TYPES OF INFORMATION SYSTEMS

An information system is a collection of hardware, software, data, people and procedures that are
designed to generate information that supports the day-to-day, short-range, and long-range activities of
users in an organization. Information systems generally are classified into five categories: office
information systems, transaction processing systems, management information systems, decision support
systems, and expert systems. The following sections present each of these information systems.

1. Office Information Systems

An office information system, or OIS (pronounced oh-eye-ess), is an information system that uses
hardware, software and networks to enhance work flow and facilitate communications among
employees. Win an office information system, also described as office automation; employees perform
tasks electronically using computers and other electronic devices, instead of manually. With an office
information system, for example, a registration department might post the class schedule on the Internet
and e-mail students when the schedule is updated. In a manual system, the registration department would
photocopy the schedule and mail it to each student’s house.

An office information system supports a range of business office activities such as creating and
distributing graphics and/or documents, sending messages, scheduling, and accounting. All levels of
users from executive management to non-management employees utilize and benefit from the features of
an OIS.

The software an office information system uses to support these activities include word processing,
spreadsheets, databases, presentation graphics, e-mail, Web browsers, Web page authoring, personal
information management, and groupware. Office information systems use communications technology
such as voice mail, facsimile (fax), videoconferencing, and electronic data interchange (EDI) for the
electronic exchange of text, graphics, audio, and video. An office information system also uses a variety
of hardware, including computers equipped with modems, video cameras, speakers, and microphones;
scanners; and fax machines.

2. Transaction Processing Systems

A transaction processing system (TPS) is an information system that captures and processes data
generated during an organization’s day-to-day transactions. A transaction is a business activity such as a
deposit, payment, order or reservation.

Clerical staff typically perform the activities associated with transaction processing, which include the
following:

1. Recording a business activity such as a student’s registration, a customer’s order, an

employee’s timecard or a client’s payment.

2. Confirming an action or triggering a response, such as printing a student’s schedule, sending

a thank-you note to a customer, generating an employee’s paycheck or issuing a receipt to a
client.

3. Maintaining data, which involves adding new data, changing existing data, or removing
unwanted data.
Transaction processing systems were among the first computerized systems developed to process business
data – a function originally called data processing. Usually, the TPS computerized an existing manual
system to allow for faster processing, reduced clerical costs and improved customer service.

The first transaction processing systems usually used batch processing. With batch processing,
transaction data is collected over a period of time and all transactions are processed later, as a group. As
computers became more powerful, system developers built online transaction processing
systems. With online transaction processing (OLTP) the computer processes transactions as they are
entered. When you register for classes, your school probably uses OLTP. The registration administrative
assistant enters your desired schedule and the computer immediately prints your statement of classes. The
invoices, however, often are printed using batch processing, meaning all student invoices are printed and
mailed at a later date.

Today, most transaction processing systems use online transaction processing. Some routine processing
tasks such as calculating paychecks or printing invoices, however, are performed more effectively on a
batch basis. For these activities, many organizations still use batch processing techniques.

3. Management Information Systems

While computers were ideal for routine transaction processing, managers soon realized that the
computers’ capability of performing rapid calculations and data comparisons could produce meaningful
information for management. Management information systems thus evolved out of transaction
processing systems. A management information system, or MIS (pronounced em-eye-ess), is an
information system that generates accurate, timely and organized information so managers and other users
can make decisions, solve problems, supervise activities, and track progress. Because it generates reports
on a regular basis, a management information system sometimes is called a management reporting
system (MRS).

Management information systems often are integrated with transaction processing systems. To process a
sales order, for example, the transaction processing system records the sale, updates the customer’s
account balance, and makes a deduction from inventory. Using this information, the related management
information system can produce reports that recap daily sales activities; list customers with past due
account balances; graph slow or fast selling products; and highlight inventory items that need
reordering. A management information system focuses on generating information that management and
other users need to perform their jobs.

An MIS generates three basic types of information: detailed, summary and exception. Detailed
information typically confirms transaction processing activities. A Detailed Order Report is an example
of a detail report. Summary information consolidates data into a format that an individual can review
quickly and easily. To help synopsize information, a summary report typically contains totals, tables, or
graphs. An Inventory Summary Report is an example of a summary report.

Exception information filters data to report information that is outside of a normal condition. These
conditions, called the exception criteria, define the range of what is considered normal activity or
status. An example of an exception report is an Inventory Exception Report is an Inventory Exception
Report that notifies the purchasing department of items it needs to reorder. Exception reports help
managers save time because they do not have to search through a detailed report for exceptions. Instead,
an exception report brings exceptions to the manager’s attention in an easily identifiable form. Exception
reports thus help them focus on situations that require immediate decisions or actions.
4. Decision Support Systems

Transaction processing and management information systems provide information on a regular

basis. Frequently, however, users need information not provided in these reports to help them make
decisions. A sales manager, for example, might need to determine how high to set yearly sales quotas
based on increased sales and lowered product costs. Decision support systems help provide information
to support such decisions.

A decision support system (DSS) is an information system designed to help users reach a decision when
a decision-making situation arises. A variety of DSSs exist to help with a range of decisions.

A decision support system uses data from internal and/or external sources.

Internal sources of data might include sales, manufacturing, inventory, or financial data from an
organization’s database. Data from external sources could include interest rates, population trends, and
costs of new housing construction or raw material pricing. Users of a DSS, often managers, can
manipulate the data used in the DSS to help with decisions.

Some decision support systems include query language, statistical analysis capabilities, spreadsheets, and
graphics that help you extract data and evaluate the results. Some decision support systems also include
capabilities that allow you to create a model of the factors affecting a decision. A simple model for
determining the best product price, for example, would include factors for the expected sales volume at
each price level. With the model, you can ask what-if questions by changing one or more of the factors
and viewing the projected results. Many people use application software packages to perform DSS
functions. Using spreadsheet software, for example, you can complete simple modeling tasks or what-if
scenarios.

5. Executive Information Systems

Executive Information Systems are strategic-level information systems that are found at the top of the
Pyramid. They help executives and senior managers analyze the environment in which the organization
operates, to identify long-term trends, and to plan appropriate courses of action. The information in such
systems is often weakly structured and comes from both internal and external sources. Executive
Information System are designed to be operated directly by executives without the need for intermediaries
and easily tailored to the preferences of the individual using them.

EIS organizes and presents data and information from both external data sources and internal MIS or TPS
in order to support and extend the inherent capabilities of senior executives.

The role of EIS

• 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