Introduction to MIS

INTRO DUCTION TO MANAGEMENT

INFORMATION SYSTEMS
Introduction

MIS: is a system that provides the information necessary to manage an organization

effectively. MIS and the information it generates are considered essential components of
prudent and reasonable business decisions.

Components of a management information system

a)      Database: It is used to store data or information that an organization uses.

b)      Database management system. It is a collection of programs that enable the storage,

modification and manipulation of information from a database.

c)      User-interface: Allows the user to interact with the system

d)     Model base: It has the required statistical models in order to analyze the large amount
of data.

Information system: It’s the interaction of related components working together to store,
retrieve and disseminate or distribute data to achieve an objective.

Characteristics of MIS
Ø  MIS support structured decisions at operational and management control levels. 
However, they are useful for planning purpose of senior management staff.

Ø  MIS are generally reporting and control oriented.  They are designed to report on
existing operations and therefore to help provide day-to-day control of operations.

Ø  MIS rely on existing corporate data and data flows.

Ø  MIS have little analytical capability.

Ø  MIS generally aid in decision making using past and present data.

Ø  MIS are relatively inflexible.

Ø  MIS have an internal rather than an external orientation.

ROLES OF INFORMATION IN AN
ORGANISATION
ü  Reduction of uncertainty: Uncertainty exists where there is less than perfect knowledge.
Relevant information helps to reduce the unknown. This is particularly relevant in planning
and decision making.

ü  An aid to monitoring and control: By providing information about performance in the
extent of deviations from planned levels of performance, managers are better able to
control operations.

ü  As a means of communication: Information helps managers to know about development

plans, forecasts etc.

ü  An aid to simplification: By reducing uncertainty and enhancing understanding, problems

and situations are simplified and become more manageable.

SYSTEM CONCEPTS

 System

A system is a set of inter-dependent/interrelated components (some of which may be

systems in their own right), with an identifiable boundary and which collectively accomplish
certain objectives/purpose.

Characteristics of a system

1. A system has an environment-a system cannot exist in isolation. It exists in an

environment. The environment reacts with it.
2. A system has a purpose-a system performs a function. It has a reason for its
existence.
3. Systems have inputs and outputs
4. Systems have performance that can be measured in terms of its output-a system
will have measures of performance

A system has 9 characteristics.

·         Components

A system is made up of components. A component is an irreducible part or aggregation

It is what makes up a system, also called subsystems. We can repair or upgrade the system
by changing individual components without having to make changes throughout the entire
system.

The components are interrelated. This means the dependence of one subsystem on one or
more subsystems. The function of one subsystem is tied to the function of others.

·         A Boundary

A system has a boundary within which all of its components are contained and which

Establishes the limits of a system, separating the system from other systems. The boundary
is the line that makes the inside and outside of a system and that sends off the system from
its environments.

·         A purpose

This is the overall goal or function of a system. A system must give priority to the objectives
of the organization as a whole as compared to the objectives of a subsystem.

·         An Environment

This is everything external to a system that interacts with the system i.e. everything

outside the system’s boundary, usually the system interacts with its environment,
exchanging, in the case of an information system, data and information.

·         Interfaces

This is the point of contact where a system meets its environments or where subsystems

Meet each other. E.g. The interface between an automated system and its users (manual
system) and interfaces between different information systems. It is the design of good
interfaces that permits different systems to work together without being too dependent on
each other. Because an interface exists at the point where a system meets its environment,
the interface has several special, important functions outlined below:-

            i.            Security - protecting the system from undesirable elements that may want
to infiltrate it.

Filtering unwanted data both for elements leaving and entering the system.

Coding and decoding incoming and outgoing messages.

Detecting and correcting errors in its interaction with the environment

          ii.            Buffering - providing a layer of slack between the system and its
environment, so that the system and its environment can work on different cycles and at
different speeds.

        iii.            Summarizing raw data and transforming them into the level details and
format needed throughout the system.

·         Constraint/ Controls

This is a limit to what a system can accomplish. A system must face constraints in its

Functioning because there are limits – in terms of capacity, speed, or capabilities to what it
can do and how it can achieve its purpose within its environment

·         Input

This is whatever a system gets from its environment, e.g. raw data.

·         Output

This is whatever a system returns to its environment in order to fulfill its purpose

Subsystem: A system within a larger system. This means that systems exist on more than
one level and can be composed of subsystems.

Classifications of systems.
Classification of Systems

1)      Open Systems

These are the system which are connected to and interact with the environment. Examples
are, the biological and social system. All business organizations are also open systems since
they must have the capacity to adopt in the future of changing competition, changing
markets etc.

2)      Closed Systems

A closed system is that which does not interact with its environment. The system is neither
influenced by nor influences its environment. It does not take in from or give to it. The
system behavior occurs because of internal interaction and is more relevant to scientific
than social systems. They do not obtain modification from their environments. A computer
program is a relatively closed system because it accepts only previously defined outputs. In
fact, no system can be a completely closed system for a long time.

Difference between Open Systems and Closed Systems

  Open System                Closed System

-Interacts with the environment constantly - Does not interact with the Environment
-Has infinite scope - Limited Scope
-Relevant variables keep on interacting - Self Contained
-Flexible and abstract - Rigid and mathematical
 

3)      Abstract systems

These are conceptual. They are not physical entities. They maybe formulas, representation or
model of a real system.

4)      Deterministic Systems (Mechanistic Systems)

These are the systems that function according to some predetermined procedure and have
results and future behavior predicted with certainty provided they are working correctly and
under control.

5)      Probabilistic Systems (Stochastic Systems)

These are those systems which operate on probability. State and behavior can be predicted
only within certain limits, even when they’re under control.

