Information systems, in the business sense of the term, are complementary networks and interconnected components that amass, disseminate, and otherwise make data useful to bolster management’s decision-making processes.
Information systems are not just technological, however. “Besides the components of hardware, software, and data, which have long been considered the core technology of information systems, it has been suggested that one other component should be added: communication,” writes researcher Dave Bourgeois.
“An information system can exist without the ability to communicate—the first personal computers were standalone machines that did not access the internet. However, in today’s hyper-connected world, it is an extremely rare computer that does not connect to another device or network,” Bourgeois continues.
To integrate communication, Bourgeois suggests adding people and processes to the traditional hardware, software, and data components of information systems. Business executives in nearly every industry have discovered that the processes they use, particularly the “as-a-service” cloud analytics services, and the active participation of customers who want to customize their experiences more each year are inseparable from business information systems.
Once all the elements are integrated, every information system plays several roles for businesses with varying degrees of importance depending on a company’s needs. Tech writer Julie Davoren details them on Chron.com as follows:
Store and analyze information: Sophisticated and comprehensive databases, sometimes cloud-based, are used to store and analyze information pertaining to business functions, customers, transaction data, and both employee and customer activity. The results of these analyses provide insight that can help decision-makers solve current and future issues.
Assist with making decisions: Information systems can compare in-house analyses to external sources to, for example, compare internal insights to information about the general state of the economy or competitors’ financial reports. Decision-makers use these insights to review the adequacy and quality of their strategic decisions.
Asist with business processes: Information systems are used to develop value-added systems for business functions. Business processes can be simplified and unnecessary activities can be streamlined through the use of information systems adapted to common business tasks, such as manufacturing, supply chain, and employee processes.
As information systems become more entrenched in the world of business, companies’ managerial staff and executives are expected to familiarize themselves thoroughly with business information systems and what they have to offer.
Information systems are complementary networks that make data useful to corporate decision-making.
A good example of the benefits of business information systems is the success of Walmart. Since its inception, the massive retail corporation has led the industry in adapting new information technology to business use.
Walmart “was a pioneer in barcode scanning and analyzing point of sale information, which was housed in massive data warehouses,” according to data professional Anthony B. Smoak.
“Walmart launched its own satellite network in the mid-1980s, which led to profound business practice impacts with respect to its supply chain management process. Strategic systems … enabled data integration and sharing between Walmart and its suppliers. These systems also enabled the concept of vendor-managed inventory.