Information Systems/ Business information systems:
An Information system is a combination of hardware and software and telecommunication
networks that people build to collect, create, and distribute useful data in an organization. It
defines the flow of information within the system. The objective of an information system is
to provide appropriate information to the user, gather the data, process the data, and
communicate information to the user of the system.
Or
Business information systems are a set of interconnected information resources,
including software, hardware, networks and system users that work together to collect,
analyse, and disseminate data to facilitate decision-making processes within a business or
organization. These systems are used to support business operations, decision-making,
communication, and collaboration, as well as to provide digital products and services to
customers. Information systems can range from simple manual systems, such as a paper-
based filing system, to complex computer-based systems that use advanced technologies like
cloud computing and artificial intelligence.
Components of Information System
1. Computer Hardware
Physical equipment used for input, output and processing. The hardware structure depends
upon the type and size of the organization. It consists of an input and an output device,
operating system, processor, and media devices. This also includes computer peripheral
devices.
2. Computer Software
The application program used to control and coordinate the hardware components. It is used
for analysing and processing of the data. These programs include a set of instruction used for
processing information. Software is further classified into three types:
System Software
Application Software
Procedures
3. Databases
Data are the raw facts and figures that are unorganized that are later processed to generate
information. Software is used for organizing and serving data to the user, managing physical
storage of media and virtual resources. As the hardware can’t work without software the
same as software needs data for processing. Data are managed using Database management
system. Database software is used for efficient access for required data, and to manage
knowledge bases.
4. Network
Networks resources refer to the telecommunication networks like the intranet, extranet and
the internet.
These resources facilitate the flow of information in the organization.
Networks consists of both the physical devices such as networks cards, routers, hubs and
cables and software such as operating systems, web servers, data servers and application
servers.
Telecommunications networks consist of computers, communications processors, and other
devices interconnected by communications media and controlled by software.
Networks include communication media, and Network Support.
5. Human Resources
It is associated with the manpower required to run and manage the system. People are the end
user of the information system, end-user use information produced for their own purpose, the
main purpose of the information system is to benefit the end user. The end user can be
accountants, engineers, salespersons, customers, clerks, or managers etc. People are also
responsible to develop and operate information systems. They include systems analysts,
computer operators, programmers, and other clerical IS personnel, and managerial
techniques.
There are six main types of information systems that businesses can use to achieve these
goals.
Six major types of information systems
1. Transaction processing systems
Transaction Processing Systems (TPS) are the basic business systems designed to handle day-
to-day business operations, such as processing orders, handling payments, and managing
inventory. TPS are essential to the operation of any business, large or small. They help
businesses to ensure that their daily operations run smoothly, efficiently, and accurately.
2. Enterprise Resource Planning (ERP) Systems
Enterprise Resource Planning (ERP) systems are one of the most commonly used information
systems. They are designed to integrate all of a business's functions and processes into a
single system. ERP systems provide businesses with a centralized database that stores
information about customers, suppliers, employees, and other key data. These systems can be
used by a wide range of users in different departments within the organization, supporting
various office tasks such as multimedia systems, emails, video conferencing, and file
transfers.
3. Business collaboration systems
Business collaboration systems are designed to improve communication and collaboration
between individuals, teams, and departments within an organization. These systems enable
employees to communicate, share information, and collaborate on projects and tasks,
regardless of their location. Business collaboration systems include instant messaging, video
conferencing, document sharing, project management software, and more. During the
pandemic, these systems have become even more critical as remote work has become more
prevalent.
4. Management Information Systems
Management information systems (MIS) collect and process operational information from
different sources, and provide managers with the information they need for making decisions.
These systems provide managers with access to data about sales, expenses, inventory levels,
and other key performance indicators in the form of reports and statistics, and even analysis
tools which make it easier to understand and utilize the data to make strategic decisions.
5. Decision support systems
Decision Support Systems (DSS) are designed to help managers make complex decisions by
providing them with analytical tools to gain insights into complex business problems. DSS
can also help managers to simulate different scenarios, perform "what-if" analyses, and make
predictions based on historical and real-time data. These systems integrate data from multiple
sources and can include artificial intelligence and machine learning algorithms to support
decision-making. These systems are used in various industries, including healthcare, finance,
and manufacturing, to support decision-making at different levels of the organization.
6. Customer Relationship Management Systems
Customer Relationship Management (CRM) systems are used to manage the interactions and
relationships with customers from initial contact to post-sale support. CRM systems provide a
centralized platform for managing customer data, including contact information, purchase
history, preferences, feedback and other relevant data to help businesses analyze and improve
customer experience.
