Management Information System

Unit 1: Introduction to MISDefinition:• 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 organization.

• The MIS is defined as a system based on the database of the organization evolved for the purpose of providing information to the people in the organization.

• The MIS is defined as a computer-based information system.• The MIS is a computerized business processing system

gathering information for the people in the organization to meet the information needs for decision making to achieve the corporate objectives of the organization.

Concept:• The initial concept of MIS was to process data from the

organization and present it in the form of reports at regular intervals. It was impersonal, requiring each individual to pick and choose processed data and use it for his requirements. This concept was further modified when a distinction was made between data and information.

• The information is a product of an analysis of data. This concept is similar to a raw material and the finished product. The system should present information in such a form and format that it creates an impact on its user, provoking a decision or an investigation.

• The concept was then evolved that the system should be capable of handling a need based exception reporting. This need may be an individual or a group of people. Keeping all data together in

such a form that it can be accessed by anybody and can be processed to suit his needs. This concept is that the data is one but it can be viewed by different individuals in different ways.

• Over a period of time, the concept of the end user computing using multiple databases emerged. This concept brought a fundamental change in MIS. The change was decentralization of the system. The concept of MIS changed to a decision making system. The job in a computer department is to manage the information resource and leave the task of information processing to the user.

• The concept of MIS in today’s world is a system which handles the databases, provides computing facilities to the end user and gives a variety of decision making tools to the end user of the system.

• The concept of MIS gives high regard (attention) to the individual and his ability to use information.

Role of MIS:• The role of the MIS is similar to the role of heart in the body.

The information is the blood and MIS is the heart. It regulates and controls the incoming impure blood, processes it and sends it to the destination in the quality needed. It fulfils the needs of blood supply to human body in normal course and also in crisis. The MIS plays exactly the same role in the organization. The system ensures that an appropriate data is collected from the various sources, processed, and send further to all the needy destinations.

• The MIS satisfies the diverse needs through a variety of systems such as Query System, Analysis Systems, Modeling Systems and Decision Support Systems. The MIS helps in strategic

planning, Management Control, Operational Control and Transaction processing.

• The MIS helps the clerical personnel in the transaction processing and answers their queries on the data pertaining (to be concerned with sth) to the transaction, the status of a particular record and references on a variety of documents.

• The MIS helps the junior management personnel by providing the operational data for planning, scheduling and control and helps them further in decision making at the operations level to correct an out of control situation.

• The MIS helps the middle management in short term planning, target setting and controlling the business functions.

• The MIS helps the top management in goal setting, strategic planning and evolving the business plans and their implementation.

• The MIS plays the role of information generation, communication, problem identification and help in the process of decision making. The MIS plays a vital role in management, administration and operations of an organization.

Impact of MIS:`

Since the MIS plays a very important role in the organization, it creates an impact on the organization’s functions, performance and productivity.

The impact of MIS on the functions is in its management. With a good MIS support, the management of marketing, finance, production and personnel becomes more efficient. The tracking and monitoring of the functional targets become easy. The functional managers are informed about the

progress, achievements and shortfalls in the activity and the targets.

The MIS creates another impact in the organization which relates to the understanding of the business itself. The MIS begins with the definition of a data entity and its attributes.

The MIS calls for a systemization of the business operations for an effective system design. It improves the administration of the business by bringing a discipline in its operations of as everybody is required to follow and use systems and procedures.

Since the goals and objectives of the MIS are the products of business goals and objectives, it helps indirectly to pull the entire organization in one direction towards the corporate goals and objectives by providing the relevant information to the people in the organization.

Management as a Control System:

Planning, organizing, staffing, coordinating, directing and controlling are the various steps in a management process. All the steps prior to a control are necessary but are not necessarily self assuring the results unless it is followed by a strong control mechanism. These steps can be viewed as Management Control System.

A definition of control is the process through which managers assure that actual activities conform to the planned activities, leading to the achievement of the stated common goals.

The basic steps of the control process are given in the figure below:

The control system is essential to meet the environmental changes, to meet the complexity of today’s business, to correct the mistakes made by the people, and to effectively monitor the delegation process.

MIS Support for Management:

The management process is executed through a variety of decisions taken at each step of planning, organizing, staffing, directing, coordinating and control.

The decisions required to be taken in these steps are tabulated below:

Steps in Management

Decision

Planning A selection from various alternatives- strategies, resources, methods etc.

Organization A selection of a combination out of several combinations of the goals, people, resources, method, and authority.

Staffing Providing a proper manpower complement.

Directing Choosing a method from the various methods of directing the efforts in the organization.

Coordinating Choice of the tools and the techniques for coordinating the efforts for optimum

result.Controlling A selection of the exceptional

conditions and the decision guidelines.

The objective of the MIS is to provide information for a decision support in the process of management. It should help in such a way that the business goals are achieved in the most efficient manner.

IManagement Effectiveness:

While the environment factors are difficult to control, it is left for the management to change its philosophy towards the various players in the business, VIZ the employees, the consumers, the suppliers, the government, the community and the shareholders. Basically it is a change in attitude towards these players. [If the attitude to treat the employees as business partners, you will empower them and create a sense of belonging to the organization.]

If the attitude towards the consumer is changed to fulfill the expectations giving rise to a higher satisfaction, then the management practices in the product design, manufacturing and marketing will undergo a significant change.

The management practices, therefore, emerge out of the management’s philosophy and the environment, in which it operates. The management effectiveness, would largely depend on both these factors. MIS design would therefore be different depending upon the management practices followed by several organizations in the same industry. Such design

improves the management effectiveness leading to an improvement in the enterprise effectiveness.

Organization as a System:

A system is an assembly of elements arranged in a logical order to achieve certain objectives. The organization is also a system of people.

The individuals in the organization are selected in terms of number, quality and ability and are placed in hierarchical order to plan and execute the business activities to achieve certain goals and objectives.

The arrangement of task in terms of process and work design is dependent on the people. The choice of technology of handling the task is dependent on the people. You may choose the best technology and well designed task, but they have to be suited for the people.

The organization continuously exchanges the information with the environment and is influenced by the changes in it. The organization, therefore, has to be built in such a fashion that it adjusts with the changes in the environment and that the goals and objectives are achieved.

The systems and their goals are not stable. The goals changes in response to the changes in the business focus, the environment and in the people in the organization. A significant change calls for change in the organization structure. A goal displacement is said to have occurred when the system goal replace the organization system goals. When a goal displacement occurs, it affects the organization’s goals significantly.

Unit 2: Strategic Management of Business:

Corporate Planning: A plan is a determined course of action to be taken in future.

It is a document containing the details of how the action will be executed, and it is made against a time scale.

The setting of the goals and the objectives is the primary task of the management without which planning can not begin.

Planning is a dynamic process. As the future becomes the present reality, the course of action decided earlier may require a change.

Planning involves a chain of decisions, one dependent on the other, since it deals with a long term period. A successful implementation of a plan means the execution of these decisions in a right manner one after another.

Planning, in terms of future, can be long-range or short-range. Long-range planning is for a period of five years or more, while short-range planning is for one year at the most.

The long-range planning is more concerned about the business as a whole, and deals with subjects like the growth and the rate of growth, the direction of business, a business share and so on.

The short-range planning is more concerned with the attainment of the business results of the year. It could be in terms of action by certain business tasks, such as launching of a new product, starting a manufacturing facility, completing the project and so on.

Corporate business planning deals with the corporate business goals and objectives. The business may be a manufacturing or a service; it may deal with the industry or trade; may operate in a public or a private sector; may be national or international business. Corporate business planning is a necessity in all cases.

The corporate business planning deals with a company, its universe is beyond the company.

The corporate business plan considers the world trends in the business, the industry, the technology, the international markets, the national priorities, the competitors, the business plans.

