A System is a set of components that interact with each other to form a whole and work together toward a common goal. The four major components of a system are inputs, processes, outputs, and feedback.
• Input is anything that enters the system, such as energy, materials, or data.
• Output is anything leaving the system, such as products, services, or information.
• Process transforms an input into an output.
• Feedback reintroduces a portion of the output of a system as an input into the same system.
Computer-Based Information Systems
Even though an information system does not require a computer, most people think of computer-based information systems when the read or hear the term information system. People, data, and procedures are the minimum components of on Information System. A Computer-Based Information System is a set of people, data, procedures, hardware, and software that work together to achieve the common goal of information management.
• From production line through top management, people make products, deliver services, solve problems and make decisions. Good people are the backbone of an organization.
• In an information system, data provide the basis for information. The data gathered must be complete and accurate. If not the information generated from the data will not be valid or accurate, and errors in decision making may result.
• Procedures are instructions that tell people how to operate and use an information system. It explains the steps to be taken if errors occur. Common sources of procedures include operations manuals and user’s manual.
• Hardware is any physical device or connection of a computer system, such as a disk drive, printer, modem, etc.
• Software .s the set of instructions that tell the hardware how to operate.
Computers are used only to increase the efficiency and effectiveness of an information system e.g. it enables the processing and storage of more data in less time than ever before. People can take advantage of information even without computers. But, because of the speed of computers in processing data, people can take benefit of it only for timeliness. The use of computers does not automatically create a better information system. Computers simply are tools used in information system that have the advantage of performing arithmetic functions, testing relationships, and storing & retrieving data faster, more accurately, and more reliably than people con. However, people can still determine what data to collect, how to process the data, and how to use the information generated.
To accommodate the differences in information needs of the various management levels, several different types of information systems have evolved.
1. Transaction Processing Systems/ Accounting Information Systems
A transaction is a business activity or event. Transactions include buying a product such as clothes at a department store or a service such as cable television from the local cable company. The information system that records and helps manage these transactions is known as a Transaction Processing System. Certain Transaction Processing Systems are commonly seen in business organizations such as accounts payable, order entry, accounts receivable, inventory control, payroll, and general ledger. These systems are grouped into one broad category, Accounting Information Systems.
A TPS performs several functions including data collection, input validation, information processing, updating, and output generation.
2. Management Information Systems
It is such a system that provides information to managers for use in problem identification, problem solving, and decision making in all areas of activity such as planning, marketing, finance, manufacturing, human resources, and project management. An MIS not only makes internal operations more efficient but also extends its impact to external operations, such as customer and vendor relations, to make them more efficient and more beneficial. In an effort to gain greater control over their activities and thus gain advantages over their competitors, organizations have started to develop innovative MIS applications.
3. Decision Support Systems
It is such computer-based information that allows a user to communicate with a computer through dialogue and helps in solving unstructured, structured, and semi-structured problems. A DSS does not make decisions for users, but it does support them in their decision making. Using their judgment, intuition, and experience to make their own decisions, managers must evaluate the solutions proposed by a DSS. It has three basic components i.e. interface, model and data.
4. Executive Support Systems
Executive is usually synonymous with top-level management. A DSS that caters specifically to the special information needs of executives, such as managerial planning, monitoring, and analysis is called an Executive Support System.