Information System Concepts Learning Objectives

Published Date: 02 Nov 2017

Information Systems

Types of Information systems and their applications

Information and its applications in business and organization

Information technology

IT technologies and their role in organization and business

2.1 INTRODUCTION

An understanding of the effectual and accountable use and management of information systems and technologies is important for managers, business professionals, and other knowledge workers in today’s internetworked enterprises. Information system supports an organization’s business processes and operations, business decision-making and strategic competitive advantage. There are various types of information systems e.g. Management information system, Decision support system, Knowledge management system etc. available for use by an organization/business to achieve operational excellence, develop new products and services, and promote competitive advantages. It is a system that comprises of people, computer systems, data and network that helps to collect, store and analyse data to produce the desired information for the functioning, betterment and expansion of business. Information systems play a vital role in the E-business and E-commerce operations, enterprise collaboration and management, and strategic success of businesses that must operate in an internetworked global environment. Thus, the field of information systems has become a major functional area of business administration.

Because of internet small companies has opportunity to compete against large companies. E-commerce provides buying, selling and exchanging of products, services and information between Business to Business, Business to Customer, Customer to Business and Customer to Customer via computer networks. By having online advertising the company is in a reach of broad number of customer to enhance sale. Currently $80 billion is traded over internet annually and by the year 2030; the number is estimated at $4 trillion [1].

The senior managers are looking for information that can help them in planning and decision making whereas middle level managers are fond of information that can help them in monitoring and controlling the business activities. The lower level employees need information that can help out in performing their day to day activities easily and speedily. It means that in an organization the different type of information systems are running at the same time.

Tally is one of the simplest accounting software to use. It is very popular in charted accounting as it is very user friendly and can be learned by a person who is having the basic knowledge of accounts and computers on his own. It maintains all Books of accounts starting from records of vouchers, ledgers etc. and handles different types of vouchers like Payment, receipt, adjustment entries like Journals, Debit notes, Credit notes, Sales, Purchases, Receipt notes, Delivery notes etc. A charted accountant can also establish its own firm for consultancy and can use information systems in carrying out day to day activities as well as operational excellence and competitive advantage essential for its survival in this spirited world.

Obtaining full competitive advantage from information systems requires long term investment in an IT strategy that supports the manager’s strategic direction. It is not simply one time heavy investment in one or more business applications but is continuous in the areas where it can show remarkable growth.

In this chapter, we mainly focus on the information systems and its role in business. The chapter encompasses of the detailed description of information systems, its components, different types of information systems, their use in various business applications and the role of information technologies in business and organization.

2.2 OVERVIEW OF INFORMATION SYSTEMS IN IT ENVIRONMENT AND PRACTICAL ASPECTS OF APPLICATION OF INFORMATION SYSTEMS IN ENTERPRISE PROCESSES

In the today’s era of rapid growth, Information Technology is encompassing all walks of life all over the world. It helps the storage, processing, transmission and exploitation of information to satisfy a person’s, company’s, society’s or government’s need for information. It has bought very vast change in business environment. Because of global competition companies are in great need of efficient, timeliness information for better decision making ability.

With the advent of new tools for information and knowledge gathering in IT, we can expect continued refinement in the traditional skills of management i.e. planning, organizing, decision making and controlling processes and operations.

2.2.1 Information Systems and its components

With the help of information systems organizations and people are able to use computers to collect, store, process, analyse, and distribute information. Information system is a combination of people, information technology and business processes that helps management in taking important decisions to carry out the business successfully. An information system comprise of people, hardware, software, data and network for communication support [9] shown in figure 2.2.1.1. Here, people mean the IT professionals i.e. system administrator, programmers and end users i.e. the persons who can use hardware and software for retrieving the desired information. The hardware means the physical components of the computers i.e. server or smart terminals with different configurations like corei3/corei5/corei7 processors etc. and software means the system software (different types of operating systems e.g. UNIX, LINUX, WINDOWS etc.), application software (different type of computer programs designed to perform specific task) and utility software (e.g. tools). The data is the raw fact which may be in the form of database. The data may be alphanumeric, text, image, video, audio, and other forms. The network means communication media (internet, intranet, extranet etc.).

