Information Systems

End of Semester Study Notes — Part 2

Topics: Key IS Applications | Decision Support in Business | Group Decision Support
Systems
PART 1: KEY SYSTEMS APPLICATIONS IN
ORGANIZATIONS

1. The Organizational Pyramid: Levels & Functions

Organizations are viewed as a management pyramid with four levels, each served by its own
type of information system. Systems are also specialized by functional area.

Organizational Level Who They Are Main Concern

Strategic Senior executives, board of Long-term goals, strategy, external
directors environment
Management (Tactical) Middle managers, department Monitoring, controlling, decision-
heads making
Knowledge Engineers, scientists, office Creating/integrating knowledge,
workers managing paperwork
Operational Supervisors, clerks, frontline staff Day-to-day transactions and
routine activities

Functional Areas Served by IS

• Sales and Marketing
• Manufacturing
• Finance
• Accounting
• Human Resources
In large organizations, sub-functions also have their own IS (e.g., manufacturing has systems
for inventory management, process control, plant maintenance, computer-aided engineering,
and materials requirement planning).
💡 EXAM TIP: Know the four organizational levels AND the five functional areas. Exam
may ask you to map a system type to its level.

2. The Six Major Types of Information Systems

Each system type serves a specific organizational level. Systems at each level are also
specialized for each functional area.

System Type Level Served Primary Users Key Purpose

TPS — Transaction Operational Clerks, frontline Record and process daily routine
Processing System staff transactions
KWS — Knowledge Work Knowledge Knowledge Create and integrate new
System workers knowledge into the business
(engineers,
scientists)
OAS — Office Automation Knowledge Data workers Improve office productivity;
System (secretaries, coordinate communication
clerks)
MIS — Management Management Middle managers Provide periodic reports on
Information System internal operations
DSS — Decision Support Management Middle & senior Support semi-structured and
System managers unstructured decisions
ESS/EIS — Executive Strategic Senior executives, Support unstructured strategic
Support System CEO, board decisions; external data

💡 EXAM TIP: The 6-system pyramid is a guaranteed exam topic. Memorize: TPS →
KWS/OAS → MIS/DSS → ESS (bottom to top).

3. Transaction Processing Systems (TPS)

• Basic systems at the operational level — the first type to be computerized.
• Computerized system that performs and records the daily routine transactions necessary
to conduct business.
• Examples: sales order entry, hotel reservations, payroll, employee records, shipping.
• Handle large numbers of transactions updating the corporate database.
• Used by clerical staff following well-defined business procedures.
• Tasks, resources, and goals are predefined and highly structured.
• TPS failure can be catastrophic: e.g., a courier without package tracking, or airlines
without reservation systems.
• TPS are major producers of data/information for all other system types (MIS, DSS,
ESS).
💡 EXAM TIP: TPS importance and failure consequences are common short-answer
questions.

4. Knowledge Work Systems (KWS) & Office Automation Systems

(OAS)
Knowledge Workers vs Data Workers
Feature Knowledge Workers Data Workers
Education Formal university degrees, Less formal/advanced degrees
 recognized professions
Examples Engineers, doctors, lawyers, Secretaries, bookkeepers, clerks,
scientists managers
Primary Role Create new information and Use, manipulate, and disseminate
knowledge information
System Used KWS (e.g., scientific/engineering OAS (e.g., word processors, email,
workstations) calendars)

Office Automation System (OAS) Functions

• Document handling: word processing, desktop publishing, digital filing
• Scheduling: electronic calendars
• Communication: email, voice mail, videoconferencing
• Document imaging: converts documents/images to digital form for storage and retrieval
Word processing is the single most common IT application to office work.

5. Management Information Systems (MIS)

• Serves the management level — oriented to internal events (not
external/environmental).
• Provides managers with periodic reports (weekly, monthly, yearly) and on-line access to
performance records.
• Primarily serves planning, controlling, and decision-making functions.
• Dependent on TPS for underlying data. Summarizes and compresses TPS data into
reports.
• Uses control totals and exceptions to identify problems — avoids wading through raw
data.
• Addresses structured questions known in advance.
• Not flexible, little analytical capability — uses simple summaries and comparisons, not
sophisticated models.
💡 EXAM TIP: MIS vs DSS is a frequent comparison question. MIS = structured,
periodic, internal. DSS = flexible, interactive, analytical.

