Information Systems Management

Midterm exam, PGP 2017-2019 batch

Indian Institute of Management Shillong

Date: 13th November 2017 Duration: 90 minutes
Instructions:

The question paper is in the form of a multiple choice where you have to choose one of the
given alternatives as your answer and enter the corresponding letter in the your Choice
box given. However, unlike the standard multiple choice papers it is not a zero-one option:
the given alternatives may all of be a correct answer but one of them will be the best in
terms of understanding and expressing the concept. Of course, one of them may also be
totally wrong. Thus your choice may fetch you zero points if it is totally wrong and five points
if it is the best. Other options may fetch you anywhere between one point to four points,
depending on the option you choose.
Put your name and roll no on the paper.
Save your solution file with your name and upload it back to moodle as a submission to the
assignment.
It is an open book exam. You may consult own books and notes, but consulting with others
in the exam hall is not allowed.

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Name and Roll no: SAGARICA BRAHMA 2017PGP103

1. Write a brief note on the fundamentals of Information Systems and related managerial issues.
A. Everyone needs information to make choices and so does a businessman. The need for the
right information, and the amount of it, becomes more crucial and voluminous as the
business and the environment in it which operates becomes larger and correspondingly
complex.

A small time roadside vendor, knows, by inspection, how much inventory he has-by memory;
how much he sells in a day on an average; and, so, how much he should buy to maintain his
sales. He also knows, by rote, or through a record in a note book, of much money he spends
and collects in a day or week and takes action, accordingly, to keep his business running. Not
so for a manager of a large corporation be it a retail chain or a manufacturing organization:
he needs more sophisticated means of gathering, storing, retrieving and using information.

The entities that constitute the facilitation of this need of a manager form an information
system. In the case of the small vendor, it consists of his memory, eyesight, notebook, pencil
and maybe, his assistant. In a formal business/service organization, it consists of several
entities like computers, mobile phones, network, databases, technicians, organization, and so
on. Planning, organizing and controlling of these falls within the domain of Management of
Information Systems or, Information Systems Management.

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Specifically, managerial issues concerning Information Systems relate to what information is

actually required, what kind of technology is necessary, how should they relate to
organizational needs, implementation of an MIS, monitoring and controlling it such that it
continues to be useful to management of the organization.

Common practice has been for the general managers to relegate the entire management of
an IS to technical, namely, computer and communication experts. This has resulted in more
problems leading to ineffective and inefficient Information Systems. While it is not necessary
for a general manager to be knowledgeable about technology, in detail, it is necessary for him
to understand the concept of Information Systems and take the final call on decisions related
to it, in communication with the IS/IT specialists.

B. Information System is the system whose purpose is to provide information required by

managers, in an organization, for taking decisions.

In the current context, it consists of the entire IT infrastructure, namely computers, software,
databases, communication channels, peripherals like output and input devices, protocols and
standards and people to man it.

There are several managerial issues associated with an Information system:

Beginning with identifying what kind of information is required by various levels of managers,
that is relevant to their decision making, one has to decide on what kind and amount of
technology is required, how to monitor its performance how to ensure security, how can IT
itself be employed to maintain business competitiveness, etc.

Business people have always required and used methods of gathering, storing and
disseminating information, without necessarily referring to them as an information system or
employing any formal, rule bound, procedures. But, as the business grew, systems became
complex the need for and the methods of collecting, storing and using information became
intricate, and role of information systems as an organized approach of doing all this became
conspicuous.

Furthermore, the use of technology became imperative and that has given rise to a new
managerial discipline of Information systems.

Managing Information systems, therefore, consists of addressing issues related to decision

making, corresponding information requirement, the plan for and implementation of IT
infrastructure, its maintenance and so on.

C. As Organizational systems become complex over time, entropy increases. The only way it can
survive and grow is through appropriate employment of negentropy, namely, information.

The IT infrastructure used in an organization, to create negentropy is referred to as

Information Systems.

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Given that modern technology is very complex, the managerial issues concerning an IS is also
very complicated:

It is related to making a base blueprint of the Architecture followed by a future Architecture

plan. This needs to be discussed with the general manager and the technical people before an
investment decision is made.

The IT infrastructure consists of computers, applications, data bases, networks, protocols and
so on, required by the IS. Most of these are made simple through standards. The question is
now only one of how much budget the manager has earmarked for the IS, the IT maturity of
the organization and the obsolescence rate of the technology.

A good approach to managing an IS is to use the general systems approach to management,

by defining the purpose, identifying the people and technology, drawing a conceptual
boundary around these entities and structuring a feedback and control mechanism.

