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Types of Information System. Databases & Information Systems Monica Farrow. Business Information Systems. A business information system is a group of interrelated components that work collectively to carry out input, processing, output, storage

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Types of Information System

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types of information system

Types of Information System

Databases & Information Systems

Monica Farrow

business information systems
Business Information Systems
  • A business information system is a group of interrelated components that work collectively to carry out
    • input,
    • processing,
    • output,
    • storage
  • and control actions in order to convert data into information products that can be used to support
    • forecasting,
    • planning control,
    • coordination,
    • decision making
    • and operational activities
  • in an organisation.
    • Bocij and Chaffey (2005)
examples of a business

Increasing scale

more employees

higher turnover

more locations

more complex

more information

more paperwork?

Examples of a business
  • A self employed plumber
  • A hardware shop with 4 staff
  • A chain of five car dealers
  • A national chain of high street chemists
  • A manufacture of digital TV set-top boxes
  • A multi-national petrochemical company
business environment of an organisation
Business environment of an organisation

Key Points

Business environments are complex, dynamic and potentially hostile.

A business needs information about its environment:

to be able to make decisions

to use its resources to best exploit its environment

and to survive!

Bocij and Chaffey (2005), page 16

major organisational functions
Major organisational functions

Sales and marketing Selling products and services

Manufacturing Making products and services

Accounting Maintaining financial records; accounting for flow of funds

Human resources Attracting, developing,

(personnel) maintaining the labour force; maintaining employee records

advantages and disadvantages of computer systems
Humans are better at:





Qualitative information

Advantages and Disadvantages of Computer Systems
  • Computer systems are good at:
    • Speed
    • Accuracy
    • Reliability
    • Programmability
    • Repetitive Tasks

“ The computer is incredibly fast, accurate, and stupid. Man is unbelievably slow, inaccurate, and brilliant. The marriage of the two is a force beyond calculation” -- Leo Cherne

development of business information systems
Development of business information systems

Data processing systems (1950s and 60s)

Improving internal efficiency, batch processing bills and payslips

Management information systems (1970s and 80s)

Analysis of data to make predictions, provision of information on customers

Strategic information systems (1990s+)

Changing the external practice of organisations and bringing added value to customers

types of business information systems

Executive Information Systems

Management Information Systems

Systems used to support tactical and strategic decision making:

Decision Support

Information Reporting

Executive Information Systems




Operational Information Systems

Systems used for the tasks involved in the daily running of the business:

Transaction Processing

Process Control

Office Automation

Management Control

and Tactical Planning

Operational Planning and Control


Source: Anthony (1965) Hierarchy of IS Applications

Types of Business Information Systems
4 levels of information system
4 Levels of Information System
  • Alternatively, information systems can be divided into 4 levels
    • Operational-level Systems
    • Knowledge-level Systems
    • Management-level Systems
    • Strategic-level Systems
operational level systems
Operational-level Systems
  • Support operational managers by keeping track of the elementary activities and transactions of the organisation.
  • The principle purpose of systems at this level is to answer routine questions and track the flow of transactions through the organisation.
  • Covers things such as sales, receipts, cash deposits, payroll, credit decisions, flow of materials.
operational level systems1
Operational-level Systems
  • Transaction-Processing Systems (TPS)
    • Basic business systems
    • Perform daily routine transactions necessary for business functions
    • At the operational level, tasks, resources and goals are predefined and highly structured
    • Generally, five functional categories are identified, as shown in the diagram.
    • Answers routine questions such as
      • How many of a particular part do we have in stock?
      • What happened to Mr Williams’s payment?
key elements of a transaction processing system
Key Elements of a Transaction Processing System

