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Business Trends

• Changing business environment– Specialization– Management by Methodology and Franchises– Mergers– Decentralization and Small Business– Temporary Workers– Internationalization– Service-Oriented Business– Re-engineering

• Need for faster responses and flexibility

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Management information systemManagement is usually defined as planning, organizing, directing, and controlling the business operation.

This definition, defines what a manager does, but it is probably more appropriate to define what management is rather than what management does.

Management is the process of allocating an organization's inputs, including human and economic resources, by planning, organizing, directing, and controlling for the purpose of producing goods or services desired by customers so that organizational objectives are accomplished.

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Why is MIS Important?

• MIS affects all areas of business– Manufacturing– Accounting & Finance– Human resources– Marketing– Top management

• Performance evaluations—expectations

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Why is MIS Important?

•If management has knowledge of the planning, organizing, directing, and controlling of the business, its decisions can be made on the basis of facts, and decisions are more accurate and timely as a result.

•Management information systems are those systems that allow managers to make decisions for the successful operation of businesses.

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What is MIS ?•Management information systems consist of computer resources, people, and procedures used in the modern business enterprise.

•The term MIS stands for Management Information Systems.

• MIS also refers to the organization that develops and maintains most or all of the computer systems in the enterprise so that managers can make decisions.

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The goal of the MIS organization is to deliver information systems to the various levels of corporate managers. MIS professionals create and support the computer system throughout the company. Trained and educated to work with corporate computer systems, these professionals are responsible in some way for nearly all of the computers, from the largest mainframe to the desktop and portable PCs.

Management information systems do not have to be computerized, but with today's large, multinational corporations, computerization is a must for a business to be successful.

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However, management information systems began with simple manual systems such as customer databases on index cards.

The need for an effective management information system is of primary concern to the business organization. Managers use MIS operations for all phases of management, including planning, organizing, directing, and controlling.

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MIS Organization

Business Operations

TacticalManagement

StrategicMgt.

EIS

ESDSS

Tran

sacti

on

Proc

ess C

ontro

l

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Classification of ISInformation Systems

Operations Support System Management Support

System

Transaction processing systemsProcess control

systems

Office automation systems

Management information systems

Decision support systems

Executive information systems

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1. Operations support systems process data generated by business operations

Major categories are:

i) Transaction processing systems

ii) Process control systems

iii) Office automation systems

2. Management Support Systems provide information and support needed for effective decision making by managers

Major categories are

i) Management Information System

ii) Decision Support Systems

iii) Executive Information System

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1. Operations Support System

i) Transaction processing systems• Process business exchanges• Maintain records about the exchanges• Handle routine, yet critical, tasks• Perform simple calculations

ii) Process control systems monitor and control industrial processes.

iii) Office automation systems automate office procedures and enhance office communications and productivity.

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2. Management support systems provide information and support needed for effective decision making by managers

Major categories are:

i) Management information systems

Routine information for routine decisions Operational efficiency Use transaction data as main input Databases integrate MIS in different functional areas

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ii) Decision Support System• Interactive support for non-routine decisions or problems• End-users are more involved in creating a DSS than an MIS

iii) Executive information systemsprovide critical information tailored to the information needs of executives

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Types of Information Systems

Organizations and individuals use different types of systems for different purposes. Here are some of the main types of information systems and their uses.Components of information systems: people, equipment, procedures, data.The main ones you need to know are TPS, MIS & DSS, and EIS.Transaction processing system (TPS):A TPS collects and stores information about transactions, and controls some aspects of transactions. A transaction is an event of interest to the organisation. e.g. a sale at a store.

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A TPS is a basic business system. It:is often tied to other systems such as the inventory system which tracks stock supplies and triggers reordering when stocks get low;serves the most elementary day-to-day activities of an organization;supports the operational level of the business;supplies data for higher-level management decisions (e.g. MIS, EIS);is often critical to survival of the organization;mostly for predefined, structured tasks;can have strategic consequences (e.g. airline reservation system);

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usually has high volumes of input and output;provides data which is summarized into information by systems used by higher levels of management;need to be fault-tolerant.On-line transaction processing: A transaction processing mode in which transactions entered on-line are immediately processed by the CPU.Sub-species of TPS:1.Manufacturing and production systems: Systems that supply data to operate, monitor and control the production process. e.g. purchasing, receiving, shipping, process control, robotics, inventory systems, scheduling, engineering, operations, quality control, resource management etc.

