INFORMATION TECHNOLOGY FOR BUSINESS

Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

Unit-2
Subsystems of Information System

Introduction:
 A subsystem of an information system is a self-contained, functional component within
the larger system that performs specific tasks or functions.
 These subsystems work together to support the overall objectives of the information
system.
 They can be designed to handle various aspects of data processing, such as data
storage, data retrieval, data analysis, user interfaces, and communication with external
systems.
 Subsystems are often organized based on their specialized roles and responsibilities,
contributing to the overall efficiency and effectiveness of the information system.

Subsystem:
 A sub System is simply a system. This means that a system exist on more than one
level and can be composed of sub systems or element parts.
 The system can contain several subsystems, all operating independently of each other.
 Subsystems manage resources. All jobs, with the exception of system jobs, run within
subsystems.

Following are the Sub Systems

1) Transaction Processing Systems (TPS)
2) Management Information System (MIS)
3) Decision Support Systems (DSS)
4) Group Decision Support System (GDSS)
5) Executive Information System (EIS)
6) Expert System (ES)

Transaction Processing Systems (TPS)

Introduction:
 A transaction is any event or activity that affects the organization which occur as part of
doing business, such as sales, purchases, deposit, withdrawals, refunds and payments.

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 INFORMATION TECHNOLOGY FOR BUSINESS
Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

 A TPS collects and stores information about transactions, and controls some aspects of
transactions.
A transaction processing system has three main purposes:
1. Keep records about the state of an organization,
2. Process transactions that affect these records and
3. Produce outputs that report on transactions that have occurred.

What is a Transaction Processing System (TPS)?

A transaction process system (TPS) is an information processing system for business
transactions involving the collection, modification and retrieval of all transaction data.

Examples of transaction processing systems (TPS):

1) ATM (Automated Teller Machines)
2) Online store
3) Order processing systems.
4) Buying through credit/debit card
5) Airline seat reservation system.
6) Bus/railway ticket reservation
7) Employee record-keeping

Features / characteristics of TPS:

1. Rapid response: Fast performance with rapid results. Transaction processing systems
are usually measured by the number of transactions they can process in a given period
of time.

2. Reliability: Well designed backup and recovery with a low failure rate.

3. Continuous Availability: The system must be available during the time period when
the users are entering transactions. Many organizations rely heavily on their TPS. A
breakdown will disrupt operations or even stop the business.

4. Data Integrity: The system must be able to handle hardware or software problems
without corrupting data. Multiple users must be protected from attempting to change
the same piece of data at the same time.

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 INFORMATION TECHNOLOGY FOR BUSINESS
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For example two operations cannot sell the same seat on an airplane.

5. Inflexibility: Treat every transaction equally. Every transaction must be processed in

the same way regardless of users or time.

6. Controlled processing: Maintain specific requirement for the roles and

responsibilities of different employees.

7. Ease of Use: Often users of transaction processing system are casual users. The system
should be simple for them to understand, protect them from data-entry errors as much
as possible, and allows them to easily correct their errors.

Transaction Processing System Functions:

Transaction processing systems perform input, output, storage, and processing functions.

 Input functions include capturing data on a source document, entering the input data into the
system, and checking input data for errors, a process called data validation

 Output functions include producing screen or paper reports, such as detail reports, summary
reports, and exception reports.

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Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

 Storage functions include storing data in files and databases, accessing stored data, sorting
stored data, and updating stored data.
 Processing functions involve the manipulation of data, including computation and decision
making

Advantages of transaction processing system (TPS)

Productivity:

By using TPS, the staff of the company increases their productivity. Also, customers get
more trust and satisfaction in the company.

Fast:

The transactions are carried out in fast time and there is no delay. The real-time transaction is
also a type of TPS in which no delay in time occurs.

Low cost:

As most of the work is carried out by TPS so less staff is needed to be hired.

Large data:

TPS can process a large amount of data. There are thousands of transactions done by the TPS
on daily basis.

Use anywhere:

TPS can be used anywhere you want. You can use it in organizations, stores, banks, schools
etc. Also, customers can do transactions online from anywhere.

Error recovery:

If some data is lost in the transaction, then it can be retrieved by the TPS. The system also
self-solves issues and errors are detected and removed by the system easily.

Easy to use:

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Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

Staff can easily use the TPS software and there is little or no training required to use the TPS
software. It is also user friendly.

Disadvantages of transaction processing system (TPS)

Setup cost:

The initial setup cost of TPS is high. You have to buy a license for TPS software. Also, you
need to buy computers, cameras and price detecting devices.

Incompatible:

Sometimes your software and hardware have compatibility problems. Some hardware has
drivers problems.

Overload problem:

Sometimes there occur a high number of transactions on the TPS so it slows down the system
or it stops working.

High internet:

Users need to have a high internet connection to use the TPS.

Standard format:

TPS lacks a standard format.

Role of Transaction Processing System (TPS) in decision making process:

 A TPS tracks routine operations but does not provide much support for decision
making.
 For example, in the case of a bank account, a TPS keeps track of all the events
associated with a single account: deposits, withdrawals, transfers, fees, interest paid,
etc. This provides a good description of the account activity.

Role of Transaction Processing System (TPS) in business are:

A transaction processing system (TPS) is the basic business system that serves the
operational level and assists in making structured decisions. It makes structured decisions
faster and more efficient to a business.

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Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

1. Records the daily routine transaction necessary to conduct business.

 TPS used by lower management to record hotel reservations, sales
order entry, employee record keeping and shipping.

2. TPS in payroll
 Payroll system keeps track of the money paid to employees. An employee time
sheet with the employee’s name, social security number, and number of hours
worked per week represents in a single transaction.

3. TPS help managers to monitor organization status

 Controlling status of internal operations such as sales and the firm’s relations with
the external environment.

