Management Information System - I PDF

Management Information System - I Syllabus 1. Introduction to Information Systems and MIS 2.Decision Support Systems Introduction to Information System and MIS Unit 1 ▪ Information System- Meaning, Definition and Types ▪ Using Information Systems to Achieve Competi...

Management Information System - I Syllabus 1. Introduction to Information Systems and MIS 2.Decision Support Systems Introduction to Information System and MIS Unit 1 ▪ Information System- Meaning, Definition and Types ▪ Using Information Systems to Achieve Competitive Advantage ▪ MIS-Nature, Scope, Need and Impact on business ▪ MIS and User ▪ Information, Classification of information ▪ Information and Decision Making  Unit 2 Decision Support Systems Decision Support System (DSS), Group Decision Support Systems (GDSS) Executive Information System (EIS/ ESS) Expert System and Knowledge based Expert systems (KES), Artificial Intelligence (AI) ERP Evolutions of software  Artificial Intelligence Expert System (Robotics) Executive (Chess, other Information games, mimics Decision Support System / human being) System / Group Executive Management Decision Support Information Support System System (aid in Office automation System the process of system (Inventory, (providing DM) Transaction information) Billing, Wordstar) Processing (Payroll) / EDP  EDP : Focus on Data OAS : Focus on Communication MIS : Focus on Information DSS : Focus on Decision Support for a specific business problem EIS : Focus on Decision Support for Top Management ES : Focus on Consultation AI : Focus on self-learning/thinking systems Reports DP was impersonal and not according to user requirement Data & Information Information to one may be data to another Format to provoke decision making Also helps in further investigation Selective approach in analysis and exception reporting Need base exception reporting Databases & MIS Storing data at one place De-centralization Proper Decision Making Information System are categorized as :- Associated with specific functional areas of business Systems which apply to any functional areas Specific functional areas of Enterprise resource planning systems Supply chain management systems business Customer relationship management systems Knowledge Management Systems  Transaction Processing System Office Automation System IS which apply to any functional areas :- Knowledge management System Management Information System Decision Support System Executive Support System Definition of MIS MIS at different levels of mangement Top Level -- Strategic Planning Middle Level -- Management Control Junior Level -- Operational Control Clerical Level --- Transaction Processing “An integrated user-machine system for providing information to support the operations, management, analysis and decision making functions in an organization The system utilizes Computer Hardware & Software Manual procedures Models for analysis, planning, control and decision making An a database  MIS has more than one definition 1. A system which provides information support for decision making in the organization 2. 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. A system based on the database of the organization evolved for the purpose of providing information to the people in the organization 4. Computer based Information system. MIS is based on four major Data Data pertaining to the operations of the organization are gathered from both external and gathering internal sources components Data The above data is keyed in and stored in databases for processing. entry Data Data is transformed into useful information through the application of computer software transformation programs and judgments made by technical support staff and other system users. Information This information is used as needed by all levels of management for decision making. Utilization MIS is a blend of theories , principles of management and Information System Management Science Management Accounting Operations Research Organizational Behavior MIS Engineering Computer Science Psychology & Human Behavior  MIS can be summarized as :- MIS is a product with dynamic design Should be kept under constant review and modification Primary objective being providing information for decision making Developed considering the requirements of the organization Gives due regards to the people in the organization. Management function and management control are also considered to be crucial  Objectives Of MIS 1.Information given within correct time to facilitate decision making in order to take proper course of action. (Time) 2.Provide requisite information at each level of management (Level Of Mgt) 3.Helping in highlighting critical factors. (Success) 4.Regulate a process thru which information is recorded, stored and retrieved. (Storage) 5.Reliable Information (Reliability) 6.Support decision making in both structured and unstructured problem environment (decision) 7.Provide a system transmitting information to the users. (Information)  Characteristics Of MIS Management Oriented Management directed Integrated Common data flow Heavy Planning Element Flexibility and ease of use Modern MIS relies on computer technology A well designed MIS relieves human decision making process  Effective information processing requires a formal system which should take care of Handling huge amount of 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 information All the above is taken care by MIS through the use of computers and communication technology Role Of MIS The role of MIS in an organization can be compared to the role of heart in the body. Information is the blood and MIS is the heart. The system ensures that 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 everyone the the organization MIS generates information, communication, problem identification and helps in the process of decision-making. Need For MIS  Need of MIS Facilitates planning Minimizes information overloading Encourages decentralization Bring coordination Makes control easier Impact Of MIS  Pulls entire organization in one direction Monitoring of functional targets become easy Progress, achievement and shortfalls are brought to notice Helps in forecasting and long term planning Disciplined information reporting Impact Of Knowledge base MIS Direct to use information is given thereby saving time Information based work culture Managerial efficiency “The information we have, Is not what we want, The information we want Is not the information we need, The information we need, Is not available”. Hence, it is said that, “Don’t give the manager, What he said he wanted. But what he meant”. One important aspect of the difference between MIS and routine data processing is the capability to provide analysis, planning, and decision making support. An MIS orientation means users have access to decision models and methods for querying the database on an ad hoc basis; the database is also, an essential part of routine transaction processing and reporting. In MIS information is utilized so as to improve decision making and achieve improved organizational effectiveness.  