The Business value of Information System

Topics: Information systems, Management information system, Information system Pages: 9 (2709 words) Published: April 8, 2014


Table of Contents

Introduction
In the 21st century Information Systems has become an essential part of every business or, as Nicholas Carr wrote in his famous “IT doesn’t matter”, Information Technology has become a backbone of comerce1. We simply cannot imagine our everyday life without having an opportunity to check our mail, order something online, book tickets or read news from all over the world. In nowadays world the data has become the new currency in the digital economy. Vast quantity of data is captured with every message we send, every credit card we swipe, every order we make. But it is only useful if it is processed and used for innovation by increasing our collective knowledge. Leaders should take a holistic and integrated approach that mirrors how organizations think, how they operate and how they respond now and in the future. By combining and analyzing multiple data sources like social, text-based and point-of sale data companies in sectors such as retail, telecommunications and banking, can understand the needs of customers. Organizations can use high performance analytics to meet customers’ needs in real time yielding transformational and valuable insight in seconds instead of hours. In a typical day a customer service might face 600 phone calls, 400 mails and 300 Internet comments. That is a subtle quantity of data within one day. Companies are missing a major opportunity if they can only understand a small part of this data. Regardless of the industry sector the integration of unstructured data opens a lot of possibilities for any organization. Everyone understands the importance of information systems. Companies are in the race of getting new technologies as soon as possible. Businesses worldwide spend trillions of dollars on IT development. In this paper we are going to distinguish a business value of Information systems and find out whether these investments are justified. Information Systems

Definition
During the work on this paper I found several approaches to define Informational Systems. Some sources like, for example, Britannica, offer a definition based on IS functions. Information system - an integrated set of components for collecting, storing, and processing data and for delivering information, knowledge, and digital products. Business firms and other organizations rely on information systems to carry out and manage their operations, interact with their customers and suppliers, and compete in the marketplace.2 Other sources, like Farlex free dictionary, offer definitions that emphasize on Information System’s components. Information system - system consisting of the network of all communication channels used within an organization.3 The best definition, in my opinion, is given by Wiki Answers: Information System is a combination of people, hardware, software, communication devices, network- and data resources that processes (can be storing, retrieving, transforming information) data and information for a specific purpose.4 To sum it up we can say that Information System is a collection of people, processes, data, models, technology and partly formalized language, forming a cohesive structure, which serves the purpose of recording, storing, and disseminating linguistic expressions.as well as for the supporting of inference making5 The graph below illustrates the functions of Information Systems: Graph 1.1.1. The functions of Information Systems

Source: Technical University of Iraq.
Information Systems consist of 5 components such as:
Resources of people (end users and IS specialists, system analyst, programmers, data administrators etc.) Hardware: (Physical computer equipments and associate device, machines and media) Software: (programs and procedures)

Data: (data and knowledge bases)
Networks: (communications media and network support)
The graph below illustrates the components on Information Systems:

Graph 1.1.2. Components of Information Systems....

References: 1. http://www.britannica.com/ - Britannica. Online encyclopedia.
2. http://www.thefreedictionary.com/ - The Free Dictionary by Farlex
3. http://wiki.answers.com/ - Wiki Answers
4. http://weforum.org/ - World Economic Forum
5. http://www.uotechnology.edu.iq/ - Technical University of Iraq
6. http://www.gartner.com/ - Gartner Analytics
7. N. Carr- “IT doesn’t matter”, January 2007
8. http://www.uwosh.edu/ - University of Wisconsin, Oshkosh.
9. S. H. Haeckel – Managing by Wire, September 1993
10. A. McAfee and E. Brynjolfsson - Investing in the IT That Makes a Competitive Difference, July 2008
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