Information systems: EVOLUTION AND

Development
Alejandro HERNANDEZ TRASOBARES

Department of Economics and Business Management

University of Zaragoza

Summary: I. Introduction: definition of information system and classification. II.

Evolution of information systems. III. The strategic systems of information. IV. The
development of information systems. V. success and failure of information systems. VI.
Conclusions

I. Introduction: DEFINITION OF CLASSIFICATION AND INFORMATION

SYSTEM

During recent years the information systems constitute one of the main areas of study in
the area of company organization. The environment where the companies develop their
activities are becoming increasingly complex. The increasing globalization, the process
of internationalization of the company, the increasing competition in the markets for
goods and services, the quickness in the development of information technologies, the
increased uncertainty in the environment and the reduction of the life cycle of the
products originate that information becomes a key element for the management, as well
as to the survival and growth of the business organization. If the core resources
analyzed so far were land, labor and capital, now the information appears as another
fundamental input to evaluate in the companies.

When defining a system of information there is a wide range of definitions . Perhaps the
more precise the proposal by Andreu, Ricart and Value (1991), in which an information
system is defined as: "formal set of processes that operate on a collection of data
structured according to the needs of the company, collects, prepares and selectively

distributed the information necessary for the operation of that undertaking and to the
activities of direction and control corresponding, supporting, at least in part, the
decision-making processes necessary to perform the functions of business of the
company in accordance with its strategy".

Any information system uses as a raw material data which stored, processed and
transformed to obtain the final result information, which will be supplied to the different
users of the system, there is also a process of feedback or "feedback", in which it has to
assess whether the information obtained is suited to the expected (see figure 1).

Other definition of information system would be the proposals by K and J Laudon (1996), for which an
"information system is the set of interrelated components that capture, store, process and distribute the
information to support decision making, control, analysis and vision of an organization".

The INFORMATION SYSTEM OF THE ORGANIZATION

Storage

Final information

Use

Data

Processing

Information

Feedback

Figure 1. The Information System of the business organization: Functions

Along with the data, the other two basic component that constitute a system of
information are the users (managers, employees and in general any agent of the business
organization that uses the information in your job) and equipment (computer, software,
hardware and storage technologies of information and telecommunications).

In many occasions there is quite a bit of confusion, since when referring to information
2

systems is thought in a first time both computers as in computer programs . A company

can acquire new computers, install new telecommunications products, develop a web
page, make electronic commerce, but this does not imply that exists in your
organization with a system of information. An information system encompasses more
than the purely computational, not only because we have to take into account these
tools, but also the way to organize these tools and to obtain the information necessary
for the proper functioning of the company.

Those responsible for developing information systems must have knowledge of both the
technologies of information available and that can be used in the company, how to
organize them. To do this you first have to know the strategy of the organization and the
type of organization later to establish the needs of information and acquire the necessary
tools for the development of the information system.

Any information system is going to have a few main objectives, which are summarized
below:

Support the objectives and strategies of the company: the information system has to
provide the Organization with all the necessary information for your
Correct operation. The information handled will cover from the

Often confused information systems with the technologies of information. The computer equipment,
software and telecommunications equipment constitute the information technologies. The information
system is a broader concept, it establishes what are the information needs of the companies, how you are
going to solve and what means IT (information technology) you want to use.

Routine activity of the company until that required for the process of long-term planning
of the company.

Provide information for the control of the entirety of the activities of the company, being
able to check compliance with the targets set by the Organization. The information
systems cover all departments of the company and to the overall management of the
Organization.

Adapt to the needs of information to the evolution of the company: as the company is
going to grow and develop new information needs that have to be met by the information
system, evolving the latter to adapt to the new circumstances of the environment.

Interacturar with the different actors of the organization, allowing these employ the
information system to meet their needs for a fast and efficient way. The interactivity and
flexibility of the systems of information constitute a key point in the success or failure.

For the achievement of these objectives, a good information system has to be able to
receive and process the data in the most efficient way and without errors, provide the data
at the right time, to assess the quality of the input data, delete the information little useful
avoiding redundancies, store the data so that they are available when the user creates it
convenient, provide security by preventing the loss of information or intrusion by
unauthorized personnel or agents external to the company and generate output
information useful to the users of the information systems, helping in the decision-making
process.

