LECTURE - 2

TYPES AND FUNCTIONS

OF A SYSTEM IN
BUSINESS

James A. O'Brien, and George Marakas

Management Information Systems
 
 Chapter 1 Foundations of Information Systems in
Business
2

Basic Functions of a System

• Input
• Capturing and assembling elements that enter the system to be
processed
• Processing
• Transformation process that converts input into output
• Output
• Transferring transformed elements to their ultimate destination
 Chapter 1 Foundations of Information Systems in
Business
3

Cybernetic System
• All systems have input, processing, and output
• A cybernetic system (by Norbert Wiener (1948)), a self-
monitoring, self-regulating system, adds feedback and
control.

• Feedback: Data about the performance of a system

• Control: Involves monitoring and evaluating
feedback to determine whether a system is moving
toward the achievement of its goal or not.
 Chapter 1 Foundations of Information Systems in
Business
4

A Business as a System
 Chapter 1 Foundations of Information Systems in
Business
5

Other System Characteristics

A system does not exist in a vacuum; rather, it exists and functions in
an environment containing other systems.
•
Subsystem:  A system that is a component of a larger system, where the larger system is
its environment.

•System Boundary: A system is separated from its environment and other systems by its
system boundary.

•Interface: Several systems may share the same environment. Some of these systems
may be connected to one another by means of a shared boundary or interface. 

•Open System:  A system that interacts with other systems in its environment is called an
open system (connected to its environment by exchanges of inputs and outputs).

•Adaptive System:  A system that has the ability to change itself or its environment in
order to survive is called an adaptive system.
 Chapter 1 Foundations of Information Systems in
Business
6

Information System Resources

• People Resources
• Specialists
• End users
• Hardware Resources
• Machines
• Media
• Software Resources
• Programs
• Procedures
• Data Resources
• Product descriptions, customer records, employee files, inventory
databases
• Network Resources
• Communications media, communications processors, network
access and control software
• Information Resources
• Management reports and business documents using text and
graphics displays, audio responses, and paper forms
 Chapter 1 Foundations of Information Systems in
Business
7

Components & Resources of an IS

 Chapter 1 Foundations of Information Systems in
Business
8

Developing IS Solutions
 Chapter 1 Foundations of Information Systems in
Business
9

Types of Business Information Systems

• No single system can provide all the information an organization
needs. Even small firms have a collection of different systems: e-mail
systems, sales tracking systems, etc. Different systems can be
described through:

• A functional perspective: Identifying systems by their major business function

• A constituency perspective: Identifying systems in terms of the major
organizational groups that they serve

• There are four main types of information systems that serve different
functional perspective, and

• There are four main categories of systems from a constituency

perspective.
 Chapter 1 Foundations of Information Systems in
Business
10

Functional perspective:
1. Sales and marketing IS: Help the firm with marketing business processes (identifying
customers for the firm's products or services, developing products and services to meet
their needs, promoting products and services) and sales processes (selling the products
and services, taking orders, contacting customers, and providing customer support).
 Chapter 1 Foundations of Information Systems in
Business
11

Functional perspective:
2. Manufacturing and production IS: Deal with the planning, development,
and production of products and services, and controlling the flow of production.
This system provides information about the number of items available in
inventory to support manufacturing and production activities.
 Chapter 1 Foundations of Information Systems in
Business
12

Functional perspective:
3. Finance and accounting IS: Keep track of the firm's financial assets and
fund flows.
• An accounts receivable system tracks and stores important customer data,
such as payment history, credit rating, and billing history.
 Chapter 1 Foundations of Information Systems in
Business
13

Functional perspective:
4. Human resources information systems maintain employee records, track
employee skills, job performance and training, and support planning for
employee compensation and career development.
• This system maintains data on the firm’s employees to support the human
resources function.
 Chapter 1 Foundations of Information Systems in
Business
14

Constituency perspective
1. Transaction Processing Systems (TPS) are basic
business systems that serve the operational level of the
organization by recording the daily routine transactions
required to conduct business, such as payroll and sales
receipts.
2. Management Information Systems (MIS) serve
middle managers' interests by providing current and
historical performance information to aid in planning,
controlling, and decision making at the management
level. MIS typically compress TPS data to present
regular reports on the company's basic operations.
 Chapter 1 Foundations of Information Systems in
Business
15

Constituency perspective
3.Decision Support Systems (DSS)
•Known as business intelligence systems;
• Help managers with non-routine decisions that are unique, rapidly
changing, and not easily specified in advance.
• DSS are more analytical than MIS, using a variety of models to
analyze internal and external data or condense large amounts of
data for analysis.
 Chapter 1 Foundations of Information Systems in
Business
16

Constituency perspective
4. Executive Support Systems (ESS) 
•Provide a generalized computing and communications environment
that help senior managers address strategic issues and identify long-
term trends in the firm and its environment.

•ESS present graphs and data from many internal and external sources
through an interface that is easy for senior managers to use.
 Chapter 1 Foundations of Information Systems in
Business
17

Constituency perspective
• Ideally, these constituency-based systems are interrelated. TPS are
typically a major source of data for other systems, whereas ESS are
primarily a recipient of data from lower-level systems and external
sources.
 Chapter 1 Foundations of Information Systems in
Business
18

Questions
• Sketch the Basic Functions of a System, and Components &
Resources of an IS.2
• Define cybernetic system with feedback and control.2
• What are the other
  system characteristics?2-3
• Sketch and show the different stakeholders in the business
environment (Business as a system). 4-5
• What are the different information system resources? Diagram. 4
• Write the Business Information Systems in regards to Functional and
Constituency perspective.10