INTRODUCTION TO MANAGEMENT INFORMATION SYSTEMS

Management Information Systems - Concept

The concept of the MIS has evolved over a period of time comprising many different facets of the organizational functions. MIS is necessity of all the organizations. The initial concept of MIS was to process data from the organization and present it in the form of reports as regular intervals. The system was largely capable of handling the data from collection to processing. It was more impersonal, requiring each individual to pick and choose the processed data and use it for his requirements. This concept was further modified when a distinction was made between data and information. The information is a product of an analysis of data. This concept is similar to a raw material and the finished product. What is needed is information and not a mass of data. However, the data can be analyzed in a number of ways, producing different shades and specifications of the information as a product. It was, therefore, demanded that the system concept should be an individual oriented, as each individual may have a different orientation towards the information. This concept was further modified, that the system should present information in such a form and format that it creates an impact on its user, provoking a decision, an action or an investigation. It was later realized that even though such an impact was a welcome modification, some sort of selective approach was necessary in the analysis and reporting. Hence, the concept of exception reporting was imbibed in MIS. The concept remained valid till and to the extent that the norm for an exception remained true and effective. Since the environment turns competitive and is ever changing, fixation of the norm for an exception becomes a futile exercise at least for the people in the higher echelons of the organization. The concept was then evolved that the system should be capable of handling a need based exception reporting. This need may be either of an individual or a group of people. This called for keeping all data together in such a form that it can be accessed by anybody and can be processed to suit his needs. The concept is that the data is one but it can be viewed by different individuals in different ways. This gave rise to the concept of Database, and the MIS based on the database proved much more effective. The concept of MIS gives high regard to the individual and his ability to use the information. An MIS gives information through data analysis. While analyzing the data, it relies on many academic disciplines. These include the theories, principles and concepts from the Management Science, Management Accounting, Operations Research, Organization Behavior, Engineering, Computer Science, Psychology and Human Behavior, making the MIS more effective and useful. These academic disciplines are used in designing the MIS, evolving the decision support tools for modeling and decision-making. MIS uses the concept of management control in its design and relies heavily on the fact that the decision maker or the manager is a human being and is a human processor of information.

A management Information System can be evolved for a specific objective if it is evolved after systematic planning and design. It calls for an analysis of a business, management views and policies, organization culture and the management style. The information should be generated in this setting and must be useful in managing the business. This is possible only when it is conceptualized as a system with an appropriate design. The MIS, therefore, relies heavily on the systems theory. The systems theory offers solution to handle the complex situations of the input and output flows. It uses theories of communication which helps to evolve a system design capable of handling data inputs, process, and outputs with the least possible noise or distortion in transmitting the information from a source to a destination. It uses the principles of System Design, viz., an open system or a closed system. An open system of the MIS offers an ability of continuous adjustment or correction in the system in line with the environmental changes in which the MIS operates. Such a design helps to keep the MIS tuned with the business management needs of the organization. The concept, therefore, is a blend of principles, theories and practices of the Management, Information and System giving rise to single product known as Management Information System (MIS). The MIS is a product of a multi-disciplinary approach to the business management. It is a product which needs to be kept under a constant review and modification to meet the corporate needs of the information. The MIS model of organization changes over a time, as the business passes through several phases of developmental growth cycle. It supports the management of business in each phase by giving the information which is crucial in that phase. Every business has critical success factors in each phase of growth cycle and the MIS model gives more information on the critical success factors for decision making.

MIS - Definition
The Management Information System (MIS) is a concept of the last decade or two. It has been understood and described in a number of ways. It is also popularly known as the Information System, the Information and Decision System, the Computer-based Information System. The MIS has more than one definition, some of which are given below:

The MIS is defined as a system which provides information support for decision making in the organization. The MIS is defined as an integrated system of man and machine for providing the information to support the operations, the management and the decision making function in the organization. The MIS is defined as a system based on the database of the organization evolved for the purpose of providing information to the people in the organization. The MIS is defined as a Computer-based Information System. The MIS is a system to support the decision making function in the organization. The difference lies in defining the elements of the MIS. However, in todays world, the MIS is a computerized business processing system generating information for the people in

organization to meet the information needs for decision making to achieve the corporate objectives of the organization. In any organization, small or big, a major portion of the time goes in data collection, processing, documenting and communicating it to the people. Hence, a major portion of the overheads goes into this kind of unproductive work in the organization. Every individual in an organization is continuously looking for some information which is needed to perform his/her task. Hence, the information is people-oriented and it varies with the nature of the people in the organization. In order to get a better grip on the activity of information processing, it is necessary to have a formal system which should take care of the following points:

Handling of a voluminous data Confirmation of the validity of data and transaction Complex processing of data and multidimensional analysis Quick search and retrieval Mass storage Communication of the information system to the user on time Fulfilling the changing needs of the information.

The management information system uses computers and communication technology to deal with these points of supreme importance.

Role of the Management information system

The role of the MIS in an organization can be compared to the role of hear 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. The heart works faster and supplies more blood when needed. It regulates and controls the incoming impure blood, processes it sends it to the destination in the quantity needed. It fulfills the needs of blood supply to human body in normal and also in crisis. 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 fulfill information needs of an individual, a group of individuals, the management functionaries; the managers and the top management. The MIS satisfies the diverse needs through a variety of systems such as Query Systems, Analysis Systems, Modeling Systems and Decision Support Systems. The MIS helps in Strategic Planning, Management Control Operational Control and Transaction Processing. 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. The MIS helps the junior management personnel by providing the operational data for planning, scheduling and control, and helps them further in decision making at the operations level to correct an out of control situation. The MIS helps the middle management in short term planning, target setting and controlling the business functions. It is supported by the use of the

management tools of planning and control. The MIS helps the top management in goal setting, strategic planning and evolving the business plans and their implementation. The MIS plays the role of information generation, communication problems and helps in the process of decision making. The MIS, therefore, plays a vital role in the management, administration and operations of an organization.

The impact of the Management Information System

The impact of MIS on the functions is in its management. With a good MIS support, the management of marketing, finance, production and personnel becomes more efficient, the tracking and monitoring the functional targets becomes easy. The functional managers are informed about the progress, achievements and shortfalls in the activity and the targets. The manager is kept alert by providing certain information indicating the probable trends in the various aspects of business. This helps in forecasting and long-term perspective planning. The manager' attention is brought to a situation which is exceptional in nature, inducing him to take an action or a decision in the matter. A disciplined information reporting system creates a structured database and a knowledge base for all the people in the organization. The information is available in such a form that it can be used straight away or by blending and analysis, saving the managers valuable time. The MIS creates another impact in the organization which relates to the understanding of the business itself. The MIS begins with the definition of a data entity and its attributes. It uses a dictionary of data, entity and attributes, respectively, designed for information generation in the organization. Since all the information systems use the dictionary, there is common understanding of terms and terminology in the organization bringing clarity in the communication and a similar understanding of an event in the organization. The MIS calls for a systemization of the business operations for an effective system design. This leads to streamlining of the operations which complicate the system design. It improves the administration of the business by bringing a discipline in its operations everybody is required to follow and use systems and procedures. This process brings a high degree of professionalism in the business operations. Since the goals and objective of the MIS are the products of business goals and objectives, it helps indirectly to pull the entire organization in one direction towards the corporate goals and objectives by providing the relevant information to the people in the organization. A well designed system with a focus on the manager makes an impact on the managerial efficiency. The fund of information motivates an enlightened manager to use a variety of tools of the management. It helps him to resort to such exercises as experimentation and modeling. The use of computers enables him to use the tools and techniques which are impossible to use manually. The ready-made packages make this task simpler. The impact is on the managerial ability to perform. It improves the decision making ability considerably.

Management Information System and Computer

Translating the real concept of the MIS into reality is technically, an infeasible proposition unless computers are used. The MIS relies its ability to store, process, retrieve and communicate with no serious limitations. The variety of the hardware having distinct capabilities make it possible to design the MIS for a specific situation. For example, if the organization needs a large database and very little processing, a computer system is available for such a requirement. Suppose the organization has multiple business locations at long distances and if the need is to bring the data at one place, process, and then send the information to various locations, it is possible to have a computer system with a distributed data processing capability. If the distance is too long, then the computer system can be hooked through a satellite communication system. The ability of the hardware to store data and process it at a very fast rate helps to deal with the data volumes, its storage and access effectively. The ability of the computer to sort and merge helps to organize the data in particular manner and process it for complex lengthy computations. Since the computer is capable of digital, graphic word, image, voice and text processing, it is exploited to generate information and present it in the form which is easy to understand for the information user. The software, an integral part of a computer system, further enhances the hardware capability. The software is available to handle the procedural and nonprocedural data processing. For example, if you want to use a formula to calculate a certain result, an efficient language is available to handle the situation. If you are not required to use a formula but have to resort every time to a new procedure, the nonprocedural languages are available. The advancement in computer and the communication technology has made the distance, speed, volume and complex computing an easy task. Hence, designing the MIS for a specific need and simultaneously designing a flexible and open system becomes possible, thereby saving a lot of drudgery of development and maintenance of the system. The concept of user friendly systems and the end user computing is possible, making information processing a personalized function. However, the application of the management principles and practices in todays complex business world is possible only when the MIS is based on a computer system support.

Management information system and academics

The management information systems draw a lot of support from other academic disciplines too. The foundation of MIS is the management theory. It uses the principles and practices of management while designing the system, and gives due regard to the theory of organizational behavior. It considers the human mind as a processor of information. While designing the report format and forming communication channels, MIS takes into account the behavior of the manager as an individual and in a group. It gives due regard to the personal factors such as bias, thinking with a fixed frame of reference, risk aversion, strengths and weaknesses. Another area of academics is operational research. The operational research is used for developing the models of management problem and they are then incorporated in MIS as

decision support systems. The inventory control, queuing theory, and resource programming are used in the MIS as decision support systems. The network theory is used for planning and controlling large projects. In the area of accounting application, it uses the accounting principles to ensure that the data is correct and valid. It uses the accounting methodology for generating a trial balance, balance sheet and other books of accounts. The MIS uses the communication theory in a significant manner. The principle of feedback is used while designing analysis and reporting systems. While designing the report format, attention is paid to avoid noise and distortions in the communication process. The MIS is based on database and uses the database for generating information. The three types of data structures, viz., hierarchical, network and relational database have roots in the mathematics and the set theory. The MIS becomes rich in content and more useful when it becomes more and more a decisionmaking or decision support system. This is possible when it builds decision making systems in MIS which in turn is possible if it draws tools, techniques, methods, rules and principles from pure science and application science, and uses them as an integral part of the system. The MIS uses knowledge from management, business management, mathematics, accounting, psychology, communication theory, operations research and probability theory for building processes, methods, and decision-support systems in designing business applications.

MIS and the User

Every person in the Organization is a user of the MIS. The people in the organization operate at all levels in the hierarchy. A typical user is a clerk, an assistant, an officer, an executive or a manager. Each of them has a specific task and a role play in the management of business. The MIS caters to the needs of all persons. The main task of a clerk is to search the data, make a statement and submit it to the higher level. A clerk can use the MIS for a quick search and reporting the same to higher level. An assistant has the task of collecting and organizing the data, and conducting a rudimentary analysis of it. The MIS offers the user tools to perform these tasks. An officer has a role of integrating the data from different systems and disciplines to analyze it and make a critical comment if anything adverse is found. In MIS offers the methods and facilities to integrate the data and report the same in a proper format. An executive plays the role of a decision maker. He is in a position of responsibility and accountability; a position of a planner and a decision maker. He is responsible for achieving the targets and goals of the organization. The MIS provides facilities to analyze the data and offers the decision support systems to perform the task of execution. The MIS provides action-oriented information. The manager has a position of responsibility and accountability for the business results. His management role expands beyond his management function. The MIS provides information in a

structured or unstructured format for him to react. The MIS caters to his constant changing needs of information. The user of the MIS is expected to be a rational person and the design of the MIS is based on this assumption. However, in reality the impact created on individuals by MIS is difficult to explain. The recent major technological advances in communication such as Multimedia, Imaging, Graphical User Interface (GUI) etc and the ability to access the data stored at different locations on the variety hardware of platforms would make MIS more attractive and efficient proposition. An intelligent user of information can demonstrate the ability of decision making, since his manipulative capability is considerably increased, with the information now being available on his desktop. Through the MIS, the information can be used as a strategic weapon to counter the threats to business, make businesses more competitive, and bring about the organizational transformation through integration. A good MIS also make an organization seamless by removing all the communication barriers.

IMPORTANCE OF MANAGEMENT
Introduction to Management
Management as defined by Mary Follet is the art of getting things done through people. A manager is defined as a person who achieves the organizations goals by motivating others to perform not by performing himself. Whether management is an art or a science is a very subjective question. But it can be said without doubt that modern management in the environment of technology is becoming more of a science than an art. We define management for the purpose of Management Information Systems as the process of planning, organizing, staffing, coordinating and controlling the efforts of the members of the organization to achieve common stated goals of the organization. In the process of management, a manager uses human skills, material resources and scientific methods to perform all the activities leading to the achievement of goals. The management process involves a continuous resolution of conflicts of one kind or the other which affects the achievement of goals, conflict between alternative resources, conflict of time, conflict of goals, conflict of approach or method and the conflict of choice. The manager uses a variety of tools, techniques and skills while executing the management process of planning, organizing, staffing, coordinating and controlling. The key concepts of the systems theory used in the management are as follows:

A system is comprehensive assembly of parts becoming an organization to achieve the stated goals. A system is called open if it has an interaction with the environment, and closed if it does not have an interaction with the environment.

A system is defined, described and understood by the boundaries within which it performs. The systems are subject to entropy, i.e., the tendency to run down. Closed systems suffer from entropy as they are cut off from the environment, while open systems interact with the environment and draw upon the support of resources to maintain a given condition. System tries to remain in equilibrium or a steady state by taking recourse to corrective action. This is possible when the system has its own feedback, i.e., an informational input about the state of the system.

The advantage of viewing the management as a system is that it enables us to see the critical variables, constraints and their interaction with one another. It forces the manager to look at the situation in such a way that due regard is given to the consequences arising out of interaction with the related elements or subjects.

Approaches to Management
Frederick W Taylor, is recognized as the father of scientific management. His principles can be summarized as follows:

Replace the rules of thumb with scientific rules Obtain a harmony in group action. Achieve cooperation of human beings, rather than chaotic individualism. Work for a maximum output. Develop all workers to the fullest possible potential for their own highest possible prosperity.

