MANAGEMENT INFORMATION SYSTEMS – Dept of MBA SREC

UNIT – III
Business application of IS - Enterprise systems, ERP, CRM, SCM, DSS, Types of decisions, Decision support
techniques, Decision making and Role of MIS, Business intelligence and Knowledge management systems.

3.1 ENTERPRISE SYSTEMS

Enterprise systems are the highly integrated information systems that cut across the traditional
functional areas in an Organization and thus the scope of such systems is entire enterprise wide. Such
systems, even, go beyond the boundaries of the organization and may have interfaces with the other
stake holders of the business like dealers, customers etc

Now-a-days, instead of having functional mainframe-based legacy systems, organizations are shifting
to integrated cross-functional client/server applications, for example Enterprise Resource Planning
(ERP) systems, Supply Chain Management (SCM) systems, and customer relationship management
(CRM) systems.

3.2 ENTERPRISE RESOURCE PLANNING (ERP) SYSTEM

An Enterprise Resource Planning (ERP) system may be defined as a highly integrated information
system, which provides information for all the functional areas as well as at all the management levels
of an organization. ERP system is a set of application software/package that provides operational,
managerial, and strategic information for an enterprise.

ERP systems enable the manager to take an overall view of the business as a whole instead of having a
myopic view (or narrow perspective) of business functions, and thus offer the benefits of synergy of
various functions in achieving the goals and objectives of the organization.

Evolution of ERP : ERP systems have evolved from the Materials Requirements Planning (MRP)
systems of the 1970s and the Manufacturing Resources Planning (MRP-II) systems of the 1980s. Both
MRP systems and MRP-II systems were fairly successful in industry.

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Information Systems Perspective of ERP: ERP systems can be viewed as a logical extension
of the evolution of Electronics Data Processing (EDP), Management Information Systems (MIS),
Decision Support Systems (DSS) and Knowledge based Systems (KBS) over the past four decades.

ERP systems capture the essence of the business processes. It is driven by business needs and not the
IT needs. An IT driven solution often attempts to formulate a way of using a technique to solve a
known business problem.

ERP Modules: ERP system is an integrated information system, which comprises various modules
covering different functions of an organization.

These modules are discussed, in brief, as follows:

Sales and Distribution (SD) module: This module tracks sales order and scheduled deliveries. It

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includes information about the customer, which includes pricing, shipping of products, billing, etc.
Materials Management (MM) module: purchasing of raw materials needed to manufacture products;
handling of raw materials inventory, from storage to work-in-progress goods etc.

Production Planning (PP) module: This module maintains production information, performs capacity
planning and creates a daily production schedule.

Quality Planning (QM) module: QM module plans and records quality control activities, such as
product inspections and material certifications.

Plant Maintenance (PM) module: manages maintenance resources and planning for preventive
maintenance of plant machinery, to minimize equipment breakdowns.

Asset Management (AM) module: It helps in managing the fixed asset like plant and machinery
purchases and related depreciation.

Human Resources (HR) module: This module facilitates employee recruiting, hiring, training, payroll
and benefits.
Project Systems (PS) module: PS module includes the activities pertaining to planning and control over
various projects may be from R & D, construction, marketing and IT.

Financial Accounting (FI) module: This module records transactions in the general ledger accounts;
generates financial statements; monitors and analyses cash holdings, financial deals and investments
etc.
Controlling (CO) module: It supports the organization in controlling and decision making. By
assigning costs to products and to cost centres, the module helps in analyzing the profitability of
various activities of the company.

Workflow (WF) module: This module is a set of tools that can be used to automate any of the activities
in ERP package. It can perform task-flow analysis and prompt employees for action.

Components of ERP Systems: The ERP system, which is an integrated computer-based

information system, comprises the following components.

BP1 BP2 BP3

HARDWARE SOFTWARE

ERP
SYSTEM

DATABASE
MODELBASE

USER

Components of MRP system

People: This component include all the people, may be users, top management and IT personnel, etc.

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Hardware and software: Hardware like servers, desktops, peripherals; and software like enterprise
resource systems software, operating systems, etc.

Database: This is the repository of organizational data from within and outside the organization.

Model base: This is the group of various models like mathematical model, arithmetical model,
statistical model, financial model etc..

