Mis - Abi's New Year Gift For 2012

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Introduction to Management Information Systems
1.1
Management Information Systems: Concept
Data:
Data is a fact (collection). Data can be a character or a word or a graph or even a number etce.g facts regarding a market survey.
Information: Information is the data that has been processed into a form that is meaningful to the recipient and is of real or perceived value in current or prospective actions or decisions. e.g processing of market research facts. Processing the facts involves the task of comparison, sorting (context) e.g file processing involves creation, manipulation, maintaining etc Information ads to a representation, corrects or confirms previous information, Information has surprise value telling something receiver did not know or unpredicted Information reduces uncertainty. Information has value in the decision-making process which will change the probabilities associated with the expected outcomes in a decision situation. System: The comprehensive assembly of parts becoming an organization to achieve the stated goals. Management: is the art of getting things done through people. functions associated with Management with respect to MIS Involves supporting planning, organizing, staffing, directing, coordinating and controlling. IT: IT (information technology) is the technology which supports activities involving the creation, storage, manipulation and communication of
information (electronic communication) together with their related methods, management and applications. [ Technology is the study or use of the mechanical arts and applied sciences ]
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MIS is one of the numbers of important application areas of IT. Management Information Systems : Definition (Gordan .B.Davis) 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 and software, manual procedures, models for Analysis, planning, control and decision making procedures and a database. User - Machine (computer based )System : Existence of Organization or MIS doesnt depend on computer completely. But the MIS or organization will be more efficient, effective [ right thing in right way ] and feasible to operate. Why computers? Computers does some tasks better than humans but some are best done by humans Usage of computer at every aspect is not mandatory but to the extent it is used contextually that much comfort will be achieved.
User of MIS is any person who is responsible of ente ring input data, instructing the system and utilizing the information output (documents, reports of analysis, plans..) Designer of MIS should keep in mind all the aspects of human behavior and consider human as the information processor. He should also be well aware of the computers limitations before deciding the functions that are to be done by the computer. the computer may not be able to do very complex or confusing calculations) Computer could be a single user or multiple user (server). (
3 Downloaded from www.pencilji.com Integrated Systems : MIS provide basis for the integration of organizational information processing. Each
application might be designed separately and with different views of different developers so if there is no integration processes and mechanisms of individual applications then there would be lot of inconsistency and incompatibleness because of different data specification and also usage of same data by different applications e.g- sale details may be necessary both for the reporting, analysis , further calculations in stock and so on There might be redundant development if there is no proper integration, also the integration process has to be done according to some standards, guidelines and procedure sets, which prescribe machine compatibility, and centralized database should be used for the communication from all the individual applications. Utilization of computer hardware is addressed above now about s/w & database
Database has greater importance because data needs to be managed in order to be available for processing and have appropriate quality. This management of data is organization of data and software. The software to create and manage a database is database management system. DBMS thus gives controlled unique data accesses to prevent update anomalies. Authority would be set up to preserve database rather than just securing. Database when
controlled by DBMS they can be easily made sharable, distributable and even restricted from unauthorized accesses. Models for analysis, planning, control & decision-making. Data should be processed and presented in such a way that the result is directed toward the decision to be made. Processing of data depends on decision models; intelligence models can be used for problems and / or opportunities. Choice models (optimization techniques) can be used to find the most desirable solutions. (All models are human based).Manual procedures are used where there is an ultimate decision has to be taken.
4 Downloaded from www.pencilji.com 1.2 Role of Management Information Systems
[ MIS is the heart of an organization & Information is blood to MIS ] MIS ensures that an appropriate data is collected from the various sources, processed and sent further wherever it is necessary. MIS has to fulfill the information needs of an individual, a group of individuals, the management functionaries: the managers and the top management. MIS satisfy all the information needs using the subsystems Query Systems, Analysis Systems, Modeling Systems and Decision Support Systems. MIS helps in Strategic planning, management control, operational control and transaction processing.
MIS Pyramid Structure