Planning, therefore, is a complex exercise of steering the company through the complexities, the difficulties and the uncertainties towards the attainment of goals and objectives.

Strategic Planning:

The following reasons make planning an essential management process to keep the business in a good shape and condition:1. Market Forces:

It is very difficult to predict the market forces such as the demand and supply, the trend of the market growth, the consumer behavior and the choices, the emergence of new products and new product concepts. The market forces affect the sales, the growth and the profitability.

2. Technical Change:There are number of illustrative cases throughout the world on the technological breakthroughs and changes which have threatened the current business creating new business

opportunities. The emergence of the microchip, laser technology, fiber optics technology, wireless communication, turbo engines are the examples which have made some products obsolete (no longer used, out of date), threatening the current business, but at the same time, have created new business opportunities.

3. Complex Diversity of Business: The scope of business is wide, touching many fronts. The variety of products, the different market segments, the various methods of manufacturing, the multiple locations, the transport, the communication, the manufacturing resources brings complexity in the management of business. Unless there is a proper planning, prepared with due consideration to the diverse and complex nature of business, handling these factors is not possible. This might lead to loss of business opportunity. 4. Competition:

Facing competition in the business means fighting on a number of fronts. Competition could be direct or indirect. It may share the market or create a new product which will shift the market affecting your business. The companies compete on the merits such as the know how (practical knowledge, skill or experience in sth), quality, prompt delivery, after sales service etc.Competition is a natural phenomenon in business, and it has to be dealt within a proper manner to protect business interests. This means that the management has to continuously evolve new strategies to deal with the competition.

5. Environment:The environment is beyond the control of management. It could be one of the social, businesses, economic, industrial,

technological environments affecting the business. The environmental changes are difficult to predict and are generally slow.The introduction of television has adversely (not favorable, opposing) affected the film industry. Personal computers are fast replacing the typewriters on account of changing office environment.Planning does not eliminate the risk but provides an effective tool to face it. Business planning therefore is absolute essential for the survival of the business.

Development of the Business Strategies:

Like any other business activity, planning also has a process and methodology. It begins with deciding the social responsibility, and proceeds to spell out the business mission and goals, and the strategies to achieve them.

In the very beginning of the planning process, it is necessary to establish and communicate to all concerned, the social and economic responsibilities of the organization. In order to discharge these responsibilities, it is necessary to decide the mission of the organization. The mission or aim sets the direction of the organization and decide the scope and the boundaries of the business.

The task after deciding the mission is to set goal(s) for the organization. The goal is more specific and has a time scale of three to five years. The goals become a reference for the top management in planning the business activities.

After determining the mission and the goals, the next task is to set various objectives for the organization. The objectives

are described in terms of business results to be achieved in a short duration of a year or two. Objectives may be profitability, the sales, the quality standard etc. When achieved the objectives will contribute to the accomplish of the goals.

The next step in the planning process is to set targets for more detailed working and reference. The targets may be monthly for the sales, production, inventory(detailed list of sth) and so on.

The success in achieving the goals and objectives are the environmental factors such as the technology, the markets, the life style, the work culture, the policies of the government and so on. A strategy helps to meet the external forces affecting the business development effectively and further ensures that the goals and the objectives are achieved.

Type of Strategies:

Strategies can be classified into four broad classes:1. Overall Company Strategy: This strategy considers a very long term business perspective

and deals with the strength of the entire company. It is the most productive strategy, if chosen correctly and fatal(causing disaster) if chosen wrongly.

The other strategies act under the overall company strategy.To illustrate the overall company strategy, following examples are given:

• A two wheeler manufacturing company will have a strategy of mass production and an aggressive marketing.

• A computer manufacturer will have a strategy of adding new products every two or three years.

• A company can have a strategy of remaining in the low price range and catering (to try to satisfy a particular need or demand) to the masses.

2. Growth Strategy: An organization may grow in two different ways. Growth

may either means the growth of the existing business turnover year after year, or it may means the expansion and diversification of the business.

Growth strategy means the selection of a product with a very fast growth potential. It means choice of industries such as electronics, communication, transport, textile, plastic and so on where the growth potential exists for expansion, diversification and integration. The growth strategy means acquisition of business of the other firm and opening new market segments.

3. Product Strategy: A product strategy means choice of a product, which can

expand as a family of products and provide the basis for adding associated products.

The product strategy can be innovated continuously for new markets. Some examples are as follows:

a) A company producing pressure cookers enters the business of making ovens, boilers, washing machines and mixers- the product for home market.

b) A company producing a low price detergent powder enters the business of washing soap and bath soap.

4. Market Strategy:The marketing strategies deal with the distribution, services, market research, pricing, advertising, packing and choice of the market itself.Some examples of marketing strategies are as follows:

a) Many companies adopt the strategy of providing after sales service of the highest order. They may offer a free after sales service or establish service organizations to solve customer complaints and problems.

b) A company can offer its products in different packages keeping in mind the customer budget.

Short-Range Planning:

Short-range planning deals with the targets and the objectives of the organization. Based on the goals and the objectives, a short-range plan provide the scheme for implementation of the long-range plan.

Short-range plans are made for one year in terms of the targets which are to be achieved within the given budget. A manufacturing organization will make targets for production, sales, capacity, etc. Most of the companies after deciding the targets, work on the budgets.

A budget gives details of the resources required to achieve the targets. The companies prepare budgets for sales, production, expenses, capital expenditure, raw materials, advertising etc.

The budgets are used as a control mechanism. The person responsible for the budget is informed regularly whether the performance is below the budget or above.

The budgets act as self-motivating tools for achieving the operational performance. It induces (to cause sth) action on the part of the manager if his performance is under the budget. All the budgets when computed in the monetary terms results into financial budgets.

The advantages of short-range planning with the help of budgets are as follows:

a) It gives the manager a clear target of achievement.b) It specifies to the manager the resources allocation for a

given task and the freedom to use it.c) It helps the manager with information on the

performance whether it is under or over the budget.d) It provides an efficient tool to coordinate all the efforts

within the organization.

Tools of Planning:

When we talk about the tools of planning, we are talking about the tools of decision-making reference to planning.

There are a number of alternatives, choices, options available while planning the business. Further, there is selection of resources and their allocation in an optimum manner to maximize the gains.

The planning, therefore, involves decision-making with the help of tools. These tools are based on one of more factors. These factors are:

a) Creativity: Creativity comes out of an experience, a judgment, an

intuition of an individual or group of individuals.

Creativity is the result of the conceptual skills of an individual. The conceptual skills comprises the following skills:

1. The ability to generate a number of ideas rapidly.2. The ability to change quickly from one frame

reference to another.3. Originally in interpreting an event and generating

different views on the situation.4. The ability to handle with clarity and ease a

complex relationship of various factors in a given situation.

b) System Approach: System approach to planning considers all the factors and

their inter-relationship relevant to the subject. It takes a course to an analytical study of the total system, generates alternative course of action and helps to select the best in the given circumstances.

The systems approach helps to understand the situation with clarity. It helps to find solutions to problems.

The systems approach has the following characteristics:1. It uses all the areas and the branches of knowledge.2. It follows a scientific analysis to identify the problem.3. It uses a model of a complex situation to handle the

problem.4. It weights cost against benefit for assessment of the

alternatives.5. It considers the environment and its impact on the

problem situation.c) Sensitivity Analysis:

The sensitivity analysis helps to test the validity of the solution in variable conditions. The problem situation is handled with certain assumptions and conditions.

Sensitivity analysis required to know whether the solution will still remain valid if the assumption changed and new conditions emerged.

