Management Information System

A management information system (MIS) provides information that organizations require to

manage themselves efficiently and effectively. Management information systems are typically
computer systems used for managing five primary components:
1. Hardware
!. "oftware
#. $ata (information for decision ma%ing)
&. 'rocedures (design development and documentation) and
(. 'eople (individuals groups or organizations).
Management information systems are distinct from other information systems )ecause they are
used to analyze and facilitate strategic and operational activities. Academically the term is
commonly used to refer to the study of how individuals groups and organizations evaluate
design implement manage and utilize systems to generate information to improve efficiency
and effectiveness of decision ma%ing including systems termed decision support systems e*pert
systems and e*ecutive information systems.
Overview
A management information system gives the )usiness managers the information that they need to
ma%e decisions. +arly )usiness computers were used for simple operations such as trac%ing
inventory )illing sales or payroll data with little detail or structure. ,ver time these computer
applications )ecame more comple* hardware storage capacities grew and technologies
improved for connecting previously isolated applications. As more data was stored and lin%ed
managers sought greater a)straction as well as greater detail with the aim of creating significant
management reports from the raw stored data. ,riginally the term -M."- descri)ed applications
providing managers with information a)out sales inventories and other data that would help in
managing the enterprise. ,ver time the term )roadened to include: decision support systems
resource management and human resource management enterprise resource planning (+/')
enterprise performance management (+'M) supply chain management ("0M) customer
relationship management (0/M) pro1ect management and data)ase retrieval applications.
Management information systems provide a variety of information products to managers.
'eriodic "cheduled /eports are a traditional form of providing information to managers via a
specified format designed to provide managers with information on a regular )asis. +*ception
/eports are produced only when e*ceptional conditions occur. +*ception reporting reduces
information overload instead of overwhelming decision ma%ers with periodic detailed reports of
)usiness activity. $emand /eports and /esponses are availa)le when the managers require
immediate access to vital information. 2e) )rowsers $3M" query languages and report
generators ena)le managers to get this information and not force them to wait for periodic
detailed reports of )usiness activity. 'ush /eporting is information that is pushed directly to the
manager4s respective networ%ed wor%station. 2e)casting software is )eing more frequently
utilized to )roadcast selective reports and other vital information.
History
5enneth 0. 6audon and 7ane 6audon identify five eras of M." evolution corresponding to the
five phases in the development of computing technology: 1) mainframe and minicomputer
computing !) personal computers #) client8server networ%s &) enterprise computing and ()
cloud computing.
9he first era (mainframe and minicomputer) was ruled )y .3M and their mainframe computers:
these computers would often ta%e up whole rooms and require teams to run them ; .3M supplied
the hardware and the software. As technology advanced these computers were a)le to handle
greater capacities and therefore reduce their cost. "maller more afforda)le minicomputers
allowed larger )usinesses to run their own computing centers in;house.
9he second era (personal computer) )egan in 1<=( as microprocessors started to compete with
mainframes and minicomputers and accelerated the process of decentralizing computing power
from large data centers to smaller offices. .n the late 1<>?s minicomputer technology gave way
to personal computers and relatively low cost computers were )ecoming mass mar%et
commodities allowing )usinesses to provide their employees access to computing power that ten
years )efore would have cost tens of thousands of dollars. 9his proliferation of computers
created a ready mar%et for interconnecting networ%s and the popularization of the .nternet.
As technological comple*ity increased and costs decreased the need to share information within
an enterprise also grew@giving rise to the third era (client8server) in which computers on a
common networ% access shared information on a server. 9his lets thousands and even millions of
people access data simultaneously. 9he fourth era (enterprise) ena)led )y high speed networ%s
tied all aspects of the )usiness enterprise together offering rich information access encompassing
the complete management structure.
9he fifth era (cloud computing) is the latest and employs networ%ing technology to deliver
applications as well as data storage independent of the configuration location or nature of the
hardware. 9his along with high speed cellphone and wifi networ%s led to new levels of mo)ility
in which managers access the M." remotely with laptop and ta)let computers plus smartphones.
Types and Terminology
9he terms Management Information System (M.") information system Enterprise Resource
Planning (+/') and information technology management are often confused. .nformation
systems and M." are )roader categories that include +/'. .nformation technology management
concerns the operation and organization of information technology resources independent of
their purpose.
Most management information systems specialize in particular commercial and industrial
sectors aspects of the enterprise or management su)structure.
Management information systems (MIS) produce fi*ed regularly scheduled reports )ased on
data e*tracted and summarized from the firm4s underlying transaction processing systems to
middle and operational level managers to identify and inform structured and semi;structured
decision pro)lems.
Decision Support Systems (DSS) are computer program applications used )y middle and
higher management to compile information from a wide range of sources to support pro)lem
solving and decision ma%ing.$"" is ma1orly used for semi;structured and unstructured
decision pro)lems.
Executive Information Systems (EIS) is a reporting tool that provides quic% access to
summarized reports coming from all company levels and departments such as accounting
human resources and operations.
Marketing Information Systems (MIS) are Management .nformation "ystems designed
specifically for managing the mar%eting aspects of the )usiness.
ffice !utomation Systems (!S) support communication and productivity in the enterprise
)y automating wor% flow and eliminating )ottlenec%s. ,A" may )e implemented at any and
all levels of management.
School Information Management Systems (".M") cover school administration and often
including teaching and learning materials.
Enterprise Resource Planning (ERP) facilitates the flow of information )etween all )usiness
functions inside the )oundaries of the organization and manage the connections to outside
sta%eholders.
Advantages
9he following are some of the )enefits that can )e attained for different types of management
information systems.
0ompanies are a)le to highlight their strengths and wea%nesses due to the presence of
revenue reports employeesA performance record etc. 9he identification of these aspects can
help the company improve their )usiness processes and operations.
Biving an overall picture of the company and acting as a communication and planning tool.
9he availa)ility of the customer data and feed)ac% can help the company to align their
)usiness processes according to the needs of the customers. 9he effective management of
customer data can help the company to perform direct mar%eting and promotion activities.
Management .nformation "ystems can help a company gain a competitive advantage.
0ompetitive advantage is a firm4s a)ility to do something )etter faster cheaper or uniquely
when compared with rival firms in the mar%et.
Enterprise Applications
Enterprise systems@also %nown as enterprise resource planning (ERP) systems@provide
integrated software modules and a unified data)ase that personnel use to plan manage and
control core )usiness processes across multiple locations. Modules of +/' systems may
include finance accounting mar%eting human resources production inventory
management and distri)ution.
Supply chain management (S"M) systems ena)le more efficient management of the supply
chain )y integrating the lin%s in a supply chain. 9his may include suppliers manufacturers
wholesalers retailers and final customers.
"ustomer relationship management ("RM) systems help )usinesses manage relationships
with potential and current customers and )usiness partners across mar%eting sales and
service.
#no$ledge management system (#MS) helps organizations facilitate the collection
recording organization retrieval and dissemination of %nowledge. 9his may include
documents accounting records unrecorded procedures practices and s%ills.
Database Management System:
DBMS is a collection of interrelated data and a set of programs to access those data. The primary goal of a DBMS is to provide a
way to store and retrieve database information that is both convenient and efficient. Database systems is a computerized record
keeping system which provides mechanisms for the safety of the stored information from data corruption and unauthorized
access.
DBMS Architecture:
The AS!"S#A$% architecture is divided into three levels& known as the internal& conceptual and e'ternal level.
Internal Level: This is also known as the physical level is the one closest to the physical storage ( i.e. it is the one
concerned with the way the data is physically stored.
External Level: This is also known as the user logical level is the one closest to the users ( it is the one concerned with the
way the data is seen by individual users.