Source: Figure 6.1 Bocij and Chaffey (2005), page 259

knowledge level systems
Knowledge-level Systems
  • Support knowledge and data workers in an organisation.
  • The purpose of these systems is to help the organisation discover, organise and integrate new and existing knowledge in to the business, and to help control the flow of paperwork.
  • These systems, especially in the form of collaboration tools, workstations, and office systems, are the fastest growing applications in business today.
knowledge level systems1
Knowledge-level Systems
  • Office Automation Systems (OAS)
    • Targeted at meeting the knowledge needs of data workers within the organisation
    • Data workers tend to process rather than create information. Primarily involved in information use, manipulation or dissemination.
    • Typical OAS handle and manage documents, scheduling and communication.
    • Word processing, spreadsheets, electronic calendars
knowledge work systems kws
Knowledge Work Systems (KWS)
  • Targeted at meeting the knowledge needs of knowledge workers within the organisation
  • In general, knowledge workers hold degree-level professional qualifications (e.g. engineers, scientists, lawyers), their jobs consist primarily in creating new information and knowledge
  • KWS, such as scientific or engineering design workstations, promote the creation of new knowledge, and its dissemination and integration throughout the organisation.
management level systems
Management-level Systems
  • Designed to serve the the monitoring, controlling, decision-making, and administrative activities of middle managers.
  • Answers the question “Are things working well?”
  • Falls into 2 categories
    • Management Information Systems
    • Decision Support Systems
management information systems mis
Management Information Systems (MIS)
  • MIS provide managers with routine reports and, in some cases, on-line access to the organisation’s current performance and historical records
  • Typically these systems focus entirely on internal events, providing the information for short-term planning and decision making.
  • MIS summarise and report on the basic operations of the organisation, dependent on the underlying TPS for their data.
  • Simple routines, such as summaries and comparisons
  • E.g.
      • Actual v Planned yearly product sales by region
      • Total amount of products used this quarter
decision support systems dss
Decision-Support Systems (DSS)
  • Focus on helping managers make non-routine decisions that are semi-structured, unique, or rapidly changing, and not easily specified in advance
    • What would be the impact on production schedules if we were to double sales in December?
    • What would happen to our return on investment if a factory schedule were delayed for 6 months?
decision support systems dss1
Decision-Support Systems (DSS)
  • Use internal information from TPS and MIS, but also information from external sources, such as current stock prices or product prices of competitors.
  • Greater analytical power than other systems, incorporate modelling tools, aggregation and analysis tools, and support what-if scenarios
  • Must provide user-friendly, interactive tools
    • Because queries cannot be set up in advance
  • More detail in Data Warehousing lecture, next
voyage estimating decision support system
Voyage-estimating Decision Support System
  • Company carries bulk cargoes of coal, oil, ores and finished products for parent company
  • Owns some ships, charters others
  • Bids for shipping contracts in open market for general cargo
voyage estimating decision support system1
Voyage-estimating Decision Support System
  • Questions
    • What is the optimal speed at which a particular vessel can optimize its profit and still meet its delivery schedule?
    • What is the optimal loading pattern for a ship journeying from US W coast to Malaysia
    • Given a customer delivery schedule and an offered freight rate, which vessel should be assigned at what rate to maximise profits?
voyage estimating decision support system2
Voyage-estimating Decision Support System
  • Needs voyage-estimating system to calculate
    • financial details
      • Ship/time costs (fuel, labour, capital)
      • Freight rates for various types of cargo
      • Port expenses
    • technical details
      • Ship cargo capacity
      • Speed
      • Port distances
      • Fuel and water consumption
      • Cargo loading patterns
ski operator and decision support
Ski operator and decision support
  • Customer data from web site, call centre, reservations, ski school, ski equipment rental
  • Determies value, revenue potential and loyalty of each customer. Divides customers into categories from ‘passionate experts’ to ‘value-minded families’
  • Makes decisions on targets for marketing. Emails suitable video clips to each category.
other decision support systems
Other decision support systems
  • Medical diagnosis
  • Credit of bank loan applicant
  • Engineering firm making competitive bid
  • Replacement system for defective rails on railways
strategic level systems
Strategic-level Systems
  • Help senior management tackle and address strategic issues and long-term trends, both within the organisation and in the external environment.
  • Principal concern is matching organisational capability to changes, and opportunities, occurring in the medium to long term (i.e. 5 - 10 years) in the external environment.
  • E.g.
    • What will employment levels be like in 5 years?
    • What are the long-term industry cost trends?
    • What products should we be making in 5 years?
    • What new acquisitions would protect us from cyclical business swings?
strategic level systems1
Strategic-level Systems
  • Executive Support/Information Systems (ESS/EIS)
    • Serve the strategic level of the organisation
    • Address non-routine decisions requiring judgement, evaluation and insight. There is no agreed-upon procedure for arriving at a solution.
    • ESS/EIS address unstructured decisions and create a generalised computing and communications environment, rather than providing any fixed application or specific capability.
    • Such systems are not designed to solve specific problems, but to tackle a changing array of problems
ess eis contd
ESS/EIS contd
  • ESS/EIS are designed to
    • incorporate data about external events, such as new tax laws or competitors,
    • and also draw summarised information from internal MIS and DSS
  • These systems filter, compress, and track critical data, emphasising the reduction of time and effort required to obtain information useful to executive management
  • E.g. The CEO of a company that manufactures health products has an ESS giving a minute-to-minute view of the firm’s financial performance measured by working capital, accounts receivable, accounts payable, cash flow and inventory.
ess eis contd1
ESS/EIS contd
  • ESS/EIS employ advanced graphics software to provide highly visual and easy-to-use representations of complex information and current trends
  • Often a web interface is used present the content.
inter relationships of systems
Inter-relationships of systems
  • TPS are a major source of data for other systems
  • ESS primarily receive data from lower-level systems
  • Other types of system may exchange data with each other
within the organisation
Within the organisation
  • Typically, an organisation might have operational, knowledge, management and strategic level systems for each functional area within the organisation.
    • Sales and Marketing
    • Manufacturing and Production
    • Finance and Accounting
    • Human Resources
  • Enterprise level information systems attempt to encompass the whole organisation in one system.
modern bis erp systems
Modern BIS ERP Systems

Source: Figure 2.10, Bocij and Chaffey (2005), page 56

enterprise systems
Enterprise systems
  • It is costly to maintain different systems and to enable information sharing.
  • Over a period of time, organisations end up with a collection of systems of varying ages
  • An enterprise application spans functional areas and include all levels of management.
  • Also known as Enterprise Resource Planning (ERP) systems