Information system.

Information system, an integrated set of components for collecting, storing, and

processing data and for providing information, knowledge, and digital products. It
is a combination of numerous resources, such as software, hardware, computers,
system connections, and end users. Business firms and other organizations rely on
information systems to carry out and manage their operations, interact with their
customers and suppliers, and compete in the marketplace. In the process of the
information systems, the data is collected, stored, and processed for end users in
various projects.

How Information Systems are Transforming Business?

Changes in technology and new innovative business models have transformed
social life and business practices. Smartphones, social networking, texting,
emailing, and Webinars have all become essential tools of business because that’s
where your customers, suppliers, and colleagues can be found.

Many major companies are built entirely around information systems. These
include  Amazon, an expanding electronic mall and provider of cloud computing
services; Alibaba, a business-to-business e-marketplace; and Google, a search
engine company that derives most of its revenue from keyword advertising
on internet searches.

Governments deploy information systems to provide services and cost-effectively

to citizens. Digital goods—such as electronic books, video products, and software
—and online services, such as gaming and social networking, are delivered with
information systems. Individuals rely on information systems, generally Internet-
based, for conducting much of their personal lives: for socializing, study, shopping,
banking, and entertainment.

Information systems are used to run inter organizational supply chains and
electronic markets. For instance, corporations use information systems to process
financial accounts, to manage their human resources, and to reach their potential
customers with online promotions.

Businesses are using information technology to sense and respond to rapidly

changing customer demand, reduce inventories to the lowest possible levels, and
achieve higher levels of operational efficiency. Supply chains have become more
fast, with companies of all sizes depending on real time inventory to reduce their
overhead costs and get to market faster.

As technology increases, more people read a newspaper online, and more read
other news sites, watch a video online every day, creating an explosion of new
writers and new forms of customer feedback that did not exist five years ago.
Social networking site Facebook attracted over billions of people monthly visiting
the site worldwide and so creating job opportunities. Businesses are starting to use
social networking tools to connect their employees, customers, and managers
worldwide. Many developed companies now have Facebook pages, Twitter
accounts, and so on which is making them open to their customers.

E-commerce and Internet advertising continues to expand where goods are being
delivered online. Google’s online ad revenues are increasing every day and so
more opportunities for developing their businesses

Why are Information Systems important to business?

Information systems help decision-makers at a business to make informed
decisions for the company. Information technology helps get prepared data on all
areas of the business as it offers current data, background, and trend analysis.
These are the reasons to why information system is being used in today’s business.

Information Storage

Every organization needs records of its activities to find the cause of problems and
proper solutions. Information systems come in handy when it comes to storing
operational data, communication records, documents, and revision histories.
Manual data storage will cost the company lots of time, especially when it comes
to searching for specific data. A quality information system stores data in a
comprehensive and sophisticated database which makes the process of finding it
convenient. With such information, a company can analyze how certain actions
affected the business as well as prepare cost estimates and forecasts.

New products, services, and business models:

For businesses to make new products and services, information systems play a
crucial role. I.S systems also help create new business models, and these can
describe how a company produce, design, and sell their products. Business model
describes how company produces, delivers and sells product or service to create
wealth Information systems and technology which is a major enabling tool for new
products, services, business models etc. Examples: Apple’s iPod, iTunes, and
iPhone, Netflix’s Internet-based DVD rentals.

Custom Formats

Custom formats make information systems more effective because the data is
easier to use. A salesperson seeking information about his week’s productivity
might see on his screen a list of his contacts and the recent purchase orders of
each. The sales manager, based on the same data set, may see a pie chart showing
each sales representative‘s share of total sales and a bar graph displaying the
volume of sales for each product, while another screen might display the same
data compared to an earlier time period. An accountant looking at the same data
might have a listing of the dollars generated by each sales representative and the
total dollars generated for each product.

Real-Time Information

An information system can be a boon to a manufacturing operation. If a

production line stops, the real-time information provided can help the line
operator quickly determine if the shutdown is the result of a mechanical failure, a
lack of product or some other cause. The benefit is having immediate data
converted to useful information presented to people who can act upon it.
Behavioral changes:

Employers and employees can communicate rapidly and more effectively with an
information system. While emails are quick and effective, the use of Information
systems is more efficient since documents are stored in folders that can be shared
and accessed by employees.

This implies that information flows from the management to lower-level

employees and vice versa. Also, the lower-level employees get enlightened and
involved in important decision making, and this eliminates the need for middle
managers. Employees who are directly involved in the decision-making process are
motivated and dedicated to their tasks.

Better decision making:

Without an information system, a company can take a lot of time and energy in the
decision making process. However, with the use of IS, it’s easier to deliver all the
necessary information and model the results and this can help you make better
decisions. The management team can use the information system to choose the best
course of action and carry out the tasks. When there are several appealing
alternatives, the information system can be used to run different scenarios by
calculating key indicators such as costs, sales, and profits. This way, you can
determine the alternative with the most beneficial results.

Customer and supplier intimacy:

Serving customers well leads to customers returning, which raises revenues and
profits z Example: High-end hotels that use computers to track 1.10 © 2010 by
Prentice Hall customer preferences and use to monitor and customize environment.
Intimacy with suppliers allows them to provide vital inputs, which lowers costs.

Operational excellence/ effeciencey:

Improvement of efficiency to attain higher profitability. Information systems

technology is an important tool in achieving greater efficiency and productivity.
This is possible to do by continuously storing the correct amount of stock so that
you can always give your consumers what they want. For example retail Link
system have been created to link suppliers to stores so as to keep inventory flowing
through the supply chain by maintaining efficient order and line item fill rates.