Organisations and individuals use different types of systems for different

purposes. Here are some of the main types of information systems and their
uses.

Components of information systems: people, equipment, procedures, data.

The main ones you need to know are TPS, MIS & DSS, and EIS.

Transaction processing system (TPS):

A TPS collects and stores information about transactions, and controls some
aspects of transactions. A transaction is an event of interest to the
organisation. e.g. a sale at a store.

A TPS is a basic business system. It:

 is often tied to other systems such as the inventory system which

tracks stock supplies and triggers reordering when stocks get low;
 serves the most elementary day-to-day activities of an organisation;
 supports the operational level of the business;
 supplies data for higher-level management decisions (e.g. MIS, EIS);
 is often critical to survival of the organisation;
 mostly for predefined, structured tasks;
 can have strategic consequences (eg airline reservation system);
 usually has high volumes of input and output;
 provides data which is summarised into information by systems used
by higher levels of management;
 need to be fault-tolerant.

On-line transaction processing: A transaction processing mode in which

transactions entered on-line are immediately processed by the CPU.

Decision support system (DSS):

Helps strategic management staff (often senior managers) make decisions by
providing information, models, or analysis tools. For support of
semistructured and unstructured decisions (structured decisions can be
automated). Used for analytical work, rather than general office support.

They are flexible, adaptable and quick. The user controls inputs and outputs.
They support the decision process and often are sophisticated modelling tools
so managers can make simulations and predictions.

Their inputs are aggregate data, and they produce projections. An example
job for a DSS would be a 5 year operating plan.

Management information system (MIS) :

Condenses and converts TPS data into information for monitoring
performance and managing an organisation.

Transactions recorded in a TPS are analyzed and reported by an MIS.

They have large quantities of input data and they produce summary reports as
output. Used by middle managers. An example is an annual budgeting
system.

Executive information system (EIS):

Also known as an Executive Support System (ESS), it provides executives
information in a readily accessible, interactive format. They are a form of
MIS intended for top-level executive use. An EIS/ESS usually allows
summary over the entire organisation and also allows drilling down to
specific levels of detail. They also use data produced by the ground-level TPS
so the executives can gain an overview of the entire organisation.

Used by top level (strategic) management. They are designed to the

individual. They let the CEO of an organisation tie in to all levels of the
organisation. They are very expensive to run and require extensive staff
support to operate.

Office automation system (OAS) :

OAS provides individuals effective ways to process personal and

organisational data, perform calculations, and create documents. e.g. word
processing, spreadsheets, file managers, personal calendars, presentation
packages

They are used for increasing personal productivity and reducing "paper
warfare". OAS software tools are often integrated (e.g. Word processor can
import a graph from a spreadsheet) and designed for easy operation.

OAS Subspecies:

Communication systems: helps people work together by sharing information

in many different forms
Teleconferencing (including audioconferencing, computer conferencing,
videoconferencing), electronic mail, voice mail, fax

Groupware system: helps teams work together by providing access to team

data, structuring communication, and making it easier to schedule meetings.
For sharing information, controlling work flows, communication/integration
of work

Expert Systems

Expert system (noun): "a computer system or program that uses artificial

intelligence techniques to solve problems that ordinarily require a
knowledgeable human. The method used to construct such systems,
knowledge engineering, extracts a set of rules and data from an expert or
experts through extensive questioning. This material is then organized in a
format suitable for representation in a computer and a set of tools for
inquiry, manipulation, and response is applied. While such systems do not
often replace the human experts, they can serve as useful adjuncts or
assistants. Among some of the successful expert systems developed are
INTERNIST, a medical diagnosis tool that contains nearly 100,000
relationships between symptoms and diseases, and PROSPECTOR, an aid to
geologists in interpreting mineral data."
(http://www.encyclopedia.com/articles/04322.html)

Expert systems imitate human experts in many different fields of expertise.

Such systems contain rules (such as decision tables) that help a human answer
expert questions.

This is a classic example of how deskilling can affect people: imagine you are

an expert rock identifier and people from around the world treat you like a
living national treasure because of your brilliant ability to identify rocks. One
day, a system is built that contains all the rules you intuitively use to make
your rock identification decisions. By answering a few simple questions
presented by the expert system, a human can identify a rock just as well as
you can.
Expert systems are built with decision-making rules, and they can ask humans
a series of questions to narrow down the correct answer. One early and
influential expert system wasMYCIN, a disease diagnosis system.

