Information Systems, Management &

Organization

Overview of information systems, management and

organization as their component

What Is an Information System?

An information system can be defined technically as a set of interrelated

components that collect (or retrieve), process, store, and distribute

information

to support decision making and control in an organization. In addition to

supporting

decision making, coordination, and control, information systems may

also help managers and workers analyze problems, visualize complex

subjects,

and create new products.

Information systems contain information about significant people, places,

and things within the organization or in the environment surrounding it. By

information we mean data that have been shaped into a form that is
meaningful

and useful to human beings. Data , in contrast, are streams of raw facts
representing

events occurring in organizations or the physical environment before

they have been organized and arranged into a form that people can
understand

and use.

A brief example contrasting information and data may prove useful.

Supermarket

checkout counters scan millions of pieces of data from bar codes, which
describe each product. Such pieces of data can be totaled and analyzed to
provide

meaningful information, such as the total number of bottles of dish detergent

sold at a particular store, which brands of dish detergent were selling the
most

rapidly at that store or sales territory, or the total amount spent on that
brand of

dish detergent at that store or sales region.

Raw data from a supermarket checkout counter can be processed and organized to produce
meaningful information, such as the total unit sales of dish detergent or the total sales
revenue from dish detergent for a specific store or sales territory.

Functions :-

Three activities in an information system produce the information that

organizations

need to make decisions, control operations, analyze problems, and create

new products or services. These activities are input, processing, and output.
Input captures or collects raw data from within the organization or from its
external environment. Environmental actors, such as customers, suppliers,
competitors, stockholders, and regulatory agencies, interact with the
organization and its information systems.

Processing converts this raw input into a meaningful form. Output

transfers the processed information to the people who will use it or to the
activities for which it will be used. Information systems also require
feedback , which is output that is returned to appropriate members of the
organization to help them evaluate or correct the input stage.

In a professional sports team’s system for selling tickets, the raw input
consists

of order data for tickets, such as the purchaser’s name, address, credit card

number, number of tickets ordered, and the date of the game for which the

ticket is being purchased. Another input would be the ticket price, which
would

fluctuate based on computer analysis of how much could optimally be

charged

for a ticket for a particular game. Computers store these data and process
them

to calculate order totals, to track ticket purchases, and to send requests for

payment to credit card companies. The output consists of tickets to print out,

receipts for orders, and reports on online ticket orders. The system provides

meaningful information, such as the number of tickets sold for a particular

game or at a particular price, the total number of tickets sold each year, and

frequent customers.
Components :-

Using information systems effectively requires an understanding of the

organization,

management, and information technology shaping the systems. An

information system

creates value for the firm as an organizational and management solution to

challenges

posed by the environment.

Information systems are an integral part of organizations. Indeed, for some
companies,

such as credit reporting firms, there would be no business without an

information system. The key elements of an organization are its people,

structure,

business processes, politics, and culture.

Organizations have a structure that is composed of different levels and

specialties.

Their structures reveal a clear-cut division of labor. Authority and

responsibility in a business firm are organized as a hierarchy, or a pyramid

structure. The upper levels of the hierarchy consist of managerial,

professional,

and technical employees, whereas the lower levels consist of operational

personnel.

Senior management makes long-range strategic decisions about products

and services as well as ensures financial performance of the firm. Middle

management carries out the programs and plans of senior management,

and
operational management is responsible for monitoring the daily activities
of

the business. Knowledge workers , such as engineers, scientists, or

architects,

design products or services and create new knowledge for the firm, whereas

data workers , such as secretaries or clerks, assist with scheduling and

communications

at all levels of the firm. Production or service workers actually

produce the product and deliver the service.

Experts are employed and trained for different business functions. The major

business functions , or specialized tasks performed by business

organizations,

consist of sales and marketing, manufacturing and production, finance and

accounting, and human resources.

Business organizations are hierarchies consisting of three principal levels:

senior

management, middle management, and operational management.

Information systems

serve each of these levels. Scientists and knowledge workers often work with
middle

management.
An organization coordinates work through its hierarchy and through its

business processes . Most organizations’ business processes include formal

rules

that have been developed over a long time for accomplishing tasks. These
rules guide employees in a variety of procedures, from writing an invoice to
responding

to customer complaints. Some of these business processes have been

written

down, but others are informal work practices, such as a requirement to

return

telephone calls from coworkers or customers, that are not formally

documented.

Information systems automate many business processes. For instance, how a

customer receives credit or how a customer is billed is often determined by

an

information system that incorporates a set of formal business processes.

Each organization has a unique culture , or fundamental set of assumptions,

values, and ways of doing things, that has been accepted by most of its
members.

You can see organizational culture at work by looking around your university
or

college. Some bedrock assumptions of university life are that professors

know

more than students, that the reason students attend college is to learn, and
that classes follow a regular schedule.

Types :-

Information systems are broadly categorized into six main types: Transaction
Processing Systems (TPS), Management Information Systems (MIS), Decision
Support Systems (DSS), Executive Information Systems (EIS), Knowledge
Management Systems (KMS), and Office Automation Systems (OAS). Each
serves a distinct role in supporting business operations, decision-making,
and strategic planning.

Type Purpose Key Features Examples

Transaction Handles day-to-day Fast, reliable, Point-of-sale

Processing business records large systems, online
System (TPS) transactions volumes of data banking

Management Provides
Periodic reporting, Sales reports,
Information summarized reports
structured data HR dashboards
System (MIS) for managers

Decision Forecasting
Assists in complex Analytical models,
Support System tools, risk
decision-making simulations
(DSS) analysis

CEO
Executive Supports senior High-level
dashboards,
Information executives with summaries, trend
market
System (EIS) strategic insights analysis
intelligence

Knowledge Captures and shares Collaboration tools, SharePoint,

Management organizational document
System (KMS) knowledge repositories Confluence

Office Improves Communication,

Email systems,
Automation productivity in office document
word processors
System (OAS) tasks management

Role in supporting Business processes and decision making :-

Role of Information Systems is described in four different stages for decision

making: intelligence, design, choice, and implementation.

Intelligence consists of discovering, identifying, and understanding the

problems occurring in the organization—why a problem exists, where, and
what effect it is having on the firm.

Design involves identifying and exploring various solutions to the problem.

Choice consists of choosing among solution alternatives.

Implementation involves making the chosen alternative work and continuing

to monitor how well the solution is working.
 Decision Types in Organizations

o Structured decisions: Routine, repetitive, and well-defined (e.g.,

payroll processing).

o Semi-structured decisions: Partly routine but requiring judgment

(e.g., marketing campaign planning).

o Unstructured decisions: Novel, complex, and non-routine (e.g.,

entering a new market).

 Challenges in Decision Making

o Information overload.

o Uncertainty in outcomes.

o Need for timely and accurate data.