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CIS 465 -Types of Information Systems (99F) 1

Types of Information Systems

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Frito-Lay, Inc., a snack food subsidiary of Pepsi-Cola,

outfitted its 10,000-person direct store-delivery sales

force with handheld terminals used while calling on the

400,000 stores that sell its 100 products. Salespeople

use the terminals to enter replenishment orders and

record the number of stales removed after their 35-dayshelf life. Based on this data, a printer in the truck prints

an invoice handed to the store manager as part of the

days deliveries. Salespeople hook the terminals to

telephone lines to transfer each days data to thecompanys mainframe computers in Dallas. The system

saves salespeople four or five hours of paperwork per

week.

Case: Frito Lay

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The mainframes in Dallas consolidate the data each

night as part of Frito-Lays internal replenishmentsystem. Requirements for that system changed

drastically in the 1980s, and Frito-Lays regional

competitors became stronger. Frito-Lay had to be

able to respond quickly to a variety of competitive

challenges, ranging from price changes to totally new

products. Coordination between manufacturing and

sales had to be much tighter because the company

needed to be able to run local promotions on

Thursday for a product that would have to beavailable on Monday.

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The system also used a data warehouse to providecomprehensive, up-to-date data for studying sales

by any combination of product, store, and time

period. In South Texas, the data from this system

showed an unexpected drop in sales of Tostitos

tortilla chips. Research into the cause of the drop

indicated that a small competitor had launched a

white corn tortilla chip. Frito-Lay developed a

competitive white corn product within three months

and regained market share.

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Question:What type(s) of information systems does

the case illustrate?

Debate:

The ability of large firms to build information systems likethe one in the case gives them unfair advantages over small

firms that lack both the staff and money to build such systems.

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The Frito-Lay information system supports a range ofcommunication and decision-making functions

typically associated with different types of information

systems. It is a transaction processing system

because it is used to enter orders from each retailer. Itcan be considered a management information system

or executive information system because it provides

information in a readily available form for

managements use. It is a decision support system

because it supports decision making by helping route

drivers, customers, and managers obtain needed

information in a genuinely useful form.

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7/94CIS 465 -Types of Information Systems (99F) 7

Frito-Lay

Customers Frito-lay Customers

Managers and others who use data

Products Complete and timely information accessible for decision-

making

Convenience and low-cost for salespeople and customersrelated to ordering and managing inventory

Business Process Steps:

Track customer inventories of Frito-Lay products

enter orders

Consolidate data about orders and the market

Use data for monitoring and decision-making

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Frito-Lay Business Process

Rationale: Use hand-held terminals to collect data duringsales calls. Consolidate the information in a system thatsupports decision making.

Participants

Driver and salespeople

Marketing managers

Information Inventory by product and customer

Customer orders

sales by product, region, and period

Technology hand held terminals

computers

telecommunications networks

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Introduction We can think of information systems as providing

three basic functions:

support fordecision-making (fromcomputation capabilities)

support forcommunication support foraccess to information

We will explore these concepts in depth over thenext few weeks. The concepts are introduced

here. Types of information systems will be introduced

and we will look at how they affect decision-making, communication, and information access.

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Capabilities of Information

Systems1. Fast and Accurate Data Processing, with large-Capacity Storage and Rapid CommunicationBetween Sites. Computer and telecommunications systems

exploited by operational support systems deriving management reporting from volumes of data

business opportunities built on this capability

e.g. consolidate financial results from multiple organizationalsites

2. Instantaneous Access to Information on-line, ad-hoc access to databases

tailorable graphical interfaces

support of knowledge-workers

e.g. EIS allowing executive access to yesterdays sales

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Systems - 23. Means of Coordination

bringing parts of organizations together in a common effort

office information systems

project management systems portable computing widening the reach of information systems

creating the virtual office

inter-organizational information systems coordinating effortsof cooperating enterprises.

Coordinate means to harmonize in a common action or effort

e.g. planning, scheduling, and running a workgroup project

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Systems - 34. Boundary Spanning

IS link an organization to the outside world

EDI replacing paper documents

connecting suppliers with customers Enables organizations to more quickly receive information

about their environment

Use of the Internet and Web presence to make contact withcustomers

e.g. companies that have project teams to monitor publicforums

e.g. investigating the competitive opportunities in new markets

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Systems - 45. Support for Decision Making

Informing managers and permitting them to select fromalternative courses of action.

