Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

Module-2 (7 Hours) Kinds of Information System

Concepts: Transaction Processing System (TPS) - Office Automation System (OAS) -
Management Information System (MIS) - Decision Support System (DSS) and Group
Decision Support System (GDSS) - Expert System (ES) - Executive Support System (EIS
or ESS), Ethical Issues in Information systems.

Transaction Processing System

• TPS is designed to handle a transaction between parties. The parties could be two or
more and have a designated role in TPS.
• TPS uses data fi les, master fi les, transaction records and processes the data in a manner
specified in the transaction process designed to execute the transaction.
• TPS output is a transaction and updating the various other records based on the result
processed as a part of the transaction execution.

Office Automation System

An office automation system is essentially a collection of software and hardware tools that work
together to automate repetitive, manual tasks in an office environment. It's like having a robot
assistant that takes care of all the tedious stuff, freeing you up to focus on more strategic and
creative work.

Dr. Pranav U, Dept. of MBA, AIT 1

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

What it does:

• Automates tasks: Think data entry, scheduling meetings, sending invoices, sending email
reminders, generating reports, managing documents, and even controlling office lighting
and temperature.

• Manages data and workflows: Stores information electronically, keeps track of

processes, and ensures smooth flow of data between different systems and teams.

• Boosts communication and collaboration: Provides tools for video conferencing, instant
messaging, file sharing, and project management, making it easier for everyone to stay
connected and on the same page.

• Improves efficiency and productivity: By eliminating manual tasks and streamlining

workflows, office automation saves time, reduces errors, and helps employees get more
done in less time.

The benefits:

• Increased productivity and efficiency: Say goodbye to repetitive tasks and hello to a
smoother, faster workflow.

• Improved accuracy and reduced errors: Automation minimizes human error in data entry
and other manual processes.

• Cost savings: By eliminating unnecessary tasks and paperwork, you can save on resources
and manpower.

• Enhanced employee satisfaction: Freed from tedious work, employees can focus on
more challenging and rewarding tasks, leading to increased job satisfaction.

• Better decision-making: Access to real-time data and analytical tools allows for data-
driven decisions.

Examples of office automation systems:

• Email software like Gmail and Outlook

• Document management systems like Google Drive and Dropbox

• Project management tools like Asana and Trello

• Communication platforms like Slack and Microsoft Teams

• Customer relationship management (CRM) systems like Salesforce and HubSpot

• Workflow automation tools like Zapier and IFTTT

Dr. Pranav U, Dept. of MBA, AIT 2

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

Management Information System

• The MIS is an arrangement of data processing and information systems in an orderly

manner to support the management in achieving the business objectives. The MIS
boundaries cross the limits of the organisation and draw the data from the sources external
to the organisation.
• MIS follows a generalised model of a system as stipulated in the theory and performs on
the principle of feedback and control. It works on the principle of control by exception.
• MIS is designed to provide the information which is exceptional in nature from the point
of view of business. The exceptions could be abnormal events, surprising developments,
shocking news, or something that was not consistent with the expectations. The MIS must
catch all such points and report them to the concerned management.
• By nature, the MIS is an open system interfacing continuously with the internal and the
external environment and is self-organising to meet the ever increasing and changing
information needs of the organisation. This is made possible by organising the MIS in a
hierarchical structure.
• It is subdivided into smaller subsystems. The breaking up of the system into smaller
subsystems is for understanding and determining the boundaries, and for setting the
objectives. It also aids in chalking out the developmental path of the MIS. The complexity
of the MIS is handled by simplifying the subsystem structure and decoupling the two
subsystem clusters.
• The elements of the MIS are the computer hardware, the communication channels, the
software and the software tool, the development plan and a well defi ned measurable
objective of the MIS consistent to the business objectives of the organisation.

Dr. Pranav U, Dept. of MBA, AIT 3

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

Decision Support System

• Decision Support Systems are an application of Herbert Simon Model - the model has
three phases, viz. Intelligence, Design and Choice.
• The decision support system basically helps the information system in the intelligence
phase where the objective is to identify the problem and then go to the design phase for
solution. The choice of selection criterion varies from problem to problem. It is, therefore,
required to go through these phases again and again till a satisfactory solution is found.
• The decision support system helps in deciding and in its performance evaluation. These
systems can be used to validate the decision by performing sensitivity analysis on various
parameters of the problem.
• The decision support system refers to a class of system which support in the process of
decision making and does not always give a decision itself. The nature of the decision is
such that the decision makers need a variety of information, when same or similar types of
decisions are to be made.

