Information Systems: Definition and Characteristics

Management is the often unseen force that helps bind an entire organization and helps it to achieve its objectives by conducting the activities of planning, directing, organizing and controlling. In an organization the structure of management conforms to the pattern of a pyramidal structure (in most cases) with a well-defined hierarchy.

This hierarchy in the management with an increasing authority and responsibility as one rises up the pyramid has to be understood before a suitable MIS is designed for the organization. Management deals with organizational functions. Managers are the people who drive an organization by planning for its future, organizing and controlling its present and directing others in the organization to work towards a common objective. However, strictly speaking, in functional terms, management is all about taking decisions. In fact, the only attribute, which distinguishes a manager from the rest of people in the organization, is the manager’s ability to take decisions.

However, decision cannot be taken in isolation. Even simple decisions require information as an input.These decision requirements fuel an insatiable need for information within the organization. This information need is met by a set of information systems working in a synchronized manner, which is collectively called management information system (MIS). The competitive environment of today’s business necessitates that the MIS of any modern organization works on an information technology platform and that suitable information is delivered to the right person at the right time. Information systemscan be theoretically even manual systems but for all practical purposes3, information systems in today’s organizations are based on information technology platforms. Therefore, such information systems are expensive to acquire and maintain. The cost of their failure is even more expensive for the organization as lack of information may cause havoc within the organization. Thus, almost all business organizations have an information technology enabled information system.

Information systems are of different types catering to different user classes. Information systems that cater to the needs of management are the focus in this chapter. These systems are broadly called management information systems if they conform to some specifications. These management information systems can be created from scratch or can be acquired off the shelf and then customized to fit the needs of the organization. Contribution to MIS literature (Anthony 1965) by developing a framework for management information systems in organizations, that remains largely valid. The framework under which management works is also important from the point of view of MIS as MIS is a support function. MIS in an organization is also dependent on the role played by some key personnel like CIOand the system analyst. We shall look into these aspects in detail in this chapter.

Information Systems: Definition and Characteristics

The role of information in enhancing the competitiveness of an organization has been known in management circles for quite some time now. A former Chairman and CEO of Citicorp, Walter B Wristoncommented on information systems and their value to organizations more than two decades back saying,

‘Timely information has always conferred power, both in the commercial and in the political marketplace. But as the availability and timeliness of information continues to increase, some of the more traditional sources of power (e.g., natural resources), are declining. Today, management structures are being flattened and sharply reduced by those who really understand the impact of technology on business. The need for layers of management is being reduced everywhere, when information becomes available to more and more people at all levels at a faster rate; One of our leadership tasks is to design … databases which are important for our own business Anything that enhances the value of a company’s data and makes it more available to executives who lack computer skills in general, cannot help but improve the performance of our companies. Corporations may have to develop a formal information strategy, or a formal financial strategy. As all successful companies are market driven, timely access to market information must not only be out in place, but it has to be linked to the internal MIS system.’

According to (Orlikowski 1992), ‘Nothing is more central to an organization’s effectiveness than its ability to transmit accurate, relevant and understandable information amongst its employees. All of the advantages of an organization’s economy of scale, financial and technical resources, diverse talents and contacts are of no practical value if the organization’s employees are unaware of what other employees require of them’.

Information systems come a long way. Over the years, their role in the organization has increased and their importance understood and valued by all. They have become sophisticated and now offer a variety of benefits to organizations. They deliver value by enhancing the organization’s internal communication channels, extending suitable information to managers to help them take decisions, help in decision-making of top level management by simulating different scenarios, assisting in routine office tasks by automating them, capturing, stores and mapping all transactions between the organization and its internal and external customers. In short, in an organization they are all pervasive and offer tremendous value. This is evident from the enormous investments in information systems by most business organizations. Let us now formally define information systems and its related concepts.

Information System

Information systems are a special class of systems whose main objective is to store, retrieve and process, communicate and secure data. Information systems which help management at different levels to take suitable decisions are called management information systems. Typically information systems are housed in a computerized environment/platform to enable users to get faster and accurate information.

Information Systems over the Years

Information systems have themselves had a remarkable transformation in the last forty years of their existence. Initially information systems were designed to perform a specific task. The objective here in this type of system was to perform a task as quickly as possible with the minimum number of errors. The concept of using information systems for taking decisions had not been thought of yet. Organizations used information systems for data processing work only. Be it salary processing or bill processing, information systems of those times were focused on efficiency of operation. The people who worked on these systems had knowledge about the system and the user interface of the systems was very basic (character user interface). The output was in the form of output like salary slips, etc. Processing the data in the most efficient way was the prime focus of such systems. Most of these systems used file based data storage systems on which a computer programme would work, i.e., the computer programme would be able to access the data and organize it but it would store the data in a file. The problem with this type of system was that it led to replication of data and loss of consistency. Most of these system used COBOL computer programming language for such applications. The management of data and records in such files led to the development of important file management concepts like indexing.

Over the years, information systems have changed. Now more focus is on helping the management by providing information useful for decision-making. Data processing systems have become obsolete. Presently, focus is on delivering the right information to the right people at the right time. Information systems have become faster, more accurate and user friendly so that anyone can use it. The people who work on information systems nowadays are not knowledgeable about systems per se. They are normal users. The systems have become so friendly that they do not require users to be specialists in information systems to use them. Newer concepts have emerged in the information systems space to help organizations get better value for their money. Concepts like client server architecture, networking, distributed computing, centralized database, graphical user interface, and Internet have completely changed the information system space. Gone are the bulky mainframe systems requiring loads of money to procure and run. Now more money is required to procure the software than the hardware.