4. Help combining data in different ways.

 Such as, combine data to create report of interest, sales of the day and send pay
checks to employees

Objectives of TPS
1) To serves the most elementary day-to-day activities of an organization
2) To support the operational level of the business
3) Supplies data for higher-level management decisions
4) Very often critical to survival of the organization
5) Mostly for predefined, structured tasks
6) To helps strategic consequences (e.g. airline reservation system)
7) It has high volumes of input and output
8) To provides data which is summarized into information by systems used by higher
levels of management
9) Need to be fault-tolerant.

Transaction Processing Cycle

Transaction processing systems are a cross-functional information system that process
data resulting from the occurrence of business transactions. And transactions are events
that occur as parts of doing business, such as purchases, deposit etc.

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 INFORMATION TECHNOLOGY FOR BUSINESS
Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

Transaction processing systems generally go through a five-stage cycle of:

1. Data entry
2. Transaction processing
3. File and database updating
4. Document and report generation
5. Inquiry processing

1) Data Entry:
1) The first step of the transaction processing cycle is the capture of business data.
2) In this process, data is captured, or collected by recording, coding and editing activities.
3) Data can be entered in three ways. These are manual data entry, semi-automated data
entry and fully automated data entry.
4) In manual data entry, a person called operator enters the data by hand
5) The problem with manual data entry is it is difficult to enter data quickly and accurately
into the computer. To overcome this problem, manual data entry is replaced by semi-
automated and automated data entry methods.
6) In semi-automated data entry, a data capturing device like bar code reader or scanner is
used to enter data with some human intervention.
For example: data can be collected by using optical scanning of barcodes.

2) Transaction Processing:
In transaction processing systems process data in two ways.
a) Batch processing and
b) Real-time or online processing

a. Batch processing: Where transaction data are accumulated over a period of time and
proceed periodically.

Example:
1. Cheque clearance involves checking that the person who wrote the cheque has
enough money in his/her account to cover the cheque.

2. Bill generation: organizations create a bill, or invoice, for goods or services that
have been supplied to a customer. They usually generate a group of bills at a
scheduled time and done as a group.

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Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

3. The printing of documents from the print queue is a batch process. The document is
written to a file before being printed at the printer.

b. Real-time processing (on time processing): Where data are processed immediately after
a transaction occurs.

For Example: Reservation system are used in many businesses to put aside a service or
product for a customer (Travel Agents)

Batch Processing Vs Real Time Processing

Sl. No. Batch Processing Real Time Processing

Batch processing involves collecting, Real-time processing is all about analyzing
1 storing, and processing data in groups data as soon as it arrives. There's no
or batches at specific intervals. waiting period or accumulation of data.
2 Processed periodically Immediately processed
3 Completion time is not critical. Completion time is critical.
4 It has lower cost per unit of data. It has higher cost per unit of data.
Examples: paying by cheque, Examples: bank ATM transactions,
transactions of credit card, generation customer services, radar system, weather
5
of bills, processing of input and output forecasts, temperature measurement etc.
in the operating system etc.

3) File and database processing:

 File and database processing are the basic activities of transaction processing
systems.
 These are also known as file and database maintenance. This term emphasizes that
an organizations files and databases must be maintained by its transaction processing
systems so that they are always correct and up to date.
 Transaction processing systems update and make changes to corporate databases,
which are then used to
a) Provide data needed to produce proper information products, and
b) Provide data needed for further processing by management information systems.

4) Document and Report Generation:

 Transaction processing system produced a variety of document and reports.
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 For example, purchases order payable register-etc.

5) Inquiry processing:
 Many transaction processing allows using Internet and web browsers or database
management query languages to make inquiries and receive responses concerning
the results of transaction processing activity.
 Responses are displayed in a variety of pre specified formats or screen.
 For example: Checking balance in an account and receive immediate response on
personal computer.

Importance of Transaction Processing System

 Transaction processing system (TPS) is an information system that processes data
arising from the occurrence of business transactions, supports day-to-day operations.
 These systems help any company to conduct operations and keep track of its activities.
 A transaction is any event or activity that affects the organization.
 Common transactions include the placing of orders, billing of customers, hiring of
employees, depositing of cheques etc.
 The types of transactions vary from organization to organization.
 But all firms have to process some type of transactions as a major part of their daily
business activities.
 Transaction processing is the set of procedures for handling the transactions.

The common activities include:

1. Calculation
2. Classification
3. Sorting
4. Storage
5. Summarization

TPS is able to perform one or more of the following operations:

1. Storing transaction data to create a file of transaction record
2. Sorting, sequencing or arranging records
3. Merging the contents of two or more files

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Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

4. Performing calculations on the file data

5. Accumulating amounts to develop summary total
6. Storing data for future use
7. Retrieving stored data
8. Displaying or printing out data and/or reports from files for use by employees and/or
managers.

Management Information Systems (MIS)

What is a management information system?
An MIS is a system that provides managers with the necessary information to make decisions
about an organization's operations. The MIS gathers data from various sources and processes
it to provide information tailored to the managers' and their staff's needs.

Need for MIS

 Business Driven: The purpose of MIS the organization and its stakeholders

 Management Oriented/Directed: information needs of the management

organizational objectives are achieved

 Flexibility and Ease of Use: The MIS is designed flexible enough to accommodate
new requirements. System is easy to operate so that not much computer skills are
required on the part of the user to access databases

 Common Databases: MIS stores transaction data for present and future uses.
Applications access this database for relevant data to process transaction or to generate
information. The system maintains general databases so that any functional subsystem
can access the database

 Integrated System: MIS views organization information needs from a systems point
of view. it blends together database of all subsystems of the business system and
through information interchange integrates the organization

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Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

 Avoids redundancies in Data Storage: avoids unnecessary duplication and

redundancy in data gathering and change

 Distributed System: Most organization have their offices sales outlets

 Heavy planning: Design and implementation of MIS require detailed and meticulous
planning of such activities as acquisition and deployment of hardware and software

Scope of MIS
The scopes of MIS are as follows:
1. To provide a variety of reports and displays to management.
2. To provide managerial end user with information products that supports much of their
day-to-day decision-making needs.
3. To provide information on the contents of the information products specified in
advance by managers.
4. To obtain data about the business environment from external sources so as to process
them to serve the managers in a better way.