The sensitivity analysis helps to test the validity of the optimal solution under changed conditions.

d) Modeling: A model is a meaningful representation of a real situation, on

a mini scale, where only the significant factors of the situations are highlighted. The purpose of a model is to understand complex situation based on only the significant factors.

The model could be a physical model, like a model of a house, a park, a sport complex etc. The model could be a scale model reducing a large body to small one. The model could be mathematical model like breakeven analysis model, network model etc. Here a situation is represented in a mathematical form such as equations, matrices, graphics etc.

A model needs to be treated for its utility or effectiveness. The model can be tested by using the control results already obtained

Strategic Analysis of Business:

The business today is competitive. The parameters of competition change from time to time calling upon the management of business to make conscious continuous efforts to competitive.

The business continuous to be competitive so long as it has a competitive advantage in one or more aspects of the business.

The competitive advantage may be price, quality, service, product and so on or combination of these factors.

The five forces which drive an organization in competitive tussle are:

• Business rivalry(to be as good as sth/sb)• Threat from substitute product or service• Threat of new entrants• Bargaining power of suppliers• Bargaining power of customers

These forces are handled effectively by analyzing business of the organization in different manner, and building strategies, which offer a competitive advantage.

The manner in which such advantage can be built is to use one or a combination of following five strategic options:

• Create barriers to entry• Reduce cost of product process• Differentiate product or service• Improve quality of offer• Innovate to move up on value chain

MIS for strategic business planning:

Business environment is prone to change and this factor makes business planning very complex. MIS is designed to assess and monitor the factors such as the market forces, technological changes and competition. MIS design is

required to keep a watch on environment factors and provide information to the management for a strategy formation.

There are various business strategies such as overall company growth, product, market, financing and so on. MIS should provide the relevant information that would help the management in deciding the type of strategies the business needs.

MIS is supposed to provide current information on the status of the business. It is supposed to give a status with regard to whether the business is on a growth path or is likely to decline. [For example, when a business is on a growth path, it would require a mix of price, product and market strategies. If a business is showing a decline, it would need a mix of price-discount, sales promotion and advertising strategies.]

In business planning, MIS should provide support to top management for focusing its attention on decision-making and action. The MIS should provide early warning to change the focus of the management from one aspect to the other.

The task of the top management is to evolve the strategies as well as to provide the necessary resources to implement the strategies. The MIS should provide information on resources, costs, quality and availability, for deciding the cost effective resources mix.

When the strategies are being implemented, it is necessary that the management gets a continuous feedback. MIS is supposed to give a critical feedback on the strategy performance.

Unit 3: Information Security Challenges in e- enterprises:

Security Threats and Vulnerability:-

In e-enterprises there is a heavy use of technology that includes information technology, networks, internet and web, database management, telecommunication and so on.

The storage of data, information, program, packages, reports and information products is electronic and is either on hard disks on servers or compact disks.

Electronic medium, whether online or offline is vulnerable to many threats.

The vulnerability of systems to security threats can be met effectively only with security management systems (SMS) with specific following objectives:-

• Minimize the loss of physical and information assets.• Minimize the loss of business or business opportunities.• Ensure system integrity (honest and strong moral) and

reliability of data.• Keep quality of information systems highest.• Recover fast from any disaster.

Threats to information systems are caused from sources and reasons. All the reasons can be put in three classes. They are:

1. Failure of systems: Hardware, software, network failures are not uncommon

causing non-availability of the system to the users. Hardware failure is due to poor unkempt and maintenance.

Software failure is due to bad quality, and poor maintenance and incorrect, erroneous and incomplete user actions.

System failure is also caused by not providing power backup devices to control power and frequency variations.

2. Human Actions: Information systems are more vulnerable to human actions.

Information systems are used by internal personnel of the organization as well as by outside personnel who have been given access to it for limited purpose.

These actions could be wrong accidentally, or purposely with intention of theft, copying, damaging, and corrupting the information and system. The result of such human actions is non-availability of the system, some data and information of usage.

Human action could be wrong if unauthorized personnel from within of outside the organization access the system.

3. Natural Calamities: Information systems are also insecure in the event of

destruction due to natural calamities like fire, earthquake, floods and so on.

It may result in total loss of the system: both hardware and software, data files and reports. The effects of such impact is not easily manageable for the system to make up and run for the users.

Control Security Threat and Vulnerability:

To control the threats to information system and the degree of vulnerability by reducing significantly the incidence of failures, erroneous human actions and predict and prepare for contingencies (an event that may or may not happen) to minimize the damaging impact of natural calamities.

SMS is a configuration of manual or automated measures that protect information systems and assure the performance as desired.

Manual measures include security policies, procedures, rules, and operations discipline, which create awareness about security and enforces administrative discipline in work process across the organization.

Automated measures such as smart cards, Id’s, view monitors and such other devices are built in security mechanism for personal access.

1. Security controls:Security controls could be manual or automated through a

computer system. Automated controls check the quality of input in terms of valid source, and for completeness of the data.2. Fault Tolerant Computer Systems:

These systems contain redundant hardware, software, power supply to take over if the one in use fails to service the requirement.3. Physical Access Control:

Access to servers, PCs, and other sensitive installations and storage area is restricted and only allowed on authorization from the management.4. Monitoring the Usage:

Monitoring keeps track of users access, files referred, read and changed.5. Employee Evaluation:

The greatest risk to security is from insider of the organization. Their selection and appointment should be after in depth scrutiny (thorough examination) of past record and references.6. Application of Biometric Security:

Each individual user has unique physical traits, which can be used, as key to control access as well as to identify who has accessed the files and records. The physical traits (distinguishing characteristics) are fingerprints, hand geometry and style of signature.7. Virus Entry Protection:

A virus is a hidden program that gets entry through network and forces the system to clone the virus. They are capable of damaging data, erasing files or formatting disk and so on. Antivirus software products are available to prevent the entry of virus.

Management Security Threat in E-Business:

Modern organization uses Internet and public networks for E-Business. All the hardware and software on the network is challenged by security threats.

The vulnerability of the E-Business systems, applications and processes increases due to very nature of its openness to internal people as well as to outside people.

The security measures in E-Business have to be e-enabled. Measures so far successful are the following:-a. Firewall:

A firewall is placed between private networks such as LAN/MAN and external network, Internet. The role of firewall is to control access to internal network sought by the user.b. Encryption:

Encryption is the process of making information not understandable to all except authorized user or receipt. It is used to make the communication highly meaningless to unauthorized people.

c. Authentication:Authentication provides ability to individual to

conform that other party is genuine as claimed in communication.d. Digital Signature:

Digital signature is a digital code attached to the communication. It helps verify the origin and sender.

Disaster Management:

In spite of all care taken to secure information technology infrastructure, there is an element of risk due to certain unforeseen circumstance, or unpredictable and uncontrollable cause damaging information assets of the organization. To counter this threat, management resorts (to make use of sth esp sth bad) to disaster management plan (DMP).

The objective to DMP is not only to start the system again but start properly from a stage when it is stopped. DMP species the procedure of recovery action when disaster occurs.

DMP plan includes measures such as following:a) Alternative processing arrangements.b) Duplicate and offsite storage of data, hardware and

software.c) Choice of system and application, which should run, in

any case. A brief summary of certain actions to meet security threats

are given below:Threats to facilities and structure:

Earthquakes, fire, explosions, floods and such other events.

Power failure and power related problems. Theft. Damage by disgruntled (angry) employees. Unauthorized use of IT structure.

Controls: Place critical hardware on higher floor. Design buildings for the natural threats. Store sensitive data, applications, offside in a different

building. Provide security training to employee. Provide dedicated power lines with UPS. Install close circuit cameras. Use biometric access controls and IDs.

Threats to Database and DBMS: Corruption of data. Theft of data. Unauthorized access. Data inconsistency.