Components of Information Systems

Computer System

Network

People

Data

Hardware

Software

Fig. 2.2.1.1: Components of Information Systems

An information system model comprises of following steps:-

Data are collected from an organization or from external environments and converted into suitable format required for processing (Input).

It is converted into information (more meaningful form) obtained after manipulation of these collected data (Processing).

Then information is stored for future use or communicated to user after application of respective procedure on it (Output).

The three basics activities of an information system that are defined above helps organisation in making decisions, control operations, analyze problems and create new products or services shown in figure 2.2.1.2 [9]. Apart from these activities information systems also needs feedback which is output that is returned to appropriate members of the organisations to help them to evaluate the input stage.

OUTPUT

(Solution to problems in the form of reports, graphics, calculations, voices)

PROCESSING

(Software,

Programs, people, equipments, storage)

INPUT

(Business problems in the form of data, information, instructions, opportunities)

CONTROL

(Decision Makers, Auto Control) FEEDBACK

Fig. 2.2.1.2: Functions of information systems [9]

Some of the widely used information systems are discussed in the following table 2.2.1.1 [13] :-

Table: 2.2.1.1: Different Information Systems

Information System

Description

Management Information Systems (MIS)

It is mainly concerned with internal sources of information. It inputs data usually from the transaction processing systems and gives output as a series of management reports.

MIS reports can be used by middle management and operational supervisors to gather desired information.

Decision-Support Systems (DSS)

These are specifically designed to help management make decisions in situations where there is uncertainty about the possible outcomes of those decisions. DSS consists of tools and techniques that gather relevant information and helps in analysis of the options and alternatives. It usually uses complex spreadsheet and databases to generate information.

Knowledge Management Systems (KMS)

These help businesses in creation and sharing of information and are typically used in a business where employees create new knowledge and expertise - which can then be shared by other people in the organisation to create further commercial opportunities. For example, KMS are most effectively used in firms of lawyers, accountants and management consultants.

One can say that these are effective in systems which allow efficient categorisation and distribution of knowledge. For example, Knowledge discovery in database and Data mining tools can be used to extract the knowledge from word processing documents, spreadsheets, PowerPoint presentations, internet pages, databases, data warehouses.

Transaction Processing Systems (TPS)

These are designed to process and carry out routine transactions efficiently and accurately. A business will have several TPS. For example, Billing systems and invoices to customers, to calculate the weekly and monthly payroll and tax payments of an organization, to calculate raw material requirements, stock control systems to process all movements into, within and out of the business etc.

Office Automation Systems

These are systems that help in the enhancement of performance of or productivity of employees who are dealing with the data processing and information. For example, the use of MS-office can generate the list of customers who have done purchase of certain type of products, number of sales of products done on a particular date etc.

2.2.2 Application of Information System in enterprise processes

Mainly information systems perform following three vital roles in business firms [10]:-

"Support an organization’s business processes and operations". This includes operations support systems such as transaction processing systems, process control systems.

"Support business decision-making". This includes management information systems, decision support systems, and executive information systems.

"Support strategic competitive advantage". This includes expert systems, knowledge management systems, strategic information systems, and functional business systems.

To operate information systems (IS) effectively and efficiently a business manager should have following knowledge about it [10]:-

1. Foundation concepts- It includes fundamental business, and managerial concepts e.g. what are components of a system and their functions, or what competitive strategies are required;

2. Information technologies (IT) – It includes operation, development and management of hardware, software, data management, networks, and other technologies;

3. Business applications- It includes major uses of IT in business steps i.e. processes, operations, decision making, and strategic/competitive advantage;

4. Development processes- It comprise how end users and IS specialists develop and execute business/IT solutions to problems; and

5. Management challenges- It includes how the function and IT resources are maintained and utilised to attain top performance and build the business strategies.

