Management Information System (MIS)
Management Information System (MIS):
DEVELOPMENT OF MIS
Concept & definition Management Information Systems (MIS), referred to as Information Management and Systems, is the discipline covering the application of people, technologies, and procedures collectively called information systems, to solving business problems.
“'MIS' is a planned system of collecting, storing and disseminating data in the form of information needed to carry out the functions of management.”
Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert Systems, and Executive Information Systems.
Management : Management is art of getting things done through and with the people in formally organized groups. The basic functions performed by a manager in an organization are: Planning, controlling, staffing, organizing, and directing.
Information : Information is considered as valuable component of an organization. Information is data that is processed and is presented in a form which assists decision maker.
System : A system is defined as a set of elements which are joined together to achieve a common objective. The elements are interrelated and interdependent. Thus every system is said to be composed of subsystems. A system has one or multiple inputs, these inputs are processed through a transformation process to convert these input( s) to output.
MIS DEFINITION:
The Management Information System (MIS) is a concept of the last decade or two. It has been understood and described in a number ways. It is also known as the Information System, the Information and Decision System, the Computer- based information System.
The MIS has more than one definition, some of which are give below:
1. The MIS is defined as a system which provides information support for decision making in the organization.
2. The MIS is defined as an integrated system of man and machine for providing the information to support the operations, the management and the decision making function in the organization.
3. The MIS is defined as a system based on the database of the organization evolved for the purpose of providing information to the people in the organization.
4. The MIS is defined as a Computer based Information System.
Thought there are a number of definitions, all of them converge on one single point, i.e., the MIS is a system to support the decision making function in the organization. The difference lies in defining the elements of the MIS. However, in today’s world MIS a computerized .business processing system generating information for the people in the organization to meet the information needs decision making to achieve the corporate objective of the organization. In any organization, small or big, a major portion of the time goes in data collection, processing, documenting it to the people.
Hence, a major portion of the overheads goes into this kind of unproductive work in the organization. Every individual in an organization is continuously looking for some information which is needed to perform his/her task. Hence, the information is people-oriented and it varies with the nature of the people in the organization.
The difficulty in handling this multiple requirement of the people is due to a couple of reasons. The information is a processed product to fulfill an imprecise need of the people. It takes time to search the data and may require a difficult processing path. It has a time value and unless processed on time and communicated, it has no value. The scope and the quantum of information is individual dependent and it is difficult to conceive the information as a well-defined product for the entire organization. Since the people are instrumental in any business transaction, a human error is possible in conducting the same. Since a human error is difficult to control, the difficulty arises in ensuring a hundred per cent quality assurance of information in terms of completeness, accuracy, validity, timeliness and meeting the decision making needs.
In order to get a better grip on the activity of information processing, it is necessary to have a formal system which should take care of the following points:
• Handling of a voluminous data.
• Confirmation of the validity of data and transaction.
• Complex processing of data and multidimensional analysis.
• Quick search and retrieval.
• Mass storage.
• Communication of the information system to the user on time.
• Fulfilling the changing needs of the information.
The management information system uses computers and communication technology to deal with these points of supreme importance.
Objectives of MIS :
1. Data Capturing : MIS capture data from various internal and external sources of organization. Data capturing may be manual or through computer terminals.
2. Processing of Data : The captured data is processed to convert into required information. Processing of data is done by such activities as calculating, sorting, classifying, and summarizing.
3. Storage of Information : MIS stores the processed or unprocessed data for future use. If any information is not immediately required, it is saved as an organization record, for later use.
4. Retrieval of Information : MIS retrieves information from its stores as and when
required by various users.
5. Dissemination of Information : Information, which is a finished product of MIS, is disseminated to the users in the organization. It is periodic or online through computer terminal.
Characteristics of MIS :
1. Systems Approach : The information system follows a systems approach. Systems approach means taking a comprehensive view or a complete look at the interlocking sub-systems that operate within an organization.
2. Management Oriented : Management oriented characteristic of MIS implies that the management actively directs the system development efforts. For planning of MIS, top-down approach should be followed. Top down approach suggests that the system development starts from the determination of management’s needs and overall business objective. To ensure that the implementation of system’s polices meet the specification of the system, continued review and participation of the manager is necessary.
3. Need Based : MIS design should be as per the information needs of managers at different levels.
4. Exception Based : MIS should be developed on the exception based also, which means that in an abnormal situation, there should be immediate reporting about the exceptional situation to the decision –makers at the required level.
5. Future Oriented : MIS should not merely provide past of historical information; rather it should provide information, on the basis of future projections on the actions to be initiated.
6. Integrated : Integration is significant because of its ability to produce more meaningful information. Integration means taking a comprehensive view or looking at the complete picture of the interlocking subsystems that operate within the company.
7. Common Data Flow : Common data flow includes avoiding duplication, combining similar functions and simplifying operations wherever possible. The development of common data flow is an economically sound and logical concept, but it must be viewed from a practical angle.
8. Long Term Planning : MIS is developed over relatively long periods. A heavy element of planning should be involved.
9. Sub System Concept : The MIS should be viewed as a single entity, but it must be broken down into digestible sub-systems which are more meaningful.
10. Central database : In the MIS there should be common data base for whole system
ROLE OF THE MANAGEMENT INFORMATION SYSTEM:
The role of the MIS in an organization can be compared to the role of heart in the body. The information is the blood and MIS is the heart. In the body the heart plays the role of supplying pure blood to all the elements of the body including the brain. The heart works faster and supplies more blood when needed. It regulates and controls the incoming impure blood, processes it and sends it to the destination in the quantity needed. It fulfills the needs of blood supply to human body in normal course and also in crisis. The MIS plays exactly the same role in the organization.
(1) The system ensures that an appropriate data is collected from the various sources, processed, and sent further to all the needy destinations. The system is expected to fulfill the information needs of an individual, a group of individuals, the management functionaries: the managers and the top management.
(2) The MIS satisfies the diverse needs through a variety of systems such as Query Systems, Analysis Systems, Modeling Systems and Decision Support Systems the MIS helps in Strategic Planning, Management Control, Operational Control and Transaction Processing.
(3) The MIS helps the clerical personnel in the transaction processing and answers their queries on the data pertaining to the transaction, the status of a particular record and references on a variety of documents. The MIS helps the junior management personnel by providing the operational data for planning, scheduling and control, and helps them further in decision making at the operations level to correct an out of control situation.
(4) The MIS helps the middle management in short them planning, target setting and controlling the business functions. It is supported by the use of the management tools of planning and control. The MIS helps the top management in goal setting, strategic planning and evolving the business plans and their implementation.
(5) The MIS plays the role of information generation, communication, problem identification and helps in the process of decision making. The MIS, therefore, plays a vita role in the management, administration and operations of an organization.
Organizational Need for MIS in a Company
To facilitate the management decision making at all levels of company, the MIS must be integrated. MIS units are company wide. MIS is available for the Top management. The top management of company should play an active role in designing, modifying and maintenance of the total organization wide management information system. Information system and Information technology have become a vital component of any successful business and are regarded as major functional areas just like any other functional area of a business organization like marketing, finance, production and HR. Thus it is important to understand the area of information system just like any other functional area in the business. MIS is important because all businesses have a need for information about the tasks which are to be performed.
Information and technology is used as a tool for solving problems and providing opportunities for increasing productivity and quality. Information has always been important but it has never been so available, so current and so overwhelming. Efforts have been made for collection and retrieval of information, However, challenges still remain in the selection analysis and interpretation of the information that will further improve decision making and productivity.
MIS for a Business Organization :
1. Support the Business Process : Treats inputs as a request from the customer and outputs as services to customer. Supports current operations and use the system to influence further way of working.
2. Support Operation of a Business Organization : MIS supports operations of a business organization by giving timely information, maintenance and enhancement which provides flexibility in the operation of an organizations.
3. To Support Decision Making : MIS supports the decision making by employee in their daily operations. MIS also supports managers in decision making to meet the goals and objectives of the organization. Different mathematical models and IT tools are used for the purpose evolving strategies to meet competitive needs.
4. Strategies for an Organization : Today each business is running in a competitive market. MIS supports the organization to evolve appropriate strategies for the business to assented in a competitive environment.
Need of MIS
MIS helps the management at various levels and it is mean of communication where data are collected, processed, stored and retrieved for making decisions regarding planning, operation and control of an organization.
Components of MIS
Management information system refers to the data, hardware and the computer programs that are used to develop information for managerial use.
• People – it is the only living component of MIS which operates, controls the other components of MIS.
• Procedure – procedure explain people how to operate the computer hardware.
• Data – Data provide interface between the user and computer.
• Hardware – It is the machine part of the system which executes the instruction in programs.
• Programs – The program is the set of instruction written in logical order for performing specific task related to information production.
Function of MIS
It is used to collect the data and present the information to the managers. MIS is the combination of computer and procedures for providing information that manager‟s use in making decision.
• Collect Data – Data can be obtained from sources within organization and outside world.
• Store & Process Data – After creation of the data, a database must be stored and process in the form useful to manager‟s data is generally stored to CD ROM or hard disk.
• Present Information to Managers – After collection, storing and processing of data, the next step is to present information to the managers.
Role of MIS
1 MIS ensure that appropriate and relevant data is collected from various sources, processed and is sent further to the needy destination.
2 It fulfills the need of individual, workgroup and management.
3. MIS satisfies the diverse need of various systems like query, Analysis, Modeling, DSS.
4 MIS helps in strategic planning, management control, operational control and transaction processing level.
5 MIS play important role in information generation, communication, problem identification and decision making administration.
6 With good MIS support marketing, finance, production, and personal functions increases efficiently.
7 MIS helps in streamlining of the operations.
8 MIS creates structured database and therefore saves the time.
9 MIS bring clarity in communication and understanding this help in bringing high degree of professionalism.
10 MIS helps in systemization of business operation through tools and techniques of the computer, which makes task simpler, accurate and faster.
MANAGEMENT PROCESS
Management comprises process or activities via planning, organizing, controlling, directing and initiating operation of an organization. For its smooth functioning and achieving of its predetermined goals through optimal utilization of its resources like men, money, material and machines.
Management Effectiveness
Negandhi Estafen' provides a good model for the analysis of management effectiveness in achieving the goals and objectives. The model puts a lot of emphasis on the management philosophy and the environment factors on which the effectiveness is dependent. The environment factors provide the opportunities to survive and grow with certain constraints while the management philosophy sets the guidelines for deciding the management practices to run the enterprises.
Figure: * Nagendhi Estates Model for Analysis of Management Effectiveness
While the environment factors are difficult to control, it is left for the management to change its philosophy towards the various players in the business, viz, the employees, the consumers, the suppliers, the government, the community and the shareholders. Basically, it is a change in attitude towards these players. For example, how to look at the employees? If the attitude will have an impact on the management practices, where the employee will play a decisive critical role. IT will affect the organization structure by reducing its size and the reporting levels.
If the attitude towards the consumer is changed to fulfill the expectations giving rise to a higher satisfaction, then the management practices in the product design, manufacturing and marketing will undergo a significant change. The product life cycle will then be short, and more features sand functions will be added to the product fulfilling not only the functional needs but also the service needs of the consumer.
Process of Management
Process of MIS
The process of MIS starts by knowing MIS objectives. The objectives of MIS should be compatible with the company‟s objectives.
Management comprises process or activities they are as follows:-
1. Recognition of a problem and an opportunity
2. Define problem or opportunity
3. Develop alternative course of action
4. Decision
5. Implementation of plan
6. Control performance against plan
For its smooth functioning and achieving of its predetermined goals through optimal utilization of its resources like men, money, material and machines.
MIS - A Tool for Management Process
The process of management requires a lot of data and information for execution of the plan. This requirement arises on account of the fact in each step of management, a variety of decisions are taken to correct the course of development. The decisions or actions are prompted due to the feedback given by the control system incorporated in the management system. The control of overall performance is made possible by way of Budget Summarizes and reports. The summary showing sales, costs, profit and return on investment throws light on the direction the organization is moving to. The exception reports identify the weaknesses tin the system of management.
If effective management system is to be assured, it has to rest on business information. The management performance improves if the business risk and uncertainties are handled effectively. If the information provided is adequate, one can deal with these factors squarely. The information support improves the lack of knowledge, enriches experience and improves analytical abilities leading to better business judgment. So, if efficient information support is to be provided, it calls for a system with the goals of generating management information. A good MIS must furnish information to the managers to expand their knowledge base. He must know the adverse trends in business, the shortfalls and failures in the management process.
The impact of the Management Information System
The impact of MIS on the functions is in its management. With a good MIS support, the management of marketing, finance, production and personnel becomes more efficient, the tracking and monitoring the functional targets becomes easy. The functional managers are informed about the progress, achievements and shortfalls in the activity and the targets. The manager is kept alert by providing certain information indicating the probable trends in the various aspects of business. This helps in forecasting and long-term perspective planning. The manager'' attention is brought to a situation which is exceptional in nature, inducing him to take an action or a decision in the matter. A disciplined information reporting system creates a structured database and a knowledge base for all the people in the organization. The information is available in such a form that it can be used straight away or by blending and analysis, saving the manager's valuable time.
The MIS creates another impact in the organization which relates to the understanding of the business itself. The MIS begins with the definition of a data entity and its attributes. It uses a dictionary of data, entity and attributes, respectively, designed for information generation in the organization. Since all the information systems use the dictionary, there is common understanding of terms and terminology in the organization bringing clarity in the communication and a similar understanding of an event in the organization.
The MIS calls for a systemization of the business operations for an effective system design. This leads to streamlining of the operations which complicate the system design. It improves the administration of the business by bringing a discipline in its operations everybody is required to follow and use systems and procedures. This process brings a high degree of professionalism in the business operations.
Since the goals and objective of the MIS are the products of business goals and objectives, it helps indirectly to pull the entire organization in one direction towards the corporate goals and objectives by providing the relevant information to the people in the organization.
