What is Information Systems? Need, Functions, Framework, CIS,

What is Information Systems?

Information systems (IS) is made up of two words information and system. Information is a collection of organised and processed data. On the other hand, a system is a procedure which takes input, processes the input and provides the output.IS is a procedure that is used to process data and provide useful information.

Basically, IS consists of numerous components such as network of hardware, software, and people to process data to retrieve information. This information helps in making effective decisions and managing various departments and operations of a business.

Figure shows the interrelationship of components in IS:

An information system collects its data from various sources which could be internal and external employees’ performance and opponents’ performance.

The data is either stored on paper or in electronic format. Critical calculations, logical analysis and other statistical methods are used to process data. After processing data, it is converted in information. The information retrieved is distributed to various end users to help them in their decision-making, problem-solving, strategy-forming, and controlling functions in an organization.

For example, consider the data regarding individual sales made by each sales executive in a particular month, the standard sales target for each sales executive, and trends in the sales market in that month. You can sort, classify, and analyze this data to retrieve information.

Using this information, you can perform an analysis of the sales trends for that time period, the difference between target and actual sales for individual executives, and aggregate sales based on teams. This data can also be used to make predictions of the following month’s sales and set targets for the subsequent month.


Evolution of Information System

Information system has evolved with time. This evolution in IS was necessary as the requirements of a business keep changing. There are certain trends in the business environment that made the evolution of IS possible.

The trends in the evolution of information systems in ascending order are as follows.

The table shows the evolution of the information system:

Time PeriodDescription
Before 1960s,The information system played a very simple role. The main function of IS was Electronic Data Processing (EDP). It provided transaction processing, record keeping, and traditional accounting applications.
In the 1960sAnother role was added in information systems. This role was to process data into useful informative reports. Hence, the concept of management information systems (MIS) came into existence. MIS provided managers with the information they needed for decision-making.
In the 1970sThe Decision Support System (DSS) was introduced to make the process of decision-making more effective and valuable. It provided Interactive ad hoc support of the managerial decision-making process.
In 1980sA new role was added to the information system. It was added with strategic support. It provided various support systems such as end-user computing, direct computing support for users, executive support, critical information for top management expert systems, and knowledge-based expert advice for users.
Onwards 1990’sInternet-based e-business and e-commerce became part of the information system. After this, the information system was able to provide support for internet-based electronic business and electronic commerce. This was the era of e-business.

Need for Information System in Organisation

When you visit a bank to deposit some money, you give money to the cashier and some information regarding your account. But have you ever thought about how a bank manages a huge amount of information about customers? Banks and other organizations deal with their huge amount of data using information systems. Every organization needs an information system to manage its business.

An organization needs to take full advantage of IS to get maximum benefits. In order to obtain maximum benefits from IS you need to utilize all its capacities. IS helps manage the functions of an organization.

The need for IS in an organization is as follows:

Communication

IS helps in the communication of an organization and accomplishes the information needs of an organization in defining goals. The management of an organization collects and distributes information. IS makes this process more efficient by enabling managers to communicate swiftly.

It simplifies the movement of information amongst employees of different levels. Managers use IS to share information with other employees who require the information. The information system provides an effective communication platform that helps employees to collaborate in a systematic way.

Operations

The information system provides complete and updated information that allows you to perform business operations more efficiently. It helps organizations to enhance productivity and improve customer service. An information system is also needed for improving product quality.

For example, if an organization has information that customers have a preference for a specific product in a particular season. Then, an organization can start planning the production of that product in advance before the onset of that particular season. Here, the information system will guide you to streamline your operations.

Decisions

An organization needs an information system to make better decisions. It projects the outcomes of your decisions. When an organization reaches a decision, it chooses a sequence of actions from various options and performs the corresponding task.

With accurate information, an organization can make effective decisions. For instance, there might be occasions when an organization has to make a decision out of several options. In such cases, an information system enables organizations in making the best decision out of given choices.

