## **Learning Outcomes**

After reading this article, you will be able to explain the main types of information systems within an organisation—Transaction Processing Systems (TPS), Management Information Systems (MIS), Decision Support Systems (DSS), and Executive Information Systems (EIS). You should be able to distinguish their purposes, features, users, and outputs. You will also describe how each system supports decision-making at different management levels, and select an appropriate system for business scenarios relevant to the ACCA Business and Technology (BT) exam.

## **ACCA Business and Technology (BT) Syllabus**

For ACCA Business and Technology (BT), you are required to understand how various information systems support decision-making within organisations and how they align with different levels of management responsibility. In this article, the following syllabus areas are addressed:

- The main types of information systems in business: TPS, MIS, DSS, and EIS—including their functions and typical users
- How the type of information differs, and its purpose, at various management levels within Anthony’s hierarchy
- Features and outputs produced by each information system type
- The relationship between management structure and information requirements
- Selecting suitable information systems for different business problems and users

## **Test Your Knowledge**

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision._

1. Which information system is designed primarily to record daily business transactions and support operational-level decisions?
2. What type of information does an Executive Information System (EIS) typically provide, and to whom?
3. Match the following management levels with the most relevant information system: operational, tactical, strategic. Options: TPS, DSS, MIS, EIS.
4. True or false? A Decision Support System (DSS) assists managers in dealing with structured, routine decisions.

## **Introduction**

Information systems underpin the effective management of organisations. Different systems provide information to support decision-making at operational, tactical, and strategic levels. Each system type—TPS, MIS, DSS, EIS—is tailored to the specific needs of its users, processing data in suitable forms, from detailed transaction records to summarised trend reports.

Understanding these categories is essential for the ACCA BT exam and for making informed decisions about IT investment in business contexts.

> **Key Term: information system**
> A set of interrelated components that collect, process, store, and provide information for supporting operations, management, and decision-making in an organisation.

## The Role of Management Levels in Information Needs

An organisation’s structure determines its information requirements. According to Anthony’s hierarchy:

- Operational management focuses on day-to-day activities and requires detailed, current data.
- Middle (tactical) management needs summarised, routine reports to monitor departmental performance.
- Senior (strategic) management relies on concise, aggregated information—often from both internal and external sources—to make long-term decisions.

> **Key Term: Anthony’s hierarchy**
> A model categorising organisational activity into operational, tactical, and strategic levels, each with distinct information and decision-making needs.

## Main Types of Information Systems

Four main types of information systems support different levels and types of management decision-making in organisations:

### Transaction Processing Systems (TPS)

TPS capture and process the detailed data of routine operational transactions, such as sales, purchases, receipts, and payroll. These systems provide the basis for other information systems by gathering the raw data required for analysis.

TPS are essential for:

- Recording business events as they occur
- Maintaining accurate, up-to-date operational records
- Enabling routine decision-making (e.g., stock reordering, employee clock-in/out)

Typical users: operational staff and supervisors

> **Key Term: Transaction Processing System (TPS)**
> An information system designed to record, process, and store the routine day-to-day transactions of a business.

### **Worked Example 1.1**

A supermarket processes each sale at a checkout through its point-of-sale terminals, updating inventory and sales records immediately. This data is later summarised for restocking.

> **Answer:** This is a TPS, as it records routine sales transactions in real time for operational use.

### Management Information Systems (MIS)

MIS use data primarily gathered by TPS to produce reports and summaries that assist middle managers in monitoring departmental performance and making routine tactical decisions. Reports are typically scheduled (e.g., daily sales reports, monthly variance analysis).

MIS characteristics:

- Produce regular, structured reports from historical and current data
- Support planning, controlling, and performance assessment at the departmental or divisional level
- Rely primarily on internal information

Typical users: department managers, middle management

> **Key Term: Management Information System (MIS)**
> An information system that processes data from operational activities to provide managers with scheduled reports for control and tactical planning.

### **Worked Example 1.2**

A car dealership’s MIS generates a weekly summary showing the number of vehicles sold by each salesperson and location, helping managers evaluate performance.

