The Three Fundamental Roles of Information Systems in Business

You can find computers and the information systems that run on them in every type of business. An information system can help you manage your company and improve performance, but you have to know what functions you need to get the full benefits. Make sure the system you want can fulfill the three fundamental roles that an information system can play in your business.

To fulfill its possible roles adequately, an information system has to be networked and secure and have adequate speed and storage capacity. In addition to being interconnected, "networked" means that employees can access the applications they need from their work stations. "Secure" means that only authorized personnel have access to data and functions and the system keeps track of authorized activities. For adequate speed, you have to buy components that are powerful enough to handle the operations you want to carry out. The system must have a central storage capacity that is large enough to store all your data and can be backed up. This storage will be on a main server, attached to the network or in the Cloud -- a Web-based application.

A business information system carries out specific functions in support of operations, including payroll, employee record storage, preparing and storing company documents and credit card processing. If your company operates a manufacturing line, the information system can schedule tasks and processes while keeping quality records. Some companies, such as graphic designers or advertising companies, use the information system to produce their products and services. In supporting operations, the information system can increase efficiency and improve employee productivity.

Monitoring and controlling the activities of employees is a core function of information systems. This is especially true of financial transactions in which management has a duty to prevent fraud and theft. In this role, the security of the information system is critical, as managers rely on it to track payments received from customers and invoices from suppliers. The system imposes its control functions by allowing only authorized employees to log in and access the relevant functions. For example, only a few employees may be authorized to generate a company check. In addition to limiting who can perform such functions, the system keeps track of who logged in and carried out the task.

A third fundamental role for information systems is management support in making decisions. Managers can get all the information they need about company activities from the system. Complete, accurate information means management decisions are more effective. More sophisticated systems can go beyond supplying data to running scenarios: Managers present hypothetical decisions and the system shows what the results might be. This function of information systems helps managers make decisions that have relatively predictable results.