Management Information Systems

Module I
12 hours Information systems - functions of management - levels of management - framework for information systems - systems approach - systems concepts systems and their environment - effects of system approach in information systems design - using systems approach in problem solving - strategic uses of information technology

Management

The process of directing tasks and organising resources to achieve oraganisational goals

The functions of management

Planning Organising Leading Controlling Besides handling the basic managerial functions as above, managers are also responsible for adapting to changes in the internal and external environment
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Management

Planning
Planning is deciding what to do Evaluate organisations s resources & environment Establish a set of organisational goals

Organising
Organising is the art of deciding how to achieve goals Developing the best organisational structure Acquiring and training personnel Establishing communication network

Leading
Directing and motivating employees to achieve the organisations goal Develop incentive programme to motivate employees Organise team building efforts to maintain good morale

Controlling
Enables the manager to determine if the organisations performance is on target Develop and use performance standards to assess employee performance Use information systems to provide feedback on how effectively financial and physical resources are being used to achieve business goals

Levels of management

Levels of management
Top managers Responsible for the performance of all departments and have crossdepartmental responsibility. Establish organizational goals and monitor middle managers. Decide how different departments should interact. Ultimately responsible for the success or failure of an organization Middle managers Supervise first-line managers. Responsible for finding the best way to organize human and other resources to achieve organizational goals First line managers Responsible for daily supervision of the non-managerial employees who perform many of the specific activities necessary to produce goods

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Relative Amount of Time That Managers Spend on the Four Managerial Functions

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A framework for information systems

Each level operational, tactical and strategic planning requires specific information systems

Strategic planning

Special requests

Support for decisions

Tactical

Info needs

Demand reports

Operational Transactions
Payroll Billing AR Scheduling SO entry AP Engg

Scheduled reports

Inventory

Operational Systems
At the operational system level, the primary concern is to collect, validate and record transactional data describing the acquisition or disbursement of corporate resources

Financial data:
Accounts Receivable, Accounts Payable, Payroll, Cash receipts

Sales data
Items ordered, inventory level adjustment, packing list, invoices

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Characteristics of operational-level information systems

Repetitiveness The operational-level systems produce information usually repetitively at periodic intervals, such as daily, weekly or monthly Predictability The information usually does not contain any surprises or unexpected results for managers or other users of the system Emphasis on the past The information usually describes past activities of the organisation Detailed nature The information is very detailed
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Characteristics of operational-level information systems

Internal origin The data usually spring entirely from internal sources Structured form The form of the data used as input and the form of the information produced are usually very structured Great accuracy The accuracy of the data used as input to such systems and of the output produced by such systems is usually very high

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Tactical systems
Provide managers with the information they need to monitor and control operations and to allocate their resources effectively Transactions data are summarised, aggregated and analysed Generates variety of reports Summary reports Exception reports Ad hoc reports

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Characteristics of tactical-level information systems

Periodic nature Produced periodically, also when is needed i.e on an ad hoc basis Unexpected findings A tactical information system may produce unexpected information Comparative nature Comparative in nature rather than descriptive, provides managers variances from accepted standards to help them taking corrective action Summary form Usually the information is in summary form, but not detailed Both internal and external sources The data input to the system may extend beyond sources internal to the organisation
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Strategic planning systems

Designed to provide top managers with information that assists them in making longrange planning decisions for the organisation. The distinction between tactical and strategic information systems is not always clear as both use some of the same data.

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Characteristics of Strategic planning information systems

Ad hoc basis Information may be produced either regularly or periodically Unexpected information May produce unexpected information Predictive nature Usually predictive of future events rather than descriptive of past events Summary form Summary information, as long range planners are not interested in detail External data Large part of the data used for input may be acquired from external sources Unstructured format Input data may contain data that are unstructured in format Subjectivity The data used for input may be highly subjective and their accuracy may be suspect

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Systems
A system is an integrated set of components, or entities, that interact to achieve a particular function or goal. Systems have characteristics such as boundaries, outputs and inputs, methods of converting inputs to outputs and system interfaces. Systems are composed of interrelated and interdependent subsystems.

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System boundaries
Every system has a boundary that defines its scope of activities. The boundary delineates an area of responsibility. When defining a system, the boundary must be established
Examples: A teacher is responsible for the activities of the class - lectures, discussion, testing, grading, preparation of assigned course work etc A sales manager is responsible for managing, motivating and evaluating the performance of a sales organisation

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Systems and subsystems

Systems may consist of numerous subsystems, each of which has elements, interactions and objectives. Subsystems perform specilised tasks related to the overall objectives of the total system.
Examples: An educational system may consist of individual courses that are subsystems In a business various functions are subsystem. Marketing, finance and manufacturing are all subsystems

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Outputs and inputs

The inner working of a system or a subsystem is organised to produce output from input. There is a value addition to the input.
Example: A training programme should produce trained employees with certain skills, knowledge and behaviour from an input of untrained employees In a manufacturing system the raw material inputs shall produce the finished goods output
The output of one subsystem usually become input into the next

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Interface
An interface is a connection at system or subsystem boundaries. An interface serves as a medium to convey the output from one system to the input of another system Examples: Inventory control and purchasing interface each other

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System concepts in business

The systems approach is a way of analysing business problems. This approach views the business organisation as a system of interrelated parts designed to accomplish goals. Each subsystem is both a self contained unit and a part of a larger system. Managers must understand the goals of the total system and design the function of subsystems within the total system to accomplish these goals

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A companys subsystems
Market Research Subsystem

Input
Manufacturing Subsystem

Process

Output
Customer needs

Input
Marketing Subsystem

Process

Output
Finished goods

Input
Service Subsystem

Process

Output
Product in use

Input

Process

Output

The interaction among various functional subsystems is shown in the above figure

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An information system as a system

In a business context, an information system is a subsystem of the business system of an organization. Each business system has goals. Information system provides information on the day-to-day activities of a business such as processing sales or checking credit. Information provides managers with the feedback they need about a system and its operations. Feedback can be used by them for decision making. Using this information, a manager can reallocate resources, redesign jobs, or reorganise procedures to accomplish objectives successfully. An information system contains such elements as hardware, software, personnel, databases and procedure to accomplish its objectives.