> **Answer:** This MIS supports tactical decisions and performance monitoring using data accumulated from daily sales records.

### Decision Support Systems (DSS)

DSS help managers with semi-structured or non-routine decisions—where problem variables may be unclear or unpredictable and external data may be required. DSS often incorporate models, simulations, or analytical tools to allow users to explore different scenarios.

DSS features:

- Combine internal and external data
- Support decision-making through data analysis, simulations, and “what-if” scenarios
- Designed for flexibility and user-driven queries

Typical users: senior or tactical managers facing complex or unique problems

> **Key Term: Decision Support System (DSS)**
> A computer-based system that supports decision-makers in solving semi-structured or unstructured problems by combining data and analytical models.
>
> **Key Term: semi-structured decision**
> A decision for which some, but not all, variables and relationships are known in advance, often requiring judgement and analysis aided by information systems.

### **Worked Example 1.3**

A retailer is considering entering a new regional market but faces uncertainty about consumer demand and competitor reactions. The business uses a DSS to model potential sales, costs, and competitor responses, evaluating different entry strategies before deciding.

> **Answer:** Here, a DSS enables managers to explore non-routine decisions using both internal data (e.g., historic sales) and external data (e.g., market research).

### Executive Information Systems (EIS)

EIS are tailored for senior executives. They provide fast access to consolidated internal summaries and key external indicators (such as market trends, competitor status, or economic forecasts). EIS interface often includes dashboards or visual analytics.

EIS characteristics:

- Aggregate data at a high level, often from different sources
- Allow interactive investigation for strategic decision-making
- Present data graphically (e.g., charts, dashboards)

Typical users: board members, directors, C-suite

> **Key Term: Executive Information System (EIS)**
> A system that delivers summarised, often graphical, information to senior management, supporting strategic planning and monitoring.

### **Worked Example 1.4**

A multinational’s CEO reviews an EIS dashboard displaying worldwide sales by region, competitor market share data, and key financial ratios, using this concise information to decide the company's long-term investment priorities.

> **Answer:** This is an EIS scenario, as the system provides strategic, external, and internal summaries for high-level decision-making.

## Comparison Table: Information Systems Types

| System | Primary User           | Main Purpose                          | Type of Output                                       |
| ------ | ---------------------- | ------------------------------------- | ---------------------------------------------------- |
| TPS    | Operations staff       | Record routine transactions           | Detailed transaction records, receipts               |
| MIS    | Middle managers        | Monitor and control performance       | Regular reports, summaries                           |
| DSS    | Middle/senior managers | Support complex/non-routine decisions | Analytical models, scenario analysis, ad-hoc queries |
| EIS    | Executives             | Support strategic decisions           | Dashboards, high-level summaries, KPIs               |

## Selecting the Appropriate System

When determining which information system is most suitable for a particular business problem, identify:

- The management level of the decision-maker
- Whether decisions are routine/structured or complex/unstructured
- The need for internal, external, historic, or forecast data

### **Exam Warning**

Do not confuse a DSS with an MIS. DSSs are designed for exceptional, non-routine situations and often include “what-if” analysis. MIS reports are for standard, scheduled performance monitoring.

## **Summary**

Organisations use different types of information systems—TPS, MIS, DSS, and EIS—to support their unique information and decision-making requirements at each level. Recognising the correct application, features, and users of each system is essential for effective management and is a key knowledge area for the ACCA BT exam.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- Describe information needs at different organisation levels
- Define and distinguish between TPS, MIS, DSS, and EIS
- Identify primary users and typical outputs for each system
- Select the best system for given business scenarios and problems
- Recognise the importance of matching system type to management decision structure

## **Key Terms and Concepts**

- information system
- Anthony’s hierarchy
- Transaction Processing System (TPS)
- Management Information System (MIS)
- Decision Support System (DSS)
- semi-structured decision
- Executive Information System (EIS)


Information systems types and architecture - Tps mis dss and eis