Conceptual Level: This is also known as the community logical level& or sometimes )ust the logical level& un*ualified is a
level of indirection between the other two.
Working Principle:
The DBMS is a software that handles all access to the database. %onceptually what happens is the following+
A user issues an access re*uest& using some particular data sublanguage typically S,-.
The DBMS intercepts that re*uest and analyzes it.
The DBMS inspects& in turn& the e'ternal schema for that user& the corresponding e'ternal"conceptual mapping& the
conceptual schema& the conceptual"internal mapping& and the storage structure definition.
The DBMS e'ecutes the necessary operations on the stored database.
Data Models:
/nderlying the structure of a database is the data model& a collection of conceptual tools for describing data& data relationships&
data semantics& and consistency constraints. A data model provides a way to describe the design of a database at the physical&
logical and view level. The data models can be classified in four different categories.
elational Model+ The relational model uses a collection of tables to represent both data and the relationships among those
data.
Entit! elationship Model+ The entity relationship model is based on a perception of a real world that consists of a collection
of basic ob)ects called entities and of relationship among these ob)ects.
"he o#$ect oriented data %odel: This is another data model& which can be seen as an e'tension of 01$ model with notations
of encapsulation& methods& and ob)ect identity. The ob)ect relational data model combines features ob)ect oriented data
models and relational model.
Se%istructured Data Model+ The semistructured data model permits the specification of data where individual data items of
same type may have different set of attributes. The 0'tended Markup -anguage 23M-. is widely used to represent
semistructured data.
Data#ase Languages:
A database system provides a data1definition language to specify the database schema and a data1manipulation language to
e'press database *ueries and updates. !n practice& the data definition and data manipulation languages are not separate
languages& instead they simply form parts of a single language& such as the widely used S,- language.
Data#ase Design:
Database systems are designed to manage large bodies of information. Database design mainly involves the design of database
schema. The design of a complete database application environment that meets the needs of the enterprise being modeled
re*uires attention to a broader set of issues.
Bene&its o& a Data#ase S!ste%s:
Database systems arose in response to early methods of computerized management of commercial data. The typical file
processing systems is supported by conventional operating system. /sing the database approach has the following benefits over
the traditional file processing approach.
Data edundanc!:
This refers to duplication of data. !n non database system each application with own separate files often lead to redundancy in
store data which results in wastage of space. Database systems does not maintain separate copies of the same data. All the
data kept in one place and various application refer from this centrally controlled system.
Data Inconsistenc!:
Database is said to be inconsistent when contradictory information will be supplied to the users. DBMS ensures the database
is always consistent by ensuring that any change made to either of the two or more entities is automatically applied to the
other one also. This process is also known as propagating update.
Sharing o& Data:
Sharing of data allows the e'isting application to use the data by multiple users of the database system. Due to shared data it
is possible to satisfy the data re*uirement of new applications without creation of additional stored data or marginal
modification.
En&orce%ent o& Standards:
DBMS uses standard measures in naming& formatting and structuring while creating and using data within the organization.
This ensures easier enforcement of data usage particularly in migrating and interpreting data between two different systems.
Data Securit!:
To ensure security DBMS provides security tools such as user codes and passwords so that data security checks can be
carried out whenever access is attempted to sensitive data.
Concurrent Access:
4or the sake of overall performance and faster response time many systems uses multiple users to update the data
simultaneously. !n such environment interactions of concurrent updates may result in data inconsistency. DBMS guards
against this possibility by maintaining some form of supervision into such applications.
Ato%icit! Pro#le%s:
A computer system like any other mechanical device is sub)ect to failure. !n many applications it is crucial that if a failure
occurs the data is restored to the consistent state that e'isted prior to the failure. DBMS takes care of such problems by
making the transactions atomic ( it must happen in entirety or not at all.
Data Integrit!:
Data integrity refers to ensuring data in database is accurate. This is ensured through enforcing various integrity constraints
during the time of creation of data structure.
Better Interaction 'ith (sers:
!n case of DBMS the availability of up1to1date information improves and makes it easy to respond to unforeseen information
re*uest. %entralizing the data in database allows users to obtain new and combined information.
0fficient System+ in DBMS the contents of stored data can be changed easily and do not have any impact on the application
programs. !nitial cost of DBMS may be high but overall costs is less compared to conventional system.
Telecommunications !etwor"s:
A communication system is defined as the collection of software and hardware that facilitates inter system e'change of
information between different devices. Sharing of info is of 5 types.
6. -ocal 2face to face communication.
5. $emote 2%ommunication over distance..
The fundamental characteristics of data communication is considered as follows.
6. Delivery 2 The system must delver data to the correct destination
5. Accuracy 2 The system must deliver data accurately
7. Timeliness 2 System must deliver data in a timely manner without enough time lags
Data Co%%unication) Co%ponents)
6. Message+ !t is the info. That is to be communicated
5. Sender+ ! is the device that sends the message
7. eceiver+ Device that receives the message
8. Mediu%+ The transmission medium is the physical path that communicates the message from sender to receiver.
9. Protocol+ #rotocol refers to a set of rules that coordinates the e'change of info. Both the sender and receiver should
follow the same protocol to communicate data.
Data "rans%ission Mode:
6. Si%plex Mode+ !t is unidirectional. The info flows in one direction across the circuit with no capability to support response in
the other direction. 0g. T: transmission
5. *al& Duplex+ !n this mode each communication device can receive and transmit info but not at the same time. ;hen one
device is sending the other can only receive at that point of time. e.g wireless handsets
7. +ull Duplex 2Duple'.+ This mode allows both communicating devices to transmit and receive data simultaneously. e.g.
Telephone network.
Data Co%%unication Measure%ent)
The *uantity of data that is communicated is measured in terms of bandwidth. Bandwidth refers to the ma'imum volume of info
that can be transferred. !t is measured in bits per second 2B#S. or <B#S. The level of bandwidth falls into 7 categories +
6. ,arro' Band+ Single transmission channel of =8 <B#S or less.
5. Wide Band+ 6.988 MB#S to 89 MB#S
7. Broad#and+ 89 MB#S or more
"rans%ission Media
Transmission is the physical media thru which data and info are transmitted. !t is divided into 5 categories+
6. >uided media
5. /nguided media.
-uided Media+ This uses a cabling system that guides the data signal along a specific path. There are 8 basic types of guided
media.
6. ?pen wire cable&
5. Twisted pair cable&
7. %oa'ial cable&
8. ?ptical 4iber
(nguided Media+ data signals flow thru the air. 0g. $adio fre*uency propagation& Microwave propagation& Satellite.
Analog . Digital Data trans%ission)
Analog Signal: !t is a continuous wave form that changes smoothly over time. The sine wave is the most fundamental form of an
analog signal. Sine waves are characterized by 7 things.
6. Amplitude 2Magnitude for electrical signals it is measured in volts or amperes.
5. 4re*uency 2Measured in @ertz.
7. ;avelength refers to the distance between similar points of a given wave measured in Armstrong.
Digital Signals: !t is the data stored in the form of ABs and 6Bs.
Modulation: !t refers to the process of impressing information thru a carrier wave by changing some of the waveBs
characteristics viz. amplitude& fre*uency or phase& so that it is more suitable for transmission over the medium between
transmitter and receiver. There are 5 forms of modulation
6. Amplitude modulation and
5. 4re*uency Modulation.
Multiplexing: Multiple'ing refers to the process of transmitting more than one signal over a single link& root or channel. There
are 5 basic multiple'ing techni*ues
6. 4DM 24re*uency Division Multiple'ing. ( !nfo from multiple channels can be allocated bandwidth on a single wire based on
fre*uency.