MIS For Strategic & Policy Planning & Decision Making
MIS for Tactical planning and decision making
MIS for Operational planning, decision making and control
Transaction processing enquiries (status) responses
MIS for clerical personnel :
answers to queries regarding transaction processes and on status of a record and references on different documents
5 Downloaded from www.pencilji.com MIS for junior management Personnel : provides operational data for planning scheduling and controlling helps in decision making at operational level to correct an out of control situation. MIS for Middle management : helps in short term planning, target setting and controlling the business functions. MIS for Top Management : helps in goal setting, strategic planning and evolving the business plans and their implementation.
1.3
Impact of Management Information Systems
MIS impact on management functions With MIS support the management of marketing, finance, production and personnel becomes more efficient Tracking and monitoring of functional targets becomes easy. Functional managers are informed about the progress, achievements and shortfalls in the activity and the targets. Managers are helped and are kept alert by MIS in forecasting and long -term perspective planning by providing certain information indicating the probable trends in various aspects of business. MIS impact on understanding of business Because MIS (all Inf Sys) uses the data dictionary there is a common understanding of terms and terminology in the organization bringing clarity in the communicati on and a similar understanding of an event in the organization. e.g (in Japan no talk while working (low floor ). Only indicators (lights) e.g talk about computer tutors of vi editor
6 Downloaded from www.pencilji.com MIS brings high degree of professionalism in the business operations since every one is required to follow and use common systems & procedures to reach goals & objectives. MIS impact on managerial efficiency MIS improves the decision-making abilities considerably by providing different models to experiment the decisions without actually being implemented. More than 70 % of the time is saved [compared to manual processing where most of the time is spent in recording searching, processing & communicating] usage of transaction processing system and databases to support the same. MIS creates an informational based work culture in an organization. General +ve impacts on the users of MIS with the
Every user will become more effective and productive in an organization. Time and energy is saved. Decision making ability of each perso n is improved to a very high extent. Through MIS business can be made more competitive. General ve impacts on the users of MIS
At the lower level there is a feeling of lot of insecurity because of work vacuum created by the MIS but doing main jobs like searching, collecting, writing& reporting. Fear of non-recognition, loss of importance given to a person. MIS makes an organization seamless by removing all the communication barriers.
7 Downloaded from www.pencilji.com 1.4 Management Information Systems and Computer, Academics and User (what are the links between each other ?)
MIS and computer MIS depends completely on the capabilities of computer hardware and software for their abilities to store, process, retrieve and communicate with no serious limitations.
Aspects of hardware that a computer could be used as a single & distributed machine across an area makes any organization to go for MIS help most of the times in making the operations easier. Ability of computer to process textual, graphical, word, image and voice and present it in a easily understandable format by all users of MIS, makes MIS more impressive. Security to database by the software makes an organization a safer one ( e.g Bank ).
Other aspects of software like procedure oriented and non-procedure oriented and capability to transfer data from one computer to another has made the design of flexible MIS easier. Appropriate languages which supports complex calculations at one place and again use the result at another for further calculation has greater impact on MIS design.
Thus with the help of software and hardware an user-friendly. Open, flexible MIS could be designed making information processing a personalized function. MIS and Academics Academics of MIS is an extension of management & organizational theory which has Behavioral theory of organization and individual decision making, Individual motivation, Group processes & group decision making, leadership techniques, Organizational change processes & organizational structure & design.
8 Downloaded from www.pencilji.com MIS considers human mind as a processor of information, takes account of manager as an individual and in a group as well, also characteristics like bias thinking, risk aversion, strengths and weakness of individual & group are considered while design. Psychological models are also used in behavioral theory to analyze the behavior.
MIS uses inventory control, queuing theory & resource programming as D>S>S. MIS uses communication theory, For design analysis and report system feedback is used,
MIS uses decision theory & methodologies like O.R (operational research) techniques, which helps in seeking the optimal decision or optimal policy or strategy.
Network theory is used for planning and controlling large projects.
In the areas of accounting applications MIS uses principles of double-entry book keeping for balancing the accounts, uses accounting methodology for generating trial balance, balance sheet and other books of accounts.
MIS uses database as the basis of the whole architecture to generate the information All tasks associated with databases like creation, updating, maintenance are based on the Set Theory of Algebra. Also other mathematical and statistical models are used for the design of analysis models.
9 Downloaded from www.pencilji.com MIS and users
Every person in an organization is an user of the MIS. Typical user is a clerk, an assistant, an officer, an executive or a manager.
Clerk can use MIS for a quick search & reporting the same to higher level (shopping)
An assistant could use MIS for collecting & organizing data & conducting a rudimentary analysis.
MIS offers methods and facilitate to integrate the data and report the same in a proper format after an analysis.
MIS provides an action-oriented information. Managers management role expands beyond his management functions. Manager is a long-term planner, a person with a foresight, and an analytical person, who uses his abilities in performing functions of top management..
MIS provides structured or unstructured information and after managers reaction the format will keep on changing as he is a rational person and thus MIS will be designed according to the assumptions of a Manager.
10 Downloaded from www.pencilji.com 2. Role and Importance of Management 2.1 Introduction to the management
Management is the art of getting things done through people. Manager is a person who achieves the organizations goals by motivating others to perform. With respect to MIS management is defined as the process of planning, organizing, staffing, controlling the efforts of the members of the organization to achieve common stated goals of the organization. Management process involves human skills, material resources and scientific methods to perform the activities leading to the achievement of goals. Management process involves tasks of continuous resolution of conflicts like i)Human conflict ii) conflict of goals iii) conflict between alternative resources. iii) conflict of time iv) conflict of approach or method v) conflict of choice.
Manager uses a variety of tools, techniques and skills while executing the management process of P,O,S,D,C,& C. Handling above process is done at the best by viewing the organization as a system.
Key concepts of system theory used in management are:-
System is a comprehensive assembly of parts becoming an organization to achieve the stated goals. A system is called OPEN if it has interaction with the environment and CLOSED if it does not have any interaction with the environment.
A system is defined described & understood by the boundaries where it performs. Systems are subjected to entropy (tendency to change/ rundown).
11 Downloaded from www.pencilji.com Closed systems suffer from entropy because they are cut off from the environment but not so with open system. Open systems interact with the environment and draw upon the support of resources to maintain a given condition. Systems try to be in equilibrium by taking resource to corrective action. This is possible when the system has a information feedback as input about the state of the system. By viewing the management as a system enables us to seethe critical variables, constraints and their interaction with one another. By this manager would give equal importance to all the consequences arising out of interaction with the related elements (sub systems). The manager must have knowledge of management theory and principles as well as the skill to use them in a particular environment.
2.2
Different approaches to the management.
a. b.
Hierarchical school of thought (missionaries) Empirical or case of approach
Studies experience through cases. Identifies successes and failures Limitations :No attempt to identify principles. Limited value for developing management theory c. Interpersonal behavior approach
Based on individual psychology focuses on interpersonal behavior, human relations, leadership and motivation. Limitation: Ignores planning, organizing and controlling. d. Group behavior approach
Emphasis on behavior of people in groups. Based on the sociology and social psychology. Primarily study of group behavior patterns and study of large groups is called organization behavior. Limitation : Need for closer interaction with organization structure design, staffing, planning and co-coordinating e. co-operative social system approach
12 Downloaded from www.pencilji.com concerned with both interpersonal and group behavioral aspects leading to a system of co operation. Limitation: too broad a field for the study of management overlooks many managerial concepts principles. f. Socio technical systems approach
Technical systems affect social system (personal attitudes, group behavior) focus on production, office operatio ns, and other areas with close relation ships between the technical system & people limitation : emphasizes only on blue collar & lower level office work, ignores much of other managerial knowledge. g. Decision Theory approach
Focuses on the making of decisions, persons or group making decisions & decision making process limitation: there is no focus on managing & only decision making is given importance focus is some times too narrow and sometimes too wide. h. Systems approach
Systems have boundaries but they also interact with the external environment. Organizations are open systems recognizes importance of studying interrelatedness of planning, organizing and controlling in an organization all well as many subsystems. Limitation: analysis of too much of interrelatedness could lead to some inconsistency.
i.
Mathematical or management science approach
Managing is seen as mathematical processes, concepts, symbols and models. Looks at management as a purely logical process, expressed in mathematical symbols an relations.
Limitation Preoccupation with mathematical models. Many aspects in management cannot be modeled. Mathematics is a useful , but hardly a school or an approach to management.
13 Downloaded from www.pencilji.com j. Contingency or situation approach
Contingency theory recognizes the influence of given solutions on organizational behavior patterns. managerial practice depends on circumstances. (i.e contingency or a situation) limitations: Difficulty in determining all relevant contingency factors and showing their relationships can be very complex. k. Managerial roles approach
Original study consisted o observations of five chief executives on the basis of this study ten managerial roles were identified and grouped into three:i) (3)interpersonal ii) (3)informational and iii) (4)decision roles. Limitations Some important managerial activities were left out (e.g appraising managers) Original sample were very small some activities are not managerial. l. Mckinsys 7-S frame work
7-S are strategy, structure, systems ,style, staff, shared values & skills limitations : j. similar to koontz 1955 principle. Terms used are not precise & topics are not discussed in depth. Operational approach
Incorporates concepts principles techniques and knowledge from other fields and management approaches. The attempt is to develop science and theory with practical application. Distinguishes between managerial and non-managerial knowledge. Develops classification system built around the managerial functions of planning, staffing, leading and controlling. Limitations: Does not as some authors do identify representing or co-ordination as a separate function. Coordination is the essence of manager ship and is the purpose of managing. Principles of operational management Division of work, Authority and responsibility, Discipline, Unity of command,
14 Downloaded from www.pencilji.com Unity of direction towards one objective, Subordination of individual to corporate interest, Remuneration, Centralization just enough for control, Scalar chains of authority should not be cut Orderly arrangement of men, material and other resources is necessary Equality (all subordinates have to be dealt equally Stability of tenure (turnover of people is controlled for stability maintain shifts) & Initiative of subordinates should be encouraged; superiority felling shouldnt be there. Frederick W Taylor, father of scientific management says in principles that Replace the rules of thumb with scientific rules Obtain a harmony in the group Achieve cooperation of human beings, rather than the chaotic indivualism Work for maximum output, Develop all workers to the maximum potential for their own highest prosperity. Robert Owen, Rountree, Lyndall urwick are credited to evolve the management with a focus on the personnel management. Max weber, Vilfredo Pareto, Mayo Elton and the other scholars thought that the productivity in the organization could be improved through the social factors as morale and satisfactory relation between the members of workgroup and an effective management is possible only if human behavior and group behaviors managed through the interpersonal skills viz., motivating, counseling, leading and communicating. Hawthornes studies brought out the theory that man is a social animal operating in the social-technical systems and therefore emphasis in effective management is on behavioral sciences.
Chester Bernard advised Theory of systems as an approach to the management. He said that due to the physical and biological limitations of individuals they co-operate in the work environment. The co-operation increases with effective and efficient incentives and co -
15 Downloaded from www.pencilji.com operation is more effective if the members of the group communicates with one another and work with a conscious common frame of mind towards purpose. Modern management thought emerged incorporating social scientists, the behavioral scientists, the system scientists and the practicing managers thoughts, views and principles. Management is effective if it is viewed as a system of functions, system of incentives, a system of authority and a direction and a system of logical decision-making. 2.3 Functions of the manager
Manager performs tasks and functions Tasks involve activities such as accounting, selling, manufacturing, purchasing etc,,
Functions are those that are performed through the managerial functions like planning, organizing, direction, staffing, co-coordinating and controlling.
Planning is a process of determining the goals and objectives and evolving strategies, policies, programs and procedures for the achievement of these goals. Decisions are made to select appropriate alternatives of the above factors. Organization is building a meaningful, effective structure of authority and the relationship. Staffing is defining the manpower needs per position or center of activity. Staffi ng involves selecting right person for right job. Directing is to guide, clarify and solve the problems of the people to work hard for the goal.
Coordinating is the function, which brings a harmony and smoothness in group activities and individual efforts directed towards accomplishment of goals. A central process of coordination and reconcilement of the differences in approach, timing, efforts and interests towards a common goal has to be done by an authority placed at higher level in organization structure.
Controlling is a process of measurement of an output. Output is compared with goals, objectives and targets. Corrective measures are taken if output is shorter than stated norms controlling ensures an achievement of the plan. Good plan means planned good. (plan helps in evaluating the performance)
2.4
Managers and the environment
External environment has an impact on performance of manager. Environment is classified into five classes as the economic, the technological, the social, the political and the ethical environment.
Economic environment involves Capital, labor, price changes, productivity, fiscal and monetary policy and customers. Capital is required to run the organization Labor cost is very important and has impact on business cost. Price changes affect the cost of raw materials and labor & manager has no control on these aspects. Productivity is a result of the capital, labor and technology. Manager has to respond quickly to the technological changes to save the business. Fiscal and monetary policy, announced by government and controlled by them affects the organizations profit position. Also affect Social Environment Is built around the attitudes, the desires, the expectations, the degree of intelligence and education, the beliefs and customs, the religion, the caste and creed of the people. Social environment is deeply rooted in the society and has impact on the business and the organizational productivity. Social factors create an attitude towards the work, generate the product choices and manipulate the customer behavior.
17 Downloaded from www.pencilji.com Social environment always affects business and makes the managers task very difficult and challenging. Political environment The unstable political environment brings stagnancy in the business development. Changes in ruling party bring economic policy changes, affecting the business. Sectorial preferences such as agriculture vs industry, educational vs basic research, service sector vs cores sector come about with change in the ruling political party and its policies such changes have long term impact on business performance. Manager has to deal with such changes effectively Ethical Environment (Systems of a moral behavior) Business ethics also some times create few problems these ethics also sometimes create few problems. These ethics are set of norms which are universally accepted as a business behavior. Business ethics emerge from the professional conduct, the business norms and codes on confidentiality, the payment and documentation, the adherence to the generally accepted standards of accounting and auditing. All above factors are beyond the control of a manager. Manager could predict, asses, evaluate and take such actions which will help him in control the situation. 2.5 Management as a control system
Unless a control is exercised on the process, the goals will not be achieved. Control is the process through which managers assure that actual activities conform to the planned activities, leading to the achievement of the stated common goals. Control process measures a progress towards those goals and enables the manager to detect the deviations from the original plan in time to take corrective actions before it is too late.
Basic steps of control process
Establish standards & performance
Measure performance
Actual Vs Std ok
Not ok
Corrective action
No action
Management sets the performance standards in line with performance objectives, to design the information feedback systems, to design the information feedback systems, to compare the actual performance with these predetermined standards to identify the deviations from the standards, to measure its significance and to take corrective actions in case of significant deviations. The control system is essential to meet the environmental changes. To meet the complexity of todays business, to correct the mistakes made by the people and to effectively monitor the delegation process a reliable and effective control system should be there with following features.
Early warning mechanisms predicts the possibility of achieving the goals and standards before it is too late and allows manager to take corrective actions.
Performance standard must be measurable and acceptable to all the organization. The system should have meaningful standards relating to the work areas, responsibility, managerial functions and so on. e.g top management--business performance standards (production, sales, inventory)
19 Downloaded from www.pencilji.com operational managementstandards relating to shift production, rejections, downtime, utilization of resources Strategic controls on critical success factors. Feedback about progress and deviation should be give continuously so as to control system to be effective and should be communicated in time accurately. Realistic the system should be economically realistic to all the workers in the system. Information flow should be designed in such a way that in organization decisions makers provide right information is given to right person in right time.
Exception principle the system should selectively approve some significant deviations from the performance standards on the principle of management by exception. 2.6 Management by exception
Exception is defined as a significant deviation from the performance or the process and standards set in the management control systems. Like principles such as management by objectives, management by results, management of strategic areas. At the root of management methodology there lies management by exception, its principle states that the exception is decided on the impact a situation would make on the performance, the process and the standards set in the management control system. When the management operates under time constraint, each manager has to allocate specific time for the several demands made on his time. Therefore manager allocates his time to attend to such situation where his presence is needed and his presence will lead to an action, a decision or a wait-&see approach.
If all the situations are considered in a routine manner, it consumes time and tends to be neglected over a period of time, which leads to an exception.
20 Downloaded from www.pencilji.com 2.7 MIS- A support to the management
Objective of the MIS is to provide information for a decision making in the process of management (P,O,S,D,C,C). MIS should help in such a way that the business goals are achieved in most efficient manner. MIS has to support at all the levels of the ma nagement in conducting the business operations. Unless MIS becomes an aid to management it is not useful to the organization.
Steps in Management Planning Organization
Decision A selection from various alternatives-strategies, resources, method.. A selection of combination out of several combinations of the goals, people, resources, method and authority. providing a proper manpower complement choosing a method from the various methods of directing the e fforts in the organization. choice of the tools and the techniques for coordinating the efforts for optimum results A election of the exceptional conditions and the decision guidelines
Staffing Directing
Coordinating
Controlling
21 Downloaded from www.pencilji.com Environment Management and MIS Management
Goal setting
P L A N N I N G
O R G A N I Z I N G
S T A F F I N G
D I R E C T I N G
C O O R D I N A T I N G
C O N T R O L L I N G
Information support
Note : with the help of above diagram in own sentences the relationship between MIS and management could be explained
22 Downloaded from www.pencilji.com 3. Process of management 3.1 Management Effectiveness a model for analysis of management effectiveness
Negandhi estafen suggested
(generates enterprise effectiveness) which emphasis on management philosophy and the environment factors on which the effectiveness is dependent. The environment factors provide the opportunity 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 enterprise.
Management Philosophy Attitudes towards Employees, consumers, suppliers, government community share holders Management practices Planning Organizing Staffing Directing Coordinating Controlling Enterprise effectiveness
Management effectiveness
Environmental factors Social, economical, Educational Political ,legal
[write in your own sentences with reference to the diagram]
23 Downloaded from www.pencilji.com Change in philosophy (attitude) towards the various business players employees,
consumers, suppliers, government community and share holders will have an impact on the management effectiveness. Attitude change towards employees is changed like considering an employee as a business partner rather than just a worker, employee is empowered and a sense of belongingness towards organization will be developed within them a they work with more interest and high responsibility This will change the organization structure by reducing reporting levels and also contribute for the effectiveness of the enterprise.
Attitude change towards consumers is changed like going according to the needs of the consumer will create a greater satisfaction in customers & that in turn will improve the business of an enterprise evidenced by changes in the practices in product design, manufacturing and marketing and also product life cycle will get shorter.
Attitude change towards suppliers like having mutual beneficial agreement so that suppliers will always be consistent with the enterprise. Attitude change towards government community like supporting the government economically or morally will have great influence over enterprise. Attitude change towards shareholders which holds the interests of shareholders will attract more investors (like sharing more profit with share holders).
Environmental factors such as social, economical, educational political and legal will influence in practice of managerial functions (P, O, S, D, Co, C) which in turn these both i.e environmental and management philosophy influence over management practices that reflects the management effectiveness in turn the enterprise effectiveness.
24 Downloaded from www.pencilji.com Goals Objects and Targets will Will influence over business operations and enterprise effectiveness Goals become reference points for strategic, resource and operational planning, Goals help in building strategies, frame the policies and set rules for business process and provides efficient measures to monitor managerial process and have common
understanding about business and managerial process. 3.2 Planning, Organizing, Staffing
Planning Planning is a process of selecting one course of action from different alternatives, for achieving the stated goals, objectives and targets.
Planning is a decision making process determining in advance what to do, how to do, when to do, and who has to do.
An efficient plan utilizes fewer resources and enables management in handling uncertainty and risk in business.
Planning makes operations economical by continuous evaluation of costs and outputs and selecting optimal way of resource utilization.
Planning controls business operations at all levels with common reference to goals, objectives and targets
Planning is an ongoing organizational function that provides the framework for operational activities and decision-making.
25 Downloaded from www.pencilji.com Methodology of planning
I step: Forecasting the environment of operation. Forecasting provides the base which the plan will be developed and implemented II step :is determining alternative course of action. Using system model or O.R model and mathematical models, optimal is selected later after determining alternatives. III step : evaluate best among all feasible alternatives Implementation of plan is done through developing strategies, policies systems rules, procedures, programs and the budgets Effectiveness of plan depends on how it is implemented .
Organizing Deals with organizing the manpower resources for a given plan of execution. i.e deals with a quantitative aspect of manpower in terms of placement, the roles they play and the relations amongst them which will help in turn in achieving goals, objectives and targets. Organization could be formal or informal There are three ways of determining structure 1.Activity analysis, 2.decision analysis and 3.relation analysis. Factors to be considered while structuring the organization
i) Organization levels and span of control
Levels are determined by the span of control. i.e in the organization how many subordinates a superior can manage. The span of control is decided on the basis of the task to be performed, decision to be taken, and the strengths and weaknesses of the people and the degree of the delegati on of the responsibilities that a superior is willing to attain.
26 Downloaded from www.pencilji.com ii) Departmentation Departmentation is a process of breaking an enterprise into smaller group and levels Departmentation is done according to functions and according to area wise Also according to product or services. The departmentalization of organization brings operational convenience, creates
appropriate responsibility centers, facilitates a formal and informal communication, permits an evaluation of activities by a smaller group, and provides control and decision points of the top management. iii) Relations of line and staff functions Line functions are those which are directly involved and responsible for achieving the targets for production or sales. Staff functions aid the line functions to achieve the targets. E.g production, planning , marketing, purchasing etc. Performance of line functions depends on staff functions. iv) Delegation of authority
Handling over the limited authority of decision making to the subordinates is called delegation. Delegation of authority completely depends on the manager whether he has the confidence in his subordinates or not. He cannot delegate the jobs or authority if he doesnt have + ve attitude towards subordinates.
27 Downloaded from www.pencilji.com STAFFING
Staffing deals with the manning the enterprise as per the organization structure. Selection of right person for right job in right time is staffing. Staffing not only the selection of the persons but also the appraisal and development so that they perform their designated roles. Staffing of enterprise is done not just for the current needs it is also done for the future. Purpose of staffing is to create a manpower potential capable of undergoing development, so that the same manpower is able to perform the changed roles in the future.
Staffing for line functions is tough than for the staff functions. 3.3 Coordinating and directing
Generally manager will be responsible for coordinating and directing. When there are any disturbances for plans implementation manager has to coordinate all the activities and lead the group to keep plan moving. If there are any deviations from the goals manager has to lead and direct all so that the deviation from the actual se goal is removed. Manager has to create an environment, which is favorable for everyone to perform well to achieve goals, manager has to motivate and encourage the subordinates in getting his work done. Controlling Purpose of control is to regulate the process in such a way that management process continuously strives for the achievement of goals, objectives and targets. The control exercised through a system, which measures the performance of the management in terms of some predefined measures of output. It compares the output with the standard , identifies the deviations from the standard , corrects the management
28 Downloaded from www.pencilji.com process to ensure that the plan continues to be effective in terms of achieving goals, objectives and targets. Controlling system works with principle of feed-back. The feed back on the performance should be quick without any loss of time, so that corrective action can be takes immediately. The process of correction involves change in plan, reallocation of resources, application of new systems, procedures and rules. Time is the essence of control. control should be in appropriate time otherwise the enterprise will be ineffective. Control gives an advance warning, an indication that the deviations are likely to occur in the near future calling for a corrective action. The techniques used in the feed forward contro l l are forecasting ,trend analysis and judging the performance from the standpoint of input versus output. Auditing is a tool of control Management audit deals with how effectively the plans are made and implemented. It is addressed to managerial performance to judge whether it was up to the mark , and whether there are any lapses, failures or weaknesses The operational audit deals with an adherence to the rules and the policies of the management. It identifies whether the operations of the organization are carried out as per the managerial directives, rules and policies. The financial audit addresses the business and financial transactions to find out they are carried out with due regards to the accounting principles, practices and statutes. Auditing examines whether all the transactions are covered completely and correctly for the year
With the advancement of IT and computers a variety of planning and control tools have been developed. Planning and budget models, financial models, risk analysis models, PERT /CPM, operational research models are some of the examples of the central tools.
29 Downloaded from www.pencilji.com 3.4 MIS A TOOL FOR MANAGEMENT
