MIS by Santy

MIS (MCA SEM-3)
Syllabus and Question Bank
MIS Syllabus (MCA SEM-3)
1. Managing the Digital Firm o Why Information System? o Perspectives on Information System o Contemporary approach to Information System o Learning to Use Information Systems: New Opportunities with Technology 2. Information System in the Enterprise o Major Types of System in Organisation o Systems from Functional Perspectives o Integrating Functions and Business Processes: Introduction to Enterprise Application 3. Information Systems, Organisations, Management and Strategy o Organisations and Information Systems o How Information System impact Organisations and Business Firms o The Impact of IT on Management Decision Making o Information Business and Business Strategy 4. Decision making o Decision Making Concepts o Decision Methods, Tools and Procedures o Behavioural concepts in Decision Making o Organizational Decision Making o MIS and Decision Making Concepts 5. Information o Information Concepts o Information: A quality Product o Classification of Information o Methods of Data and Information Collection o Value of Information o General Model of a Human as an Information Processor o Summary of Information Concepts and their implications o Organisation and Information o MIS and Information Concepts
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Compiled by: SantY (SPIT)
MIS (MCA SEM-3) 6. Development of MIS o Development of Long Range Plans of MIS o Ascertaining the class of Information o Determining the Information Requirement o Development and Implementation of MIS o Management of Quality in MIS o Organisation for development of MIS o MIS: the Factors for Success and Failure 7. Choice of Information Technology o Introduction: Nature of IT Decision o Strategic Decision o Configuration Decision o Evaluation o Information Technology Implementation Plan
o Choice of the Information Technology and the Management Information System 8. Enterprise Applications and Business Process Integration o Enterprise Systems o Supply chain Management Systems o Customer Relationship Management Systems o Enterprise Integration Trends 9. Decision Support System o DSS: Concepts and Philosophy o DSS: Deterministic Systems o AI Systems o Knowledge Based Expert System
o MIS and Role of DSS
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MIS (MCA SEM-3)
MIS-QB (MCA SEM-III) Chapter 1: Managing the Digital Firm

o MIS, TPS, ESS o Why MIS is an integral part of management System? What if it is not there? o MIS supports managers in their functional responsibilities o Management by Control and Management by Exception o Organization as a System (Leavitts Model) o Relationship between Organisation and System o E-Business Enterprise with E-Commerce, E-Communication, E-Collaboration
Chapter 2: Information System in Enterprise

o Enterprise System and its working o Business Information System and Types (From Functional Point of View) o Business Function o Business Process
Chapter 3: Information Systems, Organisations, Management and Strategy

o Organisation and its Behavioural view and Features o Levels of Management (Top, Middle, Operational) o Distinguish Levels of management in terms of Goal, Scope and Content o Matrix Organisation o Business Strategy, Strategic Planning and Types of Strategies o Parameters used in Organisation Strategy o Can an Organisation have more than one strategy? Is it long range or short range? o How IT in todays time affect the Business Strategy?
Chapter 4: Decision Making

o Decision Making and its Types o Stages in Decision Making Process o Structured vs. Unstructured Decisions o Organisational Decision Making o Methods for dealing with uncertainty and conflict resolution o Rational Decision making, Problems in it, Can decision be right or wrong? o Simons Decision Model o Porters Competitive Model o Is it possible to automate Decision Making? Justify.
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MIS (MCA SEM-3)
Chapter 5: Information
o Information and data concept o Value of Information o Types of Information o Quality of Information o Parameters to measure the Quality of Information o Management of Quality in MIS o How information helps to improve knowledge and decision making capability? o Perfect Information and is it worth to invest for perfect information? o What is Exception? Types of reports generated in MIS that help managers to handle the Exception
Chapter 6: Development of MIS

o Why is long term plan of MIS necessary? How its linked with Business Plan of MIS o MIS Development is linked with business plan of an Organisation. Justify o Content of MIS plan, purpose of each of them o Role of System analyst in MIS Development o Problems faced by system analyst in ascertaining info at various levels of mgmt., how to solve it? o Prototype Approach and Life Cycle Approach
Chapter 7: Choice of Information Technology

o Selection of Information Technology is Strategic Decision in MIS. Explain o Parameters used in Evaluation of IT before decision is made
Chapter 8: Enterprise Applications and Business Process Integration

o ERP (never asked yet) o CRM, Analytical and Operation CRM, Features o SCM, PUSH vs. PULL based SCM o Bullwhip Effect, How to reduce it using SCM, Its value to Business
Chapter 9: Decision Support System

o DSS and DSS Components o Expert System, Knowledge Based Expert System with Example
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MIS (MCA SEM-3)
Managing the Digital Firm
Chapter 1: Managing the Digital Firm

Syllabus: o o o o Why Information System? Perspectives on Information System Contemporary approach to Information System Learning to Use Information Systems: New Opportunities with Technology
Questions: o o o o o o o o o MIS, ESS, TPS Why MIS is an integral part of management System? What if it is not there? MIS supports managers in their functional responsibilities Management by Control and Management by Exception Organization as a System (Leavitts Model) Relationship between Organisation and System MIS vs. DSS MIS vs. TPS E-Business Enterprise with E-Commerce, E-Communication, E-Collaboration
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MIS (MCA SEM-3)
Management Information Systems (MIS)

o A Management Information System (MIS) is a system or process which provides information needed to manage organizations effectively. Management information systems are regarded to be a subset of the overall internal controls procedures in a business, which cover the application of people, documents, technologies, and procedures by management accountants to solve business problems such as costing a product, service or a business -wide strategy. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive information systems. At the start, in businesses and other organizations, internal reporting was made manually and only periodically, as a by-product of the accounting system and with some additional statistics, and gave limited and delayed information on management performance. Previously, data had to be separated individually by the people as per the requirement and necessity of the organization. Later, data was distinguished from information, and in stead of the collection of mass of data, important, and to the point data that is needed by the organization was stored. Early on, business computers were mostly used for relatively simple operations such as tracking sales or payroll data, often without much detail. Over time these applications became more complex and began to store increasing amounts of information while also interlinking with previously separate information systems. As more and more data was stored and linked man began to analyze this information into further detail, creating entire management reports from the raw, stored data. The term "MIS" arose to describe these kinds of applications, which were developed to provide managers with information about sales, inventories, and other data that would help in managing the enterprise. Today, the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems, resource and people management applications, retrieval application. An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. In a way it is a documented report of the activities that were planned and executed. The terms MIS and information system are often confused. Information systems include systems that are not intended for decision making. The area of study called MIS is sometimes referred to, in a restrictive sense, as information technology management. That area of study ERP, SCM, CRM, project management and database
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MIS (MCA SEM-3) should not be confused with computer science.
Managing the Digital Firm IT service management is a practitioner -
focused discipline. MIS has also some differences with Enterprise Resource Planning (ERP) as ERP incorporates elements that are not necessarily focused on decision support. Management Information System (MIS) is a new technique. Using this different set of data from various departments of an organization are processed to from reports called Information. The smooth conduct and property of the organization depends on this information. Management information system is very important in any organization because it helps to avoid errors and complications.
Management Information System Definition of MIS: Management information system is defined as a system which provides, 1. Information to take decisions by the managers in the organization. 2. Support to management operations. 3. Information to the people in the organization for their day to day perfect functioning.
Structures of MIS: o Management Information structures provide a central location in which to store and manage the information from.
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The structure or system is fed by people (employees, vendors, suppliers, customers) who input (provide) the data and output the data (creating reports and disseminating the data).
o o
Software and hardware supply the equipment needed to process, store and control access to the data. Business rules (how production cost is figured, formulas for vacation time, how accounts payable are processed for payment) dictate how the software should operate.
Objectives of MIS: Managers play a key role in any organization. They are responsible for taking decisions appropriate to the need of the market. Information systems have become the main tool used by managers in decision making. Managers perceive information as the driving force to achieve success in any business. Hence there is a need for MIS as: o o o Support of its business process and operations Support of decision making by its employees and managers Support of its strategies for competitive advantage-Gaining a strategic advantage
The major roles of the business applications of a Management Information System may be represented in the pyramid form as below: o o o Support Strategies for Competitive Advantage Support Business Decision Making Support Business Process and Operations
Characteristics of MIS: o o o o o MIS is mainly designed to take care of the needs of the managers in the organization. MIS aids in integrating the information generated by various departments of the organization. MIS helps in identifying a proper mechanism of storage of data. MIS also helps in establishing mechanism to eliminate redundancies in data. MIS as a system can be broken down into sub systems.
The role and significance of MIS in business and its classification is explained. It is possible to understand the various phases of development in MIS based on the type of system required in any organization. Impact of MIS:
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MIS (MCA SEM-3)
1. MIS improves the performance and productivity of the organization. 2. It helps in the management of marketing, finance, production and improves the
skills of the employees.

3. It helps the employees to monitor the various department functions. 4. It gives the reports regarding progress, achievements and the errors in the day to
day functioning.
5. It is used to control the various operations involved in the smooth functioning of
the organization.
6. It helps to improve the discipline of the employees. 7. It helps to regulate the operations which complicate the day to day functioning. 8. It helps to yield good results by experimentation and modelling. 9. It motivates employees to spend more time for achieving efficiency in their
departments.
Advantages of MIS: 1. Facilitates Planning: MIS improves the quality of plants by providing relevant information for sound decision making. Due to increase in the size and complexity of organizations, managers have lost personal contact with the scene of operations. 2. Minimizes Information Overload: MIS change the larger amount of data into summarized form and there by avoids the confusion which may arise when managers are flooded with detailed facts. 3. Encourages Decentralization: Decentralization of authority is possibly when there is a system for monitoring operations at lower levels. MIS is successfully used for measuring performance an d making necessary change in the organizational plans and procedures. 4. Brings Coordination: MIS facilitates integration of specialized activities by keeping each department aware of the problem and requirements of other departments. It connects all decision centres in the organization. 5. Makes Control Easier: MIS serves as a link between managerial planning and control. It improves the ability of management to evaluate and improve performance. The used computers has increased the data processing and storage capabilities and reduced the cost.
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MIS (MCA SEM-3)
6.
MIS
Assembles,
Processes,
Stores,
Retrieves,
Evaluates
and
Disseminates
the
Information. Disadvantages of MIS: 1. Highly Sensitive: requires constant monitoring 2. Budgeting of MIS extremely difficult 3. Quality of outputs governed by quality of inputs 4. Lack of flexibility to update itself 5. Effectiveness decreases due to frequent changes in top management 6. Takes into account only qualitative factors and ignores non -qualitative factors like morale of worker, attitude of worker etc.
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MIS (MCA SEM-3)
Transaction Processing System (TPS)

o A Transaction Information Systems is a type of information system. TPSs collect, store, modify, and retrieve the transactions of an organization. A transaction is an event that generates or modifies data that is eventually stored in an information system. It is recommended that a transaction processing system should pass the ACID test (Ato micity, Consistency, Isolation, and Durability). o The essence of a transaction program is that it manages data that must be left in a consistent state, e.g. if an electronic payment is made, the amount must be both withdrawn from one account and added to the other; it cannot complete only one of those steps. Either both must occur, or neither. In case of a failure preventing transaction completion, the partially executed transaction must be 'rolled back' by the TPS. While this type of integrity must be provided also for batch transaction processing, it is particularly important for online processing: if e.g. an airline seat reservation system is accessed by multiple operators, after an empty seat inquiry, the seat reservation data must be locked until the reservation is made, otherwise another user may get the impression a seat is still free while it is actually being booked at the time. o Without proper transaction monitoring, double bookings may occur. Other transaction monitor functions include deadlock detection and resolution (deadlocks may be inevitable in certain cases of cross-dependence on data), and transaction logging (in 'journals') for 'forward recovery' in case of massive failures. o Transaction Processing is not limited to application programs. For example, Journaling file systems also employ the notion of transactions.
Transaction Processing System TPS Types of TPS:
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MIS (MCA SEM-3) 1. Contrasted with batch processing o
Batch processing is a form of transaction processing. Batch processing involves processing several transactions at the same time, and the results of each transaction are not immediately available when the transaction is being entered;[1] there is a time delay. Transactions are accumulated for a certain period (say for day) where updates are made especially after work. Online transaction processing is the form of transaction processing that processes data as it becomes available.
2. Real-time and batch processing o There are a number of differences between real-time and batch processing. These are outlined below: o Each transaction in real-time processing is unique. It is not part of a group of transactions, even though those transactions are processed in the same manner. Transactions in real-time processing are stand-alone both in the entry to the system and also in the handling of output. o Real-time processing requires the master file to be available more often for updating and reference than batch processing. The database is not accessible all of the time for batch processing. o Real-time processing has fewer errors than batch processing, as transaction data is validated and entered immediately. With batch processing, the data is organised and stored before the master file is updated. Errors can occur during these steps. o Infrequent errors may occur in real-time processing; however, they are often tolerated. It is not practical to shut down the system for infrequent errors. o More computer operators are required in real-time processing, as the operations are not centralised. It is more difficult to maintain a real-time processing system than a batch processing system.
Features of TPS: 1. Rapid response Fast performance with a rapid response time is critical. Businesses cannot afford to have customers waiting for a TPS to respond, the turnaround time from the input of the transaction to the production for the output must be a few seconds or less.
2. Reliability Many organizations rely heavily on their TPS; a breakdown will disrupt operations or even stop the business. For a TPS to be effective its failure rate must be very low. If a TPS does fail, then quick and accurate recovery must be possible. This makes welldesigned backup and recovery procedures essential. 3. Inflexibility A TPS wants every transaction to be processed in the same way regardless of the user, the customer or the time for day. If a TPS were flexible, there would be too many opportunities for
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MIS (MCA SEM-3)
non-standard operations, for example, a commercial airline needs to consistently accept airline reservations from a range of travel agents, accepting different transactions data from different travel agents would be a problem. 4. Controlled processing The processing in a TPS must support an organization's operations. For example if an organization allocates roles and responsibilities to particular employees, then the TPS should enforce and maintain this requirement. An example of this is an ATM transaction.
Components of TPS: 1. Input 2. Processing 3. Storage 4. Output Pros and Cons:

o The advantage is that usually transaction processing is really fast, it takes up usually a few seconds, however, if there a lot of files in queue, the time taken to process data might take a long time. Another advantage is that it makes the process of booking fairer as files are processed in order in which they had been queued. (e.g. ticket booking)
The disadvantage is that there is a chance of double booking. Also, transaction processing systems need to use direct access files, serial access media such as magnetic tape cannot be used.
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MIS (MCA SEM-3)
Executive Support Systems (ESS)

An Executive Support System is a class of information systems that supports business and organizational decision-making activities. It is an interactive software-based system made to help decision makers compile useful information from a combination of raw data to identify and solve problems and make decisions. o It supports the following: 1. An inventory of all of your current information assets. 2. Comparative sales figures between one week and the next. 3. Projected revenue figures based on new product sales assumptions. Its key points are: 1. Improves personal efficiency 2. Speed up the progress of problems solving in an organization. 3. Facilitates interpersonal communication 4. Promotes learning or training 5. Increases organizational control 6. Generates new evidence in support of a decision 7. Creates a competitive advantage over competition 8. Encourages exploration and discovery on the part of the decision maker 9. Reveals new approaches to thinking about the problem space 10. Helps automate the managerial processes.
Model of a typical executive support system Advantages of ESS: o Provides timely delivery of company summary information
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MIS (MCA SEM-3) o o o Provides better understanding of information Filters data for better time management Provides system for improvement in information tracking
Disadvantages of ESS: o o o o o o Computer skills required to obtain results Requires preparation and analysis time to get desired information Detail oriented Provides detailed analysis of a situation Difficult to quantify benefits of DSS How do you quantify a better decision? Difficult to maintain database integrity Provides only moderate support of external data and graphics capabilities
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Why MIS is an integral part of management System? What if it is not there? MIS supports managers in their functional responsibilities. Explain
MIS and Management

Functions of Management:
An individual who gets the thing done is a Manager. It is necessary to distinguish between the task and the functions. While manager may perform the task such as accounting, selling, manufacturing, purchasing, etc. These activities are called as tasks and not as functions. The activities that are performed through the managerial functions are planning, organization, staffing, directing coordinating and controlling. 1. Planning is a process of determining the goals and objectives and evolving strategies policies, programmers and procedures for the achievement of these goals. The essence of the process is decision making as there are a number of alternatives in each of these factors. 2. Organisation 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. Building a meaningful effective structure of authority and the relationship is known as organizing. 3. Staffing involves manning the positions in the organization structure. It requires definin g the manpower needs per position or centre of activity. It requires appropriate selection of the person or persons ensuring that they together will achieve the goals and objectives of the organization. 4. Directing is a complex task of implementing the process of management. In the process, the manager is required to guide, clarify and solve the problems of the people and their activities. It is necessary to motivate the people to work for the goal with an interest and a confidence. 5. Coordinating is the function which brings a harmony and smoothness in the various group activities and individual efforts directed towards the accomplishment of goals. It is a process of synchronizing individual actions and the efforts which may differ because of the differences in the personal goals and the common goals, the differences in the interpretation of methods and directions. It is, therefore, necessary to undertake centrally a process of coordinating and reconciling the differences in the approach, timing, efforts and interests towards a common goal. This task is to be carried out by the authority placed at a higher level in the organization structure.
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6. 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. The essence of the control lies in good planning. It helps to evaluate the performance, highlights abnormal deviations, and guides a manager to take specific corrective actions. This may call for a change of plan, a reallocation of resources, a modification of methods, procedures and even the organization structure. The control is central to the managerial function. The managers main function, therefore, is planning and control of the business functions and operations. While performing these functions, he resorts to the scientific approach to the management.
MIS as a Tool Management Process: o The process of management requires a lot of data and information for execution of the plan. This requirement arises on account of that in each step of management, a variety of decisions are taken to correct the course of development. o The decisions or actions are prompted due to the feedback given by the control system incorporated in the management system. The control of overall performance is made possible by way of budget summaries and reports. The summary showing sales, costs, profit and return on investment throws light on the direction the organization is moving to. The exception reports identify the weaknesses in the system of management. o If effective management system is to be assured, it has to rest on business information. The management performance improves if the business risk and uncertainties are handled effectively. If the information provided is adequate, one can deal with these factors squarely. The information support improves the lack of knowledge, enriches experience and improves analytical abilities leading to better business judgment. o So, if efficient information support is to be provided, it calls for a system with the goals of generating management information. A good MIS must furnish information to the managers to expand their knowledge base. o He must know the adverse trends in business, the shortfalls and failures in the management process. The MIS should provide the support to act and decisively. It should support management in terms of basic business information at the corporate level and meet the specific needs of the managers. It should highlight on the critical success factors and support key areas of management.
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MIS should have, wherever possible, support systems to help the manager in decision making. Modern management systems rely on MIS. The complexity of business operations with skill and foresight to avert the crisis. Modern business management requires shift from the traditional controls to managerial control. The shift requires the manager to become more efficient in handling the he is entrusted with.
The manager becomes more efficient if he is well informed, made richer in knowledge, experience and analytical skills and is able to face the uncertainties and the risk of business. This is possible only if he is supported by MIS in his specific task of management of business.
Modern business has business has become more technology- oriented wherein the manager is required to be up- to- date on technological advancement not only in his field of operations but also in the other technologies . The emerging new technologies are posing threats to current business and are opening new opportunities for new business ventures.
The manager has to keep himself abreast on the information of how these technologies affect his business prospects. A good MIS designed for such a support is absolutely essential. MIS therefore, is a tool for effective execution of the management process.
Types of Business Information System from functional point of view
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Role of MIS in Management: o The role of the MIS in an organization can be compared to the role of heart in the body. The information is the blood and MIS is the heart. In the body the heart plays the role of supplying pure blood to all the elements of the body including the brain. o The MIS plays exactly the same role in the organization. The system ensures that an appropriate data is collected from the various sources, processed, and sent further to all the needy destinations. The system is expected to fulfil the information needs of an individual, a group of individuals, the management functionaries: the managers and the top management. o The MIS helps the clerical personnel in the transaction processing and answers their queries on the data pertaining to the transaction, the status of a particular record and references on a variety of documents. o The MIS helps the middle management in short them planning, target setting and controlling the business functions. It is supported by the use of the management tools of planning and control. o The MIS plays the role of information generation, communication, problem identification and helps in the process of decision making. The MIS, therefore, plays a vital role in the management, administration and operations of an organization. Uses of MIS in Management: o o o o o o It deals with transaction processing such as answering the questions, status of a particular record and variety of documents. It gives operational data for planning, scheduling and control. It helps in decision making and to correct an out of control situation. It helps middle management in short term planning, target setting and control the business functions. It helps top management in goal setting, planning business planes and its implementations. It helps in generating information, communicating of the generated information, problem identification and helps in the process of decision making. MIS - A Support to the Management: o The management process is executed through a variety of decisions taken at each step of planning, organizing, staffing, directing coordinating and control. If the management is able to spell out the decisions required to be taken, the MIS can be
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designed suitably. The decisions required to be taken in these steps are tabulated in Table below. Steps in Management Planning Organization Staffing Directing Coordinating Controlling Decision A selection from various alternatives - strategies, resources, methods, etc. A selection of a 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 efforts in the organization. Choice of the tools and the techniques for coordinating the efforts for optimum results. A selection of the exceptional conditions and the decision guidelines Table: Decisions in Management
The objective of the MIS is to provide information for a decision support in the process of management. It should help in such a way that the business goals are achieved in the most efficient manner. Since the decision making is not restricted to a particular level, the MIS is expected to support all the levels of the management in conducting the business operations. Unless the MIS becomes a management aid, it is not useful to the organization.
What if MIS is NOT there?
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Management by Control and Management by Exception