5. TDM 2Time Division Multiple'ing. ( !nfo from multiple channels can be allocated based on time slot.
As!nchronous vs) S!nchronous "rans%ission:
Asynchronous+ !t refers to the transmission of one character at a time& with intervals of varying lengths& with start bits at the
beginning and stop bits at the end to control the transmission.
Synchronous+ @ere data is sent in blocks without the need for start and stop bits.
S'itching: Switching refers to routing traffic by setting up of temporary connections between 5 or more network points. A
temporary connection is achieved by devices located at different locations on the network called switches. There are / %ethods
o& s'itching:0
6. Circuit S'itching+ !t is a type of communication in which a dedicated channel is established between 5 devices for the
duration of the network. 0.g. #ST ( #ublic switch telephone network.
5. Packet S'itching+ This introduces the idea of breaking data into packets. 0ach packet contains addresses for the
machine sending it and the machine e'pected to receive it. At The destination the packets are reassembled to form the
original message.
7. Message S'itching+ !t uses a message store and forward system where each message contains a destination
address and is passed from source to destination thru intermediate nodes. At each transfer point in the connection
incoming data is stored in its entirety and then forwarded to the ne't point. This process continues until the data
reaches its destination.
"CP1IP M2DEL + Transmission %ontrol #rotocol " !nternet #rotocol The T%#"!# protocol contains 9 main layers
6. Application
5. Transport
7. etwork
8. Data link
9. #hysical.
The data unit initially created at the application layer 2by an application viz. e1mail& web browser. is called as a %essage. A
message is actually broken down into segments by the transport layer. The transport layer of the T%#"!# contains 5 protocols
6. T%# 2Transmission control protocol.
5. /D# 2/ser datagram protocol. T%# is more often used.
The transport layer then adds its own header to the segment and gives it to the network layer. The network layer adds the !#
2!nternet protocol. header to this block and gives the result to the data link layer. The data link layer adds the frame header and
gives it to the physical layer for transmission. At the physical layer the actual bits are transmitted as voltage pulses. An opposite
process happens at the destination ends where each layer removes the previous layers headers and finally the application layer
receives the original message.
Developing Information Systems
Developing IS Solutions:
Developing successful information systems solutions to business problems is a ma)or challenge for business managers and
professionals today. Most computer based information systems are conceived& designed& and implemented using some form of
systematic development process. /sing the systems approach to develop information system solutions can be viewed as a multi
step process called the information systems development cycle& also known as the system development life cycle 2SD-%.. ;hat
goes on in each stage of this process& which includes the steps of
Pro$ect Initiation+ Somebody needs to start the pro)ect. /sually it is a manager outside the !S organization who has a
problem or sees an opportunity related to the area where he are she works. A formal planning process also may identify
new systems that can help the organization meet its ob)ectives. Sometimes the !S group initiates the pro)ects that will
improve its own operations or deal with common problems among the user areas.
S!ste% Anal!sis + ?nce the pro)ect is initiated& the system analysis phase begins. System analysis refers to the
investigation of e'isting situation. Some of the ma)or activities include isolating the symptoms of the problem and
determining its cause. ?ther activities are the identification of business process and their interrelations and the flow of
information related to these process. System analysis aims at providing a through understanding of the e'isting
organization& its operation& and the situation relevant to the system.
o S!ste% Anal!sis:
System analysis refers to the investigation of the e'isting situation.
!t is a process that may take weeks& or months involving many activities.
!t aims at providing a thorough understanding of e'isting organisations and its operations
.
o S!ste% Anal!sis Activities
!solating the symptoms of the problem
Determining the cause
!dentification of business process and their interrelations.
Project Initiation
System Analysis &
Feasibility Study
Logical Analysis &
Design
Accusation or
Development
Implementation
Operation
Post Audit
Maintenance
Go Back to the Previous Stage or Stop
4low of !nformation related to these processes
o S!ste% Anal!sis deals 'ith
#eople
#rocedures involved
The e'isting information system technology
The environment surrounding the problem
o S!ste% Anal!sis Methods3
?bservation
$eview of Documents
!nterviews
#erformance Measurements
+easi#ilit! Studies: To determine the probability of success of a proposed solution. May be conducted several times
throughout SD-%. To test whether the solution is achievable with given organisational resources and constraints.
o "echnological +easi#ilit!:
Are the performance re*uirements achievable utilizing current information technologyC
!f not& are they attainable through capabilities that will be available by the time the pro)ect finishesC
;ill newer technologies supersede in the proposed pro)ect before the organisation recovers its investmentC
o Econo%ical +easi#ilit!
Are the e'pected benefits greater than the costsC
%an the organisation afford the costs in terms of spending and personal re*uirementsC
Are the risks including the possibility of cost and schedule overruns& acceptable for an investment of this size.
o 2rganisational +actors
!s the proposed system reasonably compactable with organisational culture& internal political considerations& and
work rules.
Are the skill levels to use the new system consistent with employees who will operate it.
o Legal Ethical . 2ther Constraints
!s the new or automated process ethical to employees and customersC
Does it meets all regulatory re*uirementsC
Are any of the constraints in danger of being violatedC
Logical Anal!sis . Design:
The emphasis is on
o !dentification of information re*uirements
o Specification of generic !S functions& such as input& output and storage.
o ot on program writing or identifying hardware.
Logical Designing "ools
o Data 4low Diagram
o 0ntity $elationship Diagram
o 4low %harts
o @ierarchy !nputs #rocess ?utputs %harts
o ?rganisational %harts
Ph!sical Design
Translation of abstract logical model into the specific technical design for the new systems.
0mphasis is on
o /ser re*uirements of the system
o %omputing re*uirements to features of available software
o -ess time on designing systems.
o %onfiguration re*uirements for commercial packages
Ac4uisition or Develop%ent
o /sing the specifications proposed in -ogical Design hardware and software are purchased.
o %onfiguration of the same as per the system re*uirements.
o #rogrammers write code for parts of the system where commercial sources are not appropriate.
o Technical writers develop documentation and training materials.
o Testing is done by !S personnel and some users for bugging and comparing system performance.
I%ple%entation:
!mplementing a new system re*uires conversion from a previous system
Approaches+
o Parallel Conversion:
o ?ld and ew system operate concurrently
o Safest approach
o The most e'pensive
o Direct Cutover:
o The ?ld system is turned off& and new system is turned on
o 4astest and least e'pensive
o $isk factor is the ma'imum
o Pilot Conversion:
o The new system is implemented in a subset of locations.
o !s like a direct cutover for pilot locations
o But for the whole organisation& it is like parallel conversion
o Both risks and costs are relatively low.
o Phased Conversion:
o -arge systems often are built from distinct modules. !f the modules were originally designed to be relatively
independent& it may possible to replace the modules one at a time.
o $elatively safer
o Takes longer D re*uires more testing
2peration:
After successful conversion& the system will operate for an indefinite period of time& untilE
o The system is no longer ade*uate
o ecessary
o %ost effective
#ost Audit 0valuation
Maintenance+
Total #uality Management
Total $uality management (T#M) is the organization;wide effort to install and ma%e
permanent a climate in which it continuously improves its a)ility to deliver high;quality products
and services to customers. 2hile there is no widely agreed;upon approach 9CM efforts
typically draw heavily on the previously;developed tools and techniques of quality control. As a
)usiness phenomenon 9CM en1oyed widespread attention during the late 1<D?s and early 1<<?s
)efore )eing overshadowed )y .", <??? 6ean manufacturing and "i* "igma
History
.n the late 1<>?s and early 1<D?s the developed countries of Eorth America and 2estern +urope
suffered economically in the face of stiff competition from 7apanAs a)ility to produce high;
quality goods at competitive cost. For the first time since the start of the .ndustrial /evolution
the Gnited 5ingdom )ecame a net importer of finished goods. 9he Gnited "tates undertoo% its
own soul;searching e*pressed most pointedly in the television )roadcast of If %apan "an&&& 'hy
"an(t 'e) Firms )egan ree*amining the techniques of quality control invented over the past (?
years and how those techniques had )een so successfully employed )y the 7apanese. .t was in the
midst of this economic turmoil that 9CM too% root.
