Types of Information Systems Used in Business - MBA Knowledge Base (2024)

The implementation of the information system in the development of the business is most necessary now days. For most business, there are varieties of requirements for information. In every organization different level of management need different type of information for development of business. For example, senior management needs information to help with their business planning. Middle management needs more detailed information to monitor and control business activity. The employees at lower management need information to help them to perform their duties.

In this global world information systems are playing important role in any organizations to meet their strategic goals. For the development of the business it very important to have good information system in each department of organization such as accounting, finance, marketing and human resource department to perform business operations. In addition, the technical terms of information system refers to the interaction between algorithmic process and the technology. The meaning of the information system is not just the technology used by organization, but also it refers the way in which organization uses the technology for their business process.

Information system is sets of interrelated component that collect process and store information to company’s management in decision making. Companies that are using up to date information system to evaluate internal and external information are gaining advantage over the firm. For example, a sophisticated information system helps companies to monitor employees, to keep manager and employee to coordinates activities among divisions. Furthermore good information system provides the facilities of direct communication between firm and suppliers, manufacturers, dealers and marketers. Using Information system together, they can create a valuable chain in organization. An information system enables companies to store, retrieve and control valuable information. In upcoming years, the use of good information system in organization will be no longer an option. It will be compulsory in development and success of business.

There are various kind of information are available, which can be implement in organization for the development of the business. The main kinds of information system use in businesses are Executive Support System (ESS), Management Information System (MIS), Decision Support System (DSS), Knowledge Management System (KMS), Transaction Processing System (TPS) and Office Automation System (OAS). The different level of management in organization needs different level of information system.

Executive Support System (ESS)

The Executive support system helps to senior management to decide business strategic plan and to make decision based on strategy. ESS helps to gather and analyses the internal and external information used in businesses. ESS is a like instrumental panel in air craft co*ckpit which is showing the status of all the key business activities to senior management team of organization. ESS typically involves lots of data analysis and modeling tools to help in strategic decision making. In addition, some ESS provides the analysis tool that predicts a series of performance outcomes overtime using input data. This type of ESS is useful to executive staff, it provides possible outcomes and quick reference to statistics and numbers needed for decision-making. Now days there are software wanders who offer pre design Executives support system packages suitable to one particular organization. They also provide the facilities to customize the Executive support system to meet needs of particular organization.

Management Information System (MIS)

A management information system is a system or process that provides the information necessary to manage organization effectively. MIS is planned system of collecting; processing and storing Management information system is mainly concern with the internal source of information in organization. Management information system analyzes data captured from transaction processing system and creates reports based for decision making. The report generate by MIS will be used by middle management and operational supervisor. MIS is very useful to generate reports for example, financial statements , inventory status report, performance report for routine or non routine processes. It is very important to manage the flow of information in organization for the future development of the business. The Management information system helps to big organization to manage the information interchanging between different departments such as store and distribution center.

Decision Support System (DSS)

Decision Support Systems (DSS) are specifically design to help management for decision making in situation where there is uncertainty about possible outcomes of those decision. It is important to implement decision support system in business because it supports business and organizational decision making activities. The properly designed decision support system is an interactive software based system intended to help decision maker to compile useful information from raw data. Decision support system helps to enhance the abilities of decision maker or group of decision maker to make decision in favor of company’s development. Furthermore, Decision support systems are call of computerized information system that supports decision making activities. The decision support system can be classified in to five different types which are:

1. Communication driven DSS
2. Data driven DSS
3. Document driven DSS
4. Knowledge driven DSS
5. Model driven DSS

The above different types of decision support system are used to make decision based on different situation. The implementation of Decision support system in business helps to make effective decision in order to make business development.

Knowledge Management System (KMS)

Knowledge Management system helps businesses to create and share information. This types of system used in organization where employee creates knowledge and expertise which can then be shared by other people in organization to create commercial opportunities. The examples of the knowledge management systems are Firms of Lawyers associated with organization, Accountants and management consultants Knowledge system generally built around which allows efficient categorization and distributions of knowledge. Knowledge Management system enables employee to have ready access of organization’s documents’ based of fact. Now days, it not an optional to use knowledge management System for an organization whether it is public or private big or small. Knowledge management system provides aid to organization to creating, sharing and processing knowledge.

Transaction Processing System (TPS)

Transaction processing system used to process routine transaction efficiently and accurately. One organization may have more than one transaction processing systems for example billing system to print invoice for customer, payroll and text calculation system, raw material requirements calculations system, Stock control system, Transaction processing system helps to manage data that must be in consistent state. In addition, the daily transaction done by the Transaction processing system can help to upper level management to make decision for the future business. For example, by analyzing customer transaction data management can identify the customer’s purchasing behaviors. TPS also help to maintain relationship with customers based on transaction. There are many super markets which are using transaction processing system to maintain their daily transaction.

Office Automation System (OAS)

Office automation systems are systems that help to improve the productivity of employee who are responsible to process data and information. There are many office automation system exist in market which can be easily implement in organization to improve the productivity of employee. The examples of the well know office automation system are Microsoft office, Microsoft works and more. OAS helps in optimizing or automating existing office procedure. Most of companies are using office automation system to create data sheet, reports, and statements. The well known Office automation system used by most of organizations is Microsoft Package including MS Office, PowerPoint, and Excel.

In nutshell, now days the revolutionary change in the area of information technology has changed the way of business in each industries. Complete computer based information systems provides the support to organization to maintain internal and external source of information. In addition, to over come cut throat competition to it very important for each organization either to implement computer based information system or to adopt existing computer based information system package. The use of information system gives advantage to each level of management in organization to plan strategy and decision making. The use of Computer based information system will not be optional anymore in future. It will be compulsory for organization to implement information system for business development.