QS Study

Vital roles of Information System in Business

An information system can be defined as a set of the coordinated network of components. which act together towards producing, distributing and or processing information. The purpose of an information system is to turn raw data into useful information that can be used for decision making in an organization.

Manager and business firms invest in information technology and system because they provide real economic value to the business. Following are three vital roles that information system can perform a business enterprise.

To support business process: Information system supports the business process and operations by:

  • Recording customer purchase
  • Keeping track of inventories
  • Keeping track of employee payment
  • Evaluating the sales trend.

For example, Most retain stores now used computer-based information system. To help their employees, record customer purchase, pay employees, evaluates sales trends etc.

To support decision making: Information system also help is to managers and other business professional make a better decision by:

  • Forecasting future trend and opportunities
  • Representation the financial condition of the business
  • Giving information regarding competitors
  • Showing the current level of inventories.

For example, the decision on what lines of the mercantile meet to be added or discounted or on what kind of investment they required is typically made after an analysis provided by computer-based information system.

To support competitive advantage: Innovative application of information to technology helps a business to gain strategic advantage over the competitor. A strategic information system can help provide product and services that a business a competitive advantage over its competitors.

  • Implementing ERP software in the organization
  • Introducing e-commerce to attain new customers.
  • Creating loyal costumers
  • Capturing the lifetime value of customers.