6. Supporting Organizational Memory andLearning organizational memory = the means by which knowledge from

the past exerts influence on present organizational activities.

Preserving the experience the organization has deliveringproducts and services

e.g. Auto manufacturers preserve electronic designs, hotelsmaintain customer preferences

Development of Knowledge Management Systems

organizations that acquire knowledge and modify behavior arelearning.

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Systems - 57. Routinizing Organizational Practice

e-mail and conferencing systems providing new protocols forinteraction of people within an organization.

Expert systems approve/refuse credit card transactionsassures high consistency.

Order processing cycle

Routinizing of organizational practice does not take awayfrom the creativity of individuals. It may leave time andopportunity for greater productivity and knowledge work.

E.g. electronic processing of insurance policy with the supportof workflow systems

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Capabilities of InformationSystems - 6

8. Differentiation of Products and Services Firms compete by making their products and services

different from others.

Gain an initial competitive advantage.

E.g. FedEx tracking packages and shipments

allows for mass customization

9. Modeling model future economic conditions, prospective products, and

the environment where they will operate.

Model = simplified representation of a real object or

phenomenon knowledge workers manipulate models of reality in order to

gain understanding

e.g. the spreadsheet

e.g. product engineered and tested electronically before a

physical prototype is made.

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Systems - 710. Automation

fully automate certain business functions by replacing humanlabor

e.g. POS systems

However, loss of clerical positions gives rise to jon functionsresponsible for maintaining the system and developing newones to analyze and exploit volumes of new information.

E.g. lights-out data centers run with out human participation.

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Improving Communication and

Decision Making Performance

within Business ProcessesRATE OF OUTPUT

Improve communication: Communicate more information or more

types to more people

Improve decision making: Make more decisions using better, more

complete information

CONSISTENCY

Improve communication: Make sure different people receive the

same communication

Improve decision making: Make sure repetitive decisions are made

in the same way

PRODUCTIVITY

Improve communication:Achieve more communication with less

effort

Improve decision making: Make better decisions with less effort

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Improving Communication andDecision Making Performance within

Business ProcessesCYCLE TIME

Improve communication: Eliminate undesirable delays in

communication

Improve decision making: Eliminate unnecessary delays in decisionmaking

FLEXIBILITY

Improve communication: Permit communication in many different forms

Improve decision making: Maintain decision quality across a wider

range of situationsSECURITY

Improve communication: Make sure communications go only to the

intended recipients

Improve decision making: Make sure decisions are controlled only by

those authorized to make the decisions

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Basic Concepts of

Communication

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Communication Communication is an interpersonal process of

sending and receiving symbols with messagesattached to them.

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General Model of a

Communication System

Source Transmitterencoder

Channel ReceiverDecoder Destination

Noiseand

Distortion

Feedback

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Basic Communication Concepts Social Context

Personal, Impersonal, and AnonymousCommunication

Time, Place, and Direction of Communication

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Social Context The situation and relationships within which

communication takes place. Social presence

Organizational position Relationships

Cultural Norms

Age

Gender

The topic being discussed

Nonverbal communication

Media Richness Theory

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Personal, Impersonal, and

Anonymous Communication Personal - the relationship between sender and

receiver matters. It affects form and content.

Impersonal - The sender and receivers

relationship does not matter. Both serve asagents of the organization.

Anonymous - The senders identity is hiddenfrom the recipient.

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Time, Place, and Direction of

Communication Synchronous - The sender and Receiver are

available simultaneously

Asynchronous - The sender and receiver are not

available simultaneously. Place Involves Physical Presence

Direction: One-way vs. Two Way communication.

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Common CommunicationsClassified By Time and Place

SAME

PLACE

DIFFERENT

PLACE

SAME TIME DIFFERENT TIME

Presentation Systems

Copyboards

PC Projectors

Facilitation Services

Polling SystemsGroup Decision Rooms

Transaction databases

World Wide Web

Shared Files

Electronic Mail

Voice MailShift Work Communications

Typical Telephone

Video Telephone

Video Conferencing

Live Radio TV Broadcast

EDI

Transaction databases

Electronic Mail

Computer Conferencing

Voice Mail

Fax

Pre-recorded Radio/TV

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What are some approaches forInformation Systems to

improve communications?

