Importance of Information System - Coursework Example

INFORMATION SYSTEMS By Name Course Instructor Institution City/State Date Introduction The rise of technology over the years has greatly affected the way business are conducted. This is attributed to the fact that technology is greatly integrated with business. Business companies all over the world have ensured that technology form the basis of running their organization. Therefore, as a result it is important to look at information system and how it relates to the operations of any given business. Information system be described from two perspectives; the function perspective and structure perspective. From a structural perspective information system consists of individuals, data, technology which when combined form an organized structure used by organization to serve a specific function. However, from a function perspective information system an implemented technological medium whose sole purpose is to record, store and disseminate information to be used for decision making. Therefore, by looking at information system from the two perspective it is clear that information system consists of related component which record, store and distribute information used in decision making. Components on information system As earlier stated information system comprises of various component whose purpose is to collect store and distribute information used in decision making. Therefore, it is necessary to understand the various component and how they impact on information system. The first component refers to human beings in the organization. Individuals in the organization are responsible for the setup of the components that form information system. Additionally, human beings are responsible for the technical support necessary for the running of the information system. The second component relates to the hardware systems. Hardware systems are used for recording and storage of data collected. Therefore, examples of hardware systems include midrange computer systems, digital drives and scanners. The third component of information system are software resources. Software resources are responsible of giving commands to the computer on how to process and present the processed data. However, it is important to understand that software resources are categorized into two; system software and application software. System software consists of the operating system which is responsible of running of the computers. Application soft wares, on the other hand, are programs that are responsible for the running of specific tasks for the end users. Data resources is the other component of information system and it comprises of the raw data used in information system. The last component of information system is the network resource which refers to the communication aspect of the information system. Communication is an integral part of information system since it ensures that information is distributed along the various components of information system (Oz 2008, p. 15) Importance of information system The integration of information system in businesses has proved to be quite significant in running of operation for the company. This is because information systems have made it easier for business organizations to realize their objective with a lot of ease. Therefore, one advantage of incorporating information system is in relation to decision making. Management information systems have made it easier for business to make critical decision concerning the running of their business organization. Additionally, with integration of information system it has become quite easy for business organization to process large raw data within a small amount of time. This saves the company time which is used in conducting other activities of the organization (Oz 2008, p. 30). In addition to this, information systems have made it easier to process very complex raw data which would otherwise be impossible without the use of information system. Information systems also categorizes data precisely thereby eliminating instances where wrong data is implanted. Therefore, this ensures that decisions made by the management are accurate. Additionally, by incorporating information system companies may gain a competitive advantage over their rival companies. This is attributed to the fact that with the help of information system companies may identify new ideas that do not exist in the market. Therefore, by implementing these new ideas companies gain a competitive advantage over their rival companies (Cassidy 2005, p. 13) Types of information system A business organization is usually divided into three distinct categories which play an integral role in ensuring that the company achieves its objectives. The first category is the operational level whose main objective is collection and storage of the relevant data to be used by the organization in achieving its objective. The second division of any business organization is the management level whose mandate is to overlook the day to day running of the organization. In addition to this, this level is tasked with making decision touching on the operation undertaken by the organization (Bernstein & Newcomer 2009, p. 100). The third and most important division of any business organization is the strategic level. This level is tasked with implementation and approval of the decisions reached at by the management level. Individuals at this level try to ensure that the implemented decision correspond to the core objectives of the organizations. Additionally, this level tries to ensure that the company is distinct to their rival companies which in return ensures that the company gains a competitive advantage over their rivals. Additionally, this level is tasked with making decisions that touch on the company in the future. This is to say that this level concerns itself with the position of the company in the future as a result of decisions made by the company. Therefore, in order to achieve the objective of each of division of a business organization different types of information systems are adapted. The information systems adopted for each division correspond to the objective of the respective divisions. This is to say that the information system adopted at operation level cannot be adopted for management nor the strategic level. The reason behind this is the fact that each division is tasked with different objectives thus the need to adopt different information systems for each division. Therefore, it is important to look at the various types of information system adopted at each level and how the adopted information system impact on their respective level (Sousa & Oz 2014, p. 15). Transaction processing system (TPS) Transaction processing system (TPS) serves the lowest division of a business organization, which in this case is the operational level. As the name suggest TPS is responsible with the collection and storage of data relating to transactions involving the organization. TPS is regarded as the