Page 30 - DMGT505_MANAGEMENT_INFORMATION_SYSTEM

Unit 2: Information Systems in the Enterprise

Self Assessment Notes

Fill in the blanks:
1. ................................. describes how information systems integrate and support enterprise-
wide business processes.

2. Human resource information systems support ................................. in organizations.
3. ................................. support and enhance communication and collaboration among the
teams and workgroups in an organization.

2.2 Types of Information Systems in the Organization

Management Information Systems comprise many sub-systems and are influenced by the
organization’s structure, activities, risk profile, and technological capabilities. Within an
organization set up, depending on the level of management, the information systems perform
various activities and play certain roles. Information systems support top management in setting
long-term goals, policies and achieving strategic competitive advantage. For middle
management, information systems help in taking tactical decisions. For lower level management,
an information system processes daily transactions. The role of information systems has
developed during the years. The original conception was of automation of existing manual and
pre-computer mechanical processes. This was quickly succeeded by the rationalization and
integration of systems.

Notes In both of these forms, information system was regarded primarily as an operational
support tool, and secondarily as a service to management.
We may look in some detail information systems below:

2.2.1 Transaction Processing System

Transaction processing systems were among the earliest computerized systems. Their primary
purpose is to record, process, validate, and store transactions that take place in the various
functional areas/of a business for future retrieval and use. A Transaction Processing System
(TPS) is an information system that records company transactions (a transaction is defined as an
exchange between two or more business entities).
Transaction Processing Systems (TPS) are cross-functional information systems that process
data resulting from the occurrence of business transactions.
Transactions are events that occur as part of doing business, such as sales, purchases, deposits,
withdrawals, refunds, and payments. Transaction processing activities are needed to capture
and process data, or the operations of a business would grind to a halt.

Example: Let us look at a simple example of a business transaction. McDonald’s, which
sells a large number of hamburgers everyday, orders raw materials from its suppliers. Each
time the company places an order with a supplier, a transaction occurs and a transaction system
records relevant information, such as the supplier’s name, address, and credit rating, the kind
and quantity of items purchased, and the invoice amount.

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