6. Decision Support Systems (DSS)

• Serves the management level but focuses on semi-structured and unstructured
decisions.
• User-driven: managers interact directly via GUI to request data, apply models, and
generate reports.
• Uses data from TPS, MIS, AND external sources (e.g., stock prices, competitor prices).
• Must be responsive enough to run several times a day as conditions change.
 • Has more analytical power than MIS — built with a variety of models to analyze data.
• Explicitly interactive — users can change assumptions and include new data.

MIS vs DSS — Key Comparison

Feature MIS DSS
Focus Structured information flows to Top & middle managers; emphasis
middle managers on change and flexibility
Users Dominated by IS professionals End-user driven
Methodology Traditional systems development Iterative — never frozen, never
(requirements frozen) finished
Output Periodic reports Interactive queries, models,
graphics
Analytical Power Simple summaries and comparisons Sophisticated models (optimization,
forecasting, what-if)

7. Executive Support Systems (ESS / EIS)

• Serves the strategic level — senior executives, CEO, board of directors.
• Supports unstructured decisions; addresses strategic issues and long-term trends.
• Does NOT solve specific problems — provides a generalized computing and
communications environment.
• Incorporates external data (new tax laws, competitors) + summaries from MIS and DSS.
• Filters, compresses, and delivers graphs and data from many sources immediately.
• Designed with easy-to-use graphic interfaces (executives may have little computer
experience).

Questions ESS Helps Answer

• What business should we be in?
• What are our competitors doing?
• What new acquisitions would protect us from cyclical business swings?
• What will employment levels be in five years?
💡 EXAM TIP: ESS vs DSS: both at upper levels, but ESS =
generalized/strategic/external focus; DSS = analytical/semi-structured/model-based.

8. System Integration
• TPS is the primary data source for all other systems.
• ESS is primarily a recipient of data from lower-level systems.
• MIS, DSS, KWS, and OAS may exchange data among one another.
• Integration is advantageous (easy information flow) but costs money and time.
• There is no single 'right level' of integration — each organization must weigh needs vs
complexity.
PART 2: DECISION SUPPORT IN BUSINESS

1. Levels of Managerial Decision Making

Management Level Who Time Key Activities
Horizon
Strategic Management Board of directors, Long-term Set organizational goals, strategies,
CEO, top policies; monitor overall direction in
executives political/economic/competitive
environment
Tactical Management Business unit Short to Develop plans, schedules, budgets;
managers, project medium- specify policies and procedures;
leads, self-directed term allocate resources; monitor subunit
teams performance
Operational Operating Short-term Develop short-range plans; direct
Management managers, self- (weekly) use of resources and performance of
directed teams tasks within budgets and schedules

2. Information Quality Requirements for Decision Makers

To be valuable to managers and decision makers, information must have the following
characteristics:

Quality Meaning
Accurate Free from errors and mistakes
Complete Contains all the information needed for the decision
Economical Produced at a cost proportional to its value
Flexible Can be used for a variety of purposes
Relevant Pertains to the specific decision at hand
Simple Not overly complex; presented clearly
Reliable Consistent and dependable
Timely Delivered when needed, not too late
Verifiable Can be confirmed for accuracy
Accessible Easy to obtain when needed
Secure Protected from unauthorized access
 💡 EXAM TIP: The 11 information quality characteristics are a very likely exam list
question. A good acronym: ACEF R S RTVS A (or just write them out 3x to
memorize).

3. Decision Support Trends

Decision support has evolved through three phases:
Decade Development
1960s Classical Management Information Systems (MIS)
1970s Decision Support Systems (DSS)
1980s Executive Information Systems (EIS)

Modern trends: PC hardware, client/server networks, corporate intranets, extranets, and the
Web have brought executive-class decision support down to lower management levels, non-
managerial individuals, and self-directed teams. This has also opened the door to Business
Intelligence (BI) tools for suppliers, customers, and other stakeholders.