A well designed system with a focus on the manager makes an impact on the managerial efficiency. The fund of information motivates an enlightened manager to use a variety of tools of the management. It helps him to resort to such exercises as experimentation and modeling. The use of computers enables him to use the tools and techniques which are impossible to use manually. The ready-made packages make this task simpler. The impact is on the managerial ability to perform. It improves the decision making ability considerably.
Management Information System and Computer
Translating the real concept of the MIS into reality is technically, an infeasible proposition unless computers are used. The MIS relies its ability to store, process, retrieve and communicate with no serious limitations.
The variety of the hardware having distinct capabilities make it possible to design the MIS for a specific situation. For example, if the organization needs a large database and very little processing, a computer system is available for such a requirement. Suppose the organization has multiple business locations at long distances and if the need is to bring the data at one place, process, and then send the information to various locations, it is possible to have a computer system with a distributed data processing capability. If the distance is too long, then the computer system can be hooked through a satellite communication system.
The ability of the hardware to store data and process it at a very fast rate helps to deal with the data volumes, its storage and access effectively. The ability of the computer to sort and merge helps to organize the data in particular manner and process it for complex lengthy computations. Since the computer is capable of digital, graphic word, image, voice and text processing, it is exploited to generate information and present it in the form which is easy to understand for the information user.
The software, an integral part of a computer system, further enhances the hardware capability. The software is available to handle the procedural and nonprocedural data processing. For example, if you want to use a formula to calculate a certain result, an efficient language is available to handle the situation. If you are not required to use a formula but have to resort every time to a new procedure, the nonprocedural languages are available.
The advancement in computer and the communication technology has made the distance, speed, volume and complex computing an easy task. Hence, designing the MIS for a specific need and simultaneously designing a flexible and open system becomes possible, thereby saving a lot of drudgery of development and maintenance of the system. The concept of user friendly systems and the end user computing is possible, making information processing a personalized function. However, the application of the management principles and practices in today's complex business world is possible only when the MIS is based on a computer system support.
Difference between Computers and MIS
Yet conceptual MiS does not need computers as a prerequisite, meaningful MIS today computer-based system. As the major applications of computers today are for the design development and application of MIS, to a distant observer, computer systems and information systems appear the same but this is far from the truth, as these are two disciplines that overlap and yet have quite independent existence. The following major differences between the two disciplines must be clearly maintained in order to get the maximum advantage from MIS:
1. Technology Components: Computer systems provide only the technology component; successful information systems call for understanding of the organisational dynamics, process and control systems.
2. MIS is a Discipline: MIS discipline is centred on people, to be well-versed in this discipline one needs a number of human qualities—the ability to communicate, the ability to hsten and understand problems and resolve conflicts, to respect others’ opinions and value system; one also should have vision to set goals and plan strategies to achieve these goals.
3. MIS is an Applied Area: MIS is an applied area. It calls for problem solving skills, a knack of making quick and sensible assumptions to solve specific problems in a time-bound manner, often working under time and budget constraints. Computer systems, on the other hand, being a relatively pure area calls for a strong theoretical foundation in engineering and mathematical sciences to solve general problems.
4. MIS is Specific to Organisational and Managerial Contexts: MIS is specific to organisational and managerial contexts. In a sense their focus is on solving problems specific to enterprise management, though enterprises are sufficiently general in scope. Computing systems, on the other hand, are far more generic and address problems in contexts other than managerial, eg. scientific exploration, education, and entertainment. Thus, they are not limited by organisational consideration alone and go much beyond business and commercial activities.
5. MIS is a Challenge: MIS calls for a very high conceptual challenge by understanding individuals, organisations, and their complex inter-relationships. The complex thought processes of differing individuals, the subtle inter-personal dynamics between individuals, both in their personal capacity and organisational capacity, their attitudes, aspirations, goals etc. have to be early understood before any information system is successfully implemented. Computer systems, on the other hand, call for a very high order of equally demanding challenges, though in an altogether different plane on intellectual challenges. Computer systems involve a fair degree of abstraction, nalytical thinking, generalisation and rigorous analysis.
6. Tools of MIS are Specific: The tools of MIS are generally context specific. Many of the necessary tools of the present generation of technology may not be successful in a different nological scenario. The mainframe and the minicomputer-based legacy systems are readily way to server-based computing with PC-based clients accessing the servers using client server ology. The tools of computer systems like database theory are far more context independent. The change of technology only modifies them, not completely changes them. Being context - achin andlon -term impact.
MIS and the User
Every person in the Organization is a user of the MIS. The people in the organization operate at all levels in the hierarchy. A typical user is a clerk, an assistant, an officer, an executive or a manager. Each of them has a specific task and a role play in the management of business. The MIS caters to the needs of all persons.
The main task of a clerk is to search the data, make a statement and submit it to the higher level. A clerk can use the MIS for a quick search and reporting the same to higher level. An assistant has the task of collecting and organizing the data, and conducting a rudimentary analysis of it. The MIS offers the user tools to perform these tasks. An officer has a role of integrating the data from different systems and disciplines to analyze it and make a critical comment if anything adverse is found.
In MIS offers the methods and facilities to integrate the data and report the same in a proper format. An executive plays the role of a decision maker. He is in a position of responsibility and accountability; a position of a planner and a decision maker. He is responsible for achieving the targets and goals of the organization. The MIS provides facilities to analyze the data and offers the decision support systems to perform the task of execution. The MIS provides action-oriented information.
The manager has a position of responsibility and accountability for the business results. His management role expands beyond his management function. The MIS provides information in a structured or unstructured format for him to react. The MIS caters to his constant changing needs of information. The user of the MIS is expected to be a rational person and the design of the MIS is based on this assumption.
However, in reality the impact created on individuals by MIS is difficult to explain.
The recent major technological advances in communication such as Multimedia, Imaging, Graphical User Interface (GUI) etc and the ability to access the data stored at different locations on the variety hardware of platforms would make MIS more attractive and efficient proposition. An intelligent user of information can demonstrate the ability of decision making, since his manipulative capability is considerably increased, with the information now being available on his desktop.
Through the MIS, the information can be used as a strategic weapon to counter the threats to business, make businesses more competitive, and bring about the organizational transformation through integration. A good MIS also make an organization seamless by removing all the communication barriers.
MIS- a support to the management
The management process is executed through a variety of decisions taken at each step of planning, organising, staffing, directing, coordinating and control. If the management is able to spell out the decisions required to be taken, the MIS can be designed suitably. The decisions required to be taken in these are tabulated in the table below:
1. Planning (steps in management)
A selection from various alternative strategies, resources, methods etc. (decisions)
2. Organisation (steps in management)
A selection of a combination of several combinations of the goals, people, resources, methods and authority. (decisions)
3. Staffing (steps in management)
Providing a proper manpower complement. (decisions)
4. Directing (steps in management)
Choosing a method from the various methods of directing the efforts . in the organisation. (decisions)
5. Coordinating (steps in management)
Choice of the tools and the techniques for coordinating the efforts for optimum results. (decisions)
6. Controlling (steps in management)
A selection of exceptional condition and the decision guidelines. (decisions)
The objective of the MIS is to provide information for decision support in the process of management. It should help in such a way that the business goals are achieved in the most efficient manner. Since the decision making is not restricted to a particular level, the MIS is proper to support : all the levels of the management in conducting the business operations. Unless the MIS becomes a management aid, it will not be useful to the organisation.
Planning and Decision Making:
Planning
Planning is a process of determining the goals and objectives and evolving strategies, policies, programmes and procedures for the achievement of these goals.
Information Planning :
The Information Planning can be described as the perception of opportunities, problems and alternatives surrounding the achievement of the objectives.
The Planning functions:
The information manager or management accountants’ role in planning 1s to provide information to management to assist in the evaluation of alternative causes of action.
Business or organisational planning has often been described as being composed of four parts: formulation of objectives, setting of policies, preparation of long range plans, and preparation operating budgets.
Objectives: There is probably no function of management dealt less by management in general than is the function of setting objectives. Yet, in the long run, it is probably one of the most important managerial functions. Unless top management has a clear sense of mission and knows what it is trying to accomplish, decisions are determined by personalities and by apparent opportunity rather than by objectives which should have a more enduring quality to them.
Business objectives might include the following considerations: (1) What direction should intended business growth take? (2) Which business opportunities should be considered as potential alternatives to existing ones? (3} What rate of growth should be sought for in sales, profits assets and so on? (4) What should be the profit objectives? (5) How should future expansion be financed?
When the objectives are defined in specific terms that is, a particular return on the investment or share of the market, the accounting function can be of great value to management through the internal reporting function comparing results with the predetermined objectives.
Policies: Policies may be defined as broad guides to future action. Expressed in another way, policies can be formulated only after objectives have been determined because policies constitute the broad means whereby objectives will be met.
Long-range Plans: Plans which extend over a year in length are generally referred to as long range plans. They have become more necessary because of (a) the growing scale and complexity of business operation, (b) the rapid transformation of many labour costs from variable to fixed, and (c) the tendency for qualified personnel to become a scarce resource,
Long-range plans often go wrong because of the unwillingness of financial managers to forecast. To combat this, some firms are asking for forecasts expressed in three ways: optimistic, pessimistic and the most likely predictions to which varying weights of possibility may be assigned. This is being done to allow the forecaster a greater amount of leeway in his prediction and to permit the forecast to be utilised in computerised mathematical decision-type programs to provide alternative projections which are available in management.
Operating Budgets: An operating budget is usually prepared on an annual basis and contains detained projections of the anticipated revenues and expenses of the organisation.
Corporate Planning
Corporate planning is creating a strategy for meeting business goals and improving your business. A corporate plan is a roadmap that lays out your business’s plan of action. It is imperative to write down goals and plan for how they will be achieved. Without planning, business operations can be haphazard, and employees are rarely on the same page. When you focus on corporate planning, you set achievable goals and bring your business one step closer to success.
Corporate Planning Definition
Corporate planning is the act of creating a long-term plan to improve your business. A corporate plan examines a business’s internal capabilities and lays out strategies for how to use those capabilities to improve the company and meet goals. Think of a corporate plan as a roadmap laying out everything you need to do to achieve your future goals and reach new levels of success. The plan looks at each sector of a business and makes sure that all parts are aligned, working towards similar goals. Corporate planning is often looked at through a SWOT analysis (strengths, weaknesses, opportunities, threats). Further, it usually starts with broad goals and works its way towards a much more detailed analysis, laying out exactly how objectives will be reached. The following elements tend to be in a corporate plan:
• Vision statement: You company’s vision statement broadly defines what goals you are working to achieve. This statement is where you hone in on your business’s focus and what you want to accomplish over the next three-to-five years. Think big, but remember that you will have to create a strategic plan to back these goals up. So always make sure that your goals can be defined as SMART goals (strategic, measurable, achievable, realistic and time-based).
• Mission statement: A good mission statement lays out how you will achieve your vision statement in a few sentences. It should illustrate what you plan to offer or sell, the market you are in, and what makes your company unique. A mission statement is like an elevator pitch for your entire strategy. It effectively communicates who you are and what you want to do in a few lines.
• Resources and scope: Part of corporate planning is taking stock of everything you currently have going on in your organization. You'll look at your systems, products, employees, assets, programs, divisions, accounting, finance and anything else that is critical to meeting your vision. This part is almost like making a map of your current organization. It gives you a bird’s eye view of everything your company has going on, which helps you create a plan for moving towards the future.
• Objectives: Next, you need to lay out your business objectives and how you plan to measure success. This is a good time to hone in on that SMART planning to ensure that your objectives are strategic, measurable, achievable, realistic and time-based. A vague goal such as “improve brand reputation” is meaningless without a solid measure of success in place. A SMART goal would instead be “improve brand reputation by placing the product in five positive media stories by the end of Q1.”
• Strategies: Now, it’s time to illustrate the strategies you plan to use to meet the objectives of your company. These strategies could be anything from introducing new products to reducing labor costs by 25 percent, depending on the goal. Your strategies should directly address the objectives you have laid out in your corporate plan, and include a plan of action for how you will implement them. These are the nitty-gritty plan details.
Corporate Planning Examples
The needs of your corporate planning will vary depending on your business and industry. For example, for automotive giant GM, CEO Mary Barra’s corporate turnaround strategy included several objectives. The main ones included becoming a leader in product and technology, growing the Cadillac brand, continuing to grow the GM brand in China, continuing to improve GM’s finances and becoming more efficient from an operational standpoint. These objectives are, of course, tailored to GM’s specific needs as a company.
The following are a few examples of corporate planning objectives:
• Financial objectives: Presumably, you went into business to make money. Your corporate planning financial objectives are your money-oriented goals. These objectives can include growing shareholder value, increasing profits and generating more revenue, to name a few. However, not all financial objectives are about revenue and profits. There are also objectives on cutting costs, balancing budgets, maintaining proper budget ratios and more. Another financial objective example might be diversifying or creating new revenue streams. Your specific goals will depend on your company’s individual needs, but most corporate plans include at least a few financial objectives.
• Customer objectives: Your customer objectives center on what you plan to do for your customers. A customer-centered objective could be giving your consumers the best value for the price they pay. Or, you could aim to improve product reliability. Another customer objective is increasing your market share or offering the best possible customer service. These objectives will vary, but they all center around meeting customer demand.
• Internal objectives: It’s important to consider internal objectives when doing corporate planning. Internal objectives include three areas: innovation, operations and customer service. Innovation objectives might consist of improving a product or growing the percentage of sales of a particular product. Another innovation objective might be to invest x dollars in the innovation of products. Operations objectives focus on reducing waste, investing in quality, improving workplace safety and reducing errors in manufacturing, to name a few. Another potential operations objective is streamlining. Finally, customer service objectives center on improving customer service, retention and satisfaction.
• Learning and growth objectives: Every organization needs learning and growth objectives when corporate planning. Learning and growth objectives are those that involve employees, your company culture and your business’s organizational capacity. One possible example of a learning and growth objective is boosting company culture, increasing employee retention and improving productivity.
