Information

Data
Meaning Data is raw, When data is processed, organized,
unorganized facts that structured or presented in a given context
need to be processed. so as to make it useful, it is called
Data can be something information.
simple and seemingly
random and useless
until it is organized.

Example Each student's test score is The average score of a class or of the entire
one piece of data. school is information that can be derived from the
given data.

Data is the collection of raw facts and figures. Actually data is unprocessed, that is why data is
called collection of raw facts and figures. We collect data from different resources. After
collection, data is entered into computer for processing. Data may be collection of words,
numbers, pictures, or sounds etc.

Processed data is called information. When raw facts and figures are processed and arranged
in some proper order then they become information. Information has proper meanings.
Information is useful in decision-making. Actually we process data to convert it into
information

Information can be defined as meaningfully interpreted data. If we give you a

number 1-212-290-4700, it does not make any sense on its own. It is just a raw
data. However if we say Tel: +1-212-290-4700, it starts making sense. It
becomes a telephone number. If I gather some more data and record it
meaningfully like:

Address: 350 Fifth Avenue, 34th floor

New York, NY 10118-3299 USA
Tel: +1-212-290-4700
Fax: +1-212-736-1300

It becomes a very useful information - the address of New York office of Human
Rights Watch, a non-profit, non-governmental human rights organization.

So, from a system analyst's point of view, information is a sequence of symbols

that can be construed to a useful message.
An Information System is a system that gathers data and disseminates
information with the sole purpose of providing information to its users.

The main object of an information system is to provide information to its users.

Information systems vary according to the type of users who use the system.

A Management Information System is an information system that evaluates,

analyzes, and processes an organization's data to produce meaningful and useful
information based on which the management can take right decisions to ensure
future growth of the organization.

Information Definition
"Information can be recorded as signs, or transmitted as signals. Information is any
kind of event that affects the state of a dynamic system that can interpret the
information.

Conceptually, information is the message (utterance or expression) being conveyed.

Therefore, in a general sense, information is "Knowledge communicated or received,
concerning a particular fact or circumstance". Information cannot be predicted and
resolves uncertainty."

Information Vs Data
Data can be described as unprocessed facts and figures. Plain collected data as
raw facts cannot help in decision-making. However, data is the raw material that is
organized, structured, and interpreted to create useful information systems.

Data is defined as 'groups of non-random symbols in the form of text, images,

voice representing quantities, action and objects'.

Information is interpreted data; created from organized, structured, and processed

data in a particular context.

According to Davis and Olson:

"Information is a data that has been processed into a form that is meaningful to
recipient and is of real or perceived value in the current or the prospective action or
decision of recipient."
Information, Knowledge and Business Intelligence
Professor Ray R. Larson of the School of Information at the University of
California, Berkeley, provides an Information Hierarchy, which is:

 Data - The raw material of information.

 Information - Data organized and presented by someone.

 Knowledge - Information read, heard, or seen, and understood.

 Wisdom - Distilled and integrated knowledge and understanding.

Scott Andrews' explains Information Continuum as follows:

 Data - A Fact or a piece of information, or a series thereof.

 Information - Knowledge discerned from data.

 Business Intelligence - Information Management pertaining to an organization's

policy or decision-making, particularly when tied to strategic or operational
objectives.

Information/Data Collection Techniques

The most popular data collection techniques include:

 Surveys: A questionnaires is prepared to collect the data from the field.

 Secondary data sources or archival data: Data is collected through old records,
magazines, company website etc.

 Objective measures or tests: An experimental test is conducted on the subject

and the data is collected.

 Interviews: Data is collected by the system analyst by following a rigid

procedure and collecting the answers to a set of pre-conceived questions
through personal interviews.

Based on Anthony's classification of Management, information used in

business for decision-making is generally categorized into three types:

 Strategic Information: Strategic information is concerned with long term

policy decisions that defines the objectives of a business and checks how well
these objectives are met. For example, acquiring a new plant, a new product,
diversification of business etc, comes under strategic information.
  Tactical Information:Tactical information is concerned with the information
needed for exercising control over business resources, like budgeting, quality
control, service level, inventory level, productivity level etc.

 Operational Information: Operational information is concerned with

plant/business level information and is used to ensure proper conduction of
specific operational tasks as planned/intended. Various operator specific,
machine specific and shift specific jobs for quality control checks comes under
this category.

MIS Need for Information Systems

Managers make decisions. Decision-making generally takes a four-fold
path:

 Understanding the need for decision or the opportunity,

 Preparing alternative course of actions,

 Evaluating all alternative course of actions,

 Deciding the right path for implementation.

MIS is an information system that provides information in the form of

standardized reports and displays for the managers. MIS is a broad class of
information systems designed to provide information needed for effective
decision making.

Data and information created from an accounting information system and

the reports generated thereon are used to provide accurate, timely and
relevant information needed for effective decision making by managers.

Management information systems provide information to support

management decision making, with the following goals:

 Pre-specified and preplanned reporting to managers.

 Interactive and ad-hoc support for decision making.

 Critical information for top management.

MIS is of vital importance to any organization, because:

 It emphasizes on the management decision making, not only processing of data

generated by business operations.
  It emphasizes on the systems framework that should be used for organizing
information systems applications.

n efficient information system creates an impact on the organization's

function, performance, and productivity.

Nowadays, information system and information technology have become a

vital part of any successful business and is regarded as a major functional
area like any other functional areas such as marketing, finance, production
and human resources, etc.

Thus, it is important to understand the functions of an information system

just like any other functional area in business. A well maintained
management information system supports the organization at different
levels.

Many firms are using information system that cross the boundaries of
traditional business functions in order to re-engineer and improve vital
business processes all across the enterprise. This typical has involved
installing:

 Enterprise Resource Planning (ERP)

 Supply Chain Management (SCM)

 Customer Relationship Management (CRM)

 Transaction Processing System (TPS)

 Executive Information System (EIS)

 Decision Support System (DSS)

 Knowledge Management Systems (KMS)

 Content Management Systems (CMS)

The strategic role of Management Information System involves using it to

develop products, services, and capabilities that provides a company major
advantages over competitive forces it faces in the global marketplace.

We need an MIS flexible enough to deal with changing information needs of

the organization. The designing of such a system is a complex task. It can
be achieved only if the MIS is planned. We understand this planning and
implementation in management development process.

Decision support system is a major segment of organizational information

system, because of its influential role in taking business decisions. It help
all levels of managers to take various decisions.

A management information system (MIS) is an information system[1] used

for decision-making, and for the coordination, control, analysis, and visualization of
information in an organisation; especially in a company.
The study of management information systems examines people and technology in an
organizational context.
In a corporate setting, the ultimate goal of the use of a management information system
is to increase the value and profits of the business.

Terminology
The terms management information systems (MIS), information system (IS) , enterprise
resource planning (ERP), computer science, electrical computer engineering,
and information technology management (IT) are often confused. MIS is a hierarchical
subset of information systems. MIS are more organization-focused narrowing in on
leveraging information technology to increase business value. Computer science is
more software-focused dealing with the applications that may be used in MIS.
[6] Electrical computer engineering is product-focused mainly dealing with the
architecture behind computer systems. ERP software is a subset of MIS and IT
management refers to the technical management of an IT department which may
include MIS.

Management
While management information systems can be used by any and every level of
management, the decision of which systems to implement generally falls upon the chief
information officers (CIO) and chief technology officers (CTO). These officers are
generally responsible for the overall technology strategy of an organization including
evaluating how new technology can help their organization. They act as decision
makers in the implementation process of new MIS.
Once decisions have been made, IT directors, including MIS directors, are in charge of
the technical implementation of the system. They are also in charge of implementing the
policies affecting the MIS (either new specific policies passed down by the CIOs or
CTOs or policies that align the new systems with the organizations overall IT policy). It
is also their role to ensure the availability of data and network services as well as the
security of the data involved by coordinating IT activities.
Upon implementation, the assigned users will have the appropriate access to relevant
information. It is important to note that not everyone inputting data into MIS need
necessarily be management level. It is common practice to have inputs to MIS be
inputted by non-managerial employees though they rarely have access to the reports
and decision support platforms offered by these systems

Types
The following are types of information systems used to create reports, extract data, and
assist in the decision making processes of middle and operational level managers.
 Decision support systems (DSS) are computer program applications used by
middle and higher management to compile information from a wide range of
sources to support problem solving and decision making. A DSS is used mostly
for semi-structured and unstructured decision problems.
 Executive information systems (EIS) is a reporting tool that provides quick
access to summarized reports coming from all company levels and departments
such as accounting, human resources and operations.
 Marketing information systems are management Information Systems designed
specifically for managing the marketing aspects of the business.
 Accounting information systems are focused accounting functions.
 Human resource management systems are used for personnel aspects.
 Office automation systems (OAS) support communication and productivity in the
enterprise by automating workflow and eliminating bottlenecks. OAS may be
implemented at any and all levels of management.
 School Information Management Systems (SIMS) cover school administration,
often including teaching and learning materials.
 Enterprise resource planning (ERP) software facilitates the flow of information
between all business functions inside the boundaries of the organization and
manage the connections to outside stakeholders.
 Local Databases, can be small, simplistic tools for managers and are considered
to be a primal or base level version of a MIS.

Advantages
The following are some of the benefits that can be attained using MIS:
 Companies are able to identify their strengths and weaknesses due to the
presence of revenue reports, employees' performance record etc. Identifying
these aspects can help a company improve its business processes and
operations.
 Giving an overall picture of the company.

 Acting as a communication and planning tool.

  The availability of customer data and feedback can help the company to align
its business processes according to the needs of its customers. The effective
management of customer data can help the company to perform direct marketing
and promotion activities.
 MIS can help a company gain a competitive advantage.
 MIS reports can help with decision-making as well as reduce downtime for
actionable items.

Enterprise applications
 Enterprise systems—also known as enterprise resource planning (ERP) systems
—provide integrated software modules and a unified database that personnel
use to plan, manage, and control core business processes across multiple
locations. Modules of ERP systems may include finance, accounting, marketing,
human resources, production, inventory management, and distribution. [9]
 Supply chain management (SCM) systems enable more efficient management of
the supply chain by integrating the links in a supply chain. This may include
suppliers, manufacturers, wholesalers, retailers, and final customers. [10]
 Customer relationship management (CRM) systems help businesses manage
relationships with potential and current customers and business partners across
marketing, sales, and service.[11]
 Knowledge management system (KMS) helps organizations facilitate the
collection, recording, organization, retrieval, and dissemination of knowledge.
This may include documents, accounting records, unrecorded procedures,
practices, and skills. Knowledge management (KM) as a system covers the
process of knowledge creation and acquisition from internal processes and the
external world. The collected knowledge is incorporated in organizational policies
and procedures, and then disseminated to the stakeholders. [12]

The Study of People, Technology, and Organizations

Management Information Systems (MIS) is the study of people, technology, and
organizations.
If you enjoy technology like iPhones, iPods, and Facebook, you have what it takes to
major in information systems. All you need is an interest in technology and the desire
to use technology to improve people's lives. Many people think that MIS is all
programming. However, programming is just a small part of our curriculum and there
are many, many jobs in MIS where you do not program.

