Types of Information Systems

1. Types of Information Systems • An organization consists of many people with different interests, specialties, and levels. • How a single information system can provide all the information that an organization needs? • There is no such single information system. • An organization should have different info systems for different interests, specialties, and levels.

2. Different levels in an Organization Senior manager Strategic Middle manager Management Knowledge and data workers Knowledge Operational Manager Operational Level

3. Different kinds of Info systems for different levels • Strategic-level System • Management-level System • Knowledge-level Systems • Operational-level Systems

4. Strategic-level System • What are the functions of strategic-level info system? • => helps senior managers with long-term planning. • => the principal concern of strategic-level system is matching changes in the external environment with existing organizational capability. • It should answer the questions: • => What kinds of products the organization should produce in five years? • => What units should we sell to raise cash? • => What would be the sales trend over five years?

5. Management-level System • What are the functions of management-level info system? • => Helps middle managers for monitoring, controlling, decision-making, and administrative activities. • => Generally it provides periodic reports rather than instant information • => However, some systems supports nonroutine decision making. • It should answer the questions: • => Relocation Control System: It reports on the total moving, house-hunting, and home financing costs for all employees in the organization. It will also notify if actual costs exceed the budgets. • => What would happen to our return on investment if an organization schedule were delayed for six months?

6. Knowledge-level System • What are the functions of management-level info system? • => It supports knowledge workers (engineers, architects, scientists) • => It supports data workers ( secretaries, bookkeepers, clerks) • => It helps process paper work. • Examples: • Workstations => Engineering workstations • => Graphics workstations • Office Systems => Word Processing

7. Operational-level System • What are the functions of management-level info system? • => It supports operational managers. • => It keeps track of basic activities and transactions of the organizations • => generally, it can answer routine questions, such as, how many parts have been supplied in London this month? • Examples: • A system to record bank deposit from automatic teller machines.

8. Functional Specialties • An organization can have five major functions, such as • => sales and marketing • => manufacturing • => finance • => accounting • => human resources. • An organization needs different information system for each function. • In large organization, subfunctions of each major function also have their own information systems.

9. Examples • A) Example 1: • Functional specialty: sales • level: strategic level • The system can answer: • => What would be the sales trends over five-year period. • B) Example 2: • Functional specialty: sales • level: management level • The system can answer: • => the amount of monthly sales and can predict whether it exceed or fall below anticipated levels.

10. Different Objectives • Why different organizations have different information systems for the same functional area? • Because their objectives, structures, and interests are different. • No two organizations have exactly same objectives, structures, and interests. • There is no universal info system that can fit all organizations.

11. Six Major types of Information Systems • There are six major types of information Systems to serve each of the four levels of an organizations. • ESS => Executive Support System serves the strategic level. • MIS => Management Information System serves the management level. • DSS => Decision Support System serves the management level. • KWS => knowledge work System serves the knowledge level. • OAP => Office Automation System serves the knowledge level • TPS => Transaction Processing system serves the operational level.

12. Executive Support System • It helps senior managers. • It addresses unstructured decisions. • It provides a generalized computing & telecommunications capability to solve problems. • It employs the most advanced graphics software. • It can deliver graphs & (historical data and competitive data) from internal corporate systems and external databases. • Senior managers often have little experience with computer-based information systems, ESS should have easy-to-use graphic interfaces.

13. Management Information System • It helps the middle managers with reports, with on-line access to the organization’s current performance and historical records. • It primarily serves the functions of planning, controlling, decision-making at the management level. • Generally it depend on TPS for data. • It summarizes and reports on the basic operations of the organization. • It usually serve managers interested in weekly, monthly, and yearly results, not day-to-day activities. • It generally address structured questions that are known in advance. • It is not flexible and have little analytical capability.

14. Decision Support System • It also serves the management level • It help managers make decisions that are semistructured, unique, or rapidly changing, and not known in advance. • It depends on TPS and MIS for data. • It also can bring information from external sources (e.g. current stock prices). • DSS has more analytical power than other systems. • They are built explicitly with a varity of models to analyze data. • DSS are designed so that users can work with them directly. • It explicitly includes user-friendly software. • DSS is interactive: users can change assumptions, ask new questions, and include new data.

