CMT 403 -

MANAGEMENT
INFORMATION
SYSTEMS
Module 2: Types of
Information Systems
 Learning Objectives
 Discuss common applications of computers and
information systems.
 Explain the differences between computer
literacy and information literacy.
 Define transaction processing systems.
 Define management information systems.
 Describe the four major components of an
information system.
 Discuss the differences between data and
information.

MIS, Chapter 1
©2011 Course Technology, a part of Cengage Learning 2
 Learning Objectives (cont’d.)
 Explain the importance and applications of
information systems in functional areas of a
business.
 Discuss how information technologies are used to
gain a competitive advantage.
 Explain the Five Forces Model and strategies for
gaining a competitive advantage.
 Review the IT job market
 Summarize the future outlook of information
systems.

MIS, Chapter 1
©2011 Course Technology, a part of Cengage Learning 3
Computers and Information Systems in Daily
Life
• Computers and information systems are all around you
• Online classes
• Grading
• Grocery and retail
• PDA and smartphones
• Internet
• “Information systems” versus “information technology”

Module 2: Types of Information Systems 4

A New Era of Marketing: YouTube

• YouTube is a popular video sharing service that can be used as a

marketing tool.
• The following are examples of corporations that are using YouTube to
promote their products and services:
• Quiksilver
• Ford Models
• University of Phoenix Online
• The Home Depot
• Nikefootball

Module 2: Types of Information Systems 5

Computer Literacy and Information Literacy

• Computer literacy
• Having skills in using productivity software
• Information literacy
• Understanding the role of information in generating and using business
intelligence
• Business intelligence (BI)
• Provides historical, current, and predictive views of business operations and
environments
• Gives organizations a competitive advantage in the marketplace

Module 2: Types of Information Systems 6

Social Networking and the Vulnerability of Personal Information

To reduce risk and improve the privacy of your personal information,

consider the following:
• Always use the privacy controls offered by the social networking sites
• Use long passwords
• Do not post a phone number or a full address
• Do not post children’s names
• Do not be specific when posting information about vacations or
business trips
Module 2: Types of Information Systems 7
The Beginning: Transaction Processing
Systems
• Transaction processing systems (TPSs)
• Focus on data collection and processing
• Cost reduction
• Operations repetitive
• Human involvement minimal

Module 2: Types of Information Systems 8

 What is a Transaction Processing System?
• A transaction process system (TPS) is an information processing system for
business transactions involving the collection, modification and retrieval of
all transaction data.
• Characteristics of a TPS include:
i. Performance
ii. Reliability and
iii. Consistency
• TPS is also known as transaction processing or real-time processing.

Module 2: Types of Information Systems 9

 Transaction Process System
• A transaction process system and transaction processing are often
contrasted with a batch process system and batch processing, where many
requests are all executed at one time.
• The former requires the interaction of a user, whereas batch processing
does not require user involvement.
• In batch processing the results of each transaction are not immediately
available.
• Additionally, there is a delay while the many requests are being organized,
stored and eventually executed.
• In transaction processing there is no delay and the results of each
transaction are immediately available.
Module 2: Types of Information Systems 10
• During the delay time for batch processing, errors can occur.
• Although errors can occur in transaction processing, they are
infrequent and tolerated, but do not warrant shutting down the entire
system.
• To achieve performance, reliability and consistency, data must be
readily accessible in a data warehouse, backup procedures must be in
place and the recovery process must be in place to deal with system
failure, human failure, computer viruses, software applications or
natural disasters.

Module 2: Types of Information Systems 11

Characteristics of TPS
• Transaction Processing Systems are characterized by their:
i. Rapid processing of data
ii. Reliability
iii. Use of standard procedures, and
iv. Control access

Module 2: Types of Information Systems 12

What is a Management Information System?
• Management Information Systems (MIS) is the study of people,
technology, organizations, and the relationships among them.
• MIS professionals help firms realize maximum benefit from
investment in personnel, equipment, and business processes.
• MIS is a people-oriented field with an emphasis on service through
technology.
• If you have an interest in technology and have the desire to use
technology to improve people’s lives, a degree in MIS may be for you.