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Approaches for Improving

Communication1. Make face to face communication more effective.

2. Eliminate Unnecessary Person to PersonCommunication

3. Make Communications more systematic

4. Combine and Extend Electronic Communications

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Making Face to Face

Communication More Effective Presentation Technologies:

Blackboard

Prepared Paper Handouts

Overhead projector or slide projector with colortransparencies

Electronic Blackboard

Computer LCD Display panels

Computer for What-If Scenarios

Computer-controlled Multi-media

Computer controlled multi-media with interactive control.

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Eliminate Unnecessary Person to

Person Communication Substitute on-line Access to data

Example: Supplier/Customer Relationships as discussed inInterorganizational Information systems

ATM access Automated Telephone Attendants

Danger of becoming too impersonal

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Making Communication

Systematic Contrast communication between people vs.

communication between machines.

The business Memo Header:

To: From:

Date:

Re:

Having structure reduces the effort required tofigure out what the communication means.

Even with communication between groups ofpeople, repetitive aspects of communication aresystematized.

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Combine and Extend Electronic

Communication Functions Early communication technologies have been

combined and extended to create more powerfulcommunication technologies.

Example: Telegraph, Telephone, RadioBroadcast

Consider how more modern technologies arebeing combined.

More convergence of computing andcommunications technologies.

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Question:

How have the different degrees ofsocial presence in communication,

or how have time,place, anddirection of communication affecteda situation in which you have been

involved?

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Basic Decision-Making Concepts

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Steps in Decision Making

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Types of Information Systems

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Different Classification Schema

There is no one hard and fast rule for classifyinginformation systems. Some way we mightconsider:

By Organizational Level By Major Functional Area

By the Support Provided by the System

By the Information System Architecture

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Classification of IS:Organizational Levels

Consider the hierarchical nature of organizations.Although many organizations are reengineeringthemselves and transforming themselves to other

structures, the vast number of organizations havea hierarchical structure. Typical informationsystems that follow organizational levels are:

Departmental or functional area

Enterprise Information Systems ( e.g. vendorstoday market enterprise systems - PeopleSoft,SAP).

Inter-organizational Systems (e.g. AmericanAirlines Sabre)

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Classification of IS:MajorFunctional Area

Departmental information systems may followtraditional Functional Areas:

The accounting system

the finance system the manufacturing (operation/production) system

the marketing system

the human resource system

Note in each functional area, there may be basiccomputerized tasks that essential to theoperations of the organization and are routine innature (e.g. preparing a payroll and billing acustomer).

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Major Functional Areas

Primary Activities:

Manufacturing Materials Management (logistics)

Engineering

Testing and Quality Control

Maintenance and Service

Marketing and Sales

Support Activities Accounting

Finance

Strategic Planning

Human Resource Management

Research and Development

Procurement (Purchasing)

Public Relations

Information Systems

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Classification of IS:Support Provided

Another way to classify IS is by the type of supportprovided regardless of the functional areainvolved:

Transaction Processing Systems (TPS) -supporting routine operations central to themission of the organization.

Management Information Systems (MIS) -supporting functional managers.

Office Automation Systems (OAS) - supporting

office workers.

Group Support Systems (GSS) - supportingpeople working in groups

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Classification of IS:Support Provided

Decision Support Systems (DSS) - supportingmanagers and analysts.

Executive Information Systems (EIS) -

supporting executives Execution systems - systems that directly

support the organizations value-added work (e.g.help sales people sell, doctors practicemedicine, architects design, etc.)

Intelligent Support system - supportingknowledge workers using Expert systems (ES)and artificial neural networks (ANN)

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Classification of IS:By Nature of Activity Supported

Operational Systems - deal with day to dayoperations. Often involve TPS. Systems used byfirst-line managers (supervisors). Operationaldecisions are of short-term nature.

Managerial or Tactical - used by middlemanagement; short-term planning, organizing,and controlling. Managerial systems are broaderin scope that operational systems. They are oftenequated with MIS.

Strategic - deal with long-term situations whichsignificantly affect how business is conducted.

Note: Reference Gorry Scott-Morton article.