To classify the information systems, there is a wide variety of criteria. In Table 1 we can
see some of the main types of information systems that we can find:

Type of Information System

Types
Degree of formality

Formal


Informal
Automation

Manuals

Computing
Relation with decision making

(high steering) Strategic

Managerial (intermediate level)

Operational (operating control)

Functionality

Commercial Management

Accounting management

Financial Management

Human Resources Management

 Production Management

Degree Specialization

Specific

General
Table 1. Typology of Information Systems (based on Garcia Bravo, 2000 and Edwars, Ward and
Bythesway, 1998)

However the most useful classification is the proposal by K and J Laudon (1996). In it
the information systems are grouped according to their usefulness in the different levels
of the business organization. The organization consists of 4 basic levels: an operating
level referred to the daily operations of the Organization, a level of knowledge that
affects the employees responsible for the management of information (usually the
Department of Informatics), an administrative level (would cover the intermediate
managers of the organization) and a strategic level (the top management of the
company).

According to these levels, K and J Laudon set the following classification of

information systems:

Transaction Processing System (SPO): computer systems responsible for the

administration of those daily operations of necessary routine in the business
management (payroll applications, order tracking, audit, registration and employee
data). These systems generate information that will be used for the rest of information
systems of the company being employed by the staff of the lower levels of the
organization ( Operating Level)

Systems of knowledge work (STC): those systems of

Information responsible for supporting the agents who handle information in the
creation and integration of new knowledge for the company (workstations for the
administration); part of the level of knowledge

Automation systems in the Office (SAO): computer systems used to increase the
productivity of employees who handle the information in the lower levels of the
Organization (word processor, electronic agendas, spreadsheets, e-mail,...); they are
framed in the level of knowledge as well as the systems of knowledge work

Management information systems (CIS): information systems at the administrative

level employees in the process of planning, control and decision-making process by
providing reports on ordinary activities (inventory control, annual budgeting l, analysis
of investment and financing decisions). Are employed by the management and directors
of the intermediate levels of the Organization.

Systems for decision support (SSD): interactive computer systems that help and
various users in the decision-making process, at the time of using different data and

models for the resolution of problems not structured (cost analysis, analysis of prices
and profits, sales analysis by geographic area). Are employed by the intermediate
management of the Organization.

Management Support Systems (SSG): information systems at the strategic level of the
organization designed to take strategic decisions through the use of graphics and
advanced communications. Are used by the top management of the Organization in
order to develop the overall strategy of the company (sales planning for 4 years, plan of
operations, manpower planning).

All this information systems in turn could be analyzed according to the different areas
of the company: sales and marketing, manufacturing and production, finance,
accounting and human resources. For each of these areas there is a specific set of
computer applications and equipment, which have to be coordinated among if. If this is
not carried out a company will have problems of exchange of data between the different
areas, it appears the existence of data redundancy and the existence of inefficiencies and
increased costs for communication. Therefore it is key to the successful planning and
development of information systems as we will see in subsequent paragraphs.

II. Evolution of the Information Systems

The information systems have evolved over the past few years to constitute the socalled strategic information systems. First business information systems were
considered as an instrument simplifier of the different activities of the company, a tool
that will facilitate the process and reduced the bureaucracy. Its purpose was basically
carry out the accounting and the processing of documents that at the operational level.

Subsequently the development of informatics and telecommunications had made it

possible to increase the effectiveness in performing tasks, save time in the development
of the activities and to store the maximum amount of information in the shortest
possible space, which increased in the organizations for the interest in the information
systems. With the passing of time the companies were watching as the technologies and
information systems allowed the company to obtain better results than its competitors,
being constituted by themselves as a source of competitive advantage and a powerful
weapon that allowed to differentiate themselves from their competitors and obtain better
results than these. In this way the information systems to be constituted as one of the
strategic issues of the company, which could always be considered in any process of
business planning.