There are various types of Information Systems e.g. Manual information systems that make use of paper-and-pencil, Informal information systems that uses vocal communication, Formal information systems which uses written documents, manuals, Computer-based information systems that use hardware, software, Internet, and other telecommunications networks, computer-based data resource management techniques, and other forms of information technologies (IT) to collect, store and transform data into various information desired by the consumers and business professionals. In this chapter, we mainly emphasize on computer based information systems.

Information technology can be viewed as a subsystem of information system that includes hardware, software, databases, networks and other electronic devices. Sometimes, the term information technology can be used interchangeably with information systems. Information Technology refers to the technology of the production, storage and communication and management of information using computers and micro-electronics and is a crucial part of information systems. Most business uses IT to create and process data. Small businesses generally need to purchase software packages, and may need to contract with IT businesses that provide services such as hosting, marketing web sites and maintaining networks. However, larger companies can consider having their own IT staffs to develop software, and otherwise handle IT needs in-house [2]. IT has changed the working styles of staff at all levels of organizations, from the executives to middle management and lower level staff e.g. Supervisors etc. The prime area’s where IT enabled tools are used in any organization is shown in figure 2.2.2.1 whereas figure 2.2.2.2 shows different IT enabled tools used in three i.e. top, middle and lower management of an organization.

IT in Business World

Decision Making

Retailing

Marketing

Customer Relationship Management

Supply Chain Management

Knowledge Management

Fig. 2.2.2.1: IT in prime business area

Application of IT at different management levels

Top Management level Middle Management level Lower Management level

-Mainly uses -Mainly uses -Mainly uses

DSS, Internet, Intranet ERP, SAP, DBMS, Internet CC Camera, printer, scanner etc.

MIS, BI, KDD, laptop etc. laptop, Desktop, wi-fi, etc.

Fig. 2.2.2.2: Application of IT at different management levels

In a global survey conducted by Economist Intelligence Unit, Global Technology Forum survey, 2006 of 4,018 executives conducted for the report, 59% agreed that IT’s primary role in five years’ time will be to increase competitive advantage rather than drive cost efficiency. Executive confidence in this development has clearly grown since the Business 2010 [3].

Andrew McAfee from Harvard Business School and Erik Brynjolfsson from MIT's Sloan School of Management have divided the US private sector into 61 industries and determined the IT intensity of each one by the amount of spending on computer hardware and software as a percentage of total spending on fixed assets, grouping them into high-IT, medium-IT, and low-IT industry groups [4]. They found that "Market share increases were greatest in industries that used IT most extensively. High-IT industries experienced different competitive dynamics than other industries." Sales turbulence (i.e., the amount of shifting in where a company ranks in sales within an industry from year to year) was substantially higher in the high-IT industries than in the other two categories [2].

In recent years, the advent of information technology has transformed the way marketing is done and how companies manage information about their customers [5]. The first step in marketing is the identification of patterns in a large data set of the customer and making critical marketing decisions. The technologies used to implement knowledge management are artificial intelligence, extranet, groupware, decision support system, document management system, data warehousing, data mining, intranet and internet.

By the use of information technology tools large volume of data related to customers can be stored and is available for use. This has created opportunities as well as challenges for businesses to gain competitive advantage. e.g. Wal-Mart is the largest retailer in the U.S. has a customer database that contains around 43 tera-bytes of data [6]. The information and knowledge from this huge database can be extracted by the use of various information technology techniques.

2.3 INFORMATION AS A KEY BUSINESS ASSET AND ITS RELATION TO BUSINESS OBJECTIVES, BUSINESS PROCESSES

Information is a strategic resource that helps business in achieving long term objectives and goals. In today’s competitive and unpredictable business environment, only those organizations survive which have complete information and knowledge of customer buying habits and market strategy. Information management enhances an organization ability and capacity to deal with and develop in mission, competition, performance and change. It is important as the managed information and knowledge enables the members of the organization to deal with today's situations and effectively envision and create their future. It involves coordination between people, process and technology.

