Business Trends

Changing business environment

Specialization Management by Methodology and Franchises Mergers Decentralization and Small Business Temporary Workers Internationalization Business
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Management information system as planning, Management is usually defined

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 4/27/12 22

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 4/27/12 large, multinational corporations, 66

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

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Pr Tra n Co oce nsa nt ss cti o ro l

Strategi c Mgt . Tactic al Manageme nt

EIS

DS ES S

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Classification of IS
Information Systems

Operations Support System

Management Support System

Transaction processing systems

Process control systems

Office automatio n systems

Manageme nt informatio n systems

Decision support systems

Executive informatio n 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) ii) iii)

Management Information System Decision Support Systems Executive Information System

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1. i)

Operations Support System 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 v) Routine information for routine decisions v) Operational efficiency v) Use transaction data as main input v) 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 systems provide critical information tailored to the information needs of executives

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Types of Information Systems 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 4/27/12 1414
Organizations and individuals use different

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; 4/27/12 1515

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, 4/27/12 1616

e.g. A system in a factory that: gets information from measuring samples of products does statistical analysis of samples shows when operators should take corrective action 2.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-up telemarketing - use phone for selling order processing - process orders, produce invoices, supply data for sales analysis and inventory control point-of-sale - capture sales data at cash register often by scanner customer 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 list improve customer service maintain customer data

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Typical Applications of TPS

TYP E O F TP S S YS TE M S a le s / M a n u fa c tu rin g !F in a n c e / H um an O th e r ty p e s m a rk e tin g p ro d u c tio n a c c o u n tin g re s o u rc e s (e .g ., u n iv e rs ity ) s y s te m s s y s te m s s y s te m s s y s te m s M a jo r fu n c tioS a le s m a n a g e m e n te d u lin g ns Sch B u d g e tin g P e rs o n n e l re c A rdm is s io n s ad o f s y s te m M a rk e t re s e a rc h u rc h a s in g P G e n e ra l le d g e rB e n e fits G ra d e re c o rd s P ro m o tio n S h ip p in g /re c e iv in g g B illin C o rn p e n s a tio n o u rs e re c o rd s C P ric in g E n g in e e rin g C o s t a c c o u n tin g b o r re la tio n A lu m n i La s N e w p ro d u c ts O p e ra tio n s T ra in in g M a jo r S a le s o rd e r M a te ria ls re s o uG e e e ra l le d g e rP a y ro ll rc n R e g is tra tio n s y s a p p lic a tio n in fo rm a tio n s y spte m n in g s y s te m s la n s y s te m s M a rk e t re s e a rc h u rc h a s e o rd e A c c o u n ts P r E m p lo y e e re c o rd s e n t tra n s c r S tu d s y s te m c o n tr o l s y s te m re c e iv a b le /p a y a b le s s y s te m P ric in g s y s te m E n g in e e rin g B u d g e tin g B e n e fit s y s te m su rric u lu m c la s C s y s te m s c o n tro l s y s te m s Q u a lity c o n tro lF u n d s m a n a g eCm e ne r p a th A lu m n i b e n e fa c a re t s y s te m s s y s te m s s y s te m s s y s te m

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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. 4/27/12 2020

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. 2222 4/27/12

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 semistructured 4/27/12 2424

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 4/27/12 2626 organization.

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 4/27/12 spreadsheet) and designed for easy2727 operation.

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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30

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 4/27/12 3232

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 todays 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 ( Todays 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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Workgroup A 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
Intermediary Information

Output

Data Flow

Input from some other source

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Input from Data Bank

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The 3 Cs 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 Subspecies Communication systems: helps people work together by sharing information in many different forms Teleconferencing (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 Systems Expert 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, 4/27/12 4646

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 4949 4/27/12 a network.

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 experts evaluation processes to offer a conclusion. An advantage of an expert system is that it may 4/27/12 include the knowledge of many experts 5050

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

Decision making Design

Choice

Problem solving

Implementat ion Monitoring

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Solution Types
Optimization model Satisficing model Heuristics
Finding the best solution Finding a good -- but not necessarily the best -- solution to a problem 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

Merge with another company?

How many widgets should I order?

low Frequency 4/27/12

high

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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

Strategic Tactical Operation al High Decision Frequency Strategic-level managers involved with long-term decisions Operational-level managers involved with daily decisions Low 6262

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Integration of TPS, 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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Databas e

Model base

DBM S

MMS

Access to the internet, networks, and other computer systems

External database access

External database s

Dialogue manager

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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

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Financial models Statistical analysis models Graphical models Project management models
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Advantages and Disadvantages of Advantages Modeling

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

Access to the internet and corporate intranet, networks, and other computer system

Dialogue manager

External database access

External database s

Users

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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
hig h Local area decision network Wide area decision network

Decision frequency

Decision room

Teleconferenci ng

low clos e Location of group members 4/27/12 dista nt 7474

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 area vice presidents Function area managers 8080

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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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What an EIS is NOT It is not a substitute for other computerbased 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.

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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 4/27/12 8787 organization.

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.
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Use of real-time data leads to8888

Hardware Components An EIS requires no specific or unique hardware.

q

A key issue is to be sure that the EIS components optimize and conform to the organizations 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.
q

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. 9090 4/27/12

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.

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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

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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 Need good internal processes for data
9494

to manage

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management

Some EIS Limitations and Pitfalls to Avoid

Technological limitations: the EIS needs to be seamlessly integrated into the companys 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 executives 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, wellestablished reporting cycles.

Destabilization: fast EIS response may cause the executive to react too swiftly, 4/27/12 9696

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
100100

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