Meaning of Information System

The purpose of an information system is to improve the effectiveness of an organization by

providing useful, accurate and timely information.

For example, a computerized information system helps a company improve the effectiveness of
its operations by providing data communication among outlets, tracking orders from customers
scheduling shipments, and tracking inventory at each branch outlet.

An information system collects, maintains, and provides information to people. These

information systems can be defined as the computers, peripheral devices, programs, data, people,
and procedures that work together to record, store, process, and distribute information.

1. Information systems capture data from the organization

(internal data) and its environment (external data).
2. They store the database items over an extensive period of
time.
3. When specific information is needed, the appropriate data
items are manipulated as necessary, and the user receives the
resulting information.
4. Depending on the type of information system, the information
output may take the form a query response, decision outcome,
expert-system advice, transaction document, or a report.
Formal information systems rely on procedures (established and
accepted by organizational practice) for collecting, storing,
manipulating, and accessing data in order to obtain information.
Formal systems do not have to be computerized, but today they
usually are. Informal information systems also exist within an
organization (interpersonal networking, water cooler gossip,
etc.).

An information system is a specific type of system in general. A

system is a set of components (subsystems) that operate together
to achieve certain objectives.
The objectives of a system are realized in its outputs. In
particular, the objective of an information system is to provide
the appropriate outputs to the members of the organization.
Effectiveness and Efficiency
An organization is an example of an artificial system: it is a
formal social unit devoted to the attainment of specific goals. It
does not emerge naturally - it has to be organized.
The quality of the system may be evaluated in terms of its
effectiveness and efficiency. Effectiveness measures the extent
to which the system meets its objectives. Efficiency is a measure
of resources consumed to produce given outputs. The fewer
resources a system consumes in producing given outputs, the
more efficient it is.
Information Systems in the Feedback Loop of an Organization
[Figure 2.5]
All organizations exist as part of a larger system. Information
systems are used to assist management by providing feedback
on the firm's performance. Feedback refers to the outputs of a
system that are transformed back into inputs in order to control
the system's operation. Information systems are used to compare
the data on the actual performance with the standards developed
earlier. Based on the information about the discrepancies,
managers can formulate corrective actions, which are then fed
back into the firm's operations.

Information is a major resource in our day-to-day lives and in running a business. Very
little activity can take place without the appropriate information being available.
USES OF INFORMATION WITHIN ORGANISATIONS

What is information used for within an organization?

Planning
Decision- making
Control
Education

Planning
Planning involves actions carried out leading to the forming of a set of aims to be achieved.

These actions are the steps to be taken in the future to get where you have decided you are going.
Having decided on a goal an organisation must know the actions to be carried out to achieve it -
the activity of setting down the actions is known as planning.

Where are we going?

How will we get there?

Two methods used are forecasting and modelling each of which is based on the usage of raw
data.

Decision-making
Decision-making is the ability to examine information related to any situation alternative actions
available, probable results of actions available - and to identify the next action(s) to be taken.

In order to make suitable decisions all information related to a situation should be available. An
informed person or group should carry out decision-making

Control
Control is the monitoring or checking of current performance against expected results. Control
allows organisations to see if everything is progressing according to plans. Control identifies
where there is a variance from the expected results. Adjustments can take place to return to the
expected performance rates.

Education
Without full knowledge of developments in a field of activities, an organisation will be unable to
function to its best ability. Ongoing education in relation to current developments within
industry and management techniques will allow an organisation to carry out its activities to the
optimum level.

information about advancements in production techniques

information about the latest available machines for production
information collected about the customers of the business
information on the latest training methods for staff

All of these are educational information for an organisation to keep up-to-date. If an organisation
fails to use information to educate the staff and enhance the knowledge base available it will be
much more difficult for them to continue let alone grow and improve.
PLANNING, DECISION MAKING, CONTROL AND EDUCATION EXAMPLES

ORGANISATIONAL USES

Planning
Without a plan a business will not
achieve it aims.

For example, if we wish to increase our

market share we should plan activities
that would allow us to make this happen
within a specified time scale.

Decision-making
Without making decisions a business
would not continue to exist. For example,
- What business are we in?

Only when that decision is made will a

business progress.

Control
Without checking against targets a
business will not know its progress. For
example, in a plan to increase our
market share we have to know what our
share is to start with. We also have to
know what we want to increase market
share to, otherwise we will not know
whether the target improvement has
been achieved.
Education Without keeping up-to-date in current
technological developments a business
could not survive. Without knowledge of
relevant legislation an organisation will
be unable to function within the bounds
of the law.

PERSONAL USES OF INFORMATION

Many personal uses are the same as organisational uses. It is possible to identify Planning,
Decision-making, Control and Education within personal life.

Planning Without a plan it will be more difficult to

achieve what you want. For example I
want to gain a degree in computing. I
have to plan what units and grades I have
to achieve.

Decision-making
Without making decisions we would not
get very much done in day-to-day life.
For example -
What will I wear to go out today?
What will I have for breakfast? Without
deciding about subsequent activities we
would not progress towards anything.
Control
Without checking against targets you will
be unable to check true levels of
achievement.
For example - Have I got all the entrance
requirements to take the degree course in
computing?
Have I got enough money to go on a
night out?
In each of these cases there will be a
standard to measure against and possible
actions available where the standard is
not being reached.

Education
Without gaining appropriate information
regarding the availability of degree level
computing courses it will be difficult to
carry out any of the other activities.

Attributes of Quality Information [Table 2.1]

Quality information needs to possess several attributes. Notably,
it has to be:
1. Timely Available when needed and not outdated when made
available
2. Complete Includes all the user needs to know about the
situation where the information will be used
3. Concise Does not include elements unneeded by the user
4. Relevant Has direct bearing on the situation
5. Precise Offers quantitative information with a degree of
exactness appropriate to the underlying data
6. Form The level of detail, tabular versus graphic display, and
quantitative versus qualitative form are selected in accordance
with the situation Internal and External Information

Most of the data captured by information systems relates to the

operations of the organization itself, serving to produce internal
information. But in an increasingly competitive marketplace, a
firm needs to access more and more external information.
Therefore, it is important to note that decision makers need both
the internal information about their organization and the external
information about its environment.
A firm can succeed only by adapting itself to the demands of its
external environment. The environment is represented by a
number of groups that affect the company's ability to achieve its
objectives or that is affected by it. Such groups are called the
stakeholders of a firm, which includes both internal and external
stakeholders.