Learn the information system definition and see examples. Learn about the components and basic concepts of information systems.
Updated: 11/21/2023
Information Systems | Definition, Concepts & Examples
Table of Contents
- What Is an Information System?
- Basic Concepts of Information Systems
- Components of an Information Systems
- Examples of Information Systems
- Lesson Summary
- FAQs
- Activities
Information Systems - A Business Case
The following business case will allow you to put your knowledge of information systems into practice in a real-life corporate context.
Here, you're the head of information technology at PhunkyCars, Inc., a car part reseller. You receive a call from the board of directors, in which you're asked to attend their next meeting to explain how the different types of information systems can be used to optimize a business' operations. The board member who called provided you with a list of tasks and needs (presented below) that he has been told can be optimized by using information systems. He specifically wants to know the type of information system required for each task so that the board can assess whether an investment in information systems is warranted.
| Task/Need |
|---|
| PhunkyCars purchases hundreds of spare parts every day from multiple sellers and currently records these purchases in a paper journal. |
| PhunkyCars's employees record their time using pen and paper, where every form is signed by managers daily. |
| PhunkyCars wants to be notified when its goods sold have been delivered to customers by the courier. |
| PhunkyCars sells multiple spare parts to customers every day and records these sales in an offline excel spreadsheet. |
| PhunkyCars wants to know if they should expand to Canada. |
| PhunkyCars wants to keep track of customers who have paid their balances owed versus those who have not. |
Required:
Identify which type of information system is required for each of these tasks/needs.
Solution:
| Task/Need | Information System Type |
|---|---|
| PhunkyCars purchases hundreds of spare parts every day from multiple sellers and currently records these purchases in a paper journal. | Transaction processing system |
| PhunkyCars's employees record their time using pen and paper, where every form is signed by managers daily. | Management information systems |
| PhunkyCars wants to be notified when its goods sold have been delivered to customers by the courier. | Decision support systems |
| PhunkyCars sells multiple spare parts to customers every day and records these sales in an offline excel spreadsheet. | Transaction processing system |
| PhunkyCars wants to know if they should expand to Canada. | Executive information systems |
| PhunkyCars wants to keep track of customers who have paid their balances owed versus those who have not. | Management information systems |
What are the 5 components of an information system?
The five components of an information system are hardware, software, network, data, and procedures. Sometimes, people are added as a 6th component.
What is meant by information system?
An information system is a way to organize and analyze data. Its purpose is to turn raw data into useful information that can guide decision-making in an organization.
Table of Contents
- What Is an Information System?
- Basic Concepts of Information Systems
- Components of an Information Systems
- Examples of Information Systems
- Lesson Summary
Information systems are defined as complex sets of interconnected information, data, and processes. They are used in all aspects of human life, business, and industry.
In technology, the definition of information system is a broad term that refers to any information system or tool that helps with the collection and use of data. Information systems can be used to assist an organization, or they can be used for personal gain.
Put simply, information systems are sets of technological methods and techniques used to store, organize, manage, and retrieve information digitally. They take on many forms such as computers, mobile devices, tablets, and software programs.
In technology, information systems are mainly used as a platform for information gathering and processing. They can be hardware or software and use computer systems to perform tasks like data storage or data analysis.
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An information system is a system designed to process, store, and retrieve data. The term is broad and encompasses data storage both on computers (using local memory and disks) and in the cloud.
The system for the management of information includes programs that are used to process and manage data. The program performs activities such as extracting, categorizing, analyzing, retrieving, and storing the data. Depending on the type of system used by an organization, the basic concepts of an information system can vary significantly.
The basic processes of an information system include input and output processes, coordination processes, and decision-making processes.
The output processes are responsible for delivering new, useful information to the user or end-user after processing the input data.
The coordination process coordinates all other functions within the system while maintaining overall performance. Finally, the decision-making process is also known as a control process because it is used to manage everything else in the information system.
Some common characteristics of information systems include the following:
- Data stored in electronic form
- Processing of all types of inputs including visual, audio, and video
- Capable of handling high volumes of data with minimal effort
Another important distinction to note is that data and information are two different things.
Data is a collection of facts and statistics that can easily be accessed via technology such as computers and smartphones. Data consists of singular values. Data is recorded as an input or output from an operation/process. Data can also be stored in memory for later use, for example, when processing the data and calculating new results.
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Information, on the other hand, is difficult to quantify. It can be anything from newspaper articles to images. Information may be a general idea that we have about something or facts about something, e.g., "the population of Africa". Information can also be a value that our data contains like "the average age in Africa" or "the percentage of people who speak Arabic."
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These are some of the key terms that you should be familiar with in the concept of systems for handling information.
- Hardware: A physical system that houses the components necessary for information processing and storage, such as the CPU, RAM, and hard drive.
- Software: Programs that can be installed on electronic devices such as computers and smartphones to run calculations or perform tasks.
- Database: A collection of interrelated data files stored on a computer's hard drive.
- Network: A system of computers connected by cables to share data across different systems and communicate with one another.
- Procedure: A set of instructions that are used when interacting with an information system, such as to search for data or record new data.
The following sections are part of the general IT departments in a company:
- Software
- Hardware
- Databases
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The following two systems are the most common examples of information systems in everyday life: general-purpose systems and specialized systems.
