Syllabus Focus: Unit 1 Module 2 Content 2

Specific Objective 2: identify the components of an Information Technology System;

Content: hardware, software, network, users: end-users and IT professionals; definitions

and examples.

Information System and Its

Components
Posted on August 25, 2012 by John Dudovskiy

Morley and Parker (2010) define information system as a

discipline that is formed from elements of business and
computer science and is developing to form a separate
area of scientific study.
It has been stated that “healthcare information systems
and healthcare processes are closely entwined with one
another. Health care processes require the use of data
and information and they also produce or create
information” (Wager et al, 2009, p.65)
Three basic components of system are explained by
Bagad (2010) as input, process/transformation and
output. In information system inputs are data that are

CAPE NOTES Unit 1 Module2 Content 2 1

going to be transformed. The process component of an
information system transforms input into an output.
Output is considered to be the final product of a system.
In case of an information system, an output would be
obtaining necessary information in a desired format
(Currie, 2009).
Explanations of all of the components of information
system are offered by Stair et al (2008) in the following
manner:

Components of Definitions
information system

Data Input the system takes to produce

information

Hardware A computer and its peripheral

equipment: input, output and storage
devices; hardware also includes data
communication equipment

Software Sets of instructions that tell the

computer how to take data in, how to
process it, how to display information,

CAPE NOTES Unit 1 Module2 Content 2 2

 Components of Definitions
information system

and how to store data and information

Telecommunication Hardware and software that facilitates

s fast transmission and reception of text,
pictures, sound, and animation in the
form of electronic data

People Information systems professionals and

users who analyse organisational
information needs, design and construct
information systems,  write computer
programs, operate the hardware, and
maintain software

Procedures Rules for achieving optimal and secure

operations in data processing;
procedures include priorities in
dispensing software applications and
security measures

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Source: Stair, R.M, Reynolds, G & Reynolds, G.W.
(2008) “Fundamentals of Information Systems” fifth
edition, Cengage Learning p.102
Moreover, Hoyt et al (2008) and Carter (2010), discuss
the role of intranet, i.e. a local communications network
within organisation that is implemented on the basis of
World Wide Web software in terms of effectively sharing
information and knowledge within organisations. As
Hoyt et al (2008) argue the advantages of intranet
include information sharing in a fast manner, facilitating
communication between members of the organisation in
a cost-effective way.
Taken from: http://research-methodology.net/information-system-and-its-components/ on
January 28, 2017

THE COMPONENTS OF INFORMATION SYSTEMS

As I stated earlier, I spend the first day of my information

systems class discussing exactly what the term means.
Many students understand that an information system has
something to do with databases or spreadsheets. Others
mention computers and e-commerce. And they are all
right, at least in part: information systems are made up of
different components that work together to provide value
to an organization.

The first way I describe information systems to students is

to tell them that they are made up of five components:

CAPE NOTES Unit 1 Module2 Content 2 4

hardware, software, data, people, and process. The first
three, fitting under the technology category, are generally
what most students think of when asked to define
information systems. But the last two, people and process,
are really what separate the idea of information systems
from more technical fields, such as computer science. In
order to fully understand information systems, students
must understand how all of these components work
together to bring value to an organization.
TECHNOLOGY

Technology can be thought of as the application of

scientific knowledge for practical purposes. From the
invention of the wheel to the harnessing of electricity for
artificial lighting, technology is a part of our lives in so
many ways that we tend to take it for granted. As
discussed before, the first three components of
information systems – hardware, software, and data – all
fall under the category of technology. Each of these will
get its own chapter and a much lengthier discussion, but
we will take a moment here to introduce them so we can
get a full understanding of what an information system is.

Hardware

Information systems hardware is the part of an

information system you can touch – the physical

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components of the technology. Computers, keyboards,
disk drives, iPads, and flash drives are all examples of
information systems hardware.

Software

Software is a set of instructions that tells the

hardware what to do. Software is not tangible – it cannot
be touched. When programmers create software
programs, what they are really doing is simply typing out
lists of instructions that tell the hardware what to do.
There are several categories of software, with the two
main categories being operating-system software, which
makes the hardware usable, and application software,
which does something useful. Examples of operating
systems include Microsoft Windows on a personal
computer and Google’s Android on a mobile phone.
Examples of application software are Microsoft Excel and
Angry Birds. Software will be explored more thoroughly
in chapter 3.

Data

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The third component is data. You can think of data as a
collection of facts. For example, your street address, the
city you live in, and your phone number are all pieces of
data. Like software, data is also intangible. By
themselves, pieces of data are not really very useful. But
aggregated, indexed, and organized together into a
database, data can become a powerful tool for businesses.
In fact, all of the definitions presented at the beginning of
this chapter focused on how information systems manage
data. Organizations collect all kinds of data and use it to
make decisions. These decisions can then be analyzed as
to their effectiveness and the organization can be
improved. Chapter 4 will focus on data and databases, and
their uses in organizations.

