Management information system

Management Information System

Need of Business in IT

Support of strategic advantage

Support of managerial decision making

Support of Business operations

Fundamental reasons for use of IT• Support of business operations

– Eg:- Retail stores to record customer purchases, keep track of inventory,employees pay, buy new merchandise & evaluate sales trends.

• Support of managerial decision making– Eg:- Decisions - lines of merchandise - added or

discontinued, or kind of investment they require- after analysis.

• Support of strategic competitive advantage– Require innovative use of information technology eg:-

computerized touch-screen catalog ordering system, telephone ordering system, Internet-based computer shopping network-ease of ordering-comparative advantage over competitors.

• The rapid pace of change in today’s business environment-IS & IT vital components that help keep an enterprise on target to meet its business goals.

• Internetworking of computing• Internetworking the enterprise• Globalization,BPR, & using IT for

competitive advantage.• These are the major reasons for businesses

needing IT.

Types of Information Systems

Transaction

Processing

Systems

Process

Control

Systems

Enterprise

Collaboration

Systems

Operations

Support

Systems

Management

Information

Systems

Decision

Support

Systems

Executive

Information

Systems

Management

Support

Systems

Information Systems

Operations Support Systems

• Role is to efficiently process business transactions, control industrial processes, support enterprise communications and collaboration, and update corporate databases

• Examples– Transaction Processing Systems – record and process data from

business transactions in one of two ways – batch process and real-time process

– Process Control Systems – monitor and control physical processes such as in petroleum refining

– Enterprise Collaboration Systems – enhance team and workgroup communications and productivity

Management Support Systems

• Focus on providing information and support for effective decision making by management

• Examples– Management Information Systems – provide

information in forms of reports and displays to managers and other professionals

– Decision Support Systems – gives direct computer support during the decision making process

– Executive Information Systems – provide critical information from a wide variety of internal and external sources in an easy to use displays

Other Classifications• Expert Systems – provide expert advice for operational chores

like equipment diagnostics• Knowledge Management Systems – support the creation,

organization, and distribution of business knowledge to employees and managers

• Functional Information Systems – focus on operational and managerial applications in support of basic business functions such as accounting

• Cross Functional/Integrated Information Systems –

TYPES OF INFORMATION SYSTEMSTYPES OF INFORMATION SYSTEMS

DATA WORKERSDATA WORKERS

KIND OF SYSTEM GROUPS SERVEDKIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR STRATEGIC LEVEL SENIOR MANAGERSMANAGERS

MANAGEMENT LEVEL MIDDLE MANAGEMENT LEVEL MIDDLE MANAGERSMANAGERS

OPERATIONAL OPERATIONAL

OPERATIONAL LEVEL OPERATIONAL LEVEL MANAGERS MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &KNOWLEDGE LEVEL KNOWLEDGE &

SALES & MANUFACTURING FINANCE ACCOUNTING HUMANSALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESRESOURCESMARKETINGMARKETING

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)

*

Cont…………..

• Providing Information system for all levels of mgmt DM is thus not easy task

• Conceptually several major types of IS needed• MIS,DSS,ESS• Developing such mgmt support systems has

been one of the primary thrusts of the business use of IT

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System- Definition

Simply defined as an orderly grouping of interrelated or interacting elements linked together according to a plan to achieve a specific objective.– Eg:- Biological system- Human body– Technological system- Oil refinery– Socioeconomic system- Business Orgn.

Characteristics of system

Organization - Hierarchal relationshipInteraction- Purchasing with production, advt-salesInterdependence-o/p of subsystem to be I/p of another systemIntegration-holism, how linked together, synergic effectCentral objective - real &statedBoundaryAdaptive nature

Dynamic & cybernetic

FinanaciaFinanacial InstitutionsFiana

contro

aManagement

Information System

Economic Resources

People,Money, material, Machine,

Land, Facilities,Ene

rgy, Information

Organizational Processes: Market, Develop,Produce

and deliver products and

servicessupport customers other

processes

Goods and services:Products Services

Payments Contributions Information

Other effects

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IS Model

Control of system Performance

Input of data resources

Processing data into information

Output of information Products

Storage of Data Resources

End users & IS specialistsData & Knowledge bases

Program

s & P

rocedures

Communications media & n/w support

Mac

hine

s &

med

ia

People resourcesData Resources

Har

dwar

e re

sour

ces

Softw

are resources

Network resources

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Information system resources

• An information system model expresses a fundamental conceptual framework for the major components and activities of information systems.

• An information system depends on the resources of people, hardware, software, data & networks to perform input,processing, output, storage, and control activities that convert data resources into information products.