Module 2: Types of Information Systems 13

MIS
• To the managers, Management Information System is an
implementation of the organizational systems and procedures.
• To a programmer it is nothing but file structures and file processing.
• However, it involves much more complexity.
• The three components of MIS provide a more complete and focused
definition, where:
i. System suggests integration and holistic view,
ii. Information stands for processed data, and 
iii. Management is the ultimate user, the decision makers.

Module 2: Types of Information Systems 14

• Management information system can thus be analyzed as follows −
i. Management
• Management covers the planning, control, and administration of the
operations of a concern.
a. the top management handles planning;
b. the middle management concentrates on controlling; and
c. the lower management is concerned with actual administration.

Module 2: Types of Information Systems 15

ii. Information
• Information, in MIS, means the processed data that helps the
management in planning, controlling and operations.
• Data means all the facts arising out of the operations of the concern.
• Data is processed i.e. recorded, summarized, compared and finally
presented to the management in the form of MIS report.

Module 2: Types of Information Systems 16

iii. System
• Data is processed into information with the help of a system.
• A system is made up of inputs, processing, output and feedback or
control.
• Thus MIS means a system for processing data in order to give proper
information to the management for performing its functions.

Module 2: Types of Information Systems 17

Definition
• Management Information System or 'MIS' is a planned system of
collecting, storing, and disseminating data in the form of information
needed to carry out the functions of management.

Module 2: Types of Information Systems 18

Management Information Systems

• Management information system (MIS)

• Organized integration of hardware and software technologies, data,
processes, and human elements
• Designed to produce timely, integrated, relevant, accurate, and useful
information
• For decision-making purposes
• Include:
• Hardware components
• MIS software
• Processes

Module 2: Types of Information Systems 19

Management Information Systems (cont’d.)

• Designing an MIS
• Define objectives
• Collect and analyze data
• Provide information in useful format
• Used in both the private and public sector
• Many organizations use information systems to gain a competitive
advantage

Module 2: Types of Information Systems 20

Objectives of MIS
• The goals of an MIS are to implement the organizational structure
and dynamics of the enterprise for the purpose of managing the
organization in a better way and capturing the potential of the
information system for competitive advantage.
• Following are the basic objectives of an MIS −
i. Capturing Data − Capturing contextual data, or operational
information that will contribute in decision making from various
internal and external sources of organization.

Module 2: Types of Information Systems 21

ii. Processing Data − The captured data is processed into information
needed for planning, organizing, coordinating, directing and controlling
functionalities at strategic, tactical and operational level.
• Processing data means −
• making calculations with the data
• sorting data
• classifying data and
• summarizing data
iii. Information Storage − Information or processed data need to be
stored for future use.

Module 2: Types of Information Systems 22

iv. Information Retrieval − The system should be able to retrieve this
information from the storage as and when required by various users.
v. Information Propagation − Information or the finished product of the
MIS should be circulated to its users periodically using the
organizational network.

