Chapter One: Introduction to MIS

 

Chapter One: Introduction to Management Information System

 

 

– Information System

 

-Role of IS in Business

-Management Information Systems

1. System

1.1. What is a system?

• In its simplest form, a system is a set of interrelated components, with a clearly defined boundary, working together to achieve a common set of objectives.
• input-process-output an orderly arrangement of interdependent ideas or constructs (ABSTRACT SYSTEM)

1.2. Features of a system

• Boundary:which define and form the system.The system acts in the boundary, and components in the boundary are directly controlled by the system
• Subsystem/Components : A system is made from independent but interacting components or subsystems

• Purpose/Objective: a define reason for its existence
• Interconnection/Interaction: Different components interacting to accomplish common objective
• Interface: A point where a system interacts/ sends and receives messages to its environment.

1.3. Classification of a system

1. Open vs Closed

• Closed: self contained, one that does not exchange material, information, or energy with its environment.

 

• Relatively Closed System: in organizations and in information processing, there are systems that are relatively isolated from the environment, but are not completely closed, these will be considered

 

• Open: exchange information, material, or energy with the environment, including random and undefined inputs

 

2. Deterministic versus probabilistic

• Deterministic: The interaction between the parts or subsystems is known for certain; example: a computer program which performs exactly to a set of instructions
• Probabilistic: A system that can be described in terms of probable behavior (a certain degree of error)

3. Natural and Artificial

• Natural: Occur in nature without human intervention

E.g. Biological systems- immune systems,   digestive

• Artificial: Human made or modified

E.g. Information systems, stereo

2 Information System

2.1. What is Information System?

Organized combination of people, Information Technology, data resources, and policies and procedures that stores, retrieves, transforms, and disseminates information in an organization.

• The ways that organizations
• Store
• Move
• Organize Manipulate/process  their information

2.2. Components of an Information Systems

a.People:

• Users: users at operational, tactical and strategic levels
• Developers: design and develop the system
• Information Technologists: responsible to support and operate it

b.Information Technology:Hardware, Software, communication and network devices

c.Data Resource: Input for the system

d.Policies /Protocols: set of rules and procedures guiding on how the components interact and work together.

 

why Information System for Business?

• Operational Excellence
  • Businesses continuously seek to improve the efficiency of their operations in order to achieve higher profitability. Information systems and technologies are some of the most important tools available to managers for achieving higher levels of efficiency and productivity in business operations, especially when coupled with changes in business practices and management behavior.
• New Product s, Service s, and Business Models
  • Iformation systems and technologies are a major enabling tool for firms to create new products and services, as well as entirely new business models. A business model describes how a company produces, delivers, and sells a product or service to create wealth. Today’s music industry is vastly different from the industry a decade ago. Apple Inc. transformed an old business model of music distribution based on vinyl records, tapes, and CDs into an online, legal distribution model based on its own iPod technology platform.
• Knowing your customer
  • When a business really knows its customers, and serves them well, the customers generally respond by returning and purchasing more. This raises revenues and profits. Likewise with suppliers: the more a business engages its suppliers, the better the suppliers can provide vital inputs. This lowers costs. How to really know your customers, or suppliers, is a central problem for businesses with millions of offline and online customers.
• Improved Decision Making
  • Many business managers operate in an information fog bank, never really having the right information at the right time to make an informed decision. Instead, managers rely on forecasts, best guesses, and luck. The result is overor underproduction of goods and services, misallocation of resources, and poor response times. These poor outcomes raise costs and lose customers. In the past decade, information systems and technologies have made it possible for managers to use real-time data from the marketplace when making decisions.
• Competitive Advantage
  • When firms achieve one or more of these business objectives—operational excellence; new products, services, and business models; customer/supplier intimacy; and improved decision making—chances are they have already achieved a competitive advantage. Doing things better than your competitors, charging less for superior products, and responding to customers and suppliers in real time all add up to higher sales and higher profits that your competitors cannot match.
• Survival
  • Business firms also invest in information systems and technologies because they are necessities of doing business.

3. Organization

3.1. What is an Organization?

• An Organization is a systematic arrangement of people and technology intended to accomplish some purpose
• Organizations are collectivities oriented to the pursuit of relatively specific goals and exhibiting relatively high formalized social structures. RATIONAL
• Organizations are collectivities whose participants share a common interest in the survival of the system and who engage in collective activities, informally structured, to secure this end. NATURAL SYSTEM
• Organizations are coalitions of shifting interest groups that develop goals by negotiation; the structure of the coalition, its activities, and its outcomes are strongly influenced by environmental factors. OPEN SYSTEM

Every Organization has 3 parts:

1.  people: (workers, supervisors, consultants, engineers, superintendents, etc.)
2.  Tasks: the operations (paint, fix, print, compress, etc.)
3. Management: Planning, Organizing, leading, controlling the performance of people engaged in the tasks

4. Management

4.1. What is management?

Management as defined by Mary Follett is .the art of getting things done through people. A manger is defined as a person who achieves the organizations goals by motivating others to perform.

• Whether management is an art or a science is a very subjective question. But it can be said without doubt that . Modern management in the environment of technology is becoming more of a science than an art. We define management for the purpose of Management information Systems as the process of planning, organizing, staffing, coordinating and controlling the efforts of the members of the organization to achieve common stated goals of the organization.
• In the process of management, a manager uses human skills, material resources and scientific methods to perform all the activities leading to the achievement of goals.
• The management process involves a continuous resolution of conflicts of one kind or the other which affects the achievement of goals. In the management of any activity, a manager comes across human conflict, conflict of goals, between alternative resources, conflict of time, conflict of approach or method and the conflict of choice.

