Information Systems Pyramid for business management

The Information Systems Pyramid provides a context for managers to be able to request reports and systems to give information at different levels.

The model developed in the 1980s still has relevance for modern business but the definitions need some review.

This article seeks to contextualise reporting levels for managers to further discussions with their IT teams.  This article should evoke discussion and not everyone should agree.

There is nothing technical in this report

  • The Basics
  • Information Systems
  • Evolution
  • Wrap up

 

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The Basics

An Information System

Five general items make up an Information System.

  • Hardware (technology)
  • Software (technology)
  • Data (technology)
  • People
  • Process

The model could include Communication however equally could it form part of the hardware, the software or the people.

An Information System seeks to answer one question.  How our technology helps people get their job done from the context of our business.

What this article is more interested in is how do you make the most of the technology to help the people making decisions and doing work.

 

The Information Systems Pyramid

A car analogy is the easiest way I’ve come across to describe how the information systems pyramid relates to life.

 

Straight to the controversy in the room

Not everyone believes in this model and some staunch supporters believe that the model is out of date as it has been around since the 1980s.  This article attempts to introduce the concepts so that people can make informed decisions for themselves.

As William Shakespeare wrote “A rose by any other name would it smell as sweet”.  I am not hung up on names but rather trying to get across an idea.

 

Let’s take Oregon State University’s definition of their college module Business Information Systems “Business Information Systems (BIS) comprises the analysis and organization of business information through the application of technology. As such it blends core concepts of management, operations and information systems theory with computer science and engineering methods and technologies to manage an organization’s data. ” 

By that definition BIS would actually find itself delivering all kinds of information to all levels of the information pyramid.

 

For the purposes of general discussion this articles views BIS as tactical information, MIS as and DSS at managerial / decision level and EIS at executive level.  These are generalities and gross simplifications of the highest order so we can start the discussion.

So before all the toys leave the pram, let’s continue…

 

Data

Data at the very bottom is raw information and means nothing.  Red, 20, low all out of context mean nothing.  The dashboard of the car will give you some numbers but you need to understand what they are showing you.

That traffic light is red but unless you understand what the colours signify then red means nothing on its own.

Business Information Systems provide reports that are just that, data on a plate.  The focus of the solution is to get tactical data to people.

Numbers are known in reporting terms as metrics.

This world is very black and white in terms of factual delivery.  There is no ambiguity here.

 

Information

So data on it’s own isn’t much use to newbies so adding explanations around the data can help.  Now it becomes information like a news headline.

Chris of the sales team has closed 20 sales today.

 

Management Information Systems are just that systems focused on providing information to managers to inform them.

MIS is a lot more helpful to someone who hasn’t seen this kind of report before.

They are statements of fact designed to give managers a prompt to help them make decisions or focusing their attention on short to medium term goals.

 

 

Knowledge

Knowledge is different in that it implies something can happen. If we continue doing XYZ based on data ABC will happen.

Knowledge is more refined than just data and information.  Knowledge helps form our opinions consequently irrelevant information gets ignored.

Decision Support Systems can help to prioritise information and draw attention to the really important facts.  The focus is to fill out the knowledge of the target audience.

So in the example the system is going, have you noticed the light has turned red as this is significant.  The time focus is usually short and medium term decisions.

 

Wisdom

At the top of the pyramid is the ultimate opinion swaying solution.

Wisdom is defined as “the quality of having experience, knowledge, and good judgement; the quality of being wise”.

More often than not no computer is needed for wisdom, good old fashion experience is what is required… but how you do you automate that?

The output is no longer just statement of fact now there’s opinion even gut feelings.

 

 

 

 

 

Information Systems

Business Information Systems

Business Information Systems can also go by the title Transaction Processing Systems and occupy the bottom of the Information Systems Pyramid.

They are often aimed at employees in the business rather than management and strategists.  The systems provide key data to staff such as metrics to inform them about an aspect of their role.

  • How much fuel left?
  • What speed are you going?
  • What is the tyre pressure like?

The information changes rapidly and the context focuses on the right now.

The primary benefit of BIS is that it saves a lot of space and can get a lot of business important information across in a short space of time.