Management by Control:
o A definition of 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. o The central 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. o Planning, Organizing, Staffing, Coordinating, Directing, and Controlling are the various step in management process.
NOT OK
OK
Basic steps of the control process The management is a systematic effort to set the performance standards in line with the performance objectives, 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. o o This systematic effort is undertaken through the management control system. The control system is essential to meet the environmental changes discussed earlier,to meet the complexity of today's business, to correct the mistakes made by the people, and to effectively monitor the delegation process. A reliable and effective control system has the following features.
Early Warning Mechanism: This is a mechanism of predicting the possibility of achieving the goals and the standards before it is too late and allowing the manager to take corrective actions.
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MIS (MCA SEM-3) Performance Standard:
The performance standard must be measurable and acceptable to all the organization. The system should have meaningful standards relating to the work areas, responsibility, an d managerial functions and so on. For example, the management would have standards relating to the business performance, such as production, sales, inventory, quality, etc. The operational management would have standards relating to the shift production, rejections, down time, utilization of resources, sale in a typical market segment and so. On. The chain of standards, when achieved, will ensure an achievement of the goals of the organization.
Feedback: The control system would be effective; it continuously monitors the performance and sends the information to the control centre for action. It should not only highlight the progress but also the deviations. Accurate and Timely: The feedback should be accurate in terms of results and should be com municated on time for corrective action.
Realistic: The system should be realistic so that the cost of control is far less than the benefits. The standards are realistic and are believed as achievable. Sufficient incentive and rewards are to be provided to motivate the people. The Information Flow: The system should have the information flow aligned with the organization structure and the decision makers should ensure that the right people get the right information for action and decision making. Exception Principle: The system should selectively approve some significant deviations from the performance standards on the principle of management by exception. A standard is control system has a set of objectives, standards to measure, a feedback mechan ism and an action centre as elements of the system. They need to be properly evolved and instituted in the organization with due recognition to the internal and the external environment. The system as a whole should be flexible to be change with ease so th at the impact of changed environment is handled effectively.
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Management by Exception:
o Paretos principle of 80:20 applications to the management of enterprise. Several terms have been coined on this principle such as management by objectives; management methodology is the management by exception. When the management operates under time constraint, each manager has to him to attend to the situation where his attention is necessary. Such attention would lead to an action, a decision or a wait and- see approach. o If all the situations are considered in a routine manner, it consumes time and tends to be neglected over a period of time. An efficient manager tries for selective attention to manage within the available time resource. The principle evolved, therefore, is of the management by exception. The exception is decided the impact a situation would make on the performance, the process and the standards set in the management control system. o The exception is defined as a significant deviation from the performance, or the process and the standard. The deviation could be abnormal on a positive or on a negative side of the standard. The deviation could be predictive or could be arising out of random causes in the business operations. IT is, therefore, necessary to assess whether the deviation is sporadic or consistently coming in, calling for managerial attention. The manager is interested in knowing the significant deviation by the yardsticks of consistency and not out of random causes. The significant deviations are exceptional in nature and require to be attended to immediately. A manager is further interested in knowing the reasons behind the exceptional nature of the situation. It is possible to trace the reasons of deviation, and it is possible to take a corrective action. o The significant deviation can occur on account of wrong performance standards and wrong management process. Many times standards are set very low and they need to be looked in to avoid the misuse of resources. If the standards are set too high, then the people fail to achieve them on account of de motivating factor of the high standards. o A wrong management process refers to a variety of decisions a manager has taken in the planning, organization, staffing, directing and controlling a given management task. These decisions relate to the choice and the allocation of resources, the methods of using resources, the application of the tools and the techniques, the use of manpower by way of staffing and the manner in which the efforts are coordinated in the organization. For an efficient and an effective management, without loss of time, it is, therefore, necessary to report the significant deviations to the right person in the organization. In this regard a manager himself has to provide the conditions of exceptions in the control system so that they are highlighted and informed. The management by exception commands grip on the management process. The managerial effort gets directed towards the goal with the purpose of achievement.
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Organization as a System (Leavitts Model) OR Relationship between Organisation and System

o Normally system is defined as a structure where the employees are placed in hierarchical order according to their quality and ability, to achieve the goals of the management. o A system is an assembly of elements arranged in a logical order to achieve corrective objectives. The organization is also a system of people. o o This is the simplest justification for calling the organization a system. The management theorists however have seen organization in different views and perspectives. They have identified more elements in the systems in the system besides the people. The choice of technology and structure as additional three elements of the organization system. o He says that the task technology and people structure are dependent on each other and their signification cannot be ignored as elements of the system. o The arrangement of task in terms of process and work design is dependent on the people. The choice of technology of handling the task is dependent on the people. You may choose the best technology and well-designed task, but they have to be suited for the people. o Over and above these are to be arranged in proper structure. Further a fourth Element has been added as culture. According to Leavitt an organization should be viewed as a sociotechnical system consisting of people task technology culture and structure. The modified Leavittsmodel is shown in Fig.
Organisation as a System (Leavitts Model) In view the nature of the task the organization is supposed to carry out it has to be designed as an open system capable of adjusting itself to the changing environment. o The organization continuously exchanges the information with the environment and is influenced by the changes in it. o The organization therefore has to be built in such a fashion that it adjusts with the changes in the environment and the goals and the objectives are achieved.
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Hence the organization is a socio-technical system whose sub-systems are task people technology culture and structure each having its own input and output satisfying at first its own objective and eventually the corporate organization goals and objectives. If the sub-system's goals and objectives are not congruent with the goals and objectives of the corporate organization poor performance resistance to change and non -attainment of corporate goals will be the consequences. The systems and their goals are not stable. The goals change in response to the changes in the business focus the environment and in the people in the organization. A significant change calls for change in the organization structure a goals displacement is said to have occurred when the system goals significantly. Another reason for goals change is due to the Natural process of growth and decline.
All organizations and their business go through the different phases of growth cycle in stages as Introduction Growth Maturity and Decline. Each phase generates new goals to be served if the changed or displaced goals are not reflected in the organization is bound to suffer from decay.
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MIS vs DSS
o MIS and DSS are two abbreviations that are often heard in the field of Business Management. They differ in a few aspects. It is important to know that MIS stands for Management Information Systems whereas DSS stands for Decision Support Systems. It is interesting to note that MIS is a type of link that assists in the communication between managers of various disciplines in a business firm or an organization. On the whole it plays a very important role in building up communication among the corporate people. DSS on the other hand is an improvement of the concept of MIS. It is true that both of them differ in terms of their focus. DSS focuses more on leadership. It is all about senior management in a firm providing innovative vision. On the other hand MIS focuses more on the information gathered and the information that has poured from different quarters. Experts on managerial behavior say that DSS focuses more on decision making. MIS on the other hand focuses more on planning the report of various topics concerned with the organization that would assist the managers to take vital decisions pertaining to the functioning of the organization. One of the finest differences between MIS and DSS is that MIS focuses on operational efficiency whereas DSS focuses more on making effective decision or in other words helping the company to do the right thing. Flow of information is from both sides, up and down in the case of MIS. On the other flow of information is only upward in the case of DSS. In the case of DSS the report can be flexible whereas in the case of MIS the report is usually not flexible. MIS is characterized by an input of large volume of data, an output of summary reports and process characterized by a simple model. On the other hand DSS is featured by an input of low volume of data, an output of decision analysis and a process characterized by interactive model. Experts would also say that MIS is a primary level of decision m aking whereas DSS is the ultimate and the main part of the decision. This is one of the most talked about different between the two.
As a matter of fact MIS is all about theory whereas DSS is all about practice and analysis. An organization should employ both the systems effectively.
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MIS vs TPS (1)

TPS is an acronym describing Transaction Processing Systems. TPS systems are exactly what the name implies - a system that processes transactions that occur within an organization or business. TPS systems tend to perform routine operations and serve as a foun dation for other systems. Transactions are business operations such as customer orders, purchase orders, receipts, time cards, invoices, payroll checks and, yes, college registrations. A Transaction Processing System can consist of: o o o o o o Data Collection eg getting registration papers. Data Editingeg making the paper ready for input to the system. Data Correction eg sorting out incorrect dates of birth, postal codes etc. Data Manipulation eg assigning students to courses, car parking, halls of residence etc Data Storage eg where the data is physically located on disks/tapes etc. Document Production eg hard copy of registration forms, ID cards etc.
Here are some examples of TPS systems o Sales/marketing introduction. o Manufacturing/production engineering, operations. o Human resources systems for personnel records, benefits, compensation, labor relations, training. o Industry specialized systems such as university registration, freight shipping and rates, property management and renting etc. So you can see that a TPS covers a wide variety of both manual and automated tasks, in support of an overall process or business. MIS is an acronym for Management Information System, which is a system that provides periodic and predetermined reports that summarize information. It is usually attached, and part of, a bigger Transaction Processing system, and exists to give Management repor ts of activity eg an MIS attached to a larger Student Registration system might give reports on numbers of students registering, amounts of course fees defaulted etcetc, -- information that the college would require to make management decisions. systems for scheduling, purchasing, shipping/receiving, systems for market research, pricing, promotion, new product
So MIS supports the management level by providing routine summary reports and exception reports (e.g. Which students were here in the Fall who did not choose to return in the Spring?) and MIS differs from TPS in that MIS deals with summarized and compressed data from the TPS.
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MIS vs TPS (2)

MIS: MIS, which stands for Management Information System, helps middle level management in monitoring, controlling, decision making and administrative activities. MIS provides managers with current performance of the organization. Managers make use of this information to monitor and control business and also to devise strategies to better the performance in future. The data which is available through MIS is summarized and presented in concise reports on a regular basis. MIS serves the interests of managers on weekly, monthly and yearly results though some MIS can produce results on a daily basis to be used by managers. A manager can get answers to predefined set of questions through MIS regularly. MIS is not very flexible and also does not have analytical capability. A vast majority of MIS systems make use of simple routines and stay away from complex mathematical models.
TPS: Another type of information system that has become very popular is TPS. It stands for Transaction Processing System and collects, stores, modifies and retrieves all information about transactions in an organization. A transaction here is referred to any event that generates or modifies the already stored information. If an organization is using both MIS and TPS, there is regular exchange of data among these systems. TPS becomes a major source of data for MIS. The data that is generated through TPS is on the level of operations such as payroll or order processing. TPS tracks daily routine transactions that are essential to conduct business. MIS makes heavy use of data from TPS though it also utilizes data from other sources. In Brief: o Information systems have become very necessary for systems to remain competitive and more productive today. o MIS stands for Management Information System and helps in controlling, monitoring and decision making at the middle level management. o TPS generates data at the operational level and makes available information that is used heavily my MIS.
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E-Business Enterprise with E-Commerce, E-Communication, E-Collaboration

E-Business: E-business is the digital enablement of transactions and processes within a firm and therefore does not include any exchange in value. E-commerce and e-business intersect at the business firm boundary at the point where internal business systems link up with suppliers. For instance, e-business turns into e-commerce when an exchange of value occurs across firm boundaries.
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MIS (MCA SEM-3) E-Commerce: Transacting or facilitating business on the Internet
Managing the Digital Firm is called ecommerce.
Ecommerce is short for "electronic commerce." Types of Ecommerce: Ecommerce can be classified based on the type of participants in the transaction: Business to Business (B2B) B2B ecommerce transactions are those where both the transacting parties are businesses, e.g., manufacturers, traders, retailers and the like. Business to Consumer (B2C) When businesses sell electronically to end-consumers, it is called B2C ecommerce.
Consumer to Consumer (C2C) Some of the earliest transactions in the global economic system involved barter -- a type of C2C transaction. But C2C transactions were virtually non -existent in recent times until the advent of ecommerce. Auction sites are a good example of C2C ecommerce. Examples of Ecommerce: Online Shopping Electronic Payments Online Auctions Internet Banking Online Ticketing
Features of E-Commerce: E-commerce can provide the following features over non-electronic commerce: o Reduced costs by reducing labour, reduced paper work, reduced errors in keying in data, reduce post costs o Reduced time. Shorter lead times for payment and return on investment in advertising, faster delivery of product o Flexibility with efficiency. The ability to handle complex situations, product ranges and customer profiles without the situation becoming unmanageable. o Improve relationships with trading partners . Improved communication between trading partners leads to enhanced long-term relationships. o Lock in Customers. The closer you are to your customer and the more you work with them to change from normal business practices to best practice e-commerce the harder it is for a competitor to upset your customer relationship. o New Markets. The Internet has the potential to expand your business into wider
geographical locations.
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MIS (MCA SEM-3) Advantages and Disadvantages of Ecommerce
The invention of faster internet connectivity and powerful online tools has resulted in a new commerce arena Ecommerce. Ecommerce offered many advantages to companies and customers but it also caused many problems. Advantages of Ecommerce: o o o o o o o Faster buying/selling procedure, as well as easy to find products. Buying/selling 24/7. More reach to customers, there is no theoretical geographic limitations. Low operational costs and better quality of services. No need of physical company set-ups. Easy to start and manage a business. Customers can easily select products from different providers without moving around physically. Disadvantages of Ecommerce: o Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers money. o o o There is no guarantee of product quality. Mechanical failures can cause unpredictable effects on the total processes. As there is minimum chance of direct customer to company interactions, customer loyalty is always on a check. o There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways, all are always prone to attack.
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E-Communication: eCommunication or electronic communication refers to statements,

newsletters, marketing, reports, product change information and notices sent to you by online methods including email and SMS.
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Information System in the Enterprise
Chapter 2: Information System in the Enterprise

Syllabus: o o o Major Types of System in Organisation Systems from Functional Perspectives Integrating Functions and Business Processes: Introduction to Enterprise Application
Questions: o o o o Enterprise System and its working Business Information System and Types (From Functional Point of View) Business Function Business Process
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Enterprise System and Its Working

Around the globe, companies are increasingly becoming more connected, both internally and with other companies.They want to be able to react instantaneously when a customer places a large order or when a shipment from asupplier is delayed. Managers want to know the impact of these events on every part of the business and how thebusiness is performing at any point in time. Enterprise systems provide the integration to make this possible. Letslook at how they work and what they can do for the firm. Enterprise systems focus on integrating the key internal business processes of thefirm. These systems, which are known as enterprise resource planning (ERP) systems, are based on a suite ofintegrated software modules and a common central database. The database collects data from and feeds the datainto numerous applications that can support nearly all of an organizations internal business activities. When newinformation is entered by one process, the information is made immediately available to other business processes(see Figure below).
Enterprise system architecture
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Enterprise systems feature a set of integrated software modules and a central database that enable data to be shared by many different business processes and functional areas throughout the enterprise. If a sales representative places an order for tire rims, for example, the system would verify the customers credit limit, schedule the shipment, identify the best route, and reserve the necessary items from inventory. If inventory stock was insufficient to fill the order, the system would schedule the manufacture of more rims, ordering the needed materials and components from suppliers. Sales and production forecasts would be immediately updated. General ledger and corporate cash levels would be automatically updated with the revenue and cost information from the order. Users could tap into the system and find out where that particular order was at any minute. Management could obtain information at any point in time about how the business was operating. The system could also generate enterprise-wide data for management analyses of product cost and profitability.
How Enterprise System works?

Both the valueand the challengeof enterprise systems can be found in the integration they force on firms information and business processes. Enterprise software consists of a set of interdependent software modules that support basic internal business processes for o o o o Finance and Accounting, Human Resources, Manufacturing and Production (Including Logistics And Distribution), and Sales and Marketing.
The software enables data to be used by multiple functions and business processes for precise organizational coordination and control. Table below describes som e of the business processes supported by enterprise software.
Business Processes Supported by Enterprise Systems
Business Value of Enterprise Systems:

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Enterprise systems promise to integrate diverse internal business processes of a firm into a single informationarchitecture, and that integration can have a very large payback if firms install and use enterprise softwarecorrectly. Enterprise systems can produce value both by increasing organizational efficiency and by providingfirm wide information to help managers make better decisions.
Business Functions
Systems from a functional perspective: Information systems can be classified by the specific organizational function they serve as well as by organizational level. We now describe typical information systems that support each of the major business functions and provide examples of functional applications for each organizational level.
Traditional view of systems:
Traditional view of systems In most organizations today, separate systems built over a long period of time support discrete business processes and discrete segments of the business value chain. The organizations systems rarely include vendors and customers. Enterprise systems:
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Enterprise systems Enterprise systems integrate the key business processes of an entire firm into a single software system that enables information to flow seamlessly throughout the organization. These systems focus primarily on internal processes but may include transactions with customers and vendors. 1. Sales and Marketing Systems The sales and marketing function is responsible for selling the organizations products or services. Marketing is concerned with identifying the customers for the firms products or services, determining what customers need or want, p lanning and developing products and services to meet their needs, and advertising and promoting these products and services. Sales is concerned with contacting customers, selling the products and services, taking orders, and following up on sales. Sales and marketing information systems support these activities. Table below shows that information systems are used in sales and marketing in a number of ways. At the strategic level, sales and marketing systems monitor trends affecting new products and sales opportunities, support planning for new products and services, and monitor the performance of competitors. At the management level, sales and marketing systems support market research, advertising, promotional campaigns and pricing decisions. They analyze sales performance and the performance of the sales staff. At the operational level, sales and marketing systems assist in locating and contacting prospective customers, tracking sales, processing orders, and providing customer service support.
Examples of Sales and Marketing Information Systems
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Sales information report shows the output of a typical sales information system at the management level. The system consolidates data about each item sold (such as the product code, product description, and amount sold) for further management analysis. Company managers examine these sales data to monitor sales activity and buying trends. 2. Manufacturing and Production Systems The manufacturing and production function is responsible for actually producing the firm s goods and services. Manufacturing and production systems deal with the planning, development, and maintenance of production facilities; the establishment of production goals; the acquisition, storage, and availability of production materials; and the scheduling of equipment, facilities, materials, and labour required to fashion finished products. Manufacturing and production information systems support these activities. Strategic-level manufacturing systems deal with the firms long-term manufacturing goals, such as where to locate new plants or whether to invest in new manufacturing technology. At the management level, manufacturing costs and and production resources. systems analyze and monitor and manufacturing and production Operational manufacturing
production systems deal with the status of production tasks.
Examples of Manufacturing and Production Information Systems Most manufacturing and production systems use some sort of inventory system, as illustrated in Figure below. Data about each item in inventory, such as the number of units depleted because of a shipment or purchase or the number of units replenished by reordering or returns, are either scanned or keyed into the system. The inventory master file contains basic data about each item, including the unique identification code for each item, a description of the item, the number of units on hand, the number of units on order, and the reorder point (the number of units in inventory that triggers a decision to reorder to prevent a stock out). Companies can estimate the number of items to reorder, or they can use a formula for calculating the least expensive quantity to reorder called the economic order quantity. The system produces reports that give information about such things as the number of each item available in inventory, the number of units of each item to reorder, or items in inventory that must be replenished.
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Overview of an inventory system This system provides information about the number of items available in inventory to supportmanufacturing and production activities. Product life cycle management (PLM) systems are one type of manufacturing and production system that has become increasingly valuable in the automotive, aerospace, and consumer products industries. PLM systems are based on a data repository that organizes every piece of information that goes into making a particular product, such as formula cards, packaging information, shipping specifications, and patent data. Once all these data are available, companies can select and combine the data they need to serve specific functions. For, example, designers and engineers can use the data to determine which parts are needed for a new design, whereas retailers can use them to determine shelf height and how materials should be stored in warehouses. For many years, engineering-intensive industries have used computer-aided design (CAD) systems to automate the modeling and design of their products. The software enables users to create a digital model of a part, a product, or a structure and make changes to the design on the computer without having to build physical prototypes. PLM software goes beyond CAD software to include not only automated modeling and design capabilities but also tools to help companies manage and automate materials sourcing, engineering change orders, and product documentation, such as test results, product packaging, and postsales data. The Window on Organizations describes how these systems are providing new sources of value. 3. Finance and Accounting Systems The finance function is responsible for managing the firms financial assets, such as cash, stocks, bonds, and other investments, to maximize the return on these financial assets. The finance function is also in charge of managing the capitalization of the firm (finding new financial assets in stocks, bonds, or other forms of debt). To determine whether the firm is
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getting the best return on its investments, the finance function must obtain a considerable amount of information from sources external to the firm. The accounting function is responsible for maintaining and managing the firms financial recordsreceipts, disbursements, depreciation, payrollto account for the flow of funds in a firm. Finance and accounting share related problemshow to keep track of a firms financial assets and fund flows. They provide answers to questions such as these: o What is the current inventory of financial assets? o What records exist for disbursements, receipts, payroll, and other fund flows? Table below shows some of the typical finance and accounting information systems found in large organizations. Strategic-level systems for the finance and accounting function establish long-term investment goals for the firm and provide long-range forecasts of the firms financial performance. At the management level, information systems help managers oversee and control the firms financial resources. Operational systems in finance and accounting track the flow of funds in the firm through transactions such as paychecks, payments to vendors, securities reports, and receipts.
Examples of Finance and Accounting Information Systems 4. Human Resources Systems The human resources function is responsible for attracting, developing, and maintaining the firms workforce. Human resources information systems support activities, such as identifying potential employees, maintaining complete records on existing employees, and creating programs to develop employees talents and skills. Strategic-level human resources systems identify the manpower requirements (skills, educational level, types of positions, number of positions, and cost) for meeting the firms long-term business plans. At the management level, human resources systems help managers monitor and analyze the recruitment, allocation, and compensation of employees. Human resources operational systems track the recruitment and placement of the firms employees.
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Examples of Human Resources Information Systems Figure above illustrates a typical human resources TPS for employee record keeping. It maintains basic employee data, such as the employees name, age, sex, marital status, address, educational background, salary, job title, date of hire, and date of termination. The system can produce a variety of reports, such as lists of newly hired employees, employees who are terminated or on leaves of absence, employees classified by job type or educational level, or employee job performance evaluations. Such systems are typically designed to provide data that can satisfy federal and state record keeping requirements for Equal Employment Opportunity (EEO) and other purposes.
An employee record keeping system This system maintains data on the firms employees to support the human resources function.
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Business Processes
Business Processes and Information Systems o The new digital firm business environment requires companies to think more strategically about their business processes. Business processes refer to sets of logically related activities for accomplishing a specific business result. Business processes also refer to the unique ways in which organizations and management coordinate these activities. A companys business processes can be a source of competitive strength if they enable the company to innovate better or to execute better than its rivals. Business processes can also be liabilities if they are based on out-dated ways of working that impede organizational responsiveness and efficiency. o Some business processes support the major functional areas of the firm, others are cross functional. Table below describes some typical business processes for each of the functional areas.
Examples of Functional Business Processes Many business processes are cross-functional, transcending the boundaries between sales, marketing, manufacturing, and research and development. These cross-functional processes cut across the traditional organizational structure, grouping employees from different functional specialties to complete a piece of work. For example, the order fulfilment process at many companies requires cooperation among the sales function (receiving the order, entering the order), the accounting function (credit checking and billing for the order), and the manufacturing function (assembling and shipping the order).
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Figure below illustrates how this cross-functional process might work. Information systems support these cross-functional processes as well as processes for the separate business functions.
The order fulfilment process Generating and fulfilling an order is a multistep process involving activities performed by the sales, manufacturing and production, and accounting functions.
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Business Information System and Types