Objectives of MIS
The objectives of MIS are as follows
1) To provide requisite information support for managerial functions within the
organization.
2) To make available, right information at the right place at the right time at the lowest
cost.
3) To ensure that wrong and unwanted information is not generated; the condition of data
overload is avoided.

Functions of MIS
The broad functions of MIS are as given below:

1. To improve decision-making:

 MIS helps management by providing background information on a variety of issues

and helps to improve the decision-making quality of management.

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 The fast and accurate information supplied by MIS is leveraged by the managers to
take quicker and better decisions thereby improving the decision-making quality
and adding to the bottom line of the company.

2. To improve efficiency:

 MIS helps managers to conduct their tasks with greater ease and with better efficiency.
This reflects in better productivity for the company.

3. To provide connectivity:

 MIS provides managers with better connectivity with the rest of the organization.

Characteristics of MIS

Management information being a specialized information system conforms to certain

characteristics. These characteristics are generic in nature. These characteristics remain more
or less the same even when the technology around such management information system
changes:

1. MIS is management oriented:

The designing of MIS takes care of the managers, who meet the information
requirement. The development of the system starts after deciding the management
needs & keeping in view the overall objectives of the management

2. Management directed:

Since MIS requires heavy planning & investment management is deeply involved in
the design, implementation and maintenance of the system

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Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

3. Integrated system:

MIS is an integrated system It is integrated with all operational & functional activities
of management. A complete picture of the scenario, complete information is needed
which only an integrated system can provide.

4. Avoid redundancy in data storage:

Since MIS is an integrated system it avoids unnecessary duplication and redundancy in

data gathering & storage.

5. Common data flows:

It means use of common input. Data is captured by the system analyst only once. Then
he/she tries to utilize minimum data processing efforts and strives to minimize the
number of output documents produced by the system. Thus it avoids duplication,
simplifies operation and produces an efficient information system.

6. Heavy planning element:

Design and implementation of MIS requires detailed and meticulous planning of such
activities as acquisition and deployment of hardware, software human ware data
processing operations information presentation and feedback

7. Subsystem concept:

MIS gives provision for breaking into various subsystems based on the activity as well
as the functions of the organisation, so that effective implementation of each
subsystem is possible at a time

8. Common database:

It acts as a master that holds the functional subsystems together It achieves this aim by
allowing access to different master files

9. Flexibility and Easy to use:

It is designed to be flexible enough to accommodate new requirements. When needed

this system is easy to operate, so that any user can use it without much effort.

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Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

10. Computerized:

It is possible to have MIS without using a computer. Use of computer increases speed,
effectiveness, accuracy, consistency in data processing, avoids human error etc. in fact
its use enables system to handle wide variety of applications by providing their
information requirements quickly.

Features of MIS
MIS have several vital features, including:
 Data integration:
MIS integrates data from various departments and functions, giving decision-makers a
comprehensive view of the organization’s data.

 Data storage:
MIS stores vast data in databases, making it accessible and retrievable when needed.

 Data processing:
MIS processes data to generate meaningful information. It can perform calculations,
comparisons, and other data transformations to produce reports and insights.

 User-friendly interface:
MIS systems typically have user-friendly interfaces that allow non-technical users to
access and interact with data easily.
 Customization:
MIS systems can be customized to meet an organization’s needs. Users can define the type
of information they want to access and how it is presented.

 Real-time information:
Many MIS systems offer real-time or near-real-time data updates, ensuring decision-
makers can access the most current information to make timely decisions.

 Report generation: MIS generates various reports, including standard reports, ad-hoc
reports, and exception reports. These reports help managers monitor performance and
make informed decisions.

 Security:
Access to sensitive information is restricted, and measures are in place to protect data from
unauthorized access or breaches.

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 Accessibility:
MIS can be accessed remotely, allowing decision-makers to retrieve information from
various locations.

 Integration with other systems:

MIS systems can integrate with other software and systems of the organization, such
as ERP (Enterprise Resource Planning) systems, Customer relationship management
(CRM) systems, Human capital management (HCM) systems, etc.

 Mobile compatibility:
Many modern MIS systems are compatible with mobile devices, allowing users to access
critical information on the go.

 Data analytics:
Advanced MIS systems may incorporate data analytics and business intelligence tools to
provide deeper insights and support predictive analytics.

Benefits of MIS (Advantages)

 Allows company management access to a single database to manage all transactions
and planning processes.
 It saves time and increases work effectiveness considerably.
 Ensures improved data analysis and decision-making.
 Maintains an accurate record of the system’s inputs and outputs and tracks employee
performance.
 Critically analyze a company’s and its employee’s strengths and weaknesses.
 The CEOs or executives can take greater company financial and operational control.

Limitations of MIS (Disadvantages)

Even though MIS has many benefits, it also has its limitations, which are discussed below:
 While MIS may solve some acute problems, it is not a solution to all problems of an
organization.
 Involves maintenance and employee training costs.
 It cannot meet everyone's particular demands.
 If misdesigned, MIS does not serve the management and is irrelevant.
 The MIS is only good if the primary data is updated.

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 Most information provided by the MIS is in quantities form. Hence, it ignores

qualitative information like the behaviour of an employee.

Process of MIS
The process of Management Information System (MIS) involves several stages to ensure
effective planning, implementation, and utilization of information systems within an
organization.

Here is an overview of the typical process of MIS:

1. Identification of Information Needs:

The first step in the MIS process is to identify the information needs of the organization. This
involves understanding the business processes, objectives, and decision-making requirements
of different levels and functions within the organization.

2. Data Collection:

Once the information needs are identified, the next step is to collect relevant data. Data can
be sourced from various internal and external sources, such as transactional systems,
databases, surveys, and market research.

3. Data Processing:

After collecting the data, it needs to be processed to extract meaningful information. This
involves organizing, cleaning, aggregating, and transforming the raw data into a format that
can be used for analysis and decision making. Data processing may include tasks like data
validation, integration, and data quality assurance.

