Management Information System

MANAGEMENT INFORMATION SYSTEM

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MANAGEMENT INFORMATION SYSTEM 50 Marks

Course Content 1. Information System IS (MIS-1) 2. Management Info System (MIS-2) 3. Development of MIS ( Development_MIS) 4. SCM & CRM (combined in SCM_CRM_MISLECT)

- SCM (crm_mis) - CRM (CRMMIS)

5. Decision support system (MISDSSslide) 6. Managing Digital Firm (digitalfirmmis) 7. Executive System (EISMIS) 8. .Knowledge based system (KBS_mis) 9. Enterprise Resource Planning (misERP) 10. Transaction Processing System (TPS-mms) 11. Expert Support System (ESMIS) * NOTE Everything written in round brackets ( ) are the names of slide as uploaded in grp

PAPER PATTERN

1. Q1.Compulsary (10mks) <may consist of sub-ques> 2. Q2toQ5.Any 4 out of 5 (10mks each) 3. Total 5 Questions to be answered

BOOKS TO BE REFERED

• Waman.S.Jawadekar • Obaran


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Chapter 1 INFORMATION SYSTEMS

Why Do People Need Information?

� Individuals - Entertainment and enlightenment � Businesses - Decision making, problem solving and control

Why Learn About Information Systems?

� Information systems used in most professions � Sales reps � Managers � Corporate lawyers

� Indispensable for achieving career goals Introduction 1. INFORMATION SYSTEM (IS)

� A set of interrelated components that collect, manipulate, and disseminate data and information, and provide feedback to meet an objective

� Examples: ATMs, airline reservation systems, course reservation systems 2. DATA, INFORMATION AND SYSTEMS

� Data vs. Information � Data

� A “given,” or fact; a number, a statement, or a picture � Represents something in the real world � The raw materials in the production of information

� Information � Data that have meaning within a context � Data in relationships � Data after manipulation � Information is one of an organization’s most valuable resources � Information is different from data � Information has value in Decision making

3. DATA MANIPULATION

� Example: customer survey � Reading through data collected from a customer survey with questions in various categories would be time-

consuming and not very helpful. � When manipulated, the surveys may provide useful information.

INFORMATION What is information? Definition: Information is data that has been processed into a form that is meaningful to the recipient (USER) and is of real or perceived value in current or prospective actions or decisions.

� Processed data � meaningful � perceived value � motivating action � HAS SURPRISE VALUE � HAS NEWS VALUE � Presented facts � active (it enables doing) � business based (Domain based) � transformed form data

INFORMATION: A QUALITY PRODUCT Utility, satisfaction, error & bias 1. Utility has form, time, the access & possession facets. Improving utility means increasing cost. 2. Common key for measuring quality could be satisfaction of decision maker. 3. Error creeps due to

• Incorrect data measurement. • Incorrect collection method • Improper data processing procedure • Loss of data/ incomplete data


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• Poor data validation & control systems 4. Personal bias, organization bias & management bias may be reflected in the entire process of collection processing, & communicating inferencing. CLASSIFICATION OF INFORMATION

• ACTION V/S NO ACTION INFORMATION - e.g out of stock – stock ledger • RECURRING V/S NON RECURRING INFORMATION - e.g. monthly sales, trial balance- financial analysis, market

research • INTERNAL V/S EXTERNAL INFORMATION • Magazines - government reports • ACTION INFORMATION • RECURRING INFORMATION • INTERNAL INFORMATION CONTIRBUTE TO MIS ORGANIZATION AND INFORMATION

CLASSIFICATION OF INFORMATION BASED ON APPLICATION

� PLANNING INFORMATION- time std, operational std, design std � CONTROL INFORMATION- informed through feedback it include a decision or action leading to control. � KNOWLEDGE INFORMATION- power/ strength to organization

Data, Information, and Systems

� Generating Information � Computer-based ISs take data as raw material, process it, and produce information as output.


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� Information in Context

The Value of Information � Value of information is directly linked to how it helps decision makers achieve their organization’s goals � For example, value of information might be measured in:

� Time required to make a decision � Increased profits to company


• What Is a System? � System: A set of components that work together to achieve a common goal � Subsystem: One part of a system where the products of more than one system are combined to reach an ultimate

goal � Closed system: Stand-alone system that has no contact with other systems � Open system: System that interfaces with other systems

SYSTEM


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System Concepts � System

� A set of elements or components that interact to accomplish goals � Components of a system

� Input � Processing � Output � Feedback

System Performance and Standards

� Efficiency: measure of what is produced divided by what is consumed � Effectiveness: extent to which system attains its goals � System performance standard: a specific objective of the system


� Information and Managers � Systems thinking

� Creates a framework for problem solving and decision making. � Keeps managers focused on overall goals and operations of business.

Manual and Computerized Information Systems

� An information system can be: � Manual � Computerized


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Figure: Qualities of humans and computers that contribute to synergy

Computer-Based Information Systems � Computer-based information system (CBIS)

� A single set of hardware, software, databases, telecommunications, people, and procedures that are configured to collect, manipulate, store, and process data into information

The Components of a Computer-Based Information System

Components of an information system


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The Four Stages of Data Processing

� Input: Data is collected and entered into computer. � Data processing: Data is manipulated into information using mathematical, statistical, and other tools. � Output: Information is displayed or presented. � Storage: Data and information are maintained for later use.

Why Study IS?

� Information Systems Careers � Systems analyst, specialist in enterprise resource planning (ERP), database administrator,

telecommunications specialist, consulting, etc. � Knowledge Workers

� Managers and non-managers � Employers seek computer-literate professionals who know how to use information technology.

� Computer Literacy Replacing Traditional Literacy � Key to full participation in western society

ETHICAL AND SOCIETAL ISSUES The Not-So-Bright Side

1. Consumer Privacy � Organizations collect (and sometimes sell) huge amounts of data on individuals. � Employee Privacy � IT supports remote monitoring of employees, violating privacy and creating stress.

2. Freedom of Speech � IT increases opportunities for pornography, hate speech, intellectual property crime, and other

intrusions; prevention may abridge free speech. � IT Professionalism � No mandatory or enforced code of ethics for IT professionals--unlike other professions. � Social Inequality � Less than 20% of the world’s population has ever used a PC; less than 3% have Internet access.


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Chapter 2

MANAGEMENT INFO SYSTEM

What is a MIS � MIS is short for Management Information System � MIS refers broadly to a computer-based system that provides managers with the tools for

� organizing, � evaluating and � Efficiently running their departments.

� MIS refers to a class of software that provides managers with tools for organizing and evaluating their

department.

� MIS plays important role in management, administration & operations of an organization.

� Creates impact on organizations’ functions, performance & productivity.

MIS Definitions

1. The MIS is defined as system which provides information support for decision making

2. The MIS is defined as an integrated system of Man and Machine for providing the information to support the

operations, the management and the decision making function in the organisation

3. The MIS is defined as a system based on the database of the organisation evolved for the purpose of providing

information to the people in the organisation.

4. And simply – The MIS is defined as a Computer based information system

5. In Short : MIS is a system to support the decision making function in the organization


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Understanding Information Technology

MIS: CONCEPT

1. Initial concept

• to process data from the organisation & present it in the form of reports at regular intervals

• system was largely capable of handling the data from collection to processing

2. Concept was modified when a distinction was made between data & information

• MIS should be individually oriented

• as each individual may have a different orientation towards information

3. Concept was further modified

• system should present information in such a form & format that it creates an impact on its user

• provokes a decision, action or investigation

• concept of exception handling was imbibed into the MIS

4. Environment turned competitive

• concept was then evolved that the system should be capable of handling a need based exception reporting

• calls for keeping all data together in such a form that it can be accessed by anyone & processed to suit his

needs

• concept is that data is one but can be viewed by individuals in different ways

5. Concept of end-user computing emerged

• lead to decentralization of the system

• user becoming independent of the computer professionals

6. Current concept

• has changed to that of a decision making system

IN TODAY’S WORLD:

MIS is a system

• which handles the database

• provides computing facilities to the end-user

• gives a variety of decision making tools to the user of the system

MIS gives information through data analysis. While analysing the data it relies on many academic disciplines. Including

theories, principles & concepts from

• Management Science

• Management Accounting

• Operations Research

• Organisational Behaviour

• Engineering

• Computer Science

• Psychology

• Human Behaviour

Foundation of MIS is in the Principles & Practices of Management. It uses the concept of management control & relies

heavily on the fact that the decision maker or manager is a human being. This calls for analysis of a business,


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management views & policies; organizational culture & management style. This is possible only when it is conceptualized

as a system with an appropriate design. MIS thus relies heavily on Systems Theory. It uses Theory of Communication

• to help evolve a system design

• capable of handling data inputs, process & outputs

• with the least possible noise (distortion)

• in transferring information from source to destination

Thus the concept is a blend of principles, theories & practices of

• Management

• Information

• Systems giving rise to a single product known as Management Information Systems (MIS)

In order to provide past, present and prediction information, an MIS can include:

• Software that helps in decision making,

• Data resources such as databases,

• The Hardware resources of a system,

• Decision Support Systems,

• People Management and

• Project Management applications, and

• any other computerized processes that enable the department to run efficiently

Within companies and large organizations, the department responsible for computer systems is sometimes called the

MIS department

Other names for MIS include

• I.S. (Information Services)

• I.T. (Information Technology) or

• E.D.P. (Electronic Data Processing)

The Management Information System has to be tailored to specific needs and may include routine information such as:

• monthly reports,

• information that points out exceptions, and

• Information necessary to predict the future.