2.3.1 Information

Technically, information means processed data. Data is facts or values of results, and information is the relations between data and other relations. e.g. in spreadsheet student name, roll number and marks obtained in science and arts subjects represents data whereas the graph that shows the percentage of students acquire more than 80% in science subjects and 65% in arts subjects represents information. Information may be represented in the form of text, graph, pictures, voice, videos etc. Let us take another example "85", "Ira", "scored", "Maths", "in", "marks" itself represents data but it conveys information when we write sentence "Ira scored marks in Maths = 85" which is obtained after manipulating the data.

The collection of data is not information and collection of information is not knowledge. Information relates to description, definition, or perspective (what, who, when, where). Information is essential because it adds knowledge, helps in decision making, analysing the future and taking action in time.

Information products produced by an information system can be represented in number of ways e.g. paper reports, visual displays, multimedia documents, electronic messages, graphics images, and audio responses.

2.3.2 Role of Information in business

In today’s competitive and erratic business environment, only those organizations stay alive which have complete information and knowledge of customer buying habits and market strategy. Timeliness, accurate, meaningful and action oriented information enhances an organization ability and capacity to deal with and develop in mission, competition, performance and change.

The information can be categorised on the basis of its requirement by the top, middle and lower level management as seen in figure 2.3.2.1 [7]. The top management generally comprise of owners /shareholders, board of directors, its chairman, managing director, or the chief executive, or the managers committee having key officers, the middle management comprise of heads of functions departments e.g. purchase manager, production manager, marketing managers, financial controller, and divisional sectional officers working under these functional heads, whereas the lower level managers are superintendents, supervisor, etc [7].

Information Systems used Top level Role of Information

EIS (Executive information system) Strategic Essential for in long term planning

DSS (Decision support system) Information

Middle level Essential for short term planning MIS (Management information Tactical Information

system)

Low level Essential to carry out

Operational Information day to day activities

TPS (Transaction smoothly & efficiently

Processing system)

Fig. 2.3.2.1: Types of Information Systems and information at different management level

Top level management strives for the information that can help them in major policy decisions such as establishment of new plant, launching of new product etc. In other way, we can say that the top management requires strategic information that helps them in making strategy of an organisation in terms of scope of products, targets of products i.e. customers, competition with market i.e. price, quality, long term planning etc. The information about the customers buying habits such as what combination of products and type of products they are likely to purchase together will help top managers to decide the launching of new products. e.g. If the information like a customer whose income is more than one lakhs per month and working in IT sector and are in habit of buying latest model of laptops are more in a city where large number of IT companies are existing then it’s better to launch notebook with latest operating system there. Such information can help top management of company to decide to work on new products as well as the location where it has to be launched for maximum profit and sale which is one of the objectives and goals of the top management.

Middle managements are striving for somewhat called tactical information that helps in top level plans. For example by having information of customers likely to purchase certain product in a particular location can help sales managers to fulfil their sales target efficiently. Tactical information is used for short term planning whereas strategy information is used for long term planning. For example, the offers of companies during festive seasons are a short term planning which is done by having information about the customers buying capacity in that location.

The lower management deals with operational information those are required in day to day activities. The operational information mainly comprises of information about stock on hand, information about customer order pending, information about bill payable by customer etc. These are essential for smooth running of the daily activities of a business at primary level. For example, if a regular customer demands for a product other than the daily purchase then this information is important for salesman because it will help him in providing better service.

2.4 RELATIVE IMPORTANCE OF INFORMATION SYSTEM FROM STRATEGIC AND OPERATIONAL PERSPECTIVES

A business model can be defined as an outline of how business is to be done by a company to generate maximum revenue. A business strategy is defined as a long term planning for success i.e. tactics that are applied to manage business for More business. It emphasizes on competition that business model does not. A good business strategy is one that enables company to keep hold of customers, uses resources efficiently and explore business opportunities outside of the standard business practice to help inspire company expansion.

