Lecture 3

To be covered
• What are the types of Information System
(IS) within an organization
• The role of each types of IS in
organization
• DSS
Classification of Information Systems

A common approach to examine the

types of Information System used
within Organizations is

to categorize Information System

applications by the roles they play at
various level

This is known as vertical approach,

where the organization is seen as
management pyramid with four
levels:
 Classification of Information Systems
Responsible for defining the long
term goals of the company, and
how it intends to position itself
within its particular industry.

Decide on budgets, set targets,

identify trends and develop short
term plans for the business.
Responsible for monitoring the
transactions that are occurring,
and dealing with any problems
that may arise
Attend to routine daily business
transactions
e.g. selling goods & issuing
receipts for payment
Transaction Processing Systems (TPS)
• support the day-to- •Used by
day and routine clerical staff
• Staff process or
activities such as •Following query one
invoicing and well defined transaction at a
issuing of stock.
business time,

Activities
Function

• Support simple
procedures. • Using computer
processing of large

User
•Work at the systems to
amount of
lowest level of capture the raw
structured data
detail data
• These data are of
• Those data
internal origin
reflects the
(resulting from
business
numerous routine
processes of the
transactions)
organization

For example,
The itemized till slip (receipt) from the supermarket is produced by the
TPS, and details of each individual item sold will be recorded in the
store’s database.
 TPS Five Common Modules
General ledger:
Order Processing:
details of all transactions affecting the
orders for goods or services can enter the
accounts of the company are
system from customers,
recorded to simplify bookkeeping and
salespeople, or other internal departments.
reporting

Payroll:
employee details,
earnings, deductions,
leave accrual etc.

Accounts payable and receivable:
data generated from sales journals or
purchase orders can be used to improve
debt collection and cash flow.
Inventory management:
along with updating of stock levels, IS is
commonly used for
tracking of materials and for linking the
organization to suppliers and purchasers
 Management Information Systems (MIS)
• Systems that use the data • Use a variety of
generated by the TPS to • low level techniques to process,
help lower and middle and middle summarize and present
managers in their decision level the information in the
making form of useful reports:
managers tables, statistics,
• It assist operational and graphics, etc.
management in monitoring supervisors • Many MIS can easily be

Activities
Function

and controlling the • Different

User
customized and new
transaction processing MIS based reports are readily
activities on business created on demand.
• Use historical data functions • Output reports generally
e.g. HR MIS, contain summarized
• The main focus is to avoid totals of the TPS data,
wading through huge Marketing
MIS • Reports produced either
volumes of detailed data, on a cyclical basis
instead using control totals (weekly or monthly) or
and exception reports to on request
identify problems.
For example, An exception report for a bank manager
might be the list of all transactions exceeding one million
rand; or those bank departments who have exceeded
their budget by more than 10%.
 MIS Continue
Exception Report
• Report on unusual
transactions
• Report on those fall
outside the normal pattern
instead of many pages of
detailed data
• Manager can look at items
that need special attention
and corrective action
Examples of Organizational
Support Provided for
Managers
• Financial planning &
budgeting
• Financial Controls
• Investment Management
• Marketing Management
• The provision of customer
services
 Decision Support System(DSS)
• Systems that assist • DSS use various
managers with very mathematical and
• Low &
specific types of decision- statistical models to
Middle-level
making situations
managers help the manager
• They tend to focus not on • These generate
the progress of individual
managers are alternative decision
transactions but on the
responsible

Activities
options and
Function

bigger picture see e.g.

