THE NATURE OF ORGANISATIONS AND THEIR INFORMATION REQUIREMENTS

ORGANISATIONS AS SYSTEMS
Business has its origins in primitive societies - food gathering, hunting and eventually agriculture
were essential to sustain even a basic form of life and were more effective when people formed
themselves into organised groups or communities. The making of tools, implements and clothing
gave rise to today’s manufacturing industry. In this environment, organisations have developed
that are able to specialise in the manufacture of specific ranges of products.

A large number of organisations currently make use of computer based information systems.
These organisations vary in size, and in the aims and objectives that they are attempting to
achieve. For example they may be:

• business organisations which are trying to make a profit by providing a product or a service

• charities trying to raise money or highlight a specific problem

• service organisations such as the health service

• special interest groups such as animal welfare or environmental groups trying to change
public opinion

• clubs and societies such as golf clubs or social clubs.

Each of these organisations has an objective or a set of objectives which it is trying to achieve.
These objectives may sometimes be difficult to identify and may not be the objectives which the
organisation publicly adopts. Sometimes there may be contradictions between the different
objectives of the organisation.

In order to achieve its objectives an organisation must decide on what policies to implement and
what actions to take. It must monitor the effects of those policies and actions and decide whether
they are helping to achieve the objective and if necessary take corrective action.

If we look at a business organisation we can see that its main objective is usually to make a profit
in either the long or the short term though other aims such as defending market share may also be
important. Within a business there are usually a range of identifiable functions. While in a small
or one-person business they may all be carried out by one individual, in large corporations,
departments consisting of several hundred people, perhaps, may be committed to a single
function.

In the main, large organisations consist of different departments, each of which has specific tasks
and duties to carry out in order to achieve the objectives set for it by its board of directors or
senior management.

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For example, a typical business might have the following departments:

• Sales:
Whose task is to sell the products of the business. The business which is unable to sell its
products in sufficient numbers is unlikely to survive. A well-organised and motivated sales
team ensures that sufficient orders are placed by customers so as to guarantee the business’s
continued existence and healthy development. It would be embarrassing if the sales force is
too successful and the business is unable to meet all of its customer’s orders. Equally, it
would also be embarrassing if production is greatly in excess of customers’ orders. It is
therefore important that there is close liaison between the sales and production functions of
the organisation.

Often identified as a sub-system of either sales or production the Warehousing and

Distribution function ensures that the customers receive their orders. The distribution
activity, depending on the size of the organisation and its range of products, can be a simple
delivery operation or a complex scheduling and distribution headache.

• Production:
While the increasing use of technology in business - in both the production of goods and
services and in the administration of the business - has substantially reduced the need for
human involvement, even the most highly automated factory would have great difficulty in
operating without the contribution of people. The role of people is crucial to manufacturing
and service organisations and it is usually in the production or operations area that most of the
people are employed. Where the range of products is limited the task of management is
limited and straightforward. However, it is not unusual for a business to offer a wide range of
products - with each one requiring a range of production processes. Irrespective of whether
the production process is make to order, order from stock or flow production, production
management has the task of ensuring that work is carried out effectively and as safely as
possible while ensuring, as far as possible, that the employment meets the ambitions and
expectations of the employees.

• Marketing:
While production is concerned with the internal processes of actually producing the goods,
marketing is concerned with the external links to the prospective customers and embraces
activities such as market research, advertising and public relations. It is often thought of as
the front end of the business, and is concerned with determining the possible demand for a
product or service, motivating its purchase and use at a profit to the producing organisation.

In some organisations the distinction between marketing and production is not always as clear
as this. Sometimes it is the responsibility of the marketing department to distribute goods and
in other instances - even in the same industry - it is the responsibility of production. The
distinction in service industries is even less clear because of the close links between
production - or more correctly operations in the service sector - and the customer. It is quite
usual for an employee in operations to have the added responsibility of marketing.

• Purchasing:
To enable the organisation to produce products for its customers it may be necessary to buy in
raw materials and/or services from suppliers. This will involve contracts with suppliers for

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 goods and services, which are competitively priced and will ensure that materials/services are
available in the required quantities at the appropriate time. It may also be necessary to store
the materials supplied so that warehousing and stock control will be involved. It may also be
desirable to monitor the quality of supplies, so that some element of quality control and
testing will be necessary.