Cybernetic system (Self Organizing/ Adaptive)

These are systems that have to adapt to their environments/ react to stimuli, they learn from
their mistakes, so that they do not always react in the same way to a particular input.
Examples are the social systems, organizations, plants.

6)      Open – Loop System.

This is a system which does not act in a controlled manner, i.e. no feedback, and so no
measure of performance against standards.

7)      Closed – Loop System

A system that functions in a controlled manner e.g. A system accepts inputs, work upon
them according to some pre-defined processing rules, and produces outputs, so that it can
function in a controlled manner, must give feedback

8)      Artificial Systems

These systems are created rather than occur by nature e.g. computer programs,
organization, etc.

They are usually made to support the objective of the designer and user.

USE OF INFORMATION SYSTEM IN

MANAGEMENT
Management is the process of planning, organizing, leading and
controlling the effort of organization members and of using all other
organization resources to achieve organizational goals.
Functions of management

Planning

It is the function of management of systematically making decisions about the goals to be

achieved and activities needed to achieve those that an individual or a group will pursue in
future.

Organizing

It is the management function of assembling and coordinating financial resources,

information and other resources needed to achieve organizational goals.

Leading

It is the management function that involves the manager’s efforts to ensure high
performance by employees and includes directing, motivating, and communicating with
employees individually and in groups.

Controlling
The function of management of monitoring progress and making changes to make sure
that the organizational goals are achieved.

Staffing

Involves recruiting the right people with right skills.

How information systems support

management as a function
o   Information access

Management information systems simplify and speed up information retrieval by storing

data in a central location that is accessed via network. This enables quick and accurate
decision making.

o   Data collection

Information systems bring together data from inside and outside the organization.by setting
up a network that links a central database to retail outlets, distributors and members of the
supply chain companies can collect and send production data daily and decisions based on
the latest information.

o   Collaboration

Information systems make it easy managers to make collaborative decisions.

o   Interpretation

Information systems help decision makers to understand the implication of their decisions.
E.g. a sales manager can make predictions about the effect of a price change on sales by
running simulations within the system.

o   Presentation

The reporting tools within information system enable decision makers to tailor reports to
the information needs of other parties.

Types of decisions.

Unstructured/un programmed/non-programmed
These are non-routine decisions in which the decision maker must provide judgment,
evaluation and insights into the problem definition.

There is no agreed procedure for making such decisions.

These decisions are normally made by strategic level managers

Structured decisions/programmed

These are repetitive, routine and have defined procedures

They are made by the operational level employees.

Semi-structured decisions

These are decisions which are partially unstructured and partially have defined procedure on
how they are supposed to be made or executed.

                                               

Types of decisions and where they are made in an organization

Decision making cycle/stages of decision-making

Problem definition stage

At this stage, the decision maker identifies the problem clearly.

Develop alternatives/identify alternatives

The decision maker should state out the alternatives available for a particular problem. The
decision maker should do adequate research to find the best option that will aid in solving
the problem.

Evaluate alternatives

The decision maker should analyze each alternative and come up with advantages and
disadvantages of each option. The decision maker should rank the alternatives logically

Make decision

This is where the decision maker implements the decision.

Monitor the solution

Monitoring of solutions at early stage may help to alter the decision if deviations from
expectations are noticed.

Management and Types of Decisions

It is the process of getting things done through and with people to achieve organization
objectives in the changing environment. It is a way of ensuring that there is effective,
efficient use of limited resources.

The major roles of a manager include:

ü  Planning

ü  Organization

ü  Leading

ü  Controlling

ü  Coordinating
1.      Planning
It is the basic function of management. It deals with chalking out a future course of action &
deciding in advance the most appropriate course of actions for achievement of pre-
determined goals. According to KOONTZ, “Planning is deciding in advance - what to do,
when to do & how to do. It bridges the gap from where we are & where we want to be”. A
plan is a future course of actions. It is an exercise in problem solving & decision making.
Planning is determination of courses of action to achieve desired goals. Thus, planning is a
systematic thinking about ways & means for accomplishment of pre-determined goals.
Planning is necessary to ensure proper utilization of human & non-human resources. It is all
pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties,
risks, wastages etc.

2.      Organizing
It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational goals.
According to Henry Fayol, “To organize a business is to provide it with everything useful or
its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business
involves determining & providing human and non-human resources to the organizational
structure. Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

3.      Staffing
It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behavior etc. The main purpose o staffing
is to put right man on right job i.e. square pegs in square holes and round pegs in round
holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the
organization structure through proper and effective selection, appraisal & development of
personnel to fill the roles designed un the structure”. Staffing involves:

 Manpower Planning (estimating man power in terms of searching, choose the

person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
  Performance Appraisal.
 Promotions & Transfer.

4.      Directing
It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work. Direction is that inert-personnel
aspect of management which deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational goals. Direction has
following elements:

 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of

watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to

work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work
of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.

5.      Controlling
It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals. The purpose of controlling is
to ensure that everything occurs in conformities with the standards. An efficient system of
control helps to predict deviations before they actually occur. According to Theo Haimann,
“Controlling is the process of checking whether or not proper progress is being made
towards the objectives and goals and acting if necessary, to correct any deviation”.
According to Koontz & O’Donell “Controlling is the measurement & correction of
performance activities of subordinates in order to make sure that the enterprise objectives
and plans desired to obtain them as being accomplished”. Therefore controlling has
following steps:
a.                  Establishment of standard performance.

b. Measurement of actual performance.

c. Comparison of actual performance with the standards and finding out
deviation if any.
d. Corrective action.

