The Institute of Chartered Accountants of Bangladesh (ICAB)
IT
Knowledge
Class No. 3
A.H.M. Ariful Islam ACA
Information
Systems at different levels of management
Information
Systems at different levels of management: (Page 44)
There is not a
simple answer to this. As most organizations are hierarchical, the way in which
the different classes of information systems are categorized tends to follow
the hierarchy. This is often described as "the pyramid model"
Based on the hierarchy, Data, Information,
Knowledge, Process, activities and criterion, we can classified the pyramid
model in to the following:
Three level
pyramid model- based on the type of
decisions taken
Five
level pyramid model - based on the processing
requirement
Four level pyramid model - based on the hierarchy level
Details are
given below:
Three level pyramid model
Four level pyramid model
Five level pyramid model
Three
Level Model:
Information, as required at different levels
of management can be classified as operational, tactical and strategic.
Strategic
Decision - Top management
Tactical Decision - Middle
Management
Operational
Decision - Lower Level management
Strategic Decision:
Tactical decisions by the top management are dependent
on theInformation passed from middle management.While the operational
information is needed to find out how the given activity can be performed
better, strategic information is needed for making choices among the business
options.
The strategic information helps in identifying and
evaluating these options so that a manager makes informed choices which are
different from the competitors and the limitations of what the rivals are
doing or planning to do. Such choices are made by leaders only.
Tactical Decision:
At the middle level of management the decision making
processstarts. Inputs from different internal and external information sources
are collected andprocessed for strategic decisions.
Tactical information helps middle level managers
allocating resources and establishing controls to implement the top level plans
of the organization.
For example, information regarding the alternative
sources of funds and their uses in the short run, opportunities for deployment
of surplus funds in short- term securities, etc. may be required at the middle
levels of management.
Operational Decision :
All types of inputs available from various sources arecollected.
No decision making process is carried out at this level. Operational information
relates to the day-to-day operations of the organization and thus, is useful in
exercising control over the operations that are repetitive in nature. Since
such activities are controlled at lower levels of management, operational
information is needed by the lower management.
For example, the information regarding the cash
position on day-to-day basis is monitored and controlled at the lower levels of
management. Similarly, in marketing function, daily and weekly sales information
is used by lower level manager to monitor the performance of the sales force.
Figure 1.2 represents the types of information required at different levels of managerial hierarchy.
It may be remembered that each type of information has
its role to play in managerial effectiveness. Each type of information is
needed with varying degree by the managers at all levels. Thus, a part of
operational information may be used even by the chief executive officer of a
company. The difference lies in the proportion of each type of information in
the total information needs of managers at different levels of managerial
hierarchy.
Four Level Model:
Using the four level pyramid model, we can now compare how the information systems in our model differ from each other:
TPS-
Transaction
Processing System - Lower Level
Management
MIS- Management information system - Mid Level Management
DSS
- Decision support system - Mid Level Management
ESS/EIS-
Executive information system- Top Level
Management
Transaction
Processing System-TPS
A
transaction processing system collects and stores data about transactions and sometimes controls
decisions made as part of a transaction.
Thetransaction is the activity
that changes stored data, examples of such an activity would be using a credit
card, making a reservation or making a cash withdrawal at an ATM.
Functions of a
TPS
TPS
are ultimately little more than simple data processing systems.
|
Functions of a TPS in terms of data processing
requirements
|
||
|
Inputs
|
Activities/ Processing
|
Outputs
|
|
Transactions
Events |
Capturing & Entries
Validation
Sorting Listing Merging Updating Calculation |
Lists
Detail reports Action reports Summary reports. |
Some examples of TPS
o
Payroll
systems
o
Order
processing systems
o
Reservation
systems
o
Stock
control systems
o
Systems
for payments and funds transfers
The role of TPS
o
Produce
information for other systems
o
Cross
boundaries (internal and external)
o
Used
by operational personnel + supervisory levels
o
Efficiency
oriented
A management
information system (MIS) is a computerized database of financial information
organized and programmed in such a way that it produces regular reports on
operations for every level of management in a company. It is usually
also possible to obtain special reports from the system easily.
Functions of a MIS
|
MIS are
built on the data provided by the TPS
Functions of a MIS in terms of data processing
requirements
|
||
|
Inputs
|
Processing
|
Outputs
|
|
Internal Transactions
Internal Files Structured data |
Sorting
Merging Summarizing |
Summary reports
Action reports Detailed reports |
Some examples of MIS
o
Sales
management systems
o
Inventory
control systems
o
Budgeting
systems
o
Management
Reporting Systems (MRS)
o
Personnel
(HRM) systems
The role of MIS
o
Based
on internal information flows
o
Support
relatively structured decisions
o
Inflexible
and have little analytical capacity
o
Used
by lower and middle managerial levels
o
Deals
with the past and present rather than the future
o
Efficiency
oriented?
Decision
support system
A decision support
system (DSS) is a computer program application that analyzes business data
and presents it so that users can make business decisions more easily.
Functions of a DSS
DSS manipulate and
build upon the information from a MIS and/or TPS to generate insights and new
information.
|
Functions of a DSS in terms of data processing
requirements
|
||
|
Inputs
|
Processing
|
Outputs
|
|
Internal Transactions
Internal Files External Information? |
Modeling
Simulation Analysis Summarizing |
Summary reports
Forecasts Graphs / Plots |
Some examples of DSS
o
Group
Decision Support Systems (GDSS)
o
Computer
Supported Co-operative work (CSCW)
o
Logistics
systems
o
Financial
Planning systems
o
Spreadsheet
Models?
The role of DSS
o
Support
ill- structured or semi-structured decisions
o
Have
analytical and/or modeling capacity
o
Used
by more senior managerial levels
o
Are
concerned with predicting the future
o Are
effectiveness oriented?
Executive
information system
An executive
information system (EIS), also known as an executive support system
(ESS), is a type of management information system that facilitates and
supports senior executive information and decision-making needs. It
provides easy access to internal and external information relevant to
organizational goals.
Functions of an EIS
EIS organizes and
presents data and information from both external data sources and internal MIS
or TPS in order to support and extend the inherent capabilities of senior
executives.
|
Functions of a EIS in terms of data processing
requirements
|
||
|
Inputs
|
Processing
|
Outputs
|
|
External Data
Internal Files Pre-defined models |
Summarizing
Simulation "Drilling Down" |
Summary reports
Forecasts Graphs / Plots |
Some examples of EIS
Executive
Information Systems tend to be highly individualized and are often custom made
for a particular client group; however, a number of off-the-shelf EIS packages
do exist and many enterprise level systems offer a customizable EIS module.
The role of EIS
o
Are
concerned with ease of use
o
Are
concerned with predicting the future
o
Are
effectiveness oriented
o
Are
highly flexible
o
Support
unstructured decisions
o
Use
internal and external data sources
o
Used
only at the most senior management levels
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