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3 Roles for Information Systems in Business

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Purpose of Information Systems

Information Systems (IS) are to help you and your company to find new strategies in order to gain competitive advantage in your industry. One way to do this is through adapting IS in your business. IS helps the organization to use its data, reduce workload and assist compliance with mandatory regulations.

3 Roles for IS

Information Storage and Analysis

Companies now use more advanced databases that contain all types of data about what they do. IS can store, update and analyze the information. From all the information that the agency has, they can figure out new solutions to both current and future problems. Information can also be integrated from different sources both in and outside of your company. This allows you to keep the company up to date with both internal performances and external opportunities or threats.

Assist with Making Decisions

Information Systems are all about helping you to make strategic plans for your business. The management team uses the information gathered to create plans and decisions for longevity and making more money. You use IS to measure and test all the information gathered from all sources. The analysis and comparison of market trends helps you to decide if your strategic decisions made are both adequate and are good quality.

Assist with Business Processes

IS helps businesses to create more value based systems for your company. Information Systems are integrated anywhere to measure out where tasks will make that department run better and for less money. Or it can make sure that everyone follows whatever regulations each department needs to follow to stay in compliance with government laws. It both simplifies business processes and gets rid of unneeded activities. They also add controls to employee processes. This in turn makes sure that only the ones who need to know have access to certain tasks. IS gets rid of repetitive tasks, increases accuracy and leads to better project planning and implementation.

Some Considerations

Implementing new systems costs a lot of money. It includes not just the installation but also employee training sessions. Some employees might even resist the changes being brought on. This in turn can hinder your operations and employee turnover could increase. Just make sure to have strong leadership in place when doing this. It will help guide employees and managers through the transition while weighing cost against benefits to see if you would really like to do this.

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Defining IS 4 Primary Functions in Business

IS, IT, business functions, business information system function, information systems, information technology

You can define business by four primary functions: 1) Marketing and Sales, 2) Production 3) Accounting and Finance and 4) Human Resources (HR). It is all about finding ways of supporting your business operations and management.

Marketing and Sales IS

Information systems go towards planning, promoting and selling the products or services. They support decision-making through:

  • Planning
  • Price
  • Place
  • Promotion

This is the entire marketing IS where it has to draw on many sources of results to find information. Completing marketing research helps focus on finding answers supporting decision-making. Marketing subsystems help support decision-making. The decisions are then integrated with the sales forecast and marketing plan, comparing sales results.

The Subsystems

  • Product subsystem – The planning of introductions of new products
  • Place subsystem – Making the product available to the customer at the right place and time
  • Promotion subsystem – Supports both personal selling and advertising
  • Price subsystem – Contain industry prices and help set up pricing goals
  • Sales forecasting – Forecasting and developing a full marketing plan comes with planned marketing and outstanding orders

Components for information systems for accounting include:

  • Accounts receivable
  • Accounts payable
  • Payroll records
  • Inventory control
  • General ledgers

They rely heavily on online databases and reports custom-built. Essential functions of financial systems are:

  • Financial forecasting and planning – Predicting funds coming into and out of your company long-term. Using cash-flow models help find needs of funds locations along with where they’re coming from.
  • Financial control – Budgeting and Return on Investment (ROI)
  • Funds management – Managing liquid assets for high yields with lowest degree of loss risk
  • Internal auditing – Auditing reviews and shows independent appraisals of your accounting, financial, and operational procedures.
  • Human Resources IS support through providing information to the HR office. It has grown immensely over the years to keep up with needs to adapt to new laws and regulations.

Giving access to stakeholders including:

  • Employees of the HR department
  • Personnel of your company wishing to see their records
  • Workers wishing to see open positions and benefit plans
  • People taking computer training classes for work and completing evaluations
  • Managers can rate their subordinates and make decisions
  • Executives creating tactical and strategic planning

Other databases include:

  • Applicant databases
  • Position inventory
  • Skills inventory
  • Benefits databases
  • External databases

Conclusion

As we can see, all these different information systems have to work together smoothly to give superior results for your company. If not, it is bound to disappoint your customers. They expect timely delivery of products and services, perform QA to their own standards and flexible credit terms to name a few. Information systems offer support integrating business processes, cutting across functional lines to do it. In turn it makes everyone happy, from business partners to customers and suppliers.

 

 

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Why All the Different Information Systems?

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This all started back in the day.  Someone would need a system made specifically for them to handle one problem.  Soon enough that it was discovered that different problems needed similar solutions, but not always in the same manner of getting them.  This is where defining of the information systems began and why it is still needed.   When the company in question decides that they need to upgrade, they have to go through a process in order to find the right applications and hardware to handle their data.  Classification comes to play here, so that categorizing information can be completed correctly.  This will help to make the data one unit instead of many.

How Do You Identify Different Types of Systems?

