Definition of Information System
Information and Information Systems
When talking about information systems, first of all, they need to be defined what is considered under information and to define the difference between data and information. So, information can be defined as ”data converted into something valuable and usable for certain users“[1]. Out of this definition the following can be concluded: Information is data sets that together offer new knowledge to data owners. For example, the currency exchange rate is, for the ordinary person, just data, but for financial analysts it is information because together with other historical currency exchange rates, it might give a certain predictability, new information, about short-term currency trends.
From this example, financial experts can analyze gathered data, compare it with other data like treasury and cash flow and to conclude level of profit or losses from effects of currency exchange rates. Such sets of analyzed data that, of course, need to be relevant to end users for acceptance of certain knowledge, is information.
Conditions that need to be fulfilled for information to become valuable information are the following:
1. Time precondition-must be available at time when needed. For example, information about delivery problems such as: No possibility of delivery of goods in less than two days may cause business failure for two days if requested information of delivery speed was not received on time, at least two days before the warehouse was emptied. Information also needs to be defined for a certain time period that is precisely determined for an event (event happened yesterday, two days, or three months ago) for responsible decision makers. In addition, information needs to be available in adequate time frequencies. It has to be available as often as defined. (Currency exchange needs to be available daily, for example, not monthly).
2. Content precondition-Information must be accurate (reliable) and significant (has to be of value for decision makers), completed (partial information may cause more harm than benefit), concrete (information should not cause information clutter) and must be possible to measure, must be quantified and of high quality). What is not measurable is hard to present.
3. Shaping precondition-Information must be presented in simple form, must be detailed, logically constructed, presented simply for the final user.
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As presented, many preconditions exist in conversion from data to information process. Task of data processing and modification is the job of the IT department. Nevertheless, data processing should never be considered as an information system. The same data and information should not be also considered as the same. A Data Processing System is just one part of a management information system.
When talking about information systems, the definition should be defined as a term system. The system can be defined as “a group of mutually related, cooperating elements working on reaching a common goal by taking inputs and producing outputs in organized transformation processes.”
From this statement the following can be concluded: Any system consists of minimally three components:
- Input on level of sales details,
- Processing the same material in production processes.
- Output, which is new product.
Based upon these three components, modern systems use two more components. Without them many modern systems could not work without:
- the process of feedback, where from previous examples can be seen the process of quality for new products or for used materials in production processes;
- control that analyzes data from feedback and based upon results makes conclusions. (Is company moving toward goals or not?)
If, in this case, feedback data shows low new-product quality and therefore lower revenue possibilities, controlling components must detect the source of the problem and must act on it. Control might, better to say must, act on input, processing, and output within the system in order to secure reaching goal/goals. Action of control is based on feedback information. The following should be highlighted: Closed information systems interact with the environment and cooperate with other systems, like for example, production systems – CRM, Customer Relationship System.
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If you’d like to jump straight to advanced solution for Information System and Competitive Intelligence model then consider Total Controlling Concept.
After general introduction of systems and their functionalities with elements, the following text analyzes information systems and their components and specifics.
Definition of Information System – Components of Information System
Aim and purpose of each information system (definition of information system) is conversion of data into information. This process consists of four basic concepts:
- People, hardware, software, and data are four basic resources of information systems;
- Human resources consist of end users and IT specialists; hardware consists from machines and media; software resources consist of programs and procedures; data resources consist of data, model, and knowledge base;
- Data are converted in information process into many information products for end users;
- Information processes consist of input, processing, output, storage, and control processes.
All components of information systems are mutually connected and cannot exist individually and to perform role of informing. The relationship between separated components is defined for best process efficiency.
Components of information systems (basis for definition of information system) and their relations are presented in the following figures.
Information System Components
Source: O’Brien,J.: Management Information System, A Managerial End User Perspective, 2nd edition, IRWIN, 1993., Page.18, Figure 1.5.
[1] O’Brien,J.:op.quote page.21
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