The IS, being a living system, will keep growing as the needs of the organization also grows.
So, constant monitoring and enhancing the IT infrastructure over time is a must.

Fundamentally, the IS must focus on providing management information of quality, where

quality of information means, relevance, reliability, timeliness and comprehensibility.

D. Herbert Simon, proposed that decision making has three components, namely: Intelligence,
Design and Choice.

Each of these components needs to be backed up with appropriate information. A system that
caters to this need is called an Information system.

The IS information system could be manual, like the Birlas Patha System or the Indian
Railways, comprehensive set of records; or, entirely driven by technology like many modern
global conglomerates. Irrespective of this, it is the responsibility of senior general managers
to attend to the managerial concerns of an IS and not that of technology experts like some
managers often relegate it to.

The managerial problems related to an IS are mostly about identifying the functional
requirement of the IS, collaborating on the IS plan (architecture) investments and monitoring
the system.

The onus of a good working IS in an organization should lie with the senior general managers.

Your Choice: A

2. Explain the law of requisite variety with suitable illustration.

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A. The law of requisite variety states that the variety of solutions for a problem should be
reduced through a process of deductive elimination process. The final solution will be chosen
from this reduced space by evaluating them against preferred set of criteria.

For example, when you want to go on a vacation, there are several places one can go to. But
given the availability of time and money you can reduce the possibilities to four or five places.
Your preferred criteria, then, could be: a. a place that you have not seen before; b. should not
require more than an overnight travel; c. decent hotels or resorts within a certain budget
should be available; d. must be preferably a recommended place by a large number of
reviewers.

The location that meets these criteria best will be your final choice.

B. The law of requisite variety, states that controlled systems should have more variety than the
controlling systems. This means that the controlling system be compact and tight so that it
can easily browse the variety in the main system and extract and act on the variables in the
system.

For example, let us consider a large carnival. Several activities of entertainment and facilities
will be present in such a situation. It will be very difficult to control the security in such a case
if the security staff were large and dispersed.

A compact team, with a senior member will be able to keep track of all the personnel and
assign them effectively to troubled spots.

This law can be extended to the Information Systems in the sense that a reasonably small IT
infrastructure, controlled by the general senior manager will be more effective than a huge
expensive, unmanageable system.

C. The law of requisite variety states that, the variety in the controlling system should at least
as much as that in the controlled system.

As systems grow, they become complex and the variables operating within become large. For
example, as a small shop grows into a super market, the number and brand of items increase
enormously. To manage the store in terms of controlling the stock, the margins, pilferage and
so on, requires a huge effort. When the store was a small shop, the owner and an assistant
were enough to control the operations with the help of little information. But now, these two
alone and limited information will not be able control the operations. Not only will more
people be required, more information and creative methods will also be needed.

According to this law this system of control should be able to match the variety of the store in
order to manage it.

One method is to reduce the variety in the system like categorising items and space, etc.-
and another is to increase the variety in the controlling system like adding more people,
using technology and so on.

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D. Consider the example of the two gentlemen on the high stools trying to control the movement
of a rubber ball with the help of elastic strings. The elasticity of the string represents the
infinite variety of the system and the just two gentlemen are trying to control the ball which,
as was noted, was an impossible task. The variety in the controlling system was, obviously,
inadequate to control the system.

This is where the law of requisite variety comes into play. This law states that the variety in a
controlling system should be at least as much in the system being controlled.

What this means to say is that if there is not enough variety in the controlling system, it is
bound to get overwhelmed by the variety in the system being controlled and, therefore,
becomes incapable of controlling the system. One often seen instance of this is where we lose
control of a system on account of too many rules.

In the mistaken notion of control meaning the same as regimentation, we end up building up
too many rules in a system to plug every imagined loop-hole. In the bargain, what we actually
do is to increase the number of parameters in the system, thus increasing variety, disorder or
entropy making it beyond the ability of the controlling system to control. the solution lies in
having simple and few rules, ensuring that very strict vigil is maintained in enforcing these
rules.

In general, what this law implies is that proper control of a system can be achieved either
through reduction of variety in the system or increasing variety in the controlling system, or
both.

Reduction of variety in a system is usually achieved through categorization, division of labour,

de-centralization, and so on. Increasing or amplifying the variety in a controlling system can
at best be achieved through information technology. The exponential growth in the demand
for and the development of Information Technology can be explained because of this
phenomenon.

