Management information system "System vs procedure"

Systems vs. ProceduresProcedure is a defined set of instructions aimed at describing how to proceed in achieving a pre-defined milestone/target.

Systems have collection of predefined procedures related to each other in a sequenced logical manner in order to collectively achieve the desired results.

The system & procedures in all kinds of environment are subject to internal controls and checks that are necessary to ensure the effectiveness of the same.

6.1 Purpose of Systems & ProceduresThe basic purpose behind setting up systems and procedures is to make available information when required. But when procedures are organized in a logical manner to form systems, the value of information as an output of a system enhances.

When technology is added to the system, scope of a system changes to include hardware, software and designs linked together in accordance with the procedures contained in that system to give a purposeful architecture.

6.2 Data & Information

Before defining what information systems are? I would like to once again differentiate between data and information.

Data represents facts of any kind. Information is the processed form of data being verified and substantiated from various sources.

Example

100,000 is a figure which by itself does not add to the knowledge

But

When we say 100,000 sales orders, it does add to our knowledge, hence is information.

6.3 Data & Information

Generation of relevant information is the objective of every information system. Now we would move fwd with the definition & necessity of information systems.

What are Information Systems?

Interrelated components working together to collect, process, store and disseminate information to support decision making, coordination control, analysis and visualization in an organization.

6.4 Manual Vs Computerized Information Systems

As advancement was made in every field of life, manual information systems were converted to computerized systems. In manual environment, the concept of transformation was difficult to apply, since input of data into records was by itself the output which also included simple computations.

Concept of control mechanism grew stronger as computerized information systems emerged. Now the concept of Information system exists with the usage and benefits of Computers as an inevitable part.

6.5 What is Computer based Information System (CBIS)?

CBIS is an Information System that uses computer & telecommunications technology to perform its intended tasks. In CBIS, Information technology (IT) becomes a subset of the Information system.

The terms Information System (IS) and Computer Based Information System (CBIS) with the extensive use of computers in almost every field renders it inevitable to think of an IS as CBIS.

6.6 Why Information Systems?

In modern age, there has been felt a growing need for the use of information systems. Let’s take a look at

what factors increased the importance of efficient information systems.

6.7 Emerging Global Economies

High level of foreign trade has resulted in imports and exports which require inter linkage for smooth coordination. Core business functions (manufacturing, finance and customer support) have been distributed in different countries Coordination.

6.8 Transforming Industrial Economies

Industrial economies have started merging as knowledge-and-information-based economies. Manufacturing activities being shifted to low wage countries. More opportunities are available in education, health care, banks, insurance firms and law firms. More knowledge and information intense products are being created. Higher commitment expected from customer e.g. overnight package delivery, world wide reservation systems.

6.9 Transformed Business Enterprise

The structure of business enterprise have also changed, initially the organizations used to be Hierarchical, Centralized, Structured following a Fixed Set of SOP’s. However, now the organizations are moving towards more Flatter, Decentralized and Flexible structures. Information Technology makes it convenient and efficient to promote this new culture.

6.10 Emerging Digital Firms

Firms where all significant business process and relationships with customers and suppliers and employees are digitally enabled and key corporate assets are managed through digital firms. This results in rapid response with more flexibility to survive and getting more global.

7.1 What are Systems?

A system is a group of elements that are integrated with the common purpose of achieving an objective. Example

Purchase & Sales System

7.2 Components of a system

Following are the important components of the system.

• Input elements: Raw Data input to the computer system

• Process : Computation, analysis, application of any model

• Output elements: Results of computation or analysis

• Control mechanism: Comparison of actual with expected

• Feedback system: Corrective action

• Objectives: Expected/Ideal output

7.3 Types of Systems

7.3.1 Open-Loop System

The determinant factor is in an open loop system is that the information from the system not used for control purpose.

• The output is not coupled to the input for measurement.

• Hence the components of open loop system do not include control and feedback mechanism due to non-existence of internally defined objectives. That is,

o Input

o Process

o Output

Example

An information system that automatically generates report on regular basis and are not used to monitor input or activities.

7.3.2 Closed Loop System

• Is a system where part of the output is fed back to the system to initiate control to change,

Either the activities of the system or input of the system

• Has the ability to control the output due to existence of

Control Mechanism

• Feedback System

• Objectives

Example

Budgetary control system in a company by which

o The results are communicated through feedback system

o Results are compared with the objectives/budget through controls mechanism

7.3.3 Open Systems• A system that is connected to its environment by means of resource flows is called an open system.• The environment exerts influence on the system and the system also influences the environment.Example• Business is a system where management decisions are influenced by or have an influence on suppliers, customers, society as a whole.• Computerized system of a manufacturing entity, that takes influence from the society.

7.3.4 Closed Systems• A system that is not connected with its environment• Neither environment exerts any influence on the system nor does system influence the environment.Examples• An information system designed to control data in a research laboratory is a closed system.• An information system designed to record highly sensitive information is a closed system so as• To accept no input for amendment• To give no output for disclosure

Objective of Having Systems

• To subject a predefined amount of input (tangible, intangible) to predefined set of instructions in order to achieve an expected quality and amount of output.

• Effective and efficient utilization of resources

7.4 Level of Planning

There are three levels

• Strategic

• Tactical / Functional

• Operational

Strategic Planning

Is the formulation, evaluation and selection of strategies for the purpose of preparing a long-term plan of action to attain objectives.

Tactical/Functional Planning

Is the process by which managers assure the resources are obtained and used effectively and efficiently in the accomplishment of the organization’s objectives?

Operational Planning

It is the process of assuring that the specific tasks are being carried out efficiently and effectively.

Functional Strategic Planning

Commitment by Firm’s executives requires strategic planning for the following functional areas.

o Manufacturing resources

o Financial resources

o Human resources

o Marketing Resources

o Information Resources

7.5 Strategic Planning for Information Resources (SPIR)

When a firm embraces SPIR the strategic plans for information services and the firm are developed concurrently. Business strategy and IT related strategy should go hand in hand. The IT related strategy should be driven by business strategy and the former should support the achievement what’s being mentioned in the latter.

Any inconsistencies or deviations between the two should be removed and avoided. The investment in IT is costly and inflexible. Such investment is also monitored and controlled by the IT strategy. Hence any investment not supporting the business strategy would be futile.

Example

Business strategy

Modify inventory system to fulfill orders quickly through relocating system to warehouse and efficient shelf picking.

IS strategy

To identify information resources needed for the successful implementation of business strategy.

Information Value Chain

Raw information is transformed at various points and value is added before passing onwards. Every step of processing should make the information stored more valuable.

Example

When customer order received, data punched into computerized system, which updates order list, customer records and store room records. When order has been served, customer orders are filed into records.