Advantages of expert systems:

 The computer can store far more information than a human. 

 The computer does not 'forget', make silly mistakes or get drunk when
it is most needed. 
 Data can be kept up-to-date. 
 The expert system is always available 24 hours a day and will never
'retire'. 
 The system can be used at a distance over a network. 

Expert systems are computer application programs that take the knowledge of
one or more human experts in a field and computerize it so that it is readily
available for use. The human experts do not need to be physically present to
accomplish a specialized project or task. Expert systems are only designed to
be “expert” in a very narrow and specific task or subject field. They contain
the acquired expert knowledge and try to imitate the expert’s evaluation
processes to offer a conclusion. An advantage of an expert system is that it
may include the knowledge of many experts in one specific field.

Expert systems usually contain two components: a knowledge base and an

inference engine program, enabling it to suggest conclusions. The knowledge
base is programmed in an IF ... THEN logical rules structure. Such a structure
is a series of IF conditions that, if met, THEN a specific result may be
concluded. An example would be:

IF the animal is a bird

it does not fly

it swims

it is black and white

THEN it is a penguin 

The expert system rules out options with each question until there remains an
option with high probability. The rules and questions, of course, are provided
by expert humans in the first place.

Expert systems can be used for many different types of knowledge: here are a
 few examples.

These are links to the web, so they may not work after a while... (but still
work at 4 March 08)

Whale identification

The identification of Coriosolite coins from Brittany in Caesar's time

You're not too sure about thermodynamics?

You're having problems with case law?

A truckload of medical expert systems

A good introduction to expert systems and their history.

Management Information

Systems Notes

Lecture 2

September 2005

* These notes are for class use only. They were created from several research and academic

references. Any use of these notes for making profit is not permitted. 2

Introduction to the Computer-Based

Information System

INFORMATION MANAGEMENT

Five Main Resources:

A manager is required to manage five main types of resources effectively:

• Personnel

• Material

• Machines (including facilities and energy)

• Money

• Information (including data)

INTEREST IN INFORMATION MANAGEMENT

1. Increasing complexity of business activity

– International economy

Firms of all sizes are subject to economic influences that can originate

anywhere in the world. Such influences can be seen in the relative values of

the currencies of each nation, where purchases are made in those countries

with the highest currency value.

– Worldwide competition

Competition exists on a worldwide scale. Its effects can be seen in the

imports from foreign countries.

– Increasing complexity of technology

Technology is used everywhere in business. Examples are bar code scanners,

computer based airline reservation systems, automated teller machines,

factory robots ..etc.

– Shrinking time frames

All phases of business operations are performed more rapidly than ever

Physical

Conceptual3

before. (telemarketing, electronic sales orders, “just in time “ delivery of

 raw materials ..etc)

– Social constraints

Some products and services are found undesirable by society. Therefore,

business decisions must be based on economic factors, but social costs and

payoffs must be considered as well. Plant expansion, new products, new

sales outlets and similar actions must all be weighed in terms of their

environmental impact.

2. Improved computer capabilities

– Size

– Speed

Today’s users, have keyboard terminals or microcomputers in their offices.

Many of the micros are connected to other computers in a network and users

know how to use them.

WHO ARE THE INFORMATION USERS?

• Managers

The idea of using the computer as a management information system was a

breakthrough because it recognized managers’ need for problem solving

information. Embracing the MIS concept made several firms develop

applications specifically aimed at management support.

• Non-managers

Non-manages and staff specialists also use the MIS output.

• Persons & organizations in the firm’s environment

Users outside the company benefit from the MIS as well. They can be

customers receiving invoices, stockholders getting dividend checks, and the

federal government checking tax reports. 4

Management Levels

Strategic Planning Level

The strategic planning level involves mangers at the top of the organizational

hierarchy. The term strategic indicates the long-term impact of top managers’

decisions on the entire organization. The term executive is often used to describe a

manager on the strategic planning level.

Management Control Level

Middle-level managers include regional managers, product directors, and division

heads. Their level is called “management control level” due to their responsibility of

putting plans into action and ensuring the accomplishment of goals.

Operational Control Level

Lower level managers are persons responsible for carrying out the plans specified by

managers on upper levels. Their level is called the “operational control level” because

this is where the firm’s operations occur.

Influence of Management Level on Information Source and Form

When designing information systems, it is important to consider the manager’s level.

Such levels can influence both the source of information and how it is presented.

Managers on the strategic level place greater emphasis on environmental information

than do managers on the lower levels. Managers on the operational control level

regard internal information as vital.

