MODULE 1

Concepts & Types of Information Systems. Components of MIS. Information Activities.

Strategic Management of Business. Balance Score Card, Scorecard and Dashboard,
measures of business operations and business performance. Steps for strategic design
of MIS.

INTRODUCTION TO INFORMATION SYSTEM

Information systems (IS) are critical to the operation of modern organizations. They are
interconnected networks of hardware, software, data, people, and procedures designed
to collect, process, store, and disseminate information to aid in decision-making,
coordination, and control. The rise of digital technologies, as well as the increased use
of computers and the internet, has altered how organizations operate and interact with
their stakeholders. In a rapidly changing business environment, information systems
have become critical tools for organizations of all sizes and types to remain competitive,
efficient, and effective. They assist organizations in achieving their objectives by
enhancing internal operations, facilitating communication and collaboration, and
assisting in strategic decision-making. Information systems study is multidisciplinary,
combining elements of computer science, management, and information technology.
In today's business, information systems are critical because they allow organizations to
collect, store, and process data to make informed decisions. These systems can be used
to improve internal and external communication and collaboration, as well as gain
insights into customer behavior and market trends. Furthermore, by providing real-time
data and analysis, they can help businesses become more agile, responsive to market
changes, and competitive. Information systems are critical for businesses to operate
effectively and efficiently in today's fast-paced and data-driven environment.

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The combination of hardware, software, data, people, and procedures that
organizations use to collect, process, store, and disseminate information is referred to
as an information system. These systems aid in decision-making, coordination, and
control, and they assist organizations in achieving their objectives. Simple manual
systems to complex computer-based systems that automate many business processes
are examples of information systems.

Activity A

Write down examples of an information system that you know in real-time or in your
real life…………..
DEFINING INFORMATION SYSTEM
“An information system is a set of interrelated components that work together to
collect, process, store, and breakdown the information to support decision making.”

“Information system (IS) is the study of complementary networks of hardware and

software that people and organizations use to collect, filter, process, create, and
distribute data.”

“Information systems are combinations of hardware, software, and telecommunications

networks that people build and use to collect, create, and distribute useful data,
typically in organizational settings.”

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 TYPES OF INFORMATION

Internal Information:
 Internal Information is defined as information generated by the organization's
operations at various management levels in various functional areas. Internal
information is summarized and processed as it progresses from the lowest to the
highest levels of management.
 Internal information is always about the organization's various operational units.
Production figures, sales figures, personnel, account, and material information are all
examples of internal information.
 This type of information is typically consumed by middle and junior management levels.
However, top-level management consumes summarized internal in format on.

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 External Information:
 External information is typically gathered from the business organization's
surroundings. External information is defined as information that comes from outside
the organization and has an impact on its performance.
 External information includes government policies, competition, economic status, and
international market conditions.
 External information is typically required by top management cadres and is useful in
developing long-term policy plans for organizations.

OPERATING ELEMENTS OF INFORMATION SYSTEM

The components that allow an information system to function effectively and efficiently
are known as its operating elements. They are as follows:
•Hardware: A system's physical components, such as computer equipment, peripheral
devices, and other supporting equipment.
•Software: A set of instructions that instructs the hardware on what to do. System
software (such as the operating system) and application software are both included.
•Data: Information that the system stores and processes. It can include both structured
(like a database) and unstructured data (such as a text document etc)
•Procedures: The steps and processes that are followed to complete specific tasks such
as data entry, information processing, and report generation.
•People: Those who use the system as well as those who support and maintain it.
•Network: The communication channels that connect the various system components
and allow them to work together.

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•Policies and security measures: The guidelines and measures that ensure the system's
information's confidentiality, integrity, and availability.

The following are the major processing functions in information systems:

•Business transaction processing: Capture, collect, record, store, and process events of
business interest so that their impact is reflected in organizational performance
records.
•Master file updates: The effect of these transactions is carried over to the
organizational performance status files. At any given time, master files must reflect the
status of any entity after incorporating the impact of current transactions.
•Information report generation: After processing transactions and updating master
files, information reports are generated to assist managers in making decisions.
•Processing of interactive inquiries: Online information processing systems allow
managers to respond to business queries raised on data files, both master and
transaction files.
•Providing interactive analytical support: Key decision makers require not only
interaction with data files for data extraction using scientific and planning models but
also online processing support to analyze the impact of some potential actions. A
Decision Support System is created when the system can extract data from relevant
files and address it to the models selected by the user.

