Summer 2013

Master in Commerce - Semester - IV MCC403 Management Information System

Q1. Explain the role of information in decision making. Ans: Decision-making is a process that includes the following stages: Identification and structuring of problems: One needs information to identify a problem and describe it in a structured manner. Putting the problem in a context: Without information about the context in which the problem has occurred, one cannot take any decision on it. In a way the context defines the problem. Generation of alternatives: Information is a key ingredient in the generation of alternatives for decision making. Choice of the best alternative: Based on the information about the suitability of the alternatives, a choice is made to select the best alternative. Information is required to take decisions. Imagine a simple decision like the one a driver makes when he presses the brakes to stop his speeding vehicle when he sees a child crossing the road. The driver decides on braking based on the information processing that occurs in his brain. At every stage, he uses information, which he captures visually. All decisions are like this. First we get information about a problem, which we format into a structure. Then we get information about the context in which the problem has occurred. In the example described above, if, instead of the child crossing the road, the driver had seen the child about to cross over with a few steps only, he would not have braked to stop but would have slowed down, as he would have calculated that by the time the vehicle reached the crossing stage, the child would have passed. If the problem was described as how not to hit the child crossing the road, and if the child was in the middle of the road, the driver would have braked but had the child been about to complete crossing the road, the driver would have only slowed down and not braked to stop. Therefore, we see that context has a major role in decisionmaking and information is required both about the problem and about the context in which the problem occurred. The next stage for the decision-maker would be to generate alternatives. In the drivers case, such alternatives would be to: (a) Stop by braking (b) Slow down (c) Take a sharp turn towards the left or right to avoid the child (d) Press the horn so that the child crosses the road quickly (e) Drive the vehicle on to the footpath and out of the road to avoid collision

So the decision-maker generates these possible solutions to the problem at hand, based on the knowledge and information he has. For instance, in the example discussed above, the driver would need to know that braking stops the vehicle. If he is unaware of this crucial information he would not be able to generate this alternative. Therefore, to enable managers to take good quality decisions, it is very important to provide them with the right kind of information. An MIS provides this service to the managers, enabling them to take informed decisions. Q2. Explain how businesses can gain competitive advantage from managing information. Ans: Information and its use has become the competitive advantage of todays world. The efficiency with which a firm manages its information determines its success in the marketplace. This enormous power of information unleashed in todays world has reduced the managers reaction time for decision-making, made customers aware, competitors efficient and regulators alert. Today, one can no longer hide behind excuses of plausible deniability. These changes have changed the mindset of managers and have transformed the way business is conducted. Management of information itself has become a key success factor for most firms. However, information is not to be seen in isolation. Information in the current competitive business environment is available to business firms in a computerized environment. Computerization is required to make the information supply timely and accurate, since these are critical factors for success in these competitive times. Hence, the study of information management also entails an understanding of information and communication technology. However, information management is a distinct subject not related to information and communication technology. As is clear, the advantage that a modern corporate house enjoys can be traced to its management of information. If the business house cannot manage its information, then it is likely that it will not have any competitive advantage. Typically, an organization can develop competitive advantage if it can do or have what another organization cannot do or have. In modern times, the advantage on account of raw materials or technological edge is neutralized by the forces of modern business. The last frontier is information management. Companies that have managed to do it successfully, such as Dell and Google, have generated unparalleled competitive advantage as their reaction time to changes in the market and / or competition is much less, and hence, they can shift business gears faster than their competitors and hence gain the advantage. Competitive advantage through managing information can accrue to an organization if it manages information: To reduce reaction time for change To increase the organizations efficiency To gain insights into the business that competitors do not have For predictive analysis to stay ahead of competition This competitive advantage gained by managing information also requires changes in organization cultures. Companies need to create a culture of information-based management and decision-making to take advantage of the opportunities of