There is no simple answer to the question.  Every company builds an information system (IS) that is tailored to their specific needs.  There are many different types of IS that are used in some manner or another.  Classifying IS relies on how tasks are performed and responsibilities are divided in the agency.  This becomes a pyramid model as most companies are hierarchical, so classes of IS are categorized following the hierarchy going down.

To compare different information systems:

  1. Transaction Processing Systems (TPS)– These are operational level systems.  They are used by shop floor workers and front line staff.  Data is gained here through tracking of low-level activities and basic transactions.  They function as simple data processing systems only.  This is the system that produces information for other systems to use.  They are used internally and externally, are used by operational personnel and supervisors and are focused on efficiency.  Examples:  Payroll, Order processing, Reservations, Payments and Funds Transfers.
  2. Management Information Systems (MIS) – Management level used by middle managers. This system ensures smooth running of the company for short to medium terms.  Information is given out highly structured and helps managers to evaluate the company’s performance through comparison of outputs.  MIS is built on data given by TPS.  They are based on internal information flow, support structured decisions, but are inflexible with not much analytical ability.  Examples:  Sales Management, Inventory control, Budgeting, Management Reporting, and Personnel.
  3. Decision Support Systems (DSS) – Knowledge based system used by senior managers. They analyze existing structured information, allowing managers to estimate any potential effects on decisions they are thinking of implementing.  These systems are interactive and are used to solve problems.  They can access databases, offer analytical tools, allow simulations to be completed, and can support exchanges of information in the company.  This system can alter and build solutions provided by MIS and TPS, that can create insights plus new information to go off on.  DSS helps to support badly or semi-structured decisions already being built, and have analytical and modeling capacities.  Examples:  Group Decision Support Systems (GDSS), Computer Supported Co-operative work (CSCW), Logistics, and Financial Planning.
  4. Executive Information Systems (EIS) – Strategic level used by executives and senior managers. These systems analyze environments that the company works in, find long-term trends, and plan courses of action.  The information gathered is gathered from internal and external sources, and is weakly structured.  These systems are designed to be able to be used directly by the executives and are user friendly with the ability to be customized to whomever is using it.  EIS gathers and presents data from the MIS or TPS so senior management and executives can see what is going on a make decisions based off what they see.  The people who use this want ease of use and being able to predict what will happen to the company in the future.  It has to be effective, flexible, and support unstructured decisions.  Examples:  There are none.  These systems are tailored to individual wants of the user, in other words are custom made.  There are off the shelf packages that can be customized too.

The Importance of Planning

There is no easy way to explain why there are so many different types of information systems.  Every company out there is not the same, or runs their agency in the same manner as others.  This is why modifications are made to the systems in order for them to work specifically with what said company uses and the data they keep.  Also every level of the agency uses different systems.  Not everyone has to have a need to know of everything going on.  It is better to keep it at the level that the systems are going to be used at the most.  This is why planning for upgrades is so important.  If the wrong system is used, or the wrong programs…

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Information Systems and Effective Management

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Information technology (IT) is a huge part of effective management that managers have to know.  They have to as they build and put into place new decisions every day.  The information systems (IS) are for the most part completely built from scratch.  The main purpose of strategic information systems planning (SISP) is to create implement new systems to use for the agency that the managers work for.  This is something that has to be worked from the top on down or it will never gain fruition.  There are complications to building these new systems, but if done correctly, it can be a godsend.

SISP Research and Implementation

Steven L. Alter did some research into which agencies have the most success with SISP through adapting to it correctly and optimally.  He has found that applications being created and used now are now built to support the managers who have to make decisions, instead of replacing them.  This is called decision support systems and are used to greatly improve managerial effectiveness.  The problem is that there is a restriction of knowledge as to what kinds of systems are used now.    This means that information systems are out there that the manager and their superiors have not built it themselves, so they don’t know what these systems do.  Don’t just focus on the technical aspect, focus on how the new system will work with the agency in question.

6 Types of Systems

The types of systems used are:

  1. Used to retrieve isolated data
  2. Uses mechanisms for ad hoc analysis of data
  3. Gathers aggregations specified beforehand in standard reports
  4. Can estimate consequences of all proposed decisions
  5. Can propose decisions based off of data gathered
  6. Can help to make strategic decisions based off of the data gathered

Examples of SISP Being Used

Some examples of how SISP is used are:

  • For retrieval of information only – shop floor IS
  • Retrieval and analysis – portfolio analysis system
  • Multiple data bases and analysis – sales IS
  • Eval of decisions using accounting models – source-and-application-of-funds budgeting
  • Eval of decisions using simulation models – marketing decision system
  • Proposing decisions – optimize raw materials usage
  • Making decisions – insurance renewal rate system

Questions to Ask Yourself

There is a huge range of approaches that can be taken here that would be helpful depending on what is needed for said company’s business model.  What do they do?  What needs to be fixed that they would bring this up?  What improvements are going to be implemented?  What do they want the company to strive towards?  What systems are they going to use in order to implement their changes?

