Supplement 2
Types of Information Systems

 L E A R N I N G    O B J E C T I V E S

After studying this supplement, you should be able to:


Traditionally, organizations have considered four types of information systems: transaction processing systems, management information systems, decision support systems, and expert systems. We will further break down decision support systems into those for individuals, groups, and executives. Then we will briefly outline two categories of information systems, scientific (or technical) computing and office automation systems, which are recognized in many organizations.


The first type of information systems built were transaction processing systems (TPS), which are computer-based versions of manual processes used in organizations. Transaction processing systems automate the handling of transactions, which are individual simple events in the life of an organization. For example, in a sporting equipment store, a transaction occurs when a customer purchases a basketball. A record is made of each transaction that occurs. All of these records were originally kept on paper. In the early days of computerization, someone would later transfer the records to computer punched cards or to magnetic tape, so that the computer could then read and manipulate the data. Now, for medium- to large-size organizations, most transactions are captured in computer-readable form immediately at a point-of-sale terminal (see Figure 1).

When a transaction processing system processes an organization's transactions, each transaction is available for recall later. More importantly to the organization, the number and volume of transactions can be calculated for a given time period. For example, processing the number of sales per hour or per day at a sporting equipment store allows the store to more easily monitor inventory and thus more effectively manage inventory levels. Transactions also provide the official record of business activities, which drive other systems such as those which bill customers, pay vendors and employees, and reorder inventory or raw materials or stocked goods.


Management information systems (MIS) are designed to take the relatively raw data available through a TPS and convert them into a summarized and aggregated form for managers, usually in a report format (see Figure 2). Several types of reports can be produced. Summary reports present all activity over a given time period, geographic region, or other categorization in aggregate form. Exception reports only present information that is out of normal ranges. On-demand reports present anticipated summaries only when a manager wants or needs to check the status of activities. The precise contents of on-demand reports may change depending on the manager's immediate need (for example, only specified time periods, product lines, or geographical regions might be included). Ad hoc reports provide specific information as needed, the contents of which may change depending on the manager's needs. Ad hoc reports are unanticipated and may be one-time in nature.


Decision support systems (DSS) are designed to help organizational decision makers make decisions. DSS usually have three major components: a database, a model base, and a dialogue module (Sprague, 1980). Figure 3 shows these components.

By running the data and possible decisions through one or more models, the decision maker can compare possible solutions to the problem at hand. The DSS allows the manager to test or propose different solutions and see what the results may be before committing to any particular model.

The first decision support systems were designed to support individual decision makers. When computing technology was more primitive and more difficult for non-technical people to use, an intermediary often used the DSS for the manager. The intermediary was usually a staff person who had the computer skills the manager lacked to work with the DSS. The manager would then use the output to help decide which course of action to take. Due to early technical limitations, each individual or specific DSS had to be designed and built one at a time. Now, many decision support systems run on microcomputers. The models are relatively easy to construct, change, and interpret using such software programs as electronic spreadsheets. Tools like spreadsheets and fourth-generation language (4GLs) are called DSS generators because they are general purpose tools that can be used to develop many specific DSS with relative ease.

Group DSS

In the late 1970s, some companies began to develop DSS that would support groups of decision makers. All of these commercial systems failed. However, in the mid-1980s, group DSS (GDSS) were resurrected at several universities, including those in Arizona, Indiana, Michigan, and Minnesota (see Nunamaker, et al., 1991). Using a GDSS, a group of decision makers can use special software to contribute to a problem's solution. The most common form of a GDSS consists of a special-purpose room with a microcomputer for each group member and special presentation equipment (
Figure 4). The microcomputers are networked together so that group members can share information. Group members can also view aggregates of their work, such as the results of a group vote, on large screens. Researchers and packaged software houses, like Lotus Development Corp., are now working on making GDSS available and useful outside of these special-purpose rooms so that group members can join the process from their own offices on their own schedule.

Executive Support Systems

Another relatively new form of DSS is referred to as executive support systems (ESS) or executive information systems (EIS). Executive support systems are designed specifically for high-level executives who
  1. may not have many computer skills
  2. have very little time to devote to any given situation
An ESS is relatively easy to manipulate and usually provides graphical presentations on several different pre-defined topics (see
Figure 5). Some executive support systems allow an executive to drill down into the data to a deeper, more specific level. For example, an executive who sees that sales have decreased for the month in the North American market may want to find out which segments of the market are doing best. The executive would then ask for the same information by segment and, seeing that the Western U.S. segment had the best performance, the executive may then want to see which sub-region had the best performance. Once the information is presented at this level, the executive would see that Southern California had done the best. The executive may then want to examine the information by city, and so on.


Different from any of the other classes of systems we have discussed so far, expert systems (ES) attempt to codify and manipulate knowledge rather than information. By knowledge, we mean understanding acquired through experience, deep and extensive learning. Expert systems are based on principles of artificial intelligence research. Artificial intelligence is the branch of computer science devoted to creating intelligence with machines. Typically users communicate with an ES through a dialogue during which the ES asks questions and the user supplies the answers. The answers are then used to determine which rules apply and the ES finishes with a recommendation based on its rules. One of the most difficult parts in building an ES is acquiring the knowledge of the expert in the particular problem domain. Specially trained people called knowledge engineers perform this knowledge acquisition. Knowledge engineers are similar to systems analysts; however, they are trained to use different techniques, as determining knowledge is considered more difficult than determining data.


Although we are concerned in this book primarily with the types of information systems used in the administration of organizations, for completeness we should also mention some other types of information systems. We will not describe how such systems are developed, however, as an understanding of this type of systems development requires skills beyond the scope of the book.

