TYPES OF INFORMATION

SYSTEMS
J. GICHANE
TYPES OF INFORMATION SYSTEMS
TO SUPPORT MANAGEMENT
• A typical business firm will need information
system for each major business process that
support that particular functional area
• There will also be different systems supporting
decision making needs of each main
management group. There are systems that are
appropriate for the varying management levels:
Operational, Middle level and Senior level.
TYPES OF INFORMATION SYSTEMS

The different types Include:

1. Transactional Processing System
2. Management Information System
3. Decision Support System
4. Executive Support System
5. Enterprise Systems
6. Supply Chain Management System
7. Customer relation Management System
8. Knowledge Management System
 1. TRANSACTION PROCESSING
SYSTEMS (TPS)
• TPS is a computerized system that performs and records
the daily routine transactions necessary to conduct
business.
• The principal purpose of these systems is to answer routine
questions and to track the flow of transactions through the
organization. They support decisions that are highly
structured.
• Such transactions include sales order entry, hotel
reservations, payroll, employee record keeping, and
shipping.
• This information need to be easily available, current and
accurate.
 1. TRANSACTION PROCESSING
SYSTEMS (TPS)
• The transaction processing systems
include systems such as:
1. Payroll systems
2. Accounting Systems
3. HR systems
4. Inventory Systems
 1. TRANSACTION PROCESSING
SYSTEMS (TPS)
• TPS are important to operational (lower)
level managers.
• They supply such information as sales,
receipts, cash deposits, payroll, credit
decisions, and the flow of materials in a
factory.
 1. TRANSACTION PROCESSING
SYSTEMS (TPS)
• TPS are also important to higher level
managers.
• At this level they help to monitor the
status of internal operations and the firm’s
relations with the external environment
• TPS also provide information required by
the other systems.
 1. TRANSACTION PROCESSING
SYSTEMS (TPS)
• Such information include:
• General ledger
– Which maintains income and expenditure
records, and produce reports such as income
statements and balance sheets.
• Employee payment history data
– (insurance, pension, benefits, statutory
deductions, etc)
 2. MANAGEMENT INFORMATION SYSTEMS
(MIS) AND DECISION SUPPORT SYSTEMS
(DSS)
• These systems are build mainly to support
decision making in the organization.
• The other systems to support decision making
are:
– Executive support systems (ESS)
– Geographic Information Systems (GIS)
– Group decision support systems (GDSS)
– Customer decision support systems (CDSS - often
web based)
• We will consider only MIS, DSS and ESS in this
course.
 2. MANAGEMENT INFORMATION SYSTEMS
(MIS) AND DECISION SUPPORT SYSTEMS
(DSS)
MIS
• Management Information Systems (MIS) is the study
of information systems in business and management.
• The term MIS also refers to a category of information
systems that target the information needs of middle
level management.
• MIS summarize and report on the company’s basic
operations using data supplied by transaction
processing systems.
 2. MANAGEMENT INFORMATION SYSTEMS
(MIS) AND DECISION SUPPORT SYSTEMS
(DSS)
MIS
• The information systems provide management
with information that help in controlling,
decision-making, and administrative activities.
 2. MANAGEMENT INFORMATION SYSTEMS
(MIS) AND DECISION SUPPORT SYSTEMS
(DSS)
MIS
• The information is provided to middle level
management in form of summarized reports.
• These reports are mainly weekly, monthly or yearly
summaries and comparisons.
• MIS are not flexible systems, and have little analytical
capabilities
• They provide answers to routine questions, using data
that is mainly internal.
 2. MANAGEMENT INFORMATION
SYSTEMS (MIS) AND DECISION
SUPPORT SYSTEMS (DSS)
DSS
• DSS are flexible systems that handle non-routine
decision making.
• They focus on problems that are unique and
rapidly changing.
• DSS handle data both from internal as well as
from external sources.
• They use a variety of models (mathematical and
statistical) to analyze data.
 2. MANAGEMENT INFORMATION
SYSTEMS (MIS) AND DECISION
SUPPORT SYSTEMS (DSS)
DSS
• Some are designed to extract useful information
from massive amounts of data.
• DSS are sometimes referred to as business
intelligence systems because they focus on
helping users make better business decisions.
• They are designed to handle “what-if” questions,
but are not as developed as Executive Support
Systems (ESS).
3. EXECUTIVE SUPPORT SYSTEMS
(ESS) FOR SENIOR MANAGEMENT
ESS
• ESS address non-routine decisions requiring
judgment, evaluation and insight. These are
cases where there is no agreed-on procedure for
arriving at a solution.
• They are used by senior management to handle
issues of strategic planning and long-term
trends, both within the firm and in the external
environment.
• ESS draw a lot of data from MIS and DSS, and
are more developed to do “what-if” analysis.
3. EXECUTIVE SUPPORT SYSTEMS
(ESS) FOR SENIOR MANAGEMENT
ESS
• ESS retrieves information from different sources
and displays it on a single screen.
• They provide an interface that is easy for the
senior management to follow the economic
status of the firm as well as the trends occurring
in the environment.
3. EXECUTIVE SUPPORT SYSTEMS
(ESS) FOR SENIOR MANAGEMENT
ESS
• The current trend is to present the interface as a
portal that incorporate a digital dashboard. A
portal is a web interface.
• The portal displays on a single screen graphs
and charts on key indicators for managing a
company.
 4. ENTERPRISE APPICATIONS