Importance of Management
1. It helps in Achieving Group Goals - It arranges the factors of production,
assembles and organizes the resources, integrates the resources in effective manner
to achieve goals. It directs group efforts towards achievement of pre-determined
goals. By defining objective of organization clearly there would be no wastage of
time, money and effort. Management converts disorganized resources of men,
machines, money etc. into useful enterprise. These resources are coordinated,
directed and controlled in such a manner that enterprise work towards attainment of
goals.
2. Optimum Utilization of Resources - Management utilizes all the physical & human
resources productively. This leads to efficacy in management. Management provides
maximum utilization of scarce resources by selecting its best possible alternate use in
industry from out of various uses. It makes use of experts, professional and these
services leads to use of their skills, knowledge, and proper utilization and avoids
wastage. If employees and machines are producing its maximum there is no under
employment of any resources.
3. Reduces Costs - It gets maximum results through minimum input by proper
planning and by using minimum input & getting maximum output. Management
uses physical, human and financial resources in such a manner which results in best
combination. This helps in cost reduction.
4. Establishes Sound Organization - No overlapping of efforts (smooth and
coordinated functions). To establish sound organizational structure is one of the
objective of management which is in tune with objective of organization and for
fulfillment of this, it establishes effective authority & responsibility relationship i.e.
who is accountable to whom, who can give instructions to whom, who are superiors
& who are subordinates. Management fills up various positions with right persons,
having right skills, training and qualification. All jobs should be cleared to everyone.
5. Establishes Equilibrium - It enables the organization to survive in changing
environment. It keeps in touch with the changing environment. With the change is
external environment, the initial co-ordination of organization must be changed. So
 it adapts organization to changing demand of market / changing needs of societies.
It is responsible for growth and survival of organization.
6. Essentials for Prosperity of Society - Efficient management leads to better
economical production which helps in turn to increase the welfare of people. Good
management makes a difficult task easier by avoiding wastage of scarce resource. It
improves standard of living. It increases the profit which is beneficial to business and
society will get maximum output at minimum cost by creating employment
opportunities which generate income in hands. Organization comes with new
products and researches beneficial for society.

Three types of decisions:

 

There are three types of decisions made by different sections of the organization.
Information systems are used to help with these decisions.

 Unstructured decisions: These decisions require judgement, evaluation and insight to

solve the problem. Unstructured means “decision processes that have not been
encountered in quite the same form and for which no predetermined and explicit set
of ordered responses exists in the organization”.  (Mintzberg, et al., 1976, 246)  These
decisions are seen as novel, important and non routine. There is no well understood
procedure for making them. An example of an unstructured decision that
management may face could be deciding if the company should enter into a new
market or would it be more beneficial for them to stay in just their current market.
Information systems help to make such decisions. 
 Semistructured decisions: these decisions have elements of both structured and semi
structured decisions. Only part of the problem has a clear-cut answer provided by
accepted procedure. A semi structured decision is one which is partially
programmable but still requires human judgement. There are three dimensions to a
semi structured decision:

1. Degree of decision-making skill required.

2. Degree of problem complexity

3. Number of criteria considered

  Structured decisions: means having processes in place to handle a situation.  The
implication is that structured problems are recurring ones.  Because they recur, we
put processes and procedures in place to handle them. These decisions are repetitive
and routine. They involve definite procedures for answering. Therefore they don’t
need to be treated as new each time the decision has to be made. A good example
of a structured decision would be the hiring process in a company. its important to
create structure around repetitive situations so that a lot of time is not spent on very
minor decisions.

DECISION-MAKING PROCESS

Decision-Making. Decision-making is a cognitive process that results in the selection of a

course of action among several alternative scenarios. ... When it comes to business
organizations, decision-making is a habit and a process as well.

Step 1: Identification of the Purpose of the Decision

In this step, the problem is thoroughly analyzed. There are a couple of questions one should
ask when it comes to identifying the purpose of the decision.

 What exactly is the problem?

 Why the problem should be solved?
 Who are the affected parties of the problem?
 Does the problem have a deadline or a specific time-line?

Step 2: Information Gathering

A problem of an organization will have many stakeholders. In addition, there can be dozens
of factors involved and affected by the problem.

In the process of solving the problem, you will have to gather as much as information
related to the factors and stakeholders involved in the problem. For the process of
information gathering, tools such as 'Check Sheets' can be effectively used.

Step 3: Principles for Judging the Alternatives

In this step, the baseline criteria for judging the alternatives should be set up. When it
comes to defining the criteria, organizational goals as well as the corporate culture should
be taken into consideration.

As an example, profit is one of the main concerns in every decision making process.
Companies usually do not make decisions that reduce profits, unless it is an exceptional
case. Likewise, baseline principles should be identified related to the problem in hand.
Step 4: Brainstorm and Analyze the Choices
For this step, brainstorming to list down all the ideas is the best option. Before the idea
generation step, it is vital to understand the causes of the problem and prioritization of
causes.

For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-
Effect diagram helps you to identify all possible causes of the problem and Pareto chart
helps you to prioritize and identify the causes with the highest effect.

Then, you can move on generating all possible solutions (alternatives) for the problem in
hand.

Step 5: Evaluation of Alternatives

Use your judgment principles and decision-making criteria to evaluate each alternative. In
this step, experience and effectiveness of the judgment principles come into play. You need
to compare each alternative for their positives and negatives.

Step 6: Select the Best Alternative

Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of
the best alternative is an informed decision since you have already followed a methodology
to derive and select the best alternative.

Step 7: Execute the decision:

Convert your decision into a plan or a sequence of activities. Execute your plan by yourself
or with the help of subordinates.