Module 2: Types of Information Systems 23

 Characteristics of
• Following are the characteristics of an MIS −
MIS
i. It should be based on a long-term planning.
ii. It should provide a holistic view of the dynamics and the structure of the organization.
iii. It should work as a complete and comprehensive system covering all interconnecting sub-systems within the
organization.
iv. It should be planned in a top-down way, as the decision makers or the management should actively take part
and provide clear direction at the development stage of the MIS.
v. It should be based on need of strategic, operational and tactical information of managers of an organization.
vi. It should also take care of exceptional situations by reporting such situations.
vii. It should be able to make forecasts and estimates, and generate advanced information, thus providing a
competitive advantage. Decision makers can take actions on the basis of such predictions.
viii. It should create linkage between all sub-systems within the organization, so that the decision makers can
take the right decision based on an integrated view.
ix. It should allow easy flow of information through various sub-systems, thus avoiding redundancy and
duplicity of data. It should simplify the operations with as much practicability as possible.
x. Although the MIS is an integrated, complete system, it should be made in such a flexible way that it could be
easily split into smaller sub-systems as and when required.
xi. A central database is the backbone of a well-built MIS.
Module 2: Types of Information Systems 24
 Characteristics of Computerized MIS
• Following are the characteristics of a well-designed computerized MIS −
i. It should be able to process data accurately and with high speed, using
various techniques like operations research, simulation, heuristics, etc.
ii. It should be able to collect, organize, manipulate, and update large amount
of raw data of both related and unrelated nature, coming from various
internal and external sources at different periods of time.
iii. It should provide real time information on ongoing events without any delay.
iv. It should support various output formats and follow latest rules and
regulations in practice.
v. It should provide organized and relevant information for all levels of
management: strategic, operational, and tactical.
vi. It should aim at extreme flexibility in data storage and retrieval.
Module 2: Types of Information Systems 25
Strategic Information Systems
• Strategic Information System involves having a long-term vision,
define business objectives, setting goals, and taking steps to reach
those goals and address organizational issues.
• Strategic Information System keeps the organization focused on its
vision and organizational transformation.
• It is used to provide information about the current situation of an
individual, group or organization.
• It is a conceptual system that helps in understanding the present and
the future environment in which an individual or organization
operates.

Module 2: Types of Information Systems 26

• A strategic information system (SIS) is a business information system
(BIS) with the features Systematic approach to collecting, storing, and
retrieving data; Integration with other systems.
• It is essential for your company to have a clear vision, business plan,
strategy and organisation structure.
• It’s important that your employees are aligned with these strategies,
so that everyone has the same goals in mind.

Module 2: Types of Information Systems 27

• They offer competitive information, help you improve organisational
structure, allows you to tackle competitive forces and prepare you the
environmental changes.
• The features of a strategic information system are:
i. Information Security
ii. Data Integrity
iii. Data Security

Module 2: Types of Information Systems 28

Decision Support Systems
• A decision support system (DSS) is a computer program application
used to improve a company's decision-making capabilities.
• It analyzes large amounts of data and presents an organization with
the best possible options available.
• Decision support systems bring together data and knowledge from
different areas and sources to provide users with information beyond
the usual reports and summaries.
• This is intended to help people make informed decisions.

Module 2: Types of Information Systems 29

• Typical information a decision support application might gather and
present include the following:
i. comparative sales figures between one week and the next;
ii. projected revenue figures based on new product sales
assumptions; and
iii. the consequences of different decisions.

Module 2: Types of Information Systems 30

Decision support system components
• A typical DSS consists of three different parts:
i. knowledge database, 
ii. software and 
iii. user interface

Module 2: Types of Information Systems 31

Knowledge base
• A knowledge base is an integral part of a decision support
system database, containing information from both internal and
external sources.
• It is a library of information related to particular subjects and is the
part of a DSS that stores information used by the system's reasoning
engine to determine a course of action.

Module 2: Types of Information Systems 32

Software system
• The software system is composed of model management systems.
• A model is a simulation of a real-world system with the goal of
understanding how the system works and how it can be improved.
• Organizations use models to predict how outcomes will change with
different adjustments to the system.

Module 2: Types of Information Systems 33

User interface
•  The user interface enables easy system navigation.
• The primary goal of the decision support system's user interface is to
make it easy for the user to manipulate the data that is stored on it.
• Businesses can use the interface to evaluate the effectiveness of DSS
transactions for the end users.
• DSS interfaces include simple windows, complex menu-driven
interfaces and command-line interfaces.