MIS helps in planning, staffing, organizing, coordinating, directing and controlling by providing appropriate information as described above for performing each managerial function.
Whatever discussed above in each of the managerial functions they are supported by MIS by giving the appropriate information in a proper format for each of them to every task and activity associated with the function. Note :
If question is asked under this topic like
Q. How Could MIS be a tool for management? or Q. is MIS a tool to management ? explain
Way to answer
Explain what all activities are associated with each managerial function and at the end of each managerial function state the application of MIS over it . Thus MIS could support each and every activities or managerial functions and could assist the management in the smooth functioning of the organization so MIS is a TOOL for management.
30 Downloaded from www.pencilji.com 4. Organizational Structure and theory Common dimensions for organizational structure review i) ii) iii) iv) hierarchy of authority specialization formalization and centralization
i) hierarchy of authority 4.1 basic model of organizational c.e.o
R&D
marketing
Manufacturing
Each position has an authority or right to command associated with it. Authority is evidenced by control over resources, rewards and tasks and authorization to make decision about them
Authorization is distributed according to level in hierarchy. (as the level in hierarchy increases authority is distributed according to it)
Each position has a span of control, describes the number of immediate subordinates that a manager is to supervise. The shape of hierarchy of authority is affected at all levels by span of control.
ii) Specialization refer to division of labor within organization, which is divided along functional lines that encourages specialization. There are two ways of dividing and assigning tasks
31 Downloaded from www.pencilji.com First one is to give a broadly trained specialist a comprehensive range of tasks while the second one is subdivide the activities into smaller ones.
Depending on product or services and organizational philosophy of management, department of organizations are specialized according to the need. e.g R& D department need highly trained professionals. Production department need non specialized workers ( tasks are narrowed ).
The concept of specialization in information systems are implemented which is noticed while development of applications the informa tion system operations are separated from applications. Reasons for specialization are like Two functions might require different training. e.g an analyst need a different training than an operator and Segregating two functions improves internal control as the design of procedure is separated from execution. e.g if the person who designs and implements the application and operates it, there is more opportunity for fraud. iii) Formalization Formalization is setting rules and procedures to handle organizatio nal activities. Formalization is the degree to which decisions for handling various situations are programmed i.e decision rules are specified in advance. As much formalization that much less discretion individual organization members have in making decisions. e. g Degree of formalization is illustrated in the information systems department by the contrast between An organization that has formal procedures for development of computer application and An organization that lets each analyst to establish the de velopment procedures.
32 Downloaded from www.pencilji.com iv)Centralization Centralization refers to the level in the organization where decision making occurs most decision making occurs at the top of the hierarchy in a highly centralized organization. Decentralization occurs when authority is delegated to lower levels Association between Centralization and hierarchy Flat hierarchy with wide span of control implies of authority and decision making. A tall hierarchy with narrow span of control is associated with centralization. Association with centralization and formalization In a highly formalized organization operating at low levels make decisions based on rules and regulations provided to them, exceptions are referred to higher levels for decisionmaking.
4.2
Modifications to the basic model of structure of organization.
Organization by product or service Organization by project Use of lateral relations and Matrix organizations Organization by product or service Instead of being structured by functions such as manufacturing , marketing, accounts The organization may be structured i) by product or service Each product or service group will have its own functions for manufacturing, marketing, accounting etc.. Advantages: Results in an organizational structure focused on output rather tha n process .Brings all group of outputs under a unified command where any decision taken will affect each group.
Production manager
Product group A
Product group b
Product group c
accounting
marketing
Manufacturing
Examples Consumer products organization wit product groups such as house hold supplies, appliances etc. Government service organization has service groupings S/w company organized by custom s/w, package s/w and computer time-sharing sales. Organization by project Production manager
purchase
Project group
personnel
Project group A
Project group B
Project group C
accounting
engineering
Manufacturing
Resources are assigned to projects, each headed by a project director. e.g construction company
34 Downloaded from www.pencilji.com Information systems departments often use the project organization for management of the work of systems analysis and programmers.
Project organization is like dynamic form of product or service str ucture. Since projects will be usually short terms resources are allocated to projects and structure is designed as similar to that of organization byproduct or service group. Use of Lateral Relations : w.r.t product or service sometimes combining simila r functions (marketing and manufacturing ) leads to proper coordination and conflicts are resolved. Organizational methods for reconciling the functional organization with product or service objectives are termed lateral relations. Methods for providing lateral relations are: 1. Direct contact among managers of different groups for conflict resolution. e.g information system manager contacts controller to resolve conflicts of accounts. 2. liaison roles: Responsibility for coordinating lateral flow of a product or a service is assigned to an individual. e.g---preparing schedules. 3.Task force: Formal group from each department or function established to conflicts. e.g a task force to analyze and does office automation. 4.Teams: are formed around frequently occurring problems to resolve the conflict e.g quality assurance team 5.integrating personnel: product manager, project manager and brand manager they do not supervise actual work but are responsible for the integration of subunits. e.g information system manager responsible for integration of independent subunits. resolve
35 Downloaded from www.pencilji.com Matrix organizations is also one of the lateral relation establishment method Matrix organization represents formalized use of integration, lateral relations. For each product or service grouping, there is a separate integrating department, which has lateral relations with each level of the functional organization. Each level o the organization affected has a vertical authority relation for the function and a lateral authority relation with the corresponding level of the integrating product or service department such as consumer products. Product Line Authority accounts Manager A accounts Manager A accounts Manager A
controller
marketing Manager A
marketing Manager B
marketing Manager C Functiona l authority
C E O
production Chief marketingManager A executive
production Manager B
production Manager C
Chief manufacturing executive
Manager product A
Manager product B
Manager product C
Matrix organization with three product line
36 Downloaded from www.pencilji.com MIS : Organization Functional subsystem in an MIS of a manufacturing concern Organizational functions
M A R K E T I N G
P R O D U T I O N
L O G I S T I C S
P F I E I N R N f S A pr O N o N ACTIVITIES C c N I e E A s L L s
T o p M g m nt
Strategic planning Management control
Operations control
Transaction processing
DBMS Data Base
matrix organization of functions & organization activities
37 Downloaded from www.pencilji.com organizational functions common programs
Appl s/w for A C T I V I T I E S Strategic planning Management control Operational Control Transaction processing Unique files Common Data files DATA BASE The organizational MIS Model base D B M S
Common appl s/w
MIS and formal organization structure Having information system in an organization sometimes Do not cause structural changes Information systems can be designed to support increasing centralization or
decentralization, depending on the objectives, strategies, and goals of the organization
Computer based information systems are associated with greater horizontal differentiation in organization i.e subdivision of functions. the information system may also be used to coordinate lateral activities e.g computer based techniques such as material requirements planning (MRP) are used to coordinate such activities as purchasing, production, and inventory management.
38 Downloaded from www.pencilji.com Organizational structure implications for information system design The different characteristics of organizational structures have implications for the design of inf system Common dimensions for organizational structure review like hierarchy of authority, specialization formalization and centralization will have implications on information systems like a tall hierarchy with narrow span of control may mean that more formal control information is needed by upper levels than a flat hierarchy with wide span of control. Information system applications are specialized to fit the specialization of the organization. Formalization could be increased to any extent using information system. Information system could be used to suit any level of Centralization. Information systems can be designed to support product or service organization, project organization, lateral relations and matrix organization. (Modification of basic model).
Organizational
mechanisms
reduce
the
need
for
information
processing
and
communication and information systems are used to coordinate lateral activities. Organization culture affects information requirements and system acceptance. Organizational power affects organizational behavior during information system planning, resource allocation, and implementation. Computer based Information systems can be an instrument of organizational power through access to information. Information systems will and have to change according to the growth of the company. The goal displacement has to be considered while identifying goals during requirement determination. Suggestions need for information system design for both efficiency measures to promote single loop learning and effectiveness measures for double loop learning. Relationships and use of multiple channels in a semi confusing system may be useful for promoting responses to a changing environment (systems that promote organizational change)
39 Downloaded from www.pencilji.com Organizations as socio-technical systems provide approach to requirements
determination and job design when both social and technical considerations are involved.
Design of computer-based information and decision systems are frequently guilty of
view
of the human in the human-machine system. If an autocratic, non-participative style of leadership and a mechanistic, economic motivation are assumed, information system design is less complicated. functions can be allocated between humans and machines on the basis of relative efficiency. Computer based decision rules provide instant decisions with little participation. Information systems tend to change job content and frequently change the social system in organization, this change in job characteristics provides an opportunity to redesign jobs to enhance motivation.
40 Downloaded from www.pencilji.com 4.3 Organizational behavior
Organizational culture and power Organizational culture is art, manifestations and other manifestations and refined taste and manners that an organization follows
Organizational culture may emp hasize on service or on leading edge of technology i.e culture is well-articulated or could be relatively obscure.
Culture reflects dominant ideas of the founders or subsequent strong leaders. e.g Ford had a culture of providing car of low-cost and single style for decades Hindustan motors even today they have the same model of ambassador car. Nirma detergents wanted to give such a product which is affordable to every one SONY have the culture of providing 100 % error free production.
Some extremes of perception of culture are like High tech, price leader, high quality, high service, innovator, risk taker low tech, price follower, low quality, low service, copier, averse attitude
culture differs w.r.t value attached to data and information, also differs with respect to data discipline ( ( adoption to the information system) financial institutions expects high data accuracy and completeness but the culture of merchandising organization accepts a lower level of data
differences in culture---- accounts department wants on high accuracy (cant leave even a single Re)-----sales department focuses on low or medium accuracy ( leaves small change)
41 Downloaded from www.pencilji.com Informational system culture will be based on professional values, training, and beliefs of information system professionals; computer reinforces these cultures. Clashes occur because of computer application will be differing. Organizational Power refers to the ability to obtain and utilize human and material resources to accomplish objectives.
Power is not distributed uniformly across the organization. Even person at same level may not be having same powers as that of some important functional units. Groups or departments might not be having equal powers as compared to the most prioritized one.
A recognition of power differences and their causes can aid in the design and development of information systems that support the organization, its functions and individuals within it. Three contributors to the power of an organizational subunit
i) ii)
Workflow pervasiveness: number of tasks which are dependent on unit activities Immediacy: the speed at which the loss of the subunit activities would affect other organization units and the severity of the loss
iii)
Substitution ability: the ability of another unit to perform the activity or to find alternative suppliers.
Power factor of individual as well as that of group in the organization will have influence on the design of information systems. Persons positions (job definition and activities) are important rather than person.
So sometimes information systems executives will not have power to acquire resources (data) to develop information system i.e complete. So to acquire power an information
42 Downloaded from www.pencilji.com executive will have to 1. develop personal understanding of the role of information and the information system as a key competitive strategy for the organization. 2. persuade other to share the vision so as to get proper information Organizational change Any system will decay and disorganize if it does not change in response to changes in the environment. Systems change because of goal displacement, organization learning, or specific project change procedures. Organizational growth cycle has following format---[ applicable to marketing & rarely to an org ]
Introd
growth maturity
decline
Goal displacement: the goals of those operating the system displace the output goals as the primary goals of the system. e.g computer centers who should give basic education are providing computing service is displaced by a goal of providing a technologically interesting environment for staff experimentation e.g Study tours for students turning out as staff interested tours.
43 Downloaded from www.pencilji.com Organizational learning Is a process by which an organization identifies action-outcome relationships, identifies and corrects errors, stores the experience in organizational personnel who teach new employees, and store the experience in other forms like procedures, forms, systems, rules, computer programs and other forms for transferring experiences
Learning exhibits adaptive behavior. Any body in organization could learn in two ways Single loop learning ( implicit and explicit of a person ) Double loop learning ( with reference to a model and based on assumptions and theries) Model for Organizational Change Stage Unfreezing Change Refreeze Management theories of Human motivation, leadership style and job design have an influence over the design of a inf system Human motivation : initially employees were motivated by monetary rewards later by person s drive s and needs like Physiological : physical needs such as satisfaction of hunger or thirst, and activity need. Safety: protection against danger, threat, deprivation love :satisfactory associations with others, belonging to groups, giving and receiving friendship and affection esteem: self-respect and respect from others self actualization self-fulfillment. Achieving ones potential. Creativity self-development. Selfexpression some other factors that motivates anyone are sense of achievement, recognition, interesting and challenging work, responsibility and advancement Description create a climate for change and get contracts with users analysis, design development and installation institutionalize the new system
44 Downloaded from www.pencilji.com leadership styles inspires and motivates a group : there are two types of leadership
autocratic leader determines policy and directs the activities required to carry it out. He or she gives reasons for orders. Leader commands are enforced by t he power to reward or punish.
Supportive participates, consults or democratic leadership. The leader consults the subordinates about decisions affecting them, subordinates are encouraged to use initiative and supervise in general Job design or enrichment is an approach of management Dimension that affect motivation of employees 1. skill variety 2. task identity 3. task significance 4. autonomy 5. feedback from job
w.r.t information systems introduction of new information system for a task frequently causes a change in the design of jobs. Information systems create new jobs 4.4 Organization as a system ( socio-technical system) [an approach to organization change] please refer notes on approaches to management (chapter 2.2) for the definition .
45 Downloaded from www.pencilji.com Design of socio-technical system
A socio-technical approach to organizational change has been defined as one which recognizes organizations as purposive entities which have a variety of goals and which , in order to survive, have to interact successfully with the surrounding social and business environments. Viewing organizations as sociotechnical systems is to focus on human as well as technical and organizational objectives in effecting organizational change. Design of socio-technical systems Set social objectives set technical objectives
Specify social alternatives
Specify technical alternatives
Match as Socio-technical alternatives
Rank in terms of ability of each alternative to meet social and technical objective
Consider costs, resources, and constraints
Select best sociotechnical solution
First step is to assess the existing social system, primarily by measuring the job satisfaction of the work group and reporting the results in a group feedback session. The job
46 Downloaded from www.pencilji.com satisfaction data is then used as a basis for setting human (social) objectives directed at increasing job satisfaction. This can be the responsibility of the work group Social alternatives will deal with different work group structures, allocation of tasks, and design of individual jobs. The technical experts examine alternatives for meeting the technical objectives of the system (decided prior to initiating the design effort). Once technical and social alternatives have been identified, then selection of those alternatives that meet both social and technical objectives is done. The result should be a system, which improves task efficiency and job satisfaction. Socio-technical system design is suitable for clerical systems or operational staff.
4.5
MIS and ORGANIZATION
Goals
technology
management style
People tasks culture helps to achieve organization structure creates organizational behavior modifies MIS helps Organizational motivation Organizational learning Organizational changes
Note: explain each entity above with relevance to MIS i.e how MIS could help each entity with an example.
47 Downloaded from www.pencilji.com 5. Strategic management of business 5.1 Corporate planning Plan: predetermined course of action, representing goals & objectives necessary to achieve them. Provides a basis for evaluating results Removes ambiguities attached to objectives and goals. Planning is a dynamic process Planning helps in knowing the opportunities and the threats in future and predetermine course of action to convert the opportunity into a business gain and to meet the threat to avoid any business loss. Hierarchy of planning Strategic planning ( 5 years and above) plans are made regarding which business the organization should focus on?, or how to raise finance (funds) for the business? Or how current resource could be utilized in a new project. Tactical planning (1-5 years) here plans are made year after year up to 5 years and clearly targets will be set. Optimal strategies (decisions) like which sector the organization should invest or disinvest, then planning at this level deals with the product selection etc.. Operational planning (1- 12 months)at this level how actually the tasks have to been executed depending upon the targets will be planned. Also other tasks like acquisition of resources and plans of actions are decided. mission General policy limits acceptable behavior what Tasks how Strategies to
Objectives Plans and budgets Goals
specific
48 Downloaded from www.pencilji.com People have goals but collection of people does not have. Proper goals means proper plans are done Goals of business firms are generally stated in terms of goals for profit, sales, market share, inventory and production and expressed in operational terms e.g: increase in turnover by 10 % or increase in net profit by 10 %. When objectives are clearly stated then plans could be clearly made. Corporate planning deals with corporate business goals and objectives, the business may be manufacturing or service, or may deal with industry or trade or may operate in public or private sector or may be a national or an international business. Planning considers world trends in the business and also considers the industry, technology, international markets, the national priorities, the competitions, the business plans, corporate strengths and weakness for preparing a plan. Therefore planning is a complex experience steering the company through the complexities, the difficulties, the inhibitions and uncertainty towards the achievement of goals and objectives Dimensions of planning Time : utilization ? plan could be long range or short range business?, finance ? resource
Entity :
plan entity is the one which the company is focusing e.g production, quality or a new product or finance , marketing , capacity , r& d the plan has to organized well as subsidiaries like functional groups, the product group and the projects.
Organization: the division , Elements :
mission, vision, goals, objectives, targets, plans, budgets, policies .
Characteristics :
confidential written document subject to change, long term plans are flexible, short terms are rigid
49 Downloaded from www.pencilji.com 5.2 Essentiality of Strategic Planning Market Force It is difficult to predict demand and supply, consumer behavior trends of market growth, emergence of new product and the new product concepts Unless the business is managed through a proper business plan or (it affects sales, growth and profitability because of problem). Technological change affect both business proposal and managerial and operational and types of organization. Create new business opportunities, if plans are not accordingly they threaten current business, survival. Corporate plan should ensure the recovery of the business investment before such a technological change takes over. Complex diversity of business Variety of products, different market segments, various methods of manufacturing, multiple locations influence of external factors like transport, the communication brings of external factors like transport, the communication brings complexity in business management so a proper plans needed. Competition From government promoted sectors, quality, prompt delivery, after sale service. Competition forces management to look for new products, markets ,technology to keep the market share in that. Environment ( social, economical, industrial, technological, and business) Is beyond the control of the management The attitude change by the consumers International laws and agreements create new opportunities as well as could affect business. Planning is neither forecasting nor making future decisions. Today planning is making current decision in view of future. Planning doesnt eliminate the risk but provides an effective tool to face it.
50 Downloaded from www.pencilji.com 5.3 Development of business strategies
Environment
socio-economic purpose
mission Goals
Factors for strategy formulation
Strength and weakness Of the organization
business strategy
competition
Business strategies are developed starting with Mission and the a vision, according to that goals are set later the strategies for achieving goals will be decided and targets are set for that. Once the targets are set planning and budgeting will be done and policies will be set accordingly e.g development of business strategies for the service operation of a computer vendor Mission: Broad statement of the purpose of the organization e.g To provide a high-quality product and convenient customer service Vision: imaginative insight into a problem (subject) , a foresight
Goals: general statement of what is to be accomplished. e.g reduce time to respond to service request without increasing # of service request Strategies: general approaches to achieve goals e.g improve procedures for handling service requests; provide procedures for reducing time required at each time objectives: Statements of measurable results to be achieved e.g completion of service call plans and : Schedule of specific activities and actions to achieve objectives budgets e.g revise service call request procedure , revise servicing procedures to improve use of diagnostic tools policy:
etc..
limits to acceptable behavior express ethical and moral values, decision limits and standards. e.g system interfaces shall be designed to enhance and enrich the job performed by users
51 Downloaded from www.pencilji.com 5.4 Types of strategies
If management is fighting external forces of a singe area by choice is a pure strategy. If management uses or operates in more than one area it is called mixed strategy Classes of strategies 1. overall company strategy , 2. growth strategy 3. product strategy 4. marketing strategy and 5) the survival strategy overall company strategy is broad-based having a far effect on the different facets of the business and forming basis for generating strategies in other areas of business overall company strategy considers a very long term perspective, deals with overall strength of the entire company and evolves those policies of the business which will dominate the course of business movement e.g mass production, aggressive marketing. e.g a consumer goods manufacturer will have a strategy of maximum reach to the consumer and exposure by way of wide distribution network growth strategy means selection of a product with a very fast growth potential. It means choice of industries such as electronics, communication, transport, textile, plastic and so on where the growth potential exist for expansion, diversification and integration. Growth strategy means acquisition of the other firms and opening new market segments. e.g existing business structure, single product new model, manufacturing units at multiple locations expansion and diversification of a company manufacturing a variety of products and it positions them in multiple markets. Product strategy means choice of a product, which can expand as a family of products and provide the basis for adding associated products. Product is positioned into expanding markets by way of model, type and price Product strategy is innovated continuously for new markets e.g NIRMA a detergent manufacturing company initially entered the market with a low priced detergent powder then entered into business of production of washing soap and then to bathing soap. Market Strategy The product strategy and market strategy are closely related. The marketing strategies deal with the distribution, services, market research, pricing, advertising, packing and choice of the market itself.
52 Downloaded from www.pencilji.com e.g a company adopting the strategy of providing after sales service of the highest order, the company may offer a free after sales service or establish service organizations to solve customer complaints and problems. Market strategies are generally centered on one of the factors such as quality, price, service and availability. Corporate management formulates the strategies and implement them the choice of strategy and method of implementation affects corporate success. All the strategies are governed by the business policy, the policy reflects the managements bias, preference, attitude, strength and weakness. According to frame of policies strategies are set. 5.5 Short range planning [deals with the targets, objectives, and goals of the organization. ]
Short-range plans provide the scheme for implementation of the long-range plans. Short-range plans have to be implemented according to the budget of the year. e. a manufacturing concern will have short range plans in the for m of targets for each of its department like production, sales, capacity etc.. Once the targets are set budgets are made. Using budgets later decisions are taken. Budgets give details about the resources required to achieve the targets, they are first prepared in terms of physical units and later they are converted into financial units. e.g budgets for production, sales, expenses expenditure, raw materials advertising etc are prepared. Budgets are used as a control mechanism to check the deviation form t he actual set track to achieve goals or objectives or targets. All the budgets when computed in the monetary terms, result into financial budgets
53 Downloaded from www.pencilji.com Relationship of the various budgets
Goals and objectives Short-range business forecast Preparation of operations budgets
Sales goods
production
materials
services
capital
Indirect expenses Direct material overheads
capital expenditure direct labor
corporate overheads manufacturing
Financial budgets Advantages of short-range plans prepared with the help of budgets Gives the manager a clear target for achievement Specifies to the manager the resource allocation details, Provides information on the performance so as to check the deviation, Prevents the manager to be biased in decision-making regarding the plans, Helps management in assessing the overall performance of the business in light of short term goals, Proper goals means proper plans could be made and thus proper budget could be made and there will be a proper way of achieving the targets efficiently.
54 Downloaded from www.pencilji.com 5.6 TOOLS of PLANNING (tools for decision making with respect to planning)
Whatever type of plan it is a series of decisions will have to be taken by the manager.
There will be number of alternatives, choices and options available while planning the business or There will be selection of resources and their allocation in optimal manner to maximize gains. There will be selection of method whereby the efforts at levels are coordinated towards a common goal and direction thus planning involves decision making with the help of tools. Tools are based on the factors creativity; sensitivity and modeling Creativity is the result of the conceptual skills of an individual; creativity comes out of experience, a judgment, and an intuition of an individual or a group of individuals. Creativity takes over only when there are no predetermined ways of taking decisions. Especially while decisions are based on contingency where the management have not experienced previously any of such kind of situation where a new way or approach is needed to solve conflict or to take decisions. Conceptual skills involve Generation of rapid ideas, changing the frame of references quickly while taking decision immediately Or having originality in interpreting event and generating different views of an event. So a person who posses these skills will have a conceptual fluency which should be there in every manager of an organization which he can use while planning. Systems approach considers all the managerial functions and their inter-relationships so as to clearly define which function has what activity or task to perform in order to meet the targets. When the organization is considered as a whole system then it becomes very easy to further divide the subsystems of the organization and again subdivide the whole goals or objectives or targets of the organization into the sub systems goals or target which makes very clear who is responsible for what and removes ambiguities associated with the individual and group and whole organizations functions. Practically organization is divided in to subsystems and scientific approaches are fallowed in assigning targets to each system and appropriate decision making freedom is given to that subsystem thus every subsystem can work with freedom and involve whole heartedly in achieving the targets and in turn the shot term plans.