Everyone who works in business, from someone who pays the bills to the person who
hires and fires, uses information systems. For example, a supermarket could use a
computer database to keep track of which products sell best. And a music store could
use a database to sell CDs over the Internet.

Information isn’t worth much if it doesn’t serve a purpose. MIS students learn how
businesses use information to improve the company’s operations. Students also learn
how to manage various information systems so that they best serve the needs of
managers, staff and customers. MIS students learn how to create systems for finding
and storing data and they learn about computer databases, networks, computer
security, and lots more.

Below are some common questions to help you find out more about management
information systems.

What’s the difference between MIS and CS (computer science)?

It is useful to compare MIS to some of the other fields related to information technology. Here at The
University of Arizona there are at least three computer related departments and programs. The table
below will help to show the differences.

ECE (Electrical
MIS (Management CS (Computer
Computer
Information Systems) Science)
Engineering)

Focus Organization Software Product

More efficient or Reliable computer Improved engineer

Objective
effective business program product

Core Skill Problem solving Logic/Procedure Engineering

Determine
Determine business Deliver information information
Core Task requirements for systems to meet processing
information systems defined requirements requirements for
device

Theoretical
Balanced Applied Balanced
vs. Applied

Generic Job
Analyst/Designer Builder Architect and Builder
Title

Typical
Business Systems Application
Starting Job Engineer
Analyst Programmer
Title

Senior Organizational Programming Senior Engineer or

Career Goals
Manager Manager Product Manager

College Business Science Engineering

Home

All of these are great majors, however MIS is the ONLY major that focuses on both
business processes and information technology. If you are interested in business
and technology, like theory but not too much, like technology enough to want to keep up
with what's hot but don't want to be writing programs or putting together chips all your
life, then MIS is for you. We believe that the most upwardly mobile career path for
those who like to work with business and technology is definitely in MIS.

Traits of MIS Professionals

There are a lot of different profiles, but there are some traits we've found make great
MIS professionals. Do these describe you? If so, then our MIS programs are for you!
 Are good problem solvers
 Like to work with people

 Can think strategically about technology

 Like responsibility for developing and then implementing their ideas
 Can bridge both technology and business
 Can see both details and the big picture
 Are excellent communicators
 Can manage time and resources well

What jobs do MIS graduates go into?

As you can probably already tell, MIS is an integrative field. MIS professionals are the
"communication bridge" between business needs and technology. This means that you
will have to understand how to figure out how things work, solve problems, find things
out, communicate what you found, and learn a lot of new things on a regular basis. It's a
dynamic field, and it takes dynamic people to do well in it. People who can think fast,
work hard, and balance a lot of things should really think about MIS. Here's only a
sample of the kinds of MIS jobs.

• Business Analyst
• Business Application Developer
• IT Consultant
• Systems Analyst
• IT Development Project Leader
• Database Administrator
• Business Intelligence Analyst
• Systems Developer
• Database Analyst
• Web Developer
• Network Administrator
• Technical Support Specialist
• Information Systems Manager
• IT User Liaison

Why should I take courses or major in MIS?

The development of new information retrieval methods, as well as the improvement of existing ones, is
currently one of the hottest frontiers in the field of information science.

The number of reasons for taking courses in and/or majoring in MIS at the Eller College of Management
is as vast and varied as the number of individuals who have chosen to do so. The more important
reasons are:

Information systems are more strategically important now than

High Placement Rat ever and individuals who understand information systems and
e business are in high demand. Our MIS students have a
placement rate of 95% within two months of graduation!

Top MIS graduates command very competitive salaries. The

average total compensation for IT jobs is around $120,640
High Salaries
(Bureau of Labor Statistics, Occupational Outlook Handbook,
2012-2013 Edition)

Management Information Systems professionals make a

significant contribution to the competitiveness and well-being of
Job Satisfaction the organizations in which they work. They also help people and
interact with a variety of personalities and levels of
management/staff.

MIS majors are intelligent and dynamic people who can interface
Fun well with both humans and machines. They enjoy working with
people and are able to communicate well.

The rapid rate of change in the information systems world

Challenge provides professionals with constant opportunities to learn and
grow.

What is MIS?
MIS is the use of information technology, people, and business processes to record,
store and process data to produce information that decision makers can use to
make day to day decisions.

MIS is the acronym for Management Information Systems. In a nutshell, MIS is a

collection of systems, hardware, procedures and people that all work together to
process, store, and produce information that is useful to the organization.
The need for MIS

The following are some of the justifications for having an MIS system

 Decision makers need information to make effective

decisions. Management Information Systems (MIS) make this possible.
 MIS systems facilitate communication within and outside the
organization – employees within the organization are able to easily access
the required information for the day to day operations. Facilitates such as
Short Message Service (SMS) & Email make it possible to communicate with
customers and suppliers from within the MIS system that an organization is
using.
 Record keeping – management information systems record all business
transactions of an organization and provide a reference point for the
transactions.

Components of MIS
The major components of a typical management information system are;

 People – people who use the information system

 Data – the data that the information system records
 Business Procedures – procedures put in place on how to record, store and
analyze data
 Hardware – these include servers, workstations, networking equipment,
printers, etc.
 Software – these are programs used to handle the data. These include
programs such as spreadsheet programs, database software, etc.

Types of Information Systems

The type of information system that a user uses depends on their level in an
organization. The following diagram shows the three major levels of users in an
organization and the type of information system that they use.
Transaction Processing Systems (TPS)

This type of information system is used to record the day to day transactions of a
business. An example of a Transaction Processing System is a Point of Sale (POS)
system. A POS system is used to record the daily sales.

Management Information Systems (MIS)

Management Information Systems are used to guide tactic managers to make semi-
structured decisions. The output from the transaction processing system is used as
input to the MIS system.

Decision Support Systems (DSS)

Decision support systems are used by top level managers to make semi-structured
decisions. The output from the Management Information System is used as input to
the decision support system.DSS systems also get data input from external sources
such as current market forces, competition, etc.
Manual Information Systems VS Computerized Information
Systems (MIS)
Data is the bloodstream of any business entity. Everyone in an organization needs
information to make decisions. An information system is an organized way of
recording, storing data, and retrieving information.

In this section, we will look at manual information systems vs. computerized

information systems.

Manual Information System

A manual information system does not use any computerized devices. The
recording, storing and retrieving of data is done manually by the people, who are
responsible for the information system.

The following are the major components of a manual information system

 People –people are the recipients of information system

 Business Procedures –these are measures put in place that define the rules
for processing data, storing it, analyzing it and producing information
 Data –these are the recorded day to day transactions
 Filing system – this is an organized way of storing information
 Reports –the reports are generated after manually analyzing the data from
the filing system and compiling it.

The following diagram illustrates how a typical manual information system works
Advantages and Dis-advantages of a manual information
system
Advantages:

The following are the advantages of manual information systems

 Cost effective – it is cheaper compared to a computerized system because

there is no need to purchase expensive equipment such as servers,
workstations, printers, etc.
 Flexible –evolving business requirements can easily be implemented into the
business procedures and implemented immediately

Disadvantages:

The following are some of the disadvantages of a manual information system.

  Time consuming –all data entries need to be verified before filing, this is a
time consuming task when done by humans. Retrieving data from the filing
system also takes a considerable amount of time
 Prone to error – the accuracy of the data when verified and validated by
human beings is more prone to errors compared to verification and validation
done by computerized systems.
 Lack of security – the security of manual systems is implemented by
restricting access to the file room. Experience shows unauthorized people can
easily gain access to the filing room
 Duplication of data –most departments in an organization need to have
access to the same data. In a manual system, it is common to duplicate this
data to make it easy to accessible to all authorized users. The challenge
comes in when the same data needs to be updated
 Data inconsistency – due to the duplication of data, it is very common to
update data in one file and not update the other files. This leads to data
inconsistency
 Lack of backups – if the file get lost or mishandled, the chances of
recovering the data are almost zero.

Computerized information system

Computerized systems were developed to address the challenges of manual

information systems. The major difference between a manual and computerized
information system is a computerized system uses a combination of software and
hardware to record, store, analyze and retrieve information.

Advantages and Disadvantages of a computerized

information system (MIS)
The following are some of the disadvantages of a computerized information system.

Advantages:

The following are the advantages of computerized information systems

 Fast data processing and information retrieval – this is one of the biggest
advantages of a computerized information system. It processes data and
retrieves information at a faster rate. This leads to improved client/customer
service
 Improved data accuracy – easy to implement data validation and verification
checks in a computerized system compared to a manual system.
  Improved security – in addition to restricting access to the database server,
the computerized information system can implement other security controls
such as user’s authentication, biometric authentication systems, access rights
control, etc.
 Reduced data duplication – database systems are designed in such a way
that minimized duplication of data. This means updating data in one
department automatically makes it available to the other departments
 Improved backup systems – with modern day technology, backups can be
stored in the cloud which makes it easy to recover the data if something
happened to the hardware and software used to store the data
 Easy access to information – most business executives need to travel and
still be able to make a decision based on the information. The web
and Mobile technologies make accessing data from anywhere possible.

Disadvantages:

 It is expensive to set up and configure – the organization has to buy

hardware and the required software to run the information system. In addition
to that, business procedures will need to be revised, and the staff will need to
be trained on how to use the computerized information system.
 Heavy reliance on technology – if something happens to the hardware or
software that makes it stop functioning, then the information cannot be
accessed until the required hardware or software has been replaced.
 Risk of fraud – if proper controls and checks are not in place, an intruder can
post unauthorized transactions such as an invoice for goods that were never
delivered, etc.

Components of MIS and their relationship

A management information system is made up of five major components namely
people, business processes, data, hardware, and software. All of these components
must work together to achieve business objects.

People – these are the users who use the information system to record the day to
day business transactions. The users are usually qualified professionals such as
accountants, human resource managers, etc. The ICT department usually has the
support staff who ensure that the system is running properly.
Business Procedures – these are agreed upon best practices that guide the users
and all other components on how to work efficiently. Business procedures are
developed by the people i.e. users, consultants, etc.

Data – the recorded day to day business transactions. For a bank, data is collected
from activities such as deposits, withdrawals, etc.

Hardware – hardware is made up of the computers, printers, networking devices,

etc. The hardware provides the computing power for processing data. It also
provides networking and printing capabilities. The hardware speeds up the
processing of data into information.

Software – these are programs that run on the hardware. The software is broken
down into two major categories namely system software and applications software.
System software refers to the operating system i.e. Windows, Mac OS, and Ubuntu,
etc. Applications software refers to specialized software for accomplishing business
tasks such as a Payroll program, banking system, point of sale system, etc.

Influence of IT on organizational goals

Organizational goals refer to objectives and the mission of the organization,
especially in the long term. Regardless of the type of business that an organization
engages in, the overall goal is to create value for the customers or clients as stated
in the above section.

Business Information Technology alignment is concerned with using information

technology to effectively achieve business goals.