The second figure shows that strategic planning-level managers prefer information in

a summary format, whereas operational control-level managers prefer detail.

Figure 2.1

Strategic planning level

Management control level

Operational control level

Summary5

Figure 2.2
Business Areas

Managers are found in various business areas of the firm. The three traditional

business areas are marketing, manufacturing, and finance in addition to other two

areas that have gained major importance-human resources and information services.

Figure 2.3

What managers do

According the French management theorist, Henri Fayol, managers perform five

major functions.

• They plan what they are to do

• They organize to meet the plan.

• They staff their organization with the necessary resources.

• They direct the available resources to execute the plan.

• Finally, they control the resources, keeping them on course.

Finance

Function

Human

Resources

Function

Information

Services

Function

Manufacturing

Function

Marketing

Function

Strategic planning level

Management Control Level

Operational Control

Level

51-

Detail

Strategic planning level

Management control level

Operational control level6

All managers perform these functions, however with varying emphasis as shown

below.

Figure 2.4

Management Knowledge

• Computer literacy

This knowledge includes an understanding of computer terminology, a

recognition of its strengths and weaknesses, an ability to use the computer ..etc

• Information literacy

A manager should also have information literacy which consists of

understanding how to use information at each step of the problem solving

process, where this information can be obtained from, and how to share

information with others.

Information literacy is not dependent on computer literacy. A manager can be

information literate but computer illiterate.

THE MANAGER AND SYSTEMS

System Components

A system is a group of elements that are integrated with the common purpose of

achieving an objective.

Not all systems have the same combination of elements, but a basic configuration is

illustrated in the figure below: 7

Objectives

Control

mechanism mechanism

Input Input Transformation Transformation Output

1-1

Figure 2.5

Input resources are transformed into output resources. The resources flow from the

input element, through the transformation element, and to the output element.

A control mechanism monitors the transformation process to ensure that the system

meets its objectives. The control mechanism is connected to the resource flow by

means of a feedback loop, which obtains information from the system output and

makes it available to the control mechanism. The control mechanism compares the

feedback signals to the objectives and directs signals to the input element when it is

necessary to change the system operation.

Open Loop and Closed Loop Systems

Input Input Transformation Transformation Output

Figure 2.6

Not all systems are able to control their own operations. A system without the control

mechanism, feedback loop, and objective elements is called an open loop system.

A system with the three control elements is called a closed loop system.

Open and Closed Systems

• Open system: Connected to its environment by means of resource flows (e.g.,

heating system)

• Closed system: Not connected to its environment. They usually exist in tightly 8

controlled laboratory systems.

What is a subsystem?

A subsystem is simply a system within a system. This means that systems exist on
more than one level and can be composed of subsystems or elemental parts.

Subsystem A-2

Subsystem A-3

Subsystem B-2

Subsystem B-1

System

Subsystem A Subsystem B

Elemental

Part C

Subsystem A-1

Elemental

part B1 1-1

Figure 2.7

What is a Super System? (not frequently used)

When a system is part of a larger system, the larger system is the super system.

Physical and Conceptual Systems

Physical system

The business firm is a physical system, composed of physical resources

Conceptual system

It’s a system that uses conceptual resources-information and data- to represent a

physical system.

Eg. : The Computer is a physical system, but the data and information stored in it can

be viewed as a conceptual system.

The Importance of a System View

A systems view regards business operations as systems embedded within a larger

environmental setting. It’s an abstract way of thinking, but it has potential value to the

manager. The systems view: 9

– reduces complexity

– requires good objectives

– emphasizes working together

– acknowledges interconnections

– values feedback

DATA VERSUS INFORMATION

o Data consists of facts and figures that are relatively meaningless to the user.

(e.g., number of hours worked by an employee)

o Information is processed data or meaningful data. (e.g., multiplying the hours

worked by the hourly rate to get each employee’s gross earnings).

The transformation of data into information is performed by an information processor.

The information processor is one of the key elements in the conceptual system and

can include:

– Computer components

– Non-computer components

– Combination of the two

THE EVOLUTION OF COMPUTER BASED INFORMATION SYSTEMS

ƒ Data Processing (DP) during the first half the twentieth century

ƒ Management Information Systems (MIS) 1964

o IBM promoted the concept as a means of selling disk files and terminals

o The MIS concept recognized that computer applications should be implemented

for the primary purpose of producing management information.