MAJOR TYPES OF SYSTEMS

• Executive support systems (ESS)

• Decision support systems (DSS)

• Management information systems (MIS)

• Knowledge work systems (KWS)

• Office automation systems (OAS)

• Transaction processing systems (TPS)

INTERRELATIONSHIPS AMONG SYSTEMS


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Information

Individual dependent and difficult to conceive the information as a well-defined product for the organization For better

information processing, it is necessary to have a formal system which should take care of the following points:

• Handling of voluminous data

• Confirmation of the validity of data and transaction

• Complex processing of data and multidimensional analysis

• Quick search and retrieval

• Mass storage

• Communication of the information system to the user on time

• Fulfilling the changing needs of the information

ROLE OF MIS

MIS satisfies the diverse needs through variety of systems such as:

• Query System

• Analysis system

• Modeling system &

• Decision support system


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MIS helps

• Strategic planning

• Management control

• Operation Control &

• Transaction Processing

The MIS plays the role of:

• Information generation

• Communication,

• Problem identification &

• Helps in the process of decision making

Type of people MIS helps in:

Clerical Personnel Transaction processing, answers to queries, status of

records and various references

Junior Management Providing operation data for planning, scheduling &

control, Decision making at operational level

Middle Management Short term planning, Target setting, controlling the

business functions. Use of management tools of planning

and control.

Top Management Goal setting, strategic planning, evolving the business

plans and their implementation

IMPACT OF MIS

MIS creates an impact on:

• Organisation functions

• Performance &

• Productivity

With MIS support management of:

• Marketing

• Finance

• Production & Personnel

Becomes more effective

The tracking and monitoring of functional target becomes easy, Information about probable trends Helps in forecasting.

The functional Managers are informed about:

• The progress

• The achievement &

• Shortfall

MIS brings High degree of professionalism &Creates

• a structural database

• Knowledge base

• Information Bank

All this information is made easily available:

• Saves Time & Money

Better Understanding of business:

• Common terminology

• Common terms

• Wider view, perspective

• Understanding how ones work affect the entire organisation

• Better sense of responsibility

MIS calls for:

• Systemization of Business Operations:

• Streamlines the operations


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• Everybody to follow system and procedure

• Thus Better discipline

Removes

• Drudgery of clerical work

• Laborious work

• Repeated work

Large Overheads are clerical:

• Earlier time was spend in clerical job

• brings unnecessary fatigue

• Time can be better utilized

• More productive work

• Timely reports improves the decision making ability considerably

MIS creates: Information-based work culture. MIS provides Action Oriented Information

MIS & COMPUTER

Let us quickly glance at the salient features

• Massive storage capacity

• Phenomenal speed

• No mathematical or logical mistake

• Thus more reliable

• GIGO

• Networking,

• Internet, Connectivity

• Security

• Accessibility

• Diligence

• Graphics

• Quick and accurate Processing

• User friendly system

Easy Availability of good software in market

MIS & ACADEMICS

Established Branches of Management

• Operation Research (OR)

• Inventory Control

• Queuing Theory

• Resource Programming

• The network theory

• CPM / PERT

• Accounting Principles BK

• Different Mathematical Techniques

It is not only the Hardware + software + connectivity that matters. These are only tools The Principles and Practices of

Management and the organizational behaviour has a key role to play.

Personal factors in MIS:

• Bias

• Mental block

• Thinking with fixed frame of reference

• Risk aversion

• Strengths

• Weaknesses


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• MIS uses knowledge from management, business management, mathematics, accounting, psychology,

communication theory, operation research & probability theory for building processes, methods, and decision support

systems in designing applications.

• MIS is based on databases & uses it for information generation.

MIS & -VE IMPACT

At clerical Level:

• Sense of insecurity

• Work vacuum in clerical jobs

• The importance of a person is lost

• Fear of non-recognition

At middle Management Level:

• Since machine can do the job of data manipulation & Integration people doing it manually are now redundant

• Sense of being neglected

At Top Management Level

• Since Analysis of data is available at finger tips the skills and abilities to conclude becomes mechanical.

• Knowledge of business & secrets is known to too many people!

MIS makes the data easily available. True. But at the same time it would be more accessible to the competitors too!

Fear of challenge & exposure because the facts are known to everyone! Overcome by training & counseling.

MIS AS A TOOL

The recent major technological advances:

• Easy Communication

• Multimedia

• Imaging

• Graphical user Interface

• Internet & Web

• Platform independence

• Manipulative capability is considerably increased.

• Availability of information of desk top / lap top

• With the latest use of P.D.A. the information is more portable and effective.

MIS can make business more competitive; bring about the organizational transformation through integration. MIS can

make organisation seamless by removing all communication barriers.

ROLE OF MIS

MIS satisfies the diverse needs through variety of systems such as:

• Query System


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• Analysis system



MIS helps







• Communication,



ROLE OF MIS

• MIS satisfies the diverse needs through variety of systems such as:

• Query System

• Analysis system



MIS helps







• Communication,




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Steps in Management Decisions in Management

Planning A selection from various alternatives – strategies, resources,

methods etc.

Organisation A selection of combination out of several combinations of the

goals, people, resources, methods and authority

Staffing Providing a power manpower complement

Direction Choosing a method from the various methods of directing

the efforts in the organisation.

Coordinating

Choice of the tools and the the techniques for coordinating

the efforts for optimum results

Controlling A selection of the exceptional conditions and the decision

guidelines

Advantages

• Time and energy is applied for productive work

• With analytical & knowledge can improve position in the organization

• Recent trends like Multimedia, Imaging GUI, Internet, Web have made MIS a attractive proposition

Through MIS information can be used as a strategic weapon to counter threats to business, making them more

competitive, thus bringing about a organizational transformation through integration A Good MIS makes the organization

a seamless (smooth) by removing all the communication barriers

MANAGEMENT CHALLENGES

1. Design competitive & efficient systems

2. Understand system requirements of global business environment

3. Create information architecture that supports organization’s goals

4. Determine business value of information systems

5. Design systems people can control, understand & use in a socially, ethically responsible manner

THE CHANGING BUSINESS ENVIRONMENT

1. globalization

2. industrial economies

3. transformation of the enterprise

GLOBALIZATION

• management & control

• competition in world markets

• global work groups

• global delivery systems


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Chapter 3 SCM & CRM

DEVELOPMENT OF LONG RANGE PLANS OF THE MIS

• Any kind of business activity calls for long range plans for success, the same being true for MIS • The plan for development & its implementation is a basic necessity for MIS

* In MIS, information is recognised as a major resource * If this resource is to be managed well, it calls upon the management to plan for it and control its appropriate use in the organisation EARLIER • Financial resources spent on computers purely to expedite the activity of data collection & processing • Computers are used mainly for computing & accounting the business transactions & have not been considered as a

tool for information processing for management actions & decisions SINCE LATE 80’s • Computers became more versatile, in the functions of storage, communications, intelligence & language • Became user-friendly • Communicate across any distance, and share data, information resources • Tool for information processing • Storing a large database or knowledge base ADVANCEMENT OF TECHNOLOGY • Possible to recognize information as a valuable resource • Necessary to link its acquisition, storage, use & disposal as per the business needs for meeting the business

objectives • Thus it is conceived as a system which deals with management information and not data processing alone • It should provide support for management planning, decision making & action • It should support the needs of all levels of management • It should provide support to the changing needs of business management In short, we need a MIS flexible enough to deal with the changing information needs of the organisation • It should be conceived as an open system continuously interacting with the business environment with a built in

mechanism to provide the desired information • Designing such a system is a complex task, and it can be achieved only if the MIS is planned, keeping in view, the

plan of the business organisation • The plan of the MIS is concurrent to the business plan of the organisation • To ensure this, it is necessary that the business plan – states the information needs • The information needs are then Contents Of The MIS Plan

Business Plan MIS Plan

Business goals & objectives Management information system, objectives, consistent to the business goals & objectives