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e.g. A system in a factory that:gets information from measuring samples of productsdoes statistical analysis of samplesshows when operators should take corrective action2.Sales and Marketing systems: Systems that support the sales and marketing function by facilitating the movement of goods and services from producers to customers.

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Examples:sales support - keep customer records, follow-uptelemarketing - use phone for sellingorder processing - process orders, produce invoices, supply data for sales analysis and inventory controlpoint-of-sale - capture sales data at cash register often by scannercustomer credit authorisation - advise on credit to be allowed to customer. Example:A Store's Sales System would:automatically record and total purchase transactions and prints out a packing listimprove customer servicemaintain customer data

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Typical Applications of TPS

TYPE OF TPS SYSTEMSales/ Manufacturing! Finance/ Human Other typesmarketing production accounting resources (e.g., university)systems systems systems systems

Major functions Sales management Scheduling Budgeting Personnel recard Admissionsof system Market research Purchasing General ledger Benefits Grade records

Promotion Shipping/receiving Billing Cornpensation Course recordsPricing Engineering Cost accounting Labor relations AlumniNew products Operations Training

Major Sales order Materials resource General ledger Payroll Registration systemapplication information system planning systemssystems Market research Purchase order Accounts Employee records Student transcript

system control systems receivable/payable systemPricing system Engineering Budgeting Benefit systems Curriculum class

systems control systemsQuality control Funds managementCareer path Alumni benefactorsystems systems systems system

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Finance & Accounting Systems: Systems that maintain records concerning the flow of funds in the firm and produce financial statements, such as balance sheets and income statements.

e.g. for Budgeting; General Ledger; Billing: Cost Accounting, Accounts Receivable / Payable; Funds Management Systems, Payroll. They were among the earliest systems to be computerized.Examples of financial systems: cash management, loan management, check processing, securities trading.Example: Visa's Credit Card payment system.

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Human Resources System: Systems that deal with recruitment, placement, performance evaluation, compensation, and career development of the firm's employees.Examples: personnel record keeping, applicant tracking, positions, training and skills, benefits.

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Decision support system (DSS):Helps strategic management staff (often senior managers) make decisions by providing information, models, or analysis tools. For support of semi structured and unstructured decisions (structured decisions can be automated). Used for analytical work, rather than general office support.They are flexible, adaptable and quick. The user controls inputs and outputs. They support the decision process and often are sophisticated modeling tools so managers can make simulations and predictions.Their inputs are aggregate data, and they produce projections. An example job for a DSS would be a 5 year operating plan.

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Management information system (MIS) :Condenses and converts TPS data into information for monitoring performance and managing an organisation.Transactions recorded in a TPS are analyzed and reported by an MIS.They have large quantities of input data and they produce summary reports as output. Used by middle managers.

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Management Information Systems(MIS)

Information system at the management level of an organization that serves the functions of planning, controlling, and decision making by providing routine summary and exception reports.

• TYPE: Management-level• INPUTS: high volume data• PROCESSING: simple models • OUTPUTS: summary reports• USERS: middle managers• DECISION-MAKING: structured to semi-structuredEXAMPLE: annual budgeting

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Characteristics of Management information Systems

1. MIS support structured decisions at the operational and management control levels. However, they are also useful for planning purposes of senior management staff.2. MIS are generally reporting and control oriented. They are designed to report on existing operations and therefore to help provide day-to-day control of operations.3. MIS rely an existing corporate data-and data flows.4. MIS have little analytical capability.5. MIS generally aid in decision making using past and present data.6. MIS are relatively inflexible.7. MIS have an internal rather than an external orientation.

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Executive information system (EIS):Also known as an Executive Support System (ESS), it provides executives information in a readily accessible, interactive format. They are a form of MIS intended for top-level executive use.

