Types of information systems

Transaction processing to executive

decision making

1
 Information System from business perspective
Types of system Groups Served

Vertical information fows

STRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &

DATA WORKERS

OPERATIONAL OPERATIONAL
LEVEL Horizontal information flows MANAGERS

SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

MARKETING & ENGINEERING RESOURCES 2
Management Structures and Information
Requirements
Higher up the pyramid, the less structured the decision
Less defined (structured)
internal/External orientation
More summarized information

Lower down the pyramid, the more structured the decision

More defined (structured)
Internal orientation
More detailed information

3
 Classification (types) of for IS

Executive Support Systems (ESS)

Management Information Systems (MIS)
Decision Support Systems (DSS)
Transaction Processing Systems (TPS)

4
 Transaction Processing Systems (TPS)

Computerized system that performs and records the daily

routine transactions necessary to conduct the business; these
systems serve the operational level of the organization

TYPE: Operational-level
INPUTS: transactions, events
PROCESSING: updating; e.g. stock levels)
OUTPUTS: detailed reports
USERS: operations personnel, supervisors
DECISION-MAKING: highly structured. (sale of products)

EXAMPLE: payroll, accounts payable, point of sale (P.O.S.)

5
TPS payroll system

6
 Management information systems(MIS)
Information system at
the management level
of an organization that
serves the functions of
planning, controlling,
and decision making by
providing routine
summary and exception
reports.

7
Differences between the TPS and the MIS
Transaction Processing Management Information
Systems (TPS) Systems (MIS)
Support operation Provide decision-making
Management and support for routine,
control structured decisions
Routine, normal Closely linked to and fed
operations by TPS
structured Structure and sem-
structure

8
Characteristics of Management information Systems
1. MIS support structured decisions at
the operational and management
control levels. However, they are
also useful for planning purposes,
semi-structured problems, of
senior management staff.
2. MIS are generally reporting and
control oriented. They are
designed to report on existing
operations, sales , production
costs, and therefore to help
provide day-to-day control of
operations.
3. MIS rely an existing corporate data-
and data fows.
4. MIS have little analytical capability.
5. MIS generally aid in decision
making using past and present
data.
6. MIS are relatively infexible.
7. MIS have an internal rather than an
external orientation.
9
 Management problems
Most management problems, involving decisions have three elements
objectives, decision variables, and constraints.

Objective
Maximize profit
Provide earliest entry into market
Minimize employee discomfort/turnover
Decision variables
Determine what price to use
Determine length of time tests should be run on a new product/service
Determine the responsibilities to assign to each worker
Constraints
Cant charge below cost
Test enough to meet minimum safety regulations
Ensure responsibilities are at most shared by two workers

10
 Structured Decision
Structured decisions are those which are
made according to specified procedures of
rules or structured decisions are those that
are easily made from a given set of inputs.
Deciding to send a reminder notice to a customer
for an overdue balance is considered to be
structured decision

11
 Semi-structured Decision
Semi-structured decisions are those for which
information obtained from a computer system
or information system is only a portion of the
total knowledge needed to make decision.
Advertise a new product or how much to spend on
MIS.

12
 Unstructured Decision
Unstructured decisions are novel.
There is no cut and dried method for handling the problem
because it hasn't arisen before or because it's precise nature
and structure are mysterious or complex, or because it so
important' that it deserves a custom tailored treatment.
They may require a lot of creativity and intuitions from the
decision maker to tell what factors will come into play in an
unstructured play.
Deciding whether to use an integrated or intensive strategy for a
product that is the star quadrant of the BCG matrix
How successful to improving market size was the recent marketing
campaign

13
 Information Systems to support decisions

Management Decision Support

Information Systems
Systems
Decision Provide information about Provide information and
support the performance of the techniques to analyze
provided organization specific problems
Information Periodic, exception, Interactive inquiries and
form and demand, and push reports responses
frequency and responses
Information Prespecified, fixed format Ad hoc, flexible, and
format adaptable format
Information Information produced by Information produced by
processing extraction and manipulation analytical modeling of
methodology of business data business data

14
 Decision support system
Information system at the
management level of an
organization that combines
data and sophisticated
analytical models or data
analysis tools to support
semi-structured and
unstructured decision
making.
E.g.:sales region analysis
[OLAP systems]

15
 Characteristics of
Decision-Support Systems
DSS offer users fexibility, adaptability, and a quick response.
DSS provide support for decisions and problems whose solutions
cannot be specified in advance.
DSS use sophisticated data analysis and modelling tools.
Decision support system (DSS) tends to be used in planning,
modelling, analysing alternatives, and decision making by using
small, simple models which can easily be understood and used by
the manager

16
 Examples
Typical information that a decision support application
might gather and present would be:
Accessing all of your current information assets, including
legacy and relational data sources, cubes, data
warehouses, and data marts
Comparative sales figures between one week and the next
Projected revenue figures based on new product sales
assumptions
The consequences of different decision alternatives, given
past experience in a context that is described
Could be use to aid Strategic systems: SCM / CRM

17
 Tools used in aiding the DSS
Functions
Functions: pre-stored formulas that enable a user to perform a
calculator type task as soon as the function is invoked
Analysis
Analysis: review a set of facts and to assist in drawing
conclusions based on there facts.
Statistical Tools: regression/correlation
Optimizing tools: best decision for structured: maximise
production capacity (labour, capacity)
What if analysis: if increase cost what is the effect on sales;
check for various increases (1, 2.)
18
 Executive Support Systems (ESS)
Information system at the strategic level of an organization that
address unstructured decision making through advanced graphics and
communications.

TYPE: Strategic level

INPUTS: aggregate data; internal and external
PROCESSING: interactive
OUTPUTS: projections
USERS: senior managers
DECISION-MAKING: highly unstructured

EXAMPLE: 5 year operating plan

19
 Executive Support Systems: other properties

Tailored to individual executives

Not to managers in other levels
Easy to use
Drill down capabilities (more specific details)
Support need for external data: demographics,
competitors
Can help when uncertainty is high
Future-oriented
Linked to value-added processes: competitive advantage

20
Sample questions answered by ESS
What business should we be in?
What are the competitors doing?
What new acquisitions' would protect us from
cyclical business swings?
Which units should we sell to raise cash for
acquisitions?

21
 Question
Management information systems (MIS); Decision support
systems (D.S.S); and Executive information systems (EIS) are
important types of information systems used by management
to solve structured, semi-structured and unstructured problems
.
Describe, using suitable examples, the types of problems
each one is designed to solve
(6 marks)
The M.I.S. and D.S.S. play a significant role in the
formulation of strategic decisions: compare and contrast,
using suitable examples both types of information systems.
(24 marks)

22