As a student in the online Bachelor of Science (B.S.) in Computer Information Systems (CIS) program from Florida Institute of Technology, you will explore many types of information systems as well as their unique applications in different use cases. Logically, expertise in variances between information systems and their effective integration into organization-wide information technology (IT) management is foundational to any CIS job, be it a data analytics manager role or an enterprise resource planning (ERP) specialist position.
Imagine working for a large coffee shop chain. From the number of orders taken per day at one store to the overall company’s quarterly performance, data must be processed and analyzed at all levels of the organization for managers to make sound decisions. If you’re a store manager, inventory information may be what you need to decide what product to order more of. As a chief executive, having an overall picture of the company’s performance could be the information you require to evaluate diversification strategies. How can you store and classify this information so that you can make the informed decisions you need to as a manager?
The Pyramid Model for Classifying Information
One of the most widely used systems for classifying different information systems is known as the pyramid model. The pyramid model classifies information based on the tasks and responsibilities that are found in a hierarchical organization. Think of a hierarchical organization as a pyramid that can be divided into three levels: operational level, middle management level and executive, or senior, level.
Managers residing at these three levels have different information needs and consequently utilize information systems that satisfy their specific information needs. Systems analysts help select and implement information systems according to organizational and end-user needs.
Within the operational, middle management and executive levels are five types of information systems. Note that CIS professionals refer to these five types of information systems using various names, depending on the specific application and language used. Their placement in the pyramid may also vary due to application and visual representation.
Operational Level
Operations managers run the day-to-day business operations and make routine decisions such as a coffee shop manager wanting to know whether to order more coffee or not for next week. Transaction processing systems and process control systems are two types of information systems used at the operational level.
1. Transaction Processing System
Operational managers use transaction processing systems that can track and capture automated or semi-automated transactions between an employee and a customer, an employee and a supplier, or even between two employees of different departments within the same organization. The main job of a transaction processing system is to validate, sort, merge, calculate and update data from these transactional events and produce summary reports or lists from which decisions can be made.
Examples of transaction processing systems include:
- Payroll systems
- Order processing systems
- Reservation systems
- Systems for payments and fund transfers
2. Process Control Systems
Another kind of system commonly used at the operational level is the process control system. Operational managers and others use process control systems to monitor and control physical processes. An example would be to test the temperature of food during preparation. Unlike transaction processing systems, process control systems take their input data from sensors to generate reports that are analyzed by an operational manager to adjust the business process. Process control systems are commonly found in industrial and manufacturing applications.
Examples of process control systems include:
- Assembly lines
- Petroleum refineries
Middle Management Level
Middle-level managers make tactical decisions that assist in implementing the strategy of the organization. Tactical decisions involve decisions related to developing divisional plans, structuring workflows, establishing distribution channels and acquisition of resources, such as personnel, materials and money. Using the coffee shop example, a tactical decision would be whether to open earlier in the morning or on the weekends to attract new customers. Two types of information systems that can be used by middle-level managers are management information systems and decision support systems.
3. Management Information Systems
Management information systems are built on data provided by transaction processing systems. They extract their data from databases located in different departments to compile reports such as sales analysis, inventory level reports or financial statements. They typically have little or no analytical capability and are used to provide reports on the firm’s past or current performance rather than the future performance of an organization.
Examples of management information systems include
- Sales management systems
- Inventory control systems
- Budgeting systems
- Human resource management systems
Note that management information systems may also refer to a department that oversees hardware and software integration or the academic study of management-supporting information system applications.
4. Decision Support Systems
Decision support systems, on the other hand, are interactive systems that can help solve ill-structured or semi-structured problems. An example of an ill-structured problem for the coffee shop would be whether to open a new coffee shop at another location. Decision support systems have analytical and/or modeling capabilities to analyze existing structured information and they allow managers to project the potential effects of their decisions into the future. They may also support the exchange of information within the organization, so they are also classified as knowledge management systems.
Examples of decision support systems include:
- Group decision support systems
- Computer-supported cooperative work systems
- Logistics systems
- Financial planning systems
Executive Level
The top-most tier is the senior executive level, also known as the C-suite. Management at this level comprises chief officers of various functions such as executive (CEO), operational (COO, information (CIO) or financial (CFO). The C-suite makes strategic decisions that affect and shape the future survivability of an organization. An example of a strategic decision for the coffee shop would be to decide whether to remain in the café business or not. Long-term forecasts of business turnover set against likely market conditions can help the senior management of the coffee shop determine whether they should close the café business or not.
5. Executive Information Systems
Executive information systems help executives and other senior managers analyze the environment in which the organization operates to identify long-term trends and to plan appropriate courses of action. The information in such a system is often weakly structured and comes from both internal sources, such as its own databases or data warehouse, and external sources, such as data from customers, suppliers or other governmental databases.
Executive information systems tend to be highly individualized and are often custom-made for a particular client group. However, many off-the-shelf executive information systems packages do exist. And many enterprise-level systems offer a customizable executive information system module. A straightforward digital dashboard with a real-time view of the performance of an organization is a common feature of an executive information system. As with most information systems, many executive information systems now integrate AI-driven analytics that can offer executives complex and accurate insight based on natural language queries.
Information systems are one of the many industry topics explored in Florida Tech’s information technology degree programs. Gaining facility with these systems and their applications is key to advancing your career in computer and IT management fields.
Learn more about Florida Tech’s online B.S. in CIS program.