Because there are different interests, specialties, and levels in an organization, there are different kinds of systems. No single system can provide all the information an organization needs. Figure below illustrates one way to depict the kinds of systems found in an organization. In the illustration, the organization is divided into strategic, management, and operational levels and then is further divided into functional areas, such as 1. Sales and Marketing, 2. Manufacturing and Production, 3. Finance and Accounting, and 4. Human Resources Systems are built to serve these different organizational interests.
Types of information systems Organizations can be divided into strategic, management, and operational levels and into four major functional areas: sales and marketing, manufacturing and production, finance and accounting, and human resources. Information systems serve each of these levels and functions.
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MIS (MCA SEM-3) Different Kinds of Systems:
Three main categories of information systems serve different organizational levels: 1. Operational-Level Systems, 2. Management-Level Systems, And 3. Strategic-Level Systems. Operational-level systems support operational managers by keeping track of the elementary activities and transactions of the organization, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow of materials in a factory. The principal purpose of sy stems at this level is to answer routine questions and to track the flow of transactions through the organization. How many parts are in inventory? What happened to Mr. Williamss payment? To answer these kinds of questions, information generally must be easily available, current, and accurate. Examples of operational-level systems include a system to record bank deposits from automatic teller machines or one that tracks the number of hours worked each day by employees on a factory floor. Management-level systems serve the monitoring, controlling, decision-making, and
administrative activities of middle managers. The principal question addressed by such systems is this: Are things working well? Management-level systems typically provide periodic reports rather than instant information on operations. An example is a relocation control system that reports on the total moving, house-hunting, and home financing costs for employees in all company divisions, noting wherever actual costs exceed budgets. Some management-level systems support non-routine decision making. They tend to focus on less-structured decisions for which information requirements are not always clear. These systems often answer what-if questions: What would be the impact on production schedules if we were to double sales in the month of December? What would happen to our return on investment if a factory schedule were delayed for six months? Answers to these questions frequently require new data from outside the organization, as well as data from inside that cannot be easily drawn from existing operational-level systems. Strategic-level systems help senior management tackle and address strategic issues and long-term trends, both in the firm and in the external environment. Their principal concern is matching changes in the external environment with existing organizational capability. What will employment levels be in five years? What are the long-term industry cost trends, and where does our firm fit in? What products should we be making in five years?
Information systems also serve the major business functions, such as sales and marketing, manufacturing and production, finance and accounting, and human resources. A typical organization has operational-, management-, and strategic-level systems for each functional
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area. For example, the sales function generally has a sales system on the operation al level to record daily sales figures and to process orders. A management-level system tracks monthly sales figures by sales territory and reports on territories where sales exceed or fall below anticipated levels. A system to forecast sales trends over a five-year period serves the strategic level. We first describe the specific categories of systems serving each organizational level and their value to the organization. Then we show how organizations use these systems for each major business function. Four Major Types of Systems: Figure below shows the specific types of information systems that correspond to each
organizational level. The organization has 1. Executive Support Systems (ESS) at the strategic level 2. Management Information Systems (MIS) at the management level 3. Decision-Support Systems (DSS) at the management level 4. Transaction Processing Systems (TPS) at the operational level Systems at each level in turn are specialized to serve each of the major functional areas. Thus, the typical systems found in organizations are designed to assist workers or managers at each level and in the functions of sales and marketing, manufacturing and production, finance and accounting, and human resources.
The four major types of information systems
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This figure provides examples of TPS, DSS, MIS, and ESS, showing the level of the organization and business function that each supports. Table below summarizes the features of the four types of information systems. It should be noted that each of the different systems may have components that are used by organizational levels and groups other than its main constituencies. A secretary may find information on an MIS, or a middle manager may need to extract data from a TPS.
Characteristics of Information Processing Systems
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Information Systems, Organisations, Management and Strategy
Chapter 3: Information Systems, Organisations, Management and Strategy

Syllabus: o o o o Organisations and Information Systems How Information System impact Organisations and Business Firms The Impact of IT on Management Decision Making Information Business and Business Strategy
Questions: o o o o o o o o Organisation and its Behavioural view and Features Levels of Management Distinguish Levels of management in terms of Goal, Scope and Content Matrix Organisation Business Strategy, Strategic Planning and Types of Strategies Parameters used in Organisation Strategy Can an Organisation have more than one strategy? Is it long range or short range? How IT in todays time affect the Business Strategy?
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Organisation and its Behavioural view and Features

Organization:
o An organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs. This technical definition focuses on three elements of an organization. Capital and labour are primary production factors provided by the environment. The organization (the firm) transforms these inputs into products and services in a production function. The products and services are consumed by environments in return for supply inputs (see Figure below).
The technical microeconomic definition of the organization
In the microeconomic definition of organizations, capital and labour (the primary production factors provided by the environment) are transformed by the firm through the production process into products and services (outputs to the environment). The products and services are consumed by the environment, which supplies additional capital and labour as inputs in the feedback loop. An organization is more stable than an informal group (such as a group of friends that meets every Friday for lunch) in terms of longevity and routineness. Organizations are formal legal entities with internal rules and procedures, which must abide by laws. Organizations are also social structures because they are a collection of social elements, much as a machine has a structurea particular arrangement of valves, cams, shafts, and other parts. This definition of organizations is powerful and simple, but it is not very descriptive or even predictive of real-world organizations. A more realistic behavioural definition of an organization is that it is a collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution.
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Behavioural view of Organization:

The behavioural view of organizations emphasizes group relationships, values, and structures.
The behavioral view of organizations In this behavioural view of the firm, people who work in organizations develop customary ways of working; they gain attachments to existing relationships; and they make
arrangements with subordinates and superiors about how work will be done, the amount of work that will be done, and under what conditions work will be done. Most of these arrangements and feelings are not discussed in any formal rulebook. How do these definitions of organizations relate to information systems technology? A technical view of organizations encourages us to focus on how inputs are combined to create outputs when technology changes are introduced into the company. The firm is seen as infinitely malleable, with capital and labour substituting for each other quite easily. But the more realistic behavioural definition of an organization suggests that building new information systems, or rebuilding old ones, involve much more than a technical rearrangement of machines or workers. Some information systems change the organizational balance of rights, privileges, obligations, responsibilities, and feelings that have been established over a long period of time. Changing these elements can take a long time, be very disruptive, and require more resources to support training and learning. For instance, the length of time required to implement effectively a new information system is much longer than usually anticipated simply because there is a lag between implementing a technical system and teaching employees and managers how to use the system. Technological change requires changes in who owns and controls information; who has the right to access and update that information; and who makes decisions about whom, when, and how. This more complex view forces us to look at the way work is design ed and the procedures used to achieve outputs.
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The technical and behavioural definitions of organizations are not contradictory. Indeed, they complement each other: The technical definition tells us how thousands of firms in competitive markets combine capital, labour, and information technology, whereas the behavioural model takes us inside the individual firm to see how that technology affects the organizations inner workings. Section 3.2 describes how each of these definitions of organizations organizations. can help explain the relationships between information systems and
Features of Organization:
Authority - the right to make decisions and carry out tasks Span of control - the number of people a superior is responsible for Chain of Command - the relationship between different levels of authority in the business Hierarchy - shows the line management in the business and who has specific responsibilities Delegation - authority to carry out actions passed from superior to subordinate Empowerment- giving responsibilities to people at all levels of the business to make decisions
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Levels of Management
The term Levels of Management refers to a line of demarcation between various managerial positions in an organization. The number of levels in management increases when the size of the business and work force increases and vice versa. The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories: 1. Top level/Administrative level 2. Middle level/Executor Level 3. Low level/Supervisory/Operative/First- line managers
Managers at all these levels perform different functions. The role of managers at all the three levels is discussed below:
Levels of Management 1. Top Level of Management: It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions. The role of the top management can be summarized as follows: Top management lays down the objectives and broad policies of the enterprise. It issues necessary instructions for preparation of department budgets, procedures, schedules etc. It prepares strategic plans & policies for the enterprise. It appoints the executive for middle level i.e. departmental managers. It controls & coordinates the activities of all the departments.
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It is also responsible for maintaining a contact with the outside world. It provides guidance and direction. The top management is also responsible towards the shareholders for the performance of the enterprise. 2. Middle Level of Management: The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as: They execute the plans of the organization in accordance with the policies and directives of the top management. They make plans for the sub-units of the organization. They participate in employment & training of lower level management. They interpret and explain policies from top level management to lower level. They are responsible for coordinating the activities within the division or department. It also sends important reports and other important data to top level management. They evaluate performance of junior managers. They are also responsible for inspiring lower level managers towards better performance.
3. Lower Level of Management: Lower level is also known as supervisory/operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees. In other words, they are concerned with direction and controlling function of management. Their activities include: Assigning of jobs and tasks to various workers. They guide and instruct workers for day to day activities. They are responsible for the quality as well as quantity of production. They are also entrusted with the responsibility of maintaining good relation in the organization. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers. They help to solve the grievances of the workers. They supervise & guide the sub-ordinates. They are responsible for providing training to the workers. They arrange necessary materials, machines, tools etc for getting the things done. Page 3.6 | MIS Compiled by: SantY (SPIT)
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They prepare periodical reports about the performance of the workers. They ensure discipline in the enterprise. They motivate workers. They are the image builders of the enterprise because they are in direct contact with the workers.
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Matrix Organisation Structure

o Matrix Organisation or more was introduced structures. in USA in For the early 1960's. It was used to solve Organisation and Project
management problems in the Aerospace industry. Matrix Organisation is a combination of two organisation example, Functional Organisation.
The organisation is divided into different functions, e.g. Purchase, Production, R & D, etc. Each function has a Functional (Departmental) Manager, e.g. Purchase Manager, Production Manager, etc. The organisation is also divided on the basis of projects e.g. Project A, Project B, etc. Each project has a Project Manager e.g. Project A Manager, Project B Manager, etc. The employee has to work under two authorities (bosses). The authority of the Functional Manager flows downwards while the authority of the Project Manager flows across (side wards). So, the authority flows downwards and across. Therefore, it is called "Matrix Organisation".
An example of matrix organisation is shown in the following diagram:
Features of Matrix Organisation:

1. Hybrid Structure : Matrix organisation is a hybrid structure. This is so, because it is a combination of two or more organisation structures. It combines functional organisation with a project organisation. Therefore, it has the merits and demerits of both these organisatio n structures. Page 3.8 | MIS Compiled by: SantY (SPIT)
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2. Functional Manager : The Functional Manager has authority over the technical (functional) aspects of the project. The responsibilities of functional manager are: o He decides how to do the work. o He distributes the project work among his subordinates. o He looks after the operational aspects. 3. Project Manager : The Project manager has authority over the administrative aspects of the project. He has full authority over the financial and physical resources which he can use for completing the project. The responsibilities of project manager are: o He decides what to do. o He is responsible for scheduling the project work. o He co-ordinates the activities of the different functional members. o He evaluates the project performance. 4. Problem of Unity of Command : In a matrix organisation, there is a problem of the unity of command. This is so, because the subordinates receive orders from two bosses viz., the Project Manager project. 5. Specialisation :In a Matrix organisation, there is a specialisation. The project manager concentrates on the administrative aspects of the project while the functional manager concentrates on the technical aspects of the project. 6. Suitability :Matrix organisation is suitable for multi-project organisations. It is mainly used by large construction companies, that construct huge residential and commercial projects in different places at the same time. Each project is looked after (handled) by a project manager. He is supported by many functional managers and employees of the company. and the Functional Manager. This will result in confusion, disorder, indiscipline, inefficiency, etc. All this will reduce the productivity and profitability of the
Advantages of Matrix Organisation:

1. Sound Decisions : In a Matrix Organisation, all decisions are taken by experts. Therefore, the decision are very good. 2. Development of Skills : It helps the employees to widen their skills. Marketing people can learn about finance, Finance people can learn about marketing, etc.
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3. Top Management can concentrate on Strategic Planning :The Top Managers can spend more time on strategic planning. They can delegate all the routine, repetitive and less important work to the project managers. 4. Responds to Changes in Environment :Matrix Organisation responds to the negative changes in the environment. This is because it takes quick decisions. 5. Specialisation : In a matrix organisation, there is a specialization. The functional managers concentrate on the technical matters while the Project Manager concentrates on the administrative matters of the project. 6. Optimum Utilisation of Resources : In the matrix organisation, many projects are run at the same time. Therefore, it makes optimum use of the human and physical resources. There is no wastage of resources in a matrix organisation. 7. Motivation : In a matrix organisation, the employees work as a team. So, they are motivated to perform better. 8. Higher Efficiency :The Matrix organisation results in a higher efficiency. It gives high returns at lower costs.
Limitations of Matrix Organisation:

1. Increase in Work Load :In a matrix organisation, work load is very high. The managers and employees not only have to do their regular work, but also have to manage other additional works like attending numerous meetings, etc. 2. High Operational Cost :In a matrix organisation, the operational cost is very high. This is because it involves a lot of paperwork, reports, meetings, etc. 3. Absence of Unity of Command :In a matrix organisation, there is no unity of command. This is because, each subordinate has two bosses, viz., Functional Manager and Project Manager. 4. Difficulty of Balance :In a matrix organisation, it is not easy to balance the administrative and technical matters. It is also difficult to balance the authority and responsibilities of the project manager and functional manager. 5. Power Struggle :In a matrix organisation, there may be a power struggle between the project manager and the functional manager. Each one looks after his own interest, which causes conflicts.
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6. Morale :In a matrix organisation, the morale of the employees is very low. This is because they work on different projects at different times. 7. Complexity :Matrix organisation is very complex and the most difficult type of organisation. Shifting of Responsibility : If the project fails, the project manager may shift the responsibility on the functional manager. That is, he will blame the functional manager for the failure.
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Business Strategy and Types of Strategies

Business Strategy:
A strategy is a plan of action designed to achieve a specific goal. Strategy is all about gaining (or being prepared to gain) a position of advantage over adversaries or best exploiting emerging possibilities. As there is always an element of uncertainty about future, strategy is more about a set of options ("strategic choices") than a fixed plan. It derives from the Greek "" (strategia), "office of general, command, generalship". Strategy: A detailed plan for achieving success, the bundle of decisions and activities that we choose to achieve our long-term goals. Strategy is the path we choose. Every organization has to figure out what it wants to achieve and then how it is going to make it happen, with its products, customers, and operations. We can break down strategy into three components: o Create the strategyWhat should we do? o Implement the strategyHow do we do it? o Evaluate the strategyHow well are we doing in meeting our long-term goals? Formulating a business strategy is a complex task even for the smallest of organizations. Furthermore, whether youre the manager of a small group in an organization or the CEO of a large company, youll be working with strategic issues. Creating the busin ess strategy begins with the business idea. In the case of our Italian restaurant, our business idea is authentic Italian cooking, based upon Grandmas recipes. But as we know, the idea is not enough. We cannot raise capital simply by presenting samples of Grandmas cooking to the loan committee down at the bank. Rather, we must present a comprehensive plan to our lenders that details the complete picture of our restaurant, so that the bank may judge whether well be able to acquire the assets we need and generate enough income to completely repay our debt. We also wont be able to hire good cooks without fully explaining how our ideas for the business will provide a good place to work now and into the future. If these people cannot see a viable business in our idea, theyre not likely to commit to working to prepare the foods that will turn our recipes into revenues. Also, without a good idea of what we want our restaurant to be, we wont be able to inspire our waiters and waitresses to provide the service that will make our restaurant a special experience that will delight our customers and keep attracting business.
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So formulating a strategy requires us to develop a complete picture of the business in operation, even before we implement our plan. The development of this vision of the business requires that we address a series of questions that will lead to a successful strategy.
Types of Strategies:
A strategy means a specific decision (S) usually but not always regarding the deployment of the resources to achieve the mission or goals of the organization The right strategy beats competition and ensures the attainment of goals while a wrong strategy fails to achieve the goals Correction and improvement in case of a wrong strategy is possible at a very hig h cost .such a situation is described as a strategic failure. If a strategy considers a single point of attack by a specific method .it is a mixed strategy. If a strategy acts on many fronts by different means then it is a mixed strategy the business strategy could be series of pure strategies handling several external forces simultaneously. Hence the strategy may fall in any area of the business and may deal with any aspects of the business It could be aspects like price market product technology process quality service finance management strength and so on when the management decides to fight the external forces of a single area by choice it becomes a pure strategy if it uses or operates in more than one area then it becomes a mixed strategy. The success of an organization in spite of its strength depends on the strategic moves or planning the management pursues. The strategy may be pure or mixed It can be classified into four broad classes: 1. Overall Company Strategy 2. Growth Strategy 3. Product Strategy 4. Marketing Strategy These strategies are applicable to all the types of businesses and industries.
1. Overall Company Strategy: This strategy a very long- term business perspective deals with the overall strength of the entire company and evolves those policies of the business which will dominate the course of the business movement it is the most productive strategy if chosen correctly and fatal if chosen wrongfully the other strategies act under the overall company strategy. To illustrate the overall company strategy following examples is given:
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1. A two wheeler manufacturing company will have a strategy of mass production and an aggressive marketing. 2. A computer manufacturer will have a strategy of adding new products every two or three years. 3. A consumer goods manufacturer will have a strategy of maximum reach to the consumer and exposure by way of a wide distribution network. 4. A company can have a strategy of remaining in the low price range and catering to the masses. 5. Another company can have a strategy of expanding very fast to capture the market. 6. A third company can have a strategy of creating a corporate brand image to build a brand loyalty e.g. Escorts ,Kirloskar , Godrej ,Tata , Bajaj, BHEL , MTNL. The overall company strategy is broad- based having a far reaching effect on the different facets of business and forming the basis for generating strategies in the other areas of business. 2. Growth strategy: There are two types of business growth: 1. Growth of existing business turn over year by year 2. Expansion and diversification of business The growth strategy must include the above two growths into account, so that the
organization attains the goals. Normally growth strategy concentrates mainly on the selection of product with a very fast growth potential. 3. Product strategy: Product strategy must contain plans for producing family of products from the existing product. For example a company producing coconut oil must have a strategy of entering into the business of coconut oils in sachets, small bottles and cans. 4. Market strategy: Market strategy deals with distribution, services, market research, pricing, advertising, packing and the choice of market.
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Strategic Planning
Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. Generally, strategic planning deals with at least one of three key questions: o o o "What do we do?" "For whom do we do it?" "How do we excel?"
In many organizations, this is viewed as a process for determining where an organization is goin g over the next year ormore typically3 to 5 years (long term), although some extend their vision to 20 years.
Key components:
The key components of 'strategic planning' include an understanding of the firm's vision, mission, values and strategies. (Often a "Vision Statement" and a "Mission Statement" may encapsulate the vision and mission). 1. Vision: outlines what the organization wants to be, or how it wants the world in which it operates to be (an "idealised" view of the world). It is a long-term view and concentrates on the future. It can be emotive[citation needed] and is a source of inspiration. For example, a charity working with the poor might have a vision statement which reads "A World without Poverty." 2. Mission: Defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its vision. For example, the charity above might have a mission statement as "providing jobs for the homeless and unemployed". 3. Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization's culture and priorities and provide a framework in which decisions are made. For example, "Knowledge and skills are the keys to success" or "give a man bread and feed him for a day, but teach him to farm and feed him for life". These example maxims may set the priorities of self-sufficiency over shelter. 4. Strategy: Strategy, narrowly defined, means "the art of the general" - a combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there. A strategy is sometimes called a roadmap - which is the path chosen to plow towards the end vision. The most important part of implementing the strategy is ensurin g the company is going in the right direction which is towards the end vision.
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Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement. Others begin with a vision and mission and use them to formulate goals and objectives. Many people mistake the vision statement for the mission statement, and sometimes one is simply used as a longer term version of the other. However they are meant[according to whom?] to be quite different, with the vision being a descrip tive picture of a desired future state, and the mission being a statement of a business rationale, applicable now as well as in the future. The mission is therefore the means of successfully achieving the vision. For an organisation's vision and mission to be effective, they must become assimilated into the organization's culture. They should also be assessed internally and externally. The internal assessment should focus on how members inside the organization interpret their mission statement. The external assessment which includes all of the businesses stakeholders is valuable since it offers a different perspective. These discrepancies between these two assessments can provide insight into their effectiveness. A vision statement is a declaration of where you are headedyour future state - to formulate a picture of what your organization's future makeup will be, and where the organization is headed.
Strategic planning process:

There are many approaches to strategic planning but typically one of the following approaches is used: 1. Situation-Target-Proposal Situation - evaluate the current situation and how it came about. Target - define goals and/or objectives (sometimes called ideal state) Path / Proposal - map a possible route to the goals/objectives
2. Draw-See-Think-Plan Draw - what is the ideal image or the desired end state? See - what is today's situation? What is the gap from ideal and why? Think - what specific actions must be taken to close the gap between today's situation and the ideal state? Plan - what resources are required to execute the activities?
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Situational analysis:
When developing strategies, analysis of the organization and its en vironment as it is at the moment and how it may develop in the future, is important. The analysis has to be executed at an internal level as well as an external level to identify all opportunities and threats of the external environment as well as the strengths and weaknesses of the organizations. There are several factors to assess in the external situation analysis: 1. Markets (customers) 2. Competition 3. Technology 4. Supplier markets 5. Labour markets 6. The economy 7. The regulatory environment It is rare to find all seven of these factors having critical importance. It is also uncommon to find that the first two - markets and competition - are not of critical importance. Analysis of the external environment normally focuses on the customer. Management should be visionary in formulating customer strategy, and should do so by thinking about market environment shifts, how these could impact customer sets, and whether those customer sets are the ones the company wishes to serve. Analysis of the competitive environment is also performed, many times based on the framework suggested by Michael Porter. With regard to market planning specifically, researchers have recommended a series of action steps or guidelines in accordance to which market planners should plan. Essentiality of Strategic Planning: There are some compelling reasons which force all the organizations to resort to strategic business planning. The following reasons make planning an essential management process to keep the business in a good shape and condition: 1. Market forces 2. Technological change 3. Complex diversity of business 4. Competition 5. Environment (Threats, Challenges, and Opportunities)
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Parameters used in Strategic Planning