backbone of information system because without collection of data then it becomes quite difficult to achieve the objective of the business organization. This is attributed to the fact that it is responsible of recording the data to day transaction and relevant events of the business. Therefore, with the help of TPS an organization is always updated, thus allowing making of decisions that correspond to the state of the company. In addition to these, TPS serves the purpose of determining the effectives of the organization operations as a results of the transactions and events that touch on the business. Transaction processing systems are characterized by large inputs and outputs. This is attributed to the fact that TPS is tasked with recording of the daily events thus large inputs and outputs. Additionally, as a result of large inputs and outputs TPS requires large storage hardware for the collection and storage of data. TPS is also characterized with high degree of security put into the system. This tries to ensure that the data is not attacked by malicious programs. This is because should the data be attacked by malicious programs it could jeopardize the operations of the whole business. Therefore, Transaction Processing System is quite integral to the running of an organization and could prove vital for FIN as it undertake to achieve its core objective (Bernstein & Newcomer 2009, p. 57). Management information systems (MIS) Management Information system (MIS), on the other hand, is utilized at the managerial level of the organization. It is used by middle managers to evaluate the organization performance within a short period of time. Additionally, MIS assists middle managers to predict the future of the organization based on the current trends of the business’ operations (Stair & Reynolds 2013, p. 350). This is achieved by summarizing data presented by TPS on the operations of the business. Therefore, with the help of MIS middle managers are capable of monitoring and controlling activities undertaken by the business organization. This is attributed to the fact that MIS has the capability of issuing report on an hourly basis of the business operation if the need arises. Therefore, despite middle managers absence on the ground they are always aware of all the activities that take place within the organization. Therefore, MIS ensures that middle managers are always updated on the activities of the organization. MIS could prove to be quite a significant tool for FIN in ensuring that the decisions reached at by the managers, correlates to the operations of the business. Additionally, with the help of MIS it is easier to make decisions that touch on the activities of the company (Sousa & Oz 2014, p.50) Decision support systems (DSS) Similar to MIS Decision support Systems (DSS) are utilized at the managerial level of the organization. It used by middle managers in making decisions relating to the organization and unlike MIS it is used to make decision which are unstructured. Unstructured decision refer to decisions reached at by the management regarding events that are spontaneous and unexpected by the organization. Therefore, with the help of DSS middle managers are able to make decision on events that are yet to happen but could still happen. Additionally, DSS makes it easy for managers to make decisions on events that are ever changing at high rate. Therefore, with the help of DSS middle managers do not have to fear unexpected events affecting the company. It is also important to note that DSS incorporates use of sophisticated tools for analyzing data unlike MIS. FIN being a small scale company means that it does not need to incorporate DSS into its system. This is attributed to the fact that there is quite a small chance of them experiencing unexpected events. Additionally, the data kept by FIN is not that large and at the same time straightforward thus not warranting the need to incorporate DSS into their system (Stair & Reynolds 2013, p. 438) Knowledge management systems (KMS) Knowledge management system is a system adopted by business organization whose sole purpose is to collect and store and share knowledge that exists within a company. This is in relation to the knowledge that individuals within the company possess. Therefore, with the help of KMS individuals are equipped with information on how to run certain tasks within the company. This ensures that operations do not come to standstill basically because an individual does not possess the knowledge to undertake a certain task. KMS unlike other information systems can be utilized in any division of the organization. This is to say that KMS is not limited to a specific level of the organization. As a result of this feature, FIN could greatly benefit if KMS is incorporated in their organization. This is because by incorporating this system every individual will be capable of undertaking the tasks of the company thus avoiding the need to employ other individuals (Becerra-Fernandez & Sabherwal 2010, p. 220) Executive support system (ESS) This system, on the other hand, is adopted by the strategic level of a business organization, and is utilized by the senior managers of the organization. The strategic level of the organization is concerned with implementation of decisions that affect the organization presently and in the future. Therefore, the senior managers should be cautious when making decision regarding the company. However, with the help of ESS, it becomes quite easy for senior managers to make decisions regarding the company. This is attributed to the fact that, ESS incorporate external factors and information passed on from MIS or DSS. Therefore, senior managers are equipped with both internal and external event affecting the organization, thus making it easy for them to make decisive decisions. FIN being a small scale business entity it could greatly benefit by incorporating ESS. In doing so, the entity will make decision that ensure it is capable of fighting off competition from rival companies (Stair & Reynolds 2013, p. 480) Michael Porter Competitive forces Michael porter identified five forces which he considered to be of great significant for every business organization. He was of the view that by looking at this forces it becomes easy for companies to implement strategies that would give them a competitive edge over their rival companies. Additionally, using these force a company is capable of estimating its profitability in any given industry (Hill & Jones 2009, p. 42) Bargaining power of buyers Buyers have the ability to determine the profits a company may achieve in any given industry. This is attributed to the bargaining power of the buyers in that depending on the bargaining power, buyers are capable of manipulating the prices of commodities in any given industry. Therefore, where buyers have a higher bargaining power they could cause prices of commodities to fall down. A higher bargaining power exists where buyers are exposed to substitutes. If buyers feel