4.2. Functions of Management

• Planning is a process of determining the goals and objectives and evolving strategies policies, programmers and procedures for the achievement of these goals.
• Organization involves evolving the structure of the people working in the
• organization and their roles. It specifies an authority structure and assigns activities to the people backed by the delegation of authority.
• Staffing involves manning the positions in the organization structure.
• Directing is a complex task of implementing the process of management. In the process, the manger is required to guide, clarify and solve the problems of the people and their activities.
• Coordinating is the function which brings a harmony and smoothness in the various group activities and individual efforts directed towards the accomplishment of goals.
• Controlling is a process of measurement of an output, comparing it with the goals, the objectives and the target, and taking corrective actions, if the output is falling short of the stated norms. Controlling ensures an achievement of the plan.

5. Role of IS in Business

The growth of enterprise-wide information systems with extraordinarily rich data means that managers no longer operate in a fog of confusion, but instead have online, nearly instant, access to the really important information they need for accurate and timely decisions.

There are three interrelated changes in the technology area:

1. The emerging mobile digital platform,
2. The growing business use of “big data,” and
3. The growth in “cloud computing,” where more and more business software runs over the Internet.

They are found in the three vital roles that information systems can perform for a business enterprise:

1. Support of business processes and operations.
2. Support of decision making by employees and managers.
3. Support of strategies for competitive advantage.

 

• Senior management makes long-range strategic decisions about products and services as well as ensures financial performance of the firm.
• Middle management carries out the programs and plans of senior management, and
• operational management is responsible for monitoring the daily activities of the business.

Knowledge workers, such as engineers, scientists, or architects, design products or services and create new knowledge for the firm, whereas data workers, such as secretaries or clerks, assist with scheduling and communications at all levels of the firm. Production or service workers actually produce the product and deliver the service

• information systems must be designed to produce a variety of information products to meet the changing needs of decision makers throughout an organization structure.
• 

5.1. Structured Decision

• Decisions made at the operational management level (at the lower level of the organization structure.
• Structured decisions involve situations in which the procedures to follow, when a decision is needed, can be specified in advance. The inventory reorder decisions that most businesses face are a typical example.
• Level of aggregation:
  • Very Detail information

E.g. Inventory control, machine control systems

5.2. Semi Structure Decision

• those at the tactical level are more semistructured
• some decision procedures can be prespecified but not enough to lead to a definite recommended decision.
• For example, decisions involved in starting a new line of e-commerce services or making major changes to employee benefits
• Level aggregation:
  • Condensed/ Summarized report
• Information Source:
  •  internal records

5.3. Unstructured Decision

• those at the strategic management level are more unstructured
• Unstructured decisions involve decision situations in which it is not possible to specify in advance most of the decision procedures to follow. Most decisions related to long-term strategy can be thought of as unstructured
• those for which no procedures or rules exist to guide the decision makers toward the correct decision. In these types of decisions, many sources of information must be accessed
• One example of an unstructured decision might be the answer to the question, “What business should we be in 10 years from now?”
• Level of information aggregation
  • Highly Condensed, summarized
• Information Source:
  • Internal records, and mainly from external sources like competitors status and financial reports

6. Management Information Systems

6.1. What is MIS?

• MIS is an information system that provides a suitable, summarized information to make business decisions, mainly for structured problems.
• MIS were the original type of information system developed to support managerial decision making.

• An MIS produces information products that support many of the day-to-day decision-making needs of managers and business professionals. Reports, displays, and responses produced by management information systems provide information that these decision makers have specified in advance as adequately meeting their information needs.
• Such predefined information products satisfy the information needs of decision makers at the operational and tactical levels of the organization who are faced with more structured types of decision situations. For example, sales managers rely heavily on sales analysis reports to evaluate differences in performance among salespeople who sell the same types of products to the same types of customers.

Four major reporting alternatives are provided by such systems.

• Periodic Scheduled Reports. This traditional form of providing information to managers uses a prespecified format designed to provide managers with information on a regular basis. Typical examples of such periodic scheduled reports are daily or weekly sales analysis reports and monthly financial statements.
• Exception Reports. In some cases, reports are produced only when exceptional conditions occur. In other cases, reports are produced periodically but contain information only about these exceptional conditions. For example, a credit manager can be provided with a report that contains only information on customers who have exceeded their credit limits. Exception reporting reduces information overload instead of overwhelming decision makers with periodic detailed reports of business activity.

• Demand Reports and Responses. Information is available whenever a manager demands it. For example, Web browsers, DBMS query languages, and report generators enable managers at PC workstations to get immediate responses or to find and obtain customized reports as a result of their requests for the information they need.Thus, managers do not have to wait for periodic reports to arrive as scheduled.
• Push Reporting. Information is pushed to a manager’s networked workstation. Thus, many companies are using Webcasting software to broadcast selectively reports

What makes management information systems the most exciting topic in business is the continual change in technology, management use of the technology, and the impact on business success. New businesses and industries appear, old ones decline, and successful firms are those that learn how to use the new technologies.

Reference

• Management Information Systemsn, O’Brien
• Management Information System new approaches to Organization and Technology”, 5e, Kenneth C. Laudon , Jane P. Laudon
• Management Information Systems Rutgers Business School / Undergraduate New Brunswick Professor Eckstein, Spring 2007
• Management Information Systems Managing the Digital Firm, 13th EDITION Kenneth C. Laudon. Jane P.Laudon