User
for ensuring evaluate their
below
that plans and
• Allow the manager to see outcomes.
targets set by
future impact of his senior • DSS allows the
decision management manager to see the
are achieved future impact of his
decision

For example, look at the relative sales performance of different sales areas in the
organization.
To achieve this, they need to receive regular reports from the MIS with summary totals
and comparison between prior months and years. Where summary figures are of
concern, these managers may request more detailed reports from the operations
personnel.
 DSS Special Requirements
• In many cases problems arise and additional
‘ad hoc’ reports are needed, see example below:

Cape Town sales Further analysis is

figures below needed to help the ‘Ad hoc’ report for
monthly sales information
annual year-to- manager investigate may help the analysis
date forecast the causes

1- Poor sales performance

2- loss of major customer
Causes may be:
3- lack of demand for a
product
 DSS Continue
• The nature of management decision making is
such that response time is often critical
Issue
In the past managers communicated their report requirements
to programmers who coded the request and delivered the
required output, or send their request to be extracted from
the DB.
• How to solve a problem of time critical nature, as one report
may trigger the need for alternate investigations into other
areas of the business??? In three Minutes and in a group of
4-5 people,
Find a solution for such a problem!!
 DSS Continue

ANSWERS
• User-driven DSS (allow managers to interact directly with the
system and request the needed reports)
 DSS Steps
• When information is required to support
management decision making:
The user interact directly with the
computer via a GUI or control
language to request the relevant
data,

Select and operate the appropriate

decision model

Generate the output report in the

format required
Components of DSS
 DSS Model Base
E.g. Statistical
functions (means,
standard deviation)

This is a library of
analytical tools that
can be used to e.g. The ability to test
e.g. Retrieval tools evaluate and possible scenarios
to select, sort and represent data through sensitivity
summarize analysis and goal
seeking
 DSS Database
This database contains current and historical data from all
the relevant business applications
DSS construct its own DB & It makes good sense
does not use operational DB to maintain a
database specifically
for DSS queries.
WHY!!!
WHY!!
It access the DB many times. Operational database’s security
This would impact the service the and integrity is of great concern
provided to online applications in and access is limited to a
areas where response times are minimum. While DSS systems
critical. normally download a copy of data
for analysis and rarely update the
database
Reasons to maintain a database
specifically for DSS queries.
Different • Some data need be held only in summary form
• Historical records must be retained for a five year
saving formats: period to allow for trend analysis

• Data may come from different databases, hardware and

Different Data software platforms, a

Sources • transfer and reformatting of data to a common DSS database

enables combination of data from these varied sources.

• With the demand for end-user access to current and

Data historical information
Warehouse • Many organization store large quantities of data obtained
from different functional areas of the organization.
 Executive Information System(EIS)
Decisions made by top-level executives are often too unstructured to be adequately supported
by a DSS.
In the past, much time was spent by top management wading through reports relating to the
performance of strategic areas of the business.
In order to reduce time for finding and integrating a few critical numbers from many different
reports; EIS was developed
• An EIS will • It provide rapid access to both
continuously internal and external information,
monitor selected • Top-level often presented in graphical format,
key performance managers but with the ability to present more
indicators that have • These
been identified as detailed underlying data if it is
managers are required
critical to the charged with
success of the • The user will be alerted to any

Activities
Function

the task of
organization. significant changes that occur, and
User

setting the
• It enable users to strategy for “drill-down” capabilities will then
identify problems, the provide further levels of detail
opportunities and organization. underlying this information.
trends that may
enhance or • Trend analysis can be done using
threaten their forecasting models, usually through
organization’s the integration of the EIS with a DSS
competitive system
position.
 Summary
Characteristics of each level of
management support
 Summary
Characteristics of each level of
management support
Users of IS Application
 How does IS support Business
Objectives??
• Increasing the efficiency of business
processes
• Cutting supply costs
• Improving levels of customer service
• Improving managerial decision-making
The Support that Different Types of IS
Provide to Business Objectives

TPS MIS DSS EIS

Record
routine Draw from Make use of
Assist
transactions the TPS to information
managers
within the monitor and technology
with complex
different control to gain
decision-
departments business competitive
making tasks;
of an performance; advantage;
organization;
 Done!! 
• Thank you for listening

• Any Questions???

• Refer to Book_1, Chapter (8), 8.3-(p.107-

p.111)
• Refer to Book_1, Ch.(1), p.(14-16)