BCOM304

Management Information System

Unit-3

A Transaction Processing System or Transaction Processing Monitor is a set of

information which process the data transaction in database system that monitors transaction
programs (a special kind of program). The essence of a transaction program is that it
manages data that must be left in a consistent state. E.g. if an electronic payment is made, the
amount must be either both withdrawn from one account and added to the other, or none at
all. In case of a failure preventing transaction completion, the partially executed transaction
must be 'rolled back' by the TPS. While this type of integrity must be provided also for batch
transaction processing, it is particularly important for online processing: if e.g. an airline seat
reservation system is accessed by multiple operators, after an empty seat inquiry, the seat
reservation data must be locked until the reservation is made, otherwise another user may get
the impression a seat is still free while it is actually being booked at the time. Without proper
transaction monitoring, double bookings may occur. Other transaction monitor functions
include deadlock detection and resolution (deadlocks may be inevitable in certain cases of
cross-dependence on data), and transaction logging (in 'journals') for 'forward recovery' in
case of massive failures. Transaction Processing is not limited to application programs. The
'journaled file system' provided with IBMs AIX Unix operating system employs similar
techniques to maintain file system integrity, including a journal.

Types of Transactions
Note that the transactions can be internal or external.When a department orders office
supplies from the purchasing department, an internal transaction occurs, when a customer
places an order for a product, an external transaction occurs.

Internal Transactions: Those transactions, which are internal to the company and are
related with the internal working of any organization. For example Recruitment Policy,
Promotion Policy, Production policy etc

External Transactions: Those transactions, which are external to the organization and are
related with the external sources, are regarded as External Transaction. For example sales,
purchase etc.

Characteristics of Transaction Processing Systems

1. A TPS records internal and external transactions for a company. It is a repository of data
that is frequently accessed by other systems

2. A TPS performs routine, repetitive tasks. It is mostly used by lower-level managers to

make operational decisions

3. Transactions can be recorded in batch mode or online. In batch mode, the files are updated
periodically; in online mode, each transaction is recorded as it occurs.

4. There are six steps in processing a transaction. They are data entry, data validation, data
pro- cessing and revalidation, storage, - output generation, and query support.
Role and Importance for Various Levels of Management:
Precise data and information are required by managers on all tiers of an organization to make
the right decisions and drive organizational performance. However, the needs at each level
may differ. The information needs differ between the upper and the lower levels of
management. The frontline manager would need mostly need clear, precise, quantifiable and
internal information whereas at the top level the managers would need mostly external
information that is summarised and future-oriented. This is mainly since the type of decisions
managers make can differ. However, MIS plays a vital role at each level and sometimes
different Information Systems have to be integrated into one to serve the information needs of
the entire organization.

Clerical people/operational managers:

MIS helps the operational level user with transaction processing, management control,
operations control, etc.

Junior Management:
MIS provides operational data and information that the junior level managers can use for
efficient operational decision making. It also helps at planning, scheduling and controlling at
the operational level. Apart from that, it aids in decision analysis at the operational level
that can be used to bring an out of control situation under control.

Middle Management:
MIS provides the middle management with the data and information required for short term
planning, setting targets as well as for managing the business.

Top-level management:
The top-level management requires the MIS for having precise and targeted information that
helps it with goal setting, strategic planning and other things that the top managers are
required to do.

Role of MIS in an Organization

The huge role MIS have on the survival and growth of a business organization are
summarized below: Gives managers feedback about the performance of the organization.
Need based, personal oriented managerial information are communicated in the form of time-
based or ondemand reports.MIS Data Hardware Software Communicaton People Procedure
Role of Management Information System in Business and Industry.Information primarily
geared to achieve strategic and efficient managerial decision making.; This helps to take fact
based decisions. MIS provides timely, accurate information which helps in informed
decision making. A delayed information is useless and obsolete. Flow of information is
based on systems approach. Thus information integrating the diverse activities of different
departments within the organization is supplied. Flexibility in information system is an
important attribute of a rapid evolving modern MIS. It helps theorganization to incorporate
future information requirements. It helps in better control and administration of the
organization at different levels.Enables better Communication within the organization.
Efficiency in Operations and Management of the Organization is ensured with the use of
MIS. MIS produces different types and forms of reports from the same set of information or
data. This enablesMIS to cater the diverse information requirement within the organization.
MIS enables easy, secure and quick sharing of data within the organization. Balancing
Conflicting data requirements through the use of MIS because the same data can be accessed
in more than one location even remotely from outside the organization parameters. MIS
helps in maintaining standards for data, process and managerial activities. MIS helps to
forecast the future circumstances of business by analysing the periodical reports of various
kinds of data

