The document discusses different models for classifying information systems based on management level: the three level model, four level model, and five level model. The three level model categorizes systems as strategic, tactical, or operational based on the type of decisions made. The four level model includes transaction processing systems for lower management, management information systems and decision support systems for middle management, and executive information systems for top management. Each level of systems provides different types of information, processing capabilities, and outputs tailored to the needs of managers at different hierarchical levels in an organization.

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The Institute of Chartered Accountants of Bangladesh-ICAB
IT Knowledge
Class No. 3
A.H.M. Ariful Islam ACA

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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

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Four level pyramid model
Five level pyramid model

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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 the Information 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 process starts. Inputs from
different internal and external information sources are collected and processed 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.

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Operational Decision :
All types of inputs available from various sources are collected. 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.

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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. The transaction 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.

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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
Management information system
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

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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?

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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.

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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