Kinds of Business Systems

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Business systems help organizations function on a daily basis and in the long term.
Business systems help organizations function on a daily basis and in the long term. (Image: Ryan McVay/Photodisc/Getty Images)

A business system, also known as a business information system, is a structure put in place within an organization with the purpose of improving effectiveness and efficiency. There can many kinds of business systems within an organization, with some touching on only one specific area of the business.

Decision Support Systems

Also known as executive support systems, this type of business system enables higher management and executives to make long-term strategic decisions on the direction of the business. This type of system is flexible as it is not required for the daily operation of the business and only applies to particular situations. It collects, analyzes and sums up key internal and external data that is then used in the business by senior executives when developing their strategic plans.

Management Information Systems

This type of business system is designed to help middle and lower management make choices and solve problems. A management information system is made of tools and techniques that help gather the relevant information and analyze the options and alternative solutions. Managers then use the results of this type of system to handle various queries as quickly as they can.

Knowledge Management System

A knowledge management system is put in place in businesses to allow for easier creation and sharing of information. This type of business system is typically used in organizations where employees create new knowledge and expertise to be shared by their colleagues. A good knowledge management system allows for efficient classification and distribution of knowledge. Intranets are examples of knowledge management systems.

Transaction Processing Systems

As its name implies, a transaction processing systems exists to process routine transactions. A single organization usually has several types of transaction processing systems including a billing system, an accounting system, a payroll system, an inventory control system and so on. They normally help improve employee productivity, and are vital to the daily operations of the business. This type of business system can be customized to the nature of the organization.

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