Business plan & strategy Information strategy for the business plan implementation playing a supportive role

Strategy planning & decisions Architecture of the Management Information system to support decisions

Management plan for execution & control System development schedule, matching the plan execution Operation plan for the execution Hardware & Software plan for the procurement &

implementation MIS Goals & Objectives The MIS goals & objectives will consider

• Management philosophy • Policy constraints • Business risks • Internal & external environment of the business

Typical statements of the goals are:

• Provide an online information on the stocks, markets & the account balances • Query processing should not exceed more than 3 seconds • Focus of the system will be on the end user computing & access facilities • Information support will be the first in the strategic areas of management such as marketing or service or

technology


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Strategy for the Plan Achievement The designer has to make a number of strategic decisions for the achievement of goals & objectives

Architecture of the MIS Plan

• Architecture of the MIS Plan provides a system & subsystem structure & their input, output & linkages • Also provides a way to handle the systems or subsystems by way of simplification, coupling & decoupling of

subsystems The System Development Schedule

• A schedule is made for the development of the system • Schedule must give due regard to

- the overall information requirement of the system - the logical development of the system

• Development schedule is to be weighed against the time scale for achieving a certain information requirement Hardware & Software Plan

A Model of the MIS Plan


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ASCERTAINING THE CLASS OF INFORMATION

INFORMATION CLASS

EXAMPLE USER

Organisational Number of employees, products, services, locations, type of business, turnover

Many users at all levels

Functional Purchases, sales, production, stocks, receivables, payables, outstandings, budgets, statutory information

Functional heads

Knowledge Trends in sales, production technology. Deviations from budgets, norms, targets. Competitors information, industry & business information plan performance & target; and its analysis

Middle & Top management

Decision Support

Status information on a particular aspect, such as utilization, profitability standard, requirement versus availability. Information for problem solving & modeling. Quantitative information on the business status. Non-moving inventory, overdue payments & receivables

Middle management & operations management

Operational Information on the production, sales, purchase, dispatches, and consumptions in the form of planned versus actual. The information for monitoring of execution schedules

Operational & management supervisors

DETERMINING THE INFORMATION REQUIREMENT Purpose of the MIS

• Produce information that will reduce the uncertainty in a given situation Difficulty to determine a correct & complete set of information is on account of 1. Capability constraint of the human being as an information processor, a problem solver & decision maker 2. Nature & variety of information 3. Reluctance of decision makers to spell out the information for political & behavioral reasons 4. Ability of the decision makers to specify the information Methods of Handling Uncertainty

Level of Uncertainty Level of Management Method

Low (Near certainty) Operations management

Question asked: What do you need?

Precise probabilistic knowledge (risk)

Middle management

Determine from existing systems, methods of decision making & problem solving

Not able to determine in probabilistic terms (very risky)

Middle & Top management

Determine through the critical success factors, decision parameters & decision methodology

High (Total uncertainty) Top management

Determine through experimentation


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DEVELOPMENT & IMPLEMENTATION OF THE MIS Prototype Approach

• Progressively ascertaining the information needs • developing methodology • trying it out on a smaller scale • with respect to the data & complexity • ensuring that it satisfies the needs of the users • assessing the problems of development & implementation • Process identifies problem areas • Inadequacies in the prototype • Designer then takes steps to remove the inadequacies

Life Cycle Approach

• Many systems or subsystems in the MIS that have a life cycle • They are very much structured & rule-based • Clarity of inputs and their sources • Definite set of outputs in terms of contents & formats • Details remain more or less static from the day the system emerges, remains in static mode for a long time • Such systems therefore have a life • They can be developed in a systematic manner • Can be reviewed after a year or two, for significant modification, if any


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Comparison

PROTOTYPING APPROACH LIFE CYCLE APPROACH Open system with a high degree of uncertainity about the information needs

Closed systems with little or no uncertainity about the information needs. System remains valid for a long time with no significant change. Design remains stable.

Necessary to try out ideas, application & efficiency of the information as a decision support

No need to try out the application of information as it is already provided

Necessary to control cost of the design & development before the scope of the system & its application is fully determined

Scope of the design & application is fully determined with clarity

User of the system wants to try out the system before he commits the specification & the information requirements

User is confident & confirms the specifications & information needs

System & application is highly custom oriented

System & application is universal & governed by principles & practices

Guidelines for successful implementation 1. Not question beyond the information needs of the user 2. Not forget his role is to offer a service 3. Designer should respect the demands of the user 4. Not mix up technical needs with information needs 5. Impress upon the user the global nature of the system design which is required to meet the current & prospective

information need 6. Not challenge the application of information in decision making 7. Impress upon the user that the quality of information depends on the quality of information provided 8. Impress upon the user that he must contribute to the development 9. Ensure that the user commits to all the requirements & specifications 10. Ensure that overall system effort has the managements acceptance 11. Enlist users participation from time to time 12. Realize that the user is the best guide on the complex development path 13. Not expect perfect understanding & knowledge from the user. Hence, must be prepared to change the system

specification and even design 14. Impress upon the user that change is not that easy in a computer system 15. Ensure that the problems in the organisation are resolved first before the system is taken for development 16. Conduct periodical user meetings where you get to know their difficulties 17. Train the user in computer appreciation and system analysis Implementation of the MIS in an organisation is a process where organisational transformation takes place. Change can occur in a number of ways – Lewin’s model is


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Resistance to change Handled through 1. Factors internal to the users of information 2. Factors inherent in the design of the system 3. Factors arising out of interaction between the user & the system

1. Education 2. Persuasion 3. Participation

MANAGEMENT OF QUALITY IN THE MIS

Parameter of Quality Example Comments

Complete data of all transact

All invoices & vouchers of the month Achieves integrity of data over a time period

Valid transactions & input data

Only correct transaction types are permitted in the system. Data which meets with the design specifications

Ensures validity of data & in turn validity of information

Accuracy & precision

Correct use of formula , procedures & relevant data

Assures that results are accurate and precisely correct

Relevance to the user

Should be relevant to the decision maker If relevance is appropriate, quality is high

Timely information

Information on sales, pending position Information should be received on time

Meaningful & complete

Production information reported in correct terms

Incomplete information may lead to erroneous inferences

Quality of parameters is ensured by the following: 1. All the input is processed & correct 2. All updating & corrections are completed before the data processing begins 3. Inputs are subject to validity checks 4. Access to the data files is protected & secured through an authorisation scheme 5. Intermediate processing checks are introduced 6. Due attention is given to proper file selection 7. Back-up of the data & files are taken to safeguard against corruption or loss of data 8. System audit is conducted from time to time 9. System modifications are approved 10. Systems are developed with a standard specification of design & development 11. Computer system processing is controlled MIS: THE FACTORS OF SUCCESS & FAILURES Factors contributing to success 1. MIS is integrated into the managerial functions. It sets clear objectives to ensure that the MIS focuses on major

issues of the business. Also adequate development resources are provided & human and organisational barriers removed

2. An appropriate information processing technology required to meet the data processing & analysis needs of the users is selected

3. The MIS is oriented, defined & designed in terms of the user’s requirements 4. MIS is kept under continuous surveillance, so that the design can be modified according to the changing information

needs 5. MIS focuses on the results & goals 6. MIS recognises that the manager is a human being & therefore, system must consider human behavioural factors 7. It recognises that there are different information needs depending on the objectives to be met 8. MIS is easy to operate, therefore the design of the MIS has features that make it user-friendly 9. MIS has a basic potential capability to meet new needs of information quickly 10. MIS concentrates on mission critical applications serving the needs of top management Factors contributing to failure 1. MIS is conceived as a data processing & not an information processing system 2. MIS does not provide the information that the management needs 3. Underestimating the complexity of business systems and not recognising it in the system design 4. Adequate attention is not given to the quality control aspects of the inputs, the process & the outputs leading to

insufficient checks & controls in the MIS 5. MIS is developed without streamlining the transaction processing systems in the organisation 6. Lack of training of the users 7. MIS does not meet certain critical & key factors of its users 8. Belief that a computerised MIS can solve all the problems of planning & control of the business 9. Lack of administrative discipline in following standards 10. MIS cannot provide perfect information to all the users in the organisation


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Chapter 4

SCM & CRM

ENTERPRISE SYSTEMS SUPPLY CHAIN MANAGEMENT


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Enterprise Application Architecture

SUPPLY CHAIN MANAGEMENT (SCM) Definitions • Supply chain: The flow of materials, information, money, and services from raw material suppliers, through factories

and warehouses to the end customer; includes the organizations and processes involved. • Supply chain management (SCM): The planning, organizing and coordinating of all supply chain’s activities. • E-supply chain: A supply chain that is managed electronically usually with Web-based software. The Flows in the Supply Chain • Materials flows: These are all physical products, raw materials, supplies, and so forth, that flow along the chain. The

concepts of materials flows include reverse flows-returned products, recycled products and disposal of materials or products.

