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Foundations of Information Systems in Business

1. Trends in Information Systems and Types

Information technologies have strongly integrated into all spheres of human society, and it is difficult to imagine an area of knowledge which can develop without the presence of information systems. Generally speaking, an information system is the combination of IT (information technology) itself, and human activities which involve this technology for decision-making, performing operations, management and analysis. Thus, an information system is the complex entity uniting the technologies, algorithms, processes and people (Bocij & Chaffey & Hickie & Greasley, 2006).

Elements of information systems include hardware, software, communication channels and data resources. Basically, the set of a pencil, a folder and a sheet of paper can already represent a basic information system. However, within the scope of this paper the term “information system” will relate to computer-based information systems. From a business perspective, the users of information systems are all employees or members of an organization; with regard to personal perspective, virtually all people might need to have access to information systems.

There’s a variety of information systems designed virtually to match every company and sphere of operations. It is possible to outline several major types of information systems (Bocij & Chaffey & Hickie & Greasley, 2006):

  • Integrated enterprise systems
  • Office and user productivity support
  • Decision-making support systems
  • Transaction processing systems
  • Design and manufacturing systems
  • Artificial intelligence systems

Each of these categories includes a variety of combination of hardware, software and network structure, and every company should select optimal balance of instruments to match business needs. Recent trends in information systems include the following phenomena (Bocij & Chaffey & Hickie & Greasley, 2006).

1) Information systems increase in scale and diversity, and become more and more network-based, creating a distributed environment for remote employment and team-working. Companies start organizing virtual offices, which allows to increase efficiency and to reduce costs of employment. Although virtual teams are very specific from managerial point of view, this is a clear trend, and information systems are growing towards virtual work environment.

2) Another information system trend is outsourcing: application service providers in many areas allow to cut costs and to entrust management of corporate information system or servicing of computer infrastructure to external providers, or even using a virtual platform to deploy a business environment.

3) Third clear trend in information systems is cloud computing, grid computing and computing on demand. Computing on demand means renting a software or computing power for a certain period of time. Grid computing means the splitting of large data processing or calculations to smaller parts in order to fully use existing computer power. Finally, cloud computing implies to storage of database and software online on powerful servers of external providers, so that all the functions of an information system can be performed online using any device with Internet access.

2. Information Systems Resources and Activities

Information systems include five types of resources: people resources – users, developers, administrators etc., hardware resources – all types of devices required for maintaining the system (including phones, faxes, data storage devices, etc.), software resources – applications, procedures, documents and policies relating to using the programs, communication resources – the systems used for transferring data and data resources – all information accessed by a business entity in various forms (including electronic storage, printed form, data from scanning devices and sensors, etc.) (Bocij & Chaffey & Hickie & Greasley, 2006).

The benefits of information systems include accuracy, speed, reliability, programmability and automation of repetitive tasks. It is possible to outline key types of activities related to information systems (O’Brien & Marakas, 2009):

  • input of data resources (activities related to data entry, editing, optical scanning and filling in the forms);
  • data processing (various activities related to manipulation and analysis of data with the purpose of getting out more useful information);
  • output of information products (preparation of reports, images, documents, presentations and other user-friendly forms of data representation);
  • storage of data resources (activity involving organization of data for storage and use);
  • control of system performance (feedback on the conformity of performance of data activities with the standards).

Competing With Information Technology:

 

3. Fundamentals of Strategic Advantage

One of the great benefits of information systems is the ability of these systems to deliver significant strategic advantages to business entities with regard to local and global markets. In general, a strategic advantage is the unique characteristic of a company which allows it to be ahead of the competitors for a long time. Thus, strategic advantage means a fundamental competitive advantage.

Porter’s model of competition lists five forces driving the competition: rivalry, threat of new entrants, substitute products, bargaining power of consumers and bargaining power of suppliers. In my opinion, one more force should be considered nowadays – intensity of information technology within the industry. According to these forces, it is possible to outline 5 key strategies: cost leadership, differentiation strategy, innovation, growth and alliance (Bocij & Chaffey & Hickie & Greasley, 2006). Information systems can be successfully integrated into each of these strategies and can be used to create strategic advantages in business. Furthermore, investing in information systems can be a separate competitive strategy, since using of these systems for all business activities can reduce costs, improve performance and might result in greater flexibility.

4. Using Information Technology for Strategic Advantage

Let us consider the methods of integrating information systems into competitive strategies in order to achieve superior competitive position. For cost leadership strategy, it is possible to use information systems to reduce operating and processing costs, and to optimize distribution and supply chains. Regarding differentiation strategy, information systems can be used to access target groups of customers and discover market niches, and new IT features can be used to develop and deliver new products or services (Bocij & Chaffey & Hickie & Greasley, 2006).

Innovation can be based on getting to unique market segmenting using IT technology, creating products or services using components of information systems (e.g. websites, online services, social services, etc.) and making radical restructuring based on the possibilities of information systems. Growth strategy can use information systems for advertising purposes and for diversification and integration purposes. Finally, alliance-based strategy can rely on information systems to create virtual partnerships, virtual teams or develop extranets with partners (O’Brien & Marakas, 2009).