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A model of an information system

Hardware

Software

Data

Information

People Stored data Procedures

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Subsystems
XYZ Co 1.0

Order processing 1.1

Cash receipts 1.2

Purchasing 1.3

Accounts payable 1.4

Order entry 1.1.1

Inventory update 1.1.2

Billing 1.1.3

Customer service 1.1.4

Operational systems which are designed to provide information about day-to-day activities, are composed of subsystems that accomplish specialised tasks. If one of these subsystems breaks down, the overall business will feel the effect.

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Outputs and inputs

An inventory update system
Sales listing Sales transactions Inventory update Reorder report

Old inventory master

New inventory master

An information system, like any other system, receives inputs of data and instructions, process the data according to these instructions and produces output

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Hierarchy of subsystems
The subsystems within an information system can be organised into a hierarchy to represent their functions within the overall system. Each subsystem performs a specialised function

System feedback
An information system provides system feedback to a manager about dayto-day activities and deviations from planned activity. The manager can use this information to supervise daily operations

Subsystem interfaces
As with other systems, interfaces exists between the subsystems of an information system. Again the output of one system becomes input into the next.

Internal controls
Good information systems also have internal standards to make sure that data are processed accurately. Data validation before processing, password security procedure to protect against unauthorised access are some of the internal controls
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Effect of system approach on information systems design

Many of the ideas that are part of the systems approach have implications for the design of information systems. Systems have objectives.

The structure of an enterprise

Owner

Marketing

Service

Admin

Product Line 1 Laser printers

Product line 2 Personal Computers

Supplies

Product line specialists

Parts management

Purchasing

Accounting

The entire enterprise has been organised into subsystems. A manager uses informal feedback, computer generated reports ,or both to organise people, procedure and activities to accomplish objectives.

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Using the system approach in problem solving

A owner, CEO or MD of an organisation must constantly analyse problems and reorganise the resources of the system to deal with these problems effectively. The system approach is a valuable method of problem solving that takes into account the goals, environment, and internal workings of the system. The system approach to problem solving involves the following steps:

1. Define the problem 2. Gather data describing the problem 3. Identify alternate solutions 4. Evaluate these alternatives 5. Select and implement the best alternative 6. Follow up to determine whether the solution is working

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Strategic uses of information technology

Porter and Millars concept of the value chain helps explain which business activities can be analysed and transformed through the use of information technology. The value chain divides a companys activities into value activities, the distinct activities it must perform to do business. Value activities consist of primary activities and support activities.
Value activities in the value chain Support activities

Inbound logistics Material handling delivery

Operations Manufacturing parts assembly

Outbound logistics Order processing shipping

Marketing and sales Advertising promotion

Service Service Repair

Primary activities

Strategic uses of information technology

Support activities in the value chain
Support activities include the resources that support the primary activities of the business. Some of the support activities are shown below. They provide the organisation human resources and technologies to deliver primary activities. The firm s organisation, which includes activities such as general management, legal work, and accounting, supports the entire value chain Support activities
Organisation Human resources Technology Purchasing Inbound logistics Material handling delivery Operations Manufacturing parts assembly Outbound logistics Order processing shipping Marketing and sales Advertising promotion

Service Service Repair

Primary activities 36

Strategic uses of information technology

The value System
The value chain is a system of interdependent linkages. In other words, the way one activity is performed may affect the performance of others. To obtain competitive edge a firm must be able to perform its value activities at a lower cost than its rivals or in a way that provides its buyers with added value or service. The value chain of a particular industry works with a larger system of activities called the value system. The value system includes the value chains of suppliers, of the firm, of the channel through which the firm distributes its products and services, and of the ultimate buyer.

Supplier Value Chain(s)

Firm Value Chain(s)

Channel Value Chain(s)

Buyer value Chain(s)

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Interorganisational systems (IOSs)

Information systems that link suppliers and buyers, manufacturers and distributers, and distributers and buyers are known as Interorganisational systems (IOSs). These systems benefit both participants. Information technology affects the value chain by transforming the way value activities are performed. Each activity in the value chain has physical component and an information-processing component. The physical component encompasses the physical tasks needed to perform the activity, and the information processing component includes the steps involved in capturing, manipulating, and channeling the data necessary to carry out the activity.

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How information technology supports value activities

The information-processing component of each value activity is being increasingly supported by information technology.

Value activity Inbound logistics Operations Outbound logistics Marketing and sales After-sales service

Use of information technology Just-in-time inventory Process control systems On-line link to the order-entry systems of suppliers Laptops for direct sales Electronic dispatch of technical support

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How information technology supports secondary activities

The information technology also can support the secondary activities of the value chain and reinforce the support activities that are part of the value chain
Secondary activity Management communications Human resources Technology Procurement Use of information technology Electronic mail On-line access to personal files Computer aided design and manufacturing On-line access to suppliers inventory files

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Information systems supporting value activities

Example of how information technology supports activities in the value chain are summarised below:

Support activities
Organisation - Office automation Human resources Personnel database Technology Computer aided design and manufacturing Purchasing On-line link to suppliers Inbound logistics Automated warehousing system Operations Outbound logistics Online order entry system Marketing and sales Market analysis Product profitability

Service Remote machine diagnostics

Process control Manufacturing control systems

Primary activities 41