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 are

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 Support Systems.

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 advance.

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 situations.

Summary of Information Systems

Catagories of Information System	Characteristices
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 well structured.