Different types of Information System?

Why are there different types of Information System?

In the early days of computing, each time an information system was needed it was 'tailor made' - built as a oneoff solution for a particular problem. However, it soon became apparent that many of the problems information
systems set out to solve shared certain characteristics. Consequently, people attempted to try to build a single
system that would solve a whole range of similar problems. However, they soon realized that in order to do this,
it was first necessary to be able to define how and where the information system would be used and why it was
needed. It was then that the search for a way to classify information systems accurately began.
How do you identify the different types of information system in an organization?
The different types of information system that can be found are identified through a process of classification.
Classification is simply a method by which things can be categorized or classified together so that they can be
treated as if they were a single unit. There is a long history of classification of things in the natural world such as
plants or animals, however, Information systems are not part of the 'natural' world; they are created and acquired
by man to deal with particular tasks and problems. The classification of information systems into different types
is a useful technique for designing systems and discussing their application; it not however a fixed definition
governed by some natural law. A 'type' or category of information system is simply a concept, an abstraction,
which has been created as a way to simplify a complex problem through identifying areas of commonality
between different things. One of the oldest and most widely used systems for classifying information systems is
known as the pyramid model; this is described in more detail below.
How many different kinds of Information System are there?
As can be seen above, there is not a simple answer to this. Depending on how you create your classification, you
can find almost any number of different types of information system. However, it is important to remember that
different kinds of systems found in organizations exist to deal with the particular problems and tasks that are
found in organizations. Consequently, most attempts to classify Information systems into different types rely on
the way in which task and responsibilities are divided within an organization. As most organizations are
hierarchical, the way in which the different classes of information systems are categorized tends to follow the
hierarchy. This is often described as "the pyramid model" because the way in which the systems are arranged
mirrors the nature of the tasks found at various different levels in the organization.
For example, this is a three level pyramid model based on the type of decisions taken at different levels in the
organization.

Three level pyramid model based on the type of decisions taken at different levels in the organization
Similarly, by changing our criteria to the differnt types of date / information / knowledge that are processed at
different levels in the organization, we can create a five level model.

Five level pyramid model based on the processing requirement of different levels in the organization
What are the most common types of information system in an organization?
While there are several different versions of the pyramid model, the most common is probably a four level
model based on the people who use the systems. Basing the classification on the people who use the information
system means that many of the other characteristics such as the nature of the task and informational
requirements, are taken into account more or less automatically.

Four level pyramid model based on the different levels of hierarchy in the organization
A comparison of different kinds of Information Systems
Using the four level pyramid model above, we can now compare how the information systems in our model
differ from each other.
1.

Transaction Processing Systems

What is a Transaction Processing System?
Transaction Processing System are operational-level systems at the bottom of the pyramid. They
are usually operated directly by shop floor workers or front line staff, which provide the key data
required to support the management of operations. This data is usually obtained through the
automated or semi-automated tracking of low-level activities and basic transactions.
Functions of a TPS
TPS are ultimately little more than simple data processing systems.
Functions of a TPS in terms of data processing requirements
Inputs

Processing

Outputs

Transactions
Events

Validation
Sorting
Listing
Merging
Updating
Calculation

Lists
Detail reports
Action reports
Summary reports?

Some examples of TPS

o

Payroll systems

Order processing systems

Reservation systems

Stock control systems

Systems for payments and funds transfers

The role of TPS

2.

Produce information for other systems

Cross boundaries (internal and external)

Used by operational personnel + supervisory levels

Efficiency oriented.

Management Information Systems

What is a Management Information System?
For historical reasons, many of the different types of Information Systems found in commercial
organizations are referred to as "Management Information Systems". However, within our pyramid
model, Management Information Systems are management-level systems that are used by middle
managers to help ensure the smooth running of the organization in the short to medium term. The
highly structured information provided by these systems allows managers to evaluate an organization's
performance by comparing current with previous outputs.
Functions of a MIS
MIS are built on the data provided by the TPS
Functions of a MIS in terms of data processing requirements
Inputs

Processing

Outputs

Internal Transactions
Internal Files
Structured data

Sorting
Merging
Summarizing

Summary reports
Action reports
Detailed reports

Some examples of MIS

o

Sales management systems

Inventory control systems

Budgeting systems

Management Reporting Systems (MRS)

Personnel (HRM) systems

The role of MIS

3.

Based on internal information flows

Support relatively structured decisions

Inflexible and have little analytical capacity

Used by lower and middle managerial levels

Deals with the past and present rather than the future

Efficiency oriented?

