Conceptual foundations of information systems | Management Optional Notes for UPSC PDF Download

Role of Information Systems in Modern Organizations

• Introduction: The acquisition of information serves as a valuable augmentation to knowledge, contributing to the overall framework of concepts and facts within one's awareness. The significance of information is context-dependent, relying on the recipient's existing knowledge. The field of information systems has emerged as a dedicated discipline, focusing on the design, construction, and utilization of artifacts based on information technology (IT) (Weber, 1987).
• Importance in Business: Information systems play a crucial role in the growth and survival of business organizations in today's competitive environment. Every sector of the industry, from small enterprises to large corporations such as high street banks and government entities, relies extensively on these systems for the effective management of vital information and data. Essentially, an information system is a software framework designed to capture, convey, store, retrieve, manipulate, and display information, providing support to individuals, organizations, or other software systems.
• Functionality of Information Systems: Information systems operate by capturing data from both the internal environment of the organization and its external surroundings. This data is stored in databases over an extended period. When specific information is needed, the relevant data items are manipulated as required, resulting in the generation of the desired information. The output from information systems can take various forms, such as query responses, decision outcomes, expert-system advice, transaction documents, or reports.
• Prescribed Information Systems: Certain information systems rely on established procedures for collecting, storing, manipulating, and accessing data to derive meaningful information. These systems are essential in obtaining accurate and reliable information to support organizational functions.

Role of Information Systems in Organizational Management

• Introduction: Within management literature, the concept of an information system is identified as a specific category within the broader spectrum of systems. A system, in general, is characterized as a collection of components or subsystems working collaboratively to achieve specific objectives. These objectives find realization in the form of outputs. Primarily, the goal of an information system is to provide relevant outputs to the members of an organization. It's essential to recognize that all organizations function as integral parts of larger systems. Information systems are instrumental in aiding management by furnishing feedback on the performance of the organization.
• Function of Information Systems: Information systems play a crucial role in management by facilitating feedback loops that inform the organization's performance. Feedback, in this context, refers to the outputs of a system that are looped back as inputs to regulate and control the system's operations. The purpose of information systems is to compare actual performance data with previously established standards. Managers utilize this information to identify discrepancies, allowing them to formulate corrective actions. These remedial measures are then integrated back into the operational processes of the organization.

Key Components of Information Systems

• Input: In the context of information systems, input refers to the pivotal activity of collecting and capturing raw data. This initial stage lays the foundation for subsequent processing, as the system acquires the necessary data to operate.
• Processing: Processing in information systems involves the transformative phase wherein raw data is converted into meaningful outputs. This encompasses activities such as calculations, data comparisons leading to alternative actions, and the storage of data for future utilization. The processing of data into valuable information holds significant importance, particularly in the context of business scenarios. This phase can be executed either manually or with the assistance of computer systems.
• Output: The output component of information systems focuses on producing valuable information, typically in the form of documents and reports. Examples include reports tailored for managerial use or information disseminated to various stakeholders such as stockholders, banks, government agencies, and other pertinent groups. Moreover, outputs from one system can seamlessly become inputs for another system, fostering an interconnected flow of information.
• Feedback: Feedback, a crucial element in information systems, entails information generated by the system to make adjustments to input or processing activities. This iterative process is essential for refining and enhancing the system's performance. Additionally, feedback holds significant relevance for managers and decision-makers, providing insights that aid in informed decision-making and system optimization.

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Diverse Aspects of Information Systems

• Manual and Computerized Information System: Information systems play a pivotal role in various domains, with manual and computerized systems representing distinct approaches to data management. In contemporary settings, sophisticated computerized information systems excel in monitoring stock indexes and markets, offering insights for strategic stock transactions based on market discrepancies.
• Computer-Based Information Systems (CBIS): A Computer-Based Information System (CBIS) encompasses a comprehensive set of components, including hardware, software, databases, telecommunications, people, and procedures. This integrated configuration is designed to efficiently collect, manipulate, store, and process data into valuable information.
• Theoretical Perspectives in Information Systems: Theoretical studies in the information systems field reveal a rich array of theories, reflecting diverse approaches. Ranging from strictly technological propositions like the Technology Acceptance Model (Wixom & Todd, 2015), to organizational perspectives such as Organizational Knowledge Creation theory (Cook & Brown, 1999), and human-centered approaches like Critical Social Theory (Benoit, 2001), these theories provide a nuanced understanding of information systems. A comprehensive exploration of these theories can be found on the Theories Used in IS Research website (Schneberger & Wade, 2006).
• Application Across Professions: Information systems find application across a multitude of professions. Entrepreneurs and small business owners leverage these systems to reach international clientele, while sales representatives utilize them for product promotion, customer communication, and sales trend analysis. Managers rely on information systems for critical decision-making, such as the construction of manufacturing plants. Financial advisors use these systems to guide clients in saving for retirement or their children's education, showcasing the versatility and significance of information systems in diverse professional settings.

