Information systems are extremely useful. Any specific information system aims to support operations, management, and decision-making. An information system is the information and communication technology (ICT) that an organization uses, and also the way in which people interact with this technology in support of business processes.
No single system can provide all the information an organization needs. Even small firms have a collection of different systems: e-mail systems, sales tracking systems, etc. Various systems can be described through:
- A functional perspective: Identifying systems by their primary business function.
- A constituency perspective: Identifying systems in terms of the major organizational groups that they serve.
There are four main types of information systems that serve different functional systems:
- Sales and marketing information systems help the firm with marketing business processes (identifying customers for the firm’s products or services, developing products and services to meet their needs, promoting products and services) and sales processes (selling the products and services, taking orders, contacting customers, and providing customer support).
- Manufacturing and production information systems deal with the planning, development, and production of products and services, and controlling the flow of production.
- Finance and accounting information systems keep track of the firm’s financial assets and fund flows.
- Human resources information systems maintain employee records, track employee skills, job performance and training, and support planning for employee compensation and career development.
There are three fundamental roles of Information Systems in Business:
A business information system carries out specific functions in support of operations, including payroll, employee record storage, preparing and storing company documents and credit card processing. If your company operates a manufacturing line, the information system can schedule tasks and processes while keeping quality records. Some companies, such as graphic designers or advertising companies, use the information system to produce their products and services.
Monitoring and controlling the activities of employees is a core function of information systems. This is especially true of financial transactions in which management has a duty to prevent fraud and theft. In this role, the security of the information system is critical, as managers rely on it to track payments received from customers and invoices from suppliers. The system imposes its control functions by allowing only authorized employees to log in and access the relevant functions. For example, only a few employees may be permitted to generate a company check. In addition to limiting who can perform such services, the system keeps track of who logged in and carried out the task.
A third fundamental role for information systems is management support in making decisions. Managers can get all the information they need about company activities from the system. Complete, accurate information means management decisions are more effective.
Examples of information systems include transaction processing systems, customer relationship systems, business intelligence systems, and knowledge management systems.