Networking Communication: A Fourth Technology Piece?

Besides the components of hardware, software, and data,

which have long been considered the core technology of
information systems, it has been suggested that one other
component should be added: communication. An
information system can exist without the ability to
communicate – the first personal computers were stand-
alone machines that did not access the Internet. However,
in today’s hyper-connected world, it is an extremely rare
computer that does not connect to another device or to a
network. Technically, the networking communication

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component is made up of hardware and software, but it is
such a core feature of today’s information systems that it
has become its own category. We will be covering
networking in chapter 5.

PEOPLE

When thinking about information systems, it is easy to get

focused on the technology components and forget that we
must look beyond these tools to fully understand how
they integrate into an organization. A focus on the people
involved in information systems is the next step. From the
front-line help-desk workers, to systems analysts, to
programmers, all the way up to the chief information
officer (CIO), the people involved with information
systems are an essential element that must not be
overlooked.
PROCESS

The last component of information systems is process. A

process is a series of steps undertaken to achieve a desired

CAPE NOTES Unit 1 Module2 Content 2 8

outcome or goal. Information systems are becoming more
and more integrated with organizational processes,
bringing more productivity and better control to those
processes. But simply automating activities using
technology is not enough – businesses looking
to effectively utilize information systems do more. Using
technology to manage and improve processes, both within
a company and externally with suppliers and customers, is
the ultimate goal. Technology buzzwords such as
“business process reengineering,” “business process
management,” and “enterprise resource planning” all have
to do with the continued improvement of these business
procedures and the integration of technology with them.
Businesses hoping to gain an advantage over their
competitors are highly focused on this component of
information systems. 

THE ROLE OF INFORMATION SYSTEMS

Now that we have explored the different components of

information systems, we need to turn our attention to the
role that information systems play in an organization. So
far we have looked at what the components of an
information system are, but what do these components
actually do for an organization? From our definitions
above, we see that these components collect, store,
organize, and distribute data throughout the organization.

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In fact, we might say that one of the roles of information
systems is to take data and turn it into information, and
then transform that into organizational knowledge. As
technology has developed, this role has evolved into the
backbone of the organization. To get a full appreciation of
the role information systems play, we will review how
they have changed over the years. 

IBM 704 Mainframe (Copyright: Lawrence Livermore National Laboratory)

THE MAINFRAME ERA

From the late 1950s through the 1960s, computers were

seen as a way to more efficiently do calculations. These
first business computers were room-sized monsters, with
several refrigerator-sized machines linked together. The
primary work of these devices was to organize and store
large volumes of information that were tedious to manage
by hand. Only large businesses, universities, and
government agencies could afford them, and they took a
crew of specialized personnel and specialized facilities to
maintain. These devices served dozens to hundreds of

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users at a time through a process called time-sharing.
Typical functions included scientific calculations and
accounting, under the broader umbrella of “data
processing.”

Registered trademark of International Business Machines

In the late 1960s, the Manufacturing Resources Planning

(MRP) systems were introduced. This software, running
on a mainframe computer, gave companies the ability to
manage the manufacturing process, making it more
efficient. From tracking inventory to creating bills of
materials to scheduling production, the MRP systems (and
later the MRP II systems) gave more businesses a reason
to want to integrate computing into their processes. IBM
became the dominant mainframe company. Nicknamed
“Big Blue,” the company became synonymous
with business computing. Continued improvement in
software and the availability of cheaper hardware
eventually brought mainframe computers (and their little
sibling, the minicomputer) into most large businesses.
THE PC REVOLUTION

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In 1975, the first microcomputer was announced on the
cover of Popular Mechanics: the Altair 8800. Its
immediate popularity sparked the imagination of
entrepreneurs everywhere, and there were quickly dozens
of companies making these “personal computers.”
Though at first just a niche product for computer
hobbyists, improvements in usability and the availability
of practical software led to growing sales. The most
prominent of these early personal computer makers was a
little company known as Apple Computer, headed by
Steve Jobs and Steve Wozniak, with the hugely successful
“Apple II.” Not wanting to be left out of the revolution, in
1981 IBM (teaming with a little company called
Microsoft for their operating-system software) hurriedly
released their own version of the personal computer,
simply called the “PC.” Businesses, who had used IBM
mainframes for years to run their businesses, finally had
the permission they needed to bring personal computers
into their companies, and the IBM PC took off. The IBM
PC was named Time magazine’s “Man of the Year” for
1982.
Because of the IBM PC’s open architecture, it was easy
for other companies to copy, or “clone” it. During the
1980s, many new computer companies sprang up,
offering less expensive versions of the PC. This drove
prices down and spurred innovation. Microsoft developed
its Windows operating system and made the PC even
easier to use. Common uses for the PC during this period

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included word processing, spreadsheets, and databases.
These early PCs were not connected to any sort of
network; for the most part they stood alone as islands of
innovation within the larger organization.