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Information System Model

• Expresses a fundamental conceptual framework for the major components and activities of IS

• Highlights the relationships among the components and activities of Information Systems

• Provides a framework that emphasizes 4 major concepts that can be applied to all types of Information systems– People, h/w, s/w, n/w and data – 5 basic resources of IS– People resources – end users and IS specialists

h/w resource – machines and medias/w resource – programmes and proceduresn/w resource – communications media and network support data resource – data and knowledge bases

– Data resources – information processing activities – variety of information products for end users

– Information processing – system activities of I/P, Processing, O/P, Storage and Control

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People Resource

• End Users – use info. system/uses info. it produces– Customers– Sales persons– Engineers– Clerks & accountants– Managers– Knowledge workers

• Is Specialists- develop & operate IS– System Analysts– System Developers– System Operators– Other managerial, clerical & technical personnel

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Hardware Resource

• Machines– Computers– Other equipments

• Video monitors• Magnetic disk drives• Printers• Optical scanners

• All data media– Floppy disks, magnetic tapes, optical disc, plastic cards

and paper formsH/W in computer based IS – computer systems and computer peripherals

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• Hardware Resources– Machines, such as computers and other devices, and

media, such as paper, disks• Computer Systems cpu containing micro processors and a variety

of interconnected peripheral devices Eg:- the personal computer (desktop), midrange computer systems, large mainframe cs, or laptop

• Computer peripherals such as keyboard& mouse for input of data &commands, monitor, scanner, printer for output of info. magnetic/ optical disks for storage of data resources.

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Software Resources

• All sets of info. processing instructions • Programmes- operating instructions• Procedures-info.processing instructions • System software

– System management software eg: OS,

– System development software eg: interpreters, compilers

• Application software– General purpose application software eg: MS Word, MS Excel

– Application specific software eg: student information system

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Data Resources

• Data constitute valuable organizational resources – managers & IS professionals

• Data resource management technologies• Data resources/Data Storage

– Databases – hold processed and organized data– Knowledge bases – hold knowledge in a variety of forms

such as facts, rules, and case examples of successful business practices

Data Versus Information

1200100

WestCharles Mann

79154 TM Shoes

Monthly Sales Report for West Region

Sales Rep: Charles MannEmp No. 79154Item Qty Sold PriceTM Shoes 1200 $100

Attributes of Information Quality

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Data Versus Information

• Datum(s), data (p)• Valuable organizational resources• raw facts/ observations typically

about physical phenomena/ business transactions

• Objective measurement of the attributes of entities

• Forms – alphanumeric - text data

- image data - audio data

• Information – processed, converted form.

• For specific end users• Data value added process• Apply facts, principles,

knowledge, experience & intuitions.

• Meaningful and useful form, placed in a proper context

• Form – aggregated, manipulated and organised

• Content is analysed and evaluated

Logical Data ElementsNameField

NameField

PayrollRecordPayrollRecord

PayrollFile

PayrollFile

PersonnelDatabase

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Network Resources

• Network Resources– Communication media – Twisted pair wire, coaxial

cable, fiber-optic cable and microwave, cellular, and satellite wireless technologies

– Network support – people and all of the hardware, software, and data technologies that directly support the operation and use of a communication network.

• Computers• Communication processors- modems, internetwork

processors• Communication control software-network operating systems

&internet browser packages

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IS Activities

• Input - capturing and preparing data eg: optical scanning of bar-coded tags on merchandise

• Processing eg: calculating employee pay, taxes and other payroll deductions

• Outputeg: producing reports and displays about sales performance

• Storageeg: maintaining records on customers, employees and products

• Controleg: generating audible signals to indicate proper entry of data

SM

Executives & Directors

TM Business Unit Managers & self-directed teams

OM Operating Managers &SDT

Decisi

ons

Information

Structured

SS

US

Information characteristics

Ad HocUnscheduledSummarizedInfrequentForward LookingExternal Wide Scope

Pre-specified

Scheduled

Detailed

Frequent

Historical

Internal

Narrow Focus

Decision Structure

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DifferenceStrategic Tactical Operationalunstructured semistructur

edstructured

Situation pro. cannot be specified in advance

situation-procedures –specified in advance

Info-summarized, ad hoc, unscheduled, forecasts, and External intelligence-planning & policy making reports

Pre specified internal reports-emphasis-detailed current &historical data comparisons.

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Competetive Strategic concepts.

• A firm can survive and succeed in the long run- if it successfully develops strategies to confront

• Five competitive forces that shape the structure of the competition in its industry.– 1.Rivalry of competitors within its industry– 2.Threat of new entrants– 3.Threat of substitutes– 4.Bargaining power of customers– 5.Bargaining power of suppliers.