Strategic planning
Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy. It is executed by strategic planners or strategists, who involve many parties and research sources in their analysis of the organization and its relationship to the environment in which it competes.
Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization's direction in response to a changing environment. It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful.
The Process of Strategic Planning
1. Analyse the Environment: Identify those existing and future conditions in the environment that have an influence on the company. The objective in performing this step is to identify new Opportunities for existing and new products and services and to identify major future risks to market Position and profit margins. Conditions of primary interest would include economic, competitive, technological, governmental and market.
2. Identify Company Strengths and Weakness; After an analysis of the condition in step 1 “and an orderly review of products, markets, processes, personnel and facilities, certain strength and Weakness will emerge. Such resource analysis will not only serve to highlight possible competition but will also lend to focus on opportunities and risks.
3. Consider Personnel Values of Top Management: The aesthetic, social, religious value of top management and influential stockholders exerts a significant influence on strategy Additionally, the emerging constraints of social responsibility and consumerism are factors to consider, personal values represent both guides and constraints upon the direction of the business.
4, Identify Opportunities and Risks: The company should, at this point be able to identify opportunities in the environment to fill a unique niche. These opportunities occur when there are specific needs for products (or services) that the firm is uniquely able to supply because of its resources,
5. Define Product/Market Scope: This Involves the explicit definition of the future scope of the company’s activities. The main idea is to concentrate on a very limited number of carefully defined products/market segments. These depend upon the analysis resulting from steps 1 to 4 above.
Careful identification of the product/market scope is advantageous because it (a) reduces time and complexity of decisions regarding acquisitions, new investments, and other elements of the development plan, (b) promotes integration of divisions and other organisational entities by providing a basis for their plans, (c) allows the company to focus on decisions and actions that take advantage of their competitive edge& Define the Competitive Edge: This requires a careful evaluation of unique common skill position, market advantages and other competitive factors.
7. Establish Objectives and Measures of Performance: Quantitative specifications required for desire to describe many characteristics of the firm and to provide a clear definition of strategy. Quantitative goals may be established for such parameters as annual rate of growth of sale profits, return on investment, market share, number of employees, value of asset debt, standing in the industry, and so on.
8. Development of Resources: Should resources be applied to growth form within or f acquisitions? What areas should the company focus its resources upon? Readjustment 0 application of resources is thus established in a manner similar to the grand-scale shift of men an material in military conflicts. Conversion from one type of resource to another as changing from labour-intensive to capital-intensive manufacturing is also a such deployment.
Types of Strategic Planning and tools of Planning
The key components of ‘strategic planning’ include an understanding of an entity's vines mission, values and strategies. These are as follows:
1. Vision: Outline what the organisation wants to be, or how it wants the world in which ; operates to be (an ‘idealised’ view of the world). it is a long-term view and concentrates on the future. it can be emotive and is a source of inspiration. For example, a charity working with the poor might have a vision statement which reads ‘A World without Poverty’
2. Mission: Defines the fundamental purpose of an organisation or an enterprise describing why it exists and what it does to achieve its vision. For example, the charity above might have a mission statement as ‘providing jobs for the homeless and unemployed.
3. Values: Beliefs that are shared among the stakeholders of an organisation. Values drive a organtsation’s culture and priorities and ’ a framework in which decisions are made. For example, “Knowledge the skill is the key to success or give a man bread and feed him for ada ¢ but teach m to farm and feed him for life’ These example maxims may set the priorities of sell sufficiency over shelter '
4. Strategy: Strategy, narrowly defined, means ‘he art of the several. A combination of the goals for which the firm is striving and the means (policies) by which it is seeking to get there. A strategy is sometimes called a roadmap—which is the path chosen to plow towards the end vision The most important part of implementing the strategy is ensuring the company is going in the right direction -defined as towards the end vision. Organisations sometimes summarise goals and objectives into a mission statement and a vision statement. Others begin with a vision and mission and use them to formulate goals and objectives. A newly emerging approach is to use a visual strategy plan such as used within the planning approach, and outcomes theory. The high-level outcomes being sought and all of the steps which it is believed are needed to get to them. The vision and mission are then just top layers of the visual model. Many people mistake the vision statement for the mission statement, and sometimes one is simply used as a longer term version of the other. However, they are distinct; with the vision use a visual being descriptive picture of a desired future state; and the mission being a statement of a rationale, applicable now as well as in the future. The mission is therefore the means of successfully achieving vision. This may be in the business world or the military. For an organisation's vision and mission to be effective, they must become assimilated into e organisation’s culture. They should also be assessed internally and externally. The internal assessment should focus on how members inside the organisation interpret their mission statement. external assessment—which includes all of the businesses stakeholders is valuable since it offers different perspectives. These discrepancies between these two assessments can provide insight into their effectiveness.
MIS –Business Planning
It is necessary to develop the goals and objectives for the MIS which will support the business goals. The MIS goals and objectives will consider management philosophy, policy constraints, business risks, internal and external environment of the organization and the business.
The goals and the objectives of the MIS would be so stated that they can be measured.
The typical statements of the goals are as under:
- Provide on-line information on the stocks, markets and the accounts balances.
- The query processing should not exceed more than three seconds.
- The focus of the system will be on the end user computing and access facilities.
- Information support will be the first in the strategic areas of management such as marketing or service or technology.
Table: Business Plan versus MIS Plan
Business Plan MIS Plan
Business goals and objectives. (Business Plan)
Management information system, objectives, consistent to the business goals and objectives. (MIS Plan)
Business plan and strategy (Business Plan)
Information strategy for the business plan implementation playing a supportive role. (MIS Plan)
Strategy planning and decisions. (Business Plan)
Architecture of the Management Information system to support decisions. (MIS Plan)
Management Plan for execution and control. (Business Plan)
System development schedule, matching the plan execution. (MIS Plan)
Operation plan for the execution. (Business Plan)
Hardware and software plan for the procurement and the implementation.
(MIS Plan)
Such statements of the goals and objectives enable the designer to set the direction and design implementation strategies for the MIS.
Strategy for the plan achievement: The designer has to take a number of strategic decisions for the achievement of the MIS goals and objectives. They are:
a. Development strategy: An online, a batch, a real time.
b. System Development Strategy: An approach to the system development – Operational versus Functional; Accounting versus Analysis; Database versus Conventional Approach; Distributed versus Decentralized processing; one Database versus Multiple database SSAD vs. OOT.
c. Resource for System Development: In-house versus external, customized development versus the use of packages.
Decision Making
Decision making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem.
Characteristics of Decision Making
- Advantages of Decision Making
- Open Decision Making
- If the manager operates in an environment not known to him, then decision making is called as open decision making.
- Closed Decision Making
- If the manager operates in a known environment, then it is called as closed decision making.
Decision Making Process
Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.
Using a step-by-step decision-making process can help you make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives. This approach increases the chances that you will choose the most satisfying alternative possible.
Step 1: Identify the decision
You realize that you need to make a decision. Try to clearly define the nature of the decision you must make. This first step is very important.
Step 2: Gather relevant information
Collect some pertinent information before you make your decision: what information is needed, the best sources of information, and how to get it. This step involves both internal and external “work.” Some information is internal: you’ll seek it through a process of self-assessment. Other information is external: you’ll find it online, in books, from other people, and from other sources.
Step 3: Identify the alternatives
As you collect information, you will probably identify several possible paths of action, or alternatives. You can also use your imagination and additional information to construct new alternatives. In this step, you will list all possible and desirable alternatives.
Step 4: Weigh the evidence
Draw on your information and emotions to imagine what it would be like if you carried out each of the alternatives to the end. Evaluate whether the need identified in Step 1 would be met or resolved through the use of each alternative. As you go through this difficult internal process, you’ll begin to favor certain alternatives: those that seem to have a higher potential for reaching your goal. Finally, place the alternatives in a priority order, based upon your own value system.
Step 5: Choose among alternatives
Once you have weighed all the evidence, you are ready to select the alternative that seems to be best one for you. You may even choose a combination of alternatives. Your choice in Step 5 may very likely be the same or similar to the alternative you placed at the top of your list at the end of Step 4.
Step 6: Take action
You’re now ready to take some positive action by beginning to implement the alternative you chose in Step 5.
Step 7: Review your decision & its consequences
In this final step, consider the results of your decision and evaluate whether or not it has resolved the need you identified in Step 1. If the decision has not met the identified need, you may want to repeat certain steps of the process to make a new decision. For example, you might want to gather more detailed or somewhat different information or explore additional alternatives.
Decision Making Concept
Decision making means to select a course of action from two or more alternatives. It is done to achieve a specific objective or to solve a specific problem.
According to James Stoner,
"Decision making is the process of identifying and selecting a course of action to solve a specific problem."
According to Trewartha and Newport,
"Decision making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem."
Methods of Decision Making
There’s four common ways of making decisions:
1. Command – decisions are made with no involvement.
2. Consult – invite input from others.
3. Vote – discuss options and then call for a vote.
4. Consensus – talk until everyone agrees to one decision.
1. Command Style Decision Making
Command is when there’s no involvement:
“Let’s start with decisions that are made with no involvement whatsoever. This happens in one of two ways. Either outside forces place demands on us (demands that leave us no wiggle room), or we turn decisions over to others and then follow their lead. We don’t care enough to be involved – let someone else do the work.”
2. Consult Style Decision Making
Consult is when you ask for input:
“Consulting is a process whereby decision makers invite others to influence them before they make their choice. You can consult with experts, a representative population, or even everyone who wants to offer an opinion.
Consulting can be an efficient way of gaining ideas and support without bogging down the decision making process. At least not too much. Wise leaders, parents, and even couples frequently make decisions in this way. They gather ideas, evaluate options, make a choice, and then inform the broader population.”
3. Vote Style Decision Making
Vote is when team members agree to support whatever decision is made:
“Voting is best suited to situations where efficiency is the highest value – and you’re selecting from a number of good options. Members of the team realize they may not get their first choice, but frankly they don’t want to waste time talking the issue to death.
They may discuss options for a while and then call for a vote. When facing several decent options, voting is a great time saver but should never be used when team members don’t agree to support whatever decision is made. In these cases, consensus is required.”
4. Consensus Style Decision Making
Consensus is when there’s high stakes or you need everyone to fully support the final decision:
This method can be both a great blessing and a frustrating curse. Consensus means that you talk until everyone honestly agrees to one decision. This method can produce tremendous unity and high-quality decisions. If misapplied, it can also be a horrible waste of time. It should only be used with (1) high-stakes and complex issues or (2) issues where everyone absolutely must support the final choice.
How To Choose Which Decision Method to Use
1. Who cares? Determine who genuinely wants to be involved in the decision along with those who will be affected. These are your candidates for involvement. Don’t involve people who don’t care.
2. Who knows? Identify who has the expertise you need to make the best decision. Encourage these people to take part. Try not to involve people who contribute to new information.
3. Who must agree? Think of those whose cooperation you might need in the form of authority of influence in any decisions you might make. It’s better to involve these people than to surprise them and then suffer their open resistance.
4. How many people is it worth involving? Your goal should be to involve the fewest number of people while still considering the quality of the decision along with the support that people will give it. Ask: “Do we have enough people to make a good choice? Will others have to be involved to gain their commitment?”
Decision Making – Tools and procedures
Decision making is a very important and complex process. In order to aid decision makers make the right choice, quantitative techniques are used that improve the overall quality of decision making.
Following are some of the commonly used techniques −
Decision Trees
Decision Trees are tools that help choose between several courses of action or alternatives. They are −
• Represented as tree-shaped diagram used to determine a course of action or show a statistical probability.
• Each branch of the decision tree represents a possible decision or occurrence.
• The tree structure shows how one choice leads to the next, and the use of branches indicates that each option is mutually exclusive.
• A decision tree can be used by a manager to graphically represent which actions could be taken and how these actions relate to future events.
Delphi Technique
Delphi Technique is a method used to estimate the likelihood and outcome of future events. It is unique because −
• It is a group process using written responses to a series of questionnaires instead of physically bringing individuals together to make a decision.
• Individuals are required to respond to a set of multiple questionnaires, with each subsequent questionnaire built from the information gathered in the previous one.
• The process ends when the group reaches a consensus.
• The responses can be kept anonymous if required.
Payback Analysis
Payback analysis is a technique generally used in financial management.
• It refers to the period of time required to recoup the funds expended in an investment, or to reach the break-even point.
• It is generally used to evaluate capital-purchasing alternatives.
• Alternatives are ranked according to the time each takes to pay back its initial cost.
• The strategy is to choose the alternative that has the quickest payback of the initial cost.
Simulations
Simulation is a technique that attempts to replace and amplify real experiences with guided techniques.
• It is a widely used technique in operations research.
• It models the behavior of individual elements within a given system.
• Methods generally used in simulation are random sampling to generate realistic variability.
• The overall behavior of the system emerges from the interactions between the elements.
• Widely used application areas of the simulation technique are - logistics and supply chain, service and operations management, business process improvement, health and social care information system, environment, etc.
MIS AND DECISION MAKING CONCEPTS
DECISION-MAKING CONCEPT:
A decision is choice out of several alternatives (options) made by the decision maker to achieve some objective s in a given situation. Business decisions are those, which are made in the process of conducting business to achieve its objective in a given environment. Managerial decision-making is a control point for every managerial activity may be planning, organizing, staffing, directing, controlling and communicating. Decision-making is the art of reasoned and judicious choice out of many alternatives. Once decision is taken, it implies commitment of resources.
The business managers have to take variety of decision. Some are routine and others are long-term implementation decision. Thus managerial decisions are grouped as:
(a) Strategic decision
(b) Tactical decision
(c) Operation decision
1. Strategic Decision: these are known as major decision influence whole or major part of the organization. Such decisions contribute directly to the achievement of common goals of the organization; have long range effect upon the organization.
Generally, strategic decision is unstructured and thus, a manager has to apply his business judgment, evaluation and intuition into the definition of the problem. These decisions are based on partial knowledge of the environmental factors which are uncertain and dynamic, therefore such decision are taken at the higher level of management.
