To start with, it is commonplace knowledge that businesses are set up to achieve a purpose and require owners to take critical decisions on how to use their resources which are mainly financial, human or material. Indeed, with the advent of technology, businesses have found the need to invest in information systems to help them simplify processes, reduce human errors and improve efficiency of operations. Thus, as a sequel to Monday, 15 May,2023 edition of this column which focused on software integration with its related issues, this article will further look at information systems.
Basically, an Information System is a combination of software, hardware, and telecommunication networks to process (collect, transfer, store, process, and share) data or information in an organisation. In all conversations on Information System, it is important to take note of the four (4) key components, which invariably define it-software, hardware, telecommunication and data. Data means a collection of facts and is useless by themselves, but when collected and organised together as an information, it can be very useful for decision-making.
Many businesses use information technology to manage their operations and interact with their consumers and other stakeholders. It has been established that when an information system is implemented or correctly integrated into business processes, performance improves. However, the benefits of a specific information system will differ from one company to another depending on the industry in which the company operates, and the business processes for which the information system was integrated.
Types of Information Systems
Every company or organisation needs Information Systems plan that describes how information technology supports the attainment of their business goals and keeps records of all their system applications and Information Technology (IT) infrastructure components. That said, Information System can be used for specialised and generalised purposes. A generalised Information System provides a general service like a database management system where software helps to organise the general form of data. A specialised Information System, on the other hand is built to perform a specific function for a business. Some of the applicable Information Systems for your office set-up are:
Operations Support Systems (OSS)
This type of Information System mainly supports a specific type of operation in a business. An example is the transaction processing system used in all banks worldwide. A study by Molla and Heeks (2003) revealed that a “transaction processing system collects, stores and processes information throughout a day on everyday transactions. These systems help in answering the routine questions of a business.”
Office Information System (OIS)
It is an Information System that enhances business processes and makes communication between users easier through the use of hardware, software and networks. Using computers and other electronic devices, employees perform most of their task automatically rather than manually (Awais et al. 2012).
Management Information System(MIS)
According to Reddy et al. (2009), Management Information System (MIS) is “an Information System that is concerned with collection, processing, storing and transferring of important business information to help managers perform activities. A Management Information System provides relevant and timely information that is used in the decision-making process and helps managers to plan and control efficient performance of operations.” An MIS provides regular reports and usually on-line access to the organisation’s current and historical performance.
Decision Support System(DSS)
Research by Nowduri (2010) illustrated, that a Decision Support System (DSS) is “an Information System that helps users to analyse information, which is helpful for their business, and presents it in a way suitable for decision-making. This helps to make decisions in a more efficient way.” It analyses the rapidly changing information that cannot be determined in advance. It can be used in completely automated systems and human-operated systems. However, for maximum efficiency combination of human and computer-operated systems is recommended.
Executive Support System (ESS)
Executive Support System (ESS) is an Information System that is mostly used as reporting software, which transforms business data and information into summarised reports. These reports are mainly used by senior executives of a company for long-term planning and scheduling. An Executive Support System also provides senior managers with easy access to key internal and external (e.g. competitor) information. As each of these systems covers a specific business area and supports only specific business processes, it is wise to have them integrated and connected into one Information System that would be able to meet the business needs in terms of relevant processes.
Roles of Information Systems
Investments in the design and implementation of Information Systems help businesses to achieve their strategic goals. Some of the significant roles information systems play in the modern enterprise include the following:
-Necessary to sustain and grow businesses
In a business, there may be the need for (a new) computer software or the implementation of network architecture to support operations. So, any company that is looking to secure its future and wants to take advantage of emerging opportunities or remain competitive needs to integrate a well-designed Information System into its operations. There again, customer tastes and preferences are always changing and evolving over time and, therefore, requires businesses to adopt new methods and innovative techniques to survive the market by meeting customer demands. Hence, the implementation of information system can benefit businesses a lot.
The acquisition and integration of a great information system helps to facilitate decision-making. This means, the quality of decisions and strategic plans dictate the level of success or business performance of a company. Therefore, the management of your company can use Information Systems to come up with strategic plans and make best decisions to grow the company. To note, a functional Information System evaluates information from all the company’s sources and come up with the best ideas to survive and contain external threats or economy downturn.
–Better data storage and access
Primarily, information systems are also useful for storing operational data and other sensitive corporate documentation and communication records. Manual data storage may cost a lot of time and space to preserve but Information Systems are very helpful to preserve documents even in the cloud and retrieve same for use. Indeed, Information systems store data in a sophisticated manner, making the process of finding the data much easier.
The roles Information Systems play in the modern corporate environment cannot be underestimated. Nonetheless, Information systems (IS) projects are more likely to fail due to improper design or poor management of the implementation process, budgeting /cost implications and lack of collaboration within teams. Also, Information System projects involving business process re-engineering, enterprise applications, and mergers and acquisitions fail because they require extensive organisational change to succeed and must be prioritised.
With regard to design, an Information System must be compatible with the structure, culture, and goals of the organisation and lack of it thereof can cause implementation failure. Most often, when Information Systems projects are being implemented, there is the tendency to be preoccupied with technical issues at the expense of other crucial organisational requirements. The result is that Information Systems end up being technically fit for purpose but incompatible with their organisation’s structure, culture, and goals. Without a close organisational fit, such systems create tensions, instability and conflict, hence fail.
Investment in the implementation and periodic maintenance of Information Systems has cost/budget implications. While the implementation of some systems are quite smooth, other system projects can be too costly to complete or may encounter budget over-runs. But this should not deter businesses from deploying Information Systems. What is required to manage or control the implementation cost is proper planning.
Data or information flow is at the heart of every Information System implementation project because it is very useful for decision-making and corporate strategy. The challenge is that data in the system may have a high level of inaccuracy or inconsistency. Thus, information required for a specific business function may be inaccessible because the data are incomplete and difficult to understand in isolation. It also happens that information in certain fields are not clear or properly organised for business decision-making.
To conclude, the need for Information Systems to improve business performance means that businesses need expertise advice on such projects to make the right investments. This way, companies will be better placed to understand their Information System requirements, projects costs and how to manage them after successful implementation.
Bernard is a Chartered Accountant with over 14 years of professional and industry experience in Financial Services Sector and Management Consultancy. He is the Managing Partner of J.S Morlu (Ghana) an international consulting firm providing Accounting, Tax, Auditing, IT Solutions and Business Advisory Services to both private businesses and government.
Our Office is located at Lagos Avenue, East Legon, Accra.
Contact: +233 302 528 977
+233 244 566 092