Information System for

Managers
S E MESTER I
COURS E CODE : S L I T 5 0 1
CR E DI T: 3
Data and Information
Data are stream of raw facts representing
Information is data that have been
events occurring in organizations or physical
environment before they have been
shaped into a form that is meaningful
organized or arranged into a form and useful to human beings
understandable by people

331 Brite Dish Soap 200 Item No Description Units Sold

INFORMATION
933 Nescafe 143 331 Brite Dish Soap 200
SYSTEM 933 Nescafe 143
Information System
• What is an Information ?
• What is an Information System ?
• Where these Information Systems are
used ?
• How do you see the Information System
being used in an organization ? Any
Example…
What is an Information System (IS)?
 An Information system is a set of interrelated
components that collect, manipulate, store data and Customers
distribute information to support decision making and
control in an organization. Products and
Services
 It support decision making, coordination and control
and help managers and workers analyze problems, Business processes
visualize complex subjects and create new products.
 It contain information about people, places and Participants Information Technology
things within the organization or in environment
surrounding it. Integrated view of IS
Dimensions of IS
Information system are more than computers. Using IS
effectively requires an understanding of the organization,
management and information technology shaping the system.
Information system combines the organization, management
and technology to achieve a goal.
Organizations
 People - Organizations have structure that is composed of
different levels and specialties.
 Business functions like sales and marketing, manufacturing
Senior
and production, finance and accounting and human resources Management
 Business processes are logically related tasks and behaviors Makes long term strategic
decisions & ensure financial
for accomplishing work. E.g. Developing a new product, performance
fulfilling an order or hiring a new employee.
 Culture is fundamental set of assumption, values and ways of Middle Management

doing things, that have been accepted by most of its Carries out program and plans of
members. senior management

Operational Management
Production and Service Workers
Data workers
Responsible for monitoring daily activities of business
Management
 Management role is to make sense of out many situations faced by organizations, make decisions and
formulate action plan to solve organizational problems.
 They perceive business challenges in the environment, set the organizational strategy for responding to
those challenges.
 Allocate the human and financial resources to coordinate the work and achieve success.
 Create new products and services.
 Information technology play a powerful role in helping managers design and deliver new products and
services and redirecting and redesigning their organizations.
 Technology
Information Technology is one of the many tools managers use to run an organization.
These include:
 Computer hardware: physical equipment used for input, processing and output activities in the information
system. It also consists of various types of devices, storages devices, telecommunication devices that links the
computer together.
Computer Software: consists of detailed, preprogrammed instructions that control and coordinate the computer
hardware components in the information system.
Data Management Technology: consists of software managing the organizational data on physical storage
devices.
Networking and telecommunication technology: consists of both physical devices and software, links the various
pieces of hardware and transfers data from one physical location to other. It is used for sharing voice, data,
images, sound and video.
Interdependence between Organizations and
Information Systems
• The future plans of the business depends
on the capability of the systems.

• The market share of the company,

development of new products and
employee productivity are more and more
dependent on the kind and quality of
information systems in the organization.

• Therefore, business firms invest heavily in

information systems to achieve the
business objectives.
Flipkart Big Billion Sale 2014: Rs. 600 cr sales
• The sale kicked off before the announced time – stocks were out even when people
logged in at 8am.

• Discounts offered on newspaper ads proved misleading.

• Servers crashed, HTTP 404 abounded.

• Worse, prices fluctuated between MRP, discounted price, and jacked up pre-discount
rates.

• “Out of stock” and “Sold out” were the highlights of the day.

• Confirmed orders got cancelled in hours.

Business Objectives of IS
Information systems are essential for conducting day-to-day business and thus achieving strategic business
objectives:
Operational Excellence-
Businesses continuously seek to improve the efficiency of their operations in order to achieve higher
profitability.
Information systems and technologies are some of the most important tools available to managers for
achieving higher levels of efficiency and productivity in business operations, especially when coupled with
changes in business practices and management behavior.
•New Products, Services, and Business Models
Information systems and technologies are a major enabling tool for firms to create new products
and services, as well as entirely new business models.

A business model describes how a company produces, delivers, and sells a product or service to
create wealth. As successful as Apple Inc, NetFlix, and Wal-Mart were in their traditional brick-
and-mortar existence, they have all introduced new products, services, and business models
that have made them both competitive and profitable.
•Customer and Supplier Intimacy
When a business really knows its customers, and serves them well, the way they want to be
served, the customers generally respond by returning and purchasing more. This raises revenues
and profits. Likewise with suppliers:

the more a business engages its suppliers, the better the suppliers can provide vital inputs. Wal-
Mart is an excellent example of how the use of information systems and technologies are
extensively used to better serve their suppliers and retail customers.