• Accounting:
Before an organisation can start up in business it will require substantial financial support.
This can be in the form of capital from shareholders and/or loans from banks or other
financial institutions. Much of the financial resources will be spent in purchasing buildings
and equipment - the fixed assets of the organisation - and the remainder will be required to
pay the running costs of the business, for example, raw materials/services, payroll,
maintenance and the repayment of interest on any loans.

The main purpose of accounting is to record what is happening to the money employed by the
organisation to run the business. There are two aspects to this. Firstly there is the historical
view of what has happened to the money as it passes from one area to another - from inside
the business to pay the suppliers for materials provided and from the outside, from customers
in payment for the goods they have received. Conventional accounting practice requires that
on at least one occasion a year the Financial Accountant should produce a complete view of
the company’s finances - the balance sheet. Financial Accounting is concerned with
monitoring the use of capital to produce goods and services whose sale will cause cash to flow
back into the organisation i.e. reporting the past.

The second area looks at how effectively the capital has been used, is being used and will be
used within the organisation and is aimed at helping the organisation to take decisions
regarding its future. This is the role of Management Accounting.

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 What is the difference between financial and management accounting?

Corporate Management
There are often conflicts between the different functions in an organisation particularly if each
follows a path in pursuit of its own objectives at the expense of the overall organisation
objectives. For example, there is frequently a conflict between the marketing and production
functions. Production prefers a uniform output of a limited range of products throughout the
year - this allows maximum use of the plant, no requirement for resetting machines and no
difficulty in raw materials supplies or storage of finished products. On the other hand,
marketing is likely to encourage as wide a range of products as possible so as to increase its
chances of establishing a wider customer base and perhaps coming up with a product which
will become an established market leader. Both of these functions and, in fact, all of the areas
of an organisation are subject to many constraints, particularly financial ones. There is little
point in debating the production levels and market strategy for products unless they are going
to be profitable. There is an obvious need to co-ordinate the financial and operational aspects
of an organisation. Someone has to adopt an overall view - to determine if overall objectives
are being met and to make the necessary decisions. It is the province of corporate
management to co-ordinate all of the organisation’s functions. This is normally the role of a
board of directors which will be constituted from the main functions. The board will decide
on the priorities and resolve conflicting policies, with management accounting, in particular,
providing the necessary views of the organisation. Figure 1.1 shows some of interrelationships
between these departments.

Invoices Payments
Accounting
Payments Invoices

Supplies
Budgets
Delivery
Notificatio
Delivery
Costs
Notificatio
Receipts
Management Purchasing S
C Planning and Stock u
u Control Control p
s
Market Orders p
t Sales Sales l
o Research
Plan Analysis I
m Stock
Requests e
e
r
r Advertising Stock
Marketing/ Productio Issues
Orders
Sales n

Orders

Production/ Figure 1.1

Distribution A Business Organisation
4
 Deliveries

• Personnel:
Traditionally the production manager was responsible for all aspects of his workers
employment - recruitment, training, payment and discipline. However because of the
complexities of human management the specialist role of personnel has evolved. A major
driving force in the development of the personnel function was the plethora of Government
legislation relating to people at work.

It is not unusual for the personnel function to embrace the following activities:

• manpower planning
• recruitment and selection
• education and training
• payment
• industrial relations
• employment conditions
• discipline and termination procedures

While personnel may deal with a lot of the general problems that arise - and those that it may
even cause - day-to-day management still rests with the production and other management
whose skills and experience in handling staff will have a major influence in a company
achieving its objectives.

ORGANISATIONAL GOALS
While its objectives may not be recognised or formally stated an organisation will be working
towards some goal. This may be to:

• achieve a profit
• provide a better standard of living
• to do the job better than others
• to provide a good level of services
• to produce a product at minimum cost
• to produce a good quality product

The most obvious objective for many organisations is to achieve a profit. While this might be
acceptable to many organisations a number of questions arise:

• Is it acceptable to local and national government services such as education and health and to
the legal system?