o Planning, long-range or short-range, strategic or tactical, involves a series of decisions to be taken by the managers in the organization. So when we talk about the tools of planning, we are talking about the tools of decision-making with reference to planning. Decisions relate to several aspects of corporate business planning. There are number of alternatives, choices and options available while planning the business. Further, there is selection of resources and their allocation in an optimum manner to maximize the gains. Then there is selection of method whereby the efforts at all the levels are coordinated towards a common goal and direction. The planning, therefore, involves decision -making with the help of tools. These tools are based on one or more factors. These factors are: 1. Creativity 2. Systems approach 3. Sensitivity analysis 4. Modelling 1. Creativity o Creativity comes out of an experience, a judgment, an intuition of an individual or a group of individuals. When decision making is called for a situation which has no precedent then creativity is the only tool to resolve the problem of decision making. Cr eativity is the result of the conceptual skills of an individual. The conceptional skills comprise the following skills. 1. The ability to generate a number of ideas rapidly. 2. The ability to change quickly from one frame of reference to another. 3. Originality in interpreting an event and generating different views on the situation. 4. The ability to handle with clarity and ease a complex relationship of various factors in a given situation. o A person who possesses these skills in said to have a conceptual fluency. If an organization has a number of people, at least at key positions, with conceptual fluency, then it becomes a creative organization. o Such an organization creates new ideas and new strategies for development of business. The plans are made on the strength of experience and conceptual fluency. 2. Systems Approach: o Systems approach to planning considers all the factors and their inter -relationship relevant to the subject. It takes a course to an analytical study of the total system,
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generates alternative courses of action and helps to select the best in the given circumstances. o It is uses in situation of risk or uncertainty, and examines the various alternative courses of action. I help to find solutions to problems. o The systems approach helps to understand the situation with clarity. It helps to sort out the factors on the principles of critical and non-critical, significant and insignificant, relevant and irrelevant, and finally controllable and uncontrollable. o It tests the solutions for feasibility-technical, operational and economic. It further studies the problems of implementation of the solution.
Broadly, the systems approach has the following characteristic: 1. It uses all the areas and the branches of knowledge. 2. It follows a scientific analysis to identify the problem. 3. It uses a model of a complex situation to handle the problem. 4. It weighs cost against benefit for assessment of the alternatives. 5. It deals with the problems where time context is futuristic. 6. It considers the environment and its impact on the problem situation. 7. Every solution is tested on the grounds of rationality and feasibility, and accepts a given criterion for selection of the most preferred alternative. 8. It uses operations research models if the problem is well defined. Alternately, it uses a simulation approach to solve the problem. It uses tools such a Gantt chart, PERT/CPM, Network analysis for scheduling and coordinating the activities. o The systems approach is a way of looking at a problem in a systematic manner using the scientific methods and applying the principles of a rational decision making to solve the problem. 3. Sensitivity Analysis: o The sensitivity analysis helps to test the validity of the solution in variable conditions.The problem situation is handled with certain assumptions and conditions. o Based on these considerations, a rational solution is found. Sensitivity analysis requires to know whether the solution will still remain valid if the assumptions changed, constraints were relaxed and new condones emerged. It helps to assess the impact of change on the solution in economic terms. o If various factors are involved, the sensitivity analysis helps to assess the criticality of the factor against the impact it makes on the solution. Some factors will be highly sensitive and some will not be so. o Most of the decision making problems are resolved on the principle of optimality, where you are trying to balance the two aspects of the problems, such as, inventory carrying cost versus ordering cost, waiting time cost versus idle time cost, costs, verses benefits, opportunity loss versus investment cost and so on.
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The sensitivity analysis helps to test the validity of the optimal solution under changed conditions. Sensitivity analysis helps to test the solutions on the principle of utility. A solution which is economically rational and is based on sound business principles may be rejected on the principle of utility. The utility profiles of all the people in the organization are not the same. The utility profile, alternately known as a preference curve, shows the attitude and preference of the decision maker towards the gains and the losses against a time scale. The profile shows indirectly the risk-taking ability of the decision maker. It uses techniques such as the decision tree analysis, methods of discounting, payoff matrix, simulation, and the modeling.
4. Modelling o A model is a meaningful representation of a real situation on a mini scale, where only the significant factors of the situation are highlighted. The purpose of a model is to understand the complex situation based on only the significant factors. o There are several types of models. The model could be a physical model, like a model of a house, a park, a sports complex, etc. The model could be a scale model reducing a large body to a small one. The model could be mathematical model like break even analysis model, linear programming model, queuing model, network model, etc. o Here a situation is represented in a mathematical form such as equations, matrices graphs and polynomials. o A complex situation is represented using variables, constants and parameters which play a significant role in that situation. The model is based on the relations the variables have. The relation among the variables may be linear or non -linear. The model only considers the relation of high significance. o The model, when a situation is complex, tries to simplify the complexity by ignoring minor factors and emphasizing only minor important factors. o A model could be static or dynamic. The physical models are static models. Some business models like the break even analysis model, the statistical regression models and some of the OR Programming models are static models. The static model does not change over a time period. o All the planning models and all the forecasting models are dynamic models. In a dynamic model, in addition to the variables considered, time is a dimension of the variables. The values of these variables change with the change in time. Such variables are called the stochastic variables. o A model, physical or mathematical, static or dynamic, needs to be tested for its utility or effectiveness. The model can be tested by using the control results already obtained. This would show the difference between the result given by the model and the actual result in a real life situation.
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If the difference is not significant, then one can say that the model represents the real situation. Once the model is proved useful, it is used for testing the various solution alternatives. The selection of a solution, from many alternative solutions, depends on the objective chosen. In a linear programming model, a solution is selected on the principle of maximization of the profit or minimization of the cost. In the queuing model a solution is selected, when the cost of the waiting time of a customer is less than the cost of the idle time of facility. The selection of a solution is based on the attainment of certain value of some aspect of the business, such as the turnover, the cost and the profit and so on. The planning model considers those business variables which affect the business
prospects and which show a significant impact on the business results. The long -range strategic models are, generally, dynamic models and the short-range management and operations models are mostly static models.
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Can an Organisation have more than one strategy? Is it long range or short range?
Although organizations usually have just one vision and mission statement, they usually require more than one strategy to achieve it. Strategies are the steps implemented to achieve the goals and objectives that ultimately fulfill a mission. It is rare for an organization to successfully address its reason for being in one step. Multiple strategies are basically a given.
Strategies:
Strategies are the plans for how to advantageously approach achieving objectives. Unlike the objectives and mission statement, strategies consider internal and external factors that affect the organization, including budgeting restrictions, government laws and regulations and available resources. Strategies allocate the organizations funds, define the staffs tasks and schedule actions to ensure that deadlines are met.
Objectives:
Objectives are the goals that must be met to fulfill the companys mission. Objectives define the deadlines and quality assessments that must be met to successfully complete the objectives. Objectives often include budget information and restrictions but do not allocate how the funds will be used to directly support the objectives. Similar to strategies, an organization often requires more than one objective to attain the companys mission which also results in multiple strategies.
Mission Statement:
The mission statement defines the organizations reason for existence and introduces its ultimate goal. It is the organizations personalized statement. It is generally short in nature and is written without consideration of financial budgets and industry guidelines.
Considerations:
The mission statement provides the organizations big picture. The objectives define the goals that must be met to achieve the mission statement and the strategies define the actions needed to meet each objective. There is no minimum or maximum number of allowable or necessary strategies. It is quite common, however, for an organization to have multiple strategies. While strategies may be implemented one at a time, it is also common for organizations to implement multiple strategies simultaneously.
An Example:
The vast national and international presence of the Walmart Corporation makes it a good example. The Walmart corporate mission statement is We save people money so they can live better. Meeting the criteria, Walmarts mission statement is vast and provides no restriction s or references on resources or regulations. The organization defines various objectives to help meet the organizations mission of saving people money, including health and wellness initiatives, sustainability initiatives and supplier diversity, as well as lower prices in their retail locations. The actual steps relationships with Walmart implements to achieve its defined objectives include building local suppliers and distributors, donating to and working with local
communities, as well as establishing lower prices. These multiple steps are the strategies Walmart uses to meet its objectives and achieve its mission.
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How IT in todays time affect the Business Strategy?

Technology is a broad term that encompasses many tools and innovative processes that employees use to help a company achieve its goals. A company uses the strategic management process, or planning how to use resources for goal achievement, and specific types of technology to ensure the best use of resources in each operational area. Knowledge: If you look at technology as knowledge, employees are both producers of knowledge and keepers of knowledge. Their knowledge is an asset that managers seek to develop through the strategic management process, including identifying what the organization will do to develop employees through training and professional development. Strategic managers also decide how employee knowledge will be stored electronically in the company knowledge base, such as an information system. Product Innovations: Employees can also affect the attainment of strategic goals by suggesting product innovations. This occurs when employees apply their ideas to fix problems with products or make them better. Employees must receive the right amount of input in the product development process to be utilized effectively in a strategically managed company. For example, managers use nonmanagers as members of cross-functional product development teams in some organizations. Competitiveness in Fluctuating Markets: Technology also refers to information systems that businesses use to maintain their competitive advantage by responding to their business markets. If a company uses an order tracking system to manage customer orders, it must meet the needs of the company in a changing mar ket and in a stable market. Therefore, a strategic manager plans the ordering system to accommodate many more requests than the present level of production so that the system will still serve the company if it experiences massive growth. New Capabilities: A strategically managed organization sets goals for developing new technologies, or new capabilities, to introduce in a target economy, not just product innovations. This relates to expanding the organization's market position, another goal of strategic m anagement. A firm can create new markets when it introduces new technologies if it believes in front-end investment in technology development.
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With technology, organizations can easily scan the external business environment to collect data that could be used for making decisions on allocation resources in a way that is up to societal standards and makes maximum use of available resources. With technology, information is easily communicated, ideas shared and decisions are faster. With the use of the internet, organizations can also benchmark form other companies strategies that could be used to reach objectives. IT helps organization in: Plan for change - it is the only constant Try new ways to provide services as appropriate for the organization Consistently gather client requirements and adjust services accordingly Maximize use of all resources (people, space, money, technology, professional connections) Form alliances with other information-related and technology-based services within your organization Make sure you have cohesive intra- and interdepartmental "buy in" Keep abreast of the big picture of your organization. Along with technology, many organizations are undergoing major shifts and changes. The mission and goals of the organization two years ago may not be what is intended for the next few years. Be proactive in aligning proof of organizational successes with information services provided
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Decision Making
Chapter 4: Decision Making

Syllabus: o o o o o Decision Making Concepts Decision Methods, Tools and Procedures Behavioural concepts in Decision Making Organizational Decision Making MIS and Decision Making Concepts
Questions: o o o o o o o o o Decision Making and its Types Organisational Decision Making Structured vs. Unstructured Decisions Stages in Decision Making Process Rational Decision making, Problems in it, Can decision be right or wrong? Simons Decision Model Porters Competitive Model Is it possible to automate Decision Making? Justify. Methods for dealing with uncertainty and conflict resolution
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Decision Making
Decision Making and its Types

o Decision making is the developing concepts leading to the selection of a course of action among variations. Every decision making process produces a final choice.It can be an action or an opinion. It begins when we need to do something but we do not know what. Example: Decision to raise a Purchase Order. Before making improvements in corporate decision making with system investments, you must understand more about the nature of decisions and the decision -making process. There are different information requirements at different levels of responsibility in the organization that affect the types of decisions made at each level.
MIS and Decision making Concepts:

o It is necessary to understand the concepts of decision making as they are relevant to the design of the MIS. The Simon Model provides a conceptual design of the MIS and decision making, wherein the designer has to design the system in such a way that the problem is identified in precise terms. That means the data gathered for data analysis should be such that it provides diagnostics and also provides a path to bring the problem to surface. In the design phase of the model, the designer is to ensure that the system provides models for decision making. These models should provide for the generation of decision alternatives, test them and pave way for the selection of one of them. In a choice phase, the designer must help to select the criteria to select one alternative amongst the many. o The concept of programmed decision making is the finest tool available to the MIS d esigner, whereby he can transfer decision making from a decision maker to the MIS and still retain the responsibility and accountability with the decision maker or the manager. In case of non programmed decisions, the MIS should provide the decision suppor t systems to handle the variability in the decision making conditions. The decision support systems provide a generalized model of decision making. o The concept of decision making systems, such as the closed and the open systems helps the designer in providing design flexibility. The closed systems are deterministic and rule based; therefore, the design needs to have limited flexibility, while in an open system, the design should be flexible to cope up with the changes required from time to time. The method s of decision making can be used directly in the MIS provided the method to be applied has been decided. A number of decision making problems call for optimization, and OR models are available which can be made a part of the system. The optimization models are static and dynamic, and both can be used in the MIS. Some of the problems call for a competitive
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Decision Making
analysis, such as a payoff analysis. In these problems, the MIS can provide the analysis based on the gains, the regrets and the utility. o The concepts of the organizational and behavioural aspects of decision making provide an insight to the designer to handle the organizational culture and the constraints in the MIS. The concepts of the rationality of a business decision, the risk averseness of the managers and the tendency to avoid an uncertainty, makes the designer conscious about the human limitations, and prompts him to provide a support in the MIS to handle these limitations. The reliance on organizational learning makes the designer aware of the strength of the MIS and makes him provide the channels in the MIS to make the learning process more efficient. o The relevance of the decision making concepts is significant in the MIS design. The significance arises out of the complexity of decision making, the human factors in the decision making, the organizational and behaviour aspects, and the uncertain environments. The MIS design addressing these significant factors turns out to be the best design.
Types of Decisions
The characteristics of decisions faced by managers at different levels are quite different. Decisions can be classified as o o o Structured, Semistructured, and Unstructured.
Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and insights into the problem definition. Each of these decisions is novel, important, and nonroutine, and there is no well-understood or agreed-on procedure for making them. Structured decisions, by contrast, are repetitive and routine, and decision makers can follow a definite procedure for handling them to be efficient. Many decisions have elements of both and are considered Semi-structured decisions, in which only part of the problem has a clear-cut answer provided by an accepted procedure. In general, structured decisions are made more prevalently at lower organizational levels, whereas unstructured decision making is more common at higher levels of the firm. Senior executives tend to be exposed to many unstructured decision situations that are open ended and evaluative and that require insight based on many sources of information and personal experience. For example, a CEO in todays music industry might ask, Whom should
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we choose as a distribution partner for our online music catalog Apple, Microsoft, or Sony? Answering this question would require access to news, government reports, and industry views as well as high-level summaries of firm performance. However, the answer would also require senior managers to use their own best judgment and poll other managers for their opinions. Middle management and operational management tend to face more structured decision scenarios, but their decisions may include unstructured comp onents. A typical middle level management decision might be Why is the order fulfilment report showing a decline over the last six months at a distribution center in Minneapolis? This middle manager could obtain a report from the firms enterprise system or distribution management system on order activity and operational efficiency at the Minneapolis distribution center. This is the structured part of the decision. But before arriving at an answer, this middle manager will have to interview employees and gather more unstructured information from external sources about local economic conditions or sales trends. Rank-and-file employees tend to make more structured decisions. For example, a sales account representative often has to make decisions about exten ding credit to customers by consulting the firms customer database that contains credit information. In this case the decision is highly structured, it is a routine decision made thousands of times each day in most firms, and the answer has been pre-programmed into a corporate risk management or credit reporting system. The types of decisions faced by project teams cannot be classified neatly by organizational level. Teams are small groups of middle and operational managers and perhaps employees assigned specific tasks that may last a few months to a few years. Their tasks may involve unstructured or semi-structured decisions such as designing new products, devising new ways to enter the marketplace, or reorganizing sales territories and compensation systems.
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Organisational Decision Making

o An organization is an arrangement of individuals having different goals. Each individual enjoys different powers and rights because of his position, function and importance in the organization. o Since there is an imbalance in the power structure, the different individuals cannot equally influence the organizational behaviour, the management process and the setting of business goals. Ultimately, what emerges is a hierarchy of goals which may be conflicting, selfdefeating and inconsistent. o The corporate goals and the goals of the departments/divisions or the functional goals, may a time, are in conflict. If the organization is a system, and its departments /divisions or functions are its subsystems, then unless the systems objective and the subsystems objectives are aligned and consistent to each other, the corporate goals are not achieved. Managers can be trained to make better decisions. They also need a supportive environment where they wont be unfairly criticised for making wrong decisions (as we all do sometimes) and will receive proper support from their colleague and superiors. A climate of criticism and fear stifles risk-taking and creativity; managers will respond by playing it safe to minimise the risk of criticism which diminishes the business effectiveness in responding to market changes. It may also mean managers spend too much time trying to pass the blame around rather than getting on with running the business. o Decision-making increasingly happens at all levels of a business. The Board of Directors may make the grand strategic decisions about investment and direction of future growth, and managers may make the more tactical decisions about how their own department may contribute most effectively to the overall business objectives. But quite ordinary employees are increasingly expected to make decisions about the conduct of their own tasks, responses to customers and improvements to business practice. This needs careful recruitment and selection, good training, and enlightened management.
Levels of Decision-Making
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MIS (MCA SEM-3) Decision-Making Levels:
Decision Making
There are different levels in an organization. Each of these levels has different information requirements for decision support and different constituencies or group s that information systems need to serve (see Figure below). The four different decision -making constituencies in a firm are the following:
Decision making Levels Various levels of management in the firm have differing information requirements for decision support because of their different job responsibilities and the nature of the decisions made at each level. o Senior management: Senior management is concerned with general yet timely information on changes in the industry and society at large that may affect both the long-term and near-term future of the firm, the firms strategic goals, short-term and future performance, specific bottlenecks and trouble affecting operational capabilities, and the overall ability of the firm to achieve its objectives. o Middle management and project teams: Middle management is concerned with specific, timely information about firm performance, including revenue and cost reduction targets,
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and with developing plans and budgets to meet strategic goals established by senior management. This group needs to make important decisions about allocating resources, developing short-range plans, and monitoring the performance of departments, task forces, teams, and special project groups. Often the work of middle managers is accomplished in teams or small groups of managers working on a task. o Operational management and project teams: Operational management monitors the performance of each subunit of the firm and manages individual employees. Operational managers are in charge of specific projects and allocate resources within the project budget, establish schedules, and make personnel decisions. Operational work may also be accomplished through teams. o Individual employees: Employees try to fulfill the objectives of managers above them, following established rules and procedures for their routine activities. Increasingly, much broader responsibilities and decision -making however, employees are granted
authority based on their own best judgment and information in corporate systems. Employees may be making decisions about specific vendors, customers, and other employees. Because employees interact directly with the public, how well they make their decisions can directly impact the firms revenue streams.
Types of Business Decisions:

1. Programmed Decisions: These are standard decisions which always follow the same routine. As such, they can be written down into a series of fixed steps which anyone can follow. They could even be written as computer program 2. Non-Programmed Decisions: These are non-standard and non-routine. Each decision is not quite the same as any previous decision.
3. Strategic Decisions: These affect the long-term direction of the business eg whether to take over Company A or Company B 4. Tactical Decisions: These are medium-term decisions about how to implement strategy eg what kind of marketing to have, or how many extra staff to recruit 5. Operational Decisions: These are short-term decisions (also called administrative decisions) about how to implement the tactics eg which firm to use to make deliveries.
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Stages in Decision Making Process

The General Approach in Decision Making
General Decision Making Process 1. Defining and Analysing the real problem: The manager should first find out what is the real problem. The problem may be due to bad relations between management and employees, decrease in sales, increase in cost, etc. After finding out the true problem manager must analyse it carefully. He should find out the cause and effect of the problem. 2. Developing Alternative Solutions: After defining and analysing the real problem, the manager should develop (make) alternative (different) solutions for solving the problem. Only realistic solutions should be considered. Group participation and computers should be used for developing alternative solutions.
3. Evaluating the Alternative Solutions: The manager should carefully evaluate the merits and demerits of each alternative solution. He should compare the cost of each solution. He should compare the risks involved. He should also compare the feasibility of each solution. He should find out which solution will be accepted by the employees. 4. Selecting the best Solution: After evaluating all the solutions, the manager should select the best solution. He should select a solution which is less costly and less risky. He should select a
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solution which is most feasible and which is accepted by the employees. In short, the manager should select a solution which has the most merits and least demerits. The best solution is called the "Decision". 5. Implementing the Decision: After making the decision, the manager should implement it. That is, he should put the decision into action. He should communicate the decision to the employees. He should persuade the employees to accept the decision. This can be done by involving them in the decision making process. Then the manager should provide the employees with all the resources, which are required for implementing the decision. He should also motivate them to implement the decision. 6. Follow Up: After implementing the decision, the manager must do follow up. That is, he must get the feedback about the decision. He should find out whether the decision was effective or not. This is done by comparing the decision with the action, finding out the deviations (differences) and taking essential steps to remove these deviations. So, follow-up is just like the control function. It helps to improve the quality of future decisions.
The Organizational Approach in Decision Making

Making decisions consists of several different activities. Simon (1960) describes four different stages in decision making: 1. Intelligence 2. Design 3. Choice and 4. Implementation The decision-making process can be described in four steps that follow one another in a logical order. In reality, decision makers frequently circle back to reconsider the previous stages and through a process of iteration eventually arrive at a solution that is workable. 1. Intelligence consists of discovering, identifying, and understanding the problems occurring in the organizationwhy is there a problem, where, and what effects is it having on the firm. Traditional MIS that deliver a wide variety of detailed information can help identify problems, especially if the systems report exceptions. 2. Design involves identifying and exploring various solutions to the problem. Decisionsupport systems (DSS) are ideal in this stage for exploring alternatives because they possess analytical tools for modelling data, enabling users to explore various options quickly.
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Stages in decision making 3. Choice consists of choosing among solution alternatives. Here, DSS with access extensive firm data can help managers choose the optimal solution. Also group decisionsupport systems can be used to bring groups of managers together in an electronic online environment to discuss different solutions and make a choice. 4. Implementation involves making the chosen alternative work and continuing to monitor how well the solution is working. Here, traditional MIS come back into play by providing managers with routine reports on the progress of a specific solution. Support systems can range from full-blown MIS to much smaller systems, as well as projectplanning software operating on personal computers. In the real world, the stages of decision making described here do not necessarily follow a linear path. You can be in the process of implementing a decision, only to discover that your solution is
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not working. In such cases, you will be forced to repeat the design, choice, or perhaps even the intelligence stage. For instance, in the face of declining sales, a sales management team may strongly support a new sales incentive system to spur the sales force on to greater effort. If paying the sales force a higher commission for making more sales does not produce sales increases, managers would need to investigate whether the problem stems from poor product design, inadequate customer support, or a host of other causes, none of which would be solved by a new incentive system.
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Structured vs. Unstructured Decisions

Structured Decisions: o Structured means having processes in place to handle a situation. The implication is that structured place. problems are recurring ones. Because they recur, we put processes and While procedures in place to handle them. The hiring process is a good example. The process is in What you have to do to bring in an additional resource is well defined.
justifying the additional head count may require some work and persuasion, the process to follow is defined. Note that structure creates a box within which we begin to think. The box allows us to
quickly and confidently make decisions and implement them. Knowing that the process youve used is a well-known and approved process creates a bit of justification for the decision. o In order to present an example of this, lets look at an emergency room where patien ts have potential heart problems. In these cases, the cost of a wrong diagnosis, either type one or type two, is very large. Running diagnostic tests and keeping a patient in a room until the tests have definitively answered the question is a very expensive process. And, letting a patient go home that really does have a heart problem is potentially deadly. By evaluating large numbers of patients across large quantities of data, we can find the key variables that will reduce our chance for error. The key variables can be checked very quickly and a decision made in confidence. We may not be able to spend a lot of time in evaluating a timesensitive, critical situation, but we can spend time in preparing for that situation, creating structure and confidence for a defensible solution. o Matching up structured with time, we want to look at handling repetitive tasks. As we watch how an Emergency Medical Technician (EMT) responds to a situation, they immediately begin checking specific things; heartbeat, breathing, blood pressure, etc. They know that specific items trump other issues. The training around checking vitals helps the EMT make decisions about how to treat the patient. o Weve discussed creating structure around critical events, but it is just as important to create structure around repetitive situations so that we do not spend a lot of time on very minor decisions. As an example a fast-food manager may create a rule around giving free fries or a drink to a customer if their order was slow in arriving.
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MIS (MCA SEM-3) Unstructured Decisions: o
Decision Making
Unstructured means decision processes that have not been encountered in quite the same form and for which no predetermined and explicit set of ordered responses exists in the organization. This means that the company does not have a process in place to handle this. If a process is not in place to help the decision-maker through making a decision, she is more susceptible to censure post-decision. She is less confident in knowing she has considered all of the options and variables. She is hesitant to start the process because of her lack of She would enter into the confidence and fear of repercussions of making a bad decision. steps as she learns. There are a number of mitigating tactics to help with unstructured decisions. Rarely is a situation completely unique. A more robust decision-making process may be required, but can the company assist with guidelines to help the process? As an example, one company has a number of rules of thumb that are not necessarily universally true, but are preferences built over time. One of these rules is buy verses make. In the absence of an obvious, right choice, this eases the decision-making process by reducing the variables to be considered.
decision-making process knowing that she was going to learn as she went and have to repeat
A decision-makers experience may assist in limiting the solution set or the selection variables. But, she does not have to content herself with personal experience. As an example, in choosing an overseas flight, she may want to consult with a frequent international traveller.
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Is it possible to automate Decision Making?

