Unit 3: Using IT Systems in Organisations – Study Notes

Hello future IT experts! Welcome to the exciting world of Unit 3. This chapter is super important because it connects the technology you’ve learned about (hardware, software, networks) to the real world of business.
We are going to explore how companies—big and small—use IT systems to manage their operations, make smart decisions, and stay competitive. Think of IT as the central nervous system of any modern organisation!

Don't worry if some of the business terms seem new. We'll break them down step-by-step, focusing only on the concepts needed for your IT exam. Let's get started!

1. Organisational Structures and Information Flow

Before we look at the systems, we need to understand how companies are structured, because this determines who needs what information.

The Three Main Structures
  • Hierarchical Structure (The Pyramid):
    This is the traditional, top-down structure. Think of a military or a large established corporation.
    Information Flow: Slow and formal, flowing from the top (strategic decisions) down to the bottom (day-to-day operations).
  • Flat Structure (The Wide Table):
    Fewer levels of management, allowing for quicker communication and decision-making. Common in start-ups and smaller firms.
    Information Flow: Fast, direct, and often less formal. Requires IT systems that support instant communication (like messaging and collaboration software).
  • Matrix Structure (The Grid):
    Employees report to two managers: a functional manager (e.g., Head of Marketing) AND a project manager. This is great for handling complex projects.
    Information Flow: Complex and dynamic. Requires excellent IT tools to track resources, time, and communication across multiple teams simultaneously.
Quick Takeaway: The structure of the organisation dictates the type and speed of IT systems required to handle its data. Senior managers need summarised, long-term data; front-line staff need immediate, operational data.

2. Core Organisational IT Systems (The Backbones of Business)

Organisations use different types of information systems (IS) to support specific levels of management and tasks. It's crucial to understand the difference between these systems.

A. Transaction Processing Systems (TPS)
  • What they do: Handle the day-to-day, routine transactions needed to conduct business. These are the operations that happen many times per second or minute.
  • Key Features: Speed, accuracy, reliability. They capture, store, and process data necessary for the organisation’s survival.
  • Real-World Example: When you buy something online, the system processing your payment, updating inventory, and generating a receipt is a TPS.
  • Target User: Operational (front-line) staff.
B. Management Information Systems (MIS)
  • What they do: Take the raw data collected by the TPS, summarise it, and present it in reports that management can use to monitor performance.
  • Key Features: Focus on reporting, tracking performance metrics (KPIs), and comparing results against budgets or targets.
  • Real-World Example: A monthly report showing the sales figures for each region, allowing a manager to see which area is underperforming.
  • Target User: Middle management.
C. Decision Support Systems (DSS)
  • What they do: Help senior managers solve unusual or non-routine problems that are often unstructured (meaning, there is no set procedure for the solution). They model "what-if" scenarios.
  • Key Features: Analytic capabilities, data modelling, ability to handle data from both inside (internal) and outside (external) the company.
  • Real-World Example: A company considering building a new factory might use a DSS to model the financial outcome under different interest rates or raw material costs.
  • Target User: Senior/Strategic management.
Memory Trick: Think of the data flow as a pyramid going up the management levels:

T (Transaction) -> M (Management) -> D (Decision)
(The raw data is Transformed into reports for Managers, which leads to Decisions.)
D. Enterprise Resource Planning (ERP)

Don't worry if this seems tricky at first—ERP is just a fancy name for a huge, integrated software system.

  • What it is: A single, centralised database system that integrates all major functional areas of a business, such as finance, HR, manufacturing, and inventory.
  • Benefit: Everyone in the organisation is working with the exact same, real-time data, eliminating redundant systems and confusion.
  • Analogy: An ERP system is the company's central nervous system, ensuring the left hand (Finance) always knows what the right hand (Inventory) is doing.
E. Customer Relationship Management (CRM)

This system focuses entirely on the customer lifecycle.

  • What it is: A system designed to manage all interactions with current and prospective customers. It stores details about every contact, purchase, and support request.
  • Purpose: To improve business relationships, aid in customer retention, and drive sales growth.
  • Real-World Example: When a customer service agent instantly pulls up your entire purchase history and recent support tickets, they are using a CRM system.
Key Takeaway: Systems range from routine (TPS) to strategic (DSS). Modern businesses rely heavily on integrated systems like ERP and CRM to ensure consistency and customer focus.

3. Communication and Collaboration Tools

IT systems allow organisations to operate globally and efficiently, saving massive amounts of time and travel costs.