General-Purpose Information System
A general-purpose Information system is a broad category of information system that processes, stores, and delivers information in the most suitable format for its intended use or some other use, such as for data mining or analysis purposes. General-purpose technology is usually generic but can be adapted to meet specific requirements when needed. Examples of general-purpose systems include electronic spreadsheets for basic data analysis, social media, and database management systems (DBMS).
Specialized Information Systems
A specialized information system is designed for a specific purpose such as manufacturing equipment or hospital equipment. Examples of specialized systems include online shopping portals, online news media, and electronic health records.
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Information systems are designed to store, retrieve, or present information. They are the backbone of a company's data and operations, as information systems can be used to organize and analyze data. Examples of information systems include databases, questionnaires, and online survey tools. Online survey tools collect information from the general public to create statistics about their needs and concerns. There are typically five different components in information systems: databases, hardware, software, networks, and procedures. Databases are collections of linked records containing interrelated data from several different centralized sources that have been stored on the computer's hard drive. Hardware is an apparatus in which information is processed or permanently stored.
A computer is considered a physical system, while an apparatus would be RAM and hard drive. Software is a word for programs (such as spreadsheets for basic analysis, word processors, etc.) that use electronic devices like computers and smartphones to perform tasks. Networks are groups of computers connected, where they share data across different systems and communicate with one another. Procedures are a set of instructions that are used when interacting with an information system. In a general IT department, the members usually handle software, hardware, and database issues. Data is a collection of information that is standardized and organized by a particular set of rules, while information is the total of data. Information can be stored in any form and on any medium such as digital, paper, etc. It can also be communicated through any channel such as verbal, text, or visual. A general-purpose informational system (GPIS) is a system that has some kind of general purpose in the business of information. An example of a general-purpose informational system is a database management system (DBMS). A specialized informational system (SIS) is a system that has been developed to be suited for and designed for one specific type of information. An example of a specialized informational system is an online payment system.
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Video Transcript
What is an Information System?
Many organizations work with large amounts of data. Data are basic values or facts and are organized in a database. Many people think of data as synonymous with information; however, information actually consists of data that has been organized to help answer questions and to solve problems. An information system is defined as the software that helps organize and analyze data. So, the purpose of an information system is to turn raw data into useful information that can be used for decision making in an organization.
General Purpose vs. Specialized Information Systems
There are some general types of information systems. For example, a database management system (DBMS) is a combination of software and data that makes it possible to organize and analyze data. DBMS software is typically not designed to work with a specific organization or a specific type of analysis. Rather, it is a general-purpose information system. Another example is an electronic spreadsheet. This is a tool for basic data analysis based on formulas that define relationships among the data. For example, you can use a spreadsheet to calculate averages for a set of values or to plot the trend of a value over time.
In contrast, there are a number of specialized information systems that have been specifically designed to support a particular process within an organization or to carry out very specific analysis tasks. For example, enterprise resource planning (ERP) is an information system used to integrate the management of all internal and external information across an entire organization. Another example is a geographic information system (GIS), which is used to manage and analyze all types of geographical data. Expert systems are another example of information systems. An experts system is designed to solve complex problems by following the reasoning of an expert.
Typical Components of Information Systems
While information systems may differ in how they are used within an organization, they typically contain the following components:
- Hardware: Computer-based information systems use computer hardware, such as processors, monitors, keyboard and printers.
- Software: These are the programs used to organize, process and analyze data.
- Databases: Information systems work with data, organized into tables and files.
- Network: Different elements need to be connected to each other, especially if many different people in an organization use the same information system.
- Procedures: These describe how specific data are processed and analyzed in order to get the answers for which the information system is designed.
The first four components are part of the general information technology (IT) of an organization. Procedures, the fifth component, are very specific to the information needed to answer a specific question.
Different Types
The many different types of information systems can be divided into categories based on where they are used in the hierarchy of an organization.
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This is best understood with an example. Consider a chain of bookstores. Every day, each store receives new books to put on the shelf, and many books are sold. All of these events are processed using a transaction processing system. This is used by store clerks and cashiers. Individual store managers have different tasks. They need to schedule staffing for their store, keep track of deliveries of new books and keep track of the finances. A store manager will use one or more management information systems for these tasks.
The company has a number of stores, and so it also has more senior managers who need to make sure the entire chain keeps running smoothly. This includes tasks like the logistics of shipping books from a warehouse to the stores, keeping track of inventory and sales, and managing personnel. At this more senior level, managers would use decision support systems. At the executive level, the decisions are more strategic. For example, they may need to determine where to locate a new store, identify new markets and develop an online presence in addition to the brick-and-mortar stores. This would require the use of executive information systems.
While this pyramid model is useful, some information systems might be used at different levels. In the case of the bookstore chain, the sales information from the transaction processing makes it all the way to the top in order to identify which products are doing well and which stores are doing better than others.
Lesson Summary
Let's review. Information consists of data that has been organized to help answer questions and to solve problems. An information system is the software that helps organize and analyze data. The purpose of an information system is to turn raw data into useful information that can be used for decision making in an organization. Many information systems are designed to support a particular process within an organization or to carry out very specific analysis.
Learning Outcomes
When you are finished, you should be able to:
- Explain how an information system uses data to produce useful information
- Recall the two main types of information systems
- List the components of an information system
- Identify some different categories of information systems
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Information Systems | Definition, Concepts & Examples
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