Kinds of Decision Support System

• Status Inquiry Systems

The number of decisions in the operational management and some at the middle
management are such that they are based on one or two aspects of a decision-making
situation. It does not call for any elaborate computations, analysis, choice, etc. for decision-
making. If the status is known, the decision is automatic, i.e., the status and solution is
unique relation.
• Data Analysis Systems
These decision systems are based on comparative analysis, and use of a formula or an
algorithm. But these processes are not structured and, therefore, vary. The cashflow
analysis, the inventory analysis and the personal inventory systems are examples of the
analysis systems. The use of simple data processing tools and business rules are required
to develop this system.
• Information Analysis Systems
In this system, the data is analysed, and information reports are generated. The reports
might be having exceptions as a feature. The decision makers use these reports for
assessment of the situation for decision-making. The sales analysis, the accounts receivable
systems, the market research analysis, the MRP systems are examples of this system.
• Accounting Systems
These systems are not necessarily for decision-making, but they are desirable to keep track
of the major aspects of the business or a function. The contents of these systems are more
data processing leading to formal reporting, with exceptions, if necessary. These systems
account items such as cash, inventory, personnel and so on and relate it to a norm or norms
developed by the management, for control and decision.
• Model Based Systems
These systems are simulation models or optimisation models for decision making. These
decisions, generally, are one time and infrequent and provide general guidelines for

Dr. Pranav U, Dept. of MBA, AIT 4

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

operation or management. The product mix decision, the material mix, the job scheduling
rules, and the resource or asset or facilities planning system are the examples.

Example: Materials Management function and the variety of the decision and the type of systems used therein to
support and evaluate the decision

Some more facts about decision support systems are,

• The decision support systems are developed by the users and system analysts jointly.
• The decision support system uses the principles of economics, science, and engineering,
and the tools and techniques of management.
• The data used in the decision support system is drawn from the information systems
developed in the company.
• The decision support systems are developed in isolation and form an independent system
subset of the management information system.
• The most common use of the decision support system is to test the decision alternatives
and to test the sensitivity of the result to the change in the system and assumptions.
• The data and information for the decision support system are used from the internal
sources such as the database and the conventional fi les, and from the external sources.

Types of DSS

• Behavioural Models
These models are useful in understanding the behaviour amongst the business variables. The
decision maker can then make decisions giving due regard to such behavioural relationships. The
trend analysis, forecasting, and the statistical analysis models belong to this category.

The trend analysis indicates how different variables behave in trend setting in the past and hence
in the future. A regression model shows the correlation between one or more variables. It also

Dr. Pranav U, Dept. of MBA, AIT 5

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

helps in identifying the influence of one variable on the other. These types of models are largely
used in process control, manufacturing, agricultural sciences, medicines, psychology, and
marketing. The behavioural analysis can be used to set the points for alert, alarm and action for
the decision maker.

• Management Science Models

These models are developed on the principles of business management, accounting, and
econometrics. In many areas of management, the proven methods of management control are
available which can be used for the management decision. For example, the budgetary systems,
the cost accounting systems, the system of capital budgeting for better return on the investment,
the ABC analysis, the control of inventory through the maximum-minimum levels, the MRP
systems, etc., are the examples of the use of the management science in the materials management.
Some of these models can be used straight away in the design of the decision support system.
While some others require the use of management principles and practices, most of the procedure
based decision-making models belong to this category.

• Operations Research (OR) Models

The Operations Research (OR) models are mathematical models. These models represent a real-
life problem situation in terms of the variables, constants and parameters expressed in algebraic
equations. Since, the models are mathematical, there are solutions to these problems.

In arriving the solution, methods of calculus, matrix algebra, probability, and set theory are used.
These models have a clarity to the extent that each of them has a set of assumptions which must
be true in real life. Further, if the assumptions are valid, the solutions offered are realistic and
practical, the model represents the real-life problem situations.