Your Choice: D

3. Refer to the case, Central Supplies Authority

It followed from the discussion that the following are the Key Decisions and corresponding
Processes associated with CSA:

Budget Formulation
Identifying and entering into the Rate Contract with Vendors
Inventory Control
Item List
Supply Based on Indents
Packaged Indents based on disease statistics

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Bill payments

The solution discussed in class envisaged the CSA as store of information

Major institutions can procure their requirement directly from supplier- will be monitored by
directorate/government

Top management will receive periodic reports about drug procurement, pending indents, payment
situation, etc. from institutions as well as CSA.

For
sanction Budget
proposal
Indents, item wise,
institute wise

Budget
Formulation
DB of items,
stock,
consumption,
price
Sanctioned
budget

Budget, institute
wise, total

To major institutions

Vendor List
and Rates
Vendor
Selection, Rate
Quotations
Contract

Vendor list, rates &

other data

Vendor Rating
Data

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Indent copies,
major instns.

Indents/Orders
Budget allocation

Indenting
Indents from
minor instns.
Stock

Medicines to
minor instns.

Purchase orders
Bill Payments Minor
Bill from
Vendor Instns. only
Invoices

Rate Contract

Reports &
Queries

CSA

Data Base

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The processes and corresponding required information are shown above diagrammatically.

Given this situation and your knowledge about CSA, as given in the case, which of the following IT
architecture do you feel to be most appropriate?

A. There will be one machine at CSA Store could be a minicomputer with database handling
capability and may be dial-up facility- that can be used to handle all the information processing
shown above. PCs at the major institutions are desirable for maintaining stock positions,
demands, POs and similar data. If necessary they may have a dial up connectivity to the
machine in the CSA Store to forward copies of their indents. These may actually be sent by
email or even physically through a CD.

B. A minicomputer could be installed at the Health Directorate, exclusively to for the CSA system,
which will maintain a centralised database of the institution-wise budget, vendor list, vendor
rating, purchase orders and indents, vendor bills and payments, inventory information of
major institutions and CSA store.

PCs at the CSA store and each major institutions with appropriate application software will
help in inventory management and, in the case of CSA store, handling indents from minor
institutions. Small data bases will store local data copies of which will be sent to the main
system at the directorate.

The management will retrieve reports and exceptional reports by querying on the central
database. The PCs will be connected to the mini computer through the internet.

C. Each major institute and the CSA store will have a large PC or minicomputer connected to
some PCs, through a LAN. The smaller PCs will each be dedicated to individual processes like,
inventory, purchase orders and- in the case of CSA store- vendor performance and budget
formulation.

These LANs will be connected through a WAN to a larger system, at the directorate, that is
part of the general IS of all other matters related to the health department.

D. To begin with, let a PC be installed at the CSA store, with a data base and applications that
cover all the processes shown in the diagram above. Major institutes may or may not own
PCs, at the beginning and send copies of their P.O.s to the CSA stores.

Hard copies of reports could be sent, periodically and/or as required, to the directorate from
the CSA store and the major institutes.

After the system matures somewhat, all the major institutions should also have PCs and copies
of their P.Os and stock position can be replicated in a mini computer at the CSA store. Vendors
can receive POs by email.

Subsequently a centralised data base may be created at the directorate with a reasonably
powerful PC, connected through a VPN to the CSA store and major institutions, which the top

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management can query upon for monitoring the performance of the drugs and medicines
system.

Your Choice: C

4. Study the case-let presented below and decide on the most appropriate IT architecture for this
situation, among the given alternatives:

Kaveri Department Stores

Mr. Murthy, the managing director of Kaveri Department Stores (KDS) called for a closed meeting of
his senior subordinates, to review the deployment of Information Technology in his stores and decide
on laying down a strategy for the future before laying down his office.

KDS has grown to what it is today, out of a small retail business that was founded by the grand uncle
of Mr. Murthy, in the early 1950 s. It subsequently grew into a department store that was registered
as a private limited company owned by the members of the family. Mr. Murthy was thus appointed
as the managing director in 1980. After serving this family owned business for 20 years, he decided to
retire and pass on the baton to a younger member of the family.

During Murthys time however, KDS grew to such popularity that Franchises were set up not only in
Mysore, where KDS was located but also one each in Chennai and Coimbatore.

The fundamental thrust of Murthys strategy was customer service and it is believed, thats what made
KDS grow so rapidly. His managerial attitude was quite modern for the 80s in this sense because he
was also a good paymaster and selected and treated his staff very carefully.

In tune with his policy, he introduced electronic cash registers at the counters which helped keeping
accounts as well as monitoring of stock movement very accurately. He realized, however, that he
would benefit much more by using computers to manage stocks more efficiently. He then replaced
the cash registers with stand alone PCs and printers.