Module 2: Types of Information Systems 34

 Executive Information Systems
• An executive information system (EIS) is a decision support system (DSS)
used to assist senior executives in the decision-making process.
• Executive support systems are intended to be used by the senior managers
directly to provide support to non-programmed decisions in strategic
management.
• These information are often external, unstructured and even uncertain.
• Exact scope and context of such information is often not known beforehand.
• This information is intelligence based −
i. Market intelligence
ii. Investment intelligence
iii. Technology intelligence
Module 2: Types of Information Systems 35
 Examples of Intelligent Information
• Following are some examples of intelligent information, which is often the
source of an ESS:
i. External databases
ii. Technology reports like patent records etc.
iii. Technical reports from consultants
iv. Market reports
v. Confidential information about competitors
vi. Speculative information like market conditions
vii. Government policies
viii. Financial reports and information
Module 2: Types of Information Systems 36
Features of Executive Information System

Module 2: Types of Information Systems 37

Advantages of ESS
i. Easy for upper level executive to use
ii. Ability to analyze trends
iii. Augmentation of managers' leadership capabilities
iv. Enhance personal thinking and decision-making
v. Contribution to strategic control flexibility
vi. Enhance organizational competitiveness in the market place
vii. Instruments of change
viii. Increased executive time horizons.
ix. Better reporting system
x. Improved mental model of business executive
Module 2: Types of Information Systems 38
xi. Help improve consensus building and communication
xii. Improve office automation
xiii. Reduce time for finding information
xiv. Early identification of company performance
xv. Detail examination of critical success factor
xvi. Better understanding
xvii. Time management
xviii. Increased communication capacity and quality

Module 2: Types of Information Systems 39

Disadvantage of ESS
i. Functions are limited
ii. Hard to quantify benefits
iii. Executive may encounter information overload
iv. System may become slow
v. Difficult to keep current data
vi. May lead to less reliable and insecure data
vii. Excessive cost for small company

Module 2: Types of Information Systems 40

Information Technology at Hertz Car Rental
Company
• Mainframe-based decision support system (DSS)
• Executive information system (EIS)
• Analyze essential information from both external and internal sources
• Manipulate and refine data to make it more meaningful

Module 2: Types of Information Systems 41

Major Components of an Information System

• Data
• Database
• Process
• Information

Module 2: Types of Information Systems 42

Exhibit 2.1
Data

• Data
• Input to the system
• Sources of data
• External
• Internal
• Time orientation
• Can be collected in different forms
• Aggregated
• Disaggregated

Module 2: Types of Information Systems 44

Database

• Database
• Heart of an information system
• Collection of all relevant data organized in a series of integrated files
• Essential for the success of any information system
• Managed with database management system (DBMS): e.g., Oracle
• Reduces personnel time needed to gather, process, and interpret
data manually

Module 2: Types of Information Systems 45

Process

• Process
• Generates the most useful type of information for decision making
• Generally includes transaction-processing reports and models for
decision analysis
• Includes a wide range of models to support all levels of decision
making

Module 2: Types of Information Systems 46

Information

• Information
• Output of an information system
• Facts that have been analyzed by the process component
• Quality of information
• Timeliness
• Integration with other data and information
• Consistency and accuracy
• Relevance

Module 2: Types of Information Systems 47

Information (cont’d.)

• User interface
• Must be flexible and easy to use
• Graphical user interfaces (GUIs)
• Ultimate goal of an information system
• Generate business intelligence (BI)

Module 2: Types of Information Systems 48

Examples of Information Systems

• Example 1: a university
• State university stores all student data in a database
• Built-in query capability
• Other types of analysis can be done
• Example 2: Teletech
• International textile company
• Database stores data on products, suppliers, sales personnel, costs
• Process components
• Forecasting models

Module 2: Types of Information Systems 49

Using Information Systems and Information
Technologies
• Information technologies
• Achieve goals of information systems
• Examples
• Internet
• Databases
• POS Systems
• RFID tags