2. Tactical Decision: tactical decision relate to the implementation of strategic decisions, directed towards developing divisional plans, structuring workflows, establishing distribution channels, acquisition of resources such as men, materials and money. These decisions are taken at the middle level of management.
3. Operational Decision: operational decisions relate to day-to-day operations of the enterprise having a short-term horizon and are always repeated. These decisions are based on facts regarding the events and do not require much of business judgments. Operational decisions are taken at lower level of management.
MIS AND DECISION-MAKING
It is necessary to understand the concept of decision-making as they are relevant to the design of the MIS. The Simon model provides a conceptual design of the MIS and decision-making wherein the designer has to design the system in such a way that the problem is identified in precise terms. That means the data gathered for data analysis should be such that it provides diagnostics and also provide a path to bring the problem to surface.
In the design phase of the model, the designer is to ensure that the system provides models for decision-making. These models should provide for the generation of decision alternatives, test them and pave way for the selection of one of them. In a choice phase, the designer must help to select the criteria to select one alternative amongst the many.
The concept of programmed decision-making is the finest tool available to the MIS designer, whereby he can transfer decision-making from a decision-maker to the MIS and still retain the responsibility and accountability with the decision maker or the manager. In case of non-programmed decisions, the MIS should provide the decision support systems provide a generalized model of decision-making.
The concept of decision-making system, such as the closed and the open system, such as the closed and the open systems, helps the designer in providing design feasibility. The closed systems are deterministic and rule based, therefore, the design needs to have limited flexibility, while in an open system, the design should be flexible to cope up with the changes required from time to time.
The methods of decision-making can be used directly in the MIS provided the method to be applied has been decided. A number of decision-making problem calls for optimization, and operational models are available which can be made a part of the system, the optimization models are static and dynamic, and both can be used in the MIS. Some of the problems call for a competitive analysis, such as payoff analysis. In these problems, the MIS can provide the analysis based on the gains, the regrets and the utility.
The concept of the organizational and behavioral aspects of decision-making provides an insight to the designer to handle the organizational culture and the constraints in the MIS. The concepts of the rationality of a business decision, the risk awareness of the managers and the tendency to avoid an uncertainty, makes the designer conscious about the human limitations and prompts him to provide a support in the MIS to handle these limitations. The reliance on organizational learning makes the designer aware of the MIS and makes him provide the channels in the MIS to make the learning process more efficient.
The relevance of the decision-making concepts is significant in the MIS design. The significance arises out of the complexity of decision-making, the human factors is the decision-making, the organizational and behavior aspects, and the uncertain environments. The MIS design addressing these significant factors turns out to be the best design.
INFORMATION & SYSTEMS:
INFORMATION CONCEPTS
The word information. is used commonly in our day to day working. In MIS, information has a precise meaning and it is different from data. The information has a value in decision making while data does not have. Information brings clarity and creates an intelligent human response in the mind. In MIS a clear distinction is made between data and information. Data is like raw materials while the information is equivalent to the finished goods produced after processing the raw material. Information has certain characteristics. These are: Information
Improves representation of an entity
Updates the level of knowledge.
Has a surprise value.
Reduces uncertainty.
Aids in decision making.
The quality of information could be called good or bad depending on the mix of these characteristics. Devis and Olson defines information as a data that has been processed into a form that is meaningful to the recipient and is of real or perceived value in the current or the prospective actions or decisions of the recipient. Data is defined as groups of non-random symbols in the form of text, images or voice representing quantities, actions and objects. Whether an entity is a data or information, it must be transferred through communication from the Source. to the Destination without loss of content.
The above model of communication is used in the MIS. The MIS is equivalent to the transmitter which provides information and sends through reports (channel) to the various receivers, which is decoded or interpreted by the receiver at the destination. The poor quality of information due to various factors would create confusion and misunderstanding, which is equivalent to a Noise and a Destortion in the communication model. A good MIS communicates the information without a noise and a distortion to the user.
Information Presentation
Presentation of the information is an art. The data may be collected in the best possible manner and processed analytically, bringing lot of value in the information; however, if it is not presented properly, it may fail to communicate anything of value to the receiver. The degree of communication is affected by the methods of transmission, the manner of information handling and the limitations and constraints of a receiver as the information processor and the organization as the information user.
The methods used for improving communication are summarization and message routing. The concept of summarization is used to provide information which is needed in the form and content.
The principle behind summarization is that too much information causes noises and distortions, i.e., confusion, misunderstanding and missing the purpose. The summarization suppresses the noise and the distortions.
Another method of improving the degree of communication is through message routing. The principle here is to distribute information to all those who are accountable for the subsequent actions or decisions in any manner. That is if the information is generated with a certain purpose for a primary user, then such information may have secondary purposes to some other users in the organization. This is achieved by sending the copies of the reports or documents to all the concerned people or users. The principle of the message routing achieves the spread of information to the appropriate quarters.
Knowledge is a power and an intelligent person in the organization can misuse this power to achieve personal goals undermining the functional and organizational goals. This tendency should be curbed. Further, the decision maker may call for the information on the grounds that, just in case required, he should readily have it. Apart from the misuse of information, it has an impact on the cost of information processing. In order to curb the misuse of information, a control is exercised on the content of information and its distribution.
Bias in information
While choosing the appropriate method of communicating information a care has to be taken to see that is not biased. For example, while using the techniques of classification or filtering the information, it should not happen that certain information gets eliminated or does not get classified. That is, a deliberate bias in covering certain information is to be avoided. This bias enters because people try to block sensitive information which affects them. To overcome this problem, a formal structure of organization should be adopted and the type of information and its receiver should be decided by the top management.
Many a times the data and the information are suppressed but the inferences are informed, with no or little possibility of verification or rethinking. In this case one who draws inferences may have a bias in the process of collection, processing and presentation of data and information. Though the deliberate enforcement of the inference on the receiver avoids a possibility of the multiple inferences, but in this case processor.s bias is forced on the receiver. For example, organizations have departments like Corporate Planning, Market Research, R and D, HRD and so on, which collect the data and analyze it for the company and communicate the inferences. In all these cases personal bias, organizational bias and management bias may be reflected in the entire process of collection processing, and communication inference.
The presentation of the information will generate a bias and may influence the user. For example, if the information is presented in an alphabetical order and if it is lengthy, the first few information entities will get more attention. If the information is presented with a criteria of exception, the choice of exception and deviation from the exception creates a bias by design itself. For a quick grasp, the information is presented in a graphical form. The choice of scale, the graphic size and the colour introduced a bias in the reader.s mind.
The base, which may creep in inadvertently because of the information system design, can be tackled by making the design flexible, so far as reporting is concerned. Allow
the manager or the decision maker to choose his classification or filtering criteria, the scope of information, the method of analysis and the presentation of inference. However, somewhere balance needs to be maintained between the flexibility of the design and the cost, and its benefits to the managers. Disregarding the bias in information, it must have certain attributes to increase its utility.
Redundancy is the repetition of the parts or messages in order to circumvent the distortions or the transmission errors. The redundancy, therefore, sometimes is considered as an essential feature to ensure that the information is received and digested. In MIS the redundancy of data and information, therefore, is inevitable on a limited scale. Its use is to be made carefully so that the reports are not crowded with information.
Characteristics of Information :
The parameters of a good quality are difficult to determine, however, the information can be termed as of a good quality if it meets the norms of impartiality, validity, reliability, consistency and age. The quality of information has another dimension of utility from the users point of view. The users being many, this is difficult to control. Therefore, if one can develop information with due regards to these parameters, one can easily control the outgoing quality of the information with the probable exception of the satisfaction at the users end.
Following are the essential characteristic features :
(i) Timeliness : Timeliness means that information must reach the recipients within the prescribed timeframes. For effective decision-making, information must reach the decision-maker at the right time, i.e. recipients must get information when they need it. Delays destroys the value of information. The characteristic of timeliness, to be effective, should also include up-to-date, i.e. current information.
(ii) Accuracy : Information should be accurate. It means that information should be free from mistakes, errors &, clear Accuracy also means that the information is free from bias. Wrong information given to management would result in wrong decisions. As managers decisions are based on the information supplied in MIS reports, all managers need accurate information.
(iii) Relevance : Information is said to be relevant if it answers especially for the recipient what, why, where, when, who and why? In other words, the MIS should serve reports to managers which is useful and the information helps them to make decisions..
(iv) Adequacy : Adequacy means information must be sufficient in quantity, i.e. MIS must provide reports containing information which is required in the deciding processes of decision-making. The report should not give inadequate or for that matter, more than adequate information, which may create a difficult situation for the decision-maker. Whereas inadequacy of information leads to crises, information overload results in chaos.
(v) Completeness : The information which is given to a manager must be complete and should meet all his needs. Incomplete information may result in wrong decisions and thus may prove costly to the organization.
(vi) Explicitness : A report is said to be of good quality if it does not require further analysis by the recipients for decision making.
(Vii) Impartiality: Impartial information contains no bias and has been collected without any distorted view of the situation. The partiality creeps in, if the data is collected with a preconceived view, a prejudice, and a pre-determined objective or a certain motive.
(viii)Validity: The validity of the information relates to the purpose of the information. In other words, it is the answer to the question-dose the information meet the purpose of decision making for which it is being collected? The validity also depends on how the information is used. Since the information and the purpose need not have one to one correspondence, the tendency to use it in a particular situation may make the information invalid. For example, if the quality of the manufactured product is deteriorating and it is decided to select the causes of poor quality, then one must collect all the possible causes which may affect the quality. Quality is a function of the raw material, the process of manufacture, the tools applied, the measures of the quality assessment, the attitude of the people towards the control of quality. However, if the information collected talks only about raw materials and the process of manufacture, then this information is not sufficient and hence it is not valid for all the decisions which are required to control the quality.
(ix) Reliability: It is connected to the representation and the accuracy of what is being described. For example, if the organization collects the information on the product acceptance in the selected market segment, the size of the sample and the method of selection of the sample will decide the reliability. If the sample is small, the information may not give the correct and a complete picture and hence it is not reliable. The reliability is also affected from the right source.
(x)Consistency:The information is termed as inconsistent if it is derived form a data which dose not have a consistent pattern of period. Somewhere, the information must relate to a consistent base or a pattern. For example, you have collected the information on the quantity of production for the last twelve months to fix the production norms. If in this twelve months period, the factory has worked with variable shift production, the production statistics of the twelve months for comparison is inconsistent due to per shift production. The consistency can be brought in by rationalizing the data to per shift production per month. The regularity in providing the information also helps in assessing the consistency in the information.
(xi)Age: If the information is old, it is not useful today. The currency of the information makes all the difference to the users. If the information is old then it does not meet any characteristics of the information viz., the update of knowledge, the element of surprise and the reduction of uncertainty, and the representation. Maintaining these parameters at a high degree always poses a number of problems. These problems are in the management of the operations, the sources, the data processing and the systems in the organization. A failure to maintain the parameters to a high degree affects the value of the information to the decision maker.
Types of Information
Classification of Information : The information can be classified in a number of ways provide to better understanding.
Jhon Dearden of Harvard University classifies information in the following manner :
(1) Action Verses No-Action Information : The information which induces action is called action information. ‘No stock‘report calling a purchase action is an action information. The information which communicates only the status is No-Action Information. The stock balance is no-action information.
(2) Recurring Verses No-Recurring Information : The information generated at regular intervals is recurring information. The monthly sales reports, the stock statement, the trial balance, etc are recurring information. The financial analysis or the report on the market research study is norecurring information.
(3) Internal and external information : The information generated through the internal sources of the organization is termed as Internal Information, while the information generated through the govt. reports, the industry survey etc., termed as External Information, as the sources of the data are outside the organization.
The information can also be classified, in terms of its application :
(i) Planning Information : Certain standard norms and specifications are used in planning of any activity. Hence such information is called the Planning Information. e. g. Time standard, design standard.
(ii) Control Information : Reporting the status of an activity through a feedback mechanism is called the Controlling Information. When such information shows a deviation from the goal or the objective, it will induce a decision or an action leading to control.
(iii) Knowledge Information : A collection of information through the library records and the research studies to build up a knowledge base as an information is known as Knowledge Information.
(iv)Organization Information : When the information is used by everybody in the organization, it is called Organization Information. Employee and payroll Information is used by a number of people in an organization.
(v) Functional/ Operational Information : When the information is used in the operation of a business it is called Functional/Operational Information.
(vi) Database Information : When the information has multiple use and application, it is called as database information. Material specification or supplier information is stored for multiple users.
Difference between Data Processing and Information Processing
Data Processing : Data Processing is a process that converts data into information or knowledge. The processing is usually assumed to be automated and running on a computer. Because data are most useful when well-presented and actually informative, data-processing systems are often referred to as information systems to emphasize their practicality. Nevertheless, both terms are roughly synonymous, performing similar conversions; data-processing systems typically manipulate raw data into information, and likewise information systems typically take raw data as input to produce information as output. Data processing is that a business has collected numerous data concerning an aspect of its operations and that this multitude of data must be presented in meaningful, easy-to-access presentations for the managers who must then use that information to increase revenue or to decrease cost. That conversion and presentation of data as information is typically performed by a data-processing application.
Information Processing : Information processing is the change or processing of information in any manner detectable by an observer. Information processing may more specifically be defined in terms by Claude E. Shannon as the conversion of latent information into manifest information. Latent and manifest information is defined through the terms of equivocation, remaining uncertainty, what value the sender has actually chosen, dissipation uncertainty of the sender what the receiver has actually received and transformation saved effort of questioning - equivocation minus dissipation. Practical Information Processing can be described as a cycle, where data which may have no inherent meaning to the observer is converted into information, which does have meaning to the observer.
INFORMATION A QUALITY PRODUCT
Information is a product of data processing. The quality of information is high if it creates the managerial impact leading to attention, decision and action. The quality of the information can be measured in four dimensions:
Utility.
Satisfaction.
Errors.
Bias.
