What is Information System? Definition, Examples, & Facts

Many who come across the term information system for the first time think of it as some software based on information storage or something like that. Well, the name does sound that way. However, an information system is way bigger than that. So, what is an information system?

An information system is a combination of software, hardware, and telecommunication networks to collect useful data, especially in an organisation. Many businesses use information technology to complete and manage their operations, interact with their consumers, and stay ahead of their competition. Some companies today are completely built on information technology, like eBay, Amazon, Alibaba, and Google.

Typical Components of Information Systems

Now that you know what an information system is, let’s look at its components. It has five components – hardware, software, data, and telecommunications.

1. Hardware

This is the physical component of the technology. It includes computers, hard disks, keyboards, iPads, etc. The hardware cost has decreased rapidly while its speed and storage capacity has increased significantly. However, the impact of the use of hardware on the environment is a huge concern today. Nowadays, storage services are offered from the cloud, which can be accessed from telecommunications networks.

2. Software

Software can be of two types, system software and application software. The system software is an operating system that manages the hardware, program files, and other resources while offering the user to control the PC using GUI. Application software is designed to manage particular tasks by the users. In short, system software makes the hardware usable while application software handles specific tasks.
An example of system software is Microsoft windows, and an example of application software is Microsoft Excel.
Large companies may use licensed applications which are developed and managed by software development companies to handle their specific needs. The software can be proprietary and open source, available on the web for free use.

3. Data

Data is a collection of facts and is useless by themselves, but when collected and organised together, it can be very powerful for business operations. Businesses collect all the data and use it to make decisions that can be analysed for the effectiveness of the business operations.

4. Telecommunications

Telecommunication is used to connect with the computer system or other devices to disseminate information. The network can be established using wired or wireless modes. Wired technologies include fiber optics and coaxial cable, while wireless technologies include radio waves and microwaves.

Examples of information systems

Information systems have gained immense popularity in business operations over the years. The future of information systems and their importance depends on automation and the implementation of AI technology.

Information technology can be used for specialised and generalised purposes. A generalised information system provides a general service like a database management system where software helps organise the general form of data. For example, various data sets are obtained using a formula, providing insights into the buying trends in a certain time frame.

On the contrary, a specialised information system is built to perform a specific function for a business. For example, an expert system that solves complex problems. These problems are focused on a specific area of study like the medical system. The main aim is to offer faster and more accurate service than an individual might be able to do on his own.

Types of Information Systems

There are various information systems, and the type of information system a business uses depends on its goal and objective. Here are the four main types of information systems:

1. Operations Support Systems

The first type of information system is the operation support system. Such type of information system mainly supports a specific type of operation in a business. An example is the transaction processing system used in all banks worldwide. This type of information system enables the service provider to assess a specific process of business.

2. Management Information Systems

This is the second category of information systems, consisting of hardware and software integration allowing the organisation to perform its core functions. They help in obtaining data from various online systems. The data thus obtained is not stored by the system; rather, it is analysed in a productive manner to help in the management of an organisation.

3. Decision Support Systems

An organisation can make an informed decision about its operations using decision support systems. It analyses the rapidly changing information that cannot be determined in advance. It can be used in completely automated systems and human-operated systems. However, for maximum efficiency combination of human and computer-operated systems is recommended.

4. Executive Information Systems

EIS, or executive support system, is the last category that serves as a management support system. They help in making senior-level decisions for an organisation.

Facts of Information Systems

The products of information technology are part of our daily lives. Here are some of the facts about information systems.

Necessary for Businesses to Grow

Every organisation has computer-related operations that are critical to getting the job done. In a business, there may be a need for computer software, implementation of network architecture to achieve the company’s objectives or designing apps, websites, or games. So, any company that is looking to secure its future needs to integrate a well-designed information system.

Better Data Storage and Success

Such a system is also useful for storing operational data, documents, communication records, and histories. As manual data may cost a lot of time, information systems can be very helpful in it. Information systems store data in a sophisticated manner, making the process of finding the data much easier.