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Information Systems Design

The manner is which an IS is designed dependson what it is intended to support.

It is important to conceptualize the informationrequirements of the organization (See Wetherbe

article). Often the conceptualization of how information

requirements will be met is called theinformation architecture. It is a high-leveldescription of an organizations informationresources.

The Information Systems infrastructure orinformation technology infrastructure is arelated concept.

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Information Systems Design - 2

The information technology infrastructure is adescription of how computers, networks,databases, and other facilities are arranged and

how they are operated and managed. Architecture and Infrastructure are related

aspects of Information System Design.

An analogy is the conceptual planning of a house(architecture) and the physical construction of the

foundation, walls, roof, etc. (infrastructure).

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Classification of IS:By Information Systems Architecture

Information Systems can be classified accordingto the systems architecture:

a mainframe based system, sometime called

host-based systems. a stand-alone personal computer.

a Networked (or distributed) environmentdivides the work between two or more

computers. Cooperative processing (geographic

dispersed)

client-server (generally with LANs)

enterprise wide (uses intranet)

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Detail on Information Systems by

Support Provided

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Transaction Processing Systems

A transaction is an elementary activity conductedduring business operations (e.g. merchandisesale).

Earliest Information Systems in organizations. Support the monitoring, collection, storage,

processing, and dissemination of theorganizations basic business transactions.

Provides backbone for many other applicationsinvolving other support systems.

On-line systems called OLTP vs. batch

Routine, repetitive tasks.

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Business Transactions in aFactory

Payroll: employee time cards, employee pay anddeductions, payroll checks.

Purchasing: purchase orders, deliveries,payments (accounts payable)

Sales: sales records, invoices and billing,accounts receivable, sales returns, shipping

Manufacturing: production reports, quality-control reports

Finance and Accounting: financial statements,tax records, expense accounts

Inventory management: materials usage,inventory levels

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Transaction Processing Systems -3

In addiiton to processing the routine criticalorganizational activities, transaction processingsystems also provide the source data for manyother type of information systems used at thetactical and strategic levels in the organization.

Recall that tactical and strategic levels useaggregated data, over multiple time periods.TPS are often the source of this information.

TPS often populate data warehouse whichprovide on-line analytical processing (OLAP).

TPS D t E t S

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TPS Data Entry Screen

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Management InformationSystems

Systems that convert TPS data into informationfor monitoring performance and managing anorganization.

The MIS provides periodic information to

functional (operational) and mid-level (tactical)managers on routine matters such as operationalefficiency, effectiveness, and productivity.

Example: An HRIS can provide the HR managerwith percentages of people who are on vacationor call in sick. It can compare actual to forecastedvalues, or to an industry average.

MIS are used for planning, monitoring, andcontrol.

MIS t t

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MIS management report

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Methods for Managerial SystemsSupport (MIS or Tactical Level)

1. Statistical Summaries

2. Exception Reports

3. Periodic and ad hoc reports

4. Comparative analysis

5. Projections

6. Early detection of problems

7. Routine decisions

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Statistical Summaries

Statistical Summaries - summary of raw datacollected in TPS.

Examples:

Daily production

weekly absenteeism rate

monthly usage of utilities

Enhanced with graphics - a picture tells athousand words.

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Exception Reports

To relieve managers from the information-overload syndrome, an information system canextract (or highlight) exceptions.

Produced only when pre-established out-of-bounds conditions occur

E.G. a report that compares expenses to budget,all expense items that exceed the budget bymore than 5 per cent are underlined, colored, orseparated from the rest.

Exception reporting helps managers avoidperusal of incidental figures and concentrate ondeviations from the norm.

Challenge is to define the exceptions vs.normal.

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Periodic and Ad Hoc Reports Both statistical summaries and exception reports

can be done on a routine basis or on a demandbasis by users (ad hoc).

Ad hoc requested because they containinformation not available in the routine reports orbecause users can not wait for the scheduledtime of the periodic report.

As technology improves, the ability to requestand receive ad hoc reports will improve further.Managers should be able to view current or even

real-time information at any time they wish to doso.

Query languages to databases facilitate suchinquiry. Web access tools are providing thesame.

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Comparative Analysis

Managers like to see performance values andother information compared to their competitors,past performance, or industry standards.