• Should commercial organisations be aiming at achieving maximum profit or is there some

acceptable and respectable level of profit?

• What should be done with the profit - should it be distributed among the shareholders or
reinvested in new plant and equipment to ensure the continued health and long-term future of
the organisation?

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• What is best for the employees whose efforts contribute to the profit making?

• Does the organisation have a responsibility to provide rewarding and satisfying work and
healthy and pleasant working conditions for its employees?

Where trade union influence is strong those objectives which ensure that employees interests are
considered will be given a high level of priority. On the other hand where a business is operating
in a highly competitive market the priority will be to reduce costs and increase market share.
With a greater public consciousness of environmental damage, pressure groups - and even
government - will force organisations to include objectives which are designed to meet the overall
needs of society by minimising pollution and improving the environment. A variety of influences
are constantly being brought to bear on organisations. These influences may change with time and
therefore the objectives of organisations will also have to change in response. Figure 1.2
illustrates the profit objective.

ORGANISATIONAL
OBJECTIVES

PROFIT

Acceptable or Maximum

Share holders

Increase Market Share

Long Term Survival

Employee Benefit

SUBJECT TO
Fig 1.2 The Profit Objective

Public Responsibility

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Figure 1.2 The Profit Objective
7
INFORMATION AND DECISION-MAKING
Organisational decision-making depends on a number of factors, but principally on the type of
decision to be made and on management philosophy and behaviour. Since we are normally
concerned with the purpose of the decision making process within organisations it is convenient
and practical to view this in the framework of the accepted structure associated with management.
The following three levels are usually identified:

• Operational Management
• Tactical Management
• Strategic Management

Operational managers or frontline managers - such as foremen, senior clerks, office

administrators - are concerned with ensuring that particular tasks are planned and efficiently
performed within an office, factory or workshop. Their concern is with decisions of a routine
nature which are made many times a week and, perhaps, even frequently during a day. The
information required for this level of decision-making could include such items as:

• hours worked by employees in a week

• vacancies
• current stock levels
• outstanding orders
• work-in-progress levels.

Tactical managers are responsible for implementing the short term or strategic plans of the
company. Such managers might be departmental heads - middle management - and their
priorities are to allocate resources and control these so that they are used effectively to achieve
strategic objectives. The type of information required to sustain decision-making at this level
would include such items as:

• productivity - output per person hour or per machine hour

• sales analyses by salesperson or by sales area
• cash flow projections
• departmental staffing levels
• profit results within a department.

Tactical decisions will relate to the business, its suppliers and customers, will cover the present
and the near future, and will have to be made less frequently than operational decisions, perhaps
weekly or monthly.

Strategic management is concerned with long term plans, the province of top management who
will define the objectives of the organisation, assess if these are being met in practice and revise
them where necessary. The information required to make such decisions would embrace such
items as:

• reports on overall profitability

• the profitability of major sections of the business or of products
• total cash requirements
• studies of current market trends
• projections of future market prospects.

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Strategic plans cover a relatively long-term future period. For example, a large multi-national
corporation may plan up to ten years ahead, whereas a smaller company which may be subject to
the vagaries of changing fashion would find it unprofitable to plan more than two or three years
ahead.

At all three levels decisions relating to a broad spectrum of organisational functions will be taken,
but at particular levels greater emphasis is placed on some of these functions at the expense of
others.

It is interesting to note the characteristics of the decisions made and the information on which
they are based at the different levels. At operational level the information required arises from
mainly internal sources, while at strategic level the information is almost exclusively external.
The net result of this is that computer based information systems have tended to be developed in
order to take the operational decisions since the data is readily available and is reliable.