The OR models address themselves to the resource usage optimisation, by balancing two or more
aspects of the decision situation. The efforts are made to find the optimum solution. In
manufacturing business, the maximisation of profit with an appropriate product mix, within the
capacity and the market constraint, is a common problem. The allocation of an inventory to the
various destinations with the least transportation costs is another well-known problem. The
minimisation of capital blocked in the inventory and simultaneously meeting the market demand,
or the production requirement is also a problem constantly met with.

Some problems do not precisely fall in the category of the standard OR models. In such cases, the
problems are solved by using a simulation approach. This approach uses a random occurrence of
many events, determines the status of the system, and evaluates its cost of operations.

Group Decision Support System

GDSS is “an interactive computer-based system to facilitate the solution of semi-structured or

unstructured tasks undertaken by a group and its leader. GDSS provides the hardware, software,
databases, and procedures for effective decision-making. It has computing, communication, and
storage capabilities. A rule based procedural task like loan processing is a structured task. Drafting

Dr. Pranav U, Dept. of MBA, AIT 6

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

and signing a legal contract is unstructured as contents of the contract vary with the requirement
of the contract, legal and other.

The goal of GDSSs is to improve the productivity of decision makers, either by speeding up the
decision-making process or by improving the quality of the resulting decisions, or both. This is
accomplished by providing the support for the exchange of ideas, opinions, and preferences within
the group.

The GDSS accommodates users with varying levels of knowledge regarding computing and
decision support. It can be designed for one type of problem which is handled by the group. It
facilitates and encourages generation of ideas, resolution of conflicts, and communication in the
group making the group more cohesive and collaborative.

Groupware is the hardware, software platform of GDSS which supports group work. Groupware
applications make group members more efficient and smarter in decision-making. Groupware and
GDSS have the following features and service capabilities:

• Supports parallel processing of information

• Empowers group members to participate in the meeting with more complete information
• Permits the group or individual members to use tools, techniques, or models of decision-
making of their choice
• Offers rapid and easy access to external information
• Allows computer-based discussion like oral discussions
• Produces instant, anonymous voting results
• Enables several users to interact simultaneously
• Automatically records all information that passes through the system for future
• analysis
• Develops organisation memory for subsequent use by all

There is a lot of similarity between DSS and GDSS. It mainly differs in one thing i.e., DSS is for
individual decision maker and GDSS is for the group, formal or informal. Otherwise, they are
similar in capabilities such as:

• Use models, programs, algorithms stored for use

Dr. Pranav U, Dept. of MBA, AIT 7

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

• Use interactive “what-if” capabilities

• Use internal and external data in secured conditions
• Graphical output like score card or dashboard
• Can communicate to any body
• Uses business analytics for prediction and decision-making
• Can handle AI-based expert systems

Expert Systems

Expert systems are computerised application systems driven by ‘Artificial Intelligence’. It stores
human intelligence made from expert’s experience, knowledge, and model of solving the problem.
Expert system includes a knowledge base containing various accumulated experience and a set of
rules for applying the knowledge to each situation.

Expert systems attempt to use AI in solving specific problem. Expert systems using AI relieves
experts from advisory work and permit non experts to work better independently on expert
systems.

At their core, expert systems act as digital consultants, leveraging a knowledge base containing
domain-specific facts, rules, and heuristics gleaned from human experts. This knowledge base fuels
the inference engine, the brain of the system, which utilizes various reasoning strategies (forward
chaining, backward chaining) to analyse user input and navigate the knowledge base, culminating
in diagnoses, recommendations, or solutions. This process mimics the intuitive leaps and mental
pathways employed by human experts as they tackle complex problems.

The architecture of an expert system typically revolves around three key components:

• Knowledge Acquisition: Techniques like interviews, data mining, and case studies are
employed to populate the knowledge base with the valuable insights of human experts.

• Knowledge Representation: Facts, rules, and relationships are encoded in a structured

format, employing methods like semantic networks, frames, or production rules.

• Reasoning and Inference: The inference engine, guided by the knowledge base and user
input, utilizes logical deduction, pattern matching, and other reasoning techniques to
arrive at solutions.

The impact of expert systems transcends mere automation. They bring invaluable benefits to
diverse fields, such as:

• Enhanced Decision-Making: By providing access to a vast repository of expert knowledge

and logic, these systems support informed decision-making in high-stakes domains like
medicine, finance, and engineering.