Fayol regarded the elements of management as planning, organizing, commanding, coordinating and controlling. He believed that the operational management would succeed through the elements of management. Hawthornes studies brought out the theory that man is Social Animal operating in the sociotechnical system and, therefore, the emphasis in effective management is on behavioral sciences. Chester Barnard advocated the theory of systems as an approach to the management. Barnard said that due to the physical and biological limitations of individuals, they cooperate in the work environment. The cooperation increases with effective and efficient incentives. He further said that the cooperation is more effective if the members of the group communicate with one another, are willing to contribute to group action, and have a conscious common purpose. He further said that a group of people in the system work as an organization. An effective management is possible if the organization is looked upon as a system of functions, a system of incentives, a system of authority and a direction and a system of logical decision making. The emergence of the modern management thought is credited to the social scientists, the behavioral scientists, the systems scientists and the practicing managers.

Function of the Manager

An individual who gets the things done is a Manager. It is necessary to distinguish between the tasks and the functions. While managing, a manager may perform the activities 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 Organizing Staffing Directing Coordinating and Controlling.

Planning Planning is a process of determining the goals and objectives and evolving strategies, policies, programmes and procedures for the achievement of these goals. Organization Organization involves evolving the structure of the people working in the organization and their roles. Staffing Staffing involves manning the positions in the organization structure. It requires defining the manpower needs per position or centre of activity. Directing 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. Coordinating 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 differs because of the differences in the personal goals and the common goals, the differences in the interpretation of methods and directions. 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.

Managers and the Environment

All managers, whether they are managing a business, a school, a hospital, Government department, or any enterprise, work in an environment in which the organization operates. There

are a number of forces which are generated in the environment, which have an impact on the managerial performance. These forces may be from within or from outside the organization. They affect, directly or indirectly, the process of the management and a manager is required to meet these forces effectively. While to some extent the internal environment is controllable, the external environment is beyond his control. Since it is preventing that the external environment also has an impact on the business managers performance, it is necessary to know and understand the environment. For the purpose of discussion, the external environment is classified into five classes as the economic, the technological, the social, the political and the ethical environment.

Economic Environment
The economic environment comprises capital, labor, price changes, productivity, fiscal and monetary policy and customers. Capital It is required to run the organization. The enterprise needs a long-term and a shortterm capital. The capital required can be either from the internal sources or borrowed from the financial institutions. When a capital is borrowed, it is borrowed at an interest. The organizational is forced to borrow for various reasons and the interest charged by the lending financial institutions forms the cost of the capital. Hence management of the capital is an important aspect of the business. Labor The next important cost of a business is the cost of labor. The cost of labor is determined every two to three years by a union agreement. The settlement of an agreement is based on the cost of living index, the industry wage standards, the availability of labor, etc. These aspects are external to the organization and a manager has no control on them. Price Changes Price changes occur in the economy for various reasons. The changes occur because of decrease in the demand and supply, the changes in the consumer behavior, in the consumption pattern and the money supply, and so on. The price changes affect the cost of raw material and labor and on these changes a manager has no control. Productivity Productivity is a result of the capital, labor and technology. Many a times an organizations business is taken over by better technology. The costs are affected by the technology changes affecting the productivity. The manager has to respond quickly to the technological changes to save the business. Fiscal and Monetary Policy

The Government announces fiscal policies and controls them. The organizations profit position is affected by these policies. These policies affect the credit terms, the prices of the inputs and the money supply affecting the cash position of the organization. A manager has a very little leverage to deal with these policy changes. Changes The customers rule the business, especially when the business operates in a buyers market. In a competitive world, it is very difficult to predict the customer behavior. The changes in the demands occur with growth and technology. The customer does not show consistent preference to the product. The change in the business orientation to suit the changes in the customer demand is a difficult task for the manager. It is not always possible to predict these changes well in advance in order to take any managerial action to meet the changed situation.

Technological Environment
The technology has a major impact on the business. It affects the business prospects, cuts down the profits and forces the management to change the course of the business operations. Any change in technology changes the work cultures, the methods and the systems. It affects the speed of the operations and gives a boost to the productivity of the production systems. Examples of technological changes are seen in aviation, electronics, energy, communication, consumer goods industry, optics, medicines and manufacturing.

Social Environment
The social environment is built around the attitudes, the desires, the expectations, the degree of intelligence and education, the beliefs and customs, the religion, the caste and creed of the people. The social environment is built in centuries and hence it is deeply rooted in the society. The social environment has an important impact on the business and the organizational productivity. Social factors create an attitude towards the work, generate the product choices, and manipulate the consumer behavior. It is well known that it took a lot of time to convince the farmers in India about the use of fertilizers. It is recognized that rural marketing is different from the urban marketing. Inspite of the technological advances, frozen foods are not finding consumer preferences. Introduction of computers in the service industry is still a difficult proposition. A number of such examples can be cited to prove that the social environment affects business and makes the managers task very difficult and challenging.

Political Environment
The political factor is the most important factor which affects the business in Indian environment. The unstable political environment brings stagnancy in the development. The changes in ruling party bring economic policy changes, affecting the business. The sectorial preferences, such as an agricultural versus an industrial, an educational versus a basic research, an investment in the service versus a core sector come about with change in the ruling political

party and its policies. Such changes have a long-term impact on business performance. The manager has to deal with such changes effectively.

Ethical Environment - Systems of a Moral Behavior

Some business problems arise due to failing on the ethical grounds. The government has enacted many laws and regulations to bring about harmonious operations in business. However, some aspects of the business operations are left as ethics, called the business ethics. The business ethics emerge from the professional conduct, the business norms and codes on confidentiality, the payment and documentation, the adherence to generally accepted standards of accounting and auditing. Business ethics is a set of norms which are universally accepted as a business behavior. All these factors discussed so far, are beyond the control of the manager. At best he can predict, assess, evaluate and take such action which will help him to control the situation.

Management as a control system

Planning, organizing, staffing, coordinating, directing and controlling are the various steps in a management process. All the steps prior to a control are necessary but are not necessarily self-assuring the results unless it is followed by strong control mechanism. The management experts have viewed these steps as `Management Control System. They postulate the hypothesis that unless a control is exercised on the process, the goals will not be achieved. They advocate a system of effective control to ensure the achievement of the business objectives. Definition 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. The control process measures a progress towards those goals, and enables the manager to detect the deviations from the original plan in time to take corrective actions before it is too late. Rober J Mockler defines and points out the essential elements 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. 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 todays business, to correct this 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. 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, and managerial functions and so on. For example, the top management would have standards relating to the business performance, such as production, sales, inventory, quality, etc. The operational management would have standard relating to the shift production, rejection, down time, utilization of resources, and sale in typical market segment and so on. The chain of standards, when achieved, will ensure an achievement of the goals of the organization. Strategic Controls In every business there are strategic areas of control known as the critical success factors. The system should recognize them and have controls instituted on them. Feedback The control system would be effective, if it continuously monitors the performance and send 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 communicated 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 form the performance standards on the principle of management by exception. A standard is meaningful when it is achievable and provides a challenge to the achiever. A management control system has a set of objectives, standards to measure, a feedback mechanism 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 changed with ease so that the impact of changed environments is handled effectively.

Management by Exception
Paretos principle of 80:20 is applicable to the management of enterprise. Several terms have been coined on this principle such as management by objectives, management by results, and management of strategic areas. At the roof of the management methodology is the management by exception. When the management operates under time constraint, each manager has to allocate specific time for the several demands made on his time. It is, therefore, necessary for him to attend the situation where his attention is necessary. Such attention would lead to an action, a decision or a wait-and-see approach. If all the situations are considered in a routine manner, it consumes time and tends to be neglected over a period of time. An efficient manager tries for selective attention to manager within the available time resource. The principle evolved, therefore, is of the management by exception. The exception is decided on the impact a situation would make on the performance, the process and the standards set in the management control system. 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 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 our 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.

MIS - A Support to the Management

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 designed suitably. The decisions required to be taken in these steps are tabulated in Table below. Table: Decisions in Management

Steps in Management Decision

Planning Organization Staffing 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.

Directing Coordinating Controlling

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

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.

MANAGEMENT PROCESS
Management Effectiveness
`Negandhi Estafen provides a good model for the analysis of management effectiveness in achieving the goals and objectives. The model puts a lot of emphasis on the management philosophy and the environment factors on which the effectiveness is dependent. The environment factors provide the opportunities to survive and grow with certain constraints while the management philosophy sets the guidelines for deciding the management practices to run the enterprises. Figure: * Nagendhi Estates Model for Analysis of Management Effectiveness While the environment factors are difficult to control, it is left for the management to change its philosophy towards the various players in the business, viz., the employees, the consumers, the suppliers, the government, the community and the shareholders. Basically, it is a change in attitude towards these players. For example, how to look at the employees? If the attitude will have an impact on the management practices, where the employee will play a decisive critical role. IT will affect the organization structure by reducing its size and the reporting levels. If the attitude towards the consumer is changed to fulfill the expectations giving rise to a higher satisfaction, then the management practices in the product design, manufacturing and marketing will undergo a significant change. The product life cycle will then be short, and more features sand functions will be added to the product fulfilling not only the functional needs but also the service needs of the consumer.

Goals - Objectives and Targets

The process of management begins with setting of goals, objectives and targets. The goals are long term aims to be achieved by the organization; objective are relatively short term milestones to be accomplished, while the targets generally refer to physical achievements in the organizations business. The goals, objectives and targets are so set that they are consistent with each other and help to achieve each other. These are to be achieved within a stipulated time and

failing to achieve the same, means less of business profit and image. The difference between these entities can be best understood by examples in the three types of organizations given in Table below. Table:

Business Organization
GOAL

Hospital

State Transport Organization

Be a leader in theBe a hospital providingConnect all villages of household consumertotal service to thepopulation 5000 and goods industry, withpatients. above by S T service modern amenities OBJECTIVES Provide complete productEstablish 300 bedManagement state range in the area ofhospital in three years. transport at the rate of $ 5 cleaning, preserving and per mile traveled. entertainment. TARGETS 20 per cent growth perAchieve $ 800 bed perAchieve 90 percent annum in turnover. day earnings. average seat occupancy everyday. In an organization, as time progresses, business goals, departmental goals, functional goals and personal goals emerge, which create conflicting environment in the organization. The goals, objectives and targets helps in accomplishing objectives and accomplishment of objectives leads to the attainment of goals. Careful determination of these entities is, therefore, essential for a successful management process. The goals, objective and targets become reference points for strategic planning, resource planning, and operations planning. It further helps the management to identify key areas of business and key areas of management attention. Its advantage is that it stimulates the development of people and provides motivation. According to Peter Drucker, goals and objectives are necessary in every area where performance and results directly and vitally affect the survival, growth and prosperity of business.

Planning
Planning is basic to all managerial functions. It is a process of selecting one course of action, from different alternatives, for achieving the stated goals, objectives and targets. It is a decision making process determining in advance what to do, how to do, when to do and who is to do. Planning creates a frame of activity and events which are to happen or a runway for achieving corporate goals, objectives and targets. Planning process demands resource allocation through decision marking. The organization may have a plan; but question is how effective the plan is.

The efficiency of a plan is measured by the amount it contributes towards achievement of goals. It further helps to control business operations at all levels with common reference to goals, objectives and targets. Planning is a process and hence it has a methodology. The first step in planning is forecasting the environment, in which the plan is to be made and operated. Forecasting provides information on population, growth, price trends, market changes, new opportunities, changes in technology and the external factors affecting the business. The second step in planning process is to evaluate the best among all the feasible alternatives. The analysis and evaluation is done with reference to the objectives such as, minimization of cost, maximization of profit, yield, and productivity, etc. The right choice of an objective is a crucial factor in the selection process. The planning begins with the setting of goals and objectives and end up in selecting the most rational course of action. The organization has a network of goals, objectives and targets. It is necessary to develop the network of plans corresponding to this network. The process leads to the development of corporate plans, functional plans, and departmental plans and so on. For example, the organization may have business plans, investment plans, marketing plans, and advertising plans. Normally, the corporate plans are for a longer period and the derived plans are for shorter periods. Since the plan has a commitment to time, it is necessary to build a flexible plan capable of undergoing a suitable change to alter the goals and objectives within the same time. An effective planning should begin at the top and flow down the line. The effectiveness is brought in by taking a series of decisions, committing resources, giving directions, and executing controls to achieve the goals and objectives. The process of planning, therefore, is to develop the alternatives, evaluate them by meaningful analysis of costs and benefits, and make a rational selection based on some choice about goals. If the situation is that of uncertainty, then the evaluation is done thorough risk analysis and preference theory using utility as criteria.

Organizing
Organizing is an important step in the managerial process and relates to the people in an enterprise. It deals with a quantitative and a qualitative aspect of manpower in terms of placement, the roles they play and the relations amongst them, with the aim that they work together effectively towards accomplishing the goals, objectives and the targets of the organization. The organization could be formal or informal. The organization is formal when the roles, the relations of the people and the objectives they should achieve are well defined. In an informal organization, it is left to the people to understand and evolve suitable roles and relationship to achieve the objectives. While creating the organization, attention is given to an appropriate splitting of the enterprise activities, by way of function, and grouping them in such a way that they form a division, a department, a section or a formal group. The people heading these entities should have enough authority to decide, and should exercise a discretion in using the authority. The people should be

put in such a structure of roles and relationships that it is designed to work effectively and the members of the structure are able to contribute substantially towards the achievement of goals. Peter Drucker recommends three ways to determine the structure: Activity analysis; Decision analysis; and Relation analysis. Organizing is a process by which the manager can bring a smoothness of operations, by way of conflict resolution, assigning work responsibility, and creating appropriate work environment of teamwork while deciding on the process of organizing. There are certain important factors to which attention should be paid and which are discussed as follows:

Organization Levels and the Span of Control

This factor deals with grouping the people in hierarchical form, determining the levels in the organization. The levels get determined by the span of control, i.e., in the organization how many subordinates a superior can manage. This number can vary anywhere between four to eight in higher levels of management and eight to fifteen in lower levels of management. The span of control is determined on the basis of the task to be performed, decisions to be taken, and the strengths and weaknesses of the people and the degree of the delegation of the responsibilities that superior is willing to attain.

Departmentation
Departmentation is a process of breaking an enterprise into smaller groups and levels. There are a number of ways to break the enterprise. A widely accepted practice is by functions of the enterprise, viz., Marketing, Production, Finance, Personnel, Materials, etc. The second method is based on geographic area distribution. This method is resorted to when the distances are long, the activities are many and the decision making is decentralized. Many organizations have divisions, branches and territories through which the business operations are conducted. The third method to departmentalize is by way of the product or the services the organization is providing.

Relations of Line and Staff Functions

The functions of a department can be as a line or a staff. The functions which have a direct responsibility of achieving the targets for production or sales are line functions. The staff functions are those which do not participate directly in the activity but aid line functions to achieve the targets. Production Planning, Marketing, Purchasing, etc., are staff functions. The distinction is more clear and precise at higher levels. The staff function is advisory but owns the responsibility for the results and in accountable for non-performance.

Delegation of Authority
The function may either be a line function or a staff function; but still it requires decision making. As one person cannot plan, execute and control all the tasks in the functions, owing to the limitations of time and capacity, it is necessary that the decision making is not centralized at one point.