Key Characteristics of a System:

• Systems are composed of component parts or subsystems and can only be comprehended in terms of the entire system.
• The components or subsystems within a system collaborate towards a common goal.
• Subsystems are organized in a hierarchical structure, where ascending the hierarchy offers a broader perspective, while descending provides more detailed insights.
• Any modification to a part of the system results in effects being felt throughout the entire system.
• A systems approach offers a framework for evaluating the numerous systems in our surroundings, emphasizing the interconnections between various components and focusing on relationships and processes.

Functional areas of Information systems in business:

• Accounting
• Finance
• Marketing
• Human resources
• Manufacturing
• Retail
• Customer services

Components of Information Systems

• Databases: Data, which are factual information used by programs to generate valuable insights, are typically stored in machine-readable formats on disks or tapes until needed by computers. A database, an organized collection of facts and information, consists of two or more related data files. Organizations utilize databases to store information on customers, personnel, inventory, competitors' sales, online purchases, and more. In sectors like banking, a database manager creates a secure process, generating a random numeric code from a customer's bank card for verification through a customer database, enabling financial transactions. Many managers consider databases as crucial components of computer-based information systems, with data being stored in various locations like data centers, computers, the Internet, smartphones, and small computing devices. The growing demand for database storage often poses challenges in terms of additional storage devices, space, and electricity.
• Hardware: In information systems, hardware comprises the machinery, commonly referred to as the central processing unit (CPU), along with supporting equipment. This includes input and output devices, storage devices, and communication devices, constituting the physical components responsible for input, processing, storage, and output activities. Input devices range from keyboards to scanning devices, while processing devices involve computer chips containing the central processing unit and main memory. Advances in chip design contribute to increased speed, reduced power consumption, and expanded storage capacity.
• Software: Software refers to computer programs and supporting manuals, with programs serving as machine-readable instructions governing computer operations. These programs enable various tasks, such as processing payroll, sending bills, and providing managers with information for decision-making. Software is essential for computers of all sizes, from handheld devices to supercomputers. Examples include operating systems like Android and Microsoft's Mobile 6.5 for cell phones and small portable devices.
• People: People represent a crucial element in computer-based information systems, holding responsibility for the success or failure of organizations. Information systems employees, including the Chief Information Officer (CIO) managing the IS department, play vital roles. Users, encompassing various roles like financial executives, marketing representatives, and manufacturing operators, interact with information systems to achieve specific outcomes.
• Procedures: Procedures are the policies governing the operation of a computer system, often outlined in user manuals. These encompass strategies, policies, methods, and rules for utilizing computer-based information systems, covering operation, maintenance, and security. Well-defined procedures contribute to effective operations, enabling organizations to seize opportunities and respond appropriately to potential disasters. In contrast, poorly developed or implemented procedures can lead to time wastage and inadequate responses to crises.

Principles of Information System

The information within an organization plays a vital role, directly influencing decision-makers in achieving organizational goals. Computers and information systems contribute to enhancing business operations, and possessing a comprehensive understanding of their potential impact can lead to individual career success and organizational goal attainment. Collaboration between system users, business managers, and information systems professionals is essential for the development of successful information systems. The application of information systems must be thoughtful and meticulous to ensure that society, businesses, and industries can reap the benefits.

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Development to Fulfill Requirements

Information systems are designed to meet the diverse needs of organizations and individuals. However, the rapid and extensive use of information systems exposes them to various threats from malicious individuals, computer criminals, and terrorists (Conlin, 2009). Despite the substantial benefits information systems offer, they also pose drawbacks, ranging from minor issues like unwanted emails to more severe challenges.

Barriers to Information Systems

• Privacy Concerns:
  • Privacy of customers.
  • Privacy of employees.
• Societal Challenges:
  • Social imbalance.
  • Language challenges.
  • Time and distance challenges.

Severe Challenges

• Data Security:
  • Personal data, including Social Security and credit card numbers, may be lost or stolen, leading to credit card fraud and damaged credit.
  • Reports estimate that since early 2015, around 150 million computer records in the United States have been exposed to fraud or theft, incurring substantial costs for companies.
• Computer-related Errors and Waste:
  • Significant issues within information systems that lead to errors and inefficiencies.

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Global Challenges

Globalization, marked by increased international trade and cultural exchange, has profound effects on organizations and their information systems. These changes introduce new challenges that organizations need to navigate in the evolving landscape of information systems.

Conclusion

In Conclusion, information systems are integral to modern organizations and businesses, designed to support management activities and facilitate informed decision-making for success and competitive advantage. According to management theorists, an information system is defined as any organized combination of people, hardware, software, communications network, and data resources that collects, transforms, and disseminates information within an organization. The imperative role of information systems in organizations is evident through various systems like Query, Analysis, Modeling, and Decision Support systems, addressing diverse needs. While the effective utilization of information systems in management decision-making contributes to managerial success and organizational prosperity, there is a lack of equivalent empirical studies and results examining the role of information systems technology in decision-making.