4. Data Analysis:

In this stage, the processed data is analyzed to derive insights and support decision making.
Various analytical techniques, such as statistical analysis, data mining, and predictive
modelling, can be employed to discover patterns, trends, and relationships in the data. The
analysis helps in identifying key performance indicators, evaluating performance, and making
informed decisions.

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5. Information Presentation:

The analyzed information is then presented in a meaningful and easily understandable format.
This can involve creating reports, dashboards, visualizations, and other tools to communicate
the information effectively to the relevant stakeholders. The presentation should be tailored to
the specific needs of different users, such as executives, managers, and operational staff.

6. Information Dissemination:

Once the information is presented, it needs to be disseminated to the appropriate individuals

or groups within the organization. This can be done through various channels, such as email,
collaboration tools, intranets, or mobile applications. Timely and accurate information
dissemination ensures that the right people have access to the right information at the right
time.

7. Information Utilization:

The final stage of the MIS process is the utilization of information for decision making and
performance improvement. The information provided by the MIS supports strategic planning,
operational management, problem-solving, and performance evaluation. It enables managers
and executives to make informed decisions based on accurate and up-to-date information.

Roles of MIS in Decision making process

 Management information systems can help you make valid decisions by providing
accurate and up-to-date information and performing analytic functions.
 You have to make sure the management information system you choose can work with
the information formats available in your company and has the features you need.
 Suitable management information systems can structure the basic data available from
your company operations and records into reports to present you with guidance for your
decisions.

Goals of MIS

Important Goals of MIS are as follows:

1. MIS is very useful for efficient and effective planning and control functions of the
management. Management is the art of getting things done through others. MIS will be

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instrumental in getting the things done by providing quick and timely information to the
management.
2. Reports give an idea about the performance of men, materials, machinery, money and
management. Reports throw light on the utilisation of resources employed in the
organization.
3. MIS is helpful in controlling costs by giving information about idle time, labour turnover,
wastages and losses and surplus capacity.
4. By making comparison of actual performance with the standard and budgeted
performance, variances are brought to the notice of the management by MIS which can
be corrected by taking remedial steps.
5. MIS brings to the notice of the management strength (ie., strong points) of the
organization, to take advantage of the opportunities available.
6. MIS reports on production statistics regarding rejection, defective and spoilage and their
effect on costs and quality of the products.

Impact of the Management Information System

The MIS plays a very important role in the organization; it creates an impact on the
organizations functions, performance and productivity.

1. The impact of MIS on the function is in its management. With a good support, the
management of marketing, finance, production and personnel become more efficient.
2. The tracking and monitoring of the functional targets becomes easy. The functional
managers are informed about the progress, achievements and shortfalls in the activity
and the targets. The manager is kept alert by providing certain information indicating
and probable trends in the various aspects of business. This helps in forecasting and
long-term perspective planning.
3. Disciplined information reporting system creates structure database and a knowledge
base for all the people in the organization.
4. The MIS creates another impact in the organization which relates to the understanding
of the business itself.
5. The MIS begins with the definition of data, entity and its attributes. It uses a
dictionary of data, entity and attributes, respectively, designed for information
generation in the organization.
6. Since, the MIS work on the basic system such as transaction processing and database,
the drudgery of the clerical work is transferred to the computerized system, relieving
the human mind for better work. It will be observed that lot of manpower is engaged
in this activity in the organization.

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7. This MIS has a direct impact on this overhead. It creates information –based working
culture in the organization.

Decision Support System (DSS)

Introduction

 Decision support systems (DSS) are interactive software-based systems intended to help
managers in decision-making by accessing large volumes of information generated from
various related information systems involved in organizational business processes, such
as office automation system, transaction processing system, etc.
 Strategic management staffs (often senior managers) make decisions by providing
information, models, or analysis tools. For support of semi-structured and unstructured
and decisions. Used for analytical work, rather than general office support.
 They are flexible, adaptable and quick.
 The user controls inputs and outputs. They support the decision process and often are
sophisticated modelling tools so managers can make simulations and predictions.
 Decision support systems are a major category of management support systems. They
are computer-based information systems that provide interactive information support to
managers during the decision making process.

Definition of DSS

“Decision support system (DSS) is an interactive computer based system, which help
decision makers, utilize and model to solve unstructured problems”.

Characteristics of Decision Support System

1) Ability to support the solution of complex problems: A DSS aids the solution of
complex problems that cannot be solved by other computerised approaches or can
be solved at a much slower pace.

2) Fast response to unexpected situations that result in changed inputs: It enables

a through quantitative analysis in a very short time. Even major changes in a
scenario can be evaluated objectively in a timely manner.

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3) May be constructed to support one time decisions: Helpful to those that are
infrequent, however, the type of problem or opportunity best addressed through use
of a DSS is one that requires human judgement.

4) Designed to help support decisions: These are formulated as semi-structured,

complex problems. These problems remain resistant to complete computerised.

5) It is a way to organize information intended for use in decision-making: It

involves the use of a database for a specific decision-making process. A DSS does
not just automate transactions performed on data nor simply provide output in the
form of reports.

6) DSS Generator (software) can be used: Rather than building a specific DSS from
scratch, a system analyst can use a package of interrelated hardware and a software
called DSS generator.

7) A decision support system is best conceptualised as a process instead of a product:

The following figure shows the product orientation of traditional MIS versus the
process oriented DSS.

8) Ability to quickly and objectively try different strategies under different

configurations.

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Activities of Decision Support System

1) What-if Analysis:
 What-if analysis is used to determine what some of the possible changes could
be on a theoretical solution.
 Observing how changes to selected variables affect the other variables.
Example: What if we cut advertising by 10%? What would happen to sales?

2) Sensitive Analysis:
 Sensitive analysis is the study of how different variables effect one and other,
when change occurs.
 Observing how repeated changes to a single variable affect other variables.
Example: Let’s cut advertising by 100% repeatedly so we can see its relationships to
sales

3) Goal-seeking Analysis:
 Compiles all of the given data and determines what inputs are required to reach
specific goals.
 Making repeated changes to selected variables unit a chosen variable reaches to
a target value.
Example: Let’s try increase in advertising until sales reach to target

4) Optimization Analysis:
 To find the optimum value for one or more target variables, given certain
constraints.
 Finding an optimum value for selected variables, given certain constraints.
Example: What’s the best amount of advertising to have, our budget and choice of
media?