Processes: Include business processes, procedures, and policies of the organization.

ERP Life Cycle: The implementation of ERP system is not a one-step activity; rather is a process
that comprises various phases, which are listed below and shown in.

Business Process Reengineering and ERP : Since the ERP system is a generic
product, designed on the common processes of business, is used for a large number of organizations.
However, all the organizations are not following similar business processes. Thus, when an
organization wants to implement the ERP system, its business processes need to be oriented as per the
designed processes of ERP package.

Thus, to implement an ERP package in an organization, the organization is required to modify or

change its business processes so as to match with the business processes of the designed ERP package.
In other words, change or redesigning of business processes becomes a must, if any organization
wishes to implement ERP package. This process of redesigning the business processes is
known as business process reengineering.

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Implementation Methodologies of ERP System: To implement ERP systems, two

popular approaches are used, which are known as Phased Implementation and big bang
implementation. Let us try to understand these two approaches of ERP implementation.

Big bang implementation : In a full big bang implementation, an entire suite of ERP applications is
implemented at all locations, at the same time. This transformation takes place only in a matter of days
and hence the name “big bang”.

Phased implementation: A phased approach is one where modules are implemented one at a time or in
a group of modules, often a single location at a time. Phased implementations are sequential
implementations that consist of designing, developing, testing and installing different modules.

ERP System Technology

ERP systems that are currently available belong to the client-server era. The user interface implemented
using graphical user interface technique is deployed on client machines. Powerful server machines host
the databases and business logic written as server procedures.

With suitable communication infrastructure, these systems can also be deployed in a distributed
environment and thus business processes may span across multiple geographical locations. The
technology areas that apply to ERP systems are:

• Database systems
• Communication protocols
• User interface framework

Challenges of ERP System

If you do not do ERP properly, you can kill your company, guaranteed. There have been different ERP
implementation experiences from different companies. Many companies like Hershey Food, Nike and
A-DEC sustained losses running into hundreds of millions of dollars. The main reason for the failure of
these systems has been lack of understanding of the complexity of the planning, development and
implementation required for new ERP system.

3.3 CUSTOMER RELATIONSHIP MANAGEMENT (CRM) SYSTEM

Customer relationship management (CRM) system is another kind of enterprise system that helps an
organization understand the customer needs, and support in formulating the customer focused
strategies.

Customer Relationship Management : With the change of business focus from sales to
the marketing companies now putting great effort to provide maximum satisfaction to their customers.
In order to achieve customer satisfaction objective, they try to focus on the customers and to build a
long-term relationship with them.

Managing customer relationship is a two-way process, in which the organization and all of its
employees who need to interface with the customers get a complete access to every customer at every
touch point and across all channels; and also the customers get all the required information about the
company and of its products without much effort. CRM is an iterative process that turns customer
information into positive customer relationship.

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Customer Relationship Management System: Customer relationship management

(CRM) system may be defined as a highly integrated cross functional information system that includes
a set of tools to integrate and automate customer-related processes in sales, marketing and customer
services to provide fast, convenient and reliable services to its customer. CRM applications generally
are available in the form of packaged software developed by various vendors like Siebel systems,
Oracle, PeopleSoft, SAP AG, etc.

Concept of CRM system

Components of CRM System : The various components of a CRM system.

(i) Customer interface: This component of CRM system assists sales, marketing, and service
employees in capturing and tracking all data about the existing and prospective customers. Such
information is captured from the customer touch points, such as telephone, e-mail, fax and company‟s
website (Internet), retail stores and any personal contact.

(ii) Sales: CRM system provides the software tools and information to all sales people, which is
required to support and manage the sales activities. It gives them real-time access to a single common
view of the customer in order to provide reliable and consistent information.

(iii) Marketing: The CRM system helps marketing professionals capture and manage customer
response data in the CRM database and analyse the customer and business value of a company‟s
marketing campaigns.

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(iv) Customer service and support: CRM system also provides service people with software tools and
real-time access to the customer database. It helps in managing the requests for services by the
customer. To handle specific types of requests, CRM system also allocates the services to various
business professionals.

(v) CRM model base includes analytical tools like data mining tools and other analytical marketing
software, and CRM database consists of a customer data warehouse and CRM data marts.

