Organizations manage data originating from numerous sources, such as internal data and information from clients. Data changes continuously and simultaneously; therefore, the management of data becomes critical. Information systems require the process of managing information, people handling information, and technology which support it must be managed to ensure efficient and effective flow. The business organization functions optimally when systems are dependable and reliable (Cascarino, 2007). Information system (IS) entails collecting, filtering, and distributing data within an organization, and to clients. In addition, it involves the determination of the cost of information technology and systems in place for data recovery.
One definition of the Information system states “a combination of hardware, software, infrastructure, and trained personnel organized to facilitate planning, control, coordination, and decision making in an organization” (BusinessDictionary, 2012, para.1). From the foregoing definition, information systems enable enterprises to utilize information technology to ensure efficiency in the production of goods and services. Besides, information systems combine the benefit of using technology and skilled employees to do business efficiently.
Another definition of information system states “a system to convert data from internal and external sources into information and communicate that information in an appropriate form, to managers at all levels, in all functions to enable them to make timely and effective decisions for planning, directing and controlling the activities for which they are responsible” (Lucey, p. 2). This definition assumes that the information system entails the process of collecting data, dissemination of data to relevant people and departments, and the use of data in making business decisions.
Information systems enable managers in a business organization to control data and facilitate the flow of information. When an organization has an effective information system, the extraction, viewing, and dissemination of data become efficient. As a result of efficient data extraction and dissemination, managers get access to the information they need when planning business expansion. Information systems store critical information, which managers access when making significant business decisions (Rainer & Cegielski, 2011).
Information systems enable the business organization to automate manual tasks for quality and efficiency; automation of processes minimizes inefficiencies. Information systems have artificial intelligence, which enables them to perform tasks with precision, for example, keeping phone records or storing sales data. “Business Intelligence (BI) systems provide computer-based support for complex, nonroutine decisions, primarily for middle managers and knowledge workers” (Rainer & Cegielski, 2011, p.44). Managers retrieve such information when they need to make decisions. Rainer and Cegielski (2011) claim “information systems collect, process, store, analyze and disseminate information…” (p. 38).
Information systems improve the dissemination of data in an organization, therefore, empowering employees to make decisions timely. The ability to make decisions fast improves efficiency in an organization. The ability of an enterprise to utilize information systems determines its competitiveness (Levy & Powell, 2005). Enterprises use Information systems to look for resources that improve production and outsource production. As a result of using information systems, enterprises access raw materials at cheaper prices while reducing operational cost, therefore, profitability improves. Levy and Powell (2005), claim “changes in international trading agreements and the monopoly of power of local suppliers drive firms to use global sources in order to remain competitive” (p. 2).
When organizations have an efficient information system, they become competitive and effective in attaining goals. Information systems enable organizations to lower costs, increase profit, improve service, and achieve a competitive advantage (Stair & Reynolds, 2010). When enterprises align technology to goals it takes less time to achieve them because the production process improves. Stair and Reynolds (2010) claim “organizations use information systems to support their goals” (p. 74). Information systems, therefore, help an organization to attain goals.
Besides goals, enterprises strive to provide value-added goods and services. Goods and services must get to the market in the shortest time; this happens when enterprises remove unnecessary delays in the production process. Information systems minimize delays and help to detect inefficient processes; Stair and Reynolds (2010) state “value-added processes increase the relative work of the combined inputs on their way to becoming output of an organization” (Stair & Reynolds, p. 74). Information systems ensure cooperation between employees and management; therefore, work relationship improves.
Time is a critical resource in the production process when managed efficiently an enterprise shortens the production process. An information system enables a company to minimize production time, and it helps to track and monitor production processes. Inbound logistics, warehouse and storage, marketing and sales, and customer care become predictable when they work in synchrony by using technology (Stair & Reynolds, 2010). Information systems, therefore, assist managers in monitoring employees and processes performance, decision quality, and to determine the complexity of problems.
Although information systems benefit organizations, it has negative cost effects, particularly at the beginning. In addition, it affects the rate of employment in a country. Before an organization decides to automate its information system, it must train employees. Some of the skills employees must learn to include machine learning, mobilizing applications, human resource computer interface, and project management (Stair & Reynolds, 2010). Enterprises automating information systems must have resources to train employees. Besides, skilled personnel in the IT industry earn salaries above average; information systems personnel earn an average of $ 80,000 (Stair & Reynolds, 2010).
Enterprises utilize technology to buy goods and services from other regions on the planet. The internet makes it possible to outsource services; therefore, many companies outsource from the cheapest source in order to cut costs. As a result, the rate of unemployment went up in the last decade (Stair & Reynolds, 2010). Information technology helps businesses to make a profit but creates local unemployment; it hurts local consumers. Although information technology has benefits for businesses, it has negative effects on the rate of employment.
In conclusion, information systems include information technology, human resource, and production processes. Employees benefit from effective information systems as it allows the efficient flow of data. In addition, it facilitates departmental communication and professional production of goods and services. Enterprises that hope to increase their market share must automate information systems, and train employees on how to use it. Technology forms the foundation for effective communication within organizations.
BusinessDictionary.com: Information System. (2012). Web.
Levy, M. and Powell, P. (2005). Strategies for Growth in SMEs: The Role of Information and Information Systems. Burlington: Elsevier Limited.
Lucey, T. (2005). Management Information Systems. London: Thomson Learning.
Rainer, K., and Cegielski, C. (2011). Introduction to Information Systems: Enabling and Transforming Business. New Jersey: John Wiley and Sons, Inc.
Stair, R., and Reynolds, G. (2010). Principles of Information Systems. New York: Cengage Learning.