What Is an Information System? Definition, Types, and Examples

Every time a customer makes a purchase, a payment is processed, or inventory is updated, an information system is at work. These systems power everything from healthcare records and financial transactions to supply chains and social platforms, making them essential to how modern organizations operate.

An information system is a solution used to collect, process, store, and sometimes analyze information to support operations and decision-making. It comprises a combination of hardware, software, databases, networks and human resources.

As organizations increasingly rely on data-driven decisions, the demand for professionals who can design, manage, and improve information systems continues to grow. Studying information systems can provide a pathway to a wide range of in-demand careers that combine technology, data, and business strategy.

Information systems help organizations collect, process, store, and analyze data so they can operate more efficiently. Across industries, they support everything from daily operations to long-term strategy.

Common uses of information systems in organizations include:

These tools are supported by different types of information systems, each designed for specific functions.

Information systems work by transforming raw data into useful information to support organizational activities. At a basic level, this happens through a series of steps: data is input into the system, processed, stored, and delivered to users or other systems as needed.

This process relies on technology, data, and human inputs working together. For example, when a user requests a ride (human input), the system processes the request using software and algorithms (technology), and real-time data is used to match them with a driver.

What parts actually carry out these processes? Most information systems include these core components:

Hardware includes physical devices such as computers, servers, and mobile devices that support input, processing, storage, and output of data. People can physically see, touch, and engage with hardware, which is used to access and distribute data in a more tangible form. Hardware items range in size and function, with some used for direct human interaction and others used to collect and process information.

Software includes programs and applications that direct hardware and enable users to process, store, and interact with data. Software itself is broken down into a few categories, with some of the more common ones being system software and application software. System software runs a computer’s hardware programs, such as MacOS or Microsoft Windows. Application software allows users to complete a certain task.

Data and databases include collections of relevant data that are organized and stored within a system, allowing people to access, retrieve, and use information for specific tasks. Both hardware and software are dependent on data to successfully make up an information system. On a larger scale, a database management system (DBMS) helps organize and secure data so users can search for information more easily and efficiently.

Networks are systems that connect devices and enable the transfer of data. Physical devices like computers, smartphones, and televisions rely on networks to exchange data and important communications. Networks have two transmission types: wired and wireless. Wired networks are more traditional in the sense that they require cables to connect to devices. Wireless networks do not need physical cables, as they rely on more recent technology like Wi-Fi.

The people and workflows that define how information is collected, analyzed, and applied in real-world contexts are critical to information systems. Experienced tech, finance, and marketing professionals depend on information systems for many reasons: to increase work efficiency, improve productivity, or identify solutions that can help them achieve their goals. With deeper insight into their processes, they are able to make more informed, data-driven decisions that are beneficial for their businesses.

Organizations use different types of information systems to support operations, management, and strategic decision-making. While each system serves a distinct purpose, they often work together across the organization.

Common types of information systems include transaction processing systems (TPS), management information systems (MIS), and analytics tools such as business intelligence (BI) systems. Decision support systems (DSS) also support data-driven decision-making and are closely related to modern BI tools.

The table below outlines common types of information systems, their functions, and examples.

The examples below illustrate how organizations apply these systems in real-world contexts.

Electronic health record (EHR) systems allow providers and patients to more easily access medical histories, lab results, and treatment information, improving care coordination and patient outcomes.

Banking systems process transactions, protect against fraud, and support regulatory compliance. This enables secure, real-time financial services and risk management.

E-commerce platforms and customer relationship management (CRM) systems track orders, manage inventory, and personalize recommendations. This enhances customer experience and optimizes sales and business operations.

Supply chain management (SCM) systems monitor shipments, manage inventory, and forecast demand. The results are improved efficiency, reduced costs, and stronger supplier coordination.

Enterprise resource planning (ERP) systems integrate core business functions such as finance, human resources, and procurement into a unified system. The outcome is improved data visibility, coordination, and decision-making across departments.

Platforms use information systems to manage user data, deliver content, and support real-time interactions. These systems enable communication at scale, personalization, and data-driven engagement.

To better understand their impact, it helps to look at how information systems function.

Information systems and information technology are closely related, but they are not the same. While information systems were once largely associated with information technology, the field of information systems has evolved to include the people, processes, and organizational context that shape how technology is used.

Information technology (IT), by contrast, refers specifically to the hardware, software, and infrastructure used to store, process, and transmit data. Information technology provides the technical foundation that information systems rely on. In other words, information technology is one component of an information system.

Organizations rely on IT infrastructure — servers, databases, and networks — to support the broader information systems that guide business processes and decision-making. For example, in a hospital setting:

This relationship highlights how effective information systems depend on people, processes, and technical infrastructure.

By pursuing and earning an online Master of Information and Data Science, individuals develop a strong understanding of how information is created, managed, and applied across organizations. This foundation prepares graduates to work at the intersection of data, technology, and business processes.

Many of these roles increasingly involve working with advanced technologies such as artificial intelligence and machine learning.

Common careers in information systems include:

Many of these roles are in high demand as organizations increasingly rely on data and technology to operate and compete. According to the U.S. Bureau of Labor Statistics, employment in data science and related fields is projected to grow by 34 percent in the coming years.

Information systems skills are increasingly valuable as organizations rely more on data and technology. Professionals who can design, manage, and apply these systems are in high demand across industries.

Those who study information systems develop a combination of technical, analytical, and business skills. They learn how to work with data, evaluate systems, and design solutions that improve efficiency, security, and organizational performance, including applications of artificial intelligence and machine learning. This versatility opens the door to a wide range of career paths, from business intelligence and data analytics to systems management and cybersecurity.

A graduate degree in information systems can provide structured learning, hands-on experience, and exposure to real-world applications. Programs such as UC Berkeley’s online Master of Information and Data Science offer pathways to specialize in areas like data science and business intelligence while developing the interdisciplinary skills needed to solve complex problems and innovate in today’s data-driven world.

Created by datascience@berkeley, the online Master of Information and Data Science from UC Berkeley.