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 nonmanagement 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.
 
A special type of DSS, called an executive information
system (EIS), is designed to support the information
needs of executive management.  Information in an EIS is
presented in charts and tables that show trends, ratios, and
other managerial statistics.  Because executives usually
focus on strategic issues, EISs rely on external data
sources such as the Dow Jones News/Retrieval service or
the Internet.  These external data sources can provide
current information on interest rates, commodity prices,
and other leading economic indicators.
 
To store all the necessary decision-making data, DSSs or
EISs often use extremely large databases, called data
warehouses.  A data warehouse stores and manages the
data required to analyze historical and current business
circumstances.
 
5. Expert Systems
 
An expert system  is an information system that captures
and stores the knowledge of human experts and then
imitates human reasoning and decision-making processes
for those who have less expertise.  Expert systems are
composed of two main components:  a knowledge base
and inference rules.  A knowledge base is the combined
subject knowledge and experiences of the human
experts.  The inference rules are a set of logical
judgments applied to the knowledge base each time a user
describes a situation to the expert system.
 
Although expert systems can help decision-making at any
level in an organization, nonmanagement employees are
the primary users who utilize them to help with job-
related decisions.  Expert systems also successfully have
resolved such diverse problems as diagnosing illnesses,
searching for oil and making soup.
 
Expert systems are one part of an exciting branch of
computer science called artificial intelligence.  Artificial
intelligence (AI) is the application of human intelligence
to computers.  AI technology can sense your actions and,
based on logical assumptions and prior experience, will
take the appropriate action to complete the task.  AI has a
variety of capabilities, including speech recognition,
logical reasoning, and creative responses.
 
Experts predict that AI eventually will be incorporated
into most computer systems and many individual software
applications.  Many word processing programs already
include speech recognition.
 
Integrated Information Systems
 
With today’s sophisticated hardware, software and
communications technologies, it often is difficult to
classify a system as belonging uniquely to one of the five
information system types discussed.  Much of today’s
application software supports transaction processing and
generates management information.  Other applications
provide transaction processing, management information,
and decision support.  Although expert systems still
operate primarily as separate systems, organizations
increasingly are consolidating their information needs into
a single, integrated information system.
 
Transaction Processing System
A small business processes transactions that result from
day-to-day business operations, such as the creation of
paychecks and purchase orders, using a transaction
processing system, or TPS. The TPS, unlike a batch
system, requires that users interact with the system in real
time to direct the system to collect, store, retrieve and
modify data. A user enters transaction data by means of a
terminal, and the system immediately stores the data in a
database and produces any required output. For example,
a small-business owner may direct a bank system to debit
a savings account for $500 and credit the company's
checking account for $500. Because of constant system
updates, a user can access current TPS data, such as an
account balance, at any point.
Management Information System
Small-business managers and owners rely on an industry-
specific management information system, or MIS, to get
current and historical operational performance data, such
as sales and inventories data. Periodically, the MIS can
create prescheduled reports, which company
management can use in strategic, tactical and operational
planning and operations. For example, an MIS report may
be a pie chart that illustrates product sales volume by
territory or a graph that illustrates the percentage increase
or decrease in a product's sales over time. Small-business
managers and owners also rely on the MIS to conduct
“what-if” ad hoc analyses. For example, a manager might
use the system to determine the potential effect on
shipping schedules if monthly sales doubled.
Decision Support System
A decision-support system, or DSS, allows small-business
managers and owners to use predefined or ad hoc reports
to support operations planning and problem-resolution
decisions. With DSS, users find answers to specific
questions as a means to evaluate the possible impact of a
decision before it is implemented. The answers to queries
may take the form of a data summary report, such as a
product revenue by quarter sales report. To conduct an
analysis, business owners and managers use an interface
-- a dashboard -- to select a particular graphic
representation of a key performance indicator that
measures the progress toward meeting a specific goal.
For example, a manufacturing dashboard might display a
graphic representing the number of products
manufactured on a particular line.
Executive Support System
The executive support system, or ESS, contains
predefined reports that help small-business owners and
managers identify long-term trends in support of strategic
planning and nonroutine decision making. System users
click on any icon displayed on the ESS screen and enter
report criteria to view individual predefined reports and
graphs, which are based on companywide and functional
department data, such as sales, scheduling and cost
accounting. The ESS reports brief the business manager
or owner on an issue, such as market trends and buyer
preferences.The ESS system also offers analysis tools
used to predict outcomes, assess performance and
calculate statistics based on existing data.

Knowledge Management System (KM

System)refers to a (generally IT based) system
for managing knowledge in organizations for
supporting creation, capture, storage and
dissemination of information. It can comprise a part
(neither necessary nor sufficient) of a Knowledge
Management initiative.
The idea of a KM system is to enable employees to
have ready access to the organization's
documented base of facts, sources of information,
and solutions. For example a typical claim justifying
the creation of a KM system might run something
like this: an engineer could know the metallurgical
composition of an alloy that reduces sound in gear
systems. Sharing this information organization wide
can lead to more effective engine design and it
could also lead to ideas for new or improved
equipment.
A KM system could be any of the following:
KMS systems deal with information (although
Knowledge Management as a discipline may extend
beyond the information centric aspect of any
system) so they are a class of information system
and may build on, or utilize other information
sources. Distinguishing features of a KMS can
include:
A KMS offers integrated services to deploy KM
instruments for networks of participants, i.e. active
knowledge workers, in knowledge-intensive
business processes along the entire knowledge life
cycle. KMS can be used for a wide range of
cooperative, collaborative, adhocracy and hierarchy
communities, virtual organizations, societies and
other virtual networks, to manage media contents;
activities, interactions and work-flows purposes;
projects; works, networks, departments, privileges,
roles, participants and other active users in order to
extract and generate new knowledge and to
enhance, leverage and transfer in new outcomes of
knowledge providing new services using new
formats and interfaces and different
communication channels.
The term KMS can be associated to Open Source
Software, and Open Standards, Open Protocols and
Open Knowledge licenses, initiatives and policies.