Types and Benefits of Information Systems for Organizations to Know

Understanding different types of information systems suitable for your organization is very crucial to the organization’s success. In the famous movie Underworld Blood wars, the leader of the eastern coven Semira once said ‘information is power and I collect it with passion’. Information is key to survival and no individual let alone a business organization can exist without information and not just any information but the right type of information. It is not enough to collect, organize and brag about possession of information. Without the right and necessary information, one can be rightly equated to the ignorant or layman out there that is why the essence of information is not complete if it cannot be collected, processed, and arranged in such a manner that it adds value to its user.


Information according to Merriam Webster dictionary is; knowledge obtained from investigation, study, or instruction. It is the facts and details about a subject that makes one more relevant in the discussion or analysis of the subject. Information is also a quantitative measure of the content of information.


An information system is a formal, sociotechnical, organizational system designed to collect, process, store and distribute information to the appropriate quarters. According to Britannica, an information system is an integrated set of components for collecting, storing, and processing data and for providing information, knowledge, and digital products. Every business organization needs to have an adequate information system to cater to its needs which may vary from other organizations. Business organizations whether small or large firms deal with information that often is large and varied. For this, it would be inhumane and unproductive to saddle humans with the responsibility of collecting, organizing, and analyzing vast amounts of data as a lot of errors can occur which would spell doom.

Here, an information system (usually software) would be responsible for turning raw data into useful information thereby providing the answer/solution to the problem. An information system is a set of coherent parts which form a system saddled with the responsibility of collecting, processing, and storing data and giving it off as information to individuals who need it which includes customers, employees, or executives. The importance of the right information cannot be overemphasized therefore it is important to put square pegs in square holes by getting the most suitable types of information system.


Each organization performs specific roles and for this, information systems vary for different organizations. Even for organizations that work in the same industry/sector, information systems used may differ based on the organization’s structure or any other peculiar reasons. Types of information systems used by organizations include:

Transaction Processing System

Every organization has a client and the activities performed with these clients are crucial to the survival of any organization as it is the reason for the existence of the organization. This is always the first on the list as it entails the day-to-day transactions that occur within the organization. This information system takes into record all activities that involve the clients or the recipients of the services or products the organization provides.

The transaction processing system records information such as; the type of products or services rendered by the organization, the employee who acted on behalf of the organization, mode of payment for the product/service and other important details of the transaction, details of the employees, and human resource-related information. The transaction processing system is also not limited to the activities between the company and their clients, this information system also incorporates activities carried out between employees such as information shared amongst them and their activities which can be directly or indirectly connected to the organization.

Office Automation System

This information system caters to the operational needs of the organization that is the information needed to ensure the smooth running of the daily affairs of the organization. This information system helps in the discharge of clerical and managerial functions and is often used exclusively by the employees of the organization as it facilitates the fast exchange of information that is needed to carry out organizational operations. The office automation system is often centralized and locked with a password that employees have access to.

The difference between the transaction processing system and the office automation system is that while the latter simply records the activities, the former is used to share information amongst employees and although some of this information is maybe informal, they are established to ensure ease of access to company information that enables the employees to perform their duties.

Business Intelligence System

This is often referred to as the Knowledge Management System and just as the name implies, it is the information system that is strictly made up of information meant to provide additional and clearer knowledge to both employees and clients as regards either the services or products of the organization. Although the amount of information available to the employee and clients greatly vary, the goal of the information is the same which is to further enlighten its user. To the clients, the information system provides a more detailed description which is often not accessible at first glance while for the employees, the information system can provide information ranging from detailed information of the client which ought to be considered in service delivery to information on rival companies e.t.c.

Decision Support System

This information system is often considered different from the executive support system but the difference is not much and as such will be considered as one. The decision support system is an information system available to only managers and executive members who are in the position to make significant decisions that affect the operations of the organizations.

This information system provides information like tax records, profit and loss records, reports on the progress of operations e.t.c and the key function of this information is to inform the decision making process of the individuals that belong to the top positions in the hierarchy of the organization such as managers, sectional heads, board members e.t.c. The difference between the decision support system and the executive support system is that it is determined by the position of the individual. For instance, the latter is available to managers and sectional heads while the former is available to the director(s) and executive members.

Customer Relationship Management System

This information system is specifically designed to cater to everything that has to do with the clients of the organization. Although some argue that this information system can be decentralized and distributed amongst the transaction processing system and the knowledge management system, it might not be very advisable especially to companies that consider customer satisfaction as a priority. This information system provides ample knowledge of the customers to enhance efficient service delivery. It can consist of FAQs, quick access to helplines, option to streamline activities e.t.c.


With information technology in vogue, the benefits of information systems to organizations are numerous. Some of them include:

Uninterrupted Supply of Information

One of the numerous benefits of information systems is that since the systems are often centralized and modeled to ensure ease of access, it is possible to access information from anywhere at any time. All that is often required is often steady electricity and a stable internet connection. With this, one does not need to suffer the effects of bureaucracy as a lot of stops are bypassed and the necessary information can be accessed and used. Employees can work round the clock from different locations as both time and location barrier has been removed.

Operational Efficiency

Another benefit of the information system is that it improves efficiency in the operations of the organization, clients can be attended to faster than usual and work will not be delayed by unavailability of the needed information. Also, because everyone has access, the role of one can be easily performed by another in the case of absence and this generally makes operation efficient.

Clear and Concise Records

Information systems enable professional record-keeping which is essential to the success of any organization and thanks to technology, mistakes are greatly reduced and easily traceable as the systems emphasize flawless records. The information system also ensures the right grouping of this information according to their relevance and relationship with each other so this makes them clear and understandable.


Information system has enhanced communication in organizations. From the comfort of one’s office or cubicle, emails can be sent across to other employees and duly replied to. This removes the stress of going from one place to another to look for the necessary documents needed. Also, the conversation can be held on the stipulated channel which improves communication.

Efficient Customer Service

Customer satisfaction is key to the success of any organization and information systems have ensured efficiency in that area. Information systems provide clients with a huge array of information that they need to make the right choices and the employee is also afforded the opportunity of a more fruitful interaction because of the information made available.


Despite the glowing benefits of information systems, there are still significant risks attached to them which cannot be overlooked and they include:

Security Risks

The most evident disadvantage of the information system is that it is prone to breach in security protocols which constitutes a great risk. Any skilled individual or any interested party can carefully gain access to an organization’s information system and this can be very severe in some cases. Although this is often prevented by encryptions and firewalls, there are always loopholes that can be taken advantage of.

Social Disconnections

This is a disadvantage that is always overlooked. The large dependence on virtual communication constitutes some consequences on social interactions which is important to humans. The virtual space can lead to a disconnection among workers which can affect their disposition to work and thus harm their efficiency.

Exorbitant Costs

Another downside of the information system is the cost of its maintenance. For them to be up to date and function efficiently, upgrades are always required and they can involve financial commitments which might not be very beneficial for the organization.

Breach of Privacy

Information systems are often centralized and modeled in such a way that one’s activity is visible to the employers and can be questioned. This can constitute discomfort for workers as they might feel monitored which would rub off negatively on their disposition to work.


The importance of information systems cannot be overemphasized therefore, it is something to be handled with great caution. The advice and services of trusted experts should be utilized at all times to ensure the best results. You can CONTACT US for any professional advice.

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2 thoughts on “Types and Benefits of Information Systems for Organizations to Know

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