Business Information Systems and Technologies
Business Information Systems and Technologies encompass the tools and processes that organizations use to create, manage, and disseminate information. Central to these systems are three interdependent components: computers, communications networks, and user expertise. Together, these elements enable businesses to capture, process, generate, store, retrieve, and transmit data, significantly enhancing operational efficiency. The rise of information technology has transformed traditional business practices, allowing for faster communication through emails rather than physical mail, and automating labor-intensive tasks through software applications like spreadsheets.
In the current information age, many organizations rely on robust databases for customer relationship management and data mining, which help identify trends and improve marketing strategies. Additionally, communication networks facilitate instant information exchange, enabling collaboration across various geographical locations. Overall, understanding and effectively utilizing these technologies is increasingly vital for organizational success, as they not only improve existing processes but also enable innovative practices that were previously unimaginable. As businesses continue to evolve, the integration of information technology remains a critical factor for achieving competitive advantage and enhancing productivity.
Business Information Systems and Technologies
The influx of data enabled by the technologies of the Information Age has literally transformed many businesses. Most businesses today use information technology in some form to create, store, and distribute information. There are three interdependent components of information systems: Computers, communications and expertise. These components must work together in order for an information system to effectively support the organization in its activities and mission. Information systems have several basic functions, including the capture, processing, generation, storage, retrieval, and transmission of data.
The influx of data enabled by the technologies of the Information Age and with which we are bombarded every day has literally transformed many businesses. At a basic level, much correspondence today is not sent by mail or even faxed, but is transmitted nearly instantaneously around the world via e-mail. Accounting and project management tasks that used to be labor intensive jobs done by hand have benefited from spreadsheet application software that allows quick and easy manipulation of data, checking of calculations, and monitoring of tasks. Huge databases improve the ability of organizations to perform customer relationship management to better serve the customer as well as data mining to determine previously unknown relationships that help the organization better market its products and services. Information technology is the use of technology from computers, communications networks, and electronics to create, store, and disperse information and knowledge. Various technology components are put together in an information system that facilitates the flow of data (i.e., raw facts, figures, or details) and information (i.e., organized, meaningful, interpreted data) between people or departments.
There are several characteristics of the information age that set it apart from other periods in history. First, the proliferation of information technology has led to a situation where society in many countries today is information-based, with more people dealing with information than with agriculture or manufacturing. As the number and range of available information technologies increase, a concomitant number of businesses depend on information technology to accomplish their work. This dependence is on both the computer technologies that enable organizations to gather, store, manipulate, and analyze data, and also on the communication technologies that allow them to interconnect more quickly and efficiently than ever before. In fact, the understanding of information technology and information systems is so important in the information age, that in many situations it is difficult if not impossible to be successful in the business world without it. Information technology has become so much a part of our lives today that it is often embedded in other products and services that we take for granted. For example, the phone call one makes for technical support may be enabled by network technology and wireless communications systems so that the call can be answered by a technician working halfway around the world. The prevalence of information technology does not mean that an organization needs to implement information technology to be successful, however. Like the manufacturing technology that came before it and the agricultural technology before that, information technology is only a tool and must be understood in order to optimize its usefulness in the organization.
Information technology does more than support our work. In many cases it also transforms the way that we accomplish our tasks and even allows us to do things that we would never have been able to accomplish before. Work processes are constantly being transformed through the application of information technology in order to improve productivity and free humans from many repetitive tasks. For example, typewriters have given way to word processors which, in turn, have given way to multitasking computers that allow us to view, create, edit, and interact with not just documents but images, audio, animation, movies, websites, and more. However, information technology not only allows humans to perform existing processes more quickly or efficiently than ever before, in many cases it also allows us to rethink and reengineer the way that we do things in the workplace. Business process reengineering helps organizations and managers rethink their practices and processes and introduce radical improvements that benefit both the organization and its customers. For example, the division of labor necessary to the industrial age is frequently being replaced by teamwork, information sharing, and other ways of increasing the interconnectedness of workers.
