Information Systems and Technology in Business: Types, Implementation and Architecture

Posted on Nov 3, 2026 in Business Administration and Innovation Management

Unit 1: Information Systems and Information Technology in the Business

How Information Systems Are Transforming Business and What’s New

Business is enabled by technology and supported by Information Systems (I.S.), pushed by society and regulatory compliance. Managers and employees face a changing management style requiring new competencies and jobs. Technology acts as a disruptor and an innovation driver, pushed by society. Regulation sets rules on technology use with regard to society. Information Systems are driven by technology innovation, enabling new business models and ways of work in a flattened world. Society and end users request technology advances and push social behavior into businesses.

Why Businesses Heavily Invest in Information Systems

Businesses invest to achieve strategic business objectives, including Operational Excellence, New Products, Services, and Business Models, Customer and Supplier Intimacy, Improved Decision Making, Competitive Advantage, and Survival.

Information Systems Dimensions and Value Chain

Information systems are interrelated components and activities that convert data into information to help with problem analysis and product creation, supporting decision making and control through Input, Processing, Output, and Feedback.

  • Organization: encompasses structure, culture, and history, including any aspect related to the organizational structure, culture (behaviors, practices, processes), and history that shapes the information system.
  • Management: involves people, Information Systems competencies, and skills, relating to employees being skilled enough to use the system, or managers ensuring the system complies with business needs and that the organization itself is the right one.
  • Technology: comprises network, computational, and data elements, including hardware, base software, applications, and the data and information supporting technology.

The Information Value Chain means investment leads to a contribution to the company’s Value Chain.

Unit 2: Types of Information Systems in Organizations

Information Systems Perspectives

There is not a single kind of Information System, but different types based on the applied perspective.

  • Perspective 1 (Who is being served): includes Operations Systems (Transaction Processing Systems, Process Control Systems, Enterprise Collaboration Systems) and Management Support Systems (Management Information Systems, Decision Support Systems, Executive Information Systems).
  • Perspective 2 (What business function is targeted): implies systems are specific to a business unit or function. Other Information Systems include Expert Systems, Knowledge Management Systems, Strategic Information Systems, and Functional Business Systems.

Information is found at the intersection of both perspectives.

Four Major Categories Supporting Business Processes

  1. Financial Management (FM) supports the identification, allocation, and control of financial assets, and the recording and reporting of business transactions. Finance focuses on financial asset management and capitalization. Accounting focuses on financial records and funds flow. It includes taxes and GRC (risk rating). The Chief Financial Officer’s new technology challenges include Cloud, Augmented Analytics, RPA, and Blockchain.
  2. Human Capital Management (HCM) supports activities to recruit, develop, and maintain the workforce. It requires complete records, and the focus is on all employees and managers to reach business goals. It is not a monolithic system; it integrates with external systems while keeping a seamless user experience. Classical functionalities include Base HR Database, Recruiting, Payroll, Compensation and Benefits, Time Recording, Learning, and Succession. New functionalities include Globalization, Contingent Workforce, Compliance, Reporting and Analytics, Engagement, and Financial Wellness.
  3. Supply Chain Management (SCM) supports relationships with suppliers to optimize the planning, sourcing, manufacturing, ordering, and delivery of products and services. It aims for demand and supply alignment via Push-based, Pull-based, or Just-in-Time (JIT) approaches to remove uncertainties. It uses the Supply Chain Operations Reference (SCOR) model. Asynchronous digital supply chains include Orchestrate, Plan, Order, Fulfill, Source, Transform, and Return. It relies on a standard set of processes and metrics, and Global Trade Management (GTM).
  4. Customer Relationship Management (CRM) revolves around customer records to improve retention, increase profitability, grow revenue, and listen to customer sentiment. Features include Data Centralization, Marketing and Campaigns Management, Lead Management, Contact and Relationship Management, and Customer Service and Support. Benefits include providing a single source of truth, connecting business silos, increasing profitability and revenue, aiding customer retention, and helping listen to customers for product improvement.

Enterprise Resource Planning (ERP)

ERP is a set of integrated systems that support major business processes common to most organizations, especially financial and human capital management. It acts as the company’s Management Information Systems backbone and is not a monolithic system. ERP is available as Generic or Industry-specific. It relies on a common database shared by Management Information Systems. Integration strategies include Home-made (tightly coupled), Suite, or Best of Breed.