TYPES OF INFORMATION SYSTEMS

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Information systems can be classified into several types based on their functions,
organizational level, and nature of data processed:
•Transaction Processing Systems (TPS)
•Management Information Systems (MIS)
•Decision Support Systems (DSS)
•Executive Information Systems (EIS)
•Expert Systems (ES)
•Artificial Intelligence Systems (AI)
•Enterprise Resource Planning Systems (ERP)
•Supply Chain Management Systems (SCM)
•Customer Relationship Management Systems (CRM)
•Knowledge Management Systems (KMS)

Transaction Processing System (TPS):

A transaction processing system is an information system that processes data resulting
from business transactions. Their goals are to provide transactions so that records can
be updated, and reports can be generated, i.e., to perform storekeeping functions. The
transaction is carried out in two stages: batch processing and online transaction
processing.
Examples: Bill system, payroll system, Stock control system.
Management Information System (MIS):
A Management Information System is intended to take relatively raw data available
through a Transaction Processing System and summarize and aggregate it for the

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manager, usually in the form of a report. Middle management and operational
supervisors are likely to use its reports. MIS generates a wide range of report types. A
summary report, an on-demand report, an ad-hoc report, and an exception report are
among the reports available.
Examples: Sales management systems, Human resource management systems.
Decision Support System (DSS):
A Decision Support System (DSS) is an interactive information system that provides
information, models, and data manipulation tools to assist decision- making in semi-
structured and unstructured situations. The end user is more involved in creating DSS
than an MIS because DSS includes tools and techniques to assist in gathering relevant
information and analyzing options and alternatives.
Examples: Financial planning systems, Bank loan management systems.
Experts System:
Experts systems include expertise to assist managers in diagnosing and solving
problems. These systems are based on artificial intelligence research principles. Experts
Systems is a data-driven information system. It acts as an expert consultant to users by
applying its knowledge of a specific area. An expert system's components are a
knowledge base and software modules. These modules perform knowledge inference
and provide answers to user questions.
Office Automation System:
An office automation system is a type of information system that automates various
administrative processes such as documenting, data recording, and office transactions.
The administrative and clerical activities are separated in the office automation system.
Email, voice mail, and word processing are
some of the business activities performed by this type of information system.

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Executive Support System:
An Executive Support System (ESS) assists top-level executives in planning and
controlling workflow as well as making business decisions. It is similar to the
Management Information System (MIS).
•It provides great telecommunication, better computing capabilities, and effective
display options to executives, among other things.
•It provides information to them in the form of static reports, graphs, and textual
information on demand.
•It helps monitor performance, track competitor strategies, and forecast future trends,
among other things.

THE COMPONENTS OF INFORMATION SYSTEMS

An information system is a collection of hardware, software, and telecommunication

networks that people construct to collect, create, and distribute useful data, usually
within an organization. It defines the information flow within the system. An
information system's goal is to provide appropriate information to the user, gather data,
process data, and communicate information to the system's user.
The components of the information system are as follows:
•Computer Hardware:
Physical equipment is used for input, output, and processing. The hardware structure
depends upon the type and size of the organization. It consists of an input and an
output device, an operating system, a processor, and media devices. This also includes
computer peripheral devices.
•Computer Software:

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The programs/ application program is used to control and coordinate the hardware
components. It is used for analyzing and processing the data. These programs include a
set of instructions used for processing information

MAJOR PROCESSING FUNCTIONS IN INFORMATION SYSTEMS

In information systems, processing functions refer to the operations performed on

data, such as data input, manipulation, storage, and retrieval, to produce
meaningful information. It entails converting raw data into a format that can be
used for decision-making, reporting, or analysis. The goal is to support an
organization's information needs by making data accessible, accurate, and useful.

The following are the primary functions of information systems:

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•Input and capture of data: It is the process of entering data into a computer
system. This can be accomplished through a variety of methods, including manual
entry, scanning, and electronic transfer.

•Data Storage and retrieval: This is the process of storing data in a system for
later use. The data can be saved in a database, a file system, or in the cloud.

