Helwan University

Business Information System Program

Chapter1: Introducing Information

Systems in organization
Part 2
 Contents
1.1Defining the Term Organization
1.2Characteristics of Organization
1.2.1 Business Process
1.2.2 Organizational Environments
1.2.3 Organizational Structure
1.3 IS Role in Business
1.4 IS Strategy
1.5 IS Strategy Levels
1.6 The Support of Information Systems in Business
1.7 Using Information Systems to Achieve Competitive Advantage
1.8 Information system categories
1.9 Transaction Processing Systems (TPS)
1.10 Management Information Systems (MIS)
1.11 Decision Support Systems (DSS)
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 1.6 Using Information Systems to Achieve
Competitive Advantage
• competitive advantage in terms of a for-profit
company, whose major goal is to maximize
profits by lowering costs and increasing
revenue.
• Table 1.1 lists eight basic initiatives
(advantages) that can be used to gain
competitive advantage.
• It is important to understand that the eight
listed are the most common, but not the only,
types of business strategy an organization can
pursue (follow).
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Figure 1.8 indicates that a company can use many
strategies together to gain competitive advantage.

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 1.7 Information system types
• The complexity of information processing and
the varying degrees or levels into which data
and processes can be structured, depending on
the problem.

• several categories of information systems are

required to deal with all the organization's
information needs.

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 1.8 Transaction Processing Systems
(TPS)
• Transaction processing systems are the cornerstones
of a company’s information system and compile their
daily business operations.
• Many companies cannot operate without this type of
system.
• As operations are carried out in the company,
transaction processing systems gather, process and store
data and reflect business transactions such as sales,
purchases, payments, etc.

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 1.8 Transaction Processing Systems
(TPS)
• Transaction processing systems are the
most defined or structured information
processes in the organization, automating
the central core of its operations.
• Their purpose is to improve the company’s
routine activities.
• Companies aim to carry out these activities
quickly, systematically, and efficiently.

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 company’s routine activities
These activities are carried out at the operative level
in any organization and have similar common
characteristics:
▪ These operations are repeated many times in
companies.
▪ The way these transactions are carried out is very
similar in all companies.
▪ The activities can be separated into well understood
stages (procedures) that can be described in detail.
▪ There are very few exceptions to the standard
procedures.
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Transaction processing systems
• Transaction processing systems are faster and
more accurate than the manual procedures
used to perform the same routine activities.
• A transaction processing system replaces
manual procedures with computer-based
procedures to perform well structured routine
tasks.
• Transaction processing system output may
take the form of transaction documents or
database queries.
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 Transaction documents
• Many transaction processing systems
produce transaction documents, such as
invoices, purchase orders or payroll lists.

• These documents may be classified as

action documents or information documents.

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 i. Action documents
• Action documents imply that action is taken.

• For example, an airline ticket guarantees

that a seat on an airplane is reserved, or a
bank must pay out money when a cheque is
presented.

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 ii. Information documents
• Information documents confirm that a
transaction has taken place or informs about
one or various transactions.

• For example, a bank transfer slip with details

of the transfer, or a breakdown of credit card
payments that accompanies the credit card
bill.

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 iii. Database queries

• A wide variety of information can be

extracted from a database using a
database management system and user-
oriented fourth generation languages.

• These queries can provide lists of all

transactions processed during a specific
time, or error reports.

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 1.9 Management Information System
(MIS)
• The main purpose of Management Information
Systems is to provide managers with the information
they need to take decisions and solve problems.

• Management Information Systems are supported by

corporate databases, which include data generated
by transaction processing.

• Every organization must take decisions on many issues

that arise on a regular basis, whether weekly,
monthly, or quarterly.

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 1.9 Management Information
System (MIS)
• An administrative information system can therefore prepare
regular reports on which to base these decisions.

• these systems provide support for structured decisions,

since administrators know beforehand which factors should
be considered in the decision-making process and the
Management Information

• System provides clearly structured reports with all the

necessary information to take these structured decisions.

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Management Information System reports in four
ways:
1. by preparing a report only when exceptions occur

2. by using the report’s sequence function to highlight exceptions.

The report’s entries can be arranged in ascending or descending
order, according to one or more key areas.

3. by grouping exceptions together. In this case, the reports are

prepared so the user can find exceptions in certain areas
according to a particular criterion.

4. by showing deviation from the norm. Results of actions are

compared with forecast actions and any difference is
presented as a deviation.

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This information is normally compiled
in:
1. Strategic level reports to provide managers with the
information they need to plan activities, setting long-term targets
(more than three years) and establishing company policies.
2. Tactical (and status) situation reports to enable
management to draw up new or revised short-term plans (from 1 to
3 years) on a continual basis.
3. Operational reports with daily information to keep managers
fully informed of the company’s current situation, thus enabling
them to carry out their control functions. In addition, much of the
information the company sends to the environment is provided
by the MIS in the form of invoices to clients, and salary and tax
payments.
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1.10 Decision Support Systems (DSS)
• Decision support systems provide a tool to deal with less
structured or defined problems that arise sporadically
(irregularly).

• DSS helps managers who must take non-structured decisions.

• A decision is understood to be non- structured if there

are no clear procedures in place to take the decision, and it
is not possible to identify beforehand all the factors that
need to be considered in the decision.

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 1.10 Decision Support Systems (DSS)
• When managers use a DSS, they consider several possible
scenarios by asking “What would happen if...?

• Unlike transaction processing systems and administrative

information systems, DSS are not structured or formalized
since they are generally used for ad hoc processes and
therefore they need to be flexible and adaptable.

• The main emphasis of DSS lies in its support function, and

not the automation of decisions. The computer’s task is to
provide access to data and offer the chance to test
alternative solutions, and in the final instance, takes the
decision.
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1.10 Decision Support Systems (DSS)
• A DSS uses data from the organization's transaction processing
system and administrative information system as well as data from
external sources.

• In fact, the data required to generate information can come from a

range of sources, not only the database as in the case of the
transaction processing system and the administrative information system.

• Moreover, a DSS can store and later reprocess previously obtained

data.

• The user interacts with the system by making requests, creating, or

modifying models to adapt them to variations and to help understand
the problem, managing data and designing the format and content of
reports, which may include text, structured information, or figures.
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 End of Lecture

Thank you

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