An information system can calculate key factors such as sales, cost, and profits for each possibility and tells you which choice is more beneficial. Therefore, you can make an effective decision using the information system.

Records

In order to resolve issues, organizations are required to find the root cause of a problem and take suitable actions. To achieve this organization needs a record of its activities. These activities need to be recorded for financial and monitoring purposes. The information system keeps the record of documents, communication records, and operational data. It arranges data from various resources and presents it as valuable historical information.


Functions of Information Systems

Mr. Mohan is the head of the human resource (HR) department of a multinational company. His boss asked him to generate a report for the employees who have taken minimum leaves in the last year. On the basis of these reports, the employees with the minimum number of leaves were to be rewarded with bonus money.

Mr. Mohan took the list of the total number of employees and placed their leave data in the information system. The information system processed the data and provided the information required in the form of a report. The information system completed the task in no time. This helped the boss to make decisions for rewarding deserving employees.

Information system helps an organization to make fast decisions and is capable for performing various functions. We can break down the functions of information systems into various parts, which are described as follows:

  • Input: Input is the data that is collected for processing. This data could be anything and it can have different meanings to different people if it is processed differently.

  • Storage: The storage of information has to be secure. In case, the information is about people then it comes under the data protection act. The storage needs to keep data safe, but the information also needs to be accessible to the organization. Therefore, easy access to information is essential.

  • Processing: Processing is the stage where data is transformed into information to make it meaningful. Data can be processed to have different meanings in different scenarios. For example, the number 2014 could mean the year or just a number to different people.

  • Output: Output is the result you get after processing the input. It is not cost-efficient to spend money on input if you are not getting any output. For example, if you are spending ‘x’ amount on research and will get less than this amount in the future.

    An organization could get output in different forms such as money and feedback. You can observe the input and output of someone’s job to determine whether their work is creating any value.

  • Control: Control is necessary to manage the systems and produce the desired output. In this stage, organizations check, record, control, direct, and validate. It is a useful technique to manage and control.

  • Closed and open systems: Closed and open are two types of systems. In a closed system, an organization keeps an internal relationship. Closed systems do not disclose their profits or losses for the past year. On the other hand, an open system shares its information publicly.

    It allows the outside world to look at their profit and losses. Both these systems have their own advantages. In closed systems, sharing any information with rival businesses is not permitted and in open systems we allow other people to see and observe our profits to create new business opportunities.

Framework of an Information System

guide. For example, when a building is constructed first a basic structure of the building is created with the help of a blueprint. This basic structure is used to construct the actual building. Similarly, a framework for IS means a basic structure for implementing IS. It is also called Information System Framework (ISF).

The primary goal of the ISF is to define numerous key building blocks that establish the primary information system that is currently used in management to provide a clear set of definitions, roles, and responsibilities applicable in the context. The ISF brings together a number of perspectives including control, monitoring, and business.

IS comprises many complex technologies and applications. Five essential areas required for the framework of IS are:

  • Foundation: It means the fundamental concepts of an IS. It includes the fundamental business environment, basic components, and managerial concepts. For example, the basic system has developed result-oriented systems.

  • Information Technology: It consists of technical components for an IS. It includes hardware, software, and networks. For example, internet-based information sharing developed e-business.

  • Business Applications: It means the application of IS in different business functions which makes it appropriate for them. Customer relationship management (CRM) is an example of a business application of IS.

  • Development: It emphasizes developing a more professional and effective system for a business function. It is done to gain a competitive advantage. More specific and advanced systems were produced to support a business.

  • Challenges: It consists of various ethical and social issues that arise from IS applications in a business. For instance, security issues and cyber-crimes are some of the contemporary challenges faced by organizations.

Information and Control Systems

A framework is a real or conceptual structure underlying a system to guide. For example, when a building is constructed first a basic structure of the building is created with the help of a blueprint.

This basic structure is used to construct the actual building. Similarly, a framework for IS means a basic structure for implementing IS. It is also called Information System Framework (ISF).

