems is more efficient since papers are saved in folders that employees can share and access.

This means that knowledge is sent down from management to lower-level staff and vice versa. Furthermore, lower-level employees are educated and participate in key decision-making, which minimizes the need for middle managers. Employees who are personally involved in decision-making are motivated and committed to their jobs.

Information Systems - 2021

Considerations for Information System Implementation

Implementing information systems within a company can be costly. Implementation costs include not just system installation but also staff training sessions. Furthermore, employees may perceive the deployment of information systems as an unjustified shift and, as a result, may oppose it. Change resistance may stymie corporate operations and lead to staff attrition.

Information Systems - 2021

Companies should have leadership in place to analyze the appropriateness of the choice to implement an information system, manage the firm through the transition period, and measure the expense of information systems against the possible advantages.

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