TYPES OF INFORMATION

Data is processed to obtain information. Further, the same data may be processed in different ways to obtain
different types of information. A fair amount of data is processed manually, particularly when the
organization is small and the amount of data to be processed is small. For example, a small retail grocery
store owner. In order to run his business efficiently he would need different types of information.

As long as his store is small and his volume of sales is small, all information may be obtained manually be
employing one or more clerks. The information required by the store owner may be classified into the
following categories :

 Strategic Information : This is the information needed for long range planning and directing the course the business should
take. The store owner may like, for example, to decide whether to expand his business by stocking new varieties of items,
in his store, whether to work on a small profit margin to expand sales, whether to open a new branch etc. He has to obtain
information on trends, effect of reduction in price of some items, impact of advertising etc. This type of information is less
structured. Further, the volume of important information in strategic planning is small and is difficult to obtain.
 Tactical Information : This type of information is needed to take short range decisions to run the business efficiently. For
instance, the information on fast and slow moving items may be used to take the tactical decision to stock more of the
former and give discount on the latter. Information on the payments of bills by customers may be used to decide
appropriate credit limits to be given to customers. Tactical information requires specifically designed processing of data.
Most of it is obtainable easily from day-to-day collection of routine data unlike strategic information.
 Operational Information : This type of information is needed for day-to-day operations of a business organization. For
instance, list of customers unpaid bills beyond due date would be used to send reminders. Operational information is
usually easy to obtain by straightforward clerical processing of data. Further, the volume of such information is much more
than tactical information.
 Statutory Information : Information and reports which are required by law to be sent to government authorities are
normally clearly specified and require straightforward processing of data.

QUALITIES OF INFORMATION

The qualities of the information to be provided to managers are as follows :

 The information should be It should be given to the manager when he needs it. Delayed information may sometimes be of
no value.
 It should also be The processing should not hide some vital information which may, for example, point out the inefficiency
of some individuals.
 The information must be in other words, the correctness of the input data and that of the processing rules should be
ensured so that the resulting information is accurate.
 Information should be tailored to the needs of the user and should be relevant to Massive volumes of irrelevant
information would waste a lot of manager’s time and there is a danger of his missing important relevant information.
 The information should be That is, it should include all data and must not exclude any.
 The information should be presented when he needs it and where he needs it in such a way that he may immediately
perceive its For example, presentation of information in a graphical form such as bar carts, pie charts, etc., ensures quick
recognition of the significance of the information. It is also essential to present the information in an attractive format
which a user can immediately understand.
 It is essential to give brief summarized information to ensure quick action.
 Information should also be up to date. It should include all data available at the time of processing.
INFORMATION SYSTEM

“An arrangement of people, data, processes and information technology that interact to collect, process,
store and provide as output, the information needed to support an organisation.” —Information System

Information system in organizations capture and manage data to produce useful information that supports an
organization and its employees, customers, suppliers and partners. Many organizations consider information
system to be essential to their ability to complete or gain competitive advantage. Therefore, information
system development is relevant.

Transaction Processing Systems (TPS) process business transactions such as orders, time cards, payments
and reservations.

Management Information System (MIS) use the transaction data to produce information needed by
managers to run the business.

Decision Support System (DSS) help various decision makers to identify and choose different options or
decisions.

Executive Information System (EIS) are tailored to the unique information needs of the executives who
plan for the business and assess performance against those plans.

Expert System (ES) capture and reproduce the knowledge of an expert problem solver or decision maker
and then simulate the ‘thinking’ of that expert.

Office Automation Systems (OAS) helps employees to create and share documents that support day-to-day
office activities.

TRANSACTION PROCESSING SYSTEM

A Transaction Processing System (TPS) is a type of information system. TPSs collect, store, modify, and
retrieve the transactions of an organization. A transaction is an event that generates or modifies data that is
eventually stored in an information system.

From a technical perspective, a Transaction Processing System monitors transaction programs, a special
kind of programs. The essence of a transaction program is that it manages data that must be left in a
consistent state. E.g. if an electronic payment is made, the amount must be either both withdrawn from one
account and added to the other, or none at all. In case of a failure preventing transaction completion, the
partially executed transaction must be ‘rolled back’ by the TPS. While this type of integrity must be
provided also for batch transaction processing, it is particularly important for online processing: if e.g. an
airline seat reservation system is accessed by multiple operators, after an empty seat inquiry, the seat
reservation data must be locked until the reservation is made, otherwise another user may get the impression
a seat is still free while it is actually being booked at the time. Without proper transaction monitoring, double
bookings may occur.

