Information System
An information system (IS) is an organized combination of people, hardware, software,
communications networks, data resources, and policies and procedures that stores, retrieves,
transforms, and disseminates information in an organization. People rely on modern information
systems to communicate with one another using a variety of physical devices (hardware) ,
information processing instructions and procedures (software) , communications channels
(networks) , and stored data (data resources).
Some of the following examples of information systems:
Smoke signals for communication
Card catalogs in a library
Your book bag, day planner, notebooks, and file folders
The cash register at your favorite fast-food restaurant
A paper-based accounting ledger
The Fundamental Roles of IS in Business
a) Support of Business Processes and Operations
As a consumer, you regularly encounter information systems that support the business
processes and operations at the many retail stores where you shop. For example, most
retail stores now use computer-based information systems to help their employees record
customer purchases, keep track of inventory, pay employees, buy new merchandise, and
evaluate sales trends. Store operations would grind to a halt without the support of such
information systems.
b) Support of Business Decision Making
Information systems also help store managers and other business professionals make
better decisions. For example, decisions about what lines of merchandise need to be
added or discontinued and what kind of investments they require are typically made after
an analysis provided by computer-based information systems. This function not only
supports the decision making of store managers, buyers, and others, but also helps them
look for ways to gain an advantage over other retailers in the competition for customers.
c) Support of Strategies for Competitive Advantage
Gaining a strategic advantage over competitors requires the innovative application of
information technologies. For example, store management might make a decision to
install touch-screen kiosks in all stores, with links to the e-commerce Web site for online
shopping. This offering might attract new customers and build customer loyalty because
of the ease of shopping and buying merchandise provided by such information systems.
Thus, strategic information systems can help provide products and services that give a
business a comparative advantage over its competitors.
Types of Information System
Conceptually, the applications of information systems that are implemented in today’s business
world can be classified in several different ways. For example, several types of information
systems can be classified as either operations or management information systems.
1. Operations support systems produce a variety of information products for internal and
external use. The role of a business firm’s operations support systems is to process business
transactions, control industrial processes, support enterprise communications and collaborations,
and update corporate databases efficiently.
Transaction processing systems are important examples of operations support systems that
record and process the data resulting from business transactions. They process transactions in
two basic ways.
Batch processing, transactions data are accumulated over a period of time and processed
periodically.
Real-time (or online) processing, data are processed immediately after a transaction
occurs. For example, point-of-sale (POS) systems at many retail stores use electronic
cash register terminals to capture and transmit sales data electronically over
telecommunications links to regional computer centers for immediate (real-time) or
nightly (batch) processing.
Process control systems monitor and control physical processes. For example, a petroleum
refinery uses electronic sensors linked to computers to monitor chemical processes continually
and make instant (real-time) adjustments that control the refinery process.
Enterprise collaboration systems enhance team and workgroup communications and
productivity and include applications that are sometimes called office automation systems . For
example, knowledge workers in a project team may use e-mail to send and receive e-messages or
use videoconferencing to hold electronic meetings to coordinate their activities.
2. Management Support System
When information system applications focus on providing information and support for effective
decision making by managers, they are called management support systems.
Management information systems (MIS) provide information in the form of reports and
displays to managers and many business professionals. For example, sales managers may use
their networked computers and Web browsers to receive instantaneous displays about the sales
results of their products and access their corporate intranet for daily sales analysis reports that
evaluate sales made by each salesperson.
Decision support systems (DSS) give direct computer support to managers during the decision-
making process. For example, an advertising manager may use a DSS to perform a what-if
analysis as part of the decision to determine how to spend advertising dollars. A production
manager may use a DSS to decide how much product to manufacture, based on the expected
sales associated with a future promotion and the location and availability of the raw materials
necessary to manufacture the product.
Executive information systems (EIS) provide critical information from a wide variety of
internal and external sources in easy-to-use displays to executives and managers. For example,
top executives may use touch-screen terminals to view instantly text and graphics displays that
highlight key areas of organizational and competitive performance
Several other categories of information systems can support either operations or management
applications.
For example, expert systems can provide expert advice for operational chores like equipment
diagnostics or managerial decisions such as loan portfolio management.
Knowledge management systems are knowledge-based information systems that support the
creation, organization, and dissemination of business knowledge to employees and managers
throughout a company.
Information systems that focus on operational and managerial applications in support of basic
business functions such as accounting or marketing are known as functional business systems.
Strategic information systems apply information technology to a firm’s products, services, or
business processes to help it gain a strategic advantage over its competitors.
Thus, most information systems are designed to produce information and support decision
making for various levels of management and business functions, as well as perform record-
keeping and transaction-processing chores.
Career
System
A system is defined as a set of interrelated components, with a clearly defined boundary,
working together to achieve a common set of objectives by accepting inputs and producing
outputs in an organized transformation process .
Systems have three basic functions:
• Input involves capturing and assembling elements that enter the system to be processed. For
example, raw materials, energy, data, and human effort must be secured and organized for
processing.
• Processing involves transformation processes that convert input into output. Examples are
manufacturing processes, the human breathing process, or mathematical calculations.