9he e*act origin of the term -total quality management- is uncertain. .t is almost certainly
inspired )y Armand H. Feigen)aumAs multi;edition )oo% *otal +uality "ontrol and 5aoru
.shi%awaAs 'hat Is *otal +uality "ontrol) *he %apanese 'ay. .t may have )een first coined in
the Gnited 5ingdom )y the $epartment of 9rade and .ndustry during its 1<D# -Eational Cuality
0ampaign-. ,r it may have )een first coined in the Gnited "tates )y the Eaval Air "ystems
0ommand to descri)e its quality;improvement efforts in 1<D(.
!otable Definitions
2hile there is no generally;accepted definition of 9CM several nota)le organizations have
attempted to define it. 9hese include:
%nited States Department of Defense &'())*
,*otal +uality Management (*+M) in the Department of Defense is a strategy for continuously
improving performance at every level- and in all areas of responsi.ility& It com.ines
fundamental management techni/ues- exppisting improvement efforts- and speciali0ed technical
tools under a disciplined structure focused on continuously improving all processes& Improved
performance is directed at satisfying such .road goals as cost- /uality- schedule- and mission
need and suita.ility& Increasing user satisfaction is the overriding o.1ective& *he *+M effort
.uilds on the pioneering $ork of Dr& '& E& Deming- Dr& %& 2& %uran- and others- and .enefits
from .oth private and pu.lic sector experience $ith continuous process improvement&,
+ritis, Standards Institution standard '((-
,! management philosophy and company practices that aim to harness the human and material
resources of an organi0ation in the most effective $ay to achieve the o.1ectives of the
organi0ation&,
International Organi.ation for Standardi.ation standard ISO )/0-:'((/
,! management approach of an organisation centred on /uality- .ased on the participation of
all its mem.ers and aiming at long term success through customer satisfaction and .enefits to
all mem.ers of the organisation and society&,
T,e American Society for #uality
,! term first used to descri.e a management approach to /uality improvement& Since then- *+M
has taken on many meanings& Simply put- it is a management approach to long3term success
through customer satisfaction& *+M is .ased on all mem.ers of an organi0ation participating in
improving processes- products- services and the culture in $hich they $ork& *he methods for
implementing this approach are found in the teachings of such /uality leaders as Philip 4&
"ros.y- '& Ed$ards Deming- !rmand 5& 6eigen.aum- #aoru Ishika$a and %oseph M& %uran&,
T,e 1,artered #uality Institute
,*+M is a philosophy for managing an organisation in a $ay $hich ena.les it to meet
stakeholder needs and expectations efficiently and effectively- $ithout compromising ethical
values&,
Approac,es to define #uality:
Harvard professor $avid Barvin in his )oo% Managing +uality summarized five principal
approaches to define quality.
Transcendent
9hose who hold the transcendental view would say I. can4t define it )ut . %now it when . see
itJ Advertisers are fond of promoting products in these terms. Cuality is difficult to define or
to operationalize. .t thus )ecomes elusive when using the approach as )asis for competitive
advantage. Moreover the functions of design production and service may find it difficult to
use the definition as a )asis for quality management.
2roduct based
Cuality is viewed as a quantifia)le or measura)le characteristic or attri)ute. For e*ample
dura)ility or relia)ility can )e measured and the engineer can design to that )enchmar%.
Although this approach has many )enefits it has limitation as well. 2here quality is )ased
on individual taste or preference the )enchmar% for measurement may )e misleading.
%ser based
.t is )ased on idea that quality is an individual matter and products that )est satisfy their
preferences are those with the highest quality. 9his is rational approach )ut leads to two
pro)lems:
0onsumer preference varies widely and it is difficult to aggregate these preferences into
products with wide appeal. 9his leads to the choice )etween a niche strategy or a mar%et
aggregation approach which tries to identify those product attri)utes that meet the needs
of the largest num)er of consumers.
Another pro)lem concerns the answer to the question IAre quality and customer
satisfaction the sameKJ the answer is pro)a)ly not. ,ne may admit that a 6incoln
continental has many qualities attri)ute )ut satisfaction may )e )etter achieved with an
+scort.
Manufacturing based
Manufacturing;)ased definitions are concerned primarily with engineering and
manufacturing practices and use the universal definition of Iconformance to requirementsJ.
/equirements or specifications are esta)lished )y design and any deviation implies a
reduction in quality. 9he concept applies to services as well as product. +*cellence in quality
is not necessarily in the eye of the )eholder )ut rather in the standards set )y the
organization.
9his approach has the serious wea%ness. 9he consumer4s perception of quality is
equated with conformance and hence is internally focused.
3alue based
.t is defined in term of costs and prices as well as num)er of other attri)utes. 9hus the
consumer4s purchased decision is )ased on quality at an accepta)le price. 9his approach is
reflected in the popular "onsumer Reports magazine which ran%s products and services
)ased on two criteria: Cuality and Halue. 9he highest quality is not usually the )est value.
9hat designation is assigned to the I)est; )uyJ product or service.
4eatures
9here is no widespread agreement as to what 9CM is and what actions it requires of
organizations however a review of the original Gnited "tates Eavy effort gives a rough
understanding of what is involved in 9CM.
9he %ey concepts in the 9CM effort underta%en )y the Eavy in the 1<D?s include:
-Cuality is defined )y customersA requirements.-
-9op management has direct responsi)ility for quality improvement.-
-.ncreased quality comes from systematic analysis and improvement of wor% processes.-
-Cuality improvement is a continuous effort and conducted throughout the organization.-
9he Eavy used the following tools and techniques:
1. 9he '$0A cycle to drive issues to resolution
2. !d hoc cross;functional teams (similar to quality circles) responsi)le for addressing
immediate process issues
#. "tanding cross;functional teams responsi)le for the improvement of processes over the
long term
&. Active management participation through steering committees
5. Gse of the "even 3asic 9ools of Cuality to analyze quality;related issues li%e
6eadership
"trategic planning
0ustomer focus
Measurement analysis and %nowledge management
2or%force focus
,perations focus
/esults
T#M 2,ilosop,y
9CM aims to )ase management decisions on a long;term philosophy even at the e*pense of
short;term financial goals. "ome of them are:
9he right process will produce the right results
1. 0reate continuous process flow to )ring pro)lems to the surface.
!. Gse the -pull- system to avoid overproduction.
#. 6evel out the wor%load. (2or% li%e the tortoise not the hare).
&. 3uild a culture of stopping to fi* pro)lems to get quality right from the first.
(. "tandardized tas%s are the foundation for continuous improvement and employee
empowerment.
=. Gse visual control so no pro)lems are hidden.
>. Gse only relia)le thoroughly tested technology that serves your people and processes.
Add value to the organization )y developing your people and partners
1. Brow leaders who thoroughly understand the wor% live the philosophy and teach it to
others.
!. $evelop e*ceptional people and teams who follow your companyAs philosophy.
#. /espect your e*tended networ% of partners and suppliers )y challenging them and
helping them improve.
