TYPES OF BUSINESS INFORMATION SYSTEM

INTRODUCTION
 Information System support business operations by
processing data related to business operation activities &
providing information to assist management.
 Computer information system increases the efficiencies
of business operations.
TRANSACTION PROCESSING SYSTEM
(TPS)
 A type of information system that collects, store, modify &
retrieve the transactions of an organization.
 TPS features :
 Rapid response
 Fast performance with a rapid response time is critical.
 Reliability
 Organizations depends heavily on TPS, failure rate must be low.
 Inflexibility
 Every transaction to be processed in the same way regardless the user.
 Controlled processing
 Processing in TPS must support an organization’ s operation.
TRANSACTION PROCESSING SYSTEM
(TPS)
 TPS general purpose;
 To keep record about the state of the organization
 To process transaction that affect these records.
 To produce output that reports on transaction that have occurred, state
of the organization & cause other transaction to occur.

 TPS structure;
 Users – people who deal with business transaction. (sales etc)
 Input – data about transactions
 Output – printed reports
 TPS stored data – consists of files & databases with data about the
state or the organization.
 TPS software – application software that accepts the input data about
the transaction, processes it, make changes & produces output.
 TPS functions;
 Input function
 Accepts data from outside the system, data must be captured from
its source before being entered in TPS (data entry process)
 Processing function
 Manipulating data within the system. Computing & decision
making is sample of processing function.
 Output function
 Usually in the form of printed or display on screen. There are few
types of reports such as detail report, summary report & exception
report.
 Storage function
 Data is stored in data files & databases. 2 types of stored data;
 Master data – main data used by the system & permanent.
 Transaction data – about transactions occurred & temporary.
CONTROLLING TPS
 Procedures to ensure completeness of the data
processing & to minimize the chance of errors is called
CONTROLS.
 There are few types of controls:
 Controltotal – a number that is computed when data enters a
system & then computed again after the system process the
data.
 Audit trails – way of tracing the effect of data through a
system. A good audit trail should allow one to start at
output through the source.
 Backup & recovery procedures
PROCESSING DATA IN TPS
 Data can be processed using 2 basic approaches;
 Batch processing
 Data for all transactions to be processed is prepared in a form
understandable to the computer before actual processing begins.
Then the batch of data is processed by the computer & resulting
output is received in a batch.

 On-line processing
 A person uses input & output devices connected to computer at the
time processing is done. Each set of data is entered directly into the
computer, processed & output received before keying in the next
input data.
TYPES OF TPS
8 basic information processing activities;
 Entering customer orders

 Billing customers

 Collecting customer payments

 Keeping track of inventory

 Purchasing stock & materials

 Paying bills

 Paying employees

 Reporting financial information

TYPES OF TPS

Order Entry System

 Accept customer orders for goods / services & to prepare
the orders in the form that can be used by the business.

Input : Processing: Output:

Accept Validate order data Product sales
customer order Check stock order
Check credit

Storage:
Store order data
Access stock master data
Access customer order data
TYPES OF TPS

Types of Billing System

 To prepare the customers bill or invoice

 Ex; sales order is the input to billing system, & invoice is the
output.

 Accounts Receivable System

 Purpose is to keep track of money owned to the business by
its customers & to record customer payments for invoice.
 Ex; invoice data & customer payments are the input for
accounts receivable system, statements are sample output.
TYPES OF TPS
Inventory Control System
 To keep track of business inventory, to indicate when
inventory should be re-ordered & to compute the value of
inventory.
 Ex; sales order data, notice on receiving item data are sample
input & output will be inventory re-order report.

Purchasing System
 To determine the best suppliers from which to purchase items
& to prepare purchase orders, which indicate the suppliers
what are the items needed.
 Ex: input (data from the inventory re-order report) & output
(purchase order)
TYPES OF TPS
Accounts Payable System
 To keep track of money owned by the business for the
purchases, to pay suppliers for items purchased & provide
reports of accounts payable to other function of the business.
 Ex: input (purchase data on what has been ordered, invoice
from supplier) & output ( supplier payment)

