Business Information Systems – 4 Helpful Components and Resources

What are information systems and their resources? What are their functions? Learn about components that comprise them including information technology, people, process and structure. Differences between computerized and manual systems?

Information systems

What is data? Unprocessed, raw facts and figures. Data is often meaningless. E.g. a number 241198 could mean Reg No; date (24/11/1998) etc. What is information? The processed data produces information. Information is the meaning we attach to data e.g. red traffic lights mean ‘stop’.

The processing operations change data into information. E.g. sort, merge, summarize, search, draw, calculate, classify, duplicate etc. 

What is an information system?

A set of interrelated components that collect, manipulate, and disseminate data and information, and provide feedback for the purpose of facilitating planning, control , analysis ,coordination and decision making in business and other organizations. Examples: ATMs, airline reservation systems, course reservation systems.

Functions of Information Systems

• Input: activity of gathering and capturing raw data
• Processing: converting or transforming data into useful outputs
• Output: production of useful information, usually in the form of documents and reports
• Distribution: refers to distribution of the output. Recordings of the output data are often called report documents. E.g. balance sheet, cash flow statements.
• Store: The processed results are stored for use as input data in the future
• Feedback: output that is used to make changes to input or processing activities

Information technology

Is defined to include hardware, software and telecommunication equipment that is used to capture, process, store and distribute information. Elements—hardware, software and telecommunication systems. Hardware is the physical equipment—such as a personal computer, a laptop, a portable computing device, and even a modern cell phone—used to process information.

Software is the set of coded instructions (programs) that direct the hardware to perform the required tasks. Example, Google Docs—a word processing program designed to instruct a computer to create text documents.

Telecommunication systems—local and inter-organizational channels of communication and routing equipment designed to connect the company to the bank for automatic money transfers. Example telephone network, which allows two callers to interact by voice over a distance.

Process

A process is the set of steps employed to carry out a specific business or organizational activity. In other words, a process maps the set of actions that an individual, a group or an organization must enact in order to complete an activity.

Example, consider the job of a grocery store manager and the process he engages in when restocking an inventory of goods for sale. The store manager must:

• Check the inventory of goods for sale and identify the needed items
• Call individual suppliers for quotations and possible delivery dates
• Compare prices and delivery dates quoted among several suppliers for the same goods
• Select one or more suppliers for each of the needed items based on the terms of the agreement (e.g. availability, quality, delivery)
• Call these suppliers and place the orders
• Receive the goods upon delivery, checking the accuracy and quality of the shipped items; pay the suppliers

People

The people component of an information system encompasses all those individuals who are directly involved with the system. These people include the managers who define the goals of the system, and the users. Example, an automated payroll system, the people component of the system includes:

• Human resources director who wants to enhance an efficient and effective payroll process,
• Human resources staff who maintain the correct employee account information
• Employees whose salaries will be deposited directly into their account

Individuals system come to IS with a set of skills, attitudes, interests, biases and personal traits that need to be taken into account when the organization designs the information system. 

Structure

The structure (or organizational structure) component of information systems refers to the relationship among the individuals in the people component. Encompasses hierarchical and reporting structures, and reward systems.

The structure component plays a critical role in an information system, simply because systems often fail when they are resisted by their intended users. This can happen because individuals feel threatened by the new work system, or because of inherent human resistance to change.

When designing a new information system the organization needs to be cognizant of the current and future reward system in order to create incentives to secure its success.

Forms of information systems

An information system can be:

• Manual e.g. telephone directory
• Computerized, e.g. ATM system

Manual systems

Advantages

Mostly cheaper in installation

Disadvantages

• Slow
• Needs extra effort to generate the desired results

Computerized Information Systems (CIS)

A single set of hardware, software, databases, telecommunications, people, and procedures that are configured to collect, manipulate, store, and process data into information.

Advantages of CIS

• Can keep large amounts of information in a small space
• Can work continuously for 24 hours
• Fast
• Allow access of information by many users from different locations and update databases instantly
• Automation of tasks is possible

Disadvantage of CIS

• Everything depends on a computer, if there is power failure, or if the system breaks down, then an alternative need to be used
• The users of the system need to be trained
• Security need to be intact against; hackers, crackers, worms and virus etc. 

Information System Resources

An information system consists of five major resources.

1) People Resources:-people are required for the operation of all information systems. These people resources include:

a) End users (also called users or clients) are people who use an information system or the information it produces. They can be sales persons, engineers or managers.
b) IS specialists are people who develop and operate information systems. They include systems analysts, or programmers.

2) Hardware Resources:-The concept of hardware resources includes all physical devices and materials used in information processing Examples of hardware resources in computer based information system are:

a) Computer systems, which consists of central processing units (CPUs) and a variety of interconnected peripheral devices. Examples are large mainframe computer systems and microcomputer systems.
b) Computer peripherals, which are devices such as a keyboard or electronic mouse for input of data and commands, a video screen or printer for output of information, and magnetic or optical disks for storage of data resource.

3) Software Resources:-The concept of software resources includes all sets of information processing instructions. The following are examples of software resources:

a) System software, such as an operating system program, which controls and supports the operations of a computer system.
b) Application software, which are programs that direct processing for a particular use of computers by end users. Example is a word processing program.
c) Procedures, which are operating instructions for the people who will use an information system. Example is using a software package.

4) Data resources:-Data constitutes a valuable organizational resource. Thus, you should view data as data resources that must be managed effectively to benefit all end users in an organization. The data resources of information systems are typically organized into:

a) Databases that hold processed and organized data.
b) Knowledge bases that hold knowledge in a variety of forms such as facts and rules of inference about various subjects.

5) Network Resources:-Telecommunication network are essential for successful operations of modern organizations and their computerized information systems. Includes; computers, end user terminals, communications processors and other devices interconnected by communications media and controlled by communications software. Network resources include:-

a) Communication media: examples include twisted-pair wire, coaxial cable, fiber optic cable, microwave systems, and communications satellite systems.
b) Network support: this generic category includes all of the people, hardware, software, and data resources that directly support the operation and use of a communication network.

Management Information System

Continue reading on management information systems in a previous post here.

Types of information systems 

1. Operations support systems: transaction processing, process control & office automation.

2. Management support systems: Management Information Systems, Decision support systems, and Executive Information systems.

3. Operations support systems; Support business processes and operations. They produce  a variety of information products. Divided into three:

a. Transaction processing systems; process data of various transactions, update operational database & produce business documents. Example, sales & inventory processing and accounting systems.

b. Process control systems; monitor and control industrial processes. Examples: petroleum refining, power generation, and steel production systems.

c. Office automation systems enhance office communications and productivity. For example, a corporation may use word processing for office correspondence, and electronic mail to send and receive electronic messages. 

4. Management support systems: provide information & support for decision making by all types of managers & business professionals (complex tax). Divided into 3 types:

• Management Information Systems: provide information in a form of pre-specified reports and displays to support business decision making. Examples: sales analysis, production performance and cost trend reporting system.
• Decision support systems: provide interactive ad hoc (unplanned) support for the decision-making processes of managers and other professionals. Examples: product pricing, profitability forecasting and risk analysis systems.
• Executive information systems: provide critical information from many sources tailored to the information needs of executives. Examples: systems for easy access to analyses of business performance, actions of competitors, and economic developments to support strategic planning. 

To explore more resources on business information systems, check out this book and related literature.