Lesson 2 AIS
Lesson 2 AIS
In Accounting:
o Automating Accounting Processes: Information systems streamline the
recording of financial transactions, reducing manual data entry and human error.
o Real-Time Reporting: Information systems provide real-time access to financial
data, allowing accountants and management to generate accurate reports instantly.
o Audit Trail & Security: Information systems maintain a detailed record of all
transactions, ensuring accountability and facilitating audits. They also offer
security features such as data encryption and user access controls to protect
sensitive financial information.
In Business:
o Improved Decision-Making: Information systems provide accurate, timely
information that supports business decision-making. Managers can make
informed decisions based on real-time data about sales, inventory, and financial
performance.
o Enhanced Communication: Information systems enable better communication
between departments, ensuring that everyone is working with the same data and
reducing miscommunication.
o Increased Efficiency: By automating routine tasks (e.g., billing, inventory
management), information systems save time, reduce costs, and improve overall
efficiency.
o Strategic Advantage: Businesses can use information systems to analyze market
trends, customer behavior, and competitor performance, gaining an advantage by
responding more quickly to changes in the market.
1. Hardware
Definition:
o The physical components of an information system, including computers, servers,
storage devices, and networking equipment.
Role in Business:
o Processing Power: Hardware like computers and servers process and execute
business applications.
o Storage: Data storage devices store critical business information, such as
customer details, transaction records, and financial data.
o Networking: Networking hardware like routers and switches connects the entire
organization, allowing information to flow between departments and locations.
2. Software
Definition:
o The programs and applications that run on hardware to process data. This includes
both system software (e.g., operating systems) and application software (e.g.,
accounting software, ERP systems).
Role in Business:
o Business Applications: Software automates business processes (e.g., accounting,
sales, customer service) and increases efficiency.
o Customization: Businesses can use specific software tailored to their industry
(e.g., QuickBooks for accounting).
o System Software: Operating systems (e.g., Windows, Linux) allow applications
to interact with hardware, enabling the smooth operation of business systems.
3. Data
Definition:
o Raw facts and figures collected from business activities (e.g., sales transactions,
customer records).
Role in Business:
o Data Collection: Information systems collect data from day-to-day business
operations, such as sales, purchases, and inventory changes.
o Data Processing: Raw data is processed into meaningful information, such as
sales trends or financial reports.
o Decision Support: Processed data helps managers make informed decisions and
plan for the future based on accurate information.
4. Procedures
Definition:
o The set of instructions or guidelines that govern how data is collected, processed,
and used within an organization.
Role in Business:
o Standardization: Procedures ensure that data is consistently processed across the
organization, maintaining accuracy and reliability.
o Efficiency: Clearly defined procedures reduce errors, increase efficiency, and
ensure that everyone in the organization follows the same steps in handling
information.
o Compliance: Procedures help ensure that the business complies with legal
requirements, such as data privacy regulations and financial reporting standards.
5. People
Definition:
o The individuals who use and manage the information system, including IT
professionals, end-users, managers, and decision-makers.
Role in Business:
o End-Users: Employees who input data into the system (e.g., accountants, sales
staff) or retrieve information to make decisions (e.g., managers).
o IT Professionals: Responsible for maintaining and updating the system, ensuring
it runs smoothly and securely.
o Management: Uses the information provided by the system to make strategic
decisions for the organization.