540 Making Key Strategic Decisions
SOFTWARE
Exhibit 16.3 represents the information systems paradigm. Operational control
systems, which run the company’s day-to-day operations, are typically used by
the lowest level of the organization, are run on a scheduled basis, and usually
contain large volumes of input data, output reports, and information. These
systems might be accounts payable, accounts receivable, payroll, order entry,
or inventory control.
Decision support systems are generally used by middle-level managers to
supply them with information that they can use to make decisions. Usually run
on an ad hoc basis and involving small amounts of data, budgets, exception re-
porting, cash-f low forecasting, accounts receivable dunning reports, “what if ”
analyses, audit analysis reports, and variance analyses are examples of these
decision support systems. Many of the newer applications packages come with
facilities for managers without any programming knowledge to create their
own decision reports.
Strategic information systems are used by senior management to make de-
cisions on corporate strategy. For example, a retail company might use demo-
graphic census data, along with a computerized geographical mapping system,
to evaluate the most appropriate locations at which it should open new stores. A
manufacturing company, given its demands for both skilled and unskilled
labor, might use a similar method to determine the optimal location for a
new plant.
While most older hardware has given way to newer computers, most com-
panies use a combination of newly acquired and older, self-developed software.
The latter was developed over a period of years, perhaps 20 or more, using
COBOL, which, until the early 1990s, was the standard programming language
in business applications. Today, many companies’ mission critical systems still
EXHIBIT 16.3 Types of information systems.
Operational control
systemsDecision support
systemsStrategic
information
systems