Build the System

These are just some of the questions that have to be answered before the company goes forward.  If there’s no clear vision on what is going to be done SISP can be a complete failure instead of being a bonus.  Build small prototypes first of specific areas in order to find where the bugs are.  Then they can be fixed with little or any cost before the big implementation begins.  Just remember as the author points out, building an IS makes sense when it is clear that changes are needed in how decisions are made in the company.  That and everyone learns what the role is of computers are in their workplaces, and helps managers to make decisions dealing with administration and competitive strategies against other companies in their industry.

 

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Key Methods of SISP

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SISP can be defined as the process to determine the computer applications that help achieve business objectives. SISP can be considered a critical management tool as it focuses on strategic goals of organizations. It’s needed in order to move strategic directions of organizations.  Otherwise things could get sloppy really fast. SISP keeps things organized when change is being implemented in agencies, especially with information technology (IT).

Why Use Any Methodology of SISP

Different methodologies that SISP uses is:

1. Business System Planning
2. Strategic Systems Planning
3. Information Engineering
4. Information Quality Analysis
5. Business Information Analysis

Whichever changes are chosen by the agency will influence methodology of implementation. It may also be more prudent to choose a bunch of different ways to complete it. This will help to keep a balancing act together when planning for the future.

Why Use SISP At All?

It seems that top management still doesn’t fully support using SISP methods in order to better compile and implement new changes. Research suggests agencies cannot reach success if there isn’t proper alignment of business and information systems strategies. There has to be a good mesh in order for the changes to be fully implemented with no problems. If there is no fit, it’s unlikely that there will be a proper alignment between information technology (IT) and the agency in question.

The Different Methodologies

The different methodologies are:

1. Business planning
2. Competitive impact
3. Computer-based applications
4. Conceptual analysis
5. Information systems planning
6. Information technology resource planning
7. Methodology
8. Strategic alignment
9. Strategic information systems planning (SISP)
10. Strategic management
11. SISP approach
12. SISP methodology
13. Strategic management planning
14. Strategic planning

The Why of All This

These methods can all be switched around and used in different ways in order to better find solutions. It has to be done correctly or a large amount of money will be invested with no results. Benefits from investing in IT can only be seen when there is a strategic alignment between IT and strategic business strategies. IT resources have to be able to target areas in the agency that are considered the most critical to their success. This has to be done with upper management, to include CEOs, CIOs and managers. This is why I have suggested in past posts that upper management is critical in SISP. If they are not willing to change initiatives and programs, there will be no change in the agency.

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Why is SISP Important for Organizations to Use?

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data, information, information technology, information systems, systems, IS, IT, SISP, strategic information systems planning, planning, IS planning, IT planning
The Relationship Between Data, Information and Intelligence

As time goes on there has been a recognition that information technology (IT) is becoming more and more integrated in businesses and organizations. But as it is, IT is only as successful as how aligned the information system (IS) development is within the company. This is where SISP comes into play. One issue is that there is raised pressure to leverage importance of SISP, and is a key issue to top management.

The Main Purpose

Basically SISP helps to find computer-based applications in order to better assist organizations. This helps them to use their business plans and reach business goals. So in this it helps to identify and use IS to reach both goals, objectives, and affect strategy. If it isn’t used correctly it instead can cause lost opportunities and waste money on resources not needed.

Strategic…How?

IS can be considered a strategic part of an organization. It helps conducting of daily activities, supports decision making, and works correctly in timely manners. There are four areas that IS can be considered a strength in:

1. It helps to gain competitive advantages
2. It helps increase productivity/performance
3. It enables new ways in management and organization
4. It assists to create new business opportunities

How Does SISP Work?

As to how the strategy works depends on how the customer wants the IS to be used in their organization. But SISP brings users and professionals together in order to help build a mutual understanding of what the information systems do and what problems can arise from them. This helps to create priorities in development. What the customer and professional does is rank systems in terms of efficiency, effectiveness and value to the company or organization that is considering switching systems.

The Five Phases of SISP

It can help build barriers against new entrants, change the competition, create new products to sell, and find cost-effective methods between they themselves as the customer with their suppliers. There are five phases in SISP:

1. The new business plan incorporating IT
2. Information systems assessment
3. Information systems vision
4. Information systems guidelines
5. New strategic initiatives

Four Objectives when Implementing

This is for both public and private organizations, as it is an incredibly important step in the entire process. SISP is only as good as how the organization implements and uses the ideas given. This in turn will decide how successful the company will be in the future. Always plan ahead as adopting IS creates a huge expense.
There are four objectives when implementing the new information systems:

1. Alignment
2. Analysis
3. Cooperation
4. Marked improvement of capabilities

Challenges

SISP improvements are considered a major challenge today for IS executives. Planning has to be successful in order to find out potential strategic impacts of IS. One thing to make sure of is, IS has to be planned and aligned with organization planning or it won’t work correctly. If it is aligned correctly then there will be fewer problems with the new hardware and software, along with a smooth and effective implementation of plans.