Unit 1.1
Introduction to Information Systems
IT 233: Business Information Systems
🎯 Learning Objectives
By the end of this session, you will be able to:
- ✅ Define what an Information System (IS) is and its purpose.
- ✅ Differentiate between data, information, and knowledge.
- ✅ Identify and describe the five core components of an IS.
- ✅ Understand the strategic role of IS in modern organizations.
What is an Information System?
An Information System (IS) is a formal, sociotechnical, organizational system designed to collect, process, store, and distribute information.
In simple terms, it's the backbone of modern business operations.
It helps organizations manage activities, interact with customers, and gain a competitive edge. ⚡
The Value Chain: Data to Knowledge 📊
Data
Raw, unorganized facts and figures. Meaningless on its own.
Example: 250
Information
Data that is processed and given context to become useful.
Example: "250 momos sold today"
Knowledge
Information analyzed to find patterns and insights for decision-making.
Example: "We sell 250 momos every Friday. We should prep more for the weekend rush."
IS: The Bridge from Data to Decisions
➡️
Information System
(Collects, Processes, Stores)
➡️
The primary role of an IS is to transform raw data into valuable knowledge that drives strategy.
The 5 Core Components of an IS
An information system is an integrated set of five components that must work together.
- Hardware - The physical tech
- Software - The instructions for the tech
- Data - The raw facts
- People - The users and operators
- Processes - The rules and procedures
Think of it as a recipe: you need all the ingredients (components) in the right amounts, following the right steps (processes), to get the desired result.
Components 1 & 2: The Technology
1. Hardware
The physical equipment used to input, process, and output data.
- Computers & Laptops
- Servers & Storage Drives
- Keyboards, Monitors
- Networking Gear (Routers)
2. Software
The programs and instructions that tell the hardware what to do.
- System Software: Windows, macOS, Linux
- Application Software: MS Word, CRM, Inventory Systems
Component 3: Data 💾
Data refers to the raw facts that the information system collects, stores, and processes.
- Considered a critical organizational asset.
- Can include customer details, sales figures, inventory levels, employee records.
- Typically managed using a Database Management System (DBMS).
Components 4 & 5: The Human Element
4. People
The most crucial component! People design, build, maintain, and use the system.
- End-Users (employees, customers)
- IT Professionals (developers, analysts)
- Managers
5. Processes
The policies, procedures, and rules that govern how the system is used to achieve business goals.
- How to process a new order
- Password security policies
- Steps for generating a monthly report
Practical Application: A Nepali Business
Example: Paying an electricity bill with Khalti in Nepal
Let's break down this process using the 5 components:
- Hardware: Your smartphone, Khalti's servers, the Nepal Electricity Authority's servers.
- Software: The Khalti mobile app, the phone's OS (Android/iOS), the backend server applications.
- Data: Your login credentials, your customer ID, the bill amount, the transaction record.
- People: You (the user), Khalti's support team, the developers who maintain the app.
- Processes: The step-by-step procedure for logging in, selecting the utility, entering details, and confirming payment.
The Strategic Role of IS ⚡
Information Systems are not just for daily tasks. They provide a powerful strategic advantage.
- Support Decision-Making: Provides managers with real-time data and reports to make informed choices.
- Enhance Operational Efficiency: Automates repetitive tasks, reduces errors, and streamlines business processes.
- Gain Competitive Advantage: Enables new products, services (like online banking), and better customer relationships (CRM).
🔍 Key Takeaways
- An IS is a system of five core components that transforms raw data into valuable knowledge.
- The five components are Hardware, Software, Data, People, and Processes. All are essential.
- The "human element" (People and Processes) is just as critical as the technology.
- Information Systems play a vital strategic role in efficiency, decision-making, and gaining a competitive edge.