Two of the most common ways that an organization can provide value is by offering
a quality product at a lower price than the competitor or at a high price but with more
features that add value to the customers.

Information technology enables businesses to process and analyze large amounts

of data at a cheaper cost and within the shortest possible time. This enables
organizations to provide quality products at a cheaper price.

Let's take a bank example. A bank can use ATM to allow the clients to withdraw
money and other automated means to deposit money. Customers with queries can
be directed to a website that has frequently asked questions. Both individuals and
businesses can view the statements online if they subscribe to internet banking.

The above IT business practices lead to reduced costs of doing business and
creating new products and services. Reduced cost of doing business enables a
bank to reduce the bank charges, therefore, offering a quality product or service at a
cheaper rate.

Porter's Value chain

Think of a company such as Apple Inc. Why are they successful? Why do customers
love and buy the iPhone? It is because the iPhone adds value to their lives. This is
why Apple Inc. is a successful business. Value chain refers to activities that a
company performs to create value for its customers.

The concept of a value chain was developed by Michael Porter. Porter's value chain
has two activities namely;

 Primary activities – these are activities that are related to the creating
products/services, marketing and sales, and support. Primary activities
consist of inbound logistics, operations, outbound logistics, marketing and
sales, and service.
 Support activities – these are activities that support the primary activities.
Support activities consist of procurement (purchasing), human resource
management, technological development and infrastructure.

The following diagram depicts the value chain

Types of Information System: TPS, DSS &
Pyramid Diagram
A typical organization is divided into operational, middle, and upper level. The
information requirements for users at each level differ. Towards that end, there are
number of information systems that support each level in an organization.

This tutorial will explore the different types of information systems, the organizational
level that uses them and the characteristics of the particular information system.

In this tutorial, you will learn the different Classification of Information.

 Pyramid Diagram of Organizational levels and information requirements

 Transaction Processing System (TPS)

 Management Information System (MIS)

 Decision Support System (DSS)

 Artificial intelligence techniques in business

 Online Analytical Processing (OLAP)

Pyramid Diagram of Organizational levels and information

requirements
Understanding the various levels of an organization is essential to understand the
information required by the users who operate at their respective levels.

The following diagram illustrates the various levels of a typical organization.

Operational management level

The operational level is concerned with performing day to day business transactions
of the organization.

Examples of users at this level of management include cashiers at a point of sale,

bank tellers, nurses in a hospital, customer care staff, etc.

Users at this level use make structured decisions. This means that they have
defined rules that guides them while making decisions.

For example, if a store sells items on credit and they have a credit policy that has
some set limit on the borrowing. All the sales person needs to decide whether to
give credit to a customer or not is based on the current credit information from the
system.

Tactical Management Level

This organization level is dominated by middle-level managers, heads of

departments, supervisors, etc. The users at this level usually oversee the activities
of the users at the operational management level.

Tactical users make semi-structured decisions. The decisions are partly based on
set guidelines and judgmental calls. As an example, a tactical manager can check
the credit limit and payments history of a customer and decide to make an exception
to raise the credit limit for a particular customer. The decision is partly structured in
the sense that the tactical manager has to use existing information to identify a
payments history that benefits the organization and an allowed increase percentage.

Strategic Management Level

This is the most senior level in an organization. The users at this level make
unstructured decisions. Senior level managers are concerned with the long-term
planning of the organization. They use information from tactical managers and
external data to guide them when making unstructured decisions.

Transaction Processing System (TPS)

Transaction processing systems are used to record day to day business transactions
of the organization. They are used by users at the operational management level.
The main objective of a transaction processing system is to answer routine
questions such as;

 How printers were sold today?

 How much inventory do we have at hand?
 What is the outstanding due for John Doe?

By recording the day to day business transactions, TPS system provides answers to
the above questions in a timely manner.

 The decisions made by operational managers are routine and highly

structured.
 The information produced from the transaction processing system is very
detailed.

For example, banks that give out loans require that the company that a person
works for should have a memorandum of understanding (MoU) with the bank. If a
person whose employer has a MoU with the bank applies for a loan, all that the
operational staff has to do is verify the submitted documents. If they meet the
requirements, then the loan application documents are processed. If they do not
meet the requirements, then the client is advised to see tactical management staff to
see the possibility of signing a MoU.

Examples of transaction processing systems include;

 Point of Sale Systems – records daily sales

 Payroll systems – processing employees salary, loans management, etc.
  Stock Control systems – keeping track of inventory levels
 Airline booking systems – flights booking management

Management Information System (MIS)

Management Information Systems (MIS) are used by tactical managers to monitor
the organization's current performance status. The output from a transaction
processing system is used as input to a management information system.

The MIS system analyzes the input with routine algorithms i.e. aggregate, compare
and summarizes the results to produced reports that tactical managers use to
monitor, control and predict future performance.

For example, input from a point of sale system can be used to analyze trends of
products that are performing well and those that are not performing well. This
information can be used to make future inventory orders i.e. increasing orders for
well-performing products and reduce the orders of products that are not performing
well.

Examples of management information systems include;

 Sales management systems – they get input from the point of sale system
 Budgeting systems – gives an overview of how much money is spent within
the organization for the short and long terms.
 Human resource management system – overall welfare of the employees,
staff turnover, etc.

Tactical managers are responsible for the semi-structured decision. MIS systems
provide the information needed to make the structured decision and based on the
experience of the tactical managers, they make judgement calls i.e. predict how
much of goods or inventory should be ordered for the second quarter based on the
sales of the first quarter.

Decision Support System (DSS)

Decision support systems are used by senior management to make non-routine
decisions. Decision support systems use input from internal systems (transaction
processing systems and management information systems) and external systems.

The main objective of decision support systems is to provide solutions to problems

that are unique and change frequently. Decision support systems answer questions
such as;
  What would be the impact of employees' performance if we double the
production lot at the factory?
 What would happen to our sales if a new competitor entered the market?

Decision support systems use sophisticated mathematical models, and statistical

techniques (probability, predictive modeling, etc.) to provide solutions, and they are
very interactive.

Examples of decision support systems include;

 Financial planning systems – it enables managers to evaluate alternative

ways of achieving goals. The objective is to find the optimal way of achieving
the goal. For example, the net profit for a business is calculated using the
formula Total Sales less (Cost of Goods + Expenses). A financial planning
system will enable senior executives to ask what if questions and adjust the
values for total sales, the cost of goods, etc. to see the effect of the decision
and on the net profit and find the most optimal way.

Bank loan management systems – it is used to verify the credit of the loan
applicant and predict the likelihood of the loan being recovered

Metadata
Metadata is "data [information] that provides information about other data". [1] Many distinct types of
metadata exist, among these descriptive metadata, structural metadata, administrative
metadata[2], reference metadata and statistical metadata[3]


Descriptive metadata describes a resource for purposes such as discovery and identification.
It can include elements such as title, abstract, author, and keywords.

Structural metadata is metadata about containers of data and indicates how compound
objects are put together, for example, how pages are ordered to form chapters. It describes the
types, versions, relationships and other characteristics of digital materials. [4]

Administrative metadata provides information to help manage a resource, such as when and
how it was created, file type and other technical information, and who can access it. [5]

Reference metadata describes the contents and quality of statistical data

Statistical metadata may also describe processes that collect, process, or produce statistical
data; such metadata are also called process data. [6]

Definition

1. Metadata means "data about data". Although the "meta" prefix (from the Greek preposition
and prefix μετά-) means "after" or "beyond", it is used to mean "about" in epistemology.
Metadata is defined as the data providing information about one or more aspects of the
data; it is used to summarize basic information about data which can make tracking and
working with specific data easier. [12] Some examples include:
 Means of creation of the data
 Purpose of the data
 Time and date of creation
 Creator or author of the data
 Location on a computer network where the data was created
 Standards used
 File size
 Data quality
 Source of the data
 Process used to create the data

For example, a digital image may include metadata that describes how large the picture is, the color
depth, the image resolution, when the image was created, the shutter speed, and other data. [13] A text
document's metadata may contain information about how long the document is, who the author is,
when the document was written, and a short summary of the document. Metadata within web pages
can also contain descriptions of page content, as well as key words linked to the content. [14] These
links are often called "Metatags", which were used as the primary factor in determining order for a
web search until the late 1990s.[14] The reliance of metatags in web searches was decreased in the
late 1990s because of "keyword stuffing". [14] Metatags were being largely misused to trick search
engines into thinking some websites had more relevance in the search than they really did. [14]
Metadata can be stored and managed in a database, often called a metadata registry or metadata
repository.
Big data is a term used to refer to the study and applications of data sets that are so big and
complex that traditional data-processing application software are inadequate to deal with them. Big
data challenges include capturing data, data storage, data analysis,
search, sharing, transfer, visualization, querying,updating, information privacy and data source.
There are a number of concepts associated with big data: originally there were 3
concepts volume, variety, velocity
Big data usually includes data sets with sizes beyond the ability of commonly used software tools
to capture, curate, manage, and process data within a tolerable elapsed time. [21] Big data philosophy
encompasses unstructured, semi-structured and structured data, however the main focus is on
unstructured data
Big data "size" is a constantly moving target, as of 2012 ranging from a few dozen terabytes to
many exabytes of data.Big data requires a set of techniques and technologies with new forms of
integration to reveal insights from datasets that are diverse, complex, and of a massive scale.
"Big data represents the information assets characterized by such a high volume, velocity and
variety to require specific technology and analytical methods for its transformation into
value". Additionally, a new V, veracity, is added by some organizations to describe it,
Knowledge management (KM) is the process of creating, sharing, using and managing
the knowledge and information of an organisation.[1] It refers to a multidisciplinary approach to
achieving organisational objectives by making the best use of knowledge.
Knowledge management efforts typically focus on organisational objectives such as improved
performance, competitive advantage, innovation, the sharing of lessons learned, integration
and continuous improvement of the organisation.[7] These efforts overlap with organisational
learning and may be distinguished from that by a greater focus on the management of
knowledge as a strategic asset and on encouraging the sharing of knowledge.[2][8] KM is an
enabler of organisational learning.

Dimensions
Different frameworks for distinguishing between different 'types of' knowledge exist.
[10] One proposed framework for categorizing the dimensions of knowledge
distinguishes tacit knowledge and explicit knowledge.[30] Tacit knowledge represents
internalised knowledge that an individual may not be consciously aware of, such as to
accomplish particular tasks. At the opposite end of the spectrum, explicit knowledge
represents knowledge that the individual holds consciously in mental focus, in a form
that can easily be communicated to others. [16][35]

core components of KM roughly include people/culture, processes/structure and

technology. The details depend on the perspective.[26] KM perspectives include:

From a comparison of other KMS models, I proposed that there are seven fundamental
elements that must be in place for a system to be considered a ‘KMS’. The collective of
the seven elements is referred to as a Knowledge System Architectural Model (KSAM),
and are outlined as follows:

1. Strategy – Any strategy should identify the problem or the opportunity, and set the
purpose/objective for the knowledge strategy. It may also link this to policy and
governance arrangements and take into consideration the culture(s) of the
organization. In many cases, risk is a driver that should be identified and assessed.

