In this 21Century, I believe Information Systems is indispensable for any business that wants a perfect structured and well coordinated business model in order to improve operational excellence, competitive advantage, and leverage market share.
Information Systems improve business processes by automating many steps in business processes that were formerly preformed manually. For instance generating an invoice or shipping order.
So, what is an Information System?
Information System can be defined technically as a set of interrelated components that collect (or retrieve), process, store , and distribute information to support decision making and control in an organization. (Laudon & Laudon, 12th ed, p47).
In addition, information systems also help managers and workers to analyse problems, visualise complex subjects, and create new products.
Information systems contain information about significant people, places, and things within the organisation.
Input, Processing, Output and Feedback are the activities of an information system .
Input captures or collects raw data from within the organisation or from its external environment.
Processing converts this raw input into a meaningful form.
Output transfers the processed information to the people/activities
Feedback is the output returned to appropriate organisation’s members to help them evaluate or correct the impute stage.
In order to achieve the benefits of information systems, it must be built with a clear understanding of the organization in which they will be used. Factors to consider when building information systems are:
- The environment in which the organisation must function
- The structure of the organization; hierarchy, specialization, routines, and business processes
- The organization’s culture and politics
- The type of organization and its style of leadership
- The principal interest groups affected by the system and the attitudes of workers who will be using the system
- The kind of task the , decisions, and business processes that the information system is designed to assist.
TYPES OF INFORMATION SYSTEMS
There are different kinds of information systems, because there are different interests, specialties, and levels in organizations, as the says goes “No single system can provide all the information an organization needs.
- Transaction Processing Systems (TPS)
- Management Information Systems (MIS)
- Decision Supporting Systems (DSS)
- Executive Supporting Systems. (ESS)
Transaction Processing Systems (TPS) are computerised systems that performs and records the daily routine transactions necessary to conduct businesses such as sales order entry, hotel reservations, payroll, employee record keeping, and shipping. It is designed to serve the Operational Level managers in order to track the activities and transactions of the organisation, such as sales, receipt, cash deposits, credit decisions, payroll, and the flow of material into the factory. For instance, the (TPS) for payroll processing keep track of money paid to employees, time sheet with the employee’s name, social security number, and hours of worked per week.
It also provide information for the other systems and business function, serves the middle managers to monitor the status of internal operations and firm’s relation with the external environment, the data creates reports of interest to management and government agencies.
Management Information Systems (MIS) provides Middle Managers with reports on the organization’s current performance and the information is used to monitor, control the business and predict future performance.
Decision Support Systems (DSS) this support non-routine decision making. They focuses on problem that are unique and rapidly changing for which procedure for arriving at solution may not be fully predefined. This rely heavily on modelling using mathematical or analytical models to perform what-if or other kinds of analysis. E.g, what happens if we raise product prices by 5%. They are designed for Middle Managers and the Executives.
Executive Support System (ESS) helps senior management (C-level managers) address non-routine decisions requiring judgement, evaluation, and insight, and also to focus on the really important performance information that affect the overall profitability and success of the firm. ESS present graphs and data from many sources through an interface that is easy for senior managers to use. ESS are designed to incorporate data about external events, such as tax laws or competitors. They also draw summarized information from internal MIS and DSS.
From a business perspective , information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers need to improve decision making, enhance organisational performance, and ultimately increase firm profitability.
Being able to analyse business processes gives me the understanding of how business actually works in a formal environment where information system is adopted. Information system makes it possible to manage all the information processes about customers, suppliers, employees, invoices, payment, and even your product and services and most helpful to managers in their roles to disseminate information , providing liaisons between organisational levels and allocating resources and also in making better decisions.
Kenneth C. Laudon. Jane P. Laudon. Managment Information System 12th ed