Functions of DSS Applications

The major functions are as under:

1) Becoming familiar with the problem domain (DSS can be used to identify relationships
among the key elements of the problem).
2) Determining sensitivity of results to changes in decision variables (knowing which
decision variables have the greatest impact on the outcome enables the decision-
makers to focus attention on the important matter).
3) Identify patterns (using both statistical techniques and the usual display of quantitative
data, helps the analysts to identify patterns in either input data or result).

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4) Predicting decision outcomes (DSS can be used to estimate the impact on sales of
doubting the size of the sales force, increasing the advertising budget or introducing a
product into a new market).
5) Developing models of business processes (models may consist of one or more
equations that relate output to input e.g. relating sales to the number of sales personnel,
sales as function of advertising statistical programs that estimate the parameters of
such equations).
6) Computing optimum mixes (say problem of allocating people to jobs, match between
skills and available jobs etc. or techniques like linear programming can be used to
compute the optimum solutions).
7) Facilitating group communication (DSS applications involve always a group. Frequent
decisions are made by consensus. Group must have common understanding of the
problem. DSS facilitates the group process by making the facilities of the system
available to all group members).

Components of DSS Applications:

Following text will explain the basic components of DSS:

Hardware Resource:
 Workstation connected through network to other components forms the basic hardware
resource for the DSS.

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 Personal computers can also be used as a stand-alone system or connected through

network to larger computer system to access DSS software.

Software Resource:
 DSS software packages are called DSS generators. They contain models of databases,
model and dialogue managers.
 A model base management module provides the ability to create, maintain, and
manipulate the mathematical models in the models base using capabilities provided by
modelling packages.
 A dialogue generation and management module provides an attractive user interface
that support interactive input and output by managers.

Data Resource:
 A DSS contains data and information extracted from the databases of the organization,
external databases.
 It includes summarized data and information most needed by the manager for specific
type of decision.

People Resource:
 The manager and staff who are involved in decision making process and need to
explore decision alternatives can use a DSS.

Decision Support Systems (DSS) offer several advantages, including:

1) Improved Decision Making: DSS provides relevant information to support decision-

making processes, helping users make more informed and effective choices.

2) Quick Access to Data: Users can access real-time or near-real-time data, enabling
them to respond promptly to changing circumstances.

3) Enhanced Efficiency: DSS automates data analysis and facilitates quicker decision-
making, leading to improved operational efficiency.

4) Interactivity: DSS allows users to interact with data, perform analyses, and simulate
scenarios, fostering a more dynamic decision-making process.

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5) Customization: DSS can be tailored to meet specific organizational needs, ensuring

that decision-makers have access to relevant information.

6) Integration of Data Sources: DSS can integrate data from various sources, providing
a comprehensive view that aids in holistic decision-making.

7) What-If Analysis: Decision-makers can explore hypothetical scenarios and assess the
potential outcomes before making a decision, reducing uncertainties.

8) Collaboration: DSS facilitates collaborative decision-making by allowing multiple

users to access and contribute to the decision-making process.

9) Strategic Planning: DSS supports long-term planning by providing insights into

trends, patterns, and potential future scenarios.

10) Risk Management: Decision Support Systems assist in identifying and mitigating
risks by providing real-time data on various aspects of the business environment.

These advantages collectively contribute to more effective decision-making processes within

organizations.

While Decision Support Systems (DSS) offer numerous benefits, there are also some
disadvantages to consider:

1) Cost: Implementing and maintaining a DSS can be expensive, involving initial setup
costs, software licensing fees, and ongoing maintenance expenses.

2) Complexity: DSS can be complex, requiring specialized training for users to fully
utilize the system's capabilities. This complexity may lead to resistance or difficulties
in adoption.

3) Integration Challenges: Integrating DSS with existing systems and databases can be
challenging, particularly in organizations with diverse IT infrastructures.

4) Dependency on Data Quality: The accuracy and reliability of DSS outputs heavily
depend on the quality of input data. Poor data quality can lead to inaccurate decision
support.

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5) Security Concerns: Handling sensitive and confidential information within a DSS

requires robust security measures to prevent unauthorized access and protect against
data breaches.

6) Overemphasis on Technology: There's a risk that organizations may overly rely on

DSS without considering the human element in decision-making, potentially
neglecting the importance of human intuition and experience.

7) Resistance to Change: Employees might resist the adoption of DSS due to fear of job
displacement, lack of understanding, or reluctance to change established work
processes.

8) Potential for Information Overload: DSS can generate vast amounts of information,
leading to information overload for users, making it challenging to extract meaningful
insights.

9) Maintenance Challenges: Keeping DSS up-to-date with evolving technology and

business requirements can be demanding, requiring ongoing investments in training
and system upgrades.

10) Ethical Concerns: The use of DSS raises ethical considerations, particularly
regarding privacy issues and the ethical use of data, which may need careful
management and oversight.

Careful consideration of these disadvantages is crucial for organizations seeking to

implement DSS successfully.

Features of Decision Support System:

 Effectiveness: It should help knowledge workers to reach more effective decisions.

 Mathematical models: Mathematical models are applied to the data contained in data
marts and data warehouse.

 Integration in the decision-making process: Decision makers allowed integrating in

a DSS to their needs rather than passively accepting what comes out of it.

 Organizational role: DSS operate at different hierarchical levels within an enterprise.

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 Flexibility: A DSS must be flexible and adaptable in order to incorporate the changes
required to reflect modifications in the environment or in the decision-making process.

Role of DSS in Decision making:

1. Goal Oriented
 It is process of determining the input values required to achieve a certain goal.

2. Risk Analysis
 Risk is the important factor which affects the business enterprise.
 DSS allows manages to the risk associate with various alternatives.