2. Actors – People are central to any KMS and there are different participants with
differing backgrounds and experiences. There are a number of roles involved in a KMS
to ensure the system is effective. These include owners, sources, targets, enablers,
boundary spanners, communities and champions.

3. Manage the Knowledge Source – Some KMSs (but not all) may hold explicit
knowledge. Irrespective, there must be a source that the knowledge has come from
and that relationship/interface needs to be managed. A system should address the
authenticity, reliability, sufficiency and currency of the knowledge. Wherever possible,
knowledge should be held by the source external to the system and leveraged when
needed rather than maintaining it in the KMS as information.
4. Interface – The user requires some sort of interface with the KMS and this might be
a push, pull or interactive mode. The interface may be human, structural or
technological for the delivery or facilitation of knowledge or a knowledge management
service. The delivery interface should address the mode, facilitation/interface, a certain
style, adaptation techniques, provide access control and be accessible to people with
physical restrictions or a disability. This aspect is what Nonaka refers to as ‘BA’.

5. Functionality – KM systems are developed to support and enhance knowledge-

intensive processes, tasks or projects of creation, construction, identification, capturing,
acquisition, selection, valuation, organization, linking, protection, structuring,
formalization, visualization, transfer, transformation, distribution, retention,
maintenance, refinement, revision, evolution, accessing, retrieval and last but not least,
the application of knowledge.

6. Infrastructure – Most KMSs will require some form of infrastructure to enable the
system to function. This may include facilities, equipment, repositories, instruments,
tools, templates, software, networks and hardware.

7. Continuous improvement – A KMS should be regularly reviewed to ensure that it is

meeting the objectives identified in the strategy and requirements.

Business intelligence (BI) comprises the strategies and technologies used by

enterprises for the data analysis of business information.[1] BI technologies provide
historical, current and predictive views of business operations. Common functions of
business intelligence technologies include reporting, online analytical
processing, analytics, data mining, process mining, complex event processing, business
performance management, benchmarking, text mining, predictive
analytics and prescriptive analytics. BI technologies can handle large amounts of
structured and sometimes unstructured data to help identify, develop and otherwise
create new strategic business opportunities. They aim to allow for the easy
interpretation of these big data. Identifying new opportunities and implementing an
effective strategy based on insights can provide businesses with a competitive market
advantage and long-term stability.[2]
Business intelligence can be used by enterprises to support a wide range of business
decisions ranging from operational to strategic. Basic operating decisions include
product positioning or pricing. Strategic business decisions involve priorities, goals and
directions at the broadest level. In all cases, BI is most effective when it combines data
derived from the market in which a company operates (external data) with data from
company sources internal to the business such as financial and operations data
(internal data). When combined, external and internal data can provide a complete
picture which, in effect, creates an "intelligence" that cannot be derived from any
singular set of data. [3] Amongst myriad uses, business intelligence
tools empowerorganizations to gain insight into new markets, to assess demand and
suitability of products and services for different market segmentsand to gauge the
impact of marketing efforts.[4]
Often[quantify] BI applications use data gathered from a data warehouse (DW) or from
a data mart, and the concepts of BI and DW combine as "BI/DW" [5] or as "BIDW". A data
warehouse contains a copy of analytical data that facilitate decision support.

business intelligence is "a set of methodologies, processes, architectures, and technologies that
transform raw data into meaningful and useful information used to enable more effective
strategic, tactical, and operational insights and decision-making."[11] Under this definition,
business intelligence encompasses information management (data integration, data quality,
data warehousing, master-data management, text- and content-analytics, et al.). Therefore,
Forrester refers to data preparation and data usage as two separate but closely linked
segments of the business-intelligence architectural stack

The Major Components of Business Intelligence (BI)

The five primary components of BI include:

OLAP (Online Analytical Processing)

This component of BI allows executives to sort and select aggregates of data for
strategic monitoring. With the help of specific software products, a certification in
business intelligence helps business owners can use data to make adjustments to
overall business processes.

Advanced Analytics or Corporate Performance Management (CPM)

This set of tools allows business leaders to look at the statistics of certain products or
services. For instance, a fast food chain may analyze the sale of certain items and
make local, regional and national modifications on menu board offerings as a result. The
data could also be used to predict in which markets a new product may have the best
success.

Real-time BI

In a mobile society, this particular component of BI is becoming increasingly popular.

Using software applications, a business can respond to real-time trends in email,
messaging systems or even digital displays. Because it's all in real-time, an
entrepreneur can announce special offers that take advantage of what’s going on in the
immediate. Marketing professionals can use data to craft creative limited-time specials
such as a coupon for hot soup on a cold day. CEO’s may be interested in tracking the
time of day and location of customers as they interact with a website so marketing can
offer special promotions in real-time while the client is engaged on the website.

Data Warehousing

Data warehousing lets business leaders sift through subsets of data and examine
interrelated components that can help drive business. Looking at sales data over
several years can help improve product development or tailor seasonal offerings. Data
warehousing can also be used to look at the statistics of business processes including
how they relate to one another. For instance, business owners can compare shipping
times in different facilities to look at which processes and teams work most efficiently.
Data warehousing also involves storing huge amounts of data in ways that are
beneficial to different divisions within the company.

Data Sources

This component of BI involves various forms of stored data. It's about taking the raw
data and using software applications to create meaningful data sources that each
division can use to positively impact business. BI analysts using this strategy may
create data tools that allow data to be put into a large cache of spreadsheets, pie
charts, tables or graphs that can be used for a variety of business purposes. For
example, data can be used to create presentations that help to structure attainable team
goals. Looking at the strategic aspect of data sources can also help organizations make
fact-driven decisions that take into account a more holistic view of the needs of the
company.

5. Business intelligence reporting:

Reporting in business intelligence denotes the presentation of data to the end-users in
such a way that they can easily understand and analyse them for the benefit of their
businesses. Usually, a report presents text and number in a table and moreover, it is
optimised for printing and supports other document formats like PDF. In every business
intelligence solution, reporting plays a crucial role because it helps the businesses to
make meaningful sense out of the harvested data. This is done in order to enhance its
competitiveness in the market. There are various open source business intelligence and
reporting tools available in the market.

Nowadays, business intelligence has become an intrinsic component of a company if

they want to etch their name firmly in this competitive era. Those who want to extract
the maximum from BI need to be aware of and have a working knowledge of these
fundamental components of good BI system.

Business Intelligence Tools

Under the umbrella term of Business Intelligence, there are many tools that are used to
analyze the various components of BI and construct them into actual problem-solving
actions. Today’s ubiquitous use of the Internet and the great entrepreneurial spirit of our
free-market economy have fostered niche markets and start-ups, as well as, consulting
firms and other business ventures that have helped build many BI tools. These specific
business tools can help leaders look at components of their business in more depth and
detail. The most common tools in use today include business and data analytics,
predictive analytics, cloud technology, mobile BI, Big Data consultation and visual
analytics.

Why Business Intelligence Matters

Business Intelligence helps business leaders use data in ways that are meaningful and
powerful. Utilizing the tools derived from BI components, organizations can better
leverage data for competitive advantages. Used properly, the data can drive business
decisions that can proactively respond to market trends and other external factors.
While businesses today collect and store copious amounts of raw data, few are actually
harnessing the power of that data to drive business insights and transformations. The
only true constant in business is that it's always changing. Business Intelligence
provides methodologies and tools for today’s business leaders to change effectively and
lead their organizations with fact-based decisions and a more holistic view of growth
potential.

Business Intelligence Architecture and Components

The main components of business intelligence are data warehouse, business analytics and business
performance management and user interface.

Data warehouse holds data obtained from internal sources as well as external sources. The internal
sources include various operational systems.

Business analytics creates a report as and when required through queries and rules. Data mining is
also another important aspect of business analytics.

Business performance management is a linkage of data with business objectives for efficient
tracking. This business performance is then broadcasted to an executive decision-making body
through dashboards and share-point.

Benefit of Business Intelligence

The benefits of Business intelligence are as follows:

 Business intelligence is faster more accurate process of reporting critical information.

 Business intelligence facilitates better and efficient decision-making process.

 Business intelligence provides timely information for better customer relationship

management.

 Business intelligence improves profitability of the company.

 Business intelligence provides a facility of assessing organization’s readiness in meeting new

business challenges.

 Business intelligence supports usage of best practices and identifies every hidden cost.

Business intelligence usage can be optimized by identifying key projects on which company would
like to focus. This process of highlighting key projects is called business intelligence governance.

The importance of business intelligence is growing, and its usage has proliferated across various
types of users. Earlier, it was in the domain of IT staff, but now business team is also independently
handling business intelligence.
What is Data Warehousing?
A data warehousing is a technique for collecting and managing data from varied
sources to provide meaningful business insights. It is a blend of technologies and
components which allows the strategic use of data.

It is electronic storage of a large amount of information by a business which is

designed for query and analysis instead of transaction processing. It is a process of
transforming data into information and making it available to users in a timely
manner to make a difference.

How Datawarehouse works?

A Data Warehouse works as a central repository where information arrives from one
or more data sources. Data flows into a data warehouse from the transactional
system and other relational databases.

Data may be:

1. Structured
2. Semi-structured
3. Unstructured data

The data is processed, transformed, and ingested so that users can access the
processed data in the Data Warehouse through Business Intelligence tools, SQL
clients, and spreadsheets. A data warehouse merges information coming from
different sources into one comprehensive database.

By merging all of this information in one place, an organization can analyze its
customers more holistically. This helps to ensure that it has considered all the
information available. Data warehousing makes data mining possible. Data mining is
looking for patterns in the data that may lead to higher sales and profits.

Types of Data Warehouse

Three main types of Data Warehouses are:

1. Enterprise Data Warehouse:

Enterprise Data Warehouse is a centralized warehouse. It provides decision support

service across the enterprise. It offers a unified approach for organizing and
representing data. It also provide the ability to classify data according to the subject
and give access according to those divisions.

2. Operational Data Store:

Operational Data Store, which is also called ODS, are nothing but data store
required when neither Data warehouse nor OLTP systems support organizations
reporting needs. In ODS, Data warehouse is refreshed in real time. Hence, it is
widely preferred for routine activities like storing records of the Employees.

3. Data Mart:

A data mart is a subset of the data warehouse. It specially designed for a particular
line of business, such as sales, finance, sales or finance. In an independent data
mart, data can collect directly from sources.

General stages of Data Warehouse

Earlier, organizations started relatively simple use of data warehousing. However,
over time, more sophisticated use of data warehousing begun.

The following are general stages of use of the data warehouse:

Offline Operational Database:

In this stage, data is just copied from an operational system to another server. In this
way, loading, processing, and reporting of the copied data do not impact the
operational system's performance.

Offline Data Warehouse:

Data in the Datawarehouse is regularly updated from the Operational Database. The
data in Datawarehouse is mapped and transformed to meet the Datawarehouse
objectives.

Real time Data Warehouse:

In this stage, Data warehouses are updated whenever any transaction takes place in
operational database. For example, Airline or railway booking system.