55 Downloaded from www.pencilji.com Sensitivity analysis Since the problem situation or a particular activity is handles with some assumptions and conditions a rational solution is found. Sensitivity analysis helps to know in advance the effect of what could happen if the assumptions or constraints considered change during course of action in meeting the targets or while executing the short term plans. Sensitivity analysis is all about testing the optima solution under changed conditions. Sensitivity analysis helps to test the solutions on the principle of utility. The utility profiles of all the people in the organization are not same, based on preference any solution could either be rejected or accepted. Techniques such as simulation, decision tree analysis, payoff matrix, i/p o/p analysis, modeling and methods of discounting, etc.. are used. Modeling Is a meaningful representation of a real situation on a mini scale, where only the significant factors of the situation are highlighted. Model can be physical, like a prototype of a building or A mathematical, like linear programming model, queuing model where the situation is represented in a mathematical form such as equations, matrices, graphs and polynomials. A complex situation is represented using variables, constants and parameters. A model can be static (does not change over a time period) or dynamic (variables and time are considered, as and when the time changes the values of variables are change thus the situation and solution will also keep on changing). The long-range strategic models are generally dynamic models and short-range management and operations models are static models
Once the model is designed then the test for the most feasible or optimal is done using different techniques like in linear programming model, a solution is selected on the principle of maximization of the profit. Or minimization of the cost. According to the utility also a model is selected When a queuing model is used solution is selected when the cost of the waiting time of a customer is less than the cost of the idle time of facility. Computational support for planning needed for analysis preparatory to planning, the preparation of the plans, and the output of the results. Historical data analysis techniques to obtain relationships useful for projections Projection and forecasting techniques
56 Downloaded from www.pencilji.com Computations internal to the plan and computations required for o/ps Output of the results in a meaningful planning format. The above computational support can range from sophisticated statistical technique to a fairly simple spreadsheet computational procedure Historical data analysis techniques Historical data is analyzed to discover patterns or relations that will be useful in projecting the future values of significant variables, quantitative analysis may not be stable so as can be used for forecasting thus data analysis is useful for input into the judgment forecast Major (data generation ) techniques The trend or growth rate period Data smoothing Seasonal analysis adjust for it. Auto correlation analysis Data description and dispersion analysis computation of rate of change or growth over a specified
smoothens the irregularities. used to obtain the seasonal pattern & the pattern to
to get to know the relationships between key variables. useful to understand data in terms of measures such as mean, median, mode , intervals and standard deviations.
Historical extrapolation techniques Historical data describes the past, but planning involves the future. estimating is generally based on analysis of past history combined with various techniques to generate data for planning purposes. Some of the common estimation techniques are : Extrapolation of time series or growth rate in order to predict the growth Extrapolation based on regression analysis Interpolation is done to obtain the needed value for planning from the historical data. ---5-----10 1--
Formula or relation could be used to calculate the estimations in percentages (preformatted) etc Financial planning computations Models that involve financial plans need to provide for various computations and analyses commonly required for measuring or evaluating profitability, like depreciation computation, rate of return analysis and break-even analysis. Output of planning results The output of the planning process will be plans in a format suited to the need of the various users. It is common to have the major financial plans (projected income statement, balance sheet, statement of cash flow etc) in the same form as the actual reports are reported. They are often termed pro form a statements ( I the for as if they have happened) other outputs will be prepared in a form suitable for the function, project, organization unit etc., receiving their part of plan.
Preparing outputs is a very tedious process since as and when the plans change the results will change and thus the clerical work will increase, thus with the help of computer it will be very easy to make changes and check the results and prepare the documents. MIS: Business Planning Note: whatever discussed before in previous sections should be s ummarized with respect to MIS i.e saying that all those activities are best done with the help of MIS.
58 Downloaded from www.pencilji.com 7. 7.1 Information Information concepts with respect to information systems
Information is data that has been processed into a form that is meaningful to the recipient and is of real or perceived value in current or prospective actions or decisions. e.g Daily News Paper (here data is processed (edited ) and presented in a meaningful manner) above definition recognizes both the value of the information in motivation, model building, affecting future and prospective actions. Information adds to a representation, Information corrects or confirms previous information, Information has surprise value in that it tells something the receiver did not know or couldnt predict, Information reduces uncertainty, and Information has value in decision making process in that it changes the probabilities attached to expected outcome in a decision situation. Information system processes data from unusable form into usable form to the intended recipient. Theoretically information has value only as it affects the decisions or action to be taken Data storage Transformation of data into information model in information systems
Data
processing
information
Data at one level is information at another level e.g operational data presented in a daily reports format in a data processing system is information for the lower level management but the same is information for the middle level management and later the periodical reports developed by the middle level management is information to middle level management but the same is data o the top level management. Data , the raw material for information, is defined as groups of non random symbols which represent quantities, actions, objects etc,, Data items in computer based information system are formed from characters (alphabetic, numeric or special symbols such as @,$,* etc).
59 Downloaded from www.pencilji.com Data items are organized for processing purposes into data structures, file structures and databases. Data relevant to information processing and decision-making may also be in the form of text, images or voices. Information presentation Communication model source transmitter source distortion / noise because humans are the one who are involved in the interpretation and communication of received messages always there is a chance of misunderstanding therefore communication of information for human use is affected by method of transmission and message handling on the part of organizational unit or individual handling the message. [ method of transmission increases sending or receiving efficiency methods that permit content or distribution discretion ] Methods to increase the sending and receiving efficiency of a system Methods for more efficiently providing information are: 1. Summarization and 2.Message routing Message summarization in organization is done to reduce amount of data transmission required without changing the essential meaning of the original message. e.g accounting classification like sales for a period, sales by product, sales by group & Geographical sales Level of summarization is done like For president : needs only total sales by area Area sales manager: needs sales by sales representatives and sales by product. e.g transmission of copies of purchase orders to only those departments [production, distribution, billing] which take direct action in information on order but marketing department may not need information on order by may require summarized information on a periodic basis. Message handling (methods to exercise information content or distribution discretion) Individuals or organizational units exercise some discretion over the content and distribution of messages to control their workloads, to control undesirable affects to individual or unit handling data because of distribution. channel reason decoder destination
60 Downloaded from www.pencilji.com Methods to exercise information content or distribution discretion 1) Message delay: transmission is delayed because a message doesnt require immediate action, and the message receiver might experience information overload or to distort, inhibitor surpass transmission. E.g for suppressing a transmission is a subordinate who seeks to inhibit the discovery of an error in a transaction by placing it aside. 2) Message modification or filtering: (exercising discretion over transmission) the meaning of message is altered prior to transmission messages are summarized in various was as they move up the organization. This happens until there is no formal way of clarify, summarize and transmit messages. E.g customer complaints of tactics of salespersons in a particular sales district may be blocked by district sales manager because his interest is also there and lower than him and avoids the information o reach upper level and if it does it will be in a filtered and beneficial manner to the concerned
61 Downloaded from www.pencilji.com 3) Uncertainty absorption: message modification that occurs when inferences are drawn from a body of data and the inferences instead of data itself are communicated in organization therefore data reduction occurs. Inferences could be based on quantitative data such as inferences could be based on quantitative data such as statistical inference or subjective reflecting non predictive inputs to inference process e.g inferential message regarding anticipated role of a person in a merging activity might be removed thus uncertainty is absorbed. 4) Presentation bias: the way the data is presented will influence or bias the way it is used and interpreting the meaning bias is not used in sense of good or bad; it specifies influence, intentional or unintentional. e.g i ) order and grouping in presentation alphabetical order, order by rate of return (less with regard to industry) and order by rate of return within industry ii) exception selection limits only those items that vary from an acceptable level by a fixed deviation are presented to decision maker. Choice of limit which selects on exception automatically introduces presentation bias( limits may be narrow or wide) e.g low level stock iii) selection of graphics layout (potential presentation bias) graphical presentation encourages decision maker to look at relative trends, graphics introduced significant bias while decision making, choice of scale, choice of graphics, choice of size, choice of color. E.g using charts reduces decision table. 7.2 Information : A Quality Product
Quality of information Quality of information is determined how it motivates human action and contributes to effective decision making Quality of information in terms of perceptions of the decision maker 1) utility of information 2) information satisfaction 3)error and bias 4) age of information Utility of information Andrus information utilities classification 1.form utility: as the form of information more closely matches the requirements of the decision maker increases the value of information. 2.timeutility : information has greater value if it is available in time.
62 Downloaded from www.pencilji.com 3.place utility: (physical accessibility) information has greater value if it can be accessed or delivered easily (online systems increases both time and pace utility)
4.possession utility (organizational location) the processor of the information strongly affects its value by controlling its dissemination to others. Andrus points out that information has value and cost associated with it in terms of accuracy and Utilities. if cost of acquiring information exceed its value increase in value by increasing accuracy or utilities or reduce cost by decreasing accuracy and or reducing utilities. Information satisfaction is all about what is its satisfaction level of a decision maker with the information provided by the information system (formal). Giving query information is obtained if not sufficient, expanded search is one. Error and bias : if bias is known early some adjustment remedy could be taken Error is because of 1)incorrect data measurement, 2) failure to follow correct processing procedure, 3)loss or non processing of data 4) wrong recording or correcting of data 5) incorrect history file 6)mistakes in processing procedure ( program errors) 7) deliberate falsification. Error and bias could be corrected by 1) incremental controls to detect errors 2) internal and external auditing : reduces and adds value 3)addition of confidence limits 4) user instruction in measurement and processing procedures so users can evaluate possible errors. Age of information : With respect to information contained in periodic reports such as monthly operating report and the statement of financial position at the end of a period. Two types of data are identified Condition data which pertains to appoint in time such as December 31 2003, orjune31 2003 etc.. Operating data reflects changes over a period of time e.g inventory used during a month or sales for a week. Information interval (i) is defined as interval between reports Processing delay (d) is the delay in processing between the end of interva l and the issuance of report foruse Using (i) and (d) age of information in management reports could be defined as
Condition information Maximum age Average age Minimum age d +i d + 0.5 i d
operating information d + 1.5 I d+i d + 0.5 i
e.g batch processing systems Online processing systems time).
: there is lot of delay in batching the processes. : there insomuch delay in processing(delay =response
So age of information is one of the important aspects, which decided the quality of information. 7.3 Classification of information
1) Action versus no action information information which instigates action is action information information which doesnt influence to take any action is no action information e.g low stock level ( reorder level being more than current stock level) leads to take an action ( order for stock is done) e.g stock ledger showing transaction doesnt influence to take any action[immediately]. so no action is taken immediately on information. 2) Recurring versus non recurring information information generated at regular intervals is called as recurring information ( periodical reports). information generated randomly is non-recurring information (market research reports). 3) Internal versus External information internal information is generated through internal resources external information is generated by using industry surveys or by government reports classification of information in terms of application 1) planning information : certain standard, norms an specifications are used in the planning of any activity, such information is called as the planning information e.g operational standards, time standards, design standards
64 Downloaded from www.pencilji.com 2) control information : reporting the status of an activity through a feedback mechanism is called control information. control information induce a decision or action leading to control. 3) Knowledge information: collection of information through library reports and research studies to build up a knowledge base as information source for decision making is called knowledge information. Classification of information based on usage 1) organization information ----e.g employee and payroll information 2) database information used by multiple applications e.g material specification, suppliers information 3)operational information ( used in operational activities.) sales reports, production statistics. 7.4 1. 2. 3. 4. 5. 6. 7. 8. Methods of data and information collection: Observation of existing systems is functional activities. Experiment of change in variable of control, assessing new changes. Survey to check for interested aspects. Subjective estimation(Expert opinions) Transaction processing: Deciding or getting to know the way to process the data Purchased from outside : Database of other organization Publications. Government agencies.
7.5
Value of Information:
According to decision theory value of information is the value of change in decision behavior caused by information less the cost of obtaining information. If new information causes a different decision to be made, value of new information is the difference in value b/n the outcome of the old decision and that of the new decision, less the cost of obtaining the new information. If new information does not cause a different decision to be made the value of new information is zero.
Value of Perfect Information: It is computed as the difference b/n the optimal policies without perfect information and the optimal policy with perfect information. Decision Based on prior Decision Based on perfect Information. knowledge.(Imperfect information.) Pay off matrix 1 A B C 20 22 15 Pay off matrix 2 A B C 20 22 30
Decision = B
Decision = C
Value of perfect information = B C = 30 22 = 8 which is the cost for obtaining information.
Strategies.
A B C
X1 x2 -----------------------Probabilities ------------------------0.60 0.40 20 18 30 0 15 8
Expected value.
A = 19.2 B = 18.0 C = 12.2
Value of information for more than one condition is the difference b/n the maximum value in the absence of additional information and maximum value(expected) with additional information. 7.6 General model of human as information processor Memory
I/p from sensory receptors
channel
Mental processing
channel
O/p responses
Filter Downloaded from www.pencilji.com
66 Downloaded from www.pencilji.com A simple model of human as information processor consists of sensory receptors(eyes, ears, nose, etc ). That pick up signals and transmit them to the processing unit (brain with storage). The result of the processing are output responses ( physical, spoken, written etc..). The capacity of the human to accept inputs are produce outputs (responses) is limited. When the human capacity for processing information is surpassed, information overload can cause the response rate to decrease and performance is degraded.
The world provides more input than the human processing system is able to accept in order to prevent information overload, the human reduces input to a manageable quantity by filtering or selection process in which some inputs are blocked and prevented from entering processing . The filter may result from 1. frame of reference of the individual based on prior knowledge and experience 2. normal decision procedure 3. decision making under stress Filter under normal Decision-making conditions
Input Stimuli
Filter
Mental processing
Input Stimuli
Filter
Mental processing
Filtering under decision making with stress
67 Downloaded from www.pencilji.com 8 8.1 Systems System Concepts 1. It provides a meaningful framework for describing and understanding the features and problems of the subject. 2. It is defined as a set of elements arranged in an orderly manner to accomplish an objective. 3. It is not a randomly arrangement of sets. It is arranged with some logic governed by rules, regulations, principle and policies. You can any one of the above definition. Ex. If a computer system is designed to perform commercial data processing, then the elements will be the data entry devices, CPU, Disk, Memory, Application programs and printer. SYSTEMS: Abstract: Orderly arrangement of interdependent ideas or constructs. Ex. System of theology is an orderly arrangement of ideas about god and the relationships of human to god. Physical: Set of elements (entities) which operate together to accomplish an objective. Ex. Transportation system: personnel, machines and organization which transport goods. This system display activity or behavior. Each part interacts with other to achieve an objective. General model of system: process input output i/p proces s
o/ps
The features which define and delineate a system form its boundaries. System is inside the boundary and Environment is outside the boundary. Each system will or might have subsystems. The interconnections and interactions b/w the subsystems are termed interfaces. Interfaces occur at the boundary & take the form of i/p and o/p.
i/p o/p validation subsystem
Valid
Good Data
sorted Update Sort subsyste subsyste m m data
data
o/p subsyste m
68 Downloaded from www.pencilji.com TYPES OF SYSTEMS: 1. Deterministic and Probabilistic. 2. Closed and open system. Deterministic Vs probabilistic system DETREMINISTIC SYSTEM PROBABILISTIC SYSTEM Operate in predictable manner. Operate in unpredictable manner. All interactions are known with Not known with certainty, uncertainty certainty. is there. With current state and description of A certain degree of error is always operations, next state is given exactly attached to the prediction of what the without errors .Ex. Computer prog. system will do. Ex. Inventory system. Closed Vs Open system CLOSED SYSTEM OPEN SYSTEM Self contained Exchange information, material and energy with the environment Doesnt exchange material including random and undefined information or energy with its inputs. Ex. Biological system, org. environment. Ex. Chemical reactor. system. It will finally run down or become It is self organizing and attempt to be disorganized. in equilibrium. The movement to disorder is termed as increase in entropy.
Organization as open system: Katz & Kahn gave 9 characteristics of open systems which are applicable to organization: 1. Importation of energy. 2. Throughput inputs are altered in the same way as materials are processed. 3. Output there should be output in some format. 4. Systems as cycle of events there is raw data which is processed and if there is any problem then the process is revised and again cycle is going on. 5. Negative entropy attempt to impart more energy. 6. Information input, -ve feedback and coding process. 7. Steady state basic system characteristics tend to remain constant. 8. Specialization tendency towards deliberation of roles and specialization of functions. 9. Equifinality more than one-way to accomplish any task Ex. Marketing.
69 Downloaded from www.pencilji.com 8.2 System Control: i/p proces s o/p
sensor Corrective unit
Channel of feedback Comparison unit
standard
Process of measuring the o/p, comparing with standards sending the signals to corrective unit and corrective unit acting upon it is called as control. Role of control is to regulate the system operations an performance and keys it in equilibrium condition. Business system MIS Raw materials, plant and machinery, manufacturing Purchasing, manufacturing, selling, accounting. Quality, quantity of production, sales... Project Expectation of profit Vs actual profit Profit Balance sheets, reports M.D. Business decision
I/P PROCESS O/P SENSOR Comparison unit
Transactions and purchase, production and sales and payments Transactions and data processing Sales in value, stocks in weights, income and profit in rupees. Income less cost. Algebraic comparison module to compare income Vs budgeted income Budgeted profit. Exception reports after analysis showing products earning profit. Decision maker, managers at all levels. Information to support decision.
Standard Feed back Corrective unit Decision Goals and objectives
70 Downloaded from www.pencilji.com 8.4 Handling System Complexity : Decomposition: Factoring system into subsystems. There is decomposition of systems into subsystems to perform a particular task in a very easy way. Like an information system, it is divided into different subsystems as Sales and order entry, accounting and control, inventory, planning, production, personnel and payroll, purchasing, environmental intelligence. Further personnel and payroll system is divided into different subsystem as Creation and updating of personnel-payroll records. Personnel reports Payroll data entry and validation. Hourly payroll processing. Salaried payroll processing. Payroll reports for management. Payroll reports for government. Further hourly payroll is divided into subsystems as Calculation of gross pay, deductions and net pay. Preparation of payroll registers and audit control. Check printing Payroll registers and controls output. By this decomposition there is an increment in the communication b/w different subsystems, so to reduce this communication there is a use of Simplification Simplification: process of organizing subsystems so as to reduce the number of interconnections There are 2 types by which this can be done; 1. Clustering: in this there is different groups of subsystems and only one interface b/w two groups so that communication is only done through interface which reduces the complexity. e.g Let us take an example of classes as there should be class representatives for each class so that the only communication is done through the representatives.
All systems interconnected systems connected within clusters and interconnected within interface
71 Downloaded from www.pencilji.com 2. Decoupling. Methods are established for decoupling systems so that the need for interconnection is reduced. If two different subsystems are connected very tightly, very close coordination between them is required e.g, if the raw material is put directly into production the moment it arrives at the factory , the raw materials system can be said to be tightly coupled. prevent new material from arriving too soon with no place to be stored. So a very tight coupling places a very heavy coordination and timing requirement on the two systems. Because they are somewhat independent, it is difficult to make them operate completely in synchronized fashion. But it is very difficult to have a synchronized operations of all events or processes because they can produce random or unplanned delays. The solution to such problems is to decouple or loosen the connection so that the t wo systems can operate independently. Different ways to decouple are:1. Inventories, buffers, or waiting lines As in the above example where the raw material subsystem and production subsystem, a raw material inventory allows the two subsystems to operate relatively independent (in a short duration) Data buffers are used in some computer systems and some communication systems to compensate for different rates of input and output of data. 2. lack and flexible resources when the output of one subsystem is the input to another, the existence of slack resources allow subsystems to be somewhat independent and yet allows each to respond to the demands of the other subsystems e.g most data processing systems can provide an extra report or extra analysis because they have slack resources. 3. Standard specifications, standard costs, and other standards allow a subsystem to plan and organize with reduced need to communicate with other subsystems e.g if the production department wishes to design a data processing module involving finished goods and a standard product code is used throughout the organization, there is no need to communicate and negotiate with other departments about the codes to be used
72 Downloaded from www.pencilji.com use of inventory of buffers Production Sub system Raw material subsystems inventory
Use of Slack resources Slack capacity
No coordination Varying output
Normally used capacity
Use of standards No special Std i/p communication std o/p
8.5
Post implementation Problems in a System
Preventing systems entropy Systems can run down and decay or can become disordered or disorganized, also can be said as increase in entropy takes place. Preventing or offsetting the increase in entropy requires inputs of matter and energy to repair, replenish and maintain the system. This maintenance is termed as negative entropy. Open system require more negative entropy than relatively closed systems to keep in a steady state of organization and operation.
73 Downloaded from www.pencilji.com 8.6 System Stress and System Change: It is a force transmitted by a systems supra system that cause a system to change so that the supra system can achieve its goals. Types of Stress: Two basic forms of stresses which can be imposed as a system separately or concurrently 1. Change in the goal set of the system, new goals may be created or old goals may be eliminated. 2. Change in the achievement levels desired for existing goals. Consequences of Stress: When a supra system exerts stress on a system, the system will change to accommodate the stress or it will decay and terminate. If the system doesnt accommodate the stress, the supra system decreases or terminate the supply of matter-energy and information input. Process of adapting Systems accommodate stress through a change in form; there can be structural changes or process changes. Change in structure: if a computer system under stress for more share ability of data may be changed by the installation of terminals in remote locations a structural change. Change in process: Ex. Sorting- changing the type of sort, selection sort ---quick sort. Principle of stress localization: It exists for two reasons: 1. The process of accommodating stress after places abnormal demands on system performance. If a global change has to be made. It is more likely that the system will become than if changes can be limited. 2. One of the defining characteristics of complex systems that survive is that they have relatively independent subsystems. This enables one system to remain stable even though another sub-system may be undergoing change. Thus disruption caused by change is minimized.
74 Downloaded from www.pencilji.com 9. Development of MIS 9.1 Development of long range plans of MIS We need a Management Information System flexible enough to deal with the changing environment 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 an 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 development of the MIS is linked with the steps of the implementation in a business development plan. BUISNESS PLAN Vs. MIS PLAN
Business plan Business goals and objectives
MIS plan MIS, objectives, consistent business goal and objectives.
to
the
Business plan and strategies
Information strategy for the business plan implementation playing a supportive role. Architecture of the MIS to support decisions
Strategy planning and decisions
Management plan for execution and control System development schedule, matching the plan execution. Operation plan for the execution Hardware and software plan for the procurement and the implementation.
Some important points to be noted: The organizations strategic plan should be the basis for the MIS strategic plan. The information system development schedule should match with the implementation schedule of the business plan. The choice of information technology is a strategic business decision and not a financial decision.
75 Downloaded from www.pencilji.com 9.2 Ascertaining the class of information: This can be represented by seeing the following table: Information class Organizational Example of information user The number of employees, products, At all levels services, locations, the type of business, turnover and variety of the details of each one of these entities. Purchases and sales, stocks, receivables, outstanding, budgets. production, Functional heads payables,
Functional
Knowledge
The trends in sales and production Middle and the technology. The deviation from the top management. budgets, targets an norms etc. Competitors information, industry and business information. Status information on a particular aspect, such as utilization, profitability etc. Information for problem solving and modeling. Quantitative information on the business status. Middle management and operations management.
Decision support
Operational Information on the production, sales, purchase, dispatches consumptions, etc. In the form of planned versus actual. Operational and management supervisor, section officer
9.3
DETERMINING THE INFORMATION REQUIREMENT: Asking or interviewing. Determining from the existing system. Analyzing the critical success factor. Experimentation and modeling.
76 Downloaded from www.pencilji.com 9.4 DEVELOPMENT & IMPLEMENTATION OF THE MIS:
Prototype approach:
When system is complex the developme nt strategy is prototyping of system. This process identifies: a) The problem areas, b) Inadequacies in the prototype. Vis--vis fulfillment of information needs. The designer then takes the steps to remove adequacies. These steps are: 1. Changing the prototype of the system. 2. Questioning the information needs. 3. Streamlining the operational systems and procedures and more user interaction. Advantages: 1. Ability to try out ideas without incurring large costs. 2. Lower overall development costs when requirements change continuously. 3. Ability to get a functioning system into hands of user quickly. 4. Effective division of labor between the user professionals and MIS professionals. 5. Reduced application development time to achieve a functioning system. 6. It is a simply based on the simple proposition that people can express what they like or do not like about an existing system more easily.
Disadvantages: 1. Problem in the management of development process bcoz of frequent changes. 2. It works but it is not complete. 3. Designers task becomes difficult when there are multiple users of same system and inputs they use are used by some other users as well.
Prototype approach to development of MIS :

