What is Information System: Types And Applications
Table of Contents
- jaro Education
- 27, January 2024
- 11:00 am
Information systems are the quiet powerhouses behind the seamless operations and smart decisions we encounter daily, from Amazon’s logistics and hospital record management to Spotify’s song predictions.
These systems are crucial for businesses of all sizes, enabling the collection, processing, and distribution of information. This post will explore various types of information systems, provide practical examples, and highlight their critical applications across different industries. We will also delve into key management information systems that shape today’s strategic business moves.
What is the Information System?
An information system is how you collect, store, and work with information using computers and gadgets. An information system consists of programs and software, physical devices (like keyboards and monitors), and networks together to help collect data that is important to businesses and organizations so that they can run their routine operational needs. It also makes it easy for organizations and businesses to communicate with their customers and market their services most productively. Information systems are often considered a competitive advantage whenever they operate more conveniently than others in the market.
There are organizations like eBay, Amazon, Alibaba, and Google that have collapsed so far into their technological stack that they have built their entire operational functionality on their use of information systems and technology. These companies do not operate without information systems. We are going to explore Information systems in more detail, along with the components and operational use of information systems.
Top 6 Types of Information Systems Explained
Let us familiarise you with 6 types of Information Systems and their applications through this blog below:
1. Knowledge Management System
The first among the 6 different types of Information Systems is the Knowledge Management System. Knowledge is an immense power to a company or an organization. A Knowledge Management System (KMS) mainly gathers information to create a knowledge base for users. This process largely helps in developing connections between various departments. Knowledge Management Systems are used to organize a company’s paperwork, FAQs, and other pertinent data. Even though the KMS makes all documented firm information freely available to its employees and consumers, the data is variably distributed. The System of Knowledge Management is further classified into three types: Explicit, Tacit, and Implicit.
Explicit
This is a type of knowledge that can be easily coded and shared. This form of knowledge is simple to communicate and easily comprehended by others. Employee handbooks, Standard operating procedures, and HR rules are examples of explicit knowledge.
Tacit
Tacit knowledge is comparatively difficult to understand from explicit knowledge. It consists of those qualities of an employee’s expertise that are difficult to share with others. Tacit knowledge comprises customer service expertise, design abilities, and so forth.
Implicit
Similar to tacit knowledge is Implicit knowledge, except it is more easily codifiable, that is, it can easily be written in a computer language. It is information that is ingrained in the processes of the organization but is currently unarticulated. It is indigenous knowledge that can be taught and conveyed, but has yet to be properly recorded.
Apart from the significant advantages of Knowledge Management Systems, it has major drawbacks and challenges in the industry. Few of those are not maintaining privacy and security of your data, knowledge sharing becomes crucial due to a lack of trust and reliability, and the need for advanced technology becomes expensive and economically difficult to afford.
2. Decision Support System
A Decision Support System(DSS) is a web-based database that helps the company in problem-solving and decision-making. The database stores the company’s essential data and analyses it carefully in order to assist the firm in taking appropriate action. The user can access the conveniently provided information and tools used for data modification. One example of such a system is medical diagnosis provided by hospitals and infirmaries. DSS assists in visualizing data and making it easier to interpret, which improves management’s capacity to make successful judgments quickly and easily. Apart from that, it usually converts the data into comprehensible charts and tables that can be easily analyzed by managers and users.
3. Transaction Process System
Transaction Process System(TPS) helps a business with its day-to-day operations run smoothly without any haste. TPS executes this task by gathering the data extensively and making necessary modifications to it. After the data is prepared, it is returned to the user’s system. The striking characteristic of this system is that it increases the overall performance and growth of business transactions. Even though it is a complicated task, once the user gets familiar with it, the task becomes painless and manageable. Because of its global availability, regardless of location or language, an effective TPS enables a firm to create amicable and dependable connections with other businesses and customers.
4. Executive Support System
Similar to the Management Information System (MIS), the Executive Support System (ESS) performs decision-making at the expert management level. The top-level managers and owners use this system to assist themselves in problem-solving and decision-making to maintain the company’s workflow. This system provides effective communication, enhanced processing skills and excellent display alternatives to the managers and displays the information through organized flowcharts, static reports, and graphs.
5. Office Automation System
Office Automation Systems allow data to be transferred from one system to another without the need for manual labor or human involvement. The OAS conducts office-related matters and facilitates official activities at all levels of the organization. Official activities are classified into two categories: management and clerical. Office Automation System comprises the following applications:
Email
Along with sending messages, you can attach audio notes, images, videos, and important documents.
Voice-mail
You can record and store voice messages in your system’s memory and access it whenever required.