Architecture of CRM System : CRM is more than just a set of technologies; rather it should
be understood as a process. Major components of CRM systems may be understood as discussed as in
Figure 8.8.

Data Mining and CRM System: Data mining attempts to formulate, analyse and implement
basic induction processes that facilitate the extraction of meaningful information and knowledge from
unstructured data. Data mining extracts patterns, changes, associations and anomalies from large data
sets. The scope of data mining includes from theoretical work on the principles of learning and
mathematical representations of data to building advanced engineering systems that perform
information filtering on the web. Data mining software allows users to analyse large databases to solve
business decision problems. Data mining is, in some ways, an extension of statistics, with a few
artificial intelligence and machine learning twists thrown in.

Challenges of CRM System: However, it has been revealed by surveys that over 50 per cent
of CRM systems did not produce the results that were promised and 20 per cent of the business
surveyed supported the fact that CRM implementations had actually damaged long-standing customer
relationships. Still in another survey of senior management satisfaction with 25 management tools,
CRM ranked near the bottom in user satisfaction, even though 72 per cent expected to have CRM
systems implemented shortly (Rigby, 2002).

The following CRM implementation framework can be adopted by the organizations.

• Understand your business and customer
• Do SWOT analysis
• Define CRM system strategy for your organization
• Make your organization business process reengineering-ready
• Plan implementation of CRM system
• Top management support: CRM systems must get the support from the top management on a
continuous basis.
• Develop a performance scorecard: If you can‟t measure, you will not be able to control and improve
the project and thus you must develop concrete measurement goals so as to ensure its success.

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3.4 SUPPLY CHAIN MANAGEMENT (SCM) SYSTEM :

With the business model shift from manufacturing to customer value, the question is no longer about
manufacturing costs and producing high quality product; rather the question is about delivering the new
value proposition, i.e. what the customer wants, when he wants and where it is wanted at the lowest
possible cost.

Thus, companies require integration of their systems not only from within but also it has to go a step
further and integrate the processes with the processes of other companies. SCM system is a more
outward facing, focusing on helping the organization‟s relationship with suppliers.

Supply Chain Management : The supply chain is a network of organizations and business
processes for procuring materials, transforming raw materials into finished goods and distributing these
products to the customers.

Supply Chain Management System: Supply chain management system makes supply
chain management more efficient by helping companies coordinate, schedule, and control procurement,
production, inventory management and delivery of products and services.

Supply chain management system is a cross-functional inter-enterprise system (involving more than
one organization) that uses information technology to help support and manage the linkages between
company‟s processes involved in buying, making, and moving a product. It integrates supplier,
manufacturer, distributor and custom logistics processes to improve manufacturing efficiency and
distribution effectiveness.

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Challenges of SCM System: As SCM systems provide the companies with benefits of
managing strategic relationships with their suppliers besides other benefits like faster, more accurate
order processing, reduction in inventory levels, lower transaction and materials costs, etc., these
systems are viewed as a major business strategy by the organizations. These benefits of SCM are
mainly aimed at helping an organization achieve agility and responsiveness in meeting the demands of
their customers and the needs of their business partners.

The following SCM implementation framework suggesting guiding steps can be adopted by the
organization.

• Understand your business and supplier: Make an analysis of the linkages of the supply chain of
your organization and understand what is required out of your supply chain.

• Define SCM system strategy for your organization: SCM System strategy must be aligned to your
business strategy. SCM systems are inter-enterprise systems and hence must be fused with the SCM
systems of your suppliers‟ systems.

• Make your organization business process re-engineer ready: In the process of SCM systems,
many processes of the organizations are required to be redesigned and a proper readiness of the
organization for the same is required.

• Plan implementation of SCM system: The implementation of SCM system should be planned and
made clear to each person involved in the SCM process.

• Top management support: SCM system, in order to be successful, must be provided top
management support.

• Develop a performance scorecard: Even before the implementation of SCM system starts, supply
chain measurement issues should be understood with the selected supplier of SCM system.

