Types of Information Systems (TPS, MIS, and DSS)

Summary

This video script explores the most common types of information systems in organizations: Transaction Processing Systems (TPS), Management Information Systems (MIS), Decision Support Systems (DSS), and Executive Support Systems (ESS). TPS records daily transactions, serving as the primary data source for other systems. MIS consolidates data for routine summary reports, aiding middle management in semi-structured decision-making. DSS and ESS support senior management in unstructured, long-term planning decisions, with DSS focusing on problem-specific solutions and ESS providing strategic forecasting.

Takeaways

• 💼 **Transaction Processing System (TPS)**: TPS is a system used for recording business transactions and is composed of people, procedures, software, databases, and devices.
• 🛒 **Definition of Transaction**: In TPS, a transaction is any business-related exchange of goods, services, or money, including employee payments, sales, supplier payments, and ATM withdrawals.
• 🏢 **Operational Level**: TPS serves the operational level of an organization, which includes employees at the bottom of the hierarchy, such as cashiers, bank tellers, and nurses.
• 📊 **TPS Functions**: TPS is responsible for data collection, sorting, updating, storing, modifying, and retrieving transaction-related information, as well as generating reports and summaries.
• 👥 **Examples of TPS**: Payroll systems and online reservation systems for airlines are examples of TPS, where the latter allows for real-time booking and transaction recording.
• 🔁 **Batch vs. Real-Time Processing**: TPS can operate in batch mode, processing transactions in groups with a delay, or in real-time, processing each transaction instantly with no delay.
• 📚 **Management Information System (MIS)**: MIS provides routine information to managers and decision-makers, typically used at the tactical level of an organization's management hierarchy.
• 📈 **MIS Importance**: MIS is crucial for operations management and decision-making, as it consolidates data from TPS to generate summary and exception reports.
• 🏛️ **MIS Example**: A university student management information system is an example of MIS, used to generate reports on student registration status for eligibility in exams.
• 🌐 **Enterprise Resource Planning (ERP)**: ERP systems integrate various business operations into a unified set of programs, overcoming information silos and enhancing data sharing across organizational units.
• 🛠️ **Decision Support System (DSS)**: DSS aids in problem-specific decision-making, using inputs from both internal (TPS and MIS) and external systems, and is commonly used by senior management for non-routine decisions.
• 🏦 **DSS Example**: A bank loan management system is an example of DSS, used to assess loan applicant creditworthiness and predict loan recovery likelihood.
• 📊 **DSS vs. MIS**: While MIS helps an organization do things right, DSS helps managers do the right thing, focusing on effective decision-making for long-term planning.
• 👨‍💼 **Executive Support Systems (ESS)**: ESS supports executives at the top management level, such as a sales forecasting system useful for the organization's top decision-makers.

Q & A

What are the three most common types of information systems mentioned in the video?

The three most common types of information systems mentioned are Transaction Processing Systems (TPS), Management Information Systems (MIS), and Decision Support Systems (DSS).

What is a Transaction Processing System (TPS) and what does it include?

A Transaction Processing System (TPS) is an organized collection of people, procedures, software, databases, and devices used to perform and record business transactions. It includes activities such as payments to employees, sales to customers, payments to suppliers, or cash withdrawals from an ATM.

Who primarily uses Transaction Processing Systems and why?

Transaction Processing Systems are primarily used at the operational level of an organization by employees such as cashiers, bank tellers, nurses, and others who are involved in performing day-to-day business transactions.

Can you provide an example of a TPS and explain its function?

An example of a TPS is a payroll system. It collects input data such as the number of employee hours worked and the pay rate, and its primary output consists of paychecks and related reports for the organization's management and required government documents.

What are the two types of transaction processing systems discussed in the video?

The two types of transaction processing systems discussed are batch processing TPS and real-time processing TPS. Batch processing involves collecting and processing transactions in groups, often with a time delay, while real-time processing handles each transaction immediately.

How does a Management Information System (MIS) differ from a Transaction Processing System (TPS)?

A Management Information System (MIS) differs from a TPS in that it consolidates data and information from the TPS to generate routine summary and exception reports, which are used by middle management for semi-structured decision making.

What is the purpose of a Decision Support System (DSS) and who typically uses it?

A Decision Support System (DSS) is used to support problem-specific decision making and is commonly used by senior management to make non-routine decisions and provide solutions to unique and frequently changing problems.

