Four main types of IS serve four different organizational levels: Operational-level systems

1. Different Kinds of Systems Four main types of IS serve four different organizational levels: • Operational-level systems • Knowledge-level systems • Management-level systems • Strategic-level systems Kenneth C. Laudon & Jane P. Laudon

2. Operational-level Systems • To answer routine questions and track the flow of transactions through the organization. Therefore, information generally must be easily available, current, and accurate. • Supporting operational managers by keeping track of the elementary activities and transactions of the organization, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow of materials in a factory • Including a system to record bank deposits from automatic teller machines or one that tracks the number of hours worked each day by employees on a factory floor Kenneth C. Laudon & Jane P. Laudon

3. Knowledge-level Systems • To help the business firm integrate new knowledge into the business and to help the organization control the flow of paperwork • Supporting the organization’s knowledge and data workers • Including workstations and office systems, which are the fastest-growing applications in business today Kenneth C. Laudon & Jane P. Laudon

4. Management-level Systems • To serve the monitoring, controlling, decision-making, and administrative activities of middle managers • Typically providing periodic reports rather than instant information on operations • Including control systems for annual budgeting and inventory, and management systems for sales and human resources Kenneth C. Laudon & Jane P. Laudon

5. Strategic-level Systems • To match changes in the external environment with existing organizational capability • Helping senior management deal with and address strategic issues and long-term trends, both in the firm and in the external environment • Including a system to forecast sales trends over a five-year period or systems for profit planning and personnel planning Kenneth C. Laudon & Jane P. Laudon

6. Types of Information Systems Kenneth C. Laudon & Jane P. Laudon

7. Major Types of Systems There are six specific types of IS that correspond to each organizational levels as follows: • Executive Support Systems (ESS) • Decision Support Systems (DSS) • Management Information Systems (MIS) • Knowledge Work Systems (KWS) • Office Systems • Transaction Processing Systems (TPS) Kenneth C. Laudon & Jane P. Laudon

8. The Six Major Types of IS Kenneth C. Laudon & Jane P. Laudon

9. Transaction Processing Systems (TPS) • Basic business systems that serve the operational level of the organization • Computerized systems that performs and records the daily routine transactions necessary to conduct business • Including 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. Kenneth C. Laudon & Jane P. Laudon

10. A Symbolic Representation for a Payroll TPS Kenneth C. Laudon & Jane P. Laudon

11. Typical Applications of TPS Kenneth C. Laudon & Jane P. Laudon

12. Knowledge Work Systems (KWS) & Office Systems • Knowledge Work Systems (KWS) • To aid knowledge workers (people who hold formal university degrees and are often members of recognized professions such as engineers, doctors, lawyers, and scientists) • To promote the creation of new knowledge and to ensure that new knowledge and technical expertise are properly integrated into the business • Including scientific or engineering design workstations Kenneth C. Laudon & Jane P. Laudon

13. Knowledge Work Systems (KWS) & Office Systems (Cont.) • Office Systems • To aid data workers (people who typically have less formal advanced educational degrees and tend to process rather than create information such as secretaries, bookkeepers, filing clerks, or managers whose jobs are to use, manipulate, or disseminate information) • To coordinate diverse information workers, geographic units, and functional areas • Including: • Systems for handling and manage documents through word processing, desktop publishing, document imaging, and digital filing • Systems for scheduling through electronic calendars • Systems for communicating through electronic mail (E-mail), voice mail, or videoconferencing Kenneth C. Laudon & Jane P. Laudon

14. Management Information Systems (MIS) • To 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 • Being oriented almost exclusively to internal, not environmental or external, events • Depending on underlying transaction processing systems for their data and, then, summarizing and reporting on the firm’s basic operations • To serve the functions of planning, controlling, and decision making at the management level with weekly, monthly, and yearly results (not day-to-day activities) • Being inflexible and having little analytical capability because most MIS use simple routines such as summaries and comparisons • Including systems that report the total pounds of lettuce used this quarter by a fast-food chain or compare total annual sales figures for specific products to planned targets Kenneth C. Laudon & Jane P. Laudon

