Information system is a system that provides important information in an organization so that appropriate decisions are made. Information system helps in the collection of data, analysis, and forecast of future occurrences. Some information systems are important in suggesting decisions that organizations should make. People at different levels in an organization need information system. The figure below summarizes important information systems that are used at different levels of an organization
Executive support system is one of the types of information system. This system is important in collecting internal and external information that is important for the business. After this information is collected, it is analyzed so that it can act as a guide in making important decisions in an organization.
Advantages of the system.
- Enables easy decision making
- Accurate decisions are made
- Saves time for the top managers.
- It makes the management too dependent on them such that their failure can significantly affect the business.
- It is expensive to develop
Management information system is another important information system that is used by the managers. It collects information that is within the business organization and processes it for use by the management. It collects data from data processing system that is then analyzed for use.
Advantages of the system.
- It facilitates accurate decision making
- makes management activities easy
- Makes accurate future projections important for the business.
- Makes the management too dependent on them
- Wrong data can lead to wrong decisions
- The data used is only from internal sources.
Decision supports system is another important information system. This system is important when the management is making decisions that have uncertain results. The fact that the management is uncertain means that these systems are important in making complex decisions.
- Help the management in making complex decisions.
- More accurate decisions
- Makes the work of the managers easy.
- The system is expensive to install.
- Wrong data can lead to wrong decisions.
- Makes the management too dependent on them.
Knowledge management system is important for any organization since it helps create important information in the organization that is then shared with all the employees in the organization. This system is important in that employees are always updated on any information about the organizations market.
- Help improve the efficiency of employees
- Performance of duties in the organization becomes easy.
- Learning in the organization is easy.
- Wrong information can mislead employees in the performance of their duties
- It is expensive to put the system in place
Transaction processing system is important for all businesses. This is because it records raw materials purchased, monitors their use, record goods sold, and analyze these transactions. This information has important features that are useful for many business units.
- It helps project future trends such as demand and sales
- Decisions that are more accurate can be made from the analyzed information.
- Important information to the organization is stored by the system
- Input of wrong data can lead to inaccurate information that is misleading to the organization.
- It is expensive to put in place the system
Information systems are very important for an organization. However, the choice of the information system depends on the size of the business and the basic activities that are carried out by the business. An organization should also consider costs and benefits of implementing a certain information system.
The following table summarizes the advantages and disadvantages of common information systems.
Stair, R. M., & Reynolds, G. W. (2010). Principles of information systems: A managerial approach. Boston, Mass: Course Technology, Cengage Learning.
Rainer, R. K., & Cegielski, C. G. (2011). Introduction to information systems. Hoboken, N.J: Wiley.