• Information flows: All data related to demand, shipments, orders, returns, and schedules. • Financial flows: All transfers of money, payments, credit card information and authorization, payment schedules, e-

payments and credit related data. Structure and Components of Supply Chains The supply chain involves three segment:

• Upstream, where sourcing or procurement from external suppliers occur • Internal, where packaging, assembly, or manufacturing take place • Downstream, where distribution or dispersal take place, frequently by external distributors • Supply chain also include the movement of a product or a service and the organizations and individuals involved,

are part of the chain as well.


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Supply Chain Management (SCM) • Integrates supplier, manufacturer ,warehouse, distributor, transporter, retailer and customer. • Major Supply Chain Functions are Marketing, manufacturing, Procurement, Operations, Inventory, Warehousing,

Distribution and Customer Service. • Reduces time, redundant effort, and inventory costs • Network of organizations and business processes

PROCESS VIEW OF SUPPLY CHAIN

INFORMATION LIST FOR SCM

Customer preference, Choice, purchase history and credit history, buying Pattern Product Specification, Quality, analysis, drawing and Design information Sales Analysis by Region/segment/class of customer comparative analysis by period/projections ABC

analysis by product/sales/order Inventory item, store location, inventory cost & value Production capacity, capability, schedule, availability, plan Supplier History, service, Quality, Price & Rating Transporters Fleet Capacity, Carrier Type, Lead time, Cost Marketing Schedule, Objective & Analysis Supply Chain Delivery period, Total Cost & inventory BENEFITS FROM SUPPLY CHAIN MANAGEMENT SYSTEMS HELPS FIRMS: • Decide when and what to produce, store, and move • Rapidly communicate orders • Track the status of orders • Check inventory availability and monitor inventory levels • Reduce inventory, transportation, and warehousing costs • Track shipments • Plan production based on actual customer demand • Rapidly communicate changes in product design SUPPLY CHAIN PROBLEMS AND SOLUTIONS Problems along the supply chain from two sources:

• Uncertainties • Need to coordinate several activities, internal units and business partners

Solution to Supply Chain Problems • Vertical integration: the upstream part of the supply chain with the internal part, typically by purchasing up- steam

suppliers, in order to ensure availability of supplier. • Using inventories: The most common solution used by companies to solve supply chain problems is building

inventories as an “insurance “against supply chain uncertainties. Solutions to SC Problems cont… • Information sharing: sharing information along the supply chain can improve demand forecasts. Such sharing can

be facilitated by EDI, extranets, and groupware technologies. • Vendor-managed inventory (VMI): allowing suppliers to monitor, the inventory levels of their products in the

retailors’ stores and to replenish inventory when needed.


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Customer Relationship Management (CRM) • An enterprise wide effort to acquire and retain customers often supported by IT. • Manages all ways used by firms to deal with existing and potential new customers • Provides end- to- end customer care

- Provides a unified view of customer across the company - Consolidates customer data from multiple sources and provides analytical tools for answering questions

• CRM is major customer centric business strategy • It uses IT to create cross functional enterprise system that integrates & automates many customer serving processes

in sales, marketing, product services that integrate with company’s customers. • Consist of various s/w modules that perform business activities involved in front office processes. • Provides strategic business value to company & major customer value to its customers. Type of CRM • Operational CRM: activities involving customer services, order management, invoice /billing and sale/marketing

automation and management. • Analytical CRM: activities that capture, store, extract, process, interpret, and report customer data in a corporate. • Collaboration CRM: deals with all the necessary communication coordination and collaboration between vendors

and customers. Application clusters in CRM

Approaches to CRM


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Data Driven CRM Model

Process Driven CRM Model

Analytical CRM • Process Driven CRM • Enhance the value of CRM system • Data Source:-

• Enterprise System such as - ERP, - SCM, - E-Business, - Finance and - Control

• Processes: - Customer Value management - Customer Satisfaction Analysis - Revenue analysis - Customer Classification - Customer Segmentation - Service Channel Analysis - Analysis of Market Campaign

• Analysis: - OLAP(In-Line Analytical Processing)

• On-line data • Customised analysis • Organise data on several dimensions • Deal with query • Customer Segmentation • Data Mining

• Analysis Techniques used by OLAP: - Classification - Regression - Link analysis - Segmentation - Deviation Detection


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Classification of CRM Application • Customer-facing applications • Customer-touching applications • Customer-centric intelligence applications • Online networking applications • E-CRM: The use of web browsers, the Internet and other electronic touch points to manage customer relationships. Electronic Hubs Compared to Traditional Intermediaries

SCM, CRM, ERP VENDORS • SAP AMERICA • BAAN • PEOPLE SOFT & ORACLE


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Chapter 5

DECISION SUPPORT SYSTEMS

Decision Making and Problem Solving • Problem solving is the most critical activity a business organization undertakes. Problem solving begins with decision

making. • In the intelligence stage, potential problems and /or opportunities are identified and defined • In the design stage, alternative solutions to the problem are developed • In the choice stage, a course of action is selected • In the implementation stage, action is taken to put the solution into effect • In the monitoring stage, the implementation of the solution is evaluated to determine if the anticipated results were

achieved and modify the process

What Kind of Decisions we Make? • Programmed decisions are the ones that are made using a rule, procedure or quantitative method. For example, to

say that inventory should be ordered when inventory levels drop to 100 units is to adhere to a rule. • Non programmed decisions deal with unusual or exceptional situations. In many cases these decisions are difficult to

quantify. For example, determining the appropriate training program. Optimization, Satisficing, and Heuristic

• Optimizing is finding the best solution and is usually best fit for problems that can be modeled mathematically with a low degree of estimation risk. example- find how many products an organization should produce to meet a profit goal.

• Satisficing is finding a good, but not necessarily the best, solution. Satisficing does not look at all possible solutions, but at those that are likely to give good results. Satisficing is a good decision method because it is sometimes too expensive to analyze every alternative to get the best solution. example - when you have to select a location for a new plant.

• Heuristics are guidelines or procedures that usually find a good solution by using “rules of thumb”. What is a DSS?

• A Decision Support System (DSS) is an organized collection of people, procedures, software, databases, and devices used to support problem-specific decision making when faced with unstructured or semi-structured business problems [Ralph Stair]

• A Decision Support System (DSS) is an interactive computer based information system, which helps decision makers utilize data and models to solve unstructured problems [Ralph Sprague Jr. Readings in Information Systems. West Publishing Company, 1988]

DSS: Concept & Philosophy

• A highly flexible & interactive support system that utilizes a - knowledge base - decision models - a decision maker’s own thoughts in order to create “what-if” scenarios that support decision-making when

problems are unstructured • Used in order to analyse business data and present it so that users can make business decisions more easily in

unstructured decision making situations • Typical information that a DSS application might gather & present are:

- comparative sales figures between fiscal quarters - projected revenue figures based on sales assumptions - consequences of different decision alternatives in ‘what-if’ scenarios using past experience

• Decision support system features include: - data query and collection from the knowledge base - analysis of data against decision models - presentation of resulting data for ‘best’ solutions


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Capabilities of a DSS

• Support for problem-solving phases including the intelligence, design, choice, implementation and monitoring • Support for different decision frequencies that range from one-of-a-kind (i.e., merging with another company) to

repetitive (i.e., how much inventory to purchase this week) • One-of-a-kind decisions are handled by an ad hoc DSS • Repetitive decisions are handled by institutional DSS • Support for different problem structures ranging from high structured and programmed to unstructured and non-

programmed • Support for various decision-making levels including operational-level decisions, tactical-level decisions and strategic

decisions Characteristics of DSS • DSS is based on several assumptions about the role of the computer is effective decision making

1. The computer must SUPPORT the manager but not replace his judgment 2. The main payoff of computer support is for SEMISTRUCTURED problems – parts of the problems can be

systematized for the computer, but where the decision maker’s insight and judgment are needed to control the process

3. Effective problem solving is INTERACTIVE and is enhanced by a dialog between the user & system


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Types of D.S.S.

• The DSS are developed by the user and system analysts jointly • The DSS system uses the principles of economics, science and engineering and also the tools & techniques of

management • The data in DSS is drawn from the Information System developed by the company. • The DSS are developed in isolation and form independent system subset of Management Information System • The most common use of the decision support system is to test the decision alternatives and also to test the

sensitivity of the result to the change in the system and assumptions • The data and information for the DSS are used from the internal sources such as database & also from external

sources


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Deterministic system

Components of DSS

• The data subsystem includes the Database that allows the DSS to tap into information stored in the corporate

database and the External Database Access that allows the use of external data sources. • The model base gives decision makers access to a variety of models and assist them in decision making. The model

base can include the model management software (MMS) that coordinates the use of models in a DSS. • The user interface, also called the dialog management facility, it allows users to interact with the DSS to obtain

information. The user interface requires two capabilities; the action language that tells the DSS what is required and pass the data to the DSS and the presentation language that transfers and presents the user results.

