Welcome! As an IT specialist with over 15 years of experience advising companies on technology strategy, I‘m thrilled to walk you through the 10 most important types of information systems organizations rely on to supercharge their digital capabilities.
I‘ll explain what each system is, what it does, who uses it and how it adds value for businesses striving to get the most out of their data in today‘s digital-first world. My goal is to help demystify enterprise technology so you can make informed decisions on the optimal solutions for your firm‘s needs.
What Are Information Systems?
Let‘s start with the basics – information systems refer to various combinations of tools and processes centered around information technology that help organizations run better. Simply put, they convert data into information and ultimately insights that drive business success.
Information systems have evolved tremendously over the years from basic transaction reporting engines to advanced AI platforms, especially with accelerating technology innovation. Global spend on these continues rising exponentially – IDC predicts it‘ll near $4.3 trillion in 2022!
No matter what shape or form information systems take, ultimately they help companies achieve:
- Enhanced efficiency by optimizing workflows and resources
- Informed decision making by revealing patterns and opportunities hidden within data
- Competitive advantage by responding quickly to market changes
Now that you know why they matter so much, let‘s explore the what and the how for 10 major system types:
#1. Transaction Processing Systems
Key Details
Components: POS terminals, barcode scanners, databases, servers
Capabilities: Capture, validate, store transaction data
Users: Frontline staff in operations, retail, accounting
Outcomes: Ensure accurate, timely processing and recording of routine transactions
Transaction processing systems (TPS) power the routine frontline operations of organizations across industries. They seamlessly coordinate the nitty-gritty back-end details enabling key functions – whether it‘s orders and payments for a retailer, trades for an investment bank or admittance records for a hospital.
TPS is the foundation facilitating data collection, storage and flow across departments. It provides the valuable raw material for higher level reporting and analytics.
For example, banks rely heavily on TPS to electronically process deposits, withdrawals, transfers behind the scenes while front-facing staff assist customers. Global financial TPS market size is expected to grow steadily at 8% CAGR between 2019 and 2026 reaching over $10 billion according to Verified Market Research.
#2. Management Information Systems
Key Details
Components: Reporting engines, dashboards, Excel
Capabilities: Organize, filter, summarize, visualize operational data
Users: Departmental managers, senior executives
Outcomes: Enable monitoring of business performance and aid routine decisions
While TPS focuses on transaction-level data, management information systems (MIS) provide aggregated views in the form of reports and dashboards optimized for business users. MIS condenses low-level data into information relevant to monitoring, controlling and directing departments and processes.
For instance, MIS delivers inventory status summaries with insights on fast versus slow-moving items and optimal reorder levels which helps supply chain managers make data-backed decisions.
Similarly, sales managers rely on MIS to get region or product-wise performance metrics compared to targets and previous periods as reference points for planning future initiatives. The global MIS market size was valued at $76 billion in 2021 according to Mordor Intelligence, indicative of high corporate adoption levels.
#3. Decision Support Systems
Key Details
Components: Modeling, simulations, predictive analytics, BI tools
Capabilities: Forecast scenarios and outcomes to guide choices
Users: Operations analysts, middle and senior management
Outcomes: Enables data-driven decision making and planning
As the name indicates, decision support systems (DSS) help managers leverage data to systematically evaluate alternatives and decide optimal courses of action. DSS allows businesses to leverage predictive models and simulations to minimize risks associated with decisions.
For example, banking executives can input different interest rate assumptions into DSS models to assess profitability impact and guide pricing changes. The global DSS software market was $9.5 billion in 2021 and is expected to grow at 10% CAGR from 2022-2030 reflecting rising adoption.
Leading organizations are increasingly investing in decision intelligence platforms that combine capabilities of DSS, business intelligence (BI) and machine learning to further amplify the power of data for enhanced business planning and forecasting accuracy.
