Achieving Efficiency and Effectiveness through Systems
What is an information system?
To understand what an information system is we need to first clearly differentiate it from information technology - with which it is often confused. Let's look at example. A manufacturing company with 1,200 employees used to pay the employees by checks. At the end of every month, the human resources staff would look at how much each employee should be paid and cut 1,200 checks; one for each employee. To collect their pay, the employees would have to go to the human resources office with their employee identification cards. Every employee would show his/her identification card to the human resources staff so the staff could ensure the checks were given to the right employees. Note that, while there is a system managing the payroll, the process of issuing paycheck requires no information technology and is completely manual.
One day an ill-advised employee visits the human resources office with a fake identification card and obtains the check which does not belong to him. As a result of the stolen check, the company suffers a loss - having to compensate the employee whose check was stolen.
Reacting to this event, the director of human resources considers installing a system that automates the end-of- month payment process. The information of employees' bank accounts will be stored in the system and their pay will be directly deposited into their bank accounts at the end of every month. The objectives of this new information system is to improve efficiency - saving the human resources staffs time in manually preparing 1,200 checks and verifying employees identification cards 1,200 times a month - and to improve effectiveness of the organization by reducing the possibility of lost checks.
After a few months, the human resources director finds out that the human resources staff are still preparing the checks manually for employees every month, and that the employees are still coming to collect their checks in person. In other words, the new technology is not being used. When the director investigates what went wrong with the system, the staff tell him that there is nothing wrong with the system. When an employee's account number is input, the system will notify the bank to deposit the salary into that account on every payday.
However, upon further investigation, the director discovers several possible causes for the system's failure. First, the employees are reluctant to provide their bank account information for various reasons, such as not feeling comfortable with releasing their personal information. Also, when the wrong account number is entered and the money is deposited into the wrong account, nobody in the human resources department is in charge of contacting the bank to rectify the mistakes. This discredits the new system, and employees who encounter this problem no longer want their salaries directly deposited.