ION 501: Introduction to Information Systems

Introduction to Information Systems
Chapter 2: Types of Information Systems

   2.1 Key System Applications in the Organization

   Different Kinds of Systems

Information systems support different types of decisions at different levels of the organizational hierarchy. While operational managers mostly make structured decisions, senior managers deal with unstructured decisions; middle managers are often faced with semi-structured decisions.

Click to See the Pyramid

For each functional area in the organization, four levels of organizational hierarchy can be identified: the operational level, knowledge level, management level and strategic level. Each of these levels is served by different types of information systems.

   Major Types of Systems
Transaction Processing Systems (TPS) record daily routine transactions such as sales orders from customers, or bank deposits and withdrawals. TPS are vital for the organization, as they gather all the input necessary for other types of systems. Think about how one could generate a monthly sales report for middle management or critical marketing information to senior managers without TPS. TPS provide the basic input to the company's database. A failure in the TPS often means disaster for the organization. Imagine what happens when the reservation system at Turkish Airlines fails: all operations stop, no transactions can be carried out until the system is up again. Long queues form in front of ATMs and tellers when a bank's TPS crashes.

Knowledge Work Systems (KWS) support highly skilled knowledge workers in the creation and integration of new knowledge into the company. Computer Aided Design (CAD) systems used by product designers not only allow them to easily make modifications without having to redraw the entire object (just like word processors for documents), but also enable them to test the product without having to build physical prototypes. Three dimensional graphical simulation systems like GRASP (Graphical Robotics Applications Simulation Package) are used by British Aerospace and Rolls Royce for evaluating and programming industrial robots. Architects use CAD software to create, modify, evaluate and test their designs; such systems can generate photorealistic pictures, simulating the lighting in rooms at different times of the day, perform calculations, for instance on the amount of paint required. Surgeons use sophisticated CAD systems to design operations.

Financial institutions are using knowledge work systems to support trading and portfolio management with powerful high-end PC's. These allow managers to get instantaneous analyzed results on huge amounts of financial data and provide access to external databases.

Office Automation Systems (OAS) support general office work for handling and managing documents and facilitating communication. Text and image processing systems evolved from word processors to desktop publishing, enabling the creation of professional documents with graphics and special layout features. Spreadsheets, presentation packages like Powerpoint, personal database systems and note-taking systems (appointment book, notepad, cardfile) are part of OAS.

In addition OAS include communication systems for transmitting messages and documents ( e-mail ) and teleconferencing capabilities.

Management Information Systems (MIS) generate information for monitoring performance (e.g. productivity information) and maintaining coordination (e.g. between purchasing and accounts payable).

MIS extract, process and summarize data from the TPS and provide periodic (weekly, monthly, quarterly) reports to managers.

Click to See An Example

Today MIS are becoming more flexible by providing access to information whenever needed (rather than prespecified reports on a periodic basis). Users can often generate more customized reports by selecting subsets of data (such as listing the products with 2% increase in sales over the past month), using different sorting options (by sales region, by salesperson, by highest volume of sales) and different display choices (graphical, tabular).

Decision Support Systems (DSS) support analytical work in semi-structured or unstructured situations. They enable managers to answer "What if?" questions by providing powerful models and tools (simulation, optimization) to evaluate alternatives (e.g. evaluating alternative marketing plans).

DSS are user-friendly and highly interactive. Although they use data from the TPS and MIS, they also allow the inclusion of new data, often from external sources, such as current share prices or prices of competitors.

Click to See Examples

Read pages 594-598 (pages 472-478 in 6th edition) of the textbook.

Executive Support Systems (ESS) or Executive Information Systems (EIS) provide a generalized computing and communication environment to senior managers to support strategic decisions. They draw data from the MIS and allow communication with external sources of information. But unlike DSS, they are not designed to use analytical models for specific problem solving. ESS are designed to facilitate senior managers' access to information quickly and effectively.

ESS have menu driven user friendly interfaces, interactive graphics to help visualization of the situation, and communication capabilities that link the senior executive to the external databases he requires (e.g. Dow Jones News/Retrieval, or the Gallop Poll).

Read pages 610-612 (pages 486-488 in 6th edition) of the textbook for examples of ESS applications.

Prewritten ESS software is marketed by companies such as Comshare Inc.

Relationship of Systems to One Another
Different types of systems exist in organizations. Not all organizations have all of the types of systems described here. Many organizations may not have knowledge work systems, executive support systems or decision support systems. But today most organizations make use of office automation systems and have a portfolio of information system applications based on TPS and MIS (marketing systems, manufacturing systems, human resources systems). Some organizations have hybrid information systems that contain some of the characteristics of different types of systems.

The field of information systems is moving so quickly that the features of one particular type of system are integrated to other types (e.g. MIS having many of the features of ESS). System charecteristics evolve and new types of systems emerge. Yet the classification of information systems into these different types is useful because each type of system has certain features that are relevant in particular situations.

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