TYPES OF INFORMATION SYSTEMS

An information system is a collection of hardware, software, data, people and procedures that are designed to generate information that supports the day-to-day, short-range, and long-range activities of users in an organization. Information systems generally are classified into five categories: office information systems, transaction processing systems, management information systems, decision support systems, and expert systems. The following sections present each of these information systems.

1. Office Information Systems

An office information system, or OIS (pronounced oh-eye-ess), is an information system that uses hardware, software and networks to enhance work flow and facilitate communications among employees. Win an office information system, also described as office automation; employees perform tasks electronically using computers and other electronic devices, instead of manually. With an office information system, for example, a registration department might post the class schedule on the Internet and e-mail students when the schedule is updated. In a manual system, the registration department would photocopy the schedule and mail it to each student’s house.

An office information system supports a range of business office activities such as creating and distributing graphics and/or documents, sending messages, scheduling, and accounting. All levels of users from executive management to nonmanagement employees utilize and benefit from the features of an OIS.

The software an office information system uses to support these activities include word processing, spreadsheets, databases, presentation graphics, e-mail, Web browsers, Web page authoring, personal information management, and groupware. Office information systems use communications technology such as voice mail, facsimile (fax), videoconferencing, and electronic data interchange (EDI) for the electronic exchange of text, graphics, audio, and video. An office information system also uses a variety of hardware, including computers equipped with modems, video cameras, speakers, and microphones; scanners; and fax machines.

2. Transaction Processing Systems

A transaction processing system (TPS) is an information system that captures and processes data generated during an organization’s day-to-day transactions. A transaction is a business activity such as a deposit, payment, order or reservation.

Clerical staff typically perform the activities associated with transaction processing, which include the following:

1. Recording a business activity such as a student’s registration, a customer’s order, an employee’s timecard or a client’s payment.

2. Confirming an action or triggering a response, such as printing a student’s schedule, sending a thank-you note to a customer, generating an employee’s paycheck or issuing a receipt to a client.

3. Maintaining data, which involves adding new data, changing existing data, or removing unwanted data.

Transaction processing systems were among the first computerized systems developed to process business data – a function originally called data processing. Usually, the TPS computerized an existing manual system to allow for faster processing, reduced clerical costs and improved customer service.

The first transaction processing systems usually used batch processing. With batch processing, transaction data is collected over a period of time and all transactions are processed later, as a group. As computers became more powerful, system developers built online transaction processing systems. With online transaction processing (OLTP) the computer processes transactions as they are entered. When you register for classes, your school probably uses OLTP. The registration administrative assistant enters your desired schedule and the computer immediately prints your statement of classes. The invoices, however, often are printed using batch processing, meaning all student invoices are printed and mailed at a later date.

Today, most transaction processing systems use online transaction processing. Some routine processing tasks such as calculating paychecks or printing invoices, however, are performed more effectively on a batch basis. For these activities, many organizations still use batch processing techniques.

3. Management Information Systems

While computers were ideal for routine transaction processing, managers soon realized that the computers’ capability of performing rapid calculations and data comparisons could produce meaningful information for management. Management information systems thus evolved out of transaction processing systems. A management information system, or MIS (pronounced em-eye-ess), is an information system that generates accurate, timely and organized information so managers and other users can make decisions, solve problems, supervise activities, and track progress. Because it generates reports on a regular basis, a management information system sometimes is called a management reporting system (MRS).

Management information systems often are integrated with transaction processing systems. To process a sales order, for example, the transaction processing system records the sale, updates the customer’s account balance, and makes a deduction from inventory. Using this information, the related management information system can produce reports that recap daily sales activities; list customers with past due account balances; graph slow or fast selling products; and highlight inventory items that need reordering. A management information system focuses on generating information that management and other users need to perform their jobs.

