Types of Information Systems in an Organization

The figure below shows relation of information system to the levels of organization. The
information needs are different at different organizational levels. Accordingly the information
can be categorized as: strategic information, managerial information and operational
information.
Strategic information is the information needed by top most management for decision making.
For example the trends in revenues earned by the organization are required by the top
management for setting the policies of the organization. This information is not required by the
lower levels in the organization. The information systems that provide these kinds of information
are known as Decision Support Systems.

1. Office Information System

An office information system (OIS), or office automation, facilitates communication and
workflow electronically between employees of an organization. OIS uses communications
technology (EDI, or electronic data interchange; video-conferencing, facsimile and voice mail);
software (word processing, database, spreadsheet, presentation, groupware, Web-browsers, e-
mail and personal information management); and various hardware devices (computers,
modems, speakers, fax machines, scanners and others) to automate processes. An office
information system supports a wide range of business activities, such as creating documents,
organizing scheduling tasks, accounting and sending messages.
2. Transaction Processing Systems (TPS)
Laudon define transaction processing system (TPS) as” transaction processing systems are computerized
systems that perform and record the daily routine transactions necessary to conduct the business”.
TPS processes business transaction of the organization. Transaction can be any activity of the
organization. Transactions differ from organization to organization. For example, take a railway
reservation system, booking, canceling, etc are all transactions. Any query made to it is a
transaction. However, there are some transactions, which are common to almost all
organizations. Like employee new employee, maintaining their leave status, maintaining
employees accounts, etc.
This provides high speed and accurate processing of record keeping of basic operational
processes. These include calculation, storage and retrieval.
Transaction processing systems provide speed and accuracy, and can be programmed to follow
routines functions of the organization.
Some examples of TPS
 Payroll systems
 Order processing systems
 Reservation systems
 Stock control systems
 Systems for payments and funds transfers

Important features of transaction processing system

The following are the important features of Transaction Processing System:
 Rapid response. TPS system are designed to process transactions virtually instantly. It
takes only few seconds for a transaction.
 Reliability. Transaction processing system should be reliable. Customers will not tolerate
mistakes. TPS system should always contain sufficient safety and security measures.
 Inflexibility. A TPS wants every transaction to be processed in exactly the same way, re-
gardless of the user, the customer or the time of day.
 Historical data. TPS produces information on the historical basis since it generates in-
formation taking into account transactions already taken place in the organization.
 Link with external environment. Transaction processing system establishes the relation
with external environment since it distributes information to its customers and suppliers.
 Distribution of information to other systems. TPS produces information and distributes it
to the other type of systems. For ex: sales processing systems supply information to the
general ledger systems.
 Controlled access. Since TPS systems can be such a powerful business tool, it must be
able to allow only authorized employees to access it at any time. Restricted access to the
system ensures that employees that employees who have the authority will only be able
to process and control transaction.
Advantages
• Batch or real-time processing available
• Reduction in processing time, lead time and order cycle time
• Reduction in inventory, personnel and ordering costs
• Increase in productivity and customer satisfaction
Disadvantages
• High setup costs
• Lack of standard formats
• Hardware and software incompatibility
The role of TPS
 Produce information for other systems
 Cross boundaries (internal and external)
 Used by operational personnel + supervisory levels
 Efficiency oriented

3. Management Information System

A management information system (MIS), or management reporting system (MRS), produces
accurate and organized information that enables managers and other decision-makers to reach
precise decisions, supervise activities, solve problems and track progress. An MIS typically
produces three different types of reports:
- Detailed information. A detailed information report usually confirms all transaction
processing activities.
- Summary information. A summary information report summarizes data into an easily
understandable format and generates associated graphs, tables and totals to present
information in a condensed form.
- Exception information. Exception information is used to filter data that requires
immediate actions or decisions.
Some examples of MIS
 Sales management systems
 Inventory control systems
 Budgeting systems
 Management Reporting Systems (MRS)
 Personnel (HRM) systems

Key characteristics of MIS:

