Supplement:
Types of Business Information Systems
Q1 What Categories Can Business Information
Systems be Divided Into?
Business Information Systems can be divided into three categories: Operational, Collaborative
and Managerial. These classifications differ in:
 which employees tends to use the systems in each category, and
 the primary purpose of the systems: input, processing or output.
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Q2 What are Operational Business Information
Systems?
Operational business information systems tend to be used by lower level, non-managerial
employees. The focus of operational BIS is on input or data collection. Operational information
systems do process and output the data but the processing and output are very, very simple.
For example, processing may simply be ordering the data collected. Output is usually just a list
of all the data collected. Minimal calculations are performed or output. Often the output or
dump of collected data by an operational information system is used as input into an
information system with more sophisticated processing capability such as an MIS. Operational
BIS include Transaction Processing Systems and Process Control Systems.
Transaction Processing Systems or TPS are used to record data about everyday transactions.
These transactions can occur hundreds or thousands of times each day. Examples of
transactions include selling a product, employees punching in and out on a time clock, students
submitting assignments. Each of these transactions requires some data to be recorded. For
example, when a product is sold, we must capture something to identify the item, the quantity,
the sales price and the date of the sale. We may also want to capture the payment method,
the customer’s identifying information and the sales clerk/cashier’s identity. The effort in
developing a TPS is put into the input activities. We try to capture as much data as possible as
quickly as possible and with a minimum number of errors. Few calculations are performed
beyond those necessary to compliment the data collection. In our sales example, the TPS might
calculate a sales total for the customer and deduct the item sold from inventory. The TPS
would not go on to produce monthly sales calculations by product category or by salesman.
Instead, the individual TPS transaction data might be output to an MIS which would then
calculate the monthly summary totals. TPS focus on capturing data about business transactions
as the activities take place or shortly thereafter.
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Process Control Systems or PCS are used for constant monitoring. PCS are often used to
monitor some aspect of the environment. Again, the focus is on input: get the current reading.
Processing is very simple: comparing the current reading to preset boundaries. Output is also
very simply: sound a warning if current reading is outside preset boundaries. For example, a
PCS may monitor the quality of water in a holding pond at a water treatment plant. If
pollutants exceed a predetermined number of parts per million gallons, the PCS may sound an
alarm. Sometimes, PCS’s may be able to adjust other equipment in an attempt to bring the
environment back into acceptable ranges. A PCS is not activated as a result of an activity or
transaction. A PCS is turned on and stays on. It constantly monitors something. In a generic
sense, all information systems monitor something because all information systems collect data
about something, but we are not speaking generically here. Some students get confused and
think EVERY information system is a PCS. For example, they wrongly conclude that since the
Registrar has information systems that track their progress toward their degree, the Registrar
has a PCS. The Registrar, however, has not implanted a tracking device on your person. The
Registrar does not know your academic progress every second of every day since your
enrollment. The Registrar does not sound an alarm because you arrive to class late or forget to
complete a homework assignment. The Registrar will have little idea of how you are doing in
this course until the end of the semester when I report final grades. The Registrar does not
have a PCS even though it does collect data about your academic progress. A PCS knows the
current status of the object it is monitoring every second of every day that the system is up and
running.
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Q3 What are Collaboration Business Information
Systems?
Collaboration business information systems are used by all levels of employees. As the name
implies, collaboration BIS supports the efforts of groups of employees working to achieve
common goals. Collaboration BIS are a little different than the Operational and Managerial
categories in that the focus is not more on input, processing or output. Also Collaboration BIS
sub-categories tend to build on each other rather than adhere to distinct divisions.
Collaboration BIS are categorized into three levels: Communication, Content Management and
Workflow Control.
Communication systems support the transfer of data among workgroup members. The focus is
not on just one component; input, processing or output. Instead, all components are optimized
for quick and easy exchange of data. You have probably used Communication BIS extensively.
Email and instant messaging are examples of Communication BIS. Video conferencing and
programs like Skype are also Communication BIS.
Content Management systems focus on keeping track of the documents that team members
share and making those documents available to the entire team quickly and easily. Content
Management systems will have capabilities that allow multiple users to add, change and delete
content from various types of documents like word processed documents, spreadsheets,
databases and presentations. Document manipulations are made available to the entire
workgroup instantly. Content Management systems can also keep track of various versions of
the document noting the exact changes, who made the change, when the change was made
and any notes made about the change by the author. Such an audit trail makes it easy to revert
to previous versions of the document. Wiki’s such as Wikipedia are considered Content
Management systems. Google Docs is a free Internet-based Content Management system.
