IS312: information systems theory and applications LECTURE 3: levels of systems Information Systems Department

Outlines 2 The Role of IS in Business The important attributes of information quality. What are the types of Information System (IS) within an organization. Decision support. Levels of organization. The role of each types of IS in organization. Information Systems Department

3 Do you think using IS in Business important? Why? Information Systems Department

4 THE ROLE OF IS IN BUSINESS Businesses make use of information systems so that accurate and up-to-date information will be available when it is required. Most organizations use computers to record and store the details of all their business transactions. When a query arises, or a standard business report must be produced, this raw data can be retrieved and manipulated to produce the required information. Information Systems Department

5 What characteristics of information products make them valuable and useful to Business ? Information Systems Department

Information Quality 6  Information that is:  outdated.  inaccurate.  or hard to understand,is not very meaningful, useful, or valuable to you or other business professionals.  People need information of high quality.  It is useful to think of information as having the three dimensions of time, content, and form. Information Systems Department

7 INFORMATION QUALITY

8 So what kind of IS do we need? Information Systems Department

Types of information systems Information Systems Department 9 Information systems generally are classified into four categories: 1. Transaction processing systems (TPS). 2. Management information systems (MIS). 3. Decision support systems (DSS). 4. Expert systems( ES). The following sections present each of these information systems

1-Transaction Processing Systems (TPS) 10 A transaction processing system (TPS) is an information system that captures and processes data generated during an organization’s day-to-day transactions. A transaction is a business activity such as a payment, order,reservation. Support simple processing of large amount of structured data Information Systems Department

11 As computers became more powerful, system developers built online transaction processing systems. With online transaction processing (OLTP) the computer processes transactions as they are entered. Information Systems Department 1-Transaction Processing Systems (TPS)

2- Management Information Systems (MIS) 12 A Management Information System, is an information system that generates accurate, timely and organized information so managers can make decisions, solve problems, supervise activities, and track progress. Or, it is a System that use the data generated by the TPS to help lower and middle managers in their decision making. the related management information system can produce reports Information Systems Department

13  Management information systems provide a variety of information products to managers.  Four major reporting alternatives 1. Periodic Scheduled Reports: This traditional form of providing information to managers uses a pre-specified format designed to provide managers with information on a regular basis. examples daily or weekly sales analysis reports and monthly financial statements. 2- Management Information Systems (MIS) Information Systems Department

14 2. Exception Reports. In some cases, reports are produced only when exceptional conditions occur. 3. For example, report that contains only information on customers who have exceeded their credit limits. 2- Management Information Systems (MIS) Information Systems Department

15 3. Demand Reports and Responses: Information is available whenever a manager demands it. 4. Push Reporting: Information is pushed to a manager’s networked workstation. (broadcast) 2- Management Information Systems (MIS) Information Systems Department

16 3- Decision Support System(DSS)  A decision support system (DSS) is an information system ( interactive computer-based systems and subsystems ) designed to help higher managers to reach a decision when a decision-making situation arises Information Systems Department

17 A decision support system uses data from internal and/or external sources.  Internal sources of data might include data from an organization’s database. for example sales, manufacturing, inventory, or financial  External sources could include for example interest rates, population trends, and costs of new housing construction or raw material pricing.  Users of a DSS, often managers, can manipulate the data used in the DSS to help with decisions. 3- Decision Support System(DSS) Information Systems Department

18 Types of DSS 1. Communication-driven DSS 2. Data-driven DSS 3. Document-driven DSS 4. Knowledge-driven DSS 5. Model-driven DSS Information Systems Department

19 Use network and comminication technologies to faciliate collaboartion on decision making. It supports more than one person working on a shared task. Types of DSS Communication-driven DSS. Information Systems Department

20 Emphasizes access to and manipulation of a time series of internal company data and, sometimes, external data. Simple file systems accessed by query and retrieval tools. Types of DSS Data-driven DSS. Information Systems Department

21 Use storage and processing technologies to document retrieval and analysis. A search engine is a primary tool associated with document driven DSS. Types of DSS Document-driven DSS. Information Systems Department

22 It suggest or recommend actions to managers. It is essentially used to provide management advice. Types of DSS Knowledge-driven DSS. Information Systems Department

23 complex systems emphasizes access to and manipulation of a statistical, financial, optimization, or simulation model. Use data and parameters provided by users to assist decision makers in analyzing a situation or choose between different options. Types of DSS Model-driven DSS. Information Systems Department

24 Data Management Model Management Knowledge Management User Interface User Other Systems Decision Support System components Information Systems Department

25 1 The Data Management Subsystem  Data Management subsystem includes a database that contains relevant data for the situation and managed by software called the Database Management System (DBMS) and can be interconnected with the corporate data warehouse. Usually, the data are stored or accessed via a database Web server. Information Systems Department