Word processing
You can create documents such as memoranda, reports, letters, and anything else that is electronically printed in word processing. Using word processing commands, the resulting text may be copied, altered, and saved, as well as checked for headers and footers, spelling and grammar checks, and the number of words and lines.
6. Management Information System
The management information system assists managers by automating several operations that were previously performed by human forces. A Management Information System (MIS) investigates people, technology, organizations, and their interrelationships and can help you find the best information for a company’s management, which can be pertinent to developing investment plans. These systems emphasize service through technology; therefore, data analysis and project management are their major functions. MIS also evaluates and assesses business performance, makes hardcore business choices, develops a business strategy, and establishes workflow. Besides that, it thoroughly analyses roles and responsibilities and gives feedback on the manager’s workflow.
Key Applications of Information Systems in Modern Organizations
Information technology is becoming an important aspect of the business world and making every task easy and wonderful. Below are a few Information systems applications for the rapidly growing technology:
- Decision-Making Is Easier
One of the major Information system applications is ensuring an easy decision-making process. Making a decision is a complex and hard process/decision in terms of business. The ins and outs of decision-making are difficult to follow, and you generally don’t know if you are making the right decision or if it will even work out at all. The information systems allow you to look at the underlying charts and reports already created, and as a result, make a smart and therefore reasonable decision. In some ways, the information system has allowed the exposure of stakeholders to allow them to make judgements fast and smart. Also, due to the fact that information technology provides immediate information, companies are able to make confident decisions quickly.
- Information Management
Information technology allows the accurate storage of a company’s data and vital information in the system so that data can be retrieved quickly when needed. The identified storage capacity needs to be low-cost with excess capacity to allow for a more profitable business. Additionally, a proper information management system can assist businesses with tracking critical activities to storing the company’s most vital assets. Keeping records of data and business information can also allow businesses to track issues or challenges with their activities and have a sense of how to address them.
- Launching New Products or Services
A customer’s never-ending wants are what fuel a business. Information technology assists a business with tracking new business processes that may enter the market. Any organization that wishes to be successful in the business side of the world needs to make better business decisions and create new products and services for their market, based on customer wants and needs. Information technology assists an organization’s goal to create and launch new products and services on the market.
- Enhancing Employee Behaviour and Attitude
Interpersonal communications with respect to the company and employees are based upon information systems. To assist employees feel more valued, companies can support their employees by making the information systems more open and providing trustworthy access. As a result of this strategy, employees feel valued because they are involved in the decision process. Staff members are uplifted by the feeling of empowerment and take a more advanced position in engagement in the organisation.
Common Challenges in Information Systems Management
- Privacy and Security
“Protecting data isn’t a choice; it’s a necessity of life.”
Privacy and Security are the biggest challenges to information systems in business. As organizations grow more dynamic on digital platforms, they need to protect sensitive information to put up as many defenses as possible against cyberattacks while managing and keeping up with privacy commitments. A significant challenge is the rapidly evolving technology and learning to cope with swift changes in new technologies while still managing legacy systems.
- Data Management
“Even with the smartest systems, if the data isn’t clean, the system is dumb.”
Data Management as a task is understood to be managing and integrating information from a multitude of sources to aid in better decision-making. It is also a challenge to ensure information is not just comprehensive and accurate but also trusted. This is a continuous process, and the data should be as consistent as possible through seamless active integrations.
- Technical Issues
“The more complicated the technology, the more advantageous—or potentially misleading—it can become.
Providing data without losing efficiency and maintaining a balance in an increasing load expands to performance issues. For an IT environment, engaging in data exchange while being compatible with various technologies is vital to a responsive and cohesive technical environment.
- Human Factors
“Systems don’t fail; people do when they are not trained.”
For humans to utilize the information systems, they need well-trained workers to acquire the skills that enable the proposed system to succeed, as a responsible usage of data and technology must include ethical considerations to meet the expectations of an organisation and preserve its reputation.
- The Global Character of Business
“Think globally, code locally—understanding diversity is essential.”
Next, the challenge is around the global nature of business and prioritizing cultural differences, international relations, and the need to adapt in diverse environments.
- Coping with Change Radio
“What is the one constant in IT? Change.”
New technologies such as artificial intelligence (AI), machine learning (ML), blockchain, and the Internet of Things (IoT) adoption are happening faster than organizations can keep up with. Integrating those new technologies with legacy systems and keeping employees flexible to meet these demands are two major challenges for IT professionals and business executives.
- Budgeting and Pressure for ROI
“Every byte costs—prove it worked.”
Organizations often need to justify costs when implementing or upgrading their information systems. Balancing the expectations of stakeholders and convincing them that there is a return on investment (ROI) from the latest technology within a budget is a continuous challenge.
- Downtime and Backups
“One minute of downtime could cost millions.”