Characteristics of Transaction Processing Systems

1. Rapid Response : Fast performance with a rapid response time is critical. Businesses cannot afford to have customers
waiting for a TPS to respond, the turnaround time from the input of the transaction to the production for the output must
be a few seconds or less.
2. Reliability : Many organizations rely heavily on their TPS; a breakdown will disrupt operations or even stop the business.
For a TPS to be effective its failure rate must be very low. If a TPS does fail, then quick and accurate recovery must be
possible. This makes well-designed backup and recovery procedures essential.
3. Inflexibility : A TPS wants every transaction to be processed in the same way regardless of the user, the customer or the
time for day. If a TPS were flexible, there would be too many opportunities for non-standard operations, for example, a
commercial airline needs to consistently accept airline reservations from a range of travel agents, accepting different
transactions data from different travel agents would be a problem.
4. Controlled processing : The processing in a TPS must support an organization’s For example if an organization allocates
roles and responsibilities to particular employees, then the TPS should enforce and maintain this requirement.

Features of Transaction Processing Systems

The following features are included in real time transaction processing systems:

 Good Data Placement : The database should be designed to access patterns of data from many simultaneous users.
 Short transactions : Short transactions enables quick processing. This avoids concurrency and paces the systems.
 Real-time backup : Backup should be scheduled between low times of activity to prevent lag of the server.
 High normalization : This lowers redundant information to increase the speed and improve concurrency, this alsO
improves backups.
 Archiving of historical data : Uncommonly used data are moved into other databases or backed up tables. This keeps
tables small and also improves backup
 Good hardware configuration : Hardware must be able to handle many users and provide quick response times.

In a TPS, there are 5 different types of files, the TPS uses the files to store and organize its transaction data :

 Master file : Contains information about an organization’s business situation. Most transactions and databases are stored
in the master file.
 Transaction file : It is the collection of transaction records. It helps to update the master file and also serves as audit trails
and transaction history.
 Report file : Contains data that has been formatted for presentation to a user.
 Work file : Temporary files in the system used during the processing.
 Program file : Contains the instructions for the processing of data.

MANAGEMENT INFORMATION SYSTEM

Management Information System (MIS) is a subset of the overall internal controls of a business covering
the application of people, documents, technologies, and procedures by management accountants to solving
business problems such as costing a product, service or a business-wide strategy. Management Information
Systems are distinct from regular information systems in that they are used to analyze other information
systems applied in operational activities in the organization. It refer to the group of information management
methods tied to the automation or support of human decision making, e.g., Decision Support Systems,
Expert systems, and Executive information systems.

‘MIS’ is a planned system of collecting, processing, storing and disseminating data in the form of
information needed to carry out the functions of management.
The system provides information on the past, present and project future and on relevant events inside and
outside the organization. It may be defined as a planned and integrated system for gathering relevant data,
converting it in to right information and supplying the same to the concerned executives. The main purpose
of MIS is to provide the right information to the right people at the right time.

The Concept of management information systems originated in the 1960s. During the early 1960s, it became
evident that the computer was being applied to the solution of business problem in a piecemeal fashion,
focussing almost entirely on the computerization of clerical and record – keeping tasks. The concepts of
management information systems were developed to counteract such in efficient development and in
effective use of the computer. The MIS concepts is vital to efficient and effective computer use in business
of two major reasons :

It serves as a systems framework for organizing business computer applications. Business applications of
computers should be viewed as interrelated and integrated computer – based information systems and not as
independent data processing job .

In emphasizes the management orientation of electronics information processing in business. The primary
goal of computer based information systems should be the processing of data generated by business
operations.

A management information system is an integrated man – machine systems that provides information to
support the planning and control function of manager in an organization.

The output of an MIS is information that sub serves managerial functions. When a system provides
information to persons who are not managers, then it will not be considered as part of an MIS. For example,
an organization often processes a lot of data which it is required by law to furnish to various government
regulatory agencies. Such a system, while it may have interfaces with an MIS, would not be a part of it,
Instances of such systems is salary disclosures and excise duty statements. By the same token to
sophisticated computer – aided design system for engineering purposes would also not be a part of an MIS.

Generally, MIS deals with information that is systematically and routinely collected in accordance with a
well-defined set of rules. Thus, MIS is a part of the formal information network in an organization.
Information that has major managerial planning significance is sometimes collected at golf courses. Such
information is not part of MIS, how ever, one- shot market research data collected to gauge the potential of a
new product does not come with in the scope of an MIS by our definition because although such information
may be very systematically collected it is not collected on a regular basis.