• An EIS/ESS usually allows summary over the entire organizations and also allows drilling down to specific levels of detail.

•They also use data produced by the ground-level TPS so the executives can gain an overview of the entire organization.Used by top level (strategic) management.

•They are designed to the individual. They let the CEO of an organization tie in to all levels of the organization.

•They are very expensive to run and require extensive staff support to operate.

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Office Automation System (OAS) :

•OAS provides individuals effective ways to process personal and organizational data, perform calculations, and create documents. e.g. word processing, spreadsheets, file managers, personal calendars, presentation packages.

•They are used for increasing personal productivity and reducing "paper warfare". OAS software tools are often integrated (e.g. Word processor can import a graph from a spreadsheet) and designed for easy operation.

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•Office Automation:•Classification of Office Activities•Trends in Technology•Aim of using IT Tools in Offices•Concept of Office Automation •Present Scenario •Need for re-engineering of processes •Concept of Work flow•Groupware Technology Tools: An Overview

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Classification of Office Activities

•Documents preparation•Data Management ( Structured / Unstructured)•Scheduling / Planning of activities•Presentation •Dissemination of Information•Communication / Correspondence

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Trends in Technology

• Hardware– Reduced Size, Less cost, More capabilities

• Software– More capable, User friendly, More towards real

world environment• Networking

– Faster Communication Media, Concept for LAN/WAN/MAN / Web Technology

… cont.

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•Linking of conventional tools

Telephone, Fax, Photocopier can be easily linked with Information Technology tools ( Computers & Communication) to automate office functions.

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Objective of using IT Tools in Office •Improvement in quality of output•Improved Productivity / efficiency •Optimal Utilization of Resources •Reduction in time taken in execution of activities•Better Information sharing / Transparency •Better way of delivery of information to user at a place convenient to him / her•Reduction in the dependency on human beings•Look for simplification of procedures•Better customer support etc…….

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•Mid-LIFE CRISIS•Lack of understanding of concept of Office Automation•Lack of knowledge about Technology•Lack of Coordination•Resistance to Change•Lack of willingness to adopt new tools

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•How to deal with crisis?We should understand that :•Information management is a business process, as today’s user expects quality product and satisfaction

•Organizations need to change way of working to take full advantage of technology

•Work culture needs to change to shift focus on process instead of a task

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•What is Office Automation ( Today’s concept)?

•Adoption of IT Tools for enhancing productivity and reduction of manual labour

•It is associated with paperless office

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•Technology Vs. Business•Question arises • Should Technology change business or Business needs should change technology?

•By providing IT tools at desk tops, should we not redistribute responsibilities by providing more powers of decision making down the line?

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Objective of Office Automation ( Redefined)

•To improve customer relation by bringing transparency in systems

•To achieve better management control

•To simplify operations and minimize computational errors

•To improve quality of output in terms of presentation and reduction in processing time

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WorkgroupA workgroup is a group of people working towards the same goal.

Concept of Workflow in Office Automation• Information management / Business processes can be divided into sets of inter related tasks, which need to be done in prescribed order incorporating information from various resources.

• So one has to look for work flow automation using IT tools

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•The members of the workgroup may be locally placed, e.g., people working in a section/ department or they may be placed at different far off locations.•A Workflow is anything that makes knowledge or information sharing / dissemination more efficiently ands it also helps in coordination of various activities to achieve a predefined goal .

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WorkFlow

Data Flow

Input from Data Bank

Input from some other

source

Output

Intermediary Information

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The 3 C’s in a Work flow

•Collaboration • Sharing the information

•Communication• Exchange of ideas• Consultancy

•Coordination• Monitoring the workflow• Ensuring the Quality of Output

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Technology Drivers

• Hardware Devices– Communication Devices– Processors

• New Groupware S/W • Web Technology

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OAS SubspeciesCommunication systems: helps people work together by sharing information in many different formsTeleconferencing (including audio conferencing, computer conferencing, videoconferencing), electronic mail, voice mail, fax.

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Groupware system: helps teams work together by providing access to team data, structuring communication, and making it easier to schedule meetings.• For sharing information, controlling work flows, communication/integration of work.

