Why are there different types of Information

System?
In the early days of computing, each time an information system was
needed it was 'tailor made' - built as a one-off solution for a particular
problem. However, it soon became apparent that many of the problems
information systems set out to solve shared certain characteristics.
Consequently, people attempted to try to build a single system that would
solve a whole range of similar problems. However, they soon realized that
in order to do this, it was first necessary to be able to define how and where
the information system would be used and why it was needed. It was then
that the search for a way to classify information systems accurately began.

How do you identify the different types of

information system in an organization?
The different types of information system that can be found are identified
through a process of classification. Classification is simply a method by
which things can be categorized or classified together so that they can be
treated as if they were a single unit. There is a long history of classification
of things in the natural world such as plants or animals, however,
Information systems are not part of the 'natural' world; they are created and
acquired by man to deal with particular tasks and problems. The
classification of information systems into different types is a useful
technique for designing systems and discussing their application; it not
however a fixed definition governed by some natural law. A 'type' or
category of information system is simply a concept, an abstraction, which
has been created as a way to simplify a complex problem through
identifying areas of commonality between different things. One of the oldest
and most widely used systems for classifying information systems is known
as the pyramid model; this is described in more detail below.

How many different kinds of Information System

are there?
As can be seen above, there is not a simple answer to this. Depending on
how you create your classification, you can find almost any number of
different types of information system. However, it is important to remember
that different kinds of systems found in organizations exist to deal with the
particular problems and tasks that are found in organizations.
Consequently, most attempts to classify Information systems into different
types rely on the way in which task and responsibilities are divided within
an organization. As most organizations are hierarchical, the way in which
the different classes of information systems are categorized tends to follow
the hierarchy. This is often described as "the pyramid model" because the
way in which the systems are arranged mirrors the nature of the tasks
found at various different levels in the organization.

For example, this is a three level pyramid model based on the type of
decisions taken at different levels in the organization.

Three level pyramid model based on the type of decisions taken at different
levels in the organization

Similarly, by changing our criteria to the differnt types of date / information /

knowledge that are processed at different levels in the organization, we can
create a five level model.
Five level pyramid model based on the processing requirement of different
levels in the organization

What are the most common types of information

system in an organization?
While there are several different versions of the pyramid model, the most
common is probably a four level model based on the people who use the
systems. Basing the classification on the people who use the information
system means that many of the other characteristics such as the nature of
the task and informational requirements, are taken into account more or
less automatically.
Four level pyramid model based on the different levels of hierarchy in the
organization

A comparison of different kinds of Information

Systems
Using the four level pyramid model above, we can now compare how the
information systems in our model differ from each other.

1. Transaction Processing Systems

What is a Transaction Processing System?

Transaction Processing System are operational-level systems at the

bottom of the pyramid. They are usually operated directly by shop
floor workers or front line staff, which provide the key data required to
support the management of operations. This data is usually obtained
through the automated or semi-automated tracking of low-level
activities and basic transactions.

Functions of a TPS

TPS are ultimately little more than simple data processing systems.

Functions of a TPS in terms of data processing requirements

Inputs Processing Outputs
 Validation
Sorting Lists
Transactions Listing Detail reports
Events Merging Action reports
Updating Summary reports?
Calculation

Some examples of TPS

o Payroll systems

o Order processing systems

o Reservation systems

o Stock control systems

o Systems for payments and funds transfers

The role of TPS

o Produce information for other systems

o Cross boundaries (internal and external)

o Used by operational personnel + supervisory levels

o Efficiency oriented

2. Management Information Systems

What is a Management Information System?

For historical reasons, many of the different types of Information

Systems found in commercial organizations are referred to as
"Management Information Systems". However, within our pyramid
model, Management Information Systems are management-level
systems that are used by middle managers to help ensure the
smooth running of the organization in the short to medium term. The
highly structured information provided by these systems allows
managers to evaluate an organization's performance by comparing
current with previous outputs.

Functions of a MIS
 MIS are built on the data provided by the TPS

Functions of a MIS in terms of data processing requirements

Inputs Processing Outputs
Internal Transactions Sorting Summary reports
Internal Files Merging Action reports
Structured data Summarizing Detailed reports

Some examples of MIS

o Sales management systems

o Inventory control systems

o Budgeting systems

o Management Reporting Systems (MRS)

o Personnel (HRM) systems

The role of MIS

o Based on internal information flows

o Support relatively structured decisions

o Inflexible and have little analytical capacity

o Used by lower and middle managerial levels

o Deals with the past and present rather than the future

o Efficiency oriented?

3. Decision Support Systems

What is a Decision Support System?