• Output involves transferring elements that have been produced by a transformation process to
their ultimate destination. For example, finished products, human services, and management
information must be transmitted to their human users.
Example: A manufacturing system accepts raw materials as input and produces finished goods
as output. An information system is a system that accepts resources (data) as input and processes
them into products (information) as output. A business organization is a system in which human
and economic resources are transformed by various business processes into goods and services.
The system concept becomes even more useful by including two additional elements: feedback
and control. A system with feedback and control functions is sometimes called a cybernetic
system, that is, a self-monitoring, self-regulating system.
Feedback is data about the performance of a system. For example, data about sales performance
are feedback to a sales manager. Data about the speed, altitude, attitude, and direction of an
aircraft are feedback to the aircraft’s pilot or autopilot.
Control involves monitoring and evaluating feedback to determine whether a system is moving
toward the achievement of its goal. The control function then makes the necessary adjustments to
a system’s input and processing components to ensure that it produces proper output. For
example, a sales manager exercises control when reassigning salespersons to new sales territories
after evaluating feedback about their sales performance.
Example:
Components of Information System
An information system depends on the resources of people (end users and IS specialists),
hardware (machines and media), software (programs and procedures), data (data and knowledge
bases), and networks (communications media and network support) to perform input, processing,
output, storage, and control activities that transform data resources into information products.
This information system model highlights the relationships among the components and activities
of information systems. It also provides a framework that emphasizes four major concepts that
can be applied to all types of information systems:
People, hardware, software, data, and networks are the five basic resources of
information systems.
People resources include end users and ARE specialists, hardware resources consist of
machines and media, software resources include both programs and procedures, data
resources include data and knowledge bases, and network resources include
communications media and networks.
1. People
People are the essential ingredient for the successful operation of all information systems. These
people resources include end users and ARE specialists.
End users (also called users or clients) are people who use an information system or the
information it produces. They can be customers, salespersons, engineers, clerks,
accountants, or managers and are found at all levels of an organization. In fact, most of us
are information system end users.
IS specialists are people who develop and operate information systems. They include
systems analysts, software developers, system operators, and other managerial, technical,
and clerical IS personnel.
2. Hardware
The concept of hardware resources includes all physical devices and materials used in
information processing. Specifically, it includes not only machines, such as computers and other
equipment, but also all data media, that is, tangible objects on which data are recorded, from
sheets of paper to magnetic or optical disks. Examples of hardware in computer-based
information systems are:
Computer systems, which consist of central processing units containing microprocessors
Examples, are handheld, laptop, tablet, or desktop microcomputer systems, midrange
computer systems, and large mainframe computer systems.
Computer peripherals , which are devices such as a keyboard, electronic mouse,
trackball, or stylus for the input of data and commands, a video screen or printer for the
output of information, and magnetic or optical disk drives for the storage of data
resources.
3. Software
The concept of software resources includes all sets of information processing instructions.
Software includes sets of operating instructions called programs , which direct and control
computer hardware, and the sets of information processing instructions called procedures that
people need.
The following are examples of software resources:
System software: such as an operating system program, which controls and supports the
operations of a computer system? Microsoft Windows and UNIX are two examples of
popular computer operating systems.
Application software: these are programs that direct processing for a particular use of
computers by end users. Examples are sales analysis, payroll, and word processing
programs.
Procedures: which are operating instructions for the people who will use an information
system. Examples are instructions for filling out a paper form or using a software
package.
4. Data
Data versus Information
Data are raw facts or observations, typically about physical phenomena or business transactions.
For example, sale of an automobile would generate a lot of data describing those events. More
specifically, data are objective measurements of the attributes (the characteristics) of entities
(e.g., people, places, things, events).
Example: Business transactions, such as buying a car or an airline ticket, can produce a lot of
data. Just think of the hundreds of facts needed to describe the characteristics of the car you
want and its financing or the intricate details for even the simplest airline reservation. People
often use the terms data and information interchangeably. However, it is better to view data as
raw material resources that are processed into finished information products.
5. Information
Information is the data that have been converted into a meaningful and useful context for
specific end users. Thus, information are usually subjected to a value-added process (data
processing or information processing) during which (1) their form is aggregated, manipulated,
and organized; (2) their content is analyzed and evaluated; and (3) they are placed in a proper
context for a human user.
Example: Names, quantities, and dollar amounts recorded on sales forms represent data about
sales transactions. However, a sales manager may not regard these as information. Only after
such facts are properly organized and manipulated can meaningful sales information be furnished
and specify, for example, the amount of sales by product type, sales territory, or salesperson.
6. Network
Networks consist of computers, communications processors, and other devices interconnected by
communications media and controlled by communications software. The concept of network
resources emphasizes that communications technologies and networks are fundamental resource
components of all information systems.
Network resources include:
Communications media: Examples include twisted-pair wire, coaxial and fiber optic
cables, and microwave, cellular, and satellite wireless technologies.
Network infrastructure: This generic category emphasizes that many hardware,
software, and data technologies are needed to support the operation and use of a
communications network. Examples include communications processors, such as
modems and inter-network processors, and communications control software, such as
network operating systems and Internet browser packages.