Step 8: Evaluate the Results:

Evaluate the outcome of your decision. See whether there is anything you should learn and
then correct in future decision making. This is one of the best practices that will improve
your decision-making skills.

ROLE OF INFORMATION IN AN
ORGANIZATION
The most important role of an information system in an organization is to provide data to
help executive management make decisions. Data is compiled through transaction
processing or query routines built into the information system to access item and detail
records.
Information plays an important role in an organization because it guides every decision
an organization makes or expects to make. Thus, information is important in the
decision-making and problem-solving processes, and without the
right information, organizations are bound to make mistakes in these key processes.

Characteristics of good information

The following are the characteristics of good information.

Accurate – information must be free from errors and mistakes. This is achieved by following
strict set standards for processing data into information. For example, adding $6 + 10 would
give us inaccurate information. Accurate information for our example is multiplying $6 by
10.

Complete – all the information needed to make a good decision must be available. Nothing
should be missing. If TAX is an application to the computation of the total amount that the
customer should pay then, it should be included as well. Leaving it out can mislead the
customer to think they should pay $60 only when in actual fact, they must pay tax as well.

Cost Effective – the cost of obtaining information must not exceed the benefit of the
information in monetary terms.

User-focused – the information must be presented in such a way that it should address the
information requirements of the target user. For example, operational managers required
very detailed information, and this should be considered when presenting information to
operational managers. The same information would not be appropriate for senior managers
because they would have to process it again. To them, it would be data and not information.

Relevant – the information must be relevant to the recipient. The information must be
directly related to the problem that the intended recipient is facing. If the ICT department
wants to buy a new server, information that talks about a 35% discount on laptops would
not be relevant in such a scenario.

Authoritative – the information must come from a reliable source. Let's say you have a
bank account and you would like to transfer money to another bank account that uses a
different currency from yours. Using the exchange rate from a bureau de change would not
be considered authoritative compared to getting the exchange rate directly from your bank.

Timely – information should be available when it is needed. Let's say your company wants
to merge with another company. Information that evaluates the other company that you
want to merge with must be provided before the merger, and you must have sufficient time
to verify the information.
 

ROLE OF INFORMATION SYSTEMS IN AN ORGANIZATION

An information system can be a mainframe, mid-range or network computer concept that

allows distributed processing for a group of users accessing the same software application.
These systems provide management with control over their data, with various tools to
extract data or view data structures and records. The role of an information system is to
foster a data management environment that is robust and can be expanded according to an
organizations’ strategic plan for information processing. An information system also satisfies
diverse information needs in an organization.

Automation of Manual Tasks

Information systems architecture can assist an organization in automating manual tasks.

Automation can save time, money and resources and enhance organizational workflow.
There are various types of information systems that automate manual tasking, ranging from
robotic information systems used in areas such as health and medical services to logistical
information systems (automated warehouses and distribution systems).

Hardware and Software Integration

An organization can have several different computer platforms (hardware and software). The
concept of information systems as a scalable platform can merge different hardware and
software systems. A system can process, store and distribute information if integrated into
the workflow of an information system. For example, a local area network (LAN) can
integrate into a mainframe system that processes accounting information through a
concept called a “gateway.” An open architecture information system allows for integration
at all levels throughout an organization.

Support of a Multi-Processing Environment

An information system can support a “real-time” multi-processing environment through the

concept of “time-sharing application.” Time-sharing application allows for the prioritizing of
applications based on user-id and system priority assigned to an application, device, and
database or system catalog. These features are important to an organization that process
transactions while developing and testing program applications. In a multi-processing
environment, various departments, divisions or branches can have access to the system at
the same time intervals.

System Partitioning
The layout of an information system is partitioned according to data security policies, user
access and program applications. The partitioning of the physical hard drives, memory and
storage space related to software applications creates system balance and effective use of
the system Central Processing Unit (CPU). System partitioning programs, tools and routines
keeps the system from overloading, which slows down system performance. Extra files
paged to memory that are not being used can slow down a customer support system, which
relies on timely processing of customer inquiries. System partitioning is maintained by a
process of “preventive maintenance” which ensures the integrity of system partitioning.

Provides Data for Decision Support

The most important role of an information system in an organization is to provide data to

help executive management make decisions. Data is compiled through transaction
processing or query routines built into the information system to access item and detail
records. Through decision support programs, which are packaged as software routines,
executive management can analyze several areas of an organization and create scenarios
through the information system for a desired result. These results are defined in the
organizations’ objectives and goals to improve productivity.

CHARACTERISTICS OF A GOOD
MANAGEMENT INFORMATION SYSTEM
The purpose of a management information system, often referred to simply as MIS, is to
help executives of an organization make decisions that advance the organization's goals. An
effective MIS assembles data available from company operations, external inputs and past
activities into information that shows what the company has achieved in key areas of
interest, and what is required for further progress. The most important characteristics of an
MIS are those that give decision-makers confidence that their actions will have the desired
consequences.

Relevance

The information a manager receives from an MIS has to relate to the decisions the manager
has to make. An effective MIS takes data that originates in the areas of activity that concern
the manager at any given time, and organizes it into forms that are meaningful for making
decisions. If a manager has to make pricing decisions, for example, an MIS may take sales
data from the past five years, and display sales volume and profit projections for various
pricing scenarios.

Accuracy
A key measure of the effectiveness of an MIS is the accuracy and reliability of its
information. The accuracy of the data it uses and the calculations it applies generally
determine the effectiveness of the resulting information. However, not all data needs to be
equally accurate. For example, payroll information needs to be precise, but employee hours
spent on a given task can be based on reasonable estimates. The sources of the data
determine whether the information is reliable. Historical performance is often part of the
input for an MIS, and also serves as a good measure of the accuracy and reliability of its
output.