ƒ Decision Support Systems (DSS) 1971

o A DSS is an information-producing system aimed at a particular problem that a

manager must solve and at decisions that the manager must make.

o Notes distinction: MIS: Organizational/group - general

DSS: Individual - specific

ƒ Office Automation (OA) 1964

o Facilitates communication 10

o Increases productivity among managers and office workers through the use of

electronic devices.

o Includes a variety of applications such as video conferencing, voice mail, electronic

mail, desktop publishing...etc.

ƒ Artificial Intelligence (AI)/ Expert Systems (ES) - 1990s

o AI is an application that enables the computer system to perform some of the same

logical reasoning tasks as humans.

o An expert system is a special subclass of AI that functions as a specialist in a certain

field. For example, it can provide management consultancy.

o Limitation of ES: It doesn’t improve its intelligence over time. One way to overcome

this limitation is to use neural networks, electronic and mathematical analogs of the

human brain.

THE CBIS MODEL

Computer-based

Information System

(CBIS)

Accounting

Information System

Management

Information System

Decision Support

Systems

The Virtual

Office

Knowledge-based
Systems

D e c is io n s

P r ob lem

Inf orm a t io n

P r ob lem

S o lu t io n

Figure 2.8

Managers make decisions to solve problems, and information is used in making these

decisions. Information is presented in both oral and written forms by an information

processor. The computer portion of the information processor contains each of the

computer-based application areas- AIS, MIS, DSS, the virtual office and knowledge

based systems. 11

THE INFORMATION SERVICES ORGANIZATION

Information Specialists

Those are the ones who have full-time responsibility for developing and maintaining

computer based systems. There are five categories of information specialists:

o System analysts work with users to define the requirements for developing

new systems and improving existing ones.

o Database administrators work with users and system analysts to create

databases that contain the data needed to produce the user’s information.

o Network specialists work with system analysts and users to establish the data

communication networks that tie together widespread computing resources.

o Programmers use the documentation prepared by the systems analysts to

encode the instructions that cause the computer to transform the data into

information needed by the user.

o Operators handle the large-scale computing equipment such as mainframe

computers and mini-computers.

THE TREND TO END USER COMPUTING

Information specialists do not always participate in the development of computerbased systems as

shown in the figure below. That is the traditional approach, the way

all systems were developed during the 1950s—1970s.

The trend towards End user Computing began by the late 1970s and then kept growing.

EUC is the development by user of all or part of their computer bases systems. 12

Database

Administrator

User

Systems

Analyst

Programmer Operator

Computer

Network

Specialist

Figure 2.9

Stimulants to EUC

– Increased computer literacy

– Information Services backlog, Information specialists have always had more

work than they can handle. Backlogs began to build up in the 1980s, when

information specialists could not respond quickly to users’ increasing

demands.

– Low-cost hardware (the PC)

– Prewritten software (electronic spreadsheets)

The Role of Information Specialists in EUC

User Computer

Information

Specialists
Support Support

Communicat ion

Figure 2.10

The EUC concept doesn’t mean that there

will be no more need for information

specialists. Rather, it means that information

specialists will assume more of a consulting

role than they used to have in the past.13

JUSTIFYING THE CBIS

The CBIS should be justified in the same manner as any other large investment of the

firm.

o Economic

– Cost reduction

– Reduced inventory investment

– Increased productivity (CAD/CAM)

o Non-economic

– Perceived value

ACHIEVING THE CBIS

In some respects, each subsystem of the CBIS is like a living organism: it is born, it

grows and matures, it functions, and eventually it dies. This evolutionary process is

called the system life cycle (SLC). It consists of the following phases:

1-1

Figure 2.11

REENGINEERING THE CBIS

The process of reworking a system is called reengineering or business process

redesign.

o A reengineered system is not always a clean-slate approach

o Good features of the system can be retained

o BPR will be the development methodology of choice, rather than the SLC. 14

MANAGING THE CBIS

Implementation

Phase Manager Information Specialist

Control

Control

Control

Control

Planning

Analysis

Design

Use

Define problem Support

System Study

Design system

Implement system

Make available

1-1

Implementation

Phase Manager Information Specialist

Control

Control

Control

Control

Planning

Analysis
Design

Use

Define problem Support

System Study

Design system

Implement system

Make available

1-1

Figure 2.12

The manager is the one responsible for managing the CBIS. Among his

responsibilities are:

o Planning the life cycle

o Controlling the information specialists involved.

o Ensuring that the CBIS provides the desired support.