3.5 DECISION SUPPORT SYSTEMS (DSSs)

WHY Decision Support Systems: These systems have become necessary for today‟s
manager because of following reasons:

(i) Fast computation: A decision-maker can perform a large number of computations very quickly and
that too at a low cost with the help of computer support systems.
(ii) Enhanced productivity: Support systems can enhance the productivity of support staff and also
enable the group members to discuss the problems among themselves at a distance.
(iii) Data transmission: Sometimes the data, which may be stored at different locations, may be
required to be transmitted quickly from distant locations. Computer support systems can search, store,
and transmit the required data quickly and economically.
(iv) Better decisions: Computer support systems can help a decision-maker in arriving at a better
decision.
(v) Competitive edge: Decision support systems enable the users to get a competitive edge over their
competitors as these systems enable organizations to change their operations frequently, re-engineer
processes and structures, empower employees and innovate.

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What is Decision Support Systems : “A decision support system is a specialized kind of

information system, which is an interactive system that supports in the decision-making process of a
manager in an organization, especially in semi-structured and unstructured situations. The system
utilizes information, models, and data manipulation tools to help make decisions in semi-structured to
unstructured situations.”

Components of Decision Support Systems : A decision support system comprises

three main components.

Database : The data in the database typically is a combination of master files (internal corporate data)
and data from external sources. Because of the large size of the data, data warehouse is used for
handling a huge data.
Model base : The second component of the DSS is a library of models to manipulate and analyse the
data in the desired ways. The model base might include econometric models to forecast demand by
industry and simulation models of the corporation. It may also have data mining tools to extract trends
and patterns.

Dialogue box : A user interface is the third component. Through this, the user can communicate with
the DSS. The physical interface generally consists of a terminal hooked up to the mainframe computer,
either directly or by telephone.

Characteristics and Capabilities of DSS : Decision support systems, as the name

implies, support the decision-making process of a manager and thus should be able to provide the
required support in the decision-making process.

1. DSS provide support for decision-makers mainly in semi-structured and unstructured situation by
bringing together human judgements and computerized information.

2. Support is provided for various managerial levels, ranging from managers at the strategic level to the
managers at the operational level.

3. DSS provide support to individuals as well as to groups of managers.

4. DSS provide support to several interdependent and/or sequential decisions. The decision may be
made once, several times, or repeatedly.

5. DSS support all phases of the decision-making process: intelligence, design, choice, and
implementation.

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6. DSS support a variety of decision-making processes and styles.

7. DSS are adaptive over time. The decision-maker should be reactive, able to confront changing
condition quickly, and be able to adapt the DSS to meet these changes.

8. DSS should have the features like user-friendliness, strong graphical capabilities, and an English-like
interactive human machine interface. Such features can greatly increase the effectiveness of DSS.

9. DSS attempt to improve the effectiveness of decision-making (accuracy, timelines, quality) rather
than its efficiency (the cost of making decisions).

10. The decision-maker has complete control over all steps of the decision-making process in solving a
problem. A DSS specifically aims to support and not to replace the decision maker.

11. End users should be able to construct and modify simple systems by themselves. Larger systems
can be built with assistance from information system (IS) specialists.

12. A DSS usually utilizes models for analysing decision-making situations. The modelling capability
enables experimenting with different strategies under different configurations.

13. The DSS should provide access to variety of data sources, formats, and types, ranging from
geographic information system (GIS) to object-oriented ones.

14. It can be integrated with other DSS and/or applications, and it can be distributed internally and
externally, using networking and Web technologies.

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3.5 TYPES OF DECISIONS : Organizational decisions differ in a number of ways. The

following bases are important to classify decisions.

Purpose of Decision-making : Robert B. Anthony (1965) has differentiated organizational

decisions into three categories, namely, strategic planning decisions, management control decisions and
operational control decisions.

Strategic planning decisions : are those decisions in which the decision-maker develops objectives and
allocates resources to achieve these objectives. Decisions in this category are of long time period , such
decisions are taken by strategic planning level (top level) managers. Examples of such decisions may
include introduction of a new product, acquisition of another firm, etc.

Management control decisions : are taken by management control level (middle level) managers and
deal with the use of resources in the organization. Analysis of variance, product mix planning decisions
fall in this category of decisions.

Operational control decisions : deal with the day-to-day problems that affect the operation of the
organization. For example, production scheduling decisions and inventory control decisions like the
product to be produced for the day or the items and their quantities to be ordered are operational control
decisions.

