What is Information System?

What exactly is an information system?

An information system is an organized collection of people, hardware, software, communication, networks, data resources, policies, and procedures that stores, retrieves, transforms, and disseminates information within an organization. In this digital age, people and machines use various types of physical devices (hardware), information processing instructions in the form of flow charts and structured languages (software), communication channels (Networks), and stored data or information to communicate and gather information knowledge and wisdom.


“Information systems are hardware, software, and telecommunications networks that people build and use to collect, create, and distribute useful data, typically in organizational settings.”

“An information system is a collection of interconnected components that work together to collect, process, store, and breakdown data to aid decision making.”

Information system characteristics:


It should be simple to obtain or access information. Information stored in a book of some kind is only available and easy to access if the book is nearby. A telephone directory is a good example of availability because every home in the area has one. It is most likely the first place you look for a local phone number. However, no one keeps the entire country’s phone books, so for numbers further afield, you’ll probably dial a directory enquiry number. For commercial properties, such as a hotel in London, you would most likely use the Internet.


The information must be accurate enough for the purpose for which it will be used. Obtaining information that is 100 percent accurate is usually unrealistic because it would be too costly to produce on time. The degree of precision is determined by the circumstances. At the operational level, information may need to be accurate to the nearest penny – for example, on a supermarket till receipt. Accuracy is essential. For example, if government statistics based on the most recent census show an increase in births within a given area, plans to build schools and construction companies to invest in new housing developments may be made. Any investment may not be recouped in these cases.

Objectivity or dependability

The truth of information or the objectivity with which it is presented is addressed by reliability. You can only use information with confidence if you are confident in its reliability and objectivity.

We may go straight to the library to find a suitable book when researching for an essay in any subject. We are reasonably confident that the information contained in a book, particularly one purchased by the library, is reliable and (in the case of factual information) objective. The book has been written, and the author’s name is usually prominently displayed. The publisher should have hired an editor and a subject matter expert to edit the book and question any factual concerns they may have had. In short, a lot of time and effort go into publishing a book, so we can be reasonably confident that the information is reliable and objective.


The information should be pertinent to the purpose for which it is needed. It must be appropriate. What is important to one manager may not be important to another. If the information contains data that is irrelevant to the task at hand, the user will become frustrated.

A market research firm, for example, may provide information on users’ perceptions of a product’s quality. This is irrelevant to the manager who wants to know what people think about the relative prices of the product and its competitors. The information gathered would be irrelevant to the goal.


The information should include all of the details that the user requires. Otherwise, it may be ineffective as a decision-making tool. For example, if an organization is given information about the costs of supplying a fleet of cars for the sales force but does not include servicing and maintenance costs, a costing based on the information provided will be significantly understated.

Level of detail/brevity

Information should be presented in a concise manner that allows for its examination and application. There should be no unnecessary information. For example, it is common practice to summarize financial data and present it in the form of figures, as well as through the use of a chart or graph. We would say that the graph is more concise than the tables of figures because the graph or chart contains little or no extraneous information. There is clearly a trade-off between level of detail and conciseness.

The Presentation

The user cares about how information is presented. If information is visually appealing, it is easier to understand. A marketing report, for example, that includes graphs of statistics will be more concise as well as aesthetically pleasing to the users within the organization. Many businesses use presentation software to display summary information on a data projector. These presentations are usually well thought out in order to be visually appealing and convey the appropriate amount of detail.


Information must be delivered on time for the purpose for which it is intended. Information received too late will be meaningless. For example, if you receive a brochure from a theater and notice that your favorite band performed yesterday, the information is too late to be useful.

Information worth

The relative importance of information for decision-making can either increase or decrease its value to a company. For example, a company needs information on a competitor’s performance in order to decide whether to invest in new machinery for their factory. This information would be extremely valuable. Always remember that information should be available on time, within budget, and legally obtained.

Information costs

Information should be available at a set cost, which may vary depending on the situation. If the costs of obtaining information are prohibitively high, an organization may decide to seek slightly less comprehensive information elsewhere. For example, a company may wish to commission a market research study on a new product. The survey could cost more than the product’s estimated initial profit. In that case, the organization would most likely decide to use a less expensive source of information, even if it provided inferior information.

Information System Types

TPS (Transaction Processing System)

A transaction processing system is an information system that processes data resulting from business transactions.

Their goals are to provide transactions so that records can be updated and reports can be generated, i.e. to perform storekeeping functions.

The transaction is carried out in two stages: batch processing and online transaction processing.

For instance, a billing system, a payroll system, and a stock control system.

Management Information System (MIS)

MIS is an abbreviation for Management Information System.

A Management Information System (MIS) is intended to take relatively raw data available through a Transaction Processing System and convert it into a summarized and aggregated form for the manager, typically in the form of a report. Middle management and operational supervisors are the primary users of its reports.

MIS generates a wide range of report types. A summary report, an on-demand report, ad-hoc reports, and an exception report are among the reports available.

Sales management systems and human resource management systems are two examples.

Decision Support System (DSS):

DSS is an abbreviation for Decision Support System.

A Decision Support System (DSS) is an interactive information system that provides information, models, and data manipulation tools to assist decision-making in semi-structured and unstructured situations.

The end user is more involved in creating DSS than a MIS because DSS includes tools and techniques to assist in gathering relevant information and analyzing options and alternatives.

Financial planning systems and bank loan management systems are two examples.

System of Experts (Experts System):

Experts systems include expertise to assist managers in diagnosing and solving problems. These systems are based on artificial intelligence research principles.

Experts Systems is a type of information system that is based on knowledge. It acts as an expert consultant to users by utilizing its knowledge of a specific area.

An expert system’s components are a knowledgebase and software modules. These modules perform knowledge inference and provide answers to user questions.

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