As long as organizations are small and have limited operational goals manual information systems are satisfactory. Many trends in the development of industry and commerce have made computer- based information systems essential to efficiently run organizations. These are:
• The size of organizations is becoming larger. This is particularly true in India due to increase in population and rapid rate of industrial development.
• Computer-based processing enables the same data to be processed in many ways. Based on needs, thereby allowing managers to look at the performance of an organization from different angles.
• As the volume of data has increased and the variety of information and their timeliness is now of great importance, computer-based information processing has now become essential for efficiently managing organizations.
• Organizations are now distributed with many branches.
• Markets are becoming competitive. To maintain favorable balance of payments in a country, organizations have to be internationally competitive.
• The general socio-economic environment demands more up to date and accurate information. Human society is changing faster than ever before. Governmental regulations have become complex. Organizations have to interact with many other interested parties such as
consumer groups, environmental protection groups, financial institutions, etc., which did not exist before.
Information system has become an integrated into our daily business activities as accounting, finance, operations management, marketing, human resource management, or any other business function. Information systems and technologies are vital components of successful business and organization—some would say they are business imperatives. They thus constitute an essential field of study in business administration and management, which is why most business majors include a course in information systems. Since you probably intend to be a manager, entrepreneur, or business professional, it is just as important to have a basic understanding of information systems as it is to understand any other functional area in business.
Information technologies, including Internet-based information systems, are playing vital and expanding roles in business. Information technology can help all kinds of business improve the efficiency and effectiveness of their business processes, managerial decision making, and workgroup collaboration, which strengths their competitive positions in rapidly changing marketplaces. This benefit occurs whether the information technology is used to support product development teams, customer support processes, e-commerce transactions, or any other business activity. Information technologies and systems are, quite simply, an essential ingredient for business success in today‘s dynamic global environment.
While there are seemingly endless numbers of software applications, there are three fundamental reasons for all business applications of information technology. They are found in the three vital roles that information systems can perform for a business enterprise:
• Support of business processes and operations
• Support of business decision making
• Support competitive advantages.
Support of business processes and operations: involves dealing with information systems that support the business processes and operations in a business. . For example, most retail stores now use computer based information system help their employees record customer purchases, keep track of inventory, pay employees, buy new merchandise, and evaluate sales trends. Store operations would grind to a halt without the support of such information systems.
Support of Business decision making: Information systems also help store managers and other business professionals make better decisions. For example, decisions about what lines of merchandise need to be added or discontinued and what kind of investments they require are typically made after an analysis provided by computer-based information systems. This function not only supports the decision making of store managers, buyers and others, but it also helps them look for ways to gain an advantage over other retailers in the competition for customers.
Support Competitive Advantage – help decision makers to gain a strategic advantage over competitors requires innovative use of information technology. For example, store management might make a decision to install to touch –screen kiosks in all stores, with links to the e-commerce web site for online shopping. This offering might attract new customers and build customer loyalty because of the ease of shopping and buying merchandise provided by such information systems. Thus, strategic information systems can help provide products and services that give a business a comparative advantage over its competitors.