The Role of Information System in Business - Decision and Types - Essay Example

The role of information system in business: Decision and types Introduction Information system involves the study of integrated networks of software and hardware that organizations and individuals make use of to collect, filter, process and spread data. The study usually brings computer science and business together using the theoretical basis of computation and information to analyze different business models and associated algorithmic processes in a computer science study. Information system discipline usually emphasizes functionality over the design of the system. Every particular information system seeks to support the making of decision, management and also supports the operations .In a wider scope, IS refers to not only Information and Communication Technology commonly called ICT that is used in an organization but also the interaction of people with technology in support of various business processes. A few scholars have made a distinction between business processes, information systems and computer systems. Information systems are different from businesses processes in that the former can be said to support the control and performance of the latter. Information systems basically include an ICT component but are not entirely concerned with ICT, concentrating instead on the final use of information technology. Information system can be viewed as a unique type of a work system that is to say a system whereby machines and human beings work together using resources to produce particular products and services for customers. In a nutshell IS are a work system with the core functions focused on processing(transmitting,capturing,storing,manipulating,retrieving and even displaying)information. Thus IS brings about inter-relation of data systems on one part and also activity systems on the other side. Decision Role in Information systems We are in the information age and the use of information systems has revolutionized the way of doing business. This has also affected the way organizations conduct their businesses and has greatly reduced uncertainty in making of decisions. It’s exciting how several writers (Olson and Gordon, 1985; Hicks, 1997; Peppard and Ward, 2002; Lucey, 2005) all have come to agreement that information system is critical to organizations of all sizes and types. It is a well known fact that information system is an effective tool that assists improve management by the use of the information available for decision making purposes. Apart from the traditional systems that supported the daily operations of business, IS are increasing the competitive edge of an organization. A lot of scholars have found various findings on the use of information systems in decision making (Olson and Davis, 1985; Hicks, 1997).Decision making in organizations vary among various managerial levels and thus the usage of Is to support managers in making decisions falls into two main classes of systems that enable users to examine a situation, leaving the decision to the manager, so that s/he can make some sort of conclusion and recommendation about what should be done. Information system is so vital to the lower level managers and other user who need to collect accurate information which is used by the senior level management to make crucial decisions for the organization. Thus information has long been regarded as a very key aspect of making decisions in the environment of business, since it bestows power to the decision makers. It therefore means relevant and timely information is key to any decision making in business, and this is met through information systems. Types of information systems. Several businesses have various needs for information. Different people at various levels of the organization require specific type of information. Due to this, businesses most often have many information systems working simultaneously. The following are the major types of information systems and gives a brief description to assist in understanding them. 1. Executive Support Systems This is used by the senior level managers in making strategic decisions. It usually collects, examines and gives in a summary the crucial internal and external regarding the business. An excellent way to understand ESS is to figure out members of senior level management in a plane’s cockpit monitoring the status of all the core business operations through the instrument panel. 2. Management Information System This focuses mostly on sources of information found internally.MIS takes data from transaction processing systems and makes a turns it into a summarized series of management reports. The core function of MIS is to assist a manager make decision and spring to action, ask the appropriate question or answer a querry.Reports from MIS are mostly utilized by operational supervisors and middle level management. 3. Decision Support Systems DSS are particularly designed to assist management in making decisions in circumstances where there is unpredictable results of those decisions.DSS is made up of tools and methods to assist in collection of relevant information and examine the alternatives and options.DSS involves the use of complicated databases and spreadsheet to come up with “what-if” models. 4. Knowledge Management Systems KMS assists businesses come up with new knowledge and share information. They are basically used in entities where staff comes up with new expertise and knowledge. This information can then be distributed and shared by colleagues in the business entity to further create commercially viable opportunities. Examples of such firms include management consultants, accountants and lawyers. KMS are constructed around systems that permit proper distribution and categorization of knowledge. For instance the knowledge could be in word processing documents, PowerPoint presentations and such.KMS would make use of group collaboration systems and share the knowledge. 