Meaning and Role of Information Systems

As a consumer, you have instant access to millions of pieces of data. With a few clicks of the mouse button, you can find anything from current stock prices and video clips of current movies. You can get product descriptions, pictures, and prices from thousands of companies across India and around the world. Trying to sell services and products? You can purchase demographic, economic, consumer buying pattern, and market-analysis data. Your firm will have internal financial, marketing, production, and employee data for past years. This tremendous amount of data provides opportunities to managers and consumers who know how to obtain it and analyze it to make better decisions.

Today information systems are everywhere; from supermarkets to airline reservations, libraries and banking operations they have become part of our daily lives.
The first step in learning how to apply information technology to solve problems is to get a broader picture of what is meant by the term information system. Computers are only one component of an information system. A computer information system (CIS) consists of related components like hardware, software, people, procedures, and collections of data.

The goal of Information System is to enable managers to make better decisions by providing quality information.

The term information technology (IT) represents the various types of hardware and software used in an information system, including computers and networking equipment.
The physical equipment used in computing is called hardware.
The set of instructions that controls the hardware is known as software.
In the early days of computers, the people directly involved in are tended to be programmers, design analysts, and a few external users. Today, almost everyone in the firm is involved with the information system.

Procedures are instructions that help people use the systems. They include items such as user manuals, documentation, and procedures to ensure that backups are made regularly.
Databases are collections of related data that can be retrieved easily and processed by the computers.

Quality is an important issue in business today, particularly as it relates to information systems. The quality of an information system is measured by its ability to provide exactly the information needed by managers in a timely manner. The information must be accurate and up-to-date.
Users should be able to receive the information in a variety of formats: tables of data, graphs, summary statistics, or even pictures or sound:

Framework for Business End Users
The field of information systems encompassses many complex technologies, abstract behavioral concepts, and specialized applications in countless business and non business areas. Thus, you should concentrate your efforts in five areas of knowledge:

· Foundation Concepts: Fundamental behavioral and technical concepts
· Technology: Major concepts, developments, and Management issues in IT – software, hardware, network, database mgmt etc…
· Applications: Using emails for fast communication, internet, intranet, & extranet to gather the information, for operations and management.
· Development: How end users or information specialists develop information systems solutions to business problems using fundamental problem – solving and development methodologies.
· Management: Effectively managing the resources and business strategies involved in using IT at end user, enterprise and global level of business.



Key Terms Used In Information System

Data, Information, Knowledge, and Wisdom
Let us consider the case of a retail store that is trying to increase sales.
Some of the data available includes sales levels for the last 36 months, advertising expenses, and customer comments from surveys. By itself, this data may be interesting, but it must be organized and analyzed to be useful in making a decision. For example, a manager might use economic and marketing models to forecast patterns and determine relationships among various advertising expenses and sales.
The resulting information (presented in equations, charts, and tables) would clarify relationships among the data and would be used to decide how to proceed It requires knowledge to determine how to analyze data and make decisions.
Education and experience create knowledge in humans. A manager learns which data to collect, the proper models to apply, and ways to analyze results for making better decisions. In some cases, this knowledge can be transferred to specialized computer programs (expert systems).
Wisdom is more difficult to define but represents the ability to learn from experience and adapt to changing conditions. In this example, wisdom would enable a manager to spot trends, identify potential problems, and develop new techniques to analyze the data.


Characteristics of Information
Now, let us discuss about the characteristics of good information

• Timeliness: Information must reach the user in a timely manner, just when it is needed; not too early, because by the time it is used it would be out-of-date; not too late because the user will not be able to incorporate it into his/her decision-making.

• Appropriateness: Information must be relevant to the person who is using it. It must be within the sphere of his/her activities so that it can be used to reduce uncertainty in his/her decision-making.

• Conciseness: Information should always contain the minimum amount of detail that is appropriate for the user. Too much detail causes information overload.

• Frequency: Frequency is related to timeliness. Too often the information presented is linked to the calendar (end of the week, beginning of the month); its frequency should be synchronized with the timing of the decision making of the user.

• Understandability: The format and presentation of information are very important.
Some people prefer tabular information, whereas others may need it in a graphical form. Also the use of colors enhances the understandability of what is presented.

• Relevant: It pertains to the particular problem. What data is relevant depends on the decision-making model used. E.g. university admissions officials may choose to consider the results of some high-school test irrelevant, if they believe that it does not improve the chances of some applicant later becoming a successful student.

• Complete: All the relevant parts are included. E.g. marketing data about household incomes may lead to bad decisions, if not accompanied by consumption habits of the target population.

• Current: Decisions are often based on the latest information available

• Economical: The costs of gathering information should be justified by the overall benefits








What is a System?
A system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process. System will have the following basic interacting components (functions):
1. Input
2. Processing
3. Output
4. Feedback
5. Control

What is an Information System (IS)?
An information system is an organized combination of people, hardware, software, communication networks, and data resources that collects, transforms, and disseminates information to support decision making and control in an organization. Information System helps managers and workers to analyze problems, visualize complex subjects, and create new products.
An information system differs from other kinds of systems in that its objective is to monitor/document the operations of some other system, which we can call a target system. An information system cannot exist without such a target system. For example, production activities would be the target system for a production scheduling system, human resources in the business operations would be the target system of a human resource information system, and so on.
Information Systems are more than computers. Using Information Systems effectively requires an understanding of the management, organization, and information technology for shaping the systems.

Management
Managers perceive business challenges in the environment; set the organizational strategy for responding, allocate human and financial resources to achieve the strategy and coordinate the work. Different levels of managers are:
Senior Managers: make long-range strategic decisions about products and services to produce.
Middle Managers: Carry out the programs and plans of Senior Managers
Operational Managers: Responsible for monitoring the firm’s daily activities.



Organization
The key elements of an organization are its people, structure, and operating procedures, politics, and culture. Major functions of an organization are:

Function
Purpose
Sales and marketing
Selling the organization’s products and services
Manufacturing
Producing products and services
Finance
Managing the organization’s financial assets (cash, stocks, bonds, etc.)
Accounting
Maintaining the organization’s financial records (receipts, paychecks, etc) accounting for flow of funds.
Human Resources
Attracting, developing, and maintaining the organization’s labor force; maintaining employee records.