Normally, the information provided by an MIS helps the managers to make planning and control decisions.
Now, we will see, what is planning and control. Every organization in order to function must perform certain
operations. For Example, a car manufacturer has to perform certain manufacturing activities, a wholesaler
has o provide water to its area of jurisdiction. All these are operations that need to be done. Besides, these
operations, an organization must make plans for them. In other words, it must decide on how many and what
type of cars to make next month or what commissions to offer retailers or what pumping stations to install in
the next five years. •

Generally, MIS is concerned with planning and control. Often there are elaborate systems for information
that assists operations. For example, the car manufacturer will have a system for providing information to
the workers on the shop floor about the job that needs to be done on a particular batch of material. There
may be route sheets, which accompany the rate materials and components in their movement through
various machines. This system per se provides only information to support operation. It has no managerial
 decision-making significance. It I not part of an MIS. If, however, the system does provided information on
productivity, machine utilization or rejection rates, then we would say that the system is part of an MIS.

Generally, MIS has all the ingredients that are employed in providing information support to manager to
making planning and control decisions. Managers often use historical data on an organization’s activities as
well as current status data make planning and control decisions. Such data comes from a database which is
contained in files maintained by the organization . This database is an essential component of an MIS.
Manual procedures that are used to collect and process information and computer hardware are obvious
ingredients of an MIS . These also form part of the MIS. In summary, when we say that “an MIS is an
integrated man – machine systems that provided information to supports the planning and control function
of managers in an origination.”

It does the following function .

— sub serves managerial function

— collects stores, evaluates information systematically and routinely

 supports planning and control decisions

 Includes files, hardware, software, software and operations research models.

Advantages of MIS

An MIS provides the following advantages :

1. It Facilitates planning : MIS improves the quality of plan by providing relevant information for sound decision – making .
Due to increase in the size and complexity of organizations, managers have lost personal contact with the scene of
operations.
2. In Minimizes information overload : MIS change the larger amount of data in to summarized form and there by avoids the
confusion which may arise when managers are flooded with detailed facts.
3. MIS Encourages Decentralization : Decentralization of authority is possibly when there is a system for monitoring
operations at lower levels. MIS is successfully used for measuring performance and making necessary change in the
organizational plans and procedures.
4. It brings Co-ordination : MIS facilities integration of specialized activities by keeping each department aware of the
problem and requirements of other departments. It connects all decision centers in the organization .
5. It makes control easier : MIS serves as a link between managerial planning and It improves the ability of management to
evaluate and improve performance . The used computers has increased the data processing and storage capabilities and
reduced the cost
6. MIS assembles, process, stores, Retrieves, evaluates and Disseminates the information.

DECISION SUPPORT SYSTEM

Decision support systems constitute a class of computer-based information systems including knowledge-
based systems that support decision-making activities.

Because there are many approaches to decision-making and because of the wide range of domains in which
decisions are made, the concept of decision support system (DSS) is very broad. A DSS can take many
different forms. In general, we can say that a DSS is a computerized system used for supporting, rather than
 automating, decisions. A decision is a choice between alternatives based on estimates of the values of those
alternatives. Supporting a decision means helping people working alone or in a group gathers intelligence,
generate alternatives and make choices. Supporting the choice-making process involves supporting the
estimation, the evaluation and/or the comparison of alternatives. In practice, references to DSS are usually
references to computer applications that perform such a supporting role.

The term decision support system has been used in many different ways and has been defined in various
ways.

DSS is a “model-based set of procedures for processing data and judgments to assist a manager in his
decision-making.” DSS couples the intellectual resources of individuals with the capabilities of the computer
to improve the quality of decisions (“DSS are computer-based support for management decision makers who
are dealing with semi-structured problems.”)

Characteristics and Capabilities of DSS

The key DSS characteristics and capabilities are as follows:

1. Support for decision makers in semi structured and unstructured problems.

2. Support managers at all levels.
3. Support individuals and groups.
4. Support for interdependent or sequential decisions.
5. Support intelligence, design, choice, and implementation.
6. Support variety of decision processes and styles.
7. DSS should be adaptable and flexible.
8. DSS should be interactive and provide ease of use.
9. Effectiveness balanced with efficiency (benefit must exceed cost).
10. Complete control by decision-makers.
11. Ease of development by (modification to suit needs and changing environment) end users.
12. Support modeling and analysis.
13. Data access.
14. Standalone, integration and Web-based.

