MODULE 2

SUBSYSTEMS OF INFORMATION SYSTEM

TPS (Transaction Processing System)

Meaning

A transaction processing system or TPS is a type of information system in which transactional data
is stored, modified and retrieved. Take an example of a bank in which a transaction of money is
done between bank and customer. The customer gives a check to the bank and the bank resolve
that check and it is a type of transaction.

Similarly, we go to the shop and buy something, this is also a transaction. Transaction in a company
and outside company is also managed by TPS.

TPS is software for managing daily transactions. The bank has its own TPS, the company or
organization has its own TPS. The transaction is usually carried out by front line staff who directly
interacts with customers.

Another example of TPS is online buying of railway or bus tickets. You buy a ticket through
online TPS where only one person buys a ticket at a given time. No ticket or seat is reserved by
multiple people. All the transactions are carried out in real-time. The person who comes first in
TPS gets their seat first.

You can also buy things online from any website or online store and that online store also uses
online TPS for managing its products. You can use a credit/debit card to make any transaction on
the online store.

Examples of the transaction processing system (TPS)

 Electronic transfer of funds

 Airline reservation system
 Bank account processing system

Types of the transaction processing system (TPS)

There are two types of TPS:

Batch processing system

A transaction that is done in a batch or group is known as a batch processing system. The batch
processing is not done immediately. First, the data is collected and then placed in a group or batch
then the processing is started.
Examples of batch processing systems are:

 Credit card transaction

 Payment by cheque

Real-time transaction

A transaction that is done immediately without any delay is known as real-time transaction. It is
also known as a online transaction processing system (OLTP).

Examples of OLTP are

 Use card for payment

 Online transaction

Features of TPS

The following are some crucial features of a TPS:

 Controlled Access: TPSs are powerful business tools. Hence, only authorized employees
can access it. In other words, it allows only certain employees to control and process
transactions.
 Connection With The External Environment: TPS establishes a relationship
with the external environment by distributing information to suppliers and customers.
 Fast Response: This feature is crucial for a TPS as organizations cannot afford to keep
their customers waiting long before completing a transaction.
 Inflexibility: A TPS processes all transactions in the same way, irrespective of the time of
day, user, or customer, to maximize efficiency.
 Reliability: A TPS must be reliable as customers do not tolerate errors; it must have
adequate security and safety measures.
 Distribution Of Details To Other Systems: A TPS produces and distributes information
to different systems. For instance, sales processing systems provide information to general
ledger systems.

Advantages of TPS

Productivity:

By using TPS, the staff of the company increases their productivity. Also, customers get more trust
and satisfaction in the company.

Fast:
The transactions are carried out in fast time and there is no delay. The real-time transaction is also
a type of TPS in which no delay in time occurs.

Low cost:

As most of the work is carried out by TPS so less staff is needed to be hired.

Large data:

TPS can process a large amount of data. There are thousands of transactions done by the TPS on
daily basis.

Use anywhere:

TPS can be used anywhere you want. You can use it in organizations, stores, banks, schools etc.
Also, customers can do transactions online from anywhere.

Error recovery:

If some data is lost in the transaction, then it can be retrieved by the TPS. The system also self-
solves issues and errors are detected and removed by the system easily.

Easy to use:

Staff can easily use the TPS software and there is little or no training required to use the TPS
software. It is also user friendly.

Disadvantages of TPS

Setup cost:

The initial setup cost of TPS is high. You have to buy a license for TPS software. Also, you need
to buy computers, cameras and price detecting devices.

Incompatible:

Sometimes your software and hardware have compatibility problems. Some hardware has drivers
problems.

Overload problem:

Sometimes there occurs a high number of transactions on the TPS so it slows down the system or
it stops working.

High internet:
Users need to have a high internet connection to use the TPS.

Standard format:

TPS lacks a standard format.

Process of TPS:
 Initiation

Being a banking procedure, it starts when the user or customer initiates a transaction. This happens
when users purchase or sell, which ultimately ends up in transferring funds. This action triggers a
transaction. So, this is just a beginning of the transaction processing.