Key Performance Indicators and otherCriticalSuccess Factors can be calculated fromprimarily internalinformation and compared withinformation externalto the organization. Thesemeasures are often found in Executive

Information Systems.

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Projections

In contrast to operational systems, which have ahistorical orientation, managerial informationsystems provide standard projections such astrend analysis, projection of future sales,projection of cash flows, or forecasting of marketshare.

Many projections will look at historical data andfactors in key environmental factors and factors

(e.g. consumer price index, inflation rate) topredict the future.

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Early Detection of Problems

By comparing and analyzing data, managerialsystems can detect problems in their earlystages.

For example, statistical quality control reports canreveal if a trend for reduced quality is developing.

This requires defining norms.

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Routine Decisions

Middle managers are involved in many routinedecisions.

They schedule employees, order materials and

parts, and decide what and when to produce. Standard computerized mathematical, statistical,

and financial models are available for theexecution of these activities.

St t i P t ti l f T ti

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Strategic Potential of TransactionProcessing and Management

Reporting Systems TPS should not be written off as efficiency-

oriented that requires nothing more thantechnical ingenuity

TPS can be enablers of major processinnovations when approached with a TQMperspective.

Redesigned business processes, supported byTPS, cut through functional business lines and

can ensure rapid and high-quality customerservice. They can be a source of competitiveadvantage and generate a wealth oforganizational knowledge.

St t i P t ti l f T ti

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Strategic Potential of TransactionProcessing and Management

Reporting Systems - 2 Examples:

The Ford Purchasing System highlighted inchapter 2.

NJITs Self-Registration System and other Letthe customer do it himself/herself systems.

TQM systems: customer-focus

process-oriented

total involvement

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Decision Support Systems

Help people make decisions by providing

access to data,

ietartive problem-solving

direct use of models,

and analysis tools with user-controllablemethods for displaying results.

Normally used in situations where decisions are

semi-structured and unstructured where no oneknows exactly how the decision should be made.

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IS Structured Decision-Making:Structuring loan authorization

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Decision Support Systems - 2

DSS grew out of dissatisfaction with the ability ofTPS and MIS to solve a new class of problems.

Repetitive Use of DSS: Insurance agents use

DSS to help customers choose policy options.Different scenarios are reviewed.

Non-repetitive use of DSS: models are used tohelp evaluate different business strategies.

Note the use ofwhat if?questioning.

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Graphical output from a DSS

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Decision Support Tools

The use of on-line data analysis tools to explorelarge databases of transaction data is called on-line analytical processing (OLAP). The idea ofOLAP grew out of difficulties analyzing the datain databases that were continually updated byTPS.

Periodic downloads of transaction data is storedin a separate database specifically designed tosupport analysis work. This database is calledthe data warehouse.

Use of OLAP tools to try and find relevant

patterns in large transaction databases is calleddata mining.

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Executive Information Systems

An EIS is a highly interactive systems whichprovides managers and executives flexibleaccess to information for monitoring operatingresults and general business conditions.

EIS attempts to take off where the traditionalMIS.

EIS reporting is tailorable to the user.

EIS - 1

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EIS - 1

(a) (b)

(c

)

EIS - 2

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EIS - 2

EIS - 3

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EIS - 3

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Basic Transaction Processing

Collection of Core Business Data

Management Information for

operational planning, decision-making

and control

Management Information

for tactical planningand decision-making

MIS

for

strategicand policy

planning and

decision making

TPS

MIS

DSS,

ES

EIS

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Office Automation Systems

Provide individuals with effective ways to processpersonal and organizational business data,perform calculations, and create documents.

Facilitates everyday information processing tasks Includes a wide range of tools such as

spreadsheets, word processors, presentationpackages, and personal databases. Sometimese-mail, v-mail, and fax are included.

When used for personal purposes, the work isless structured. When tools are included forgroups or teams, we often consider the toolsgroupware.

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Group Support Systems

Share information with different people workingon different parts of a task.

Controlling work flows and approval loops within

a group. Incorporating efficient methods of scheduling

meetings.

Other names used are Groupware andComputer-Supported Cooperative Work (CSCW)systems.

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Group Support Systems - 2

A form of Group Support systems called GDSS(Group Decision Support Systems) providesdecision support by providing structure formeetings.

The meetings can be held synchronously orasynchronously.