Usefulness

The information a manager receives from an MIS may be relevant and accurate, but it is only
useful if it helps him with the particular decisions he has to make. For example, if a manager
has to make decisions on which employees to cut due to staff reductions, information on
resulting cost savings is relevant, but information on the performance of the employees in
question is more useful. The MIS has to make useful information easily accessible.

Timeliness

MIS output must be current. Management has to make decisions about the future of the
organization based on data from the present, even when evaluating trends. The more recent
the data the more these decisions will reflect present reality and correctly anticipate their
effects on the company. When the collection and processing of data delays its availability,
the MIS must take into consideration its potential inaccuracies due to age and present the
resulting information accordingly, with possible ranges of error. Data that is evaluated in a
very short time frame can be considered real-time information. For example, information on
an increase in product defects may be flagged for instant management attention.

Completeness

An effective MIS presents all the most relevant and useful information for a particular
decision. If some information is not available due to missing data, it highlights the gaps and
either displays possible scenarios or presents possible consequences resulting from the
missing data. Management can either add the missing data or make the appropriate
decisions aware of the missing information. An incomplete or partial presentation of
information can lead to decisions that don't have the anticipated effects.

SYSTEMS CLASSIFICATION
Approaches to information systems classification
Classification by organizational level supported

Strategic level systems help senior manager with long-term planning.  The principle
concern at this level is matching changes in the external environment with existing
organizational capabilities.  It supports the long-range planning activities of senior
management.  It also helps the senior management to tackle and address strategic issues
both in the firm and in the external environment.

Tactical/Management level systems help middle managers monitor and control.  It

typically provides periodic reports rather than instant information on operations.  It
supports the monitoring, controlling, decision-making and administrative activities of
middle managers.  Some of the management level systems support non-routine decision
making where they tend to focus on less-structured decisions for which information
requirements are not always clear.

Knowledge level systems help knowledge and data workers design product, distribute
information and cope with paperwork.  The main purpose is to help integrate new
knowledge into the business and to help the organization control the flow of paperwork. 
Knowledge level systems, especially in the form of workstations and office systems are the
fastest-growing applications in business today.

Operational level systems help operational manager keep track of the firm’s day-today
activities.  The principle purpose is of operational level system is to answer routine questions
and to track the flow of transactions through the organization.

Classification by functional area supported/Types of information systems from

functional perspective-functional area/department/Enterprise systems (ERP systems)
Sales and marketing information system

Are information systems that help the firm identify customers for the firm’s products and
services, develop products and services to meet the customer’s needs, promote these
products and services, sells the products and services and provides ongoing customer
support.

At the strategic level, sales and marketing information systems monitor trends affecting new
products and sales opportunities, support planning for new products and services and
monitor the performance of the competitors.

At the management level, sales and marketing information systems support market
research, advertising and promotional campaigns

At knowledge level, they support market analysis

At operational level, they assist in locating and contacting prospective customers, tracking
sales, processing orders, and providing customer service support.

Manufacturing and production information system

Are systems that deal with the planning, development and production of products and
services and controlling the flow of production.

Strategic level manufacturing systems deal with the firm’s long term manufacturing goals
such as where to locate new plants, whether to invest in new manufacturing technology.

At management level, manufacturing and production information systems analyze and

monitor production costs and resources.

At the knowledge level, manufacturing and production information systems create and
distribute designed knowledge to drive the production process.

At operational level, manufacturing and production information systems deal with status of
production tasks.

Finance and accounting information systems.

Are information systems that keep track of the firm’s financial assets and fund flows.

At the strategic level, finance and accounting information systems establish long term
investment goals for the firm and provide long range forecasts of the firm’s financial
performance.
At the management level, these information systems help management to oversee and
control firm’s financial resources.

At the operational level, these systems track the flow of funds in the firm through
transactions such as pay cheques and payments to vendors.

Human resource information systems

Are information systems that maintain employee records, employee skills, job performance
and training, and support planning for employee compensation and career development?

These systems support activities such as identifying potential employees, maintaining

complete records on existing employees and creating programs to develop employee
talents and skills.

Classification of information systems by support provided.

Transaction processing systems (TPS)

It is a computerized system that performs and records the daily routine transactions
necessary to conduct the business.

These systems serve the operational level of the organization

A business can have several transaction processing systems example is stock control system,
inventory system, billing system, order tracking systems.

They are used by operational level employees to help them make structured decisions.

Knowledge management system (KMS)

These are systems designed to help businesses create and share information.

They are used in a business where employees create new knowledge which can then be
shared with other people in other organization to create further commercial opportunities.
E.g. AUTO-CAD, Arch-CARD.

Management information systems (MIS)

It is an information system at the management level of an organization that serves the

functions of planning, controlling and decision making by providing routine summary
reports.
They take data from TPS and summarize them into a series of management reports. They
make semi-structured decisions.

Decision support systems (DSS)

It is an information system at management level of an organization that combines data and

sophisticated analytical models to or data analysis tools to support semi-structured and
unstructured decision making.

A decision is considered unstructured if there are no clear information or procedure for

making the decision.

Components of a DSS

1.      data management component

Performs the function of storing and maintain information the DSS uses.

2.      user interface management component

It allows the user to communicate with the DSS.

3.      Knowledge management component

Provides information about relationships about data that is too complex for a database to
represent.

Characteristics of a DSS

·         DSS offers users flexibility, adaptability and quick response.

·         DSS operate with little or no assistance from professional programmers.

·         DSS provide support for decisions and problems whose solutions cannot be specified
in advance.