Groove is part of the Microsoft Office Suite you purchased and is also Content Management
software. You could use Google Docs or Groove the next time you have to produce a group
term paper or presentation. Content Management systems often include communication
capabilities along with the document control features.
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Workflow Control systems take a broader view of teams than just the documents they
produce. Workflow Control systems try to support the activities teams must engage in to
achieve their goal whether it results in the production of a document or not. Workflow Control
systems focus on shared scheduling. Who is responsible for each task in the project? When
should each task be performed? What is the status of each task? Microsoft SharePoint is an
example of a Workflow Control System. Workflow Control BIS may also include content
management and communication features.
Q4 What are Managerial Business Information
Systems?
Managerial BIS are used primarily by middle and upper level managers. The focus of
Managerial BIS is output and the processes necessary to produce the output. Managerial BIS
include Management Information Systems, Executive Information Systems, and Decision
Support Systems.
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Management Information Systems or MIS are the most common information systems in
business. MIS have simple processing. Calculations include basic arithmetic: addition,
subtraction, multiplication, division, average, minimum and maximum. MIS have routine
reports that are printed periodically: daily, weekly, monthly, quarterly, annually or on demand.
MIS reports are predetermined. That means that the reports are designed by a business
professional as well as an information systems professional usually at the beginning of the
MIS’s life. Once design is complete, these reports are run over and over. Each time the report
is run, the data may change but the layout, format and equations remain the same. An
example of an MIS report would be a daily sales report that lists the total amount of product
sold for a given day.
Executive Information Systems or EIS are similar to MIS in that the processing is simple, but the
outputs are not predetermined or routine. An EIS output may be generated only once for a
specific problem. An EIS output is not designed in a collaborative effort between IS professional
and business professional. Instead, the business professional decides what he/she wants to see
on the report and makes selections necessary to produce the output. Often, the executive may
run several quick reports before finding the one that meets the needs. For example, a store
manager may notice, from the MIS daily sales report, that yesterday’s sales were low. This
executive may turn to the EIS to create a report that shows yesterday’s sales broken down by
department. He might then decide the problem was with a particular department and choose
to see the sales for just the suspect department broken down by product line. Both the
department report and product line report are EIS outputs. You can think of EIS outputs as
customized reports generated from simple calculations.
Decisions Support Systems or DSS are similar to EIS in that the outputs are customized and
produced on demand. DSS processing, however, is complex. DSS calculations use higher math
such as algebra, calculus, statistics and linear programming. DSS outputs are usually designed
and generated by the executive without the help of an IS professional. DSS are used to answer
less structured questions than MIS, like predictions. An MIS might answer the question: What
was yesterday’s sales total. A DSS might answer the question: What might be next year’s sales
total given sales for the past few years and the recently reported increase in the unemployment
rate? DSS product customized reports from complex calculations.
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Q5 What’s the Difference Between Structured and
Unstructured Decisions?
We build business information systems to produce the information we need to make business
decision. Decisions can be divided into two types: Structured and Unstructured.
Structured decisions are those choices you make by following a specific set of instructions. If
three people face the same structured decision, they have access to the same data or
information, and they follow the same set of instructions or processing, therefore, they will all
arrive at the same conclusion. Structured decisions tend to be relatively easy decisions because
you know exactly how you’re going to arrive at a result. For example, if we manage inventory
and reorder points have been set for each item, we know we must place an order to restock an
item when the quantity-on-hand falls equal to or below the reorder point. The decision is made
by comparing two numbers. The routine outputs of an MIS usually help lower level managers
make structured decisions.
Unstructured decisions are those choices we make by following instinct or some other nondistinct guideline. Three people facing the same unstructured decision with access to the same
data or information may follow three different paths and arrive at three different conclusions.
Unstructured decisions tend to be the more difficult choices we face. Let’s take the inventory
management example again. Sometimes, reorder points have not been set for inventory items.
Let’s say you have a brand new item that you are selling. You’ve never sold this item before.
You have no market research that tells you how popular this item will be. You must decide how
many units of this item to order and stock. How do you pick that number? Guess. Use your
lucky number. Throw a dart. There’s no instructions to guide your decision therefore, this is an
unstructured decision. Middle and upper level management tend to make such decisions, often
based on experience, judgment and other intangible determinants. DSS outputs often support
unstructured decisions.
EIS outputs support both structured and unstructured decision making.
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