15. Knowledge Work and Office Automation systems • They serve the information needs at the knowledge level. • KWS aid knowledge workers • OAS primarily help data workers. • Knowledge workers: engineers, doctors, lawyers, and scientists. • Their jobs are creating new information and knowledge. • Example of KWS are the computer-aided design and robotics systems. • Data workers: secretaries, accountants, filing clerk whose jobs are to use, manipulate, or disseminate information. • Data workers generally process, they do not create information. • Office automation systems handle and manage documents (through word processing, document imaging, and digital filing), scheduling (through electronic calendars), and communication (through email, voice mail, or videoconferencing).

16. Transaction Processing Systems • They serve the operational level of the organization. • They are computerized systems that perform and record the daily routine transactions to run the business. • Examples: sales order entry, hotel reservation systems, payroll, employee record keeping, and shipping. • At operational level, tasks, resources, and goals are predefined and highly structured. • The decision to grant credit card to a customer is made by lower-level supervisor according to predefined criteria. • Supervisor will determine whether the customer meets the criteria.

17. Relationship of Systems to one another: Integration ESS MIS DSS KWS OAS TPS

18. Strategic Information System • Strategic information systems => Computer systems at any level of the organization that change goals, operations, products, services, or environmental relationships for staying ahead of the competition. • They are far-reaching and deeply rooted, and fundamentally transform the organization itself. • For instance, State Street Bank transformed its core business from traditional banking services (e.g. customer checking and savings accounts and loans) to electronic record keeping.

19. Difference between Strategic information system and strategic-level systems: • Strategic information system can be used at all levels of the organization. Strategic-level systems can server only senior managers • Strategic information systems are more far-reaching and deep-rooted than other kinds of systems. • Strategic information systems fundamentally change a firm’s goals, products, services, or internal and external relationships. • Strategic-level systems provide long-term planning information to senior executives.

20. Competitive forces models and Value chain models • There are two models of a firm and its environment that have been used to identify areas of the business where information systems can provide advantages over competitors. • The two models are competitive force models and Value chain models. • The two models complement each other. • Both are used to aid firms in identifying where information systems can provide a competitive advantage. • The competitive force model examines the firm’s external environment to identify threats and opportunities. • The value chain model highlights specific activities within the firm to identify where competitive strategies can be best applied.

21. Four basic competitive strategies • Product differentiation => Creates unique products and services that are distinct from competitors. • Focused differentiation => “Mine” information to focus on a previously unexploited market niche. • Developing tight linkages to customers and suppliers => Firms can create ties to customers and suppliers that “lock” customers into firm’s products. It can also tie suppliers into a delivery timetable and price structure shaped by the purchasing firm. It raises the switching costs and reduces customers’ bargaining power and suppliers’ bargaining power. • Becoming the low-cost producer => Improves internal operations to produce goods and services at a lower price or with greater efficiency than competitors.

22. Why strategic information systems difficult to build? • Strategic information systems are difficult to build because they require changes in business goals, relationships with customers and suppliers, internal operations, and information architecture. • These sociotechnical changes affect both social and technical elements of the organization. • New relationships among parts of the company with customers and suppliers must be redefined. • Sometimes entirely new organizational structures may need to be built. • There may be resistance to such changes because they impact responsibilities and jobs.

23. Advantages of an information partnership • Companies are increasingly using information systems for strategic advantage by entering into strategic alliances with other companies in which both firms cooperate by sharing resources and services. Such alliances called information partnerships in which all firms share data for mutual advantage. • Some retailers, including some grocery chains, are cooperating with airlines to award frequent flier miles. Each gains access to the customers of the others and information on good customers. • Example: American Airlines has an arrangement with Citibank to award one mile in its frequent flier program for every dollar spent using Citibank credit cards.

24. How can managers find strategic applications in their firms? • By benchmarking what others in similar industries are doing. • By examining strategic opportunities (perhaps from KWS or DSS). • By examining the fit of any opportunity for information systems with the current organizational plan, and determining the organization’s capability -technological, financial - to develop the strategic systems initiative.

25. What is total quality management (TQM) ? • Total quality management (TQM) is a concept that holds everyone in the organization responsible for the improvement of quality. • Quality is an end in itself gained by continuous improvement in design, production, sales, and management. • TQM is based on concepts developed by Deming and Juran and popularized by Japanese manufacturers. • A key part of TQM is that the ultimate goal of improving the quality of the products or services that are provided is better service to external and internal customers.

26. How can companies use information systems to promote TQM? • Information systems can help firms achieve their quality goals by helping them • => simplify products or processes, • => meet benchmarking, standards, • => make improvements based on customer demands, • => reduce cycle time, and • => increase the quality and precision of design and production.