Can you give an example of how a DSS is used in a business context?

An example of DSS use in business is a bank loan management system, which verifies the credit of loan applicants and predicts the likelihood of loan recovery, aiding in effective decision making regarding loans.

What is the main issue that ERP systems aim to solve in organizations?

Enterprise Resource Planning (ERP) systems aim to solve the issue of information silos by providing a set of integrated programs that manage vital business operations, making it easier to use and more effective, and allowing for data sharing across all organizational units.

How does a DSS help in making decisions compared to an MIS?

A DSS helps in making effective decisions by focusing on unstructured decision making that concerns long-term planning, while an MIS helps an organization do things right by providing structured decision support based on defined rules and guidelines.

What is the role of an Executive Support System (ESS) in an organization?

An Executive Support System (ESS) supports executives, typically at the topmost level of the organization's management hierarchy, by providing tools for tasks such as sales forecasting, aiding in better decision making.

Outlines

00:00

💼 Overview of Information Systems in Organizations

This paragraph introduces the three main types of information systems used across different organizational levels: Transaction Processing Systems (TPS), Management Information Systems (MIS), and Decision Support Systems (DSS). It explains that although these systems are often discussed separately, they can be integrated into a single software package. The paragraph emphasizes the role of TPS in recording business transactions and its importance at the operational level, with examples like payroll systems and online reservation systems. It also distinguishes between batch processing and real-time processing TPS, providing examples for each.

05:00

📚 The Role of TPS, MIS, ERP, and DSS in Organizational Decision Making

The second paragraph delves into the specifics of TPS and MIS, highlighting their functions in recording transactions and generating reports, respectively. It discusses the issue of information silos and introduces Enterprise Resource Planning (ERP) systems as a solution to integrate various business operations. The paragraph also describes the function of Decision Support Systems (DSS) in aiding senior management with non-routine decision-making, using a bank loan management system as an example. It contrasts DSS with MIS, emphasizing that while MIS helps with operational efficiency, DSS focuses on strategic decision-making. The paragraph concludes by illustrating the importance of DSS in business through the example of Subway, a fast-food franchise, and mentions Executive Support Systems (ESS) as tools for top-level executives in an organization.

Keywords

💡Transaction Processing System (TPS)

A Transaction Processing System, or TPS, is an organized collection of resources including people, procedures, software, databases, and devices that handle and record business transactions. It is integral to the operational level of an organization, serving employees at the bottom of the hierarchy. In the script, TPS is exemplified by a payroll system that records employee hours and generates paychecks, and an airline reservation system that processes bookings and issues electronic tickets. TPS is central to the video's theme as it forms the foundation for data collection and operational management.

💡Management Information System (MIS)

MIS stands for Management Information System, which is designed to provide managers and decision-makers with routine information. It operates at the tactical level of an organization, typically using data from TPS to generate summary and exception reports. The script mentions a university student management information system as an example, which helps determine student eligibility for exams. MIS is crucial to the video's narrative as it bridges operational data with managerial decision-making.

💡Decision Support System (DSS)

A Decision Support System, or DSS, is an information system that aids in problem-specific decision-making, often used by senior management for non-routine decisions. It uses data from both internal systems like TPS and MIS and external sources. The script provides the example of a bank loan management system that assesses creditworthiness and predicts loan recovery likelihood. DSS is significant to the video's theme as it represents advanced analytical tools for strategic decision-making.

💡Enterprise Resource Planning (ERP)

Enterprise Resource Planning systems integrate various business processes and operations into a unified set of programs, replacing multiple applications and facilitating information sharing across an organization. The script discusses ERP as a solution to information silos, enhancing the efficiency and effectiveness of business operations. ERP systems are vital to the video's message as they demonstrate the evolution of information systems towards integration and comprehensive data management.

💡Information Silo

An information silo refers to an isolated information system that does not easily exchange data with other systems. The script describes the silo mentality as a barrier to information sharing among different departments, which can impede organizational efficiency. The concept is relevant to the video's theme as it highlights the need for integrated systems to overcome communication and data sharing challenges.

💡Batch Processing

Batch processing in the context of TPS involves the collection and grouping of transactions for processing in batches, often following a first-in, first-out method, and typically includes a time delay. The script uses the example of a company's bi-weekly payroll processing to illustrate batch processing. This concept is important to the video's content as it contrasts with real-time processing and shows different approaches to transaction handling.