1. System approach. MIS follows a step- by - step approach to the study of system and its perfor-
mance in the light of the objective for which it has been constituted. It means taking an inclusive
view at sub-systems to operate within an organization.
2. Management-oriented. The management-oriented characteristic of MIS implies that top-down
approach needs to be followed for designing MIS. A top-down method says the initiation of sys-
tem development determines management requirements as well as business goals. MIS implies
the management dynamically to the system development towards the completion of management
decision.
3. As per requirements. The design and development of MIS should be as per the information re-
quired by the managers. The required design and development information is at different levels,
viz., strategic planning, management control and operational control. It means MIS should cater
to the specific needs of managers in the hierarchy of an organization.
4. Future-oriented. The design and development of MIS should also be future purpose so that the
system is not restricted to provide only the past information.
5. Integrated. A complete MIS is a combination of its multiple sub-components to provide the rele-
vant information to take out a useful decision. An integrated system, which blends information
from several operational areas, is a necessary characteristic of MIS.
6. Common data flows. This concept supports numerous basic views of system analysis such as
avoiding duplication, combining similar functions and simplifying operations. The expansion of
common data flow is a cost-effectively and logical concept.
7. Long-term planning. MIS should always develop as a long term planning because it involves
logical planning to get success of an organization. While developing MIS, the analyst should
keep future oriented analysis and needs of the company in mind.
8. Relevant connection of sub-system planning. The MIS development should be decomposing
into its related sub-systems. These sub-systems must be meaningful with proper planning.
9. Central database. it contains data in tabular form. The data base is responsible to operations like
insertion, deletion, updation of records. This database covers information related to inventory,
personnel, vendors, customers, etc. the data stored in the database.

Advantages
• Provides single integrated data system
• Provides timely information
• Capable of customizing reports
Disadvantages
• Retrieval and dissemination is depended on technology hardware and software
• Potential for inaccurate information
The role of MIS
 Based on internal information flows
  Support relatively structured decisions
 Inflexible and have little analytical capacity
 Used by lower and middle managerial levels
 Deals with the past and present rather than the future
 Efficiency oriented

4. Decision Support System

A decision support system (DSS) is used to help managers and users make relevant and timely
decisions. They typically include graphics, spreadsheets, statistical analysis capabilities and
query language (such as SQL) to help users extract relevant data and evaluate results so they can
make decisions. Some DSS's also help users simulate a decision situation to create a
comprehensive model of all the factors affecting the decision.
Some examples of DSS
 Group Decision Support Systems (GDSS)
 Computer Supported Co-operative work (CSCW)
 Logistics systems
 Financial Planning systems
 Spreadsheet Models

Characteristics of DSS

1. DSS tends to be aimed at the less well structured, underspecified problem that upper-
level managers typically face;
2. DSS attempts to combine the use of models or analytic techniques with traditional data
access and retrieval functions;
3. DSS specifically focuses on features which make them easy to use by non-computer
people in an interactive mode; and;
4. DSS emphasizes flexibility and adaptability to accommodate changes in the environment
and the decision making the approach of the user.

Advantages
• Allows for real-world inexpensive testing
• Cloud computing
• Reduced transportation costs
• Reduction in data entry errors
• Reduced operating expenses
Disadvantages
• Information overload
• Overemphasis on decision making
• Requires training
• Cost of development
The role of DSS
 Support ill- structured or semi-structured decisions
 Have analytical and/or modelling capacity
 Used by more senior managerial levels
 Are concerned with predicting the future
 Are effectiveness oriented

5. Executive Information System

Executive information system (EIS) is a special type of decision support system that is typically
used by executive management. It represents information in the form of tables which show
managerial statistics, ratios and trends. An EIS retrieves data from external sources, such as the
Internet or the Dow Jones News, to provide information regarding contemporary economic
indicators, commodity prices and other strategic issues.
Some examples of EIS
Executive Information Systems tend to be highly individualized and are often custom made for a
particular client group; however, a number of off-the-shelf EIS packages do exist and many
enterprise level systems offer a customizable EIS module.
The role of EIS
 Are concerned with ease of use
 Are concerned with predicting the future
 Are effectiveness oriented
 Are highly flexible
 Support unstructured decisions
 Use internal and external data sources
 Used only at the most senior management levels

Key Characteristics of Executive Information System

 Detailed data – EIS provides absolute data from its existing database.
 Integrate external and internal data – EIS integrates integrate external and internal data. The
external data collected from various sources.
 Presenting information – EIS represents available data in graphical form which helps to analyze
it easily.
 Trend analysis – EIS helps executives of the organizations to data prediction based on trend
data.
 Easy to use – It is a very simplest system to use.

Advantages of EIS

 Trend Analysis
 Improvement of corporate performance in the marketplace
 Development of managerial leadership skills
 Improves decision-making
 Simple to use by senior executives
 Better reporting method
 Improved office efficiency

Disadvantage of EIS

 Due to technical functions, not to easy to use by everyone

 Executives may encounter overload of information
 Difficult to manage database due to the large size of data
 Excessive costs for small business organizations

6. Expert System
An expert system is an information system that stores knowledge from human experts and then
attempts to imitate human decision-making and reasoning faculties for non-experts. It has two
main components: a knowledge base (a comprehensive repository of human knowledge and
experience) and inference rules (logical rules that are applied to the knowledge base every time a
user inputs a new decision situation to the system).
Expert systems are one part of an exciting branch of computer science called artificial
intelligence. Artificial intelligence (AI) is the application of human intelligence to computers. AI
technology can sense your actions and, based on logical assumptions and prior experience, will
take the appropriate action to complete the task. AI has a variety of capabilities, including speech
recognition, logical reasoning, and creative responses.