Common Collaboration Tools

Organisations use various tools depending on their needs:

  • Email and Messaging: Essential for internal and external communication. (Common mistake to avoid: Using informal language in professional emails.)
  • Voice over Internet Protocol (VoIP): Allows phone calls to be made using an internet connection instead of traditional phone lines, drastically reducing communication costs, especially internationally.
  • Video Conferencing: Enables real-time, face-to-face meetings regardless of geographical location. Critical for modern remote work and global teams.
  • Groupware/Shared Workspace: Software that allows multiple users to work on the same documents and projects simultaneously (e.g., shared calendars, document repositories). This facilitates synchronous (real-time) and asynchronous (not simultaneous) teamwork.
Benefits of IT Communication

IT-enabled communication delivers several advantages:

  1. Reduced Costs: Less travel, lower phone bills (thanks to VoIP).
  2. Speed and Efficiency: Decisions can be made instantly via video link.
  3. Global Reach: Teams can be distributed across continents, improving talent access.

4. Managing Organisational Data

Data is the most valuable asset of a modern company. Knowing where to store it and how to extract insights from it is key.

Databases vs. Data Warehouses

These two terms sound similar but have very different roles:

  • Operational Database: Used for day-to-day operations (like recording a new customer or stock level). Data here is current, detailed, and changes constantly.
  • Data Warehouse: Used for analysis and reporting. It stores vast amounts of historical, summarised data gathered from many different operational databases. It does not change often.

Analogy: Your current bank statement is an operational database. All your bank statements from the last 20 years, compiled to find trends, would be in a data warehouse.

Data Mining

Data mining is the process of automatically or semi-automatically searching large stores of information (usually in a Data Warehouse) to discover hidden patterns and relationships.

  • Step-by-Step Example:
    1. Preparation: Clean and structure the massive data set.
    2. Exploration: Run algorithms to search for patterns (e.g., correlations).
    3. Deployment: Use the discovered pattern (e.g., "Customers who buy Product A also usually buy Product B") to make business predictions or marketing campaigns.
Key Takeaway: Companies use Data Warehousing and Data Mining to turn historical data into forward-looking competitive advantage.

5. Policies, Security, and Legal Compliance

For IT systems to function safely and effectively, organisations must establish clear rules and procedures.

A. Acceptable Use Policy (AUP)

An AUP is a document specifying rules and procedures that govern how employees and users can and cannot use the organisation's IT assets (hardware, software, networks, internet access).

  • Examples of AUP rules:
    - No downloading of illegal content.
    - Using company email only for business purposes.
    - Strict rules regarding social media use during work hours.
B. Disaster Recovery Plan (DRP)

A DRP is a documented process or set of procedures to recover and protect a business IT infrastructure in the event of a disaster (fire, flood, cyber-attack, major power outage).

A good DRP focuses on two key metrics:

  • Recovery Time Objective (RTO): The maximum acceptable downtime for a critical system.
  • Recovery Point Objective (RPO): The maximum acceptable amount of data loss (e.g., data must be restored to a state no older than 4 hours ago).
Did you know? Companies often perform "DRP drills" where they pretend a disaster has happened to ensure the plan and staff are ready! Testing the plan is just as important as writing it.
C. Legal and Ethical Issues

Organisations must adhere to various laws regarding data and IT usage.

Legal Compliance
  • Data Protection/Privacy Laws: These laws (like GDPR in Europe, or similar acts elsewhere) mandate how personal data must be collected, stored, and processed. Key requirements usually include:
    - Data must be accurate and up-to-date.
    - Data must be kept secure.
    - Data must only be used for the specified purpose.
  • Copyright and Licensing: Organisations must ensure all software used is legally licensed. Using pirated or unlicensed software is illegal and exposes the company to massive fines.
Ethical Issues

Ethics relate to the moral principles governing conduct. IT raises specific ethical dilemmas:

  • Employee Monitoring: Is it ethical for the company to read employee emails or track their computer activity? While legal (if specified in the AUP), it raises issues of trust and privacy.
  • Data Bias: If data used in a DSS (Decision Support System) is incomplete or biased (e.g., historical hiring data that favoured one gender), the IT system will perpetuate and amplify that bias in future decisions.
  • Environmental Impact: The ethical use of resources means companies should consider the energy consumption of their data centres and the proper disposal of e-waste.
Key Takeaway: Policies like AUP and DRP protect the company's assets, while legal and ethical awareness ensures the company operates responsibly and avoids penalties, especially regarding data privacy.

You've made it through the core concepts of using IT systems in organisations! Remember, IT isn't just about hardware; it's the foundation of modern business strategy and management. Keep reviewing the differences between the core systems (TPS, MIS, DSS)—it’s a frequent exam topic!