Dr. Pranav U, Dept. of MBA, AIT 8

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

• Improved Efficiency and Productivity: Repetitive tasks, like data analysis or preliminary
diagnoses, are readily handled by expert systems, freeing human experts to focus on
higher-level tasks.

• Democratization of Expertise: Expert systems make sophisticated knowledge and

reasoning accessible to non-experts, enabling more informed user-driven decisions.

• Knowledge Preservation and Dissemination: The codified knowledge within expert

systems ensures the valuable insights of seasoned professionals are readily preserved and
transmitted to future generations.

Some applications of Expert Systems include

• Generating project proposals (Expert Systems): It is a task which requires knowledge

of Project strategy, Project management, Project evaluation and estimation, Team building
and application of PM tools and technologies. This is available with several experts in the
organisation. An expert’s knowledge base is built for users to access it and solve the
problem of generating the project proposals.
• Selecting transport routes (Expert System): This is a classic problem in OR and
application of OR models. Being a OR model, it has its own limitations to give the best
solution. Expert system will improve this solution by linking the factors which the OR
model has not considered.
• Performance evaluation (Expert Systems): To judge the performance of a product or
a manager, requires are assessment of facts about the achievement and the resources
consumed. The performance evaluation is about output and outcome, i.e., efficiency and
effectiveness. While facts will reveal quantitative aspects of achievement, its effectiveness
can be judged by experts only. The performance evaluation and determination are an
application of explicit knowledge generated through the evaluation system and tacit
knowledge contributed by the expert.
• Requirements planning (Expert Systems): Requirements’ planning is an important
management function in all businesses. Be it manufacturing, services, software
development, construction and all kinds of project situations, requirements planning is the
beginning of the task. Requirements planning has two components: Requirements analysis
for assessing the requirement and requirements management to deliver it. Requirements
are the best when experts and knowledge base created by them is available to the planner.

It is crucial to acknowledge that expert systems are not replacements for human judgment, but
rather potent augmentation tools. Their accuracy and effectiveness remain contingent on the
quality and comprehensiveness of the underlying knowledge base. Additionally, ethical
considerations, such as potential biases in the encoded knowledge, must be carefully addressed.

In conclusion, expert systems represent a powerful branch of AI, offering a compelling vision for
capturing and leveraging human expertise to empower informed decision-making across diverse
domains. As their capabilities continue to evolve, they hold the potential to reshape the way we
approach complex problems and navigate the ever-growing intricacies of our knowledge-driven
world.

Dr. Pranav U, Dept. of MBA, AIT 9

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

Executive Support System

Executive Support Systems (ESS) supply the necessary tools to senior management. The decisions
at this level of the company are usually never structured and could be described as “educated
guesses.” Executives rely as much, if not more so, on external data than they do on data internal
to their organization. Decisions must be made in the context of the world outside the organization.
The problems and situations senior executives face are very fluid, always changing, so the system
must be flexible and easy to manipulate.

The Role of ESS in the Organization

Executives often face information overload and must be able to separate the chaff from the wheat
to make the right decision. On the other hand, if the information they have is not detailed enough
they may not be able to make the best decision. An ESS can supply the summarized information
executives need and yet provide the opportunity to drill down to more detail if necessary.

As technology advances, ESS can link data from various sources both internal and external to
provide the amount and kind of information executives find useful. As common software
programs include more options and executives gain experience using these programs, they’re
turning to them as an easy way to manipulate information. Many executives are also turning to the
Web to provide the flexibility they need.

The Nature of Executive’s Work

We now know the basics of ESS. It is essential to know the nature of work performed by
executives for which they require not a DSS but ESS. This is highly required to design a suitable
ESS system. Basically, manager’s role is divided into three categories:

• Interpersonal Role: Roles like figurehead, leader, and liaison

• Informational Roles: Roles of monitor, disseminator, spokesperson
• Decisional Roles: Entrepreneur, disturbance handler, resource alligator, negotiator.

Most of the ESS support all these roles for executive’s successful working. The work of executives
is divided in relation to the decision roles into 2 phases. Phase 1 is the identification of problems
or opportunities. Phase 2 is the decision of what to do about it.

