Four Major Types of Systems

Four Major Types of Systems

Figure 2-2 shows the specific types of information systems that correspond to each organizational level. The organization has executive support systems (ESS) at the strategic level; management information systems (MIS) and decision-support systems (DSS) at the management level; and transaction processing systems (TPS) at the operational level. Systems at each level in turn are specialized to serve each of the major functional areas. Thus, the typical systems found in organizations are designed to assist workers or managers at each level and in the functions of sales and marketing, manufacturing and production, finance and accounting, and human resources.

         

FIGURE 2-2 The four major types of information systems This figure provides examples of TPS, DSS, MIS, and ESS, showing the level of the organization and business function that each supports.

          Table 2-1 summarizes the features of the four types of information systems. It should be noted that each of the different systems may have components that are used by organizational levels and groups other than its main constituencies. A secretary may find information on an MIS, or a middle manager may need to extract data from a TPS.

TABLE 2-1 Characteristics of Information Processing Systems

TRANSACTION PROCESSING SYSTEMS

Transaction processing systems (TPS) are the basic business systems that serve the operational level of the organization. A transaction processing system is a computerized system that performs and records the daily routine transactions necessary to conduct business. Examples are sales order entry, hotel reservation systems, payroll, employee record keeping, and shipping.

          At the operational level, tasks, resources, and goals are predefined and highly structured. The decision to grant credit to a customer, for instance, is made by a lower-level supervisor according to predefined criteria. All that must be determined is whether the customer meets the criteria.

          Figure 2-3 depicts a payroll TPS, which is a typical accounting transaction processing system found in most firms. A payroll system keeps track of the money paid to employees. The master file is composed of discrete pieces of information (such as a name, address, or employee number) called data elements. Data are keyed into the system, updating the data elements. The elements on the master file are combined in different ways to make up reports of interest to management and government agencies and to send paychecks to employees. These TPS can generate other report combinations of existing data elements.

FIGURE 2-3 A symbolic representation for a payroll TPS A payroll system is a typical accounting TPS that processes transactions such as employee time cards and changes in employee salaries and deductions. It keeps track of money paid to employees, withholding tax, and paychecks.

          Other typical TPS applications are identified in Figure 2-4. The figure shows that there are five functional categories of TPS: sales/marketing, manufacturing/production, finance/accounting, human resources, and other types of TPS that are unique to a particular industry. The United Parcel Service (UPS) package tracking system described in Chapter 1 is an example of a manufacturing TPS. UPS sells package delivery services; the TPS system keeps track of all of its package shipment transactions.

FIGURE 2-4 Typical applications of TPS There are five functional categories of TPS: sales/marketing, manufacturing/production, finance/accounting, human resources, and other types of systems specific to a particular industry. Within each of these major functions are subfunctions. For each of these subfunctions (e.g., sales management) there is a major application system.

          Transaction processing systems are often so central to a business that TPS failure for a few hours can lead to a firm’s demise and perhaps that of other firms linked to it. Imagine what would happen to UPS if its package tracking system were not working! What would the airlines do without their computerized reservation systems?

          Managers need TPS to monitor the status of internal operations and the firm’s relations with the external environment. TPS are also major producers of information for the other types of systems. (For example, the payroll system illustrated here, along with other accounting TPS, supplies data to the company’s general ledger system, which is responsible for maintaining records of the firm’s income and expenses and for producing reports such as income statements and balance sheets.)