·         DSS use sophisticated data analysis and modeling tools.

·         Group Decision Support System (GDSS) is a type of a DSS that helps a team of
decision makers to solve problems.

Executive support system (ESS)/Executive information system(EIS)

An information system designed to help senior management to make strategic decisions.

It is used at strategic level of organization to assist in making unstructured decisions.

They gather, summarize and analyze the key internal and external information used by the
business.

Expert information systems

It is a computer based system that emulates the decision making ability of a human expert.

They are designed to solve complex problems by reasoning about knowledge like an expert
and not by following the procedure of a developer as in the case in conventional
programming.

Benefits of expert systems

-preservation of knowledge: Expert systems preserve knowledge that might be lost through
retirement, resignation, or death of an expert or acknowledged person in a company.

-it is not subject to human feeling such as fatigue, being too busy or emotional.

-an expert system can effectively be used as a strategic tool in the areas of marketing of
products, cutting costs and improving products

Disadvantages of expert systems

-knowledge designing problem: enormous amount of time and effort is required to extract
the expert knowledge and translate it into IF/THEN rules upon which an expert system is
based.

-programming problem: programming the system and monitoring the source code is very
difficult

-judgment problem: an expert system cannot apply judgment which is an important

ingredient for problem solving. It has no common sense or judgment.

Geographic information system (GIS)

It is an information system designed to capture, store and manipulate, analyze, manage and
present all types of geographical data. Example Google earth.

Figure below shows the relationship between the different systems:

INFORMATION SYSTEM RESOURCES
(i) PEOPLE RESOURCES
People are required for the operation of all information systems. These people resources
include end users and ARE specialists.
· End users (also called users or clients) are people who use an information system or the
information it produces. They can be accountants, salespersons, engineers, clerks,
customers, or managers. Most of us are information system end users.
· IS Specialists are people who develop and operate information systems. They include
systems analysts, programmers, computer operators, and other managerial technical, and
clerical IS personnel. Briefly, systems analysts design information systems based on the
information requirements of end uses, programmers prepare computer programs based on
the specifications of systems analysts, and computer operators operate large computer
systems.
(ii) HARDWARE RESOURCES
The concept of Hardware resources includes all physical devices and materials used in
information processing. Specially, it includes not only machines, such as computers and
other equipment, but also all data media, that is, all tangible objects on which data is
recorded, from sheets of paper to magnetic disks. Example of hardware in computer-based
information systems are:
· Computer systems, which consist of central processing units containing microprocessors,
and variety of interconnected peripheral devices. Examples are microcomputer systems,
midrange computer systems, and large mainframe computer systems.

· Computer peripherals, which are devices such as a keyboard or electronic mouse for input
of data and commands, a video screen or printer for output of information, and magnetic or
optical disks for storage of data resources.

(iii) SOFTWARE RESOURCES

The concept of Software Resources includes all sets of information processing instructions.
This generic concept of software includes not only the sets of operating instructions called
programs, which direct and control computer hardware, but also the sets of information
processing instructions needed by people, called procedures.

It is important to understand that even information systems that don’t use computers have
a software resource component. This is true even for the information systems of ancient
times, or the manual and machine-supported information systems still used in the world
today. They all require software resources in the form of information processing instructions
and procedures in order to properly capture, process, and disseminate information to their
users.

The following are the examples of software resources:

· System Software, such as an operating system program, which con controls and supports
the operations of a computer system.

· Application Software, which are programs that direct processing for a particular use of
computers by end users. Examples are a sales analysis program, a payroll program, and a
work processing program.

· Procedures, which are operating instructions for the people who will use an information
system. Examples are instructions for filling out a paper form or using a software package.
(iv) DATA RESOURCES
Data is more than the raw material of information systems. The concept of data resources
has been broadened by managers and information systems professionals. They realize that
data constitutes a valuable organization resource. Thus, you should view data as data
resources that must be managed effectively to benefit all end users in an organization.
Data can take many forms, including traditional alphanumeric data, composed of numbers
and alphabetical and other characters that describe business transactions and other events
and entities. Text data, consisting of sentences and paragraphs used in written
communications; image data, such as graphic shapes and figures; and audio data, the
human voice and other sounds, are also important forms of data.

The data resources of information systems are typically organized into:

· Database that hold processed and organized data.

· Knowledge bases that hold knowledge in variety of forms such as facts, rules, and case
examples about successful business practices.

IMPORTANCE OF MANAGING INFORMATION SYSTEM RESOURCES

The key benefits should include:

Increased revenue – Resource Management Solutions will help you easily assess how well
utilized your entire resource pool is on a daily, weekly or monthly basis,  helping to ensure
your most valuable resources are used to maximum effect, and your workload is balanced to
avoid sustained periods of time on the bench.

Conflict resolution – Resource conflicts can have a significant effect on revenue, at worst
an unresolved resource conflict may result in an immediate missed revenue opportunity,
along with a negative future impact through reduced customer satisfaction. With Resource
Management Software, whenever resources are double booked, or a project plan has been
rescheduled you can easily spot any conflicts and quickly resolve them.  By storing the
details of your resources skills, experience and knowledge, you can quickly and efficiently
identify a qualified replacement.

Improve project delivery – Improving project delivery will help reduce costs and increase
margins. Research shows that organizations who have implemented a PMO have
significantly reduced costs, and for Professional Services Organization, it is a common
feature of the highest performers.  Resource Management Solutions enable resources to be
allocated to work based on a number of specific criteria such as their availability, skills and
location so you will always be sure you have the right person allocated to the right job.

