Management Information System

Session 1

What is in store in MIS Course?

• Information Technology• Enterprise Systems• E-Business• Business Process• Decision Making

THEMES

Information Technology

• Hardware and Software• Enabling the enterprise systems and e-

business applications of the organization• Necessary for security, privacy and internal

control• Business professional need to be aware of the

latest available technology to evaluate them.

Enterprise Systems

• Sharing of data across the organization• Functional Modules – Accounting– Manufacturing– Human Resources– Logistics

• Integrated software packages

E-Business

• Application of Electronic Networks to undertake business processes.

• Has created entirely new ways of working within and across organizations

• Buying and selling of goods at virtual market places

Business Process

Any process that makes the business work.

A business process is an activity or set of activities that will accomplish a specific organizational goal.

A business process is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart.

What is in store today?• Concept of Data, Information• What is Information Systems? Purpose of Information

Systems • Decision Making - The Business Environment• Foundations of Information Systems in Business• Creating Information, Sources of Information• Organizations and IS • Role of IS in Business & Management • Managerial challenges of IT • Digital Enterprises, Web-Powered Enterprises • Information Systems in global business today

What is Information System?

Let’s watch a video

The Purpose of Information Systems

• Businesses use information systems– To make sound decisions– To solve problems

• Problem is any undesirable situation• Decision arises when more than one solution

to problem exists

The Purpose of Information Systems (continued)

• Problem solving and decision making require information

• Keys to success in business are– Gathering correct information– Storing information– Using information

Generating Information

• A process is manipulation of data• Process usually produces information• Process may produce more data• A piece of information in one context may be

considered data in another context

Concept of Data

Data are raw facts or observations that are considered to have little or no value until they have been processed and transformed into information.

Examples??- Today’s Date- Marks in a quiz- Records of a business transactions

Information is Critical

• The information we have is not what we want

• The information we want is not the information we need

• The information we need is not available.

Information is a Resource

• It is scarce• It has a cost• It has alternative uses• There is an opportunity cost factor involved if

one does not process information

15

Data, Information and Systems• Generating Information– Computer-based ISs take data as raw material, process it,

and produce information as output.

Input-process-output

Why need Information?

To ensure effective and efficient decision –

making leading to prosperity of the Organization.

Data vs. Information• A house number• A bank statement• The number 3.142• A National Insurance number• A balance sheet• A bus timetable• A car registration plate• A student grade sheet• A temperature reading in the day’s weather

Data vs. Information• A house number - Data• A bank statement – Information• The number 3.142 – Data• A National Insurance number – Data• A balance sheet – Information• A bus timetable – Information• A car registration plate – Data• A student grade sheet – Information• A temperature reading in the day’s weather -

Data

Information Creation• Classifying– Categorizing Data

• Rearranging / sorting– Group data in a particular order

• Aggregating– Summarizing data. Average, subtotals, total

• Performing Calculations– Employee pay slip

• Selection– Choosing or discarding data on the basis of a

condition / criteria.

Scorecard / Dashboard

Decision Making• A step in problem solving• Intelligence gathering– Definition of problem– Data gathered on scope– Constraints identified

• Design phase– Alternatives identified and assessed

• Choice– Selection of an alternative

IS, IT in a Firm and Business Environment

IT

Business Environment

Company

IS

What is MIS?

Short for Management Information System – MIS refers broadly to a computer-based

system that provides managers with the tools for organizing, evaluating and efficiently running their departments.

Currently also defined as Management Information (MI) & System (S)

MIS Definition

System that provides information support for decision-making in the organization

Integrated system of people, processes, hardware and software (now Internet) to provide information to support operations, the management and the decision-making function in the organization.

Role of MIS in an Organization

• Appropriate data collected from various sources, processed and sent further to the needful destinations – Support business processes and operations

• Helps in Strategic Planning, Management Control, Operational Control, Transaction Processing– Support strategies for competitive advantage

• Information generation, communication, problem identification, and aid decision making– Support decision making by employees and managers

IS - First Order Effect

• Outcomes that arises as a direct consequences of the implementation of an IS known as the first order effect

• Can be negative or positive

IS - Second Order Effect

• Increased use of IS may lead to further changes over a period of time.

• It may improved decision making, processes are easier to manage, customers have lesser complaints.

• These may not be visible / measurable immediately.

IS – Third Order Effect

• Large scale consequences of implementation of IS.

• Competitive pressure may force firms to adapt a particular type of IS.