Handing over limited authority of decision making to the subordinates is called delegation. The concept of delegation is based on the premise that an individual can take decisions if supported by information, knowledge and guidance, and is motivate enough to perform. The concept of delegation accepts the responsibility of non-performance of the delegated person or the mistakes made by him. Hence, most routine types of decisions are delegated with the support of rules, conditions and the method of decision making. The failure in delegation occurs not because of the lack of understanding of the principle of delegation, but because of the inability to implement it into practice. A lot depends upon the ability of the manager to delegate and upon the capabilities of the subordinates to use the authority. The manager is not able to delegate, if he does not have a positive attitude towards delegation, if he is not receptive to the subordinates ideas and is not willing to accept the risk of failure or mistakes of his subordinates. A failure to use the delegated authority emanates from a lack of communication, guidance, training and motivation.

Towards Effective Organizing

Organizing is an activity of building a structure of roles and relations of the people to secure coordination of individual efforts to achieve common state goals, objectives and targets. The failure in organizing occurs due to the failure to plan properly, to delegate the authority and due to the confusion of roles, relations and authority.

Staffing
The function of staffing deals with manning the enterprises as per the organization structure so that they together implement the process of management. Staffing involves not only selection of persons but also their appraisal and development so that they perform their designated roles. The selection of a person is a difficult task. However, the chances of selecting a wrong person are very less if a proper method is used. Since people cannot be easily replaced because of sociopolitical and legal reasons, their selection, in terms of quality and quantity, is of paramount importance. Staffing of enterprise should be for todays needs, as well as that of the future. The requirement of the future is difficult to predict in precise terms and this requirement needs to be forecasted for more than five to six years. So the purpose of staffing is not manning for the current plan of business but to create a manpower potential capable of undergoing development, so that the same manpower is able to perform the changed roles in the future.

Coordinating and Directing

After organizing the resources and staffing the planning activities, the business plan is launched. The process of implementing the plan is dynamic. It calls upon the manager to perform a number of things in a coordinated manner so that the plan remains valid and the development takes place as per the plan. The process meets with a number of difficulties and the manager is supposed to resolve them. There will be a lag and lead in many activities. There could be shortfalls and overruns. There

could be sudden developments which may disturb the plans and the process of implementation. The managers role, in this situation, is to coordinate all the activities and provide leadership to the group to keep the plan moving. Directing and leading are the methods, whereby the subordinates are lead to understand the purpose of the activity, and by way of guidance, a direction and conflicts are resolved, bottlenecks removed and a clear path is created to progress on plan achievement.

Controlling
The last but the most important step in the process of management is controlling, the successful execution of management plan. Without control, the process becomes unproductive. The purpose of control is to regulate the process in such a way that the management process continuously strives for the achievement of the goals, objectives and targets. The control is exercised through a system. The system measures the performance of the management in terms of some predefined measures of output. It compares the output with the standard, identified the deviations from the standard, and corrects the management process to ensure that the plan continues to be effective in terms of achieving goals, objectives and targets. The control system work on the principle of feedback. The feedback on the performance should be quick without any loss of time, so that corrective action can be taken immediately. The process of correction involves changes in the plan, reallocation of resources, application of new systems, procedures and rules. The best control is the one which brings the process back into operation on the main track without outside intervention. The control system must get into action automatically to correct the midstream adverse development.

MIS - A Tool for Management Process

The process of management requires a lot of data and information for execution of the plan. This requirement arises on account of the fact in each step of management, a variety of decisions are taken to correct the course of development. 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 Summarizes 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 tin the system of management. 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. 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. He must know the adverse trends in business, the shortfalls and failures in the management process.

STRUCTURE AND THEORY OF ORGANIZATION

Basic Model of Organization Structure

The word organization means two things. The first meaning of the word organization is an institution or a functional group. A business organization, a hospital, a school, a university are some such institutions. There is another meaning of `organization, that is an arrangement of people in an institution keeping in view the concept of division of labor, authority, responsibility and decision making so that the institution, as a stable system, works coherently towards the achievement of goals. The organization structure is built by arrangement of organizational subsystems. The organization structure is built on four basic principles, viz. Hierarchy of authority, specialization, standardization or formalization and, centralization. The structure is built to achieve goals and objectives fitting into the environment. The structure built on any principle shows division of work, managerial and non-managerial manpower allocation as well as flow of decision responsibility and exchange of information.

Hierarchy of Authority
The authority rests with the individual in the organization. The degree and strength of authority depends on the level at which at person is holding position. The authority is measured on the basis of command on control of resources, the risk of business, and the decision making power to manage the risks and rewards. When the authority s distributed in a vertical order in terms of levels, the organization is built on the principle of hierarchy of authority. The effectiveness of the authority is based on the span of control, i.e., the number of persons being managed and controlled by a person. Depending on the organization, and business, the span may differ from four to seven. The span outside this range has proved to be unproductive and inefficient.

Specialization
The second principle of building organization structure is specialization. Specialization can be decided in a number of ways, arranging all similar and associated tasks under one head. For example, a business organization can be structured on the specialization such as Manufacturing, Marketing, Accounting and Personnel. A hospital can be structured on the basis of specialization such as General Medicine, Surgery, Heart diseases, Orthopedics and so on. The specialization principle brings clarity in organization functions, helps to select right people and group them properly, aids in functional planning and control of the activities of the organization.

Standardization - Formalization
The purpose of standardization or formalization is to make a person in an organization independent, whereby the interaction between the individuals in the organization is minimum. The people work on the basis of rules, procedures, systems, guidelines and policies. If the degree of such specialization is very high a person can supervise more number of people. In other words, it affects the span of control favorably. With specialization, the delegation of work and its control has become easier. Where standardization is not possible owing to the nature of business, the risk in business and decision making complexity span of control is reduced as the

number of people handle similar range of operations. Requirement of manpower then increases making the organization top heavy.

Centralization
Centralization refers to the location or position where the decision-making centre is localized. In a highly centralized organization, the decision making is at the top and in a decentralized organization; it is delegated down the line in the organization hierarchy. When business risks are high and difficult to manage, the organization emerges as centralized. The organization is structured on the basis of the above four principle. The blend of these principles is decided on the nature of business, risk of business, management style and the environment of business. The blending of this principle would undergo a change as the business grows. The organization is under a continuous process of change to meet the changing needs of business. The organization emerges as centralized. The organization is structured on the basis of the above four principle. The blend of these principles is decided on the nature of business, risk of business, management style and the environment of business. The blending of this principle would undergo a change as the business grows. The organization is under a continuous process of change to meet the changing needs of business. The organization will have a different structure in its various business stages namely, inception, growth, maturity and decline. The structure of organization affects organizational productivity, individual performance, growth of human resource, and the manpower itself. A considerable amount of saving in manpower and overhead expenses is possible, if the organization is properly structured to the business needs and towards fulfilling the objectives. Independent of the blend of these principles, the effectiveness of the structure largely depends on the quality of people ability, skills, knowledge, attitude and motivation. The basic model of the organization structure is shown in Fig 4.1. It shows the arrangement of the people in a reverse tree structure. The basic model will have more levels if the size of the organization is very large. The number of levels will be determined on the basis of the span of control and the nature of work. The appropriateness of the structure can be decided based on the factors like responsibility and authority, economy in conducting the business, the ability to achieve the goals and objectives, a smooth flow of information exchange and communication. There are four variations of the basic model which are widely used in real life.

Modifications to basic model

There are four modifications to the basic model of organization as under:

Functional Product/Market/Service Project Matrix

Functional Organization

The functional organization is most suitable where the organization business can be split into clear divisions of activity and all of them are equally important. For example, the business organization can be functionally organized into four to five functions such as marketing, manufacturing, finance, personnel, and marketing, manufacturing, finance, personnel, and materials. The strength of the people and the hierarchy in each of the functional organizations would vary depending upon the size and the number of activities. Decision making in any functional organization is at the level of the functional head with accountability to the chief of the organization. The implications of the decisions are largely on the functions themselves. A decision affecting other functions of the business, however, is referred to the top management. The information flow is from the top to the bottom and in the reverse order. The information flow across the functions is not expected. Accumulation of information is at the chief executives level and is shared by the others. The functional organization is most suited where each function is a specialty and calls for an expertise in the field; and where coordination is of a very low order and can be handled easily through the management process. The organization works efficiently when the business is stable and expected to grow in a steady manner. When the business becomes competitive and develops threats to its growth, the functional structure undergoes a change. The development of people is on the specialized functions and hence they are not equipped to handle other functions if required. The people in a functional organization develop a narrow outlook restricted to their own functions and responsibilities. The corporate culture is difficult to imbibe in a functional line. The government departments and agencies are organized on the functional principle. Product - Market - Service Organization When the organization grows large in turnover and strength, and when the decisionmaking relates to, either the product or the market or the service, the organization structure is built around one of these factors. In this structure, the total responsibility rests with the product/market/service head. He is expected to take all the decisions regarding finance, material, etc. The people in the organization report to the product head. The decision making in this structure is faster and to some extent centralized. The inter-functional conflicts are avoided resulting in speedy business progress. In this structure, people work more for product goals than the corporate goals. The contribution to profit by product can be easily measured as profit is earned by product business unit. In this structure, the manpower requirements are higher and the people develop specializations in the specific technology and management. Project Organization A project organization is a special case of product organization where the common services like finance, purchase, etc. are organized at the functional level. But the project resources are allocated to the project manager. Since the business responsibility rests with the project manager, necessary authority is given to him

with the requisite resources. This type of organization structure helps in making quick decisions for project control in terms of costs, resource and time. In a project organization some of the functions are of corporate responsibility and some of them are the project managers responsibility. In a project business, the activity is one at a time and has implications on the subsequent activities in the project. Therefore, any problem or conflict relating to the activity needs to be resolved immediately. This calls for quick decisions. This is possible by organizing all the functional resources under one command of the project manager. Matrix Organization In all the three organization structures discussed so far, the communication protocol is vertical in the hierarchy. The information flow is within the hierarchy. The lateral communication between the functions is not permitted. In a matrix organization a vertical as well as a lateral communication and information flow is allowed. The matrix organization integrates functional responsibility with product responsibility. It is combination of the functional and the product organization structure. A product manager is responsible for the total performance of the product and he will have the production manager, the marketing manager, the accounts manager as his counterparts in the manufacturing, marketing and accounting functions respectively. These functional managers report to the functional head vertically and the product manager laterally. The matrix organization structure is used in big companies having diverse business activities. The business units, known as strategic business units, are organized with a unit head at the top. The structure enjoys the advantages of a functional as well as of a product organization. It should be noted that the organization structure is a dynamic model. It is effective for the purpose it is set to fulfill under certain conditions. The moment the business conditions change, the structure should undergo a suitable change. The structural changes do not limit themselves from one type to other but many other qualitative changes are also desirable. There has to be a change in the people in terms of strengths, skills and abilities. A functional head in the functional organization may be not be suitable to shoulder the responsibility of the Product Manager in a product organization structure, because of inherent limitations of narrow specialized experience as a functional head. With the standardization and formalization drive in the organization, the span of control can be enlarged than before. With the delegation of authority, backed by the rules and policies, the junior level personnel become more knowledgeable, experienced and capable of shouldering higher responsibility. This would affect the levels in hierarchy.

Organization Behavior
Though an organization is structured according to the goals and objectives to be achieved, the actual performance is at variance for various reasons. There are some factors, beyond the control of the management, which affect the performance

of the organization. However there are some factors, which relate to the organization (independent of the type of structure). The performance is affected due to organizational behavior. The behavior of the organization is a result of the following factors:

Organization Culture Organizational Power Organizational Change Organizational Learning Organizational Motivation

Organizational Culture The culture is a set of attitudes, beliefs, values, norms and understandings, the people have in the organization. The culture is a collective behavioral result of the people who man the organization. Depending upon the person, whether he is a manager, an officer of a worker, the cultural pattern emerges and it is known as a managerial culture and a work culture, etc. Long-term performance and managerial actions depend on the managerial culture and the achievement of the targets depends on the work culture. The culture may be reflected in the philosophy, policy, strategy, goals and managerial style of the organization. If the organization culture is generating a behavior which affects the performance adversely, it can be changed by management actions such as training, education, creating awareness, transferring people, encouraging young recruitments and talent in the organization. Organizational Power The organization power is the ability of the organization structure to use human and material resources to achieve the stated goals and objectives of the organization. The power of the organization is not distributed uniformly all over the organization but it may be concentrated in small groups representing a function, a department or a section. It might be localized with the individuals. Some individuals by virtue of their position, responsibility and seniority, enjoy more power than others. Some individuals by virtue of their nearness to the management and a strong personality derive power in the organization structure. Organizational Change Even though the organization is structured properly, over the period of time it starts failing slowly due to the changes in the environment, the people and the business. Like a living organism, an organization undergoes a process of birth and death. The process of organization outlives the purpose for which it is established moves much faster, if proper corrective action is not taken. The organization structure in its life cycle, starting from the introduction, growth, maturity and decline should change suitably in the respective phases. The behavioral change through the organizational change is achieved by creating a climate for change, deciding, designing and implementing the change, watching and institutionalizing the change.

Organizational Learning The organizational behavior improves with the experience it gathers from all business fronts. With experience, people are in position to identify the cause and effect relationship. It is possible to predict the errors and probable mistakes in the business operations. The rules, systems and procedures are streamlined over a period of time. With this learning experience, some changes in the organization structure are inevitable and they should be carried out. The individuals in the organization are able to assess the strength and weaknesses within them and are able to take steps to improve. As organizational learning increases, the organizations behavior shows maturity. With increased learning, the organization moves towards high degree of formalization, affecting the structure itself. The organizational learning is faster, if people and the management are dynamic and progressive. Organizational Motivation There are two leadership styles, autocratic and supportive. In an autocratic style, the leader determines everything and dictates decisions. The decisions are enforced by the power of authority. The supportive leadership style calls for participation, consultation and respects the opinion of the subordinates. The process evokes initiative amongst the subordinates and gives them a feeling of importance and satisfaction. Organization as a System A system is an assembly of elements arranged in a logical order to achieve certain objectives. The organization is also a system of people. The individuals in the organization are selected in terms of number, quality and ability and are placed in hierarchical order to plan and execute the business activities to achieve certain goals and objectives. This is the simplest justification for calling the organization a system. 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 tasks, but they have to be suited for the people. Over and above, these are to be arranged in proper structure. Further, fourth element has been added as culture. According to Leavitt an organization should be viewed as a socio-technical system consisting of people, tasks, technology, culture and structure. In view of 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 changing environment. The organization continuously exchanges the information with the environment and is influenced by the changes in it. The organization, therefore, has to be built in such a fashion that it adjusts with the changes in the environment and that the goals and objectives are achieved.