CLIENT-SERVER

In the mid-1980s, businesses began to see the need to

connect their computers together as a way to collaborate
and share resources. This networking architecture was
referred to as “client-server” because users would log in
to the local area network (LAN) from their PC (the
“client”) by connecting to a powerful computer called a
“server,” which would then grant them rights to different
resources on the network (such as shared file areas and a
printer). Software companies began developing
applications that allowed multiple users to access the
same data at the same time. This evolved into software
applications for communicating, with the first real popular
use of electronic mail appearing at this time.

Registered trademark of SAP

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This networking and data sharing all stayed within the
confines of each business, for the most part. While there
was sharing of electronic data between companies, this
was a very specialized function. Computers were now
seen as tools to collaborate internally, within an
organization. In fact, these networks of computers were
becoming so powerful that they were replacing many of
the functions previously performed by the larger
mainframe computers at a fraction of the cost. It was
during this era that the first Enterprise Resource Planning
(ERP) systems were developed and run on the client-
server architecture. An ERP system is a software
application with a centralized database that can be used to
run a company’s entire business. With separate modules
for accounting, finance, inventory, human resources, and
many, many more, ERP systems, with Germany’s SAP
leading the way, represented the state of the art in
information systems integration.
THE WORLD WIDE WEB AND E-COMMERCE

First invented in 1969, the Internet was confined to use by

universities, government agencies, and researchers for
many years. Its rather arcane commands and user
applications made it unsuitable for mainstream use in
business. One exception to this was the ability to expand
electronic mail outside the confines of a single
organization. While the first e-mail messages on the

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Internet were sent in the early 1970s, companies who
wanted to expand their LAN-based e-mail started hooking
up to the Internet in the 1980s. Companies began
connecting their internal networks to the Internet in order
to allow communication between their employees and
employees at other companies. It was with these early
Internet connections that the computer truly began to
evolve from a computational device to a communications
device.

In 1989, Tim Berners-Lee developed a simpler way for

researchers to share information over the network at
CERN laboratories, a concept he called the World Wide
Web.  This invention became the launching point of the
[4]

growth of the Internet as a way for businesses to share

information about themselves. As web browsers and
Internet connections became the norm, companies rushed
to grab domain names and create websites.

Registered trademark of Amazon Technologies, Inc.

In 1991, the National Science Foundation, which

governed how the Internet was used, lifted restrictions on
its commercial use. The year 1994 saw the establishment
of both eBay and Amazon.com, two true pioneers in the
use of the new digital marketplace. A mad rush of

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investment in Internet-based businesses led to the dot-
com boom through the late 1990s, and then the dot-com
bust in 2000. While much can be learned from the
speculation and crazy economic theories espoused during
that bubble, one important outcome for businesses was
that thousands of miles of Internet connections were laid
around the world during that time. The world became
truly “wired” heading into the new millenium, ushering in
the era of globalization.

As it became more expected for companies to be

connected to the Internet, the digital world also became a
more dangerous place. Computer viruses and worms,
once slowly propagated through the sharing of computer
disks, could now grow with tremendous speed via the
Internet. Software written for a disconnected world found
it very difficult to defend against these sorts of threats. A
whole new industry of computer and Internet security
arose.
WEB 2.0

As the world recovered from the dot-com bust, the use of

technology in business continued to evolve at a frantic
pace. Websites became interactive; instead of just visiting
a site to find out about a business and purchase its
products, customers wanted to be able to customize their
experience and interact with the business. This new type

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of interactive website, where you did not have to know
how to create a web page or do any programming in order
to put information online, became known as web 2.0.
Web 2.0 is exemplified by blogging, social networking,
and interactive comments being available on many
websites. This new web-2.0 world, in which online
interaction became expected, had a big impact on many
businesses and even whole industries. Some industries,
such as bookstores, found themselves relegated to a niche
status. Others, such as video rental chains and travel
agencies, simply began going out of business as they were
replaced by online technologies. This process of
technology replacing a middleman in a transaction is
called disintermediation.

As the world became more connected, new questions

arose. Should access to the Internet be considered a right?
Can I copy a song that I downloaded from the
Internet? How can I keep information that I have put on a
website private? What information is acceptable to collect
from children? Technology moved so fast that
policymakers did not have enough time to enact
appropriate laws, making for a Wild West–type
atmosphere. 
Source: https://bus206.pressbooks.com/chapter/chapter-1/, retrieved on January 28, 2017

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