MIS As Seen By The User User Uses Clerical Personnel Handle transactions, process input data and answer inquiries. First Level Managers Obtain operations data. Assistance with planning, scheduling, identify out-of-control situations, and making decisions. Staff Specialists Information for analysis, Assistance with analysis, planning and reporting. Management Regular reports, Ad hoc retrieval requests, Ad hoc analyses, Ad hoc reports, Assistance in identifying problems and opportunities, assistance in decision making analysis  MIS : Organization MIS design should give due weightage to human side of the organization and culture. Task and technology are physical in nature Culture and design are diff to assess from design point of view Structure of the organization is imp while designing MIS The main decision makers and power centers must be recognized by MIS MIS should be able to support the organization thru all phases growth, maturity and decline 1. MIS plays an imp role in creating orgn behavior which in turn sets the goals for achievement. 2. The MIS should support the learning mechanism by identifying the cause and effect in a given situation. 3. It should keep the records of action and provide help to analyze the best action in a given situation. 4. It should be able to build various decision making models for managers to use. 5. Information support system should be such that the group of enterprising managers should be able to improve their capabilities and perform better Points to be remembered :- Don’t give managers what he said he wanted but what he meant. MIS brings about a qualitative decision making and not quantitative DM MIS minimizes risk and surprise (cannot eliminate) Helps bringing about a proactive decision making Think Globally act locally Use of information for competitive advantage Drastic changes have occurred in Information Technology over the last few years. These changes, in turn, have ushered in an Information Revolution which is sweeping the corporate organizations world-wide. The corporate business environment has, resultantly, become intensely competitive, increasingly globalised and highly information-based. In such a highly competitive environment, it is imperative for an organization to strive to seek and seize competitive advantage to emerge winner. Ability to access and use information effectively has been an important source of competitive advantage for a number of corporate organizations. “Competitive advantage is about changing the balance of power between a firm and its competitors in the industry, in the firm’s favor”. Alternatively, “Competitive Advantage could be usually embodied in either a product or a service that has the most added value to customers and that is unavailable from the competition”. Competitive advantage could also be seen “as an internal system that delivers benefits to a firm, not enjoyed by its competition”. Competitions are changing the rules of the game and creating new paradigm shifts, giving companies new ways to out-perform their rivals. This, in turn, facilitates the organizations gaining competitive advantage. Organzations should know how information can be used for competitive advantage According to Porter and Millar, Information Technology is affecting competition in three vital ways; 1. It changes industry structure, and, in so doing, alters the rule of competitions. 2. It spawns whole new business, often from within the company’s existing operations. 3. It creates competitive advantage by giving companies new ways to out-perform their rivals. In order to understand the specific use of information for competitive advantage we would consider the uses under two types :- a. Functional Uses b. Strategic Uses.  Functional Uses Information helps organizations to enhance : i. Quality of their operation ii. Quality of their products iii. Quality of their services Information can help simplify : i. Products ii. Product Processes iii. Production Cycle Time Information helps organization i. Meet benchmarking standards ii. Improve customer service iii. Improve quality and precision of design and product  Strategic Uses A firm can use four basic competitive strategies to deal with the competitive forces i. Product differentiation ii. Focused differentiation iii. Developing right linkages to customers and suppliers iv. Becoming a low-cost product A firm may/can achieve competitive advantage by pursuing one or more of these strategies simultaneously. It is here where information helps an organization in gaining a competitive advantage.  Information and I.T. help increase/improve an organization’s abilities to co- ordinate its activities regionally, nationally and globally. This, in turn, helps unlock/unleash the powers of broader geographical scope to create competitive advantage. It organizations to “Think Globally, Act Locally”. Information yields strategic opportunities and enables change the rules of the competition very fast, grants competitive advantage, helps organizations become more flexible and responsive, eliminate management layers, separate work from location and restructure work-flows, giving additional competitive advantage to organizations. Information and I.T. help organizations acquire Strategic Flexibility. Strategic Flexibility is “a set of capabilities firms use to respond to various demands and opportunities that are a part of dynamic and uncertain competitive environment”.  