The system and their goals are not stable. The goals change in response to the changes in the business focus, the environment and is influenced by the changes in it. The organization, therefore, has to be built in such a fashion that it adjusts with the changes in the environment and that the goals and objectives are achieved. 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 goal displacement is said to have occurred when the system goals replace the organization system goals. When a goal displacement occurs, it affects the organizations 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 phase 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 as a system, the organization is bound to suffer from decay.

MIS - Organization
Management Information Systems (MIS) should be designed, viewing the organization as discussed earlier. MIS design should give due weight age to the human side of the organization and its culture. The task and technology are the physical aspects of the organization which can be ascertained very easily. But culture and people are very difficult to assess from the design point of view. The structure of the five sub-systems should be considered while designing the MIS. MIS design should give reports in line with the organization structure. This means that the main decision makers and the power centers must be recognized in the MIS. If the organization works on a standardized system where rules, policies, systems and procedures have been laid down, then these become part of the MIS. The processing routines in the MIS incorporate these features as an integral part. This is safe as it has already been approved by the management of the organization. Along with the information, if the decision making responsibilities are also clearly defined and allocated, then the MIS can produce information reports by processing the data and summarizing the results in line with the decision makers position in the structure. If the basic model of the organization is modified as a product or a project organization system, then the MIS should focus on the management of product or project where the concerned manager has a composite responsibility of planning and control of the multiple functions. Besides these functions, he has to know the status of the other support functions. The information should be such that it highlights the trouble spots and shows the interconnection with the other functions. It must summarize all information relating to the span of control of product or project manager. The MIS should be able to cater to the view of the product or the project manager and also of the top management. If the organization culture provides sufficient incentive for efficiency and results, the MIS should support this culture by providing such information which will aid the promotion of efficiency. If

the culture encourages delegation of power and authority, then the MIS should incorporate the decision making rules in the system. The organization system is an open system and MIS should be so designed that it highlights the critical business, operational, technological and environmental changes to the concerned level in the organization, so that the action can be taken to correct the situation. The principle of the feed forward control should be extensively used as a design feature to provide a prior warning to the decision maker. The design of the MIS, in isolation from organizational factors, is destined to fail as it just does not fit into the structure. Since organization systems in the business differ for various reasons such as the leadership style, the management style, culture and group of people as a body and so on, it is difficult to evolve a standard model of the MIS for a business and / or an industry. MIS plays a very important role in creating organization behavior which in turn sets the goals for achievement. Technology and people decide the organization structure and style of the management.

INFORMATION CONCEPTS
Information Concepts
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 produced after processing the raw material. Information has certain characteristics. These are:

Information Improves representation of an entity Updates the level of knowledge Has a surprise value Reduces uncertainty Aids in decision making

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 suppresses the noise and the distortions. Table: Information Summarization

Key for Focus summarization information

Management position Responsibility

ofExample
General Manager, Divisional Head Marketing, Materials

Management functions Levels in the organization Selective on condition

Performance, Goals,Production Top, Middle Targets Relevance to theOperations level Exceptions Only those products, where sale is below the budget

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.

Bias in Information
While choosing the appropriate method of communicating information, a care has to be taken to see that is not biased. For example, while using the techniques of classification or filtering the information, it should not happen that certain information gets eliminated or does not get classified. That is, a deliberate bias in covering certain information is to be avoided. This bias

enters because people try to block sensitive information which affects them. To overcome this problem, a formal structure of organization should be adopted and the type of information and its receiver should be decided by the top management. Many a times the data and the information are suppressed but the inferences are informed, with no or little possibility of verification or rethinking. In this case one who draws inferences may have a bias in the process of collection, processing and presentation of data and information. Though the deliberate enforcement of the inference on the receiver avoids a possibility of the multiple inferences, but in this case processors bias is forced on the receiver. For example, organizations have departments like Corporate Planning, Market Research, R & D, HRD and so on, which collect the data and analyze it for the company and communicate the inferences. In all these case personal bias, organizational bias and management bias may be reflected in the entire process of collection processing, and communication inferencing. Table: Methods to Avoid Misuse of Information

Method

Reason

Example

Delayed delivery of A possibility of immediateSales report to the sales information action or decision is reduced.representative or a copy of It will have only a knowledgeinvoice to the sales value. representative. Change in the format Provide only that informationSales information to and content of the which may be needed, henceoperations management, sales report. the misuse is averted. versus target for the middle management sales with a trend analysis to the top management. Suppression and To avoid the risk of exposureThe price, the cost filtering of the and the misuse of informationinformation. Drawing and information of for achieving the undesirabledesign information. confidential and goals. sensitive nature. Suppress the details Make it difficult to collect,Statistical reports with no and references of data and process the data at thereferences. and information. user end to meet the personal needs of information. Truncated or lopsided Make it difficult to readA focus on high value sales presentation through the information andand production and suppress avoid its probable misuse. the details. The presentation of the information will generate a bias and may influence the user. For example, if the information is presented in an alphabetical order and if it is lengthy, the first few information entities will get more attention. If the information is presented with criteria of exception, the choice of exception and deviation from the exception creates a bias by design itself. For a quick grasp, the information is presented in a graphical form. The choice of scale, the graphic size and the color introduce a bias in the readers mind.

Information a Quality Product

Information is a product of data processing. Even if we take care of the aspects discussed in the above section, the manager will determine the quality of the information based on the degree of motivation it provides for action, and the contribution it provides for effective decision making. The quality of information is high, if it creates managerial impact leading to attention, decision and action. The quality of information can be measured on the four dimensions viz., utility, satisfaction, error and bias. The utility dimensions have four facets the form, the time, the access and the possession. If the information is presented in the form the manager requires, then its utility increases. If it is available when needed, the utility is optimized. If the information is easily and quickly accessible through the On-line Access system, its utility gets an added boost. Lastly, if the information is possessed by the manager who needs it, then its utility is the highest. Many of the organization suffer from the possessive nature of the managers making an access difficulty for the other users of the information. The concept of the utility of the information is subjective to the individual manager, at least in terms of the form, time and access. Since in the organization there are many users of the same information, the subjective ness would vary. Therefore, the one common key for measuring the quality could be the satisfaction of the decision maker. An error is the third dimension of the quality of the information. The error creep in on account of various reasons, namely; An incorrect data measurement An incorrect collection method Failure to follow the prescribed data processing procedure Loss of data or incomplete data Poor application of data validation and control systems A deliberate falsification Erroneous information is a serious problem because the decision maker cannot make the adjustments as he is not aware of it in terms of the location and the quantum of error. To control errors, it is necessary to follow the methods of systems analysis and design. The approach should be that the errors should be prevented, failing that they should be detected, and if not, they should be controlled. The processing of data for the information processing should be allowed only after a through validation of the transactions and the contents, as a whole, on logical plane. Care should be taken that the information is processed after ensuring the correctness of the data in terms of the time and the number of documents, and the transactions in the period. The data should be check against the master data wherever possible and the balance should be controlled through logical processing by using rules, formulae, the principles, etc., which will ascertain the correctness of the contents.

Parameter 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. 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. 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. 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. 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. 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.

Classification of the Information

The information can be classified in a number of ways provide to a better understanding. Action versus no-action information The information which induces action is called action information. The information which communicates only the status of a situation is no-action information. No stock report calling a purchase action is action information but the stock ledger showing the store transactions and the stock balances is No-action information. Recurring Versus nonrecurring The information generated at regular intervals is recurring information. The monthly sales reports, the stock statements, the trial balance, etc. are recurring information. The financial analysis or the report on the market research study is non-recurring information. Internal versus external information The information generated through the internal sources of the organization is termed as internal information, while the information generated through the Government reports, the industry surveys, etc. is termed as external information, as the sources of the data are outside the organization. The action information, the recurring information and the internal information are the prime areas of computerization and they contribute qualitatively to the MIS. Planning information Certain standards, norms and specifications are used in planning of any activity. Hence, such information is called the planning information. The time standards, the operational standards, the design standards, are the examples of the Planning Information. Control information Reporting the status of an activity through a feedback mechanism is called the control information. When such information shows a deviation from the goal or the objective, it will induce a decision or an action leading to control. Knowledge Information A collection of information through the library reports and the research studies to build up a knowledge base as an information source for decision making is known as knowledge information.

The information can also be classified base on its usage. When the information is used by everybody in the organization, it is called the organization information. When the information has a multiple use and application, it is called the database information. When the information is used in the operations of a business it is called the functional or the operational information.

Methods of Data and Information Collection

Several methods are available for the collection of data. The choice of method will have an impact on the quality of information. Similarly the design of data collection method also decides the quality of data and information. The methods of data collection and processing become a part of the MIS. An awareness of these methods is essential to the manager. Further, he should also understand the potential problems of bias, currency, and the fact versus the opinion in the various types of methods. The observation, the experiment, the survey and the subjective estimation are the methods chosen for data collection and information about a specific problem, while the remaining methods are chosen to collect data on a routine basis without any particular problem whatsoever.

Value of Information
The decision theory suggests the methods of solving 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 information, if it wipes out uncertainty or risk completely. However, perfect information is a myth. Table: The Methods of Data and Information Collection

Method
Observation

Example

Comment

Experiment

Survey

The first hand knowledgeVisit to the customer for avoids a response bias. Anassessing the customer accuracy of observation willcomplaints. A visit to assess decide the response. It isthe accidental damage. dependent on the observer and is influenced by the bias. The information on a specificAssembly the yield of a new parameter can be obtainedfertilizer by a design of the through a control overcontrol experiment. Assessing variables. The quality ofthe market response to a new information depends on thepackaging through test design of the experiments. marketing. One time. Enables to coverMarket survey, opinion polls, the interested population onand census.

Subjective Estimation

Transaction Processing Purchased from outside

Publications

Government agencies

specific aspects. The quality of questionnaire will decide the quality of information. In the absence of all the threeData pertaining to future like above, the expert options maythe alternate sources of be called to collect theenergy, the life style in the 21st information. century. The data exists but needs aLedgers, payroll, stock processing and integration forstatements, sales report. reporting. Easily available at a price.Databases on the specific May be expensive and manysubject, research studies. have a bias depending on theMarket and technology source. studies. Low cost but may project orThe government publications, emphasize one view or thethe industry publications, the other. Information may beinstitutional publications such lopsided. as NCAER, NCL, BANKS, UNO the various public forums. Available but may not beThe Reverse Bank of India directly useful not knowingpublications. The Tax the details of collectionpublications, the reports and analysis is usually not thefindings. latest.

The decision theory stipulates that the value of the additional information is the value of the change in the decision behavior, resulted by the information, less the cost of obtaining the information. If the additional information does not cause any change in the decision behavior then the value of the additional information is zero. The value of the additional information 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 decision maker will select one on the basis of the available information. If the new 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 lost 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 information 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.

General Model of a Human as an Information Processor

A manager or a decision maker uses his sensory receptors, normally eyes and ears, to pick up information and transmit them to brain for processing and storage. The result of this processing will be a response which may be a decision, and action or at least recognition of the event for future use. Hence, a manager can be said to be an information processor. While processing the information for a managerial response, the manager also uses accumulated knowledge from memory. The capacity of a manager to accept and process inputs to produce output is variable and limited. That is why it is observed that all the managers of the same level do not accept or absorb all the inputs which the information may provide. The limitation arises sometimes on account of the information overload which is external to the manager. This is a case of too much or extra information creating a problem for the user of the information to sort out the relevant from the irrelevant or the appropriate from the inappropriate. The manager in such a situation adopts the method of filtering the information. Filtering is a process whereby a manager selectively accepts that much input, which his mental ability can manage to process. The filtering process blocks the unwanted or the inconsistent data or the data which does not match the frame of reference. An inexperienced manager or a less knowledgeable manager through filtering may omit data, distort data responses and, therefore, may draw incorrect inferences. The information processor establishes the filters based on experience, knowledge and know-how. The choice of filters may be changed due to stress, urgency of decision making and the confidence in a particular method of decision making. Many a times a processor is required to perceive process and evaluate probabilistic information. The processor may be deficient in the intuitive understanding of the information, in the ability to identify the correlation and the causality, and in the capability for integrating the information.

Managers Individual Differences

The managers may come to some decision in a given situation but they may not follow the same decision process. This is because of the cognitive style of each manager. Each manager has his own style, a method to perceive the data, organize and process the same as per his frame of

reference, confidence in the decision procedures and the time available for the decision making. The managerial ability, skills and tools pay a considerable role in the cognitive style of the manager. These styles affect the information system design and the satisfaction of the manager.

Summary of Information Concepts and their Implications

Understanding of information concepts is very important and relevant to the system designer and the information user. The concepts are summarized as follows: Filtering The system designer should provide an appropriate filtering mechanism so that the information is not suppressed and relates to the frame of reference of the user. Care should be taken in the process that the certain valid information does not get blocked or over emphasized. A filtering process is used to select and suppress the information. Simon Model and is Application The designer should attempt to provide such information that it clearly defines the problem space and also takes cognizance of the users knowledge. The design of the system should be such that an appropriate mix of these two sources should yield a decision, leading to a solution of the problem. Codes and Representation The system designer should evolve such coding system that is easy for the users of the code to interpret. Secondly, the designer should report the data in such a manner that the user can grasp it quickly. Highlighting The designer should provide the information in such a way that the significant differences between the targets and the achievements, the standards, so that they become easily noticeable by the user without search.

Individual differences

Explanation

Effect onExamples information processing

Locus of control The degree ofMore informationThe production internal or perception ingathering anddecisions, selection external to the assessing theanalysis, if internal. of tools and situation control which is materials etc. internal to the organization or external to the organization. Personal The degree if faithLow dogmatism,The pricing, dogmatism in beliefs, opinionsthen moreadvertising in a

and experience. Risk prosperity

Tolerance ambiguity

for

Manipulative intelligence

Experience in decision making

Knowledge of the task, tools and technology

The management level from lower to higher

pastinformation competitive collection andenvironment. processing. The ability to takeHigher than moreThe top risk. information management gathering anddecision making in analysis. a strategic planning. Level of clarityTight toleranceManager constantly required in thethen moreasking for more information. Theinformation information. ability to readcollection and through theanalysis. information. The ability toHigh ability, thenExperienced and manipulate theless informationskillful managers data andand more selfrely on the information vis--analysis. manipulative vis the stored intelligence. information and knowledge. Extent ofHigh, then correctThe managers with experience atfiltering of data anda wide experience particular level ofappropriate choicein the different decision making. of decision makingfields of process management call for precise and less but pertinent information. The extent ofHigher, then lessThe Technocrats, knowledge in theinformation scientists, and application of therelevant to andmanagers of tools andtools and correcttechnology have technology. analysis. definite information needs based on tools, models, methods used for decision making. The nature ofHigher, then theThe top management unstructured management decisions differinformation decisions regarding from lower todifferent analysis,expansion, and higher level. and the use of thediversification and new decisionthe strategic models. Factualbusiness decisions. information at lower level.

