Different Kinds of Systems

Different Kinds of Systems
Four main types of IS serve four

different organizational levels:
1. Operational-level systems
2. Knowledge-level systems
3. Management-level systems
4. Strategic-level systems
Management Information Systems Chapter 2 Information

Eighth Edition Kenneth C. Laudon & Jane P. Laudon Systems in the Enterprise
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
• Including a system to record bank deposits from
automatic teller machines or one that tracks the
number of hours worked each day by employees on
a factory floor
Knowledge-level Systems
• To help the business firm integrate new

knowledge into the business and to help the
organization control the flow of paperwork
• Supporting the organization’s knowledge
and data workers
• Including workstations and office systems,
which are the fastest-growing applications
in business today

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

Types of Information Systems

Major Types of Systems
There are six specific types of IS that

correspond to each organizational
levels as follows:
1. Executive Support Systems (ESS)
2. Decision Support Systems (DSS)
3. Management Information Systems (MIS)
4. Knowledge Work Systems (KWS)
5. Office Systems
6. Transaction Processing Systems (TPS)
The Six Major Types of IS

Transaction Processing Systems (TPS)
• Basic business systems that serve the

operational level of the organization
• Computerized systems that performs and
records the daily routine transactions
necessary to conduct business
• Including sales order entry, hotel
reservation systems, payroll, employee
record keeping, and shipping
• At the operational level, tasks, resources,
and goals are predefined and highly
structured.

A Symbolic Representation for a Payroll TPS

Typical Applications of TPS

Knowledge Work Systems (KWS)
& Office Systems
• Knowledge Work Systems (KWS)
– To aid knowledge workers (people who hold
formal university degrees and are often members
of recognized professions such as engineers,
doctors, lawyers, and scientists)
– To promote the creation of new knowledge and
to ensure that new knowledge and technical
expertise are properly integrated into the
business
– Including scientific or engineering design
workstations

Knowledge Work Systems (KWS)
& Office Systems (Cont.)
• Office Systems
– To aid data workers (people who typically have less formal
advanced educational degrees and tend to process rather
than create information such as secretaries, bookkeepers,
filing clerks, or managers whose jobs are to use,
manipulate, or disseminate information)
– To coordinate diverse information workers, geographic
units, and functional areas
– Including:
• Systems for handling and manage documents through word
processing, desktop publishing, document imaging, and
digital filing
• Systems for scheduling through electronic calendars
• Systems for communicating through electronic mail (E-mail),
voice mail, or videoconferencing
Management Information Systems (MIS)
• To serve the management level of the organization, providing

managers with reports and, in some cases, with online access to the
organization’s current performance and historical records
• Being oriented almost exclusively to internal, not environmental or
external, events
• Depending on underlying transaction processing systems for their
data and, then, summarizing and reporting on the firm’s basic
operations
• To serve the functions of planning, controlling, and decision making
at the management level with weekly, monthly, and yearly results
(not day-to-day activities)
• Being inflexible and having little analytical capability because most
MIS use simple routines such as summaries and comparisons
• Including systems that report the total pounds of lettuce used this
quarter by a fast-food chain or compare total annual sales figures for
specific products to planned targets

TPS & MIS Relationship

A Sample of MIS Report

Decision Support Systems (DSS)
• To also serve the management level of the organization by

helping managers make decisions that are unique, rapidly
changing, and not easily specified in advance
• Using internal information from TPS and MIS and also
external information such as current stock prices or product
prices of competitors
• Having more analytical power than other systems and
addressing problems where the procedure for arriving at a
solution may not be fully predefined in advance
• Being designed so that users can work with them directly
with user-friendly software and so interactive that the user
can change assumptions, ask new questions, and include
new data
• Including a system for contract cost analysis

A Voyage-estimating DSS

Executive Support Systems (ESS)
• To serve senior managers who are making decisions at the strategic

level of the organization
• To address nonroutine decisions requiring judgment, evaluation, and
insight
• Creating a generalized computing and communications environment
(including historical and competitive data) rather than providing any
fixed application or specific capability
• Being designed to incorporate data about external events such as new
tax laws or competitors and draw summarized information from
internal MIS and DSS
• Employing the most advanced and easy-to-use graphics software
(interactive graphic interfaces) and can deliver graphs and data from
many sources immediately to a senior executive’s office or to a
boardroom
• Including systems that conduct a 5-year operating plan or answer
questions of: what business we should be in; and what the
competitors are doing

A Model of ESS

Systems from a Functional Perspective
IS can be classified by the specific

organizational function they serve as
well as by organizational level as
follows:
1. Sales and marketing systems
2. Manufacturing and production systems
3. Finance and accounting systems
4. Human resources systems

Sales & Marketing Systems
• Strategic level
– To monitor trends affecting new products and sales
opportunities, and the performance of competitors
– To support planning for new products and services
• Management level
– To support market research, advertising and promotional
campaigns, and pricing decisions
– To analyze sales performance and the performance of the
sales staff
• Knowledge level
– To support marketing analysis workstations
• Operational level
– To assist in locating and contacting prospective
customers, tracking sales, processing orders, and
providing customer service support
Examples of Sales & Marketing IS

Manufacturing & Production Systems
• Strategic level
– To deal with the firm’s long-term manufacturing goals,
such as where to locate new plants or whether to invest in
new manufacturing technology
– To analyze and monitor manufacturing and production
costs and resources
• Knowledge level
– To create and distribute design knowledge or expertise to
drive the production process
– To deal with the status of production tasks

Examples of Manufacturing & Production IS

An Inventory System

Finance & Accounting Systems
• Strategic level
– To establish long-term investment goals for the firm
– To provide long-range forecasts of the firm’s financial
performance
– To help managers oversee and control the firm’s financial
resources
• Knowledge level
– To support finance and accounting by providing analytical
tools and workstations for designing the right mix of
investments to maximize returns for the firm
– To track the flow of funds in the firm through transactions
such as paychecks, payments to vendors, securities
reports, and receipts
Examples of Finance & Accounting IS

Human Resources Systems
• Strategic level
– To identify the manpower requirements (skills,
educational level, types of positions, number of positions,
and cost) for meeting the firm’s long-term business plans
– To help managers monitor and analyze the recruitment,
allocation, and compensation of employees
• Knowledge level
– To support analysis activities related to job design,
training, and the modeling of employee career paths and
reporting relationships
– To track the recruitment and placement of the firm’s
employees
Examples of Human Resources IS

An Employee Record Keeping System


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Different Kinds of Systems

Four main types of IS serve four

Management Information Systems Chapter 2 Information

• To answer routine questions and track the flow of

• To help the business firm integrate new

Management Information Systems Chapter 2 Information

• To serve the monitoring, controlling,

Management Information Systems Chapter 2 Information

• To match changes in the external

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

There are six specific types of IS that

Management Information Systems Chapter 2 Information

• Basic business systems that serve the

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

• To serve the management level of the organization, providing

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

• To also serve the management level of the organization by

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

• To serve senior managers who are making decisions at the strategic

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

IS can be classified by the specific

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

Management Information Systems Chapter 2 Information

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