In order to discuss different types of information systems, it is first necessary to define the discipline. Depending on the area of implementation, information systems can be defined differently. The most typical approach is to identify a range of hardware and software components used to collect, store, process, and transfer data (Pearlson, Saunders & Galletta 2016). However, this definition does not account for areas where the systems in question rely significantly on a managerial component.
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Therefore, a more accurate way of describing them is an interconnection of components intended to handle information on different aspects of organization’s operations and enhance decision-making, coordination, and virtualization (Wang et al. 2016). This definition addresses two principal elements of information systems, namely the contents of the system and their role in the organization.
Areas of Application
Information systems can serve a variety of purposes. The most widely recognized aspect in the category of transaction processing. On this level, the systems are used by operational managers to optimize daily activities through better scheduling, inventory organization, and resource management, among other things. The monitoring capabilities of the technology are also utilized at this stage. At the tactical level, the systems can be used by middle management to measure the consistency of the operations with the goals and objectives formulated in the plan. These aspects include long-term schedules, possible budgetary restrictions, and variables indicative of the performance of the organization.
Finally, senior management can use information systems to obtain a strategic perspective of the current direction of the organization, including the feasibility of the overall goal, consistency with the company’s vision, and the adjustment of the long-term decisions on company operations (Kavanagh & Johnson 2018).
The first key aspect of an organization’s information system is the technology used to store and manage the content. This umbrella term usually covers the physical equipment necessary for the process, protocols and algorithms responsible for safe and effective transfer and analysis, and the format in which the information is converted and stored. The first element, known as hardware, includes servers, personal computers, devices responsible for network connectivity, and various peripherals.
The second element of the technology, known as software, includes operating systems for running complex equipment, and application software, or dedicated algorithms designed to fulfil specific tasks. Finally, the third element, known as data, can be described as a collection of facts systematized in a way that allows for a meaningful analysis. Digital data can be arranged in a number of ways depending on the tasks set by the management and suitable for specific purposes.
The second key aspect of information systems in the organization is people. Despite the high degree of automation, principal decisions and respective actions are still conducted by human operators. Understandably, the repetitive and easily replicated actions can be automated with a reasonable degree of efficiency, whereas the ones involving many variables can be addressed only partially with technology (Jeston & Nelis 2014). In addition, consistent integration with the managerial practices requires the involvement of senior managers, such as chief information officers (CIOs) in the system. Finally, the development, maintenance, and adjustment of software solutions is performed by people and is an intrinsic part of a reliable system.
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The third key aspect of the process. This is arguably the least recognized aspect, likely due to its intangible nature. In the basic terms, the process is a collection of interconnected actions required for the system to produce a desired result in the most cost-efficient way. This aspect also covers the issue of integration of the information systems into the totality of the company’s operations. In the case where the system is capable of handling the processes in a more efficient way, this aspect is considered a successful example of enterprise resource planning or business process management.
A good example of applying information systems to real-world setting is the retail industry. Historically, the segment has been associated with the existence of numerous highly complex systems, such as logistics, sales, distribution, and documentation. All of the systems rely heavily on precision and operate large volumes of items. Finally, the financial activities within the industry are under the close supervision of controlling bodies, creating strict requirements for the quality and transparency of reporting practices. All of the identified factors can be successfully addressed by implementing information systems throughout the organization.
A typical information system used in retail consists of a number of software solutions capable of inventory control, logistics, sales, and financial management. Usually, each component within the system is dedicated to a separate area of activity, with the possibility to convert the data into a universal format compatible with other applications in the system (Taino Systems n.d.). For instance, employees who work in a warehouse use inventory management software to input data on the arrival of the goods, after which the information appears in the database available to other departments.
The sales department can then create requests on their side for the desired volume of goods to be transported to the sales area. The entire process is documented in the database, with digital confirmations from the responsible parties confirming a successful transaction (Duggan 2017). Importantly, the system in question also permits making the operations compliant with the preferred accounting method. For instance, it is possible to adjust the system to allocate goods based on either FIFO or LIFO approach, which will be done seamlessly and without delay. In addition, the warehouse management system would allow for a more efficient allocation of storage space.
The integration of different components allows for additional transparency across the organization. For instance, the sales department application provides the employees with the opportunity to see the surplus of goods in the warehouse and send notifications on the risk of shortages to the responsible party. In addition, some components of the information system may have a built-in analytical module which will monitor processes, process data, and send similar alerts in the automated mode. The same analytical mechanisms can be applied to performance indicators of the organization on the strategic scale and used by senior management to determine compliance with schedules and objectives.
Duggan, T 2017, Retail management information systems. Web.
Jeston, J & Nelis, J 2014, Business process management, 3rd edn, Routledge, New York, NY.
Kavanagh, MJ & Johnson, RD (eds) 2018, Human resource information systems: basics, applications, and future directions. Sage Publications, Thousand Oaks, CA.
Pearlson, KE, Saunders, CS & Galletta, DF 2016, Managing and using information systems: a strategic approach, 6th edn, John Wiley & Sons, Danvers: MA.
Taino Systems n.d., What are retail management information systems?. Web.
Wang, S, Wan, J, Zhang, D, Li, D & Zhang, C 2016, ‘Towards smart factory for industry 4.0: a self-organized multi-agent system with big data based feedback and coordination’, Computer Networks, vol. 101, pp. 158-168.