Mission goals
Identify information needs
Refine the needs
Modify prototype specificatio n Develop revised prototype
Review
Define system boundaries & scope Define system objective
Develop & test
Implement in parallel
Initial prototype
Is the user satisfie d
NO
Training
YES Documentation
Examine feasibility
Develop initial prototype specification
Develop app with final specificatio n
2. LIFE CYCLE APPROACH: a) Each stage of development has straight forward requirements for deliverables, feedback , sign off. b) Here basic idea is that there is a well-defined process by which an application is conceived, developed and implemented. c) It gives structure to a creative process. d) They have a fairly long duration of survival and they contribute in a big way as sources of data to the corporate MIS. e) Apart from care systems some DSS can be developed through Life Cycle Approach.
Life Cycle approach to the Development of MIS :

System application Physical design Install the system
Assess feasibility
System specificatio n
Conduct awareness & training
Information requirement analysis
Program specificatio n
Operate the system
Conceptual design
Develop the system
Review & audit
79 Downloaded from www.pencilji.com 9.5 Management of Quality in MIS:
Information Quality proves to be the platform for decision making. Low quality information would adversely effect the organizational performance and reduces the cost benefits. The quality of information is the result of quality of the input data, processing design, system design, system and procedures which generate such a data. Quality parameter 1. Valid transaction and input data. 2. Complete data of all transactions. 3. Accuracy and precision . 4. Relevance to the user. 5. Timely information. 6. Meaningful and complete information. Ensuring quality parameters Conducting a proper systems analysis , designing a suitable computer system and ensuring its maintenance from time to time and also subjecting to audit checks to ensure system integrity. It is a continuing function and needs to be monitored properly. 1. Inputs to be processed and controlled. 2. Validity checks, Updating and corrections done before data processing begins. 3. Access to data files is protected and secure. 4. Proper file selection to be done. 5. Back up of data and files be made to avoid loss of data and corruption. 9.7 MIS : The factors of Success and Failure Factors Contributing Success Gaining management and user commitment to the project. Assuring that the project is well defined and plans are clearly specified. Appropriate information processing technology required to meet the data processing and analysis needs of the MIS is selected. MIS is kept under continuous surveillance , so that its open system design is modified according to the changing information need MIS focuses on the results, goals and highlights the factors and reasons for nonachievement. MIS is easy to operate, therefore is result in a user friendly design. MIS recognizes that the different information needs for the different objectives m ust be with.
Factors Contributing Failure MIS is conceived as data processing and not as information processing system. Understanding the complexity in the business systems and not recognizing it in the MIS design loads to problems in successful implementation. Lack of training and appreciation. MIS is developed without streamlining the transaction processing system in the organization. MIS doesnt give perfect information to all the users in the organization. Adequate attention is not given to the quality control aspects of input, the process and the output loading to insufficient checks and control in the MIS. Lack of administrative discipline in following the standardized systems and procedures, wrong coding and deviations from system specifications results in incomplete and incorrect information..
81 Downloaded from www.pencilji.com 10. Choice of Information Technology 10.1 Nature of IT Decision
The choice of IT is a strategic decision, making long term impact on the effectiveness of the MIS of the enterprise. The IT affects the people, the processes and the productivity of the organization. It is a strategic business decision and not a financial decision to be taken on the least cost approach. Just as the MIS handles the decision support applications, the choice of IT makes a qualitative difference in the decision making process. Hence, a wrong choice of IT would kill a good MIS design as the IT would not support the user on the aspects and the requirements such as speed, response, access, security etc. A wrong choice of IT would also kill the MIS designers ability to develop a user -friendly end user computer system, providing all capabilities of the data and the information handling with flexibility and speed. The modern IT offers a number of different system configurations, each being a candidate, as a solution to satisfy the needs of the MIS. The IT decision, therefore, is a technical decision, where it is required to decide b/w the various configuration alternatives made of a variety of h/w and s/w options. 10.2 Strategic Decision
The IT offers a number of alternatives which have varying costs. The costs differ due to difference in the architecture of the h/w, capability of the s/w and different configurations but achieving more or less the same results. Apart from cost factors there are some other factors also as:1. Management Process or Style : The information needs of the people in the organization arise from the process or the style by which the management runs the business. The quality of management
82 Downloaded from www.pencilji.com process depends on the people culture and the culture predominantly affects the decision making process. If the decisions in the organization are of the following types, then the IT options would differ. These types are: a) The decisions affecting the operations management. b) The decisions affecting the execution and control of the business. c) The strategic business decisions. In such cases, the IT choice would be the Front End Processing System connected to the Back Office central System. Hotels, hospitals and a large corporate bodies are the examples, where such a choice id desirable. The front end system takes care of the operations management and the back office systems take care of the strategic and the operations planning and the control of the business. So the IT choice considers the management process, the business organization, the decision making style and the mission critical applications as the important dominating factors. 2. Business Operations : There are many organizations where the business operations are typical, voluminous and their information needs are largely transaction processed. The typical example is that of the banks where the banking operations are uniformly standard at almost all branch locations. The transactions are large in number and need to be processed very fast. In hospitals also, where the transaction processing is very low, the decision making need is satisfied by query type applications.
83 Downloaded from www.pencilji.com 10.3 Configuration Design
The details of IT such as architecture, communication, RDBMS, storage media and OS are also strategic to the success of the MIS. The details are worked out based on the following features: 1. Data type: Words, Numeric, Image and voice. 2. Data Volume: The volume decides the disk options and their capacity in gigabytes or megabytes. 3. Storage capacity: The online storage capacity would be decided based on the processing needs. 4. I/O operations: These would decide the controllers and the speed of I/O processing. 5. Data sharing; if the data is to be shared across the databases, then the storage capacity will be decided based on the size of the databases. 6. Process speed: The speed needed for processing will decide the CPU, memory and the processing architecture. 7. RDBMS and 4GL: These will be chosen on the basis of the volume. 8. Query processing: This decides the SQL or standard SQL and 4GL. 9. Communication protocols: If different platforms need to be connected, then the s/w such as the TCP/IP needs to be considered. 10. Interface and gateways: These will be decided on the basis of data transfer needs b/w the locations and b/w the h/w-s/w platforms. 11. Security and integrity: the level will decide h/w, the s/w and OS. 12. Language and packages: The requirement often is of a special language and packages besides the main software. 10.4 Evaluation
84 Downloaded from www.pencilji.com 10.5 Information Technology Implementation Plan
It is necessary to prepare a plan of the implementation covering the following features. These are: 1. Site preparation: This is major activity, wherein you prepare the site for the physical installation of the h/w i.e., the main computer system. The modern IT needs site preparation at the users end as well for the convenience and the ease of operations. 2. System development plan: this is generally prepared while assessing the h/w a nd s/w needs. Such a plan gives the indication of the various locations of the h/w in terms of quality and tome when needed. System development plan priorities the various steps in site preparation. 3. IT installation schedule: This schedule gives the item-wise details of the h/w arrival and its installation, testing g and acceptance. It also needs to be linked with the information system development plan to synchronize the installation with the use of the h/w and the s/w. 4. Recruitment and Training of IT personnel, the implementation of the IT needs specific skills in the manpower responsible for the effective implementation. The skills may fall in the area of languages, tools of development and also acquiring the precise know-how on the new emerging technologies and its applications in the information systems. 5. Training of Users: The latest development in the IT requires its users to be well trained for its effective use. The training may range from awareness to learning of the specific tools. The user should be trained to accept the concept of end user computing. 6. Investment Plan: Summarizing the estimates on the time scale would generate an investment plan. Since, the investment in the IT is strategic, at the most it can be deferred but cannot be curtailed.
85 Downloaded from www.pencilji.com 11. Decision support system
11.1 Decision Support Systems : Concept and Philosophy A system which support in taking decision by giving information about different alternatives of solutions during solving a problem . Emphasis is on support rather than automation of decisions. Characteristics of DSS : Computer must support the decision maker and if should not replace decision makers judgment. Computer should neither try to provide the answers nor impose a predefined sequence of analysis. Eg: Robot, childcare in ICU. Computer support is mainly used for semi-structured problems where parts of the analysis is systemized using computer and decision makers insight and judgment will be necessary in solving the problem (by taking decision). MIS or computer system should help a decision maker by providing an interactive way ( Dialog b/w user and system ) to get information from the system, giving access to appropriate database and later with the analytical abilities and insight knowledge of the decision maker an effective decision could be taken. Attributes of DSS : 1) Flexibility : systems are flexible so that any semi-structured and unstructured decision making situation can be tackled with ease and speed. 2) Simple Models : The systems use simple model for decision making. The choice of a model depend upon the complexity of decision making. 3) Database : The system calls for several inputs from database for decision making.. So DSS should provide ease of access to database containing relevant data and interactive testing of solutions. Designer has to understand the process of decision making for each situation (completely) in order to design a system to support decision making.
86 Downloaded from www.pencilji.com Types Of Decision By Management activity : Structured Operational Management decision control control analysis Inventory reorder, pricing of bids, decisions, selection of credit (structured) production time institutions. scheduling. Allocation of Selection of a advertising, internal vendor, hiring new organization of a (unstructured) supervisor department. Decision support system
Strategic control Acquisition of a company, addition of new product line. Entry into market, organization company. new new of
Classes of DSS : 1. File drawer system : Allows immediate access to data items, they are basically online mechanized versions of manual filing system. 2. Data Analysis systems : Allow the manipulation of data by means of either referring a model or general analysis operations analysis is done on current or historical data. 3. Analysis Information system : Provide access to a series of database and small models. 4. Accounting Models : Calculate the consequences of planned actions on the basis of accounting definitions. 5. Representation Models : Estimate the consequences of actions on the basis of models that represent some no definitional characteristics of the system such as probabilities of occurrence. 6. Optimization Models : Provide guidelines for action by generating the optimal solution consistent with a series of constraints. 7. Suggestion Models : Compute a specific suggested decision for a fairly structured and repetitive decision. Their purpose is to bypass other procedures for generating the suggestions.
87 Downloaded from www.pencilji.com 11.2 DSS : Deterministic systems 1. Behavioral Models : Deals with understanding of behavior amongst the business variables. Eg: Trend analysis, forecasting, statistical model, regression model. 2. Management Science Model : are based on principles of business management, accounting and econometrics . Eg: The budgetary system, cost accounting system, inventory control system, material requirement planning system, production planning and control, scheduling and loading systems, manpower planning and forecasting. 3. Operations research Models (Mathematical Models) : address to optimal resource utilization/solution under some constraints. Simulation approach is used if problem has some complexities. Useful for minimization of running cost and maximization of profit. Eg. Of Behavioral Model : Forecasting using Regression model : In weather forecasting, forecasting/predicting position of clouds usually done by using simple algebraic equations as Z=X+Y+( ------). Forecasting with data smoothing means cutting off the extreme values associated with data and smoothing it before it is used for forecasting using exponential smoothing equations. Eg. Calculating average demand based on previous information.
Market research methods : By a survey , one can forecast the response rate, the recall rate on various types of advertisements and as well the influence on the buying decisions. Here mainly behaviour of customer is judged. Ratio analysis for financial assessment : Current ratio, Quick ratio, Assets to liabilities ratio, Inventory turnover ratio etc. All these ratios and some more will help in assessing the financial status of the organization, also will be helpful while making decisions for advancing loans to companies. Eg. Of Management Science Models: 1) Budgeting Models (for Planning and Control) : Sales budget, Production budget, capacity budget, Manpower4 budget, Expenses budget, Inventory budget. (Spreadsheets and accounting packages are used to perform budgets). 2) Break-Even analysis Models: used to determine the volume of business activity at which there is no loss or profit. The model tells what is BEP for a given cost & revenue, if
88 Downloaded from www.pencilji.com there are possibilities of altering the costs, model tells the impact on BEP i.e. if price is reduces, the revenue goes down & BEP will go up. BEP = Fixed cost / (Revenue Variable Cost) 3) Return of Investment analysis: How much, When & Where to invest is analyzed using present value (future cash flow). DSS is designed considering following factors: Of investment proposals. Different investments. Different cash inflow and savings. Payback period, rate of return. Maximize return using limited funds etc. Value of unit money is considered & calculated and based on that return/unit is predicted and analysis is done. NPV = PV Investment. Where PV = S (1-(1+i)^-t)/i t= period S = savings or gains(streams of each inflow) 4) Project Planning and Control Models : PERT(Project Evaluation and Review Techniques), CPM(Critical Path Method), Network diagram, Activity time estimation, Critical path selection, Probabilities of completing the project activity. 5} Cost accounting systems : To compare actual cost Vs budgeted cost so as to help in decision making. Job order cost system : material, labor & overhead. Process cost system : work in progress cost. Period cost system : Daily, weekly ,monthly, yearly estimations. Operational Research Models : Mathematical programming techniques, Linear programming. Eg. Let a company want to manufacture two products P1 & P2 and for this it needs Raw materials R1 & R2 , in that company R1 = 500 units & R2= 700 units So composition becomes for P1 (2*R1 + R2) and for P2( R1 + 2*R2) P1 & P2 are to be produced to maximize the profit. Contribution to overhead and profit is 5 for P1 and 4 for P2. So decision problem Z = Profit = 5*x1 + 4*X2.where X1 & X2 are decision variables With raw material constants 2*X1 + x2 <500 , X1 + 2*X2 < 700 , X1 & X2 >= 0 Inventory Control Models : Material requirement planning system , ABC analysis is used
89 Downloaded from www.pencilji.com 11.3 Artificial Intelligence (AI) System : Intelligence when supported by knowledge & reasoning abilities becomes on artificial intelligence when AI is induced into a database then we will have AI system. Error! Intelligence when supported by knowledge and reasoning abilities becomes an Artificial intelligence. When such an AI is packed into a database as a system then what we have is AI system. AI system falls into three basic categories: 1. Expert Systems(Knowledge based). 2. Natural Language Systems(Native Languages). 3. Perceptions Systems(Vision, Speech, Touch). AI in software technique applied to a non numeric data expressed in terms of symbols, statements and patterns. It uses the methods of symbolic processing, social and scientific reasoning and conceptual modeling for solving the problems. The AI systems are finding applications configurations,design,interpretation,analysis,planning,scheduling,training,testing and forecasting. The AI system do not replace people. They liberate experts from solving common /simple problems leaving the experts to solve complex problems. I systems help to avoid making same mistakes and respond quickly and effectively to a new problem situation. AI SYSTEM
NATURAL LANGUEGES USES