Utility dimension has 4 facets: the firm, the time, access and the possession. If the information is represented in the form manager requires then its utility increases. If the information is available when needed then the utility is optimized. If the information is easily and quickly accessible through the online process, its utility gets efficient technology. If the information is possessed by the manager who needs it then its utility is highest. To increase the utility the cost factor should be increased.
Satisfaction Since the information is available to many users in system the subjectiveness would vary. The degree of satisfaction could determine the quality of information. If the organization has high degree of satisfaction then the information can be available at all the levels to the manager.
Errors Errors occur because of various reasons such as incorrect data measurement, incorrect data collection, failure in data processing, incomplete data, poor application of data and control system and deliberate biasing. To clear the errors it is necessary to follow the methods of system analysis & design.
Bias Procedure of communicating the information should be such that the system is able to detect the degree and the nature of the bias and correct information accordingly.
PARAMETERS OF QUALITY
The users being many, the information is difficult to control. Following parameters are used to control the quality of the information.
• Impartiality: Impartial information contains no bias and has been collected without any distorted view of the system.
• Validity: The validity of the information creates to the purpose of the system or the scope of the information. It also dependent on how it is used.
• Reliability: It is connected to the representation and the accuracy of what is being described in the information.
• Consistency: The information is termed as inconsistent if it derived from a data which does not have a consistent pattern of the period.
• Age: If the information is too old, it will not be useful in today‘s system. The currency of information makes all the differences to the user. If the information is old, it doesn‘t provide any characteristic as the update of knowledge, the element of surprise, representation and the reduction of uncertainty.
The different methods for Data Collection
Methods of Data and Information Collection :
Several methods are available for the collection of data. The choice of method will have an impact on the quality of information. Similarly the design of data collection method also decides the quality of data and information. The methods of data collection and processing become a part of the MIS. The various methods of data collection are explained in Table . An awareness of these methods is essential to the manager. Further, he should also nunderstand the potential problems of bias, currency, and the fact versus the opinion in the various types of methods. The observation, the experiment, the survey and the subjective estimation are the methods chosen for data collection and information about a specific problem, while the remaining methods are chosen to collect data on a routine basis without any particular problem whatsoever.
Following are the methods of data collection :
i) Observation
ii) Experiment
iii) Survey
iv) Subjective Estimation
v) Transaction Processing
vi) Purchase from Outside
vii) Publication
viii) Government Agencies
Methods of Data and Information Collection :
The specific methods analysts use for collecting data about requirements are called fact – finding techniques. These include the interview, questionnaire, record inspections (on – site review) and observation. Analysts usually employ more that one of these techniques to help ensure an accurate and comprehensive investigation.
1 )Interview
Analysts use interviews to collect information from individuals or from groups. The respondents are generally current users of the existing system or potential users of the proposed system. In some instances, the respondents may be managers or employees who provide data for the proposed system or who will be affected by it. Although some analysts prefer the interview to other fact – finding techniques, it is not always the best source of application data. Because of the time required for interviewing, other methods must also be used to gather the information needed to conduct an investigation.
It is important to remember that respondents and analysts converse during an interview – the respondents are not being interrogated. Interviews provide analysts with opportunities for gathering information form respondents who have been chosen for their knowledge of the system under study. This method is frequently the best source of qualitative information (opinions, policies, and subjective descriptions of activities and problems). Other fact finding methods are likely to be more useful for collecting quantitative data (numbers, frequencies, and quantities).
This method of fact – finding can be especially helpful for gathering information from individuals who do not communicate effectively in writing or who may not have the time to complete questionnaires. Interviews allow analysts to discover areas of misunderstanding, unrealistic expectations, and even indications of resistance to the proposed system.
Interviews can be either structured or unstructured:
Unstructured interviews, using a question – and – answer format, are appropriate when analysts want to acquire general information about a system. This format encourages respondents to share their feelings, ideas, and beliefs.
Structured interviews use standardized questions in either an open response or closed – response format. The former allows respondents to answer in their own words; the latter uses a set of prescribed answers.
Each approach has advantages and disadvantages. The success of an interview depends on the skill or the interviewer and on his or her preparation for the interview. Analysts also need to be sensitive to the kinds of difficulties that some respondents create during interviews and know how to deal with potential problems. They need to consider not only the information that is acquired during an interview, but also its significance. It is important to have adequate verification of data through other data collection methods.
2 ) Questionnaire
The use of questionnaires allows analysts to collect information about various aspects of a system from a large number of persons. The use of standardized question formats can yield more reliable data than other fact – finding techniques, and the wide distribution ensures greater anonymity for respondents, which can lead to more honest responses. However, this method does not allow analysts to observe the expressions or reactions or respondents. In addition, response may be limited, since completing questionnaires may not have high priority among the respondents.
Analysts often use open – ended questionnaires to learn about feeling, opinions, and general experiences or to explore a process or problem.
Closed questionnaires control the frame of reference by presenting respondents with specific responses form which to choose. This format is appropriate for electing factual information.
The high cost of developing and distributing questionnaires demands that analysts carefully consider the objective of the questionnaire and determine what structure will be most useful to the study and most easily understood by the respondents. Questionnaires should also be tested and, if necessary, modified before being printed and distributed.
As with interviewees, recipients, of questionnaires would be selected for the information they can provide. The analysts should ensure that the respondents, background and experiences qualify them to answer the questions.
3 )Record Review
Many kinds of records and reports can provide analysts with valuable information about organizations and operations. In record reviews, analysts examine information that has been recorded about the system and user. Record inspection can be performed at the beginning of the study, as an introduction, or later in the study, as a basis for comparing, actual operations with the records indicate should be happening.
Records include written policy manuals, regulations and standard operating procedures used by most organizations and a guide for managers and employees. They do not show what activities are actually occurring, where the decision – making power lies, or how tasks are performed. However, they can help analysts understand the system by familiarizing them with what operations must be supported and with formal relations within the organization.
4 ) Observation
Observation allows analysts to gain information they cannot obtain by any other fact – finding method. Through observation, analysts can obtain firsthand information about how activities are carried out. This method is most useful when analysts need to actually observe how documents are handled, how processes are carried out, observers know what to look for and how to assess the significance of what they observe.
Value of Information
Dimensions of Information : There are three most common dimensions of information for MIS :
(i) Economic Dimension : Economic dimension of information refers to the cost of information and its benefits. Generation of information costs money. Measuring cost and benefit of information is difficult because of intangible characteristic of information.
Cost of Information : Cost of information may include: Cost of acquiring data, Cost of maintaining data, Cost of generating information and Cost of communication information. Cost related to the response time require to generate information and communicating it. Thus, for system with low response time, the cost is high. The cost is depends on accuracy, speed of generation etc.
Value of Information : Information has a cost for its acquisition and maintenance. Thus before a particular piece of information is acquired, decision maker must know its value. The information has a perceived value in terms of decision making. The decision maker feels more secured when additional information is received in case of decision making under uncertainty or risk.
Perfect Information : The information is called a Perfect Information, if it wipes out uncertainty or risk completely. However, perfect information is a myth. The value of information is the value of the change in decision behavior because of the information. The change in the behaviour due to new
information is measured to determine the benefit from its use. To arrive at the value of information, the cost incurred to get this information is deducted from the benefit.
Value of information = Cost to get information-benefit
Given a set of possible decisions, a decision maker will select one on the basis of the available information. If the new information causes a change in the decision, then the value of information is the difference in the value between outcome of the old decision and that of new decision, less the cost obtaining the new information. The value of the additional information making the existing information perfect (VPI) is:
VPI = (V2 - V1) - (C2 - C1)
Where V is the value of the information and C is the cost of obtaining the information. V1 and C1 relate to one set of information V2, C2 relate to the new set.
In MIS, the concept of the value of information is used to find out the benefit of perfect information and if the value is significantly high, the system should provide it. If the value is insignificant, it would not be worth collecting the additional information.
(ii) Business Dimension : Different types of information are required by managers at different levels of the management hierarchy. The information needs of managers at strategic planning level are altogether different that those of operational control managers. It is because of the fact that managers at different levels are required to perform different functions in an organization.
(iii) Technical Dimension : This dimension of information refers to the technical aspects of the database. It includes the capacity of database, response time, security, validity, data interrelationship etc.
MIS & System Concept:
DEFINING A SYSTEM
A collection of components that work together to realize some objectives forms a system. Basically there are three major components in every system, namely input, processing and output.
In a system the different components are connected with each other and they are interdependent. For example, human body represents a complete natural system. We are also bound by many national systems such as political system, economic system, educational system and so forth. The objective of the system demands that some output is produced as a result of processing the suitable inputs. A well-designed system also includes an additional element referred to as „control‟ that provides a feedback to achieve desired objectives of the system.
Term system is derived from the Greek word „Systema‟ which means an organized relationship among functioning units or components.
Definition of System :
"A system is an orderly grouping of interdependent components linked together according to a plan to achieve a specific objective".
Characteristics of a System:
• Organization
• Interaction
• Interdependence
• Integration
• Central Objective
i) Organization-It implies structure and order.
ii) Interaction-It refers to manner in which each component functions with other components of the system.
iii)Interdependence-Units/parts are dependent on each other.
iv)Integration-The parts of a system work together within the system even though each part performs a unique function.
v)Central Objective-Objective may be real or stated. All the components work together to achieve that particular objective.
Elements of a System
In most cases, systems analysts operate in a dynamic environment where change is a way of life. The environment may be a business firm, a business application, or a computer system. To reconstruct a system, the following key elements must be considered:
1. Outputs and inputs.
2. Processor(s).
3. Control.
4. Feedback.
5. Environment.
6. Boundaries and interface.
1 ) Outputs and Inputs : A major objective of a system is to produce an output that has value to its user. Whatever the nature of the output (goods, services, or information), it must be in line with the expectations of the intended user. Inputs are the elements (material, human resources, and information) that enter the system for processing. Output is the outcome of processing. A system feeds on input to produce output in much the same way that a business brings in human, financial, and material resources to produce goods and services. It is important to point out here that determining the output is a first step in specifying the nature, amount, and regularity of the input needed to operate a system. For example, in systems analysis, the first concern is to determine the user‟s requirements of a proposed computer system – that is, specification of the output that the computer is expected to provide for meeting user requirements.
2) Processor(s) : The processor is the element of a system that involves the actual transformation of input into output. It is the operational component of a system. Processors may modify the input totally or partially, depending on the specifications of the output. This means that as the output specifications change so does the processing. In some cases, input is also modified to enable the processor to handle the transformation.
3) Control : The control element guides the system. It is the decision – making subsystem that controls the pattern of activities governing input, processing, and output. In an organizational context, management as a decision – making body controls the inflow, handling and outflow of activities that affect the welfare of the business. In a computer system, the operating system and accompanying software influence the behaviour of the system. Output specifications determine what and how much input is needed to keep the system in balance.
In systems analysis, knowing the attitudes of the individual who controls the area for which a computer is being considered can make a difference between the success and failure of the installation. Management support is required for securing control and supporting the objective of the proposed change.
4 )Feedback: Control in a dynamic system is achieved by feedback. Feedback measures output against a standard in some form of cybernetic procedure that includes communication and control. Output information is fed back to the input and / or to management (Controller) for deliberation. After the output is compared against performance standards, changes can result in the input or processing and consequently, the output.
Feedback may be positive or negative, routing or informational. Positive feedback reinforces the performance of the system. It is routine in nature. Negative feedback generally provides the controller with information for action. In systems analysis, feedback is important in different ways. During analysis, the user may be told that the problems in a given application verify the initial concerns and justify the need for change.
Another form of feedback comes after the system is implemented. The user informs the analyst about the performance of the new installation. This feedback often results in enhancements to meet the user‟s requirements.
5) Environment
The environment is the “suprasystem” within which an organization operates. It is the source of external elements that impinge on the system. In fact, it often determines how a system must function. For example, the organization‟s environment, consisting of vendors, competitors, and others, may provide constraints and, consequently, influence the actual performance of the business.
6 ) Boundaries and interface
A system should be defined by its boundaries – the limits that identify its components, processes and interrelationship when it interfaces with another system. For example, a teller system in a commercial bank is restricted to the deposits, withdrawals and related activities of customers checking and savings accounts. It may exclude mortgage foreclosures, trust activities, and the like.
Each system has boundaries that determine its sphere of influence and control. For example, in an integrated banking – wide computer system design, a customer who has a mortgage and a checking account with the same bank may write a check through the “teller system” to pay the premium that is later processed by the “mortgage loan system.” Recently, system design has been successful in allowing the automatic transfer of funds form a bank account to pay bills and other obligations to creditors, regardless of distance or location. This means that in systems analysis, knowledge of the boundaries of a givensystem is crucial in determining the nature of its interface with other systems for successful design.
Types of systems
The frame of reference within which one views a system is related to the use of
the systems approach for analysis. Systems have been classified in different ways.
Common classifications are: (1) physical or abstract, (2) open or closed, and (3) “man –
made” information systems.
1.6.1 Physical or abstract systems
Physical systems are tangible entities that may be static or dynamic in operation.
For example, the physical parts of the computer center are the officers, desks, and chairs
that facilitate operation of the computer. They can be seen and counted; they are static. In
contrast, a programmed computer is a dynamic system. Data, programs, output, and
applications change as the user‟s demands or the priority of the information requested
changes. Abstract systems are conceptual or non-physical entities. They may be as
straightforward as formulas of relationships among sets of variables or models – the
abstract conceptualization of physical situations. A model is a representation of a real or a
planned system. The use of models makes it easier for the analyst to visualize
relationships in the system under study. The objective is to point out the significant
elements and the key interrelationships of a complex system.
1.6.2 Open or Closed Systems
Another classification of systems is based on their degree of independence. An
open system has many interfaces with its environment. It permits interaction across its
boundary; it receives inputs from and delivers outputs to the outside. An information
system falls into this category, since it must adapt to the changing demands of the user. In
contrast, a closed system is isolated from environmental influences. In reality, a
completely closed system is rare. In systems analysis, organizations, applications and
computers are invariably open, dynamic systems influenced by their environment.
