Types of Information System

1. Types of Information System Databases & Information Systems Monica Farrow

2. Business Information Systems • A business information system is a group of interrelated components that work collectively to carry out • input, • processing, • output, • storage • and control actions in order to convert data into information products that can be used to support • forecasting, • planning control, • coordination, • decision making • and operational activities • in an organisation. • Bocij and Chaffey (2005)

3. Increasing scale more employees higher turnover more locations more complex more information more paperwork? Examples of a business • A self employed plumber • A hardware shop with 4 staff • A chain of five car dealers • A national chain of high street chemists • A manufacture of digital TV set-top boxes • A multi-national petrochemical company

4. Business environment of an organisation Key Points Business environments are complex, dynamic and potentially hostile. A business needs information about its environment: to be able to make decisions to use its resources to best exploit its environment and to survive! Bocij and Chaffey (2005), page 16

5. Major organisational functions Sales and marketing Selling products and services Manufacturing Making products and services Accounting Maintaining financial records; accounting for flow of funds Human resources Attracting, developing, (personnel) maintaining the labour force; maintaining employee records

6. Humans are better at: Judgement/experience Improvisation/flexibility Innovation Intuition Qualitative information Advantages and Disadvantages of Computer Systems • Computer systems are good at: • Speed • Accuracy • Reliability • Programmability • Repetitive Tasks “ The computer is incredibly fast, accurate, and stupid. Man is unbelievably slow, inaccurate, and brilliant. The marriage of the two is a force beyond calculation” -- Leo Cherne

7. Development of business information systems Data processing systems (1950s and 60s) Improving internal efficiency, batch processing bills and payslips Management information systems (1970s and 80s) Analysis of data to make predictions, provision of information on customers Strategic information systems (1990s+) Changing the external practice of organisations and bringing added value to customers

8. Executive Information Systems Management Information Systems Systems used to support tactical and strategic decision making: Decision Support Information Reporting Executive Information Systems Long-Term Strategic Planning Operational Information Systems Systems used for the tasks involved in the daily running of the business: Transaction Processing Process Control Office Automation Management Control and Tactical Planning Operational Planning and Control Short-Term Source: Anthony (1965) Hierarchy of IS Applications Types of Business Information Systems

9. 4 Levels of Information System • Alternatively, information systems can be divided into 4 levels • Operational-level Systems • Knowledge-level Systems • Management-level Systems • Strategic-level Systems

10. Operational-level Systems • Support operational managers by keeping track of the elementary activities and transactions of the organisation. • The principle purpose of systems at this level is to answer routine questions and track the flow of transactions through the organisation. • Covers things such as sales, receipts, cash deposits, payroll, credit decisions, flow of materials.

11. Operational-level Systems • Transaction-Processing Systems (TPS) • Basic business systems • Perform daily routine transactions necessary for business functions • At the operational level, tasks, resources and goals are predefined and highly structured • Generally, five functional categories are identified, as shown in the diagram. • Answers routine questions such as • How many of a particular part do we have in stock? • What happened to Mr Williams’s payment?

12. Key Elements of a Transaction Processing System Source: Figure 6.1 Bocij and Chaffey (2005), page 259

13. Knowledge-level Systems • Support knowledge and data workers in an organisation. • The purpose of these systems is to help the organisation discover, organise and integrate new and existing knowledge in to the business, and to help control the flow of paperwork. • These systems, especially in the form of collaboration tools, workstations, and office systems, are the fastest growing applications in business today.

14. Knowledge-level Systems • Office Automation Systems (OAS) • Targeted at meeting the knowledge needs of data workers within the organisation • Data workers tend to process rather than create information. Primarily involved in information use, manipulation or dissemination. • Typical OAS handle and manage documents, scheduling and communication. • Word processing, spreadsheets, electronic calendars

15. Knowledge Work Systems (KWS) • Targeted at meeting the knowledge needs of knowledge workers within the organisation • In general, knowledge workers hold degree-level professional qualifications (e.g. engineers, scientists, lawyers), their jobs consist primarily in creating new information and knowledge • KWS, such as scientific or engineering design workstations, promote the creation of new knowledge, and its dissemination and integration throughout the organisation.