information management. This is a challenge, as installing an organization culture is not as straightforward as installing an information management system. It is a process that takes a lot of time. Q3. Explain the role of information technology in logistics. Ans: The impact of IT is now transforming logistics into a catalyst for renewal. The two major reasons for the use of information technology in logistics are the spatial spread of manufacturing and service activities, and the time element in planning, both of which require data intensive decision-making. To make such decision making possible, there has to be efficient, reliable and timely data capture, data availability at various locations and ease of manipulating it for the purpose of decision-making. The evolution of Logistics Information Systems (LIS) started with manual processing of information and from there moved on to stand-alone computer systems. The next step was information systems at the firm level and inter-firm integrated systems. Simultaneously, the speed of information transfer evolved in such a way that integrated systems could provide computational speeds that matched operational decision-making. These options use a combination of hardware and software, offering specifically designed systems to manage, control and measure logistics activities. Hardware includes the processor, input/output devices and storage media which can be configured in a number of ways. A continuous range of possibilities is available, starting from stand-alone personal computers, to micro computers, minicomputers, networks and mainframes. The use of local area networks (LANs), wide area networks (WANs) and client/server architecture offers the benefits of decentralization, responsiveness, flexibility and redundancy while providing data integration throughout the enterprise. Whatever the choice of IT architecture might be, the decision should reflect the desired managerial structure and also have the ability to be extended for changes expected to take place in the foreseeable future. The hardware aspect of communication and networking includes cables, fibres, satellite technology and VSAT (Very Small Aperture Terminal) technology to access satellites. This is a rapidly expanding field, where the infrastructure is becoming available and affordable for many players, through services offered by independent providers and by public sector companies in the field of communications. Software includes system and application programs used for processing transactions, management control, decision analysis and strategic planning. Logistics information is generated at each stage of the customer order performance cycle. The objective of LIS is to apply itself to the effective flow of related information from the point of origin until the point of their consumption in order to assist the firm in satisfying customer demands in the best possible way. Q4. Describe the role of Executive Support Systems (ESS) in an enterprise. Ans: Executive support systems (ESS) are designed for senior executives of organizations. Executives are responsible for the growth and survival of the organization. They need to monitor the performance of the organization, remain

competitive and respond to market changes and trends, etc. How will an executive know the performance of the organization? The answer is very simple: by looking at the performance data. This data is stored in transaction processing systems in terms of current sales, purchases, expenses incurred, etc. An executive or manager would like to look at the consolidated data, targets set, performance of previous years and performance of the competitors. If he is interested in details of a particular product or zone, he would have the option of drilling down. There are two terms associated with executive support systems: roll-up and drill-down. Roll-up refers to consolidating data and drill-down is the ability to view expanded data. If, for example, sales data is available for an organization for sixteen zones, a roll-up may present data in terms of five regions and a drill-down view may present each product or each sales office, etc. An ESS provides a graphical view of the data. The most challenging part of building an ESS is to transform transactional data into usable form. The data may be incomplete or the required fields may be missing. The problem is more pronounced in organizations where each department or functional unit has its own independent TPS. Each of these systems may have different software and hardware platforms, different application software and different representation of the same data. Just to give an example, you might have received a document that failed to open. Different units may have evolved different nomenclature. An organization had multiple manufacturing sites and each referred to components differently. This interesting fact was discovered when the management decided to consolidate purchases. ESS needs to integrate external data for market trend analysis and forecast. Sources of external data are the Web, market agencies and company reports. An ESS should be easy to learn and use. Executives may not have time to attend a training session. An ESS should also fulfill the information requirements of the executives. ESS is a new phenomenon and some executives may feel uncomfortable using an ESS. It is easy to monitor the performance not only of the organization but also of colleagues. ESS is expensive as they are mostly custom built, integrate organizational and external data and provide graphical user interface and analytical capabilities. As with any project, ESS deployment also goes through a cost-benefit analysis. However, most of the benefits of information systems are intangible. Look around you: identify information systems that you use or see in use and try to enumerate benefits. Start with cell phones and you will soon discover that all benefits are intangible. Sometimes, it is difficult to justify investment in information systems. But in the last two decades, the scenario has changed and investment in information systems has increased. Q5. Discuss why systems are vulnerable. Ans: When an organization has functional units that create and maintain their own data, the data is spread across the organization. If data is maintained in paper files, these are categorized and secured appropriately. If the data is maintained in computer systems, multiple software and computers are used. But since data is integrated across the organization, a single uniform access method is used. In such a case, one successful illegal attempt to access data can compromise the data of