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KNOWLEDGE WORK SYSTEMS (KWS): are used by technical staff.• KWS use modeling functions to convert design specifications into graphical designs. •They may include computer-aided design/manufacture (CAD/CAM).

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Expert SystemsExpert system (noun): "a computer system or program that uses artificial intelligence techniques to solve problems that ordinarily require a knowledgeable human. The method used to construct such systems, knowledge engineering, extracts a set of rules and data from an expert or experts through extensive questioning. This material is then organized in a format suitable for representation in a computer and a set of tools for inquiry, manipulation, and response is applied.

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While such systems do not often replace the human experts, they can serve as useful adjuncts or assistants. Among some of the successful expert systems developed are INTERNIST, a medical diagnosis tool that contains nearly 100,000 relationships between symptoms and diseases, and PROSPECTOR, an aid to geologists in interpreting mineral data.”

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Expert systems imitate human experts in many different fields of expertise. Such systems contain rules (such as decision tables) that help a human answer expert questions.•Expert systems are built with decision-making rules, and they can ask humans a series of questions to narrow down the correct answer. •One early and influential expert system was MYCIN, a disease diagnosis system.

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Advantages of expert systems:•The computer can store far more information than a human.

•The computer does not 'forget', make silly mistakes or get drunk when it is most needed.

•Data can be kept up-to-date.

•The expert system is always available 24 hours a day and will never 'retire'.

•The system can be used at a distance over a network.

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Expert systems are computer application programs that take the knowledge of one or more human experts in a field and computerize it so that it is readily available for use. The human experts do not need to be physically present to accomplish a specialized project or task. Expert systems are only designed to be “expert” in a very narrow and specific task or subject field. They contain the acquired expert knowledge and try to imitate the expert’s evaluation processes to offer a conclusion. An advantage of an expert system is that it may include the knowledge of many experts in one specific field.

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Expert systems usually contain two components:

1.A knowledge base and

2. An inference engine program, enabling it to suggest conclusions.

•The knowledge base is programmed in an IF ... THEN logical rules structure. •Such a structure is a series of IF conditions that, if met, THEN a specific result may be concluded.

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•The expert system rules out options with each question until there remains an option with high probability. The rules and questions, of course, are provided by expert humans in the first place.

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Decision Support Systems

• Decision support systems (DSS)– Offer potential to assist in solving both semi-

structured and unstructured problems

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Decision Making as a Component of Problem Solving

Intelligence

Design

Choice

Implementation

Monitoring

Problemsolving

Decisionmaking

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Solution Types

• Optimization model– Finding the best solution

• Satisficing model– Finding a good -- but not necessarily the best --

solution to a problem• Heuristics

– Commonly accepted guidelines or procedures that usually find a good solution

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Problem Solving Factors

• Multiple decision objectives• Increased alternatives• Increased competition• The need for creativity• Social and political actions• International aspects• Technology• Time compression

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Characteristics of a DSS

• Handles large amounts of data from different sources

• Provides report and presentation flexibility• Offers both textual and graphical

orientation

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Characteristics of a DSS

• Supports drill down analysis• Performs complex, sophisticated analysis

and comparisons using advanced software packages

• Supports optimization, satisficing, and heuristic approaches

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Characteristics of a DSS

• Performs different types of analyses– “What-if” analysis

• Makes hypothetical changes to problem and observes impact on the results

– Simulation• Duplicates features of a real system

– Goal-seeking analysis• Determines problem data required for a given result

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Capabilities of a DSS

• Supports– Problem solving phases– Different decision frequencies

Frequencylow high

Merge withanother

company?

How many widgets

should I order?