Given the classification of K and J Laudon, the first information systems to develop
were systems for processing operations. With the passing of time, were appearing in the
first place the information systems for the management and ultimately the decisionsupport systems as well as the strategic systems. There was a vertical development of
information systems,

33

The first computer was built in 1946 by Mauchly and Eckert at the University of Pennsylvania, the socalled ENIAC (Electronic Numerical Integrator and Computer)..from there with the development of the
transistors, integrated circuits, miniaturization of equipment, increasing the speed of process and
especially the development of the microprocessor in 1971 by Intel enabled the company to have
computers faster, with greater storage capacity and processing taking up less space. For more information
see Navas Lpez, J.E., 1994

On the basis of the lower levels of the organization to cover the company's management
team.

At the time of analysing the progress of the information systems, one of the fundamental
works was proposed by Gibson and Nolan (1974) .They described the evolution of
information systems on the basis of the evolution of the information technologies (see
table 2). To the extent that it developed the computer equipment, software, hardware,
databases and telecommunications, information systems were acquiring a greater
relevance in the organizations, being considered as one more element of the planning
process.

Stages of the evolution of the

Features

Information systems

1.
Initiation

Introduction of enterprise computing

 -oriented computing applications

Mechanization and automation of processes

Ordinary

Low expenditure on informatics and poor training

The Staff

2.
Contagion


The application of the technologies of information

Originate spectacular results

dissemination of information technologies in

All areas of the company

increases the qualification of personnel

 There is a great lack of coordination and little planning

In the development of information systems

3.
Control

The top management of the organization is concerned

Of Information systems as a result

The high cost in them

 centralization of investment projects in

Information technologies

4.
Integration

Controls the increase in expenditure

Occurs the integration of systems

Information existing in the various areas of the

Company

improvement and refining the systems of

Information

5.
Administration
Of
The

The information system acquires a

Information

Dimension strategy in the company


Decentralization
Of
Certain
Applications

Computing

6.
Maturity

Development of information systems in the

Higher levels of the organization to receive the

Strategic Information Systems

acquires great importance the creativity and the

Innovation

Table 2. Source: Gibson and Nolan 1974

This classification of the evolution of information systems can be grouped into 4 major
phases, as established by Andreu, Ricart and Value (1991):

Introduction of informatics in the organization: information systems applied to

simplifying and automating administrative processes. Computers are used and the
computer systems to improve the process of accounting, payroll and billing develop
looking for on all the cost and time savings in the conduct of such operations. There is a
lack of training on the part of the employees of the Organization in these systems and
there is no professionals who can solve these problems within the company.

Stage of contagion of computer applications: noting as the application of the

computer systems in some areas of the company originate significant improvements,
these are disseminated by the various departments of the company. The "contagion"
develops without any planning on the part of the Organization, which produces a high
increase in costs. Increases staff training in information technologies and computer
applications, already exist in the organization personnel capable of resolving the
problems posed in the handling of the information system.

Coordination of Information Systems and the objectives of the

company: information systems are used in the whole of the organization and are already
taken into account by management as a key element of the company. Begin to develop
procedures for the planning of information systems and appears the need to use the
information systems as a means of compliance with the objectives of the company

Emergence of strategic systems of information: information systems are valued as a

source of sustainable competitive advantage, in such a way as to develop the overall
strategy of the Company sets the planning and development of information systems as
some of the other key aspects within the managerial process.

III. The strategic systems of information

In the last stage of evolution, information systems constitute the so-called strategic
systems of information. Monforte (1994) defines strategic information system as: "that
system of information that is part of the "be " of the company, either because it is a
competitive advantage for itself, either by that is linked in an essential form the business
and provides a special attribute to the products, transactions or decision-making". K and
J Laudon (1996) in turn define strategic systems of information such as: "computer
systems at any level in the company that change the goals, operations, services,
products, or relationships of the environment to help the institution to obtain a
competitive advantage".

Both definitions we can emphasize the concept of "competitive advantage", directly

related to the strategy of the company. The competitive advantage of a company is
understood as that feature of a company that differentiates it from other competitors by
4

placing it in a higher relative position to compete .