Another influence is, of course, the mechanism for reaching the decision. At operational level the
decisions which, while being frequent in number, are usually structured with simple decision
rules. For example, the calculation of employees overtime pay, or the decision on whether a
customer should be supplied with goods in relation to his/her outstanding balance. In contrast, at
a strategic level, decisions are required much less frequently, occur on an irregular basis and tend
to be complex and unstructured. For example, deciding to market a completely new product or to
pursue new marketing opportunities overseas. The results of these decisions are unpredictable
since the decision making is not clearly defined nor is the necessary information readily available.
Computers then tend to be used more frequently at the operational level since decisions are more
clearly defined and can therefore be easily represented in the form of computer programs. As
operational information systems frequently replace significant numbers of employees financial
benefits are much easier to quantify. However, this does not suggest that computers will only be
of benefit if used at this level. Strategic and tactical information systems may well be much more
difficult and expensive to develop, but in the long-term promise much greater overall benefits to
the organisation. Figure 1.3 illustrates levels of management, the information required and the
corresponding use of computer based decisions.

Long Term
Strategic
Figure 1.3a
Management & Information
Tactica

Daily/Weekly
Operational

Management and Information

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COMPUTER BASED INFORMATION SYSTEMS
Computer based information systems have existed at operational level for many years - initially in
the form of magnetic tape based batch processing systems. While magnetic disc is the normal
method of storage nowadays, many batch systems continue to operate efficiently and form the
major part of many data processing departments activity. The input to such systems is predictable
and might include such items as:

• the hours worked by paid employees

• customers orders
• payments.

The processing is well defined and normally results in master files being brought up to date. The
output is often in printed form - for example, invoices, statements, pay advice notes, receiving
reports, etc. Such systems are often referred to as transaction processing systems.

Non-programmed
External Information
Decisions

Strategic

Tactica

Programmed
Operational Decisions

Internal
Information
Figure 1.3b
Management & Information

Middle or tactical management are charged with controlling the organisation’s resources and as
such require accurate up to date summary information. The nature of this information is well
known in advance and therefore programs are provided which abstract the necessary details from
the information stored by the operational systems and provide the required details in report form.
Exception reporting is the norm - only reports on those items which require action. Report
systems are usually batch oriented since the content and timing of the report are well known in
advance. Where there is a requirement for information on an ad hoc basis - when the form,
content, and timing of the enquiry are not known in advance - an on-line enquiry processing
system is required. Since the precise nature of the enquiry and its timing are not known in
advance, enquiry systems must be flexible enough to cope with a wide variety of requests. It is

10
extremely important that the interface to such systems is well designed to facilitate access by what
can only be described as infrequent users.

At strategic level the decisions that are to be made are often difficult to predict and since much of
the data required is external to the organisation it is difficult to access. It is therefore very
difficult to preprogram the appropriate model to make the decision. Spreadsheet programs are
currently used for simple financial modelling and allow various parameters to be varied to test the
possible outcomes of changes in management strategy. In the not too distance future it is very
likely that knowledge based systems will have a major impact in decision making at this level.
Figure 1.4 shows the systems required at each level of management.

Decision Support
Systems

Report Enquiry Management

Processing Processing Information
Systems Systems
Systems
Transaction
Processing
Systems

Figure 1.4
Management and Systems

SAQ

What are the differences between strategic, tactical and operational levels of management?

Strategic management - top management is concerned with long term plans - the direction of the
organisation and use of resources.

Tactical - middle management is responsible for implementing the strategic plans.

Operational management is concerned with the day to day problems of using resources to meet
specified targets.

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TYPES OF INFORMATION SYSTEMS: DIFFERENT WAYS TO SUPPORT
COMMUNICATI0N AND DECISION MAKING

The models of organisational management and the Information Systems

traditionally used to support the different levels of decision making referred
to in the earlier sections gave a view which doesn’t entirely reflect the
situation. The increasing complexity of large organisations coupled with the
availability of very powerful and low cost computing resources and
communication systems have encouraged changes in structures and
individual roles. In some instances management has been able to delegate
some of its decision making to a lower level of management in the
knowledge that the Information Systems available will provide the necessary
support for this lower level decision making. Such systems also provide
facilities to enable the higher level manager monitor the work of his
subordinates and therefore allow him to delegate with confidence.
One significant development has been the recognition that there is now
another layer in the organisational pyramid which is between middle
(tactical) management and operational management filled by Knowledge and
Data Workers. In many ways this change has been driven by the availability
of the technology. Knowledge - Level systems, particularly in the form of
workstations and office systems, have developed to support these workers in
their roles of integrating new knowledge into the business and helping
control the flow of paperwork.

