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Most Popular Types of Information Systems and Their Applications

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29th Jul, 2022
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Most Popular Types of Information Systems and Their Applications

Organisational growth comes with numerous roadblocks, be it for a small or a large company. It calls for escalating responsibilities, enhanced communication facilities, proper planning, growth optimisation, and so on. As more employees are hired, managers are put in place to monitor the activities, and more business sectors are developed to cater to specific functions. Such a growth calls for a proper information system to be in place, which facilitates smooth communication and collaboration between staff and managers.

In this information age, it is vital to have access to information and its proper management and usage. This is where an information system comes in. This piece covers the most popular information system types and their applicability.

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What is an Information System?

An information system is a bundle of various information resources, like hardware, software, etc., aimed to gather information, followed by its processing, storing, and distribution. While you are going through this article itself, you are putting some examples of information systems to use, like your laptop or mobile, or computer.

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Businesses and other organisations depend on these systems to communicate with their suppliers and customers and compete with their rivals. Even the smooth running of a company’s supply chain depends on an information system.

Information System Classification

Classification by organisational level is the most common segregation of information systems. Understanding the levels gives a vivid picture of the information required of any user at that level.

Level of operational management: This level deals with the company’s daily business transactions, and the users have rules guiding their decisions. Thus, they have structured decisions. For instance, a store offers credit facilities to customers but has a credit policy posing a borrowing limitation. Users in this level decide to extend credit only after they are aware of the credit information system.

Level of tactical management: This level includes the supervisors, mid-level managers, etc., who are responsible for monitoring activities of the users in operational management. At this level, the users make semi-structured decisions, guided by established guidelines and their judgement. For instance, after studying the customer’s payment history information, the supervisor is responsible for creating an exception and uplifting a customer’s borrowing limit.

Level of strategic management: Being the senior-most level, the users here create unstructured decisions. Their decisions are dependent upon the information collected from the other two levels.

Popular Information Systems

Now that you know what information systems are and their classification, we have listed six types of information systems. Although the types are not limited to these six, they are the most popular and widely used in business organisations.

1. Transaction Processing System

Transaction Processing System or TPS is responsible for data processing, which arises from business transactions. Every business operation includes daily business transactions, like order entries, goods receipts, record keeping of the company’s employees, hiring, etc. Transaction Processing System has the sole objective of providing transaction details to keep the company’s records updated.

Applications:

Payroll system: This system helps process staff salaries, manage loans, etc.

Stock control system: This system helps a company keep pace with their inventory level stocks.

Bill system: This system helps in keeping track of sales amounts.

2. Office Automation System

The Office Automation System, abbreviated as OAS, includes computers, communication-allied technologies, and various personnel involved in official tasks. OAS is responsible for supporting official functions at every level, ranging from clerical to managerial. Activities performed with the help of the Office Automation System include emailing, office calendar maintenance, document printing, etc. Office Automation System works to enhance inter-departmental communication for smoothly performing any task.

Applications

Voice mail: This calling service helps record and save telephone messages, which can be retrieved per the user’s needs.

Email: This application enables message or document transfer (or any other form of data like images, videos, audios, etc.) with the aid of communication lines.

Word processing: It is used to prepare electronically printable materials, like documents, memos, reports, etc. The keyboard helps in text generation and is displayed via the machine’s display unit. The texts in any word processing can be modified, saved, and reproduced by using commands, and it also facilitates grammar and spell checks, index creation, etc.

3. Knowledge Work System

Knowledge Work System, abbreviated as KWS, enhances knowledge creation and ensures that both technical skill and knowledge are correctly integrated into your business. KWS helps in generating and propagating new information with the use of communication, analytical, document management, and graphical tools. It is vital that KWS has easy accessibility to external databases and a user-friendly interface, ensuring that users can access information swiftly.

Applications:

CAD or Computer-Aided Design system: This unique system automatically creates computer graphics and designs. CAD can provide specific designs required in the tooling-manufacturing process.

Financial workstation: These systems are responsible for combining large chunks of data, both from external and internal sources, market and management data, research reports, etc. These systems can analyse large data volumes in an instant.

Virtual Reality Systems: This system uses various aural, visual and haptic displays and possesses capabilities beyond CAD.

4. Management Information System

MIS or Management Information System is a valuable tool for middle managers because they are often required to look into admin duties, monitor the employee performances, and make sure they are in tune with the company’s needs. This system helps these managers to plan, control and decide the workflow by pulling out data from multiple TPSs. MIS is responsible for compiling this data and its corresponding presentation. MIS can produce various reports, like ad-hoc reports, summary reports, etc.

Applications:

  • HR management system
  • Sales management system

5. Decision Support System

Decision Support System or DSS is directed towards semi-structured decision-making of the managers in an organisation. DSS helps to summarise (in charts, tables, etc.) or analyse vast chunks of information into simpler forms so that decision making on the manager’s part becomes easier. For instance, a DSS in a bank will help the managers interpret and analyse varying trends of loans or deposits and finalise a yearly target.

Applications:

  • Inventory management to itemise an organisation’s assets and boost profit.
  • Optimising sales in a company.
  • Planners can use DSS to monitor the existing sales pattern in a company and design sales projections.
  • Farmers can use DSS tools to plan their crops by analysing the best season for plantation and harvesting.
  • DSS has been used in certain states for weather forecasting and hazard forecasting.

6. Executive Support System

ESS or Executive Support System is much like MIS, except it is for decision-making at the executive level. With higher stakes, decisions demand to be insightful and require more judgement. Thus, ESS aims to provide better communication, enhanced computation capacities, and excellent display options. To make the decisions better and more effective, ESS uses internal MIS DSS data (summarised) and external data (e.g., dynamic tax laws or emerging competition, etc.).

Applications:

  • In staffing departments of organisations.
  • Accounting or billing departments.

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Profile

Pavan Vadapalli

Blog Author
Director of Engineering @ upGrad. Motivated to leverage technology to solve problems. Seasoned leader for startups and fast moving orgs. Working on solving problems of scale and long term technology strategy.

Frequently Asked Questions (FAQs)

1What are the critical components of an information system?

Any information system includes the following five components: Hardware, Software, Human resource, Databases, Telecommunications

2How can I apply information technology in business?

A few vital applications of information technology in business are: Keeping track of logistics, Introducing new goods and services to the market, To make decision-making in firms or companies simpler, To upgrade communication both within the departments and inter-department.

3Which fields use information systems?

Information systems have made their way to multiple fields, like: 1. Finance, resulting in more manageable fund transfer with an extra layer of security. 2. Healthcare, resulting in easier access to medical records, 3. Education, making learning easier, specifically remote learning.

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