0ontinuously solving root pro)lems drives organizational learning
1. Bo and see for yourself to thoroughly understand the situation:
!. Ma%e decisions slowly )y consensus thoroughly considering all options: implement
decisions rapidly:
#. 3ecome a learning organization through relentless reflection and continuous
improvement (5aizen).
1,aracteristics of T#M 5eader
1. Hisi)le 0ommitted and 5nowledgea)le
!. A Missionary Leal
#. Aggressive 9argets
&. "trong $rivers
(. 0ommunication of Halues
=. ,rganization
>. 0ustomers 0ontact
T#M 2rinciples are:
1. Cuality 2or% the First 9ime
!. Focus on the 0ustomer
#. "trategic Holistic Approach to .mprovement
&. 0ontinuous .mprovement as a 2ay of 6ife
(. Mutual /espect and 9eamwor%
Indicators of 1ustomer measure of #uality
1. Frontline empowerment
!. +*cellent hiring training attitude and morale for front line employees
#. 'roactive customer service system
&. 'roactive management of relationship with customers
(. Gse of all listening posts
=. Cuality requirements of mar%et segment
>. 0ommitment to customers
D. Gnderstanding customer requirements
<. "ervice standards meeting customers requirements
#uality 1osts:
Cuality costs are those incurred in e*cess of those that would have )een incurred if the product
were )uilt or the service performed e*actly right the first time. 9his view is held )y adherents of
9CM philosophy. 0osts include not only those that are direct )ut also those resulting from lost
customers lost mar%et share and the many hidden costs and foregone opportunities not identified
)y modern cost accounting systems.
Higher quality means higher cost. Cuality attri)utes such as performance and features cost more
in terms of la)or material design and other costly resources. 9he additional )enefits from
improved quality do not compensate for additional e*pense. 9he cost of improving quality is less
than the resulting savings. 9he saving result from less rewor% scrap and other direct e*penses
related defects. 9his is said to account for the focus on continuous improvement of processes in
7apanese firms.
Types of #uality 1osts
9he cost of quality is generally classified into four categories
'6 1ost of 2revention:
'revention costs include those activities which remove and prevent defects from
occurring in the production process. .ncluded are such activities as quality planning
production reviews training and engineering analysis which are incurred to ensure that
poor quality is not produced.
-6 1ost of Appraisal
9hose costs incurred to identify poor quality products after they occur )ut )efore
shipment to customers. e.g. .nspection activity6
76 1ost of Internal 4ailure
9hose incurred during the production process. .nclude such items as machine downtime
poor quality materials scrap and rewor%.
/6 1ost of E8ternal 4ailure
9hose incurred after the product is shipped. +*ternal failure costs include returns and
allowances warranty costs and hidden costs of customer dissatisfaction and lost mar%et
share.
+enefits of T#M:
1. Breater customer loyalty
!. Mar%et share improvement
#. Higher stoc% prices
&. /educed service calls
(. Higher prices
=. Breater productivity
+usiness 2rocess 9eengineering
+usiness process re:engineering is a )usiness management strategy originally pioneered in the
early 1<<?s focusing on the analysis and design of wor%flows and processes within an
organization. 3'/ aimed to help organizations fundamentally rethin% how they do their wor% in
order to dramatically improve customer service cut operational costs and )ecome world;class
competitors. .n the mid;1<<?s as many as =?M of the Fortune (?? companies claimed to either
have initiated reengineering efforts or to have plans to do so.
3'/ see%s to help companies radically restructure their organizations )y focusing on the ground;
up design of their )usiness processes. According to $avenport (1<<?) a )usiness process is a set
of logically related tas%s performed to achieve a defined )usiness outcome. /e;engineering
emphasized a holistic focus on )usiness o)1ectives and how processes related to them
encouraging full;scale recreation of processes rather than iterative optimization of su) processes.
3usiness process re;engineering is also %nown as )usiness process redesign )usiness
transformation or )usiness process change management.
History
.n 1<<? Michael Hammer a former professor of computer science at the Massachusetts .nstitute
of 9echnology (M.9) pu)lished the article -/eengineering 2or%: $onAt Automate ,)literate-
in the 2arvard 4usiness Revie$ in which he claimed that the ma1or challenge for managers is to
o)literate forms of wor% that do not add value rather than using technology for automating it.
9his statement implicitly accused managers of having focused on the wrong issues namely that
technology in general and more specifically information technology has )een used primarily for
automating e*isting processes rather than using it as an ena)ler for ma%ing non;value adding
wor% o)solete.
HammerAs claim was simple: Most of the wor% )eing done does not add any value for customers
and this wor% should )e removed not accelerated through automation. .nstead companies
should reconsiditors their ina)ility to satisfy customer needs and their insufficient cost
structure. +ven well esta)lished management thin%ers such as 'eter $ruc%er and 9om 'eters
were accepting and advocating 3'/ as a new tool for (re)achieving success in a dynamic world.
$uring the following years a fast growing num)er of pu)lications )oo%s as well as 1ournal
articles were dedicated to 3'/ and many consulting firms em)ar%ed on this trend and
developed 3'/ methods. However the critics were fast to claim that 3'/ was a way to
dehumanize the wor% place increase managerial control and to 1ustify downsizing i.e. ma1or
reductions of the wor% force and a re)irth of 9aylorism under a different la)el.
$espite this critique reengineering was adopted at an accelerating pace and )y 1<<# as many as
=?M of the 4ortune ;00 companies claimed to either have initiated reengineering efforts
or to have plans to do so. 9his trend was fueled )y the fast adoption of 3'/ )y the
consulting industry )ut also )y the study Made in !merica conducted )y M.9 that
showed how companies in many G" industries had lagged )ehind their foreign
counterparts in terms of competitiveness time:to:mar"et and productivity
T,e role of Information Tec,nology
.nformation technology (.9) has historically played an important role in the reengineering
concept. .t is considered )y some as a ma1or ena)ler for new forms of wor%ing and colla)orating
within an organization and across organizational )orders. 3'/ literature identified several so
called disruptive technologies that were supposed to challenge traditional wisdom a)out how
wor% should )e performed.
"hared data)ases ma%ing information availa)le at many places
+*pert systems allowing generalists to perform specialist tas%s
9elecommunication networ%s allowing organizations to )e centralized and decentralized
at the same time
$ecision;support tools allowing decision;ma%ing to )e a part of every)odyAs 1o)
2ireless data communication and porta)le computers allowing field personnel to wor%
office independent
.nteractive videodis% to get in immediate contact with potential )uyers
Automatic identification and trac%ing allowing things to tell where they are instead of
requiring to )e found
High performance computing and school allowing on;the;fly planning and revisioning
.n the mid;1<<?s especially wor%flow management systems were considered as a significant
contri)utor to improved process efficiency. Also +/' (+nterprise /esource 'lanning) vendors
such as "A' 7$ +dwards ,racle 'eople"oft positioned their solutions as vehicles for )usiness
process redesign and improvement.
2rinciples of +29
1ertain common principles e8ist in business process re engineering< and most of t,em are
facilitated by IT6 T,e ma=or principles are as follows6
Several =obs are combined into one6
Employees ma"e decisions &employee empowerment*6 Decision ma"ing becomes a
part of t,e =ob6
Steps in business process are performed in a natural order< and several =obs get
done simultaneously6
2rocesses to manufacture similar products or provide similar services can be
structured so t,at slig,t variations will permit provision of customi.ed goods or
services6 T,is ma"es possible t,e economics of scale t,at results from mass
production< yet allows customi.ation of products and services6
>or" is performed w,ere it ma"es t,e most sense< including at t,e customers or
suppliers sites6 T,us< wor" is s,ifted< if necessary< across organisational and even
international boundaries6
1ontrols and c,ec"s and ot,er non value added wor" are minimi.ed6
9econciliation c,ec"ing a product against purc,ase order< for e8ample is minimi.ed
by cutting bac" t,e number of e8ternal of e8ternal contact points and by creating
business alliances6
A ,ybrid centrali.ed ? decentrali.ed operation is used6
A single point of contact is provided to customers6
+29 Success 4ailure 4actors
,ver the past years 3'/ pro1ects and efforts have revealed some interesting findings for )oth
academics and practitioners. "ome 3'/ researchers have focused on %ey factors in the 3'/
process that ena)led a successful outcome. Many lessons were learned and many elements were
identified as essential to the success of a 3'/ activity. "ome important 3'/ success factors
which will )e discussed in further details later include )ut are not limited to the following:
1. ,rganization wide commitment.
