The three types of information systems that exist in the organization include the
- transaction processing system,
- management information system,
- the decision support system (Amin and Miller 4).
Here, the transaction processing system provides solutions for those users to handle errors that are likely to happen in day to day transactions in a safe and consistent manner. Such errors are caused by handling files using manual processes.
Different types of information systems have unique functional capabilities that support thousands of users to perform different tasks such as to concurrently accessing and modifying database files at the same time (Degryse and Van Cayseele 5). One such application is the transaction processing system, which provides solutions to problems associated with order processing, funds transfer, payments, and stock controls.
On the other hand, the management information system helps the management to solve problems related to budgeting, solve human resource management issues, and support sales management activities (Amin and Miller 4). On the other hand, the decision support system solves financial related problems, logistics problems, and cooperative work-related issues besides assisting managers to make long term predictions and strategic decisions. The information systems enable the management to make better strategic decisions and to enable the organization to compete for new business opportunities.
Impact of previous information systems
The impact of the previous information system includes enabling employees at the operations level to make error-free transactions using automated tracking of basic transactions which constitute the low-level day to day activities (Pan and Leidner12).
The system functionality enabled the user to collect information on the business transactions at the operations level for consumption at the strategic and tactical levels of the organization, which enabled the organization to efficiently run the organization. On the other hand, the management information system enabled real-time capturing, processing, and propagation of data throughout the organization. Information flow was aligned with different layers of the organizational structure so that effective cost control, better monitoring of the organization, and improved support for management operations could be possible.
Organizational managers were able to use the decision support system to create the desired knowledge base system and integrate it into the overall structure of the organization (Lagerström and Andersson 2). Besides, the system enabled the management to analyze the potential effects of the short term and long term strategic level decisions based on the performance of the organization as well as to solve problems associated with the structure of the organization. The organizational managers used the information systems to learn the behavior of businesses in different environments through simulations.
Information systems are used to achieve low-cost leadership because of the high operational efficiencies and low operational costs at the lowest prices (Wild, Wild, and Han 11). In network economics, transaction costs can be decreased significantly in a cost leadership environment. Cost leadership enables organizations to make better strategic partnerships, support strong customer relationships management, enable better supply chain management abilities, do better benchmarking, and make a strong focus on the market niche. The cost of doing business can be fundamentally changed by optimizing the cost of business processes using e-procurement models and low transaction costs.
Differentiation is used to develop differentiated product features that are consistent with the needs and expectations of the customers. The strategy involves making new products and customizing those products to meet customer needs and expectations (Schwalbe 3). This is made possible by chatting with the customers on social networks to collect information on the desired product attributes.
Strengthen customer and supplier intimacies
It is possible to establish direct access of the supplier with the sellers, avail information on the internet and social media, and make user-friendly platforms for transactions and increasing switching costs and strengthening loyalty.
Amin, Himanshu S., and John M. Miller. “System for dynamically pushing information to a user utilizing global positioning system.” U.S. Patent No. 6,353,398. 2002. Print.
Degryse, Hans, and Patrick Van Cayseele. “Relationship lending within a bank- based system: Evidence from European small business data.” Journal of financial Intermediation 9.1 (2000): 90-109. Print.
Lagerström, Katarina, and Maria Andersson. “Creating and sharing knowledge within a transnational team—the development of a global business system.” Journal of World Business 38.2 (2003): 84-95. Print.
Pan, Shan L., and Dorothy E. Leidner. “Bridging communities of practice with information technology in pursuit of global knowledge sharing.” The Journal of Strategic Information Systems 12.1 (2003): 71-88. Print.
Schwalbe, Kathy. Information technology project management. Cengage Learning, 2015. Print.
Wild, John, Kenneth L. Wild, and Jerry CY Han. International business. Pearson Education Limited, 2014. Print.