•Data processing and analysis: This is the process of converting raw data into
useful information. Data validation, sorting, and calculation is examples of such
tasks.

•Decision-making and problem-solving: The process of selecting the best option

from a set of alternatives. The process of identifying and resolving a problem or
issue is known as problem-solving. Both processes necessitate gathering
information, weighing options, making a decision, and putting a solution in place.
Critical thinking and clear, logical reasoning are required for effective decision-
making and problem-solving.

•Information output and dissemination: This is the process of presenting

processed data in a meaningful way, such as by creating reports, visualizations, or
sending notifications.

•Data Maintenance: This is the process of updating and managing data in a

system. Backups, data archiving, and data deletion are examples of such tasks.

•Data security and protection: This refers to the process of preventing

unauthorized access to and modification of data stored in a system. Encryption,
authentication, and access control are examples of such tasks.

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These functions collaborate to ensure that data is collected, processed, stored,
and presented in a way that meets an organization's needs.

HOW TO APPLY INFORMATION SYSTEMS IN BUSINESS?

Enterprise resource planning (ERP):

Enterprise Resource Planning (ERP) is a type of software that integrates different

functions of an organization into a single system. The purpose of ERP is to
streamline and automate business processes, such as financials, human resources,
procurement, supply chain management, and customer relationship
management. The goal of ERP is to provide a single source of truth for an
organization's data and to improve decision-making by giving executives and
managers real-time access to accurate information. ERP systems can vary in
complexity and scope, ranging from basic systems that handle simple tasks to
complex, multi-module systems that can manage the entire operations of a large
enterprise.

Many ERP systems are web-based and can be accessed from anywhere with an
internet connection. ERP implementation can be a complex and time- consuming
process, but it can bring many benefits to an organization, including increased
efficiency, reduced errors, better visibility into business operations, and improved
decision-making. However, it is important to carefully evaluate an organization's
needs and choose an ERP system that is appropriate for the organization's size,
budget, and goals.

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Supply chain management (SCM):

Supply Chain Management (SCM) is the coordination and management of

activities involved in the production and delivery of products and services to
customers. It involves managing the flow of materials, information, and financial
capital from suppliers, through the organization, and out to customers. SCM
encompasses a wide range of activities, including procurement, production
planning, inventory management, transportation, warehousing, and customer
service. The goal of SCM is to optimize the flow of goods and services, improve
the efficiency of the supply chain, and enhance the overall customer experience.

Effective SCM requires collaboration and communication between all participants

in the supply chain, including suppliers, manufacturers, distributors, and
customers. This can be achieved through the use of technologies such as
electronic data interchange (EDI), RFID (Radio Frequency Identification), and
cloud-based collaboration tools. In today's fast-paced business environment,
managing the supply chain is becoming increasingly complex and challenging.
Companies must be able to respond quickly to changes in demand, minimize the
risk of supply chain disruptions, and meet the evolving needs of customers. A
well-designed and efficiently managed supply chain can help companies to
improve their bottom line and achieve a competitive advantage in their markets.

Introduction to Information System

Overview of Management Information System

Customer relationship management (CRM):

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Customer Relationship Management (CRM) is a strategy that organizations use to
manage their interactions with customers and potential customers. The goal of
CRM is to create and maintain strong, lasting relationships with customers by
understanding their needs and behaviors and by delivering the products, services,
and experiences that they value. CRM is typically achieved through the use of
software and technology. CRM systems can collect and store data about
customers, including demographic information, purchase history, and interaction
history with the organization. This information can be used to inform business
decisions, such as which products to develop or which customers to target with
marketing campaigns.

CRM can encompass a wide range of activities, including sales management,

marketing, customer service and support, and customer analytics. By centralizing
customer data and automating many of the processes involved in managing
customer interactions, organizations can improve the efficiency of their customer-
facing operations and provide a better customer experience. In today's business
environment, the effective management of customer relationships is critical to
success. With the increasing competition and the rise of digital channels,
companies must be able to effectively manage their interactions with customers
to build strong, long-lasting relationships and stay ahead of the competition.

Q1. What do you understand by the term Strategic Management?