16. Management-level Systems • Designed to serve the the monitoring, controlling, decision-making, and administrative activities of middle managers. • Answers the question “Are things working well?” • Falls into 2 categories • Management Information Systems • Decision Support Systems

17. Management Information Systems (MIS) • MIS provide managers with routine reports and, in some cases, on-line access to the organisation’s current performance and historical records • Typically these systems focus entirely on internal events, providing the information for short-term planning and decision making. • MIS summarise and report on the basic operations of the organisation, dependent on the underlying TPS for their data. • Simple routines, such as summaries and comparisons • E.g. • Actual v Planned yearly product sales by region • Total amount of products used this quarter

18. Management Information Systems (MIS)

19. Decision-Support Systems (DSS) • Focus on helping managers make non-routine decisions that are semi-structured, unique, or rapidly changing, and not easily specified in advance • What would be the impact on production schedules if we were to double sales in December? • What would happen to our return on investment if a factory schedule were delayed for 6 months?

20. Decision-Support Systems (DSS) • Use internal information from TPS and MIS, but also information from external sources, such as current stock prices or product prices of competitors. • Greater analytical power than other systems, incorporate modelling tools, aggregation and analysis tools, and support what-if scenarios • Must provide user-friendly, interactive tools • Because queries cannot be set up in advance • More detail in Data Warehousing lecture, next

21. Voyage-estimating Decision Support System • Company carries bulk cargoes of coal, oil, ores and finished products for parent company • Owns some ships, charters others • Bids for shipping contracts in open market for general cargo

22. Voyage-estimating Decision Support System • Questions • What is the optimal speed at which a particular vessel can optimize its profit and still meet its delivery schedule? • What is the optimal loading pattern for a ship journeying from US W coast to Malaysia • Given a customer delivery schedule and an offered freight rate, which vessel should be assigned at what rate to maximise profits?

23. Voyage-estimating Decision Support System • Needs voyage-estimating system to calculate • financial details • Ship/time costs (fuel, labour, capital) • Freight rates for various types of cargo • Port expenses • technical details • Ship cargo capacity • Speed • Port distances • Fuel and water consumption • Cargo loading patterns

24. Voyage-estimating Decision Support System

25. Ski operator and decision support • Customer data from web site, call centre, reservations, ski school, ski equipment rental • Determies value, revenue potential and loyalty of each customer. Divides customers into categories from ‘passionate experts’ to ‘value-minded families’ • Makes decisions on targets for marketing. Emails suitable video clips to each category.

26. Other decision support systems • Medical diagnosis • Credit of bank loan applicant • Engineering firm making competitive bid • Replacement system for defective rails on railways

27. Strategic-level Systems • Help senior management tackle and address strategic issues and long-term trends, both within the organisation and in the external environment. • Principal concern is matching organisational capability to changes, and opportunities, occurring in the medium to long term (i.e. 5 - 10 years) in the external environment. • E.g. • What will employment levels be like in 5 years? • What are the long-term industry cost trends? • What products should we be making in 5 years? • What new acquisitions would protect us from cyclical business swings?

28. Strategic-level Systems • Executive Support/Information Systems (ESS/EIS) • Serve the strategic level of the organisation • Address non-routine decisions requiring judgement, evaluation and insight. There is no agreed-upon procedure for arriving at a solution. • ESS/EIS address unstructured decisions and create a generalised computing and communications environment, rather than providing any fixed application or specific capability. • Such systems are not designed to solve specific problems, but to tackle a changing array of problems

29. ESS/EIS contd • ESS/EIS are designed to • incorporate data about external events, such as new tax laws or competitors, • and also draw summarised information from internal MIS and DSS • These systems filter, compress, and track critical data, emphasising the reduction of time and effort required to obtain information useful to executive management • E.g. The CEO of a company that manufactures health products has an ESS giving a minute-to-minute view of the firm’s financial performance measured by working capital, accounts receivable, accounts payable, cash flow and inventory.

30. ESS/EIS contd • ESS/EIS employ advanced graphics software to provide highly visual and easy-to-use representations of complex information and current trends • Often a web interface is used present the content.

31. Model of an ESS

32. Inter-relationships of systems • TPS are a major source of data for other systems • ESS primarily receive data from lower-level systems • Other types of system may exchange data with each other

33. Inter-relationships and inter-dependencies between IS types

34. Within the organisation • Typically, an organisation might have operational, knowledge, management and strategic level systems for each functional area within the organisation. • Sales and Marketing • Manufacturing and Production • Finance and Accounting • Human Resources • Enterprise level information systems attempt to encompass the whole organisation in one system.

35. Modern BIS ERP Systems Source: Figure 2.10, Bocij and Chaffey (2005), page 56

36. Enterprise systems • It is costly to maintain different systems and to enable information sharing. • Over a period of time, organisations end up with a collection of systems of varying ages • An enterprise application spans functional areas and include all levels of management. • Also known as Enterprise Resource Planning (ERP) systems