The RealLink system that they use digitally links their suppliers to every one of Wal-Mart’s 5,289
stores worldwide. Suppliers are able to ensure the continuous flow of products to the stores in
order to satisfy customer demands.
•Improved Decision Making
Information systems and technologies have made it possible for managers to use real-time data
from the marketplace when making decisions.

Previously, managers did not have access to accurate and current data and as such relied on
forecasts, best guesses, and luck. The inability to make informed decision resulted in raising
costs and lost customers.
•Competitive Advantage
Doing things better than your competitors, charging less for superior products, and responding
to customers and suppliers in real time all add up to higher sales and higher profits that your
competitors cannot match.

Dell Computers and Wal-Mart are prime examples of how these companies used information
systems and technologies to separate themselves from their competition. Dell remains the most
efficient producer of PCs in the world. Wal-Mart is the most efficient retail store in the industry.
• Survival
Firms also invest in information systems and technologies because they are necessities of doing
business. Information system is not a luxury. In most businesses, information systems and
technology is the core to survival. Citibank was the first banking firm to introduce ATMs.

In doing so, they had a major competitive advantage over their competitors. In order to remain
and survive in the retail banking industry, other banks had no choice but to provide ATM services
to banking customers.
Activities involved in IS
Three main activities in an IS produce the information that is required by an organization:

 Three basic activities- Input, Processing and

Output – produce the information
organization need.

 Feedback is output returned to appropriate

people or activities in the organization to
evaluate and refine input.

 Environment actors, such as customers,

suppliers, competitors, stockholders and
regulatory agencies, interact with the
organization and its IS
Business processes and Information System?
Business process refers to manner in which work is Functional Area Business Process
organized, coordinated and focused to produce a
valuable products or services. Manufacturing and Production • Assembling the product
• Quality Check
• Producing bills of materials
The performance of the business firm depends on
design and coordination of business processes. Sales and Marketing • Identifying the customers
• Making customer aware of
They can be source of competitive strength if they the product
• Selling the product
enable the company to innovate or to execute better
than their rivals. But they can be liabilities if they are Finance and Accounting • Paying creditors
• Creating financial statements
based on outdated ways of working that impede • Managing accounts
organizational responsiveness and efficiency.
Human Resources • Hiring Employees
Every business can be seen as collection of business • Evaluating employees’ job
performance
processes. These processes might be a part of larger • Enrolling employees in benefit
processes or tied to a specific functional areas. plans
The Order Fulfillment Process
What are the
Generate
Sales Submit Order Functional Areas ?
Order

What are the Business

Processes ?

Generate
Accounting Check Credit Approve credit
Invoice

Manufacturing Assemble
Ship Product
& Production Product
 Role of IS in Business
Three fundamental roles are:
• Support of Business Processes and Operations – The consumer encounters
the information system that supports business processes and operations at
the front end. E.g. retail stores use computer based IS to store their
employee records, customer purchases etc.
• Support of Business Decision Making – IS also helps their store managers
and other business professionals make better decision. For e.g. what all
merchandise needs to be added and what needs to be discontinued. They
also helps to look for the ways to gain an advantage over other retailers.
• Support of strategies for competitive advantage – IS system helps in gaining
strategic advantage over competitors. For e.g. store manager might make a
decision to install touch screen kiosks in the store for online shopping of
items not found in the store.
Ups competes globally with Information
Technology
Organizational Management Technology
• Procedure for • Monitor service • Handheld
tracking packages levels and costs computers, bar –
and managing code scanners,
inventory and networks, desktop
provide computers
information
Intranet, Extranet & Internet
INTERNET INTRANET EXTRANET

It is a Global system of interconnected It is a Private network specific to an It is a Private network that uses public network
computer network organization to share information with suppliers and vendors

Not regulated by any authority It is regulated by an authority It is regulated by multiple organization

Thus the content in the network is The content in the network is accessible to
Thus the content in the network is
accessible only to members of the members of organization & external members
accessible to everyone connected.
organization. with access to network

It is largest in terms of number of It is small network with minimal number The number of devices connected is comparable
connected devices. of connected devices. with Intranet.

It is owned by no one. It is owned by single organization. It is owned by single/multiple organization.

It is a means of sharing information It is a means of sharing sensitive It is a means of sharing information between
throughout the world. information throughout organization. members and external members.