The Concept of Strategy:

A strategy describes how the ends (goals) will be achieved by the means
(resources). Strategy can be intended or can emerge as a pattern of activity as the

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 organization adapts to its environment or competes. It involves activities such as
strategic planning and strategic thinking.

Common themes in strategy:

From these different definitions strategy is concerned with:

 The purpose and long-term direction of the business;

 The scope of an organization’s activities and actions required to meet its
objectives (broad or narrow);
 Meeting the challenges from the firm’s business external
environment, such as competitors and the changing needs of
customers;

 Meeting the challenges from the firm’s business external environment,

such as competitors and the changing needs of customers;
 Using the firm’s internal resources and competencies effectively and
building on its strengths to meet environmental challenges;
 Delivering value to the people who depend on the firm, its
stakeholders, such as customers and shareholders, to achieve competitive
advantage.

Whatever interpretation is put on strategy, the strategic actions of an

organization will have widespread and long-term consequences for the
position of the organization in the marketplace, its relationship with
different stakeholders, and overall performance.

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Q2. Discuss the various levels of Strategic
Management. Levels of strategy:
Corporate strategy: The corporate center is at the apex of the organization.
It is the head office of the firm and will contain the corporate board. The
planning view of strategy assumes that all strategy was formulated at
corporate level and then implemented in a ‘top-down’ manner by
instructions to the business divisions. During the 1980s, high profile
corporate planners like IBM, General Motors and Ford ran into difficulties
against newer and smaller ‘upstart’

Corporate center
Corporate Strategy of
organization

Strategic
business
Business Strategy unit

Strategic Strategic
business business
unit unit

Financia Marketin Human Intern

Lost
l g resource al
Strateg
Strateg strateg s Audit
y Strategy
y y

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Organization chart showing corporate, strategic business unit & functional
strategies.
Corporate strategy: The corporate center is at the apex of the organization.
It is the head office of the firm and will contain the corporate board. The
planning view of strategy assumes that all strategy was formulated at
corporate level and then implemented in a ‘top-down’ manner by
instructions to the business divisions. During the 1980s, high profile
corporate planners like IBM, General Motors and Ford ran into difficulties
against newer and smaller ‘upstart’

Competitors who seemed to be more flexible and entrepreneurial. One

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consequence was the devolution of responsibility for competitive strategy
to strategic business units (S.B.U.).
Corporate strategy today typically restricts itself to determining the
overall purpose and scope of the organization. Common issues at this
level include:
•Decisions on acquisitions, mergers and sell-offs or closure of business
units;
•Conduct of relations with key external stakeholders such as investors, the
government and regulatory bodies;
•Decisions to enter new markets or embrace new technologies (sometimes
termed diversification strategies);
•Development of corporate policies on issues such as public image,
employment practices or information systems.

A Model of the Rational Strategy process:

The traditional approach to strategic management is often termed the
formal or rational approach, and can described as a series of logical steps
including:
•The determination of an organization’s mission;
•The setting of goals and objectives;
•The understanding of the organization’s strategic position;
•The formulation of specific strategies;
• The commitment of resources.
A continuous analysis of the external environment and the organization’s
internal resources is needed in order to plan for the future development

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and survival of the business. This is often conceived as consisting of four
major steps:

1. Analysis 2. Formulation
3. Implementation 4. Monitor, review and evaluation.

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 MANAGEMENT INFORMATION SYSTEM MBA SEM-I

Corporate strategy today typically restricts itself to determining the

overall purpose and scope of the organization. Common issues at this
level include:

 Decisions on acquisitions, mergers and sell-offs or closure of business units;

 Conduct of relations with key external stakeholders such as investors,

the government and regulatory bodies;

 Decisions to enter new markets or embrace new technologies

(sometimes termed diversification strategies);

 Development of corporate policies on issues such as public image,

employment practices or information systems.

A Model of the Rational Strategy process:

The traditional approach to strategic management is often termed the

formal or rational approach, and can described as a series of logical steps
including:

 The determination of an organization’s mission;

 The setting of goals and objectives;

 The understanding of the organization’s strategic position;

 The formulation of specific strategies;

 The commitment of resources.

