Information systems within Organizations

University Degree Business and Administrative studies

For my case study I have been asked to choose a medium to a large sized organization and write a report explaining the how the company uses 2 of the following information system.

Transaction processing systems
Management information systems
Decision support systems

I have decided to do a case study on Tesco Supermarkets which is a well know supermarket in the UK. Tesco’s offer food, clothing, electrical goods and general household items, they also prove car and house insurance. Tesco controls over 30% of the grocery market in the UK and in 2007 the supermarket chain announced over £2.55 billion in profits.

Tesco’s have also decided to enter the housing market by launching a self advertising website named Tesco Property Market.

For each topic I will need to explain the following:

Draw a diagram summarizing the links between the various parties using the system
Describe what the system does and outline the benefits offered by the system compared to the time before the system was introduced
Outline any possible problems the system might encounter, and what can be done to counter such problems

I have decided to choose transaction processing systems and Management information systems.

Transaction Processing System

A Transaction Processing System also referred to as TPS is an information system used to collect, retrieve, store, and modify transactions within an organization. For a computer to be considered a transaction processing system it must pass the ACID test. Tesco’s rely on their TPS because of the fact all there transaction made to there suppliers and customers and any middle parties involved are done by TPS also all the products have a bar code which the TPS uses to figure out how many products have been sold and needs ordering etc.

Key Features of TPS

Rapid Response

Rapid performance and a rapid response time is vital and the businesses cannot meet the expense of the customers having wait for a TPS to respond, the time taken from the input of the transaction to the production for the output must be a few seconds or less.

Reliability

This is a preview of the whole essay

Rapid Response

Reliability

Many organisations rely profoundly on their TPS if a breakdown was to occur this will disrupt operations and can even stop the business from functioning correctly. For a TPS to be efficient the failure rate must be exceptionally low. If a TPS failure does occur then fast and precise recovery must be achievable. This makes well planned backup and recovery measures extremely important.

Inflexibility

A TPS must be able to process every transaction in the same way in spite of the user, the customer or the time for day.

Controlled processing

TPS processing must support the organisation's day to day operations, i.e. if Tesco’s wishes to grant certain roles and responsibilities to certain employees then the TPS should adjust and maintain this requirement.

ACID Test

To qualify as a TPS, transactions made by the system must pass the ACID test. The ACID tests refers to the following four basics:

Atomicity

Atomicity is a name given to the function which tells you whether or not the transaction has been completed in full or not. For example if a customer came in to Tesco’s to do their weekly shopping and decided to pay by a credit card, if the money from deducted from the customers account and had not been credited to Tesco’s account then this would not a completed transaction however on the other hand if the money is deducted and credited to Tesco’s account then this is classed as a complete transaction. A TPS is in place to make sure this happen correctly.

Consistency

TPS systems are present within a set of operational rules or reliability constraints. A reliability constraint states that all transactions made on the database must have a positive value the TPS system is there to refuse any transaction made with a negative value.

Isolation

Transactions have got to appear to have taken place in isolation meaning; when a money transfer is made between the customer and Tesco’s the deduction from one and the crediting of another account must appear to take place simultaneously. The money can’t be credited to an account before it is deducted from another.

Durability

When the transactions have been completed they cannot be reversed this is to ensure that even in the case the TPS suffers a failure a record will be created to documenting all the completed transactions.

These four conditions ensure that TPS systems carry out their transactions in a methodical, standardised and reliable manner.

Different types of transactions

Each transaction process is standardised to increase competence, Tesco’s require a custom made TPS which works with Tesco’s business strategy and processes. This is why there are 2 types of transactions.

Batch Processing - Batch processing stores data for processing at pre-defined times. Batch processing is useful to an organisation because it needs to process large amounts of data using limited resources.

Real Time Processing – Real time processing systems are in place to react to an event within a prearranged time. These types of operating systems are found within organisation i.e. banks.

Management Information Systems

Management information system also referred to as MIS and management information services, this is a computer based system which provides managers with essential tools for managing, evaluating and efficiently running their departments this enables them to provide past, present and prediction information, an MIS can also include software that helps managers in decision making, Within organizations the department which is usually responsible for computer systems is called the MIS department however other names such as IS (Information Services) and IT (Information Technology). For example Tesco’s can use this system to find out how many hours the employees have worked over a period of time, and get monthly reports of expenses compared to the costs. Tesco’s also use this system in Replenishment, Pricing Analysis i.e. Markdowns and Sales Management.

MIS Key Features

MIS help organizations to view sales figures, sales orders, purchasing information, and payroll information. MIS also helps to monitor production information i.e. Productivity and product lifecycle information. In addition to this MIS allow manager’s access to financial information and try possible "what if" scenarios. It should inform the company strategy by referring back to the overall mission and business aims.

MIS also use raw data to run simulations or theoretical scenarios that answer a range of ‘what if’ questions regarding alterations in strategy. For example Tesco’s use MIS system give them a insight about the effect it will have on sales if an alteration in price i.e. mark down would have on a product sales. These Decision Support Systems (DSS) allow more informed decision making within an organisation than would be possible without MIS systems.

Data Processing

MIS systems enable for the gathering of huge amounts of company data however they also provide a all important time saving benefit to the workforce where in the past business information had to be physically processed for filing and analysis which took a lot of man hours, it can now be entered quickly and easily onto a mainframe by a data processor which in turn allows for swift decision making and faster reflexes for the organisation as a whole.

Tesco’s currently a system that allows personnel and finance department remain up to date with changes in employee’s preferences for work and their personal contact details i.e. bank account information, and tax contributions. Each time one of the employee’s clocks in and out of work it is processed electronically enabling personnel department to work out their wages and any tax contribution they owe, these are worked out automatically.

Enhanced reporting of business processes leads without doubt to a more smooth production process with better information on the production process this enables the organisation to improve the management of the supply chain including everything from the suppliers of materials to the production and distribution of the complete product.

Conclusion

In conclusion Tesco’s benefits from both the transaction processing systems and Management information systems. Using these automated systems helps Tesco’s to run efficiently by helping with stock replenishment and analysing sales figures and help Tesco’s bringing in revenues of £42,641 million and net profits of £1,899 million in 2007.