Why this matters
A database is only useful when something acts on it. The systems that record sales, report to managers, or help executives steer the business all sit on top of stored data. Knowing which system does what tells you where a given piece of information comes from, and who it is for.
The idea
An information system is the whole arrangement of people, computers, and communication equipment that collects, processes, and shares information. They form a rough ladder by who they serve:
- TPS (transaction processing system) records the routine daily transactions, like a shop's POS till or an airline's reservations.
- MIS (management information system) turns those transactions into periodic reports for managers, such as monthly sales and inventory levels.
- DSS (decision support system) helps managers with non-routine choices through modelling and simulation, like "what if" analysis and scenario planning.
- EIS (executive information system) gives executives a summarised view of overall performance, such as dashboards and KPIs.
Separate systems can be linked two ways. Vertical integration connects different levels (a TPS feeding an MIS). Horizontal integration connects the same level across departments (sales talking to inventory). When a single integrated system combines many business functions (accounting, HR, supply chain, customer management), it is called enterprise resource planning (ERP).
Picture it
flowchart TD TPS[TPS: records daily transactions] --> MIS[MIS: periodic reports for managers] MIS --> DSS[DSS: modelling and simulation for hard choices] DSS --> EIS[EIS: summarised performance for executives] V[Vertical integration] -.-> TPS V -.-> MIS H[Horizontal integration: same level, different departments] -.-> MIS ERP[ERP: one system combining all functions] --- TPS
Worked example
A supermarket scans a sale at the till, and that is the TPS capturing a transaction. Each month the store manager reads an automatic sales-and-stock report built from those scans, which is the MIS. The chain's head office wants to test "what if we cut prices 10% before a holiday?"; the modelling tool that answers it is a DSS. When the report flows from the till system up to the manager's report system, that link between two different levels is vertical integration.
Your turn
Try the practice questions. Match each system (TPS, MIS, DSS, EIS, ERP) to its job, and tell vertical from horizontal integration.
Recap
- TPS records daily transactions, MIS reports to managers, DSS supports hard decisions, EIS summarises performance for executives.
- Vertical integration links different levels; horizontal integration links the same level across departments.
- ERP is one integrated system combining many business functions.