The primary goal of the ISF is to define numerous key building blocks that establish the primary information system that is currently used in management to provide a clear set of definitions, roles, and responsibilities applicable in the context. The ISF brings together a number of perspectives including control, monitoring, and business.

IS comprises many complex technologies and applications. Five essential areas required for the framework of IS are:

  • Foundation: It means the fundamental concepts of an IS. It includes the fundamental business environment, basic components, and managerial concepts. For example, the basic system has developed result-oriented systems.

  • Information Technology: It consists of technical components for an IS. It includes hardware, software, and networks. For example, internet-based information sharing developed e-business.

  • Business Applications: It means the application of IS in different business functions which makes it appropriate for them. Customer relationship management (CRM) is an example of a business application of IS.

  • Development: It emphasizes on developing a more professional and effective system for a business function. It is done to gain a competitive advantage. More specific and advanced systems were produced to support a business.

  • Challenges: It consists of various ethical and social issues that arise from IS applications in a business. For instance, security issues and cyber-crimes are some of the contemporary challenges faced by organizations.

Information and Control System

Have you ever wondered if you were unable to control the temperature of a microwave oven, you might not be able to heat or cook the food as desired?

Also, how will you drive a car if there was no steering wheel in it? Thus, control is essential to make these machines work. For instance, while driving the car you need to take a right turn, so you will make use of the steering wheel for turning right.

In this case, you used the information and controlled the outcome. Similarly in the business organization, we use information and control systems to control the business outcomes of a process.

Thus, control can be defined as the process in which it is determined whether the business is functioning according to desired standards or not and if not what steps should be taken to rectify. Therefore, control means maintaining the desired performance.

A good information control system in the organization should have the following characteristics:

  • Objective: The control system should be certain.

  • Appropriate: The control system should be according to the need and culture of the organization.

  • Clear: The control system should be clear and easily understandable.

  • Flexible: The control system should be flexible enough so that it works even if the planned changes fail.

  • Economical: It should be cost-effective and economical for the organization.

Computerized Information System

Mr Shyam is CEO (Chief Executive Officer) of M&N inc. which is a small furniture manufacturing company. Initially, the company had fewer clients therefore it used to manage all the data manually. The managers made their decisions on the basis of their knowledge and instincts.

Soon the business of the company grew and many new clients were added to their business. More clients lead to more business.

This led to a change in the style of functioning of M&N inc`s business. Now, Mr. Shyam needed to make fast, accurate, and effective decisions and could not rely only on his managers ` instincts for business decisions. He consulted with his managers and decided to implement a computer-based information system for his company.

An information system is used for collecting, processing, storing, and distributing information for a specific purpose. An information system that uses computer technology to perform these tasks is called a computerized information system or computer-based information system (CBIS).

Today, almost every industry uses a computerized information system. For example, the airline industry, investment firms, banks, and savings and loan companies, and the transportation industry are some organizations that use a computer-based information system.

A computer-based information system consists of the following components:

  • Hardware: The term hardware refers to various devices such as input, output, processing, and storage devices of an organization. Monitor, printer, CPU, etc. are examples of such devices.

  • Software: The term software refers to computer programs that enable hardware to process data. This software are stored in a storage device such as a hard disk and provides useful information from data after processing it.

  • Networks: Networks refer to a system that allows computers to connect and share data and other resources with each other.

  • Data: Data are facts and are used as input to CBIS to process it. The CBIS processes this data and delivers valuable information to the organization.

  • Procedures: Procedures are the instructions or commands for the components of CBIS to process the data and generate the preferred output.

  • People: CBIS needs people to prove its usefulness. As CBIS is operated by people in order to perform various tasks. People influence the success and failure of an information system.

The Figure shows the fundamental components of a computerized information system:

Now, let us consider some of the advantages of CBIS for an organization in the following section:

  • Accessibility Speeds: A CBIS is able to sort, store and access data much faster. It can quickly analyze data and find the desired information.