3. Model Building
 DSS allows decision maker to identify the most appropriate model for solving
the problems.

4. Graphical Analysis
 This help managers to quick digest large volumes of data and visualize the
impacts of various because courses of action.

Difference between MIS and DSS

Sl. No. MIS DSS

Full form is Management Information Full form is Decision Support
1
System System
Process of collecting and summarizing data Process of converting data into
2
to help in decision making useful information
3 It is collection and storage of data It is manipulation of data
4 Useful for operating level of management Useful for Top level management
5 Helpful for routine decisions Helpful for managerial judgment

Group Decision Support System (GDSS)

Introduction:
 Many organizations are made by groups rather than by individuals.
 A Group Decision Support System, or GDSS, consists of interactive software that
allows for making decisions by a group of participants.

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 The goal of a GDSS is to improve the productivity of a group to come to a decision.

 GDSS also called as Group Process Support systems, Electronic Meeting Systems, or
simply as group support systems.

What is Group Decision Support System (GDSS)

• A group decision support system (GDSS) is an interactive computer-based system that
facilitates a number of decision-makers (working together in a group) in finding
solutions to problems that are unstructured in nature.

Features of Group Decision Support System (GDSS)

 Ease of Use:
o It consists of an interactive interface that makes working with GDSS simple and
easy.

 Better Decision Making:

o It provides the conference room setting and various software tools that facilitate
users at different locations to make decisions as a group resulting in better
decisions.

 Emphasis on Semi-structured and Unstructured Decisions:

o It provides important information that assists middle and higher-level
management in making semi-structured and unstructured decisions.

 Specific and General Support:

o The facilitator controls the different phases of the group decision support system
meeting (idea generation, discussion, voting and vote counting, etc.) what is
displayed on the central screen and the type of ranking and voting that takes
place, etc. In addition, the facilitator also provides general support to the group
and helps them to use the system.

 Supports all Phases of the Decision Making:

o It can support all the four phases of decision making, viz intelligence, design,
choice, and implementation.

 Supports Positive Group Behaviour:

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In a group meeting, as participants can share their ideas more openly without the fear
of being criticized, they display more positive group behaviour towards the subject
matter of the meeting.

Advantages of GDSS

• Better decision: Through the GDSS we can take better decisions because the under
GDSS the decisions are taken by a group of DSS.

• Solve the problem: GDSS provide solution to unstructured problems. GDSS collects
various type of information at various sources.

• Minimize the risk: GDSS allows managers to assess the risks associated with various
alternatives. This helps managers to be proactive rather than reactive.

• Collect large amount of information: GDSS collect information at various sources

for making decision making. This information minimizes the risk.

• Provide interactive communication: GDSS provide interactive communication. It

takes better decision through the interactive communication.

• Improve the decision making process: GDSS improve the decision making process
because GDSS is a goal oriented. When the GDSS is designed the goal is considered.

• Make coordination in various activities: In GDSS decision are taken by a group of

DSS. The work is divided into different parts then each DSS performs own work. So
the coordination is possible.

Disadvantages of GDSS
• Cost: A significant amount of cost may be associated with putting up the infrastructure
consisting of the room, network connectivity and the software.

• Security: This risk arises when the facility for setting up GDSS has been rented. There
are chances that information gets leaked to the peers by a low level employee.

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• Technical Failure: The system must be properly implemented to reduce the risk
associated with loss of connectivity and power loss. It is highly dependent
on LAN/WAN infrastructure and bandwidth.

• Keyboarding Skills: If the members get frustrated they might participate less.

• Training: There is variation in the learning curve of the user in various situations.

Process of GDSS
• Group Decision Support Systems (GDSS) involve a structured process to enhance
group decision-making.

The typical process includes:

1. Idea Generation:
 Participants generate ideas independently or collectively.

2. Idea Presentation:
 Ideas are shared with the group using GDSS software.

3. Idea Clarification:
 Participants clarify and discuss the presented ideas.

4. Voting or Ranking:
 Individuals express their preferences through voting or ranking features in the
GDSS.

5. Consolidation:
 The system consolidates the input, often in real-time, to provide a collective view.

6. Analysis:
 GDSS tools assist in analyzing the input, highlighting trends, and identifying key
insights.

7. Decision-making:
 The group uses the information provided by the GDSS to make informed decisions.

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8. Documentation:
 The system may record the entire process, including inputs, discussions, and final
decisions.

Throughout the process, GDSS helps overcome geographical barriers, ensures anonymity if
needed, and facilitates structured communication among group members.

A Group Decision Support System (GDSS) serves a vital role in the decision-making
process.

• Information Sharing:
GDSS enables participants to share relevant data, information, and insights, ensuring
that everyone has access to the necessary information for informed decision-making.

• Collaborative Decision-Making:
It promotes collaboration among group members, allowing them to contribute ideas,
opinions, and expertise in a structured manner.

• Real-time Communication:
GDSS supports real-time communication, enabling geographically dispersed teams to
interact seamlessly, share updates, and engage in discussions without time delays.

• Structured Decision Processes:

GDSS often provides structured decision-making frameworks, helping groups follow a
systematic approach, analyze alternatives, and reach consensus more effectively.

• Anonymity and Equal Participation:

Some GDSS systems allow participants to contribute anonymously, encouraging open
and honest input. This can help in overcoming barriers to communication and ensuring
equal participation.

• Documenting Decisions:
GDSS tools often document the decision-making process, capturing inputs,
discussions, and outcomes.

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This documentation can be valuable for future reference and accountability. Overall, GDSS
contributes to more inclusive, data-driven, and efficient group decision-making processes.

Office Automation System (OAS)

Introduction:
 Office Automation systems (OAS) s is a collection of hardware and software for
developing documents, scheduling resources and communicating.
 Document development tools include word processing and desktop publishing
software as well as hardware for printing and producing documents.
 Scheduling tools include electronic calendars that help manage resources like
equipment, conferences rooms etc.
 Communicating tools include electronic mail, voice mail, fax, video conference.

Word processing: Word processing refers to the software and hardware technology that
creates edits, formats, stores and prints documents.

