6 Information System Types Every Business Professional Should Know

6 Information System Types

A one-size-fits-all approach rarely works in the business world. Processes that work in the manufacturing industry will most likely not work for retailers or restaurants. In the same way, various sectors and departments of a company have different data sharing and data management requirements.

An automated system's functions depend on the daily tasks and processes of a specific business unit. For example, the Human Resource department needs to run payroll, check timesheets, and manage onboarding processes. Internal HR teams need support systems that can maintain all of that real-time and historical data.

On the other hand, the management level of an organization needs information systems that assess performance data, business transactions, and sales numbers across franchises. In short, every sector of an organization uses a type of information system that carries out the processes and tasks of that sector. That is why there are different types of information systems. Read ahead for a breakdown of each type and how they work.

1. Information System Types Transaction Processing System

Every business must process transactions to maintain business operations. Transactions encompass any event or process that impacts a company. The type of transactions varies, depending on the type of industry. In restaurants, customer payments and inventory reorders are typical transactions. In a manufacturing business, order entry or shipping information are normal transactions.

Some transactions are similar across all industries. This includes ordering supplies, invoicing customers, and time tracking. A TPS is a support system that optimizes and handles all of the transaction processing within a company.

Functions of a TPS:

• Coordinating inventory and distribution of products
  
• Managing transactions from payment accounts
  
• Processing sales and payroll
  
• Payment of salaries to employees
  

2. Information System Types Office Automation Systems

An office automation system is a combination of collaborative tools, artificial intelligence, and individuals who carry out official activities. These processing systems perform business transactions and facilitate clerical and managerial tasks in each sector of a company. Management systems carry out clerical activities such as typesetting, scheduling meetings, or preparing documents. Managerial functions include support for conferencing, generating reports, and monitoring performance. Word processing and filing electronic documents are other applications that integrate with an office automation system. An OAS provides executive support and administrative support to optimize decision-making and solve problems.

3. Information System Types Knowledge Work Systems

A knowledge management system is information technology that facilitates knowledge creation throughout the organization. This ensures that everyone across the supply chain is equipped with the proper expertise, training, and technical skills. Systems include graphics and document management tools to enable teams to create and deliver new information to others.

To make a group decision, employees also need to search for external sources. The system provides quick and easy access to any external databases to facilitate this process. Furthermore, an effective KWS comes with a user-friendly interface to make sure teams can extract and use information quickly. This functionality improves employee expertise, which increases morale and productivity.

Must-Know Facts About Knowledge Management Systems:

• 74% of organizations claim a knowledge management system increases productivity from 10-40%
  
• Poor knowledge sharing costs Fortune 500 companies up to $31.5 billion per year
  
• Knowledge management systems facilitate cross-training programs, content publishing, and automatic customer service rep tools such as Chatbox
  

4. Information System Types Management Information Systems

Management information systems are decision support tools that enable middle-managers to plan and control tasks/requirements. A management information system takes transaction information from a TPS, aggregates it, and generates reports and displays. When everything is in a more understandable format, managers can drill down into and analyze data. These expert systems utilize summaries and compare and contrast tools, enabling supervisors to make quick decisions based on accurate insights.

Most MIS reports are summaries, such as reports on annual employee sales. Exception reports specify any special circumstances for outlier data, such as an employee who generated fewer sales than expected. The system uses typically includes reports for monthly, quarterly, or annual time frames, but can also assess hourly or daily data.

5. Information System Types Decision Support Systems

A decision support system DSS supports managerial decision-making and is considered a computer-based information system. Unlike an MIS, it processes data to optimize group decision support among managers. For example, banks use a decision support system to drill down into evolving trends in loans to gauge annual objectives.

Every manager uses a DSS to solve a particular problem related to managerial tasks. They use OAS and TPS data to help make semi-structured and complex decisions. These platforms have more analytical power than every other expert system. They utilize complex models to drill down into data and describe large quantities of information in the form of data visualizations. This makes it easier for managers to understand complicated insights and analyses. Users can also directly alter or change information, or input new queries as required.

Top Benefits of a DSS:

• Reduction in decision time
  
• More accurate decisions that lead to increased operational effectiveness
  
• Cost savings in technologies, labor costs, and other expenses
  
• Promote learning across the organization
  
• Increase organizational control

6. Information System Types Executive Support System

An executive information system manages executive information intending to optimize decision-making for high-level personnel. These individuals make non-routine decisions that require greater scrutiny and judgment. Most executive support systems provide better cloud computing functionality and more efficient display choices. They utilize high-tech graphics software to summarize key data in the form of data visualizations. This facilitates decision-making and allows senior executives to solve complex issues.

An ESS combines MIS and DSS insights, along with external information such as competitor data. It then aggregates, filters, and monitors and makes this information accessible to executives upon request. An ESS tracks performance, competitor information, and pinpoints revenue opportunities. It can also predict future outcomes and trends. This provides a competitive edge and helps executives manage key information in one centralized location.

Key Takeaways for Information System Types

In conclusion, here are the 6 types of information systems -

• A transaction processing system collects, modifies, and enables the retrieval of transaction data. An office automation system handles clerical and managerial tasks and data.
• A knowledge work system maintains expertise, training documents, and records to improve knowledge and knowledge-sharing within a business.
• A management information system is a database of financial data that generates regular reports on every managerial sector of an organization.
• A decision support system optimizes decision-making among managers. An executive support system uses MIS and DSS data, along with external information, to optimize decision-making among high-level executives.