Unit 3: Implementing Information Systems in the Company

Systems Development Process

There is always a business problem or opportunity. Applying the Problem-Solving Approach to a business problem requires an Information System:

  1. Define and understand the problem: based on facts and stakeholders, considering People, Organization, and Technology. It moves from Objective to Requirements. Systems vs. Collections means looking for purpose, interrelation, and interdependency. It requires Systems Thinking (holism) to see properties of the whole apart from its components.
  2. Design alternative solutions: an Information System solution is not always required. Design is a blueprint with all specifications addressing People, Organization, and Technology factors. It requires engaged users and owners.
  3. Choose the best solution: it must be achievable (Financial, Technical, Organizational, and Legal). It involves a Feasibility Study and a Systems Proposal Report outlining costs and benefits, advantages and disadvantages, and changes to the organization.
  4. Implement the solution: involves Management of Change (MOC). Activities and phases include creating detailed design specifications, sourcing required resources and crafting the system, testing the system (Test Plan and Acceptance Tests), preparing training and documentation, converting the system (release and deploy via Parallel, Direct Cutover, Pilot, or Phased approaches), and production and maintenance.

Modeling and Design Methodologies

1. Structured Methodologies: a step-by-step, top-down, process-oriented approach with a separation of entities (processes and data).

  • Data Flow Diagrams (DFD) analysis is a graphical model showing events, processes, data stores, information flows, and boundary or scope.
  • Data Dictionaries and Logical Data Structures define what the data is and how it is supported.
  • Process specifications explain transformation at the lowest level of the DFD using procedures indicating what and how, with tools such as Structured English, Use Cases, Flowcharts, UML Activity Diagrams, Decision Tables, Pre- and Post-conditions, and Nassi-Schneiderman diagrams.
  • Structure Chart Design provides a static, structural view of the solution through functional decomposition.

2. Object-Oriented Design, Development, and Method: data and processes are not separated entities; it is a bottom-up approach. The object is the basic unit of systems analysis and design. Encapsulation means data is accessed by object operations (methods), using messages instead of data flows. A class means a general category of similar objects. It involves Abstraction and Inheritance.

Building Approaches

  1. Systems Development Life Cycle (SDLC): a phased approach with formal stages (Waterfall). It uses a division of labor between users and systems specialists, focusing on formal specifications and documentation. It suits complex systems but is costly, time-consuming, and inflexible.
  2. Prototyping: an iterative approach with standard steps to mock up a system for customer evaluation. It is useful when there is uncertainty about requirements but struggles with the management of non-functional requirements.
  3. Agile Development: an iterative approach prioritizing collaboration, continuous improvement, and early delivery of working products through phases (Concept, Inception, Construction, Release). It is useful for high requirement uncertainty but hard to scale at the company level.
  4. End-User Development: led by Citizen Developers focusing on the person rather than title or role, using Low-Code or No-Code development. Pros: faster time to market and better customer experience. Cons: issues with performance, non-standard management controls, and quality.
  5. Outsourcing: taking the activity out of the company to be executed by a third party or supplier. Location can be On-Shore, Near-Shore, or Off-Shore. Pros: organizational flexibility. Cons: hidden costs, vendor selection issues, and risk of losing intellectual property.

Unit 4: Architecture of Information Technology

Architecture of Information Technology

This is the outcome of the Business/IT Strategy Planning process. IT Infrastructure Architecture covers the technology platform, data resources, and applications architecture. It defines logical and physical components and their interrelationships, plus guidelines, rules, and principles to acquire, build, modify, or interface. IT Organizational Structure defines how the organization operates, and communication styles are determined by leaders and culture.

Centralization and Decentralization Concepts

Centralized means a single place. Decentralized means power is split among places. Distributed means power is shared among places.

Centralized Architectures and Structures

IT Infrastructure Architecture: centralized means functions and resources are controlled by a single central node, used whenever the company requires greater control and visibility. Advantages include enhanced visibility and control, lower cost structure, improved IT staff collaboration, increased purchasing power, and improved accuracy. Drawbacks include reliability, resilience, security, Single Point of Failure, scalability, and flexibility issues.

IT Organizational Structure: centralized is the most traditional organizational structure and the best fit for organizations requiring high levels of visibility and control. It uses top-down decision-making. Advantages include a clear chain of command, focused company vision, quick implementation, and improved quality of work. Drawbacks include bureaucratic leadership, remote control, delays in work, and lack of employee loyalty.

Decentralized Architectures and Structures

IT Infrastructure Architecture: decentralized means most functions and resources are distributed among multiple nodes. It is used whenever different departments have different IT needs and strategies. Advantages include addressing specific needs, resilience, and agility to adopt new technologies. Drawbacks include complexity, integration challenges, standardization issues, and redundancy waste.

IT Organizational Structure: decentralized is common to emerging industries or organizations requiring a quick response to diverse market needs. Decision-making authority is dispersed among multiple employees and teams. Advantages include decision-making flexibility, staff development, autonomy, and cultural integration. Drawbacks include loss of control and coordination, issues with branding and policies, and risk of duplication.

IT Organizational Structure Types and Trends

Types include Functional (activity based), Divisional (business target oriented), Flat (empowers employees by reducing hierarchies), Matrix (crossed responsibilities), Network (web of entities), and Circular (hierarchical with spread decision-making groups).

Trends involve finding a balance between Efficiency and Empowerment, pushing for scalability, interoperability, accountability, transparency, and new technologies.