that the substitute satisfies them then it could cause companies to lower their prices. Additionally, the population of buyers could lead to lower prices especially where consumer population is low (Hill & Jones 2009, p. 43) Bargaining power of suppliers Suppliers could also significantly affect the profits of any company in any given industry, due to the fact that companies depend on suppliers for raw materials. Therefore, where suppliers have a greater bargaining power they could affect the profitability of companies negatively. This is more likely to happen where there exists very few suppliers compared to the number of companies in the industry. As a result suppliers may manipulate the price at which companies obtain raw materials thus affecting the profitability of companies (Hill & Jones 2009, p. 43) Rival competition Competition from rival companies could also affect the profitability of companies in any given industry. Big companies usually manipulate the prices of commodities in any given industries which could be detrimental to small companies. As a result of this small companies experience low profits when calculating their returns. Additionally, the concentration of rival companies also affects the profitability of companies(Hill & Jones 2009, p. 45) Threat of new entrants New entrants in any industry are a worry to the already existing companies, since new entrants do affect the profitability of existing companies. This arises due to the fact new entrants increase the concentration of companies thus leading to high competition. This in return, could force companies to lower prices of their commodities as a way of retaining customers. Therefore, as a result of lowering prices profitability of companies is affected. Additionally new entrants could bring about substitutes and as a result consumers abandon products of existing companies. This in return, affects the profitability of existing companies (Hill & Jones 2009, p. 45) Presence of substitutes Substitutes refer to products that offer similar satisfaction to goods of any given industry. Presence of substitutes greatly affects the profitability of companies since consumers opt for the substitutes thus lowering sales of companies in a given industry. Additionally, if the substitute is of superior quality then profitability of companies is likely to be affected greatly (Hill & Jones 2009, p. 44) Ethical issues The incorporation of information systems in any business organization is likely to raise ethical issues within the organization. Ethical issues refer to the manner in which individuals in any given society act and how such actions affect other individuals within the society. One ethical issue that could arise in the organizations in relation to privacy. Information system is not complete without the use of computers which could lead to breach of privacy within the organization. Computers in in an information system are networked together meaning that individuals can access computers within the network from any workstation. Therefore, this could lead to various individuals accessing some information which is private in nature. Additionally, to facilitate the smooth running of information systems computers are usually connected to the internet. However, this could lead to abuse of the internet, whereby individuals use the internet for their personal benefits. The other major ethical issue that could arise is in relation to property right more so on soft wares used by the company. Individuals within the company may take advantage of availability of certain software. Such individuals install these soft wares in their personal computers without paying for them. These actions amount to property theft and raises ethical concerns among companies that have incorporated information systems (Brennan & Johnson 2004, p. 300). Organizational changes Every once in a while organization experience changes within the organization and the manner in which an organization adapts to the changes quite significant. This is due to the fact that changes do affect the way a company operates which is different from what individuals within an organization are used. Therefore, this could have a great impact on the operations of the company, because if the change is not handled appropriately it could lead to the company experiencing great losses (Graetz et al, 2012, p. 200). Therefore, should FIN decide to set up an information system it should put into consideration the various factors. In doing so the company would avoid instances of losses resulting from changes in the organization. The first thing FIN should do is create a communication channel with its employees. The communication channel ensures that the employees are informed the reason behind the changes within the organization and how the changes will affect them. Additionally, through the communication the company also gets to know the reactions of the employees in regard to the changes. In addition to this, the FIN management should lead by example. This is achieved through taking the first step in embracing changes within the organization. In doing so, this makes it easy for the employees to follow suit in implementing changes within the organization. Additionally, good leadership is a clear indication that the changes are not targeted towards the employees but rather the changes affect them equally. This in return creates a sense of bonding in the organization. In addition to these, the company should also be patient when implementing changes. This is because not every employee will not embrace changes in the organization directly. Therefore, it is important that the company to be patient as the employees adopt to changes within the organizations. Additionally, the company should offer support to such employees and guide them through the changes and indicate to them why the changes were necessary (Graetz et al, 2012, p. 240). References Becerra-Fernandez, I & Sabherwal, R 2010, Knowledge Management: Systems and Processes, M.E Sharpe, New York. Bernstein, PA & Newcomer, E 2009, Principles of Transaction Processing, 2nd edn, Morgan Kaufmann, Massachusetts. Brennan, LL & Johnson, VE 2004, Social, Ethical and Policy Implications of Information Technology, Idea Group Inc, Pennsylvania. Cassidy, R 2005, A Practical Guide to Information Systems Strategic Planning, Second Edition, 2nd edn, CRC Press, Florida. Graetz, F, Rimmer, M, Smith, A & Lawrence A 2012, Managing Organisational Change, Google eBook, 3rd edn, John Wiley & Sons, New Jersey. Hill, C & Jones, G 2009, Strategic Management Theory: An Integrated Approach, 9th edn, Cengange Learning, New York. Sousa, K & Oz, E 2014, Management Information Systems, 7th edn, Cengange Learning, New York. Stair, R & Reynolds, G 2013, Fundamentals of Information Systems, 7th edn, Cengange Learning, New York. Stair, R & Reynolds, G 2013, Principles of Information Systems, 11th edn, Cengange Learning, New York. Oz, E 2008, Management Information Systems, 6th edn, Cengange Learning, New York. Read More