A sales transaction, for example, may include the customer’s name, type of merchandise purchased, price paid and the mode of payment such as cash or credit card. The primary purpose of the systems is to record, process and store information about transactions that take place in the various functional areas of business for future retrieval and use.
Transaction systems exist for the various functional areas in an organization, such as production, marketing, accounting, quality control, human resources, finance, research and development and so on.
Recently, optical scanning is commonly used as a part of transaction processing system. For example, in a grocery store, optical scanning is used to automatically record each unit sold, its selling price and so on.
Management information systems are general purpose systems that provide managers with vital information about organizational activities. It is an organized collection of people, procedures, data bases and computers that provide routine reports to decision makers. The input to an MIS comes primarily from transaction processing systems and the output is simply a summary report of these transactions. For example, a bank manager may get a summary report of the daily transactions of deposits and withdrawals at his branch. (MIS is discussed in more detail in the later part of this chapter.)
Decision support systems provide managers with data and tools for decision making for specific semi-structured and unstructured problems. For example, if one company wants to acquire another company, then this would be a unique problem rather than a routine problem requiring a unique solution.
A DSS accesses and processes vast amount of internal and external data and integrates these data with various decision making models, in order to produce alternative solutions to a given problems. Then the decision maker can select the best alternative.
While MIS primarily draws information from internal transaction system, a DSS is more capable of analyzing internal as well as external information in an integrated way.
An ESS is a “specialized” decision support system, primarily designed to be used by top executives of a company. The information is gathered from internal as well as external sources. This information is analyzed by sophisticated software and the output, in a summarized form, is used by top management engaged in long-range planning, crisis management and other strategic decisions.
Top level managers expect an ESS to provide them with information needed to:
i. Understand their organization’s position in the industry.
ii. Build communication based networks with people inside and outside the organization.
iii. Monitor situation of special interests through specified details.
iv. Deal with multiple problems simultaneously.
Expert systems are information systems in which computer programmes store data and rules to replicate the abilities and decisions of human experts in specialized fields. They are built on a framework of known facts and responses to situations. They may incorporate such knowledge and problem solving skills as that of a nuclear scientist or a physician.
An ES has three main components. These are:
i. A Knowledge base:
It serves as a store house for knowledge and experience of experts in a given field. For example, the experience of a car mechanic would serve as a knowledge base for an expert system designed to solve car problems.
ii. Inference engine:
It is a set of programmed rules of interconnections between different parts of knowledge to solve a given problem. It selects the appropriate knowledge and application related to the specific problem.
iii. User interface:
In consists of tools such as menus, graphics and so on that help users to interact with the system.
Expert Systems are a branch of an area known as “artificial intelligence” (AI). AI refers to the use of the computer to simulate characteristics of human thought by developing computational approaches to intelligent behaviour.
Office automation systems serve the needs of those who are primarily involved in processing of data such as word processing specialists, file clerks and so on. These systems support the automation of various managerial and clerical activities. According to Gupta, office automation systems include:
i. Word processing:
Creating written documents such as letters and reports on a computer using a software programme.
ii. Desktop publishing:
Using software with sophisticated publishing capabilities to create documents.
Sending mail electronically from one computer to others.
iv. Video conferencing:
Using group oriented systems that allow users in different parts of the world to discuss matters in a televised face-to-face communication.
v. Fascimile transmission:
Using faxes as instruments in transferring information over phone lines to users anywhere in the world.
Because of the importance of MIS, a more detailed discussion on the system is necessary. Information provided to managers through such information systems helps them to plan, organize, direct and control both resources and operations. It puts managers in touch with the current conditions and emerging trends relevant to the needs of their organizations.