Integrated Data Warehouse:

In this stage, Data Warehouses are updated continuously when the operational
system performs a transaction. The Datawarehouse then generates transactions
which are passed back to the operational system.

Components of Data warehouse

Four components of Data Warehouses are:

Load manager: Load manager is also called the front component. It performs with
all the operations associated with the extraction and load of data into the
warehouse. These operations include transformations to prepare the data for
entering into the Data warehouse.

Warehouse Manager: Warehouse manager performs operations associated with

the management of the data in the warehouse. It performs operations like analysis
of data to ensure consistency, creation of indexes and views, generation of
denormalization and aggregations, transformation and merging of source data and
archiving and baking-up data.

Query Manager: Query manager is also known as backend component. It performs

all the operation operations related to the management of user queries. The
operations of this Data warehouse components are direct queries to the appropriate
tables for scheduling the execution of queries.

End-user access tools:

This is categorized into five different groups like 1. Data Reporting 2. Query Tools 3.
Application development tools 4. EIS tools, 5. OLAP tools and data mining tools.

Who needs Data warehouse?

Data warehouse is needed for all types of users like:

 Decision makers who rely on mass amount of data

 Users who use customized, complex processes to obtain information from
multiple data sources.
 It is also used by the people who want simple technology to access the data
 It also essential for those people who want a systematic approach for making
decisions.
 If the user wants fast performance on a huge amount of data which is a
necessity for reports, grids or charts, then Data warehouse proves useful.
  Data warehouse is a first step If you want to discover 'hidden patterns' of
data-flows and groupings.

Steps to Implement Data Warehouse

The best way to address the business risk associated with a Datawarehouse
implementation is to employ a three-prong strategy as below

1. Enterprise strategy: Here we identify technical including current architecture

and tools. We also identify facts, dimensions, and attributes. Data mapping
and transformation is also passed.
2. Phased delivery: Datawarehouse implementation should be phased based
on subject areas. Related business entities like booking and billing should be
first implemented and then integrated with each other.
3. Iterative Prototyping: Rather than a big bang approach to implementation,
the Datawarehouse should be developed and tested iteratively.

Data mining is the process of discovering patterns in large data sets involving methods at the
intersection of machine learning, statistics, and database systems.[1] Data mining is
an interdisciplinary subfield of computer science with an overall goal to extract information (with
intelligent method) from a data set and transform the information into a comprehensible structure for
further use.

Data mining is the process of sorting through large data sets to identify
patterns and establish relationships to solve problems through data analysis.
Data mining tools allow enterprises to predict future trends.
the goal is the extraction of patterns and knowledge from large amounts of data, not the extraction
(mining) of data itself

Process
The knowledge discovery in databases (KDD) process is commonly defined with the stages:

1. Selection
2. Pre-processing
3. Transformation
4. Data mining
5. Interpretation/evaluation.[5]

It exists, however, in many variations on this theme, such as the Cross Industry Standard Process
for Data Mining (CRISP-DM) which defines six phases:

1. Business understanding
2. Data understanding
 3. Data preparation
4. Modeling
5. Evaluation
6. Deployment

or a simplified process such as (1) Pre-processing, (2) Data Mining, and (3) Results Validation.

Pre-processing
Before data mining algorithms can be used, a target data set must be assembled. As data mining
can only uncover patterns actually present in the data, the target data set must be large enough to
contain these patterns while remaining concise enough to be mined within an acceptable time limit. A
common source for data is a data mart or data warehouse. Pre-processing is essential to analyze
the multivariate data sets before data mining. The target set is then cleaned. Data cleaning removes
the observations containing noise and those with missing data.

Data mining
Data mining involves six common classes of tasks:[5]

 Anomaly detection (outlier/change/deviation detection) – The identification of unusual data

records, that might be interesting or data errors that require further investigation.
 Association rule learning (dependency modelling) – Searches for relationships between
variables. For example, a supermarket might gather data on customer purchasing habits. Using
association rule learning, the supermarket can determine which products are frequently bought
together and use this information for marketing purposes. This is sometimes referred to as
market basket analysis.
 Clustering – is the task of discovering groups and structures in the data that are in some way
or another "similar", without using known structures in the data.
 Classification – is the task of generalizing known structure to apply to new data. For
example, an e-mail program might attempt to classify an e-mail as "legitimate" or as "spam".
 Regression – attempts to find a function which models the data with the least error that is, for
estimating the relationships among data or datasets.
 Summarization – providing a more compact representation of the data set, including
visualization and report generation.

Results validation
An example of data produced by data dredging through a bot operated by statistician Tyler Vigen, apparently
showing a close link between the best word winning a spelling bee competition and the number of people in the
United States killed by venomous spiders. The similarity in trends is obviously a coincidence.

Data mining can unintentionally be misused, and can then produce results which appear to be
significant; but which do not actually predict future behaviour and cannot be reproduced on a new
sample of data and bear little use. Often this results from investigating too many hypotheses and not
performing proper statistical hypothesis testing. A simple version of this problem in machine
learning is known as overfitting, but the same problem can arise at different phases of the process
and thus a train/test split - when applicable at all - may not be sufficient to prevent this from
happening.
The process of data mining includes several distinct components that address different needs :

Preprocessing. Before you can apply data mining algorithms, you need to build a target
data set or sample data from population data set. One common source for data is a data mart or
warehouse. You need to perform preprocessing to be able to analyze the data sets.

Data cleansing and preparation. The target data set must be cleaned and otherwise

prepared, to remove “noise,” address missing values, filter outlying data points (for anomaly

detection) to remove errors or do further exploration, create segmentation rules, and perform

other functions related to data preparation.

Association rule learning (also known as market basket analysis). These tools search
for relationships among variables in a data set, such as determining which products in a store are
often purchased together.
Clustering. This feature of data mining is used to discover groups and structures in data sets
that are in some way similar to each other, without using known structures in the data.
Classification. Tools that perform classification generalize known structures to apply to new
data points, such as when an email application tries to classify a message as legitimate mail or
spam.
Regression. This data mining technique is used to predict a range of numeric values, such as
sales, housing values, temperatures, or prices when given a particular data set.
Summarization. This technique provides a compact representation of a data set, including
visualization and report generation.
Decision support systems (DSS) are interactive software-based systems intended to help
managers in decision-making by accessing large volumes of information generated from
various related information systems involved in organizational business processes, such as
office automation system, transaction processing system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the analytical
models. A decision support system helps in decision-making but does not necessarily give a
decision itself. The decision makers compile useful information from raw data, documents,
personal knowledge, and/or business models to identify and solve problems and make
decisions.

Programmed and Non-programmed Decisions

There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work, where:
 These decisions have been taken several times.
 These decisions follow some guidelines or rules.

For example, selecting a reorder level for inventories, is a programmed decision.

Non-programmed decisions occur in unusual and non-addressed situations,
so:

 It would be a new decision.

 There will not be any rules to follow.

 These decisions are made based on the available information.

 These decisions are based on the manger's discretion, instinct, perception and
judgment.

For example, investing in a new technology is a non-programmed decision.

Decision support systems generally involve non-programmed decisions.

Therefore, there will be no exact report, content, or format for these
systems. Reports are generated on the fly.

Attributes of a DSS
 Adaptability and flexibility
 High level of Interactivity

 Ease of use

 Efficiency and effectiveness

 Complete control by decision-makers

 Ease of development

 Extendibility

 Support for modeling and analysis

 Support for data access

 Standalone, integrated, and Web-based

Characteristics of a DSS
 Support for decision-makers in semi-structured and unstructured problems.

 Support for managers at various managerial levels, ranging from top executive
to line managers.
  Support for individuals and groups. Less structured problems often requires the
involvement of several individuals from different departments and organization
level.

 Support for interdependent or sequential decisions.

 Support for intelligence, design, choice, and implementation.

 Support for variety of decision processes and styles.

 DSSs are adaptive over time.

Benefits of DSS
 Improves efficiency and speed of decision-making activities.

 Increases the control, competitiveness and capability of futuristic decision-

making of the organization.

 Facilitates interpersonal communication.

 Encourages learning or training.

 Since it is mostly used in non-programmed decisions, it reveals new approaches

and sets up new evidences for an unusual decision.

 Helps automate managerial processes.

Components of a DSS
Following are the components of the Decision Support System:

 Database Management System (DBMS): To solve a problem the necessary

data may come from internal or external database. In an organization, internal
data are generated by a system such as TPS and MIS. External data come from
a variety of sources such as newspapers, online data services, databases
(financial, marketing, human resources).

 Model Management System: It stores and accesses models that managers

use to make decisions. Such models are used for designing manufacturing
facility, analyzing the financial health of an organization, forecasting demand of
a product or service, etc.
 Support Tools: Support tools like online help; pulls down menus, user
interfaces, graphical analysis, error correction mechanism, facilitates the user
interactions with the system.

Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies
DSS as follows:

 Text Oriented DSS: It contains textually represented information that could

have a bearing on decision. It allows documents to be electronically created,
revised and viewed as needed.

 Database Oriented DSS: Database plays a major role here; it contains

organized and highly structured data.

 Spreadsheet Oriented DSS: It contains information in spread sheets that

allows create, view, modify procedural knowledge and also instructs the system
to execute self-contained instructions. The most popular tool is Excel and Lotus
1-2-3.

 Solver Oriented DSS: It is based on a solver, which is an algorithm or

procedure written for performing certain calculations and particular program
type.

 Rules Oriented DSS: It follows certain procedures adopted as rules.

 Rules Oriented DSS: Procedures are adopted in rules oriented DSS. Export
system is the example.

 Compound DSS: It is built by using two or more of the five structures

explained above.

TYPES OF DSS
Following are some typical DSSs:

 Status Inquiry System: It helps in taking operational, management level, or

middle level management decisions, for example daily schedules of jobs to
machines or machines to operators.

 Data Analysis System: It needs comparative analysis and makes use of

formula or an algorithm, for example cash flow analysis, inventory analysis etc.
  Information Analysis System: In this system data is analyzed and the
information report is generated. For example, sales analysis, accounts
receivable systems, market analysis etc.

 Accounting System: It keeps track of accounting and finance related

information, for example, final account, accounts receivables, accounts
payables, etc. that keep track of the major aspects of the business.

 Model Based System: Simulation models or optimization models used for

decision-making are used infrequently and creates general guidelines for
operation or management.
DSS components may be classified as:

1. Inputs: Factors, numbers, and characteristics to analyze

2. User knowledge and expertise: Inputs requiring manual analysis by the user
3. Outputs: Transformed data from which DSS "decisions" are generated
4. Decisions: Results generated by the DSS based on user criteria

ERP is an integrated, real-time, cross-functional enterprise application, an

enterprise-wide transaction framework that supports all the internal
business processes of a company.