• The DSS generator acts as a buffer between the user and the other DSS components, interacting with the database, the model base and the user interface.


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DSS Database

• Collection of current and historical data from a number of applications • It may be a small database residing on a PC that contains a subset of corporate data that has been downloaded and

possibly combined with external data • Alternatively it may be a massive data warehouse that is continually updated by a major organisational TPS • Data in databases are generally extracts or copies of production databases so that using the DSS does not interfere

with other critical operational system DSS Software System

• Contains the software tools that are used for data analysis • May contain various OLAP tools, data mining tools or a collection of mathematical and analytical models that can

easily be made accessible to the DSS user Model

• Abstract representation that illustrates the components or relationships of a phenomenon • A model can be a - Physical Model - Mathematical Model - Verbal Model Using DSS Using a DSS involves an interactive analytical modeling process which may be

What-If Analysis

• An end-user makes changes to variables or relationships among variables and observes the resulting changes in the values of other variables

• If you are using a spreadsheet, you might change a revenue amount (a variable) or a tax rate formula (a relationship among variables)

• Then you could command the spreadsheet to instantly recalculate all affected variables in the spreadsheet • Managerial user would be very interested in observing and evaluating any changes that would occur to the values in

the spreadsheet • This type of analysis would be repeated until the manager was satisfies with what the results revealed about the

effects of various possible decisions Sensitivity Analysis

• Is a special case of What-If analysis • Typically, the value of only one variable is changed repeatedly, and the resulting changes on other variables are

observed • Thus it a case of sensitivity analysis involving repeated changes to only one variable at a time • Used when decision makers are uncertain about the assumptions made in estimating the values of certain key

variables Goal-Seeking Analysis

• Reverses the direction of the analysis done in What-If and sensitivity analysis • Instead of observing how changes in a variable affect other variables,


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• Goal-seeking analysis sets a target for a variable and then repeatedly changes other variables until the target is achieved

• Example: Specify a target of Rs.2 lac for net profit after taxes for a business venture. Then you could repeatedly change the value of the revenue or expenses in a spreadsheet model until the result of Rs.2 lac is achieved

• This form of modeling thus helps answer the question “How can we achieve Rs.2 lac in net profit after taxes?” Optimisation Analysis

• Is a more complex extension of goal seeking analysis • Instead of setting a specific target for a variable, the goal is to find the optimum value for one or more target

variables, given certain constraints • Then, one or more other variables are changed repeatedly, subject to the specified constraints until the best values

for the target variables have been discovered • Example: You could try to determine the highest possible figure of profits that could be achieved by varying the

values for selected revenue sources & expense categories. Changes to such variables could be subject to constraints such as limited capacity of production processes or limits to available financing

GDSS: Group Decision Support Systems So much work is accomplished in groups within organisations that a special category of systems called GDSS has been developed to support group & organisational decision making Definition

• A GDSS is an interactive computer-based system to facilitate the solution of unstructured problems by a set of decision makers working together as a group

• GDSS provides tools and technologies geared explicitly toward group decision making and were developed in response to a growing concern over the quality and effectiveness of meetings

• Electronic Questionnaires • Electronic Brainstorming Tools • Idea Organisers • Questionnaire Tools • Tools for voting or setting priorities • Stakeholder identification & analysis tools • Policy formation tools • Group Dictionaries • People


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The Group Decision Support System The Group Decision Support System (GDSS) is a CBIS that provides support in group decision-making settings. Characteristics of a GDSS:

• Special design of software packages called groupware to allow two or more individuals in a group to effectively work together

• Easy to use eliminating complexities that will make the system unusable • Flexible to allow two or more decision makers working on the same problem utilize their decision-making styles and

preferences • Specific and general support capabilities • Anonymous input to foster objective and unbiased decision making • Reduction of negative group behavior that is counterproductive or harmful to effective decision making • Support of positive group behavior Capabilities of a GDSS • Decision-making aids include computer programs that assist in listing alternatives, analyzing potential solutions and

ranking alternatives • Word processing and text manipulation allowing group members to access common files • Database and file manipulation allowing access to several types of databases and DBMSs • Spreadsheet capabilities to allow calculations and analysis in group meetings • Communications facilities that support teleconferencing and videoconferencing often called electronic meeting

systems (EMS) Overview of Management Information Systems Applications


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Chapter 6 MANAGING DIGITAL FIRM

MIS • An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information

needed to carry out the functions of management. • MIS combines tech with business to get people the information they need to do their jobs better/faster/smarter.

Information is the life blood of all organizations - now more than ever. Doing Business in the Digital Firm • Business in the digital economy using Web-based systems on the Internet and other electronic networks. • Electronic integrated business processes makes company much more agile & adaptive to changing environment. • Emergence of internet into full blown international communications system reduced cost of operation on global scale. BUSINESS RELATIONS IN DIGITAL FIRM

Role of IT/ IS

The New Economy VS. The Old Economy

Business Model in the Digital Economy The Internet is revolutionizing the economic, societal, technological foundations of the old economy.


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• 40 million business registered dot.com in 2005. • 5 exabyte of digital information • Internet advertising gained popularity.

Digital networking and communications infrastructures • A vast array of digitizable product -data bases, news and information, books, magazines, TV and radio programming,

movies, electronic games, musical CDs, and software which are delivered over the digital infrastructure anytime, anywhere in the world

• Consumers and firm conducting financial transaction digitally-through digital currencies or financial tokens carried via networked computers and mobile devices

• Physical goods such as home appliances and automobiles that are embedded with microprocessors and networking capabilities.

• E-commerce and internet advertising are blooming. Digital networking and Business Transformation • More wireless cell phone accounts were opened in 2005 than telephone land lines installed. Cell phones, laptops,

handhelds, e-mail, online conferencing and teleconferencing over the internet become essential tools of business. • Newspapers readership continue to decline, more than 35 million people receive their news online, write blogs and

read blogs. • Federal Security, health laws and occupational laws require many businesses to keep email messages for 5 years,

spurring the growth of digital information now estimated to be 5 exabytes annually. Digital Firm The firm in which nearly all of the organisation’s significant business relationships with customers, suppliers and employees are digitally enabled and mediated. Core business processes are done through digital technologies (computers, software and electronic devices), including digital networks (the Internet , intranets, and extranets) and other telecommunication technologies Extended Features of Digital Firm • Time Shifting-24x7 • Space Shifting- Global Workshop Why Information Technology The collection and management of computing systems used by an organization is done with the help of various information systems. Like • Executive info system (EIS) • Decision Support system (DSS) • Management info system (MIS)

- Production info system - Personnel info system - Marketing info system - Financial info system - Material info system

Major Capabilities of Information System • Perform high-speed, high-volume, numerical computation. • Provide fast, accurate, and inexpensive communication within and between organizations. • Automate both semiautomatic business processes and manual tasks. • Store huge amounts of information in an easy-to-access, yet small space. • Allow quick and inexpensive access to vast amount of information, worldwide. • Facilitate the interpretation of vast amounts of data • Enable communication and collaboration anywhere, any time. • Increase the effectiveness and efficiency of people working in groups in one place or in several locations, anywhere. IS

• operational excellence • competitive advantage • survival • new product /services/ business model • customer supplier intimacy • improved decision making

Strategic Business objectives of Information System • Operational Excellence E.g. Wal-Mart

- Largest retailer - Power of IS coupled with brilliant business practices & supportive management. - Sales > $ 28 per sq. foot 5,289 stores worldwide.

• New Products, services and business models


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E.g. Apple - IPod innovations, including original iPod, to iPod Nano, iTunes music service, iPod video player. Video rental business with internet enabled business, e.g. Netflix

• Customer and Supplier intimacy E.g. Mandarin Hotels, JC pemnny- Tal apparel • Improved Decision Making E.g. Verizon Corporation- bell operating company uses web based dashboards to serve customers. • Competitive advantage E.g. Dell Computers- customization • Survival E.g. ATM banking Different perspectives of Information System Information System can be technically defined as a set of interrelated components that collect, process, store and distribute info to support decision making and control in an organisation. It contains info about people, places and things within the organisation or in the environment. Three activities in the information system produce the information needed to make decisions, control operations, analyse problems and create new products or services.

