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“An information system can be defined as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making, coordination, and control in an organisation. In addition to supporting decision making, coordination and control, information systems may also help managers and workers analyse problems visualise complex subjects, and create new products”
(Laudon & Laudon, 2001)
In order for an organisation to fully appreciate the information systems available to them they must appreciate the value of information available. Information Technology and Information Management have experienced tremendous growth. Information is available everywhere and anytime. The Internet has certainly devalued information, before its creation many organisations benefited from gathering, sorting and selling information to stakeholders in need information to grow their business.
When printed information is turned into digital information the price drops. Take for example newspapers. It is the norm that Newspapers today publishes part of its information on the Newspapers website for free, if you want to view the rest of the articles you must pay for it at a premium. Meta information providers such as Google pick up this digital information and provide it free over the internet. The value of the information to the providers is obviously monetary but to the consumer of these online products it is ease of access and less time consuming to purchase online information.
Although much of information provided is considered to be free, we do pay the internet provider, and the internet provider charges a third party for access to the information.
The internet today has turned into the largest library in the world. In the past students when looking for information for assignments, research projects and exams gathered information from books, newspapers and research journals. The internet has made attaining information uncomplicated.
1.1 The Value of Information to the Organisation
It does not matter what type of business you are running whether it be a manufacturing business or providing a service the vital ingredient for any organisation is information. It is an organisation most vital asset. Information enables us to determine the need to create new products and services. “Information tells us to move into new markets or to withdraw from other markets. Without information, the goods do not get made, the orders are not placed, the materials are not procured, the shipments are not delivered, the customers are not billed, and the business cannot survive.” www.referenceforbusiness.com 
2. Information Management Systems
An Information System (IS) is more than hardware or software. The most important components of the system are the people who design it, maintain it, and use it. While the overall system must meet various needs in terms of power and performance, it must also be functional for the organisation’s employees.
Regardless which Information System an organisation chooses it is a major investment for any firm in today’s business environment. A poorly chosen or designed Information System can become an impediment to an organisation in attaining its goals. If the Information system if not capable of collecting, storing and transferring vital information for the business then the outcome can be catastrophic. Customers of the business may be discontented or worse lost. Valuable revenue may be lost due to increased overheads and the business may lose desired business direction due to an ineffective Information System.
2.1 Information Management Challenges
It may be essential to design different systems aimed at different levels of the organisation, firms are likely to find rewards in integrating systems, although integrating systems for different levels to freely exchange information can be complicated and expensive. Organisations need to decide what level of systems integration is required and how much it is going to cost.
Sustaining a competitive advantage does not necessarily last long. Competitors can reproduce a competitor’s strategic information management system. Changing market conditions, changes in what the consumer wants today and changes in the business environment all add to the loss of competitive advantage within an organisation if previous standards are not maintained. Updated technology from rival companies can lead to your organisation losing its competitive advantage.
- Operational Level Systems
- Knowledge Level Systems
- Management Level Systems
- Strategic Level Systems
3. Operational Level Systems
3.1 The Transaction Support System
TSS supports managers in the day to day running of the business. It keeps track of basic transactions such as sales figures, lodgements to bank, payments to creditors, payroll etc. The main purpose of the system is to answer questions which arise on a daily basis. Information must be easily obtained and precise.
These are fundamental systems that serve the operational level of the organisation. Transaction Support System is a computerised system that executes the daily routine transactions necessary to carry out the day to day tasks of running a business. At the operational level duties, resources and goals are predefined and form the foundation of daily business. Example of which is a bank lending money to customers, the predetermined questions are on the computer if the customer has the capacity to fund the repayments of the loan the transaction support system will give the answer as to whether the loan can be grant or not as the case may be.
Typical TPS have five major functional categories, sales & marketing, manufacturing & production, finance & accounting and Human Resource.
3. 2 Knowledge Level Systems
Knowledge Work Systems (KWS) supports the organisation employee’s involved in data processing. The knowledge based system helps integrate new information into the organisation and controls the flow of paper. Knowledge Level Systems are found in workstations throughout the organisation. Normally knowledge workers are people who hold formal university degrees and are often members of professional bodies such as doctors, engineers, lawyers and scientists. Their main role is to primarily create new information and knowledge. KWS, such as scientific or engineering design work stations, promote the creation new knowledge and ensure that new knowledge and technical expertise are properly integrated into the business.
4. Management Level Systems
Management Information Systems (MIS) are used to monitor and control decision making and administrative activities. Management level reports provide regular intelligence rather than information on operations. Some management systems centre on less structured decisions from which the information received may not always be clear. These systems often answer the question “what if” an example of which would be “what will happen if our sales figures double in the next two months”. Answers to questions often need new data from outside the organisation as well as the readily available data found from the existing operational level system. MIS primarily serve the function of controlling, planning and decision making at management level, depending on transaction processing system for their data.
The MIS condense and report on the company’s basic operations. This system usually provides managers with weekly, monthly and yearly results. It will provide specified answers to routine questions that have been prepared in advance and have a predefined formula for answering them. For instance, MIS reports might list the amount of coffee used last quarter in a chain of coffee shops, or it can make comparisons between one quarter and another. Management information systems are usually not flexible and they have little diagnostic capabilities, they use simple routine reports such as summaries and comparisons.