 Data Entry
This is a data input step where the relevant information, such as customer account details,
transaction type, product/service information, quantities, amount, etc. are recorded online. The
inputs automatically enter the online tools in the backend as one makes a payment or transfers
money. This is because of advanced machine learning tools, which is trending.
 Authorization
Now that the data is recorded, authorization takes place. It means executing the verification process
to see if the transaction is authentic or true. For this, several methods are introduced, such as 2-
Factor authentication, Biometric Verification, Device Fingerprinting, Geolocation Verification,
Address Verification System, Card Verification Value (CVV), SSL/TLS Encryption
methods. Apart from these, there are some other AI systems like Forter, Simility, Whitepages Pro,
etc. that help in detecting & preventing fraudulent activities.

These all methods help in verifying customers’ identities, account balances, available credits, and
fraud checks online.

 Processing and Routing

This is the processing phase, wherein the transactions are filtered, cleaned, and routed to the
appropriate channels. Once processed, the transfer of the amount is routed to the payment gateway.
This also encloses details to a fulfilment center. This raises a service request to a concerned
department. So, this is just one way of a transaction.

 Payment Processing (if applicable)

Now, security comes in a pivotal role. In financial transactions, it is necessary to securely

channelize the payment for transmission to the next level, which is to the processor, banks master
data, and credit card networks. As it reaches the destination, it is further checked and approved or
settled. It’s actually the payment processor that interacts with the backend systems to provide or
further the transaction status back to the system.

 Confirmation and Receipt

Just the transaction is made in the previous steps. Now is the time to confirm if the transaction is
successful. For this purpose, there are many other communication systems attached to route the
status of the transaction through an email, SMS, or on-screen confirmation. Also, a receipt is
typically generated and sent to the customer as well.

MIS (Management Information System)

Meaning
A Management Information System (MIS) is an information system that provides managers with
the tools to effectively organize, evaluate, and manage departments within an organization. It’s
used for decision making and the coordination, control, analysis, and visualization of information
in an organization.

When used in a corporate context, a MIS is used to increase the value and profits of a business by
providing managers with the relevant and appropriate information needed to make important
decisions quickly. When implemented properly, a MIS helps achieve a high level of efficiency in
a company’s management operations.

Example

Let us assume that a multinational company owns multiple domestic and foreign offices. The total
number of employees is 900. Maintaining a manual record of all the employees is not feasible.

Therefore, firms’ human resource department uses a human resource information system
to collect, record, and classify employee information. The firm also uses MIS to track attendance
and leaves. In addition, the firm opts for a centralized database to store large amounts of data.

Features of MIS

The main features of MIS are as follow:

1) Integrative system:
An MIS is logically integrated system comprising of subsystem, where activities of each are
interrelated. this integration is possible by the auto rotation of data among the sub system.

2) Sub- system concept:

Alto system is considered a single entity, but a big system is divided into sub system. so that one
such system can be implemented at a time, for better effectiveness.

3) Provides relevant information to management:

MIS should provide only relevant information to managers. At times, determining relevant
information becomes very difficult, especially when and analyses of problems is done differently
by different managers, according to the varying circumstances. Thus, MIS provides relevant
information and helps in reducing confusion and solving problems.

4) Flexible:
A MIS must be one that can be easily modified to changing circumstances.
It must be capable of expansion, accommodate growth or new type of processing activity and
contraction as and when required.

5) Enhances productivity:
MIS oh whole improves the efficiency of an organisation. It helps in efficient document
preparation, provides high level of services to individuals and external organisation, help in early
detection of warning about internal and external problems ,and also in identifying opportunities. It
assist in the overall management of organisation and improve the managers ability to deal with
unexpected problems.

6) Co-ordinated system:
MIS is centrally synchronized so that all its components such as data processing, office
automation, intelligence and decision support system, are developed and managed in a planned
and coordinated manner.

6) Feedback System:
MIS provides feedback about its own efficiency and effectiveness. The system itself provides
statistics about by 'whom and 'how much' the system has been used.

8) Management Oriented:
MIS is design from top to bottom corner but not necessarily start from the management needs of
the overall business goals. this means that the system may be developed keeping in mind the needs
of the middle /operation management as well as the top management to stop. this ensures a good
MIS.