Advantages of DSS

1. Improving Personal Efficiency

2. Expediting Problem Solving
3. Facilitating Interpersonal Communication
4. Promoting Learning or Training
5. Increasing Organizational Control

The right decision in business is usually based on the quality of your data and your ability to shift through
and analyze the data to find trends in which you can create solutions and strategies for. DSS or decision
support systems are usually computer applications along with a human component that can sift through large
amounts of data and pick between the many choices.

The key to decision support systems is to collect data, analyze and shape the data that is collected and then
try to make sound decisions or construct strategies from analysis. Whether computers, databases or people
are involved usually doesn’t matter, however it is this process of taking raw or unstructured data, containing
and collecting it and then using it to help aid decision making.
 It is important to note that the field of DSS does not have a universally accepted model, meaning that there
are many theories vying for supremacy in this broad field. Because of there are many working theories in the
topic of DSS, there are many ways to classify DSS.

EXECUTIVE INFORMATION SYSTEM

An Executive Information System (EIS) is a type of management information system intended to facilitate
and support the information and decision making needs of senior executives by providing easy access to
both internal and external information relevant to meeting the strategic goals of the organization. It is
commonly considered as a specialized form of a Decision Support System (DSS).

The emphasis of EIS is on graphical displays and easy-to-use user interfaces. In general, EIS are enterprise-
wide DSS that help top-level executives analyze, compare, and highlight trends in important variables so
that they can monitor performance and identify opportunities and problems. EIS and data warehousing
technologies are ■ converging in the marketplace.

In recent years, the term EIS has lost popularity in favour of Business Intelligence.

History

Traditionally, executive information systems were developed as mainframe computer-based programs. The
purpose was to package a company’s data and to provide sales performance or market research statistics for
decision makers, as such financial officers, marketing directors, and chief executive officers, who were not
necessarily well acquainted with computers. The objective was to develop computer applications that would
highlight information to satisfy senior executives’ needs. Typically, an EIS provides data that would only
need to support executive level decisions instead of the data for all the company.

Today, the application of EIS is not only in typical corporate hierarchies, but also at personal computers on a
local area network. EIS now cross computer hardware platforms and integrate information stored on
mainframes, personal computer systems, and minicomputers. As some client service companies adopt the
latest enterprise information systems, employees can use their personal computers to get access to the
company’s data and decide which data are relevant for their decision makings. This arrangement makes all
users able to customize their access to the proper company’s data and provide relevant information to both
upper and lower levels in companies.

Components of EIS

The components of an EIS can typically be classified as:

1. Hardware : When talking about hardware for an EIS environment, we should focus on the hardware that meet the
executive’s needs. The executive must be put first and the executive’s needs must be defined before the hardware can be
selected.

The basic computer hardware needed for a typical EIS includes four components:

 Input data-entry devices. These devices allow the executive to enter, verify, and update data immediately;
 The central processing unit (CPU), which is the kernel because it controls the other computer system components;
 Data storage files. The executive can use this part to save useful business information, and this part also help the executive
to search historical business information easily;
 Output devices, which provide a visual or permanent record for the executive to save or read. This device refers to the
visual output device or printer. In addition, with the advent of local area networks (LAN), several EIS products for
networked workstations became available. These systems require less support and less expensive computer hardware.
They also increase access of the EIS information to many more users within a company.

1. Software : Choosing the appropriate software is vital to design an effective EIS. Therefore, the software components and
how they integrate the data into one system are very important. The basic software needed for a typical EIS includes four
components:
2. Text base software. The most common form of text is probably documents;
3. Heterogeneous databases residing on a range of vendor-specific and open computer platforms help executives access both
internal and external data;
4. Graphic base. Graphics can turn volumes of text and statistics into visual information for executives. Typical graphic types
are: time series charts, scatter diagrams, motion graphics, sequence charts, and comparison-oriented graphs (i.e., bar
charts);
5. Model base. The EIS models contain routine and special statistical, financial, and other quantitative analysis.

Perhaps a more difficult problem for executives is chosing from a range of highly technical software
packages. Ease of use, responsiveness to executives’ requests, and price are all reasonable considerations.
Further, it should be considered whether the package can run on existing hardware.

1. User Interface : An EIS needs to be efficient to retrieve relevant data for decision makers, so the user interface is very
important. Several types of interfaces can be available to the EIS structure, such as scheduled reports, questions/answers,
menu driven, command language, natural language, and input/output. It is crucial that the interface must fit the decision
maker’s decision-making style. If the executive is not comfortable with the information questions/answers style, the EIS
will not be fully utilized. The ideal interface for an EIS would be simple to use and highly flexible, providing consistent
performance, reflecting the executive’s world, and containing help information.

