Management information systems 1

Types of business information systems

Saqib Rehman

BBA 6th – Finance

Submitted to : Raja Ahmed Jamil

Department of management sciences

University of Haripur.
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Table of Contents

Abstract……………………………………………………………..………3

What is an information system?......................................................…...........4

Three Activities of information systems………………..………….....…….4

Information systems are more than computers………..……..……........5

Role of Information systems in businesses…………………………..…..….5

Types of Information systems………………………………………...…......6

Transaction processing system…………………………………….....……...7

Decision support system………………………………………………..…….7

Executive support system…………………………………………..…………8

Enterprise system…………………………………………………….….…….8

Supply chain management system……………………………….……...8

Customer relationship management system………………….………….…9

Knowledge management system……………………………………….…….9

Intranets and extranets………………………………………………..….......9

E-Business, and E-commerce, and E-Government………………........…10

Social networking, Wikis, and Virtual worlds…………………….………10

References……………………………………………………………...…...11
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Abstract

Centuries back, world was thought to be round. In 1421, Columbus approved this stating that it

could be sailed through seas. In 2005, Thomas Friedman, In his book, said that world is flat and

the reason he provided is that information technology has taken over the world and reduced the

economic and cultural advantages of developed countries. He stated that U.S and European

countries are in a fight for their economic lives with the less developed countries having highly

educated, highly motivated population and low wages. (Friedman, 2007). This globalization

represents both the opportunities and challenges for organizations. In this technology driven

industrial economic system information plays a vital role. Information systems are a foundation

for conducting business today. In many industries, survival and the ability to achieve strategic

business goals are difficult without extensive use of information technology. Businesses today

use information systems to achieve six major objectives: operational excellence; new products,

services, and business models; customer/supplier intimacy; improved decision making;

competitive advantage; and day-to-day Survival.(1)

What is an information system?

An information system can be defined technically as a set of interrelated components that

collect (or retrieve), process, store, and distribute information to support decision making and

control in an organization.(Kenneth&Jane) In addition to supporting decision making,

coordination, and control, information systems may also help managers and workers analyze

problems, visualize complex subjects, and create new products.(1)

Information systems contain information about significant people, places, and things within the

organization or in the environment surrounding it. By information we mean data that have been

shaped into a form that is meaningful and useful to human beings. Data, in contrast, are streams

of raw facts representing events occurring in organizations or the physical environment before

they have been organized and arranged into a form that people can understand and use.

Three activities of an information systems

Three activities in an information system produce the information that organizations need to

make decisions, control operations, analyze problems, and create new products or services.

These activities are input, processing, and output. Input captures or collects raw data from within

the organization or from its external environment. Processing converts this raw input into a

meaningful form. Output transfers the processed information to the people who will use it or to

the activities for which it will be used. Information systems also require feedback, which is

output that is returned to appropriate members of the organization to help them evaluate or

correct the input stage.(1)

Information systems are more than computers

Computer literacy primarily means the understanding of computer’s components and information

technology, management information systems contrast, try to achieve this broader information

literacy by understanding not only the hardware components but behavioral components as well.

The field of management information systems (MIS) tries to achieve this broader information

systems literacy. MIS deals with behavioral issues as well as as technical issues surrounding the

development, use, and impact of information systems used by managers and employees in the

firm.(1)

Role of information systems in businesses

What makes information systems so essential today? Why are businesses investing so much in

information systems and technologies? In the United States, more than 23 million managers and

113 million workers in the labor force rely on information systems to conduct business.(1)

Information systems are essential for conducting day-to-day business as well as achieving

strategic business objectives. Entire sectors of the economy are nearly inconceivable without

substantial investments in information systems. E-commerce firms such as Amazon, eBay,

Google, and E*TRADE simply would not exist. Today’s service industries—finance, insurance,

and real estate, as well as personal services such as travel, medicine, and education—could not

operate without information systems. Similarly, retail firms such as Walmart and Sears and

manufacturing firms such as General Motors and General Electric require information systems to

survive and prosper. There is a growing interdependence between a firm’s ability to use

information technology and its ability to implement corporate strategies and achieve corporate
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goals. What a business would like to do becoming the high-quality or low-cost producer,

developing new products, and increasing employee productivity depend more and more on the

kinds and quality of information systems in the organization. The more you understand about this

relationship, the more valuable you will be as a manager. Specifically, business firms invest

heavily in information systems to achieve six strategic business objectives: operational

excellence; new products, services, and business models; customer and supplier intimacy;

improved decision making; competitive advantage; and survival.

Types of information systems

A typical business organization has systems supporting processes for each of the major business

functions—systems for sales and marketing, manufacturing and production, finance and

accounting, and human resources.(kenneth&Jane). A typical firm also has different systems

supporting the decision-making needs of each of the main management groups. Operational

management, middle management, and senior management each use systems to support the

decisions they must make to run the company. Let’s look at these systems and the types of

decisions they support.

1- Transaction Processing Systems

2- decision-support systems (DSS)

3- Executive support systems (ESS)

4- Enterprise Systems

5- Supply Chain Management Systems

6- customer relationship management (CRM) systems

7- Knowledge management systems (KMS)

8- Intranets and Extranets

9- E-Business, E-Commerce, and E-Government

10- Social networking, Wikis, virtual worlds

1- Transaction process systems

Operational managers need systems that keep track of the elementary activities and transactions

of the organization, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow

of materials in a factory. Transaction processing systems (TPS) provide this kind of information.

