Types of Information Systems

Organisational Structure

Traditionally, organisations have a hierarchical structure: the strategic level, the tactical level and the operational level.

Levels in a traditional organisation

The strategic level includes the top-level management in an organisation such as the chairman, board of directors etc. They make corporate goals and strategic decisions for an organisation. The top-level management typically makes strategic decisions. These decisions are typically unstructured in nature. Let us consider our example of the bank. The board of directors, chairman and other top-level management of the bank consist of strategic level management. They may decide to expand their customer base and profits, and decide to open bank branches in different regions of the country or elsewhere in the world and invest funds for it. This is a strategic decision based on business environment, fund availability etc. These unstructured strategic decisions are rarely based on routine procedures, complex in nature and involve the subjective judgement of the decision makers.

The middle or tactical management level must acquire and arrange the resources to meet the goals, and define the detailed tasks to be carried out at the operational level. These resources may include people, machinery, buildings, etc. needed to accomplish the goals. The information that middle managers need include review, summarisation, and analysis of data to help plan and control operations and implement
policy that is been formulated by upper management. In our example of the bank, this Strategic Tactical Operational Set Goals Arrange Resources Carry out Tasks may include finding appropriate locations and buildings, purchasing equipment, hiring staff and training, making marketing strategies etc. for the newly established bank branches. Managers at the middle level generally deal with semi-structured decisions. A semi-structured decision or a tactical decision is a decision that is made without a clearly defined informational procedure.

The personnel at the operational level carry out the detailed tasks defined by the middle management. Most decisions at this level require easily defined information that relates to the current status and activities within the basic business functions. This information is generally given to lower management in detailed reports. The decisions taken at this level are called structured decisions, also known as operational decisions. A structured decision is a predictable decision that can be made by following a well-defined set of routine procedures.

Let us consider the bank example. A bank teller withdraws cash for a customer’s request if the customer’s account has the available funds. This is a structured decision. The current balance of the customer’s account is the information the bank teller requires to make this decision.

So far we have discussed hierarchical organisation structure. Even though traditional organisations have a hierarchic al structure, today, we are seeing more organisations with a flat organisational structure. A flat organisational structure has a reduced number of management layers. Flat organisational structures empower employees at lower levels to make decisions and solve problems without needing permission from the midlevel managers. Empowerment gives employees and their managers more responsibility and authority to make decisions, take certain actions, and in general have more control over their jobs. In our example of the bank, a bank teller may be able to process a customer’s cheque and return cash to a customer without approval from his/her manager. Empowerment usually results in faster action and quicker resolution of problems. It can also reduce costs and result in higher quality products and services.

Information systems can be a key element in empowering employees. Often, information systems enable empowerment by providing information directly to employees at lower levels of the hierarchy. In our example of the bank, the bank teller may be enabled to obtain information to verify the validity of the cheque and availability of funds prior to processing the cheque.