Senior

Strategic

Tactica Middle

Knowledge Knowledge and Data

Level
Operational
Operational

Figure 1.5

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The other significant changes have been the downsizing and ‘flattening’ of
management structures combined with the blurring the interfaces between
the different levels of organisational management. Boundaries are less rigid
and more people have management roles. These changes are a consequence
of both business philosophy and technological development. Systems which
at one time had a narrow management focus now provide access to and
support for a wider range of decision making situations and monitoring
facilities which allow senior managers to supervise the activities of their
subordinates. System categories are no longer mutually exclusive and often
overlap and will change as applications combine new capabilities with
old ones.
This ‘new’ situation is reflected in figure 1.6 as is the general increase in
technological support for the business. Electronic communication systems
have also had a major impact in the way that many businesses operate.

EIS Executive
Managers
DSS

Middle
Managers
MIS
Expert
Office Systems Supervisors
Automation Technical &
Professional
Transaction Workers
Communication
(or Data)
Systems Clerical
Processing Systems
workers

Figure 1.6 Typical Information Systems Applications

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SEVEN MAJOR TYPES OF SYSTEMS
In addition to the four types of systems identified earlier - viz.
Transaction Processing Systems, Management Information
Systems (Reporting Systems, and Enquiry Processing
Systems), and Decision Support Systems, we must now add
Knowledge Work Systems, Office Automation Systems,
Communication Systems and Executive Information Systems
(also called Executive Support Systems).

Executive Information Systems

An executive information system (EIS) is a highly interactive MIS system
providing managers and executives flexible access to information for
monitoring operating results and general business conditions. Sometimes
called executive support systems (ESS), these systems attempt to take
over where the traditional MIS approach falls short. Although sometimes
acceptable for monitoring the same indicators over time, the traditional
MIS approach of providing prespecified reports on a scheduled basis is
too inflexible for many questions executives really care about, such as
understanding problems and new situations.
An EIS provides executives with internal and competitive information
through user-friendly interfaces that can be used by someone with almost
no computer-related knowledge. The EIS is designed to help executives
find the information they need whenever they need it and in whatever
form is most useful. Typically, users can choose. among numerous
tabular or graphical formats. They can also control the level of detail that
triggers for exception conditions, and other aspects of the information
displayed. Most EIS focus on providing executives with the status and
performance information they need, as well as helping them understand
the causes of exceptions and surprises This leaves executives better
prepared to discuss issues with their subordinates.
In a typical sequence of an EIS user starts with a menu listing available
types of information, such as sales results, manufacturing results,
competitive performance, and e-mail messages. The categories are
customized for individual executives. The user selects a category from the
menu and receives an additional menu identifying available subcategories
plus the specific online reports that can be obtained. Often, the executive
can customize these reports by choosing options such as selecting a
subset of the data, sorting, or providing more detail. For example, while
looking at last month's sales results, a user might select the products
with less than 2 percent improvement in volume, sort these sales
branches from highest to lowest percentage improvement, and obtain
more detail for these branches by looking at results for individual
departments within these branches. In addition, users can generate
graphical displays such as trend charts and pie charts to make it easier
to visualize
For an EIS to operate, technical staff members must ensure that the right
data are available and are downloaded to the EIS from other systems in a
timely manner. The data in EIS are usually replenished periodically from

14
internal company databases and external databases. Although technical
advances in data display and networking capabilities have made EIS
much easier to maintain, EIS continually modified to keep up with
current business issues still require major efforts and substantial
technical maintenance. Even when commercial EIS software is used, the
time and effort to customize and maintain an EIS limits use to high-level
managers. Ideally, the flexibility and ease of access built into EIS should
also be built into other systems. Ten years ago, it was much more
expensive to provide EIS capabilities to executives. Ten years from now,
the interfaces in systems at all organizational levels may mimic or exceed
those in today's EIS. This can be seen in the way some EIS consultants
are starting to replace the word executive with the word enterprise, saying
that EIS now stands for enterprise information system.