Around this time he attended a conference in the US and that time, he met some people who sold
him the idea of using an IBM AS/400 machine and DB2 data base management software. This was
used for inventory management, accounts and payroll. The programmes were written in COBOL.
Similarly, the PCs at the counter also ran small programmes that could print out bills, total up daily
sales and print out summaries that could be keyed into the AS/400 machine for further processing.
The sales data were also converted, using a small programme, into files that could be used by the
popular accounting package called Tally. Tally was very user friendly and versatile accounting packing.

The AS/400 machine was also used to generate several management information reports like sales
analysis, pending purchase orders, accounts receivables, etc. Incidentally, the basic billing and
purchase applications were written using FoxPro database and FoxPro command language and a
simple language called clipper. This in turn was made to speak to the DB2 using appropriate software.

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Subsequently, the PCs at the counter were replaced with integrated point of sale terminals, referred
to as POS, bar codes were used for reading item details, and these, along with two PCs and the AS/400
were linked up through a Novel Netware LAN. With this step, the entire process from the placing of
orders on a supplier to the point of sales, at the counter, had been linked through the IT network.

Actually, though the system worked fine, as Mr. Murthy reviewed the history, he agreed that the
system was a hotchpotch of hardware and software. This started being bothersome when, around
1997, an attempt was made to replace the text based character inputs with popular graphic user
interfaces, or GUI. Incompatibility with the AS/400 started showing itself. Ultimately, a third party
software was purchased that could crudely provide the compatibility. The idea was also to introduce
the Windows NT network. However, the main system could not be accommodated in this framework
and had to be abandoned.

The real issue came up when Mr. Murthy decided to link up the franchises with an IT network. There
were about 8,000 items to be moved across from warehouses to retail points. Of course, he came up
with a scheme whereby the franchisees themselves will have to pay for the IT investment, but the
architecture had to be standardized across all of them.

A more cost effective and reliable solution would be to standardize on Windows NT with SQL server
as the database engine. It only meant that KDS would have to keep its main system of the network
across the chain.

The other issues that cropped up during this review was that the entire IT in KDS was driven by Mr.
Murthys passion for customer orientation and his IT savvy nature that enabled him to dedicate
himself to deploy IT for this purpose. He had a dedicated team that actually learnt quite a bit about
Information Technology in the process. Most of the experienced staff began seeking lucrative jobs
outside and similar talent was difficult to get.

Just before handing over charge, Murthy was already negotiating with some vendors to introduce e-
commerce, facilitating online shopping, especially to regular customers. He was also negotiating to tie
up with a private bank for this purpose.

There was also a move to invite an MNC partner to expand the chain.

***

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Reports

Your Choice: B

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5. Which of the following notes is most correct, concerning a systems Matrix?

A. A systems matrix is drawn to help one decide on which of hypotheses of living systems can
applied in designing the system. It indicates the relationship between functional and
organisational accountability thus allowing one to decide on the proper organisational
structure.

B. A systems Matrix consists of the tasks that are required to be performed to achieve the
purpose of a system, on the one hand, and the agencies associated with these tasks.
It thus gives one a pictorial view of a system, which can then be used to understand and
manipulate the structure of the system in order to make it more meaningful.
C. A systems matrix is a kind of table, where we list down the tasks being performed or to be
performed within the system to achieve the intended purpose, as rows; and, the agencies
associated with the system that may be engaged in performing these tasks, as columns.
By identifying the combination of tasks and the agencies one can design the system by
identifying subsystems, their control levels and the matter-energy & information links
between the subsystems.
This helps in looking at a system from a holistic point of view and resolve associated issues.
D. A systems matrix is a table with tasks in the rows and agencies, performing these tasks, in the
columns.
This helps one to understand the relationships between the subsystems that are made up of
the agencies and the tasks that become the purpose of the subsystems. By linking them
appropriately with matter-energy and information flows and identifying hierarchy between
them, for control purpose, we get a perfect, workable, organisational structure.

Your Choice: C
Answer whether the following statements are true or false by ticking the appropriate box:

6. The law of equifinality deals with the possibility of alternate solutions.

[ T ] [ F]

Ans: [ T ]

7. Determination of clear financial benefits of an IT an implementation is a must in order to

determine the worth of an IT investment.

[ T ] [ F ]

Ans: [ T ]

8. Preparing a baseline IT architecture is a must before finalising on one.

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[ T ] [ F ]

Ans: [ T ]

9. Internet connectivity is to be totally avoided, as being expensive, in the case of a medium sized
departmental store.

[ T ] [ F ]

Ans: [ F ]

10. IT maturity of an organization should be a consideration in deciding on the IT investment in a

company.

[ T ] [ F ]

Ans: [ T ]

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