Decision Support System

Decision support systems DSS are interactive software-based systems intended
to help managers in decision-making by accessing large volumes of
information generated from various related information systems involved in
organizational business processes, such as office automation system,
transaction processing system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the
analytical models. A decision support system helps in decision-making but does
not necessarily give a decision itself. The decision makers compile useful
information from raw data, documents, personal knowledge, and/or business
models to identify and solve problems and make decisions.
Programmed and Non-programmed Decisions
There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work,
where: These decisions have been taken several times. These decisions follow
some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations, so: It
would be a new decision. There will not be any rules to follow. These decisions
are made based on the available information. These decisions are based on the
manger's discretion, instinct, perception and judgment.

For example, investing in a new technology is a non-programmed decision.

Decision support systems generally involve non-programmed decisions.
Therefore, there will be no exact report, content, or format for these systems.
Reports are generated on the fly.

Attributes of a DSS
 Adaptability and flexibility
 High level of Interactivity
 Ease of use
 Efficiency and effectiveness
 Complete control by decision-makers
 Ease of development
 Extendibility
 Support for modeling and analysis
  Support for data access
Standalone, integrated, and Web-based

Characteristics of a DSS

Support for decision-makers in semi-structured and unstructured problems

Support for managers at various managerial levels, ranging from top
executive to line managers.
Support for individuals and groups. Less structured problems often requires the
involvement of several individuals from different departments and organization
level.
Support for interdependent or sequential decisions.
Support for intelligence, design, choice, and implementation. Support for variety
of decision processes and styles.

DSSs are adaptive over time.

Benefits of DSS
Improves efficiency and speed of decision-making activities.
Increases the control, competitiveness and capability of futuristic decision-
making of the organization.
Facilitates interpersonal communication.

Encourages learning or training.

Since it is mostly used in non-programmed decisions, it reveals new approaches

and sets up new evidences for an unusual decision.
Helps automate managerial processes.

Components of a DSS
Following are the components of the Decision Support System:
Database Management System DBMS: To solve a problem the necessary data
may come from internal or external database. In an organization, internal data
are generated by a system such as TPS and MIS. External data come from a
variety of sources such as newspapers, online data services, databases financial,
marketing, humanresources.
Model Management System: It stores and accesses models that managers use to
make decisions. Such models are used for designing manufacturing facility,
analyzing the financial health of an organization, forecasting demand of a
product or service, etc.
Support Tools: Support tools like online help; pulls down menus, user
interfaces, graphical analysis, error correction mechanism, facilitates the user
interactions with the system.

Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS
as follows:
Text Oriented DSS: It contains textually represented information that could
have a bearing on decision. It allows documents to be electronically created,
revised and viewed as needed.
Database Oriented DSS: Database plays a major role here; it contains
organized and highly structured data.
Spreadsheet Oriented DSS: It contains information in spread sheets that allows
create, view, modify procedural knowledge and also instructs the system to
execute self-contained instructions. The most popular tool is Excel and Lotus 1-
2-3.
Solver Oriented DSS: It is based on a solver, which is an algorithm or
procedure written for performing certain calculations and particular program
type.
Rules Oriented DSS: It follows certain procedures adopted as rules.

Rules Oriented DSS: Procedures are adopted in rules oriented DSS. Export
system is the example.
Compound DSS: It is built by using two or more of the five structures explained
above.