An MIS generates three basic types of information: detailed, summary and exception. Detailed information typically confirms transaction processing activities. A Detailed Order Report is an example of a detail report. Summary information consolidates data into a format that an individual can review quickly and easily. To help synopsize information, a summary report typically contains totals, tables, or graphs. An Inventory Summary Report is an example of a summary report.

Exception information filters data to report information that is outside of a normal condition. These conditions, called the exception criteria, define the range of what is considered normal activity or status. An example of an exception report is an Inventory Exception Report is an Inventory Exception Report that notifies the purchasing department of items it needs to reorder. Exception reports help managers save time because they do not have to search through a detailed report for exceptions. Instead, an exception report brings exceptions to the manager’s attention in an easily identifiable form. Exception reports thus help them focus on situations that require immediate decisions or actions.

4. Decision Support Systems

Transaction processing and management information systems provide information on a regular basis. Frequently, however, users need information not provided in these reports to help them make decisions. A sales manager, for example, might need to determine how high to set yearly sales quotas based on increased sales and lowered product costs. Decision support systems help provide information to support such decisions.

A decision support system (DSS) is an information system designed to help users reach a decision when a decision-making situation arises. A variety of DSSs exist to help with a range of decisions.

A decision support system uses data from internal and/or external sources.

Internal sources of data might include sales, manufacturing, inventory, or financial data from an organization’s database. Data from external sources could include interest rates, population trends, and costs of new housing construction or raw material pricing. Users of a DSS, often managers, can manipulate the data used in the DSS to help with decisions.

Some decision support systems include query language, statistical analysis capabilities, spreadsheets, and graphics that help you extract data and evaluate the results. Some decision support systems also include capabilities that allow you to create a model of the factors affecting a decision. A simple model for determining the best product price, for example, would include factors for the expected sales volume at each price level. With the model, you can ask what-if questions by changing one or more of the factors and viewing the projected results. Many people use application software packages to perform DSS functions. Using spreadsheet software, for example, you can complete simple modeling tasks or what-if scenarios.

A special type of DSS, called an executive information system (EIS), is designed to support the information needs of executive management. Information in an EIS is presented in charts and tables that show trends, ratios, and other managerial statistics. Because executives usually focus on strategic issues, EISs rely on external data sources such as the Dow Jones News/Retrieval service or the Internet. These external data sources can provide current information on interest rates, commodity prices, and other leading economic indicators.

To store all the necessary decision-making data, DSSs or EISs often use extremely large databases, called data warehouses. A data warehouse stores and manages the data required to analyze historical and current business circumstances.

5. Expert Systems

An expert system is an information system that captures and stores the knowledge of human experts and then imitates human reasoning and decision-making processes for those who have less expertise. Expert systems are composed of two main components: a knowledge base and inference rules. A knowledge base is the combined subject knowledge and experiences of the human experts. The inference rules are a set of logical judgments applied to the knowledge base each time a user describes a situation to the expert system.

Although expert systems can help decision-making at any level in an organization, nonmanagement employees are the primary users who utilize them to help with job-related decisions. Expert systems also successfully have resolved such diverse problems as diagnosing illnesses, searching for oil and making soup.

Expert systems are one part of an exciting branch of computer science called artificial intelligence. Artificial intelligence (AI) is the application of human intelligence to computers. AI technology can sense your actions and, based on logical assumptions and prior experience, will take the appropriate action to complete the task. AI has a variety of capabilities, including speech recognition, logical reasoning, and creative responses.

Experts predict that AI eventually will be incorporated into most computer systems and many individual software applications. Many word processing programs already include speech recognition.

Integrated Information Systems

With today’s sophisticated hardware, software and communications technologies, it often is difficult to classify a system as belonging uniquely to one of the five information system types discussed. Much of today’s application software supports transaction processing and generates management information. Other applications provide transaction processing, management information, and decision support. Although expert systems still operate primarily as separate systems, organizations increasingly are consolidating their information needs into a single, integrated information system.

Discovering Computers 2000 – Concepts for a Connected World by Shelly, Cashman and Vermaat; Course Technology 1999