See Navas Lopez , J.E. and Wars Martin, L.A. (2002)

Good and Morcillo (1994) defined as: "The dominion and control by a company of a feature, skill,
resources or knowledge that increases its efficiency and allows you to distance itself from the
competitors". This position of superiority over competitors has to be sustainable in time, because only
in that way will be achieved the results for the organization.

Thus an information system would allow an organization to obtain better results than the rest of
players in the economy. The company would benefit from a reduction of costs in the manufacture of
the product, reducing the cost of communication between the different areas of the Company, better
coordination between the different hierarchical levels of the company, a better connectivity with
suppliers and customers, rapid adaptation to the needs of the consumer, decreasing the time of delivery
of the product, etc. In this way would enhance the possible strategy followed by the company, for
5

example those raised by Porter: leadership in costs, product differentiation and concentration .

Those organizations that did not value the information systems as a strategic element, or although bear
in mind do not develop in a manner consistent with its strategy, will face a great diversity of problems:
competitors, suppliers and customers can increase its power at the time to negotiate with the company,
appears the establishment of business objectives unattainable with information systems currently
available in the company, arises duplication of effort, inaccuracy of the systems, inadequate
management of the information, poor choice of information technologies, ... In this way the strategic
systems of information allow the company to survive in highly competitive environments and achieve
a growth of the Organization. An organization may consider using the model of competitive forces of
Porter (1982), where the company relates the threats and opportunities that can be found with the
external agents and to act accordingly.

New Entrants

Company

Customers

Suppliers

Competitors

Current

Substitute products and services

Figure 2: Core Competitive Porter (1982)

See "Competitive Strategy" , Porter (1982)

On the basis of this model, the information systems we would serve to compete and
obtain better results:

Threat Of New participants: information systems will improve the control of

distribution channels and provisioning to limit the access of competitors. They can also
be used information systems to better tailor our products to the needs of the customer, to
exploit economies of scale in order to reduce prices and compete before a possible price
war with the opposing companies, being more aggressive in the strategy of leadership in
costs.

Threat of substitute products or services: they can get a better adaptation to the needs
of the customer, establish a correct adaptation of quality-price of our product, more
easily identify the unmet needs of consumers and redefine the market segments

Rivalry with the current competitors: information systems constitute a weapon that
allows to reduce costs or improve the brand image of the company.

Bargaining power of customers and suppliers: information systems can be used as a

means of balancing power with suppliers and buyers of our product.

The company can get the competitive advantage well differentiating the product (trying
to create loyalty to the brand, trying to the product of the company believes more value
in the consumer), using the strategy of leadership in costs (information systems make it
possible to decrease the costs of communication and exchange of information within
organizations, this cost being evaluated in both time and money) or by using a strategy
of concentration (using a strategy similar to the above but focusing on a particular
market segment).

IV. Development of the Information Systems

The achievement of a competitive advantage using information systems will depend in

large measure on the correct development and implementation of the system of
information. The development of an information system is not simple. Those
organizations that simply acquire information technologies without taking into account
the needs existing in the company will fail, endangering the survival of the company.
That is why it is essential to the steps to be followed in the development of information
systems.

The process of development of information systems would consist of seven fundamental

stages.

Definition of the project: At this stage to determine whether the company presents
problems and as this can be resolved through the implementation of an information
system. It will identify which are the objectives of the use of the

Information systems and as these are located within the overall strategy of the company.
At this stage it is essential that the high direction will consider information systems as a
strategic weapon and actually creates in this.

Systems analysis: after having identified the different problems of the organization
these will be analyzed in more detail, dentificando the causes and pose various
solutions. At this stage there will be a feasibility study to see if solutions are possible
given the resources it possesses the organization. We will discuss three types of
feasibility:
Technical feasibility: so that the solution can be implemented we have to analyze if the
company has the appropriate computer media, or if we buy in the outside
Economic feasibility: a study and the economic valuation of the solution by checking
that the benefits of the improvement outweigh the costs of the establishment or
modification of information systems
Operational feasibility: we have to assess whether the proposed solution is desirable
dates the internal organization of the company
Design of Systems: once chosen that solution to resolve the problems, will explain how
the information system meets the requirements posed by the Organization. At the time
of designing the systems, we indicate that components of the systems of information we
will use (level hardware, software and telecommunications technology) and as will
relate these components together. In this way there will be the specification of the
information system