Trends in IS• 1960s – Electronic Data Processing– Predefined management reports

• 1970s – Decision Support Systems– Ad-hoc interactive support for decision making

• 1980s – End-user Computing– Executive Information System

• 1990s – Strategic Information System– ERPs

• 1990s onwards – Web-enabled enterprises– global e-business

The information pyramid

Operational

Tactical

Strategic

MIS and the User

• Operational Level– Transaction Processing System

• Tactical Level– Management Information System / ESS

• Strategic Level– Decision Support System / Strategic Information

System

The information pyramid

Operational

Tactical

Strategic

Input

Input

Stages of Decision Making

• Intelligence - the individual collects information to identify problems occurring

• Design - the individual conceives of possible alternative solutions to the problem

• Choice - the individual selects among the various solution alternatives

• Implementation - the individual puts the decision into effect and reports on the progress of the solution

Decision Types

Decision Types• Structured decisions – repetitive, routine, and involve a definite procedure for

handling

• Semi-structured decisions – where only part of the problem has a clear-cut answer

provided by an acceptable procedure

• Unstructured decisions – non-routine decisions the decision maker must provide

judgment, evaluation, and insights; no agreed-upon procedure for making the decision

Example of a Structured and Semi-structured Problem

• Structured problem: – How much will I earn after two years if I invest

$100,000 in municipal bonds that pay 4 percent per annum tax free?

• Semi-structured problem: – If I invest $100,000 in stock XYZ and sell the stock in two

years, how much money will I make?

• How are these problems different?

Examples of Structured and semi-structured problems

Structured Problems Semi-structured problems

How many workers are needed to fully staff the production line?

What are benefits of merging with XYZ Inc?

What is the optimal order quantity for the raw material Z based on the production?

Where should we deploy the next five stores for our retail chain

How many turbines are needed to supply power to the production unit C?

How will the consumer react if we vary the price of our product by 10%?

Which of the regions yield the highest revenue per sales person?

What is the best advertisement campaign to launch our new financial service?

Which money market fund currently yields the highest returns?

What are the benefits of opening an office in Paris, France?

How much would the implementation of pollution preventing devices cost us?

Which stock will yield the highest return by the end-of the year?

Business Environment - Decision Types

• Structured Decisions: Operational Planning

• Semi-Structured Decisions: Tactical Planning

• Unstructured Decisions: Strategic Planning

The IS pyramid – A revisit

Types of IS• Operations Support System– Transaction Processing Systems– Process Control Systems– Enterprise Collaboration Systems

• Management Support Systems– MIS– DSS– EIS

• Specialized processing Systems– ES– KMS– SIS

Qualities of Information• Time Dimension

– Timeliness– Currency– Frequency

• Content Dimension– Accuracy– Relevance– Completeness– Conciseness– Scope

• Form Dimension– Clarity– Detail– Order– Presentation– Media

Business Information System• Transaction Processing Systems

– Elementary activities such as sales, receipts, payroll, flow of materials etc

– Routine, voluminous– Track flow of transactions in organizations

• Management Information System– Name designated to a specific category of IS– Summarize and report – Monitor and control

• Decision Support System– Non-routine decision– Input from TPS and MIS– Also referred to as Business Intelligence

• Executive Information System

Organizational Level Decisions?An exercise

• What should we set our budget, for the next year?• Does this customer qualify for a discount on a large order?• How should we deal with a take over bid?• Should we employ more staff to cope with an urgent order?• Should we expand abroad?• Should we launch an advertising campaign?• Should use a Enterprise-wide software to solve our

departmental-sync problems?• Should we take a short-term loan to help our current cash

flow position?• What new markets should we move into?• What should we do about a faulty machine?

Business Environment• That influences the way in which the

organization operates.• Dynamic• External and internal• Other factors of IS– Purpose – Inputs – Outputs– Boundary

External Business Environment

• The Internet Economy• Global Market place• Business Ecosystems• De-capitalization• Faster Business Cycles• Accountability and Transparency• Rising Societal risks of IT

Internal Organization Environment

• From Supply-Push to Demand-Pull• Self-service• Real-Time Working• Team-Based Working• Anytime, Anyplace information• Outsourcing and strategic alliances• Demise of Hierarchy

Business Drivers To IS Foundations

• The Internet Economy• Global Market place

New products, services, and business models: Information systems and technologies create opportunities for products, services, and new ways to engage in business.

Customer and supplier intimacy: Improved communication with and service to customers raises revenues, and improved communication with suppliers lowers costs

Business Ecosystems

Operational excellence: Efficiency, productivity, and improved changes in business practices and management behavior

• Real-Time Working• Team-Based Working• Anytime, Anyplace information• Demise of Hierarchy

Competitive advantage: Implementing effective andefficient information systems can allow a company to charge less for superior products, adding up to higher sales and profits than their competitors. Also for survival.

• Outsourcing and strategic alliances• Faster Business Cycles

Foundations of IS in Business

• Amazon• Dell• IRCTC• e-Bay• HUL• HDFC, ICICI, SBI, Citibank et al

Goals of new work environment

• Leverage knowledge globally

• Organize for complexity

• Work electronically

• Handle continuous and Discontinuous Change

Managerial Challenges

• What Information Systems to build?• How much to spend on Information systems?• What level of capabilities should be created

with Information Systems?• How centralized should the services be?• What are the security levels are required?• What is the technology road map for

organization?