An information system can be large or small depending upon the size of the company and can help in decision making, produce high quality of products and perform logistical functions. An information system can assist in determining scenarios such as unifications and achievements, and streamline the strategic planning process that can help top management to take corporate decision easily. In operations management, information systems design can apply to production control, research, development, and manufacturing to produce desired results of the products in terms of quality and cost [11]. Information systems applications in the area of human resources management can help in retaining highly qualified employees by having important data concerning employees obtained after several processes used by human resource managers or personnel. Information systems also support logistical processes in various ways, such as real time inquiries to track an item from the point of shipment, receiving and storage of the item and inventory status of the item. Not only this, information systems can also provide the structure for programmers, database managers and data administrators to collaborate on new and existing projects [11].

In this age of technology and competition, business people are looking for novel ideas and information that can enhance and expand their business. In order to achieve this they are becoming more and more dependent on information systems. Information system is used in every aspects of business right from customer relationship management, marketing strategies, retailing, communication, product promotion, product development, forecast future sales to supply chain management etc. ERP, Data Mining tools, EDI (electronic data interchange), Data warehouse, Business intelligence, MIS, internet, intranet, extranet etc. are the information systems and information technologies that support managers in every step of business.

Information System has speedup the whole process of the business e.g. Instead of gathering data manually and taking out hidden information from it by conducting meeting of executives which is crucial in decision making for marketing strategies, customer relationship management etc., the same can be obtained by using the respective data mining tools and data warehouse. Not only this, Information System also provides new platform to business world where space and time is no more obstacle. For example, selling and purchasing of products can be done on web anytime and from anywhere.

2.5 VARIOUS TYPES OF BUSINESS APPLICATIONS

Information system has changed traditional business system entirely. With the advent of information technology, everything is just a mouse click away and is available anytime, anywhere. IT has speed up communication between executives by providing online meeting irrespective of their location. Information system also contributes to an organization’s success by providing information that provides innovative ideas to managers and helps them in decision making which is very important to keep the organization ahead in this competitive world. Financial, trading, manufacturing, retail industries etc. are moving towards a real time business model where transaction and information sharing are near instantaneous. In this topic, we focus on the different types of business and organizations where information systems and information technology are popular.

E-business – Also called electronic business and includes purchasing, selling, production management, logistics, communication, support services and inventory management through the use of internet technologies. The primary components of E-business are infrastructure (computers, routers, communication media e.g. wire, satellite etc., software and programmers), electronic commerce and electronically linked devices and computer aided networks. The advantage of E-business are 24 hour sale, lower cost of doing business, more efficient business relationship, eliminate middlemen, unlimited market place and access with extend customer base, secure payment systems, easier business administration and online fast updating. This is so because it does not require land for store or shops and anyone from anywhere can do business anytime as information regarding products etc. are available on the web. Only investment needed in the purchase of space on internet, designing and maintenance of website. Different types of business can be done e.g. it may be B2B (business to business), B2C (business to customer), C2C (customer to customer) and C2B (customer to business). Because of no limitations of time and space people prefer to involve in E-business. Thus, we can say that information technology has given new definition to business.

Financial Service Sector- The financial services sector (banks, building societies, life insurance companies and short term insurers) manages large amounts of data and processes vast numbers of transactions every day. Owing to application of IT, all the major financial institutions operate nationally and have extensive networks of regional offices and associated electronic networks. The associated massive client databases are handled via large central mainframe systems which still characterise the industry. IT has changed the working style of financial services and makes them easier and simpler for customers also. Now most of the services are offered by the financial services on internet which can be accessed from anywhere and anytime that makes it more convenient to the customers. It also reduces their cost in terms of office staff and office building. It has been observed that automated and IT enabled service sectors reduces cost effectively. Through the use of internet and mobile phones financial service sectors are in direct touch with their customers and with adequate databases it will be easier for service sectors to manage customer relationships. For example, through emails or sms the customers can be made aware of launch of new policies; they can be informed on time the day of maturity of their policies etc.