Programming: will translate the system specifications developed in the previous stage,
carrying out this programming and software development

Testing phase: to assess the proper functioning of the information system will be
necessary carried out an exhaustive process and deep to determine if the information
system works in various conditions and if the results correspond to what was expected.
At the time of establishing the evidence, enterprises may be performed by one of three
types:

Evidence of programs: the various programs developed will be tested or separately in

order to ensure that each one of them is free of errors

Tests the system: you will test the information system as a whole. The purpose will be to
the correct operation of the system as a whole, since sometimes it may be that the

programs function correctly individually, but at the hour of work together the
information system does not provide the expected results by the company
Acceptance tests: tests carried out by the end users of the information system. When
they give the seen good provides the final certification of the proper functioning of the
system of information

Conversion: once you have verified that the information system works correctly will
take out the implementation of this, or the replacement of the old system of information
for the new. At the time to carry out this conversion, organizations will be able to opt for
various strategies:

The strategy known as in parallel. In it during a period of time both programs are going
to live together and used to operate both the new information system as the old one. This
strategy is the most reliable and secure, although however is the most expensive and we
can get redundant information

You can opt for a direct change, replacing the old information system by the new in a
particular date. This strategy would be the least expensive, however before any problem
that may arise can originate the paralysis of the activity of the company. It also requires
that the company staff has received training on the new system of information, if not we
will find ourselves with employees unable to know how to handle the new information
systems

To carry out a pilot experience, where the new information system is used in a limited
area of the company and after checking their correct operation is installed in the entire
company. It would be a mixture of the two previous strategies

Production and Maintenance: once installed the new information system the system is
said to be in production. From here there is a constant process of evaluation of the
system of information by users and specialized personnel. After this is identifying new
errors and will consider the correction of these.

All the stages analyzed constitute the so-called life cycle of information systems.
However for many companies to develop the information system in accordance with the
whole of the previous stages can be very costly in both time and money. Other
disadvantages would be given by the continuous changes of the information
requirements that may cause a system of information is obsolete even at the stage of
development. That is why the companies at the time of developing an information
system can opt for another set of strategies that can enable you to obtain such positive
results as those obtained using the life cycle of information systems.

Other possible strategies to be adopted by the companies would be the following:

Development of prototypes: The company develops a system of information is not

functional, which will be a preliminary version of the total information system. The
development of a prototype is the reduction of the steps followed in the life cycle of
systems, looking for the quickness in development and the reduction of costs in both
time and money. The prototypes are evaluated by employees at their place of work and
are continuously adapting to the needs of these. Once that is checked for correct
functioning of the prototype will be spreading in other areas of the company.

Indicate that the main problem of the use of prototyping is its superficiality,

Since in many cases the company focuses on the reduction of costs, forgetting the
information needs of the company, lack

10

Preparation of documentation on the functioning of the prototype which can result in the
lack of knowledge of the operation of the prototype and the absence of any evidence to
verify the correct operation of the prototype. Are often used in small organizations or
with low information needs; in large organizations are not very recommendable.

Application software packages: Acquisition by the company of software packages of

existing applications in the market and that you will use to manage the information. It is
a very simple solution for organizations, because the company simply acquires the
program and install it in the organization. The software packages tend to be applied to a
wide variety of areas of the company (payroll, accounting, personnel...) and are very
useful when the company does not have enough capital to be able to develop by itself
the information system.

However the main drawback would be the lack of flexibility of these to suit the specific
needs of the company. Has to be assessed because issues such as the resources which
the company owns, the functions of the software, the effort of installing and maintaining
the software package, the cost and the ease of handling this.

Development by end users: the development of computer applications during the past
few years such as the calculation sheets, text editors, databases,... allows them to be the
end users themselves who develop and develop their own information systems, exist a
little involvement on the part of technical specialists. This solution allows for greater
control of the system by users as well as the savings in cost.

However the main drawbacks would be the excessive proliferation of information

systems without control, the non-compliance with minimum quality levels and the lack
of appreciation of the organization from a global point of view.