• Enterprise applications are systems that span

functional areas, focus on executing business
processes across the business firm and include
all levels of management.
• Popular enterprise applications include:
a) Enterprise systems (also called ERP – Enterprise
Resource Planning)
b) Supply Chain Management Systems
c) Customer Relations Management systems
d) Knowledge Management Systems
 a) ENTERPRISE SYSTEMS
• Enterprise systems are systems that are based on a suite
of integrated software modules and a common central
database.
• Enterprise systems collect data from various key
business functions and storing the data in a single central
data repository.
• They are also known as Enterprise Resource Planning
Systems, and commonly referred to as ERP
• The most common are those that integrate systems from
HR with those for Finance and accounting.
 a) ENTERPRISE SYSTEMS

Business Value of Enterprise systems

• Enterprise systems
1. increase operational efficiency
2. provide firm-wide information to help
managers make better decisions.
3. Information that was previously fragmented
in different systems can be easily shared
across the firm to help different parts of the
business work more closely together.
 b) SUPPLY CHAIN MANAGEMENT
SYSTEMS (SCM)
• These help businesses to manage
relationships with suppliers.
• They assist businesses to make orders in
the right amounts and at the right time.
• The firm does not have to maintain a large
unnecessary stock, or run out of stock
when customers are placing large orders.
 b) SUPPLY CHAIN MANAGEMENT
SYSTEMS (SCM)
• This has created the concept of:
1. Just-in-time (JIT) strategy – Items are supplied to
customer at the moment the customer needs them. This
strategy is based on a demand-driven supply chain.
2. Zero-inventory strategy – Just-in-time leads to the concept
of Zero-Inventory strategy. The supplier organization is
maintains almost zero stock because the items produced
are shipped to the customer almost immediately they leave
the assembly line.
• With SCM implementation, business is pull-based model.
Items are produced according to known demand by customer.
In push-based model, production is based on forecasting,
rather than known demand. This often leads to
overproduction.
• JIT concept sometimes can result in unsuitable
condition called bullwhip effect.
• Bullwhip effect is created by distorted information
from one organization along the supply chain.
• This is a condition in which some of the
organization in the supply chain stockpile
production ready to supply to the customer
 b) SUPPLY CHAIN MANAGEMENT
SYSTEMS (SCM)
• SCM are an example of inter-organizational systems.
• The information is shared with supplier and customer
organizations, but also between branches of the same
organization.
• SCM software are in two major categories:
1. Supply chain planning systems
– Mainly for planning production levels to meet customer demand
(Demand planning systems)
2. Supply chain execution systems.
• Mainly provide information to ensure efficient delivery of products
to the various customers
 6. CUSTOMER RELATIONSHIP
MANAGEMENT SYSTEMS (CRM)
• CRM help firms to manage their relationships with their customers.
• CRM benefits the organization in three major areas:
a)Sales Force Automation (SFA)
b) Customer service
c) Marketing
• They provide information that help the firm to :
– identify, attract, and retain the most profitable customers,
– provide better service to customers,
– and increase sales.
– Design cross-selling (marketing products that are often complementary
to what a customer has already purchased).
– They consolidate and integrate customer information from multiple
communication channels – telephone, email, wireless devices, retail outlets, or
the web.
 6. CUSTOMER RELATIONSHIP
MANAGEMENT SYSTEMS (CRM)
• CRM contain modules for partner relationship
management (PRM) and employee relationship
management (ERM).
– PRM: Relationship with distributors and retailers, and
helping them to develop higher customer intimacy.
– ERM: Improving employees in their relationship with
customers, and provision of service.
• CRM applications support either the operational
or analytical aspects of the CRM
 7. KNOWLEDGE MANAGEMENT
SYSTEMS (KMS)
• Knowledge is the information in the minds, and
in the experience of the workers and managers.
It is an intangible asset in the organization. It
can be stored in libraries and records, and also in
business processes and employee know-how. It
can be shared in lectures.
• Knowledge management systems are systems
that help to capture and store knowledge in the
firm.
• These will be discussed more as a separate
lesson.
 8. OTHER SYSTEMS AND TECHNOLOGIES

1. INTRANET AND EXTRANET

• Intranet is a system internal to an organization,
that uses the internet technologies. It is contained
within a LAN (Local Area Network), and accessed
within the LAN
• An extranet is an internal system that allows
authorized access outside of the LAN. Security
settings are put in place to prevent unauthorized
access or intrusion.
OTHER SYSTEMS AND TECHNOLOGIES

2. COLLABORATION AND
COMMUNICATION SYSTEMS
• These include:
a) Videoconferencing – This system allows
people far and wide to hold a meeting in real
time, and to talk and see each other.
b) Email and Instant messaging (IM) – Message
is transmitted within seconds
OTHER SYSTEMS AND TECHNOLOGIES

c) Cellphones and smartphones

d) Social networking – For instance, facebook and
twitter
e) Wikis – For instance – wikipedia. This is a
website where users can add to the information
f) Virtual world – Eg: Second life. Some people
create virtual worlds using internet and 3D
technologies. Life in virtual worlds try to
emulate life in the real world.
OTHER SYSTEMS AND TECHNOLOGIES

3. E-BUSINESS, E-COMMERCE AND E-

GOVERNMENT
a) E-Business is using computers and related
technologies to transact normal organization
business process – eg: students making
registration by accessing the system over the
internet
OTHER SYSTEMS AND TECHNOLOGIES

b) E-commerce is to use computers and

related technologies to place orders, and
to make payments.
c) E-government is to use computers and
related technologies to provide
government services