#4. Executive Information Systems
Key Details
Components: Data visualization dashboards, end-user self service BI
Capabilities: Real-time personalized performance metrics
Users: CEOs, VPs and directors
Outcomes: Strategic goal setting and tracking for senior management
While MIS satisfies the day-to-day performance monitoring needs of middle management, senior executives require big picture views on the state of business. This is fulfilled by executive information systems (EIS).
EIS condenses information from cross-functional databases into graphical executive dashboards that provide macro KPIs customized to the role and preferences of each individual executive user.
For instance, the CEO dashboard may showcase year-to-date revenue, customer satisfaction rate and new product pipeline metrics while the Sales VP view highlights lead conversion ratios. EIS enables rapid information access and understanding for strategic planning by the C-suite.
The global business intelligence and analytics industry, of which EIS forms a major segment, was valued at $215 billion in 2021 as per an IBM report and is predicted to expand further at 8% CAGR until 2028 indicating the vast total addressable market.
#5. Knowledge Management Systems
Key Details
Components: Training manuals, internal wikis, specialized search engines
Capabilities: Standardize processes and share best practices across organization
Users: All employees
Outcomes: Drive business agility through continuity in adaptation to market changes
While the systems above focus heavily on quantitative data, knowledge management systems (KMS) enable creation, structuring, dissemination and reuse of institutional knowledge in order to foster innovation. Effective KMS delivers a competitive edge.
For instance, consultancies rely on cataloging engagements into searchable repositories mapping business challenges to solutions for reference in future projects. Technology firms document product requirements, design principles and testing protocols to embed continuity and accelerate ideation for next-generation offerings.
According to leading research firm Gartner, 80% of organizations will leverage KMS to orchestrate expertise sharing, learning and skill development by 2025. The KMS industry will reach $1.1 billion by 2028 predicts Statista, implying the vast value delivered by knowledge continuity and institutionalizing expert insights.
#6. Expert Systems
Key Details
Components: Rules engine, machine learning algorithms
Capabilities: Automate specialized decision making mimicking human experts
Users: Operations analysts, IT engineers, data scientists
Outcomes: Solve complex issues across domains from medical diagnosis to seismic analysis
While humans obviously cannot scale in terms of workload bandwidth and hours per day, expert systems leverage artificial intelligence to replicate the decision making capacity of specialists around the clock. By encoding domain intricacies into software models, expert systems automate highly complex tasks.
The earliest expert system, MYCIN from Stanford in the 1970s, diagnosed bacterial infections with 95% + accuracy comparable to infectious disease experts by applying over 450 rules encoding medical knowledge. Another system, GEOS, specializes in mass spectrometry analytics for oil and gas exploration achieving significant cost and turnaround time savings.
Given the exponential benefits, expert system market size is predicted to balloon to $31.3 billion by 2028 expanding at 24% CAGR as per Reports and Data research. Continued advances in machine learning to mimic specialists across domains from insurance underwriting to mechanical inspection will further boost adoption.
#7. Geographic Information Systems
Key Details
Components: Digital maps and globes, GPS visualizers, spatial databases
Capabilities: Capture, store and visualize location-based data
Users: Urban planners, transport directors, market analysts
Outcomes: Optimize geography driven decision making across logistics, real-estate and more
Most business dealings involve a geographic component – distribution logistics span cities, real estate locations influence valuations, service territories impact municipal budgets and so on. Geographic information systems (GIS) enable capturing, managing and analyzing this spatial aspect of data relative to geography.
For example, retail firms use GIS modeling for smarter site selection based on target demographics, brand presence and population reach. Transport companies rely on it for vehicle dispatch optimization and route planning factoring in real-time traffic, weather forecasts and shipment priority.
According to leading research organization Reportlinker, the global GIS industry will balloon to a whopping $13.4 billion valuation by 2028 expanding at a healthy CAGR of 10.5% driven by location intelligence applications across sectors.
#8. Enterprise Resource Planning Systems
Key Details
Components: Unified databases, shared ledger transaction processing
Capabilities: Centralize core business operations into integrated software
Users: Finance, supply chain, manufacturing, HR and IT
Outcomes: Consistent workflows and enhanced visibility leading to operational excellence
As organizations scale, interdependencies and information gaps between isolated departmental systems cause inefficiencies. Enterprise resource planning (ERP) constitutes unified management software centralizing vital business operations into a common database application suite accessed firm-wide.
