Transaction Processing System (TPS)

Transaction processing systems are used to record day to day business transactions of the organization. They are used by users at the operational management level. The main objective of a transaction processing system is to answer routine questions such as:

  • How printers were sold today?
  • How much inventory do we have at hand?
  • What is the outstanding due for John Doe?

By recording the day to day business transactions, TPS system provides answers to the above questions in a timely manner.

  • The decisions made by operational managers are routine and highly structured.
  • The information produced from the transaction processing system is very detailed.

For example, banks that give out loans require that the company that a person works for should have a memorandum of understanding (MoU) with the bank. If a person whose employer has a MoU with the bank applies for a loan, all that the operational staff has to do is verify the submitted documents. If they meet the requirements, then the loan application documents are processed. If they do not meet the requirements, then the client is advised to see tactical management staff to see the possibility of signing a MoU.

Examples of transaction processing systems include:

  • Point of Sale Systems: Records daily sales
  • Payroll systems: Processing employee’s salary, loans management, etc.
  • Stock Control systems: Keeping track of inventory levels
  • Airline booking systems: Flights booking management

Management Information System (MIS)

Management Information Systems (MIS) are used by tactical managers to monitor the organization’s current performance status. The output from a transaction processing system is used as input to a management information system.

The MIS system analyzes the input with routine algorithms i.e. aggregate, compare and summarizes the results to produced reports that tactical managers use to monitor, control and predict future performance.

For example, input from a point of sale system can be used to analyze trends of products that are performing well and those that are not performing well. This information can be used to make future inventory orders i.e. increasing orders for well-performing products and reduce the orders of products that are not performing well.

Examples of management information systems include:

  • Sales management systems: They get input from the point of sale system
  • Budgeting systems: Gives an overview of how much money is spent within the organization for the short and long terms.
  • Human resource management system: Overall welfare of the employees, staff turnover, etc.

Tactical managers are responsible for the semi-structured decision. MIS systems provide the information needed to make the structured decision and based on the experience of the tactical managers, they make judgement calls i.e. predict how much of goods or inventory should be ordered for the second quarter based on the sales of the first quarter.

Decision Support System (DSS)

Decision support systems are used by senior management to make non-routine decisions. Decision support systems use input from internal systems (transaction processing systems and management information systems) and external systems.

The main objective of decision support systems is to provide solutions to problems that are unique and change frequently. Decision support systems answer questions such as;

  • What would be the impact of employees’ performance if we double the production lot at the factory?
  • What would happen to our sales if a new competitor entered the market?

Decision support systems use sophisticated mathematical models, and statistical techniques (probability, predictive modeling, etc.) to provide solutions, and they are very interactive.

Examples of decision support systems include;

  • Financial planning systems: It enables managers to evaluate alternative ways of achieving goals. The objective is to find the optimal way of achieving the goal. For example, the net profit for a business is calculated using the formula Total Sales less (Cost of Goods + Expenses). A financial planning system will enable senior executives to ask what if questions and adjust the values for total sales, the cost of goods, etc. to see the effect of the decision and on the net profit and find the most optimal way.
  • Bank loan management systems: It is used to verify the credit of the loan applicant and predict the likelihood of the loan being recovered.

Office Automation System (OAS)

Office automation refers to the varied computer machinery and software used to digitally create, collect, store, manipulate, and relay office information needed for accomplishing basic tasks. 

Raw data storage, electronic transfer, and the management of electronic business information comprise the basic activities of an office automation system. Office automation helps in optimizing or automating existing office procedures.

The backbone of office automation is a LAN, which allows users to transmit data, mail and even voice across the network. All office functions, including dictation, typing, filing, copying, fax, Telex, microfilm and records management, telephone and telephone switchboard operations, fall into this category. 

As office methods evolved to take full advantage of new technologies, there was a corresponding increase in innovations tailor-made to optimize office processes. Office automation was a popular term in the 1970s and 1980s as the desktop computer exploded onto the scene.

Advantages are:

  • Office automation can get many tasks accomplished faster.
  • It eliminates the need for a large staff.
  • Less storage is required to store data.
  • Multiple people can update data simultaneously in the event of changes in schedule


“Office automation system is an information system which is computer based that collects, processes, stores and transmits electronic messages”

Word processing, document imaging or calendar is some of the applications used in the office automation systems.

The modern history of office automation began with the typewriter and the copy machine, which mechanized previously manual tasks. 

Today, however, office automation is increasingly understood as a term that refers not just to the mechanization of tasks but to the conversion of information to electronic form as well. 

The advent of the personal computer revolutionized office automation, and today, popular operating systems and user interfaces dominate office computer systems. This revolution has been so complete, and has infiltrated so many areas of business, that almost all businesses use at least one commercial computer business application in the course of daily activity. 

Even the smallest companies commonly utilize computer technology to maintain financial records, inventory information, payroll records, and other pertinent business information. 

“Workplace technology that started as handy (but still optional) business tools in the 1980s evolved into a high-priority requirement in the 1990s,” summarized Stanley Zarowin in Journal of Accountancy. “As we enter the new millennium, it has taken another quantum leap, going from a priority to a prerequisite for doing business.”

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