Offlce Automation Systems: Supporting General Offlce Work An office

automation system (OAS) facilitates everyday information processing
tasks in offices and business organizations. These systems include a wide
range of tools, including spreadsheets, word processors, and presentation
packages. Although telephones, e-mail, v-mail, and fax can be included in
this category, we will treat communication systems as a separate
category.
OAS help people perform personal record keeping, writing, and
calculation chores efficiently. Of all the system types, OAS and
communication systems are the most familiar. Tools generally grouped
within the OAS category include:

Spreadsheets are an efficient method for performing calculations that

can be visualized in terms of the cells of a spreadsheet. Although
spreadsheet programs seem second nature today, the first spreadsheet
program was VisiCalc, which helped create the demand for the first
personal computers in the late 1970s.
Text or image processing systems. These systems started with simple
word processors but have evolved to include desktop publishing systems
for creating complex documents ranging from brochures to book chapters.
Presentation packages help managers develop presentations
independently instead of working with typists and technical artists. These
products automatically convert outlines into printed pages containing
appropriately spaced titles and subtitles.
Personal Database Systems help individuals keep track of their own
personal data (rather than the organisation’s shared data). Typical
applications include an appointments book and calendar, a to-do list, and
a notepad.

Electronic communication systems

These systems have changed the way many businesses operate. Systems
include both group communication systems and systems for transmitting
individual messages and documents.
Applications include:
Teleconferencing, Audioconferencing, Computer conferencing,

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Videoconferencing, E-Mail, Voice Mail and Fax.

16
Knowledge work systems (KWS) and office automation systems (OAS)
serve the information needs at the knowledge level of the organization.
Knowledge work systems aid knowledge workers, whereas office
automation systems primarily aid data workers although they are also
used extensively by knowledge workers.
In general, knowledge workers are people who hold formal university
degrees and who are often members of a recognized profession, like
engineers, doctors, lawyers, and, scientists. Their jobs consist primarily of
creating new information and knowledge. Knowledge work systems (KWS),
such as scientific or engineering design workstations, promote the
creation of new knowledge and ensure that new knowledge and technical
expertise are properly integrated into the business. One example of a KWS
is the computer-aided design system.
Data workers typically have less formal, advanced educational degrees
and tend to process rather than create information. They consist
primarily of secretaries, accountants, filing clerks, or managers whose
jobs are principally to use, manipulate, or disseminate information. Office
automation systems (OAS) are information technology applications
designed to increase the productivity of data workers in the office by
supporting the coordinating and communicating activities of the typical
office. Office automation systems coordinate diverse information workers,
geographic units, and functional areas: The systems communicate with
customers, suppliers, and other organizations outside the firm and serve
as a clearinghouse for information and knowledge flows.
Typical office automation systems handle and manage documents (through word
processing, desktop publishing, and digital filing), scheduling (through electronic cal-
endars), and communication (through electronic mail, voice mail, or videoconferencing).

17
Typical Ways Each Type of Information System Supports Communication and Decision Making
System Type Typical User Impact on Communication Impact on Decision Making
Office automation system: Anyone who stores personal data,  Provides tools for creating  Provides spreadsheets and other
Provides individuals effective ways creates documents, or performs documents and presentations, such as tools for analysing information
to process personal and calculations word processors and presentation  Communication tools also help in
organisational business data, systems implementing decisions
perform calculations, and create
documents
Communication system: Helps Anyone who communicates with  Telephones and teleconferencing  Telephones and teleconferencing
people work together by sharing others, including office workers, for inactive communication for decision making
information in many different forms managers, and professionals  E-mail, v-mail, and fax, for  E-mail, v-mail, fax, and other tools
communicating using messages and for obtaining information
documents
Transaction processing system People whose work involves  Creates a database that can be  Gives immediate feedback on decision
(TPS): Collects and stores performing transactions accessed directly, thereby making made while processing transactions
information about transactions; some person-to-person  Provides information for planning and
controls some aspects of transactions communication unnecessary management decisions
Management information system Managers and people who receive  Provides a basic of facts rather than  Provides summary information and
(MIS): Converts TPS data into feedback about their work opinions for explaining problems and measures of performance for monitoring
information for monitoring their solutions results
performance and managing an
organisation
Executive information system Executives and high-level  Same as MIS but also incorporates  Provides easy ways to analyse the
(EIS): Provides executives managers e-mail and other communication types of information provided in
information in a readily accessible methods less flexible form by MIS
interactive format
Decision support system (DSS): Analysts, managers, and other  Analysis using DSS help provide a  Provides tools for analysing data
Helps people make decisions by professionals clear rationale for explaining a and building models
providing information, models, or decision  Analysis using a DSS helps define
analysis tools and evaluate alternatives
Knowledge system: Director People who do an organisation’s  May support communication or  May provide tools, information, or
supports the organization’s value- value-added work, especially if that information sharing between people structured methods for making
added work. (For example, helps work involves special skills or doing different parts of the task decisions
salespeople sell, doctors practice knowledge  May help explain the result of the  May store and provide expert
medicine, or architects design task to customers knowledge to support decisions in
buildings) specific areas

