Information System: Its Definition and Role in Decision Making

What is an information system? How can it influence an organization’s effectiveness? This article defines information system and how it works.

The rapid pace of urban development in the information age is made possible by computer-based information systems. Middle level and upper-level managers benefit a lot from the outputs of a well-designed and efficient information system. In a highly competitive world, information systems define the winners and the losers in many areas: economic, political, social, among others.

But what is an information system? How does it work? How can managers make use of it?

Definition of Information System

An information system is an organized scheme of people and data collection and retrieval tools to produce information. Data is meaningless unless analyzed or processed to meet the needs of the users. Thus, data processors which may be human or machines, process the data and produce information. Information may be in the form of graphs, tables, figures or any output that translates data into understandable forms. Thus, information is processed data.

Modern organizations use computer-based or computer information systems because of its high efficiency in delivering information. Manual information systems, while still in use, is slower and relies mainly on the ability of people to process data.

In the age of information, information systems are synonymous with computer-based or computer information systems. That is because computers are used to process data into understandable chunks of information that the user needs. Slow data processing systems that rely on manual retrieval of data from physical folders or files in a metal cabinet are gradually phased out in modern workplaces.

information system
The information system in relation to the business world (Source:

How Does a Computer Information System Work?

A computer information system requires the input of data, a processing capability, and the ability to produce an output that can be stored for future use. The acronym IPOS summarizes the components of an information system. This acronym stands for Input, Process, Output, and Storage.

In a computer information system, an input is made through the use of a keyboard, a mouse, or a microphone. Process refers to data analysis using software applications that take advantage of the computer’s processor. Computers perform complex calculations to organize data into useful outputs that can be displayed on a screen or printed on paper. It makes sense of data whose raw form is meaningless.

The output may be used immediately or retrieved from a storage whenever necessary. Flash drives, hard disks, and cloud storage facilities are commonly used to store both data and information.

Requisites of Good Information

The information produced in an information system is only as good as the data used to generate it. It follows the GIGO principle: Garbage In, Garbage Out. Wrong information produces false results.

According to Zikmund (1999), useful information should be 1) relevant, 2) timely, 3) of high quality, and 4) complete.

Relevance is the degree to which the information produced is related or useful to the current issue that needs resolution.  Information is timely if it is available whenever needed. Information is of high quality if it is based on accurate data and analyzed correctly. And information is highly useful if it answers all of the user’s queries or requirements.

Good information, therefore, is helpful in decision making if it is produced through systematic means. The rigorous manner applied in conducting research plays an essential role in delivering information that makes clear a decision maker’s options.

See how information is generated in the post titled: Market Analysis: The Pizza Study.


Zikmund, W. (1999). Essentials of marketing research. Dryden Press. 422 pp.

Cite this article as: Regoniel, Patrick A. (June 8, 2016). Information System: Its Definition and Role in Decision Making. In SimplyEducate.Me. Retrieved from

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