Information Systems in Organizations: Types and Functions

Posted on Mar 10, 2025 in Business Administration and Innovation Management

Information Systems in Organizations

Chapter 3: Information Systems in Organizations

Information Systems (IS) are used to store and process data for sales, payrolls, stock management, and more. They must be useful, effective, and efficient.

Evolution of Information Systems

There are five stages in the evolution of IS:

  1. Very elemental: Only manual procedures.
  2. Application of IT: IT is applied to data processing; the first data processing centers appear.
  3. Information Systems Department: IS departments appear to solve information processing problems.
  4. Management Information Systems (MIS): Managers start to use MIS to gain insights into competitors.
  5. Strategic Integration: Firms integrate information with corporate strategy, leveraging IT.

Functions of Information Systems

IS perform three main functions:

  • Collect: Gather data as main elements (INPUTS).
  • Warehouse: Store information and process data (PROCESSING).
  • Distribute: Deliver prepared information to users (OUTPUTS).

To achieve effectiveness, IS must develop these functions in a systemic way:

  1. Collecting and Registering: Gathering and recording data.
  2. Warehousing: Storing information in different locations and at different times.
  3. Processing: Treating the information to transform it.
  4. Spreading the Information: Managers decide how, when, and to whom information is disseminated.

Classification of Information Systems

  1. Strategic Management: Systems that support strategic planning.
  2. Tactical Management: Systems that support tactical plan development.
  3. Operational Management: Systems that support daily operations.

Types of IS for Decision-Making Levels

  • Transaction Processing Systems (TPS): Mechanically process large quantities of data to reduce costs and increase productivity.
  • Management Information Systems (MIS): Designed for operational levels, producing internal information in predefined formats.
  • Decision Support Systems (DSS) and Executive Information Systems (EIS): Oriented towards decision-making problems, using internal and external information.

Types of IS According to Functional Areas

  • Financial IS: Accounts payable, inventory, etc.
  • Production IS: Manufacturing, quality control, etc.
  • Commercial IS: Selling systems, market analysis, etc.
  • Human Resources IS: Personnel recruitment, training, etc.

IS Towards the Firm and the Environment: ERP and CRM Systems

  • ERP (Enterprise Resource Planning): Used for planning firm resources.
  • CRM (Customer Relationship Management): Systems for managing customer relationships.

Application to Manage Supply Chain (SCM)

  • SCM: Processes to ensure the management of activities from the supplier to the end of manufacturing and to the final customer. They are most useful when suppliers and customers have compatible systems.

Document Management System

  • DMS: Systems to manage the lifecycle of organizational documents, based on a web platform that enables control of document flow.

Geographic Information System (GIS)

  • GIS: Composed of hardware, software, and procedures designed to obtain, maintain, manipulate, analyze, and represent spatial or geographic data to solve complex planning and management problems.

Business Intelligence (BI): Refers to the design and implementation of ICT infrastructure and processes for the storage, integration, communication, and analysis of business information.