ERPs like SAP, Oracle and Infor integrate functions such as accounting, inventory, HR, manufacturing scheduling and customer relationship management enabling seamless cross-functional data flows, consistency in processes and end-to-end visibility. This empowers sound decision making at every level, guided by broader context beyond departmental silos.
Per leading industry research firm Mordor Intelligence, the global ERP software market is expected to reach a staggering value of $117 billion by 2027 expanding at 8% CAGR, driven by large enterprises racing to digitally transform business workflows.
#9. Supply Chain Management Systems
Key Details
Components: Inventory engines, logistics trackers, order management
Capabilities: Optimize sourcing through distribution delivery workflows
Users: Supply chain directors, warehouse managers, procurement VPs
Outcomes: Enhanced resilience, coordination and performance across the supply network
While ERP takes a broad business suite approach, supply chain management (SCM) systems offer specialized capabilities tailored to break down data silos and empower informed decision making across the manufacturing to retail product flow cycle.
SCM provides detailed inventory analysis, cross-dock transportation planning, and order status monitoring to enhance workflow orchestration across stakeholders from factory to storefront. Companies like Walmart demonstrate supply chain leadership with custom-built SCM enhancing visibility and coordination with over 11,000 suppliers globally.
Driven by SCM proving its worth in amplifying supply network responsiveness and resilience, Statista finds this industry is gearing for expansive growth escalating at 11% CAGR between 2022 and 2030 to exceed $27 billion in market size.
#10. Customer Relationship Management Systems
Key Details
Components: Contact records database, text analytics, campaign trackers
Capabilities: Consolidate data to deliver personalized customer experiences
Users: Sales representatives, marketing managers, customer success teams
Outcomes: Deeper engagement leading to increased lifetime value and referrals
While supply chain process efficiencies focus on operational excellence behind the scenes, customer relationship management (CRM) systems empower users on the frontlines interacting with prospects and customers to foster repeat business and loyalty.
CRM technology captures data from diverse touchpoints such as email, call center, social media and in-person meetings to build unified customer profiles. This powers targeted content personalization and multidimensional analytics revealing lifetime value, churn risk factors, campaign effectiveness and overall experience.
Industry leader Salesforce clocked revenues exceeding $26 billion in 2021 offering SaaS CRM powering digital transformation initiatives in enterprises worldwide. Overall industry outlook shines bright with Fortune Business Insights predicting the global CRM market to witness prolific expansion reaching $128 billion by 2029.
Evaluating Information System Needs
With a solid understanding of the spectrum spanning transaction processing engines to intelligent customer experience platforms, an obvious question arises – how to determine the right mix of information systems for your organization? Here are key considerations:
- User personas: Who needs what data and insights – operations, management or executives?
- Use cases: What goals do you want to achieve – efficiency or innovation?
- Scale complexity: Transaction volumes, geographic spread and functional breadth?
- Existing landscape: Build or buy? On-premise, cloud or hybrid deployment?
- Budget and timelines: Investments required balancing priority and payback period expected
For most firms, the optimal route forward entails maintaining robust TPS serving as the foundation, complemented by MIS and DSS delivering actionable analytics to guide management planning and decisions. EIS offers strategic visibility for executive goal setting while KMS powers continuity and ideation.
Emerging technologies like industry-specific expert systems and AI-enabled CRM that promise step function benefits merit significant evaluation and selectively piloted based on use case relevance. With meticulous assessment of needs, custom solution blueprinting and phased roadmaps emphasizing quick wins and flexibility, companies can methodically evolve systems solving both today‘s challenges and tomorrow‘s opportunities.
I hope this guide served the purpose of elucidating key system types so you feel empowered navigating technology decisions and investments on your organization‘s digital transformation journey! Do reach out if any follow-up questions.
