Information has become one of the primary factors in business success. We’re living in the Information Age, and those with the best, most current, most accurate information will win the day. Knowledge is power, and data information is just another example of that power.
However, it’s not enough to have vast amounts of good information; businesses and organizations need to have the best types of information systems to work with that information and produce the best outcomes. That’s why, in today’s data-heavy world, organizations need a solid information system.
So today, we’re covering six different types of information systems and how they’re applied.
We’ll begin with the fundamentals, namely “what is an information system?”
Information Systems Defined
Information systems are collections of multiple information resources (e.g., software, hardware, computer system connections, the system housing, system users, and computer system information) to gather, process, store, and disseminate information.
Tools such as laptops, databases, networks, and smartphones are examples of information systems. So yes, as you read this article, you’re employing an information system! Many people rely on various types of information systems to communicate with friends and family, bank or shop online, or look up information via a search engine.
Companies and organizations employ information systems to communicate and work with their customers and suppliers, manage the organization, perform essential business operations, and roll out and maintain marketing campaigns.
Six Major Types of Information Systems
Now that we have dealt with the basics, let's look at the six primary types of information systems. Although information systems are not limited to this list, typical businesses and organizations have the following six, each system supporting a different organizational level.
For starters, we have the transaction processing systems (TPS) at the operational level. Next are the office automation systems (OAS) and knowledge work systems (KWS), both working at the knowledge level. Next, the management level has the management information systems (MIS) and decision support systems (DSS), and we conclude with the executive support systems (ESS) at the strategic level.
Let’s explore the different types of information systems more in-depth.
Transaction Processing System (TPS)
Transaction processing is essential to helping businesses perform daily operations. Transactions are defined as any activity or event that affects the company, and include things like deposits, withdrawals, shipping, billing customers, order entry, and placing orders. TPS supports these business transactions.
Office Automation System (OAS)
OAS consists of computers, communication-related technology, and the personnel assigned to perform the official tasks. The OAS covers office transactions and supports official activity at every level in the organization. The official activities are subdivided into managerial and clerical activities.
Office automation systems include the following applications:
- Email: The email application also covers file attachments such as audio, video, and documents.
- Voice Mail: This application records and stores phone messages into the system’s memory and can be retrieved anytime.
- Word Processing: Word processing covers the creation of documents, including memos, reports, letters, and anything else that’s printable electronically. The created text can be copied, edited, and stored via word processing commands, and checked for grammar and spelling, line and word counting, and headers and footers.
Knowledge Work System (KWS)
The KWS is a specialized system that expedites knowledge creation and ensures that the business's technical skills and knowledge are correctly applied. The Knowledge Work System aids workers in creating and disseminating new information using graphics, communication, and document management tools. Here are some examples of KWS:
- Computer-Aided Design Systems (CAD): CAD systems automate design creation and revision via computers and graphics software, especially in the manufacturing and tooling processes.
- Financial Workstations: These systems pull and combine data from many different internal and external sources, covering research reports, market data, and management data. Financial workstations can rapidly analyze huge amounts of financial data and trading situations.
- Virtual Reality Systems: These systems take the CAD system to the next level, using interactive graphics utilities to create realistic computer-generated simulations. VR systems are typically found in scientific, educational, and business circles.
Management Information System (MIS)
Middle managers handle much of the administrative chores for day-to-day routines and performance monitoring, ensuring that all the work is aligned with the organization's needs. That's why MIS is such a valuable tool. Management Information Systems are specially designed to help middle managers and supervisors make decisions, plan, and control the workflow. The MIS pulls transactional data from various Transactional Processing Systems, compiles the information, and presents it in reports and displays.
Additionally, these reports can be produced monthly, quarterly, or annually, although MIS can have more immediate reports (e.g., hourly, daily).
Decision Support System (DSS)
The DSS is a management-level, interactive computer-based information system that helps managers to make decisions. The Decision Support System specifically gives middle managers the information necessary to make informed, intelligent decisions.
Decision Support Systems use different decision models to analyze or summarize large pieces of data into an easy-to-use form that makes it easier for managers to compare and analyze information. Often, these summaries come in the form of charts and tables.
Executive Support System (ESS)
- The ESS is like the MIS but for executive-level decision-making. The decisions involve company-wide matters, so the stakes are higher. Consequently, they demand more insight and judgment.
The ESS provides greater telecommunication, better computing capabilities, and more efficient display options than the DSS. Executives use ESS to make effective decisions through summarized internal data taken from DSS and MIS and external sources. In addition, executive support systems help monitor performances, track competitors, spot opportunities, and forecast future trends.
What Are the Main Applications of Information Technology?
Although the system application descriptions hint at how they are best applied, let’s spell out some of the chief information technology applications.
Although companies need good information to create better goods and services, they must also have a reliable, cost-effective system to store the information that allows rapid data access when required. In addition, a sound information system helps businesses keep logs of essential activities and store valuable assets such as communication records, revision histories, activity logs, operational data, and other relevant documents.
By storing information in an organized manner, businesses understand why problems and roadblocks occur and how to solve them.
Rolling Out New Products and Services
Although there is an ever-increasing demand for new goods and services, any business that wants to stay competitive needs information to make better decisions and consequently offer better products. Information systems help analyze independent processes and organize the company's work activities. So, an information system allows a business to better understand how it can design, create, and sell services or products that people want.
Simplified Decision Making
It’s challenging enough to make decisions, let alone consistently making the exact, right decisions. There are no guarantees that an organization’s decisions will work. However, information systems help take some of the pain out of the process by offering information rapidly and easily.
Improving Employee Behaviors and Attitudes
Information systems can be effectively employed to improve communication between employers and employees. An efficient information system empowers employees by making relevant information more accessible, helping them become a part of the decision-making process. This empowerment boosts motivation and increases commitment to the project or assignment.
Here are some broad categories that highlight types of information system applications:
- Communication. Information system applications allow rapid data sharing on a global scale.
- Education. Information systems help make remote learning easier (particularly useful during pandemics) and make people more comfortable with tech advancements such as smartphones, tablets, and other network devices.
- Employment. The advent of information systems has directly resulted in creating new positions such as data analyzers and cyber-security experts.
- Finance. Information systems make the transfer of funds more manageable and more secure.
- Healthcare. Thanks to information systems, healthcare providers can access vital medical records faster.
- Security. Information systems make it easier to employ data safeguards to reduce the likelihood of a data breach or malware.
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Would You Like a Career in Cyber-Security?
Information drives today’s business world, and that means we need to keep that data safe. But, unfortunately, many elements out there will readily hack into different types of information systems and steal or corrupt data, perhaps even shutting down an entire business operation.
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