In traditional banking system the customer has to visit bank branch to deposit or withdraw money and get updated passbook from the respective counter. With the advancement of IT, the customer can do transactions by using internet banking, phone banking and the deposit or withdraw of money can also be done by using ATM (automatic teller machine), internet or mobile banking. Banks also offered most of direct banking services free of charge to the customers. The customers can check the status of their accounts in different banks by the use of direct banking. Retail banking in India has assured great importance recently with a number of retail banking products available to the consumer like real time account status, transfer of funds, bill payments and so on. e.g. HDFC, SBI and ICICI are the banks in India that offer real time online transactions etc.

Wholesaling and Retailing- A visit to any large store will show that information technology has become a vital part of retailing. Retail business uses IT to carry out basic functions including till systems for selling items, capturing the sales data by item, stock control, buying, management reports, customer information and accounting. The laser scanners used in most grocery supermarkets and superstores to read product bar codes are among the most distinctive examples of modern computer technology. By using internet or mobile phones retailers can collect and exchange data between stores, distribution centers, suppliers and head offices.

Lowe and Wringley (1996) suggest three main ways in which retailers have used IT, ‘positioning themselves at the cutting edge of technological development’ compared with manufacturers which are [12]:-

IT in retailing, improves retail logistics, reduces delivery lead times, thus resulting in a progressive reduction in retailer inventory holdings.

Through exchange of emails or sms and use of databases the retailers can have better information about consumer demand supported retail policies in own brand, product development and the refocusing and redefinition of many of the most successful firms.

Retailers have cut their labour costs by effective staff scheduling and by using more part time and casual staff. They can use IT to measure staff performance, enabling costs to be further reduced by virtue of the information relating to transactions and performance levels.

IT can be used in wholesale for supply chain logistics management, planning, space management, purchasing, re-ordering, and analysis of promotions. Data mining and data warehousing applications helps in the analysis of market baskets, customer profiles and sales trends. E-commerce among partners (suppliers, wholesalers, retailers, distributors) helps in carrying out transactions.

Public sectors- It includes services provided by the government mainly hospitals, police stations, Universities etc. E-government is most admired in karnatak state of India that covers E-panchayat also. IT/IS can be used here, to keep records of the cases, respective people involved it, other related documents and can consult the existing data warehouse or databases to take appropriate actions. For example, IS like ERP can be implemented in a University to keep record of its employees in terms of their designation, leaves availed, department, achievements that can be used further in analysing their performance. Similarly, E-learning implements distance education by using internet facility to reach distant learners. e.g. lectures can be represented in the form of text or combination of text and images (powerpoint presentations), video (youtube provides this facility) and also students can interact with the concerned faculty through video conferencing or chatting. Hospitals can be automated to carry out day to day activities e.g. generating report of patient, information about availability of doctors, listing of doctors in specific area etc. by a touch of mouse.

Owing to application of IT and IS it becomes easy to file FIR of a case without going to police station personally and also important documents like passports can be made easily by applying online.

Others- IT is efficiently used in entertainment industry (games, picture collection etc.), agriculture industry (information is just a mouse click away to the farmers), Tour industry (railway, hotel and airline reservations) and consultancy.

Thus, we can say that IT has changed the working style of business world drastically and make it simpler day by day with its advancement.

2.6 OVERVIEW OF UNDERLYING IT TECHNOLOGIES

Now day’s business uses Information Technology (IT) to carry out basic functions including systems for selling items, capturing the sales data by item, stock control, buying, management reports, customer information, decision making, accounting etc. Here, we discuss some of the IT tools crucial for business growth.