Outsourcing of Information Systems: The company decides to hire external

companies to develop the information systems of the Organization. Businesses would
benefit from the exploitation of economies of scale by the supplier would ensure quality
in the service, there would be no uncertainty in costs and the adaptation to the needs of
enterprises would be more appropriate.

On the other hand outsource implies a certain loss of control on the part of the
companies, remain the key negotiating power with the supplier of computer services.
Equally information considered as strategic for the organization is known by
organizations outside the company, emerging in addition a dependency of the supplier.

The following table compares the different approach to systems development:

11

Approach

Features

Advantages
Disadvantages
Life cycle of

Sequential
necessary for systems and
Slow and costly
Systems
realization of a formal process
Very complex projects and
Not stimulates changes in the

Specifications and approvals by

Large

Organization

Writing

has been to develop a lot of

Users have a limited role

Documentation
Development of

Specified Requirements

Fast and cheap

unsuitable for large systems and
Prototypes
Dynamically with experimental System


Useful when there is
Complex

quick process, informal and iterative

Uncertainty in the requirements of
can be superficial to obviate the

users interact faster with the

Information or end users
Analysis, documentation and tests

Process
Are Important

Package of
commercial software prevents need
are reduced the design,
may not meet the

Software for the

Internally developed programs
Programming, installation and
Requirements of the institution
Application

Maintenance
may not play well some

savings in time and cost

Functions

decreases the need for

Possess internal resources

Development of
systems created by and for users

Users control the

excessive proliferation of systems
End users
The end
Construction of the Systems
Without interconnection between them

Quick and casual

saves the cost and time of
on many occasions does not meet the

 little influence specialists from the

Development
Quality standards

Information

External Sources
Systems built and operated by
Reduces and best controlled the
loss of control over the area of

External providers
Costs
Information Systems

 systems are obtained when

Technical Steering Unit

There is a lack of resources in the

And the prosperity of the suppliers

Company
External

Table 3. Comparison of approaches of systems development

12

V. Success and Failure OF INFORMATION SYSTEMS

The development and implementation of information systems on many occasions ends

in failure, which implies a high cost to the company and the loss of resources could have
been used in alternative uses. We are now going to carry out an analysis by way of a
summary of the main causes of the failure of information systems:

Lack of alignment between information systems and business strategy: Many

organizations continue to considering information systems as a mere instrument that
simplifies the bureaucracy without assessing the strategic advantages that these present.

Little support from the administration: the top management of the company has to
perceive really that information systems constitute a strategic weapon. In addition there
has to be a willingness to change the business organization if you require new
information systems.

Bad identifying needs for information: companies deploy the technologies of

information without having previously been carried out a process of identifying
information needs and how these can be satisfied properly using the information
systems.

Low involvement or influence of end user: at the time of designing the information
system it is essential to have the opinion of the end user, which is going to be the people
who use the information system. This user has to be motivated and encouraged to
collaborate on the design of the system.

No staff training: always requires the implementation of training activities for

programming the new computer tools to be used in the company.

VI. Conclusions

The information systems constitute one of the key strategic aspects for the good work of
the company. To do this it is necessary that the whole of the organization is conscious of
its usefulness, both by the top management, which has taken into account at the time of
making the strategic planning process of the company as well as by the different users of
the company. There has to be a policy of information and motivation within the
company. If this is done, the company will overcome its competitors, may increase their

bargaining power and can even prevent the entry of new competitors achieved the socalled "sustainable competitive advantage".

At the time of planning, developing and implementing information systems has to be

carried out by the company an alignment of the overall strategy of the company and the
information systems, identifying the main needs and evaluating the

13

Different methods of satisfaction, bearing in mind at all times what are the technologies
of information available on the market and how these can be used. In addition have to be
clearly defined which are the objectives of the information systems.

The process of development of information systems will greatly affect the success or
failure of the Organization; the organizations will have to adapt information systems to
their capital resources and the needs of the Organization. The possession of the company
the most advanced computers, the best programs and the best telecommunications
network is not indicative of a better system of information, because sometimes you may
with information technologies more modest are met in the same way the needs of the
company. Thus any company has to consider the information systems as a whole, a
further element of its business policy.

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