4. Telecommunication : As decentralizing is becoming the current trend in companies, telecommunications

will play a pivotal role in networked information systems. Transmitting data from one place to another has
become crucial for establishing

a reliable network. In addition, telecommunications within an EIS can accelerate the need for access to
distributed data.

Applications of EIS

EIS enables executives to find those data according to user-defined criteria and promote information-based
insight and understanding. After realizing its advantages, people have applied EIS in many areas, especially,
in manufacturing, marketing, and finance areas which are as follows :

1. Manufacturing : Basically, manufacturing is the transformation of raw materials into finished goods for sale, or
intermediate processes involving the production or finishing of semi-manufactures. It is a large branch of industry and of
secondary Manufacturing operational control focuses on day-to-day operations, and the central idea of this process is
effectiveness and efficiency. To produce meaningful managerial and operational information for controlling manufacturing
operations, the executive has to make changes in the decision processes. EIS provides the evaluation of vendors and
buyers, the evaluation of purchased materials and parts, and analysis of critical purchasing areas. Therefore, the executive
can oversee and review purchasing operations effectively with EIS. In addition, because production planning and control
depends heavily on the plant’s data base and its communications with all manufacturing work centers, EIS also provides an
approach to improve production planning and control.
2. Marketing : In an organization, marketing executives’ role is to create the future. Their main duty is managing available
marketing resources to create a more effective For this, they need make judgments about risk and uncertainty of a project
and its impact on company in short term and long term. To assist marketing executives in making effective marketing
decisions, an EIS can be applied. EIS provides an approach to sales forecasting, which can allow the market executive to
compare sales forecast with past sales.
3. Financial : A financial analysis is one of the most important steps to companies today. The executive needs to use financial
ratios and cash flow analysis to estimate the trends and make capital investment decisions. An EIS is a responsibility-
oriented approach that integrated planning or budgeting with control of performance reporting, and it can be extremely
helpful to finance executives. Basically, EIS focuses on accountability of financial performance and it recognizes the
importance of cost standards and flexible budgeting in developing the quality of information provided for all executive
levels. EIS enables executives to focus more on the long-term basis of current year and beyond, which means that the
executive not only can manage a sufficient flow to maintain current operations but also can figure out how to expand
operations that are contemplated over the coming years.

Advantages and Disadvantages

Advantages

 Easy for upper-level executives to use, extensive computer experience is not required in operations
 Provides timely delivery of company summary information
 Information that is provided is better understood
 Filters data for management
 Improves to tracking information
 .Offers efficiency to decision makers

Disadvantages

 Functions are limited, cannot perform complex calculations

 Hard to quantify benefits and to justify implementation of an EIS
 Executives may encounter information overload
 System may become slow, large, and hard to manage
 Difficult to keep current data
 May lead to less reliable and insecure data
 Small companies may encounter excessive costs for implementation

EXPERT SYSTEM

An expert system is a software system that attempts to reproduce the performance of one or more human
experts, most commonly in a specific problem domain, and is a traditional application and/or subfield of
artificial intelligence.

A wide variety of methods can be used to simulate the performance of the expert however common to most
or all are :

 the creation of a so-called “knowledge base” which uses some knowledge representation formalism to capture the subject
matter experts (SME) knowledge.
 a process of gathering that knowledge from the SME and codifying it according to the formalism, which is called
knowledge engineering. Expert systems may or may not have learning components but a third common element is that
 once the system is developed it is proven by being placed in the same real world problem solving situation as the human
SME, typically as an aid to human workers or a supplement to some information system.

Advantages and Disadvantages of ES

Advantages

 Provides consistent answers for repetitive decisions, processes and tasks.

 Holds and maintains significant levels of information.
 Encourages organizations to clarify the logic of their decision-making
 Never “forgets” to ask a question, as a human might.

Disadvantages

 Lacks common sense needed in some decision making.

 Cannot make creative responses as human expert would in unusual
 Domain experts not always able to explain their logic and reasoning.
 Errors may occur in the knowledge base, and lead to wrong decisions.
 Cannot adapt to changing environments, unless knowledge base is changed.

OFFICE AUTOMATION SYSTEM (OAS)

Office automation systems are among the newest and most rapidly expanding computer based information
system. They are being developed with the hopes that they will increase the efficiency and productivity of
office workers. Many organisations have taken the first step towards automating their office— Often, this
steps involves the use of word processing equipment to facilitate the typing, storing, revising and printing of
textual materials. Another development is a computer based communication system such as electronic mail
which allow people to communicate in an electronic mode through computer terminals. An office
automation system can be described as a multi-function, integrated computer based system that allows many
office activities to be performed in an electronic mode.