Desktop publishing: Desktop publishing produces professional quality documents

combining output from word processors with design, graphics and special layout features.

Communication systems: communication systems helps people work together by sharing

information in many different forms like teleconferencing (including audio conferencing,
computer conferencing, video-conferencing), electronic mail, voice mail, fax.

Groupware system: Groupware system helps team work together by providing access to
team data, structuring communication, and making it easier to schedule meetings. For sharing
information, controlling work flows, communication/ integration of work.

 What is Office Automation System (OAS)?

“Office automation system is an information system which is computer based that
collects, processes, stores and transmits electronic messages.”

Features of Office Automation System

There are numerous features of office automation; however, here are some of the most
attractive features that are classified into the following groups:

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 Information Storage
This comprises information recording tools such as forms, documents, files, photos, or
spreadsheets. Information storage is commonly found in word processors or
spreadsheets, but it can also be more sophisticated, such as official records in a CMS or
an automation software application.
 Data Exchange
With OAS enabled office, team members can quickly exchange and share information
in real time. For example, e-mail. E-mail uses a computer and network protocol to send
messages from one user to another user. The E-mail also features a mail management
system, relaying mail to more than one user known as cc and bcc.
 Data Management
Office automation systems can effectively handle short- and long-term data like
marketing expenditures, financial plans, inventory management, workforce allocation
plans etc. Task management also can be monitored and controlled, such as office
activities, scheduling meetings etc.
 Multitasking
OAS can perform various office administration tasks at once. For example, it can
control office temperatures; it can process and manage work data entry simultaneously.

Definition of office automation system

OAS or office automation system is a tool for moving data from one system to another
without human intervention. By OAS data is securely moved with accuracy.

Examples of office automation system

Some examples of office automation systems are:-

1. Email and messaging system
2. Electronic calendar and scheduling systems
3. Accounting and financial management systems
4. Backup and recovery systems
5. Time and attendance systems

Advantages of office automation system

Some benefits of office automation systems are:-

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1. Work anywhere:
Employees can now work from anywhere if they have internet access. They can
remotely connect with the boss and work remotely.

2. Accuracy:
With the most modern application software like MS Excel and MS Word, data is
entered into the software with accuracy. You can now work with consistency without
doing error mistakes. Data is entered into the software with accuracy.

3. Decision making:
Office management can take decisions quickly. In old days all the data is hardcoded
and finding the data of any person was very difficult and takes many days. But in
current days, data can be fetched in seconds even if there are a million records on
computers.

4. Productivity:
As data is quickly accessible so it is now possible that employees can perform more
work with less time. So the productivity of employees has increased.

5. Security:
Data is securely kept in computers. Data is protected by a firewall and antivirus
installed on the systems. By using security measures the data in the office is moved
securely from one device to other.

6. Low cost:
As computer devices are used to replace paperwork so it is cost-effective. Now you
can use email instead of post letters and use the scanner in replacement of printing.

7. Scalability:
Offices can be expanded easily. You need less manpower and most of the work can be
done by automatic machines. You can assign tasks to automated machines and the
tasks are performed on scheduled time.

8. Customer support:
With AI automatic chat, customers can get their queries solved easily. Employees can
perform their regular work and most customer communications are done with online
support software.

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9. Better collaboration:
Office management and team members can collaborate through audio and video chat.
They can use Whats App, Team Viewer, Skype and other communication software.

10. Time-saving:
As team members in the office can communicate with each other online so it saves
their time. There is no time limit for communication. The team members can discuss
important points while they are not in the office also.

Disadvantages of office automation system

Some drawbacks of office automation systems are:-

1) Privacy issue:
Customer data is stored in the office and any employee can get access to the data.
Office employees can use customers’ data in the wrong way also.

2) Risk of job:
As most of the work is done automatically so employees get the risk of losing their
jobs. Office management also hires fewer people in the office because of the
automatic office system.

3) Implementation costs:
It is costly to set up office automation in the initial stage. You have to buy costly
devices like scanners, printers, modems, switches, network cables, security
cameras, computers, laptops and servers. Some software which makes office
automation is expensive to buy. It is also costly to do maintenance because it needs
technical staff.

4) Compatibility issues:

Some old software may not work with the new version of the software. Sometimes
data may get lost in the up gradation of software. The integration between new and
old office automation systems is also difficult and risky.

5) Extra training:
If the office is using customized software then new employees need to get extra
training. Some automatic software gets updated regularly and employees need to be
getting trained for the new version of the software also.

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6) Dependence:
The office automation system depends upon technology e.g. electricity and internet
connection. Sometimes the server goes down and your all work gets stopped.

7) Still need manual work:

As all the activities of the office cannot be handled by the automatic system e.g.
some manual data entry and error detection. Some data has to be checked manually
and corrected by humans only.

8) Real communication gets affected:

As most office work is done automatically so employees do not get time to discuss
office work. They get busy automating the processes. All the work is ready-made
by the software and human thinking power is less used.

9) Less customization:
Some popular software like MS PowerPoint and MS Access are difficult to
customize. Sometimes you need to make the software customized but it becomes
not possible to do so.

10) Lack of irregular work:

The software which is used in the automated office does regular work. If any
irregular data is fed into the software then it may give you exceptions and cannot
process and correct the data automatically.

Features of Office Automation System

• There are numerous features of office automation; however, here are some of the most
attractive features that are classified into the following groups:

1. Information Storage
 This comprises information recording tools such as forms, documents, files,
photos, or spreadsheets. Information storage is commonly found in word
processors or spreadsheets, but it can also be more sophisticated, such as official
records in a CMS or an automation software application.

2. Data Exchange
 With OAS enabled office, team members can quickly exchange and share
information in real time. For example, e-mail. E-mail uses a computer and
network protocol to send messages from one user to another user. The E-mail
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also features a mail management system, relaying mail to more than one user
known as cc and bcc.

3. Data Management
 Office automation systems can effectively handle short- and long-term data like
marketing expenditures, financial plans, inventory management, workforce
allocation plans etc. Task management also can be monitored and controlled,
such as office activities, scheduling meetings etc.

