Lecture 3

To be covered What are the types of Information System (IS) within an organization What are the types of Information System (IS) within an organization The role of each types of IS in organization The role of each types of IS in organization DSS DSS

Classification of Information Systems A common approach to examine the types of Information System used within Organizations is to categorize Information System applications by the roles they play at various level This is known as vertical approach, where the organization is seen as management pyramid with four levels:

Classification of Information Systems Attend to routine daily business transactions e.g. selling goods & issuing receipts for payment Responsible for monitoring the transactions that are occurring, and dealing with any problems that may arise Decide on budgets, set targets, identify trends and develop short term plans for the business. Responsible for defining the long term goals of the company, and how it intends to position itself within its particular industry.

Transaction Processing Systems (TPS) Function support the day-to- day and routine activities such as invoicing and issuing of stock. Support simple processing of large amount of structured data These data are of internal origin (resulting from numerous routine transactions) User Used by clerical staff Following well defined business procedures. Work at the lowest level of detail Activities Staff process or query one transaction at a time, Using computer systems to capture the raw data Those data reflects the business processes of the organization For example, The itemized till slip (receipt) from the supermarket is produced by the TPS, and details of each individual item sold will be recorded in the store’s database.

TPS Five Common Modules Order Processing: orders for goods or services can enter the system from customers, salespeople, or other internal departments. General ledger: details of all transactions affecting the accounts of the company are recorded to simplify bookkeeping and reporting Accounts payable and receivable: data generated from sales journals or purchase orders can be used to improve debt collection and cash flow. Inventory management: along with updating of stock levels, IS is commonly used for tracking of materials and for linking the organization to suppliers and purchasers Payroll: employee details, earnings, deductions, leave accrual etc.

Management Information Systems (MIS) Function Systems that use the data generated by the TPS to help lower and middle managers in their decision making It assist operational management in monitoring and controlling the transaction processing activities Use historical data The main focus is to avoid wading through huge volumes of detailed data, instead using control totals and exception reports to identify problems. User low level and middle level managers and supervisors Different MIS based on business functions e.g. HR MIS, Marketing MIS Activities Use a variety of techniques to process, summarize and present the information in the form of useful reports: tables, statistics, graphics, etc. Many MIS can easily be customized and new reports are readily created on demand. Output reports generally contain summarized totals of the TPS data, Reports produced either on a cyclical basis (weekly or monthly) or on request For example, An exception report for a bank manager might be the list of all transactions exceeding one million rand; or those bank departments who have exceeded their budget by more than 10%.

MIS Continue Exception Report Report on unusual transactions Report on those fall outside the normal pattern instead of many pages of detailed data Manager can look at items that need special attention and corrective action Examples of Organizational Support Provided for Managers Financial planning & budgeting Financial Controls Investment Management Marketing Management The provision of customer services

Decision Support System(DSS) Function Systems that assist managers with very specific types of decision- making situations They tend to focus not on the progress of individual transactions but on the bigger picture see e.g. below Allow the manager to see future impact of his decision User Low & Middle-level managers These managers are responsible for ensuring that plans and targets set by senior management are achieved Activities DSS use various mathematical and statistical models to help the manager generate alternative decision options and evaluate their outcomes. DSS allows the manager to see the future impact of his decision For example, look at the relative sales performance of different sales areas in the organization. To achieve this, they need to receive regular reports from the MIS with summary totals and comparison between prior months and years. Where summary figures are of concern, these managers may request more detailed reports from the operations personnel.

DSS Special Requirements In many cases problems arise and additional ‘ad hoc’ reports are needed, see example below: Cape Town sales figures below annual year-to- date forecast Further analysis is needed to help the manager investigate the causes ‘Ad hoc’ report for monthly sales information may help the analysis Causes may be: 1- Poor sales performance 2- loss of major customer 3- lack of demand for a product

DSS Continue In three Minutes and in a group of 4-5 people, Find a solution for such a problem!! In three Minutes and in a group of 4-5 people, Find a solution for such a problem!!

DSS Continue

DSS Steps When information is required to support management decision making: When information is required to support management decision making: The user interact directly with the computer via a GUI or control language to request the relevant data, Select and operate the appropriate decision model Generate the output report in the format required

Components of DSS

DSS Model Base This is a library of analytical tools that can be used to evaluate and represent data E.g. Statistical functions (means, standard deviation) e.g. The ability to test possible scenarios through sensitivity analysis and goal seeking e.g. Retrieval tools to select, sort and summarize

DSS Database This database contains current and historical data from all the relevant business applications DSS construct its own DB & does not use operational DB It access the DB many times. This would impact the service the provided to online applications in areas where response times are critical. Operational database’s security and integrity is of great concern and access is limited to a minimum. While DSS systems normally download a copy of data for analysis and rarely update the database WHY!! It makes good sense to maintain a database specifically for DSS queries. WHY!!!

Reasons to maintain a database specifically for DSS queries. Some data need be held only in summary form Historical records must be retained for a five year period to allow for trend analysis Different saving formats: Data may come from different databases, hardware and software platforms, a transfer and reformatting of data to a common DSS database enables combination of data from these varied sources. Different Data Sources With the demand for end-user access to current and historical information Many organization store large quantities of data obtained from different functional areas of the organization. Data Warehouse

Executive Information System(EIS) Function An EIS will continuously monitor selected key performance indicators that have been identified as critical to the success of the organization. It enable users to identify problems, opportunities and trends that may enhance or threaten their organization’s competitive position. User Top-level managers These managers are charged with the task of setting the strategy for the organization. Activities It provide rapid access to both internal and external information, often presented in graphical format, but with the ability to present more detailed underlying data if it is required The user will be alerted to any significant changes that occur, and “drill-down” capabilities will then provide further levels of detail underlying this information. Trend analysis can be done using forecasting models, usually through the integration of the EIS with a DSS system Decisions made by top-level executives are often too unstructured to be adequately supported by a DSS. In the past, much time was spent by top management wading through reports relating to the performance of strategic areas of the business. In order to reduce time for finding and integrating a few critical numbers from many different reports; EIS was developed

Summary Characteristics of each level of management support

Users of IS Application

How does IS support Business Objectives?? Increasing the efficiency of business processes Cutting supply costs Improving levels of customer service Improving managerial decision-making

The Support that Different Types of IS Provide to Business Objectives TPSMIS DSS EIS

Done!! Done!! Thank you for listening Thank you for listening Any Questions??? Any Questions??? Refer to Book_1, Chapter (8), 8.3-(p.107- p.111) Refer to Book_1, Chapter (8), 8.3-(p.107- p.111) Refer to Book_1, Ch.(1), p.(14-16) Refer to Book_1, Ch.(1), p.(14-16)