Controls: Use of antivirus software. Backup copies. Restricted authority to update, delete. Limited, authorized access to database. Dedicated DB administrator.

MIS and Security Challenges:-

There are three main security areas, Data, Database and Application where security mechanism must execute its control to assure the security of Information assets.

Data Security:Backing up a data is an essential security measures, easy to

implement by policy. Data has gained intrinsic (belonging naturally to sb/sth) value, either in the manpower needed to generate that data or in the significance of that data to your customers. Data loss, both accidental and due to theft, it is a heavy cost and risk to business.

Database security:Database often lie within the organization boundary and are

generally protected through ‘firewall system’. A database is considered to be secure if it assures the confidentiality, integrity and availability of the information stored.The database is insecure due to following reasons:

a) Data tampering (interfere with/without authoring):The confidentiality and integrity of information is at risk

due to its tampering during its transmission from one location to another.

b) Data Theft:The data theft is a possibility from organization’s people

if they identify such a weakest link to penetrate.c) Password-related threats:

In large systems, application users must remember multiple passwords for different applications and services that they are authorized to use.

d) Unauthorized access to Data:

The risk of accessing the confidential data is very high if access control by selective control, user Vs data is absent.

Application Security:Application security flaw (a fault or weakness) can undo

(loosen) the good work done by infrastructure security components. Application level attacks often cannot be prevented or detected by infrastructure security components. Infrastructure security components can ensure confidentiality and integrity of sensitive data intended for critical servers and meant for prevail (superior) age users.

4. Information Technology Impact on Society:

Impact of IT on Privacy:• Privacy is the right of individual to hold back certain

information about self without disclosure and allow it to be collected with the consent (permission) with the assurance that it would remain protected from unauthorized access.

• Information technology is playing a mission critical role in the life of individual. Individual is a member of the family, a social group and organization. An individual during the course of the working provides lot of personal data, and information about others. This information could be about credit/debit card, e-mail address, telephone numbers, bank account number and so on.

• IT is capable of finding access to this data, download and process it in some manner and create an information set about an individual without the knowledge of that individual. This is termed as privacy violation or breach (breaking of law) of privacy.

• In the process of business execution, data about individual is collected as a requirement for processing the transaction.

• When goods are sold, address, phone number, credit card information is collected from the consumer for billing, and post sales service.

• Most people prefer to maintain their personal data in most secured place so that privacy violation is almost impossible. The organizations which are collecting this data, have an ethical and moral obligation (a law that forces one to do sth) to protect the interest and wishes of the individuals whose data they are using for a known requirements.

• Some precautionary measures, actions are to be taken by an individual as under:

1. Check why personal data is required?2. Get commitment on what use it would be put to?3. Declare your choice where data should not be used without your

permission.4. Do not give credit card number, PAN number that identifies you

uniquely.5. Sign a privacy agreement/contract with the organization or

obtain a standard privacy agreement signed by the party.

Ethics: (a study of moral principles or rules of behavior)• Ethics is a study of the principles and practices, which guide to

decide whether the action taken is morally right or wrong. Ethics is about values and human behavior. The values (moral or professional standards of behavior, principle) and human behavior is primary regulated by various legal provisions.

• When IT solution is thought and designed it is necessary to check whether it is legally tenable (that can be defended

successfully against attack) along with technical, operational and economic feasibility. Checking legal feasibility protects you from violation or breach of law enacted for privacy protection, obligation to provide healthy work atmosphere.

• Respecting ethical values means making a beginning to protect generally accepted individual human rights. The rights are:

1. The right to healthy life and work safety.2. The right to privacy.3. The right to private intellectual property (information and

knowledge)4. The right to fair treatment and no discrimination.

Code of ethics and professional conduct:General Moral Imperatives (a thing that is essential):• Contribute to society and human well being.• Avoid harm to others• Be honest and trust worthy• Be fair and take action not to discriminate• Give proper credit intellectual property• Honor confidentiality

More specific professional responsibilities:• Acquire and maintain professional competence• Know and respect existing laws pertaining to professional work• Honor contracts, agreements and assign responsibilities.• Improve public understanding of computing and its

consequences.

Technical Solutions for Privacy Protection:

• Protecting the privacy of individual or organization assumed critical importance on emergence of Internet and Web technology. Some technology solutions are also available to ensure such protection.

• The data entered, processed and sent through Internet passes through different computer systems installed on network across the world. These systems are capable of keeping the record of this communication traffic and also can capture and store the communication with all connecting references and identifies. All these activities happen at backend without the knowledge of the user.

• The communication system capabilities can identify and analyze the following:

1. Identification of a person or location from where an action has started through registration record.

2. Which files, websites and web pages visited?3. Which transactions have been attempted and completed,

namely buying, selling, displaying, downloading and others.

Intellectual Property, Copyright and Patents:• Information or information product such as business rule,

business model, pattern, layout, diagram or specific compilation in certain format and for business advantage can be classified as intellectual property. They can be viewed, copied and distributed on network. And in such distribution, it can change in structure, content, and matter with loss of its original identity. Therefore such intellectual property requires protection provisions from trade secrets, copyright and patents acts.

• Software, if it is unique in design, architecture, process, and it is a creation from within the organization then software is a trade secret. Protecting information and information product falling in public domain from copying is difficult as both are distributed for use to an outsider. In the trade secret act ‘idea’ behind uniqueness is a trade secret and prevents it copying by law. Another protection mechanism is to bring the product under license arrangement restricting the use and knowledge to know license users.

Copyright:Copyright act protects intellectual property for pretty long time from copying by others. The protection is applicable against copying part or full in any manner. The weakness of the copyright act is that it does not protect the idea behind product and its use. Hence if somebody uses the idea and develops a product with difference then it is not copying. Illegal copying of computer software is known as a software piracy.If software along with computer capability generates a product, can one person or organization be considered as author or owner? There are many aspects of intellectual property which are legal issues, and do not have foolproof legal protection. The only way is to depend on ethics and moral commitment on the part of users of the product.

Patents:A ‘patent’ grants the owner of the product exclusive monopoly on the ideas behind the product for number of years, sufficiently protecting the interest of the owner/inventor of the product. The patents are granted the patent office after formal application by the inventor to patent certification body of the country.

Note: patent-- an official document giving the holder the sole right to make, use or sell an invention and preventing others from copying it.

Impact of IT on the workplace:• Information and information products have raised number of

ethical, moral, and legal issues, and they are being resolved with acts and laws.

• Though positive benefits or impacts are largely in management area improving financial performance of the business, it has affected resource in some aspects in negative manner.

• Information and information products application has brought down personal interaction between human beings as most of the processes are automated. With the result individuals analytical and decision-making skills are getting rusted, and work and work place is boring. With no interaction, individuals are isolated affecting human behavior. It has also created health hazards due to continuous working on systems and applications under stressful conditions.

• It has also made a negative impact when it is used to monitor the work, workplace and the worker. It is used to measure worker’s performance, behavior, and personal characteristics. The people who are affected by this application resent (to feel angry about sth insulting) it.

Information System Quality and Impact:• Users of information and information products have a capability

and understanding to use it with limited knowledge obtained through training, online help, system documentation and so on.

• Information systems are designed to work on certain technology platforms whose inherent technical strengths and limitations are considered as known to the users.

• Under such circumstances, it is difficult to define ‘Information System Quality’ as a benchmark or control to pinpoint the responsibility and accountability in the event of damaging impact.