4. Business Intelligence (BI) Applications

• Decision Support Systems (DSS)
• Management Information Systems (MIS)
• Knowledge Management Systems (KMS)
• Data Mining
• Online Analytical Processing (OLAP)

5. Online Analytical Processing (OLAP)

OLAP enables managers and analysts to interactively examine and manipulate large amounts
of detailed and consolidated data from many perspectives. It provides fast answers to complex
business queries in real time.

OLAP Operations
Operation Description Example
Consolidation (Roll-up) Aggregating data from detailed to Sales offices → districts → regions
summary levels
Drill-down Moving from summary to detailed Regional total → individual
data product/rep sales
Slicing and Dicing Viewing the database from different Sales by channel within each
perspectives (dimensions) product type
 💡 EXAM TIP: OLAP's three operations (consolidation, drill-down, slicing & dicing) are
commonly tested. Know a real-world example for each.

6. Data Mining for Decision Support

• Purpose: provide decision support through knowledge discovery.
• Analyses vast stores of historical business data in data warehouses to discover patterns,
trends, and correlations.

What Data Mining Can Do

• Highlight buying patterns
• Reveal customer tendencies
• Cut redundant costs
• Uncover unseen profitable relationships and opportunities
• Find profitable ways to perform direct mailings / e-mailings
• Discover better ways to display products in a store
• Design a better e-commerce website
• Reach untapped profitable customers
• Recognize customers or products that are unprofitable or marginal

7. Decision Support Systems (DSS) — Deep Dive

DSS emerged in the 1970s as smaller, interactive systems designed to help end-users use data
and models to discuss and decide (not solve) semi-structured and unstructured problems.

Types of Problems DSS Addresses

Problem Type Description
Structured Repetitive and routine; known algorithms provide solutions (e.g.,
payroll calculation)
Unstructured Novel and non-routine; no algorithms exist; discussed and decided but
not 'solved'
Semi-structured Falls between structured and unstructured; DSS are designed
specifically for these

DSS Components
Component Description
DSS Database Collection of current or historical data from multiple applications;
managed by a DBMS that protects integrity and saves historical data
Model Base Collection of mathematical and analytical models (optimization,
 forecasting, sensitivity/what-if) accessible to the DSS user
DSS Software System Permits easy interaction between users, the database, and model
base; manages model storage/retrieval; provides flexible graphical user
interface

Types of Models in the Model Base

Optimization Models: Use linear programming to determine optimal resource allocation
(maximize profits, minimize costs). Example: best product mix for a given market.
Forecasting Models: Project future conditions from historical data. Users supply historical data;
the model projects future sales. Can test impact of new conditions (e.g., rise in raw material
costs).
Sensitivity / What-if Analysis: Ask 'what-if' questions repeatedly to determine the impact of
changes in one or more factors on outcomes. Working forward from known/assumed conditions.

DSS Success Factors

• User training, involvement, and experience
• Top management support
• Length of use
• Novelty of the application
Success is defined as perceived improvements in decision making and overall satisfaction with
the DSS.
💡 EXAM TIP: DSS components (database, model base, software system) and the
types of models are high-probability exam questions.
PART 3: GROUP DECISION SUPPORT SYSTEMS
(GDSS)

1. What Is a GDSS?
A Group Decision Support System (GDSS) is an interactive computer-based system that
facilitates the solution of unstructured problems by a set of decision makers working together as
a group.
GDSS emerged in the 1980s in response to growing concern over the quality and effectiveness
of meetings — specifically due to the explosion in the number, length, and size of decision-
maker meetings.