NATIV E LANGUAGE KNOELEDGE APPLI ES LANGUAGE REASONING
EXPERT
PERCEPTION S
USES USES
SIZE,SHAPE,IMAGE, VOICE APPLIES
KNOWLEDGE
APPLIES HUMAN LIKE REASONING
SENSING ABILITIES FOR REASONING
90 Downloaded from www.pencilji.com AI is a s/w technique applied to data expressed in terms of symbo ls , statements & patterns. AI uses the methods of symbolic processing, social & scientific reasoning & conceptual modeling for solving the problems. Application of AI : Configurations, design, diagnosis, interpretation, analysis, planning, scheduling, training, testing and forecasting. It helps in solving complex problem but cant replace people. Eg. Movie of kids or cartoons. 11.4 Knowledge Based Support System : It is a special case of AI system. Expert system is a computer application that guides the performance of ill-structured tasks which usually require experience & specialized knowledge ( i.e. Expertise ). Expert system is an instance of DSS . Expert system has knowledge base, the data, database & decision rules which represent expertise. Using Knowledge Based Expert System ( KBES) a non expert can achieve same performance comparable to an expert in a particular problem domain. Eg. 1)Medical diagnosis expert system provides the system with a particular set of symptoms, program searches its knowledge of symptoms & possible causes. 2) Program might begin an interactive dialog with the user to identify more information or to suggest a strategy of further tests. The problem is unstructured in the information may be incomplete or inaccurate. Various strategies are being implemented for restructuring & searching the knowledge base of an expert system. Research on expert system is associated with the field of artificial intelligence. Like Robot, converting languages and interpreting in generate the conclusion.
Some Pitfalls of Expert System : Eliciting knowledge from an Expert to incorporate in an expert system is costly and difficult. There is a need for a simple but flexible user interface with a non-expert user.
91 Downloaded from www.pencilji.com 13. Technology of Information Systems
13.1 Introduction The technologies behind information system are a. data processing b. transaction processing c. application processing d. system processing 13.2 Data Processing, Transaction Processing a) data processing each entity in information processing s ystem is processed to confirm its specification, character and validity at data processing stage , the system would point out errors of wrong specifications, errors of value, errors in validity.. following steps will be implemented before the data is accepted in the system for usage confirming the character, structure and presentation as per data design checking the value of the data as per data value specification such as single specific value, range of value and limit value ranges if a single no conformance is seen, pointing out the error and seeking corrective response before the processing control shifts to a new field b)Transaction processing Step 1 : Data capturing [ manual recording or terminal entry] Step 2 : Data preparation [ key to disk, OCR< MICR] Step 3 : Validation Test Missing data checking, valid size checking, Class or composition error check, Range or reasonableness test Invalid data test Step 4: Transaction Processing Batch, online entry and immediate processing/ subsequent processing. Step 5: Transaction Data Output [format] O/p will be either informational [reporting kind] or action information or investigational. Step 6: Document preparation Step 7: Document Transmission
92 Downloaded from www.pencilji.com 13.3 Application Processing, Information System Processing c) Application processing application should be designed to change the number of different files holding a variety of information application should be designed for status updating at all levels concurrently and the status triggered actions in the related field of the application scope of application has to be implemented properly d) Information system processing Data Transaction Application System
System Engineering
Data acquisition
processing
networking
communication
13.4 TQM OF INFORMATION SYSTEMS Total Quality Management (TQM) in the information systems design is to assure the quality of information. It ensures whether the scope and the objective of the system and planning methodologies are correctly chosen. The single most important measure of quality assurance is the level of user satisfaction it attains. It must help to achieve business goals and mission. TQM ensures that the information system design is flexible, and easy to maintain with the changing needs. The emerging technologies of TQM are Internet/intranet, EDI and e mail, groupware for team based application, client/server applications, multimedia, artificial intelligence, etc. The 7 parameters of quality of information are flexibility, reusability, integration, consistency, usability and reliability. The software quality assurance depends on testing. The testing kinds are unit testing, integration testing, validation testing a nd system testing.
93 Downloaded from www.pencilji.com Unit Testing: The smallest portion of the system is checked by error management (identifying error by throwing the message, controlling the execution). Integration Testing: Top-down approach or bottom-up is followed based on system design. Validation: is done when the integration phase is confirmed. System Testing: The faults are recovered. The performance testing is the last phase of the system testing and TQM where operational performance of the system is tested. Quality assurance is ensured through strict adherence.
94 Downloaded from www.pencilji.com 14. 14.1 Database Management Systems: Database Concepts
Data: Facts / Collection of Facts. Database: An integrated collection of well defined data and information which is centrally controlled. Data structure and its storage should be such that it facilitate share ability, availability and integrity of the data Disadvantages of a typical file processing system: Data redundancy and inconsistency Difficulty in access the data ( of complex file structure and multiple relation ) Concurrent access anomalies. Security problems Integrity of data ( integrity constraints ) No data independence. To overcome the above constraints DBMS evolved. DBMS: it is a s/w, designed to manage and maintain the database of an organization. Main steps in DBMS: Data structuring Defining database (data dictionary, directory ) Creation of data base Interrogating with database Updating (saving the changes ) DBMS is also defined as a collection of the interrelated files and a set of programs through which the users can access and modify these files. In DBMS files contains tables. There are e some common things about DBMS: Database is a mechanized, formally defined, centrally controlled collection of data in an organization The data records are physically organized and stored so as to promote: Availability: Data should be available for use by application (both current and future) and by queries. Share ability : Data items prepared by one application are available to all applications or queries ( No data items are owned by an application ) Evolvability : The database can evolve as application usage a query needs to evolve. Data Independence : The users of the database establish their view of the data and its structure without regard to the actual physical storage of the data. Data Integrity : The database establishes a uniform high level of accuracy and consistency , validation rules are applied by DBMS.
Another definition of DBMS : It is a s/w system which performs the functions of defining, creating, revising and controlling the database. DBMS provides facilities for retrieving data, generating reports, revising data definitions , updating data and building applications. Data Base Administration : it is a function which exercises control over database. Data Base Administrator : it is the person who does DBAdministration function.
E.G. TYPICAL FILE PROCESSING SYSTEM . PURCHASE FILE ITEM ITEM PO# SUPP# SUPPLIER DELIVERY
CODE NAME NAME DATE
QTY.
RECEIVED
QTY.
REJECTED
GOODS
RECEIPT NO.
ITEM
CODE
ITEM
NAME
STOCK ACCOUNTING FILE X X X QTY.