Types of DSS

Following are some typical DSSs:

Status Inquiry System: It helps in taking operational, management level, or

middle level management decisions, for example daily schedules of jobs to
machines or machines to operators.
Data Analysis System: It needs comparative analysis and makes use of formula
or an algorithm, for example cash flow analysis, inventory analysis etc.
Information Analysis System: In this system data is analyzed and the
information report is generated. For example, sales analysis, accounts receivable
systems, market analysis etc.
Accounting System: It keeps track of accounting and finance related
information, for example, final account, accounts receivables, accounts payables,
etc. that keep track of the major aspects of the business.
Model Based System: Simulation models or optimization models used for
decision-making are used infrequently and creates general guidelines for
operation or management.
Executive Information System
Executive support systems are intended to be used by the senior managers directly to
provide support to non-programmed decisions in strategic management.
These information are often external, unstructured and even uncertain. Exact scope and
context of such information is often not known beforehand.
This information is intelligence based −

 Market intelligence
 Investment intelligence
 Technology intelligence

Examples of Intelligent Information

Following are some examples of intelligent information, which is often the source of an ESS −

 External databases
 Technology reports like patent records etc.
 Technical reports from consultants
 Market reports
 Confidential information about competitors
 Speculative information like market conditions
 Government policies
 Financial reports and information

Features of Executive Information System

Advantages of ESS
 Easy for upper level executive to use
 Ability to analyze trends
 Augmentation of managers' leadership capabilities
 Enhance personal thinking and decision-making
 Contribution to strategic control flexibility
 Enhance organizational competitiveness in the market place
 Instruments of change
 Increased executive time horizons.
 Better reporting system
 Improved mental model of business executive
 Help improve consensus building and communication
 Improve office automation
 Reduce time for finding information
 Early identification of company performance
 Detail examination of critical success factor
 Better understanding
 Time management
 Increased communication capacity and quality

Disadvantage of ESS
 Functions are limited
 Hard to quantify benefits
 Executive may encounter information overload
 System may become slow
 Difficult to keep current data
 May lead to less reliable and insecure data
 Excessive cost for small company

Expert Systems
Artificial Intelligence is a piece of software that simulates the behavior and judgment of a
human or an organization that has experts in a particular domain is known as an expert
system. It does by acquiring relevant knowledge from its knowledge base and interpreting it
according to the user’s problem. The data in the knowledge base is added by humans that are
expert in a particular domain and this software is used by a non-expert user to acquire some
information. It is widely used in many areas such as medical diagnosis, accounting, coding,
games etc.
An expert system is an AI software that uses knowledge stored in a knowledge base to solve
problems that would usually require a human expert thus preserving a human expert’s
knowledge in its knowledge base. They can advise users as well as provide explanations to
them about how they reached a particular conclusion or advice.
Examples: There are many examples of expert system. Some of them are given below:
 MYCIN: One of the earliest expert systems based on backward chaining. It can identify
various bacteria that can cause severe infections and can also recommend drugs based on the
person’s weight.
 DENDRAL: It was an artificial intelligence based expert system used for chemical analysis.
It used a substance’s spectrographic data to predict it’s molecular structure.
 R1/XCON: It could select specific software to generate a computer system wished by the
user.
 PXDES: It could easily determine the type and the degree of lung cancer in a patient based on
the data.
 CaDet: It is a clinical support system that could identify cancer in its early stages in patients.
 DXplain: It was also a clinical support system that could suggest a variety of diseases based
on the findings of the doctor.
Components of an expert system:
 Knowledge base: The knowledge base represents facts and rules. It consists of knowledge in
a particular domain as well as rules to solve a problem, procedures and intrinsic data relevant to
the domain.
 Inference engine: The function of the inference engine is to fetch the relevant knowledge
from the knowledge base, interpret it and to find a solution relevant to the user’s problem. The
inference engine acquires the rules from its knowledge base and applies them to the known
facts to infer new facts. Inference engines can also include an explanation and debugging
abilities.
 Knowledge acquisition and learning module: The function of this component is to allow
the expert system to acquire more and more knowledge from various sources and store it in the
knowledge base.
 User interface: This module makes it possible for a non-expert user to interact with the
expert system and find a solution to the problem.
 Explanation module: This module helps the expert system to give the user an explanation
about how the expert system reached a particular conclusion.
Characteristics of an expert system:
 Human experts are perishable but an expert system is permanent.
 It helps to distribute the expertise of a human.
 One expert system may contain knowledge from more than one human experts thus making
the solutions more efficient.
 It decreases the cost of consulting an expert for various domains such as medical diagnosis.
 They use a knowledge base and inference engine.
 Expert systems can solve complex problems by deducing new facts through existing facts of
knowledge, represented mostly as if-then rules rather than through conventional procedural
code.
 Expert systems were among the first truly successful forms of artificial intelligence (AI)
software.