4. Multitasking
 OAS can perform various office administration tasks at once. For example, it
can control office temperatures; it can process and manage work data entry
simultaneously.

Goals and Benefits of OAS

 OAS helps in increasing personal productivity. They reduce “paper warfare”.
 OAS software tools are often integrated (e.g. Word processor can import a graph
from a spreadsheet) and designed for easy operation. Thus, office Automation
systems-
 Tend to process data workers rather than create information. Primarily involved in
information use, manipulation or dissemination.
 Handle and manage documents, scheduling and communication.

Executive Information Systems (EIS)

What is an Executive Information System?

• An executive information system (EIS), also known as an executive support system

(ESS), is a type of management support system that facilitates and supports senior
executive information and decision-making needs. It provides easy access to internal
and external information relevant to organizational goals.

Advantages of EIS

• Easy for upper-level executives to use, extensive computer experience is not required
in operations.
• Provides timely delivery of company summary information.
• Information that is provided is better understood.

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• Filters data for management.

• Improves to tracking information.
• Offers efficiency to decision makers.

Disadvantages of EIS

• System dependent
• Limited functionality, by design
• Information overload for some managers
• Benefits hard to quantify
• High implementation costs
• System may become slow, large, and hard to manage
• Need good internal processes for data management
• May lead to less reliable and less secure data

Application of EIS

EIS is especially applied in the following areas:

Manufacturing:

• EIS provides the evaluation of vendors and buyers, the areas.

• Therefore, the executive can oversee and review purchasing operations effectively with
EIS.

Marketing:

• EIS provides an approach to sales forecasting, which can allow the market executive to
compare sales forecast with past sales.

• EIS also offers an approach to product price, which is found in venture analysis.

• In summary, EIS software package enables marketing executives to manipulate the

data by looking for trends, performing audits of the sales data, and calculating totals,
averages, changes, variances, or ratios.

• All of these sales analysis functions help marketing executives to make final decisions.

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Financial:

• EIS focuses on accountability of financial performance and it recognizes the

importance of cost standards and flexible budgeting in developing the quality of
information provided for all executive levels.

• EIS is a good tool to help the executive to review financial ratios, highlight financial
trends and analyze a company’s performance and its competitors.

Expert Systems (ES)

Introduction

• An expert system is a knowledge-based information system; that is, it uses its

knowledge about a specific area to act as an expert consultant to users.

• Expert system is intelligent computer program designed to stimulate the problem

solving behavior of human experts

• Expert systems can provide decision support to end users in the form of advice from an
expert consultant in a specific problem area.

• There are expert systems that can be diagnose human illness, make financial forecast,
and schedule routes for delivery vehicles.

• Expert systems can support either operations or management activities.

• They also play chess, underwrite insurance policies, and perform many services which
previously required human expertise.

• Some expert systems are designed to take the place of human experts, while others are
designed to aid them.

Definition

• “An expert system is an interactive computer-based decision tool that uses both facts
and heuristics to solve difficult decision problems based on knowledge acquired from
an expert.”
• An expert system compared with traditional computer:
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• Inference engine + Knowledge = Expert system

Components of Expert Systems

1. Knowledge Base
 The component of an expert system that contains the system’s knowledge is called
its knowledge base.
 It is critical to the way most expert systems are constructed.
 Contains both declarative and procedural knowledge.
 Rule-based production system approach is used.

2. Interference Engine
 An interference engine tries to derive answers from a knowledge base.
 It is the brain of the expert systems that provide the methodology for reasoning
about the information in the knowledge base, and for formulating conclusions.
 In effect, an interference engine “runs” an expert system.

3. User Interface
 It enables the user to communicate with an expert system.
 Communication is bidirectional.

Benefits of expert systems

• Increase the probability, frequency, and consistency of making good decisions.

• Help distribute human expertise.
• Facilitate real-time, low-cost expert level decisions by the non expert.
• Enhance the utilization of most of the available data.

Advantages of Expert Systems

1. The computer can store far more information than a human.

2. The computer does not ‘forget’, make silly mistakes or get drunk when it is most
needed.
3. Data can be kept up-to-date.
4. The expert system is always available 24 hours a day and will never ‘retire’.
5. The system can be used at a distance over a network.
6. Low accessibility cost.
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7. Fast response.
8. Not affected by emotions, unlike humans.
9. Low error rate.
10. Capable of explaining how they reached a solution.

Disadvantages of Expert Systems

• The expert system has no emotions.

• Common sense is the main issue of the expert system.
• It is developed for a specific domain.
• It needs to be updated manually. It does not learn itself.
• Not capable to explain the logic behind the decision.
• Doesn’t provide a creative response in certain situations.
• It relies on rules and knowledge being correct.

Limitations of Expert systems

1. Not widely used or tested.

2. Limited to relatively narrow problems.
3. No “common sense”.
4. Cannot readily deal with “mixed” knowledge.
5. Possibility of error.
6. Cannot refine own knowledge base?
7. Difficult to maintain.
8. Systems are not always up to date.
9. May have high development costs.

Features of Expert Systems

 Useful
 Usable
 Educational when appropriate
 Explain its advice
 Respond to simple questions
 Learn new knowledge
 Easily modified

D.M.S. Mandal’s College of Business Administration, Belgaum. Page 40

 INFORMATION TECHNOLOGY FOR BUSINESS
Semester: Vth (BBA) Prof. Miss. Poonam M. Patil

Difference between DSS and ES

Sl. No. DSS (Decision Support System) (ES) Expert System

1 It facilitates decision-making. It automates decision-making.

The decision environment is

2 The decision environment has structure.
unstructured.

It extracts or gains knowledge from a Inject expert knowledge into a computer

3
computer system. system.

Characteristics of the problem domain are

4 In this, it is limited and specialized.
complex and broad.

The type of data manipulation is

5 The type of data manipulation is numeric.
symbolic.

6 It has limited capacity. It has a full capacity.

D.M.S. Mandal’s College of Business Administration, Belgaum. Page 41