A continuous analysis of the external environment and the organization’s

internal resources is needed in order to plan for the future development
and survival of the business. This is often conceived as consisting of four
major steps:

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MANAGEMENT INFORMATION SYSTEM MBA SEM-I

1. Analysis 2. Formulation
3. Implementation 4. Monitor, review and
evaluation.

This process seeks to answer questions concerning where the

organization is now, where it should go in the future, and how it should
get there. The rational model therefore involves a number of
interrelated stages. These are illustrated in Figure below, which shows
the various stages which management may take to develop a strategy for
their organization.
The basic idea from the model is that we start with the existing strategy of the
organization and evaluate it using information collected from internal and
external analysis. Form this we can determine if the organization should
continue with its existing strategy or formulate a new strategy that will enable
the organization to compete more effectively. Having made a choice on the
strategic direction, the next stage involves implementing the
Strategy and then evaluating performance to determine whether or not
goals have been achieved.

Each of the different stages in the model above will now be elaborated
on, introducing some of the tools and techniques of strategic
management.

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MANAGEMENT INFORMATION SYSTEM MBA SEM-I

Position audit
internal analysis

1. 2. Strategy Strategic Strategy

Corporat option evaluation
implementati
Mission& e generatio & choice
onappraisal
n

Environmental
Review
analysis
&
external
control
analysis
competitor
analysis

A model of a rational strategy process

Mission, Objectives and goals:

Mission :: The Fundamental objects of entity expressed in general

terms (CIMA).Overriding purpose in line with the values and
expectations of stakeholders.

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MANAGEMENT INFORMATION SYSTEM MBA SEM-I

Objective :: Quantification (if possible) or more precise statement of the Goal.

Strategies :: Long-term direction expressed in broad statement about
the direction the organization should be taking and the type of actions
required to achieve objectives.

The Balanced Scorecard (BSC):-

is a strategic management tool that helps organizations track and manage their
performance by translating their strategic objectives into a set of performance
measures. It was developed by Robert Kaplan and David Norton in the early
1990s. The BSC goes beyond traditional financial metrics to include non-
financial aspects of performance, ensuring a more holistic view of an
organization’s health and strategy execution. Here are some key points:

Four Perspectives of the Balanced Scorecard

1) Financial Perspective: Measures how well the organization is performing

financially. Common metrics include revenue growth, profitability, return on
investment (ROI), and cost management.

2) Customer Perspective: Focuses on customer satisfaction and retention.

Metrics might include customer satisfaction scores, customer retention rates,
market share, and customer loyalty.

3) Internal Business Processes Perspective: Examines the efficiency and

effectiveness of internal processes. Metrics can include cycle time, quality
rates, process innovation, and operational efficiency.

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 MANAGEMENT INFORMATION SYSTEM MBA SEM-I

4) Learning and Growth Perspective: Looks at the organization's ability to

innovate, improve, and learn. This includes employee training and
development, employee satisfaction, knowledge management, and
organizational culture.

Objectives, Measures, Targets, and Initiatives:

Objectives: Specific goals aligned with the organization’s strategy.

Measures (Key Performance Indicators - KPIs):Metrics used to gauge performance

toward achieving the objectives.

Targets: Specific goals for the measures to reach.

Projects or actions taken to achieve the targets.

Benefits of Using a Balanced Scorecard:

Alignment: Ensures that all levels of the organization are aligned with strategic
goals.

Balance: Provides a balanced view by incorporating both financial and non-

financial metrics.

Communication: Improves internal and external communication about the

organization's strategy and progress.

Feedback and Learning: Allows organizations to monitor their strategy and make
adjustments as needed based on performance data.

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 MANAGEMENT INFORMATION SYSTEM MBA SEM-I

A scorecard and a dashboard are both tools used in performance management, but
they serve different purposes and are used in different contexts. Here’s a
comparison:

Scorecard

 A scorecard, like the Balanced Scorecard (BSC), is used for strategic

management. It is designed to track performance against strategic goals and
objectives over time.
 It typically focuses on long-term outcomes and how well the organization is
executing its strategy.
 Includes a mix of financial and non-financial metrics aligned with the
organization's strategy. These metrics are usually organized into key
perspectives (like financial, customer, internal processes, and learning and
growth).
 Scorecards are structured around specific objectives, measures (KPIs), targets,
and initiatives. They often include visual elements like strategy maps that
show the cause-and-effect relationships between different objectives.
 Primarily used by senior management and executives to assess and steer
strategic initiatives. It helps in aligning the day-to-day work with the long-term
goals of the organization.
 Typically used for periodic reviews (quarterly, annually) to assess strategic
performance over time.