Decision Support Systems

What is a Decision Support System?
A Decision Support System can be seen as a knowledge based system, used by senior managers, which
facilitates the creation of knowledge and allow its integration into the organization. These systems are
often used to analyze existing structured information and allow managers to project the potential effects
of their decisions into the future. Such systems are usually interactive and are used to solve ill
structured problems. They offer access to databases, analytical tools, allow "what if" simulations, and
may support the exchange of information within the organization.
Functions of a DSS
DSS manipulate and build upon the information from a MIS and/or TPS to generate insights and
new information.
Functions of a DSS in terms of data processing requirements
Inputs

Processing

Outputs

Internal Transactions
Internal Files
External Information?

Modelling
Simulation
Analysis
Summarizing

Summary reports
Forecasts
Graphs / Plots

Some examples of DSS

o

Group Decision Support Systems (GDSS)

Computer Supported Co-operative work (CSCW)

Logistics systems

Financial Planning systems

Spreadsheet Models?

The role of DSS

4.

Support ill- structured or semi-structured decisions

Have analytical and/or modelling capacity

Used by more senior managerial levels

Are concerned with predicting the future

Are effectiveness oriented?

Executive Information Systems

What is an EIS?
Executive Information Systems are strategic-level information systems that are found at the top of the
Pyramid. They help executives and senior managers analyze the environment in which the organization
operates, to identify long-term trends, and to plan appropriate courses of action. The information in
such systems is often weakly structured and comes from both internal and external sources. Executive
Information System are designed to be operated directly by executives without the need for
intermediaries and easily tailored to the preferences of the individual using them.
Functions of an EIS
EIS organizes and presents data and information from both external data sources and internal MIS or
TPS in order to support and extend the inherent capabilities of senior executives.
Functions of a EIS in terms of data processing requirements
Inputs

Processing

Outputs

External Data
Internal Files
Pre-defined models

Summarizing
Simulation
"Drilling Down"

Summary reports
Forecasts
Graphs / Plots

Some examples of EIS

Executive Information Systems tend to be highly individualized and are often custom made for a
particular client group; however, a number of off-the-shelf EIS packages do exist and many enterprise
level systems offer a customizable EIS module.
The role of EIS
o

Are concerned with ease of use

Are concerned with predicting the future

Are effectiveness oriented

Are highly flexible

Support unstructured decisions

Use internal and external data sources

Used only at the most senior management levels

The Role of Management Information Systems in Decision Making.

Management information systems combine hardware, software and network products in an integrated
solution that provides managers with data in a format suitable for analysis, monitoring, decision-making and
reporting. The system collects data, stores it in a database and makes it available to users over a secure
network.

Information Access
Managers need rapid access to information to make decisions about strategic, financial, marketing and
operational issues. Companies collect vast amounts of information, including customer records, sales data,
market research, financial records, manufacturing and inventory data, and human resource records.
However, much of that information is held in separate departmental databases, making it difficult for
decision makers to access data quickly. A management information system simplifies and speeds up

information retrieval by storing data in a central location that is accessible via a network. The result is
decisions that are quicker and more accurate.

Data Collection
Management information systems bring together data from inside and outside the organization. By setting
up a network that links a central database to retail outlets, distributors and members of a supply chain,
companies can collect sales and production data daily, or more frequently, and make decisions based on
the latest information.

Collaboration
In situations where decision-making involves groups, as well as individuals, management information
systems make it easy for teams to make collaborative decisions. In a project team, for example,
management information systems enable all members to access the same essential data, even if they are
working in different locations.

Interpretation
Management information systems help decision-makers understand the implications of their decisions. The
systems collate raw data into reports in a format that enables decision-makers to quickly identify patterns
and trends that would not have been obvious in the raw data. Decision-makers can also use management
information systems to understand the potential effect of change. A sales manager, for example, can make
predictions about the effect of a price change on sales by running simulations within the system and asking
a number of what if the price was questions.

Presentation
The reporting tools within management information systems enable decision-makers to tailor reports to the
information needs of other parties. If a decision requires approval by a senior executive, the decision-maker
can create a brief executive summary for review. If managers want to share the detailed findings of a report
with colleagues, they can create full reports and provide different levels of supplementary data.

CONCLUSION
The role of information in decision making cannot be overemphasized. Effective decision
making demands accurate, timely and relevant information. MIS provides accurate and
timely information necessary to facilitate the decision-making process and enable the
organizations planning, control, and operational functions to be carried out effectively. MIS
also plays the crucial role of providing a wide range of streamlined options from which

decision-makers are able to make their preferred choices and this ensures that whatever
choices are made by decision makers, the outcome, more often than not, becomes positive.
This, as a matter of fact, is the reason why many decision makers tend to prefer using MIS
tools when making tough business choices. MIS as renowned concept, having good decision
choices guarantees viable decisions in our businesses.