Your business can buy software tools off the shelf or custom design them to fit your business processes.  Wallboards and dashboards are the simplest to read and most to the point BIS systems possible to provide data.

  • How many calls are currently on hold waiting to speak to operators?
  • There are how many emails need answering today?

 

Management Information Systems

Management Information Systems sit above BIS in the Information Systems Pyramid.  MIS tend to focus on summative reporting over time periods.  The idea that you can see trends spanning a number of weeks enables management level decisions.  The systems are giving managers the raw data for them to draw their conclusions but in a context that is not just a number in a box.

  • How big have backups been getting over the last few weeks?
  • The sales team have had what kind of results over the the last few months?

This world is also black and white for decisions with no ambiguity.  However if not all data is present key data can go missing.  The expression “lying by omission” applies to systems at this level.

 

Decision Support Systems

A DSS is defined as “a set of related computer programs and the data required to assist with analysis and decision-making within an organization.”

As the Information Systems Pyramid signifies the system requires information feeding up from the layers below.

The term “thought leader” describes a business or individual who see trends in Industry and enables their business to react to them before competitors do.

This kind of help usually involves lots of data.  Tools such as data warehouses can store the data and data mining and OLAP (OnLine Analytical Processing) tools enable managers to explore theories and use their experience to  decide for the business.

Projection and prediction become very big words to these kinds of systems.

If we sold 12 units every month for the last 14 months it is reasonable to assume that next month we will sell 12 units.

This form of this predicting the future is discussed here.

The world becomes grey in DSS, in that decisions are not as clear and inferences are made rather than just having facts.  Decisions are much harder and the solutions offer observations not complete definite answers.

 

Executive Information Systems

The business at your fingertips system.  The pinnacle of the Information Systems Pyramid

EIS allows all the information that the business has be at the finger tips of a director or strategic manager.  This exploitative tool allows drill down to the most basic facts and also allows modelling in DSS to see what could happen.

Again the “not important” information is hidden away and simultaneously we can drill down into data should we want to go exploring.

These tools are wonderful for businesses that don’t change much.  They take a long time to build, design and they work on the premise that the business is easily definable.  If I am a farmer, in pharmaceuticals, in manufacturing yes the products will change but the overall system and structure generally remains the same.

Designing EIS for rapidly and drastically changing businesses is very difficult.

Long term and strategic decision influence is the focus of EIS.

The greyest area of all consequently helping 50:50 decisions and scenarios which may never have arisen before.

 

Evolution

New information systems

If you try to stick to the model of Information Systems as BIS, MIS, DSS and EIS then the model fails when you introduce new forms of information system such as:

  • data warehouses
  • enterprise resource planning
  • enterprise systems
  • expert systems
  • search engines
  • geographic information system
  • global information system
  • office automation
  • data analytics suites

If however you keep the Information pyramid approach of Data, Information, Knowledge and Wisdom the model continues to work and the new systems find their places straddling numerous layers.

 

Interface design

How you interface with systems is the most evolving area of modern computing.

Infographics, interactive charts and gamification are just some of the terms that change the human perception of information.

There are many ways to present the same data and how a system designer chooses to present that information is critical to the effectiveness of the tool.

No longer is it good enough to just have data in the era of 2018 how you present and offer interaction with that information is equally if not more important than having the data in the first place.

Interface design is discussed in other topics in this blog.

 

Wrap up

I first saw the infographic idea in Michael A. Urmeneta’s blog and then added a bit.

The Information Systems Pyramid, Information Systems, definitions of specific layers are blurred due to the evolution of technology and capabilities.

 

I use this diagram when starting discussions with clients about what systems that want and think they need.  Specifically the information diagram I have used in presentations to help everyone communicate collectively on their needs and wants from the system.

If one of my clients asks for a management support tool that helps them “thought lead” an industry we talk about DSS level tools not EIS tools.

Knowing that an EIS tool helps directors and boards frequently articulate what they want in technical terms, not just DSS tools.

 

By presenting this article I know that purists have had definitions they have stuck to for many decades which have held true and do to traditional systems. With the advent of new technologies the model should generally hold with a shift in emphasis to Information rather than just Information Systems.

I would love to hear your thoughts on the subject.

If there’s anything in this article you’d like to chat to me about you can contact me here or on social media.

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