Input – Process - Output • IS transform raw data into useful information through 3 basic activities i/p, process and o/p • From business perspective IS provides solution to problem or challenges and provides real economic value to

business. Dimensions of Information System

Dimension • Management -Involves leadership, strategy & management behavior. • Technology- consists of computer h/w, s/w, data management technology, networking/ telecommunications

technology (internet). • Organization- Organization’s hierarchy, functional specialties, business processes, culture, & political interest groups. Business Perspective on Information System

• IS is part of series of value adding activities for acquiring, transforming, and distributing information to improve

management decision making, enhance organizational performance, & ultimately increase profitability. • IT requires supportive changes in organization & management (complementary assets)


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Complementary assets • New business models • New business processes • Supportive organizational culture • Incentives for management support & innovation • training • Social assets - stds, laws & regulations, telecommunications infrastructure • Investment called- Organizational & management capital

Contemporary Approaches to Information System

• Study of IS deals with issues & insights contributed from technical & behavioral disciplines. • Technical disciplines – CS, management science, OR. • Behavioral disciplines- psychology, sociology & economics.

Contemporary Approaches to Information System

New Opportunities with Technology • Computing Environment - The way in which an organization’s information technologies ( hardware, software, and

communications technology) are organized and integrated for optimal efficiency and effectiveness. • Distributed Computing - Computing architecture that divides the processing work between two or more computers,

using a network for connection, also called distributed processing. e.g. Load balancing between computers • Client / server architecture - A type of distributed architecture that divides distributed computing units into two major

categories, clients and servers, connected by a network • Enterprise wide computing - Computing environment in which each client/ server architecture is used throughout

an organization. • Peer - to – Peer (P2P) - A distribute computing network in which each client/ server computer shares files or

computer resources directory with others but not through a central service (as in traditional client/ server architecture).

• Web based systems - Applications or service that are resident on a server that is accessible using a web browser and is therefore accessible from anywhere via the internet.

• Information Superhighway - A national fibre-optic- based network and wireless infrastructure that will connect all internet users in a country

• World Wide Web - An application that uses the transport functions of the Internet; has universally accepted standards for storing, retrieving formatting, and displaying information via a client/server architecture - Intranet - A private network, usually within one enterprise that uses web technologies such as browsers and

internet protocols separated from the Internet by a security gateway such as a firewall - Extranet - A secured network that connects several intranets via the Internet; allows two or more enterprise to

communicate and collaborate in a controlled fashion. - Corporate Portals - Web site that provide the gateway to corporate information from a single point of access.

Web-Based E-Commerce Systems • Electronic Storefront - The web- equivalent of a show room or a physical store through which an e-business can

display and/or sell its products,.e.g. Barnes and Noble • Electronic market - A network of interaction and relationships over which information, products service and

payments are exchanged, e.g. eBay, Orkut, etc. • Mobile commerce - The buying and selling of goods and services in a wireless environment. • Location based commerce- M–commerce transaction targeted to customers in specific locations at specific times. • Web services - Universal, prefabricated business process software modules, delivered over the Internet that users

can select and combine through almost any device enabling disparate system to share data and services.


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Chapter 7

EXECUTIVE INFORMATION SYSTEMS Overview of Management Information Systems Applications

Capabilities of an EIS • Support for defining the overall vision • Support for strategic planning • Support for strategic organizing and staffing • Support for strategic control • Support of crisis management EIS: Executive Information Systems Definition & Example • An EIS is a MIS tailored to the strategic needs of top management • Goal of a computer-based EIS is to provide top management with that are critical to accomplishing a firm’s strategic

objectives • EIS provide information about the current status and the projected trends for key factors selected by top executives • It combines many of the features of the MIS and DSS • Example: Executives of a department store chain would probably consider factors such as its sales promotion efforts

and its product line mix to be critical to its survival and success Information Sources

Information Presentation

Presented in a form tailored to the preferences of the executives using the system


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Ability to DRILL DOWN, which allows executives to quickly retrieve displays of related information is another important capability Information System specialists have capitalised on advances in computer technology to develop attractive, easy-to-use ways to provide executives with the information they need

• Resulting in: - EIS spreading into the ranks of middle management - More executives coming to recognise their feasibility and benefits

• Resulting in: More features

- Web browsing - Electronic mail - Groupware tools - DSS - Expert System capabilities

Being added to make the EIS more useful to managers

The Executive Support System The Executive Support System (EIS) is a CBIS used to assist senior-level executives within the organization Characteristics of a GDSS: • Easy to use eliminating complexities and saving time for decision makers who are often not technically oriented • Offer a wide range of computing resources including personal computers, mainframe systems and networks • Perform sophisticated data analysis including "what-if" and goal-seeking analysis as related to executive decisions • Offer a high degree of specialization allowing the decision maker to accurately see the "big picture" of the

organization, the economy, and competitors • Provide flexibility because the decision making environments can change rapidly • Provide comprehensive communications abilities with other managers around the world • Support all aspects of decision making


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Chapter 8 KNOWLEDGE MANAGEMENT SYSTEMS

• Collects relevant knowledge and make it available wherever and whenever it is needed • Support business processes and management decisions • Also link the firm to external sources of knowledge • Support processes for acquiring, storing, distributing, and applying knowledge MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Management Opportunities: There are extraordinary opportunities to use information systems to achieve business value, and increase profitability Management Challenges: 1. Integration and the whole firm view:

Given the different interests and perspectives within a firm, it is difficult to achieve consensus about the need for the "whole firm" viewpoint.

2. Management and employee training: Training a large number of employees on many systems in a large organization involves commensurately large investments.

3. Accounting for the cost of systems: Given the large number of different types of systems in a firm, and the large number of people involved with using them, it is a complex task to understand which systems are truly necessary and productive with high returns on investment

Solution Guidelines: • Inventory the firm’s information systems: Develop a list of firm-wide information requirements to give a 360-degree

view of the most important information needs of the firm. • Employee and management education: Ensure that you understand how much training is required. • Account for the costs and benefits: Develop an accounting system for information services firm- wide. Overview of E-Business and E-Commerce • Electronic commerce (e-commerce, EC). The process of buying, selling, transferring, or exchanging products,

services, and/or information via computer networks, including the Internet. • E-business. A broader definition of EC, including buying and selling of goods and services, and also servicing

customers collaborating e-learning, and conducting electronic transactions within an organization. Pure versus partial EC • Electronic commerce can take several forms depending on the degree of digitization- the transformation from

physical to digital- involved. The degree of digitization can relate to: 1. the product (service) sold, 2. the process, or 3. the delivery agent (or intermediary).

• In pure EC all dimensions are digital. • If there is at least one digital dimension, we consider the situation partial EC. • Brick- and-mortar organizations. Organization in which the product, the process, and the delivery agent are all

physical. • Virtual organization: Organization in which the product, the process, and the delivery agent are all digital; also

called pure – play organization • Click and mortar: Organization in which the product, the process, and the delivery agent may be physical or digital. Types of E-Commerce Transactions • Business-to-Business (B2B): E-commerce in which both the sellers and the buyers are business organizations. • Collaborative commerce ( c-commerce): E –commerce in which business partners collaborate electronically • Business-to-Consumers (B2C): E-commerce in which the sellers are organizations and the buyers are individual

also known as e-tailing. • Consumer-to-Consumer (C2C): E-commerce in which an individual sells products or services to other individuals. • Intra-business (intra-organizational) commerce: E-commerce in which an organization uses EC internally to

improve its operations. • B2E (business to employees) EC: A special case of intra-business e-commerce in which an organization delivers

product or services to its employees. • Government–to–Citizens (G2C): E-commerce in which a government provide services to its citizen via EC

technologies. • Government-to–business (G2B): E-commerce in which a government does business with other governments as

well as with businesses. • Mobile Commerce (m-commerce): E-commerce conducted in a wireless environment.


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The Scope of EC EC applications are supported by an infrastructure that includes hardware, software, and networks, ranging from browsers to multimedia, and also by five support areas. • People • Public Policy • Marketing and advertising • Support services • Business Partnerships Benefits of E-commerce 1. Benefits to organization:

• The availability of natural and international markets, • The decreased cost of processing, distributing, and retrieving information.

2. Benefit to customer: • The access to a vast number of products and services, around the clock.

3. Benefit to society: • The ability to deliver information, services, and product to people in cities, in rural areas and in developing

countries. Technological Limitations

• The lack of universally accepted security standards. • Insufficient telecommunication bandwidth. • Expensive accessibility

Non-technological Limitations

• A perception that EC is insecure. • Unresolved legal issue. • A lack of a critical mass of sellers and buyers.