Systems for Decision Support OR Automation of Decision Making): There are four kinds of systems used to support the different levels and types of decisions just described (see Table below). 1. Management information systems (MIS) provide routine reports and summaries of
transaction- level data to middle and operational-level managers to provide answers to structured and semi-structured decision problems. 2. Decision-support systems (DSS) are targeted systems that combine analytical models with operational data and supportive interactive queries and analysis for middle managers who face semi-structured decision situations. 3. Executive support systems (ESS) are specialized systems that provide senior management making primarily unstructured decisions with a broad array of both external information (news, stock analyses, industry trends) and high -level summaries of firm performance. 4. Group decision-support systems (GDSS) are specialized systems that provide a group electronic environment in which managers and teams can collectively make decisions and design solutions for unstructured and semi-structured problems.
Organizational Level and Systems for Decision Support
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Rational Decision making

Rational decision making brings a structured or reasonable thought process to the act of deciding. The choice to decide rationally makes it possible to support the decision maker by making the knowledge involved with the choice open and specific. This can be very important when making high value decisions that can benefit from the help of tools, processes, or the knowledge of experts.
Characteristics of rational decision making:

o o Decision making will follow a process or orderly path from problem to solution. There is a single best or optimal outcome. Rational decisions seek to optimize or maximize utility. o The chosen solution will be in agreement with the preferences and beliefs of the decision maker. o The rational choice will satisfy conditions of logical consistency and deductive completeness. o o o o Decision making will be objective, unbiased and based on facts. Information is gathered for analysis during the decision making process. Future consequences are considered for each decision alternative. Structured questions are used to promote a broad and deep analysis of the situation or problem requiring a solution. o Risk and uncertainty are addressed with mathematically sound approaches.
In the ideal case, all rational decision makers would come to the same conclusion when presented with the same set of sufficient information for the decision being made. This would suggest that collaborative decision making will often employ a rational decision making process.
More on decision making models:

o As with any ideal, additional models have been developed to address the problems with realizing the full rational model. The Bounded Rationality model acknowledges our cognitive and environmental limits and suggests that we act rationally within these constraints. Many decision making theories are a result of looking at the consequences of bounded rationality. o Rational ignorance takes a similar approach to looking at the cost of gathering in formation. In this model, it is suggested that if the cost to acquire information exceeds the benefits that can be derived from the information, it is rational to remain ignorant. This aligns with our concept of using decision value to limit the decision effort, ensuring an appropriate return from using a rational decision making process.
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The benefits of Rational Decision Making:

Within the limitations described above, choosing rationally can provide a number of benefits that include: o o o o o o Addressing complex decisions by breaking them down Characterizing decision problems and goals to ensure addressing all needs and desires Being aided by structured techniques, mathematics, and computers Ongoing improvement when codified in a process, procedure, or program A long list of decision making techniques and tools with proven usefulness A growing capability to analyze and access the information that can improve guidance based on the facts
Problems and limitations of Rational Decision Making:

Most of the issues and limitations associated with rational choice result from falling short of the ideal proscribed in the full rational decision making model. Here are three areas that generate much of the concern.
Limits of human capabilities - The limits on our human ability to gather, process, and understand all the information needed to optimize a decision outcome make it impractical to meet the ideal except in very constrained or simple situations. We have limits in our ability to formulate as well as solve very complex problems. Our desire to optimize is also limited, and we will usually "sacrifice", or be content with acceptable solutions when confronted with obstacles. Limits on information and knowledge - The model assumes we should or can gather sufficient information in terms of quantity, quality, accuracy, and integrity. It also assumes that we have access to the required knowledge of the cause and effect relationships that are important to the evaluation of alternative solutions, particularly with respect to projecting future consequences. Limits in time - Search for the optimum solution will generate a delay that could negatively impact the benefits of the chosen alternative. In essence, if the decision alternatives are not properly discounted for changes due to decision timing, the chosen alternative may not be optimum
While unable to meet the requirements of the full rational decision making model, this ideal serves as a valuable approximation that supports predictions and decision making with increasingly broad application. Rational approaches continue to provide the standard for effective decision making when considered in light of current limitations. Coping with complexity and information overload will place greater demand on enh ancing capabilities that support rational choice.
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Simons Decision Model

Decision-making, in organizations, is regarded as a rational process. Herbert A.Simon has given a model to describe the decisionmaking process. The model comprises of 3 major phases, namely, 1. Intelligence 2. Design, and 3. Choice
Simons Model of Rational Decision-Making 1. Intelligence Phase:In this phase, the decision maker scans the environment & identifies the problem or opportunity. The scanning of environment may be continuous or non -continuous. Intelligence phase of decision-making process involves: Problem Searching Problem Formulation Problem Searching: For searching the problem, the reality or actual is compared to some standards. Differences are measured & the differences are evaluated to determine whether there is any problem or not. Problem Formulation: When the problem is identified, there is always a risk of solving the wrong problem. In problem formulation, establishing relations with some problem solved earlier or an analogy proves quite useful. 2. Design Phase:In this phase, the decision maker identifies alternative courses of action to solve the problem. Inventing or developing of various alternatives is time consuming and crucial activity, as the decision maker has to explore all the possible alternatives. 3. Choice Phase:At this stage, one of the alternatives developed in design phase is selected & is called a decision. For selecting an alternative, detailed analysis of each and every alternative is made. Having made the decision, it is implemented. The decision maker in choice phase may reject all the alternatives and return to the design ph ase for developing more alternatives.
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Porters Competitive Model

Five Forces model of Michael Porter is a very elaborate concept for evaluating company's competitive position. Michael Porter provided a framework that models an industry and therefore implicitly also businesses as being influenced by five forces. Michael Porter's Five Forces model is often used in strategic planning.
Need of Porters Competitive Forces Model:

o In general, any CEO or a strategic business manager is trying to steer his or her business in a direction where the business will develop an edge over rival firms. Michael Porter's model of Five Forces can be used to better understand the industry context in which the firm operates. Porter's Five Forces model is a strategy tool that is used to analyze attractiveness of an industry structure. Porter's Five Forces model provides suggested points under each main heading, by which you can develop a broad and sophisticated analysis of competitive position. This can be then used when creating strategy, plans, or making investment decisions about your business or organization. Porter's competitive five forces model is probably one of the most commonly used business strategy tools and has proven its usefulness in numerous situations. Porters Five Forces model is made up by identification of 5 fundamental competitive forces: 1. Barriers to entry 2. Threat of substitutes 3. Bargaining power of buyers 4. Bargaining power of suppliers 5. Rivalry among the existing players Some later economists also consider government as the sixth force in this model. When putting all these points together in a graphical representation, we get Porter's Five Forces model which looks like this:
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Porters competitive forces model Force 1: Barriers to entry Barriers to entry measure how easy or difficult it is for new entrants to enter into the industry. This can involve for example: o o o o o o o Cost advantages (economies of scale, economies of scope) Access to production inputs and financing, Government policies and taxation Production cycle and learning curve Capital requirements Access to distribution channels Patents, branding, and image also fall into this category.
Force 2: Threat of substitutes Every top decision makes has to ask: How easy can our product or service be substituted? The following needs to be analyzed: o o o o How much does it cost the customer to switch to competing products or services? How likely are customers to switch? What is the price-performance trade-off of substitutes? If a product can be easily substituted, then it is a threat to the company because it can compete with price only.
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Force 3: Bargaining power of buyers Now the question is how strong the position of buyers is. For example, can your customers work together to order large volumes to squeeze your profit m argins? The following is a list of other examples: o o o o o o o o o Buyer volume and concentration What information buyers have Can buyers corner you in negotiations about price How loyal are customers to your brand Price sensitivity Threat of backward integration How well differentiated your product is Availability of substitutes Having a customer that has the leverage to dictate your prices is not a good position.
Force 4: Bargaining power of suppliers This relates to what your suppliers can do in relationship with you. o o o o o o o o o How strong is the position of sellers? Are there many or only few potential suppliers? Is there a monopoly? Do you take inputs from a single supplier or from a group? (concentration) How much do you take from each of your suppliers? Can you easily switch from one supplier to another one? (switching costs) If you switch to another supplier, will it affect the cost and differentiation of your product? Are there other suppliers with the same inputs available? (substitute inputs) The threat of forward integration is also an important factor here.
Force 5: Rivalry among the existing players Finally, we have to analyze the level of competition between existing players in the industry. o o o o o o o o o Is one player very dominant or all equal in strength/size? Are there exit barriers? How fast does the industry grow? Does the industry operate at surplus or shortage? How is the industry concentrated? How do customers identify themselves with your brand? Is the product differentiated? How well are rivals diversified? Rivalry is the fifth factor in the Five Forces model but probably the one with the most attention.
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Methods for dealing with uncertainty and conflict resolution

Dealing with Uncertainty:
o The organizations perform in an environment of uncertainty. The market uncertainly, the price fluctuations, the changers in the Government policy, not knowing the moves of the competitors, the technology changes are some of the factors which make the business environment uncertain. o Organizational behaviour will, therefore, be towards minimizing the risk in decision making. The trend will be for risk avoidance with the available information support. o The organization will vote for a decision which has 90 per cent chance of earning Rs 1 million as against a decision which has 10 per cent chance of earning Rs 10 million. The organizational behaviour in decision making tends to avoid risk and minimize cost.
Dealing with Conflict Resolution:
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Chapter 5: Information
Syllabus: o o o o o o o o o Information Concepts Information: A quality Product Classification of Information Methods of Data and Information Collection Value of Information General Model of a Human as an Information Processor Summary of Information Concepts and their implications Organisation and Information MIS and Information Concepts
Questions: o o o o o o o o o Information and data concept Value of Information Types of Information Quality of Information Parameters to measure the Quality of Information Management of Quality in MIS How information helps to improve knowledge and decision making capability? Perfect Information and is it worth to invest for perfect information? What is Exception? Types of reports generated in MIS that help managers to handle the Exception
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Information & Data Concept

Data that has been verified to be accurate and timely, is specific and organized for a purpose, is presented within a context that gives it meaning and relevance, and that can lead to an increase in understanding and decrease in uncertainty. The value of information lies solely in its ability to affect a behaviour, decision, or outcome. A piece of information is considered valueless if, after receiving it, things remain unchanged.
Information Concept:
The word information is used commonly in our day to day working. In MIS, information has a precise meaning and it is different from data. The information has a value in decision making while data does not have. Information brings clarity and creates an intelligent human response in the mind. In MIS a clear distinction is made between data and information. Data is like raw materials while the information is equivalent to the finished goods produ ced after processing the raw material. Information has certain characteristics. Improves representation of an entity Updates the level of knowledge. Has a surprise value. Reduces uncertainty. Aids in decision making.
o o o o o
The quality of information could be called good or bad depending on the mix of these characteristics. Information Presentation: Presentation of the information is an art. The data may be collected in the best possible manner and processed analytically, bringing lot of value in the information; however, if it not presented properly, it may fail to communicate anything of value to the receiver. The degree of communication is affected by the methods of transmission, the manner of information handling and the limitation and constraints of a receiver as the information user. The methods used for improving communication are summarization and message routing. The concept of summarization is user to provide information which is needed in the form and content. The information can be summarized in a number of ways as shown in Table below. The principle behind summarization is that too much information causes noises and distortions, i.e., confusion, misunderstanding and missing and purpose. The summarization suppres ses the noise and the distortions.
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MIS (MCA SEM-3) Key for summarization Management position Focus of information Responsibility Example General Materials Management functions Performance, Goals, Production Operations Top,
Information
Manager,
Divisional Head Marketing,
Middle
Levels in the organization
Targets Relevance to the level
Selective on condition
Exceptions
Only budget
those
products, below the
where sale is
Table: Information Summarization Another method of improving the degree of communication is through message routing. The principle here is to distribute information to all those who are accountable for the subsequent actions or decisions in any manner. That is if the information is generate with a certain purpose for a primary user, the information may have secondary purposes to some other users in the organization. This is achieved by sending the copies of the reports or documents to all the concerned people or users. The principle of the message routing achieves the spread of information to the appropriate quarters. Knowledge is a power and an intelligent person in the organization can misuse this power to achieve personal goals undermining the functional and organizational goals. This tendency should be curbed. Further, the decision maker may call for the information on the grounds that, just in case required, he should readily have it. Apart from the misuse of information, it has an impact on the cost of information processing.
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Types of Information
The following are the different classifications of information: 1. Action and No action Information 2. Recurring and Non-Recurring Information 3. Internal and External Information 4. Planning Information 5. Control Information 6. Knowledge 1. Action and No-action Information Action Information are information which simulates an action. Example: No stock information calls a purchase action. No action Information are information which communicates the status of the information. Example: Stock balance
2. Recurring and Non-Recurring Information Recurring Information are information generated at regular intervals. Example: Monthly sales report, Stock statements etc. Non Recurring Information are information regarding the financial analysis or report on the market analysis study. Example: 3. Internal and External Information Internal Information are information generated within the organization. Example: Daily absentee report External Information are information generated through government reports, industry survey s etc. Example: 4. Planning Information: Planning Information are information needed to plan any activity connected with the organization. Example: Fixing the time standard, operational standard etc., 5. Control Information: Control Information are information in the form of feedback to control an activity. Example:
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6. Knowledge: Knowledge is defined as a collection of information. Knowledge is not connected directly with the decision making. But it is considered as strength of any organization. Knowledge is very much useful during urgent situation and to attack the unsolved problems. Example: Knowledge about the day to day operations of an organization is got by collecting and storing the internal information from the various departments of the organization.
Quality of information
An information is said to be a quality of information, when it is directly applicable to take a decision without analyzing it. Quality information must contain the following factors. 1. Utility 2. Satisfaction 3. Error 4. Bias
1. Utility: If the information needed by the manager is given to his satisfaction, then that information is having a high degree of utility. If the needed information reaches the manager in the correct form, in vorrect time and if it is easily accessible through on line then the utility is maximized. 2. Satisfaction: All organization consists of employees in different departments in different levels. The information given should satisfy each and every employee in the departments. 3. Error: Information given to the employees must be free from errors. If the information contains errors the whole system will collapse. The common errors are: 4. Bias: Presented information must be free from any external or internal pressure. Incorrect data measurement Incorrect collection method Failure in following the correct data processing procedure Loss of data or incomplete data collection Poor data validation and quality control Deliberately giving wring data
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Parameters used to measure Quality of Information

Quality of information refers to its fitness for use or its reliability. Some of the attributes of information which influence the quality of information are as follows: 1. Timeliness: stage. The Timeliness means of that information timeliness, to must reach the recipients within the
prescribed time frame. Timely information can ensure correct executive action at an early characteristic be effective, should also include current information. 2. Accuracy: Accuracy is another key-attribute of management information. It means that information is free from mistakes and errors, is clear and accurately reflects the meaning of data on which it is based. It conveys an accurate picture to the recipient, who may require a presentation in graphical form rather than tabular form. 3. Relevance: Relevance is yet another key attribute of management information. Information is said to be relevant if it answers specifically for the recipient what, why, where, who and why? In other words, the MIS should serve reports to managers, which are useful, an d the information helps them make decisions.
4. Adequacy: Adequacy means information must be sufficient in quantity. MIS must provide reports containing information, which is required in deciding processes of decision -making. 5. Completeness: The information, which is provided to a manager, must be complete and should meet all his needs. Incomplete information may result in wrong decisions and thus may prove costly to the organization. 6. Explicitness: A report is said to be of good quality if it does not require further analysis by the recipient for decision-making. Thus the reports should be such that a manager does not waste any time on the processing of the report, rather he should be able to extract the required information directly. 7. Exception based: Top managers need only exception reports regarding the performance of the organization. Exception reporting principle states that only those items of information, which will be of particular interest to a manager, are reported. This approach results in saving precious time of the top management and enables the managers to devote more time in pursuit of alternatives for the growth of the organization.
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Parameters of Quality
The parameters of a good quality are difficult to determine, however, the information can be termed as of a good quality if it meets the norms of impartiality, validity, reliability, consistency and age. 1. Impartiality: Impartial information contains no bias and has been collected without any distorted view of the situation. The partiality creeps in, if the data is collected with a preconceived view, a prejudice, and a pre-determined objective or a certain motive. 2. Validity: The validity of the information relates to the purpose of the information. In other words, it is the answer to the question does the information meet the purpose of decision making for which it is being collected? The validity also depends on how the information is used. Since the information and the purpose need not have one to one correspondence, the tendency to use it in a particular situation may make the information invalid. 3. Reliability: It is connected to the representation and the accuracy of what is being described. For example, if the organization collects the information on the product acceptance in the selected market segment, the size of the sample and the method of selection of the sample will decide the reliability. 4. Consistency: The information is termed as inconsistent if it is derived from a data which does not have a consistent pattern of period. Somewhere, the information must relate to a consistent base or a patter. For example, you have collected the information on the quantity of production for the last twelve months to fix the production norms. If in this twelve months period, the factory has worked with variable shift production, the production statistics of the twelve months for comparison is inconsistent due to the variable shift production. The consistency can be brought in by rationalizing the date to per shift production per month. The regularity in providing the information also helps in assessing the consistency in the information. 5. Age: If the information is old, it is not useful today. The currency of the information makes all the difference to the users. If the information is old it does not meet any characteristics of the information viz., the update of knowledge, the element of surprise and the reduction of uncertainty, and the representation.
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Value of Information
The decision theory suggests the methods of solvin g the problems of decision making under certainty, risk and uncertainty. A decision making situation is of certainty when the decision maker has full knowledge about the alternatives and its outcomes. This is possible when perfect information is available. Therefore, the information has a perceived value in terms of decision making. The decision maker feels more secured when additional information is received in case of decision making under an uncertainty or a risk. The information is called perfect infor mation, if it wipes out uncertainty or risk completely. However, perfect information is a myth.
Method Observation
Experiment
Survey
Subjective Estimation
Example The first-hand knowledge avoids a response bias. An accuracy of observation will decide the response. It is dependent on the observer and is influenced by the bias. The information on a specific parameter can be obtained through a control over variables. The quality of information depends on the design of the experiments. One time. Enables to cover the interested population on specific aspects. The quality of questionnaire will decide the quality of information. In the absence of all the three above, the expert options may be called to collect the information. The data exists but needs a processing and integration for reporting. Easily available at a price. May be expensive and many have a bias depending on the source. Low cost but may project or emphasize one view or the other. Information may be lopsided. Available but may not be directly useful not knowing the details of collection analysis is usually not the latest.
Comment Visit to the customer for assessing the customer complaints. A visit to assess the accidental damage.
Assembly the yield of a new fertilizer by a design of the control experiment. Assessing the market response to a new packaging through test marketing. Market survey, opinion polls, and census.
Data pertaining to future like the alternate sources of energy, the life style in the 21st century. Ledgers, payroll, stock statements, sales report. Databases on the specific subject, research studies. Market and technology studies. The government publications, the industry publications, the institutional publications such as NCAER, NCL, BANKS, UNO the various public forums. The Reverse Bank of India publications. The Tax publications, the reports and findings.
Transaction Processing Purchased from outside Publications
Government agencies
Table: The Methods of Data and Information Collection
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Information
The decision theory stipulates that the value of the additional information is the value of the change in the decision behaviour, resulted by the information, less the cost of obtaining the information. If the additional information does not cause any change in the decision behaviour The value of the additional information then the value of the additional information is zero. making the existing information perfect (VPI) is: VP1 = (V2 - V1) - (C2 C1) Where V is the value of the information and C is the cost of obtaining the information. V1 and C1 relate to one set of information and V2, C2 relate to the new set. If the VP1 is very high, then it is beneficial to serve the additional information need. A manager is faced with the problem of decision making under uncertainty or risk conditions, if he does not know the perfect information about the decision situation. Further, his ability to generate decision alternatives owing to the imperfect information of the situation, and also the expected events in the future is limited. In other words, given a set of possible decisions, a If the new information decision maker will select one on the basis of the available information.
cause a change in the decision, then the value of the new information is the difference in the value between the outcome of the old decision and that of new decision, less the loss of obtaining the new information. In MIS, the concept of the value of information is used to find out benefit of perfect information and if the value is significantly high, the system should provide it. If the value is in signification, it would not be worth collecting the additional information. The decisions at the operational and the middle management level are such that the value of additional or new in formation is low, while at the higher levels of the management, the decision being mainly strategic and tactical in nature, the value of additional information is very high.
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Information
Management of Quality in MIS

Information is a corporate resource, as important as the capital, labour, know-how, etc. and is being used for decision making. Its quality, therefore, is required to be very high. Low quality information would adversely affect the organizational performance as it affects decision making. The quality of information is the result of the quality of the input data, processing design, system design, system procedure which generate such a data, and the management of the data processing function. Quality, unlike any other product, is not an absolute concept. Its level is determined with reference to the context and its use, and the user. Perfect quality just as perfect information is non-achievable and has cost benefit implications.
However, it is possible to measure the quality of information on certain p arameters.
All these
parameters need not have a very high value in terms of the unit of measure. Some parameters may have lesser importance in the total value on account of their relevance in the information and its use. The quality of the parameters is assured if the following steps are taken: o o o o o All the input is processed and controlled. All updating and corrections are completed before the data processing begins. Inputs (transactions, documents, fields and records) are subjected to validity checks. The access to the data files is protected and secured through an authorization scheme. Intermediate processing checks are introduced to ensure that the complete data is processed right through, I.e., run to run controls. o o o Due attention is given to the proper file selection in terms of data, periods and so on. Back-up of the data and files are taken to safeguard corruption or loss of data. The system audit is conducted from time to time to ensure that the computer system specification is not violated. o The system modifications are approved by following a set procedure which begins with authorization of a change to its implementation followed by an audit. o o Systems are developed with a standard specification of design and development. Computer system processing is controlled through programme control, process control and access control. Proper people organization is basic to the management of any activity or function. The same thing is true for the development of the MIS. The principle of the organization and struct uring the organization to the specific needs of the function is a prime necessity. When we talk with reference to the MIS a number of issues come up and they are not the same in all the organizations. to the other. Hence, the organization structure of the MIS would differ from one organization
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Information
The type, the size and the structure of corporate organization becomes the basis for the MIS organization for handling the MIS function and management alternatives. The major issues involved are: Whether the function should be handled as a centralized or decentralized activity. The allocation of the hardware and software resources. The maintenance of the service level at an appropriate level. Fitting the organization of the MIS in the corporate organization, its culture and the management philosophy. The question of centralization versus decentralization is resolved by assessing the status of information resource in the organization, i.e., whether the status is the information system management or the information resource management. In a centralized set, the responsibility of acquisition of the data, of providing the information to the users, becomes the centralized function. The centralized organization is also recommenced when the information needs are more or less static.
o o o o
Depending upon the situation, hardware and software solutions are available. In a decentralized set-up the allocation the hardware is a centralized decision but the collection of data and its processing becomes the user's responsibility. Training, problem solving and system development, however, is a centralized function. In all such situations, the information
processing is based on the database management system. Therefore, the management of the database becomes the centralized responsibility and its use becomes the responsibility of users. The MIS functions in any organization would vary on account of the issues mentioned earlier and too that extent the variations of these two models would be the organization of the MIS.
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Information
Perfect Information
Perfect information in Game theory: In game theory, perfect information describes the situation when a player has available the same information to determine all of the possible games (all combinations of legal moves) as would be available at the end of the game.
In game theory, a game is described as a game of perfect information if perfect information is available for all moves. Chess is an example of a game with perfect information as each player can see all of the pieces on the board at all times. Other examples of perfect games include tic tac toe, irensei, and go. Games with perfect information represent a small subset of games. Card games where each player's cards are hidden from other players are examples of games of imperfect information. Perfect information in Microeconomics: In microeconomics, a state of perfect information is assumed in some models of perfect competition. That is, assuming that all agents are rational and have perfect information, they will choose the best products, and the market will reward those who make the best products with higher sales. Perfect information would practically mean that all consumers know all things, about all products, at all times (including knowing the probabilistic outcome of all future events), and therefore always make the best decision regarding purchase. This is physically impossible, however, as the Bekenstein Bound provides a physical limit to the amount of information that can be stored in a given physical system (in this case, a market participant). Still, perfect information is a common assumption in economic models because it allows mathematical derivation of desirable results. The pervasive effects of information asymmetry in markets have been documented and studied in numerous contexts. In his 2001 Nobel Prize lecture, economist Joseph E. Stiglitz spoke to the faults of standard economic models and the faulty policy implications and recommendations that arise from their unrealistic assumptions, writing: "I only varied one assumption the assumption concerning perfect information and in ways which seemed highly plausible. ... We succeeded in showing not only that the standard theory was not robust changing only one assumption in ways which were totally plausible had drastic consequences, but also that an alternative robust paradigm with great explanatory power could be constructed."
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Is it worth to invest for perfect information?