Moreover, information systems can be used for building new relationships with customers, creating IT-based entry barriers and improving business processes with the help of integrated enterprise systems (Bocij & Chaffey & Hickie & Greasley, 2006).

Computer Hardware

 

5. Computer Systems: End User and Enterprise.

With regard to scale of operations, information systems can be divided into such categories as microcomputer, midrange computer and mainframe (O’Brien & Marakas, 2009). Mainframes are designed to match the needs of enterprises, e.g. supercomputers, transaction processors, superservers and complex enterprise systems can all be considered to be mainframes. These devices address complex business needs and can be used by large corporations or by companies with huge data storage and processing tasks (e.g. cloud computing providers).

For medium-sized and small enterprises, midrange information systems such as multi-user systems, network servers, web and terminal servers and minicomputers can be suitable (Bocij & Chaffey & Hickie & Greasley, 2006). The choice of components of an information system depends on the scale and needs of the enterprise, mobility of its agents and core tasks. Finally, for the needs of end users such devices as PCs, technical workstations, portable computers, laptops, nettops, PDAs, tablets and even smartphones can be used. The choice of computer hardware and software is usually done basing on the available resources, intensity of business tasks and their nature, and sometimes even basing on the familiarity of employees with certain information systems.

6. Computer Peripherals: Input, Output, and Storage Technologies.

Physically, information systems include devices performing input, output and storage functions. There is a variety of hardware available for building information systems, and it is important to be able to select optimal combination of them to match the business needs.

Input mechanisms can transform external information into computer-based, and are commonly used for controlling the systems. Essential input devices are keyboard and mouse, or a device performing similar functions (e.g. touchpad, trackball, etc.). Although a computer system can work without a mouse or similar device, it is more convenient to use these devices. Some computers or PDAs use touch-screen technology and multitouch, which are more user friendly. Other examples of input devices are scanners, microphones, digital cameras and webcams.

Output devices show the information presented by an information system to the user in a certain form. For displaying the information, such screens as CRT and LCD monitors are used. Output devices are not limited to displays only, such devices as printers, stereo systems, headphones and projectors also perform output functions (Bocij & Chaffey & Hickie & Greasley, 2006).

The main characteristic of storage devices is their capacity and type of device. Mass storage devices include floppy disks (only a very rare thing), hard disks, SSD disks, optical disks (CD, DVA, and Blue-ray) and flash storage devices based on EEPROM memory (O’Brien & Marakas, 2009). Hard disks are mainly used for storing information, while optical disks and USB flash drives are mostly used for transferring information.

Computer Software

 

7. Application Software: End User Applications

In general, all computer software can be divided into application and system software. Application software, in its term, includes such categories as application-specific software and general purpose applications (O’Brien & Marakas, 2009). Examples of the latter are office software suites, networking software (e.g. browsers, mailing systems, online calendars etc.). Various groupware, database management software and managerial information systems can also be included into this category. In general, the industry of end-user applications is currently driving away from using custom-designed programs (developed inside an organization) and programming systems based on machine-specific codes or procedural programming to using a diverse off-the-shelf packages of software, natural programming languages or visual programming systems (Bocij & Chaffey & Hickie & Greasley, 2006). Further trend is witnessed towards moving end-user applications online, into cloud computing services and in some situations outsourcing the tasks to external providers. This trend makes key functions needed to the end user available from any location, and greatly increases business flexibility.

8. System Software: Computer System Management.

Another branch of computer software is system software, which also includes two categories: system management and system development software. System management class includes such types of software as operating systems, programs for network and database management, system utilities, monitors of performance and security and application servers (O’Brien & Marakas, 2009). Programming class includes translators of programming languages, editors and tools for development purposes and computer-aided software engineering software.

The choice of operating system is highly important both for end-users and for the functioning of an enterprise. Operating systems include such elements as user interface, resource management systems, utilities for file management and task management. Key types of operating systems are Windows, Linux/UNIX and Mac OS X (O’Brien & Marakas, 2009). Windows systems are proprietary and require licensing, but they are considered to be easier for beginners to start with, and provide a number of assistance functions. Linux/UNIX systems are open source systems, which means that the source code of these systems can be available online, and everyone can modify or assemble the system in a specific way (Bocij & Chaffey & Hickie & Greasley, 2006). These systems are naturally more complex in maintenance (although the recent Ubuntu versions are not more difficult than Windows for beginners), but are known as more stable and reliable. Regarding Mac OS X, this is a powerful operating system which can be used at Apple computers. The choice of operating system is an issue of high importance, and while Windows mostly goes with laptops and PCs and is already installed, the process of installing Linux OS requires more attention.

In general, it is possible to determine that information systems have a powerful impact on all spheres of the society, and their effect on business is very multifaceted. Entrepreneurs should consider many IT-related factors which can generate competitive advantages for their business.

 

References

Bocij, P. & Chaffey, D. & Hickie, S. & Greasley, A. (2006). Business information systems. Pearson Education.
O’Brien, J. & Marakas, G. (2009). Introduction to Information Systems. McGraw-Hill.