Three Components of Information Technology
As shown in Figure 1, information technology comprises three interdependent components: computers, communications and expertise. The computer component of an information technology system can be any electronic system that can be instructed to accept, process, store, and present data. Although most people are familiar with desktop computers for work and home, many other devices meet this definition, including the microwave oven in the kitchen, the timer for the front door lights, the autofocus digital camera, the ATM machine outside the bank, and the automatic ticket kiosk at the cinema.
Computers
In general, computers can be classified into four size categories. Microcomputers or personal computers are relatively compact. This category of computers includes desktop computers that comprise a display unit and keyboard which sit easily on a desk or table with the processing unit fitting on or under the desk. Notebook or laptop computers are smaller versions of the desktop computer and are designed for portability. The keyboard, display, and processing unit are all part of one unit, and weigh an average of three to nine pounds, making them easy to transport from site to site. Tablet personal computers range in weight from just over half a pound to just over two pounds (Consumer-Reports.org, 2013). Tablet personal computers are available in a variety of shapes and sizes depending on their purpose. For example, many police departments use tablet computers for writing tickets while insurance agents often use other models to sketch details of situations or prepare damage claims in the field. Smart phones are not just phones but are small computers that weigh ounces, yet are both fast and powerful, with a wide and growing range of applications.
Personal computers are prevalent in most businesses. In addition, many medium to large sized business also may have midrange or mainframe computers. Midrange computers (sometimes called minicomputers) are used to interconnect people and large sets of information. Midrange computers can be used across the entire organization (i.e., enterprise-wide) or within a specific department. Midrange computers typically are dedicated to performing specific functions. In addition, mainframe computers -- which are typically larger, faster, and more expensive than midrange computers -- allow the interconnection of larger numbers of people or processing of larger amounts of data. As opposed to midrange computers, mainframe computers typically perform several functions at once. In addition to these classifications of computers, supercomputers are available to solve problems comprising long and difficult calculations. Supercomputers run various complex applications including scientific research and real-world simulations for the design of complex equipment such as new aircraft.
In order for a computer to do the work it is intended to do, it needs software as well as hardware. Computer software is a set of instructions that controls the computer or communications network and that manages the hardware in the system. Operating systems are sets of software programs that coordinate the actions of the computer and its peripheral devices (e.g., printer). Application software performs functions not directly related to the running of the actual computer. Application software packages focus on particular types of tasks such as desktop publishing, graphic design, or database management.
Communications Networks
In addition to computer systems, information technology also includes various communications networks. These are sets of locations (or nodes) with concomitant hardware, software, and information that are linked together to form a system that transmits and receives information and data. Communications networks include local area networks (LANs) that comprise multiple computers that are located near each other and linked into a network that allows the users to share files and peripheral devices such as printers, fax machines, and storage devices; metropolitan area networks (MANs) that transmit data and information citywide and at greater speeds than a local area network; and wide area networks (WANs) that comprise multiple computers that are widely dispersed and are linked into a network. Wide area networks typically use high speed, long distance communications networks or satellites to connect the computers within the network.
Organizations, by definition, involve groups of people working together to accomplish work. Information technology can aid organizations in their tasks by linking together multiple computers to share files and peripheral devices such as printers. This capability allows multiple people to work on the same document (e.g., inputting data, commenting on a document, creating reports from a database). Wide area networks -- which typically use high speed, long distance communications networks or satellites to connect the computers within the network -- can also allow employees to communicate and cooperate not only with colleagues in the next office, but across the globe.
Expertise
Just as computer hardware and software are useless without each other, both require the additional input of the user's expertise in order to be able to optimize the work that they can do. This expertise includes familiarity with the tools of information technology, the skills needed to use these tools, and an understanding of how and where information technology can best be implemented. When all three of these components of information technology are working together, they can create an information system that facilitates and optimizes the flow of information and data between people or departments. Information technology and systems can support the organization in its processes and help it to maximize the use of its other resources and be more effective.
