Types and Levels of Information System
- Modern companies depend heavily on information systems (IS) to handle, store, analyse, and distribute data in order to facilitate efficient decision-making and operations. They are categorised widely according to their rank within the organisation, functioning, and purpose. The primary categories and tiers of information systems are as follows:
- Information System Types:
- Systems for processing transactions (TPS):
- The TPS is the information systems basic layer. They are designed to handle and document regular business operations including payroll, inventory control, sales, and purchases. TPS makes sure that the fundamental operational data, which serves as the foundation for higher layers of information systems, is properly and promptly gathered.
- Systems known as management information systems (MIS) gather, analyse, and display compiled and condensed data from different TPS. It gives middle-level managers the information and dashboards they need to keep an eye on the operation of the company, spot patterns, and make wise choices. Managers may concentrate on tactical and strategic decision-making with the aid of MIS.
- Decision Support Systems (DSS): DSS is intended to help managers make semi-structured and unstructured choices at every level. To assist managers in weighing different alternatives and possible consequences, they use modelling strategies, data analysis tools, and “what-if” scenarios. Strategic decision-making is supported and situations that may not have obvious answers may be solved with the help of DSS.
- Top-level executives are the target audience for Executive Information Systems (EIS), which are specialised information systems. To aid in executive decision-making, it offers high-level performance metrics and strategic information. ERP Systems: ERP systems integrate different business processes and functions across an organisation into a single, unified system. Enterprise Resource Planning (ERP) Systems: ERP systems typically offer visually rich dashboards and customizable displays to help executives quickly grasp the organization’s overall health and performance. They provide real-time data exchange and information flow across many departments, including supply chain management, finance, human resources, and sales. ERP increases productivity, minimises duplication, and fosters teamwork.
- Information management systems, or KMSs, are centred on gathering, arranging, and disseminating the knowledge and skills inside a company. Employees can access important data, best practises, and lessons learned thanks to its document management, collaboration, and knowledge sharing solutions.
- Information System Levels:
- Operational Level: Daily, regular chores and transactions are handled at this level. Transaction Processing Systems (TPS), which handle data from operational operations, are mostly involved. Supervisors and operational employees are the main users as they need accurate and up-to-date information to do their jobs well.
- Tactical Level: Middle-level managers and their decision-making procedures are supported by the tactical level. At this level, management information systems, or MIS, are essential because they provide managers a way to monitor performance, assess trends, and make short- to medium-term plans by delivering summarised and aggregated data from several TPS.
- Strategic Level: Decision-makers at this level are focused on the organization’s overall performance and long-term course. At this level, top-level executives employ Executive Information Systems (EIS) and Decision Support Systems (DSS) to help them make strategic choices that will affect the organization’s future.
- Knowledge Level: All three organisational levels are covered by the knowledge level. By capturing, storing, and sharing organisational knowledge, knowledge management systems (KMS) make sure that crucial data and knowledge are accessible to assist decision-making and problem-solving at all levels.
- Information systems are becoming essential parts of businesses of all kinds and sectors. In today’s ever changing digital world, their efficient implementation and usage may boost productivity, optimise workflows, enhance decision-making, and provide firms a competitive advantage.
- Systems for processing transactions (TPS):
- TPS is necessary for an organization’s daily operations. Capturing, processing, and storing transactional data from regular company operations, such sales, purchases, inventory movements, and staff timekeeping, is its main duty. TPS guarantees the timeliness, accuracy, and dependability of data. Important features of TPS include:
- Real-time processing: TPS keeps track of and updates data as soon as transactions take place, guaranteeing that the data is accurate at all times.
- High transaction volumes: TPS must be able to process a lot of transactions quickly and effectively.
- High reliability: To avoid data loss, TPS needs strong backup and recovery procedures since it handles vital operational data.
- Limited decision support: Rather than offering information for management or strategic decision-making, TPS primarily supports operational choices by supplying data for daily chores.
- Information systems for management (MIS):
- Middle-level managers may effectively monitor and control operations by using the information that MIS compiles and summaries from TPS. It supports managers in seeing patterns, comprehending the functioning of the company, and coming to wise judgments. Among the main components of MIS are:
- Reports and dashboards: To provide a summary of the performance of the company, MIS regularly creates reports and dashboards containing key performance indicators (KPIs).
- Data integration: To provide a thorough picture of corporate operations, MIS gathers data from several TPS and departments.
- Periodic reporting: To help monitor ongoing operations, MIS reports are usually generated on a regular basis, such as a daily, weekly, or monthly basis.
- Drill-down capability: Reports allow managers to obtain more specific information and pinpoint the underlying causes of problems.
- Decision Support Systems (DSS): DSS helps managers make choices that are semi-structured or unstructured, often involving circumstances that are complicated and unclear. To assist in decision-making, DSS makes use of modelling tools, simulations, and data analysis. One of DSS’s primary features is “what-if” analysis, which enables users to simulate several situations and evaluate the possible implications of each one before choosing a course of action.
- Data mining: DSS may examine huge datasets to find links, patterns, and trends that would not be seen in traditional reporting.
- Ad hoc support: To assist managers with specific and unforeseen decision-making requirements, DSS is built to react to ad hoc inquiries and provide instantaneous analysis.
- Collaboration features: To help with group decision-making and consensus-building, DSS often incorporates collaboration capabilities.
- Executive Information Systems (EIS): EIS provides support to an organization’s senior executives, including the CFO, CEO, and other members of the C-suite. Its main goal is to provide leaders a clear picture of the organization’s performance and critical success elements. Among EIS’s primary attributes are:
- Dashboards and scorecards: EIS gives executives a fast overview of the state of the company by displaying key performance measures graphically.
- External data integration: To provide decision-makers a more comprehensive picture, EIS may include data from other sources, such as market trends and economic indicators.
- Drill-down and drill-up: Depending on their requirements, executives may zoom out for a higher-level picture or dig into more specific details.
- Support for strategic planning: EIS assists executives in seeing opportunities, evaluating risks, and coordinating choices with long-term objectives.
- Systems for enterprise resource planning (ERP): ERP unifies disparate data and business activities within a company into a single system. By removing data silos, it facilitates smooth information flow and improves efficiency. Key components of ERP systems consist of:
- Centralized database: ERP makes use of a common database to guarantee that all departments have access to the same precise and current data.
- Process automation: ERP streamlines company processes by automating workflows, which also lowers mistakes and human labour.
- Cross-functional integration: ERP links many functional domains, including sales, inventories, human resources, and finance, to promote improved decision-making and teamwork.
- Scalability: ERP systems are able to accommodate growing user demands and data quantities as a business expands.
- Knowledge management systems, or KMSs, are designed to collect, preserve, arrange, and disseminate the knowledge and skills inside a company. It contributes to making sure that workers have access to information that they can use to solve issues and make better decisions. Important KMS components consist of:
- Information repositories: KMS keeps track of knowledge in a variety of forms, including guides, manuals, best practises, reports, staff expertise profiles, and lessons learned.
- Collaboration tools: To encourage knowledge sharing among staff members, KMS often incorporates communication and teamwork tools.
- Capabilities for search and retrieval: KMS enables users to quickly find relevant information by conducting targeted searches.
- Expert identification: KMS facilitates knowledge exchange and mentorship by assisting in the identification of subject matter experts within the company.