Freddy Duarte

Transaction Processing Systems

The objective of many early computer systems was to reduce costs by automating many routine, labor-intensive business systems. Such routine processes as payroll (producing paychecks and wage reports for state and federal agencies), customer billing, and inventory control were the earliest process to be computerized. Because these early systems handled and processed daily business exchanges, or transactions, they were called transaction processing systems (TPS). Transaction processing systems are still vitally important in most modern organizations. Transaction processing systems represent the application of information concepts and technology to routine, repetitive, and usually ordinary business transactions. A transaction processing system (TPS) is an organized collection of people, procedures, databases, and devices used to record completed business transactions.

Management Information Systems

Early transaction processing systems sped the processing of business activities and reduced clerical costs. Early on, they were used most prevalently by accounting and finance departments. It soon became clear that the data stored in these systems could be used to help managers make better decisions in their respective business areas, whether human resources, marketing, or administration. Consequently, management information systems (MIS) began to be developed in the 1960s and are characterized by the use of information systems to produce managerial reports on a periodic basis (daily, weekly, monthly, or yearly). These reports helped managers better perform their duties. As managers learned of the value of the information the reports contained, MIS began to proliferate throughout the management ranks. (e.g. Payroll summary might help production monitor and control labor and job costs. Other scheduled reports could be used to help managers from a variety of departments control customer credit, payments to suppliers, the performance of sales representatives, inventory levels, and more.) A management information system (MIS) is an organized collection of people, procedures, databases, and devices used to provide routine information to managers and decision makers.

Decision Support Systems

By the 1970s and 1980s improvements in technology resulted in information systems that were less expensive and more powerful. People at all levels of organizations began using personal computers to do a variety of tasks; they were no longer solely dependent on the information systems department for all their information needs. During that time period it was recognized that computer systems could support additional decision-making activities. A decision support system (DSS) supports and assists all aspects of problem-specific decision making. A DSS goes beyond a traditional MIS which merely produces reports. A DSS can provide immediate assistance in solving complex problems that are not supported by a traditional MIS. Many of these problems are unique and not straightforward. A decision support system (DSS) is an organized collection of people, procedures, databases, and devices used to support problem-specific decision making.

Integration of TPS, MIS, and DSS

TPS, MIS, and DSS tend to overlap, and are often integrated within many organizations through the use of a common database.

CAPABILITIES OF A DECISION SUPPORT SYSTEM

• Support for problem solving. This is the focus of decision support systems
• Support for different decision frequencies Decisions can range from one of a kind (unique) to repetitive (recurring).
• Support for different problem structures. Range from highly structured (programmed) to semistructured or unstructured (nonprogrammed) decisions.
• Support for various decision-making levels. Can be used for operational (low level), tactical (mid level) and strategic (top level) decisions.

Tech

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Avoiding the wrong way starts with avoiding the 7 deadly sins pointed out by Michael Hammer in his article:

• Vanity
  Don’t just use measures that will inevitably make the organization, its people, and especially its managers, look good. Every organization has weaknesses, and the key to becoming best in class is improving upon them. However, you cannot improve upon a weakness you cannot identify.
• Provincialism
  Organizational boundaries and concerns should not dictate performance metrics.
• Narcissism
  Organizations often measure from their point of view when they should be measuring from their customer’s point of view.
• Laziness
  Many organizations assume they know what is important to measure without giving it adequate thought or effort.
• Pettiness
  Measuring only a small component of what is important.
• Inanity
  Implementing metrics without giving any thought to the consequences of these metrics on human behavior and, ultimately, on enterprise performance. People in an organization will seek to improve a metric they are told is important, especially if they are compensated for it, even if doing so has counter-productive consequences.
• Frivolity
  Not being serious about measurement in the first place.

The author offers four steps to avoid falling for these 7 common mistakes:

1. Decide what to measure
   Select the right things to measure, those aspects of organizational performance that are both controllable and important to achieving success.
2. Measure the right way
   Use metrics that capture the essence of what needs to be measured in a usable form.
3. Use metrics systematically
   Embed the metrics in a disciplined process for performance improvement.
4. Create a measurement-friendly culture
   The organization must encourage the disciplined use of metrics for ongoing performance improvement rather than regarding them as threats to be feared or opponents to be vanquished.

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Management

As the rest of the financial community was scrambling to get its money out, a government-owned German lender gave Lehman Brothers what might be called a parting shot in the arm, transferring 300 million euros ($426 million dollars) to the investment bank on the same day it filed for bankruptcy.

Read more upon this hilarity.

NYT