It supports all core business processes such as sales order processing,

inventory management and control, production and distribution planning,
and finance.
Why of ERP?
ERP is very helpful in the follwoing areas:

 Business integration and automated data update

 Linkage between all core business processes and easy flow of integration

 Flexibility in business operations and more agility to the company

 Better analysis and planning capabilities

 Critical decision-making

 Competitive advantage

 Use of latest technologies

Features of ERP
The following diagram illustrates the features of ERP:
Scope of ERP
 Finance: Financial accounting, Managerial accounting, treasury management,
asset management, budget control, costing, and enterprise control.

 Logistics: Production planning, material management, plant maintenance,

project management, events management, etc.

 Human resource: Personnel management, training and development, etc.

 Supply Chain: Inventory control, purchase and order control, supplier

scheduling, planning, etc.

 Work flow: Integrate the entire organization with the flexible assignment of
tasks and responsibility to locations, position, jobs, etc.

Advantages of ERP
 Reduction of lead time

 Reduction of cycle time

 Better customer satisfaction

  Increased flexibility, quality, and efficiency

 Improved information accuracy and decision making capability

 Onetime shipment

 Improved resource utilization

 Improve supplier performance

 Reduced quality costs

 Quick decision-making

 Forecasting and optimization

 Better transparency

Disadvantage of ERP
 Expense and time in implementation

 Difficulty in integration with other system

 Risk of implementation failure

 Difficulty in implementation change

 Risk in using one vendor

MIS - Knowledge Management System

All the systems we are discussing here come under knowledge management
category. A knowledge management system is not radically different from
all these information systems, but it just extends the already existing
systems by assimilating more information.

As we have seen, data is raw facts, information is processed and/or

interpreted data, and knowledge is personalized information.
What is Knowledge?
 Personalized information

 State of knowing and understanding

 An object to be stored and manipulated

 A process of applying expertise

 A condition of access to information

 Potential to influence action

Sources of Knowledge of an Organization

 Intranet

 Data warehouses and knowledge repositories

 Decision support tools

 Groupware for supporting collaboration

 Networks of knowledge workers

 Internal expertise

Definition of KMS
A knowledge management system comprises a range of practices used in an
organization to identify, create, represent, distribute, and enable adoption to insight
and experience. Such insights and experience comprise knowledge, either embodied in
individual or embedded in organizational processes and practices.

Purpose of KMS
 Improved performance

 Competitive advantage

 Innovation

 Sharing of knowledge

 Integration
  Continuous improvement by:

o Driving strategy

o Starting new lines of business

o Solving problems faster

o Developing professional skills

o Recruit and retain talent

Activities in Knowledge Management

 Start with the business problem and the business value to be delivered first.

 Identify what kind of strategy to pursue to deliver this value and address the KM
problem.

 Think about the system required from a people and process point of view.

 Finally, think about what kind of technical infrastructure are required to support
the people and processes.

 Implement system and processes with appropriate change management and

iterative staged release.
Level of Knowledge Management

MIS - Executive Support System

Executive support systems are intended to be used by the senior managers

directly to provide support to non-programmed decisions in strategic
management.

These information are often external, unstructured and even uncertain.

Exact scope and context of such information is often not known beforehand.

This information is intelligence based:

 Market intelligence

 Investment intelligence
  Technology intelligence

Examples of Intelligent Information

Following are some examples of intelligent information, which is often the
source of an ESS:

 External databases

 Technology reports like patent records etc.

 Technical reports from consultants

 Market reports

 Confidential information about competitors

 Speculative information like market conditions

 Government policies

 Financial reports and information

MIS - Strategic Business Objectives

Strategic planning for an organization involves long-term policy decisions,
like location of a new plant, a new product, diversification etc.

Strategic planning is mostly influenced by:

 Decision of diversification i.e., expansion or integration of business

 Market dynamics, demand and supply

 Technological changes

 Competitive forces

 Various other threats, challenges and opportunities

Strategic planning sets targets for the workings and references for taking
such long-term policy decisions and transforms the business objectives into
functional and operational units. Strategic planning generally follows one of
the four-way paths:

 Overall Company Strategy

 Growth orientation

 Product orientation

 Market orientation

In this chapter, let us discuss the Strategic Business Objectives of MIS with
regards to the following aspects of a business:

 Operational Excellence

 New Products, Services and Business Models

 Services and Business Models

 Customer and Supplier Intimacy

 Improved Decision-making

 Competitive Advantage, and Survival

Material requirements planning (MRP) is a production planning, scheduling, and inventory control
system used to manage manufacturing processes. Most MRP systems are software-based, but it is
possible to conduct MRP by hand as well.

Material requirements planning (MRP) is a system for calculating the materials

and components needed to manufacture a product. It consists of three
primary steps: taking inventory of the materials and components on hand,
identifying which additional ones are needed and then scheduling their
production or purchase.

MRP is one of the most widely used systems for harnessing computer power
to automate the manufacturing process.

An MRP system is intended to simultaneously meet three objectives:

 Ensure materials are available for production and products are available for delivery to
customers.
 Maintain the lowest possible material and product levels in store
 Plan manufacturing activities, delivery schedules and purchasing activities.

MRP vs ERP: What are the Biggest Differences?

As you can tell based on the definitions above, ERP and MRP have their similarities. That
said, they’re still quite different. So how exactly can you tell one from the other? Here are
the biggest differences between MRP vs ERP:

Standalone vs Integrated
The biggest difference between MRP and ERP lies in the fact that MRP is more of a solo
software, while ERP is integrated. MRP systems are standalone manufacturing software
that function by themselves with only manufacturing-related features. ERP solutions, on
the other hand, support several modules for total business control.

As we mentioned earlier, ERP vendors provide support for all types of business
processes, from HR to supply chain management and financial management. Due to the
potentially overwhelming nature of so many departments and processes coming
together, an ERP is best for large businesses. The high level of integration required can
also be difficult for smaller businesses to pull off. Conversely, a MRP is good for any size
business, as long as they’re in the manufacturing industry (obviously).

Users
The people that use each system often varies drastically as well. Since an ERP is common
among many industries and is handled by many departments, there isn’t really a limit on
who ERP software users are. They could be someone in HR who’s checking on payroll.
They could be a sales rep checking the status of a lead. Or they could be a data analyst
creating a business intelligence report.

MRP software users are — as you can guess at this point — exclusive to manufacturing
operations. This could be a warehouse manager checking on the inventory of necessary
raw materials, or it could be a warehouse worker checking on lead times. And it could
also be a production planning specialist overseeing the entire operation.

The point is: MRP users are much more limited, as only those related to manufacturing
typically use it, while ERP users are much more diverse.

Online analytical processing, or OLAP (/ˈoʊlæp/), is an approach to answering multi-

dimensional analytical (MDA) queries swiftly in computing.[1] OLAP is part of the broader
category of business intelligence, which also encompasses relational databases, report writing
and data mining.[2] Typical applications of OLAP include business reporting for sales, marketing,
management reporting, business process management (BPM),
[3] budgeting and forecasting, financial reporting and similar areas, with new applications coming
up, such as agriculture.[4] The term OLAP was created as a slight modification of the traditional
database term online transaction processing (OLTP).[

Core Banking Solution (CBS) is networking of branches, which enables

Customers to operate their accounts, and avail banking services from any
branch of the Bank on CBS network, regardless of where he maintains his
account. The customer is no more the customer of a Branch. He becomes the
Bank’s Customer.
As per pure definition Core banking refers to a centralized system established by
a bank which allows its customers to conduct their business irrespective of the
bank’s branch. Thus, it removes the impediments of geo-specific transactions. In
fact, CORE is an acronym for "Centralized Online Real-time Exchange", thus the
bank’s branches can access applications from centralized data centers.

What Are the Benefits of an MIS?

Not having an effective, functional MIS leaves managers guessing in the dark.
Employees are busy going through their workdays without direction or purpose. A
management information system provides the data to identify non-performing
areas and leads to the following benefits:
Helps to achieve a higher level of efficiency: Managers have the information
needed to identify a company's strengths and weaknesses.
Improves the quality of decisions: Better availability of information reduces
uncertainty and lets managers make more rational decisions based on reliable
data.
Promotes better communications between departments in a
workplace: When managers, department heads and employees are sharing the
same information, there is better communication between them to identify
problem areas and find mutually agreeable solutions.
Provides a platform to explore different scenarios for various alternatives
and economic environments: Management is able to explore various alternatives
to see the possible results before making decisions and commitments.
Improves employee productivity: Employees are more productive because they
don't have to spend time gathering the data that management wants. A well-
designed MIS will gather all the data without any more input from employees.
Strengthens a company's competitive advantage: Running a more efficient
business by reducing and eliminating weaknesses and non-performing areas
increases a company's competitive advantage over its rivals.
Reveals more data about customers: With more data about the needs of
customers, management is better able to improve customer service and design
more effective marketing and promotional campaigns.
A management information system is essential for any small business owner who is
serious about improving the performance of his company. Without a good MIS,
managers are managing by trial-and-error rather than making intelligent decisions
based on a thoughtful analysis of data.
What is the role of Management Information System (MIS) in sustaining efficiency and effectiveness of
an organization?

What is the role of Management Information System (MIS) in sustaining efficiency and effectiveness of
an organization? Explain with the help of the prevailing MIS in an organization known to you. Briefly
describe the organization along with its reporting relationships.

A management information system (MIS) is a system that provides information needed to manage
organizations effectively. Management information systems are regarded to be a subset of the overall
internal controls procedures in a business, which cover the application of people, documents,
technologies, and procedures used by management accountants to solve business problems such as
costing a product, service or a business-wide strategy. Management information systems are distinct
from regular information systems in that they are used to analyze other information systems applied in
operational activities in the organization. Academically, the term is commonly used to refer to the group
of information management methods tied to the automation or support of human decision making, e.g.
Decision Support Systems, Expert systems, and Executive information systems.

An 'MIS' is a planned system of the collection, processing, storage and dissemination of data in the form
of information needed to carry out the management functions. In a way, it is a documented report of the
activities that were planned and executed. According to Philip Kotler "A marketing information system
consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed,
timely, and accurate information to marketing decision makers."

Applications of MIS ---------With computers being as ubiquitous as they are today, there's hardly any
large business that does not rely extensively on their IT systems. However, there are several specific
fields in which MIS has become invaluable.

 Strategy Support While computers cannot create business strategies by themselves they can assist
management in understanding the effects of their strategies, and help enable effective decision-making.

 MIS systems can be used to transform data into information useful for decision making. Computers can
provide financial statements and performance reports to assist in the planning, monitoring and
implementation of strategy.

 MIS systems provide a valuable function in that they can collate into coherent reports unmanageable
volumes of data that would otherwise be broadly useless to decision makers. By studying these reports
decision-makers can identify patterns and trends that would have remained unseen if the raw data were
consulted manually.

 MIS systems can also use these raw data to run simulations - hypothetical scenarios that answer a
range of ‘what if’ questions regarding alterations in strategy. For instance, MIS systems can provide
predictions about the effect on sales that an alteration in price would have on a product. These Decision
Support Systems (DSS) enable more informed decision making within an enterprise than would be
possible without MIS systems.