💡Real-Time Processing

Real-time processing is a method of transaction handling where each transaction is processed immediately, providing instant verification without delay. The script contrasts this with batch processing and uses a hotel reservation system as an example where customers receive instant confirmation of their bookings. Real-time processing is key to the video's theme as it represents the modern, efficient approach to transaction management.

💡Operational Level

The operational level of an organization consists of employees who perform day-to-day business transactions. The script describes this level as the primary user of TPS systems, such as cashiers, bank tellers, and nurses. Understanding the operational level is essential to the video's theme as it underscores the importance of TPS in supporting the core activities of an organization.

💡Tactical Level

The tactical level in an organization includes middle management who use MIS to make decisions based on routine information. The script explains that MIS provides summary and exception reports to this level, which is vital for the video's theme as it shows how information systems support middle management in strategic planning and decision-making.

💡Strategic Level

The strategic level comprises senior management and executives who use DSS and ESS for high-level decision-making. The script mentions that DSS helps with non-routine decisions and long-term planning, while ESS, such as sales forecasting systems, aids top executives. The strategic level is crucial to the video's theme as it illustrates the use of advanced information systems for strategic management.

💡Executive Support System (ESS)

An Executive Support System, or ESS, is designed to assist top-level executives in making decisions that require a broad overview of the organization's operations. The script provides sales forecasting as an example of an ESS application. ESS is significant to the video's theme as it represents the pinnacle of information systems, catering to the unique needs of the highest level of management.

Highlights

Introduction to the most common types of information systems used in organizations.

Definition and explanation of Transaction Processing Systems (TPS).

TPS as an organized collection of resources for performing and recording business transactions.

Examples of transactions in TPS, such as payments and sales.

TPS serving the operational level of an organization.

Examples of TPS users, including cashiers and bank tellers.

Functions of TPS in data management and reporting.

Payroll system as an example of TPS.

Online transaction processing systems in airlines and travel agencies.

Differentiation between batch processing and real-time processing TPS.

Examples of batch processing in payroll and real-time in hotel reservations.

Introduction to Management Information Systems (MIS).

MIS as a tool for managers and decision-makers at the tactical level.

MIS providing routine and exception reports from TPS data.

University student management information system as an MIS example.

Difference between TPS and MIS in library systems.

Challenge of information silos and the rise of Enterprise Resource Planning (ERP) systems.

ERP systems as integrated programs for business operations.

Decision Support Systems (DSS) for problem-specific decision making.

DSS used by senior management for non-routine decisions.

Bank loan management system as an example of DSS.

Importance of DSS in business initiatives like Subway's bundle meal offers.

Executive Support Systems (ESS) for top-level executives.

Summary of TPS, MIS, and DSS roles in structured, semi-structured, and unstructured decision making.

