How does Information System benefit a business?

Information technology, also known as IT, is a comprehensive term that includes all types of technology used to exchange, store, use or create information. Commonly used information technology equipment includes computers, servers, peripheral devices, Internet connectivity equipment and phone systems. From basic computer terminals to IP-based telephony systems, information technology is an integral part of most modern business operations.

Benefits to Communication

Rapid communications can help increase productivity, allow for better business decision-making and ease a company’s expansion into new territories or countries. Email servers, routers, internal company billboards and chat services can serve as the backbone of a company’s communications. These electronically based communication systems are used to disseminate routine and critical business information in a quick and efficient manner. IT equipment can be used to send business status reports to executives, to update employees on critical business projects and to connect with business partners and customers.

Improved Workplace Efficiency

Streamlined work flow systems, shared storage and collaborative work spaces can increase efficiency in a business and allow employees to process a greater level of work in a shorter period of time. Information technology systems can be used to automate routine tasks, to make data analysis easier and to store data in a manner that can easily be retrieved for future use. Technology can also be used to answer customer questions through email, in a real-time chat session or through a telephone routing system that connects a customer to an available customer service agent.

Competitive Advantage over Rivals

Adoption of information technology resources allows companies to maintain a competitive advantage over their rivals. Companies using a first-movers strategy can use information technology to create new products, distance their products from the existing market or enhance their customer services. Companies that follow a low-cost product strategy can look to information technology solutions to reduce their costs through increased productivity and reduced need for employee overhead. Businesses can also build-in information technology to their products that makes it difficult for customers to switch platforms or products.

Cost Reduction and Economic Efficiencies

Companies can harness information technology resources to lower their costs. Using IT infrastructure, redundant tasks can be centralized at one location. For example, a large company could centralize their payroll function at one location to lower employee costs.

Economic efficiencies can also be realized by migrating high-cost functions into an online environment. Companies can offer email support for customers that may have a lower cost than a live customer support call. Cost savings could also be found through outsourcing opportunities, remote work options and lower-cost communication options.

To gain the maximum benefits from your company's information system, you have to exploit all its capacities. Information systems gain their importance by processing the data from company inputs to generate information that is useful for managing your operations. To increase the information system's effectiveness, you can either add more data to make the information more accurate or use the information in new ways.

Business Communication Systems

Part of management is gathering and distributing information, and information systems can make this process more efficient by allowing managers to communicate rapidly. Email is quick and effective, but managers can use information systems even more efficiently by storing documents in folders that they share with the employees who need the information. This type of communication lets employees collaborate in a systematic way.

Each employee can communicate additional information by making changes that the system tracks. The manager collects the inputs and sends the newly revised document to his target audience.

Business Operations Management

How you manage your company's operations depends on the information you have. Information systems can offer more complete and more recent information, allowing you to operate your company more efficiently. You can use information systems to gain a cost advantage over competitors or to differentiate yourself by offering better customer service. Sales data give you insights about what customers are buying and let you stock or produce items that are selling well. With guidance from the information system, you can streamline your operations.

Company Decision-Making

The company information system can help you make better decisions by delivering all the information you need and by modeling the results of your decisions. A decision involves choosing a course of action from several alternatives and carrying out the corresponding tasks. When you have accurate, up-to-date information, you can make the choice with confidence.

If more than one choice looks appealing, you can use the information system to run different scenarios. For each possibility, the system can calculate key indicators such as sales, costs and profits to help you determine which alternative gives the most beneficial result.

Company Record-Keeping

Your company needs records of its activities for financial and regulatory purposes as well as for finding the causes of problems and taking corrective action. The information system stores documents and revision histories, communication records and operational data. The trick to exploiting this recording capability is organizing the data and using the system to process and present it as useful historical information. You can use such information to prepare cost estimates and forecasts and to analyze how your actions affected the key company indicators.

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