In fact, by improving your resource management process you will be able to identify skills
shortages and training requirements, helping to alleviate any future resourcing conflicts and
there negative effects. What’ s more, Resource Management Software enables your
organization to gain real time visibility into resource capability and your capacity to deliver
future projects, enabling you to better manage customer expectations, whilst minimizing
any adverse effects on customer satisfaction and future revenue opportunities.

Reduce administration costs – No doubts if you are utilizing a homegrown or spreadsheet

based resource management system it will be prone to errors and cumbersome to use. In
fact it is probably only reviewed once a week, or worse, once a month – meaning you are
likely to be suffering from many of the issues we have discussed in this post! With a central,
up to date view of your entire resource pool you will reduce the administration costs
associated with maintaining these out of date systems. What’s more you can improve
revenue, maximize fee earning potential and nurture customer relationships.  Only
integrated resource management software provides this visibility, control and opportunity.

Information society/information age

This is a term for a society in which the creation, distribution and manipulation of
information has become the most significant economic and cultural activity.

It is a society characterized by high levels of information intensity in the everyday life of

most citizens, in most organizations and work place.

The machine tools of the information society are computers and telecommunication rather
than plough.

Characteristics of information society

·         Information is used as an economic resource

Organizations make great use of information to increase their efficiency, stimulate

innovation and increase competitive positions.

·         Stratification into new classes of those who are information rich and those who are
information poor.

·         Greater use of information among general public

People use information more intensively in the activities as consumers.

·         Development of the information sector within the economy

The function of the information sector is to satisfy the general demand for information
facilities and services.

·         Globalization of capitalism which is facilitated by and is dependent upon computer

networks permitting economic decision making on wide scale in real time.

Challenges of information society

Ø  Trust and confidence

It is difficult to enhance trust and confidence in ICT and network systems

Threats to ICT systems such as computer virus attacks, hacking, cracking and network
outages.

Ø  Privacy challenges

Rights to privacy face new challenges and it must be protected

The collection, storage, processing, use and disclosure of personal data should remain
under the control of people concerned.

Ø  Literacy challenges

Computer literacy has become an essential pre-requisite/requirement to access and use the
internet.

Ø  Security challenges
The widespread use of internet has led to the immergence of new security threats to
individual and organization.

The rise of computer crime can compromise security making an organization to lose very
important data.

Ø  Ethical or moral challenges

The use of internet and other telecommunication technologies have changed the culture of
different societies.

INFORMATION SYSTEM PLANNING

Strategic planning of information systems means the process in which the
organization identifies and chooses information system projects that support
the realization of its business plans and attainment of the goals the organization
has set.
At the early stages of an information system project, it must prove that it is connected to
the business plan and how this is lined up with corporate purpose.

Importance of information system planning

 An organization can improve its development methods and ensure that user’s goals
have been achieved.
 Information system planning process should be based on constant interaction
between users and information system management.

  Enables a shared view of the goals of ICT use in the business between developers
and users.
  Acquisition of the right system at minimum cost possible
 Through planning, the right system which addresses the organization requirements
can be acquired.

Information system planning process

Steps:

Agreeing on planning objectives and stakeholders

In this phase, stakeholders will formulate the scope and objectives of the plan and select
participants.
Alignment of business objectives and information objectives

Activities in this phase include reviewing existing documents and information resources,
performing business and technology analysis and aligning information system plans with
business objectives.

Analyzing information system resources and technology infrastructure

Activities in this phase include planning the IS/ICT infrastructure, planning information
system organization and evaluating the IS/ICT development manpower. Stakeholders need
to identify the required resources.

Authorizing the action

Activities during this phase include identifying organizational implications, defining criteria
for decision making and authorizing final decisions.

Reasons for aligning information system plan to organization plan

 Information resources will support business resources

 To streamline key business processes
 Strategic alignment can successfully speed up acquisition and placement of ICT that
is in harmony or in line with the competitive needs of the business.
  ICT/IS alignment enables organization to improve on how to manage their business
needs, technology and rivals/competitors.

Elements of information system strategy plan

·         Business information strategy

Indicates how information will be used to support the business

·         Information system functionality strategy

It indicates what features and performance the organization will need from the system.

·         IS/ICT strategy

It defines the policies for software and hardware e.g. any standards to be used or preferred
suppliers.

It also defines the organization stand on the information system organization e.g. whether it
is to be centralized or distributed.
INFORMATION SYSTEM PLANNING
Strategic planning of information systems means the process in which the
organization identifies and chooses information system projects that support the
realization of its business plans and attainment of the goals the organization has
set.
At the early stages of an information system project, it must prove that it is connected to
the business plan and how this is lined up with corporate purpose.

Importance of information system planning

 An organization can improve its development methods and ensure that user’s goals
have been achieved.
 Information system planning process should be based on constant interaction
between users and information system management.

  Enables a shared view of the goals of ICT use in the business between developers
and users.
  Acquisition of the right system at minimum cost possible
 Through planning, the right system which addresses the organization requirements
can be acquired.

Information system planning process

Steps:

Agreeing on planning objectives and stakeholders

In this phase, stakeholders will formulate the scope and objectives of the plan and select
participants.

Alignment of business objectives and information objectives

Activities in this phase include reviewing existing documents and information resources,
performing business and technology analysis and aligning information system plans with
business objectives.

Analyzing information system resources and technology infrastructure

Activities in this phase include planning the IS/ICT infrastructure, planning information
system organization and evaluating the IS/ICT development manpower. Stakeholders need
to identify the required resources.

Authorizing the action

Activities during this phase include identifying organizational implications, defining criteria
for decision making and authorizing final decisions.