9) Management Directed:
It is imperative that management should dynamically direct and development of system because
Management Information System is management oriented. Management should decide that
information is required and hence help in designing MIS.

10) Common Database:

Since MIS is an integrative system, it has the opportunity to avoid duplication and redundancy in
data collection, storage and sharing. One master file should be maintained, which can then use be
different function areas from their respective report preparation and analysis.
Advantages of MIS

1)Facilitates planning:
Management Information System provides relevant information for efficient decision making for
stop with the increasing size and complexity of organisation, managers now work remotely rather
than from the operations location. MIS proves to be a big help in such scenarios.

2) Minimizes Information Overload:

MIS help in compartmentalizing data into smaller relevant parts of decision-making. This reduces
the confusion of large can organized data.

3) MIS Encourages Decentralization:

MIS enables decentralization of authority. This is possible as there and minority system at lower
levels of measuring performance. This helps in making changes in organizational plans and
procedures.

4) Brings Co-ordination:
MIS connect all decision-making nodes in an organisation. it assists in assimilation of specialized
activities whereby each department becomes aware of the problems and requirement of other
departments. this ensures smooth functioning of an organisation.

5) Makes Control Easier:

MIS at as an important tool to relate managerial planning and control. MIS increases the data
processing and storage capacity as well as reduces the cost with the help of computer. It enhances
the managements capability to evaluate and improve performance.

Disadvantage of MIS

1)Highly sensitive, requires constant monitoring:

MIS content highly sensitive information about an organisation which can be used for fraudulent
activities. Constant monitoring and filtering are required to avoid manipulation of data by fraudster
causing harm to business.

2) Budgeting of MIS is Extremely Difficult:

MIS cannot be budgeted like activities of all other department. Hence, its expense is unpredictable.
Even though it forms a very sensitive and important function of organisation but it is not possible
to predict its expense.
3) Quality of Outputs Governed by Quality of Input:
The quality of the information generated through MIS is dependent on the quality of raw data used
for processing.

4) Lack of Flexibility to Update Itself:

MIS Cannot update itself automatically like many other applications. Updating has to be done
manually by obtaining raw data and feeding it into the system for processing and updating
preexisting data.

5) Effectiveness Decrease Due to Frequent Changes in Top Management:

Frequent changes in middle or top management levels reduces the effectiveness of information
produced through MIS, as requirements of reports are the result of input provided by the top
management level. Change in management result in chair changed information requirement
because new team of management will require information on their own format.

6) Takes into Account only Qualitative Factors:

MIS takes into consideration only qualitative factors, ignoring the non-qualitative factors such as
morale, attitude, and motivation of workers. is the biggest limitation of MIS.

Process of MIS

1. Identification of Information Needs:

The first step in the MIS process is to identify the information needs of the organization. This
involves understanding the business processes, objectives, and decision-making requirements of
different levels and functions within the organization.
2. Data Collection:
Once the information needs are identified, the next step is to collect relevant data. Data can be
sourced from various internal and external sources, such as transactional systems, databases,
surveys, and market research.
3. Data Processing:
After collecting the data, it needs to be processed to extract meaningful information. This
involves organizing, cleaning, aggregating, and transforming the raw data into a format that can
be used for analysis and decision making. Data processing may include tasks like data validation,
integration, and data quality assurance.
4. Data Analysis:
In this stage, the processed data is analyzed to derive insights and support decision making.
Various analytical techniques, such as statistical analysis, data mining, and predictive modeling,
can be employed to discover patterns, trends, and relationships in the data. The analysis helps in
identifying key performance indicators, evaluating performance, and making informed decisions.
5. Information Presentation:
The analyzed information is then presented in a meaningful and easily understandable format.
This can involve creating reports, dashboards, visualizations, and other tools to communicate the
information effectively to the relevant stakeholders. The presentation should be tailored to the
specific needs of different users, such as executives, managers, and operational staff.
6. Information Dissemination:
Once the information is presented, it needs to be disseminated to the appropriate individuals or
groups within the organization. This can be done through various channels, such as email,
collaboration tools, intranets, or mobile applications. Timely and accurate information
dissemination ensures that the right people have access to the right information at the right time.
7. Information Utilization:
The final stage of the MIS process is the utilization of information for decision making and
performance improvement. The information provided by the MIS supports strategic planning,
operational management, problem-solving, and performance evaluation. It enables managers and
executives to make informed decisions based on accurate and up-to-date information.