Features of EIES/VC are compatible with GDSS.

GDSS Room

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GDSS Room

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Communication Systems

Helps people work together by sharinginformation in different forms.

Examples: teleconferencing, video conferencing,

messaging systems. Sometimes called Computer Mediated

Communication Systems (CMC).

Sometimes the features are considered part ofgroupware or office automation systems.

f l f

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Options for teleconferencing

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Expert Systems

Information systems that support the work ofprofessionals in bounded, but complex situationswhere it is recognized that experts do better thannon-experts.

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Example: Information Systems in

a Human Resource Department

The boundaries between different classifications

of IS are not precise and several real-life systemscombine several of the categories.

Follow the descriptions of various HRISs in thenext few slides.

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Transaction Processing in anHRIS

Keep inventory of personnel

payroll preparation

compute salaries and incentive plans

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Management InformationSystems as part of an HRIS

Summary reports (e.g. average salaries in town)

performance tracking of employees

labor budget

preparation, monitoring, and analysis

short-term scheduling

match positions and candidates

fringe benefits monitoring and control

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Decision Support Systems in anHRIS

Special report (e.g. safety records, equalopportunity achievements)

Long range planning for human resources

design of a compensation plan quantitative support of labor-management

negotiations

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Expert Systems in an HRIS

Advice on legal and tax implications duringmanagement-labor negotiations.

Develop social responsibility plans

select training media design comprehensive training programs

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Office Automation in an HRIS

On-line job interviews and recruiting,

schedule meetings,

mailing lists,

schedule training,

electronic mail,

labor news and statistics received on-line

preparation of training materials

E i I f i S

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Executive Information Systemsin an HRIS

Exists at corporate level only

will measure key performance indicators of thedepartment (such as dollar per employee)

IS I C i i

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IS Impacts on Communicationand Decision Making

Transaction Processing Systems:

Communication:

creates database that can be accessed directly,

thereby making some person to personcommunication necessary.

Decision-Making:

gives immediate feedback on decisions while

processing transactions.

IS I t C i ti

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Management Information Systems andExecutive Information Systems:

Communication

Provides a basis of facts rather than options forexplaining problems and solutions

Decision Making

provides summary information and measures of

performance for monitoring results. May provide easy ways to analyze the types of

information provided in less flexible form by olderMIS

IS I t C i ti

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Decision Support Systems:

Communication:

analysis using DSS helps provide a clear

rationale for explaining decisions.Decision Making:

provides tools for analyzing data and buildingmodels

Analysis using a DSS helps define nd evaluatealternatives

Information System Examples in Three FunctionalAreas of Business

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Areas of Business

Sales,Manufacturing, and Finance

OFFICE AUTOMATION SYSTEMS

COMMUNICATION SYSTEMS

TRANSACTION PROCESSING SYSTEM (TPS)

MANAGEMENT INFORMATION SYSTEM (MIS)

AND EXECUTIVE INFORMATION SYSTEM (EIS)

DECISION SUPPORT SYSTEM (DDS)

EXECUTION SYSTEM

Reference Table 5.6 in Alter Textbook.

Transferable Features of IS

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OFFICE AUTOMATION SYSTEMSTransferable features:

Multiple forms of information, sometimes used in combination

Immediacy and interactivity of communication

Avoidance of unproductive work

COMMUNICATION SYSTEMS

Transferable features:

Emphasis on communication in addition to data processing

Consideration of social presence and other communication

characteristics when building systems

Recognition of the need to handle different combinations of same or

different time or place

Sharing information betwween different people working on different

parts of a task

Controlling work flows and approval loops within a group

Incorporating efficient methods of scheduling meetings

TRANSACTION PROCESSING SYSTEMS


Control

Procedures and rules

Repetitions

Transferable Features of IS - 2

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MANAGEMENT AND EXECUTICE INFORMATION SYSTEMSTransferable features:

Emphasis on measures of performance

Use of standard formats and measures by people in different departments

User friendly interface

User friendly methods for analyzing data

DECISION SUPPORT SYSTEMS


User-controlled interaction with computers

Use of models and data

Information systems applied to semistructured tasks

EXECUTION SYSTEM


Integrating computerized systems into doing the organizations value added work

Bringing knowledge in active form to people doing the work

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