• Three main source of poor information system quality and performance producing damaging impact are the following:

Poor Input Data Quality:• Invalid source• Incomplete verification and validation• Inadequate (not sufficient) data entry level controls• Incorrect application

Software Bugs and Errors:• Poor testing, test case design• Heavy reliance (confidence or trust in sth) on automated

testing tools

Hardware and software failure:• Poor maintenance of hardware and software• Power failure, and associated system stoppage problems• Faulty software not able to support promised capabilities and

features• Hardware and software failure caused due to natural or other

causes and not supported by sufficient backup provisions

Impact on Quality of Life:

• Use of information technology is now being experienced at home, in public institutions, business organizations, education, health care, transportation, manufacturing and services. It has not only touched our personal life but also affected social life of everybody.

• Following four main areas are seen as affected by impact of information technology:

1. People are empowered with information and knowledge. It has changed the decision-making hierarchy structure in the organization. Operational decisions are passed on to lower level and high risk strategic decisions are in the hands of top management.

2. Business dynamics and competitions are changing so fast that response time to a change has to be much less than before. IT is capable of giving strength to respond quickly. People affected by such impact have to adjust very fast to faster pace of work. Those who can not adjust suffer from work stress.

3. The concept of houses, family and office life is slowly getting vanished because technology exposes you to work anytime anywhere. This means your home could be your office. The result in relation with family members, friends become weak over a period of time. You may be isolated from family and friends.

4. IT has given birth to new crime, called internet or cyber crime, a result of widespread abuse (wrong use) of IT. The list of abuses is as given below:

• Spamming: sending unsolicited (not asked for like advertising purpose) mail.

• Hacking: obtain illegal access to personal, commercial data.

• Jamming: Disabling the site so that unauthorized viewers can not use website.

• Sending Viruses: Insert and sent viruses through internet to disable the computers and networks.

5. Decision Making:Decision-Making Concept:• The word ‘decision’ is derived from the Latin root decido,

meaning to cut off. The concept of decision, therefore, is settlement, a fixed intention bringing to conclusive result, a judgment, and a resolution (determination).

• A decision is the choice out of several options made by the decision maker to achieve some objective in a given situation.

• Business decisions are those, which are made in the process of conducting business to achieve its objectives in a given environment.

• The business decision making is sequential in nature. Each of them has a relation to some other decision or situation. The decision-making process is a complex process in the hierarchy of management.

• The decision-making process requires creativity, imagination and deep understanding of human behavior.

Decision Making Process:• Decision making is a process which the decision maker uses to

arrive at a decision.• The core of this process is described by Herbert Simon in a

model.

Fig. Herbert Simon Model

Intelligence: Raw data collected, processed and examined. Identifies a problem calling for a decision.

Design: Inventing, developing and analyzing the different decision alternative and testing the feasibility of implementation. Assess the value of the decision outcome.

Choice: Select one alternative as a decision, based on the selection criteria.

• In the intelligence phase, the MIS collects the data. The data is scanned, examined, checked and edited. Further, the data is sorted and merged with other data and computations are made, summarized and presented. In this process, the attention of the manager is drawn to all problem situations.

• In the design phase, the manager develops a model of the problem situation on which he can generate and test the different decisions to facilitate its implementation.

Intelligence

Design

Choice

• In the choice phase, the manager evolves a selection criterion such as maximum profit, least cost, minimum waste, least time taken and highest utility. The criterion is applied to the various decision alternatives and the one which satisfies the most is selected.

• In these three phases, if the manager fails to reach a decision, he starts the process all over again form the intelligence phase where additional data is collected, the decision making model is refined, the selection criterion is changed and a decision is arrived at.

Decision Analysis by Analytical Modeling:Based on the method discussed, a decision is made but decision needs to be analyzed for conditions and assumptions considered in the decision model. The process is executed through analytical modeling of problem and solution. The model is analyzed in four ways:1. What IF Analysis:-

Decisions are made using a model of the problem for developing various solution alternatives and testing them for best choice. The model is built with some variables and relationship between variables. In reality, the considered values of variables or relationship in the model may not hold good and therefore solution needs to be tested for an outcome, if the considered values of variables or relationship change. This method of analysis is called ‘What If Analysis’.2. Sensitivity Analysis:-

In what if analysis you test the effect on solution by changing the value of number of variables simultaneously or changing the relations between them. But in sensitivity analysis, a special case

of what if analysis, only one variable is changed and rest are kept unchanged.3. Goal Achieving Analysis:-

In goal achieving analysis, you analyze the problem in exactly reverse way as that of what if analysis or sensitivity analysis. In goal achieving analysis, goal is fixed and you go down to analyze the variables and values, which would help to seek that goal. We work backward from the goal.4. Goal Seeking Analysis:-

In goal seeking analysis, you do not fix the goal but you try to achieve a goal of an optimum value arrived at after satisfying all the constraints operating in the problem. In optimization analysis, you come to know which are critical constraints and which are limiting the value of goal. The decision maker can use this analysis to work on constraints and resources and find ways to improve upon solution to seek highest goal.

Behavioral Concepts in Decision Making:• A manager, being a human being, behaves in a particular way in

a given situation. The response of one manager may not be the same as that of the two other managers. Even though tools, methods and procedures are evolved, the decision is many a times influenced by personal factor such as behavior.

• The manager differs in their approach towards decision making in the organization. They can be classified into two categories. They are, the achievement-oriented i.e., looking for excellence and the task-oriented i.e., looking for the completion of the task somehow. In the achievement-oriented, manager will always optimize for the best and therefore will be enterprising in every aspect of the decision making.

• Some of the managers show a nature of risk avoidance. Their behavior shows a distinct pattern indicating a conservative approach to decision making – a path of low risk or no risk.

• The behavior of the manager is also influenced by the position he holds in the organization. The behavior is influenced by a fear and an anxiety (feeling nervous) that the personal image may be tarnished (to damage reputation) and the career prospects (the hope that sth will happen) in the organization may be spoiled due to a defeat or a failure.

• If two managers are placed in two decision making situations, and if their objectives are in conflict, the managers will arrive at a decision objectively, satisfying individual goals. Thus, it is clear that if the attitudes and the motives are not consistent across the organization, the decision-making process slows down in the organization.

MIS and Decision-Making:• It is necessary to understand the concepts of decision making as

they are relevant to the design of the MIS. The Simon Model provides a conceptual design of the MIS and decision making, wherein the designer has to design the system in such a way that the problem is identified in precise terms.

• In the design phase of the model, the designer is to ensure that the system provides models for decision making. These models should provide for the organization of decision alternatives, test them and pave way for the selection of one of them.

• The concept of programmed decision making is the finest tool available of the MIS designer, whereby he can transfer decision-making to the MIS and still retain the responsibility and accountability with the decision maker of the manager.

• In case of non-programmed decisions, the MIS should provide the decision support systems to handle the variability in the decision making conditions.

• The relevance of the decision-making concepts is significant in the MIS design. The significance arises out of the complexity of decision-making, the human factors in the decision-making, the organizational and behavioral aspects, and the uncertain environment.

6. Information and Knowledge:Classification of the Information:The information can be classified in a number of ways provide a better understanding.1. Action versus No-action Information:

The information which induces action is called and action information. The information which communicates only the status of a situation is a no-action information. ‘No stock’ report calling a purchase action is action information but the stock ledger showing the store transactions and the stock balances is a No-action information.2. Recurring versus Non-recurring Information:

The information generated at regular intervals is a recurring information. The monthly sales reports, the stock statements, the trial balance, etc. are recurring information. The financial analysis or the report on the market research study is a non-recurring information.3. Internal versus External Information:

The information generated through the internal sources of the organization is termed as an internal information, while the information generated through the Government reports, the industry surveys, etc. is termed as an external information.

4. Planning Information:Certain standards, norms and specifications are used in the

planning of any activity. Hence, such information is called the planning information.5. Control Information:

Reporting the status of an activity through a feedback mechanism is called the control information. When such information shows a deviation from the goal or the objective, it will induce a decision or an action leading to control.6. Knowledge:

A collection of information through the library reports and the research studies builds a knowledge base as a source for decision making. Such a collection is not directly connected to decision-making, but the need of knowledge is perceived as a power or strength of the organization.