DSS (Decision Support System)

Meaning
A decision support system (DSS) is a computerized system that supports decision-making in
organizations. Decision support systems are typically used to help managers and other decision-
makers solve problems by providing them with relevant information, models, and analysis tools.

DSSs are used in a variety of different ways, depending on the specific problem that needs to be
solved. For example, a DSS may be used to help plan production levels or track inventory levels.
In some cases, a DSS may even be used to make decisions automatically, such as routing phone
calls or scheduling employees.

For example, a Decision Support System may be used to:

1. Help plan production levels

2. Track inventory levels
3. Make decisions automatically, such as routing phone calls or scheduling employees

Features of a DSS

1. Interactive computer-based systems.

2. Use data from a variety of sources.
3. Provide information and advice to decision-makers.
4. Outputs are tailored to the needs of the decision-maker.
5. Flexible and can be adapted to changing needs.
6. Intended to supplement, not replace, human judgment.
Advantages of DSS:

Fast:

DSS is a fast method for taking decisions. Computers give us results fast. The data we need is
displayed on the screen within a few minutes. We have to just take decisions overselves after
getting data from the computer software.

Automation:

If you want to reward any customer then you don’t need to worry. The software will know which
consumer buy most of the company products and you will give them a 50% discount on their next
purchase. So it automates the process of decision making.

Efficient:

It is an efficient method. There are fewer chances that computerized data may be wrong.
Computers always extract the data that we feed to them. If we feed relevant data then it will output
data that is accurate.

Training:

If we have all the data available on our desk then deciding by top management is easy. They make
decisions in no time. First, they get data from a single click. For example, the CEO of Samsung
want to know how many sales of a specific model of mobile is sold in December, then he will get
information from the computer software. If he wants to know which Samsung mobile model has
most of the sales in last year then he will know by doing a couple of clicks from the computer. It
is noted that the data is only available to the CEO and top management of the company. So they
don’t need extra training.

Communication:

The top company authority gets accurate data from the computerized software. The company CEO
and managerial staff communicate with each other and make decisions. They have all the statement
ready from the software and they have to only say yes or no to the statements.

Low cost:

If we use the old method of organizing and processing the data then it consumes a lot of manpower.
We just get data from relevant authorities and input it into our software. We also get data from
doing little research in any field. For example, if we want to construct a building then we get
information from real estate agents about cost, time, structure, maps and then we input in computer
software and get the results about total cost, and time duration.
Satisfaction:

If you make a random decision without any valid data in front of you then you will be not confident
in your decision. But if you first see the data and then make a decision then you get satisfaction
with your decisions.

Disadvantages of DSS:
Limited skills:

If the management of the company gets all the data prepared by the system then they don’t do any
research by themselves. I mean they will do less mental things. Their brain will become limited.
Their skills will be not polished.

Blame computer:

If any staff make mistake, then he will directly blame the computer. He will tell that his computer
is not working that is why I am not giving a result.

Machine dependent:

All the data is kept in the computer machine. So, the CEO will be bound to the machine. He cannot
decide without investigating data from the machine.

Wrong information:

If the computer system is given the wrong data input, then the results will also be not correct. The
computer does not know if the data is right or wrong. The computer is dependent on us. If we feed
the right data, it will show the right result and if we make mistakes and feed wrong data to the
computer then obviously it will show us the wrong result.

Overconfidence:

The management of the company becomes overconfidence. They know all the data and take
decisions upon data. But they don’t know that they are doing clerical work. They are making fewer
self-decisions and they are most of the time fetching data from the machine.

Wrong coding of software:

Sometimes the software is not coded correctly. The software may get errors and shows wrong
results. I mean it will show errors which you try to fetch data. So the IT staff of the company have
to make sure that software works well before handling it to management staff.
Process of DSS

Step 1: Problem recognition: It is a crucial step in the Decision Support System (DSS) process.
It involves identifying and defining a specific issue or challenge that requires decision-making and
problem-solving. Problem recognition is the foundation upon which the entire decision-making
process in a Decision Support System is built. It sets the stage for gathering data, generating
alternative solutions, evaluating options, and ultimately making informed decisions to address the
identified problem or challenge.