A Decision Support System can be seen as a knowledge based

system, used by senior managers, which facilitates the creation of
knowledge and allow its integration into the organization. These
systems are often used to analyze existing structured information and
allow managers to project the potential effects of their decisions into
 the future. Such systems are usually interactive and are used to
solve ill structured problems. They offer access to databases,
analytical tools, allow "what if" simulations, and may support the
exchange of information within the organization.

Functions of a DSS

DSS manipulate and build upon the information from a MIS and/or
TPS to generate insights and new information.

Functions of a DSS in terms of data processing requirements

Inputs Processing Outputs
Modelling
Internal Transactions Summary reports
Simulation
Internal Files Forecasts
Analysis
External Information? Graphs / Plots
Summarizing

Some examples of DSS

o Group Decision Support Systems (GDSS)

o Computer Supported Co-operative work (CSCW)

o Logistics systems

o Financial Planning systems

o Spreadsheet Models?

The role of DSS

o Support ill- structured or semi-structured decisions

o Have analytical and/or modelling capacity

o Used by more senior managerial levels

o Are concerned with predicting the future

o Are effectiveness oriented?

4. Executive Information Systems

What is an EIS?
Executive Information Systems are strategic-level information
systems that are found at the top of the Pyramid. They help
executives and senior managers analyze the environment in which
the organization operates, to identify long-term trends, and to plan
appropriate courses of action. The information in such systems is
often weakly structured and comes from both internal and external
sources. Executive Information System are designed to be operated
directly by executives without the need for intermediaries and easily
tailored to the preferences of the individual using them.

Functions of an EIS

EIS organizes and presents data and information from both external
data sources and internal MIS or TPS in order to support and extend
the inherent capabilities of senior executives.

Functions of a EIS in terms of data processing requirements

Inputs Processing Outputs
External Data Summarizing Summary reports
Internal Files Simulation Forecasts
Pre-defined models "Drilling Down" Graphs / Plots

Some examples of EIS

Executive Information Systems tend to be highly individualized and

are often custom made for a particular client group; however, a
number of off-the-shelf EIS packages do exist and many enterprise
level systems offer a customizable EIS module.

The role of EIS

o Are concerned with ease of use

o Are concerned with predicting the future

o Are effectiveness oriented

o Are highly flexible

o Support unstructured decisions

o Use internal and external data sources

o Used only at the most senior management levels

1. Operational information:

Operational information relates to the day-to-day operations of the

organisation and thus, is useful in exercising control over the operations
that are repetitive in nature. Since such activities are controlled at lower
levels of management, operational information is needed by the lower
management.

For example, the information regarding the cash position on day-to-day

basis is monitored and controlled at the lower levels of management.
Similarly, in marketing function, daily and weekly sales information is used
by lower level manager to monitor the performance of the sales force.
It may be noted that operational information pertains to activities that are
easily measurable by specific standards. The operational information
mainly relates to current and historical performance, and is based primarily
on internal sources of data. The predictive element in operational
information is quite low and if at all it is there, it has a short term horizon.

2. Tactical information:

Tactical information helps middle level managers allocating resources and

establishing controls to implement the top level plans of the organisation.
For example, information regarding the alternative sources of funds and
their uses in the short run, opportunities for deployment of surplus funds in
short- term securities, etc. may be required at the middle levels of
management.

The tactical information is generally predictive, focusing on short-term

trends. It may be partly current and partly historical, and may come from
internal as well as external sources.

3. Strategic information:

While the operational information is needed to find out how the given
activity can be performed better, strategic information is needed for making
choices among the business options.

The strategic information helps in identifying and evaluating these options

so that a manager makes informed choices which are different from the
competitors and the limitations of what the rivals are doing or planning to
do. Such choices are made by leaders only.

Strategic information is used by managers to define goals and priorities,

initiate new programmes and develop policies for acquisition and use of
corporate resources. For example, information regarding the long-term
needs of funds for on-going and future projects of the company may be
used by top level managers in taking decision regarding going public or
approaching financial institutions for term loan.

Strategic information is predictive in nature, relies heavily on external

sources of data, has a long-term perspective, and is mostly in summary
form. It may sometimes include what if scenarios. However, the strategic
information is not only external information.

For long, it was believed that strategic information are basically information
regarding the external environment. However, it is now well recognised that
the internal factors are equally responsible for success or failures of
strategies and thus, internal information is also required for strategic
decision making.

Figure 1.2 represents the types of information required at different levels of

managerial hierarchy.

It may be remembered that each type of information has its role to play in
managerial effectiveness. Each type of information is needed with varying
degree by the managers at all levels. Thus, a part of operational
information may be used even by the chief executive officer of a company.

The difference lies in the proportion of each type of information in the total
information needs of managers at different levels of managerial hierarchy.
https://www.youtube.com/watch?v=ZrI34DoF6Yk&t=55s