  • Security: It provides a protected environment for data files. It protects data using passwords and encryption (a mechanism to encode your data) so that only authorized users can access the data. Manual information systems do not provide such kind of security.

    In a manual security system, it is not easy to monitor and check the people who have access to data. It also does not provide role-based access to data which is provided by a CBIS. For example, you can allow some users to read and write data and prevent some users from making any changes.

  • Track Changes: In manual information systems it is almost impossible to track changes without going through a huge amount of paperwork. Using CBIS you can record which user accessed which data, the access time of data, and any changes made by the user.

  • Data Storage and Availability: A CBIS stores a huge amount of data and it automatically sorts data. This increases the availability of data for users.

CBIS has some characteristics that make it useful for organizations. These characteristics of CBIS are as follows:

  • It processes data accurately and fast, using various techniques like operations research, simulation, etc.

  • It performs tasks such as collecting, organizing, manipulating, and updating a large amount of data, coming from different internal and external sources

  • It provides real-time information without any delay

  • It supports various output formats and follows the latest rules and regulations in practice.

  • It provides structured and related information for all levels of management.

  • It targets flexibility in data storage and retrieval.

There are numerous types of systems that are used by organizations. However, there are some fundamental systems that are more popular among these organizations.

The figure shows some popular types of CBIS among organizations.

Figure shows some popular types of CBIS. These types will be discussed in chapter 5 of this book.


Architecture of an Information System

Information system architecture defines the business process rules, systems structure, technical framework, and product technologies for an organizational information systems. Information system architecture generally includes four layers:

  • Business process architecture
  • Systems architecture
  • Technical architecture
  • Product delivery architecture

The architecture of the information system includes the hardware and software used to provide the solution to the end users of the services. The architecture represents the design and contents of a computer-based system.

The architecture may contain information such as an inventory of current hardware, software and networking capabilities, future strategies, and a plan for upgrading outdated equipment and software.

Information system architecture determines data to be stored, the functions of the system, location of the components, timing of activities and events occurring in the system, and the essence of the system.

Let us explore some basic components of information system architecture:

  • Information: The term information is used to distinguish it from data. Data is facts and figures. When you deal with the information system, there is no one correct answer to the given question. Information of all shapes and size is considerable.

    For example, websites, documents, software applications, images, and other types of information. Metadata also play important role in information system architecture. It is used to describe and represent content sources such as documents, people, processes and organizations.

  • Structuring, organizing and labeling: Structuring means the determination of a suitable level of granularity for information in your website. Organizing involves grouping these components together in distinct categories. Labelling signifies giving a name to these categories and navigation links that redirect to them.

  • Finding and managing: Finding is an important factor to determine the success of information system architecture. If the information is not found by browsing, searching or asking then the system is failed.

    The organisation and the people who manage business are also important for the architecture. Information system architecture must provide a balance between the objective of business and user requirements. Efficient content management with clear policies is essential.

  • Art and Science: Science is playing an important role in identifying the user need by analysing their behaviours and patterns.

    This is useful to improve the information system but we should also rely on experience, intuition and creativity to determine users’ requirements. This is considered the art of information system architecture.
ARTICLE SOURCES
  • Rainer, R. K., & Cegielski, C. G. (2012). Introduction to information systems: enabling and transforming business (4th ed.). Hoboken, NJ: Wiley.

  • Srinivasan, R. (2011). Business Process Reengineering. : Tata McGraw Hill Publishing.

  • Stair, R. W., & Reynolds, G. M. (2006). Fundamentals of Information Systems (3rd ed.). Cambridge, Boston: Thomson Learning.

  • Introduction to Information System. Retrieved from http://www. oum.edu.my/oum/v3/download/CBAD2103.pdf

  • Importance of Information Systems in an Organisation. Retrieved from http://smallbusiness.chron.com/importance-information-systems-organisation-69529.html.

  • An Introduction To Control Systems. Retrieved from http://www. facstaff.bucknell.edu/mastascu/econtrolhtml/intro/intro1.html.

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