Level of Programmability : Simon (1965) on the basis of the level of the programmability of
a decision, proposed two types of decisions: programmed and non-programmed, also known as
structured and unstructured decisions (Gorry and Scott Morton, 1971).

Programmed/structured decisions: Programmed or structured decisions are those decisions, which are
well defined and some specified procedure or some decision rule may be applied to reach a decision.
Such decisions are routine and repetitive and require little time for developing alternatives in the design
phase. Programmed or structured decisions have traditionally been made through habit, by operating
procedures or with other accepted tools.
Non-programmed/unstructured decisions: Decisions which are not well-defined and have no pre-
specified procedure or decision rule are known as unstructured or non-programmed decisions. These
decisions are novel ones, which may range from one-time decisions relating to a crisis (such as a
catastrophe at the location of the unit) to decisions relating to recurring problems where conditions
change so frequently and to such an extent that decision rules cannot be specified.

Knowledge of Outcomes : Another approach of classifying decisions is the level of knowledge of

outcomes. On the basis of the level of knowledge of outcomes, decision-making can be classified into
three categories. (i) Decision under certainty (ii) Decision under risk (iii) Decision under uncertainty

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Decision under certainty : Decision-making under certainty takes place when the outcome of each
alternative is fully known. There is only one outcome for each alternative.

Decision under risk :Decision-making under risk occurs when there is a possibility of multiple
outcomes of each alternative and a probability of occurrence can be attached to each outcome. Such a
decision-making is also similar to decision-making under certainty, where instead of optimizing
outcomes, the general rule is to optimize the expected outcome.

Decision under uncertainty: Decision-making under uncertainty takes place when there are a number
of outcomes for each alternative and the probabilities of their occurrence are not known. Optimization
criteria cannot be applied for making decisions under uncertainty because there is no knowledge of the
probabilities.

3.6 DECISION SUPPORT TECHNIQUES: Some of the techniques, which are often used in
decision-making support. These techniques that follow complex approaches, are discussed, in brief,
here:

Simulation : In this approach, a mathematical model of the situation is created. Main decision variables
are defined and the model is operated under different assumptions or with different starting conditions
to help explore alternative paths for the real situation.
Optimization: In optimization technique, a mathematical model of the situation is developed. The
model is designed so that optimization techniques can be used to search for optimal values of decision
variables.
OLAP and data mining: It uses statistical techniques to analyse business results and find hidden
relationships.
Expert systems: Here an expert‟s view of an area of knowledge in terms of facts and rules are
summarized and then the facts and rules to a particular situation are applied to help someone else
decide what to do.
Neural networks: Neural networks apply automated statistical „learning‟ techniques to find the
statistical parameters that best present correlations between groups of characteristics within the trading
set.

Fuzzy logic: In this approach, decision processes are controlled using logic systems that replace „either
– or‟ logic with logic based on relative degrees of inclusion in sets.

Case-based reasoning: This approach creates a database of examples that may help in making
decision. Add another example to the database when the database does not cover a new situation.

Intelligent agents: In this technique, decision parameters are specified for a computerized „agent‟ that
searches one or more databases to find a specific answer, such as the lowest price for a particular
mobile set.

3.7 DECISION MAKING AND ROLE OF MIS : Simon‟s model of decision-making

proposes three stages in the decision-making process.
Intelligence Stage : In this stage, an information system may provide information about internal as
well as external environments. Internal information is generated from the functional areas, whereas

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external information is collected from various sources, such as databases, newspapers, government
reports, personal contacts, etc. Thus, information systems can be used to scan the business environment
of an organization.
In order to get the required information in the intelligence phase of decision-making, MIS must be
designed so as to answer pre-specified as well as ad hoc queries (unique, unscheduled,
situationspecific) made by the decision-maker.
Design Stage : At this stage, various alternatives are developed and evaluated. In the case of structured
decisions, information systems can support by quantifying and automating a decision-making process.
On the other hand, for semi-structured to unstructured decisions, information systems can support such
decision-making by providing:
(i) the ability to make ad hoc queries for information in the organizational databases
(ii) the ability to reach a decision in an interactive process (decision support system capability)
Choice Stage : It is the choice stage in which a course of action is selected and feedback is collected on
the implemented decision. Information systems can provide summarized and organized information to
the decision-makers at this stage.
Information systems can also help the decision-maker monitor the successful implementation of a
decision by providing feedback. During the process of decision-making, if the decision-maker chooses
to return to any of the preceding stage for more information, such information support is again provided
by the information system.