1. Business website – By having this organisation/business becomes reachable to large amount of customer. Not only can this it also be used in an advertisement which is cost effective and in customer relationship management. These websites can be designed by using HTML, XML, ASP.NET etc.

2. Internet and Intranet – It’s a best source of communication. Time and space is no more obstacles for conducting meeting of people working in a team from multiple locations, or with different vendors and companies.

Intranet is system that permits the electronic exchange of business data within an organization, mostly between managers and senior staff. E-commerce among partners (suppliers, wholesalers, retailers, distributors) using intranets, EDI, e-mail etc. provides new platform to the business world for conducting business in a faster and easier way. E-commerce provides business to business, business to customer, customer to customer and customer to business communication with a click of mouse.

3. Software and packages- DBMS, data warehousing, data mining tools, knowledge discovery can be used for getting information that plays important role in decision making that can boost the business in the competitive world. e.g. by having information of buying habits of customer, sales of product; marketing strategy can be built quickly and effectively with the use of data mining tools and knowledge discovery in database (KDD). These can be used in Supply chain logistics, including planning, purchasing, replenishment, logistics, and space management.

Business Intelligence (BI) refers to applications and technologies that are used to gather, provide access and analyse data and information about companies operations. BI software includes range of tools. Some BI applications are used to analyze performance or internal operations e.g. EIS (executive information system), business planning, finance and budgeting tools. While others are used to store and analyze data e.g. Data mining, data warehouses, Decision support system, OLAP (online analytical processing) etc. Some BI applications are also used to analyze or manage the human resources e.g. customer relationship and marketing tools. A complete BI provides consistent and standard information essential in enterprise operations.

Now progressively firms are replacing legacy systems with newer client/server based solutions. Data warehousing, data mining tools and knowledge discovery (KDD) applications for analysis of market baskets, customer profiles and sales trends can be used in retailing. Enterprise resource planning (ERP), Management information system (MIS), antivirus software, Tally packages not only increases processing speed but also cut cost of hiring more employees. Tally an accounting Software is one of the simplest software to use, is very user friendly and even a person having the basic knowledge of accounts and computers can easily learn this package on his own.

Data mining can be applied in database analysis and decision support i.e. market analysis and management by finding patterns that are helpful in target marketing, customer relation management, market basket analysis, cross selling, market segmentation, risk analysis, customer retention, improved underwriting, quality control, competitive analysis and fraud detection. Other applications of DM are- (i) text mining, (ii) web analysis, (iii) customer profiling - it can list out what types of customers buy what products by using clustering or classification, (iv) identifying customer requirements- it can identify the most demanding and appropriate products for different customers, and also can list the factors that will attract new customers by using prediction etc., (v) provide summary information i.e. various multidimensional summary reports and statistical summary information, (vi) finance planning and asset evaluation (vii) cross-sectional and time series analysis, and (viii) resource planning- it can summarize and compare the resources and spending [8].

4. Computer systems, scanners, laptop, printer, webcam, smart phone etc.-

Webcam, microphone etc, are used in conducting long distance meeting. Use of computer system, printer, scanner increases accuracy, reduce processing times, enable decisions to be made more quickly and speed up customer service. e.g. one can charge accurate prices and eliminates the need to apply price labels to individual items by the use of scanning system.

2.7 SUMMARY

Although information systems has set high hopes to companies for their growth as it reduces processing speed and helps in cutting cost but in reality it’s not true because most of the research shows that there is a mark able gap between its capabilities and the business-related demands that senior management is placing on it. Information system is not simply one time investment but needs continuous updating.

Moreover, senior managers won’t promote acquiring new technology because of need of skilled and trained persons for its application in business and the problem with IT staff having less exposure to other parts of the business. Other disadvantages of IT are less social interaction that causes isolation and may affect the team work.

Obtaining full competitive advantage from information system requires long term investment in an IT strategy that supports the manager’s strategic direction. It is not simply one time heavy investment in one or more business applications but is continuous in the areas where it can show remarkable growth.