Types of Information systems

Transaction processing systems and

Management information systems
 Different Kinds of Systems

Four main types of IS serve four different

organizational levels:
1. Operational-level systems
2. Management-level systems
3. Strategic-level systems
 Operational level systems
• To answer routine questions and track the flow
of transactions through the organization.
Therefore, information generally must be easily
available, current, and accurate.
• Supporting operational managers by keeping
track of the elementary activities and
transactions of the organization, such as sales,
receipts, cash deposits, payroll, credit
decisions, and the flow of materials in a factory
 Management-level Systems
• To serve the monitoring, controlling,
decision-making, and administrative activities
of middle managers
• Typically providing periodic reports rather
than instant information on operations
– Including control systems for annual budgeting
and inventory, and management systems for
sales and human resources
 Strategic-level systems
• To match changes in the external environment
with existing organizational capability
• Helping senior management deal with and
address strategic issues and long-term trends,
both in the firm and in the external
environment
– Including a system to forecast sales trends over a
five-year period or systems for profit planning and
personnel planning
 Major Types of systems
• Executive Support Systems (ESS)
• Decision Support Systems (DSS)
• Management Information Systems (MIS)
• Transaction Processing Systems (TPS)
 Transaction processing systems
• Definition: A Transaction Processing System (TPS) is a type of
information system that collects, stores, modifies and retrieves
the data transactions of an enterprise.
• – E.g. sales order entry, payroll, shipping

• – For example McDonald's, which sells a large number

of hamburgers every day, orders raw materials from its suppliers.
Each time the company places an order with a supplier,
a transaction occurs and a transaction system records
relevant information, such as the supplier's name, address, and
credit rating, the kind and quantity of items purchased, and the
invoice amount.
 Types of transactions
• 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.
Transaction processing systems are the data
lifeline of the company
• If a company fails to capture a transaction it may
lead not only to customer dissatisfaction and lost
profit but also to serious penalties and lawsuits.
• TPS s become the source of data for other
systems in the organization. If analyzed and
integrated it will give business key information
about new company plans. A better plan how to
meet customer needs and preferences.
• TPS is a link between the organization and
external entities, such as suppliers, customers &
distributors.
 Batch processing
• Transactions are accumulated over time and
processed identically.
• Batch processing may be done on a daily,
weekly, or monthly basis or any other time
period appropriate to the application.
– For example, a company may process the travel
expenses of its employees on a monthly basis
 Real time processing
• The immediate processing of data with the
database updated as the transaction is
being carried out.

– An example may be the Bank ATM and POS

terminal, both of which have user input which
requires immediate feedback.
 Characteristics of a transaction processing
system
• Records internal and external transactions that take place
in a company
• Is used mostly by lower-level managers to make
operational decisions
• Stores data that are frequently accessed by other systems
• Is ideal for routine, repetitive tasks
• Records transactions in batch mode or on-line
• Requires six steps to process a transaction—data entry,
validation, data processing, storage, output generation,
and query support
TPS payroll system
Management Information Systems
– Serve middle management
– Provide reports on firm’s current performance,
based on data from TPS
– Provide answers to routine questions with
predefined procedure for answering them
– Typically have little analytic capability
Management Information Systems
• An MIS provides managers with information and
support for effective decision making, and
provides feedback on daily operations.
• MIS provides information to the users in the form
of reports
• Output, or reports, are usually generated through
accumulation of transaction processing data.

– Example: Annual budgeting

 Management Information Systems
Transaction Processing
Management Information
Systems
Systems
(TPS)
(MIS)
– Provide
Support decision-making
operation support for routine,
– structured
Management decisions
and control
– Closely
Routine,linked to operations
normal and fed by TPS
– Structured
Structured and Semi-structured decisions
decisions
 Structured decisions
• Structured decisions are those which are
made according to specified procedures of
rules or structured decisions are those that
are easily made from a given set of inputs.
• Deciding to send a reminder notice to a
customer for an overdue balance is considered
to be structured decision
 Semi-structured decisions
• Semi-structured decisions are those for which
information obtained from a computer system
or information system is only a portion of the
total knowledge needed to make decision.
• Advertise a new product or how much to
spend on MIS.
 Unstructured decisions
• Unstructured decisions are novel, and insignificant.
• There is no cut and dried  method for handling the problem
because it hasn't arisen before or because it's precise
nature and structure are mysterious or complex, or
because it so important' that it deserves a custom tailored
treatment.
• These, types of decisions often , involve a high degree of
freedom.
• They may require a lot of creativity and intuitions from the
decision maker to tell what factors will come into play in an
unstructured play.
MIS systems obtain data from TPS systems
MIS report
 MIS report types
• Scheduled reports
• Key-indicator reports
• Exception reports
• Ad hoc (demand) reports
• Drill-down reports
Scheduled reports
• Produced periodically,
or on a schedule (daily,
weekly, monthly
Key-Indicator report
• Summarizes the
previous day’s critical
activities and typically
available at the
beginning of each
day.
Demand and exception reports
• Gives certain
information at a
manager’s
request.

• Automatically
produced when a
situation is
unusual or
requires
management
action
Drill Down Reports
• Provide
detailed data
about a
situation.
 Management
• Management is decision making
• The manager is a decision maker
• Organizations are filled with decision makers at different level.
• Management is considered as art: a talent acquired over years by
trial-and-error.
• However decision making today is becoming more complicated:
– Technology / Information/Computers : increasing More
alternative to choose
– Structural Complexity / Competition : increasing larger cost of
error
– International markets / Consumerism : increasing more
uncertainty about future
– Changes, Fluctuations : increasing need for quick decision
 Management problems
• Most management problems for which decisions are sought can be
represented by three standard elements – objectives, decision variables, and
constraints. These problems can be structured, semi-structured and
unstructured in nature:
• Objective
– Maximize profit
– Provide earliest entry into market
– Minimize employee discomfort/turnover
• Decision variables
– Determine what price to use
– Determine length of time tests should be run on a new product/service
– Determine the responsibilities to assign to each worker
• Constraints
– Can’t charge below cost
– Test enough to meet minimum safety regulations
– Ensure responsibilities are at most shared by two workers
 Information Systems to support
decisions
Management Decision Support
Information Systems
Systems
Decision Provide information about Provide information and
support the performance of the techniques to analyze
provided organization specific problems
Information Periodic, exception, Interactive inquiries and
form and demand, and push reports responses
frequency and responses
Information Prespecified, fixed format Ad hoc, flexible, and
format adaptable format
Information Information produced by Information produced by
processing extraction and manipulation analytical modeling of
methodology of business data business data
 Decision support systems
• A Decision Support System (DSS) is an interactive
computer-based system or subsystem intended to
help decision makers use communications
technologies, data, documents, knowledge and/or
models to identify and solve problems, complete
decision process tasks, and make decisions.
• Decision Support System is a general term for any
computer application that enhances a person or
group’s ability to make decisions; can be as simple
as an excel spread sheet to a complicated system
involving large databases, statictical modelling
techniques and applying A.I. to dervive
information.
 Question

• Explain the difference between a structured, semi-

structured and unstructured decision.
• (6 marks)
• Describe, using suitable examples the parts played by
both a transaction processing system (T.P.S.) and an
Management information system (M.I.S. in the
generation of information required for strategic level
decision making
• (24 marks)