An information system, designed to collect, process, store and distribute information, is comprised of four critical components: technology, process, structure, and people. Technology and process represent the technical subsystem of an information system, while structure and people represent the social sub-system. 

The technology component includes hardware, software and telecommunication equipment. A process is a set of actions that are designed to carry out a specific business or organizational activity. The people component include all of the individuals who are directly involved with the information system. Finally, the structure component refers to the relationship among the individuals in the people component.

These four components of information systems are interdependent. That is, changes in one component may affect the other components. The major reasons of organizations introducing a new information system are to enhance efficiency (doing things right), and/or to improve effectiveness (doing the right thing). Efficiency can be enhanced by reducing inputs while producing same or more outputs, or producing more outputs while using the same level of inputs. Effectiveness can be improved by better responding to the different needs of stakeholders. The impact an information system brought to an organization can be assessed from the financial point of view as well as from the managerial performance point of view.