Information System Types

As per our previous discussion, different levels of management require different types of information for their decision-making process. There are different types of information systems available geared towards different user needs. We can broadly classify some of the basic types of information systems as follows:

• Transaction Processing Systems
• Management Information Systems
• Decision Support Systems
• Executive Information Systems
• Expert Systems

The following figure illustrates the focus areas of the different information system.

The different types of information systems and their focus areas

It is important to note that a single organisation may have many different types of information systems. Let us consider each information system type in detail.  

Transaction processing systems: The Transaction Processing Systems (TPS) are a popular type of information system. Transaction processing systems capture and process data about business transactions. A TPS is focused at the operational level of a business. In our example of the bank, the banking system that maintains information about customers, accounts and financial transactions (such as withdrawals, deposits etc.) is a TPS. Many people at the operational level of the bank use the TPS. The lower-level management mainly uses the reports generated by TPS.

ATM is an example of a customer’s interface to the bank’s Transaction
Processing System

The design of a TPS tends to focus on factors such as response time, throughput (volume of transactions per unit time), accuracy, consistency, and service. A TPS usually operates within one functional area of a business. It is common for large organisations with many functional areas (such as marketing, accounting, production etc.) to have their own TPS. Some examples of TPSs include: Stock Control, Order Processing, Payroll, Payment Processing, etc.

Management information systems: Management Information Systems (MIS) supplement transaction-processing systems with management reports required to plan, monitor, and control routine business operations. In other words, an MIS provides managers with information and support for effective decision-making and provides feedback on daily operations. The primary focus of an MIS is managing theefficiency at the operational level. Management info rmation systems typically provide standard reports derived from information in transaction processing systems. These reports assist managers at the middle -level in their decision–making process. For example, in the bank, a report consisting of average cash flow per month in a branch might assist the manager to plan for future cash requirements at the branch.

A Sample Report generated by a Bank’s Management Information System

There are different types of reports produced by an MIS: (i.) scheduled reports – that are generated periodically such as daily, weekly, monthly; (ii.) demand reports - that generate information on request; and (iii.) exception reports –that usually describe unusual or critical situations like low inventory levels etc.

Decision support systems: A Decision Support System (DSS) is used to support problem-specific decision-making. The focus of a DSS is to support effective decision-making. A DSS supports all aspects of problem-specific decision-making. It goes beyond the traditional MIS. It supports complex, unstructured and semistructured decision-making. For instance, in our bank example, the management decides to expand and open a branch. A DSS may support in finding the best city or town to open the branch. It may analyse customers’ addresses and their nearest bank branch to suggest locations. For instance, “there are many customers whose addresses are in Matara region having accounts in the Galle branch”, which may suggest opening a branch at Matara. Traditional MISs are seldom used to solve these types of problems; a DSS can help by suggesting alternatives and assisting in final decision-making. A DSS analyses the information already captured by TPSs and MISs in order to support unstructured and semi-structured decision-making at various levels. A DSS may also include data obtained from external sources as well.

Executive information systems: An Executive Information System (EIS) or sometimes also called Executive Support System (ESS), is a DSS specifically made for top-level managers and executives to support their strategic decision making process. EISs provide executives with internal information as well as information from external sources (such as research databases, news services etc.). EISs provide executives to view information in a user-friendly, customised manner that assist them in their decision-making process.

Expert systems: Expert Systems belong to area known as Artificial Intelligence1 in the Computer Science field. The focus of an expert system is to capture the knowledge and reasoning of a human expert in a particular field and utilise this in decision-making in the respective field. Expert systems have been successfully utilised in different areas such as performing medical diagnosis or credit evaluations. In our bank example, an expert system may be utilised to determine the creditworthiness of a loan application.

In this section, we have seen the different types of information systems. In the next section, we will investigate the steps that can be followed in developing information systems.