Methods of data and Information Collection:The methods of Data and Information collection are tabulated below:

Method ExampleObservation Visit to the customer for assessing the customer complaints. A visit to

assess the accidental damage.Experiment Assessing the yield of a new fertilizer by a design to the control

experiment. Assessing the market response to a new packaging through test marketing.

Survey Market survey, opinion polls, census.SubjectiveEstimation

Data pertaining to future like the alternate source of energy, the life style in the 21st century.

TransactionProcessing purchased from outside

Ledgers, payroll, stock statements, sales reports. Database on the specific subject, research studies. Market and technology studies.

Publications The government publications, the industry publications, the

institutional publications such as Banks, UNO.Government agencies

Nepal Rastra Bank publications, the tax publications, the reports and findings.

Value of Information:• The decision theory suggests the methods of solving the

problems of decision-making under certainty, risk and uncertainty.

• A decision-making situation is of certainty when the decision maker has full knowledge about the alternatives and its outcomes. This is possible when perfect information is available. Therefore, the information has a perceived value in terms of decision-making.

• The decision-maker feels more secured when additional information is received in case of decision-making under an uncertainty of a risk.

• The information is called a perfect information, if it wipes out uncertainty or risk completely. However, a perfect information is a myth.

General Model of a Human as an Information Processor:• A manager or a decision maker uses his sensory receptors,

normally eyes and ears, to pick up information and transmit them to brain for processing and storage. The result of this processing will be a response which may be a decision, an action or at least a recognition of the event for future use. Hence, a manager can be said to be an information processor.

• While processing the information for a managerial response, the manager also uses accumulated knowledge form memory. The capacity of a manager to accept and process inputs to produce output is variable and limited. That is why it is observed that all

the managers of the same level do not accept or absorb all the inputs which the information may provide. The manager in such a situation adopts the method of filtering the information.

• Filtering is a process whereby a manager selectively accepts that much inputs, which his mental ability can manage to process.

Knowledge:• Knowledge is a set of information which provides capability to

understand different situations, enables to anticipate (to aspect sth) implications (a thing that is suggested) and judge their effects, suggests ways or clues to handle the situations.

• Knowledge is a capability to handle a complex situation. More the knowledge, higher is the capability.

7. Development of MIS:Development of Long Range Plans of MIS:• The plan for development and its implementation is a basic

necessity for MIS. In MIS, the information is recognized as a major resource like capital, time and capacity.

• If this resource is to be managed well, it calls upon the management to plan for it and control it for the appropriate use in the organization.

• With the advancement of computer technology more known on information technology, it is now possible to recognize information as a valuable resource like money and capacity. It is necessary to link its acquisition, storage, use, and disposal as per the business needs for meeting the business objectives.

• The plan of MIS is consistent to the business plan of the organization. The information needs for the implementation of the business plan should find place in the MIS.

• The plan of development of the MIS is linked with the steps of the implementation in a business development plan.

Ascertaining the Class of Information:The design of the MIS should consider the class of information as a whole and provide suitable information system architecture to generate the information for various users in the organization.

Information Class

Example of information User

Organizational The number of employees, products, services, locations, the type of business

Many users at all the levels

Functional Managerial

Purchases, sales, production, stocks, receivables, payables.

Functional heads and others

Knowledge The trends in sales, production, technology. The deviations from the budgets, targets, norms etc.

Middle and the top management

Decision support Status information on a particular aspect, such as utilization, profitability standards, requirement versus availability.

Middle management and operational management

Operational Information on the production, sales, purchase, dispatches, consumptions, etc.

Operational and managementSupervisor, section officers.

Determining the Information Requirement:• The sole purpose of the MIS is to produce such information

which will reduce uncertainty risk in a given situation.• The difficulty to determine a correct and complete set of

information is on account of the factors given below:1. The capability constraint of the human being as an information

processor, a problem solver and a decision maker.2. The nature and the variety of information in précised terms.3. Reluctance (unwilling and therefore slow to act, agree etc.) of

decision makers to spell out the information for the political and the behavioral reasons.

4. The ability of the decision makers to specify the information.• There are four methods of determining the information

requirements: 1. Asking or interviewing2. Determining from the existing system3. Analyzing the critical success factors4. Experimentation and modeling.

Development and implementation of the MIS:• Having made plan of the MIS, the development of the MIS calls

for determining the strategy of development. The development strategy determines where to begin and in what sequence the development can take place with the sole objective of assuring the information support.

• The choice of the system or the subsystem depends on its position in the total MIS plan, the size of the system, the user’s understanding of the systems and the complexity and its interface with other systems.

Prototype Approach:• When the system is complex, the development strategy is

Prototyping of the system. Prototyping is a process of progressively ascertaining the information needs, developing methodology, trying it out on a smaller scale with respect to the data and the complexity, ensuring that it satisfies the needs of the users, and assess the problems of development and implementation.

Life Cycle Approach:• There are many systems or subsystems in the MIS which have a

life cycle, that is, they have birth and death. Their emergence may be a sudden or may be a part of the business need, and they are very much structured and rule based.

• They have hundred per cent clarity of inputs and their sources, a definite set of outputs in terms of the contents and formats.

• These details more or less remain static from the day the system emerges and remain in that static mode for a long time. Minor modifications or changes do occur but they are not significant in terms of handling either by the designer or the user of the system.

• Such systems, therefore, have a life and they can be developed in a systematic manner, and can be reviewed after a year or two, for significant modification, if any.

Management of Information Quality in the MIS:

• Information is a corporate resource, as important as the capital, labor, know-how etc. and is being used for decision making. Its quality, therefore, is required to be very high. A low quality of

information would adversely affect the organizational performance as it affects decision making.

• The quality of information is the result of the quality of the input data, processing design, system design, system and procedures which generate such a data, and the management of the data processing function.

• However, it is possible to measure the quality of information on certain parameters. The quality of important parameters is ensured by conducting a proper system analysis, designing a suitable information system and ensuring its maintenance from time to time, and also subjecting it to audit checks to ensure the system integrity.

• The quality of the parameters is assured if the following steps are taken:o All the input is processed and controlled.o All updating and corrections are completed before the data

processing begins.o Inputs are subjected to validity checks.o The access to the data files is protected and secured

through an authorization scheme.o Back-up of the data and files are taken to safeguard

corruption or loss of data.o The system audit is conducted from time to time to ensure

that the information system specifications are not violated.o Systems are developed with a standard specification of

design and development.

Organization for Development of MIS:

• Proper people organization is basis to the management of any activity or function. The same thing is true for the development of the MIS.

• The principles of the organization and structuring of the organization to the specific needs of the function is a prime necessity when we talk with reference to the MIS a number of issues come up and they are not same in all the organization. Hence, the organization structure of MIS would differ from one organization to the other.

• The type, the size and the structure of corporate organization becomes the basis for the MIS organization for handling the MIS function and management alternatives. The major issues involved are:

1. Whether the MIS function should be handled as a centralized or decentralized activity.

2. The allocation of the hardware and software resources.3. The maintenance of the MIS service level at an appropriate

level.4. Fitting the organization of the MIS in the corporate

organization, its culture and the management philosophy.

Development Process Model of MIS:

Many organization use MIS successfully, other do not. Though the hardware and the software is the latest and has appropriate technology, its use is more for the collection and storage of data and its elementary processing. There are some features which make the MIS a success and some others, which make it failure. These factors can be summarized as follows:

Features Contributing to Success:1. The MIS is integrated into the managerial functions. It sets clear

objectives to ensure that the MIS focuses on the major issues of the business.