A framework for e-commerce


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Major EC Mechanism • Electronic Catalogues - Electronic catalogues on CD-ROM and the Internet have gained popularity. Electronic

catalogues consist of a product database, directory and search capabilities and a presentation function. • Electronic Auctions (E-auction) - A market mechanism by which sellers place offers and buyers make sequential

bids, and prices are determined dynamically by competitive bidding. • Electronic battering - The exchange of goods or services without a monetary transaction. B2B Applications • In business to business (B2B) applications, the buyers, sellers, and transactions involve only organizations • The major models are: sell-side marketplaces, buy-side marketplaces, and electronic exchanges • Sell-side marketplace: B2B model in which organizations sell to other organizations from their own private e-

marketplace and/or from a third-party site • Buy-side marketplace: B2B model in which organizations buy needed products or service from other organizations

electronically often through a reverse auction. • E-procurement: Purchasing by using electronic support. • E-government: The use of e-commerce to deliver information and public services to citizens, business partners and

suppliers of government entities, and those working in public sector. E-government application can be divided into three major categories; government-to-citizens (G2C), government–to–business (G2B), and government-to–government (G2G).

E-commerce support services

Electronic Payments

• Electronic Checks • Electronic Credit Cards • Purchasing Cards • Electronic Cash • Electronic Bill Payments • Paying Bills at ATMs.


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Three forms of electronic cash • Person - to-Person Payment: A form of e-cash that enables the transfer of funds between two individuals, or

between an individual and a business, without the use of a credit card. • Stored - value money card: A form of e-cash on which a fixed amount of prepaid money is stored, the amount is

reduced each time the card is used. • Smart card: A form of e-cards that contains a microprocessor (chip) that enables the card to store a considerable

amount of information and to conduct processing. Security in Electronic Payment • Authentication: The buyer, the seller, and the paying institution must be assured of the identity of the parties with

whom they are dealing. • Integrity: It is necessary to ensure that data and information transmitted in EC, are not accidentally or maliciously

altered or destroyed during transmission. • Nonrepudiation: Merchants need protection against the customer’s unjustified denial of placing an order. On the

other hand, customers need protection against merchant’s unjustified denial of payment made. (such denials, of both types, are called repudiation)

• Privacy: Many customers want their identify to be secured. • Safety: Customers want to be sure that it is safe to provide a credit card number on the Internet. Security Protection • E-wallets (digital wallets): Mechanisms that combine security measure and convenience in EC purchasing. • Virtual credit card: A payment mechanism that allows a buyer to shop with an ID number and a password instead of

with a credit card number. Legal Issues Specific to E-Commerce

• Fraud on the internet • Domain names • Taxes and other fees. • copyright

Tips for Safe Electronic Shopping

• Look for reliable brand names at sites like Wal-Mart online, and Amazon.com. Before purchasing, make sure that the site is authentic by entering the site directly and not from an unverified link

• Search any unfamiliar selling site for the company’s address and phone and fax numbers. Call up and quiz the employee about the seller.

• Check out the vendor with the local chamber of commerce or better business bureau (bbbonline.org). Look for seals of authenticity such as TRUSTe.

• Investigate how secure the seller’s site is by examining the security procedure and by reading the posted privacy notice

• Examine the money- back guarantees, warranties, and service agreements. • Compare price to those in regular stores. too.-low prices are too good to be true, and some ‘’catch ‘’ is probably

involved. • Ask friends what they know. Find testimonials and endorsements in community sites and well –known bulletin

boarder. • Find out what your rights are in case of a dispute. Consult consumer protections agencies and the national

fraud information center (fraud.org) • Check consumerworld.org for a listing of useful resources.


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Electronic Hubs Compared to Traditional Intermediaries

Electronic Data Interchange (EDI) • EDI is a communication standard that enables the electronic transfer of routine documents between business

partners. Major Components of EDI • EDI translators • Business transactions messages • Data formatting standards The Benefits of EDI • Data entry errors are minimized • The length of the message can be shorter • The messages are secured • EDI fosters collaborative relationships • Reduced cycle time • Better inventory management • Increased productivity • Enhanced customer service • Minimized paper usage and storage • Increased cash flow


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Chapter 9 ENTERPRISE RESOURCE PLANNING

(Leading Vendors- SAP, Oracle) Legacy Systems Many firms have limited to no integration across geographic areas functional areas (v-chain) products, plants, & business units.

• It is package encompassing all major functions of the business. • It is generic in nature , supposed to incorporate the best business practices , followed in most companies • ERP - Enterprise Resource Planning Software

– sometimes called Enterprise Applications / Packages / Suites / Systems – connects all of the information which flows through a company to a single integrated set of systems – implemented in modules which can be integrated (all at once or at a later date) e.g. Financials, Logistics, HR – may work with a wide variety of databases, hardware, and operating systems

Business demands

• Paperless operation • Wireless communication • Transparent & automated operations • Decision support • Integration & coordination

ERP solution

• Availabe on UNIX, Windows platform • Solution is structured in modular fashion to cover the entire business operation • It can have following modules • Sales, marketing, distribution • Manufacturing • Stores management • Finance • Personnel • Maintenance • Purchase , inventory • Planning and control

Features

• Report writer

• Authorization

• OS security & additional design features

• Referencing

• Communication technology support

• User friendly flexible design

• Define alerts, events, schedules

• Drill down and context sensitive help

ERP architecture

• Two tier -Three tier

• CLIENT/ SERVER


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ERP/ EMS

• Offers integrated solution out of all available technologies, thereby offering enterprise wide management support.

• Not all ERP solutions are appropriate for all the organizations. Each has its own peculiarities in terms of design,

architecture, and technology, coverage of business scope, functions and features.

• Choice is based on ERP fit for organization, functions & features.

COMPONENTS OF EMS

SYSTEMS

• ERP

• EDI

• CAD/CAM/CAE

• AMS

• DMS

• CMS

• SMS

ERP

• Plays the role of front running system.

• Major decision making & its execution takes place here

• System that manages all functions, handles operational system

• Provide input to planning & control system for middle management

• Provide decision support information for strategic planning & control to top management.

ERP in Action


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ERP Benefits

• Systems integration - enterprise data model

– squeeze out waste & enable strategies

• Standard software enables -

– Inter-organizational systems (easier if buyers & suppliers use the same system, e.g. petrochem. ind.)

– Broad selection of add-on packages (e.g. data warehouses, etc.)

• Package upgrading and new technology development is handled by vendor

• Speed of deployment (possibly)

EDI

• For commerce, communication & action

• It assist ERP in connecting 2 systems electronically for e-mail, document transfer, data transfer etc.

• Handle commercial functions of the business so called e commerce.

• Acts as gateway to interact with the vendor, customer & other associated institutions of the organization.

CAD/CAM/CAE

• Handle design, manufacturing & engineering functions.

• Provide drawings, designs information to ERP in its execution of a manufacturing, purchase & inspection functions.

• It is equipped with data base management facilities & there database act as back up support to ERP

AMS

• Employee attendance and presence management for the role management or data capture systems on floors, in

stores, at gates etc.

• It keeps track of employees’ related info for personnel planning, availability and scheduling.

• Provides Static and dynamic info.

DMS

• Keep imaging, copying, text management, dispatching document DBMS

• Keep important documents in database for viewing, sending message, documenting for transaction handling.

• Provides text edit , data manipulation facility

• Used for cross checking the key information, confirm the authenticity of transaction.

• Handles document access, editing, copying & mixing the information & sending to various destinations

CMS

• Used for tracking important resource for action

• Resources are located, altered, and advised to act from the location where they are.

• ERP uses CMs as tool for all its communication needs of recording an event.

SMS

• Handles security, entry access requirement of business operation.

• Entities movement, availability and access is tracked, monitored, & guarded for security & safety.

• Provides support to ERP by clearing the situation to act further.

• Six systems support ERP

• All these systems are extensively used for main purpose for which ERP is installed

• Each system operates on their native system and is interfaced to ERP through the gateway by using specific

software.

• these systems are part of ERP

ERP system

• Deals with planning and use of resource like (finance, materials, manufacturing capability, human resource) used in

business.

• Provides methodology of assessing the resource needs for given business plan to achieve business objectives.

• Helps to execute strategies, plans, decisions & actions in time bound manner.

• Provides support system in TPS, updating, reporting across functions.

The Risks

• Tied to a single vendor

• Flexibility limited by options offered by the vendor

– may inappropriately force generic processes


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– may inappropriately force org. structure changes

• Complexity - particularly regarding mapping and standardizing processes across the organization.

ERP SELECTION

• Market offers number of ERP packages, buyer has choice to make.

• Three dimensions to make buy decision

1. Vendor evaluation

• Business strength of vendor

• Product share in total business of vendor

• R &D investment in the product

• Future plans of vendor

• Market reach & resource strength of vendor

2. Technology evaluation

• h/w s/w configuration management

• Use of case tool, screen generators, report writers, screen painter & batch processor

• Support system technologies like barcoding, EDI, imaging, communication, network

• Handling of server and client based data and application logic.

