There are different kinds of systems according to different interests, specialists, and levels in an organization. Single system cannot provide all the information needed by an organization.
Systems for Different Management Groups
.1 The four main types of information systems that serve different management groups are: Transaction processing systems, Management information systems, Decision support systems, and Executive support systems.
Transaction Processing Systems
These are the computerized systems that perform and records the daily routine transactions necessary to conduct business. These systems serve the operational level of the organization. Some examples include sales order entry, hotel reservation systems, payroll, employee record keeping, and shipping.
Transaction processing systems are central to a business. TPS failure for a few hours can cause a firm‘s demise and perhaps other firms linked to it. Managers need TPS to monitor the status of internal operations and the firm‘s relations with external environment. TPS are also major producers of information for the other types of systems.
Online transaction processing systems (OLTPS) is an interactive data processing system that involves a direct connection between TPS programs and users. As soon as a single transaction is entered into a computer system, the program interacts immediately with the user for that transaction. It is often known as the live system where there is no time lag between data creation and its processing. A good example of this system is online ticket reservation system. Most of the OLTPS system requires the support of networks that is spread over number of organizations or branches for performing it‘s operations.
Unlike the OLTPS, Batch processing systems accumulates the transaction over a time, makes a queue of the processes depending upon the priorities and processes them periodically at the later time. Some of the TPS must follow batch processing due to business process of the organization. For example, opening an account and getting ATM card is batch processing system. In this case all requests for ATM card collected during the day time but these requests are only processed after some hour or even if after some days. This is the reason that we need to wait some time for activating of our ATM cards.
2. Management information systems
These are the information systems at the management level of an organization and serve management-level functions like planning, controlling, and decision-making. These systems provide routine summary of reports and, in some cases, with online access to the organization‘s current performance and historical records to managers. Typically, these systems use internal data provided by the transaction processing systems. Normally, these systems are used for structured decision-making.
MIS usually serve managers interested in weekly, monthly, bi- monthly results—not day-to day activities. MIS generally provides answers to the routine questions that have been specified in advance and have predefined procedures for answering them.
Order Production master file
Fig: How MIS takes data from TPS
- Decision-support systems
These systems also serve at the management level of the organization. These systems combine data and sophisticated analytical models or data analysis tools to support semi-structured and unstructured decision-making. These systems use internal information from TPS and MIS, and often information from external sources, such as current stock prices or product prices of competitors. DSS have more analytical power than other systems. DSS helps managers to make decision that are unique, fast changing and not easily specified in advance. DSS that supports and facilities the decision making process by a group is called group decision support system (GDSS). Three quantitative models often used by DSS include:
- Sensitivity analysis is the study of the impact that changes in one (or more) parts of the model have on other parts of the
model. Users change the value of one variable repeatedly and observe the resulting changes in other variables.
- What-if analysis checks the impact of a change in an assumption on the proposed solution. For example, ―What will happen to the supply chain if a blizzard in Alberta reduces holding inventory from 30 percent to 10 percent?‖ Users repeat this analysis until they understand all the effects of various
- Goal-seeking analysis finds the inputs necessary to achieve a goal such as a desired level of output. Instead of observing how changes in a variable affect other variables as in what-if analysis, goal-seeking analysis sets a target value (a goal) for a variable and then repeatedly changes other variables until the target value is achieved. For example, ―How many customers are required to purchase a new product to increase gross profits to $5 million?‖
Fig: DSS and its components 4.Executive support systems
4.Executive support systems
These systems serve the strategic level of the organization. These systems are designed to address unstructured decision making through advanced graphics and communication. These systems incorporate data about external events such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS.
These systems are not designed to solve a specific problem but they provide a generalized computing and telecommunication capacity that can be applied to a changing array of problems. ESS helps senior executives to monitor firm performance, spot problems, identify opportunities, and forecast trends. These systems can filter out extraneous details for high level overviews, or they can drill down to provide senior managers to detailed transaction data if required.
ESS helps senior managers to analyze, compare, and highlight trends so that they may easily monitor organizational performance or identify strategic problem and opportunities. There is less use of analytical tools (as compared to DSS) in ESS. It is not necessary for users to be an expert in computer-based information system to be able to use them. Therefore executive system must be easy to use and the information must be easily manipulated.