Statistical Analysis

The designer should provide the information in such a way that the information not only represents something meaningfully but also aids in the statistical analysis by the user. The information should provide the additional results such as variance, correlation, coefficients, and futuristic estimates and give a measure of statistical significance for the user to consider while decision making. Format The designer should present the information in the form or format which is complete in all respects and in which all data is processed as per the frame of reference of the user. The user should not be required to do additional processing with other data set through the computer systems or mentally by using the data set from the memory. Referencing and Adjustment The designer should evolve a system in such a way that it covers the valid system boundaries and provides a reference to an acceptable point (the year, the product, the norm, the standard, the knowledge), giving a facility to make an adjustment to results or status which the information provides. Cognitive Style Each user has his own style of resolving or reconciling his internal view and an understanding of the problems or environment versus the actually perceived or seen or as it exists. In line with his individual style, he also evolves a process of the decision making which is personal to him. Learning Theory The designer should appreciate that the user inadvertently is learning through the information and is building his knowledge set. Hence the information should be such that the user is not overload with the supply of information which is already known to him. Feedback Loop The designer should provide the information feedback loop, so that the user understands that the process of decision implementation is smooth and the results are evaluated with references to the norms or the expectations, giving the user a sufficient motivation to change, amend or act. Perceived Value of Data Some data or information may not have a value or an importance in the current operations of the business but some time in the future or in a different context some value is perceived for the information. The designer would keep this data out of the current processing and reporting.

Information Absorption The designer should provide only that amount of information which the user to grasp and use. Any additional information, beyond the ability of the users absorption, will be ignored or go unnoticed without any response. Individual Differences The information needs of different managers will differ based on individual human processing ability and cognitive style. The designer should support all such needs effectively by making the separate information reports.

Organization and Information

Management through decision making is a common feature to all the organization. The management consists of a group of people who are placed in the organization at various levels with an assigned task, job and responsibility to achieve the goals. Depending upon the levels in the organization, the nature and the complexity of the job is determined. These features are common to all the organization whether they are in the field of business, education, health or social service, banks, Central Government bodies and so on. The MIS should acknowledge the problem and difficulties in various methods of the data gathering and their sources in the organization. Each of these methods has a bearing on a quality of the input data which will be processed by the MIS. The necessary checks and controls should be introduced to control the quality of the input data. The people organization, the business organization, the business organization and the infrastructure of the organization has an influence on the nature, the type and the quality of information.

MIS and the Information Concepts

The goal of the MIS should be to provide the information which has a surprise value and which reduces the uncertainty. It should simultaneously build the knowledge base in the organization by processing the data obtained from different sources in different ways. The designer of the MIS should take care of the data problems knowing that it may contain bias and error by introduction of high level validations, checking and controlling the procedures in the manual and computerized systems. While designing the MIS, due regard should be given to the communication theory of transmitting the information the data obtained from different sources in different ways. The designer of the MIS should take care of the data problems knowing that it may contain bias and error by introduction of high level validations, checking and controlling the procedures in the manual and computerized systems. While designing the MIS, due regard should be given to the communication theory of transmitting the information from the source to the destination. Special care should be taken to handle a noise and a distortion on the way to destination. The presentation of information plays a significant role in controlling the noise and distortion which might interrupt, while communicating information to the various destinations. The principles of summarization and classification should be carefully applied giving regard to the levels of

management. Care should be taken in the process that no information is suppressed to over emphasize. The utility of information increase if the MIS ensures that the information possesses the necessary attributes. The redundancy of the data and the information is inevitable on a limited scale. MIS should use the redundancy as a measure to control the error in communication. The information is a quality product for the organization. The quality of information as an out going product can be measured on four dimensions, viz., the utility, the satisfaction, the error and the bias. The MIS should provide specific attention to these quality parameters. A failure to do so would result in a wasteful expenditure in the development of the MIS and poor usage of investment in the hardware and software. The quality can be ensured if the inputs to the MIS are controlled on the factors of impartiality, validity, reliability, consistency and age.

SYSTEM CONCEPTS & CONTROLS

System Concepts
The word `System is used in day to day life very frequently in describing the subjects, as the traffic system, education system, business system, etc. The system provides a meaningful framework for describing and understanding the features and problems of the subject. System is defined as a set of elements arranged in an orderly manner to accomplish an objective. Some examples are given in Table below: Examples of System

System
Computer

Elements

Objective

Accounting

Business Organization

Input, process and outputProcess the data and provide devices. Operating system,information. compilers, packages, DBMS, personnel. Financial transactions,Process the transactions and accounting principles andproduce monthly books of rules, transaction processingaccounts and the information methods of accounting. for financial management. People, plant and machinery,Produce goods and services to product and services,achieve the business communications, transport,objectives of service, turnover materials. and profits.

It is to be noted that a system is not a randomly arranged set. It is arranged with some logic governed by rules, regulations, principles and policies. Such an arrangement is also influenced

by the objective the system desires to achieve. For example, if a computer system is designed to perform commercial data processing, then the elements will be the data entry devices a CPU, a disk, a memory, application programmes and a printer. A system may have single input and multiple outputs or may have several inputs and outputs. For example, a business organization system has several inputs and multiple objectives, such as sales, profit, service and growth. The choice of inputs and processing methodology is governed by the objectives set for the system. Any misalignment in this arrangement would lead to a wasteful collection of inputs, and its processing will fail to achieve the desired objective. All the systems operate in an environment. The environment may influence the system in its design and performance. When a system is designed to achieve certain objective, it automatically sets the boundaries for itself. The understanding of boundaries of the system is essential to bring clarity in explaining the system components and their arrangement. Since the systems are designed for specific objectives/outputs, the designer provides a filter around the system to control the influence on the system. For example, take a manufacturing system, where the objective is to produce products of desired quality. Since the raw material and the processes are selected with this objective, the quality control systems exercise a control on the quality of incoming raw material and keep a continuous watch on the process parameters to keep the desired quality of production. The quality control system which protects the system from the undesirable influences of the environment. The designer of the system, therefore, has to consider the environment and select appropriate inputs, and filtering mechanism to protect the system from the undue or undesirable influences of the environment. Most of the failures of the systems lie in the area of selection of the inputs and the processes, and not providing the appropriate filtering systems.

System Control
Since the systems are designed to achieve specific objectives, ensuring the achievement of the objectives through system control, becomes the integral part of the system design. The control calls for, in the first place, a measurement of the output in some terms. The device that measures the output is called a sensor. The next step is to set the standard or norm of the output as an index of the system performance. The sensor measures the output the compares it with the standard. If the measured output compares well with the standard, the system provides a feedback to continue the operations. If the measured output does not compare well with the standard, then a feedback is provided to the system to stop the operations. The process of comparison of a measured output with the standard is done by a unit called as comparison unit. The mechanism, which provides a signal to the system, about the quality of performance, favorable or adverse, is called a feedback mechanism.

Many times, the system may not have an appropriate mechanism to act on the signal which it receives. It is, therefore, necessary to provide an in-built mechanism which will decide, based on the feedback, to stop, regulate or continue the system operations. Such as mechanism is called a corrective unit and it is responsible for ensuring the system performance. The corrective unit, in its performance, will act on inputs and processes to bring the system under control. The process of measuring the output, comparing with the standard, sending the signal to the corrective unit and the corrective unit action upon it, is called a control. Any breakdown in this path will affect the system performance adversely. A system set for a specific objective, devoid of any control, will perform in a disorderly manner and can disturb the system equilibrium. The role of a control is to regulate the system operations and performance, and keep it in an equilibrium condition. The control, therefore, is the heart and brain of the system. The control could either be internal or external to the system. For example, in an air conditioning system, switching on and off the compressor is automatic and hence it is an internal control. In the roads and traffic system, the traffic policeman acts as a control system, which is external to the traffic system? Most of the modern systems have in-built automatic control systems. The information system can be understood in terms of system concepts. The information system receives the inputs of the data and the instructions (a set of the Computer Programmes), processes the data according to the give instruction, and gives the output of the processed results. The information systems are designed in a particular environment of business, industry and management. When the environmental factors or the inputs change, the system process is under a stress. Stress beyond a limit affects the other system elements which in turn affects the achievements of the goal. A system may have the ability to manage the stress and still be in a condition to achieve the desired goal. Unmanageable stress leads to a system failure. The concept of control is based on the condition of a feedback. If the feedback is positive, i.e., the measure of the output compares favorably with the standard or norm, the control will keep the system operating in the same condition. However, if the feedback is negative, i.e., the measure of the output is unfavorable when compared to the standard or norm, the control will act on the input or process to bring back the system to the state of equilibrium.

Types of system
A system is defined and determined by its boundaries and objectives. It is quite likely that a system is an arrangement of smaller systems in a logical order. When many smaller systems together make a larger system, the smaller systems are called the subsystems of the larger system. A large system can be split or decomposed into smaller subsystems up to a certain level. This decomposition can go down to a level where the input and the output are more or less same.

In a serial system processing, the entire output of a subsystem is the input to the next subsystem and so on. In the matrix arrangement the different outputs go to different sub-systems. A subsystem receives more than input from other subsystems. A large system is always complex and difficult to understand. Therefore, for viewing it is in a different way, the system is split into the smaller subsystems. Breaking the system is hierarchical manner provides a way to structured systems analysis. It gives a clear understanding of the contribution of each subsystem in terms of data flow and decisions, and its interface to the other subsystems. The systems can be classified in different categories based on the predictability of its output and the degree of information exchange with the environment. A system is called deterministic when the inputs, the process and the outputs are known with certainly. In a deterministic system, you can predict the output with certainly. A system is called probabilistic terms. The accounting system is deterministic while the demand forecasting system is probabilistic one. A deterministic system operates in a predictable manner while a probabilistic system behavior is not predictable. If a system is functioning in isolation from the environment, then the system does not have any exchange with the environment not is it influenced by the environmental changes. Such a system is called a closed system. If the system has exchange with the environment and is influenced by the environments then it is called an open system. All kinds of accounting systems, viz., cash, stocks, attendance of employees are closed systems. Most of the systems based on rules and principles are closed systems. The systems which are required to respond to changes in the environment, such as marketing, communication and forecasting are open systems. All open systems must have a self-organizing ability and sensitivity to absorb and adjust to the environmental changes. The business organization systems are open systems. The systems of manufacturing are closed systems. The information systems are a combination of a person (the user of information), the hardware and the software. The hardware software system is a closed deterministic system but in combination with the user it is an open a probabilistic system.

Handling System Complexity

Information Systems are relatively complex as compared to physical systems, and therefore, they should be handled properly enabling the system designer to understand, design, develop and implement. To handle the complexity, the system can be viewed as an assembly of subsystem each with a clear definition of the boundaries, interfaces and their connectivity. The subsystems then are put in the hierarchical order to provide a structural view showing the developmental path to the designer.

The process of simplification provides a way to handle these interconnections and reduce the complexity. The method of simplification is as follows:

Identify the subsystems which have to be together for the functional `cohesion. Form a cluster of these subsystems and identify interconnections in this cluster. Form clusters of the remaining subsystems. Connect the clusters with an interface.

System Efficiency and Effectiveness

The performance of the system can be measured by two factors, viz., the efficiency and the effectiveness. The efficiency indicates the manner in which the inputs are used by the system. Being efficient means the system uses inputs in a `right way. If the input-output ratio is adverse, we say that the system is inefficient though it produces the desired output. The effectiveness is the measure for deciding whether the system provides the desired output or not. Being effective means producing the right output in terms of quantity and quality. When the system is ineffective, the system is out of control and it needs a major correction. A system has to be effective and efficient for the highest utility to the user of the system. Broadly speaking, the effectiveness is a measure of the goodness of the output, while the efficiency is a measure of the productivity, i.e., the measure of the output against the input.

MIS and System Concepts

The MIS is an arrangement of data processing and information systems in an orderly manner to support the management in achieving the business objectives. The MIS boundaries cross the limits of the organization and draw the data from the source external to the organization. MIS follows a generalized model of a system as stipulated into the theory and performs on the principle of feedback and control. It works on the principle of control by exception. MIS is designed to provide the information which is exceptional in nature form the point of view of business. The exceptions could be abnormal events, surprising developments, shocking news, or something that was not consistent with the exceptions. The MIS must catch all such points and reports then to the concerned management. It must, therefore, recognize all such possible points and provide a measure for comparison with the actual performance. Unless such a feature is included, the MIS will be supplying merely data and not information. The MIS, initially, concentrates on the quality of in put satisfying the parameters, viz., impartiality, validity, reliability, consistency and age. A large amount of system effort is spent in this area to ensure the quality of the input.

The MIS provides a system for data processing and data analysis. It uses a number of applications and business models, operational research models and applications and business models, operational research models and application packages to produce the information. The MIS has a provision to display the information and also print it in a report format. It also provides a facility to store the intermediate results, which are used in a number of other systems. The MIS is a combination of the deterministic and the closed systems, and the probabilistic and the open systems. By nature, the MIS is an open system interfacing continuously with the internal and the external environment and is self organizing to meet the ever increasing and changing information needs of the organization.

DEVELOPMENT OF MIS

Development of Long Rate Plans of the MIS

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 it s 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. 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 such 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.

Contents of the MIS Plan

A long range MIS plan provides direction for the development of the systems, and provides a basis for achieving the specific targets or tasks against a time frame. The plan would have the following contents which will be dealt by the designer under a support from the top management.

MIS Plan is Linked to the Business Plan

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 are as under:

Provide on-line information on the stocks, markets and the accounts balances. The query processing should not exceed more than three seconds. The focus of the system will be on the end user computing and access facilities. Information support will be the first in the strategic areas of management such as marketing or service or technology.

Table: Business Plan versus MIS Plan

Business Plan
Business goals and objectives.

MIS Plan
Management information system, objectives, consistent to the business goals and objectives.

Business plan and strategy Strategy planning and decisions. Management Plan for execution control. Operation plan for the execution.

Information strategy for the business plan implementation playing a supportive role. Architecture of the Management Information system to support decisions. and System development schedule, matching the plan execution. Hardware and software plan for the procurement and the implementation.

Such statements of the goals and objectives enable the designer to set the direction and design implementation strategies for the MIS. Strategy for the plan achievement: The designer has to take a number of strategic decisions for the achievement of the MIS goals and objectives. They are: a. Development strategy: An online, a batch, a real time.

b. System Development Strategy: An approach to the system development Operational versus Functional; Accounting versus Analysis; Database versus Conventional Approach; Distributed versus Decentralized processing; one Database versus Multiple database SSAD vs. OOT. c. Resource for System Development: In-house versus external, customized development versus the use of packages.

