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Information
Systems

Lecture Outline:
1. Key System Applications in the Organization
2. 4 Main Kinds of Systems
3. 6 Major System Types
4. 4 Functional Areas of a Business Enterprise
5. Business Process
Key System
Applications in the
Organization
4

This diagram shows how the key system applications fit under the different functional areas that serve
different groups of people and with the corresponding functional areas.

4 Main Kinds of Systems

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1. Operational-level Systems
 Monitor the elementary activities and transactions of the organization
 Principal purpose: To track specific transactions and answer routine questions any time
 Example: Tracking system of number of hours worked for employees
 Operational-level systems can be considered the simplest of the four kinds.

2. Knowledge-level Systems
 Support knowledge and data workers
 Principal Purpose: Integration of new knowledge into the business and control of the flow of
paperwork
 Example: MS Office Applications

3. Management-level Systems
 Support the monitoring, controlling, decision-making, and administrative activities of middle
managers
 Principal Purpose: Provide historic, periodic information and support decision-making
 Example: Data Warehouse System with Monthly Comparisons of Actual vs. Target
Production Figures

4. Strategic-level Systems
 Support the long-range planning activities of senior management
 Principal Purpose: Assess the organization vs. environment
 Example: Systems that present what the firm will be like in 5 yearsNote that strategic-level
systems are the most complex types of systems, and oftentimes the most expensive
systems.

NOTE:
 While the management-level focuses mainly on historical data within the company to
support the decision-making, strategic-level positions the company relative to the
environment in which the company exists to support the planning for long-term goals.
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6 Major
System Types

1. Transaction Processing Systems (TPS)

TPS
 Basic business systems that serve the operational level
 A computerized system that performs and records the daily routine transactions necessary
to the conduct of the business (business operations)

Example:
Types
[Laudon of 2003]
& Laudon,
Payroll
TPS
[Laudon & Laudon, 2003]
Systems
2. Knowledge Work System (KWS)
 Knowledge level
 Inputs: Design specs
 Processing: Modeling
 Outputs: Designs, graphics
 Users: Technical staff and professionals
 Example: Engineering work station
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3. Office Automation System (OAS):
 Toward a “Paperless” Office
 Redesign of Work Flow
 Integrated Software
 Ergonomic Design
 Bright, cheerful work space
 Example: Presentation Graphics

4. Management Information System (MIS)

 Management level
 Inputs: High-volume data
 Processing: Simple models
 Outputs: Summary reports
 Users: Middle managers
 Examples: Annual budgeting and Monthly Sales

[Laudon & Laudon, 2003]

Sample report that might be produced by the MIS based on the previous example:

NOTE: An MIS supports the following:

• Structured and semi-structured decisions
• Report- and control-oriented functions
• Past and present data
• Internal orientation
• Lengthy design process
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5. Decision Support System (DSS)

 Management level
 Inputs: Low-volume data
 Processing: Interactive
 Output: Decision analysis
 Users: Professionals, staff
 Example: Contract cost analysis

Voyage-estimating Decision Support System

NOTE: A DSS has the following characteristics:

• Flexible, adaptable, quick
• User controls inputs and outputs and supports “what if” scenarios
• External sources included as well as sophisticated modeling tools

6. Executive Support System (ESS)

 Executive (Strategic) Level
 Inputs: Aggregate data
 Processing: Interactive
 Outputs: Projections
 Users: Senior managers
 Example: 5-year operating plan
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NOTE: ESS Characteristics:
• Top level management
• Employ the most advanced graphics software
• Ties CEO to all levels

Interrelationshi
•
•
Very expensive upkeep
Extensive support staff

ps among
[Laudon & Laudon, 2003]
Systems

4 Functional Areas of a
Business Enterprise
1. Marketing
 Identify customers for the firms products or services
 Determine customer needs and wants
 Plan and develop products and services to meet their needs
 Advertise and promote products and services
 Effective marketing aims for total customer satisfaction to promote customer loyalty.

Sales
• Contact customers
• Sell the products and services
• Take orders
• Follow-up on sales transactions
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Examples of Marketing and Sales Systems

2. Manufacturing and Production

 The planning, development, and production of products and services
 Controlling the flow of production
 “Critical-level” and “economic reorder quantity” concepts

Examples of Manufacturing and Production Systems

3. Finance and Accounting

4. Human Resources
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Definitions
Business Processes
• Unique ways to coordinate work, information, and knowledge
• Ways in which management chooses to coordinate work

Cross-Functional Business Processes

• Transcend boundaries between sales, marketing, manufacturing, and research and
development
• Group employees from different functional specialties to a complete piece of work

Example: The Order Fulfillment Process

[Laudon & Laudon, 2003]