Keeping systems running is critical. Just as critical are the plans and procedures for events that include, but are not limited to, server crashes, ransomware attacks, and data corruption. Having no disaster recovery plan is the same as having no plan at all, and an organization can be effectively immobilized without one.
- Data Protection Compliance
“Miss one regulation, and you’re done.”
From GDPR, HIPAA, and India’s DPDP Act, data regulations are forcing businesses to reconsider systems to ensure they are compliant across diverse geographical areas, which can be a daunting task. If compliance is voided, businesses are left with hefty fines and, more importantly, damage to their reputation.
- Resistance to User Adoption
“Even the best system can fail if no one uses it.”
It is common to see employees resist new systems or upgrades. Slow adoption and loss of efficiency can occur for many reasons, such as a lack of training, fear of automation replacing their job, or simply that the user interface is unfamiliar to them.
Upcoming Trends in Information Systems
In 2025 and beyond, information systems will continue to advance rapidly, driven by the need for better decision-making, security considerations, and automation for multiple business functions. In every industry, including healthcare, finance, and others, an information system is even more vital today than it was yesterday. The following represents the top trends that will contribute to the future of information systems and how they will affect businesses and society.
- Artificial Intelligence (AI) & Machine Learning (ML)
AI and ML are fundamentally changing the manner in which organizations process and analyze data. Information systems can learn the patterns in data, make decisions, and optimize operations and strategies as data becomes available. For example, AI will empower certain types of management information systems to predict trends, identify associated risks, and provide a personalized end-user experience.
There are many examples of information systems that will leverage AI, including them (but not limited to):
Predictive analytical tools
Smart chatbots
AI CRM’s
- Cybersecurity Advancements
As digital transformation continues to grow, companies are highlighting the importance of cybersecurity. Now, many modern information systems include a strong information security framework that can alert to a security threat, defend systems against breaches, and help achieve compliance. Digital crime is growing, and companies are changing their approach to adopting intelligent information systems that can learn effectively to better protect and secure information handled by systems.
- Augmented Reality (AR) and Virtual Reality (VR)
AR and VR are changing how information systems are applied in industries like healthcare, education, and retail. These immersive technologies enhance virtual training environments, remote consultations, and online shopping experiences, making information systems more engaging and user-centered.
- 5G Technology Adaptations
5G enables high-speed connectivity and greater access to real-time information systems. This helps to improve the speed of communication and connectivity for Internet of Things (IoT) devices and enterprise systems, speeds up data processing, and enables smart automation in information systems such as real-time tracking and remote monitoring.
- Genomics and Digital Healthcare
Genomics is an innovative use of an information system in medicine. By digitally processing DNA and genetic information, health practitioners can track and identify when and even why diseases occur, allowing them to predict and ultimately prevent diseases. These are really personalized insights based on underlying biological data and activity at a molecular level, with demographic, cultural, and behavioral insights powered by artificial intelligence (AI) and big data, dramatically changing the patient experience while advancing medical research.
- Robotic Process Automation (RPA)
Robotic process automation, known as RPA, automates repetitive actions or tasks, especially tasks that are rule-based, after which information is processed by an information system. RPA is also quickly becoming an embedded type of management information system in many management processes, especially in the banking, insurance, and logistical fields, as the workflow is most efficient in a digital way.
Various examples of information systems that use RPA include:
Member Invoicing through Integrated Automated Invoicing Systems
Customer Onboarding through Information-Processing Systems
Claim Processing through Information-Prompting Systems
- Data Privacy and Ethics
With the growth of information systems, the ethical use of data becomes significant. Organizations are increasingly embedding privacy by design into all forms of information systems to continue to be publicly transparent regarding data privacy, protection, and the accountability of protecting the data in a compliant manner (i.e., Accountable) with globally accepted privacy regulations (i.e., GDPR).
- Technologies in Blockchain
Blockchain technology has evolved beyond cryptocurrencies to be a trusted part of modern information systems. It incorporates transparency, security, and traceability into industries such as supply chain, health, and finance. Examples of information systems using blockchain include digital identity verification, secure voting approaches, and smart contracts.
- Quantum Computing
Quantum computing will change the way information systems perform complex calculations and simulations. Although quantum computing is still in the early stages of development, it is used with certain types of information systems, could greatly improve their ability to solve problems, particularly in pharmaceuticals, aerospace, and cryptography.
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Conclusion
In a data- and technology-driven world, information systems are no longer optional; they’re essential. No matter what you study, whether you learn about the types of information systems, an information system’s application in the real world, or the various types of management information systems that support business decisions, you will have a competitive advantage by learning the material. With real-world examples of information systems across sectors, it is evident that an understanding of information systems can lead to infinite opportunities. Are you ready to leverage information systems for your benefit and future-proof your career?
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