Rivalry among Existing Competitors

Bargaining Power of Customers

Bargaining Power of Suppliers

Threat of Substitute Products or Services

Threat of New Entrants

Strategic uses of Information Technology

1. Using Internet technologies2. Improving Business Processes3. Promoting Business Innovation4. Locking in Customers and suppliers5. Creating switching costs6. Raising Barriers to entry7. Leveraging a Strategic IT Platform8. Developing a Strategic Information Base. 9. Transcend communication barriers

How to use Internet technology

• Continually assess the strategic position of its applications

• A strategic positioning matrix helps a Co. optimize the strategic impact of Internet technologies for electronic business and commerce applications. matrix

Global Market penetration

Product and service transformation

Cost and efficiency improvements

Performance Improvement in Business Effectiveness

High

Low High

Ext

ern

al D

rive

rs

Cus

tom

er c

onne

ctiv

ity/c

ompe

titio

n/ t

echn

olog

y

Internal Drivers

E-business processes/collaboration/cost containment

The Value Chain

• Views a firm as a series, chain, or network of activities that add value to its products and services.– Improved administrative coordination– Training– Joint design of products and processes– Improved procurement processes– JIT inventory– Order processing systems

Value Chain (continued)

Systems Approach to Problem Solving

• Uses systems orientation• interrelated activities

1. Recognize and define a problem or opportunity using systems thinking

2. Develop and evaluate alternative system solutions

3. Select the system solution that best meets your requirement

4. Design the selected system solution5. Implement and evaluate the success of the

designed systemHow it help develop solutions to business

problems?

Define the problem

Develop alternative solutions

Selectthe solution

Design thesolution

Implement the solution

1.Defining problems and Opportunities

• First step- Identify problems & solutions• Problem- A basic condition that is causing

undesirable results• Symptoms- separate from problem are merely

signals of an underlying cause or problem• Opportunity- a basic condition that presents the

potential for desirable results

• Using systems thinking to understand a problem/opportunity is one of the important aspects of the systems approach

• Peter Senge calls- fifth discipline• Senge argues mastering ST is vital to personal

fulfillment & business success in a world of constant change.

• The essence of ST is seeing the forests and the trees in any situation by:

• Seeing interrelationships among systems rather than linear cause-and – effect chains whenever events occur

• Seeing processes of change among systems rather than discrete “snapshots” of change,whenever changes occur.

• Practice- find systems,subsystems& their components of systems in any situation you are studying, this ensures imp. factors and their interrelationships are considered. Systems context, systemic view of a situation

2. DEVELOPING ALTERNATIVE SOLUTIONS

• Several different ways to solve problem /pursue opportunity.

• Jumping from problem definition to a single not good idea– Limits options– Robs the chance to consider the advantages &

disadvantages of several alternatives.

• Sources of alternative solutions– Experience,– solutions that have worked, or at least been

considered in the past should be reconsidered,– advice of others,including recommendations of

consultants and the suggestions of expert systems,

– intuition & ingenuity for creative solutions– DS software ie, simulation process &– doing nothing.

3. Evaluating alternative solutions

• Alternative solutions evaluated to identify best solution

• Goal of evaluation is to determine how well each alternative solution meets your business and personal requirements– Requirements are key characteristics and

capabilities that one feel is necessary for personal or business success

• Criteria may be ranked or weighted, based on their importance in meeting one’s requirements. Eg:- In sales related information problems criteria may be startup costs,operating costs,ease of use,and reliability.

• Finally each alternative solution may be evaluated based on how well it meets your evaluation criteria.

4. Selecting the best solution• Once all AS evaluated,selecting the best solution

begins.• Alternative solutions can be compared to each

other because they have been evaluated using the same criteria.– Eg:- 2 alternatives screened and ranked and selected

or rejected based on individual criteria or overall scores.

• Possible that one might not always select the top-ranked alternative for reasons like unforeseen budget constraints,political developments,or legal challenges.

• Doing nothing.

5. Designing and Implementing a Solution

• Once solution selected , it must be designed and implemented.

• Help- other business end users & technical staff to develop design specifications & Implementation plan

Design specification

• Describe the detailed characteristics and capabilities of the people,hardware, software & data resources and information system activities needed by a new system– Eg:- Computer based sales support system– Types and sources of computer h/w,s/w to be

acquired for the sales rep.– Operating procedures for the new sales

support system

Implementation Plan

• Specifies the resources,activities and timing needed for proper implementation– Training of sales reps and other personnel– Conversion procedures and timetables for final

implementation

6. Post implementation review.• Final step• Implementation solution can fail to solve

the problem for which it was developed as even well- designed solutions can be confounded by real world.

• post implementation review process- results of implementation monitored and evaluated.

• Success of a solution-reviewed after it is implemented.

• The focus of this step is to determine if the implemented solution has indeed helped the firm and selected subsystems meet their system objectives.

• If not systems approach cycle back to a previous step and find workable solution.