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• Highly structured problems– Straightforward problems, requiring known

facts and relationships.• Semi-structured or unstructured problems

– Complex problems wherein relationships among data are not always clear, the data may be in a variety of formats, and are often difficult to manipulate or obtain

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Decision Making Levels

Operational-levelmanagers involved withdaily decisions

Strategic-level managersinvolved with long-term

decisions

LowHigh

Decision Frequency

Strategic

Tactical

Operational

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Integration ofTPS, MIS, and DSS

• In many organizations they are integrated through a common database

• Separation of DSS transactions in the database from TPS and MIS transactions may be important for performance reasons

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Web-Based Decision Support Systems

• Web-based decision support systems– Decision support system software provides

business intelligence through web browser clients that access databases either through the Internet or a corporate intranet

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Components of a DSS

• Model management software (MMS)– Coordinates the use of models in the DSS

• Model base– Provides decision makers with access to a

variety of models• Dialogue manager

– Allows decision makers to easily access and manipulate the DSS

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Database Model base

External databaseaccess

Access to theinternet, networks,and other computersystems

Dialogue manager

DBMS MMS

Externaldatabases

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Model Base

• Model Base– Provides decision makers with

access to a variety of models and assists them in decision making

• Models– Financial models– Statistical analysis models– Graphical models– Project management models

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Advantages and Disadvantagesof Modeling

– Advantages• Less expensive than custom approaches or real systems.• Faster to construct than real systems• Less risky than real systems• Provides learning experience (trial and error)• Future projections are possible• Can test assumptions

– Disadvantages• Assumptions about reality may be incorrect• Accuracy of predications often unreliable• Requires abstract thinking

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Group Decision Support System

• Group Decision Support System (GDSS)– Contains most of the elements of DSS plus

software to provide effective support in group decision-making settings

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Databases

Model base GDSS processor GDSS software

Dialoguemanager

External databaseaccess

Users

Access to the internetand corporate intranet,

networks, and othercomputer system

Externaldatabases

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Characteristics of a GDSS

• Special design• Ease of use• Flexibility• Decision-making support

– Delphi approach (decision makers are geographically dispersed)

– Brainstorming– Group consensus– Nominal group technique

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• Anonymous input• Reduction of negative group behaviour• Parallel communication• Automated record keeping• Cost, control, complexity factors

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Components of a GDSS and GDSS Software

• Database• Model base• Dialogue manager• Communication capability• Special software (also called GroupWare)• E.g., Lotus Notes

– people located around the world work on the same project, documents, and files, efficiently and at the same time

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GDSS Alternatives

Local areadecision network

Wide areadecision network

Decisionroom Teleconferencing

Location of group members

close distant

high

low

Dec

isio

n fr

eque

ncy

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Decision Room

• Decision Room– For decision makers located in the same geographic

area or building– Use of computing devices, special software,

networking capabilities, display equipment, and a session leader

– Collect, coordinate, and feed back organized information to help a group make a decision

– Combines face-to-face verbal interaction with technology-aided formalization

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Wide Area Decision Network

• Characteristics– Location of group members is distant– Decision frequency is high– Virtual workgroups

• Groups of workers located around the world working on common problems via a GDSS

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Definition of an EIS

• A tool for the senior manager• Direct on-line access to relevant

information• Timely and accurate• For individuals with limited time, limited

keyboarding skills, and little direct experience with computers

• An EIS is easy to navigate

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Executive Support Systems (ESS)

Information system at the strategic level of an organization that address unstructured decision making through advanced graphics and communications. TYPE: Strategic level• INPUTS: aggregate data; internal and external• PROCESSING: interactive• OUTPUTS: projections• USERS: senior managers• DECISION-MAKING: highly unstructured

EXAMPLE: 5 year operating plan

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Executive Support System

• Characteristics– A specialized DSS that

includes all the hardware, software, data, procedures, and people used to assist senior-level executives within the organization

Board of directors

President

Function areavice presidents

Function areamanagers

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•An EIS is a special type of DSS designed to support decision making at the top level of an organization.•An EIS may help a CEO to get an accurate picture of overall operations, and a summary of what competitors are doing.•These systems are generally easy to operate and present information in ways easy to quickly absorb (graphs, charts, etc.).

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Characteristics of ESSs

• Tailored to individual executives• Easy to use• Drill down capabilities• Support the need for external data• Help with situations with high degree of

uncertainty• Futures orientation (predictions, forecasting)• Linked with value-added business processes

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Capabilities of an ESS

• Support for– defining overall vision– strategic planning– strategic organizing and staffing– strategic control– crisis management

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•It is not a substitute for other computer-based systems. The EIS actually feeds off these systems.•It does not turn the executive suite into a haven for computer “techies”.•It should be viewed by senior management as a trusted assistant who can be called on when and where necessary.