5. Transaction Processing Systems These are designed to process regular transactions in an accurate and efficient manner. A business could have several TPS such as monthly payroll, systems to compute the weekly, monthly or annual tax payments, purchasing and production systems, billing invoices and systems such as stock control to monitor movements in and out of the entity. 6. Office Automation Systems These are systems that attempt to raise the output of employees who require to process information and data. The best examples of these include Microsoft Office Suite, which greatly improves the productivity of employee operating within the office, or systems which enable employees perform their duties while away or on the move. Role of Information System in Business. Over the past two decades, the world has witnessed a tremendous change in technology, making businesses to embrace technology and so information systems completely. Dynamism in business processes, regulations and strategies most of the time require a complete overhaul in telecommunications, databases, hardware, as well as software. The following are the critical roles that IS plays in businesses. 1. Enhances decision making-with accurate and very correct information at their disposal, business managers are able to make timely and correct decisions thus averting over or under-production of products thus minimizing costs and potential loss of clients. 2. Creates improved relationship between customers and suppliers-with IS there is improved communication and service to customers increases revenue and enhanced communication with suppliers reduces costs. 3. Improves competitive advantage-acquiring efficient and effective IS enables a firm to price less its superior products increasing sales and profits margins than the competition. 4. Facilitates survival-In the current age and time IS have become part and parcel of business transactions. A necessity can be created by changes in the industry, such as the acquisition and installation of ATMs in the banking industry. Necessity could also be pushed by authorities such as regulations by federal and states that part of the requirements of businesses is to store data and give out particular information. 5. Unequaled Operational Excellence-Information system highly increases productivity, efficiency and enables transformation in a business. 6. Production of new products, business models and services-Business models demonstrates how a firm manufactures, delivers and sells its products or services and enables wealth creation. Embracing information systems enables creation of opportunities for a firm’s services, products and ensures new methods of engaging in business. 7. Analysis and storage of Information Two decades ago, most organizations used to store their information and vital data manually, with mainly registers and copies of hard copy. With the coming of information systems, companies can comfortably utilize complicated and sophisticated databases that stores incredible amount of data for the whole company. Information systems have the capability of storing, updating and analyzing information fed into them, which can then be used by the company to come up with solutions to solve current and even future challenges. Information systems also are able to integrate information sourced from different places, both within and outside the organization, thus ensuring the company is updated with the performance internally and also external threats and opportunities. Role of Information Systems in Business transformation Information systems have dramatically transformed business operations globally by provision of access to information that is real time and can be acted upon instantly. Information systems are closely connect with globalization since they interconnect firms,companies,data and people together enabling easy access to the users of information. This is because of increased wireless technology and websites. Communication via email, teleconferencing and mobile phones have taken over in conduct of business. Information systems are the basis of fast and efficient supply chains. Information systems have completely traversed the globe, broken trade barriers and enabled businesses to enjoy so much interaction and interconnectivity than has ever been witnessed before. The web enables numerous businesses to transact by buying, selling, advertising, soliciting and getting customer feedback online and just by the click of the mouse. Organizations world over is adjusting themselves to gain more competitive edge and streamline their operations efficiently by digitally enhancing their key business operations and transforming into digital entities. Thus through increased and enhanced communication outlets and channels and a decrease in the cost of communication, customers are more informed than ever before and are demanding more from businesses,productwise as well as servicewise. The internet has completely transformed the hours of doing business in that its now possible to have your shop open 24/7.Companies are operating from anywhere in the globe. Customers on the other are no longer tied by time and distance and can shop anywhere anytime; this has led to increased sales and profit margins. Conclusion From the above information it is clear that no business entity can survive without adopting Information system. IS are such an important aspect that businesses need to devote most of their resources in constantly improving them. IS are critical for continued survival of any business. Pave way for the future for revolution has come and is here to stay. Information systems are the future. Welcome to the future of business world! 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