!. 3'/ team composition.
#. 3usiness needs analysis.
&. Adequate .9 infrastructure.
(. +ffective change management.
=. ,ngoing continuous improvement
Benerally 3'/ does not only mean change )ut rather dramatic change. 9he constituents of this
drastic change include the overhaul of organizational structures management systems employee
responsi)ilities and performance measurements incentive systems s%ills development and the
use of .9. 3'/ can potentially impact every aspect of how )usiness is conducted today. 0hange
on this scale can cause results ranging from envia)le success to complete failure. .n spite of the
depth of change involved in underta%ing 3'/ efforts a recent survey showed that some DD
percent of 0.,s were satisfied with the end result of 3'/ efforts. "uccessful 3'/ can result in
enormous reductions in cost or cycle time. .t can also potentially create su)stantial improvements
in quality customer service or other )usiness o)1ectives. 9he promise of 3'/ is not empty: it
can actually produce revolutionary improvements for )usiness operations. /eengineering can
help an aggressive company to stay on top or transform an organization on the verge of
)an%ruptcy into an effective competitor. 9he successes have spawned international interest and
ma1or reengineering efforts are now )eing conducted around the world.
,n the other hand 3'/ pro1ects can fail to meet the inherently high e*pectations of
reengineering. .n 1<<D it was reported that only #? percent of reengineering pro1ects were
regarded as successful. 9he earlier promise of 3'/ has not )een fulfilled as some organizations
have put forth e*tensive 3'/ efforts only to achieve marginal or even negligi)le )enefits. ,ther
organizations have succeeded only in destroying the morale and momentum )uilt up over their
lifetime. 9hese failures indicate that reengineering involves a great deal of ris%. +ven so many
companies are willing to ta%e that ris% )ecause the rewards can )e astounding.
Many unsuccessful 3'/ attempts may have )een due to the confusion surrounding 3'/ and
how it should )e performed. ,rganizations were well aware that changes needed to )e made )ut
did not %now which areas to change or how to change them. As a result process reengineering is
a management concept that has )een formed )y trial and error or in other words practical
e*perience. As more and more )usinesses reengineer their processes %nowledge of what caused
the successes or failures is )ecoming apparent. 9o reap lasting )enefits companies must )e
willing to e*amine how strategy and reengineering complement each other )y learning to
quantify strategy in terms of cost milestones and timeta)les )y accepting ownership of the
strategy throughout the organization )y assessing the organization4s current capa)ilities and
process realistically and )y lin%ing strategy to the )udgeting process. ,therwise 3'/ is only a
short;term efficiency e*ercise.
Ma=or 9eengineering Activities:
/eengineering efforts involve many activities some of them are as under
9edesigning of 2rocesses:
4rom Mass 2roduction to Mass 1ustomi.ation: 9he )asic idea of mass customization
is to ena)le a company to provide fle*i)le and quic% responsiveness to a customer needs
at a low cost and with high quality. .t is made possi)le )y allowing fast and ine*pensive
production changes )y reducing the ordering and sales process costs )y shortening the
production time and )y using pre fa)ricated parts and modules.
1ycle Time 9eduction: 0ycle time refers to the time it ta%es to complete a )usiness
process from )eginning to end. 3ecause speed is recognised as a ma1or element that
provides competitive advantage cycle time reduction is a ma1or )usiness o)1ective. .t
provides a competitive advantage. .9 ma%es a ma1or contri)ution in shortening cycle
times )y allowing companies to com)ine or eliminate steps and to e*pedate various
activities in the )usiness processes.
9estructuring Entire Organisation:
Empowerment of 1ustomers< Suppliers and +usiness 2artners:
Decision Support System &DSS*
A Decision Support System (DSS) is a computer;)ased information system that supports
)usiness or organizational decision;ma%ing activities. $""s serve the management operations
and planning levels of an organization (usually mid and higher management) and help to ma%e
decisions which may )e rapidly changing and not easily specified in advance (Gnstructured and
"emi;"tructured decision pro)lems). $ecision support systems can )e either fully computerized
human or a com)ination of )oth. 2hile academics have perceived $"" as a tool to support
decision ma%ing process $"" users see $"" as a tool to facilitate organizational processes.
"ome authors have e*tended the definition of $"" to include any system that might support
decision ma%ing. "prague (1<D?) defines $"" )y its characteristics:
1. $"" tends to )e aimed at the less well structured underspecified pro)lem that upper level
managers typically face:
2. $"" attempts to com)ine the use of models or analytic techniques with traditional data
access and retrieval functions:
#. $"" specifically focuses on features which ma%e them easy to use )y non computer
people in an interactive mode: and
&. $"" emphasizes fle*i)ility and adapta)ility to accommodate changes in the environment
and the decision ma%ing approach of the user.
$""s include %nowledge;)ased systems. A properly designed $"" is an interactive software;
)ased system intended to help decision ma%ers compile useful information from a com)ination
of raw data documents and personal %nowledge or )usiness models to identify and solve
pro)lems and ma%e decisions.
9ypical information that a decision support application might gather and present includes:
inventories of information assets (including legacy and relational data sources cu)es
data warehouses and data marts)
comparative sales figures )etween one period and the ne*t
pro1ected revenue figures )ased on product sales assumptions.
History
9he concept of decision support has evolved from two main areas of research: 9he theoretical
studies of organizational decision ma%ing done at the 0arnegie .nstitute of 9echnology during
the late 1<(?s and early 1<=?s and the technical wor% on 9echnology in the 1<=?s. $"" )ecame
an area of research of its own in the middle of the 1<>?s )efore gaining in intensity during the
1<D?s. .n the middle and late 1<D?s e*ecutive information systems (+.") group decision
support systems (B$"") and organizational decision support systems (,$"") evolved from the
single user and model;oriented $"".
According to "ol (1<D>) the definition and scope of $"" has )een migrating over the years. .n
the 1<>?s $"" was descri)ed as -a computer;)ased system to aid decision ma%ing-. .n the late
1<>?s the $"" movement started focusing on -interactive computer;)ased systems which help
decision;ma%ers utilize data )ases and models to solve ill;structured pro)lems-. .n the 1<D?s
$"" should provide systems -using suita)le and availa)le technology to improve effectiveness
of managerial and professional activities- and towards the end of 1<D?s $"" faced a new
challenge towards the design of intelligent wor%stations.
.n 1<D> 9e*as .nstruments completed development of the Bate Assignment $isplay "ystem
(BA$") for Gnited Airlines. 9his decision support system is credited with significantly reducing
travel delays )y aiding the management of ground operations at various airports )eginning with
,AHare .nternational Airport in 0hicago and "tapleton Airport in $enver 0olorado.
3eginning in a)out 1<<? data warehousing and on;line analytical processing (,6A') )egan
)roadening the realm of $"". As the turn of the millennium approached new 2e);)ased
analytical applications were introduced.
