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Analysis and Design
Types of Information Systems
Information systems differ in their business needs. Also depending upon different
levels in organization information systems differ. Three major information systems
Transaction processing systems
Management information systems
Decision support systems
Figure 1.2 shows relation of information system to the levels of organization.
The information needs are different at different organizational levels. Accordingly
the information can be categorized as: strategic information, managerial information
and operational information.
Strategic information is the information needed by top most management for
decision making. For example the trends in revenues earned by the organization
are required by the top management for setting the policies of the organization.
This information is not required by the lower levels in the organization. The
information systems that provide these kinds of information are known as Decision
Figure 1.2 - Relation of information systems to levels of organization
The second category of information required by the middle management is known
as managerial information. The information required at this level is used for
making short term decisions and plans for the organization. Information like sales
analysis for the past quarter or yearly production details etc. fall under this
category. Management information system (MIS) caters to such information needs
of the organization. Due to its capabilities to fulfill the managerial information
needs of the organization, Management Information Systems have become a necessity
for all big organizations. And due to its vastness, most of the big organizations
have separate MIS departments to look into the related issues and proper functioning
of the system.
The third category of information is relating to the daily or short term information
needs of the organization such as attendance records of the employees. This kind
of information is required at the operational level for carrying out the day-to-day
operational activities. Due to its capabilities to provide information for processing
transaction of the organization, the information system is known as Transaction
Processing System or Data Processing System. Some examples of information provided
by such systems areprocessing of orders, posting of entries in bank, evaluating
overdue purchaser orders etc.
Transaction Processing Systems
TPS processes business transaction of the organization. Transaction can be any activity
of the organization. Transactions differ from organization to organization. For
example, take a railway reservation system. Booking, canceling, etc are all transactions.
Any query made to it is a transaction. However, there are some transactions, which
are common to almost all organizations. Like employee new employee, maintaining
their leave status, maintaining employees accounts, etc.
This provides high speed and accurate processing of record keeping of basic
operational processes. These include calculation, storage and retrieval.
Transaction processing systems provide speed and accuracy, and can be programmed
to follow routines functions of the organization.
Management Information Systems
These systems assist lower management in problem solving and making decisions.
They use the results of transaction processing and some other information also.
It is a set of information processing functions. It should handle queries as quickly
as they arrive. An important element of MIS is database.
A database is a non-redundant collection of interrelated data items that can
be processed through application programs and available to many users.
Decision Support Systems
These systems assist higher management to make long term decisions. These type
of systems handle unstructured or semi structured decisions. A decision is considered
unstructured if there are no clear procedures for making the decision and if not
all the factors to be considered in the decision can be readily identified in
These are not of recurring nature. Some recur infrequently or occur only once.
A decision support system must very flexible. The user should be able to produce
customized reports by giving particular data and format specific to particular
Summary of Information Systems
|Catagories of Information System
Transaction Processing System
|Substitutes computer-based processing for manual procedures.
Deals with well-structured processes. Includes record keeping applications.
Management information system
|Provides input to be used in the managerial decision
process. Deals with supporting well structured decision situations. Typical information
requirements can be anticipated.
Decision support system
|Provides information to managers who must make judgements
about particular situations. Supports decision-makers in situations that are not
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