Manpower Information
One can define the organizational information as the information required by a number of personnel, departments and divisions or the functions in the organization. Such information can be determined by constructing a matrix of information versus user as show in Table. It can be observed from the table that the information entity is one, but its usages are different. For example, the employee attendance information would be used by the personnel department for legal compliance of maintaining the muster recommended by the Factory Inspector. The production manager would use it for scheduling, rescheduling and loading of the jobs on the shop floor depending upon the persons present. The corporate planning and administration will use it for manpower assessment and control and manpower forecasting.

Information Manager Entity (Personnel)

Employees X attendance Salary Wages X and Overtime Human X Resources

Manager Manager Manager (Production) (Administration) (Accounts)

X X X X X X X

Information The organizational information requirement needs to be studied thoroughly and critically as it is used across the organization. It is necessary, therefore, to map the information in terms of the data source, generation and usage, so that the designer can provide a path from the acquisition to the generation and the storage.

Organizational Information
One can define the organizational information as the information required by a number of personnel, departments and divisions or the functions in the organization. Such information can be determined by constructing a matrix of information versus user as show in Table. It can be observed from the table that the information entity is one, but its usages are different. For example, the employee attendance information would be used by the personnel department for legal compliance of maintaining the muster recommended by the Factory Inspector. The production manager would use it for scheduling, rescheduling and loading of the jobs on the shop floor depending upon the persons present. The corporate planning and administration will use it for manpower assessment and control and manpower forecasting.

Information Manager Entity (Personnel)

Employees X attendance Salary Wages X and Overtime Human X Resources Information

Manager Manager Manager (Production) (Administration) (Accounts)

X X X X X X X

The organizational information requirement needs to be studied thoroughly and critically as it is used across the organization. It is necessary, therefore, to map the information in terms of the data source, generation and usage, so that the designer can provide a path from the acquisition to the generation and the storage.

Functional Information
The functional information is defined as a set of information required by the functional head in conducting the administration and management of the function. This information is purely local to that function and by definition, does not have a use elsewhere. This information is used by a manager to plan and control his function. Functional information is largely factual, statistical and detailed in multi-dimensions of the function. For example, if you take the sales information, it can be processed in seven ways, viz. the product, the product groups, the market segment, the geographic zones, the locations, the customer, and the sales organization structure.

The functional information is normally generated at equal time intervals; say monthly, quarterly, etc. for understanding the trend and making comparisons against the time scale. Such as information is used for planning, budgeting and controlling the operations of the function. The functional information can be assessed on the following three parameters the work design, the responsibility and the functional objectives. Work Design: For example, for the customer order scrutiny the available stock, the price, the terms of payment and the probable delivery is an information set evolved out of the work design of customer order processing. Responsibility: The managers in the functional areas of management are responsible for achieving the targets and accomplishing the goals and objectives. It is, therefore, necessary to inform and update the information on targets at regular intervals to enable him to make or change decisions in his domain of operations. Most of these targets are business targets such as the turnover, production, utilization, stocks and so on. For example, the marketing manager has a monthly target of $ 1 million order booking, half a million invoicing, and not more than two months receivables. Since, he is responsible for achieving the targets, it would be necessary to inform him on these aspects at regular intervals. This information is used for the responsibility accounting and decision making for achieving the targets. The manager would be assessed on the basis of responsibility he discharges in conducting the business.

Knowledge Information
The information creates an awareness of those aspects of business where the manager is forced to think, decide and act. Such information shows the trend of the activity or a result against the time scale. For example, whether the sales are declining and the trend is likely to continue in the next quarter. The product is failing continuously on one aspect and the reason of failure is the process of manufacturing. Such information pin-points the area or entity and forces the manager to act. It highlights the deviations from the norm or standard and also any abnormal developments which are not in congruence with the forecasts or expectations. Such information gives rise to business decision, which will affect the process of business significantly. In some situations the strategic decisions may be necessary to solve the problem. The knowledge information may cut across the functional boundaries of the organization. The action or decision may fall in other functional areas of business operations, the decision may fall in the domain of top management or the middle management. Knowledge information is tracked continuously and reported in a fixed format, for consistency and at fixed intervals for updating the knowledge base. The nature of this information is analytical and relates to the past, the current and the future. The knowledge information is reported in graphic formats for a quick grasp and managerial response. It contains business results and comparative analysis of the performance.

Decision Support Information

Most of the information required by the middle and the top management is for decision making. The information does not act to a direct input to the decision making procedure or formula but supports the manager in the efforts of decision making. Information is used in a decision support system for model building and problem solving. The support may act in two ways, one for justifying the need of a decision, and the other as an aid to decision making. For example, the information on the non-moving inventory justified the decision of the disposal at throwaway prices. The demand forecasts information aids in the decision on determining the economic order quantity for production or a sale. The decision support information can be determined for the company at the entity level leaving its use to the decision makers in a suitable manner. The source of this information could be internal or external to the organization. It can be determined by identifying the tools, techniques, models and procedures, used by the managers in the decision making.

Operational Information
This information is required by the operational and the lower levels of the management. The main purpose of this information is fact finding and taking such actions or decisions which will affect the operations at a micro level. The decisions may be to stay on overtime, draw additional material, change the job from one machine to the other, and send a reminder to the supplier for the supply of material. These decisions are such that they make the routine administration of the business smooth and efficient. These decisions do not fall in the category of the managerial decisions. The sole purpose of the MIS is to produce such information which will reduce uncertainly in a given situations. The moment what is unknown becomes known, the decision makers problem becomes simple. Methods have been evolved to handle the degree of uncertainty the management is expected to deal with. The difficulty to determine a correct and complete set of information is on account of the factors given below:

The capability constraint of the human being as an information processor, a problem solver and a decision maker. The nature and the variety of information. Reluctance of decision makers to spell out the information for the political and the behavioral reasons. The ability of the decisions makers to specify the information.

Analyzing the Critical Factors

Every business organization performs successfully on the basis of certain critical factors. Other factors are important and play a support role in the functioning of the organization. Many times a function is singularly critical to the successful functioning of a business organization. For example, in a high technology business, the management of the technology becomes the critical function. Or in a service organization, the management of service becomes a critical factor. In a consumer industry, marketing and service become critical functions. The information requirements of such organizations largely relate to these critical factors. The analysis of these functions of factors will determine the information requirements.

Experimentation and Modeling

When there is a total uncertainty, the designer and the user of the information resort to this method for determining the information requirements. The experimentation would decide the methodology for handling the complex situation. If the method is finalized, the information needs are determined as they have been evolved through the experimentation. Test marketing of a product is an approach to the experimentation to decide the correct marketing strategy.

Management of Quality in the MIS

Information is a corporate resource, as important as the capital, labor, 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 parameters. 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:

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. 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. The system modifications are approved by following a set procedure which begins with authorization of a change to its implementation followed by an audit. 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 structuring 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. Hence, the organization structure of the MIS would differ from one organization to the other. 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. 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 users 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.

MIS - The factors of Success and Failure

Many organizations use MIS successfully, others do not. Though the hardware and the software is the latest and has appropriate technology, its use is more for the

collection and storage of data and its elementary processing. There are some factors which make the MIS a success and some others, which make it a failure. These factors can be summarized as follows: Factors Contributing to Success If a MIS is to be success then it should have all the features listed as follows: The MIS is integrated into the managerial functions. It sets clear objectives to ensure that the MIS focuses on the major issues of the business. An appropriate information processing technology required to meet the data processing and analysis needs of the users of the MIS is selected. The MIS is oriented, defined and designed in terms of the users requirements and its operational viability is ensured. The MIS is kept under continuous surveillance, so that its open system design is modified according to the changing information needs. MIS focuses on the results and goals, and highlights the factors and reasons for non achievement. MIS is not allowed to end up into an information generation mill avoiding the noise in the information and the communication system. The MIS recognizes that a manager is a human being and therefore, the systems must consider all the human behavioral factors in the process of the management. The MIS recognizes that the different information needs for different objectives must be met with. The globalization of information in isolation from the different objectives leads to too much information and information and its non-use. The MIS is easy to operate and, therefore, the design of the MIS has such features which make up a user-friendly design. MIS recognizes that the information needs become obsolete and new needs emerge. The MIS design, therefore, has a basic potential capability to quickly meet new needs of information. The MIS concentrates on developing the information support to manager critical success factors. It concentrates on the mission critical applications serving the needs of the top management. Factors Contributing to Failures

Many a times MIS is a failures. The common factors which are responsible for this are listed as follows: The MIS is conceived as a data processing and not as an information processing system. The MIS does not provide that information which is needed by the managers but it tends to provide the information generally the function calls for. The MIS then becomes an impersonal system. Underestimating the complexity in the business systems and not recognizing it in the MIS design leads to problems in the successful implementation. Adequate attention is not given to the quality control aspects of the inputs, the process and the outputs leading to insufficient checks and controls in the MIS. The MIS is developed without streamlining the transaction processing systems in the organization. Lack of training and appreciation that the users of the information and the generators of the data are different, and they have to play an important responsible role in the MIS. The MIS does not meet certain critical and key factors of its users such as a response to the query on the database, an inability to get the processing done in a particular manner, lack of user-friendly system and the dependence on the system personnel. A belief that the computerized MIS can solve all the management problems of planning and control of the business. Lack of administrative discipline in following the standardized systems and procedures, wrong coding and deviating from the system specifications result in incomplete and incorrect information. The MIS does not give perfect information to all the users in the organization.

TECHNOLOGY OF INFORMATION SYSTEMS

Introduction
The development of modern information system is a complex process. It needs knowledge, know-how, skills and technology in almost all the disciplines. The developer, the designer and the user must be knowledgeable in their respective area of functions and responsibilities. As information systems are being demanded for on-line real time usage in business management, its

development requires through understanding of the business and the manner in which it is executed. Further, different technologies, other than the Information Technology, are used for providing input to the information systems. As the business processes are getting automated, the information systems are undergoing cultural changes making them more sensitive to the business needs. It demands flexibility in design and reliability in its use. In the seventies, the information systems were a stand-alone type outside the mainstream of the business. In the eighties, the information systems were looked upon as a resource for information to support the decision making. Still, its use was off-line and was largely dependent on the user/manger/decision maker in the organization. In the nineties, the information technology developed multifold and the focus shifting from supply management to customer service management. In short, the nature, type and the quality of information system has undergone an overwhelming change. The business management process has changed from function management to process management. The organization culture also changed from centralized, bureaucratic, authority structure to work-group culture where members of the work-groups were trained and empowered to make decisions. This called upon the information system availability at the workplace.

Data Processing
In any information system application, the method generally followed is to design modular and hierarchical steps of processing leading to an output in a report form or information having certain value specific or perceived as seen by the user. The steps involved are data processing, transaction processing, application processing and system processing. Data is the smallest atomic entity in the information system which is basic to build the information system. The character of data decides the quality of information it offers to the user, if the data is taken care of properly, its usage will ensure quality output. Hence, in any information system significant care is taken in building the data as a first level input to the system. The data is built through data design and modeling process which provides specification and character to the data. These specifications and characters are used throughout the information system for a variety of applications. Data processing is handling raw data in a systematic manner to confirm to the data quality standards as determined by the designer of the information system. Let us take a simple example of a data used extensively in every application. Though the data is a universal entity in nature, it still requires determination of specification, character and presentation. A data is isolation conveys the position of the day in a calendar. In the information system, however, it may convey a number of things to the user. First, therefore, it needs specification. It is necessary to specify how the data will be specified, whether in the form of DD-MM-YY or MM-DD-YY or YY-MM-DD. So the data `date has a specific order of positioning and presenting. Its interpretation also changes beyond it generic meaning as a day in the calendar.

Transaction Processing

After the data has been processed, as discussed above in a transaction, the next step is to process transaction itself on certain lines. A transaction is processed with reference to business rules, i.e., a transaction are scrutinized for conformance to the rules, policy or guidelines before it is taken up for further processing. The rules may be directly related to the transaction or it may have some relation and association with other transactions. In any case, if the transaction does not conform to the set of specified conditions governed by the rules the error is displayed for user to take corrective action. The transaction is processed for adherence to business rules, correctness and consistency of data values and for validity of transaction for acceptance. It should be noted that these three aspects are applicable to all the transaction for acceptance. It should be noted that these three aspects are applicable to all the transactions across the business management functions. Let us take an example of the goods receipt as a transaction. Having checked the individual data entities, the goods receipt transaction is subjected to further checks for acceptance and execution. The business rules in case of this transaction are: The purchase order must be present and open and the item received should be present on Purchase Order. Further, the receipt is as per the schedule date. The supplier has sent the necessary supporting documents such as Excise Gate Pass, Octroi Challan, Sales Tax Form, Certification by Third Party, etc. Such other conditions that may be applicable. One can add more business rules if necessary. However, if the receipt transaction is to be processed, it will first be processed for confirmation and conformance of these rules before it is taken to the next stage. The rules are checked at the entry level processing after the individual data fields are checked. The next check in transaction processing is to confirm internal consistency, correctness and completeness of the data. In our example of receipt transaction, a consistency should be confirmed between the quantity sent, the quantity received, the quantity accepted, and the quantity rejected. The third check after confirming the data quality and observance of the business rules is for validity of the transaction itself for its use in application and system processing. The validity of the transaction is checked against the conditions present outside the domain of the transaction. For example, the transaction of the Fixed Deposit might go through all checks at the data level and at the transaction level, it is not acceptable as the tool deposit permitted is already received. Hence, though the transaction is in order but cannot be posted as it ceases to be valid at the Fixed Deposit application level.

Application Processing

After data and transaction processing, the data finalized in these two stages gets posted on the affected files. Application processing is designed to process more than one type of transactions to bring out the specific business results in one or more business functions. This processing is carried out once the transaction is processed for its validity. Let us take an inventory application which requires the receipt and issue transactions duly validated for inventory processing. When these two transactions are processed, the inventory is updated for receipts and issues giving the net balance at the end of the processing for each item in the inventory is updated for receipts and issues giving the net balance at the end of the processing for each item in the inventory. The application processing means the use of transaction data for bringing out a particular status. The application could be designed to change the number of different files holding a variety of information. The application can be designed for status updation and the status triggered actions in the related field of the application. For example, if the number of work orders are on `hold for no material to process. The scope of application processing can be made diverse by incorporating different transactions from the same application area or associated areas. For example, the inventory and purchase application can be processed together for vendor evaluation, item valuation and payable accounting. The scope of the application can be made diverse, if it is foreseen from the design stage. At this stage necessary inputs are provided in the transaction which can be used at a later data in the other application. The advent of communication technology and its embedded use in application processing extended its scope beyond the boundaries of the organization. The application can be designed for processing the results, updation of the business status, for triggering predefined actions and also communicating with the affected agencies located within the outside the organization.

