Information System:
An Information System (IS) is a system that accepts inputs in the form of raw data, processes them, and provides output in the form of information. Information systems are designed in a manner that helps managers to analyze data and make decisions. Some of the important functions carried out by information systems are accepting input in the form of data resources, processing the data resources into information products, storing the data resources, generating output, and controlling the performance of the system. Information systems help an organization perform various functions, solve business problems, and pursuer business opportunities.
In an organization, the management can be broadly categorized into three levels - top, middle, and lower. The decisions taken by these levels of management are also classified into three levels - strategic decisions (taken by the top level management), tactical decisions (taken by the middle level management), and operational decisions (taken by the lower level management). Due to the varied nature of decisions taken at different levels of management, their information needs also differ. The information should be consistent with the requirement of the organizational level at which it is targeted.
Operational decisions are short-term in nature and usually involve large-scale processing of internal data such as attendance, daily cash flows, sales figures, etc. The examples of decisions taken at the operational level are decisions pertaining to materials, facilities, personnel, etc. Accuracy and speed are the two most important aspects to be considered while making operational decisions and these are made possible through the use of information systems.
Decisions at the tactical level are likely to have a medium to long-term impact on the organization and are made by the middle management. These decisions should be supported by organizational information. The quality of data processing has a major impact on the profitability of the organization. The examples of decisions taken at the tactical level are budget analysis, vendor rating, staff promotion, etc. Information system applications help in taking such tactical decisions.
Decisions at the strategic level are concerned with long-term business issues such as diversification, expansion of capacity, and strategic alliances. Information that is external to the organization influences strategic decisions. It is usually difficult to get clear-cut information and the decision-making situation is often unstructured and uncertain. Various avenues of information need to be explored and discrepancies in information reconciled. Hence, there is a need for adaptive, flexible, and insightful information systems. They help in arriving at indicators such as demographic preferences, cultural trends, and psychological influences.
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