CAPE Information Technology
Unit 1: Module 2
Topic: Information Systems
What is an Information System?
An information system can be defined technically as a set of interrelated components that
collect (or retrieve), process, store, and distribute information to support decision making
and control in an organization. In addition to supporting decision making, coordination,
and control, information systems may also help managers and workers analyze problems,
visualize complex subjects, and create new products.
TYPES OF INFORMATION SYSTEMS
Transaction Processing Systems
Transaction processing systems (TPS) are the basic business systems that serve the
operational level of the organization. A transaction processing system is a computerized
system that performs and records the daily routine transactions necessary to conduct
business. Examples are 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.
The decision to grant credit to a customer, for instance, is made by a lower-level supervisor
according to predefined criteria. All that must be determined is whether the customer
meets the criteria.
An example of a TPS is a payroll TPS, which is a typical accounting transaction processing
system found in most firms. A payroll system keeps track of the money paid to employees.
The master file is composed of discrete pieces of information (such as a name, address, or
employee number) called data elements. Data are keyed into the system, updating the data
elements. The elements on the master file are combined in different ways to make up
reports of interest to management and government agencies and to send paychecks to
employees. These TPS can generate other report combinations of existing data elements.
Management Information Systems
The term management information systems (MIS) designates a specific category of
information systems serving management-level functions. Management information
systems (MIS) 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. Typically, they are oriented almost exclusively to internal, not
environmental or external, events. MIS primarily serve the functions of planning,
controlling, and decision making at the management level. Generally, they depend on
underlying transaction processing systems for their data.
How management information systems obtain their data from the organization’s TPS. In
the system illustrated by this diagram, three TPS supply summarized transaction data at
the end of the time period to the MIS reporting system. Managers gain access to the
organizational data through the MIS, which provides them with the appropriate reports.
Decision-support systems (DSS) also serve the management level of the organization.
DSS help managers make decisions that are unique, rapidly changing, and not easily
specified in advance. They address problems where the procedure for arriving at a solution
may not be fully predefined in advance. Although DSS use internal information from TPS
and MIS, they often bring in information from external sources, such as current stock prices
or product prices of competitors.
Clearly, by design, DSS have more analytical power than other systems. They are built
explicitly with a variety of models to analyze data, or they condense large amounts of data
into a form in which they can be analyzed by decision makers. DSS are designed so that
users can work with them directly; these systems explicitly include user-friendly software.
DSS are interactive; the user can change assumptions, ask new questions, and include new
data.
Expert Systems
An expert system pools the knowledge of experts in specific fields to help users make
decisions.
Executive Support Systems
Senior managers use executive support systems (ESS) to make decisions. ESS serve the
strategic level of the organization. They address non-routine decisions requiring judgment,
evaluation, and insight because there is no agreed-on procedure for arriving at a solution.
ESS create a generalized computing and communications environment rather than
providing any fixed application or specific capability. ESS are designed to incorporate data
about external events such as new tax laws or competitors, but they also draw summarized
information from internal MIS and DSS. They filter, compress, and track critical data,
emphasizing the reduction of time and effort required to obtain information useful to
executives. ESS employ the most advanced graphics software and can deliver graphs and
data from many sources immediately to a senior executive’s office or to a boardroom.
Unlike the other types of information systems, ESS are not designed primarily to solve
specific problems. Instead, ESS provide a generalized computing and telecommunications
capacity that can be applied to a changing array of problems. Although many DSS are
designed to be highly analytical, ESS tend to make less use of analytical models.
Knowledge Work and Office Systems
Knowledge work systems (KWS) and office systems serve the information needs at the
knowledge level of the organization. Knowledge work systems aid knowledge workers,
whereas office systems primarily aid data workers (although they are also used extensively
by knowledge workers). KWS, such as scientific or engineering design workstations,
promote the creation of new knowledge and ensure that new knowledge and technical
expertise are properly integrated into the business.
Typical office systems handle and manage documents through word processing, desktop
publishing, document imaging, and digital filing; scheduling through electronic calendars;
and communication through electronic mail, voice mail, or videoconferencing. Word
processing refers to the software and hardware technology that creates, edits, formats,
stores, and prints documents. Word processing systems represent the single most common
application of information technology to office work, in part because producing documents
is what offices are all about. Desktop publishing produces professional publishing- quality
documents by combining output from word processing software with design elements,
graphics, and special layout features. Companies are now starting to publish documents in
the form of Web pages for easier access and distribution.