4.1 Decision Support Systems
DSS also supports management level in the organisation. DSS assist managers make decisions that are exclusive, briskly adjusting, not easy to specify beforehand. They address problems where the procedure for arriving at a solution may not be fully predefined. Even though DSS use internal information from TPS and MIS, they frequently bring in information from external sources, such as product price of competitors or current stock price.
By design the Decision Support System have more analytical power that the other systems. Built for the sole purpose with a variety of models to analyse data, or compress large amounts of data into a form where they can then be studied by the decision makers.
“DSS are designed so that users can work with them directly; these systems explicitly include user-friendly software. DSS are interactive; the user can change assumptions, ask new questions, and include new data” (Laudon & Laudon. 2001)
4.2 Strategic Level Systems
Executive Support System (ESS) assists senior managers attempt to address strategic issues and long term goals within the internal and external environments. The main concern is matching changes in the external environment to organisational capabilities. Information systems also supply major business functions as in sales, marketing, manufacturing and finance, accounting and human resource. A classic system will have each of the information systems designed to give the information required from each of the various departments. The sales function has a sales system on the operational level to record daily sales figures and to process customer’s orders. A management level system can track monthly sales, can send reports and calculate if there is an increase or decrease in sales. The system can complete sales forecasts for specific periods of time depending on the strategic structure the organisation requires.
The ESS serves to address non routine decisions requiring evaluation, judgement and insight as there is no agreed procedure to find a solution. The system creates a sweeping computing and communications environment rather than supplying any fixed application or specific capabilities. The design is such; that the system incorporates data about external events like new tax laws or competitors, but they also illustrate information from the MIS and DIS. The system filters, compresses and track significant data, highlighting the reduction of time and effort in finding information of value to the executives. Within the Executive Support System there is the most advanced graphics software with the ability to deliver graphs and data from many sources without delay.
5. Integration of Information Systems
The Transaction Processing Systems plays a key role in turning raw data into information it also provides data to the other systems. The ESS system relies on data from the lower level systems. Data is exchanged between the different functional areas. To aid the exchange of information many organisations are now building enterprise systems, also known as Enterprise Resource Planning (ERP) systems. Enterprise software models mechanise many of the business processes, such as filling an order, or planning a shipment, with the objective of integrating information across the organisation and getting rid of complex, highly priced connections between computer systems in various areas of the business. The flawless stream of information which was previously uneven throughout the organisation can now be sent throughout the various departments seamlessly. The system will collect data from a range of sources within the business process and accumulate them in a single comprehensive data repository where it can be retrieved by other departments of the business. For the managers it means that information is attained in a precise and timely manner.
Enterprise systems can improve organisational effectiveness and efficiency, help the managers in the decision making process the difficulties are that the system is extremely complex and difficult to construct. Organisations will need to restructure their business practices to improve how information flows throughout the organisation. In reviewing their practices employees need to be trained to use the system and take on new responsibilities. Enterprise systems require intricate pieces of software and large investments of time, money, and expertise.
5.1 Industrial Networks
Some companies are extending their enterprise systems beyond their internal enviroment to share information and synchronise their business practices and proccesses with other other businesses withing their industry. Industrial Networks can also be known as Extended Enterprises, connect together the enterprise systems of businesses within an entire industry.
“For instance, Proctor and Gamble (P&G), the worlds largest consumer goods company, have been developing and integrated industry -wide system that coordinatesthe grocery store point-of-sale systems with grocery store warehouses, shippers, its own manufacturing facilities, and its suppliers of raw materials. The single industry-spanning system effectively allows P&G to moniter the movement of all its products from raw materials to customer purchase”
(Laudon & Laudon. 2001)
Depending on the type of business the organisation may have several different types of Information Systems.
For Example: An Accounts firm whose main activity is the collation of figures, with a large volume of clients would have various different departments working off a mainframe. Each department within the organisation will have various different levels of access to the centralised computer system. The Human Resource department will have access to the files of the employees working for the company but would not have access to the client’s business records. The accountants working for the firm have access to the client’s files but do not have access to the files of the employees.
Because there are different interests in a firm no single system can give all the information an organisation requires. Information Systems can be made to provide different organisational interests. The use of these systems can provide an organisation with a strategic competitive advantage although unless a business can keep up with technological advances competitors may in fact remove the advantage an organisation has worked hard to retain.
This report is titled “Information Management Systems that support organisations” But in order to appreciate what an Information system and integration can do for an organisation it was worthwhile to investigate the value of information. The advantages to organisations are clear – raw data processed through Transaction Report Systems and reports are generated to the specifications required for managers. Knowledge Work Systems which is specialised system creating new information operated by professional employees. Organisations and information influence each other. Information systems must be aligned to provide information that is important to each department in the organisation. In order for the organisation to work efficiently and effectively it must be open to the influence of the Information Systems.
Keeping abreast of new technologies will essential for organisations in order to sustain competitive advantage. Interaction between information technologies is complex and is influenced by interceding issues, including the structure of the organisation, operating procedures, culture, politics, internal and external environment, and manager’s decision making. Unless it is understood that Information system changes life in the organisation, they are unable to successfully design new systems or understand active systems within the organisation. Within the organisation managers will decide what systems will be built, what they will do, and how the implantation of the systems will occur. However the cost involved in building Information Management Systems has to take into consideration but can any organisation afford to be without one.
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