Security is dependent of the user of the Security is enforced via a firewall that separates
Security is enforced via a firewall.
device connected to network. internet & extranet.
Case 1
Case Study: Ups competes globally with
Information Technology
CASE STUDY QUESTIONS
1. What are the inputs, processing, and outputs of UPS's package tracking system?
2. What technologies are used by UPS? How are these technologies related to UPS's business
strategy?
3. What strategic business objectives do UPS's information systems address?
4. What would happen if UPS's information systems were not available?
Case Summary
•UPS has created its own information system with Delivery Information Acquisition
Device (DIAD) and Web-based Post-Sales Order Management System (OMS)
globally by using developed information technology. These special systems help the
company to reduce the cost of transaction greatly.
• By building its efficient order information management system, UPS can make
optimal routing strategy, place orders online, and track shipments to meet customer
needs. These information systems guarantee the possibility of two-day delivery
nationwide as well as lower warehousing and inventory costs for the company.
Classification of Information System
 Transaction Processing System (TPS)
Transaction processing systems are used to •The decisions made by operational managers
record day to day business transactions of the are routine and highly structured.
organization. They are used by users at the •The information produced from the transaction
operational management level. The main processing system is very detailed.
objective of a transaction processing system is to
answer routine questions such as;
Examples of transaction processing systems
•How printers were sold today? include;
•How much inventory do we have at hand?
Point of Sale Systems – records daily sales
•What is the outstanding due for John Doe? Payroll systems – processing employees salary,
By recording the day to day business loans management, etc.
transactions, TPS system provides answers to the Stock Control systems – keeping track of
above questions in a timely manner. inventory levels
Airline booking systems – flights booking
management
Transaction Processing System (TPS)
Inputs Processing Outputs TPS are the inputs to the organizational
Transactions Validation Lists database and also major producers of
information for other systems.
Events Sorting Detailed Reports
Listing Action Reports TPSs have to efficiently handle high volume,
Merging Summary Reports avoid errors, handle large variations in data
volume and maintain privacy and security.
Updating
Calculation
Examples of TPS

• Order Processing system

• Reservation systems
How TPS Manage Data?
Events occurring due
to a single transaction
at a retail store….
A Payroll TPS
• The payroll TPS keeps track of the
money paid to the employee
• The employee time card with
employee details like employee name,
social security no. and the number of
hours worked per week represents a
single transaction for this system
• This transaction is saved into the
system
• The data in the system is combined in
different ways to create reports of
interest for management and also to
generate paychecks for the
employees.
 Management Information System (MIS)
• Management Information Systems are management- For example, input from a point of sale system can be used to analyze
level systems that are used by middle managers to help trends of products that are performing well and those that are not
ensure the smooth running of the organization in the performing well. This information can be used to make future inventory
short to medium term. The highly structured orders i.e. increasing orders for well-performing products and reduce
information provided by these systems allows managers
to evaluate an organization's performance by comparing the orders of products that are not performing well.
current with previous outputs. Examples of management information systems include;

• MIS serve managers interested in weekly, monthly and Sales management systems – they get input from the point of sale
yearly results thus providing answers to routine system
questions. Budgeting systems – gives an overview of how much money is spent
• The output from a transaction processing system is used within the organization for the short and long terms.
as input to a management information system. Human resource management system – overall welfare of the
employees, staff turnover, etc.
• The MIS system analyzes the input with routine Tactical managers are responsible for the semi-structured decision. MIS
algorithms i.e. aggregate, compare and summarizes the systems provide the information needed to make the structured
results to produced reports that tactical managers use decision and based on the experience of the tactical managers, they
to monitor, control and predict future performance. make judgement calls i.e. predict how much of goods or inventory
should be ordered for the second quarter based on the sales of the first
quarter.
Management Information System (MIS)
Inputs Processing Outputs
Examples of MIS
Internal Sorting Summary Reports • Sales management systems
Transactions Trend Reports • Inventory control systems
Internal Files Merging Detailed Reports • Budgeting systems
• Management Reporting Systems (MRS)
Structures Summarizing Action Reports • Personnel (HRM) systems
data

Role of MIS
• Based on internal information flows
• Support relatively structured decisions
• Inflexible and have little analytical capacity
• Used by lower and middle managerial levels
• Deals with the past and present rather than
the future
MIS Reporting System
Product Description Sales Actual Planned Actual
Code Region Sales Vs.
Planned

4469 Carpet Northeast 4,066,700 4,800,000 0.85

Cleaner South 3,778,112 3,750,000 1.01
Midwest 4,867,001 4,600,000 1.06
West 4,003,440 4,400,000 0.91
Total 16,715,253 17,550,000 0.9575