1.4 SYSTEM LIFE CYCLE:
System life cycle is an organizational process of developing and maintaining systems. It helps in establishing a system project plan, because it gives overall list of processes and sub-processes required for developing a system.
System development life cycle means combination of various activities. In other words we can say that various activities put together are referred as system development life cycle. In the System Analysis and Design terminology, the system development life cycle also means software development life cycle.
Following are the different phases of system development life cycle:
1. Preliminary study
2. Feasibility study
3. Detailed system study
4. System analysis
5. System design
6. Coding
7. Testing
8. Implementation
9. Maintenance
PHASES OF SYSTEM DEVELOPMENT LIFE CYCLE
(1) Preliminary System Study:
Preliminary system study is the first stage of system development life cycle. This is a brief investigation of the system under consideration and gives a clear picture of what actually the physical system is? In practice, the initial system study involves the preparation of a „System Proposal‟ which lists the Problem Definition, Objectives of the Study, Terms of reference for Study, Constraints, Expected benefits of the new system, etc. in the light of the user requirements. The system proposal is prepared by the System Analyst (who studies the system) and places it before the user management. The management may accept the proposal and the cycle proceeds to the next stage. The management may also reject the proposal or request some modifications in the proposal. In summary, we would say that system study phase passes through the following steps:
• problem identification and project initiation
• background analysis
• inference or findings (system proposal)
(2) Feasibility Study:
In case the system proposal is acceptable to the management, thenext phase is to examine the feasibility of the system. The feasibilitystudy is basically the test of the proposed system in the light of itsworkability, meeting user‟s requirements, effective use of resourceand of course, the cost effectiveness. These are categorized as technical,operational, economic and schedule feasibility. The main goalof feasibility study is not to solve the problem but to achieve thescope. In the process of feasibility study, the cost and benefits are estimated with greater accuracy to find the Return on Investment(ROI). This also defines the resources needed to complete the detailed investigation. The result is a feasibility report submitted tothe management. This may be accepted or accepted with modificationsor rejected. The system cycle proceeds only if the managementaccepts it.
(3) Detailed System Study:
The detailed investigation of the system is carried out in accordancewith the objectives of the proposed system. This involves detailedstudy of various operations performed by a system and their relationshipswithin and outside the system. During this process, dataare collected on the available files, decision points and transactionshandled by the present system. Interviews, on-site observation andquestionnaire are the tools used for detailed system study. Usingthe following steps it becomes easy to draw the exact boundary of the new system under consideration:
• Keeping in view the problems and new requirements
• Workout the pros and cons including new areas of the system
All the data and the findings must be documented in the form of detailed data flow diagrams (DFDs), data dictionary, logical data structures and miniature specification. The main points to be discussed in this stage are:
• Specification of what the new system is to accomplish based on the user requirements.
• Functional hierarchy showing the functions to be performed by the new system and their relationship with each other.
• Functional network, which are similar to function hierarchy but they highlight the functions which are common to more than one procedure.
• List of attributes of the entities – these are the data items which need to be held about each entity (record)
(4) System Analysis:
Systems analysis is a process of collecting factual data, understand the processes involved, identifying problems and recommending feasible suggestions for improving the system functioning.
This involves studying the business processes, gathering operational data, understand
the information flow, finding out bottlenecks and evolving solutions for overcoming the weaknesses of the system so as to achieve the organizational goals. System Analysis also includes subdividing of complex process involving the entire system, identification of data store and manual processes.
The major objectives of systems analysis are to find answers for each business process: What is being done, How is it being done, Who is doing it, When is he doing it, Why is it being done and How can it be improved? It is more of a thinking process and involves the creative skills of the System Analyst. It attempts to give birth to a new efficient system that satisfies the current needs of the user and has scope for future growth within the organizational constraints. The result of this process is a logical system design. Systems analysis is an iterative process that continues until a preferred and acceptable solution emerges.
(5) System Design:
Based on the user requirements and the detailed analysis of the existing system, the new system must be designed. This is the phase of system designing. It is the most crucial phase in the developments of a system. The logical system design arrived at as a result of systems analysis is converted into physical system design. Normally, the design proceeds in two stages:
• Preliminary or General Design
• Structured or Detailed Design
Preliminary or General Design: In the preliminary or general design, the features of the new system are specified. The costs of implementing these features and the benefits to be derived are estimated. If the project is still considered to be feasible, we move to the detailed design stage.
Structured or Detailed Design: In the detailed design stage, computer oriented work begins in earnest. At this stage, the design of the system becomes more structured. Structure design is a blue print of a computer system solution to a given problem having the same components and inter-relationships among the same components as the original problem. Input, output, databases, forms, codification schemes and processing specifications are drawn up in detail.
In the design stage, the programming language and the hardware and software platform in which the new system will run are also decided.
There are several tools and techniques used for describing the system design of the system. These tools and techniques are:
• Flowchart
• Data flow diagram (DFD)
• Data dictionary
• Structured English
• Decision table
• Decision tree
Each of the above tools for designing will be discussed in detailed in the next lesson. The system design involves:
i. Defining precisely the required system output
ii. Determining the data requirement for producing the output
iii. Determining the medium and format of files and databases
iv. Devising processing methods and use of software to produce output
v. Determine the methods of data capture and data input
vi. Designing Input forms
vii. Designing Codification Schemes
viii. Detailed manual procedures
ix. Documenting the Design
(6) Coding:
The system design needs to be implemented to make it a workable system. This demands the coding of design into computer understandable language, i.e., programming language. This is also called the programming phase in which the programmer converts the program specifications into computer instructions, which we refer to as programs. It is an important stage where the defined procedures are transformed into control specifications by the help of a computer language. The programs coordinate the data movements and control the entire process in a system. It is generally felt that the programs must be modular in nature. This helps in fast development, maintenance and future changes, if required.
(7) Testing:
Before actually implementing the new system into operation, a test run of the system is done for removing the bugs, if any. It is an important phase of a successful system. After codifying the whole programs of the system, a test plan should be developed and run on a given set of test data. The output of the test run should match the expected results. Sometimes, system testing is considered a part of implementation process. Using the test data following test run are carried out:
• Program test
• System test
Program test: When the programs have been coded, compiled and brought to working conditions, they must be individually tested with the prepared test data. Any undesirable happening must be noted and debugged (error corrections)
System Test: After carrying out the program test for each of the programs of the system and errors removed, then system test is done. At this stage the test is done on actual data. The complete system is executed on the actual data. At each stage of the execution, the results or output of the system is analysed.
During the result analysis, it may be found that the outputs are not matching the expected output of the system. In such case, the errors in the particular programs are identified and are fixed and further tested for the expected output. When it is ensured that the system is running error-free, the users are called with their own actual data so that the system could be shown running as per their requirements.
(8) Implementation:
After having the user acceptance of the new system developed, the implementation phase begins. Implementation is the stage of a project during which theory is turned into practice. The major steps involved in this phase are:
• Acquisition and Installation of Hardware and Software
• Conversion
• User Training
• Documentation
The hardware and the relevant software required for running the system must be made fully operational before implementation. The conversion is also one of the most critical and expensive activities in the system development life cycle. The data from the old system needs to be converted to operate in the new format of the new system. The database needs to be setup with security and recovery procedures fully defined.
During this phase, all the programs of the system are loaded onto the user‟s computer. After loading the system, training of the user starts. Main topics of such type of training are:
• How to execute the package
• How to enter the data
• How to process the data (processing details)
• How to take out the reports
After the users are trained about the computerized system, working has to shift from manual to computerized working. The process is called „Changeover‟. The following strategies are followed for changeover of the system.
(i) Direct Changeover: This is the complete replacement of the old
system by the new system. It is a risky approach and requires comprehensive system testing and training.
(ii) Parallel run: In parallel run both the systems, i.e., computerized and manual, are executed simultaneously for certain defined period. The same data is processed by both the systems. This strategy is less risky but more expensive because of the following:
• Manual results can be compared with the results of the computerized system.
• The operational work is doubled.
• Failure of the computerized system at the early stage does not affect the working of the organization, because the manual system continues to work, as it used to do.
(iii) Pilot run: In this type of run, the new system is run with the data from one or more of the previous periods for the whole or part of the system. The results are compared with the old system results. It is less expensive and risky than parallel run approach. This strategy builds the confidence and the errors are traced easily without affecting the operations.
The documentation of the system is also one of the most important activity in the system development life cycle. This ensures the continuity of the system. There are generally two types of documentation prepared for any system. These are:
• User or Operator Documentation
• System Documentation
The user documentation is a complete description of the system from the users point of view detailing how to use or operate the system. It also includes the major error messages likely to be encountered by the users. The system documentation contains the details of system design, programs, their coding, system flow, data dictionary, process description, etc. This helps to understand the system and permit changes to be made in the existing system to satisfy new user needs.
(9) Maintenance:
Maintenance is necessary to eliminate errors in the system during its working life and to tune the system to any variations in its working environments. It has been seen that there are always some errors found in the systems that must be noted and corrected. It also means the review of the system from time to time. The review of the system is done for:
• l knowing the full capabilities of the system
• l knowing the required changes or the additional requirements
• l studying the performance.
If a major change to a system is needed, a new project may have to be set up to carry out the change. The new project will then proceed through all the above life cycle phases.
Types of System
1. • Physical or Abstract System
• Physical – These are tangible entities that may be static or dynamic in operation.
For example- parts of a computer center are the desks, chairs etc. that facilitate
operation of the computer. They are static and a programmed computer is dynamic.
Continued…
• Abstract System – These are conceptual or non physical entities. For example- the
abstract conceptualization of physical situations. A model is a representation of a
real or planned system. A model is used to visualize relationships.
2. Deterministic or Probabilistic System
• Deterministic System – It operates in a predictable manner and the interaction between parts is known with certainty. For example: Two molecules of hydrogen and one molecule of oxygen makes water.
• Probabilistic System – It shows probable behavior. The exact output is not known. For example: weather forecasting, mail delivery.
3. Social, Human Machine, Machine System
• Social System- It is made up of people. For example: social clubs, societies
• Human Machine System- When both human and machines are involved to
perform a particular a particular task to achieve a target. For example:- Computer.
• Machine System- Where human interference is neglected. All the tasks are performed by the machine. Natural and Manufactured
• Natural System- The system which is natural. For example- Solar system, Seasonal System.
• Manufactured System- System made by man is called manufactured system. For example- Rockets, Dams, Trains. Permanent or Temporary System
• Permanent System- Which persists for long time. For example- policies of business.
• Temporary System- Made for specified time and after that they are dissolved. For example- setting up DJ system.
4. Adaptive and Non Adaptive System
• Adaptive System- respond to change in the environment in such a way to improve their performance and to survive. For example- Human beings, animals.
• Non Adaptive System-The system which doesn‟t respond to the environment. For example- Machines Continued…
• Open System – It has many interfaces with its environment. It interacts across its boundaries, it receives inputs from and delivers outputs to the outside world. It must adapt to the changing demands of the user.
• Closed System – It is isolated from the environmental influences. A completely
closed system is rare.
Characteristics of Open Systems
• Input from outside- Open systems are self
adjusting and self regulating. When
functioning properly open system reaches
a steady state or equilibrium.
• Entropy- Dynamic systems run down over time resulting in loss of energy or entropy.
Open systems resist entropy by seeking new input or modifying the processes to
return to a steady state.
• Process, output and cycles- Open system produce useful output and operate in
cycles, following a continuous flow path.
• Differentiation- They have a tendency toward an increasing specialization of
functions and a greater differentiation of their components. For example the role of machines and people tend toward greater specialization and greater interaction.
• Equifinality- Goals are achieved through differing courses of action and a variety of paths.
5. Man Made Information Systems
• Information System may be defined as a set of devices, procedures, and
operating systems designed around user based criteria to produce information and
communicate it to the user for planning, control and performance.
Formal Information Systems
• It is based on the organization represented by organization chart.
• The chart is a map of positions and their authority relationships, indicated by boxes and connected by straight lines.
Categories of Information
• Strategic Information- relates to ling range planning policies that are direct interest to upper management and for long range goals. For example- population growth, trends in financial investment, human resources.
• This information is achieved with the aid of DSS.
• Managerial Information- It is of direct use to middle management and department heads for implementation and control. For example- sales analysis, cash flow projections, and annual financial statements.
• This information is of use in short and intermediate range planning- i.e. months rather
than years.
• It is maintained with the help of MIS.
• Operational Information- It is short term, daily information used to operate
departments and to enforce the day to day rules and regulations of the business. For example- daily employee absence sheets, overdue purchase orders, current stock.
• It is established by data processing systems. Informal Information Systems
• It is an employee based system designed to meet personnel and vocational needs and to help solve, work related problems.
Computer Based Information System
• It relies on computer for handling business applications.
Computer System Design
System Design
Based on the user requirements and the detailed analysis of the existing system, the new system must be designed. This is the phase of system designing. It is the most crucial phase in the developments of a system. The logical system design arrived at as a result of systems analysis is converted into physical system design. Normally, the design proceeds in two stages:
· Preliminary or General Design
· Structured or Detailed Design
Preliminary or General Design: In the preliminary or general design, the features of the new system are specified. The costs of implementing these features and the benefits to be derived are estimated. If the project is still considered to be feasible, we move to the detailed design stage.