Limitations:

 Don’t have human-like decision making power.

 Can’t possess human capabilities.
 Can’t produce correct result from less amount of knowledge.
 Requires excessive training.
Advantages:
 Low accessibility cost.
  Fast response.
 Not affected by emotions unlike humans.
 Low error rate.
 Capable of explaining how they reached a solution.
Disadvantages:
 Expert system have no emotions.

 Common sense is the main issue of the expert system.

 It is developed for a specific domain.
 It needs to be updated manually. It does not learn itself.
 Not capable to explain the logic behind the decision.
Expert systems have evolved so much that they have started various debates about the fate of
humanity in the face of such intelligence, with authors such as Nick Bostrom (Professor of
philosophy at Oxford University), pondering if computing power has transcended our ability
to control it.

Recent Developments and The Future of Management Information

Systems
Management information systems, like any discipline that involves computers and software,
is constantly changing. Some recent developments in the field include the following:

 PCs Can Now Host MISs: A small business can have access to the powerful software that
previously was only available to large enterprises.
 Application and Management Service Providers: Similar to renting cloud storage,
companies can rent software packages and systems management services and expand as their
needs change.
 Security: As proved by recent data breaches, data security has moved from a minor concern
to a major one. Detailed information about security practices can be found here. 

In the future, many of the same forces that will change the larger world will affect MIS,
but some will have a greater impact than others. MIS experts weigh-in on the topic and
what we can expect going forward:

Maeve Cummings believes:

One big area of development in information technology is artificial intelligence (AI), which
goes far beyond robots that control production (for example, in the automobile industry).
Machines are becoming smarter in that they can learn how to solve problems. One such
system is a neural network, which is used to alert you that your credit card may have been
used unlawfully. These neural networks form a pattern of your spending and based on that,
they flag purchases that are out of character, which is when you're notified or your credit card
is frozen, depending on the situation. Such developments undoubtedly affect MIS, but they
also affect the culture, the law, medicine, military defense, etc.

With so much big data being collected and analyzed nowadays, there will be a great need for
legal minds to help sort through the various issues of what should and should not be legal
from a privacy point of view. Also, with the budding field of computer-aided mind reading,
still very much in its infancy, the issue of what society is allowed to do with that information
will be crucial. For example, if you can read a person’s mind to determine whether that
person is lying or not, would that be considered evidence or testimony? The law protects
people from incriminating themselves (i.e. testimony). However, evidence, such as blood and
hair samples may be taken without the consent of the accused. So which is mind-reading?
The most interesting part of this business is that it is constantly changing and becoming more
powerful. That is also the most alarming part of it.

R. Kelly Rainer Jr shares his thoughts on emerging technologies:

 Artificial Intelligence: Narrow AI (AI for specific tasks) is now pervasive in many

organizations. Advances in machine learning and deep learning are making narrow AI much
more valuable to all of us. Think instantaneous translation, autonomous vehicles, robots,
digital manufacturing (3D printing), etc. MIS departments must try to keep up with these
advances and decide how narrow AI can be used in their organizations. 
 The Internet of Things (IoT): The rapid increase of placing sensors on all objects (animate
and inanimate) is leading to a sense-and-respond environment. MIS employees should
perform the SWOT analysis on IoT for their organizations. A well-publicized example of IoT
is General Electric and its Predix operating system.
 Blockchain: Distributed-ledger technology is now being used in a large number of areas.
Again, MIS employees must keep up with this technology and see how it impacts their
organizations. 
 Financial Technology (FinTech): If your organization is in the financial sector, your MIS
employees had better be closely watching start-up FinTech companies. These companies are
planning on disrupting the traditional financial sector.
 Quantum Computing: As Moore’s Law begins to slow as we reach the physical limits on
how many integrated circuits we can place on a chip, a new paradigm is emerging called
quantum computing. Classical computing uses bits, which are either a “0” or a “1.” Quantum
computing uses quantum bits (qubits). Unlike classical bits, qubits can store much more
information than just 1 or 0 because they can exist in any superposition of these values.
Quantum computing is in its very early days, but its potential can provide a dramatic increase
in computing speeds. For example, scientists are hoping to be able to accurately model the
climate. Another application lies in the field of information security.