CHAPTER 1
AN INTRODUCTION TO INFORMATION SYSTEMS IN
ORGANIZATIONS
1.1. Introduction to Information Systems
1.2. Information System in Organizations
1.1 Introduction to Information Systems
1.1.1 Definition of Information System
Information systems are interrelated components working together to collect
data, process, store, and disseminate information to support decision making,
coordination, control, analysis, visualization (creating mental picture) etc in an
organization.
1.1.2 Components of Information Systems
The components that must come together in order to produce an information
system is:
1. Computer Hardware
2. Computer Software
3. Telecommunication Systems and Networks
4. Databases and Data Warehouses
5. Human Resources
6. Procedures
1. Computer Hardware
Computer hardware is the physical components that a computer system
requires to function. It encompasses everything with a circuit board that
operates within a PC or laptop; including the motherboard, graphics card,
CPU (Central Processing Unit), ventilation fans, webcam, power supply,
and so on.
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2. Computer software
Software, instructions that tell a computer what to do. Software comprises
the entire set of programs, procedures, and routines associated with the
operation of a computer system. The term was coined to differentiate
these instructions from hardware—i.e., the physical components of a
computer system.
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3. Telecommunication system and networks
Telecommunication networks are transmission systems enabling
information to be transmitted in analogue or digital form between various
different sites by means of electromagnetic or optical signals. The
information may consist of audio or video data or some other type of
data. Whereas company network is designed to share resources within
the company itself. The detailed discussion will be given in chapter 3
4. Databases and data warehouses
A database is a data structure that stores organized information. Most databases
contain multiple tables, which may each include several different fields. For example, a
company database may include tables for products, employees, and financial records.
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Examples of information held in database
Employee, customer and supplier information
Patient health records
Criminal records
students, parents and staff records in school
members of social media sites
etc
Note: A data warehouse contains all of the data in whatever form that an
organization needs
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5. Human Resources
The people that are needed to run the information system and the
procedures
The component that most influence the success or failure of information
systems.
Examples
Programmers
Systems Analysts
Systems designers
Project managers
Network specialists
Trainers
Computer operators
chief information officer (CIO)
operations managers,
database administrators
computer security specialists
Tactical managers
Senior mangers
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Executives etc
6. Procedures
The policies/rules/ regulations that govern the operation of an information
system
– Operating Procedures (using Apps)
– Backup and Recovery Procedures
– Security Procedures
– Development Procedures
Example: Rules and regulations that must be followed to do payroll in a Payroll
information systems
What Is ICT/IT?
Information technology (IT) is the use of modern technology to aid the :-
Capture,
Processing,
Storage and Retrieval
And
Communication of information, in the form of numbers, text, sound, Still
image/graphic, video, or the combination of them
IT Computer technology (hardware and software) + Telecommunications
Components of IT
1. Computing Devices
2. Communication Networks
3. know-how (the practical skill and knowledge necessary to do something)
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Functions and Application of IT
The Functions of IT:
There are four basic functions of IT.
1. Capture: Compiling detailed records of activities.
Example when a book is taken from the library
2. Processing and Generation of information: Converting, analyzing,
computing and synthesizing all forms of data and information.
3. Storage and retrieval: Retaining information for further use and
Locating and copying stored data or information for further
processing or for transmission to another user.
4. Transmission: Distributing information over a communication network
Question:
List down some application Of IT/ICT that you have seen in your day to day life
1.2 Information System in Organizations
Question: How many different kinds of Information System are there in an
organization?
Answer: Depending on how you create your classification, you can find almost
any number of different types of information system in an organization
• One of the oldest and most widely used systems for classifying information
systems is known as the Pyramid Model
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• As most organizations are hierarchical, the way in which the different
classes of information systems are categorized tends to follow the
HIERARCHY
• Classification information systems based on the Pyramid Model (Three
level model )
1. Transaction Processing Systems (TPS) - Bottom Layer
Purpose: Supports Operational Decisions
Users: Front-line employees, clerks, supervisors
Functions: Handles routine, day-to-day business transactions like sales, payroll,
inventory management, and order processing.
Example Systems: Point of Sale (POS) systems, Payroll systems, Online Banking
Systems.
2. Management Information Systems (MIS) - Middle Layer
Purpose: Supports Tactical Decisions
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Users: Middle managers, department heads
Functions: Aggregates data from TPS and provides summarized reports to help
managers track business performance and trends.
Example Systems: Sales Reporting Systems, Inventory Management Systems, HR
Management Systems.
3. Executive Information Systems (EIS) - Top Layer
Purpose: Supports Strategic Decisions
Users: Senior executives, CEOs, board members
Functions: Provides high-level insights, forecasts, and trends for long-term decision-
making. Uses dashboards, data visualization, and predictive analytics.
Example Systems: Business Intelligence (BI) tools, Corporate Planning Systems, Market
Analysis Systems.
Decision-Making Levels and Their Relationship
Operational Decisions: Routine and structured, requiring fast and efficient processing
(TPS).
Tactical Decisions: Semi-structured, requiring analysis of past data to make short-term
plans (MIS).
Strategic Decisions: Unstructured, requiring deep insights and forecasts for long-term
business strategies (EIS).
Exercise:
What is the difference between Information Systems (IS) and Information
Technology (IT)? Support your answer with example
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