Payroll System
 To prepare paychecks for employees & to provide reports of
payroll.
 Ex : input (employee work report data), output (produce
paycheck)
TYPES OF TPS
General Ledger System
 To maintain the business’s financial accounts & to
prepare financial statements.
 Ex : input(data on revenue, expenses, assets) & output
(financial statement)
OTHER BUSINESS INFORMATION
SYSTEM
Accounting Information System
 Supports the accounting function, consists of 3 types;
 Fixed asset accounting – to account for business asset such
as building, land & equipment.
 Budgeting – prepares projections of revenues & expenses &
compares actual figures with the projected ones.
 Tax Accounting – to prepare business tax reports & to pay
taxes.
OTHER BUSINESS INFORMATION
SYSTEM
Financial Information System
 Responsible for obtaining money needed by the business & for
planning the use of that money.
 Cash management – balances the need for cash & expected cash
availability.
 Capital expenditure analysis – to analyze the effect on business of
large expenditure such as major repair, new building etc
 Financial forecasting – forecast financial information such as
revenue & expenses for future.
 Portfolio management – analyzes alternative investment strategies
for the business’s cash & keep track of the investments.
 Credit analysis – to determine which customer should receive
credit.
OTHER BUSINESS INFORMATION
SYSTEM
Marketing Information System
 Responsible for selling goods & services for the business.
Order entry is considered to be a marketing information
system.
 Sales analysis – determines which products are selling well &
poorly.
 Sales forecasting – to project sales in the future.
 Marketing research – analyzes information about product &
consumers to identify the trends.
 Direct mail advertising – prepares advertising pieces for mailing
directly to potential customers.
 Electronic commerce – uses internet to advertise & sell goods.
 Sales force automation – provide information to assist staffs to
perform their task.
OTHER BUSINESS INFORMATION
SYSTEM
Manufacturing Information System
 Concerned with the production of goods that the business
sells.
 Production scheduling – schedules the use of manufacturing
facilities to produce products efficiently.
 Materials requirements planning (MRP)- determining what
parts/ materials will be needed & when will it be needed.
 Just-in-time inventory management – a form of inventory control
on which parts & materials are scheduled to arrive from supplier
before they are needed.
 Computer aided design (CAD) – using computer to assist in
the design of the product.
 Computer aided manufacturing (CAM) – using computers
to control machines in the manufacturing process.
 Robotics – uses computer controlled robots
 Computer integrated manufacturing – combines many of
the other manufacturing systems into a single system.
OTHER BUSINESS INFORMATION
SYSTEM
Human Resource Information System
 Responsible for hiring, training, compensating &
terminating employees.
 Performance appraisal – analyzes employee’s performance
on the job
 Skills inventory – keeps track of employee’s skills &
matches with specific job
 Benefits administration – manages employee’s benefit
packages
 Job applicant tracking – keeps track of applicants for job.
ORGANIZING INFORMATION SYSTEM
FUNCTIONS
 Main features of 4 ways of organizing the functions of
information system.

 Centralized systems
 Teleprocessing systems
 Decentralized systems
 Distributing systems
CENTRALIZED SYSTEM
 Means that all input, output, processing & storage
functions are performed at a single / central location.
 Advantages
 Economical - in terms of hardware usage
 Better control – due to one location

 Disadvantages
 Lack of response to the user – output take long time to be
returned to user.
 Not user friendly – users have to deal with central staffs for
any outputs which is frustrating.
TELEPROCESSING SYSTEM
 Transmits input & output data electronically between
user’s location & the central location.
 Processing & storage functions are still centralized,
while input& output are from different locations.
 Advantages
 Quicker input/output response to the user
 Disadvantages
 Userstill need to deal with central staffs to request
new/modifies system.
DECENTRALIZED SYSTEM
 To overcome the lack of response to user’s needs for new &
modified system.
 Advantages
 Better response to the user’s needs – because each group of users
has a computer for its system.
 Disadvantages
 Hardware cost – several smaller computers usually cost more than
one large computer that can perform all processing.
 Lack of control – each group responsible for controlling the use of
their computer & failing to follow procedures may result in
system not performing as desired. Data may not be transferable to
another.
DISTRIBUTED SYSTEM
 Similar to decentralized system in terms of location,
hardware & control but allows for communication between
one system to another since they are linked using data
communications to form LAN/WAN
 Computers do not have to do the processing tasks as it can be
send to another computer where the processing can be done
& output sent back.
 Advantages
 Providebetter response to users with added capabilities.
 More control – users must follow a standard procedure

 Disadvantages
 Complexity – many computers, & massive network, a lot of
procedures & users need training.