What an EIS is NOT

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Purpose of an EIS

• Gives managers access to the data• Promotes managerial learning• Provides timely information• Looking at the data leads to questions• Identifies trends• Measures performance

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Types of EISs

• Corporate Management – E.g., Management functions, human resources,

financial data, correspondence, performance measures, etc. (whatever is interesting to executives)

• Technical Information Dissemination– E.g., Energy, environment, aerospace, weather, etc.

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Types of Executive Information

•Accounting systems that relate revenue to specific operational areas are more important than traditional accounting systems.

•Information about markets, customers and suppliers is valuable in determining strategy.

•The information required is often spread across several computer systems and located throughout the organization.

•The information used is often short-term and volatile.

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Executive information system Components

•Early EIS products were developed for use on high-powered computers, but current products target the client/server platform.

•These more-flexible platforms can adapt to changes in the organization and in technology.

•Use of real-time data leads to faster, more informed decisions.

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Hardware Components•An EIS requires no specific or unique hardware.

•A key issue is to be sure that the EIS components optimize and conform to the organization’s computing resources.

•The system must be configured so that the resources are well-matched to the executives using them.

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Software Components•In contrast to hardware, software is usually highly specialized to the problem domain.

•This specialization is often achieved by using off-the-shelf components for the EIS backbone, and customized modules to meet specific needs.

•Lotus Notes is a good example. It can be used alone, or can accommodate third-party plug-in modules.

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Current EIS Technologies A three-tiered functional categorization:

• Category 1 products include a full set of applications from one vendor

• Category 2 products are implemented on top of DSS products developed by the same vendor

• Category 3 products bind together any number of products owned by the firm.

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Making the EIS Work•Building an EIS is much like building any other type of modern information system.

•A structured development approach should be followed from design to implementation.

•Yet, EIS projects tend to be unique and require working in the realm of executives.

•Building an EIS may turn out to be the most formidable task a developer ever faces.

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Advantages of EIS•Easy for upper-level executives to use, extensive computer experience is not required in operations

•Provides timely delivery of company summary information

•Information that is provided is better understood

•Filters data for management

•Improves to tracking information

•Offers efficiency to decision makers

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Disadvantages of EIS

•System dependent

•Limited functionality, by design

•Information overload for some managers

•Benefits hard to quantify

•High implementation costs

•System may become slow, large, and hard to manage

•Need good internal processes for data management

•May lead to less reliable and less secure data

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•Some EIS Limitations and Pitfalls to Avoid •Technological limitations: the EIS needs to be seamlessly integrated into the company’s current IT architecture, so it is a formidable challenge to the designer.

•Organizational limitations: the organizational structure might not be right.

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•Organizational Limitations•Agendas and time biases: the EIS represents only part of executive’s total agenda, and it may become easy to be overly reliant on it.

•Managerial synchronization: heavy reliance on the timely, ad-hoc, EIS reports may disrupt stable, well-established reporting cycles.

•Destabilization: fast EIS response may cause the executive to react too swiftly, leading to less stability in the organization.

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•Failure is not an Acceptable Alternative•Some factors that contribute to EIS failure:•Lack of management support•Political problems•Developer failures•Technology failures•Costs•Time

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•The Future of Executive Decision Making and the EIS

Several conditions will merge to transform the technology.

Some are easy to predict, some not. Two that we can

foresee are:

• Increased comfort with computing technology in the

executive suite will make innovations more readily

accepted.

• Broadening of executive responsibilities will broaden

the demand for information.

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•The EIS of Tomorrow•The intelligent EIS: advances in AI technology will be deployed in the EIS •The multimedia EIS: multimedia databases will allow future integration of text, voice and image•The informed EIS: future EISs will make wider use of data external to the company•The connected EIS: high-bandwidth communication allows greater interconnectivity

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Structure of an EIS

• Presentation Graphics• Tutorials• Web Pages• Internet Portals• Intranet• Database Queries and Reporting