3.8 BUSINESS INTELLIGENCE

Business Intelligence (BI) may be defined as knowledge about the customers, the competitors, the
business partners, the competitive environment and the internal operations of the organisation. This
knowledge, in turn, enables the organization to make effective decisions that may have strategic
implications for the business.

Nowadays, organizations collect and store this data electronically in databases and data warehouses.
Besides data generated from internal transactions, organizations collect data from external sources as
well. With proper software tools, organizations can process this data to know trends, patterns and
unknown facts from this data and thus can know more about customers and suppliers, and therefore can
make better decisions.

As the purpose of BI is to improve the timeliness and quality of the input for decision-making, it helps
the managers to understand the following:
• Internal capabilities of the organization
• Trends and future directions in the markets
• External environment such as economic, political, social, technological and demographic environment
• Behaviour of the competitors
Business intelligence is a way to truly understand markets, competitors, and processes. Software
technology such as data warehouses, data marts, and data mining or Online Analytical Processing
(OLAP) makes it possible to sift through data to find out trends and patterns that can be used by the
organisation to improve profitability.

The organizations that develop Business Intelligence (BI) tools create interfaces that help the managers
to quickly grasp business situations. Such an interface is simple to understand and interpret by the
managers. One of such interface is called dashboard, because it looks similar to a car dashboard.

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Online Analytical Processing (OLAP) : Online analytical processing systems are multidimensional
databases. These systems allow analysts to display data in one or more of a number of different
dimensions, such as time, geographic region, product, organizational department, customer, or other
factors. The data used by OLAP applications usually comes from a data warehouse. While data
warehouse focuses on storing huge amount of data efficiently, OLAP systems are designed to make this
data easy to analyze. In simple terms, OLAP is an extension of the Structured Query Language (SQL)
framework to accommodate queries that are not feasible on relational database

Data Mining Queries : Data mining queries are more advanced and sophisticated than those of
traditional queries. For example, a typical traditional query may be: „What is the relationship between
the amount of product A and the amount of product B that an organization sold over the past week?‟
Whereas in the data mining, the manager would be interested to know the products that would be in
demand on the coming weekend and thus the query from the data mining may be „Find out the products
most likely to have the maximum demand on the coming weekend.‟ This query meant for data mining
would find patterns that would otherwise not be known through observation. Thus, data mining queries
go one step beyond the traditional queries.

Data mining has four main objectives:

• Sequence or path analysis: Finding patterns where one event leads to another,
• Classification: Finding whether certain facts fall into predefined groups,
• Clustering: Finding groups of related facts not previously known, and
• Forecasting: Discovering patterns in data that can lead to reasonable predictions.

BI Applications in Business : Business intelligence finds its application in a large number of areas,
for example in marketing, banking, human relations management, insurance, credit card management,
etc.
Retailing : Retailers in general and grocery stores in particular, can get valuable predictive information
from data mining. Grocery stores generate huge amount of data that require automated tools for
analysis.
Customer relationship management : Customer Relationship Management (CRM) allows businesses
to identify the profitability of specific customers and to increase chances of retaining them. This can be
achieved by having all relevant information readily available that is needed for planning, development
and selling of the products.
Credit card management : Data mining can also be used in credit card management. From a large
number of credit card users, banks can find out the most profitable customers and also can target its
credit card campaign to the right set of potential customers.
Insurance : The insurance industry can also find useful applications of data mining tools to detect
frauds and to market its products. By linking names, telephone numbers, streets, birthdays, and other
information with slight variations, patterns indicating fraud can be identified.
Telecommunications : In the last two decades, telecommunication industry has seen a new revolution.
With so many players, it has really become difficult to retain the customers. The phenomenon of a
customer switching carriers is referred to as chum, a fundamental concept in telephony as well as in
other fields. Analysis using data mining can reduce this customer chum to a great extent.
Telemarketing :Telephone providers are among the many marketing operations utilizing telemarketing.
Data mining can be used on the collected data to determine segments based on common characteristics,
such as the set of customers who respond to new promotions; the set of customers who respond to
discounts; or the set of customers who respond to new product offers.