Functional units like finance, production, accounting, and personnel, etc. generate the internal
information. The external information comes from the sources such as online databases,
newspaper, industry newsletters, government reports, personal contacts, etc. The collected
information is then checked and verified for its correction that is it is evaluated for the further use
of the organization. Finally, the evaluated information is sent for qualitative or quantitative analysis.
Then the executive decides whether an opportunity occurs, or problem occurs. If there is a
problem, then information is given as an input for the next step else it is again scanned for further
evaluation. Finally, the executives take the decision.

Dr. Pranav U, Dept. of MBA, AIT 10

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

Advantages and disadvantages of ESS

As more executives come up through the ranks, they are more familiar with and rely more on
technology to assist them with their jobs. Executive Support Systems don’t provide executives
with ready-made decisions. They provide the information that helps them make their decisions.
Executives use that information, along with their experience, knowledge, education, and of the
corporation and the business environment, to make their decisions.

Executives are more inclined to want summarized data rather than detailed data (even though the
details must be available). ESS rely on graphic presentation of information because it’s a much
quicker way for busy executives to grasp summarized information. Because of the trend toward
flatter organizations with fewer layers of management, companies are employing ESS at lower
levels of the organization. This trend will probably continue as more managers become
knowledgeable about the power and flexibility of ESS.

Advantages of ESS

• Simple for high-level executives to use Operations do not require extensive computer
experience.
• Provides timely delivery of company summary information.
• Provides better understanding of information.
• Filters data for better time management.
• Provides system for improvement in information tracking.

Disadvantages of ESS

• Computer skills required to obtain results.

• Requires preparation and analysis time to get desired information.
• Detail oriented Provides detailed analysis of a situation.
• Difficult to quantify benefits of DSS, how do you quantify a better decision?
• Difficult to maintain database integrity.
• Provides only moderate support of external data and graphics capabilities.

Ethical Issues in Information System

Ethics is a study of the principles and practices, which guides to decide whether the action taken
is morally right or wrong. A well-defi ned and accepted code of conduct largely ensures the
obligation of ethical use of IT for competitive advantages and material progress.

When IT solution is thought and designed it is necessary to check whether it is legally tenable
along with technical, operational, and economic feasibility. Checking legal feasibility protects you
from violation or breach of law enacted for privacy protection, obligation to provide healthy,
hygienic, and congenial work atmosphere.

Respecting ethical values means making a beginning to protect generally accepted individual
human rights. The rights are:

Dr. Pranav U, Dept. of MBA, AIT 11

Module 2: Kinds of Information Systems 22MBA302 – IT for Managers

(a) The right to healthy life and work safety

(b) The right to privacy

(c) The right to private intellectual property (Information & Knowledge)

(d) The right to descent

(e) The right to fair treatment and no discrimination

(f) The right to be treated by just due process

Being ethical means making ethical choice of IT solution and be responsible, accountable, and
liable for action and consequences.

Technological solutions for privacy protection

Protecting the privacy of individual or organisation assumed critical importance on emergence of

Internet and web technology. As Internet and web enabled solutions became common, individual’s
risk of privacy exposure increased many folds. Some technology solutions are also available to
ensure such protection and obligation.

The data entered, processed, and sent through Internet passes through different computer systems
installed on network across the world. These systems can keep the record of this communication
traffic and can capture and store the communication with all connecting references and identities.
This activity of capturing data, monitoring its use, and storing happens at backend without the
knowledge of the user. If one can put these information sets together and analyse, it may reveal
personal data, and the behaviour traits of an individual.

It is a practice in web community to declare on site organisation’s privacy policy for visitors to
review. ‘Trustee’ seals back such publication. This seal is a stamp of confirmation that organisation
has agreed to adhere to established privacy principles of disclosure, choice, access, and security.
Such publications are also known as legal notice, disclaimer, and privacy policy.

If a visitor wants self-generated technical solutions to safeguard privacy of information, privacy

protection tools are available. The presence of cookies can be controlled using ‘Cookie Crusher’
tools, which come along with browser. Similarly, ‘Blocking ads’ tools control or block the ads,
which pop up based on visitor’s interest. Encryption technology helps scramble message or data
so that nobody can read and understand.

Dr. Pranav U, Dept. of MBA, AIT 12