1 Management reporting systems 2 Decision support systems and business intelligence 3 Executive information systems 4 Acquiring information systems and services
1 Management reporting systems
Information systems support all levels of management, from those in charge of short-term schedules and budgets for small work groups to those concerned with long-term plans and budgets for the entire organization. Management reporting systems provide routine, detailed, and voluminous information reports specific to each manager‘s areas of responsibility. These systems are typically used by first-level supervisors. Generally, such reports focus on past and present activities, rather than projecting future performance. To prevent information overload, reports may be automatically sent only under exceptional circumstances or at the specific request of a manager.
2 Decision support systems and business intelligence
All information systems support decision making, however indirectly, but decision support systems are expressly designed for this purpose. As these systems have been developed to analyze massive collections of data, they have also become known as business intelligence applications. The two principal varieties of decision support systems are model-driven and data-driven.
In a model-driven decision support system, a preprogrammed model is applied to a relatively limited data set, such as a sales database for the present quarter. During a typical session, an analyst or sales manager will conduct a dialog with this decision support system by specifying a number of what-if scenarios. For example, in order to establish a selling price for a new product, the sales manager may use a marketing decision support system. Such a system contains a model relating various factors the price of the product, the cost of goods, and the promotion expense in various media to the projected sales volume over the first five years on the market. By supplying different product prices to the model, the manager can compare predicted results and select the most profitable selling price.
The primary objective of data-driven business intelligence systems is to analyze large pools of data, accumulated over long periods of time in data warehouses, in a process known as data mining. Data mining aims to discover significant patterns, such as sequences (buying a new house, followed by a new dinner table), clusters, and correlations (large families and van sales), with which decisions can be made. Predictive data mining attempts to forecast future outcomes based on the discovered trends. Data-driven decision support systems include a variety of statistical models and may rely on various artificial intelligence techniques, such as expert systems, neural networks, and machine learning. In addition to mining numeric data, text mining is conducted on large aggregates of unstructured data, such as the contents of social media that include social networks, wikis, blogs, and micro blogs. As used in electronic commerce, for example, text mining helps in finding buying trends, targeting advertisements, and detecting fraud.
An important variety of decision support systems enables a group of decision makers to work together without necessarily being in the same place at the same time. These group decision systems include software tools for brainstorming and reaching consensus.
Another category, geographic information systems, can help analyze and display data by using digitized maps. Such data visualization supports rapid decision making. By looking at a geographic distribution of mortgage loans, for example, one can easily establish a pattern of discrimination.
3 Executive information systems
Executive information systems make a variety of critical information readily available in a highly summarized and convenient form, typically via a graphical digital dashboard. Senior managers characteristically employ many informal sources of information, however, so that formal, computerized information systems are only of partial assistance. Nevertheless, this assistance is important for the chief executive officer, senior and executive vice presidents, and the board of directors to monitor the performance of the company, assess the business environment, and develop strategic directions for the future. In particular, these executives need to compare their organization‘s performance with that of its competitors and investigate general economic trends in regions or countries. Often individualized and relying on multiple media formats, executive information systems give their users an opportunity to ―drill down‖ from summary information to increasingly focused details.
4 Acquiring information systems and services
Information systems are a major corporate asset, with respect both to the benefits they provide and to their high costs. Therefore, organizations have to plan for the long term when acquiring information systems and services that will support business initiatives. On the basis of long-term corporate plans and the requirements of various individuals from data workers to top management, essential applications are identified and project priorities are set. For example, certain projects may have to be carried out immediately to satisfy a new government reporting regulation or to interact with a new customer‘s information system. Other projects may be given a higher priority because of their strategic role or greater expected benefits.
Once the need for a specific information system has been established, the system has to be acquired. This is generally done in the context of the already existing information systems architecture of the firm. The acquisition of information systems can either involve external sourcing or rely on internal development or modification. With today‘s highly developed IT industry, companies tend to acquire information systems and services from specialized vendors. The principal tasks of information systems specialists involve modifying the applications for their employer‘s needs and integrating the applications to create coherent systems architecture for the firm. Generally, only smaller applications are developed internally. Certain applications of a more personal nature may be developed where the programming environment supports simple end-user enhancement.