Step 2: Problem Definition: Once the problem is identified, it's essential to define it clearly and
precisely. This includes understanding the scope of the problem, its impact on the organization,
and the goals or objectives to be achieved through the decision-making process.

Step 3: Alternative Generation: Alternative generation is a critical step in the Decision Support
System (DSS) process. Once a problem or decision is identified and defined, the next step is to
generate a set of alternative solutions or courses of action. The goal of alternative generation in a
DSS is to provide decision-makers with a range of viable options to consider. These alternatives
should be well-documented and evaluated against the decision criteria to facilitate the subsequent
stages of the decision-making process, such as evaluation and selection.
Step 4: Model Design: Designing the model is a critical step in the development of a Decision
Support System (DSS). The model serves as the framework for analyzing data, generating insights,
and facilitating decision-making. Model design in a DSS is a complex process that involves a
combination of domain knowledge, data expertise, and modeling skills. It is essential to align the
design with the specific needs of the organization and the decision-making context. Additionally,
user feedback and continuous improvement should be integrated into the design process to enhance
the effectiveness of the DSS over time.

Step 5: Alternative Analysis: Alternative analysis in a Decision Support System (DSS) is a critical
step in the decision-making process. It involves evaluating and comparing different options or
alternatives to determine the most suitable course of action. Alternative analysis in a DSS helps
decision-makers make informed choices by systematically evaluating and comparing options
based on predefined criteria and data-driven insights. It promotes transparency, objectivity, and
accountability in the decision-making process.

Step 6: Choice: The choice phase in a Decision Support System (DSS) involves selecting the most
suitable alternative or course of action based on the analysis of alternatives and criteria. This phase
is crucial as it leads to the actual decision-making. The choice phase in a DSS is where all the
analysis and evaluation efforts culminate in a decision. It requires careful consideration of all
relevant factors and a commitment to making the best decision possible based on available
information and insights. The process should be transparent, well-documented, and aligned with
the organization's goals and values.

Step 7: Implementation: The implementation phase in a Decision Support System (DSS)

involves putting the chosen alternative into action based on the decision made in the previous
stages of the DSS process. This phase is crucial for translating decisions into real-world actions
and achieving the desired outcomes. The implementation phase in a DSS is where the chosen
alternative becomes a reality, and the organization works toward its goals and objectives.
Successful implementation requires effective planning, resource management, communication,
and a commitment to achieving the desired outcomes. Continuous monitoring and adaptability are
key to ensuring that the implementation remains on track and aligned with the organization's
strategic objectives.

GDSS (Group Decision Support System)

Meaning:

A group decision support system (GDSS) is an interactive computer-based system that facilitates
a number of decision-makers (working together in a group) in finding solutions to problems that
are unstructured in nature. They are designed in such a way that they take input from multiple
users interacting simultaneously with the systems to arrive at a decision as a group.

The group decision support system’s tools and procedures help to improve the quality and
effectiveness of group meetings. Some group decision-making procedures are supported by
groupware and web-based technologies for electronic meetings and videoconferencing, although
their primary function is to allow communication between decision-makers.
Each participant in a group decision support system (GDSS) electronic conference is given a
computer. The computers are linked to one another, as well as to the facilitator’s computer and the
file server. At the front of the room, there is a projection screen. This screen can be used by both
the facilitator and the participants to project digital text and images.

Examples of GDSS:
• 1) “One example of implementation of GDSS is at IBM. They, as well as many other
corporations, initiated GDSS to improve group meetings. A specific case involved a plant manager
not being able to identify the cause of problems with shop floor control. After having a meeting
for two hours with plant personnel all that resulted were arguments and bad feelings.

• So, after meeting with the company’s GDSS facilitator, the manager decided to have ten plant
employees, himself, and two junior analysts participate in a GDSS program. They would use
electronic brainstorming and voting to resolve the shop floor control problem.