One broad classification of systems is based on scientific and engineering computing. These systems support engineers in the design of new products or improvement of older ones. Their computer support might require computer simulations or analytical models of physics or chemistry properties. Computer-aided design (CAD) systems allow engineers to create graphic simulations of the products they design. Engineers can then manipulate and observe these simulations, allowing the engineers to see what a product will look like and how the produce will react without having to build the product first. Related to CAD is computer-aided manufacturing (CAM) systems. These systems help automate and control the manufacturing process in factories. Scientific computing allows scientists in many fields to simulate everything from molecular movements to global weather patterns, providing an understanding that would otherwise either not be possible or be cost-prohibitive.

Another class of systems consists of office automation systems. The term office automation promises more than the term delivers, as the term conjures up images of offices organized and run like automated factories. Office automation systems are usually quite basic and include such tools as word processing and accounting information systems. Integrated office systems that include electronic mail, calendaring features, and reminder files in addition to word processing are also available. Electronic mail (e-mail) allows office workers to send each other messages and files directly from their computers and is usually more convenient than trying to reach someone by telephone. Calendaring features allow office workers to coordinate their schedules, to reserve conference rooms, and to schedule meetings. Reminder files provide a means for conveniently reminding ourselves of meetings and other commitments. Office systems are rarely if ever developed in-house, but instead are purchased or leased from hardware or software producers.

 A P P E N D I X    R E V I E W


Decision support systems (DSS)
DSS generators
Executive support systems (ESS)
Expert systems (ES)
Knowledge engineers
Management information systems (MIS)
Transaction processing systems (TPS)


  1. Define each of the following terms:
    1. management information systems (MIS)
    2. exception report
    3. group DSS
  2. Contrast on-demand and ad hoc reports.
  3. List the three general components of a decision support system.
  4. Contrast decision support systems and DSS generators.
  5. Contrast decision support systems and expert systems.
  6. Contrast decision support systems and group decision support systems.


  1. Match the following terms to the appropriate definitions.
        summary report
        exception report
        on-demand report
        model base
        decision support system
        expert system
    a. system designed to mimic human experts
    b. set of models
    c. information out of normal range
    d. set of related data
    e. helps people make decisions
    f. information about all activity
    g. data when needed
  2. Describe the potential links between transaction processing and management information systems. For example, consider an order processing system and a sales analysis system. How would these two systems be related to each other? List the pieces of data in this order processing system that might be used in the sales analysis system. Describe how these pieces of data would be used in the sales analysis system. Would these pieces of data take on new form in the sales analysis system or would they remain the same? Why or why not? What would happen if these two systems were designed independently of each other?
  3. What unique features might a group DSS possess that a DSS designed to support only one person might not? What changes to an electronic spreadsheet package would have to be made if the spreadsheet files were made available to multiple users simultaneously? What security and data integrity issues would arise?
  4. Discuss the importance of clearly defining a business transaction. Specifically, from the viewpoint of maintaining the integrity of information, what is the significance of the transaction concept?
  5. For each of the following three group task types, describe a group task: (1) group members perform the task together simultaneously (2) group members work on the task apart from each other, yet in parallel (3) group members work on the task apart from each other and each performs his or her subtask sequentially. For each task, what are each of the subtasks? How, when, and by whom are each performed? How could a group DSS be used to support each of these three group tasks? Would the group DSS help or hinder the group? Why?
  6. Assume that you are the owner/manager of a small, start-up organization. Choose a product and/or service that you provide and a location for your firm. Describe the types of information that you will need to have to manage this organization effectively. What are the sources for this information? With what frequency and in what form will you need to have this information? At what level of detail will you want the information (for example, will you need to drill down from summaries and averages to specific data)? Does it make sense to have a microcomputer-based ESS to support your information needs for managing this company? Why or why not?


  1. Visit an office in your university or in another organization that uses an office automation system. What information processing functions does this system possess? Which ones do people use regularly? Which functions do you believe are under-utilized and why?
  2. Ask a friend or instructor to show you an expert system generator, the software used to build expert systems. How does one "program" an expert system? What are the components of an expert system generator?
  3. Identify three DSS products. If you need to, speak directly with the vendors and/or users of these products. Are these tools for specific DSS applications or are they DSS generators? On what hardware platforms do these DSS products run? What is planned for these products? Is a microcomputer-based version offered or planned? Is a graphical, object-oriented version offered or planned? What other new features will come in future versions of the product? If no further versions or enhancements are planned, why not?
  4. Identify three group DSS products. If you need to, speak directly with the vendors and/or users of these products. In what ways are these products similar? different? What advantages do these specific group DSS products seem to offer over other group DSS products? over other DSS tools? What is planned for these products? Can the software be run in a distributed fashion, with participants in different locations? If not, is this planned for? If this is neither offered nor planned, why not?
  5. Choose a work group in your university or another organization and determine which of their tasks can be better supported by a group DSS. Why? Which tasks cannot be better supported by a group DSS? Why not? What are the potential barriers to implementing a group DSS for this group?


Alter, S. 1992. Information Systems: A Management Perspective. Redwood City, CA: Benjamin/Cummings Publishing.

Nunamaker, J. F., Jr., Dennis, A. R., Valacich, J. S., Vogel, D. R., and George, J. F. 1991. "Electronic Meeting Systems to Support Group Work." Communications of the ACM 34 (July): 40-61.

Sprague, R. H., Jr. 1980. "A Framework for the Development of Decision Support Systems." MIS Quarterly 4(4):1-26.

Back to the suppliment index

1999 Prentice-Hall, Inc., A division of Pearson Education, Upper Saddle River, New Jersey 07458 Legal Statement
Comments should be directed to