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The term information system refers to information technology that is used by people to accomplish a specified organizational or individual objective. The technology may be used in the gathering, processing, storing, and/or dissemination of information, and the users are trained in the use of that technology, as well as in the procedures to be followed in doing so. The specific technologies that collectively comprise information technology are computer technology and data communications technology. Computers provide most of the storage and processing capabilities, while data communications—specifically networks—provide the means for dissemination and remote access of information.

Advances in computer hardware, software, and networking technologies have spurred an evolution in the structure, design, and use of corporate information systems.

COMPUTER HARDWARE

When computers first began moving into the business world in the late 1950s and early 1960s, the computing environment was best described as centralized, host-based computing. In this environment, the typical organization had a large mainframe computer (the centralized host) connected to a number of "dumb" terminals scattered throughout the organization or at remote sites. These terminals were labeled "dumb" be cause they had no native "intelligence" (i.e., they had no built-in central processing units [CPUs] that were capable of processing data). The mainframe did all the data processing for all the user terminals connected to it.

In the mid-1960s, Digital Equipment Corporation (DEC) announced the development of the minicomputer. Smaller than the mainframe, the minicomputer ushered in the era of distributed data processing (DDP). In this new processing environment, an organization could connect one or more minicomputers to its mainframe. Typically, the minicomputers were located in an organization's regional offices, from which they were connected to the mainframe in corporate headquarters. Thus, the organization's data-processing function was no longer localized in a single, centralized computer (the mainframe) but, rather, distributed among all the computers.

The commercial introduction of the personal computer by IBM in the early 1980s revolutionized organizational data processing. The personal computer carried the distributed processing concept even further within organizations— it brought data processing to the desktop. Also, it eclipsed the dumb terminal as the terminal of choice by users. The commercial success of the IBM personal computer led other computer manufacturers to develop their own personal computers that were compatible with the IBM PC (these are usually described as IBM clones or IBM-compatible computers). One notable exception is Apple Computers, Inc., which developed its own line of non-IBM-compatible computers, namely the Apple and Macintosh line of computers. The all-inclusive term microcomputer is sometimes used to encompass all makes and models of desktop computers, including the IBM

PC (and its clones) and the Apple/Macintosh computers.

It is important to note that, despite their proliferation and ubiquity, personal computers have not replaced minicomputers or mainframes. A large number of organizations still rely on these larger computers for significant aspects of their day-to-day operations.

COMPUTER SOFTWARE

Computer software is the set of programs and associated data that drive the computer hardware to do the things that it does, such as performing arithmetic calculations or generating and printing a report. Software typically comes in one of two forms: custom-written application programs or off-the-shelf software packages. Custom-written application programs are usually written by an organization's own programming team or by professional contract programmers to satisfy unique organizational requirements. Off-the-shelf software packages are produced by software development companies and made commercially available to the public. They usually fall in one of two main categories, namely system software or application software. The former includes such specialized programs as operating systems, compilers, utility programs, and device drivers. While these programs are important—and necessary— to the overall performance of an information system (especially from the "machine" perspective), they are not the primary focus of corporate information systems. Their basic functions are more machine-oriented than human-oriented.

Application software is designed to more directly help human users in the performance of their specific job responsibilities, such as business decision making, inventory tracking, and customer record keeping. From a software perspective, this is what corporate information systems are primarily concerned with.

One of the very important information systems functions is systems analysis and design, that is, analyzing a client's business situation (or problem), with respect to information processing, and designing and implementing an appropriate—usually computerized—solution to the problem. Information systems professionals who specialize in this area are known as systems analysts. The process begins with a detailed determination of the client's information requirements and business processes. The solution frequently involves some programming, as well as the use of an appropriate application software package(s), such as a database management system (DBMS) for designing and implementing a database for the client. It may also involve some networking considerations, depending on the user's requirements and goals. Some typical organizational information systems that can result from a systems analysis and design effort include the following.

Transaction processing systems: These record and track an organization's transactions, such as sales transactions or inventory items, from the moment each is first created until it leaves the system. This helps managers at the day-to-day operational level keep track of daily transactions as well as make decisions on when to place orders, make shipments, and so on.

Management information and reporting systems: These systems provide mid-level and senior managers with periodic, often summarized, reports that help them assess performance (e.g., a particular region's sales performance in a given time period) and make appropriate decisions based on that information.

Decision support systems: These systems are designed to help mid-level and senior managers make those difficult decisions about which not every relevant parameter is known. These decisions, referred to as semi structured decisions, are characteristic of the types of decisions made at the higher levels of management. A decision on whether or not to introduce a particular (brand new) product into an organization's product line is an example of a semi structured decision. Another example is the decision on whether or not to open a branch in a foreign country. Some of the parameters that go into the making of these decisions are known. However, there are also many unknown factors—hence the "semi structuredness" of these decisions. The value of a decision support system (DSS) is in its ability to permit "what-if" analyses (e.g., What if interest rates rose by 2 percent? What if our main competitor lowered its price by 5 percent? What if import tariffs are imposed/increased in the foreign country in which we do, or plan to do, business?). That is, a DSS helps the user (decision maker) to model and analyze different scenarios in order to arrive at a final, reasonable decision, based on the analysis. There are decision support systems that help groups (as opposed to individuals) to make consensus-based decisions. These are known as group decision support systems (GDSS).

A type of decision support system that is geared primarily toward high-level senior managers is the executive information system (EIS) or executive support system (ESS). While this has the capability to do very detailed analyses, just like a regular DSS, it is designed primarily to help executives keep track of a few selected items that are critical to their day-to-day high-level decisions. Examples of such items include performance trends for selected product or customer groups, interest rate yields, and the market performance of major competitors.

Expert systems: An expert system is built by modeling into the computer the thought processes and decision-making heuristics of a recognized expert in a particular field. Thus, this type of information system is theoretically capable of making decisions for a user, based on input received from the user. However, due to the complex and uncertain nature of most business decision environments, expert system technology has traditionally been used in these environments primarily like decision support systems—that is, to help a human decision maker arrive at a reasonable decision, rather than to actually make the decision for the user.

COMPUTER NETWORKS

Together with computer technology, data communications technology has had a very significant impact on organizational information processing. There have been tremendous increases in the bandwidths (i.e., signal-carrying capacities) of all data communications media, including coaxial cables, fiber-optic cables, microwave transmission, and satellite transmission. Wide area networks (WANs) provide access to remote computers and databases, thus enabling organizations to gain access to global markets, as well as increase their information sources for decision making purposes. The Internet in particular— the worldwide network of computer networks— has greatly facilitated this globalization phenomenon by making it possible to connect any computer to virtually any other computer in any part of the world. Advances in networking technologies have also enabled organizations to connect their in-house personal computers to form local area networks (LANs). This greatly facilitates organizational communication and decision-making processes.

The combination of computer and networking technologies has also changed the way basic work is done in many organizations. For example, telecommuting and virtual offices are commonplace in several organizations. Telecommuting refers to the practice of doing office work from home (i.e., without physically being in the office). The term "virtual office" acknowledges the fact that a person's office does not necessarily have to be a physical location. A person can do productive "office work" (including the making of managerial decisions) on the go, for example, at the airport while waiting for a flight, on the airplane, or from a beach half-way around the world. These practices are made possible through modem-equipped computers that can access a remote computer (the office computer) via a data communications network.

An organization's overall performance can be greatly enhanced by strategically planning for, and implementing, information systems that optimize the inherent benefits of information technology to the benefit of the organization. This requires effective leadership and vision, as well as knowledge of both information technology and the organization's (business) environment.