• The manager and the facilitator decided the topic would be “What are the key issues in improving
shop floor control?”

• After brainstorming for 35 minutes and compiling 645 lines of suggestions, ideas and comments
on how to improve shop floor control, the manager found that he had gotten useful information
about the issue for the first time.

• A list was compiled of the comments and then the members of the group ranked them in order of
importance. The results were displayed and a discussion occurred for ten minutes. The manager
thanked the participants and was given a printout of all the discussion and results of the group vote
(Aiken 3).”

Features of Group Decision Support System (GDSS):

1) Ease of Use : It consists of an interactive interface that makes working with GDSS simple
and easy.

2) Better Decision Making : It provides the conference room setting and various software tools
that facilitate users at different locations to make decisions as a group resulting in better
decisions.

3) Emphasis on Semi-structured and Unstructured Decisions : It provides important

information that assists middle and higher level management in making semi-structured and
unstructured decisions.

4) Specific and General Support : The facilitator controls the different phases of the group
decision support system meeting (idea generation, discussion, voting and vote counting, etc.)
what is displayed on the central screen and the type of ranking and voting that takes place, etc. In
addition, the facilitator also provides general support to the group and helps them to use the
system.

5) Supports all Phases of the Decision Making : It can support all the four phases of decision
making, viz intelligence, design, choice, and implementation.

6) Supports Positive Group Behavior : In a group meeting, as participants can share their
ideas more openly without the fear of being criticized, they display more positive group behavior
towards the subject matter of the meeting.

Advantages of GDSS:

1) More Information in Less Time :

It is possible to gather huge amount of information in a very short time period as GDSS
facilitates the members of the team to work parallel.

2) Greater Participation :
The risks associated with conformity pressure and groupthink is greatly decreased when the
members of the group work in a GDSS because the members are able to express their thoughts
freely. This is due to the anonymity feature extended by GDSS.

3) More Structure :
In a GDSS environment the discussions are much more concentrated and focused. Irrelevant
degradations are greatly reduced.

4) Automated Documentation :
Comments are preserved forever and the system provides the result without any delay. Excellent
graphics makes viewing more attractive.

Disadvantages of GDSS :

1) Cost:
A significant amount of cost may be associated with putting up the infrastructure consisting of
the room, network connectivity and the software.

2) Security:
This risk arises when the facility for setting up GDSS has been rented. There are chances that
information gets leaked to the peers by a low-level employee.

3) Technical Failure:
The system must be properly implemented to reduce the risk associated with loss of connectivity
and power loss. It is highly dependent on LAN/WAN infrastructure and bandwidth.

4) Keyboarding Skills:
If the members get frustrated, they might participate less.

5) Training:
There is variation in the learning curve of the user in various situations.

6) Perception of Messages:
MIS-interpretations may occur in case the members communicate less verbally.

Process of GDSS:

Step 1: Problem Identification and Definition: The process begins with identifying and defining
the problem or decision that the group needs to address. This step involves clarifying the
objectives, scope, and context of the decision.

Step 2: Idea generation: Idea generation in a Group Decision Support System (GDSS) involves
facilitating the collaborative generation of ideas and solutions within a group or team using
computer-based tools and technologies. Effective idea generation in a GDSS can lead to more
creative and innovative solutions. The use of technology enhances collaboration, idea organization,
and documentation, making the process more efficient and inclusive.

Step 3: Evaluation: The evaluation of a Group Decision Support System (GDSS) is a critical step
in assessing its effectiveness, usability, and impact on decision-making within a group or
organization. Evaluating a GDSS helps identify strengths, weaknesses, and areas for improvement.
The evaluation of a GDSS should be an ongoing process, with feedback and improvements
incorporated over time to ensure that the system continues to meet the evolving needs of the
organization and its decision-making processes.

Step 4: Selection of alternatives: The selection of alternatives is a crucial step in the decision-
making process, whether it's for business decisions, personal choices, or any other context. When
faced with multiple alternatives, you need to carefully evaluate and choose the one that best aligns
with your goals, criteria, and constraints. The selection of alternatives is a structured and analytical
process that aims to make informed decisions based on objective assessments. By following these
steps, you can systematically evaluate and choose the best alternative that aligns with your goals
and criteria while considering potential risks and constraints.

