What Are Information Systems? — Defined and Explained in 2023

As the reliance on technology continues to grow globally, so does the widespread presence of information systems. Information systems, often abbreviated as IS, are the collection of hardware, software, and telecommunications networks that people build and use to capture, process, create, and distribute useful data. This data is typically found in organizational settings but can also exist in personal and household settings.

This definition, along with many others on the internet, focuses on two integral aspects when defining information systems:

1. The pieces of the information system
2. The role these pieces play in an organization 

The Purpose of an Information System

Information systems reduce human error through tech automation and algorithms. In addition, with information systems, you can gather large quantities of data from customers, vendors, marketers, competitors, and industries.

Effectively, information systems give you an edge over others regarding conducting accurate research. This research, therefore, helps you optimize available time for data collection and analysis, thereby improving customer relationships and increasing revenue. Information systems also aid the generation of knowledge or data for decision-making.

The Five Components of an Information System

Within the two aspects mentioned, five distinct components make up the collective information system of an organization. These components include the following:

1. Hardware
2. Software
3. Data
4. People
5. Process

Each of these components is integral to the functionality and efficiency of an information system. The former three are components of the pieces of the information system. The latter two describe the role of said pieces in the information system. Now that we have defined an information system, its purpose, and its related parts, we’ll outline each and explain their importance in the grand scheme of an organization’s information system.

Hardware in an Information System

The hardware in an information system is the technology you can touch — the physical aspects of technology. Computers, tablets, mobile phones, disk drives, and more are all examples of information system hardware. Hardware is often considered the most visible aspect of an information system.

Hardware is important to the effectiveness of an information system because most of the software and data are accessed via hardware. Likewise, people use the hardware and many processes are carried out on the technologies established as a part of the information system. 

Software in an Information System

Software builds directly upon the hardware of an information system. In fact, the software is a set of instructions that tells the hardware what to do. Unlike hardware, software is not tangible. You can’t touch it. When software is being programmed, instructions are written to tell the hardware what to do.

There are several types of software within two main categories of operating-system software and application software. Operating-system software is the software that makes hardware usable. 

Application software is defined as software that does something useful. This category includes all applications, from antivirus software to streaming applications and any other software in your organization’s information system. 

Examples of operating-system software include Microsoft Windows on a PC and Apple’s iOS on mobile phones. Examples of application software include Microsoft Excel, Norton Antivirus, and downloaded games like Minecraft.

Data in an Information System

The third component of an information system is data. You can think of data as a collection of facts and information. For example, your street address, city, name, and phone number are all pieces of data that help describe you. Like software, data is intangible. Also, by itself, data is not particularly useful. However, aggregated, indexed, and organized data is a powerful tool for your organization.

Organizations collect all sorts of data and use this data to make informed decisions. These decisions can then be analyzed based on their effectiveness. This additional analysis and data dissection help improve the organization.

People in an Information System

When considering information systems, focusing on the technology components — hardware, software, and data — is easy. However, we must look beyond these tools to fully understand how they can integrate into an organization. The next step is to focus on the people involved in the information system. When considering the human aspect of an information system, it’s important to look at the big picture.

From the front-line help desk workers up to the chief information officer (CIO), all people involved with the information system are essential because they make the technology practical.

Process in an Information System

The last component of an information system is the process. A process is a series of steps undertaken to achieve a desired outcome or goal. Information systems are becoming increasingly integrated with organizations’ processes. This integration brings more productivity and better control to those processes. However, simply automating activities using technology is not enough.

Businesses looking to use information systems effectively need to do more. The ultimate goal is to use technology to manage and improve processes within a company and externally with suppliers and customers. Buzzwords like “business process reengineering” and “business process management” all have to do with the continuous improvement of these business processes. Businesses hoping to gain an advantage over their competitors should focus highly on this aspect of their information system.

Examples of Information Systems

Information systems come in various forms. We will briefly examine three of them:

1. E-commerce
2. Collaboration
3. Content Management

E-commerce 

Today, IS have paved the way for business owners to set up online shops instead of brick-and-mortar ones. The combination of hardware, software, and telecommunications networks allows business owners to display products digitally, receive sales orders, sell, and process transactions. As you carry out these actions, you also have the opportunity to gather customer data and use them for remarketing, building relationships, running targeted ads, etc.

Collaboration

Organizations and teams thrive on quality collaboration. With the growth in tech, which includes information systems, collaboration improves. IS help give organizations the platform to come together to brainstorm and solve problems collectively.

Information systems have given birth to numerous collaboration tools in the market. These tools aid productivity increase, enhanced efficiency, and quick feedback sharing. As your team members collaborate, they can also share data in the form of documents, pictures, lines of code, videos, and audio.

Content Management

An organization would seem non-existent without content consistently published to engage its audience. This is where information systems come in. They hand a company the platform to communicate with its audience through an intranet, public website, or both.

An organization can share data and information with only its members through its intranet. Also, these employees can get up-to-date news, articles, research, or announcements about their organization. In the same vein, an organization can share data with and receive data from its customers through its public website.

Suppose a company has a blog section on its website for publishing fashion-related content. This means the company is sharing information. The company could also add a CRM (customer relationship management) plug-in to the website for collecting customers’ emails through a newsletter – the data collection aspect. After collection, the company can analyze the data or repurpose it in ways that fit into its data privacy policies.

How to Build an Information System

Building an information system requires the SDLC (software development life cycle). The SDLC helps tech teams to build and design information systems in phases. The phases include:

1. Survey
2. Analysis
3. Design
4. Implementation
5. Testing
6. Maintenance

Survey

The survey phase involves system identification, selection, and system planning. The system identification process involves consistently identifying the challenges your company and its existing system encounter. This stage concerns issue identification and extends to discussing the way out as a team.

At the selection stage, your organization ensures that the information system solutions created match its expectations. This is done by applying evaluation points. During system planning, your organization develops a working plan to start building its information system based on the development concept the team agreed on.  

Analysis

The analysis (also needs analysis) phase focuses on breaking into smaller elements your system components. This helps you discover each component’s details and how all components operate interconnectedly.  To build a well-functioning information system, analyze critical aspects like problems, solutions, business plans, business tools, business users, business processes, agreed rules, and job analysis. 

Design

At this stage, your organization provides a design guideline to the in-house or outsourced IT team. The guideline specifies the proposed system’s hardware, software, and network infrastructure and how it will operate. 

Implementation  

Implementation requires completely building & installing a new system and turning off the old. Also, at this stage, your organization gets the system documentation.

Testing

After implementation, your organization needs to test the new system. This helps determine if the system meets set goals, user needs, business requirements, and regulatory policies. It will also help to ascertain the system’s speed, performance, efficiency, output, etc. 

Maintenance

Maintenance is the final SDLC phase that caters to improving the information system. Here, your organization enhances performance, removes errors, updates system’s documentation, fixes bugs, etc. This will aid the continuous optimal performance of the information system.

The Role of an Information System in an Organization

Now that we’ve dissected the components of an information system, it’s time to look at the role an information system plays in an organization. As explained above, the components of an information system collect, store, organize, and distribute data throughout the organization. In fact, we might say that one of the roles of information systems is to take data, turn it into information, and then transform that into actionable knowledge.

As technology has developed, information systems have evolved to become the backbone of organizations. Information systems in the modern world provide organizations with a consistent and powerful advantage in the business environment. Organizations taking advantage of their information system to make informed and data-driven decisions no doubt have an advantage over those operating with an information system on a traditional level.