26 2 The Model Management Subsystem Model Management Subsystem is a software package that includes financial, statistical, management science or other quantitative models that provide the system’s analytical capabilities and appropriate software management.  There can be 3 different types of modeling software for DSSs: 1. Statistical models, 2. Optimization models, 3. Forecasting models. Information Systems Department

27 The model management subsystem : statistical models  Statistical modeling software can be used to help establish relationships such as relating product sales to differences in age, income or other factors between communities.  Ex: SPSS. Information Systems Department

28  Optimization models often using Linear Programming (LP) determine the proper mix of products within a given market to maximize profit. The model management subsystem : Optimization models Information Systems Department

29 Companies often use this software to predict the action of competitors. The model management subsystem : Forecasting models Information Systems Department

30 3 The Knowledge Management Subsystem  Provides expertise in solving complex unstructured and semi-structured problems  Example: Data mining Information Systems Department

31 4 The User Interface (Dialog) Subsystem Includes all communication between a user and the DSS To most users, the user interface is the system Information Systems Department

32 Tools used in a DSS  Using a DSS involves different types of analytical modeling activities:

33 The DSS Hierarchy 1. Suggestion systems 2. Optimization systems 3. Representational models 4. Accounting models 5. Analysis information systems 6. Data analysis systems 7. File drawer systems high Possible Complexity low Information Systems Department

34 Optimization models Used to estimate the effects of different decision alternatives. Suggestion models a prescriptive model may be used to suggest to the decision maker the best action THE DSS HIERARCHY Information Systems Department

35 Managers and decision making  For each decision you make, the decision will fall into one of the following categories: 1. Structured Decisions 2. Unstructured 3. Semi-Structured Information Systems Department

36 1-structured decisions  Often called “programmed decisions” because they are routine.  there are usually specific policies, procedures, or actions that can be identified to help make the decision Information Systems Department

37 2-Unstructured Decisions  Decision scenarios that often involve new or unique problems and the individual has little or no programmatic or routine procedure for addressing the problem or making a decision 3-Semi-structured Decisions Decision scenarios that have some structured components and some unstructured components. Information Systems Department

38 4 Executive Information System(EIS)  An expert system is an information system that captures and stores the knowledge of human experts and then imitates human reasoning and decision-making processes for those who have less expertise.  Examples systems that have resolved diverse problems as diagnosing illnesses, searching for oil.  Expert systems are one part of an exciting branch of computer science called artificial intelligence.  Artificial intelligence (AI) is the application of human intelligence to computers.  AI technology can sense your actions and, based on logical assumptions and prior experience, will take the appropriate action to complete the task. Information Systems Department

39  Expert systems are composed of two main components: a knowledge base and inference rules. 1. A knowledge base is the combined subject knowledge and experiences of the human experts. 2. The inference rules are a set of logical judgments applied to the knowledge base each time a user describes a situation to the expert system. 4 Executive Information System(EIS) Information Systems Department

40 Now, how can we use these IS types in an organization? Information Systems Department

41 Different levels of organisation  Within any single organization, executives at different levels in the management hierarchy have :  very different information requirements,  different types of information systems to meet their needs.  A common approach to examine the types of information systems used within organizations, is to categories IS applications by the roles they play at various levels in the organizational structure. There are four levels: 1.At the lowest level, non-management staff. 2.Operational management. 3.Tactical management. 4.At the top of the pyramid, strategic management. Information Systems Department

42 1.Lowest level The lowest level, non-management staff:  attend to routine daily business transactions. Type of IS used : Transaction processing system (TPS) Example: selling goods and issuing receipts for payment. Information Systems Department

43 2. Operational Level  Operational management are responsible for monitoring the transactions that are occurring, and dealing with any problems that may arise.  Type of IS used :management information system.  Day-to-day business processes  Interactions with customers  Information systems used to:  Automate repetitive tasks  Improve efficiency  Decisions:  Structured (What are structured decisions?)  Recurring Information Systems Department

44  Tactical management decide on budgets, set targets, identify trends and develop short term plans for the business.  Type of IS used : Decision support systems.  Monitoring and controlling operational-level activities  Providing information to executive level  Managers’ decisions  Semistructured 3. Managerial (Tactical) Level Information Systems Department

45  At the top of the pyramid, strategic management is responsible for defining the long term goals of the company, and how it intends to position itself within its particular industry.  Type of IS used : Executive information systems.  Decisions  Long-term strategic issues  Unstructured decisions  Complex and non-routine problems 4. Executive (strategic) Level Information Systems Department

46 Different levels of organisation and types of support systems Strategic Management Tactical Management Operation Management Non- management staff TPS MIS DSS EIS Information Systems Department

47 How does IS support business objectives? Increasing the efficiency of business processes Cutting supply costs Improving levels of customer service Improving managerial decision-making Information Systems Department