Step 5: Implementation: The implementation of a Group Decision Support System (GDSS)

involves setting up and configuring the necessary technology and processes to enable effective
group collaboration and decision-making. Implementation of a GDSS should be an iterative
process, with adjustments made based on user feedback and changing organizational requirements.
By following these steps, you can set up a GDSS that enhances group collaboration and supports
more informed and effective decision-making within your organization or group.
EIS (Executive Information System)

Meaning:

An executive information system (EIS) is a decision support system that helps top executives of
the organization to make decisions.

EIS uses both internal and external information to make decisions.

Internal information is the information gathered within the organization and external information
is the information that is gathered outside the organization.

The internal information is the profit/loss of the own company while external information is the
profile/loss of competitive companies.

The executive management of the company analyzes data of the company through statistical
graphs. The executives check the latest trends in the market and then make decisions on how to
make improvements in the company.

Examples of Executive Information System (EIS)

Some examples of EIS are: -

Marketing teams:

Marketing teams use EIS to market their services and analyze the marketing data of the company.
The profit of the company is increased by using EIS.

Used by the financial department:

The financial department of the company uses EIS for making income statements, balance sheets
and financial statements.

Hiring department:

The hiring department of the company uses EIS to analyze the CVs of applicants and check their
abilities and skills and then make decisions to shortlist applicants for interviews.

Features of EIS

Some features of executive information systems include: -

Easy to use:

EIS made it easy to present data to the executive staff of the company. The executive can check
the details of the data easily.
Integration of data:

Internal and external data of the company are integrated and final decisions are made after that
integration of data.

Forecasting:

The future planning of the company is made after analyzing the data of the company.

Accessible to multiple devices:

EIS can be accessed on multiple devices. The EIS software can be used on smartphones, tablets,
laptops or desktop PC.

Data is secured:

The data in EIS is secured from hackers. Also, data is only used by executives and other employees
of the company are restricted to access that data. The privacy of data is kept safe and only
authorized people can have access to the data.

Advantages of EIS

 Easy for upper-level executives to use, extensive computer experience is not required in
operations
 Provides timely delivery of company summary information
 Information that is provided is better understood
 Filters data for management
 Improves to tracking information
 Offers efficiency to decision makers

Disadvantages of EIS

 System dependent
 Limited functionality, by design
 Information overload for some managers
 Benefits hard to quantify
 High implementation costs
 System may become slow, large, and hard to manage
 Need good internal processes for data management
 May lead to less reliable and less secure data

ES (Expert System)

Meaning
An expert system is AI software that uses knowledge stored in a knowledge base to solve
problems that would usually require a human expert thus preserving a human expert’s knowledge
in its knowledge base. They can advise users as well as provide explanations to them about how
they reached a particular conclusion or advice.
Example:

 DXplain –
It was also a clinical support system that could suggest a variety of diseases based on the
findings of the doctor.
 MYCIN –
One of the earliest expert systems based on backward chaining. It can identify various
bacteria that can cause severe infections and can also recommend drugs based on the
person’s weight.

Features of Expert System

1) High-Level Expertise:
The most helpful feature of the expert system is the high-level expertise which it gives while
solving any problem. It offers best thinking, just like top experts and end up with imaginative,
accurate and efficient solutions to the problems.

2) Predictive Modelling Power:

Predictive modelling power is another significant feature of an expert system as it helps the user
to evaluate the possible effects of changes in facts or data. It also helps to understand the
relationship of changes to the outcome. This is possible because the system acts as a model of
problem-solving, which provides answers to given problems and also illustrates changes occurring
due to new situations.

3) Institutional Memory:
An expert system is a corpus of knowledge (providing expertise to the system) and thus acts as
institutional memory. This implies that even when important people leave the organisation, their
expertise remains intact. This feature is essential in business and mainly in military and
government that has rapid turnovers and frequent personnel transfers.

4) Ability to Provide a Training Facility:

Expert system has the ability to train important personnel and staff members. It can provide such
training because of its vast knowledge base and ability to explain.