15. TPS & MIS Relationship Kenneth C. Laudon & Jane P. Laudon

16. A Sample of MIS Report Kenneth C. Laudon & Jane P. Laudon

17. Decision Support Systems (DSS) • To also serve the management level of the organization by helping managers make decisions that are unique, rapidly changing, and not easily specified in advance • Using internal information from TPS and MIS and also external information such as current stock prices or product prices of competitors • Having more analytical power than other systems and addressing problems where the procedure for arriving at a solution may not be fully predefined in advance • Being designed so that users can work with them directly with user-friendly software and so interactive that the user can change assumptions, ask new questions, and include new data • Including a system for contract cost analysis Kenneth C. Laudon & Jane P. Laudon

18. A Voyage-estimating DSS Kenneth C. Laudon & Jane P. Laudon

19. Executive Support Systems (ESS) • To serve senior managers who are making decisions at the strategic level of the organization • To address nonroutine decisions requiring judgment, evaluation, and insight • Creating a generalized computing and communications environment (including historical and competitive data) rather than providing any fixed application or specific capability • Being designed to incorporate data about external events such as new tax laws or competitors and draw summarized information from internal MIS and DSS • Employing the most advanced and easy-to-use graphics software (interactive graphic interfaces) and can deliver graphs and data from many sources immediately to a senior executive’s office or to a boardroom • Including systems that conduct a 5-year operating plan or answer questions of: what business we should be in; and what the competitors are doing Kenneth C. Laudon & Jane P. Laudon

20. A Model of ESS Kenneth C. Laudon & Jane P. Laudon

21. Systems from a Functional Perspective IS can be classified by the specific organizational function they serve as well as by organizational level as follows: • Sales and marketing systems • Manufacturing and production systems • Finance and accounting systems • Human resources systems Kenneth C. Laudon & Jane P. Laudon

22. Sales & Marketing Systems • Strategic level • To monitor trends affecting new products and sales opportunities, and the performance of competitors • To support planning for new products and services • Management level • To support market research, advertising and promotional campaigns, and pricing decisions • To analyze sales performance and the performance of the sales staff • Knowledge level • To support marketing analysis workstations • Operational level • To assist in locating and contacting prospective customers, tracking sales, processing orders, and providing customer service support Kenneth C. Laudon & Jane P. Laudon

23. Examples of Sales & Marketing IS Kenneth C. Laudon & Jane P. Laudon

24. Manufacturing & Production Systems • Strategic level • To deal with the firm’s long-term manufacturing goals, such as where to locate new plants or whether to invest in new manufacturing technology • Management level • To analyze and monitor manufacturing and production costs and resources • Knowledge level • To create and distribute design knowledge or expertise to drive the production process • Operational level • To deal with the status of production tasks Kenneth C. Laudon & Jane P. Laudon

25. Examples of Manufacturing & Production IS Kenneth C. Laudon & Jane P. Laudon

26. An Inventory System Kenneth C. Laudon & Jane P. Laudon

27. Finance & Accounting Systems • Strategic level • To establish long-term investment goals for the firm • To provide long-range forecasts of the firm’s financial performance • Management level • To help managers oversee and control the firm’s financial resources • Knowledge level • To support finance and accounting by providing analytical tools and workstations for designing the right mix of investments to maximize returns for the firm • Operational level • To track the flow of funds in the firm through transactions such as paychecks, payments to vendors, securities reports, and receipts Kenneth C. Laudon & Jane P. Laudon

28. Examples of Finance & Accounting IS Kenneth C. Laudon & Jane P. Laudon

29. Human Resources Systems • Strategic level • To identify the manpower requirements (skills, educational level, types of positions, number of positions, and cost) for meeting the firm’s long-term business plans • Management level • To help managers monitor and analyze the recruitment, allocation, and compensation of employees • Knowledge level • To support analysis activities related to job design, training, and the modeling of employee career paths and reporting relationships • Operational level • To track the recruitment and placement of the firm’s employees Kenneth C. Laudon & Jane P. Laudon

30. Examples of Human Resources IS Kenneth C. Laudon & Jane P. Laudon

31. An Employee Record Keeping System Kenneth C. Laudon & Jane P. Laudon