Transcripts

in this video we are going to learn the

most common types of information systems

used in different levels of an

organization they are the transaction

processing system or tps management

information system or mis and decision

support system or dss

although these systems are commonly

discussed separately they are often

integrated in one product and delivered

by the same software package

let's begin discussing tps it is an

organized collection of people

procedures software databases and

devices used to perform and record

business transactions the term

transaction in tps is defined as any

business related exchange of goods

services or money such as payments to

employees sales to customers payments to

suppliers or cash withdrawn from an atm

these systems serve the organization's

operational level this level is composed

of employees who are at the bottom level

of the organization's hierarchy examples

of users at this level include cashiers

at a point of sale bank tellers nurses

in a hospital and other positions

concerned with performing day-to-day

business transactions of an organization

a tps collects input data from

transactions and events which are

recorded by operational level employees

it is responsible for sorting listing

merging updating storing modifying and

retrieving data pertaining to the

transactions that have taken place in an

organization and finally generate

detailed reports lists and summaries

which are used by other levels of

management

an example of tps is a payroll system

the primary inputs for a payroll tps are

the number of employee hours worked

during the week and the pay rate the

primary output consists of paychecks

payroll systems produce employee

paychecks and related reports for the

organization's management and documents

required by government agencies

another example is an online transaction

processing reservation systems used by

airlines and travel agencies these

systems enable travelers to select and

book their own flights through the

systems passengers can choose their

destinations and flight dates compare

costs on alternate flight dates book

their seats and generate electronic

tickets

the system is used to record each sale

transaction which takes place on the

website at the end of the day it can

generate a report of all transactions in

order to view which seats have been sold

there are basically two types of

transaction processing systems first is

the batch processing tps here the

processing of transactions takes place

over batches which means transactions

are collected combined and grouped in

batches it generally follows the first

in first out method and there is usually

a time delay in this type of processing

the second is called real-time

processing tps under real-time

processing every single transaction is

processed with immediate effect and

provides instant verification of it

there is no time delay and systems can

be accessed remotely and over the cloud

let's have an example for each type of

processing it is batch processing when a

company processes the payroll of its

employees in bi-weekly manner that

processes batches of employee salaries

over a span of two weeks in a hotel

reservation it is extremely useful for

customers to have an instant

verification of the request therefore

this is an example of real-time

processing our next type of system to

discuss is called management information

system or mis

it is an organized collection of people

procedures software databases and

devices that provides routine

information to managers and decision

makers management information systems

are usually used at the tactical level

this level includes employees who are at

the middle of the organization's

management hierarchy

it typically collects data and

information generated from the tps to

provide routine summary and exception

reports

this type of system is important in an

organization as it provides information

that is essential to operations

management and decision making functions

an example of an mis is a university

student management information system

which can be used to generate reports

about the registration status of the

students in order to determine who's

eligible to sit for the end of semester

examinations we now know that a tps

records data and generates detailed

reports while an mis can consolidate

those data and information to generate

routine summary and exemption reports

let's use modern library systems as an

example to show the difference between

these two in terms of their functions

the tps in library systems is used by

library patrons to locate books used by

librarians to manage transactions as

books are checked in and out

on the other hand the mis in library

system is used by librarians to request

and analyze reports such as summary

reports that indicate how many books are

checked out and exception reports that

list long overdue books

tps and mis are still being used today

but increasingly companies are

experiencing information silos an

isolated information system that is not

easily capable of exchanging information

with other information systems is called

information silo the silo mentality is a

way of thinking that occurs when groups

of people do not share information goals

tools priorities and processes with

other departments with this more

organizations have begun turning to

enterprise resource planning or erp

systems an enterprise resource planning

system is a set of integrated programs

that manages the vital business

operations for an entire organization it

can replace many applications with one

unified set of programs making the

system easier to use and more effective

it is used to support organizations

routine business processes maintain

records about those processes and

provide extensive reporting and data

analysis capabilities

these systems use a database of key

operational and planning data that can

be shared by all employees across all

organizational units and when

appropriate with customers and suppliers

last but definitely not the least type

of information system that we will talk

about is called decision support system

or dss it is an organized collection of

people procedures software databases and

devices that support problem specific

decision making decision support systems

use input from internal systems which

are the tps and mis and external systems

they are commonly used by senior

management to make non-routine decisions

and to provide solutions to problems

that are unique and change frequently

an example of dss is a bank loan

management system it is used to verify

the credit of the loan applicant and

predict the likelihood of the loan being

recovered the focus of a dss is on

making effective decisions to

differentiate it from mis remember that

mis helps an organization do things

right while a dss helps a manager do the

right thing

let's use subway an american fast food

restaurant franchise that primarily

sells sub-burning sandwiches salads and

beverages to see the importance of dss

in a business subway uses a dss to

evaluate various initiatives such as

implementing bundle meal offers and

price promotions the dss is able to

predict what impact the initiative will

have on revenues profits and market

share it can also help to design a roll

out program that maximize returns

in addition to dss for managers other

systems use the same approach to support

executives which is called executive

support systems or ess an example of an

ess is a system which can be used for

sales forecasting that is useful to

people who are at the topmost level of

the organization's management hierarchy

to make better decisions

this level is composed of the firm's

president vice presidents and members of

the board of directors

to summarize the tps records daily

routine transactions in an organization

with this it becomes the major source of

data for other systems in an

organization since they record every

transaction it aids in monitoring the

status of the operations and therefore

helps in structured decision making this

means that they have defined rules that

guide them while making decisions

usually receive and utilize the data

they get from the tps the reports

generated in the system is used by

middle level managers to make

semi-structured decisions which are

partly based on set guidelines and

judgmental calls

dss is a major recipient of data from

the lower level systems which is mainly

used by senior managers in unstructured

decision making that concerns with a

long-term planning of the organization