Basic Functions of Information Technology
As shown in Figure 2, information technology has several basic functions. These functions may occur sequentially or simultaneously. First, information technology captures data, that is, it compiles detailed records of activities for later analysis or processing. Examples of data capture include the collection of patron information and book information when a book is checked out of the library; the assignment of seats on an airplane or in a theatre; and the collection of customer information for orders taken over the Internet. Captured data are processed (i.e., converted, analyzed, or synthesized) into information that can be used by the organization and its employees. Data processing comprises the handling and transformation of data into information. Information processing involves the transformation of collected data from one form into another. Word processing allows users to create documents and other text-based documents. Image processing converts visual information such as graphics and photographs into a format that can be stored or manipulated in the information system and/or transmitted across the network. Voice processing systems transform and transmit spoken information to enable virtual meetings and other applications. Information technology can also be used to generate data through processing. The generation function organizes data and information into a useful form such as in the generation of a document or multimedia presentation. Data and information are also stored so that they can be retrieved and processed at a later time. Finally, data and information can also be transmitted by information systems and distributed to other parties via a communications network.
Applications
Linking computers into networks can enhance the productivity and effectiveness of the entire enterprise. A common example of this can be seen in the information systems used in many modern retail stores. Computerized cash registers in a retail store or other point of sale can be linked together so that sales clerks can search across the network to see what other store may have a particular item in stock. In addition, the computers at the point of sale can be linked directly to the corporate headquarters so that the store's closing data each evening can be directly and immediately shared with corporate management. Information technology can also help individual stores keep track of their inventories including what items they have in stock, what products are most in demand, when it is time to reorder, and even assist in automatically ordering stock. Information technology can also be used to automatically invoice customers and do other billing tasks.
It is not just the enterprise that uses computers to improve the effectiveness and efficiency of its processes. Individual employees, too, increasingly turn to information technology to help them in their tasks. For example, application software can help people keep track of their calendars, including scheduling of appointments, meetings, and tasks to be done. Other application software is available for project management to help employees keep track not only of their own tasks but the tasks and processes of large projects. These software applications allow project managers to track and control schedules for complex projects and to communicate status, risks, and other information about the project to customers and team members.
Another important use of information technology for businesses is database management systems. These systems are computer software application programs that allow the user to create, change, and manage a collection of data items that are related to each other. Databases are distinguished from other collections of data by the fact that their data are used for multiple purposes. In a database management system, data are placed into a series of tables that are keyed to each other and that can be manipulated into a variety of reports that display only that portion of the database in which the user is currently interested. The data in the system are managed through inputting data into the database, updating the data, and representing all or part of the data in various reports that meet the user's specific needs. Information technology enables the creation and manipulation of large databases that could not be managed through another medium.
Database management systems have a wide range of applications for business. Inventory control systems in retail stores or chains are one example of a database management system. Similarly, medical records management systems in hospitals can help a hospital or physician's office control, organize, and manage a wide range of demographic information about their patients and their medical histories, information about their medical insurance coverage, and other data that are important to the healthcare system. These systems can allow users to pull together the information in a variety of ways for various forms and records.
Database management systems are also used in marketing. Database systems can help marketers better understand their target market, collect and analyze data on prospective customers, keep track of current customers' buying histories, needs, and other characteristics. Database management systems can be used to develop targeted mailing lists for new products based on customer demographics or buying history or track customer purchases so that better solutions can be offered or new products developed to better meet their needs.
Another way that organizations are meeting the increasing demands for communication and information exchange is through communications networks. These networks can be used for a number of purposes. One of the most common uses of this application of information technology is the electronic transmission of messages and documents. These capabilities include e-mail, voice mail, electronic document exchange, electronic funds transfer, and access to the Internet or other networks. Communications networks can also be used for purposes of e-commerce to buy and sell goods or services -- including products and information retrieval services -- electronically rather than through conventional means. Networks can also be used to support group activities such as the ability to hold meetings with participants at geographically dispersed sites. Audio and videoconferencing capabilities combined with electronic document exchange capabilities can often obviate the need for extensive travel to meetings.