• Object orientation in design & implementation

3. ERP solution evaluation

• ERP fit for business of the organization in terms of functions, features , and processes

• Ease of use – to learn, implement and train

• Flexible design

• Rating on performance , response and integration

• Product quality in terms of security, reliability, precision in results

• ERP solution architecture and technology

• Study of organization in terms of business focus, critical application, sensitive business process etc.

• ERP is tool to change business management and requires through understanding of

• Business

• Business issues

• Management criticalities

• Socio-cultural factors

ERP implementation is 2-3 yrs. project; ERP solution will sustain & be adequate for current & future business needs for

7-8 yrs.

ERP selection

• Committee consisting of important functional heads, strong information technology person and persons from

corporate planning function headed by CEO

• Selected vendors are handed over document & allowed to study organization and business

• Product presentation & demonstration

• ERP implementation follows water fall model


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Make vs. Buy

Successful Deployment of Large Scale Systems

• Business Case

– benchmark, cost justify (e.g. stop maintaining old systems)

• Leadership

– from the highest levels (e.g. success at Owens Corning, failure at Westinghouse)

• Staffing

– largely from business, not IT (users know the process)

– ‘compensation handcuffs’ (e.g. end of deployment bonuses, training payback agreements)

– experienced consultants - check refs., clients

• Execute with proven methodologies


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Chapter 10 TRANSACTION PROCESSING SYSTEM

TYPES OF INFORMATION SYSTEMS

TRANSACTION PROCESSING • Defined as one of the basic processing functions • TPS is vital to the operations of the organisation. Without it, bills would not be paid, sales orders would not be filed,

manufacturing parts would not be ordered • Prior to computers, transaction processing was performed manually or with mechanical machines • Computer based processing has altered the speed and complexity of transaction processing TPS • Transaction is processed for adherence to business rules, correctness & consistency of data values & for validity of

transaction for acceptance. • 3 aspects

- check individual data entities - process for confirmation of rules - Confirm internal consistency, correctness & completeness of data.

• An organization’s transaction processing system (TPS) must support the routine, day-to-day activities that occur in the normal course of business and help a company add value to its products and services. – Identify the basic activities and business objectives common to all TPSs. – Explain some key control and management issues associated with TPSs. – Identify the challenges multinational corporations must face in planning, building, and operating their TPSs.

HISTORY


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STEPS IN TRANSACTION PROCESSING

TRANSACTION PROCESSING CYCLE

METHODS OF PROCESSING TRANSACTIONS

An Overview of Transaction Processing Systems

• Provide data for other business processes: – Management information system/decision support system (MIS/DSS) – Special-purpose information systems

• Process the detailed data necessary to update records about the fundamental business operations • Include order entry, inventory control, payroll, accounts payable, accounts receivable, and the general ledger.

Transaction Processing System

TPS, MIS/DSS, and Special Information Systems in Perspective


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TRADITIONAL TRANSACTION PROCESSING METHODS AND OBJECTIVES • Batch processing system: method of computerized processing in which business transactions are accumulated over

a period of time and prepared for processing as a single unit or batch • Online transaction processing (OLTP): computerized processing in which each transaction is processed immediately,

without the delay of accumulating transactions into a batch

Batch versus Online Transaction Processing

Transaction Processing Activities • TPSs

– Capture and process data that describes fundamental business transactions – Update databases – Produce a variety of reports

• Transaction processing cycle: the process of data collection, data editing, data correction, data manipulation, data storage, and document production

Data Processing Activities Common to TPSs

• Data collection – Should be collected at source


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– Should be recorded accurately, in a timely fashion • Data editing • Data correction • Data manipulation

• Data storage

• Document production and reports

Basic TPS Applications

Systems That Support Order Processing

Order Processing Systems

• Order entry

• Sales configuration

• Shipment planning

• Shipment execution

• Inventory control

• Invoicing

• Customer relationship management

• Routing and scheduling

Purchasing and Accounting Systems

• Purchasing transaction processing systems include:

– Inventory control

– Purchase-order processing

– Receiving


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– Accounts payable

• Accounting transaction processing systems include:

– Budget

– Accounts receivable

– Payroll

– Asset management

– General ledger


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A Symbolic Representation for a Payroll TPS

TPS Control and Management Issues

Business continuity planning: identification of the business processes that must be restored first in the event of a disaster

and specification of what actions should be taken and who should take them to restore operations

Transaction Processing System Audit

• Does the system meet the business need for which it was implemented?

• What procedures and controls have been established?

• Are these procedures and controls being used properly?

• Are the information systems and procedures producing accurate and honest reports?

International Issues

Issues that multinational corporations face in planning, building, and operating their TPSs

– Different languages and cultures

– Disparities in IS infrastructure

– Varying laws and customs rules

– Multiple currencies


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Chapter 11 EXPERT SUPPORT SYSTEM

AI: ARTIFICIAL INTELLIGENCE AI is the effort to develop computer based systems – both hardware & software – that behave as humans Such systems would be able to

- Learn natural language - Perform coordinated physical tasks - Use a perceptual apparatus that informs their physical behavior and languages - Emulate human expertise & decision making

Such systems would exhibit

- Logic - Reasoning - Intuition - Common sense qualities that we associate with human beings

Elements of the AI family

Human Intelligence • Key factor that distinguishes human beings from other animals is their ability to develop associations and to use

metaphors and analogies such as ‘like’ and ‘as’ • Using metaphors and analogies, humans create new rules, apply old rules to new situations an at times, act

intuitively and/or instinctively without rules • It also includes a unique ability to impose a conceptual apparatus on the surrounding world • Meta-concepts such as cause-and-effect and time, concepts of a lower order such as breakfast, lunch, dinner; are all

imposed on the world by human beings • Thinking in terms of these concepts and acting on them are central to human behaviour


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Why Business is interested in AI? Store information in an active form in organisational memory

Creates an organisational knowledge base Employees can examine this base Expertise can be preserved

Create a mechanism that is not subject to human feelings System is not subject to fatigue and worry Useful when jobs are environmentally, physically or mentally dangerous to humans Eliminates routine or unsatisfying jobs held by people

Enhance Organisational Knowledge Generates solutions to specific problems that are too massive or complex to be analysed by humans in a short period of time

Capturing Knowledge: EXPERT SYSTEMS DEFINITION Information Systems that solve problems by capturing knowledge for a very specific and limited domain of human expertise are called EXPERT SYSTEMS WORKING OF EXPERT SYSTEMS

The Expert System

KNOWLEDGE BASE • Knowledge base of an expert systems contains

- FACTS about a specific subject area o (Example: John is an analyst)

- HEURISTICS (Rules of thumb) that express the reasoning o procedures of an expert on the subject o (Example: IF John is an analyst


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� THEN he needs a workstation) • There are many ways in which this knowledge can be represented in the system Methods of Representation • CASE-BASED REASONING - Representing in the form of cases – examples of past performance, occurrences and

experiences • FRAME-BASED KNOWLEDGE - Knowledge represented in the form of a hierarchy or network of frames. A frame is

a collection of knowledge about an entity consisting of a complex data package of data values describing its attributes

• OBJECT-BASED KNOWLEDGE - Knowledge represented as a network of objects. An object is a data - element that includes both data and the methods or processes that act on those data

• RULE-BASED KNOWLEDGE - Knowledge represented in the form of rules and statements of fact. Typically take the form of a premise and a conclusion. IF(condition) THEN(conclusion)

SOFTWARE RESOURCES • An expert system software package consists of an inference engine and other programs for refining knowledge and

communicating with users • The INFERENCE ENGINE program processes the knowledge related to the specific problem • It then makes associations and inferences resulting in recommended courses of action for a user • USER INTERFACE programs for communicating with end users are also needed, including an explanation program

to explain the reasoning process to the user is requested APPLICATION CATEGORIES

1. DECISION MANAGEMENT 2. DIAGNOSTIC / TROUBLESHOOTING 3. MAINTENANCE / SCHEDULING 4. DESIGN / CONFIGURATION 5. SELECTION / CLASSIFICATION 6. PROCESS MONITORING / CONTROL

KNOWLEDGE ENGINEERING • A knowledge engineer is a professional who works with experts to capture the knowledge (facts & rules of thumb)

that they possess • The knowledge engineer then builds the knowledge base using an iterative, prototyping process until the expert

system is acceptable BENEFITS

• Captures the expertise of an expert or group of experts in a computerized form • Faster and more consistent • Does not get tired or distracted • Helps preserve and reproduce the knowledge of experts • Expertise can be shared • Effective use allows a firm to significantly improve the efficiency of its business

LIMITATIONS

• Limited focus • Inability to learn • Maintenance problems • Development costs • Fail in problem solving that requires a large knowledge base

Management Information System

Documents

information systems

systems information

system data

manipulation information

useful information

systems system

action information e

systems data