Advantages of Expert System

1. Providing consistent solutions – It can provide consistent answers for repetitive

decisions, processes and tasks. As long as the rule base in the system remains the same,
 regardless of how many times similar problems are being tested, the final conclusions
drawn will remain the same.
2. Provides reasonable explanations – It has the ability to clarify the reasons why the
conclusion was drawn and be why it is considered as the most logical choice among other
alternatives. If there are any doubts in concluding a certain problem, it will prompt some
questions for users to answer in order to process the logical conclusion.
3. Overcome human limitations – It does not have human limitations and can work around
the clock continuously. Users will be able to frequently use it in seeking solutions. The
knowledge of experts is an invaluable asset for the company. It can store the knowledge
and use it as long as the organization needs.
4. Easy to adapt to new conditions – Unlike humans who often have troubles in adapting in
new environments, an expert system has high adaptability and can meet new requirements
in a short period of time. It also can capture new knowledge from an expert and use it as
inference rules to solve new problems.

Disadvantages Expert System

1. Lacks common sense – It lacks common sense needed in some decision making since all
the decisions made are based on the inference rules set in the system. It also cannot make
creative and innovative responses as human experts would in unusual circumstances.
2. High implementation and maintenance cost – The implementation of an expert system
in business will be a financial burden for smaller organizations since it has high
development cost as well as the subsequent recurring costs to upgrade the system to adapt
in new environment.
3. Difficulty in creating inference rules – Domain experts will not be able to always explain
their logic and reasoning needed for the knowledge engineering process. Hence, the task
of codifying out the knowledge is highly complex and may require high
4. May provide wrong solutions – It is not error-free. There may be errors occurred in the
processing due to some logic mistakes made in the knowledge base, which it will then
provide the wrong solutions.

Process of ES

1. Problem Identification: dentification" refers to the process of identifying a specific

problem or a set of conditions that require expert knowledge or decision-making. This is
typically the first step in the development and use of an ES. The identification phase begins
with recognizing a problem or a decision-making scenario within a specific domain where
expert knowledge is essential. This could be in fields like medical diagnosis, financial risk
assessment, technical troubleshooting, or any area that requires specialized expertise.

2. Conceptualization: The conceptualization phase in the development of an Expert System

(ES) is a critical step that involves defining the overall vision, goals, and high-level design
of the ES project. This phase sets the direction for the entire development process and helps
stakeholders understand the project's scope and objectives. The conceptualization phase
sets the stage for the subsequent phases of ES development, including knowledge
 acquisition, system design, implementation, testing, and deployment. It is essential to have
a well-defined project vision and scope before proceeding with the detailed design and
development of the expert system.

3. Formalization: The "Formalization" stage in Expert System (ES) development refers to

the process of converting the acquired knowledge and problem-solving strategies into a
structured and formal representation that can be processed by the computer. This stage is
crucial for creating the knowledge base and rules that the ES will use to make decisions
and provide expert advice. The formalization stage is a critical component of ES
development because it transforms expert knowledge into a format that can be processed
by the ES's inference engine. It requires careful planning, collaboration with domain
experts, and attention to detail to ensure that the formalized knowledge accurately
represents the expertise needed to make informed decisions within the domain.

4. Implementation: The implementation stage in Expert System (ES) development involves

translating the formalized knowledge and rules into a functioning computer-based system.
This phase focuses on building the actual ES software, integrating the knowledge base,
developing the user interface, and ensuring that the ES operates as intended. The
implementation stage is a crucial phase in ES development, as it transforms the
conceptualized ES into a working system that can provide expert advice and decision
support. It requires technical expertise, rigorous testing, and collaboration with domain
experts to ensure the ES operates accurately and effectively within the chosen domain.

5. Testing: The testing stage in the development of an Expert System (ES) is a critical phase
that focuses on evaluating the system's functionality, accuracy, and performance. Thorough
testing is essential to ensure that the ES operates as intended, provides accurate
recommendations or decisions, and meets the requirements of the domain and end-users.
The testing stage is an iterative process that may require multiple rounds of testing and
refinement to ensure the ES's reliability and accuracy. It is essential to involve domain
experts and end-users throughout the testing phase to validate the system's performance
and usability in real-world scenarios.