In order to know about is it worth to invest for perfect information we must know the expected value of perfect information (EVPI) of corresponding information. In decision theory, the expected value of perfect information (EVPI) is the price that one would be willing to pay in order to gain access to perfect information. The problem is modeled with a payoff matrix Rij in which the row index i describes a choice that must be made by the payer, while the column index j describes a random variable that the payer does not yet have knowledge of, that has probability pj of being in state j. If the payer is to choose i without knowing the value of j, the best choice is the one that maximizes the expected monetary value:
Where:
is the expected payoff for action i i.e. the expectation value, and is choosing the maximum of these expectations for all available actions.
On the other hand, with perfect knowledge of j, the player may choose a value of i that optimizes the expectation for that specific j. Therefore, the expected value given perfect information is
Where;
is the probability that the system is in state j, and is the pay-off if one follows action i while the system is in state j.
Here
indicates the best choice of action i for each state j.
The expected value of perfect information is the difference between these two quantities,
This difference describes, in expectation, how much larger a value the player can hope to obtain by knowing j and picking the best i for that j, as compared to picking a value of i before j is known. Note: EV|PI is necessarily greater than or equal to EMV. That is, EVPI is always non negative. EVPI provides a criterion by which to judge ordinary mortal forecasters. EVPI can be used to reject costly proposals: if one is offered knowledge for a price larger than EVPI, it would be better to refuse the offer. However, it is less helpful when deciding whether to accept a forecasting offer, because one needs to know the quality of the information one is acquiring.
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Information
Example:
Suppose you were going to make an investment into only one of three investment vehicles: stock, mutual fund, or certificate of deposit (CD). Further suppose, that the market has a 50% chance of increasing, a 30% chance of staying even, and a 20% chance of decreasing. If the market increases the stock investment will earn $1500 and the mutual fund will earn $900. If the market stays even the stock investment will earn $300 and the mutual fund will earn $600. If the market decreases the stock investment will lose $800 and the mutual fund will lose $200. The certificate of deposit will earn $500 independent of the market's fluctuation. Question: What is the expected value of perfect information?
Solution:
Expectation for each vehicle:
The maximum of these expectations is the stock vehicle. Not knowing which direction the market will go (only knowing the probability of the directions), we expect to make the most money with the stock vehicle. Thus, On the other hand, consider if we did know ahead of time which way the market would turn. Given the knowledge of the direction of the market we would (potentially) make a different investment vehicle decision. Expectation for maximizing profit given the state of the market: That is, given each market direction, we choose the investment vehicle that maximizes the profit. Hence, Conclusion: Knowing the direction the market will go (i.e. having perfect information) is worth $350.
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What is Exception? Types of reports generated in MIS that help managers to handle the Exception
Management information systems process raw data from office processing systems, such as desktop computers and mobile applications, and transaction processing systems, such as retail point-of-sale systems. The output is sometimes in the form of reports that present aggregated data, which facilitates analysis and decision making. The reports could be summaries of daily sales or detailed sales trends organized by product and business units.
MIS and Reports 1. Summary Reports: o Summary reports aggregate data by accounting periods, geographic regions, business units or product categories. The reports consolidate information in a format that makes it easy for managers to review and analyze. o For example, an inventory summary report could include the number of items in stock, recent purchases and total inventory value. Similarly, a sales summary report could provide information on daily sales and group the information by product category and geographic regions. MIS applications, including even basic spreadsheet applications, usually allow users to specify different report formats.
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2. Trend Reports: o Trend reports allow managers to compare the performance of business units or product categories and to evaluate historical results. o For example, a sales trend report for a retailer could show the sales of different product categories over a year, broken down by weeks or months. The report could also include historical year-over-year comparisons, which would allow management to identify possible problem areas and implement corrective actions. If a business unit or product category is showing declining sales compared to the company average, a management change might be required. Similarly, if a product is not selling well, the company could r edesign or discontinue it. 3. Exception Reports: o An exception refers to data that are outside of normal ranges. Exception reports aggregate these unusual conditions and present them separately. A timely reporting of exception conditions makes it easier for a manager to isolate cases that require immediate attention. The manager does not have to pore through other reports looking for these exception conditions. o For example, an MIS exception report could notify a store manager when his inventory is running low so that he can reorder supplies. For a large organization, a human resources exception report could flag unusual levels of sick days for certain employees and business units. 4. On-Demand Reports: o On-demand reports provide specific information as and when needed. The content of these reports depends on the circumstances and the requesting manager's requirements. These reports can be in a custom format or in one of the regular summary or trend formats. o For example, a small business owner might want to know how her products are selling around certain holidays, in specific geographic areas or a combination. A marketing manager can perform a scenario analysis to see how a pricing change could affect sales and profitability.
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Development of MIS
Chapter 6:Development of MIS

Syllabus: o o o o o o o Development of Long Range Plans of MIS Ascertaining the class of Information Determining the Information Requirement Development and Implementation of MIS Management of Quality in MIS Organisation for development of MIS MIS: the Factors for Success and Failure
Questions: o o o o o Why is long term plan of MIS necessary? How its linked with Business Plan of MIS MIS Development is linked with business plan of an Organisation. Justify Content of MIS plan, purpose of each of them Role of System analyst in MIS Development Problems faced by system analyst in ascertaining information at various levels of mgmt.How to solve it? o Prototype Approach and Life Cycle Approach
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Development of MIS
Why is long term plan of MIS necessary?

o Any kind of business activity calls for long range plans for success, the same being true for MIS. The plan for development and its implementation is a basic necessity for MIS. In MIS the information is recognized as a major resource like capital, time and capacity. And if this resource is to be managed well, it calls upon the management to plan for it and control it for the appropriate use in the organization. Most of the organizations do not recognize `Information as a resource. They have looked at information as one of the many necessities for conducting the business activity. Hence, due regard is often not given for its planned development and use. Many organizations have spent financial resources on computers purely to expedite the activity of data collection and processing. Many organizations have purchased computers for data processing and for meeting the statutory requirements of filing the returns and reports to the Government. Computers are used mainly for computing and accounting the business transactions and have not been considered as a tool for information processing. The organizations have invested in computers and expanded its use by adding more or bigger computers to take care of the numerous transactions in the business. In this approach the information processing function of the computers in the organization never got its due regard as an important asset to the organization. In fact, this function is misinterpreted as data processing for expeditious generation of reports and returns, and not as information processing for management action and decisions. However, the scheme has been changing since late eighties when the computers became more versatile, in the function of Storage, Communication, Intelligence and Language. The computer technology is so advanced that the barriers of storage, distance, understanding of language and speed are broken.
With the advancement of computer technology, it is now possible to recognize information as valuable resources like money and capacity. In short, we need a Management Information System flexible enough to deal with the changing information 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 as 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.
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Development of MIS
The plan of MIS is concurrent to the business plan of the organization. The information needs for the implementation of the business plan should find place in the MIS. To ensure su ch an alignment possibility, it is necessary that the business plan strategic or otherwise, states the information needs. The information needs are the traced to the source data and the systems in the organization which generate such a data. The plan of development of the MIS is linked with the steps of the implementation in a business development plan. The system of information generation is so planned that strategic information is provided for the strategic planning, control information is provided for a short term planning and execution.
MIS controls the overall development of any organization. Its main objective is to behave like an open system that interacts continuously with the business environment and provides the needed information for achieving the organizations objectives. Therefore a good planning is needed for development and implementation of a good MIS.
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Development of MIS
MIS Development is linked with business plan of an Organisation. Justify Content of MIS Plan
o The plan for development and its implementation is a basic necessity for MIS. In MIS the information is recognized as major resource like capital and time. If this resource has to be managed well, it calls upon the management to plan for it and control it, so that the information becomes a vital resource for the system. o The management information system needs good planning. This system should deal with the management information not with data processing alone. It should provide support forthe management planning, decision making and action. It should provide support to the changing needs of business management. o A long range MIS plan provides direction for the development of the system and provides a basis for achieving the specific targets or tasks against time frame. Following are the contents of MIS planning: 1. MIS goals and objectives: It is necessary to develop the goals and objectives for the MIS which will support the business goals. The MIS goals and objectives will consider management philosophy, policy constraints, business risks, internal and external environment of the organization and the business. The goals and the objectives of the MIS would be so stated that they can be measured. The typical statements of the goals can be providing online in formation on the stock and market; the query processing should not exceed more than three seconds and the like. The typical statements of the goals are as under: 1. Provide on-line information on the stocks, markets and the accounts balances. 2. The query processing should not exceed more than three seconds. 3. The focus of the system will be on the end user computing and access facilities. 4. Information support will be the first in the strategic areas of management such as marketing or service or technology. 2. Strategy for Plan Achievement: The designer has to take a number of strategic decisions for the achievement of MIS goals and objectives. They are o Development Strategy: Ex. an online, batch, a real time. o System Development Strategy: Designer selects an approach to system development like operational verses functional, accounting verses analysis. o Resources for the Development: Designer has to select resources. Resources can be in house verses external, customized or use of package. o Manpower Composition: The staff should have the staffs of an analyst, and programmer.
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Development of MIS
3. The Architecture of MIS: The architecture of the MIS plan provides a system and subsystem structure and their input, output and linkage. It spells out in details the subsystem from the data entry to processing, analysis to modelling and storage to printing. 4. The System Development Schedule: A schedule is made for development of the system. While preparing a schedule due consideration is given to importance of the system in the overall in formation requirements. This development schedule is to be weighed against the time scale for achieving certain information requirements. 5. Hardware and Software Plan: Giving due regards to the technical and operational feasibility, the economics of investment is worked out. Then the plan of procurement is made after selecting the hardware and software. One can take the phased approach of investing starting from the lower configuration of hardware going to the higher as development take place. The process needs matching the technical decisions with the financial decisions.
Business Plan Business goals and objectives
MIS Plan Management information system, objectives, consistent to the business goals and objectives.
Business plan and strategy
Information strategy for the business plan implementation playing a supportive role.
Strategy planning and decisions.
Architecture of the Management Information system to support decisions.
Management Plan for execution and control Operation plan for the execution
System development schedule, matching the plan execution. Hardware and software plan for the procurement and the implementation.
Table: Business Plan versus MIS Plan
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Prototype Approach and Life Cycle Approach

Alternative Systems-Building Approaches:
Systems differ in terms of their size and technological complexity and in terms of the organizational problems they are meant to solve. A number of systems-building approaches have been developed to deal with these differences. This section describes these alternative methods: o o o o o The Traditional Systems Life Cycle, Prototyping, End-User Development, Application Software Packages, And Outsourcing.
Traditional Systems Life Cycle Approach:

o The systems life cycle is the oldest method for building information systems. The life cycle methodology is a phased approach to building a system, dividing systems development into formal stages. Systems development specialists have different opinions on how to partition the systems-building stages, but they roughly correspond to the stages of systems
development that we have just described. The systems life cycle methodology maintains a very formal division of labour between end users and information systems specialists. Technical specialists, such as system analysts and programmers, are responsible for much of the systems analysis, design, and implementation work; end users are limited to providing information requirements and reviewing the technical staffs work. The life cycle also emphasizes formal specifications and p aperwork, so many documents are generated during the course of a systems project.
The systems life cycle is still used for building large complex systems that require a rigorous and formal requirements analysis, predefined specifications, and tight controls over the systems-building process. However, the systems life cycle approach can be costly, time consuming, and inflexible. Although systems builders can go back and forth among stages in the life cycle, the systems life cycle is predominantly a waterfall approach in which tasks in one stage are completed before work for the next stage begins. Activities can be repeated, but volumes of new documents must be generated and steps retraced if requirements and specifications need to be revised. This encourages freezing of specifications relatively early in the development process. The life cycle approach is also not suitable for many small desktop systems, which tend to be less structured and more individualized.
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Development of MIS
Prototyping Approach:
o Prototyping consists of building an experimental system rapidly and inexpensively for end users to evaluate. By interacting with the prototype, users can get a better idea of their information requirements. The prototype endorsed by the users can be used as a template to create the final system. The prototype is a working version of an information system or part of the system, but is meant to be only a preliminary model. Once operational, the prototype will be further refined until it conforms precisely to users requirements. Once the design has been finalized, the prototype can be converted to a polished production system. The process of building a preliminary design, trying it out, refining it, and trying again has been called an iterative process of systems development because the steps required to build a system can be repeated over and over again. Prototyping is more explicitly iterative than the conventional life cycle, and it actively promotes system design changes. It has been said that prototyping replaces unplanned rework with planned iteration, with each version more accurately reflecting users requirements.
Steps in prototyping:
Step 1: Identify the users basic requirements. The system designer (usually an information systems specialist) works with the user only long enough to capture the users basic information needs. Step 2: Develop an initial prototype. The system designer creates a working prototype quickly, using tools for rapidly generating software.
Revise and Enhance the Prototype No
STEP 4
Identify Basic Requirements STEP 1
Develop a Working Prototype STEP 2
Use the Prototype STEP 3 The Prototyping Process
User satisfied?
Yes
Operational Prototype
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Development of MIS
Step 3: Use the prototype. The user is encouraged to work with the system to determine how well the prototype meets his or her needs and to make suggestions for improving the prototype. Step 4: Revise and enhance the prototype. The system builder notes all chang es the user requests and refines the prototype accordingly. After the prototype has been revised, the cycle returns to step 3. Steps 3 and 4 are repeated until the user is satisfied. The process of developing a prototype can be broken down into four steps . Because a prototype can be developed quickly and inexpensively, systems builders can go through several iterations, repeating steps 3 and 4, to refine and enhance the prototype before arriving at the final operational one. When no more iterations are required, the approved prototype then becomes an operational prototype that furnishes the final specifications for the application. Sometimes the prototype is adopted as the production version of the system.
Types of prototyping:
1. Throwaway Prototyping: Throwaway or Rapid Prototyping refers to the creation of a model that will eventually be discarded rather than becoming part of the finally delivered system. After preliminary requirements gathering is accomplished, a simple working model of the system is constructed to visually show the users what their requirements may look like when they are implemented into a finished system. The most obvious reason for using Throwaway Prototyping is that it can be done quickly. 2. Evolutionary Prototyping: Evolutionary Prototyping (also known as Breadboard Prototyping) is quite different from Throwaway Prototyping. The main goal when usingEvolutionary Prototyping is to build a very good prototype in a structured manner so that we can refine it or make further changes to it. The reason for this is that the Evolutionary prototype, when built, forms the heart of the new system, and the improvements and further requirements will be built on to it. It is not discarded or removed like the Throwaway Prototype. When developing a system using Evolutionary Prototyping, the system is continually refined and rebuilt. 3. Incremental Prototyping: The final product is built as separate prototypes. At the end the separate prototypes are merged in an overall design.
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Advantages of Prototyping:
1. Reduced Time and Costs: Prototyping can improve the quality of requirements and specifications provided to developers. Early determination of what the user really wants can result in faster and less expensive software. 2. Improved and Increased User Involvement: Prototyping requires user involvement and allows them to see and interact with a prototype; allowing them to provide better and more complete feedback and specifications. Since users know the problem better than anyone, the final product is more likely to satisfy the users desire for look, feel and performance.
Disadvantages of Prototyping:
1. Insufficient Analysis: Since a model has to be created, developers will not properly analyse the complete project. This may lead to a poor prototype and a final project that will not satisfy the users. 2. User Confusion of Prototype and Finished System: Users can begin to think that a prototype, intended to be thrown away, is actually a final system that merely needs to be finished or polished. Users can also become attached to features that were included in a prototype for consideration and then removed from the specification for a final system. 3. Excessive Development Time of the Prototype: A key property to prototyping is the fact that it is supposed to be done quickly. If the developers forget about this fact, they will develop a prototype that is too complex. 4. Expense of Implementing Prototyping: The start-up costs for building a development team focused on prototyping may be high. Many companies have to train the team for this purpose which needs extra expenses.
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Choice of Information Technology
Chapter 7:Choice of Information Technology

Syllabus: o o o o o o Introduction: Nature of IT Decision Strategic Decision Configuration Decision Evaluation Information Technology Implementation Plan Choice of the Information Technology and the Management Information System
Questions: o o Selection of Information Technology is Strategic Decision in MIS. Explain Parameters used in Evaluation of IT before decision is made
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Selection of Information Technology is Strategic Decision in MIS. Explain
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Parameters used in Evaluation of IT before decision is made
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Enterprise Applications and Business Process Integration
Chapter 8: Enterprise Applications and Business Process Integration

Syllabus: o o o o Enterprise Systems Supply chain Management Systems Customer Relationship Management Systems Enterprise Integration Trends
Questions: o o o o CRM, Analytical and Operation CRM, Features SCM, PUSH vs. PULL based SCM Bullwhip Effect, How to reduce it using SCM, Its value to Business ERP (never asked yet)
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Customer Relationship Management (CRM)