Data Processing

Not only do MIS systems allow for the collation of vast amounts of business data, but they also provide a
valuable time saving benefit to the workforce. Where in the past business information had to be
manually processed for filing and analysis it can now be entered quickly and easily onto a computer by a
data processor, allowing for faster decision making and quicker reflexes for the enterprise as a whole.

Management by Objectives

While MIS systems are extremely useful in generating statistical reports and data analysis they can also
be of use as a Management by Objectives (MBO) tool.

MBO is a management process by which managers and subordinates agree upon a series of objectives
for the subordinate to attempt to achieve within a set time frame. Objectives are set using the SMART
ratio: that is, objectives should be Specific, Measurable, Agreed, Realistic and Time-Specific.

The aim of these objectives is to provide a set of key performance indicators by which an enterprise can
judge the performance of an employee or project. The success of any MBO objective depends upon the
continuous tracking of progress.

In tracking this performance it can be extremely useful to make use of an MIS system.

Since all SMART objectives are by definition measurable they can be tracked through the generation of
management reports to be analyzed by decision-makers.

Benefits of MIS
The field of MIS can deliver a great many benefits to enterprises in every industry.

Expert organisations such as the Institute of MIS along with peer reviewed journals such as MIS
Quarterly continue to find and report new ways to use MIS to achieve business

objectives.

1. Core Competencies

Every market leading enterprise will have at least one core competency - that is, a function they perform
better than their competition. By building an exceptional management information system into the
enterprise it is possible to push out ahead of the competition. MIS systems provide the tools necessary
to gain a better understanding of the market as well as a better understanding of the enterprise itself.

2. Enhance Supply Chain Management

Improved reporting of business processes leads inevitably to a more streamlined production process.
With better information on the production process comes the ability to improve the management of the
supply chain, including everything from the sourcing of materials to the manufacturing and distribution
of the finished product.

3. Quick Reflexes

As a corollary to improved supply chain management comes an improved ability to react to changes in
the market. Better MIS systems enable an enterprise to react more quickly to their environment,
enabling them to push out ahead of the competition and produce a better service and a larger piece of
the pie.

4. Significant cost benefits, time savings, productivity gains and process re- engineering

opportunities are associated with the use of data warehouse for information processing.

5. Data can easily be accessed and analysed without time consuming manipulation and processing.

6. Decisions can be made more quickly and with confidence that the data are both time-relevant and
accurate.

7. Integrated information can be also kept in categories that are meaningful to profitable operation

Further information about MIS can be found at the Bentley College Journal of MIS and the US Treasury’s
MIS handbook, and an example of an organisational MIS division can be found at the Department of
Social Services for the state of Connecticut.

MIS in Banking Sector (AXIS BANK)

Axis Bank, previously called UTI Bank, was the first of the new private banks to have begun operations in
1994, after the Government of India allowed new private banks to be established. The Bank was
promoted jointly by the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I), Life
Insurance Corporation of India (LIC), General Insurance Corporation Ltd., National Insurance Company
Ltd., The New India Assurance Company, The Oriental Insurance Corporation and United Insurance
Company Ltd. UTI-I holds a special position in the Indian capital markets and has promoted many leading
financial institutions in the country.
For example, using MIS strategically can help a company to become a market innovator.

By providing a unique product or service to meet the needs of customers, a company can raise the cost
of market entry for potential competitors and thus gain a competitive advantage. Another strategic use
of MIS involves forging electronic linkages to customers and suppliers. This can help companies to lock in
business and increase switching costs. Finally, it is possible to use MIS to change the overall basis of
competition in an industry. For example, in an industry characterized by price wars, a business with a
new means of processing customer data may be able to create unique product features that change the
basis of competition to differentiation.

Relevance of Data Warehousing and Data Mining for banks in India. Banking being an information
intensive industry, building a Management Information System within a bank or an industry is a gigantic
task. It is more so for the public sector banks which have a wide network of bank branches spread all
over the country.

At present, banks generate MIS reports largely from periodic paper reports/statements submitted by the
branches and regional/zonal offices. Except for a few banks which have been using technology in a big
way, MIS reports are available with a substantial time lag. Reports so generated have also a high margin
of error due to data entry being done at various levels and the likelihood of varying interpretations at
different levels. Though computerization of bank branches has been going on at a good pace, MIS
requirements have not been fully addressed to. It is on account of the fact that most of the Total Branch
Computerization (TBC) software packages are transaction processing oriented. They have been designed
primarily for day-to-day operations at the branch level and day-end balancing of books

Need for building MIS

The need for building MIS at the corporate level has increased considerably during the last few years
because of the following reasons:

 Regulatory requirements indicated by the RBI for preparation of Off-site Monitoring Surveillance
(OSMOS) Reports on a regular basis in electronic format

 Regulatory requirement of filing of statutory returns such as the one under Section 42 of the Reserve
Bank of India Act, 1934 for working out Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
obligations in electronic format

 Asset Liability Management (ALM) guidelines for banks being implemented by the RBI w.e.f. April 1,
1999 with the stipulation that the banks should capture 100 percent of their business through the ALM
system by April 1, 2000.

 Need for timely submission of Balance Sheets and Profit & Loss Accounts

 Focus on transaction costing and a need for relating the service charges levied on the customers to be
based on cost of servicing

 Need for Inter-Branch Reconciliation of Accounts within a definite time frame

 Need to meet the stipulations made by the Central Vigilance Commission (CVC) to computerise at least
70 percent of banking business by January 1, 2001.
 Need to undertake risk management strategies and for this purpose build up appropriate sets of data
and market intelligence reports

Application of data warehousing and data mining techniques

Implication of adopting such technology in a bank would be as under

1. All transactions captured at the branch level would get consolidated at a central location. Such a
central location could be called the Data Warehouse of the concerned bank

2. For banks with large number of branches, it may not be desirable to consolidate the transaction
details at one place only. It can be decentralised by locating the services on regional basis.

3. By way of data mining techniques, data available at various computer systems can be accessed and by
a combination of techniques like classification, clustering, segmentation, association rules, sequencing,
decision tree (described in detail at Annexure-15), various ALM reports such as Statement of Structural
Liquidity, Statement of Interest Rate Sensitivity etc. or accounting reports like Balance Sheet and Profit &
Loss Account can be generated instantaneously for any desired period/date

ORGANISATION COMPUTING RESOURCES SOFTWARE RESOURCES

RisKompass : A software system for derivatives valuation and risk management, RisKompass enables
clients to manage derivative trades in a further controlled way from the front to back office. Supporting
the industry standard FpML (Financial Product Markup Language) protocol, it can manage valuation and
risk management of a broad range of derivatives instruments. The system will handle derivatives such as
interest rates and foreign exchange for Bank.

ORGANISATION COMPUTING RESOURCES

1. The implementation will provide the bank with an automated system that reduces manual effort to
streamline its operations.

2. The benefit envisaged by the bank is that everybody being on the same system, it can be accessed by
anyone on the different locations of the bank.

3. The users at the bank would include traders, dealers and risk managers.

4. The solution will result in smoother deal processing, with verifying and online risk monitoring
mechanism.

5. It will streamline all operations and the risk mechanism can be monitored centrally

Electronic Clearing Service (ECS Credit)

•Electronic Clearing Service (ECS Credit)

ECS Credit is an electronic clearing system that facilitates paperless transaction through an offline
system. Bank facilitates ECS Credit at all ECS designated locations. We accept the electronic file and
arrange abstention of settlement date (date of credit to beneficiary account) from RBI/SBI/Local Clearing
House as the case may be. The funds gets debited from a centralized account and credit is accorded to
the respective beneficiaries as per settlement cycle. A detailed MIS about the transactions is provided to
the customer.

NEFT

To establish an Electronic Funds Transfer System to facilitate an efficient, secure, economical, reliable and
expeditious system of funds transfer and clearing in the banking sector throughout India. The customer
willing to avail the NEFT facility offered by us shall submit an "NEFT Application Form" authorising the
sending bank to debit the sender's account and transfer funds to the beneficiary specified in the NEFT
Application Form. The Beneficiary's account will be credited on the same day by crediting the specified
account of the beneficiary or otherwise placing funds at the disposal of the beneficiary.

Centralised Service Desk

A dedicated service desk has been started at our Centralised Collection and Payment HUB (CCPH) to
ensure that your queries are resolved quickly and efficiently. The Customers can contact CCPH regarding
any query about the MIS or the process flow.

• Web CMS Web CMS provides you with all the information at a click. Detailed MIS Like location wise
collection and return, product-wise pooling, pooling in pipeline (due credit report) etc. can be viewed
and downloaded from web interface through internet

Comprehensive MIS We provide comprehensive MIS reports like daily report, transaction report future
credits reports and cheque returned unpaid report. On the payments side we provide daily paid - unpaid
status for the demand drafts, cheques or warrants issued by your Organisation.

Mobile Alert Service

The CMS clients availing our collection products now have the facility to subscribe to Mobile Alert
Service for receiving alerts on registered mobile phone numbers instantly after the funds are pooled. To
avail this facility, please visit nearest CMS designated branch or log on to our Web CMS to download the
form online and send it to our branch where your account is maintained. .

Artificial intelligence techniques in business

Artificial intelligence systems mimic human expertise to identify patterns in large
data sets. Companies such as Amazon, Facebook, and Google, etc. use artificial
intelligence techniques to identify data that is most relevant to you.

Let's use Facebook as an example, Facebook usually makes very accurate

predictions of people that you might know or went with to school. They use the data
that you provide to them, the data that your friends provide and based on this
information make predictions of people that you might know.

Amazon uses artificial intelligence techniques too to suggest products that you
should buy also based on what you are currently getting.

Google also uses artificial intelligence to give you the most relevant search results
based on your interactions with Google and your location.

These techniques have greatly contributed in making these companies very

successful because they are able to provide value to their customers.

Online Analytical Processing (OLAP)

Online analytical processing (OLAP) is used to query and analyze multi-dimensional
data and produce information that can be viewed in different ways using multiple
dimensions.

Let's say a company sells laptops, desktops, and Mobile device. They have four (4)
branches A, B, C and D. OLAP can be used to view the total sales of each product
in all regions and compare the actual sales with the projected sales.

Each piece of information such as product, number of sales, sales value represents
a different dimension

The main objective of OLAP systems is to provide answers to ad hoc queries within
the shortest possible time regardless of the size of the datasets being used.

What is Management Information Systems (MIS)?

Definition: A Management Information System is a set of combined procedures that gathers and
produces reliable, relevant, and properly organized data that supports the decision making process of an
organization. To sum up, it is a group of processes through which data is obtained, sorted, and displayed
in a useful way for decision-making purposes.

What Does Management Information Systems Mean?

What is the definition of MIS? Management Information Systems are very useful tools for the purpose of
reviewing and controlling company’s operations. The main goal of these systems is to organize all data
collected from every level of the company, summarize it, and present it in a way that facilitates and
improve the quality of the decisions being made to increase the company’s profitability and productivity.

These systems are typically are computer-based including either simple excel sheets or more complex
platforms. The information being collected and gathered for the system normally comes from both inside
and outside sources.
Let’s look an example and see how MIS works.