2. Meeting Problems GDSS Addresses

Meeting Problem How GDSS Addresses It
Improved pre-planning Electronic questionnaires identify issues and ensure key planning
information is not overlooked
Increased participation All attendees can contribute simultaneously; free riding is reduced
because non-participants stand out
Open, collaborative Anonymity of input allows lower-level staff to contribute without fear
atmosphere of judgment from management
Criticism-free idea generation Anonymity ensures ideas are contributed without fear of personal
criticism
Evaluation objectivity Anonymity prevents criticism based on the source; ideas are
evaluated on their own merits
Idea organization and Structured software tools allow individuals to organize ideas and
evaluation submit for group modification
Setting priorities and making Anonymous voting/ranking tools give all participants equal weight
decisions
Documentation of meetings Complete records are generated automatically for use after the
meeting
Access to external information Factual disagreements can be settled quickly by accessing external
data
Preservation of organizational Data generated is stored and accessible to non-attendees and other
memory teams at different sites

💡 EXAM TIP: The 8–10 meeting problems addressed by GDSS are a favourite exam
list. Match each problem to how GDSS solves it.
3. Characteristics of GDSS — Three Basic Elements
Element Description
Hardware The conference facility itself (room, tables, chairs), plus electronic display
boards, audiovisual equipment, and computer setups (ergonomics of the
meeting room design)
Software Tools for organizing ideas, gathering information, ranking and setting priorities,
and other collaborative work. Includes groupware and more decision-oriented
GDSS tools.
People Participants in the meeting, a trained facilitator, and a technical support staff for
hardware and software

These elements combine to create different types of GDSS — from simple electronic
boardrooms to elaborate collaboration laboratories.
In a collaboration laboratory, individuals work at their own desktop computers. Input is
integrated on a file server and displayed on a common screen at the front of the room.

4. GDSS Software Tools

Tool Purpose
Electronic Questionnaires Aid organizers in pre-meeting planning by identifying issues and
ensuring key information is not overlooked
Electronic Brainstorming Tools Allow individuals to simultaneously and anonymously contribute
ideas on meeting topics
Idea Organizers Facilitate organised integration and synthesis of brainstormed
ideas
Questionnaire Tools Support facilitators in gathering information before and during
priority-setting
Voting / Priority-Setting Tools Provide methods from simple voting to ranked and weighted
priority-setting
Stakeholder Identification Tools Evaluate impact of proposals on the organization and identify
stakeholders
Policy Formation Tools Provide structure for developing agreement on wording of policy
statements
Group Dictionaries Document agreement on definitions of key terms central to the
project

5. Electronic Meeting Systems (EMS)

An Electronic Meeting System (EMS) is a type of collaborative GDSS that uses IT to make
group meetings more productive by facilitating both communication and decision making. It
supports meetings at the same place/time or different places/times.
How an EMS Works (e.g., IBM's EMS)
• Each attendee has a networked workstation connected to the facilitator's console (which
is also the file server).
• Data from all attendees is collected and saved on the file server.
• Facilitator can project computer images onto a screen using the console; whiteboards
are also available.
• Rooms are typically tiered in semi-circle (legislative style) to accommodate many
attendees.
• Each attendee controls their own screen — work is private until released to the file
server.
• All input to the file server is anonymous — contributions (brainstorming, voting,
comments) are visible to all but the source is never identified.
• Attendees enter data simultaneously, not in a round-robin fashion.

6. How GDSS Enhances Group Decision Making

Key Benefits with Evidence
Improved Pre-Planning: Planning tools improve the quality of meeting preparation; planning
information is available at the actual meeting.
Increased Participation: Traditional optimal meeting size is 3–5; with GDSS, meeting size can
increase while productivity also increases because all contribute simultaneously.
Collaborative Atmosphere: Anonymity reduces the 'deadening effect' of high-status
individuals; lower-level staff contribute freely without fear.
Criticism-Free Idea Generation: Studies show interactive GDSS meetings generate more
ideas and more satisfaction than verbally interactive meetings.
Evaluation Objectivity: Anonymity allows participants to detach from their own ideas and
evaluate them critically; increases free flow of feedback.
Idea Organization: Structured tools allow organized synthesis of ideas; groups interactively
modify until a document is completed.
Priority Setting & Decision Making: Anonymous voting ensures lower-level participants' views
are taken into consideration equally.
Meeting Documentation: IBM evidence: post-meeting data is used to continue dialogue, share
with non-attendees, and make presentations.
Preservation of Organizational Memory: Meeting output from one site can serve as input to
another meeting on the same project at a different site.