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Examples of Each Type of Information System in Three Functional Areas of Business

System Type Sales Examples Manufacturing Examples Finance Examples

Office automation systems  Spreadsheet to analyse different  Spreadsheet to analyse a production  Spreadsheet to compare several
possible prices schedule loan arrangements
 Word processor to create sales  Word processor to write a memo  Word processor to write a memo
contract about how to fix a machine about new financial procedures
Communication systems  E-mail and fax used to contact  E-mail and v-mail used to discuss a  V-mail and fax to communicate
customer problem with a new machine with bank about loan arrangements
 Videoconference to present new  Videoconference to coordinate  Videoconference to explain effect
sales materials to sales force manufacturing and sales efforts of financing on factory investments
Transaction processing system  Point-of-sale system for sales  Tracking movement of work in  Processing of credit card payments
(TPS) transactions process in a factory  Payment of stock dividends and
 Keeping trace of customer contacts  Tracking receipt of materials from bond interest
during a sales cycle suppliers
Management information  Weekly sales report by product  Weekly production report by  Receivables report showing invoices
system (MIS) and region production and operation and payment
 Consolidation of sales projections  Determination of planned purchases  Monthly financial plan
by product and region based on a production schedule consolidation
Executive information system Flexible access to sales data by  Flexible access to production data by  Flexible access to corporate
(EIS) product and region product and operation financial plan by line item
Decision support systems  System helping insurance sales  System displaying current priroities  System analysing characteristics of
(DSS) people test alternatives of machine operator customers who pay bills promptly
 Marketing data and models to  Production data and models to  Stock database and models to help
analyse sales analyse production results in selecting stocks to buy or sell
Knowledge Work systems  System to generate competitive  System to diagnose machine failures  System to support a loan approval
bids  System to transfer customer process
 System to help salespeople suggest requirements to an automated  System to find price inconsistencies
the best choice for the customer machine cell between different equity markets

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WHAT IS A STRATEGIC INFORMATION SYSTEM AS OPPOSED TO A
STRATEGIC LEVEL SYSTEM?
In the last few decades there has been a revolution in the way that we all treat
information and information systems. Today, leading companies are using information
and information systems as tools for staying ahead of competitors. Organisations have
developed a special category of information systems called strategic information systems
for this purpose.
Strategic information systems change the goals, operations, products, services,
or environmental relationships of organisations to help them gain an edge over
competitors. Systems that have these effects may even change the business of
organisations. Merrill Lynch, for instance, used information systems to change
from the stock brokerage business to the financial services business. In the
1980s, State Street Bank and Trust Co. of Boston transformed its core business
from traditional banking services, such as customer checking and savings
accounts and loans, to electronic recordkeeping, providing data processing
services for securities and mutual funds. Now it is moving beyond
computerised recordkeeping into a broad array of financial information
services, including a monitoring service that allows pension funds to keep better
tabs on their money managers.
Strategic information systems often change the organisations well as its prod-
ucts, services, and internal procedures, driving the organisation into new
behavior patterns. Organisations may need to change their internal operations
to take advantage of the new information systems technology. Such changes
often require new managers, a new work force, and a much closer relationship
with customers and suppliers.

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