Information System Processing

The system processing is at a higher level, over the application for processing. The system is defined as a product made up of several applications set in orderly manner to produce a higher level information output different than the output of the application processing. For example, the financial system is a product of finance, sales and purchase accounting application. Normally the system processing addresses the management issues of the business. In the financial system, processing is done for cash management, asset and liability management, working capital management, etc. Applications which are used for system processing are the finance transaction accounting the fixed asset processing, the receivables and payables processing, the sales and purchase accounting, etc. On the platform of these applications the system is processed for the analysis of a number of aspects of the finance management. It provides an insight into the funds flow, the sources and the uses of funds, profitability and productivity of the business.

The basic management functions are same, i.e., finance, materials, production or service, personnel and sales, etc. In all the business. However, these functions are executed in different manners on account of the following factors:

Nature of business (trading or manufacturing); The type of business (product or service); The complexity of business (multiple locations, divisions, products, etc.); Management style (autocratic, participative); Decision making (centralized, decentralized and empowered); and Quality of the organization and the people (learning and positive proactive work culture).

In the information system processing, the underlying design and architecture would vary giving due regard to the specifics and specialties of that business. Though all the businesses need a trial balance, a balance sheet, an income statement, the payables and receivables statement and the expense analysis, etc., the chart of account in each case would be different and typical to that particular business only. This entire work of ascertaining the information needs to determination of the system design and architecture is called System Engineering. System Engineering not only deals with applications and transactions but also with the various technologies which are used in the system implementation. The data acquisition technologies such as the bar code readers, the hand held terminals, the process embedded data loggers, the image processors, the digitizers, etc., are used for capturing the data inputs.

TQM of Information Systems

The objective of the Total Quality Management (TQM) in the information system design is to assure the quality of information. This is done by ensuring, verifying, and maintaining software integrity through an appropriate methodology choice amongst the technology, design and architecture. It institutes appropriate procedures with checks and control in all the processes of information systems development. It ensures that the scope and the objective of the system, choice of the design architecture and development methodology and further quality ensuring the processes and planned implementation methodologies are correctly chosen. The quality of information is governed by the quality of the information processing system design. The perception of good quality is that of a customer or a user of the information system and not that of the conceiver, the planner or the designer of the information system. The quality of the information and the systems which generate that information will be rated high provided it assures:

A precise and an accurate information A high level response in an interactive processing User friendly operations Reliability of information

An ease of maintenance

A single most important measure of quality assurance is the level of user satisfaction it attains. The user satisfaction is highest if it meets his information needs on a continuing basis in a dynamic business environment. In the process of achieving user satisfaction, the information system must be conceived with business focus and orientation. It must address the total scope of the business with specific attention in the areas of core competence and mission critical applications. The choice of the Information Technology strategy should be such that it supports the business strategy implementation to achieve business goals and mission. TQM addresses all these requirements of the information systems development. It ensures that the information system design is flexible, bug free and easy to maintain with the changing needs. In the TQM application to information systems, the technologies play a vital role. We can make two parts of these technologies. First, as a current and the second one as the emerging technologies. The current technologies are database management, distributed data processing, object orientation, parallel processing, data warehousing and replication, networks and communication. The emerging technologies are Internet/Intranet, EDI and E-mail, Groupware for team based application, client/server for application processing, multi-media for voice, video, image processing, imaging systems for image creation, storage mixing knowledge base (KBS) for expert, artificial intelligence system and Computer Aided Software Engineering (CASE) for a systematic application development. James W Cortada measures the quality of information by seven parameters. They are flexibility, maintainability, reusability, integration, consistency, suability and reliability. Flexibility satisfies the changing and evolving needs of users offering quick response. Main inability facilities a quick repair and a replacement of the problem improving the user service. The reusability of the objects or the object codes reduces the development cycle and controls the cost of the development. Integration improves the processing time and offers a quick access to the users to the data and information. Consistency in the usage of standards, tools and technologies reduces the learning time of the users. The usability of the software component in different manner for different applications reduces the user training time and finally the reliability of the system assures dependence and supports for all conceivable user and processes.

Human Factors and User Interface

The information systems are designed for the users who are human beings. The human beings are the drivers of the information system to meet their information needs. The use of the information system is made through an interactive process between the human beings and the system through which the information system is activated, operated and closed. May times, in spite of the Information System software design being good, the user interfaces are not properly built causing a discomfort to the users. As it is difficult to consider all the users to

build such an interface, the human perception, the human skills and the skill levels, the behavioral profiles and the activities expected in the interactive processes are the human factors of design of the user interface. The use of the information system is accomplished through a visual medium. The user reacts to the printed reports, the graphical presentations or the displays on the screen. The reaction is through the visual and the mental responses to these displays or reports through his perception of the information conveyed to him through size, shape, color, format, layout, orientation and such other characteristics of the display. The human response differs from person to person owing to the varying human perception. Hence, the user interface should try to minimize the distortions which may occur when the displays are made. The quick human response neutralizing the human perception differences is the requirement of the user interface. When most of the users belonging to the same class of human capabilities find the interface easy to operate and it results in the same human response, then the user interface is friendly. The system then is called a user-friendly system. The first step in the interaction is extracting the information from display. The speed of the extraction of the information will depend on the display design which includes the text size, the front type, the text length, the use of upper case and lower case, positioning and application of color, etc. The speed will be decided by the choice of these factors and its retention in the memory will be governed by the impact it makes on the human beings who are the users of the system. The next factor is skill levels and behavioral differences amongst the various users. The differences in the skill levels occur due to differences in the training, experience and exposure of the people in the business operations. The behavioral differences occur due to personality variations and personality traits. The user interface is expected to assist the four tasks which are basic to all the software or the systems. They are communication dialogue, system execution and control of the process. In the latest technology advances, the interface characteristics are more or less standard. The system execution will be handled through a menu driven feature. It will provide a window based help for reference or local processing. Such windows can be popped up in a number of sequences. The interface will have a point and pick facility to pick the icons which could be general or can be built for the system.

Real Time Systems and Design

All real time systems are on-line and are triggered by the response to the external events like the information systems in batch mode. A real time system must also integrate the hardware, the software, the user and the database to achieve certain results with an acceptable performance. The real time systems have the following design components:

Data acquisition Measurement, interpretation and evaluation

Decision making and action Initialization, operation and control.

The real time, systems are developed for diverse applications in the process control, process automation, medical and scientific research traffic management, aerospace systems and instrumentation. In all these applications, the real time system responds to the external stimulate in a time which is governed by the external world. Hence, the performance of the real time system depends on the speed of its performance. The entire cycle of acquisition, measurement, evaluation, decision making, action, control and bringing the system back to the initial condition is highly time sensitive. If this cycle is not performed in a time within which no damage is possible then the system performance is acceptable. Failing this, the real time system needs re-look and redesign in most of the applications, the real time systems are many and they are organized to obtain certain output. They are dependent on each other and some of them run in parallel and some in sequence. Some of these work on priority which is in-built in the total application design. In the real time systems are analyzed in an industrial application or in the business commercial application, it will be found that their functional requirements are same. They are as follows:

Interface handling with the external world Context switching after the measurement Prime response time Data management Resource allocation by priority Task synchronization and communication

The real time systems are designed first with a prototype and then rigorously tested through simulation processes to confirm the accuracy in handling the following features:

Triggers and context switching on condition Concurrency of the data and processes Communication and synchronization Timing constraints attached to the tasks Coupling of the processes and actions

The real time software system has all the aspects of the conventional system design and in addition it has to handle a new set of requirements arising out of the real time feature. The real time software is either time or event driven and hence the hardware and software which deals with these parameters gather a lot of importance in design of the system.

DATABASE AND ENTERPRISE MANAGEMENT SYSTEMS

Database Concepts

A database is an integrated collection of well defined data and information, centrally controlled in all its aspects, created and stored in a typical structure for an organization, the database could be, one or more, depending upon the needs and the operations of the organization. The data structure and its storage should be such that it facilitates shareability, availability, evolvability and integrity of the data. The database separates a design of the information system from the data design, and its management.

Why Database
Conventionally, in an information system, the information is obtained by developing the systems and integrating them. This calls for breaking the system into various subsystems and developing the information systems independently. In this approach, each system will have its master files and transaction files. They have to be processed separately at different times, depending upon the needs and schedules. The file layouts and the access methods could be different in different systems. Therefore, the files will be updated at different times. This approach does affect the quality of the information across all the systems due to various reasons. The data in many systems are common, and there is repetition of data storage in various systems. This called data redundancy. The redundancy of data gives rise to problems of keeping the data current and same in all the files. The data management is complex in such a situation. The reports generated out of such files show discrepancies in the information. Since the data files are different for different systems, data sharing is not possible. These files need to be created at different times. Transaction updating is also carried out at different times. It requires the increase of a magnetic media for storage because the systems are developed independently. The redundancy causes lack of integrity and inconsistency of the data in the various files.

Disadvantages of a typical proceeding system

The main disadvantages of a typical proceeding system are as under: The data redundancy and inconsistency: Since the files are created for each application differently, the files are likely to have different formats and data designs as they are created by different designers and programmers over a period of time. Hence, the same data record may be present in more than one file, the creation, updation, and deletion of which is managed by different programmes. Over a period of time, a situation arises when the data is redundant and inconsistent, due to the changes not being incorporated simultaneously, in all the applications and in all the files. Difficulty in access to the data: In conventional system design, the file structure is consistent to the specific information needs. If the information needs change, gaining access to the data present in different files to satisfy the revised need, requires writing the necessary application programmes every time. This is difficult and very time consuming at critical times. Concurrent access anomalies: In a dedicated file system application, the concurrent access is provided to improve the response of processing; however, the file systems are

incapable of supervising and coordinating the changes arising out of the concurrent access to the record. Security problems: The file systems have a limitation of controlling the access to the record causing insecurity with respect to the information. Since the application programmes are written time and again it is difficult to enforce a discipline on the security constraints across all the applications. Integrity of the data: In a file system it is difficult to maintain integrity of the data across the applications. The integrity rules are added when the programmes are written. If any change in the rules occur, it is very difficult to ensure that it is affected across the files in all the applications.

Advantages in the database approach

The advantages in the database approach are as follows: All the three managers are using the same database; hence, any report using the information will not be inconsistent. All the three managers can view the database as per their needs. The application systems can be developed independent of the database. The data validation and updating will be once and same for all. The data is shared by all users.

The data security and privacy can be managed and ensured because the data entry in the database occurs once only and is protected by the security measures. Since the database is storage of the structured information, the queries can be answered fast by using the logic of the data structures.

Database Management System - DBMS

The DBMS is software designed to manage and maintain the database of an organization. The main steps are data structuring, defining, interrogating, updating and creating. Through these steps, it manipulates the data and provides an environment which is appropriate to use in retrieving and storing the database information. The DBMS is a collection of the inter-related files and a set of programmes through which the users can access and modify these files. In DBMS files contains tables. Data store: The data are stored in a database in a particular manner. The user of the database need not know how the data are actually stored. For example, if the quality control manager wants the vendor quality rating and the reliability index of the selected vendors, then he can get

this report without bothering where and how it is stored in the database. The DBMS will locate them, assemble them and show them in a report format for the user. Data definition and data directory: Since the data independence is provided to the user, it requires that all the users understand the data to the user, it requires that all the users understand the data in the same manner. Therefore, each data entity is defined in the system and its directory is formed for all the users. Interrogation: In interrogation, the data are selected from the database and extracted or copied for processing. For interrogation, it is necessary to identify the data or a part of the data and the through the user of query language the information is processed and printed. Updating: The database needs updating as the values of the data keep changing from time to time. For updating the database the following information is necessary. Description of data Present value of data Changed value of data Processing rule for update

Creation: Initially, the database is to be created in the manner and the kind as defined in the DBMS. The data is entered in the database by the transaction processing. A special programme is written to create the database. The DBMS organize the data internally in the structure defined in the DBMS.

Different Views of Database

There are three different views of the database. The views are seen through the schema and the sub-schema of the data. Logical view of the user of data This is a view of the application programmer or user as he wants it. This could be a partial view of the database. For example, the quality control manager and the purchase manager would view the data differently for their use. The views of the database administrator (DBA) This is a view of the person who is managing the database through the creation, updating, structuring and ensuring that it is up-to-date. The view of the DBA is a global view. Physical view This is the view of the data actually stored and organized on the physical devices.

Database Models

There are three types of database models which are common in the industry. They are the Hierarchical Data Model, the Network Data Model and the Relational Data Model. These models have their own particular nature, and, therefore, they are applicable in the industry where a similar situation exists. There is fourth model known as the Object Data Based Model (ODBM) in which data is structured as objects at a much higher level as compared to the other models providing flexibility in designing the application. Hierarchical Database Model (HDBM) The HDBM is applicable when the data in an organization can be put down in the hierarchical or in terms of the levels, one after another. The data model is equivalent to a tree. A tree has roots, branches and leaves; their equivalents in the HDBM begins records, nodes and fields. The typical characteristics of the HDBM are: HDBM starts with a root and has several roots. A root will have several branches. Each branch is connected to one and only one root. A branch has several leaves and a set of leaves are connected to one branch. Network Database Model (NDBM) The NDBM interconnects the entities of an organization into a network. The data model is shown by an arrangement of the blocks. The lock represents an entity or a record. The collection of the blocks is called as the Area of database. The NDBM uses the blocks, the area and the arrows to represent the database of the organization. Relational Database Model (RDBM) In the RDBM, the concept of two dimensional tables is used to show the relation. In our example of the product database, the table showing the component name and component number is a representation of the data in a table form, RDBM model users theories of relational algebra in representing the data in various tables. Difference between Three Models The main difference between three models of the database lies in representation of the entity relationships and its structure, and the user has to understand the structure, while designing the application based on the database models. Of the three, the Relational Model has founded wider acceptance for the following reasons: Simplicity: The entity relationships are identified in simple tabular form, understandable to the users of the data. It is not related to any structure of entities like the hierarchy or the network.

Non-procedural requests: Since there is no structure dependence, the information can be obtained from any point in the database. No procedural language is to be used. Data independence: Since the model is based on the relations and not on the structures, there is a high degree of data independence. This, however, calls for ensuring that the relationship must be complete and accurate. Theoretical foundation: The relational data model is based on the set theory of relations and is designed on the principle of normalization. For the other models, such mathematical foundation does not exist. The disadvantages of the relational model are that it demands a large amount of storage, access and speed capabilities to handle the model.