Customer Relationship Management is defined as a process of creating and maintaining relationship with customers. CRM is not a technology, but it is are approach which satisfies the customers. A good CRM system should cover the following: Identify the factors important to customers Adopt customer based measures Develop end-to-end processes to serve customers Provide successful customer support Handle customer complaints Track all sales process
o o o o o o
CRM Cycle Customer relationship management is a broadly recognized, widely-implemented strategy for managing and nurturing a companys interactions with customers and sales prospects. It involves using technology to organize, automate, and synchronize business processes principally sales related activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new customers, nurture and retain those the company already has, entice former customers back into the fold, and reduce the costs of marketing and customer service. o CRM, or Customer relationship management, is a number of strategies and technologies that are used to build stronger relationships between companies and their customers. A company will store information that is related to their customers, and they will spend time analysing it so that it can be used for this purpose.
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Some of the methods connected with CRM are automated, and the purpose of this is to create marketing strategies which are targeted towards specific customers. The strategies used will be dependent on the information that is contained within the system. Customer relationship management is commonly used by corporations, and they will focus on maintaining a strong relationship with their clients. There are a number of reasons why CRM has become so important in the last 10 years. The competition in the global market has become highly competitive, and it has become easier for customers to switch companies if they are not happy with the service they receive. One of the primary goals of CRM is to maintain clients. When it is used effectively, a company will be able to build a relationship with their customers that can last a lifetime. Customer relationship management tools will generally come in the form of software. Each software program may vary in the way it approaches CRM. It is important to realize that CRM is more than just a technology. Customer relationship management could be better defined as being a methodology, an approach that a company will use to achieve their goals. It should be directly connected to the philosophy of the company. It must guide all of its policies, and it must be an important part of customer service and marketing. If this is not done, the CRM system will become a failure. There are a number of things the ideal CRM system should have. It should allow the company to find the factors that interest their customers the most. A company must realize that it is impossible for them to succeed if they do not cater to the desires and needs of their customers. Customer relationship management is a powerful system that will allow them to do this. It is also important for the CRM system to foster a philosophy that is oriented towards the customers. While this may sound like common sense, there are a sizeable nu mber of companies that have failed to do it, and their businesses suffered as a result. With CRM, the customer is always right, and they are the most important factor in the success of the company. It is also important for the company to use measures that are dependent on their customers. This will greatly tip the odds of success in their favour. While CRM should not be viewed as a technology, it is important to realize that there are end to end processes that must be created so that customers can be properly served. In many cases, these processes will use computers and software. Customer support is directly connected to CRM. If a company fails to provide quality customer support, they have also failed with their CRM system. When a customer makes complaints, they must be handled quickly and efficiently. The company should also seek to make sure those mistakes are not repeated. When sales are made, they should be tracked so that the company can analyze them from various aspects. It is also important to unders tand the architecture of Customer relationship management. The architecture of CRM can be broken down into three categories, and these are collaborative, operational, and analytical.
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The collaborative aspect of CRM deals with communication between companies and their clients. o The operational aspect of the architecture deals with the concept of making certain processes automated. The analytical aspect of CRM architecture deals with analysing customer information and using if for business intelligence purposes. Each one of these elements are critical for the success of a CRM system. A company must learn how to use all three properly, and when they do this proficiently, they will be able to build strong customer relationships and ensure their profits for a long period of time. As more businesses continue to compete on a global level, it will become more important for them to use successful Customer relationship management techniques. Types/Variations of CRM: 1. Sales force automation: Sales force automation (SFA) involves using software to streamline all phases of the sales process, minimizing the time that sales representatives need to spend on each phase. This allows a business to use fewer sales representatives to manage their clients. At the core of SFA is a contact management system for tracking and recording every stage in the sales process for each prospective client, from initial contact to final disposition. Many SFA applications also include insights into opportunities, territories, sales forecasts and workflow automation. 2. Marketing CRM systems for marketing help the enterprise identify and target potential clients and generate leads for the sales team. A key marketing capability is tracking and measuring multichannel campaigns, including email, search, social media, telephone and direct mail. Metrics monitored include clicks, responses, leads, deals, and revenue. Alternatively, Prospect Relationship Management (PRM) solutions offer to track customer behaviour and nurture them from first contact to sale, often cutting out the active sales process altogether. In a web-focused marketing CRM solution, organizations create and track specific web activities that help develop the client relationship. These activities may include such activities as free downloads, online video content, and online web presentations. 3. Customer service and support CRM software provides a business with the ability to create, assign and manage requests made by customers. An example would be Call Centre software which helps to direct a customer to the agent who can best help them with their current problem. Recognizing that this type of service is an important factor in attracting and retaining customers, organizations are increasingly turning to technology to help them improve their clients experience while aiming to increase efficiency and minimize costs. CRM software can also be used to identify and reward loyal customers which in turn will help customer retention. Even so, a 2009 study
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revealed that only 39% of corporate executives believe their employees have the right tools and authority to solve client problems. 4. Appointment Creating and scheduling appointments with customers is a central activity of most customer oriented businesses. Sales, customer support, and service personnel regularly spend a portion of their time getting in touch with customers and prospects through a variety of means to agree on a time and place for meeting for a sales conversation or to deliver customer service. Appointment CRM is a relatively new CRM platform category in which an automated system is used to offer a suite of suitable appointment times to a customer via e-mail or through a web site. An automated process is used to schedule and confirm the appointment, and place it on the appropriate person's calendar. Appointment CRM systems can be an origination point for a sales lead and are generally integrated with sales and marketing CRM systems to capture and store the interaction. 5. Analytics Relevant analytics are often interwoven into applications for sales, marketing, and service. These features can be complemented and augmented with links to separate, purpose-built applications for analytics and business intelligence. Sales analytics let companies monitor and understand client actions and preferences, through sales forecasting and data quality. 6. Integrated/collaborative Departments within enterprises especially large enterprises tend to function with little collaboration. More recently, the development and adoption of these tools and services have fostered greater fluidity and cooperation among sales, service, and marketing. This finds expression in the concept of collaborative systems that use technology to build bridges between departments. For example, feedback from a technical support center can enlighten marketers about specific services and product features clients are asking for. Reps, in their turn, want to be able to pursue these opportunities without the burden of re-entering records and contact data into a separate SFA system. 7. Small business For small business, basic client service can be accomplished by a contact manager system: an integrated solution that lets organizations and individuals efficiently track and record interactions, including emails, documents, jobs, faxes, scheduling, and more. These tools usually focus on accounts rather than on individual contacts. They also generally include opportunity insight for tracking sales pipelines plus added functionality for marketing and service. As with larger enterprises, small businesses may find value in online solutions, especially for mobile and telecommuting workers.
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MIS (MCA SEM-3) 8. Social media
Social media sites like Twitter, LinkedIn, Facebook and Google Plus are amplifying the voice of people in the marketplace and are having profound and far-reaching effects on the ways in which people buy. Customers can now research companies online and then ask for recommendations through social media channels, as well as share opinions and experiences on companies, products and services. As social media is not as widely moderated or censored as mainstream media, individuals can say anything they want about a company or brand, positive or negative. 9. Non-profit and membership-based Systems for non-profit and membership-based organizations help track constituents and their involvement in the organization. Capabilities typically include tracking the following: fund raising, demographics, membership levels, membership directories, volunteering and communications with individuals. Strategies for CRM: For larger-scale enterprises, a complete and detailed plan is required to obtain the funding, resources, and company-wide support that can make the initiative of choosing and implementing a system successful. Benefits must be defined, risks assessed, and cost quantified in three general areas: 1. Processes: Though these systems have many technological components, business processes lie at its core. It can be seen as a more client-centric way of doing business, enabled by technology that consolidates and intelligently distributes pertinent information about clients, sales, marketing effectiveness, responsiveness, and market trends. Therefore, a company must analyze its business workflows and processes before choosing a technology platform; some will likely need re-engineering to better serve the overall goal of winning and satisfying clients. Moreover, planners need to determine the types of client information that are most relevant, and how best to employ them. 2. People: For an initiative to be effective, an organization must convince its staff that the new technology and workflows will benefit employees as well as clients. Senior executives need to be strong and visible advocates who can clearly state and support the case for change. Collaboration, teamwork, and two-way communication should be encouraged across hierarchical boundaries, especially with respect to process improvement. 3. Technology: In evaluating technology, key factors include alignment with the companys business process strategy and goals, including the ability to deliver the right data to the right employees and sufficient ease of adoption and use. Platform selection is best undertaken by a carefully chosen group of executives who understand the business processes to be autom ated
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as well as the software issues. Depending upon the size of the company and the breadth of data, choosing an application can take anywhere from a few weeks to a year or more. Uses of CRM: o It provides on-line access to product information and technical assistance around the clock o o o o o It identifies the customer value and device correct service for each customer It provides mechanisms for managing and scheduling follow-up sales calls It provides mechanism for handling problems and complaints It provides mechanism for correcting service difficulties It provides facilities for maintaining information about the repair and on going support given to customers o o It has facilities to identify problems before they appear It provides user-friendly methods to register customer complaints
Advantages of CRM: 1. Streamlined sales and marketing processes 2. Higher sales productivity 3. Added cross-selling and up-selling opportunities 4. Improved customer service, loyalty, and retention 5. Increased call center efficiency 6. Higher close rates 7. Better customer profiling and targeting 8. Reduced expenses 9. Increased market share 10. Higher overall profitability Disadvantages of CRM: 1. Difficult to work with 2. Require additional work inputting data 3. Dehumanize a process that should be personal 4. Require continuous maintenance, information updating, and system upgrading costly 5. Difficult to integrate with other management information systems
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CRM Architecture
The Customer relationship management architecture can be broken down into three categories, and these are: 1. Operational, 2. Analytical, and 3. Collaborative.
CRM Architecture Each plays an important role in Customer relationship management, and a company that wants to success must understand the importance of using these three components successfully . 1. Operational CRM: o Operational CRM deals with the automation of certain business processes. An example of business processes that are connected to operational CRM are marketing and sales. When a connection is made to a customer, the information related to this interaction will be automatically stored in a database, and the company can pull up specific information on that customer when it is needed. Operational CRM can further be broken down into three components. These components are Enterprise marketing automation, Customer service automation, and Sale force automation. The Enterprise marketing automation will give the company information about the business climate, and it will also provide them with crucial data on their competitors, as will as trends within the industry and other important variables. As the name implies, Enterprise marketing automation deals with strategies a company can use to strengthen their marketing tactics.
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Customer service and support will automate specific processes that are connected to service. An example of this could be item returns or customer complaints. 2. Analytical CRM: o By enhancing its customer service capability, a company will build a stronger relationship with its customers. There are a number of common ways that Analytical CRM is used to achieve this. A number of companies will use the data they've collected and analyzed to cross-sell products to their customers, as well as retaining customers that may normally switch to another company. Analytical CRM can also be used to provide important information to customers within a short period of time. In addition to building stronger relationships with customers, Analytical CRM can be an important tool for fraud prevention and detection. It can analyze the patterns of sales, inventory, and profits in order to find any patterns that are not consistent. Analytical CRM is also important when it comes to both product dev elopment and risk management. It is important to realize that Analytical CRM is an ongoing process. The company may need to alter its strategies or methods based on the information that is analyzed through this process. The third important aspect of CRM architecture is Collaborative CRM. Collaborative CRM is important because it places an emphasis on the interactions that a company will make with its customers. These interactions could be personal, or they could come through mediums such as the telephone or the Internet. Collaborative CRM will give companies a powerful form of communication that will utilize multiple technologies. It will also be responsible for providing services over the Internet so that the costs of the service can be reduced. When interactions are made with customers, Collaborative CRM will allow the company to provide them with useful information. At the highest level, CRM should be an important part of all interactions that a company makes with its customers. When this done, a company can become highly successful. The goal of CRM is to find out what customers need, and to make sure those needs are filled. Once a company is making interactions with their customers, they can collect and analyze information. This information can be used to strengthen interactions. Customer relationship management can also be used to stop problems before they occur. A number of companies strive to solve problems once they occur, but CRM can be used to stop potential problems before they occur. Preventing problems is much easier than solving it.
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Supply Chain Management (SCM)

o Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. A supply chain is a set of network facilities and distribution options that perform functions like procurement of raw material and their transformation into finished products. The management of interconnected business activities that are involved in the provision of product and service packages is referred to as supply chain managem ent. It is defined as the management and coordination of a product's supply chain in order to increase efficiency and portability. It consists of all the stages involved in fulfilling customer requests. According to an American professional association, supply chain management comprises the planning and management of all the activities involved in sourcing, procurement, conversion and logistics. The customer and customer service are an integral part of the process of supply chain management. The primary purpose of this process is to satisfy customer needs. The main objective of supply chain management is to maximize the product value. The product value is the numerical difference between the worth of the efforts taken for production and the actual price of the product. The process of coordinating with the parties involved in the supply chain also forms a part of supply chain management. It includes the coordination with retailers, wholesalers, manufacturers and customers. It aims at integrating relevant activities between the trading partners and customers in order to reduce the system -wide costs of moving the product from a pre to a post-production stage. Components of SCM: The following are five basic components of SCM:
1. Plan:
This is the strategic portion of SCM. Companies need a strategy for managing all the
resources that go toward meeting customer demand for their product or service. A big piece of SCM planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers. 2. Source: Next, companies must choose suppliers to deliver the goods and services they need to create their product. Therefore, supply chain managers must develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And then, SCM managers can put together processes for managing their goods and services inventory, including receiving and verifying shipments, transferring them to the manufacturing facilities and authorizing supplier payments.
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Components of Supply Chain 3. Make: This is the manufacturing step. Supply chain managers schedule the activities necessary for production, testing, packaging and preparation for delivery. This is the most metricintensive portion of the supply chainone where companies are able to measure quality levels, production output and worker productivity. 4. Deliver: This is the part that many SCM insiders refer to as logistics, where com panies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments. 5. Return: This can be a problematic part of the supply chain for many companies. Supply chain planners have to create a responsive and flexible network for receiving defective and excess products back from their customers and supporting customers who have pr oblems with delivered products. Decision Areas in SCM: There are four major decision areas in supply chain management: 1. Location, 2. Production, 3. Inventory, and 4. Transportation (distribution), And there are both strategic and operational elements in each of these decision areas.
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MIS (MCA SEM-3) o The first type of decision is the
Enterprise Applications and Business Process Integration location decision. The location is dependent on
determination of customer satisfaction and the prevalent and predicted market demands for the product of service. Having the right projections is critical so that the strategic decisions may correctly focus on the placement of production plants, distribution and stocking facilities, and placing them in prime locations to the market served. Once customer markets are determined, long-term commitment must be made to locate production and stocking facilities as close to the consumer as is practical. In industries where components are lightweight and market driven, facilities should be located close to the end -user. In heavier industries, careful consideration must be made to determine where plants should be located so as to be close to the raw material source. Decisions concerning location should also take into consideration tax and tariff issues, especially in when the distribution is to be outside the city. o Strategic decisions regarding production focus on what customers want and the market demands. This first stage in developing supply chain flexibility takes into consideration what and how many products to produce, and what parts or components should be produced at which plants or outsourced to capable suppliers. These strategic decisions regarding production must also focus on capacity, quality and volume of goods, keeping in mind that customer demand and satisfaction must be met. Operational decisions, on the other hand, focus on scheduling workloads, maintenance of equipment and meeting immediate
client/market demands. Quality control and workload balancing are issues, which need to be considered when making these decisions. o Third strategic decisions focus on inventory and how much product should be in-house. A delicate balance exists between too much inventory, which can cost anywhere between 20 and 40 percent of their value, and not enough inventory to meet market demands. This is a critical issue in effective supply chain management. Operational inventory decisions revolved around optimal levels of stock at each location to ensure customer satisfaction as the market demands fluctuate. Control policies must be looked at to determine correct levels of supplies at order and reorder points. These levels are critical to the day-to-day operation of organizations and to keep customer satisfaction levels high. o Strategic transportation decisions are closely related to inventory decisions as well as meeting customer demands. Using air transport obviously gets the product out quicker and to the customer expediently, but the costs are high as opposed to shipping by boat or rail. Yet using sea or rail often times means having higher levels of inventory in -house to meet quick demands by the customer. It is wise to keep in mind that since 30% of the cost of a product is encompassed by transportation, using the correct transport mode is a critical strategic decision. Above all, customer service levels must be met, and this often times determines the mode of transport used. Often times this may be an operational decision, but strategically, an organization must have transport modes in place to ensure a smooth distribution of goods.
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MIS (MCA SEM-3) Functions of SCM: o
The process of supply chain management can be divided into three distinct flows; the product flow, the information flow and the finances flow. The product flow includes the movement of goods from a supplier to a customer. The flow of information related to the status of product delivery is referred to as the information flow while the finances flow involves payment schedule, credit terms and title ownership arrangements. The strategic activities that are a part of the supply chain management involve strategic network optimization, the establishment of partnerships with suppliers, distributors and customers, planning for the integration of existing products into the supply chain and the design of a business strategy. Taking inventory and production decisions, devising
transportation strategies, benchmarking of operations and focusing on customer demand are some of the other activities involved in the supply chain management. Planning of daily production and distribution, planning and scheduling of inbound and outbound operations are some of the important operational activities involved in supply chain management.
Business Value of SCM:

Supply chain management systems enable firms to streamline both their internal and external supply chain processes and provide management with more accurate information about what to produce, store, and move. By implementing a networked and integrated supp ly chain management system, companies can match supply to demand, reduce inventory levels, improve delivery service, speed product time to market, and use assets more effectively. Companies that excel in supply chain management have been found to produce h igher rates of growth in their market value than the average for their industries. Effective supply chain management systems enhance organizational performance in the following areas: 1. Improved customer service and responsiveness: If a product is not available when a customer wants it, that customer will likely try to purchase it from someone else. Having the right product at the right place at the right time will increase sales. 2. Cost reduction: Supply chain management helps companies contain, and often reduce, some or all of the costs associated with moving a product through the supply chain. These costs include material acquisition, inventory carrying, transportation, and planning costs. (Inventory carrying costs may amount to 30 or 40 percent of the value of the entire inventory.) Total supply chain costs represent the majority of operating expenses for many businesses and in some industries approach 75 percent of the total operating budget (Handfield, 1999). Reducing supply chain costs can thus have a major impact on firm profitability.
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MIS (MCA SEM-3) 3. Cash utilization:
The sooner a company delivers a product, the sooner that company will get paid. Companies leading in supply chain efficiency have cash available two to three months faster than companies that do not have this capability. Advantages of SCM: 1. Reduce Costs o o Increased automation maximizes the efficiency of order processes. Integrate with public or private e-marketplaces to quickly and easily compare suppliers on a global basis. o o Sophisticated planning tools allow you to precisely match supply and demand. Reduce inventories, free up resources without reducing your ability to meet unexpected demand. o o Improved visibility and collaborative planning improves forecasts. Shorter planning cycles and reduced lead times means less guessing, reduced safety stocks and faster response times. 2. Increase Revenue o o Higher utilization of capacity helps you increase revenues. Collaborate with partners and optimize supply planning and execution across enterprise boundaries. o o o o Achieve faster responsiveness to unanticipated demand. Reduce order cycle times, enhancing the conversion of materials to revenue. Improve asset use and reduce unnecessary capital expenditures. Introduce new products and promotions with efficiency and accuracy.
3. Retain Customers o o o o o o Accurate planning improves customer service and in turn customer retention. Detailed order-status information results in higher customer satisfaction Provide quality products and services at competitive prices. Have the ability to respond to unanticipated demand so you can commit to more orders. Respond to changing customer requirements quickly and efficiently. Share performance information and common goals among partners.
Disadvantages of SCM: 1. Distribution Network Configuration 2. Distribution Strategy 3. Trade-Offs in Logistical Activities 4. Information
5. Inventory Management and Cash Flow
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PUSH and PULL based CSM

Do we have Retail supply chain, FMCG supply Chain, automotive supply chain, IT supply chain etc? In my opinion, no and what we have is PULL Supply Chain and Push Supply Chain. Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand. All the above industries fall under Pull or Push supply chain. We have also seen hybrid new model called Pull and Push supply chain. Whatever is the industry, as long as you make supply chain efficient using either pull techniques or push techniques or both, that is what matters to the business.
PUSH and PULL based Supply Chain
Pull Supply Chain:

o Under pull supply chain, products are manufactured or procured based on specific customer requests. We also know it as Built to Order or Configured to Order model. We often see this model operating in IT/High Tech Industries, where customization is the competitive advantage. Briefly, we have seen this model in automotive industry and it is being used in high end luxury market segment. The objective of this model is to minimize the Inventory carrying and optimize supply. Pull model are is as a response to growing uncertainty in demand and short product cycle. Some of the characteristics of this model include: 1. Volatile demand situation; 2. High rate of Customization; 3. Minimal Inventory Carrying; 4. Not a off the shelf product; 5. Highly dynamic and effective distribution network. Even though there are many challenges in implementing a pull supply chain in a globalized environment, converting a push supply chain into a pull supply chain is considered as next frontier of innovation and lean thinking. Particularly if we are able to implement pull process for procurement activity and take advantage of Point of Sale information to provide the demand visibility to suppliers, it would be a great innovation. Again supply chain visibility is a very challenging aspect and costly proposition as well. However, if we are able to achieve overcoming all hurdles, the business would be saving costs (warehousing, inventory carrying; capital costs etc.) and also could introduce JIT or Cross Dock Operation which are again cost efficient models. As the pull of material is linked to POS data and store inventory data, the
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buffer inventory if any in the supply chain will get corrected automatically from time to time eliminating excess inventory. This process would eliminate waste and save cos ts and also known as agile supply chain model. Internet becomes the backbone of this model. This model could work very well in FMCG industry if the business model is well understood and a solution is developed and implemented efficiently.
Push Supply Chain:

o Under Push model, products are manufactured or procured based on anticipated customer orders (speculative). This model is also known as Built to Inventory or Built to Sock. The name itself reveals its functionality. Products are manufactured in anticipation of customer needs. There are no prizes for identifying industries that use push model, it is obvious that retail heavily uses push model. Even though direct to store or cross docks are implemented, overall retail supply chain is based on push model. Some of the big names in the retail industry are trying to adopt the hybrid model which is a combination of pull and push. Some of the key challenges and characteristics could include: 1. High inventory costs, 2. Challenging working capital requirements due to low inventory turns; 3. Huge warehousing and distribution costs; 4. Inability to meet dynamic market conditions and 5. Seasonal demand and off the shelf product. Push programs represent a top down approach. The core assumption of push programs is that demand can be anticipated and that it is more efficient and reliable to mobilize resources in pre-specified ways to serve this demand. However, in reality globalization posed several challenges and one of them is hyper-competition. Hyper-competition is a state, in which the rate of change in the competitive rules of the game are evolving rapidly and business survival is becoming a challenge. As the customers are becoming demanding, if the product is not available in the store, they are willing to look at other options in the market place. This is forcing retailers carry huge inventories and opt for low cost sourcing models which in turn increase the procurement cycle time. In case of demand slump due to financial recession or change buying habits or seasonal weather conditions, businesses are forced to create artificial demand by unleashing promotions in a scale never seek in market place. To objective is to draw the customer to the store and try to sell the product. Product proliferation and Scrambled Merchandising is further making push model more complex and challenging for the retail industry and for push model. The world is becoming a complex place to do business. It is up to the Supply Chain managers to come forward and take the responsibility of aligning supply chain to business needs and objectives. There is an urgent need for Supply Chain experts who can customize supply chains to need of the hour. Do away with recycling supply chain professionals within the
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industry. Embrace change in order to innovate and improve supply chain health. A true supply chain professional should be comfortable working in a pull or push environment as long as S/he is functionally and professionally trained using both models. Having said that, supply chain is a not a rocket science, it is all about common sense and thinking outside the box.
Push vs Pull Strategies
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Bullwhip Effect
Bullwhip Effect also known as whiplash effect is a phenomenon observed in forecast driven distribution channels. It is basically the amplification of the demand variance up the supply chain, from the customer to factory, as demand information passes back through the supply chain. The issues associated with bull whip effect are excess inventory, quality problems, increased raw material costs, increased shipping costs, lost sales and lost customer service.
The example given below can help us in understanding the Bullwhip Effect better 1. Company X produces widgets for sale on the open market 2. Customer demand for Company Xs widgets become stagnant 3. Retailers offer a sale promotion to boost sales of Company X widgets 4. Retailers fail to notify manufacturers of sales promotion 5. Company X assumes that the demand for widgets has increased 6. Company X increases inventory to allow for increased manufacturing of widgets 7. Company X notifies part suppliers of increased demand 8. Suppliers increase inventory to meet demand. Therefore distorted information along the supply chain caused the inventory levels to increase along the supply chain which may result in increased inventory costs, poor customer service, adjusted capacity and other problems which are associated with the Bullwhip Effect.
The Bullwhip Effect
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MIS (MCA SEM-3) Causes of Bullwhip Effect: 1. Demand Forecast Updating
Demand forecast updating refers to the situation where demand is non-stationary and one uses past demand information to update forecasts. 2. Rationing Gaming The rationing gaming refers to the strategic ordering behavior of buyers when supply shortage is anticipated.
3. Order Batching When fixed order cost is nonzero, ordering in every period would be uneconomical, and batching of orders would occur. 4. Price Variations Price variations refer to non-constant purchase prices of the product. Bullwhip effect as seen in a traditional supply chain:
Bullwhip Effect on Traditional Supply Chain
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Impact of Vendor Managed Inventory(VMI) on causes of Bullwhip effect
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Reducing Bullwhip Effect

1. Improve information flow: The most obvious way to reduce the bullwhip effect is to improve communication and forecasting along the supply chain. While end -user demand is more predictable, it should not be the only source of information for forecasting. Supply chain managers should be a part of the forecast. Ignoring supply chain supply-and-demand signals when forecasting ignores day-to-day fluctuations. 2. Reduce delays along the supply chain: The best way to achieve this is by cutting order-todelivery time. This also reduces inventory carry and operating costs as less capacity is needed to respond to fluctuations. 3. Focus on point of sale data collection:
By focusing on the end user via electronic data interchange, supply chain mangers can reduce misleading signals sent from sales and marketing (distribution). 4. Create smaller purchase orders: By reducing the order increments and order "batching," supply chain managers can focus on ordering according to need rather than vendor promotions to cut costs. The bullwhip effect has a greater cost to the overall organization than any discount achieved from making a bulk order. 5. Maintain consistent pricing: Pricing fluctuations change forecasts by spurring purchases when prices are low and reducing purchases when prices are high. This invariably leads to increased fluctuations for the supply chain to manage, which increases the bullwhip effect.
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Enterprise Resource Planning (ERP)

o Enterprise resource planning (ERP) is a term usually used in conjunction with ERP software or an ERP system which is intended to manage all the information and functions of a business or company from shared data stores.It is a commercial software package that promotes seamless integration of all the information flowing through a company. An ERP system typically has modular hardware and software units and "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed. What is an ERP? o An ERP system spans multiple departments in a corporation, and in some cases an ERP will also transcend the corporate boundary to incorporate systems of partners and suppliers as well, to bring in additional functions like supply chain management. Because it is so vast and all-encompassing, the ERP system goes far beyond being just a simple piece of software. Each implementation is unique and is designed to correspond to the implementer's various business processes. An ERP implementation can cost millions of dollars to create, and may take several years to complete. An ERP system likely represents a company's largest IT investment, so some companies prefer to implement ERP in a more incremental fashion rather than all at once. Some ERP vendors provide modular software units together with a unified interface to allow for this gradual approach.
ERP System
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MIS (MCA SEM-3) ERP Implementation: o
Companies providing IT services have to clearly know what enterprise resource is planning before thinking of implementing them. The catch word of ERP implementation is speed. The faster it is implemented the quicker and better are the advantages and delivery in terms of results. For example, cheap no teletrack payday loans as well as small business credit cards are issued much faster, teleconferencing with the help of online credit card application forms and verifying through teleconferencing. This early process has another hold on liquidation. The returns are sought at a shorter period. This deviation from the conventional practice has become the order of the day as far as many companies are concerned for legal recruitment. According to Curtis Pope, business process reengineering played a vital role with respect to implementation. It is important to know the promotional product of Enterprise resource planning .Merely defining enterprise resource planning will not help in this. This naturally paved way to development of gaps between the actual results and the one derived during the process of foreseeing.
ERP Components: o Enterprise Resource Planning (ERP) is a term used to describe when a business merge all functions, operations and departments into one computer system and database. o A successful ERP system needs to be universal so the entire company can use it but it must also be modular so that individual departments within the business have their particular needs met. o This is accomplished through ERP software specially designed for the particular company.
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MIS (MCA SEM-3)
ERP Components Need for ERP: ERP systems are totally changing the way in which the organizations do business. ERP cannot be neglected, because it is giving huge impact on both the business and information technology world. The following points insist the need for ERP in any organization. 1. Integrate organizations activities: ERP access are cross functional. So it forces the firm to come out of traditional business process. It integrates the data spread in different areas into a single system. So decision making becomes very easy. This is the first and important need for an ERP.
2. Force the use of best practice: ERP has number of different best business process to follow. By using any one of the best practice in trail method the business process of an organization can be improved. 3. Enables organizational standardization: ERP helps to standardize the methods followed in departments speeded in different locations. Because of this, the departments with poor standards can be brought in line with other efficient departments. This helps the firms to show single image to the outside world.
4. Allows simultaneous access to data for planning and control: ERP uses a single database. In this, almost all the data regarding different departments are stored directly. Since the data are available to all the users in the organization, it is very much helpful for planning and control.
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MIS (MCA SEM-3) Objectives of ERP:
1. Speed: Speed is defined as the time taken to implement the ERP system in an organization. While designing ERP, the time taken by the organization to implement ERP must be taken into account. 2. Scope: ERP should consider and include all the functional and technical characteris tics required by the organization. 3. Resources: Resources are everything that is needed to support the project. This includes people, hardware, systems, software, technical support etc. All these resources must be taken into account. 4. Risk: Risk is defined as the factors that resists the overall success of ERP implementation. Therefore, all the risks that will arise must be taken into account while developing ERP. 5. Complexity: Complexity is the degree of difficulty anticipated during implementation , operation and maintaining the ERP systems. Care must be taken to minimize the complexity while designing ERP.
6. Benefits: Benefits are the extent to which the company uses the functions of the ERP software. To get the maximum benefit from ERP, care must be taken to design the ERP by following the procedures followed by the organization. Advantages of ERP: 1. Integration: Integration can be the highest benefit of them all. The only real project aim for implementing ERP is reducing data redundancy and redundant data entry. If this is set as a goal, to automate inventory posting to G/L, then it might be a successful project. Those companies where integration is not so important or even dangerous tend to have a hard time with ERP. ERP does not improve the individual efficiency of users, so if they expect it, it will be a big disappointment. ERP improves the cooperation of users. 2. Efficiency: Generally, ERP software focuses on integration and tends to not care about the daily needs of people. I think individual efficiency can suffer by implementing ERP. The big question with ERP is whether the benefit of integration and cooperation can make up for the loss in personal efficiency or not.
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MIS (MCA SEM-3) 3. Cost reduction:
It reduces cost only if the company took accounting and reporting seriously even before implementation and had put a lot of manual effort in it. If they didn't care about it, if they just did some simple accounting to fill mandatory statements and if internal reporting did not exists of has not been financially-oriented, then no cost is reduced. 4. Accuracy: No. People are accurate, not software. What ERP does is makes the lives of inaccurate people or organization a complete hell and maybe forces them to be accurate (which means hiring more people or distributing work better), or it falls. Disadvantages of ERP: 1. Expensive: This entails software, hardware, implementation, consultants, training, etc. Or you can hire a programmer or two as an employee and only buy business consulting from an outside source, do all customization and end-user training inside. That can be cost-effective. 2. Not very flexible: It depends. SAP can be configured to almost anything. In Navision one can develop almost anything in days. Other software may not be flexible.
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MIS (MCA SEM-3)
Decision Support System
Chapter 9: Decision Support System