2. MIS focuses on the business result and goals, and highlights the factors and reasons for non-achievements.

3. The MIS is easy to operate and, therefore, the design of the MIS has such features which make up a user-friendly design.

4. MIS recognizes that the information needs become obsolete and new needs emerge. The MIS design, therefore, has a basic potential capability to quickly meet new needs of information.

Features Contributing to Failures:1. The MIS is conceived as a data processing and not an

information processing system.2. The MIS does not provide that information which is needed by

the managers but it tends to provide the information generally the function call for. The MIS then becomes an impersonal system.

3. Underestimating the complexity in the business system and not recognizing it in the MIS design leads to problems in the successful implementation.

4. Adequate attention is not given to the quality control aspects of the inputs, the process and the outputs leading to insufficient checks and controls in the MIS.

5. The MIS is developed without streamlining the business processing systems in the organization.

Unit 8. Application of MIS

Personnel Management:

• Personnel management function has the primary objective of providing suitable manpower in number and with certain ability, skills, and knowledge, as the business organization demands from time to time.

• Its goal is to control personal cost though continuous increase in manpower productivity by resorting to the following techniques.

1. Human Resource Development through training and upgrading the skills.

2. Motivation through leadership and job enrichment.3. Promotion and rewards through performance appraisal.4. Grievance (to complain unfairly) handling.5. Structuring the organization.

Financial Management:

• Financial management function has a primary objective of meeting the financial needs of the business, from time to time, by way of working capital and long-term capital to run the business with the goal of containing the cost of capital at the minimum.

• The second objective of financial management is to meet the statutory compliance by way of declaring the audited financial

results, submit all reports and returns to the Government and Tax Authorities and fulfill the obligations to the shareholders.

• In meeting these objectives, Financial Management uses variety of tolls and techniques as under:

1. Breakeven Analysis2. Cost Analysis3. Cash Flow Projection4. Ratio Analysis5. Capital Budgeting and ROI Analysis6. Financial Modeling7. Management Accounting8. Expense Analysis, Auditing and Control

Production Management:

• The objective of Production Management function is to provide manufacturing service to the organization. This involves the manufacture of products of a certain specified quality and within certain costs in a stipulated time fulfilling the promise given to the customer.

• The production management is supported by other function, viz., Production planning and Control, Industrial Engineering, Maintenance and Quality Control. It has a very strong interface with materials Management Function.

• The functional goals of the production management are fuller utilization of the manufacturing capacity, minimal rejections, maximum uptime of plant and equipment, and meeting the delivery promises.

Service Concept:

• Service is an identifiable, intangible activity or a process designed to fulfill certain expectations of the customer/consumer.

• Kotler defines it as ‘service is an activity or a benefit that one part can offer to another which is essentially intangible and does not result in the ownership of anything.’

• To understand the service better, it is necessary to understand its character or attributes. They are described below:

1. Intangibility:All services are fully intangible i.e. they lack ‘physical

existence.’ They can be seen being delivered and being received by the customer but cannot be displayed. Intangible service may have an association with physical goods.2. Inseparability of Receiver & Provider:

In case of service, receiver and provider must be present. Service process cannot be executed unless both are present at the site of service delivery. It is a live consumption of service experience.3. Storage:

Service being intangible cannot be stored like goods, which can be stored in the warehouse and can be used at a later date.4. Inconsistency:

Service process being intangible, can vary from one service incident to the other service incident. This being the case, it is difficult to standardize the process. At the most service scope can be defined but is delivery process cannot be standardized. Every service experience is different. The inconsistency occurs due to different service providers performing at different times.

Customer Service Design:

The customer, who initiates the service trigger to avail the service, is influenced by the:• Assessment of Service, Scope, Quality.• Assessment of price of offer and willingness to pay that price.• Perception of ease of availing service delivery.• Perception of service standard.• Extend of knowledge about the service.• Impact of promotion campaign.

Service process designer designs the ‘customer service’ based on the assessment and analysis of customer’s choices, preferences, quality expectations, willingness to pay the price and so on.

Customer service design is crucial for customer satisfaction. It is strategic and also governed by the cost of service to the customer. Cost of service is linked to customer service level decision of the management. Higher the service level, higher is the cost of service.

Service Management System:• Service process scope is ‘Initiated to Delivery to Post service

evaluation.’ This cycle is a basis for designing all service delivery processes.

• Once the service process design is finalized, its lunch and implementation is a system by itself.

• The process is best managed through a well-designed system, termed as Service Management System (SMS).

Unit 9. Decision Support System and Knowledge Management:

DSS concept and philosophy:• Decision Support Systems are an application of Herbert Simon

Model. The decision support system basically helps the information system in the intelligence phase where the objective is to identify the problem and then go to the design phase for solution.

• The choice of selection criterion varies from problem to problem. It is, therefore, required to go through these phases again and again till a satisfactory solution is found.

• The decision support system helps in making a decision and also in its performance evaluation.

• In decision making, there are two type of decisions- Programmable and Non-programmable.

• The programmable decision, because of its rule base structure, can be computerized, as inputs, processing methodology, analysis and choice of decision making are predetermined.

• While in non-programmable decisions, the rules are not fixed or predetermined, and requires every time the user to go through the decision-making cycle as indicated in the Herbert Simon Model.

Group Decision Support System (GDSS):

• Many decision-making situations call for involvement of a number of persons, each contributing towards the decision process. Information technology supports such decision-making where there is group participation. Such decision support system is termed as Group Decision Support System (GDSS).

• If GDSS is a group responsibility then the group needs a platform to conduct the process. Four configurations of group members are possible as listed below:

a) Group members in one room operating on network with common display screen to share the display for all members. GDSS process is transparent.

b) Group members sit at their respective locations and use their desktop and LAN to interact with other members. GDSS process is not as transparent as in case of ‘a’.

c) Group members are in different cities and they come together through teleconferencing or video conferencing with prior planning for GDSS operations.

d) Group members are at remote locations may be in different countries and they come together through long distance telecommunications network.

In all four configurations, GDSS support software is available on server for members to use. Disregarding the configuration model of the group and the type of the network they use, following activities are common:

• Sending the receiving information in all forms, types across the network.

• Display of notes, graphics, drawings, pictures.• Sharing ideas, choices, and indicating preferences.• Participate in decision-making process with inputs, help

and so on.

In GDSS, group members interact, debate, communicate and conclude using different tools and techniques. This process may

run for sometime online, then stop and wait for response(s), then react on response till the problem is solved.

DSS Application in E-enterprise:

• DSS are used in Supply Chain Management (SCM) as well as in Customer Relationship Management (CRM).

• The objective of DSSs in supply chain management is to reduce the cost of supply chain operations. Total cost of supply chain is made of cost of transportation, cost of material handling, cost of carrying inventory, cost of delayed operations, loss of overheads relating to HR, power, cost of maintenance etc.

• DSSs for CRM focus on meeting customer centric decision requirements namely pricing, product differentiation, deciding payment options, and credit facilities, deciding methods of problem resolutions, customer segmentation and so on.

• Another major application of DSS is executive decision support. The executives responsible for strategic management of business need DSS which are conceptualized, modeled and used by them to look into every new problem.

Knowledge Management:

• Knowledge is the ability of a person to understand the situation and act effectively. Philosophers, thinkers, scientists are considered to process a knowledge because of their ability to abstract, understand, speculate and act on the subject. Beside knowledge, these people have several other skills, namely use of principles and theory, application of principles, reasoning

and problem solving capability, decision-making skill and so on.

• Knowledge in the work place is the ability of people and organization to understand and act effectively.

• Another important term in context of knowledge management is IC, intellectual capital components. IC could be defined as a body of knowledge, which is well structured in text and numeric form and has commercial and economic value significance to the person or organization.