Database Design
To develop a database that satisfies that information needs of today as well as of tomorrow, it is necessary to understand the database conceptually. The first task of the designer is to develop the Conceptual Model. The conceptual model is independent model independent of the user applications, the hardware and the DBMS. The steps in the development of the conceptual model are:

Data analysis Relational Identity Graphical representation Design process

Data Analysis The database administrator should initiate a plan to collect the data needs of each person in the organization. It is necessary to investigate further as to how the data is processed by these persons in executing their functional responsibilities. Collect all the names of the data entities and determine its description and spell out in brief the use of it the operations and the management of organization. As mentioned earlier, the entity is to be described by its attributes. An attribute should be described with the details, viz. Name and description Source Characteristics of attitude Numeric, Alpha, its unit of measure, its value range. Use of the attribute in the various applications. Security, Access, Read, update protocols. Importance: Importance in the database. Attribute relationships

Relational Identity The conceptual model is used to develop a logical model which can be implemented with the relational, hierarchical or network model of the Database Management System. The major concept used form the relational theory is Normalization. The normalization process groups the entities and attributes in the form of two-way tables. The major concept used from the relational theory is Normalization. The normalization process groups the entities and attributes in the form of two-way tables. The first step in the normalization process consists of transforming the entities into two dimensional tables. There are five forms of normalization. The fourth and the fifth forms are difficult to achieve and handle. The form of the data is called as the Un-normalised because at the crossing of the row and the column, more than one value of an attribute is present. For example, for one patient identified by a unique primary key the `Patient Number, there are two values of the surgeon registration number, and two types of surgery. Hence, for a given patient, we cannot determine the value of the non-key attribute uniquely. When the data is in such form it is called as an un-normalised. The normalization process in stages brings data uniquely into the Normal Form. First Normal Form: A relation in the first normal form is a table. At every intersection of the row and the column there can be only one value. No groups of values are permitted at the intersection. Design Process It is necessary to examine systematically the purpose of the input data which will find place in the database of the desired outputs. The design process considers information requirements of many different types of users (data views) and designs the inputs for the database. The conceptual relationships will decide the key data entities and its attributes. While designing the database, these elements play an important role.

RDBMS
Organizations need those Management Information Systems that would give them a competitive strength. Simply computerizing the back office or the front office operations is no longer sufficient. The need is to handle on-line operations, mission control applications and exercise the operational and management control. The need demands a tool to effectively handle both the transaction processing and the decision processing requirements. It also requires the capability of dealing with hundreds of users who are using, and updating a large database. The need further demands the user multiple database residing on the hardware platforms situated at different locations nearby sites and remote sites.

The decision making is required more in a real time environment where the decision making process, right from the problem definition to solution, needs to be handled quickly. The business environment is distributed and decentralized requiring real time resource (hardware, software, data, information) sharing with a compiled data flow. All this demands the RDBMS which can serve both the decision support and the transaction processing requirements. The latest RDBMS systems have to sub-systems or parts. One deals with data management and transaction processing which is independent of its applications in the information processing. The second part provides a set of tools for developing and utilizing on-line applications for the decision support. This is handled by the Client-Server architecture which separates the data management functions from its application. The data management function is handled by the server and the applications are handled by the client. The server centrally enforces all integrity, security and autonomy rules and the Client (User) makes use of the database over the networks of heterogeneous hardware. The latest trend in the Information Technology is to make the end user computing simple, easy to understand and easy to use. The concept is extended to the system analyst and programmers, where the RDBMS provides the tools, saving development and processing time. It allows the business rules of the organization, standard transactions and queries to be programmed once and makes them available to all the users and developers as a stored procedure in the Data Dictionary. The user does not have to change the development made on other platforms, i.e. the RDBMS can interact with the other RDBMS, or call the data from a Personal Computer based Lotus application or can user the programme written in the other language such as C, FORTRAN, COBOL, etc. With these facilities of the modern RDBMS over the traditional DBMS, the information processing through put and the resultant performance is considerably enhanced. The RDBMS allows an on-line maintenance, rapid recovery and software-based fault tolerance. These features ensure the availability of the database round the clock as the database maintenance is possible on-line when the system is in use. The maintenance activity consists of the following tasks:

Backup Diagnostics Integrity Recovery Design changes Performance tuning

The modern RDBMS, unlike the traditional DBMS, handles the distributed heterogeneous data sources, software environments and hardware platforms. The system is open RDBMS. The modern business enterprises operate through multiple locations having a specific or a general business activity using the multiple hardware-software platforms. Such a business enterprise has multiple databases residing at various locations. The information needs call for the unification

and coordination of these databases. The data would get updated in the distributed locations while its use could be at other locations.

MIS and RDBMS

The MIS is supported by database in its endeavor to support the management in decision making. The database models be it the NDBM, the HDBM or the RDBM, play the same role in the MIS. With the latest computer hardware and software capabilities the RDBMS have become popular. The concept of the end user computing can be implemented easily with the database approach to the information system. With the database approach, considerable data processing efforts, which were spent in the approach of the conventional system, are saved. The data is made independent of its application. The MIS designs have become more dependable due to the database and the SQL. The rigidity of the design is replaced by the flexibility of the design. It is now possible to review the applications more frequently from the point of view of utility and have them modified, if necessary. The database has strengthened the foundations of the MIS due to the following:

The database can be evolved to the new needs of the MIS. The multiple needs can be met with easily. The data design and the output design is flexible Open system design of the MIS is possible. The query handling becomes easier due to the Standard SQL. User-friendly end user computing is possible. The data is freed from its ownership and its use has become universal. The Information Technology provides tools to handle distributed multiple databases making the MIS richer.

Enterprise Management Systems - EMS

Computer, electronics, communication, and audio video technologies have converged closely to produce a new style of operating business. The dynamic business environment of today is full of challenges and opportunities. The dependence on the information, as a driving energy source, is increasing. Every business activity has additional dimensions, viz., speed and time. The business needs of today are beyond the transaction processing. It requires an instant real time response in every case, wherever it occurs. The word enterprise is chosen to convey that it encompasses the larger business community covering all the players and their participation in the business. The system is extended beyond the corporate boundaries. In such a scenario, the system which you are designing is an enterprise wide. It must catch an event, interpret it and trigger the action, and communicate it across to the enterprise. Since, business is information hungry, it must have an ability to sense the situation and act accordingly. When the business requires on-line information to make the informed, knowledge-based decisions and have

them executed in the business operations in a coordinated manner, it has to take support of many other systems.

Enterprise Resource Planning Systems

The ERP system deals with the planning use of resources used in the business. The resources are finance, materials, manufacturing capacity and human resource. The ERP provides methodology of assessing the resource needs for a given business plan to achieve certain business objectives. It also helps to execute the strategies, plans, decisions, and actions in a time bound manner. The ERP provides a support system in the transaction processing, updation, and reporting across the functions. The ERP is a package encompassing all major functions of the business. The product is generic in nature and is supposed to incorporate the best business practices, generally followed in mist of the companies. The product philosophy is to implement the system as it is with some customization which may be typical to the customer requirement. The system design of the ERP is integrated with the features and functions providing an enterprise wide solution to handle all the process functionalities. For example, it provides capability to process the purchase order from ordering to bill processing and also meets the information needs of purchase, stores, manufacturing, accounts and finance. The solution is structured in the modular fashion to cover the entire business operation. A typical ERP package solution has following modules: Sales, Marketing, Distribution Manufacturing Stores Management Finance Personnel Maintenance Purchase, Inventory Planning and Control

ERP Architecture

Any information system has three basic components, viz., the Data Management, the Application Logic, and the Presentation. These components can be built with the client server role definitions. The client is a user and the server provides the service required by the user to run the system. Since, the information needs are dynamically changing, the architecture required is to separate the data and its management from its application. The user requires the choice of using the data as it suits him the most. Hence the application logic has to be separate from the data. There is variability in the manner how the application logic is developed and presented.

Since, the ERP is a generic solution for the business operations, in each case of implementation; customization should suit the specifics of the business or customer. The architecture choice is influenced by this requirement.

ERP Model and Modules

The generic ERP package represents the commonly operated business model of the organization. It is built with the function models like the Finance, Materials, Marketing, Sales and Personnel and their sub-modules. These modules are then integrated to perform, ensuring data and information consistency and concurrency. The seamless integration of the modules allows the user at any level to take a micro and a macro view of the function and process view of the transaction across the function. A typical ERP solution has the following modules:

Business forecasting, planning and control (Business) Sales, distribution, invoicing (Sales) Production planning and control (Production) Materials management (Materials) Finance and accounting (Finance) Personnel management (Personnel)

ERP Basic Features

General Features Separation of the programme code and the data areas Command language Screen based flow control Application logic Common service functions such as the currency, date, editing and help Diagnostic functions Transaction flow control Help functions Business System Business forecasting for product, groups, markets Target fixing and allocation by the key parameters Business planning in terms of the resources to execute Strategy formulation and implementation MIS for strategy monitoring and control Business modeling for the strategy development and testing, DSS for resource planning Information base management for management applications Sales

Basic data (master) management Order processing Dispatching and invoicing Order analysis, forecasting Sales analysis budgets and control Finished goods stores management Dealer, distributor management system Receivable analysis Production Basic master data management Bill of materials, classification Process sheet, routing Work order generation, scheduling and control Production Planning: BOM, MRP, MPS and capacity planning Interface of CAD/CAM/CAE systems Materials Purchasing and procurement Goods receipt and issue system Stock management and valuation Inventory analysis Stores ledger, valuation, analysis, disposal Excise/customs interface Finance General accounting functions Ledger, payable and receivables Subsidiary ledgers Cash-flow management Loan management, funds management Working capital management Budgeting, planning and control Balance sheet processing Tax management, status reporting Assets accounting Personnel Personnel data management Personnel attendance system, time management Payroll Accounting: salary, wages, incentives, bonus, income tax and other deductions, and contributions to various public and provident funds Human Resources Management: Planning, recruitment, training and up graduation Personnel cost, projection and planning

Fixed Assets Fixed assets accounting: Inventory, register Depreciation accounting Capital work in progress Fixed assets retirement and disposal Year and processing for balance sheet schedules Maintenance Plant maintenance planning Breakdown, preventive, conditional maintenance Maintenance Management: Initiation, planning, execution, control, and cost accounting Monitoring performances for maintenance actions as all kinds of productive assets Contract management Quality Control System of data gathering to assess quality and measure against standard. Analysis of quality by process, material, work centre location Analysis of quality by reasons and actions taken Building quality assurance data for equipment/process technology selection Monitoring quality across the organization from input to output for operating decisions and business decisions Consolidation of Business Operations Accounting by units and divisions with local focus Consolidation by accounts in corporate functions Bringing out comprehensive reporting system for business decisions.

Characteristics of ERP Solution

Modular structure Scalable architecture Seamless integration of modules RDBMS independent Independence of hardware platform Interface capabilities PC download/upload facility

Benefits of the ERP Better management of resources reducing the cost of operations. Planning at functional and process level. Simultaneous increase in the productivity of the business possible Customer satisfaction increased due to shorter delivery cycle. Closer contact with the customer.

 Simultaneous activisation of the decision centers because of instant inducement through triggers or updates. Business operations transparency between business partners cutting down the execution time of critical business operations. Intelligent ERP downloads the decision making at lower level, releasing the burden on the middle management. Due to faster processing technology and SQL, management can see the information in their perspective and take different view of the business. Due to strong interface capabilities, the human resource can be utilized better due to access to information across the database distributed over the organization. Since, the ERP design is proactive; it makes the management alert at a number of points demanding the decision or action. The process becomes faster due to work group technology and application of workflow automation.

ERP Selection
Since, the market offers a number of ERP packages; the buyer has a choice to make. Each product has its own USP and differs in an umber of ways in content, scope, an ease of implementation, etc. The selection can be made on three dimensions, viz., the vendor, the technology, the solution scope, and architecture. Vendor Evaluation Factors Business strength of the vendor. Product share in total business of the vendor. R & D investment in the product. Business philosophy of the vendor. Future plans of the vendor. Market reach and resource strength of the vendor. Technology Evaluation Factors Client server architecture and its implementation two tier or three tier. Object orientation in development and methodology. Handling or server and client based data and application logic. Application and use of standards in all the phases of development and in the product. Front end tools and back end data based management system tools for the data, process presentation management. ERP Solution Evaluation Factors

ERP fit for the business of the organization in terms of the functions, features and processes, business scope versus application scope and so on. The degree of deviation from the standard ERP product. Ease of use: Easy to learn, implement and train. The ability to migrate to the ERP environment from present status. Flexible design.

ERP Implementation
The ERP implementation, generally, follows the waterfall model approach. Once a firm order is received, the implementation begins with the kick-off meeting between the vendor and the organization. In such meetings the organizational issues are taken care of. Since it is a long term activity a preliminary planning is done to start the implementation. Requirement Definition and Description - RDD Though, initially, the study has been carried out by the vendor, more in-depth study is taken up jointly by the vendor and the project in-charge of the organization. In this phase of study the users are contacted for their requirement specifications. These requirements may be of the data, information, function, features, processes or reports. It is necessary to understand them to evaluate the ability of the ERP solution to satisfy these requirements. Since, the ERP is designed as a standard package, it often requires changes and modifications to suite the requirements of the business. All the ERP packages provide standard features, functions lists of the package used. These lists are examined vis--vis the requirements and new document is prepared called as the deviation RDD. The implementation steps are given as follows:

A user meeting is arranged to explain the ERP and process of implementation. The RDD and the DRDD is explained for understanding and approval. The resource to carry out the changes in the system, generally, known as customization is provided. This could be business specific and customer specific. The DERP (Deviation ERP) solution is tested. The solution on the recommend platform is loaded. The solutions are tested on a sample data of substantial nature. The solution is then demonstrated to the users for their understanding and confirmation. The users are trained to run the solution and resolve the difficulties in operations of the system solution.

The change over from the manual system to the ERP solution are meticulously planned, taking care of the cut off dates, the opening balances, the data transfer etc.

A logbook of the system usage is kept to note down the problems, solutions and modifications carried out to make the solutions more efficient and effective.

EMS and MIS

There is a qualitative change in the MIS design due to the complexity of the business operations and the risk involved in handling the business. The management focus is shifting form the function to the process, i.e., the management requires the information support in the process management and not in the functions management. The process definition now goes beyond the organization boundary. It connects the organization to other agencies. The emphasis is on the automation of processes with a strong Information Technology implementation. The MIS is now required to maximize the process productivity and performance. The decision making support is required for the process optimization. The decision models are built across the business management functions. Besides the normal MIS reports required for the top management, the Top Management also needs a set of the additional reports, where the critical business processes and the critical success factors are a focus area. The ERP solution caters to this requirement very early. The ERP solution is an integrated solution. The solution operation is seamless, disregarding the hardware or the software platform. The ERP solution takes care of data integrity and consistency across the organization, which may have multiple locations. The ERP design provides transparency to the users of information giving them an access to the sensitive information to locate, define and resolve the problems. The ERP enables the work group management efficiently and effectively. The effect uses of the variety of tools, like the data replication, the work flow automation, the EDI/E-mail, the data warehousing, the EIS, the bar coding, and the paging systems are built in ERP. The effective use of these variety of tools also speeds up processing, cuts down the operation cycle time and raises the ability of the management to take decisions. Once the ERP is built in the organization, it takes care of the data, the information and its storage and, therefore, provides the capability to modify the Management Information System from time to time as per the changing information needs.