Dashboard

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 MANAGEMENT INFORMATION SYSTEM MBA SEM-I

 A dashboard is a reporting tool that provides a real-time or near-real-time

overview of current performance. It is used for monitoring and managing
operations.
 Dashboards are focused on short-term performance and day-to-day
operations.
 Displays key performance indicators (KPIs) and metrics, often in real-time,
across various aspects of the business. These can be financial data, sales
figures, web analytics, project statuses, etc.
 Dashboards are typically visual, with charts, graphs, gauges, and other
graphical elements that provide a quick snapshot of performance. They are
often customizable to show the most relevant data for the user.
 Used by a broad range of roles within an organization, from executives to
operational managers to front-line employees. They are useful for quick
decision-making and identifying issues that require immediate attention.
 Dashboards provide continuous, up-to-date information and are often
reviewed daily or weekly to manage ongoing operations.

Steps for strategic design of MIS.

1) Planning and Requirement Analysis
 The project planning part involves the following steps −
 Reviewing various project requests
 Prioritizing the project requests
 Allocating the resources
 Identifying the project development team

The techniques used in information system planning are −

 Critical Success Factor

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 MANAGEMENT INFORMATION SYSTEM MBA SEM-I

 Business System Planning

 End/Mean Analysis

The requirement analysis part involves understanding the goals, processes and
the constraints of the system for which the information system is being
designed.

It is basically an iterative process involving systematic investigation of the

processes and requirements. The analyst creates a blueprint of the entire
system in minute details, using various diagramming techniques like −

Data flow diagrams

Context diagrams

Requirement analysis has the following sub-processes −

 Conducting preliminary investigation

 Performing detailed analysis activities
 Studying current system
 Determining user requirements
 Recommending a solution
2) Defining Requirements

The requirement analysis stage generally completes by creation of a 'Feasibility

Report'. This report contains −

 A preamble
 A goal statement
 A brief description of the present system
 Proposed alternatives in details

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 The feasibility report and the proposed alternatives help in preparing the costs
and benefits study.

Based on the costs and benefits, and considering all problems that may be
encountered due to human, organizational or technological bottlenecks, the
best alternative is chosen by the end-users of the system.

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3) Designing System Architecture

System design specifies how the system will accomplish this objective. System
design consists of both logical design and physical design activity, which
produces 'system specification' satisfying system requirements developed in
the system analysis stage.

In this stage, the following documents are prepared −

Detailed specification

Hardware/software plan

4) Building or Developing the System

The most creative and challenging phase of the system life cycle is system
design, which refers to the technical specifications that will be applied in
implementing the candidate system. It also includes the construction of
programmers and program testing.

5) Coding and testing each module

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 MANAGEMENT INFORMATION SYSTEM MBA SEM-I

The final report prior to implementation phase includes procedural flowcharts,

record layout, report layout and plan for implementing the candidate system.
Information on personnel, money, hardware, facility and their estimated cost
must also be available. At this point projected cost must be close to actual cost
of implementation.

6) Testing the System

System testing requires a test plan that consists of several key activities and
steps for programs, strings, system, and user acceptance testing. The system
performance criteria deals with turnaround time, backup, file protection and
the human factors.

Testing process focuses on both −

The internal logic of the system/software, ensuring that all statements have
been tested;

The external functions, by conducting tests to find errors and ensuring that the
defined input will actually produce the required results.

In some cases, a 'parallel run' of the new system is performed, where both the
current and the proposed system are run in parallel for a specified time period
and the current system is used to validate the proposed system.

7) Deployment of the System

At this stage, system is put into production to be used by the end users.
Sometime, we put system into a Beta stage where users' feedback is received

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and based on the feedback, the system is corrected or improved before a final
release or official release of the system.

8) System Evaluation and Maintenance

Maintenance is necessary to eliminate the errors in the working system during

its working life and to tune the system to any variation in its working
environment. Often small system deficiencies are found, as system is brought
into operation and changes are made to remove them. System planner must
always plan for resources availability to carry on these maintenance functions.

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