the entire organization. A single database server failure can make the entire data inaccessible if there are no backup servers. A network failure or Web site failure can cause inconvenience, financial loss and embarrassment to the organization. Computer systems can fail or not perform their designated function due to many other possible reasons such as hardware failure, software failure or telecommunication problems. A human error, theft, natural disaster or a break in electrical supply can threaten the functionality of an information system. Sometimes, a policy change by a regulatory authority can render existing systems useless; for example when the VAT system was modified. One Major Source of Security Threat is Communication Technology The objective of communication technology is to enhance accessibility. The data stored at a location can be accessed virtually anywhere on the globe providing multiple potential points for an intruder. An attack from an intruder may corrupt the data or prevent it from reaching the intended user. Such attacks are active attacks. A hacker can easily gain access to any data. Such attacks are performed by computer viruses that are software programs. Viruses travel from one computer to another through e-mails. There are viruses that attack mobile devices. There are programmers who write virus generating programs, and there are programmers who write anti-virus programs. But somehow, virus creators always stay ahead of the anti-virus creators. Concerns for System Builders and Users Software companies that create software systems and organizations that use them and depend on them, make efforts to protect their systems from natural and technical failures. A natural disaster such as an earthquake or fire can destroy an entire system and precious data beyond repair. Most organizations therefore keep one or two backup servers in different seismic zones. These servers are updated in real time and kept in sync with the primary server. Data Quality Problems Another problem is that of poor quality data. Data is generally stored in a Relational Database Management System (RDBMS). An RDBMS has very little capability to check the integrity of data. One can enter an invalid address and the system has no way of checking and stopping it from entering the system. Sometimes, data entry staff can make a mistake or the data available to them may not be correct. Q6. Describe five components of a network. Ans: In general, a computer network is composed of one or more servers, workstations, network interface cards, active and passive hub, routers, bridges, gateways, modem, software components like network operating systems, and other application software. The following components are widely used for the construction of networks. Server It is the most powerful computer of the network. In a local area network, usually a powerful microcomputer or a super microcomputer with the power of a minicomputer is used as a server. There are two types of servers normally employed in a local area network. They are dedicated servers and non-dedicated servers.

In a dedicated server, the server computer performs functions and services of the whole network. It helps to efficiently run user applications and increases the overall system cost. Users cannot run their applications directly in a dedicated server. It provides e-mail service, sharing of multiple hard disks, and sharing of other resources and faster response time. For larger networks with heavy load, dedicated servers are usually employed. In a non-dedicated server, apart from the role of a network controller, a server also acts as an individual workstation. The server is equipped with large memory. Network operations demand only a portion of server memory. The remaining portion of the memory may be used for the user applications. Under light load conditions, it is advisable to use a non-dedicated server. Some servers can operate on both modes, according to the requirement of the user. File Server The primary goal of a computer network is to share data among several users. They also make their attached disk drives, printers, modems, and unique communication links available to the various client stations. Providing one computer with one or more hard disks facilitates this. All client stations share these hard disks. Clients can make their requests to access any of the shared facility to the server. The file server is a powerful computer, which runs special software. It provides the files and other shared resources to different users in the network. It provides facilities like user authentication, security to various user programs, and data. It can be accessed through network operating system (NOS). Typical configurations of a server are Pentium 4 machine with 128 MB or higher capacity RAM, 40 GB or higher capacity hard disk, to serve up to 10 nodes or workstations. All activities of a file server can be monitored and controlled from the monitor called console. The network administrators are given special privileges. They are given supervisory passwords. They perform the network administration operation for the entire network. Any user of the network needs to get a new network service, they have to contact the network administrator and make a request for the specific service they need. The file server has a large memory, which is used for caching directories and files and hashing directories. Novell Netware and Windows NT are the two network operating systems that run on a server machine. Workstation Another important component of a network is the workstation or a client. A workstation is an individual computer with capabilities to communicate with other machines. It must be equipped with the hardware and software necessary to connect to a LAN. Usually a Network Interface Card (NIC) or an Ethernet card or an Arc net card is used for this purpose. Part of the network operating system is also available in the workstation. A workstation can communicate with other workstations or to the server. The hardware requirement for a workstation depends on the application and the size of the network. In a typical LAN of a university computer center, a Pentium III system with 64 MB RAM and 4 to 8 GB hard disk capacity, with necessary network interface card can be used for a typical workstation. In general, the memory and hard disk capacity of a workstation is much less than that of the server. Network Interface Unit Every computer on the network needs one add on card called Network Interface

Card (NIC) or Ethernet Adapter or Network Interface Adapter. The role of NIC is to move the serial signals on the network cables or media into parallel data stream inside the PC. In some cases, two or more such NICs are used in the server to split the load. These interface units also have the important jobs of controlling access to the media. This includes activities known as carrier sense (listen before transmit), sequential station number, and token passing. Transmission Media The data signal travels through this medium. There are two general categories. They are bounded (guided) and unbounded (unguided) medium. Twisted pair, coaxial cable, and fibre optic cables are all bounded media. The data signals travel within the boundaries of the transmission media. On the other hand, microwave and satellite transmissions, both travel through the air, which has no boundaries, hence called un-bounded transmission.