7. Limitations and Contingencies of GDSS

• GDSS can be configured in an almost infinite variety of ways — complexity makes
evaluation difficult.
• Effectiveness partially depends on the quality of the facilitator.
• Quality of planning affects outcomes.
 • Cooperation of attendees matters.
• Appropriateness of tools for the type of meeting is critical.
• Other factors affecting outcomes: nature of the group, the task, cultural settings, and
organizational context.
💡 EXAM TIP: GDSS limitations/contingencies are often asked as an essay or short-
answer question. Always contrast with the benefits.

8. GDSS vs DSS — Quick Comparison

Feature DSS GDSS
Focus Individual decision making Group/collective decision making
Emerged 1970s 1980s
Problem Type Semi-structured and unstructured Unstructured (group context)
Key Feature Database + model base + software Hardware + software + people
system (facilitator)
Anonymity Not a feature Core feature — all input is
anonymous
Primary Benefit Analytical power for individual Better meeting quality; more
managers participation
QUICK REFERENCE: KEY TERMS GLOSSARY

Term One-Line Definition

TPS Transaction Processing System — records daily operational
transactions
KWS Knowledge Work System — helps knowledge workers create and
integrate new knowledge
OAS Office Automation System — improves office productivity for data
workers
MIS Management Information System — periodic reports on internal
operations for middle managers
DSS Decision Support System — supports semi-structured decisions using
data and models
ESS / EIS Executive Support System — generalized strategic support for senior
executives
GDSS Group Decision Support System — supports unstructured group
decision making
EMS Electronic Meeting System — a collaborative GDSS for productive
meetings
OLAP Online Analytical Processing — interactive analysis of large data sets
in real time
Data Mining Knowledge discovery from large historical datasets to find patterns and
trends
BI Business Intelligence — tools for gathering, storing, analysing, and
accessing data for decisions
Consolidation OLAP operation — aggregating data from detailed to summary levels
(roll-up)
Drill-down OLAP operation — going from summary data to the underlying detail
Slicing & Dicing OLAP operation — viewing data from different
dimensions/perspectives
What-if Analysis Sensitivity analysis asking how changes in variables affect outcomes
Optimization Model DSS model using linear programming to maximize/minimize a variable
Forecasting Model DSS model that projects future conditions from historical data
Structured Problem Routine, repetitive; has a known algorithmic solution
Semi-structured Problem Partly routine, partly judgment-based; DSS are designed for these
Unstructured Problem Novel, non-routine; no algorithm; discussed and decided, not solved
Free Riding Attending a group meeting without contributing — reduced by GDSS
anonymity
Synergy Group output greater than the sum of individual contributions
EXAM PREPARATION CHECKLIST

Part 1: Key IS Applications

• Can I name the four organizational levels and give an example system for each?
• Can I draw or describe the IS pyramid with all 6 system types in the correct positions?
• Can I explain TPS fully — what it does, who uses it, what happens if it fails?
• Can I distinguish knowledge workers from data workers and match them to KWS and
OAS?
• Can I list at least 4 OAS functions?
• Can I compare MIS and DSS across 5+ dimensions?
• Can I explain ESS — what it does, who uses it, and why it's different from DSS?
• Can I explain system integration — why it matters and why there is no single right level?

Part 2: Decision Support in Business

• Can I name and describe the 3 levels of managerial decision making?
• Can I list all 11 information quality characteristics?
• Can I explain OLAP's 3 operations with examples?
• Can I explain what data mining is and list 5+ things it can do?
• Can I explain the 3 components of a DSS?
• Can I describe the 3 types of DSS models with examples?
• Can I list the 4 DSS success factors?

Part 3: Group Decision Support Systems

• Can I define GDSS in one sentence?
• Can I list the 3 elements of a GDSS (hardware, software, people)?
• Can I name at least 6 GDSS software tools and their purposes?
• Can I explain how an EMS works (anonymity, simultaneous input, file server)?
• Can I list at least 6 meeting problems GDSS addresses and explain how?
• Can I explain 3 limitations/contingencies of GDSS?
• Can I compare DSS and GDSS across key dimensions?

You've covered a lot of ground, Danny. Review the tables and the exam
tips, and you'll be well prepared!