Types of Information Systems

Information System

• An information system is a set of

interrelated components that work
together to collect, store, process
and disseminate information to
support decision making,
coordination, control, analysis, and
visualization in an organization.
 Information System
• The Components include:
– Hardware
– Software
– Communication Networks
– Business Procedures
– People
Levels of Management & Decisions
 Organization as a System
Business Partners Government

Control Component Labor

Unions
Tactical & Strategic
Competitors Information
Feedback

•Raw Material •Manufacturing •Product

Suppliers
•Machinery •Marketing •Service Customers
•Technology •Accounting •Financial
Results
•Real Estate •Advertising
•Computers •Billing
•People •Payroll
Processing Output
Input
 Breadth of Support of
Information Systems
• The numerous and diverse types of
information systems employed by modern
organizations and the types of support
these systems provide.
• Certain information systems support parts
of organizations,others support entire
organizations, and still others support
groups of organizations.
 Types of Information Systems
• Functional Area Information system(FAIS)
• Transaction Processing Systems (TPS)
• Enterprise Resource Planning (ERP)
• Management Information Systems (MIS)
• Decision Support Systems (DSS)
• Executive’s Information Systems (EIS)
• Interorganizational information systems
(IOSs).
Functional Area
Information Systems
• Information Systems for
Accounting and Finance
• Information Systems for
Marketing
• Information Systems for
Production/Operations
Management
• Information Systems for Human
Resource Management
Activities supported by FAIS
Activities supported by FAIS
 Transaction Processing
Systems (TPS)
• Processes and stores day-to-day
business transactions
• Used at Operational Level
• Overall usage is well defined and
repetitive in nature
• Highly structured decisions
• Very detailed information on each
aspect
 Transaction Processing
Systems (TPS)

• For example,
– Point of sale
– Inventory Control
– Payroll
– Airline reservation
– Online shopping
 Transaction Processing
Systems (TPS)
• Advantages:
– Precise information
– Needed to run the business
• Limitations:
– Can not provide an abstract view
– Can not maintain historical information
– Not suitable for decision making
– Information usually can not flow across
departments
 Enterprise Resource Planning
(ERP)
• Main objective is to integrate all business
processes within the organization
• Typically has three tier architecture
– Data tier
– Application tier
– Web tier
• Many features similar to TPS
 ERP
• Enterprise resource planning (ERP) systems are
• designed to correct a lack of communication among
the functional area ISs. ERP systems were an
important innovation because the various functional
area ISs were often developed as standalone
systems and did not communicate effectively (if at
all) with one another.
• ERP systems resolve this problem by tightly
integrating the functional area ISs via a common
database. In doing so, they enhance
communications among the functional areas of an
organization. For this reason, experts credit ERP
systems with greatly increasing organizational
productivity.
 Enterprise Resource Planning
(ERP)
• Advantages:
– Integrates all business processes under
single roof
– Improves efficiency and productivity
– Reduces costs
– Streamlines the workflow and processes
– Can be extended to SCM & CRM
• Limitations:
– Data still at operational level
– Not suitable for decision making
 Management Information
Systems (MIS)
• Data Analysis is the base for decision
making
• Provides the base for analysis
• Used as Tactical & Strategic Management
levels
• Gathers information from TPS, ERP and
external sources
• Data warehouse plays an important role in
implementation of MIS
 Management Information
Systems (MIS)
Data Mart 1
Multidimensional
Operational Data Model Data Mart 2
Data
Data Mart 3
ERP Data
Enterprisewide
view of Data
External
Data ETL Process
To Data
Analysis Tools
Internal
Data
Meta Data
Data Mart N
Decision Support System (DSS)
• The main objective of decision support
systems is to provide solutions to
problems
• Used at tactical and strategic management
level
• Takes input from Operational systems,
external sources, MIS
Decision Support System (DSS)
• It has four fundamental components
– User interface
– Database
– DSS model
• Performs what-if analysis
• Provides alternate solutions
– Knowledge
• Specifies relationships between variables and/or
parameters
• Stores previous predictions
• Also notifies the users when the prediction
mismatches with actual output
Decision Support System (DSS)