• Knowledge and IC is a set made of information, ability, experience, and wisdom which gives the organization a competitive advantage and expertise.

• Knowledge management has following processes:o Define, capture, manipulate, store and develop.o Develop information systems for knowledge creation.o Design applications for improving organization’s

effectiveness.o Create knowledge set, i.e. intellectual capital to increase

economic value of the organization.o Keep IC continuous on upgrade to use it as a central

resource.o Distribute and share to concentrate.

Knowledge Management System:

• Time has come to handle the knowledge-IC systematically, for use in strategic management of business. The knowledge over a period gets developed in the organization and it resides in people, information files, and databases.

• To bring knowledge as critical input in the management process, it is necessary to have knowledge management systems.

• The knowledge management system therefore deals with definition, acquisition, construction, storage, delivery and application of knowledge.

• Knowledge therefore is an essence of business management intelligence, residing in individuals, group of individuals, systems in the form of information set, models, processes and databases. Use of knowledge is critical to the organization, hence knowledge creation, storage, distribution and delivery is very important calling for establishing formal KMS.

Knowledge Based Expert System (KBES):

• The generalized problem solving is a unique situation riddled with uncertainty and complexity, dominated by the resource constraints and a possibility of several goals.

• The knowledge based problem solving approach considers the specific constraints within a domain, examines the limited problem alternatives within a knowledge domain and selects the one with knowledge based reasoning with reference to a goal.

• In generalized approach, all alternatives are considered and the resolution of the problem is by trial and error, with no assurance, whether it is the best or the optimum, while, in the knowledge based approach, only limited alternatives are considered and resolution is made by a logical reasoning with the assurance of the local optimum.

• The generalized approach is dominated by a procedure or method, while the knowledge based approach is dominated by the reasoning process based on the knowledge.

• Since, the KBES considers knowledge as the base; the question arises whose knowledge is to be considered as a basis. It is generally agreed that an expert has knowledge, and therefore, he becomes the source of knowledge.

• Knowledge in the KBES is defined as a mix of theory of the subject, knowledge of its application, organized information and the data of problems and its solutions, and an ability to generate new avenues to solve the problem.

MIS and the Benefits of DSS:

• Many of the decision-making situations, at all levels of management, are such that its occurrence is infrequent but the methodology of decision-making is known. Some of the methods are proven and are widely used. Such applications are separated and are packed in the DSS.

• DSS use data from the general MIS and they are used by a manager or a decision maker for decision support. The basic character of the DSS is that is based on some tool, technique or model.

• The DSS could be an internal part of the MIS. When the decision making need is in real time dynamic mode, all such systems are designed to read, measure, monitor, evaluate, analyze and act as per the decision guidance embedded in the system.

• The MIS could become more useful if the decision-making is made person-independent and executed with well-designed DSS.

Unit 10. Enterprise Management System:

Enterprise Resource Planning (ERP) System:

• The word enterprise is chosen to convey that it encompasses the larger business community covering all the players and their participation in the business.

• Enterprise resource planning is an enterprise-wide information system designed to coordinate all the resources, information, and activities needed to complete business processes. The focus of ERP is on resource management within constraints to maximize the return on investment.

• ERP implementation achieves the following:o Seamless integration among different functional areas.o Design engineering support to make the best of resource.o Customer or vendor order tracking till its fulfillment.o Receivable and credit management linked order execution.o Managing inter-dependencies of complex processes.o Accounting and measuring the progress and performance

with respect to resources planned and consumed.• The ERP system deals with the planning and use of resources

used in the business. The resources are finance, materials, manufacturing capacity and human resource. The ERP provides methodology of assessing the resource needs for a given business plan to achieve certain business objectives.

ERP Model and Modules:

• The generic ERP package represents the commonly operated business model of the organization. It is built with the function models like Finance, Materials, Marketing, Sales, and Personnel and their sub-modules. These modules are then integrated to perform ensuring data and information consistency and concurrency.

• The seamless integration of the modules allows the user at any level to take a micro and a macro view of the function and process view of the transaction across the function.

• A typical ERP solution has the following modules:o Business forecasting, planning and control (Business)o Sales, distribution, invoicing (Sales)o Production planning and control (Production)o Material management (Materials)o Finance and accounting (Finance)o Personnel management (Personnel)

Benefits of the ERP:

• Better management of resources reducing the cost of operations.• Planning at function and process level increase in the

productivity of the business.• Customer satisfaction increase due to shorter delivery cycle.

Closer contact with the customer.• The processes become faster due to work group technology and

application of work flow automation.

• Due to strong interface capabilities, the human resource can be utilized better due to access to information across the databases distributed over the organization.

• Due to faster processing technology and SQL, management can see the information in their perspective and take different view of the business.

ERP Product Evaluation:

Market is flooded with ERP products with wide variety of functions, features and so also cost. ERP products are evaluated as following factors:1. ERP fit for the business of the organization in terms of the

functions, features and processes, and so on.2. The degree of deviation from the standard ERP products.3. Ease of use: Easy to learn, implement and train.4. The ability to migrate to the ERP environment from present

status.5. Flexible design.6. Rating on performance, response and integration.

ERP Implementation:

• The ERP implementation, generally, follows the waterfall mode approach. Once a firm order is received, the implementation begins with meeting between vendor and the organization. In such meeting the organizational issues are taken care of.

• Though initially, the study has been carried out by the vendor, more in-depth study is taken up jointly by the vendor and the project in-charge of the organization.

• In this phase of study the users are contacted for their requirement specifications. These requirements may be of data, information, function, features, processes or reports. It is necessary to understand them to evaluate the ability of the ERP solution to satisfy these requirements.

• Since, the ERP is designed as a standard package; it often requires changes and modifications to suit the requirements of the business.

Supply Chain Management (SCM):

• Supply chain management is an enterprise software to manage and integrate a network of customers, suppliers, business partners, distributors into organizations internal supply network involved in the ultimate provision of product and service packages required by end customers.

• Supply chain management spans all movement and storage of raw materials, work in process inventory, and finished goods from point of origin to point of consumption.

• SCM system keeps track of inventory and value of material throughout the chain and provides information to SC Manager to act.

• Supply chain management is a cross-functional approach to manage the movement of raw materials and components into an organization, acting as a bridge between external network of suppliers, customers and business partners.

Information Management in SCM:

• Information is a key driver of SCM. The participants in supply chain need information about goods movement, order placed, and order delivered and payables and receivables.

• All the participants are tied up in supply chain through an integrated information system.

• Supply chain partners have their own information systems designed to meet their MIS goals to support the achievement of their business goals.

• A supply chain is a dynamic network of its participants and runs with a constant flow of information; goods and funds between participants.

• The primary purpose of SC is to satisfy customer requirements and maximize the value of supply chain.

Customer Relationship Management (SCM):

• With rapid globalization of business and product differentiation becoming less relevant and competitive, customer relationship now is the key enabler for moving the business ahead. Customer relationship has become a factor of competitive advantage.

• Customer approaches the organization for product or service with certain expectations. If fulfillment experience of the expectation is encouraging then customer will revisit for service. If the experience is not encouraging then customer may go to competition. The ability to recognize this aspect and to actively manage the customer behavior is the basis for customer relationship management.

• CRM is a comprehensive set of processes and technologies for managing the relationships with potential and current customers across the business functions.

• The relationship is built through managing customer initiatives and behavior in such a way that customer experience is full of comport, happiness and satisfaction.

• CRM is a combination of policies, processes, and strategies implemented by an organization to unify its customer interaction and provide a mean to track customer information. CRM system is used to track and organize its contacts with its current and prospective customers.

• CRM system is designed to capture customer queries, orders and contact information and then to be shared with internal departments for action.