Better Decision Making

Information system helps a business in its decision-making process. With an information system, delivering all the important information is easier to make better decisions. In addition, an information system allows employees to communicate effectively. As the documents are stored in folders, it is easier to share and access them with the employees.

Since you have been reading about information systems, a career in information technology (IT) could interest you. We have collated some information to give you an idea about the field of IT.

ALSO READ: What is Cloud Migration? Top 5 Strategies, Risk Assessment, and Implementation

How Does an Information System Work?

When we talk about what is information system, it is also important to understand how it works. Here are the five common steps in any information system. 

1. Input 

The first step to information system functioning is data input. Systems collect data through various means such as voice, typing, or touchscreens. Moreover, information systems use internal or external sensors to collect data from various sources. This input data can either be in a structured or unstructured format.

2. Processing 

Since the input data is often in raw form, the Central Processing Unit (CPU) processes the data and converts it into a structured format. It involves various processing strategies such as sorting, grouping, classification, searching, graphing, analyzing, and reporting.

3. Storage 

In the next step, organizations store processed data either temporarily or permanently in databases, data lakes, and data storage units. Moreover, they also use physical devices such as hard disks, and Solid-State Drives (SSDs) for data storage.

4. Output 

Information systems use a suitable format to analyze stored data. This is called data output. And organizations use tools to show data output in reports, dashboards, or using data visualization tools.

5. Feedback 

The final step involves an information system workflow gathering user feedback to understand their experience and assess the system’s efficiency.

How to Manage Information Systems?

Information system management is a crucial part of understanding what is information system. It is essential to ensure effective and safe use of information systems and prevent data breach. Popular controls or technological and operational measures to manage information systems include:

1. Set Policies and Procedures 

One of the best ways for organizations to effectively manage information systems is to define policies and procedures for the use and implementation of information systems and data sharing. This measure is also administrative control. The management publishes a control policy, segregates the duties of team members to monitor information systems, and hires personnel for auditing various processes.

2. Conduct Regular Audits

Information system management also involves tracking system access and login trails, the flow of data, and assessing the efficiency of an information system. Organizations hire both internal and external information technology auditors to review system performance, documentation, and changes.

3. Operations Management 

As understood from what is information system, it is clear that these technological frameworks store significant amounts of confidential data. Therefore, companies have to ensure proper operational control to protect confidential data. It involves proper documentation, limiting access to data servers, and managing data archives.

4. Physical Protection 

Software protection does not suffice. Information system management also involves the physical protection of hardware and data centers. Organizations implement environment controls to ensure appropriate temperature in data server rooms, power controls for continuous power supply, and avoiding disruption in services. 

5. Identity Verification 

Data security is one of the biggest challenges for organizations implementing information systems. Therefore, one way to ensure the security of an information system is to establish secure coding practices, use firewalls, and implement identity verification through fingerprints, voice features, or face recognition.

Building a Career in IT

It should be no surprise that a career in IT will help one grow significantly in the coming years. It is considered one of the most highly paid industries. There’s a constant need for skilled and qualified professionals to meet the IT industry requirements, a great opportunity for ambitious and hard-working people.

But ambition and hard work alone is not enough. Having strong fundamentals, a creative mindset, and the ability to communicate effectively is highly important to become successful in such a technical field.

Attaining certifications is another way to get a competitive advantage in this field. Employers are always looking for people who never stop learning, so having a few certifications shows that you are always up for new learning. Getting a certification from a reputed institute offers a better understanding of the field, and a chance to interact with industry experts and is considered more valuable during growth assessment.

Emeritus is a leading educational platform that offers various IT certificate courses in collaboration with premium institutions like ISB and IIT. The courses offered by Emeritus allow you to transform and accelerate your career. If you want to explore new horizons with technology, you can also explore the Certificate Programme in Digital Transformation and Innovation from IIM-Indore offered on the Emeritus platform.