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3.9 KNOWLEDGE MANAGEMENT SYSTEMS

Knowledge (experience based know-how) is understood, these days, as a key asset in any organization
and if not managed adequately, would lose the competitive advantage. In other words, knowledge
management is not only important rather essential for any organization. Where, knowledge
management may be understood as planning, organizing and controlling the knowledge resources in the
organization; knowledge management system refers to the framework or a system that helps in
managing the knowledge.

In simple words, knowledge management system may be defined as a strategy, a framework,

combination of activities, or a system that is designed to help organization create, capture, analyze,
apply and reuse knowledge to improve its performance and to achieve competitive advantage.

It starts with data (raw facts), which is processed and converted into information by putting it into
context and further converting the information into knowledge by combining it with experience and
judgment.

Knowledge can be understood to be of two types – explicit and tacit knowledge.

Whereas explicit knowledge is always tangible, transferable and can be documented, for example
databases, text books, formulae and equation, etc.; tacit knowledge may be intangible or in unconscious
mind, non-transferable or personal and exists in the minds of persons, for example, experiences, know-
how, perceptions and insights, etc.
The tracks of knowledge management have been identified as
Management of information, i.e. knowledge equals to objects that can be identified and handled in
information system; and
Management by people, i.e. knowledge consists of processes, complex set of dynamic skills, now how,
etc., that is constantly changing.

The components of the model are discussed as below:

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 MANAGEMENT INFORMATION SYSTEMS – Dept of MBA SREC

• A knowledge asset: It is validated knowledge, captured and stored for re-use. Knowledge assets often
contain the context behind the activity, recommendations for how to do the activity in future, a list of
people with relevant experience, stories from the past and valuable reusable documents.
• Learning before: Knowledge is accessed at the start of a project or a piece of work, to ensure that you
start the work with a full knowledge base. You can learn before through accessing knowledge assets,
interviewing experts or holding a peer assist
• Learning during: New knowledge is identified and collected during implementation, while work is in
progress.
• Learning after: Upon completion of a task or at the end of a project cycle, the knowledge is collected
from all those who took part and collated for future use. A retrospect is a suitable process for learning
after.
• Communities of practice: These are networks dedicated to sharing knowledge among practitioners, in
order to help them practice better. These practitioners can be professionals within the organization, or
in several organizations, or they can be armatures who form a community that is not work-related at all.
• Accountable knowledge roles: They are represented by the face with in the business activity cycle at
the bottom of the model picture. Individuals need to be identified who can take responsibility for
making sure that knowledge management processes are applied and that knowledge is captured,
collated validated, stored and re-used.

Knowledge Management System (KMS) refers to the information systems that supports and enhance
the organizational processes of knowledge creation, storage, retrieval, transfer, and application. The
technologies for the knowledge management system include intranets and extranets; search and
retrieval tools; content management and collaboration tools; data warehousing and mining tools; and
groupware and Artificial Intelligence (AI) tools like expert systems and Knowledge Base Systems
(KBS).

Knowledge Management Strategies : There are a number of strategies that can be

formulated and implemented for the knowledge management systems in the organizations.

(i) What knowledge to share: The knowledge sharing program may be limited to a specific function,
such as sales and marketing, or research or a specific area of expertise such as engineering. The
question of “What to Share” includes not only the type of knowledge but also its quality.

(ii) With whom to share knowledge: Knowledge sharing programs may aim at sharing with either an
internal or an external audience.

(iii) How will knowledge be shared: In this strategy, the organizations need to decide about the
principal channels by which knowledge will be shared? It may include face-to-face, with the help
desks, by telephone, by fax, through email collaborative tools on the web, or may be some combination
of these mentioned strategies.

(iv) Why will knowledge be shared: Knowledge management is undertaken for supporting the business
of the organization and thus knowledge should be shared to increase speed, lower the cost of operation,
and accelerate innovation and to increase the client base.

S. Md. Riyaz Naik, Assistant proff, Dept of CSE Page 17