9he advent of )etter and )etter reporting technologies has seen $"" start to emerge as a critical
component of management design. +*amples of this can )e seen in the intense amount of
discussion of $"" in the education environment.
$"" also have a wea% connection to the user interface paradigm of hyperte*t. 3oth the
Gniversity of Hermont '/,M." system (for medical decision ma%ing) and the 0arnegie Mellon
L,B85M" system (for military and )usiness decision ma%ing) were decision support systems
which also were ma1or )rea%throughs in user interface research. Furthermore although hyperte*t
researchers have generally )een concerned with information overload certain researchers
nota)ly $ouglas +ngel)art have )een focused on decision ma%ers in particular.
Types of DSS
$"" as has )een differentiated )y $aniel 'ower are communication3driven DSS data3driven
DSS document3driven DSS kno$ledge3driven DSS and model3driven DSS.
A communication:driven DSS supports more than one person wor%ing on a shared tas%:
e*amples include integrated tools li%e Boogle $ocs or Broove
A data:driven DSS or data;oriented $"" emphasizes access to and manipulation of a
time series of internal company data and sometimes e*ternal data.
A document:driven DSS manages retrieves and manipulates unstructured information
in a variety of electronic formats.
A "nowledge:driven DSS provides specialized pro)lem;solving e*pertise stored as facts
rules procedures or in similar structures.
A model:driven DSS emphasizes access to and manipulation of a statistical financial
optimization or simulation model. Model;driven $"" use data and parameters provided
)y users to assist decision ma%ers in analyzing a situation: they are not necessarily data;
intensive. $icodess is an e*ample of an open source model;driven $"" generator.
1omponents
9hree fundamental components of a $"" architecture are:
1. the data)ase (or %nowledge )ase)
2. the model (i.e. the decision conte*t and user criteria) and
#. the user interface.
9he users themselves are also important components of the architecture.
DSS 1,aracteristics and 1apabilities
1. "olve semi;structured and unstructured pro)lems
!. "upport managers at all levels
#. "upport individuals and groups
&. .nterdependence and sequence of decisions
(. "upport .ntelligence $esign 0hoice
=. Adapta)le and fle*i)le
>. .nteractive and ease of use
D. .nteractive and efficiency
<. Human control of the process
1?. +ase of development )y end user
11. Modeling and analysis
1!. $ata access
1#. "tandalone and we);)ased integration
1&. "upport varieties of decision processes
1(. "upport varieties of decision trees
1=. Cuic% response
+enefits
1. .mproves personal efficiency
!. "peed up the process of decision ma%ing
#. .ncreases organizational control
&. +ncourages e*ploration and discovery on the part of the decision ma%er
(. "peeds up pro)lem solving in an organization
=. Facilitates interpersonal communication
>. 'romotes learning or training
D. Benerates new evidence in support of a decision
<. 0reates a competitive advantage over competition
1?. /eveals new approaches to thin%ing a)out the pro)lem space
11. Helps automate managerial processes
1!. 0reate .nnovative ideas to speed up the performance
Applications
As mentioned a)ove there are theoretical possi)ilities of )uilding such systems in any
%nowledge domain.
,ne is the clinical decision support system for medical diagnosis. ,ther e*amples include a )an%
loan officer verifying the credit of a loan applicant or an engineering firm that has )ids on
several pro1ects and wants to %now if they can )e competitive with their costs.
$"" is e*tensively used in )usiness and management. +*ecutive dash)oard and other )usiness
performance software allow faster decision ma%ing identification of negative trends and )etter
allocation of )usiness resources. $ue to $"" all the information from any organization is
represented in the form of charts graphs i.e. in a summarized way which helps the management
to ta%e strategic decision.
A growing area of $"" application concepts principles and techniques is in agricultural
production mar%eting for sustaina)le development. For e*ample the $""A9& pac%age
developed through financial support of G"A.$ during the D?s and <?s has allowed rapid
assessment of several agricultural production systems around the world to facilitate decision;
ma%ing at the farm and policy levels. 9here are however many constraints to the successful
adoption on $"" in agriculture.
$"" are also prevalent in forest management where the long planning time frame demands
specific requirements. All aspects of Forest management from log transportation harvest
scheduling to sustaina)ility and ecosystem protection have )een addressed )y modern $""s.
A specific e*ample concerns the 0anadian Eational /ailway system which tests its equipment
on a regular )asis using a decision support system. A pro)lem faced )y any railroad is worn;out
or defective rails which can result in hundreds of derailments per year. Gnder a $"" 0E
managed to decrease the incidence of derailments at the same time other companies were
e*periencing an increase.
Human resource management system
A Human 9esources Management System &H9MS* or Human 9esources Information
System &H9IS* refers to the systems and processes at the intersection )etween human resource
management (H/M) and information technology. .t merges H/M as a discipline and in
particular its )asic H/ activities and processes with the information technology field whereas
the programming of data processing systems evolved into standardized routines and pac%ages of
enterprise resource planning (+/') software. ,n the whole these +/' systems have their origin
on software that integrates information from different applications into one universal data)ase.
9he lin%age of its financial and human resource modules through one data)ase is the most
important distinction to the individually and proprietary developed predecessors which ma%es
this software application )oth rigid and fle*i)le.
9he function of human resources (H/) departments is generally administrative and common to
all organizations. ,rganizations may have formalized selection evaluation and payroll
processes. +fficient and effective management of -human capital- progressed to an increasingly
imperative and comple* process. 9he H/ function consists of trac%ing e*isting employee data
which traditionally includes personal histories s%ills capa)ilities accomplishments and salary.
9o reduce the manual wor%load of these administrative activities organizations )egan to
electronically automate many of these processes )y introducing specialized human resource
management systems. H/ e*ecutives rely on internal or e*ternal .9 professionals to develop and
maintain an integrated H/M". 3efore the client7server architecture evolved in the late 1<D?s
many H/ automation processes were relegated to mainframe computers that could handle large
amounts of data transactions. .n consequence of the high capital investment necessary to )uy or
program proprietary software these internally developed H/M" were limited to organizations
that possessed a large amount of capital. 9he advent of clientNserver application service
provider and software as a service ("aa") or human resource management systems ena)led
increasingly higher administrative control of such systems. 0urrently human resource
management systems encompass:
1. 'ayroll
!. 9ime and attendance
3. 'erformance appraisal
&. 3enefits administration
(. H/ management information system
=. /ecruiting
7. 6earning management
D. 'erformance record
9. +mployee self;service
1?. "cheduling
11. A)sence management
1!. Analytics
9he payroll module automates the pay process )y gathering data on employee time and
attendance calculating various deductions and ta*es and generating periodic pay cheques and
employee ta* reports. $ata is generally fed from the human resources and time %eeping modules
to calculate automatic deposit and manual cheque writing capa)ilities. 9his module can
encompass all employee;related transactions as well as integrate with e*isting financial
management systems.
9he time and attendance module gathers standardized time and wor% related efforts. 9he most
advanced modules provide )road fle*i)ility in data collection methods la)or distri)ution
capa)ilities and data analysis features. 0ost analysis and efficiency metrics are the primary
functions.
9he benefits administration module provides a system for organizations to administer and
trac% employee participation in )enefits programs. 9hese typically encompass insurance
compensation profit sharing and retirement.
9he H9 management module is a component covering many other H/ aspects from application
to retirement. 9he system records )asic demographic and address data selection training and
development capa)ilities and s%ills management compensation planning records and other
related activities. 6eading edge systems provide the a)ility to -read- applications and enter
relevant data to applica)le data)ase fields notify employers and provide position management
and position control. Human resource management function involves the recruitment placement
evaluation compensation and development of the employees of an organization. .nitially
)usinesses used computer )ased information systems to:
produce pay chec%s and payroll reports:
maintain personnel records:
pursue talent management.