Terms & Concepts
Application Software: A software program that helps users perform tasks not directly related to the running of the actual computer. Application software includes desktop publishing, electronic spreadsheets, graphic design , media players, and presentation software among others.
Business Process Reengineering (BPR): A management approach that strives to improve the effectiveness and efficiency of the various processes within an organization.
Capture: The process of collecting various types of data and information for later processing and transmission.
Communications Network: Sets of locations (or nodes) with concomitant hardware, software, and information that are linked together to form a system that transmits and receives information and data.
Customer Relationship Management: The process of identifying prospective customers, acquiring data concerning these prospective and current customers, building relationships with customers, and influencing their perceptions of the organization and its products or services.
Data Mining: The process of analyzing large collections of data to establish patterns and determine previously unknown relationships. The results of data mining efforts are used to predict future behavior.
Database: A collection of data items used for multiple purposes which is stored on a computer.
Enterprise: Any organization that is designed for commercial purposes. Most now use computers.
Information System: A system that combines information technology and individual activities to facilitate the flow of information and data.
Information Technology: Information technology is the use of technology from computers, communications networks, and electronics to create, store, and disperse information and knowledge.
Network: Computers that are electronically linked together.
Processing: The activities of computer programs that convert, analyze, compute, and synthesize data to increase its usefulness.
Spreadsheets: A table of values arranged in rows and columns in which the values have predefined relationships. Spreadsheet application software allows users to create and manipulate spreadsheets electronically.
Technology: The application of scientific methods and knowledge to the attainment of industrial or commercial objectives. Technology includes products, processes, and knowledge.
Transmission: The process of distributing data or information over a communications network.
Bibliography
ConsumerReports.org (2013). Tablets: Tablet ratings & reliability. Retrieved December 4, 2013 from http://www.consumerreports.org/cro/electronics-computers/computersinternet/tablets/tablet-ratings/ratings-overview.htm
Drnevich, P. L., & Croson, D. C. (2013). Information technology and business-level strategy: Toward an integrated theoretical perspective. MIS Quarterly, 37(2), 483-509. Retrieved December 4, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=87371536
Lucas, H. C. Jr. (2005). Information technology: Strategic decision making for managers. New York: John Wiley and Sons.
Otim, S., Dow, K. E., Grover, V., & Wong, J. A. (2012). The impact of information technology investments on downside risk of the firm: Alternative measurement of the business value of IT. Journal of Management Information Systems, 29(1), 159-194. Retrieved December 4, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=79629592
Senn, J. A. (2004). Information technology: Principles, practices, opportunities (3rd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
Wang, N., Liang, H., Zhong, W., Xue, Y., & Xiao, J. (2012).
Resource structuring or capability building? An empirical study of the business value of information technology. Journal of Management Information Systems, 29(2), 325-367. Retrieved December 4, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=83778602
Suggested Reading
DeJarnett, L. R. (2000). Knock, knock!…Who's there?…
The twenty-first century century! Information Strategy: The Executive's Journal, 16(2), 3-5. Retrieved June 20, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=2510654&site=ehost-live
Lu, Y., & Ramamurthy, K. (2011). Understanding the link between information technology capability and organizational agility: An empirical examination. MIS Quarterly, 35(4), 931-954. Retrieved December 4, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=67129445
Mohamed, A. (2007, 6 Feb). How to get it right when shopping for a database management system. Computer Weekly, 30-32. Retrieved May 12, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24344224&site=ehost-live
Peterson, K. (2007). Organizing business staff for greater productivity. Kitchen & Bath Design News, 25(4), 40.
Retrieved May 11, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24791674&site=ehost-live
Tallon, P. P., & Pinsonneault, A. (2011). Competing perspectives on the link between strategic information technology alignment and organizational agility: Insights from a mediation model. MIS Quarterly, 35(2), 463-486. Retrieved December 4, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=60461965