• Advantages:
– Allows what-if analysis
– Performs predictive analysis
• Limitations:
– Selection of appropriate DSS model needs
experience and expertise
– Doesn’t emphasis much on data visualization
– User needs to have technical background
 Executive’s Information System
(EIS)
• Also known as Executive’s Support System
(ESS)
• Considered to be a specialized form of DSS
• Mainly focuses on graphical display and
easy-to-use interfaces
• Designed for senior executives for decision
making
• Strong reporting and drill-down capabilities
 Executive’s Information System
(EIS)
• Can distinguish between vital and rarely-
used data
• Can track critical activities
• Mainly used in manufacturing, marketing and
finance areas
• EIS components
– Hardware, Software, User Interface &
Communication Network
– EIS models and Graphics are the most important
Executive’s Information System
(EIS)
• Advantages:
– Easy to use for upper level executives
– No technical skill set required
– Strong drill down and cross dimensional
capabilities
• Limitations:
– Information overload
– High implementation cost
– Not effective for small organizations
 IOS
• Information systems that connect two or more
organizations are referred to as
interorganizational information systems
(IOSs).
• IOSs support many interorganizational operations,
of which supply chain management is the best
known.
• An organization’s supply chain is the fl ow of
materials, information,money, and services from
suppliers of raw materials through factories and
warehouses to the end customers.
• Note that the supply chain in Figure 1.5
shows physical flows, information flows,
and financial flows.
 E-Commerce
• Electronic commerce (e-commerce) systems
are another type of interorganizational
information system.
• These systems enable organizations to conduct
transactions, called business-to business (B2B)
electronic commerce, and customers to conduct
transactions with businesses, called business-to-
consumer (B2C) electronic commerce. E-
commerce systems typically are Internet-based.
Figure 1.5 illustrates B2B and B2C electronic
commerce.
 Types of Management
Information Systems
• Management Reporting System
• Process Control System
• Sales & Marketing System
• Inventory Control System
• Accounting & Finance System
• Human Resource (Enterprise
Collaboration/Office Automation) System
 Management Reporting System
• Used by middle managers to generate
regular reports
• Compare current & past performance
• Determine growth & track performance
• For example, generating profit & loss
statement with respect to divisions,
geographic regions, customer segments,
products, financial advisors, etc.
• Also used to track nonfinancial variables like
employee head count, clients, investment
performance, client assets in custody, etc
 Process Control System
• Used to monitor industry process such as
metal fabrication, petroleum processing,
automobile assembly line etc.
• Continuously gathers data and generates
reports on system performance
• Managers can determine how often a
particular event occurs over a course of time
• Used to determine efficiency of the system
and workers
 Sales & Marketing System

• Used to track effectiveness of sales and

marketing functions of the organization
– Projected sales
– Handling distribution channels
– Compiling & tracking advertise schedules
– Pricing, discounts & promotions
– OLAP operations such as slice, dice, pivot are
extensively used
 Inventory Control System
• Used to track inventory of the organization
• Includes spoilage, theft, sales, at hand
• Managers can determine movement of
products from warehouse to store, number
of products sold, number of products
returned, number of products spoiled, etc
• Extremely useful for e-commerce based
companies like Flipkart, Amazon, etc
 Accounting & Finance System
• Tracks organization’s assets and
investments
• Compiles data for financial reporting
– Payrolls
– Government taxes
– Pension funds
• All periodic financial statements are
generated
 Human Resource System
• Used to manage human resources
• Streamlines communication between
employees
• Tracks employees’ work attendance,
leaves, vacations, etc
• Automates recruitment process by resume
collection and analysis for potential hires
• Manages workflows
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