Structured or Detailed Design: In the detailed design stage, computer oriented work begins in earnest. At this stage, the design of the system becomes more structured. Structure design is a blue print of a computer system solution to a given problem having the same components and inter-relationships among the same components as the original problem. I
Input, output, databases, forms, codification schemes and processing specifications are drawn up in detail. In the design stage, the programming language and the hardware and software platform in which the new system will run are also decided. There are several tools and techniques used for describing the system design of the system. These tools and techniques are:
· Flowchart
· Data flow diagram (DFD)
· Data dictionary
· Structured English
· Decision table
· Decision tree
The system design involves:
1. Defining precisely the required system output
2. Determining the data requirement for producing the output
3. Determining the medium and format of files and databases
4. Devising processing methods and use of software to produce output
5. . Determine the methods of data capture and data input
6. Designing Input forms
7. Designing Codification Schemes
8. Detailed manual procedures
9. Documenting the Design
DEVELOPMENT OF MIS
Development of Long Rate Plans of the MIS
Any kind of business activity calls for long range plans for success, the same being true for MIS. The plan for development and its implementation is a basic necessity for MIS. In MIS the information is recognized as a major resource like capital, time and capacity. And if this resource is to be managed well, it calls upon the management to plan for it and control it for the appropriate use in the organization. Most of the organizations do not recognize Information' as a resource. They have looked at information as one of the many necessities for conducting the business activity. Hence, due regard is often not given for its planned development and use. Many organizations have spent financial resources on computers purely to expedite the activity of data collection and processing.
Many organizations have purchased computers for data processing and for meeting the statutory requirements of filing the returns and reports to the Government. Computers are used mainly for computing and accounting the business transactions and have not been considered as a tool for information processing.
The organizations have invested in computers and expanded its use by adding more or bigger computers to take care of the numerous transactions in the business. In this approach the information processing function of the computers in the organization never got it s due regard as an important asset to the organization. In fact, this function is misinterpreted as data processing for expeditious generation of reports and returns, and not as information processing for management action and decisions.
However, the scheme has been changing since late eighties when the computers became more versatile, in the function of Storage, Communication, Intelligence and Language. The computer technology is so advanced that the barriers of storage, distance, understanding of language and speed are broken.
With the advancement of computer technology, it is now possible to recognize information as valuable resources like money and capacity.
In short, we need a Management Information System flexible enough to deal with the changing information needs of the organization. It should be conceived as an open system continuously interacting with the business environment with a built-in mechanism to provide the desired information as per the new requirements of the management. The designing of such as open system is a complex task. It can be achieved only if the MIS is planned, keeping in view, the plan of the business management of the organization.
The plan of MIS is concurrent to the business plan of the organization. The information needs for the implementation of the business plan should find place in the MIS. To ensure such an alignment possibility, it is necessary that the business plan – strategic or otherwise, states the information needs. The information needs are the traced to the source data and the systems in the organization which generate such a data. The plan of development of the MIS is linked with the steps of the implementation in a business development plan. The system of information generation is so planned that strategic information is provided for the strategic planning, control information is provided for a short term planning and execution.
Contents of the MIS Plan
A long range MIS plan provides direction for the development of the systems, and provides a basis for achieving the specific targets or tasks against a time frame. The plan would have the following contents which will be dealt by the designer under a support from the top management.
Different Approaches to Development of MIS
There are two basic approaches for development of MIS :
a) System development life cycle : In order to develop a system successfully, it is managed by breaking the total development process into smaller basic activities or phases. Any system development process, in general, is understood to have the following phases
i) Systems Planning
ii) Systems Analysis
iii) Systems Design
iv) Systems Implementation
v) Systems Operation and Support (System Maintenance)
b) Prototyping : Prototyping is the process of creating an incomplete model of the future full-featured system, which can be used to let the users have a first idea of the completed program or allow the clients to evaluate the program.
Determining the information requirement
• The difficulty to determine a correct and complete sets of information is on account of the factor given below:
1)The capability constraint of human being as an information processor
2)The nature and the variety of information in précised terms
3)Reluctance of decision maker to spell out the information
4)The ability of the decision makers to specify information
• There are 4 methods of determining information requirements
1)Asking or interviewing
2)Determining from existing system
3)Analyzing the critical success factors
4)Experimentation and modeling
Development and implementation of MIS
• The plan consists of various system and subsystems
• The choice of the subsystem depends on the its positions in the total mis plan
• The designer first develops systems independently and start integrated them with other systems
• Basically 2 approaches effected on MIS
1)Prototype approach
2)Life cycle approach
Prototype approach
• It is useful for complex system
• Prototyping is a process of progressively ascertaining the information needs, developing methodology, trying it out on a smaller scale with respect to the data and the complexity.
• Designers task is complex and full of difficult in this approach
• Multiple user can involve in this approach
Decision Support System (DSS)
A decision support system (DSS) is an information system application that assists decision-making. DSS tends to be used in planning, analyzing alternatives, and trial and error search for solution. The elements of the decision support system include a database, model base & software. The main application areas of DSS are Production, finance and marketing.
DSS can be differentiated from MIS on the basis of processing the information. MIS processes data to convert it into information. DSS processes information to support the decision making process of a manager.
Concept and Philosophy
Decision support systems (DSS) are interactive software-based systems intended to help managers in decision-making by accessing large volumes of information generated from various related information systems involved in organizational business processes, such as office automation system, transaction processing system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the analytical models. A decision support system helps in decision-making but does not necessarily give a decision itself. The decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions.
Programmed and Non-programmed Decisions
There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work, where −
• These decisions have been taken several times.
• These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations, so −
• It would be a new decision.
• There will not be any rules to follow.
• These decisions are made based on the available information.
• These decisions are based on the manger's discretion, instinct, perception and judgment.
For example, investing in a new technology is a non-programmed decision.
Decision support systems generally involve non-programmed decisions. Therefore, there will be no exact report, content, or format for these systems. Reports are generated on the fly.
Attributes of a DSS
• Adaptability and flexibility
• High level of Interactivity
• Ease of use
• Efficiency and effectiveness
• Complete control by decision-makers
• Ease of development
• Extendibility
• Support for modeling and analysis
• Support for data access
• Standalone, integrated, and Web-based
Characteristics of a DSS
• Support for decision-makers in semi-structured and unstructured problems.
• Support for managers at various managerial levels, ranging from top executive to line managers.
• Support for individuals and groups. Less structured problems often requires the involvement of several individuals from different departments and organization level.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for variety of decision processes and styles.
• DSSs are adaptive over time.
Benefits of DSS
• Improves efficiency and speed of decision-making activities.
• Increases the control, competitiveness and capability of futuristic decision-making of the organization.
• Facilitates interpersonal communication.
• Encourages learning or training.
• Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up new evidences for an unusual decision.
• Helps automate managerial processes.
Components of a DSS
Following are the components of the Decision Support System −
• Database Management System (DBMS) − To solve a problem the necessary data may come from internal or external database. In an organization, internal data are generated by a system such as TPS and MIS. External data come from a variety of sources such as newspapers, online data services, databases (financial, marketing, human resources).
• Model Management System − It stores and accesses models that managers use to make decisions. Such models are used for designing manufacturing facility, analyzing the financial health of an organization, forecasting demand of a product or service, etc.
Support Tools − Support tools like online help; pulls down menus, user interfaces, graphical analysis, error correction mechanism, facilitates the user interactions with the system.
Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows −
• Text Oriented DSS − It contains textually represented information that could have a bearing on decision. It allows documents to be electronically created, revised and viewed as needed.
• Database Oriented DSS − Database plays a major role here; it contains organized and highly structured data.
• Spreadsheet Oriented DSS − It contains information in spread sheets that allows create, view, modify procedural knowledge and also instructs the system to execute self-contained instructions. The most popular tool is Excel and Lotus 1-2-3.
• Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written for performing certain calculations and particular program type.
• Rules Oriented DSS − It follows certain procedures adopted as rules.
• Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the example.
• Compound DSS − It is built by using two or more of the five structures explained above.
Types of DSS
Following are some typical DSSs −
• Status Inquiry System − It helps in taking operational, management level, or middle level management decisions, for example daily schedules of jobs to machines or machines to operators.
• Data Analysis System − It needs comparative analysis and makes use of formula or an algorithm, for example cash flow analysis, inventory analysis etc.
• Information Analysis System − In this system data is analyzed and the information report is generated. For example, sales analysis, accounts receivable systems, market analysis etc.
• Accounting System − It keeps track of accounting and finance related information, for example, final account, accounts receivables, accounts payables, etc. that keep track of the major aspects of the business.
• Model Based System − Simulation models or optimization models used for decision-making are used infrequently and creates general guidelines for operation or management.
Objectives of DSS
To save time and effort in decision making process.
• To help in processing the collected data and in producing a suggested solution to a problem.
• To provide sophisticated and fast analysis of vast amount of data and information.
• To provide support for decision maker at all management levels mainly in semi-structured or unstructured situation by bringing together human judgement and computerized information.
• To promote learning, which leads to new demands and refinement of application.
• To provide efficient and effective solution of every complex problem.
• To check the impact of changes on the proposed solution with help of “what-if” analysis
• To use the goal seeking analysis to find the value of the inputs necessary to achieve a desired level of output.
Capabilities of DSS
- Support for problem solving Phase
- Support for different decision frequencies
- Support for different problem structures
- Support for various decision-making levels
There are a number of situations, where the management has to make a decision based on the analysis of business statistics. Most of these decision situations are fairly structured and therefore, can be put in the form of the business models.
If the management can design such models duly tested, they can be used by the decision makers, whenever the need arises. All such tools and models act as the support systems for decision making. The decision support systems based on such tools or models have found extensive use, as a number of computer based software tools and packages are available at a very reasonable price.
The origin of these tools and models lie in the Business Management, the Management Science and the Operations Research.
Some are universally known and proven tools and have application in the Business Management.
1. The most significant advantage of the decision support system is its use in sensitizing the decisions and assessing its implications on the result or business performance.
2. The second advantage of such system is in focusing on the critical issues in business.
3. The third advantage of the decision support system is that it provides higher management ability to delegate decision making to the lower level once the tools and the models are tested.
TYPES OF TOOLS/ MODELS:
The decision support system can be based on the different types of tools and models.
1. Behavioral models:
These models are useful in understanding the behavior amongst the business variables. The decision maker can then make decisions giving due regard to such behavioral relationships.
E.g. The trends analysis, forecasting, and the statistical analysis models. The trend analysis indicates how different variables behave in trend setting in the past and hence in the future. A regression model shows the correlation between one or more variables. It also helps in identifying the influence of one variable on the other. These types of models are largely used in process control, manufacturing, agricultural sciences, medicines, psychology and marketing. The behavioral analysis can be used to set the points for alert, alarm and action for the decision maker.
2. Management science models:
These models are developed on the principles of business management, accounting and econometrics. There are also management systems, which can be converted into the decision support system models.
E.g. The budgetary systems, the cost accounting systems, the system of capital budgeting for better return on the investment, the ABC analysis, the control of inventory through the maximum-minimum levels, the MRP systems, etc are the examples of the use of the management science in the materials management. Production planning and control, scheduling and loading systems are the examples in Production Management. Manpower planning and forecasting is the example in Personnel Management.
Some of these models can be used straight away in the design of the decision support system. While some others require the use of management principles and practices, most of the procedure based decision making models belong to this category. Such models take away the personal bias of the decision maker.
3. Operations research (OR) Models:
The Operations Research (OR) models are mathematical models. These models represent a real life problem situation in terms of the variables, constants and parameters expressed in algebraic equations. Since, the models are mathematical; there are solutions to these problems. In arriving the solution, methods or calculus, matrix algebra, probability, and set theory are used. These models have clarity to the extent that each of them has a set of assumptions which must be true in real life. Further, if the assumptions are valid, the solutions offered are realistic and practical; the model represents the real life problem situation.
The OR models address themselves to two or more aspects of the decision situation. In business and industry, there are a number of situations where one type of cost is controlled, the other cost goes up. This play balanced at a point is an optimum point which finds a solution to minimize certain aspects of constraints.
In manufacturing business, the maximization of profit with an appropriate product mix, within the capacity and the market constraint. The allocation of an inventory to the various destinations with the least transportation costs. The minimization of capital blocked in the inventory and simultaneously meeting the market demand or the production requirement. The inventory control models offer an optimum solution, where the cost of inventory and the cost of ordering or set up is balanced. Some problems do not precisely fall in the category of the standard OR models. In such cases, the problems are solved by using a simulation approach. This approach uses a random occurrence of a large number of events, determines the status of the system and evaluates its cost of operations.
Artificial Intelligence (AI) System:
All human beings have intelligence which they use for problem solving. Intelligence when supported by knowledge and reasoning abilities becomes an artificial intelligence. When such an artificial intelligence is packed into a database as a AI system.AI system falls into three basic categories, the Expert systems (knowledge based), the Natural Language (Native languages) Systems, and the Perception System (vision, speech, touch)
Artificial intelligence is a software technique applied to the non-numeric data expressed in terms of symbols, statements, and patterns. It uses the method of symbolic processing, social and scientific reasoning and conceptual modeling for solving the problems. The AI systems are finding applications in configurations, design, diagnosis, interpretation, analysis, planning, scheduling, Training, testing and forecasting. Artificial Intelligence systems help to avoid making same mistakes, and to respond quickly and effectively to a new problem situation. The knowledge-based Expert System is a special AI System. It has wide application in business and industry.
Knowledge Based Expert System (KBES):
Decision making or problem solving is a unique situation riddled with uncertainty and complexity, dominated by the flexible systems (open system), the unstructured situations, and the knowledge based expert system, (KBES).
The generalized problem solving approach considers the generally applicable constraints, examines all possible alternatives and selects one by trial and error method with reference to a goal. The knowledge based problem solving approach considers the specific constraints within a domain, examines the limited problem alternatives within a knowledge domain and selects the one with knowledge based reasoning with reference to a goal.
The KBES considers knowledge as the base. Knowledge is with experienced people and experience, is wide and distributed. Hence, a system is required which will hold the knowledge of experienced people and provide an application path to solve the problem. Such a system eliminates the knowledge bottleneck.
To build a knowledge-based system certain prerequisites are required. The first prerequisite is that a person with the ability to solve with knowledge-based reasoning should be available. The second prerequisite is that such an expert should be able to articulate the knowledge to the specific problem characteristics.
Knowledge in the KBES is defined as a mix of theory of the subject, knowledge of its application, organized information and the data of problems and its solutions, and an ability to generate new avenues to solve the problem. The KBES has three basic components which are necessary to build the system:
Knowledge base: It is a database of knowledge consisting of the theoretical foundations, facts, judgments, rules, formulae, intuition, and experience. It is a structural storage with facilities of easy access.
