Information system

It an integrated set of components for collecting, storing, and processing data and for
providing information, knowledge, and digital products. Business firms and other organizations
rely on information systems to carry out and manage their operations, interact with their
customers and suppliers, and compete in the marketplace. Information systems are used to run
inter organizational supply chains and electronic markets.

For instance, corporations use information systems to process financial accounts, to manage their
human resources, and to reach their potential customers with online promotions. Many major
companies are built entirely around information systems. These include eBay, a largely auction
marketplace; Amazon, an expanding electronic mall and provider of cloud computing services;
Alibaba, a business-to-business e-marketplace; and Google, a search engine  company that
derives most of its revenue from keyword advertising on Internet searches.
Governments deploy information systems to provide services cost-effectively to citizens. Digital
goods—such as electronic books, video products, and software—and online services, such as
gaming and social networking, are delivered with information systems. Individuals rely on
information systems, generally Internet-based, for conducting much of their personal lives: for
socializing, study, shopping, banking, and entertainment.

Components of information systems

The main components of information systems are

1. Computer hardware and software
2. Telecommunications,
3.  Databases and data warehouses
4. Human resources and procedures.
Management Information System (MIS)
It is one of the five major Computer Based Information Systems (CBIS). Its purpose is to meet
the general information needs of the managers in firm or organization. MIS is a computer
based system that makes information available to users with similar needs.
Management Information System (MIS) consists of following three pillars: Management,
Information, and System. These are explained as following below.
1. Management: art of getting things done through and with the people of in formally
organized groups.

Managerial functions:
Panning
Organizing
Staffing
Directing
Controlling

2. Information: data that have a meaning with a context ,where data is raw facts about an
entity (entity is the object of interest).
3. System: set of inter-related components with a clearly defined boundary working together
to achieve a common goal.

Executive Information System (EIS)

An Information System that provides Strategic information tailored to the needs of executives
and other decision makers. The emphasis of EIS is on graphical displays and easy-to-use user
interfaces. They offer strong reporting and drill-down capabilities. In general, EIS are enterprise-
wide DSS that help top-level executives analyze, compare, and highlight trends in important
variables so that they can monitor performance and identify opportunities and problems.
Senior managers need systems that address strategic issues and long-term trends, both in firm
and in the external environment. They are mainly concerned with the following frequently
asked questions so as to find the suitable solutions.

What will employment levels be in 5 years?

What are the long term industry cost trends, and where does our firm fit in?
How well competitors performing?

What products should we be making in 5 years?

What new acquisitions would protect us from cyclical business swings?

Characteristics & capabilities of EIS:-

Some of the desired characteristics and capabilities are described as below.

1) DRILL DOWN
The investigation of information in detail. For e.g. an executive may notice a decline in
corporate sales by region or by any means.

2) CRITICAL SUCCESS FACTORS (CSFs)

The factors those are most critical to the success of an organization. Such factors can be
strategic, managerial, or operational and are derived mainly from three resources like
organizational, industrial and environmental.

3) STATUS ACCESS
A rapid access to current information, provided by a computer. It may require daily or
even hourly operational tracking and reporting. In extreme cases, real-time reporting
may be required.

4) ANALYSIS
Analytic capabilities are available in EIS that use mathematical formulas to derive an
optimal solution directly or to predict a certain result, mainly in solving structured
problems.

5) EXCEPTION REPORTING
It is based on the concept of management by exception. That means in exception
reporting, the executive's attention is called only to cases with a very bad or very good
performance.
Transaction Processing System (TPS)

Transaction processing systems are used to record day to day business transactions of the
organization. They are used by users at the operational management level. The main objective of
a transaction processing system is to answer routine questions such as;

 How printers were sold today?

 How much inventory do we have at hand?
 What is the outstanding due for John ?

By recording the day to day business transactions, TPS system provides answers to the above
questions in a timely manner.

 The decisions made by operational managers are routine and highly structured.
 The information produced from the transaction processing system is very detailed.

For example, banks that give out loans require that the company that a person works for should
have a memorandum of understanding (MOU) with the bank. If a person whose employer has a
MOU with the bank applies for a loan, all that the operational staff has to do is verify the
submitted documents. If they meet the requirements, then the loan application documents are
processed. If they do not meet the requirements, then the client is advised to see tactical
management staff to see the possibility of signing a MOU.

Examples of transaction processing systems include;

 Point of Sale Systems – records daily sales

 Payroll systems – processing employees salary, loans management, etc.
 Stock Control systems – keeping track of inventory levels
  Airline booking systems – flights booking management

Decision support system

A decision support system produces detailed information reports by gathering and analyzing
data. Hence, a DSS is different from a normal operations application, whose goal is to collect
data and not analyze it.

In an organization, a DSS is used by the planning departments – such as the operations

department – which collects data and creates a report that can be used by managers for decision-
making. Mainly, a DSS is used in sales projection, for inventory and operations-related data, and
to present information to customers in an easy-to-understand manner.

Theoretically, a DSS can be employed in various knowledge domains from an organization to

forest management and the medical field. One of the main applications of a DSS in an
organization is real-time reporting.