Pre-requisites of MIS Should be a unified system. 2. Should support/facilitate decisions. 3. Should be compatible with the organization’s structure and culture. 4. Should have user-involvement and user-orientation. 5. Should be cost-effective/beneficial. 6. Should use the principle of selectivity and control by exception. 7. Should be responsive to changes around and within the organization. 8. Should be speedy and accurate. 9. Should provide validated and valid information. 10. Should be “Management” and NOT “Manipulated” Information System. Hardware support for MIS A management information system (MIS) is a computer system consisting of hardware and software that serves as the backbone of an organization's operations. An MIS gathers data from multiple online systems, analyzes the information, and reports data to aid in management decision-making. Information The data which has been converted into a useful and meaningful form is INFORMATION The term data and information are used interchangeably Data is not useful until subjected to “value added” process Information has a value in decision making Information brings clarity and creates an intelligent human response in the mind Information is processed data , placed in a context that gives it value for specific end user From data to information Stored Data Input (Data) Processing (Processor) Output (Information)  Definition (Davis and Olson) Data that has been processed into a form that is meaningful to the receipt and is of real or perceived value in the current or the prospective actions or decision 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. Characteristics of information Improves representation of an entity Updates the level of knowledge Has a surprise Reduces uncertainty Aids in decision making. Quality, Timeliness, Completeness, Relevance  Information Process The process of converting data into information is called as data processing Data processing activity involves collection, capturing, recording, storage, retrieving and unambiguous processing data into useable formats. Processing system depends on the nature of organization and kind of information required. Correct and up to date information can lead to correction decision making and corrective measures it required. Information process follows important functions such as :- Collection Classification Sorting Storing Retrieval Processing of data Information & Decision Making ✓Information is not only relevant but also critical for the decision maker as the quality of decision making is dependent on the quality of information ✓A decision is a choice out of several options made by the decision maker. ✓Major characteristics of the business making are :- ✓Sequential in nature ✓Exceedingly complex due to risks and trade ✓Influenced by personal values ✓Made in institutional settings and business environment  Sources Of Information External information sources → Government, trade organizations, newspapers, customers, suppliers etc Internal information sources → functional or departmental , report, daily sales report etc Primary Data → First hand information Secondary Data → Borrowed data  Types of information Strategic Tactical Operational Information Information Information Information can also be classified as Action Information → No stock No Action Information → Stores transaction Recurring information → Repetitive in nature, monthly stock status Non recurring information → non repetitive, market research  Internal information → generated thru internal sources External information → generated thru external sources Planning information → Use of standards, norms and specification for futuristic planning Control information → Reporting the status thru a feedback mechanism is called as control information Knowledge information → Collection of information thru library reports and research studies to build knowledge base for DM Action information, recurring information and internal information are the prime area for computerization and they contribute qualitatively to MIS. Timing and Accuracy of the action information is important Attributes of information Timely Available → Information must be communicated to the actual user in time, vital information if made available late is redundant. Information overloading should be avoided. The content of information should be governed by the user of the information rather then by producer of information. Accuracy→ Sufficient accurate information should be provided, raising of accuracy level at times increases cost substantially. Appropriate level of accuracy is matter of judgment in a given situation  Form of presentation Frequency of reporting → The frequency at which information updates are to be provided should be in line with the usage of information or the time cycle of the activity Understanding → Simplicity of understanding is essential for effective usage of information Application → information should be designed using end application Communication→ information should be communication effectively Relevant to decision making Complete for the decision consideration → should cover all the aspects of the decision situation.  Interpretation Quality of information Verifiability Cost effective Consistent “The information we have, Is not what we want, The information we want Is not the information we need, The information we need, Is not available”. Hence, it is said that, “Don’t give the manager, What he said he wanted. But what he meant”.  Information Process The process of converting data into information is called as data processing Data processing activity involves collection, capturing, recording, storage, retrieving and unambiguous processing data into useable formats. Processing system depends on the nature of organization and kind of information required. Correct and up to date information can lead to correction decision making and corrective measures it required. Internal information generated thru internal sources External information generated thru external sources Planning information Use of standards, norms and specification for futuristic planning Control information Reporting the status thru a feedback mechanism is called as control information Knowledge Collection of information thru library reports and information research studies to build knowledge base for DM