Inference mechanism: It is a tool to interpret the knowledge available and to perform logical deductions in a given situation.
Use control mechanism: It is a tool applied to the inference mechanism to select, interpret and deduct or infer. The user control mechanism uses the knowledge base in guiding the inference process.
In the KBES, three components are independent of each other. This helps in modifying the system without affecting all the components. The KBES database, stores the data, the cause-and-effect relation rules, and the probability information on event occurrences.
KBES stores and uses knowledge, accepts judgments, questions intelligently, draws inferences, provides explanation with reasons, offers advice and prompts further queries for confirmation.
The knowledge data base uses certain methods of knowledge representation. These methods are- Semantic Networks, Frames and Rules.
Semantic networks:
Knowledge is represented on the principles of predicate functions and the symbolic data structures which have a meaning built into it are known as semantics. A semantic network is a network of nodes and arcs connecting the nodes. The node represents an entity and the arc represents association with a true and false meaning built into it. The association and meaning uses the principle of inheritance. E.g., all animals with four legs have a tail and a dog has four legs, hence the dog has a tail. The system inherits from the fact that the dog has four legs hence the dog is an animal and therefore, a dog has a tail or not.
e.g. If the table in the room is big, It would be inferred as conference room table. If the knowledge base has elliptical shape as an attribute of the table then it is correct.
The characteristics of a variety of tables are used to represent knowledge on table. A table in a drawing room inherits the characteristics of a table in a drawing room.
MIS AND THE ROLE OF DSS: -
The Decision Support System (DSS) is a special class of system which is used as a support decision making. The basic characteristic of the decision support system is that it is based on some tool, technique or model. The DSS could be an internal part of the MIS. When the decision making need is in real time dynamic mode, all such systems are designed to read, measure, monitor, evaluate, analyze and act as per the decision guidance embedded in the system. The MIS designer has to look for all situations and design the DSS for integration in the system. The MIS would become more useful if the decision making is made person-independent and executed with well-designed DSS. When the decision situation requires multidimensional analysis using the internal and external data, then such decision support systems are kept out of the main MIS design scope. Most of these situations call for the use of models and the nature of decision is strategic, decision for planned activity.
Decisions like new product launch, price revision, appointing new dealers, change of product design or change in the manufacturing process are strategic decisions which require critical analysis of data, careful evaluation of various alternatives and selecting one of them for implementation on the given criteria.
The decision support system plays a dominant role in the management information system, as a support to decision making.
Transaction Processing System:
TPS processes transaction and produces reports. It represents the automation of the fundamental, routine processing used to support business operations. It does not provide any information to the user to his/her decision-making. TPS uses data and produces data as shown in the following diagram.
Previously, TPS was known as Management Information System. Prior to computers, data processing was performed manually or with simple machines. The domain of TPS is at the lowest level of the management hierarchy of an organization.
Transaction Processing System(TPS) records or process the data resulting from the business transactions(i.e.) it records and process the business transactions and it supports the day to day operations. Examples:
• Order – entry system,
• Cheque processing system,
• Accounts receivable system,
• Accounts payable system,
• Payroll system,
• Ticket reservation system, etc.
Transaction Processing System(TPS) is the oldest type of information system and can be called as the ―work horse‖ in the industry of IS, for the last 50 years. Generally, transactions are processed in the following 2 basic ways.
(a) Online Batch Transaction Processing, and,
(b) Online Realtime Batch Transaction Processing(OLRTP)
They are explaned as follows:
(a) Online Batch Transaction Processing: Online involves a direct connection between the operator and the TPS program, and so they provide immediate results. In case of Batch Processing, transactions are grouped together and processed periodically as a unit.
Example: We can take the case of Cheque processing system in a bank. Here, all the cheques which are received in a particular time frame, say, on a particular day, are first grouped together. Then, they are sorted out by the account number and processed in a batch.
(b) Online Realtime Transaction Processing(OLRTP): Real time processing means that, not only the input data is processed immediately, but, the output results are available fast enough so as to meet the immediate information needs of the end-user.
Here, data are processed immediately after a transaction occurs.
Example: Airlines enquiry for ticketing, railway ticketing, point-of-sale(POS) systems at many retail stores use electronic cash register terminals to electronically capture and transmit the sales data over the telecommunications links to the regional computer centers for the immediate(real-time) or nightly(batch) processing.
Enterprise Management System
• Enterprise Management Systems (EMS) Are Large- scale Application Software Packages that Support Business Processes, Information Flows, Reporting, and Data Analytics In Complex Organizations.
• In today’s age of information and technology the way business being operated has changed completely. The business needs of today have changed and the response that is expected from the business enterprise by the customer is instant.
• Today’s business enterprise thrive on information, they are information hungry and in a such scenario the system that is developed and implemented by the enterprise should consider the complete enterprise and the effect a event would have on enterprise.
• The system need to be automated in accordance with the need of the business enterprise, interfacing with other system need to also be done.
• What we need is an enterprise wide system that caters to the need which is an integrated system using modern technology of communication and information processing as a support and such a system is the Enterprise Management System.
• Enterprise Management System is made up system which when implement in an integrated manner with an aim to coordinate and bring about cooperation within a function of an enterprise.
• Enterprise Management System (EMS) is made up of integrated Enterprise Resource Planning (ERP), Supply Chain Management (SCM), and Customer Relationship Management (CRM).
The crucial component of EMS is the ERP which controls the support systems like;
ERP: Enterprise Resource planning Systems.
EDI: Electronic Data Interchange System for commerce, communication and action.
CAD/CAM/CAE: Computer Aided Design/Manufacturing/Engineering System for production management.
AMS: Attendance Management System; that is, employee attendance and presence management for the role management or data capture systems on floors, in stores, at gates etc.
DMS: Document Management System, which are, imaging, copying and text management and dispatching document, DBMS.
CMS: Communication Management Systems, such as, paying, cordless, mobile, telephone systems and audio-video system.
SMS: Security Management Systems such as the close-circuit television, alarm or warning systems, movement tracing system, etc.
The ERP plays the pivotal role of taking the major decision and executing of this decision the enterprise revolves around the ERP. The EMS manages the function of the enterprise with support of ERP. EMS provides the vital information needed by the middle as well as the top management to aid their decision making.
EMS COMPONENTS:
1. Electronic Data Interchange is the structured transmission of data between organizations by electronic media. EMS is used to transfer electronic documents or business data from one computer system to other computer system.
2. Attendance Management System is the system of managing attendance or presence of work information, which increase and motivates employee attendance thereby minimizing loss. If company are on loss due to employee downtime time it is time to opt for a good time attendance managing system.
A few reasons to implement an attendance managing system:
• Save you lots of time.
• Promotes optimal and consistent attendance at work.
• Ensures proper utilization of the human capital.
• Ensures maximum productivity.
3. Document management system (DMS) is a computer system used to track and store electronic documents or images of paper documents. DMS is designed to keep important data into database and making them available them when demanded for document support.
4. CAD/CAM is broad term describing the use of computer technology to help in the construction, analysis and construction of products. The design and drawing are also stored in a database.
5. Communication Management System is the proper planning, implementing, supervising, and revision of all channels of communication within organization and between organizations.
6. Security Management System is broad field of management related to asset management physical security and human resource safety function. Information generated through SMS is sent to ERP.
Enterprise Resource Planning (ERP) System
ERP is an integrated, real-time, cross-functional enterprise application, an enterprise-wide transaction framework that supports all the internal business processes of a company.
It supports all core business processes such as sales order processing, inventory management and control, production and distribution planning, and finance.
Why of ERP?
ERP is very helpful in the follwoing areas −
• Business integration and automated data update
• Linkage between all core business processes and easy flow of integration
• Flexibility in business operations and more agility to the company
• Better analysis and planning capabilities
• Critical decision-making
• Competitive advantage
• Use of latest technologies
Features of ERP
The following diagram illustrates the features of ERP −
Scope of ERP
• Finance − Financial accounting, Managerial accounting, treasury management, asset management, budget control, costing, and enterprise control.
• Logistics − Production planning, material management, plant maintenance, project management, events management, etc.
• Human resource − Personnel management, training and development, etc.
• Supply Chain − Inventory control, purchase and order control, supplier scheduling, planning, etc.
• Work flow − Integrate the entire organization with the flexible assignment of tasks and responsibility to locations, position, jobs, etc.
Advantages of ERP
• Reduction of lead time
• Reduction of cycle time
• Better customer satisfaction
• Increased flexibility, quality, and efficiency
• Improved information accuracy and decision making capability
• Onetime shipment
• Improved resource utilization
• Improve supplier performance
• Reduced quality costs
• Quick decision-making
• Forecasting and optimization
• Better transparency
Disadvantage of ERP
• Expense and time in implementation
• Difficulty in integration with other system
• Risk of implementation failure
• Difficulty in implementation change
• Risk in using one vendor
Benefits of ERP
1. Better management of resources reducing the cost of operations.
2. Planning at function and process level increase in productivity of the business.
3. Customer satisfaction increase due to shorter delivery cycle, closer contact with the customer.
4. Simultaneous launching of the decision centers because of instant inducement through triggers or updates.
5. Business operations transparency between business partners cutting down the execution time of critical business operation.
6. Intelligent ERP download the decision making at the lower level, releasing the burden on the middle management.
7. Due to strong interface capabilities, the human resources can be utilized better due to access to information across the databases distributed over the organization.
8. Since, the ERP design is practice; it makes the management alert at a number of points demanding the decision the decision or action.
9. The processes become faster due to work group technology and application of work flow automation.
10. Due to the support technologies like EDI, E-mail, office automations, paperless office is a newer possibility as communication is faster and systems get connected directly.
11. The ERP still remain a valid solution with the expansion of business as it is a scalable architecture.
12. Due to the client/server architecture, the application of the object technology and use at the front and tools, the process changes can be easily the user service can be maintained at higher level.
13. The ERP implementation automatically leads to the usage of the best business procedures bringing the consistency of operation in the world of business.
14. With the use of data warehousing and data reverse engineering, management becomes knowledge driven and the organization becomes a learned one.
15. The ERP scope can be enlarged through the internet/intranet access, making the ERP sensitive to the date of events in the business, market and technology.
16. The quantity of decision making improves as the user decision maker is made alert and knowledgeable and better informed dynamically.
17. The tools available to the decision maker are friendly whereby he is equipped to make decision and execute it simultaneously.
EMS & MIS
There is a qualitative change in MIS due to the complexity of business operation and the risk involved in handling the business. The management focus is shifting from the function to the process, i.e. the management requires the information support in the process management and not in the function management.
The process definition now goes beyond the organization boundary. It connects the organization to the other agencies. The emphasis is on the automation of processes with strong information technology implementation. Today’s enterprise has ERP, SCM, CRM implementation are up and running effectively. An integrated system of ERP, SCM and CRM is called an EMS.
The MIS is now required to maximize the process productivity and performance. The decision-making support is required for the process optimization. The decision models are built across the business management functions. Besides the normal MIS reports required for the top management, the top management also needs a set of the additional reports, where the critical business processes and the critical success factors are a focus area.
The EMS solution caters to these requirements easily. The ERP solution is an integrated solution. The solution operation is seamless, disregarding the hardware or the software platform. The EMS solution takes care of data integrity and consistency across the extended organization.
In today’s competitive world, the shift of decision-making is towards strategic management of the business. The EMS solution, due to its scope and coverage, and supported by a variety of tools enables strategic management based on the strategic information for decision-making.
The management attention on the focused area is easily possible. The conventional MIS design is more or less embedded in the ERP solution. They provide all the routine reports at any time for the middle management of the organization. The EMS over and above this; provides an executive information for the strategic management of business. It helps to formulate the strategies to achieve the business goals. The EMS design provides transparency to the users of information giving them an access to the sensitive information to locate, define and resolve the problems.
The ERP enables the work group management efficiently and effectively. The effective uses of the variety of tools, like the data replication, the work flow automation, the EDI, the EIS, the bar coding, the paging systems are build in ERP. The effective use of these variety of tools also speeds up processing, cuts down the operation cycle time and raises the ability of the management to take decisions. Once the ERP is built in the organization, it takes care of the data, the information and its storage and therefore, provides the capability to modify the MIS from time-to-time as per the changing information needs.
All the ERP solution use the client-server architecture in the solution, where the data processing and the application level processing logic is taken care in the server level giving freedom to the user, as a client, to define the problem and evolve the solution using the front-end tools. The front end hardware and the tools are so powerful that an individual can develop his own MIS based on his decision-making information needs beside the usual MIS like corporate, functional, etc. the decision maker can operate as an individual in isolation from others, if need be.
The ERP through such an MIS design improves the decision-making skills of the individuals very effectively. It provides an autonomy in a global system operations with the ERP, the MIS design is more flexible highly decision intensive and efficient.
EMS, an integrated ERP, SRM and CRM are also so advanced that most of the operational decisions are automated in the EMS. The decisions at the middle management level are delegated to functional systems. Managers at this level are empowered through information support to make decision. Main focus of MIS in enterprise environment is to support strategic management decisions at top management level. ERP system supports management in decision-making of capacity allocation, scheduling of jobs and so on.
MIS focuses on resources, planning and control. MIS point out shortfalls and under utilization of capacity. In SCM, MIS focus is on value of chain of supply chain. In CRM, MIS focuses on decision related to improving customer relations.
EMS benefits can be summarized in three classes’ namely operational, business and management. In operational benefits, significant benefits are in cost and delivery of goods, due to the reduced processing cycle. It also increases resources, resource productivity. The business benefits are improvement in profits and higher level of ROI. Management benefits are in the area of strategic information management and its application for strategic analysis and decision-making.
EMS solutions have proved more powerful due to business rules embedded in the process, automation of decision analysis and decision-making and generation of knowledge database. The solutions are advanced in technology application enabling seamless flow of information and integration of other technologies such as bar coding, automated data capturing on shop floor, EDI, internet etc.
Comments
Post a Comment