A transaction processing system is a computerized system that performs and records the daily

routine transactions necessary to conduct business, such as sales order entry, hotel reservations,

payroll, employee record keeping, and shipping.(Kenneth &Jane)

2- Decision support system

decision-support systems (DSS) support more non-routine decision making They try to answer

questions such as these: What would be the impact on production schedules if we were to

double sales in the month of December? What would happen to our return on investment if a

factory schedule were delayed for six months? Although DSS use internal information from TPS

and MIS, they often bring in information from external sources, such as current stock prices or

product prices of competitors.

Voyage estimating system

A voyage-estimating system calculates financial and technical voyage details. Financial

calculations include ship/time costs (fuel, labor, capital), freight rates for various types of cargo,
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and port expenses. Technical details include a myriad of factors, such as ship cargo capacity,

speed, port distances, fuel and water consumption, and loading patterns (location of cargo for

different ports).

3- Executive support system

Executive support systems (ESS) help senior management make decision. ESS present graphs

and data from many sources through an interface that is easy for senior managers to use. ESS

are designed to incorporate data about external events, such as new tax laws or competitors, but

they also draw summarized information from internal MIS and DSS. They filter, compress, and

track critical data, displaying the data of greatest importance to senior managers. Increasingly,

such systems include business intelligence analytics for analyzing trends, forecasting, and

“drilling down” to data at greater levels of detail.

4- Enterprise system

Firms use enterprise systems, also known as enterprise resource planning (ERP) systems, to

integrate business processes in manufacturing and production, finance and accounting, sales and

marketing, and human resources into a single software system.

5- Supply chain management system

Firms use supply chain management (SCM) systems to help manage relationships with their

suppliers. These systems help suppliers, purchasing firms, distributors, and logistics companies

share information about orders, production, inventory levels, and delivery of products and

services so that they can source, produce, and deliver goods and services efficiently. The ultimate
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objective is to get the right amount of their products from their source to their point of

consumption in the least amount of time and at the lowest cost. These systems increase firm

profitability by lowering the costs of moving and making products and by enabling managers to

make better decisions about how to organize and schedule sourcing, production, and

distribution.

6- Customer relationship management system

Firms use customer relationship management (CRM) systems to help manage their

relationships with their customers. CRM systems provide information to coordinate all of the

business processes that deal with customers in sales, marketing, and service to optimize revenue,

customer satisfaction, and customer retention. This information helps firms identify, attract, and

retain the most profitable customers; provide better service to existing customers; and increase

sales.

7- Knowledge management system

Some firms perform better than others because they have better knowledge about how to create,

produce, and deliver products and services. This firm knowledge is difficult to imitate, unique,

and can be turned into long-term strategic benefits. Knowledge management systems (KMS)

enable organizations to better manage processes for capturing and applying knowledge and

expertise. These systems collect all relevant knowledge and experience in the firm, and make it

available wherever and whenever it is needed to improve business processes and management

decisions. They also link the firm to external sources of knowledge.

8- Intranets and extranets

Intranets are simply internal company Web sites that are accessible only by employees. The term

“intranet” refers to the fact that it is an internal network, in contrast to the Internet, which is a

public network linking organizations and other external networks. Intranets use the same

technologies and techniques as the larger Internet, and they often are simply a private access area

in a larger company Web site. Likewise with extranets. Extranets are company Web sites that are

accessible to authorized vendors and suppliers, and often used to coordinate the movement of

supplies to the firm’s production apparatus.

For example, Six Flags, which operates 19 theme parks throughout North America, maintains an

intranet for its 2,500 full-time employees that provides company-related news and information

on each park’s day-to-day operations, including weather forecasts, performance schedules, and

details about groups and celebrities visiting the parks.

9- E-Business, E-Commerce, E-Government

Electronic business, or e-business, refers to the use of digital technology and the Internet to

execute the major business processes in the enterprise. E-business includes activities for the

internal management of the firm and for coordination with suppliers and other business partners.

It also includes electronic commerce, or e-commerce.

E-commerce is the part of e-business that deals with the buying and selling of goods and services

over the Internet. It also encompasses activities supporting those market transactions, such as

advertising, marketing, customer support, security, delivery, and payment.

10- Social networks, wikis, and Virtual world

Social networking tools are quickly becoming a corporate tool for sharing ideas and

collaborating among interaction-based jobs in the firm. Social networking sites such as
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Linkedin.com provide networking services to business professionals, while other niche sites have

sprung up to serve lawyers, doctors, engineers, and even dentists.

Wikis are ideal tools for storing and sharing company knowledge and insights.

At Intel Corporation, employees built their own internal wiki, and it has been edited over

100,000 times and viewed more than 27 million times by Intel employees. (Kenneth&jane).

Virtual worlds Organizations such as IBM and INSEAD, an international business school with

campuses in France and Singapore, are using this virtual world to house online meetings, training

sessions, and “lounges.” (1)

References

1- (Laudon&Laudon) 2012.Management information systems 12th edition. Pearson.

2- Thomas L. Friedman. The world is flat. 2005

3- https://www.cleverism.com/management-information-systems-mis/

4- https://medium.com/educational-blog/different-types-of-mis-management-infomation-

system-4a5814e20f81

5- https://www.marketing91.com/types-of-management-information-systems

6- https://www.quora.com/What-are-examples-of-different-types-of-MIS-management-

Information-System

7- https://bizfluent.com/about-5194585-types-management-information-systems.html

8- (Elisabeth A. Sullivan) 75 years of marketing. AMERICAN MARKETING

ASSOCIATION.
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