Module 2: Types of Information Systems 50

Information Technologies at Home Depot

• POS system
• Fast customer service
• Improved inventory management
• Wireless network
• Efficient in-store communication
• Web site
• Communicate with customers
• Increase sales with online orders
• RFID tags
• Better manage inventory
Module 2: Types of Information Systems 51
The Importance of Information Systems

• Information
• Second most important resource in any organization
• Four Ms of resources:
• Manpower
• Machinery
• Materials
• Money

Module 2: Types of Information Systems 52

The Importance of Information Systems
(cont’d.)
• Personnel information system (PIS) or human resource information
system (HRIS)
• Designed to provide information that helps decision makers in personnel
carry out their tasks more effectively
• Use Web technologies
• Main difference between an intranet and the Internet
• Intranets are private and the Internet is public

Module 2: Types of Information Systems 53

The Importance of Information Systems
(cont’d.)
• Logistics information system (LIS)
• Designed to reduce the cost of transporting materials
• Maintains safe and reliable delivery
• Manufacturing information system (MFIS)
• Manages manufacturing resources
• Companies can reduce manufacturing costs, increase product quality, and
improve inventory decisions

Module 2: Types of Information Systems 54

The Importance of Information Systems
(cont’d.)
• Financial information system (FIS)
• Provides information to financial executives in a timely manner
• Marketing information system (MKIS)
• Improves marketing decisions
• Provides timely, accurate, and integrated information about the marketing
mix

Module 2: Types of Information Systems 55

Information Technologies at UPS

• UPS Delivery Intercept

• Web-based service that allows customers to intercept and reroute packages
before they are delivered
• Package Flow Technology

Module 2: Types of Information Systems 56

Wal-Mart Stores, Inc.

• Wal-Mart Satellite Network

• Largest private satellite communication system in the United States
• Links branch stores with the home office in Bentonville, Arkansas
• POS systems
• RetailLink
• Electronic data interchange
• RFID technologies

Module 2: Types of Information Systems 57

Using Information Technologies for a
Competitive Advantage
• Michael Porter
• Professor at Harvard Business School
• Identified three strategies for competing in the
marketplace successfully
• Overall cost leadership
• Differentiation
• Focus

Module 2: Types of Information Systems 58

Using Information Technologies for a
Competitive Advantage (cont’d.)
• Information systems
• Help organizations reduce the cost of products and services
• Assist with differentiation and focus strategies
• Can help bottom-line and top-line strategies
• Enterprise systems
• Supply chain management (SCM)
• Customer relationship management (CRM)
• Enterprise resource planning (ERP)
• Collaboration software

Module 2: Types of Information Systems 59

Using Information Technologies for a
Competitive Advantage (cont'd.)
• Differentiation strategies
• Make products and services different from competitors
• Examples: Apple, Amazon.com

Module 2: Types of Information Systems 60

Using Information Technologies for a
Competitive Advantage (cont'd.)
• Focus strategies
• Concentrate on a specific market segment
• Attempt to achieve a cost or differentiation advantage
• Examples: Apple, Abercrombie & Fitch, Nordstrom

Module 2: Types of Information Systems 61

Porter’s Five Forces Model: Understanding
the Business Environment
• Five Forces Model
• Michael Porter
• For analyzing an organization, its position in the
marketplace, and how information systems could be used
to make it more competitive
i. Buyer power
ii. Supplier power
iii. Threat of substitute products or services
iv. Threat of new entrants
v. Rivalry among existing competitors

Module 2: Types of Information Systems 62

Exhibit 2.2 The Five Forces Model
Porter’s Five Forces Model: Understanding
the Business Environment (cont'd.)
• Buyer power
• High when customers have many choices
• Low when they have few choices
• Limit buyers’ choices by offering services that make it
difficult for customers to switch
• Supplier power
• High when customers have fewer options
• Low when customers have more options
• Use information systems to make their products and
services cheaper

