1.3.

1 Example
Finance subsystem
x The operational level would deal with cash receipts and payments, bank reconciliations and so
forth.
x The tactical level would deal with cash flow forecasts and working capital management.
x Strategic level financial issues are likely to be integrated with the organisation's commercial
strategy, but may relate to the most appropriate source of finance (eg long-term debt, or equity).
The type of information at each level can be seen in the table below.

Inputs Process Outputs

Strategic Plans, competitor information, Summarise Key ratios, ad hoc
overall market information Investigate market analysis,
Compare strategic plans
Forecast
Management/tactical Historical and budget data Compare Variance analyses
Classify Exception reports
Summarise
Operational Customer orders, programmed Update files Updated file
inventory control levels, cash Output reports listings, invoices
receipts/payments

Although opinions differ and not all categories are agreed, we can identify seven types of information
system.
x Executive Support Systems (ESS)
x Management Information Systems (MIS)
x Decision-Support Systems (DSS)
x Expert systems
x Knowledge Work Systems (KWS)
x Office Automation Systems (OAS)
x Transaction Processing Systems (TPS)

1.4 Executive Support Systems (ESS)

Key term An Executive Support System (ESS) pools data from internal and external sources and makes
information available to senior managers in an easy-to-use form. ESS help senior managers make
strategic, unstructured decisions.

An ESS should provide senior managers with easy access to key internal and external information. It is a
flexible system which summarises and tracks strategically critical information, possibly drawn from
internal MIS and DSS, but also including data from external sources eg competitors, legislation, external
databases such as Reuters.

1.5 Management Information Systems (MIS)

Key term Management Information Systems (MIS) convert data from mainly internal sources into information (eg
summary reports, exception reports). This information enables managers to make timely and effective
decisions for planning, directing and controlling the activities for which they are responsible.

An MIS provides regular reports and (usually) on-line access to the organisation's current and historical
performance.

54 2: Information technology and systems ~ Part A Business organisational structure, governance and management
 MIS usually transform data from underlying transaction processing systems into summarised files that are
used as the basis for management reports.
MIS have the following characteristics:
x Support structured decisions at operational and management control levels
x Designed to report on existing operations
x Have little analytical capability
x Relatively inflexible
x Have an internal focus

1.6 Decision Support Systems (DSS)

Key term Decision Support Systems (DSS) combine data and analytical models or data analysis tools to support
semi-structured and unstructured decision making.

The DSS has analytical capabilities, is user-friendly and flexible and supports the decision maker. An
example of a DSS is the spreadsheet.

1.7 Expert systems

Key term An expert system is a computer program that captures human expertise in a limited domain of knowledge.

An expert system can make decisions and is used in specific applications such as medical diagnosis and
credit approval in banking. It has a database of facts and rules and an inferencing engine to process the
rules and establish which ones apply. It can then suggest a decision.

1.8 Knowledge Work Systems (KWS)

Key terms Knowledge Work Systems (KWS) are information systems that facilitate the creation and integration of
new knowledge into an organisation.
Knowledge Workers are people whose jobs consist of primarily creating new information and knowledge.
They are often members of a profession such as doctors, engineers, lawyers and scientists.

KWS help knowledge workers create new knowledge and expertise. Examples include:
x Computer Aided Design (CAD)
x Computer Aided Manufacturing (CAM)
x Specialised financial software that analyses trading situations

1.9 Office Automation Systems (OAS)

Key term Office Automation Systems (OAS) are computer systems designed to increase the productivity of data
and information workers.

OAS support the major activities performed in a typical office such as document management, facilitating
communication and managing data. Examples include:
x Word processing, desktop publishing, and digital filing systems
x E-mail, voice mail, videoconferencing, groupware, intranets, schedulers
x Spreadsheets, desktop databases

1.10 Transaction Processing Systems (TPS)

Key term A Transaction Processing System (TPS) performs and records routine transactions.

Transaction processing systems are used at operational level for routine processing of data items and
transactions. They provide the raw material for management information systems. Examples include
inventory systems and order processing systems.

Part A Business organisational structure, governance and management ~ 2: Information technology and systems 55