Information Systems and Their Impact on Business Processes

Introduction: Information Systems in the Modern Business World

Information systems have brought revolutions and innovations to today's business environments and have also developed a close relationship with globalization. The responsibility of information systems in an organization is not merely to support the tasks of individuals, but to support business functions as a whole. Nowadays, business operations are conducted using email, online conferences (video and audio), and cell phones, which have become the most fundamental tools in business execution. Information systems are, in truth, the basis for accelerating supply chains. Businesses today have the advantage of using the internet for purchasing, selling, advertising, and soliciting feedback from consumers and customers online.

It is now the purpose of every organization, large or small, to develop and grow by making its core business processes digital — essentially striving to become a digital firm. As far as globalization is concerned, this phenomenon has been stimulated by the internet, as one can observe dramatic reductions in the costs of production, purchasing, and trading goods at an international level (Laudon, Laudon & Dass, 2010). In the contemporary world, "mobile digital platform, online software as a service, and cloud computing" (Laudon, Laudon & Dass, 2010) have emerged as modern information system trends. Information systems have thus transformed the operations, products, and services of today's business world by introducing wireless technology that has catalyzed media and advertising trends, while also prompting amendments to federal security measures and accounting laws.

Information systems have become indispensable for running, organizing, and managing businesses in the modern era. It is not an overstatement to say that information systems have emerged as the foundation for business performance and the accomplishment of business tasks. Today, companies cannot afford to ignore information systems, as these systems help businesses survive and enable them to achieve their goals. The success of a business is increasingly dependent on the wide-ranging use of information systems.

Core Business Objectives Supported by Information Systems

There are six major objectives that businesses today seek to achieve through the use of information technology. Those six goals are "operational excellence; new products, services, and business models; customer/supplier intimacy; improved decision making; competitive advantage; and day-to-day survival" (Laudon, Laudon & Dass, 2010).

The use of information technology is important for business operations because it improves competency and effectiveness, enabling organizations to achieve higher profits. New technological innovations in information management systems have paved the way for new products, better services, and more efficient business models. The relationship between consumers and suppliers has also improved due to information systems, as companies generate profits by serving customers in an appropriate and responsive manner. For customers, information technology helps lower costs through rapid and effective communication. Since both customers and suppliers have access to data through information systems, they are empowered to make better decisions. Moreover, information systems have helped companies gain competitive advantage by enabling them to deliver high-quality performance — selling superior products at lower prices and communicating with customers quickly and efficiently.

Components and Functions of Information Systems

An information system works in several ways and encompasses different managerial, organizational, and technological components. From a technical standpoint, an information system is used for the gathering, storage, and distribution of information from an organization's environment and internal processing systems to support "organizational functions and decision making, communication, coordination, control, analysis and visualization" (Laudon, Laudon & Dass, 2010). By employing input, processing, and output as three fundamental activities, information systems transform raw data into valuable information (Laudon, Laudon & Dass, 2010).

The input activity captures raw data from both internal and external settings. The processing activity converts that raw data into meaningful information. Finally, the output activity transfers the processed information to the departments, employees, or activities that will make use of it (Chatterjee, 2010).

From a business perspective, an information system is a set of interconnected components used to provide solutions to the various problems businesses face, composed of managerial, organizational, and technological elements. The management aspect includes subjects such as leadership, policies, strategies, and management conduct. The organizational aspect covers the chain of command, functional areas of expertise, workflows, and the workplace environment (Laudon, Laudon & Dass, 2010). The technological aspect encompasses "computer hardware, software, data management technology, and networking/telecommunications technology (including the Internet)" (Laudon, Laudon & Dass, 2010).