Syllabus: o o o o o DSS: Concepts and Philosophy DSS: Deterministic Systems AI Systems Knowledge Based Expert System MIS and Role of DSS
Questions: o o DSS and DSS Components Expert System, Knowledge Based Expert System with Example
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MIS (MCA SEM-3)
Decision-Support System (DSS)

o A Decision Support System (DSS) is an interactive computer-based information system that supports business or organizational decision-making activities. DSSs serve the management, operations, and planning levels of an organization and help to make decisions, which may be rapidly changing and not easily specified in advance. o DSSs include knowledge-based systems. A properly designed DSS is an interactive softwarebased system intended to help decision makers compile useful information from a
combination of raw data, documents, personal knowledge, or business models to identify and solve problems and make decisions. o Decision support systems constitute a class of computer-based information systems including knowledge-based systems that support decision-making activities. o A Decision Support System (DSS) is a class of information systems (including but not limited to computerized systems) that support business and organizational decision-making activities. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from a combination of raw data, documents, personal knowledge, or business models to identify and solve problems and make decisions.
Typical information that a decision support application might gather and present are: 1. Inventories of information assets (including legacy and relational data sources, cubes, data warehouses, and data marts), 2. Comparative sales figures between one period and the next, 3. Projected revenue figures based on new product sales assumptions.
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MIS (MCA SEM-3) o
Decision-support systems (DSS) also serve the management level of the organization. DSS help managers make decisions that are unique, rapidly changing, and not easily specified in advance. They address problems where the procedure for arriving at a solution may not be fully predefined in advance. Although DSS use internal information from TPS and MIS, they often bring in information from external sources, such as current stock prices or product prices of competitors. Clearly, by design, DSS have more analytical power than other systems. They use a variety of models to analyse data, or they condense large amounts of data into a form in which they can be analysed by decision makers. DSS are designed so that users can work with them directly; these systems explicitly include user-friendly software. DSS are interactive; the user can change assumptions, ask new questions, and include new data. Sometimes youll hear DSS systems referred to as business intelligence systems because they focus on helping users make better business decisions.
Types of DSS:
Since the definition of Decision Support Systems can be stretched to include almost any application that processes data there is some confusion as to exactly what constitutes a DSS. In an effort to clarify the term, DS systems can be separated into seven broad categories, each aiding decision making by different methods. 1. Communications Driven DSS: A C-D DSS is a type of DSS that enhances decision-making by enabling communication and sharing of information between groups of people. At its most basic level a C-D DSS could be a simple threaded e-mail. At its most complex it could be a web-conferencing application or interactive video. Communication-Driven DSS will exhibit at least one of the following characteristics: Supports coordination and collaboration between two or more people; Facilitates information sharing; Enables communication between groups of people; Supports group decisions.
2. Data-Driven DSS: Data-driven DSS are a form of support system that focuses on the provision of internal (and sometimes external) data to aid decision making. Most often this will come in the form of a data warehouse a database designed to store data in such a way as to allow for its querying and analysis by users. Another example of a data-driven DSS would be a Geographic Information System(GIS), which can be used to visually represent geographically dependant data using maps.
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MIS (MCA SEM-3) 3. Document-Driven DSS:
Document-driven DSS are support systems designed to convert documents into valuable business data. While data-driven DSS rely on data that is already in a standardised format that lends itself to database storage and analysis, document-driven DSS makes use of data that cannot easily be standardised and stored. The three primary forms of data used in document driven DSS are: Oral (i.e. transcribed conversations); Written (i.e. reports, memos, e-mail and other correspondence); Video (i.e. TV commercials and news reports).
None of these formats lend themselves easily to standardised database storage and analysis, so managers require DSS tools to convert them into data that can be valuable in the decision making process. Document-driven DSS is the newest field of study in Decision Support Systems. Examples of document-driven tools can be found in Internet search engines, designed to sift through vast volumes of unsorted data through the use of keyword searches. 4. Knowledge-Driven DSS: Knowledge-driven DSS are systems designed to recommend actions to users. Typically, knowledge-driven systems are designed to sift through large volumes of data, identify hidden patterns in that data and present recommendations based on those patterns. 5. Model-Driven DSS: Model-driven support systems incorporate the ability to manipulate data to generate statistical and financial reports, as well as simulation models, to aid decision -makers. Model-based decision support systems can be extremely useful in forecasting the effects of changes in business processes, as they can use past data to answer complex what-if questions for decision makers. In addition to these basic types of DSS there are also two additional factors: whether the DSS is spreadsheet-based, web-based or something else entirely. 6. Spreadsheet-based DSS: Model- and Data-driven DS systems can be built using spreadsheets. Spreadsheets offer decision-makers easy to understand representations of large amounts of data. Additionally, spreadsheet data is arranged in such a way as to make it easy to convert the data into visualisations to further aid decision-makers. 7. Web-based DSS: Any type of DSS can be web-based. The term simply describes any decision support system that is operated through the interface of a web browser, even if the data used for decision support remains confined to a legacy system such as a data warehouse.
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MIS (MCA SEM-3) Attributes of DSS: 1. Performance data 2. Flow rates 3. Degree of replication 4. Experimental control 5. Environmental condition 6. Level of O & M Provided 7. Independence of the study 8. Degree of peer review
Objective of DSS:
There are three decisions to be achieved by the decision support system, namely: 1. 2. 3. Increase the effectiveness of the manager's decision-making process. Supports the manager in the decision-making process but does not replace it. Improve the directors effectiveness of decision making.
Comparison between computer systems and decision support systems:

Computer systems are Management Information Systems that are programmed using the computer, to help departments in their daily work and solve recurring problems with the extraction of the required reports and statistics on a regular basis. While decision support systems offer different alternatives to solve new and non -repeated problems ( semi-programmed) clarifying the advantages and disadvantages and the financial cost of each alternative, this is done by building separate data warehouses.
Advantages of DSS:
1. Improves personal efficiency 2. Expedites problem solving (speed up the progress of problems solving in an organization) 3. Facilitates interpersonal communication 4. Promotes learning or training 5. Increases organizational control 6. Generates new evidence in support of a decision 7. Creates a competitive advantage over competition 8. Encourages exploration and discovery on the part of the decision maker 9. Reveals new approaches to thinking about the problem space 10. Helps automate the managerial processes.
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MIS (MCA SEM-3)
Disadvantages of DSS:
Decision Support System can create advantages for organizations and can have positive benefits, however building and using Decision Support System can create negative outcomes in some situations. 1. Monetary cost: The decision support system requires investing in information system to collect data from many sources and analyze them to support the decision making. Some analysis for Decision Support System needs the advance of data analysis, statistics, econometrics and information system, so it is the high cost to hire the specialists to set up the system. 2. Overemphasize decision making: Clearly the focus of those of us interested in computerized decision support is on decisions and decision making. Implementing Decision Support System may reinforce the rational perspective and overemphasize decision processes and decision makin g. It is important to educate managers about the broader context of decision making and the social, political and emotional factors that impact organizational success. It is especially important to continue examining when and under what circumstances Decision Support System should be built and used. We must continue asking if the decision situation is appropriate for using any type of Decision Support System and if a specific Decision Support System is or remains appropriate to use for making or informing a specific decision.
3. Assumption of relevance: According to Wino grad and Flores (1986), "Once a computer system has been installed it is difficult to avoid the assumption that the things it can deal with are the most relevant things for the manager's concern." The danger is that once Decision Support System become common in organizations, that managers will use them inappropriately. There is limited evidence that this occurs. Again training is the only way to avoid this potential problem. 4. Transfer of power: Building Decision Support System, especially knowledge-driven Decision Support System, may be perceived as transferring decision authority to a software program. This is more a concern with decision automation systems than with Decision Support System. We advocate building computerized decision support systems because we want to improve decision making while keeping a human decision maker in the "decision loop". In general, we value the "need for human discretion and innovation" in the decision making process. 5. Unanticipated effects: Implementing decision support technologies may have unanticipated consequences. It is conceivable and it has been demonstrated that some Decision Support System reduce the skill
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needed to perform a decision task. Some Decision Support System overload decision makers with information and actually reduce decision making effectiveness. We are sure that other such unintended consequences have been documented. Nevertheless, most of the examples seem correctable, avoidable or subject to remedy if and when they occur. 6. Obscuring responsibility: The computer does not make a "bad" decision, people do. Unfortunately some people may deflect personal responsibility to a Decision Support System. Managers need to be continually reminded that the computerized decision support system is an intermediary between the people who built the system and the people who use the system. The entire responsibility associated with making a decision using a Decision Support System resides with peop le who built and use the system. 7. False belief in objectivity: Managers who use Decision Support System may or may not be more objective in their decision making. Computer software can encourage more rational action, but managers can also use decision support technologies to rationalize their actions. It is an overstatement to suggest that people using a Decision Support System are more objective and rational than managers who are not using computerized decision support. 8. Status reduction: Some managers argue using a Decision Support System will diminish their status and force them to do clerical work. This perceptual problem can be a disadvantage of implementing a Decision Support System. Managers and IS staff who advocate building and using computerized decision support need to deal with any status issues that may arise. This perception may or should be less common now that computer usage is common and accepted in organizations.
9. Information overload: Too much information is a major problem for people and many Decision Support System increase the information load. Although this can be a problem, Decision Support System can help managers organize and use information. Decision Support System can actually reduce and manage the information load of a user. Decision Support System developers need to try to measure the information load created by the system and Decision Support System users need to monitor their perceptions of how much information they are receiving. The increasing ubiquity of handheld, wireless computing devices may exacerbate this problem and disadvantage.
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MIS (MCA SEM-3)
Components of DSS
The major components of DSS are:
1. Hardware: A personal computer or computer network 2. Software: Database programs , management programs 3. Human Resource: Trained and experienced staff for the areas of operations research, decision support, analysis, statistical analysis, computer technology, networking and communications. 4. Procedures 5. The user interface: dialogue with the program 6. Database 7. Forms and models database Figure below illustrates the components of a DSS. They include a database of data used forquery and analysis; a software system with models, data mining, and other analytical tools; and a user interface.
Overview of a decision-support system
The main components of the DSS are the DSS database, the DSS software system, and the user interface. The DSS database may be a small database residing on a PC or a massive data warehouse. and milk. The DSS database is a collection of current or historical data from a number of applications or groups. It may be a small database residing on a PC that contains a subset of corporate data that has been downloaded and possibly combined with external data. Alternatively, the DSS database may be a massive data warehouse that is continuously updated by major corporate TPS (including enterprise systems and data generated by Website transactions).
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MIS (MCA SEM-3)
The data in DSS databases are generally extracts or copies of production databases so that using the DSS does not interfere with critical operational systems. o The DSS software system contains the software tools that are used for data analysis. It may contain various OLAP tools, data-mining tools, or a collection of mathematical and analytical models that easily can be made accessible to the DSS user. A model is an abstract representation that illustrates the components or relationships of a phenomenon. A model can be a physical model (such as a model airplane), a mathematical model (such as an equation), or a verbal model (such as a description of a procedure for writing an order). Each decision-support system is built for a specific set of purposes and makes different collections of models available depending on those purposes.
Perhaps the most common models are libraries of statistical models. Such libraries usually contain the full range of expected statistical functions, including means, medians, deviations, and scatter plots. The software has the ability to project future outcomes by analysing a series of data. Statistical modelling software can be used to help establish relationships, such as relating product sales to differences in age, income, or other factors between communities. Optimization models, often using linear programming, determine optimal resource allocation to maximize or minimize specified variables, such as cost or time. A classic use of optimization models is to determine the proper mix of products within a given market to maximize profits.
Forecasting models often are used to forecast sales. The user of this type of model might supply a range of historical data to project future conditions and the sales that might result from those conditions. The decision maker could vary those future conditions (entering, for example, a rise in raw materials costs or the entry of a new, low-priced competitor in the market) to determine how new conditions might affect sales. Companies often use this software to predict the actions of competitors. Model libraries exist for specific functions, such as financial and risk analysis models. The DSS user interface permits easy interaction between users of the system and the DSS software tools. A graphic, easy-to-use, flexible user interface supports the dialogue between the user and the DSS. The DSS users can be managers or employ ees with no patience for learning a complex tool, so the interface must be relatively intuitive. Many DSS today are being built with Web-based interfaces to take advantage of the Webs ease of use, interactivity, and capabilities for personalization and cu stomization. Building successful DSS requires a high level of user participation to make sure the system provides the information managers need.
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MIS (MCA SEM-3)
Expert System, Knowledge Based Expert System

Knowledge-based expert systems, or simply expert systems, use human knowledge to solve problems that normally would require human intelligence. These expert systems represent the expertise knowledge as data or rules within the computer. These rules and data can be called upon when needed to solve problems. Books and manuals have a tremendous amount of knowledge but a human has to read and interpret the knowledge for it to be used. Conventional computer programs perform tasks using conventional decision -making logic -containing little knowledge other than the basic algorithm for solving that specific problem and the necessary boundary conditions. This program knowledge is often embedded as part of the programming code, so that as the knowledge changes, the program has to be changed and then rebuilt. Knowledge-based systems collect the small fragments of human know-how into a knowledge-base which is used to reason through a problem, using the knowledge that is appropriate. A different problem, within the domain of the knowledge-base, can be solved using the same program without reprogramming. The ability of these system to explain the reasoning process through back-traces and to handle levels of confidence and uncertainty provides an additional feature that conventional programming don't handle. Most expert systems are developed via specialized software tools called shells. These shells come equipped with an inference mechanism (backward chaining, forward chaining, or both), and require knowledge to be entered according to a specified format (all of which might lead some to categorize OPS5 as a shell). They typically come with a number of other features, such as tools for writing hypertext, for constructing friendly user interfaces, for manipulating lists, strings, and objects, and for interfacing with external programs and databases. These shells qualify as languages, although certainly with a narrower range of application than most programming languages Expert system is an artificial intelligence program that has expert-level knowledge about a particular domain and knows how to use its knowledge to respond properly. Domain refers to the area within which the task is being performed. Ideally the expert systems should substitute a human expert. Edward Feigenbaum of Stanford University has defined expert system as an intelligent computer program that uses knowledge and inference procedures to solve problems that are difficult enough to require significant human expertise for their solutions. It is a branch of artificial intelligence introduced by researchers in the Stanfo rd Heuristic Programming Project. The expert system is a branch of AI designed to work within a particular domain. As an expert is a person who can solve a problem with the domain knowledge in hands it should be able to solve problems at the level of a human expert. The source of knowledge may come
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from a human expert and/or from books, magazines and internet. As knowledge plays a key role in the functioning of expert systems they are also known as knowledge-based systems and knowledge-based expert systems. The experts knowledge about solving the given specific problems is called knowledge domain of the expert.
Expert System Components Of Expert System: The expert system consists of two major components: 1. Knowledge base and 2. Inference engine. Knowledge base contains the domain knowledge which is used by the inference engine to draw conclusions. The inference engine is the generic control mechanism that applies the axiomatic knowledge to the task-specific data to arrive at some conclusion. When a user supplies facts or relevant information of query to the expert system he receives advice or expertise in response. That is given the facts it uses the inference engine which in turn uses the knowledge base to infer the solution. Characteristics of expert systems: 1. High performance: They should perform at the level of a human expert. 2. Adequate response time: They should have the ability to respond in a reasonable amount of time. Time is crucial especially for real time systems. 3. Reliability: They must be reliable and should not crash. 4. Understandable: They should not be a black box instead it should be able explain the steps of the reasoning process. It should justify its conclusions in the same way a human expert explains why he arrived at particular conclusion.
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MIS (MCA SEM-3) Shell:
A shell is a special purpose tool designed based on the requirements of particular applications. User should supply the knowledge base to the shell. Example for the shell is EMYCIN (Empty MYCIN) shell. Shell manages the input and output. It processes the information given by the user, relates it to the concepts contained in the knowledge base, and provides solution for a particular problem. Well-functioning Expert Systems can mean: Increased distribution of expertise Broader job description for individual workers New services A new communication channel for knowledge More efficient education Faster adaptation to changing condition
Advantages of expert systems: 1. Availability: Expert systems are availabe easily due to mass production software. 2. Cheaper: The cost of providing expertise is not expensive. 3. Reduced danger: They can be used in any risky environments where humans cannot work with. 4. Permanence: The knowledge will last long indefinitely. 5. Multiple expertise: It can be designed to have knowledge of many experts. 6. Explanation: They are capable of explaining in detail the reasoning that led to a conclusion. 7. Fast response: They can respond at great speed due to the inherent adavantages of computers over humans. 8. Unemotional and repsonse at all times: Unlike humans, they do not get tense, fatigue or panic and work steadily during emergency situations. More Advantages: Provides consistent answers for repetitive decisions, processes and tasks Holds and maintains significant levels of information Encourages organizations to clarify the logic of their decision -making Never "forgets" to ask a question, as a human might Can work round the clock Can be used by the user more frequently A multi-user expert system can serve more users at a time
Disadvantages: Lacks common sense needed in some decision making
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Cannot make creative responses as human expert would in unusual circumstances Domain experts not always able to explain their logic and reasoning Errors may occur in the knowledge base, and lead to wrong decisions Cannot adapt to changing environments, unless knowledge base is changed
Examples of Expert System Applications: 1. An example of the application of expert systems in the financial field is expert systems for mortgages. Loan departments are interested in expert systems for mortgages because of the growing cost of labour, which makes the handling and acceptance of relatively small loans less profitable. They also see a possibility for standardized, efficient handling of mortgage loan by applying expert systems, appreciating that for the acceptance of mortgages there are hard and fast rules which do not always exist with other types of loans. Another common application in the financial area for expert systems are in trading recommendations in various marketplaces. These markets involve numerous variables and human emotions which may be impossible to deterministically characterize, thus expert systems based on the rules of thumb from experts and simulation data are used. Expert system of this type can range from ones providing regional retail recommendations, like Wishabi, to ones used to assist monetary decisions by financial institutions and governments. 2. Another 1970s and 1980s application of expert systems, which we today would simply call AI, was in computer games. For example, the computer baseball games Earl Weaver Baseball and Tony La Russa Baseball each had highly detailed simulations of the game strategies of those two baseball managers. When a human played the game against the computer, the computer queried the Earl Weaver or Tony La Russa Expert System for a decision on what strategy to follow. Even those choices where some randomness was part of the natural system (such as when to throw a surprise pitch-out to try to trick a runner trying to steal a base) were decided based on probabilities supplied by Weaver or La Russa. Today we would simply say that "the game's AI provided the opposing manager's strategy". 3. A new application for expert systems is automated computer program generation. Funded by a US Air Force grant, an expert system-based application (hprcARCHITECT) that generates computer programs for mixed processor technology (FPGA/GPU/Multicore) systems without a need for technical specialists has recently been commercially introduced.
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MIS (MCA SEM-3)

Syllabus and Question Bank

MIS Syllabus (MCA SEM-3)

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Compiled by: SantY (SPIT)

Syllabus and Question Bank

o MIS and Role of DSS

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MIS (MCA SEM-3)

Syllabus and Question Bank

MIS-QB (MCA SEM-III) Chapter 1: Managing the Digital Firm

Chapter 2: Information System in Enterprise

Chapter 3: Information Systems, Organisations, Management and Strategy

Chapter 4: Decision Making

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MIS (MCA SEM-3)

Syllabus and Question Bank

Chapter 6: Development of MIS

Chapter 7: Choice of Information Technology

Chapter 8: Enterprise Applications and Business Process Integration

Chapter 9: Decision Support System

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MIS (MCA SEM-3)

Managing the Digital Firm

Chapter 1: Managing the Digital Firm

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MIS (MCA SEM-3)

Managing the Digital Firm

Management Information Systems (MIS)

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MIS (MCA SEM-3) should not be confused with computer science.

Managing the Digital Firm IT service management is a practitioner -

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MIS (MCA SEM-3)

Managing the Digital Firm

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MIS (MCA SEM-3)

Managing the Digital Firm

skills of the employees.

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MIS (MCA SEM-3)

Managing the Digital Firm

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MIS (MCA SEM-3)

Managing the Digital Firm

Transaction Processing System (TPS)

Transaction Processing System TPS Types of TPS:

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MIS (MCA SEM-3) 1. Contrasted with batch processing o

Managing the Digital Firm

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MIS (MCA SEM-3)

Managing the Digital Firm