5674 Northeast 3,676,700 3,900,000 0.94

South 5,608,112 4,700,000 1.19
Midwest 4,711,001 4,200,000 1.12
West 4,563,440 4,900,000 0.93
Total 18,559,253 17,700,000 1.045
Decision Support System (DSS)
• A Decision Support System can be seen as a knowledge based system, used by senior managers, which facilitates the
creation of knowledge and allow its integration into the organization. These systems are often used to analyze existing
structured information and allow managers to project the potential effects of their decisions into the future. Such
systems are usually interactive. They offer access to databases, analytical tools, allow "what if" simulations, and may
support the exchange of information within the organization.
• Decision support systems are used by senior management to make non-routine decisions. Decision support systems
use input from internal systems (transaction processing systems and management information systems) and external
systems.
• The main objective of decision support systems is to provide solutions to problems that are unique and change
frequently. Decision support systems answer questions such as;
What would be the impact of employees' performance if we double the production lot at the factory?
What would happen to our sales if a new competitor entered the market?
Decision support systems use sophisticated mathematical models, and statistical techniques (probability, predictive
modeling, etc.) to provide solutions, and they are very interactive.
For e.g. Bank loan management systems – it is used to verify the credit of the loan applicant and predict the
likelihood of the loan being recovered.
Decision Support System (DSS)
Decision Support System (DSS)
Inputs Processing Outputs
Internal Transactions Modelling Summary Reports Role of DSS
• Support ill- structured or semi-structured
decisions
Internal Files Simulation Forecasts
• Have analytical capacity
External Information Analysis Graphs/Plots • Used by more senior managerial levels
• Are concerned with predicting the future
Summarizing • Are effectiveness oriented

Characteristics and capabilities of DSSs

Answer question such as
Sensitivity Analysis – study of the impact that changes in one • What would be the impact on production
part of the decision making model have on other parts. schedules if we were to double the sales in the
next month
What-if Analysis – It attempts to check the impact of a change
• What would be the impact on ROI if the factory
in the input data on the proposed solution.
schedule were delayed by 2 months.
Goal – Seeking Analysis – It represents a “backward” solution
approach. It attempts to find out the input necessary to
achieve a desired level of output.
 Structure and Components of DSS
The components of DSS:

• Data Management subsystem

•Model Management subsystem
•User Interface
•Knowledge based systems

Working of DSS
• When a user has a business problem, the user obtain
their data from the data warehouses, databases and
other sources.
• These data are entered into the DSS.
• Knowledge can also be gathered from the corporate
knowledge base.
• As more problems are solved, more knowledge is
accumulated in the knowledge base
DSS System
Manufacturing Schedule Estimating DSS
It answers questions such as
• At what rate the product manufacturing should
be done so as the quantity of raw materials are
Sales Report optimized and still able to meet the adhoc
orders along with the predefined orders .
Analytical • How many minimum manufacturing units are
Model run to meet the delivery time lines and still
make enough profits.
Production Cost Report Queries • Given the customer delivery schedule and
offered shipping rate, what delivery methods
to be used so that the cost is minimized for the
company.

Shipping Cost Report

Executive Information System (EIS)
Executive Information Systems help senior management make non routine decisions requiring judgement, evaluation
and insight because there is no agreed-on procedure for arriving at the solution. They help executives and senior
managers analyze the environment in which the organization operates, to identify long-term trends, and to plan
appropriate courses of action.
The information in such systems is often weakly structured and comes from both internal and external sources.
Executive Information System are designed to be operated directly by executives without the need for intermediaries
and easily tailored to the preferences of the individual using them.
Details of EIS

Inputs Processing Outputs Role of EIS

• They are concerned with ease of use
Internal Transactions Modelling Summary Reports
• They help in predicting the future
• They are effectiveness oriented
Internal Files Simulation Forecasts • They are highly flexible
External Information Analysis Graphs/Plots • Support unstructured decisions
• Use internal and external data sources
Summarizing • Used only at the most senior management levels
 EIS System
The EIS might be useful for the CEO of a steel
manufacturing company.
• It would provide on his laptop a minute to minute
Queries view of firm’s financial performance measured by
 Menus inventory, accounts payable, accounts receivable
 Graphics
 Communications etc.
• The information is displayed on the single screen
with the help of graphs and charts of key
performance indicators of the company.
Internal Data External Data
 TPS/ MIS data  News Feed • It can be used to access internal as well as external
 Financial Data  Internet data databases with the help of menus and user friendly
 Modelling/  Market
Analysis performance interfaces.

Queries Queries

 Menus  Menus
 Graphics  Graphics
 Communications  Communications
Summary

Story of Jimmy’s Success

Assignment No. 1