,nline recruiting has )ecome one of the primary methods employed )y H/ departments to
garner potential candidates for availa)le positions within an organization. 9alent management
systems typically encompass:
analyzing personnel usage within an organization:
identifying potential applicants:
recruiting through company;facing listings:
recruiting through online recruiting sites or pu)lications that mar%et to )oth recruiters and
applicants.
9he significant cost incurred in maintaining an organized recruitment effort cross;posting within
and across general or industry;specific 1o) )oards and maintaining a competitive e*posure of
availa)ilities has given rise to the development of a dedicated applicant trac%ing system or
AA9"A module.
9he training module provides a system for organizations to administer and trac% employee
training and development efforts. 9he system normally called a -learning management system-
(6M") if a stand alone product allows H/ to trac% education qualifications and s%ills of the
employees as well as outlining what training courses )oo%s 0$s we) )ased learning or
materials are availa)le to develop which s%ills. 0ourses can then )e offered in date specific
sessions with delegates and training resources )eing mapped and managed within the same
system. "ophisticated 6M" allow managers to approve training )udgets and calendars alongside
performance management and appraisal metrics.
9he employee self:service module allows employees to query H/ related data and perform
some H/ transactions over the system. +mployees may query their attendance record from the
system without as%ing the information from H/ personnel. 9he module also lets supervisors
approve ,.9. requests from their su)ordinates through the system without overloading the tas%
on H/ department.
Many organizations have gone )eyond the traditional functions and developed human resource
management information systems which support recruitment selection hiring 1o) placement
performance appraisals employee )enefit analysis health safety and security while others
integrate an outsourced applicant trac%ing system that encompasses a su)set of the a)ove.
Assigning /esponsi)ilities 0ommunication )etween the +mployees.
9he Analytics module ena)les organizations to e*tend the value of an H/M" implementation )y
e*tracting H/ related data for use with other )usiness intelligence platforms. For e*ample
organizations com)ine H/ metrics with other )usiness data to identify trends and anomalies in
headcount in order to )etter predict the impact of employee turnover on future output.
E:H9M
A+;H/M is t,e &planning< implementation and* application of information tec,nology for
bot, networ"ing and supporting at least two individual or collective actors in t,eir s,ared
performing of H9 activities6
+;H/M is not the same as H/." (Human resource information system) which refers to .09
systems used within H/ departments. Eor is it the same as H;H/M or Hirtual H/M ; which is
defined )y 6epa% and "nell as -...a networ%;)ased structure )uilt on partnerships and typically
mediated )y information technologies to help the organization acquire develop and deploy
intellectual capital.-
+;H/M is in essence the devolution of H/ functions to management and employees. 9hey
access these functions typically via intranet or other we);technology channels. 9he
empowerment of managers and employees to perform certain chosen H/ functions relieves the
H/ department of these tas%s allowing H/ staff to focus less on the operational and more on the
strategic elements of H/ and allowing organisations to lower H/ department staffing levels as
the administrative )urden is lightened. .t is anticipated that as +;H/M develops and )ecomes
more entrenched in )usiness culture these changes will )ecome more apparent )ut they have yet
to )e manifested to a significant degree. A !??> 0.'$ survey states that -9he initial research
indicates that much;commented;on development such as shared services outsourcing and e;H/
have had relatively little impact on costs or staff num)ers-.
Types
9here are three types of +;H/M. 9hese are descri)ed respectively as
1. Operational E:H9M is concerned with administrative functions ; payroll and employee
personal data for e*ample.
!. 9elational E:H9M is concerned with supporting )usiness processes )y means of
training recruitment performance management and so forth.
#. Transformational E:H9M is concerned with strategic H/ activities such as %nowledge
management strategic re;orientation.
An organisation may choose to pursue +;H/M policies from any num)er of these tiers to
achieve their H/ goals.
@oals
+;H/M is seen as offering the potential to improve services to H/ department clients ()oth
employees and management) improve efficiency and cost effectiveness within the H/
department and allow H/ to )ecome a strategic partner in achieving organizational goals.
9raditionally H/ goals have )een )ro%en into three categories:
1. maintaining cost effectiveness
!. enhancement of service for internal customers
#. addressing the tactics of the )usiness.
2ith e;H/M there is a fourth goal added to the three categories and that is the improvement of
glo)al orientation of human resource management. H/ functions that e;H/M assist with are the
transactional and transformational goals. 9ransactional goals help reduce costs and
transformational goals help the allocation of time improvement for H/ professionals so that they
may address more strategic issues. 9o add to this operational )enefits have )ecome an outcome
of the implementation of e;H/M. 9he process of payroll is an e*ample of this with H/ )eing
a)le to have more transactions with fewer pro)lems. +;H/M has increased efficiency and helped
)usinesses reduce their H/ staff through reducing costs and increasing the overall speed of
different processes. +;H/M also has relational impacts for a )usiness: ena)ling a company4s
employees and managers with the a)ility to access H/ information and increase the connectivity
of all parts of the company and outside organizations. 9his connectivity allows for
communication on a geographic level to share information and create virtual teams. And finally
e;H/M creates standardization and with standardized procedures this can ensure that an
organization remains compliant with H/ requirements thus also ensuring more precise decision;
ma%ing.
Advantages:
.t helps to improve administration O efficiency.
.t helps to improve client orientation O service.
.t helps to improve H/As strategic orientation.
e;H/M is a cost reduction programme.
e;H/M reduces administrative wor%.
.t helps H/ dept. to get a clean profile of the employees.
+mployees are e*periencing more H/M s%ills with the help of e;H/M.
+mployees get updated news of the org. dynamics.
+mployees ta%e part in online discussion.
+mployees are self initiators of their own career mgt. direction.
+mployee O time managers self manage employee mgt.
H/ managers will )ecome more efficient in their wor%ing.
.nternet recruiting is a faster communication.
e;H/M saves time or it is time efficient.
$ata management of all the employees in the world of an ,rg. effectively.
9he employees concentrate on the wor% efficiently
"trategic aspects of the 1o) as e;H/M relieve them with their routine wor%.
Adapta)ility to client increases after applying e;H/M.
9here is security of data in e;H/M.
e;H/M supports multi;language.
e;H/M is a more dynamic wor%flow in the )usiness process productivity.
9he solution can )e accessed and used in a we) )rowser
security of data protected levels of access to individual modules records
documents and their component parts
parametric and customiza)ility
access to archived records and documents
user;friendly interface
connectivity with the clientAs e*isting information system (payroll accounting
+/' attendance registration document systemsP gradual implementation
adapta)ility to any client
collection of information as the )asis for strategic decision;ma%ing
integral support for the management of human resources and all other )asic
and support processes within the company
prompt insight into reporting and analysis
a more dynamic wor%flow in the )usiness process productivity and employee
satisfaction
a decisive step towards a paperless office
lower )usiness costs
+E!E4ITS O4 E:H9M
"tandardization
+ase of recruitment selection and assessment
+ase of administering employee records /eductions to cost time and la)our
Access to +"" training enrollment and self development
0ost and +""
6ocation and timeliness
TA2ES O4 E:H9M:
6epa% and "nell(1<<D) distinguished three areas of H/M as operational H/M
relational H/M and transformational H/M.
Operational H9M: e;H/M is concerned with administrative function
li%e payroll employee personal data etc.
9elational H9M: e;H/M is concerned with supportive )usiness process )y
the means of training recruitment performance management and so forth.
Transformational H9M: e;H/M is concerned with strategic H/
activities such as %nowledge management strategic re;orientation etc.