Module 2: Types of Information Systems 64

Porter’s Five Forces Model: Understanding
the Business Environment (cont'd.)
• Threat of substitute products or services
• High when many alternatives for an organization’s products
or services are available
• Add services to make organization more distinct
• Add fees to discourage customers from switching
• Threat of new entrants
• Low when duplicating a company’s product or service is
difficult
• Use focus strategies to ensure that this threat remains low

Module 2: Types of Information Systems 65

Porter’s Five Forces Model: Understanding
the Business Environment (cont'd.)
• Rivalry among existing competitors
• High when many competitors occupy the same
marketplace position
• Low when there are few competitors

Module 2: Types of Information Systems 66

Information Technology at Boeing

• Intelligent information systems

• Artificial intelligence technologies
• Expert systems

Module 2: Types of Information Systems 67

The IT Job Market

IT jobs fall into the following categories:

• Operations and help desk
• Programming
• Systems design
• Web design and Web hosting
• Network design and maintenance
• Database design and maintenance
• Robotics and artificial intelligence

Module 2: Types of Information Systems 68

The IT Job Market (cont'd.)

CTO/CIO
• The top job in the information systems field belongs to either the
chief technology officer (CTO) or the chief information officer (CIO)
• This person is responsible for long-range information systems
planning and for keeping abreast of new developments in the field
that can affect a company's productivity or competitiveness

Module 2: Types of Information Systems 69

The IT Job Market (cont'd.)

Manager of Information Systems Services

This person is responsible for managing all the

hardware, software, and personnel within the
information systems department

Module 2: Types of Information Systems 70

The IT Job Market (cont'd.)

Systems Analyst

• This person is responsible for the design and implementation of

information systems

• In addition to computer knowledge and an information systems

background, this position also requires a thorough understanding of
business systems and functional areas within a business organization

Module 2: Types of Information Systems 71

The IT Job Market (cont'd.)

Network Administrator

• This person oversees a company's internal and external network

systems, designing and implementing network systems that deliver
correct information to the right decision-maker in a timely manner
• Providing network and cybersecurity is part of this position’s
responsibility

Module 2: Types of Information Systems 72

The IT Job Market (cont'd.)

Database Administrator

• A database administrator (DBA) is responsible for database design

and implementation

• Additionally, a database administrator should have knowledge and

understanding of data warehouses and data mining tools

Module 2: Types of Information Systems 73

The IT Job Market (cont'd.)

Computer Programmer

• A computer programmer writes computer programs or software

pieces that allow the information system to perform a specific task

• There are many computer languages available, and each one requires
a specific knowledge suitable for a specific application

Module 2: Types of Information Systems 74

The IT Job Market (cont'd.)

Webmaster

• A webmaster designs and maintains the organization’s Web site

• Because of the popularity of e-commerce applications, webmasters

have been in high demand

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 Requirements for IT Positions

• The educational backgrounds for an IT position can include an AA, BA,

BS, MS, or MBA in information systems and related fields

• The salaries vary based on educational background, experience, and

the job’s location

• Salaries range from $52,000 for a programmer to over $180,000 for a

CIO

Module 2: Types of Information Systems 76

Future Outlooks

• Hardware and software costs continue to decline

• Processing information less expensive in the future
• Artificial intelligence and related technologies will continue to
improve and expand
• Computer literacy will improve
• Networking technology will improve
• Personal computers will continue to improve in power and quality

Module 2: Types of Information Systems 77

Future Outlooks (cont'd.)

• Internet growth and acceptance will continue

• Computer criminals will become more sophisticated
• Protecting personal identity information will become more difficult

Module 2: Types of Information Systems 78

Summary
• Examples of uses for computers and information
systems
• Difference between computer literacy and
information literacy
• Management information system (MIS)
• Data, database, process, and information
• Porter
• Three competitive strategies
• Five Forces Model

Module 2: Types of Information Systems 79

***END***

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