Reasons for aligning information system plan to organization plan

 Information resources will support business resources

 To streamline key business processes
 Strategic alignment can successfully speed up acquisition and placement of ICT that
is in harmony or in line with the competitive needs of the business.
  ICT/IS alignment enables organization to improve on how to manage their business
needs, technology and rivals/competitors.

Elements of information system strategy plan

·         Business information strategy

Indicates how information will be used to support the business

·         Information system functionality strategy

It indicates what features and performance the organization will need from the system.

·         IS/ICT strategy

It defines the policies for software and hardware e.g. any standards to be used or preferred
suppliers.

It also defines the organization stand on the information system organization e.g. whether it
is to be centralized or distributed.

 Topic 6: Information system accusation

.
Factors affecting the choice of information system acquisition
method.
Cost of accusation. Small organizations can prefer to purchase
commercial off-the-shelf software rather than developing in-house
programs
Capability of in-house ICT team. The number of ICT persons and the
level of their knowledge and skills can determine if the organization has
enough work force expertise to develop the system.
System complexity. If enough act team is not able to manage a complex
system the organization can adopt the outsource ICT services.
Size of the organization. Small organization may not be able to develop in
our software and therefore can adopt other methods like purchasing ready-
made software or using open source software.

Information system acquisition methods.

1. Commercial off-the-shelf purchase

2. System development development in house development
3. Outsourcing
4. Open source software
5 .Renting
6. Leasing

1. Commercial off-the-shelf purchase

This accusation method involves direct purchase of a pre-written
application or system used by more than one company.

Advantages of commercial off-the-shelf purchase

1. Readily available for purchase and
2. Cheap
3. Quit to implement
4. Can access reviews and advice from existing users
There are pre-existing solutions
Updates are usually included
Can offer you more functionality than you need
Some have support included
Disadvantages
The system may lack all the requirements needed
Can be impossible or inflexible to change should you need
You have no control
Update scan cost extra
May not fit your work process

System development
This is where an information system is developed from scratch by
information system professionals to Sweet the business requirements of
the organization.

Advantages of system development

Ownership. The organization wants the system completely.
The system has the required features.
Disadvantages of system development
Expensive as it requires both resources and time to develop.

Outsourcing
It is the practice of subcontracting part of or all of an organization's
information system functions to an external provider.
Advantages
Cost reduction. Focus concentrate on their core competence
Knowledge. Our way to gain access to new technology and outside
expertise

Open source software

Software that has no copyright over the code and allows the public to
modify the source code and develop it to their own content.

Renting
An accusation method where an organization that require the hardware
software or computer system gets them from another company after
signing a rent contract. The computer system or hardware system can be
used for the activities or function that has been specified in the contract

Leasing
Information systems is acquired from another company after signing a
lease contract. The lease contract is longer than that of renting.

Topic 7: The strategic role of information system in an organisation

Strategic information system can be defined as a computer system at any

level of organization that change golf operations products services or
environmental relationship to help the organization gain a competitive
advantage
The following describes the eight basic ways to gain competitive advantage

Reduce costs- a company can gain advantage if it can sell more units at a
lower price while providing quality and maintaining or increasing its profit
margin

Raise barriers to market entrance.-a company can gain advantage if it

deter.
Market entrance-potential entrants into the market leaving less
competition and more market potentials.
Establish high switching cost.. a company can gain advantage if in it
creates high switching costs making it economically infeasible for
customers to buy from competitors
Create new products or services... A company can gain advantage if it
offers a unique product or service.
Differentiate product or services... A company can gain advantage if it
can attract customers by convincing them its products differ from their
competitors

Enhance product or services. A company can gain advantage if its

product or services are better than someone else’s is.
Establish alliances... Companies from different industries can help each
other gain advantage by offering combined packages of goods or services
at special prices.

Login suppliers or buyers…. A company can gain advantage if it can log

in other suppliers of buyers making it economically impractical for suppliers
of buyers to deal with competitors

 Strategic information system should be distinguished from shortages

level 6 * 4 senior managers that focus on long-term decision-making
systems while strategic information system can be used at all levels
of organization and are for reaching and deep-rooted than the other
kinds of systems.
 Such a jerk information system fundamentally and health change a
firm's goal product services or internal and external relationships.
 In order to use strategic information system as competitive weapons
we must understand where strategic opportunities for business are
likely to be found based on two models of farm and its environment .
The two types of models are
Competitive Force model
Value chain model

1 Countering competitive (Competitive forces model)

In the competitive forces model a model is used to describe the interaction

of external influences especially threats and opportunities that affect an
organization strategy and ability to compete.
A firm faces a number of external threats and opportunities.

Threats.
The threat of a new entrants into the market

The pressure from substitute products or services

The bargaining power of customers

The positioning of traditional industry competitors

Competitive advantage can be achieved by enhancing the firm's ability to

deal with customers suppliers substitute products and services and new
entrance into markets, which in turn may change the balance of power
between a farm and other competitors in the industry in the farms favour.
Organization can use for basic competitive strategies to deal with a
competitive forces

1. Product differentiation

Firms can develop brand loyalty by product differentiation

Creating unique new products and services that can be easily distinguished
from those of competitors

2. Focused differentiation-business can create new market niche by

focused differentiation
Identifying a specific target for a product or service that is can serve in a
superior manner
Org can provide specialized product or service that serves this narrow
target market better than existing competitors and that discourages new
competitors.

3. Developing tight linkages to customers and suppliers

Fans can create ties to customers and suppliers that stick customers into
fans products and it ties suppliers to a delivery time table and price
structure shaped by the purchasing power
4. Becoming the low-cost producer
To prevent new competitors from entering their markets business can
produce goods and services at a lower price than competitors can.