RECEIVED
QTY.
REJECTED
GOODS
RECEIPT NO.
ITEM
CODE
ITEM
NAME
QUALITY ACCOUNTING SYSTEM FILE PO# SUPP# SUPPLIER X QTY.

NAME RECEIVED
QTY.
REJECTED
GOODS
RECEIPT NO.
Advantages in database approach : All managers use same database ( no inconsistency ) View of database as per need of manager. No updating anomalies. Data could be shared by all users. Data security is implied appropriately Data retrieved is very easy ( by queries ) Report generation as per the need.
SCHEMA AND SUB-SCHEMA : Data model is an abstract representation of data. Data model defines the way , t he data items are organized and related. Data model can use variety of representations . E.g.: graphs, mathematical formula and tables etc. Objective of data model is to represent the essential elements of the data without the detail. Data models are of two types : 1) logical data model (How data is used ? or we can say that user views ) 2) physical data model ( How data is stored ? or physical views ) Physical storage and retrieval of data strategies must be designed around the physical chrematistics of storage media and devices. Users of data should be able to describe, think about, and use data without the concern of physical storage . Word schema is used as a synonym for view, model or diagram ( Overall logical database description ) Three major schemas are related to logical and physical models : 1) External Schema (user view) : it is the way the user of the data defines the data and data relationships .Also called Subschema, since it is one part or one view of the larger conceptual schema . 2) Conceptual Schema : It is the overall logical model of the database . 3) Internal schema ( physical ) : It is the physical storage data model. User model of data needed User scheme or User view Conceptual schema
Different users have need of a Items or records from the
set of database
User describe the data ,they need , The way they view it but using a Notation
in specified
The data items are extracted from overall logical design model of the
an database.
The logical design of the corresponding physical design
Internal schema
database has a model.
SUB-SCHEMA FOR PROGRAMMER A PURCHASE ORDER MASTER ORD# SUPP# SUPP SUPP. DELI. ORD TOTAL NAME ADD. DATE QTY
SUB-SCHEMA FRO PROGRAMMER B PARTS IN STOCK PART# PART

NAME
QTY. IN
HAND
PURCHASE ORDER DETAIL PART# PART

NAME
ON-ORDER DETAIL ORD# SUPP

NAME
QTY.
ORDERED
PRICE
QTY.
ORDERED
ORDER DATE
DELIVERY
DATE
A1 LET THIS IS PROGRAMMER A
A2 THIS IS PROGRAMMER B
SCHEMA THE LOGICAL DATABASE DESCRIPTION PURCHASE ORDER ORD# SUPP# ORD
DATE
SUPPLIER DELE TOTAL

DATE
PART PART# PART PART

NAME DESCR.
SUP# SUPP. SUPP. ADD. INFO.
QTY.
ORDERED
LINE ITEM PART# QTY.