Experts predict that AI eventually will be incorporated into most computer systems and many
individual software applications. Many word processing programs already include speech
recognition.

Enterprise Applications
An enterprise application is the term used to describe applications -- or software -- that a
business would use to assist the organization in solving enterprise problems.
Enterprise applications are typically designed to interface or integrate with other enterprise
applications used within the organization, and to be deployed across a variety of networks
(Internet, Intranet and corporate networks) while meeting strict requirements for security and
administration management.
Proprietary enterprise applications are usually designed and deployed in-house by a specialized
IT development team within the organization. However, an enterprise may outsource some or all
of the development of the application, and bring it back in-house for deployment.
Today, using enterprise application service providers (ASP) is more prevalent. Here, the
enterprise application is designed by a third-party application service provider and leased to the
enterprise, as an on-premise or hosted service. This is also often referred to software-as-a-
service (SaaS) or Web-based applications.
Another trend in enterprise applications is the move to cloud computing, where the enterprise
moves some or its entire infrastructure to the cloud -- a type of Internet-based computing, where
services are delivered to an organization's computers and devices through the Internet as an on-
demand service. Some enterprises may also choose a hybrid solution where cloud applications
are integrated with on-premise systems.
Some of the more common types of enterprise applications include the following:
 automated billing systems
 payment processing
 email marketing systems
 content management
 call center and customer support
 Customer Relationship Management (CRM). It is a model for managing a company’s
interactions with current and future customers. It involves using technology to organize,
automate, and synchronize sales, marketing, customer service, and technical support
 Enterprise Resource Planning (ERP). It is a business management software that allows an
organization to use a system of integrated applications to manage the business. ERP software
integrates all facets of an operation, including product planning, development, manufacturing
processes, sales and marketing.
 Business Intelligence. It is the process bringing the right information at the right time to the
right people in the right format. It is a 5-step process to run your business smarter, starting with
registering the right data correctly, collecting the data from multiple sources, transforming,
combining and storing it in a data warehouse. It is a set of theories, methodologies, processes,
architectures, and technologies that transform raw data into meaningful and useful information
for business purposes
 Business Continuity Planning (BCP) identifies an organization's exposure to internal and
external threats and synthesizes hard and soft assets to provide effective prevention and recovery
for the organization, while maintaining competitive advantage and value system integrity”.
 HR Management
 Enterprise Application Integration (EAI) is the use of software and computer systems
architectural principles to integrate a set of enterprise computer applications.
 enterprise search
 messaging and collaboration systems.
Example
Enterprise resource planning systems (ERP)
ERP systems are comprised of independent software modules with a common central database
that support basic internal business processes for finance and accounting, human resources,
manufacturing and production, and sales and marketing

Enterprise Application Requirements

Like any modern application, an enterprise application must be reliable, perform well, provide an
intuitive and efficient user interface, and so on. But beyond these common qualities, it can be
characterized by three specific attributes.
An enterprise application is:
 Large
A multi-user, multi-developer, multi-machine, multi-component application that can
manipulate massive data and utilize extensive parallel processing, network distributed
resources, and complex logic. It can be deployed across multiple platforms and inter-
operate with many other applications, and it is long lived.
 Business Oriented
Its purpose is to meet specific business requirements. It encodes business policies,
processes, rules, and entities, is developed in a business organization, and is deployed in
a manner responsive to business needs.
 Mission Critical
An enterprise application must be robust enough to sustain continuous operation. It must
be extremely flexible for scalability and deployment, and allow for efficient maintenance,
monitoring, and administration.
These qualities clearly make the task of enterprise development extraordinarily challenging, and
the trend is toward rapidly increasing demands. The rapid improvement of computer hardware
and software, combined with global economic competition — and opportunities — have created
an environment in which business systems must respond quickly and deliver unparalleled levels
of performance. As these demands continue, developers must automate even more of their
businesses, build their software even faster, serve more and more users, and process a rapidly
growing mass of data.
Aside from these challenges, the power, complexity, and rate of change of the technology used
in building these corporate solutions makes efficient development ever more difficult.
To design an enterprise application one must consider and balance an enormous array of
application requirements, such as:
 Its business goals.
 How soon it must be delivered.
 Its budget.
 How many people will develop, test, and maintain it.
 How many concurrent users it must support.
 The importance of performance and ease of use.
 The hardware it must run on.
 Where it will be deployed.
 What security is required.
 How long you expect to use it.