ORDERED
PART# PRICE PRICE
DEL.TIME
ORDER#
OVERALL SCHEMEA
98 Downloaded from www.pencilji.com Two different programmers require different files. Above diagram shows programmers sub schemas ( A1,A2) Both sub-schemas are derived from the schema B. DBMS controls the interaction b/w the database and application programs prepared by programmers and b/w the database and non-programmers , adhoc users accessing or updating items in the database is performed only through the DBMS. CONCEPTUAL MODEL OF A DBMS : Non-programming users Database query Language facility Database definition Database creation Database redefinition Database restructure Integrity controls Database programming Language interface
Database Administrator (DBA)
DATABASE
Programming users
Application programs Database Manager (DBM) : It is a program module which provides the interface b/w the low level data stored in the database and the application programs and queries submitted to the system. DBM is responsible for security, integrity, synchronization, backup and recovery and interaction with the file manager. DBA responsibilities : Creating schemas, granting of authorization for data access, physical organization modification, backup copies, and integrity constraint specifications. LOGICAL DATA CONCEPTS AND DEFINITIONS : Data Independence : Changes in the storage technology should be possible without affecting applications using data Changes in logical data model should also be allowed without affecting physical storage. This separation of physical & logical data models is termed as data independence. The user or analyst is responsible for defining data requirements and it is done with the help of logical data model. Developer & database system defines physical storage of data by meeting logical requirements. Entity : It is any type of thing about which data is collected. Entities can be an object, person, abstract concept or event. E.g. Student details, assignment details, events which are done and which are not done.
99 Downloaded from www.pencilji.com Attribute : it is a characteristic of interest about an entity. Values of the attributes describe a particular entity. Instance : it is an instance of the entity which is represented by a set of specific values for each of the attributes E.g. Professors interested in student details. ATTRIBUTES OF STUDENT REC. LAST NAME , STUDENT ASSIGNMENT ADD. FIRST NAME ID# 11 A,B 1 AAA 12 13 14 B,C C,D D,E 2 3 4 BBB CCC DDD GRADES ON 1 FINANCE 1 ACC. MIS COP. 2 3 4 A A B A B C A A 2 3 4 5
ADDRESS
MAJOR
YEAR
Relationship : It is a correspondence or association b/w entities. E.g. Students grade performance associates a student with an assignment. Data Item : Each attribute of an entity is represented in storage by a data item. The data representation in storage of each instance of an entity is commonly termed as a record and collection of related records is called a file. A data item is sometimes referred as field. Record identification and location :record key, index, sort key, sequence of data.
100 Downloaded from www.pencilji.com 14.1 RDBMS : serves transaction processing and supports decision making. It allows communication at database level and processing to take place at respective distributed locations and updates are done in unified manner. Basically it has two parts : 1) Data management 2) Transaction processing (is independent of its application in information processing) FEATURES OF RDBMS : Data management function is handled by server Applications are handled by client Server centrally enforces all integrity, security and heterogeneous h/w Stored procedure are used in reusable and shareable manner. RDBMS operates under the client-server environment (not master/slave) In a traditional DBMS a typical transaction processing has 3 stages i.e. creation, validation and checking transaction integrity logic but in RDBMS checking is common to all transaction and user stored procedures are used. It allows high level of security It allows online maintenance, rapid recovery and s/w based fault tolerance . These features ensure the availability of database. Maintenance activity consists of following tasks : a) Backup b) Diagnosis c) Integrity changes d) Recovery e) Design changes f) Performance tuning
101 Downloaded from www.pencilji.com 16. 16.1 Business Process Re-engineering Introduction to Business process Re-engineering
Re-engineering is the fundamental rethinking and radical redesign of business process to achieve dramatic improvements in the critical contemporary measures of performance suc h as cost, quality, service and speed. The approach to re-engineering aims at customer focus The approach requires organization restructuring and redesign based on the process which terminates at the customer door contributing to the value desired by the customer. Fundamental rethinking call for questioning everything that is being fallowed, practiced and found acceptable for centuries. Fundamental rethinking rejects old legacies and proven practices Fundamental rethinking calls for starting all over again rejecting the past. It requires a vision, an innovation and an imagination. Radical Redesign calls for a change in the technology tools and techniques. It calls for the pushing down decision making to the lowest level by enlightening and empowering the people. Radical redesign calls for off loading the activity outside the business organization. If it contribute to the cost and not to the consumer desired values. It begins with the objective of activity elimination Improvisation Outsourcing
Business re-engineering requires a major change in the mind set. What is required by re-engineering is the change of focus from physical aspect to time aspect of the business. e.g Instead of orders, order processing cycle time is important, processing the right materials of the right quality is important but how soon can the material be processed is important. Another r change would be in measuring the performance of business in terms of customer satisfaction. Customer satisfaction is measured now in not by the number of complaints but how quickly the customer problem is solved and his service expectations fulfilled, faster responses.
102 Downloaded from www.pencilji.com Another radical change in the mindset is from the cost and overhead to the performance cost, mindset should change from direct cost to the cost of business execution. Change in management philosophy business strategy should be competitive rather than protective . Always be ready for new, worst situations. Delegation to empowerment down the line Relation should be based on trust and not on command control
Re-engineering calls for change in the performance measures, cost, quality, productivity, efficiency overheads etc.. Business performance measures (shift to be done from ) Traditional Cost Quality Productivity Market segment Task productivity Efficiency Delivery promise Function overheads Human resource Future Value Satisfaction Performance Niche Process productivity Effectiveness Service fulfillment Process overheads Knowledge resource
Business process Concentration will have to be on process and not on task when it comes to re-engineering Business as a set of activities performed across the organization creating an output of value to the customer. Every process will have a customer internal and external e.g traditional sense of order processing is for marketing department but w.r.t. re-engineering the scope expands to manufacturing, storing , delivering and recovery of money. Similarly bill payment is not just for accounts and finance departments but it covers ordering the vendors, receipt and acceptance of goods and paying the bill amount.
103 Downloaded from www.pencilji.com Basic elements of business process are: Motivation to perform, Checking ,validating and control, Decision making Data gathering, processing and storing Information processing (generating) Communication and relate to human initiative. If the external customer focus is taken as a criterion for process selection, then all the processes which generate and add value to the customer are called the value stream processes. 16.3 Process model of the organization
Re-engineering initiative begins with viewing the organization through the process and not by the tasks or functions The process model of the organization considers only those processes where the end of each process produces a result whereby the customer concern, internet, expectation and perception are affected It contains only those processes which produce value for the customer For constructing the process model, the processes which are essential for the smooth working of the business are not considered ( e. audit , budgeting, accounting, security, canteen) Above processes contribute to substantial overheads and could be considered for cost control leading to the price reduction under the re-engineering methodology. Process view of organization process stream
16.4
Value stream model of the organization
Value stream in process model For the effective process organization build, it is necessary to normalize the process by segregating them on the basis of internal and external customer. The processes should then be scrutinized by questioning the philosophy, policy, pride , procedure and practices followed by management over a period of time. The existing processes shall be redesigned if they suffer from defective philosophy, policy and rules. The use of Information technology, keeping the existing processes as it is, would make them faster but would be inefficient if they are not changed. The organization is required to design such processes, which will fulfill the basic needs of the customer by producing a product, which will satisfy the value perceptions of the customer. Depending upon the value choice of the c ustomer the processes of the organization become critical and relevant only these critical processes really matter for business success in terms of survival growth, leadership and competitive advantages.
105 Downloaded from www.pencilji.com 17. Data Warehouse: Architecture to implementation 17.1 Introduction to Data Warehouse Data warehouse is a collection of non-volatile data of different business subjects and objects, which is time variant and integrated drawn from various sources and applications and stored in a manner to make a quick ana lysis of business situation. Data Warehouse is a special database containing large stocks of enterprise data and related meta data processed to a ready to use stage for decision makers for operational and analytical business analysis. Concept of Data Warehouse T P S Application Systems database [operational] Middle Ware External database Database warehouse [ business data]
Management Knowledge workers Operational staff
Operational architecture of Data Warehouse
Operational database
conversion process Middleware data warehouse Business data
External database
select, filter, validate Transform, compute Consolidate, move to warehouse
Is termed as business data, because it has a business value. Business data, representing the state of the business and only its value enters into the data warehouse Business data assumes value because it represents facts and figures about the business. But speaks volumes when processed and put in the proper form. Along with this business data, its metadata is associated to describe the meaning of the business data.
106 Downloaded from www.pencilji.com 17.2 Data in Data Warehouse When business data is determined for data warehouse Scope of business data has to be determined Business data could be stored either in atomic or summary format Currency level in terms of time has to be decided about business data. Currency features of business data are:Current data : a view of the business at the present time, it is up to seconds and changes with respect tom time. Point-in-time data : is a snap shot of business data particular moment in time indicating the business status at that point of time. Periodic data: is a representation of business data by periods such as last number of years, last number of period etc.. Business data entering in data warehouse is often a derived data. The data is taken from the data set generated at point-in-time or data processes periodically Example of business data Sales summary, market analysis, product analysis Rejection analysis for critical raw material Like passenger revenue in a transport system Patient versus disease in an health care center etc Data warehouse supports DSS to manage the business as it provide detail historical, consistent, normalized business data for further manipulation by decision makers Scope of data warehouse is the whole organization Data Warehouse enables to take business view, application view, at a point in time on business and physical view. Advantages Data warehouse makes business decisions on facts and not on intuition, application to both tactical and strategic business decisions. Data warehouse enables to get insight into key areas of business where information support for strategic decision is necessary.
Introduction to E-Business
E-business essentially means carrying out the business using electronic methods of business processes. E-methods using tools and technologies enable every process to run with greater speed, and precision in an automated manner where decision making is embedded in the process itself. In E-business, discontinuity of process marked with delays, on line waiting and storage is eliminated through on line integration of customers, partners, suppliers and employees. It allows information sharing bringing transparency in business management processes. In E-business you may be anywhere in the world, but u r closer to your business location, as access to information is possible from anywhere. The biggest beneficiary of E-business is the customer, who has access to information about the products and services he requires and order it from any supplier located in any country. The second beneficiary is the supplier who gets access to information on inventory, schedules etc. enabling to manage his resources effectively to meet customers most recent, real time needs of raw material or services. There are following characteristics of E-business : One global order management system. Global database, single or distributed. Paperless transactions. Customers select, configure the needs and enter their own order. Suppliers manage your inventory. Dynamic order statusreceived, delivered and order balance. Collaborative working through Group-ware technology. Business relationship with customer, vendor and business partner gets transformed to trust relationship. Employees become knowledge based intelligent workers. A management and operations overhead shows decline over a period of time. There are following four factors of E-business : COST OF
BUSINESS OPERATIONS INCREASING
CUSTOMER
RESPONSE TIME
E-BUSINESS
INTIATIVE
TOO HIGH
MANAGEMENT
OVERHEADS VERY HIGH
COMPETITION
LEVERAGING THROUGH TECHNOLOGY
Models of E-Business.
E-business functions through 4 business models. These models are :Business to Business (B2B) Business to Customer (B2C) Customer to Business (C2B) Customer to Customer (C2C) In B2B model, the participants in E-business are two organizations with relations as buyer-seller, distributor-dealer and so on. Hence the participants are two business entities. The E-business applications in B2B are of two types. One of information sharing and second of transaction processing. Issuing business circular Product catalogues publications Information delivery applications News clippings Messaging Order processing Order execution. Transaction processing applications Payment processing. Money transfer. In B2C model, the participants in E-business are an organization and customer as an individual. The customer is an individual consumer or employee. The E-business applications in B2C are the following. Organization manual Database knowledge. Information sharing applications Business information Service offers / contacts
Payments to employee Issue of shares / bonds Delivery through courier.
Transaction processing applications
In C2B, the customer / consumer deals with business organization in individual capacity. Down loading of information. Viewing the bank balance. Information sharing applications Seeing manuals / drawings / pictures / images. Etc. Requesting an item Obtaining travel advance Inquiry processing Transaction processing Credit card payment
In C2C both parties are individuals and play the role of buyer / seller as the case may be. Messaging Email Reports Information delivery applications News groups Payment approvals Memos Sanctions and confirmation Transaction processing Issues and receipts. Basically information-sharing application is built on back end systems, which collect data and process it to create information databases. Supply chain management is a typical B2B model where information is shared and business is transacted b/w two organizations. It should be noted that B2B business models actually run with the help of B2C, C2B, C2C models. In B2C, messaging and information downloading and using is a big application. Inter organization communication applications like announcements, price version are very common in B2C.
In C2B model, customer interacts with information databases such as product catalogues, price information, configure the product, compare the cost etc. Bill payments are a big application of C2B model. In C2C model, E-business revolves around two individuals who deal with each other in their individual capacities and play a designated role as buyer / seller, teacher / student. In all models basic business and communication processes are executed through electronic documents. The components of E-business models are : Internet / Extranet (Internal communication) Internet (External communication) Network and TCP / IP protocols and tools (Delivery mechanism). Web server and Web browsers software (Access, process and download and send) Back end systems ( Application processes). MIS AND E-BUSINESS. In E-business, nature of MIS has changed completely bcoz the role of people running the business has undergone radical qualitative change. The organization has become smaller with less over heads . MIS reporting has become more online and real time which is linked to business status at, point in time. Nature of MIS is more customer focused than function or performance focused. With E-business, scope of business is larger and global, inviting more competition. This gave rise to MIS where strategic information content is higher. MIS in E-business talks more about trends, patterns, analysis, causes and effects. MIS in E-business forces managers to be more dynamic and quick in response to changing scenario. There is more action and interaction on external front of the business. MIS in E-business reduces stress of vendor management and helps to contain the stress of customer demand management. MIS information content is more on customer requirements and less on internal users requirements.
MIS reports in number have come down in E-business as concerned users have access to information without anybodys permission or approval. MIS in E-business therefore calls for complete restructuring to be effective in new global E-business environment.

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1 Downloaded from www.pencilji.com 1.

Introduction to Management Information Systems

Management Information Systems: Concept

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4 Downloaded from www.pencilji.com 1.2 Role of Management Information Systems

MIS Pyramid Structure

MIS for Tactical planning and decision making

MIS for Operational planning, decision making and control

Transaction processing enquiries (status) responses

MIS for clerical personnel :

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Impact of Management Information Systems

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Network theory is used for planning and controlling large projects.

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9 Downloaded from www.pencilji.com MIS and users

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Key concepts of system theory used in management are:-

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Different approaches to the management.

Hierarchical school of thought (missionaries) Empirical or case of approach

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Mathematical or management science approach

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13 Downloaded from www.pencilji.com j. Contingency or situation approach

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Managers and the environment

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Basic steps of control process

Establish standards & performance

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20 Downloaded from www.pencilji.com 2.7 MIS- A support to the management

Steps in Management Planning Organization

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21 Downloaded from www.pencilji.com Environment Management and MIS Management

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Negandhi estafen suggested

Environmental factors Social, economical, Educational Political ,legal

[write in your own sentences with reference to the diagram]

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25 Downloaded from www.pencilji.com Methodology of planning

i) Organization levels and span of control

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27 Downloaded from www.pencilji.com STAFFING

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29 Downloaded from www.pencilji.com 3.4 MIS A TOOL FOR MANAGEMENT

If question is asked under this topic like