Example

Mr. Parson is the Chief Operations Officer (COO) at Bermuda Fabrics LLC. As part of his job, he needs to
forecast the next quarterly production plan, which includes an expected production quantity for each of
the products that the company sells. He needs a lot of information and statistics to come up with a
useful and reliable projection that captures the current business environment the company is facing and
the company’s capacity to manufacture within those parameters. How could a MIS help Mr. Parson to
develop these forecasts properly?

The system can provide all the different variables Mr. Parson needs to develop the forecast. He will need
to review production patterns, past sales, current equipment, and current suppliers. By the system
displaying all this information in a useful way, Mr. Parson will be able to design a forecasting model
(which can also be included on the system) that will allow him to plan for next quarter production.

Business Process Reengineering (BPR) – Definition,

Steps, and Examples
Business Process Reengineering (BPR) aims at cutting down enterprise costs and
process redundancies, but unlike other process management techniques, it does so on a
much broader scale. Business Process Reengineering (BPR) - also known as process
innovation and core process redesign - attempts to restructure or obliterate
unproductive management layers, wipe out redundancies, and remodel processes
differently.

Business process reengineering is the act of recreating a core business process with the
goal of improving product output, quality, or reducing costs.
Typically, it involves the analysis of company workflows, finding processes that are
sub-par or inefficient, and figuring out ways to get rid of them or change them.

Business process re-engineering (BPR) is a business management strategy, originally pioneered

in the early 1990s, focusing on the analysis and design of workflows and business processes within
an organization. BPR aimed to help organizationsfundamentally rethink how they do their work in
order to dramatically improve customer service, cut operational costs, and become world-
class competitors.[1]

The principles of business process reengineering

In 1993, Hammer and organizational theorist James Champy published a book to

expand upon the ideas Hammer proposed in his research paper. The book, which was
entitled “Reengineering the Corporation: A Manifesto for Business Revolution,”
quickly became a national bestseller. The authors suggested seven principles for
reengineering a work process and achieving a significant level of improvement in
quality, time management, speed and profitability.

1. Organize around outcomes, not tasks.

2. Identify all the processes in an organization and prioritize them in order of

redesign urgency.

3. Integrate information processing work into the real work that produces the
information.

4. Treat geographically dispersed resources as though they were centralized.

5. Link parallel activities in the workflow instead of just integrating their results.

6. Put the decision point where the work is performed and build control into the
process.

7. Capture information once and at the source.

5 Steps to business process redesign

The business community's enthusiasm for business process reengineering inevitably

generated many interpretations for how radical change should be implemented. For
example, while Hammer used the word reengineering and provided business leaders
with broad guiding principles, Thomas Davenport used the word redesign and
provided business leaders with more concrete advice, emphasizing the value
of prototypes, simulations and tests.

Davenport’s book with James Short, entitled “The New Industrial Engineering:
Information Technology and Business Process Redesign,” suggested that business
leaders use a five-step approach to radically change workflow:

1. Develop the business vision and process objectives.

2. Identify the processes to be redesigned.

3. Understand and measure the existing processes.

4. Identify IT levers.

5. Design and build a prototype of the new process.

Business process management (BPM) is a discipline in operations management in which people
use various methods to discover, model, analyze, measure, improve, optimize,
and automate business processes.[1] BPM focuses on improving corporate performance by managing
business processes.[2] Any combination of methods used to manage a company's business
processes is BPM.[3] Processes can be structured and repeatable or unstructured and variable.
Though not required, enabling technologies are often used with BPM.
A business process or business method is a collection of related, structured activities
or tasks that in a specific sequence produces a service or product (serves a particular business goal)
for a particular customer or customers. [1][2][3] A business process may often be visualized (modeled) as
a flowchart of a sequence of activities with interleaving decision points or as a process matrix of a
sequence of activities with relevance rules based on data in the process. [2][3][4][5] The benefits of using
business processes include improved customer satisfaction and improved agility for reacting to rapid
market change.
A business process is a series of repeatable steps taken by a team or company to achieve some
sort of business goal: managing deliveries, assembling products, onboarding employees, etc.
The key aspect of a business process is repeatability – a process is not a one-time thing.

A workflow consists of an orchestrated and repeatable pattern of business activity enabled by

the systematic organization of resources into processes that transform materials, provide services,
or process information. [1] It can be depicted as a sequence of operations, the work of a person or
group,[2] the work of an organization of staff, or one or more simple or complex mechanisms.

Workflow is the repeatable pattern of the activities sequence or steps that

take place to complete a specific task on a regular basis. The flow being
described includes tasks, documents or information that are passed to a
proper workflow participant for action in a sequence determined by actions
or pre-defined business rules.

Workflows have three essential qualities.

 They must be a predictable progression of steps.

 They must be repetitive.

 They must involve at least two people.

There are three key types of workflows:

  Linear Workflow – typically progresses from one step to next and does
not step back.
 State Machine Workflow – usually progress with reference to ‘State’ and
return can to a previous point if required.
 Rules-driven Workflow – processed according to predefined rules that
can enable mandatory data capture, automatic task reassignment or
other actions.

The idea of workflow began in the manufacturing sector to coordinate tasks

between people, modern businesses have adopted the term to enjoy the
following key benefits:

 Improved efficiency
 Better responsiveness
 Work process transparency
 Increased profitability

A workflow management system (WfMS) is a software system for setting up, performing, and
monitoring of a defined sequence of processes and tasks, with the broad goals of increasing
productivity, reducing costs, becoming more agile, and improving information exchange within an
organization.[20] These systems may be process-centric or data-centric, and they may represent the
workflow as graphical maps. The workflow management system may also include an extensible
interface so that external software applications can be integrated and provide support for wide area
workflows that provide faster response times and improved productivity.

GIGO (garbage in, garbage out) is a concept common to computer science

and mathematics: the quality of output is determined by the quality of the
input. So, for example, if a mathematical equation is improperly stated, the
answer is unlikely to be correct. Similarly, if incorrect data is input to a
program, the output is unlikely to be informative.
A program working on inaccurate data will only yield misleading result.
A process is a set of activities that interact to produce a result.
LIFO assumes that the last items put on the shelf are the first items sold. Last-in,
first-out is a good system to use when your products are not perishable or at risk
of quickly becoming obsolete. Under LIFO, when prices rise, the higher priced
items are sold first and the lower priced products are left in inventory. This
increases a company's cost of goods sold and lowers its net income, both of
which reduce the company's tax liability.
FIFO, on the other hand, assumes that the first items put on the shelf are the first
items sold, so your oldest goods are sold first. This system is generally used by
companies whose inventory is perishable or subject to quick obsolescence. If
prices go up, FIFO will give you a lower cost of goods sold because you are
using your older, cheaper goods first. Your bottom line will look better to your
banker and investors, but your tax liability will be higher because you have
a higher profit. Because FIFO represents the cost of recent purchases, it usually
more accurately reflects replacement costs.
FIFO and LIFO are cost layering methods used to value the cost of goods
sold and ending inventory . FIFO is a contraction of the term "first in, first
out," and means that the goods first added to inventory are assumed to be
the first goods removed from inventory for sale. LIFO is a contraction of the
term "last in, first out," and means that the goods last added to inventory are
assumed to be the first goods removed from inventory for sale.

Sir, I Am Determined To Be A Banker. I Never Try For Any Job Opportunity Except To
Be Banker. I Always Try My Level Best To Get Employed Any Esteem Bank Like You.
There Is No Lacking Of My Dedication, Hardworking, Confidence To Fulfill My Dream.
After All I Had Some Weaknesses (Mention Some Real Weaknesses Of You) For Which
I Couldn’t Be Success Earlier. But I Never Gave Up My Patience, My Dream. I Am
Always Trying To Find Out My Limitations And Overcome These Limitations. Now, I
Think I Have Brought My Weakness At Minimal Level And Hope For Getting The
Opportunity To Work At Your Organization.

Why Should We Select/Hire/Buy You?

How Can You Add Value To The Bank?

What’s Your Strength?

What Are Your Strong Points?

উপররর VIVA Question গললর অনররররহত রবষয়বস একই। তলই Answer এর অনররররহত রবষয়বস পরতরকরতই
একই হরব।

পথরম যয রবষয়টল রররয় বলরত চলই তলহরলল মলরনরষর কত ধরররর Positive Characteristic থলকরত পলরর তল
রররয়। মলরনরষর Positive Characteristic এর সসখখল এত যবরশ যয সবগলল উরলখ কররত পলররছ রল। রররচ
করয়কটলর রলম যদওয়ল হরলল (যলরদর সময় কম তলরল এই অসশটন কন Skip কররত পলররর):
1. Adaptable, 2. Adventurous, 3. Affable, 4. Affectionate, 5. Agreeable, 6. Ambitious, 7.
Amiable, 8. Amicable, 9. Amusing, 10. Brave, 11. Bright, 12. Broad-minded, 13. Calm,
14. Careful, 15. Charming, 16. Communicative, 17. Compassionate, 18. Conscientious,
19. Considerate, 20. Convivial, 21. Courageous, 22. Courteous, 23. Creative, 24.
Decisive, 25. Determined, 26. Diligent, 27. Diplomatic, 28. Discreet, 29. Dynamic, 30.
Easygoing, 31. Emotional, 32. Energetic, 33. Enthusiastic, 34. Exuberant, 35. Fair-
minded, 36. Faithful, 37. Fearless, 38. Forceful, 39. Frank, 40. Friendly, 41. Funny, 42.
Generous, 43. Gentle, 44. Good, 45. Gregarious, 46. Hard-working, 47. Helpful, 48.
Honest, 49. Humorous, 50. Imaginative, 51. Impartial, 52. Independent, 53. Intellectual,
54. Intelligent, 55. Intuitive, 56. Inventive, 57. Kind, 58. Loving, 59. Loyal, 60. modest,
61. Neat, 62. Nice, 63. Optimistic, 64. Passionate, 65. Patient, 66. Persistent, 67.
Pioneering, 68. Philosophical, 69. Placid, 70. Plucky, 71. Polite, 72. Powerful, 73.
Practical, 74. Pro-active, 75. Quick-witted, 76. Quiet, 77. Rational, 78. Reliable, 79.
Reserved, 80. Resourceful, 81. Romantic, 82. Self-confident, 83. Self-disciplined, 84.
Sensible, 85. Sensitive, 86. Shy, 87. Sincere, 88. Sociable, 89. Straightforward, 90.
Sympathetic, 91. Thoughtful, 92. Tidy, 93. Tough, 94. Unassuming, 95. Understanding,
96. Versatile, 97. Warmhearted, 98. Willing …….

একটন যখয়লল কররলই যদখরবর এখলরকলর অরধকলসশ গরর আপরর গণলরনত। তরব VIVA Board এ আপরলর
এত গররর কথল বললর সময় আপরর পলরবর রল। একটন সময় রররয় রররজর সমরকর রচনল করর যকলর ৫-৬ টল
Point এর উপর আপরর যবরশ Focus কররত চলর। Bank গললর Circular + আমলর Experience যথরক
যদরখরছ রররচর Point গলল যবরশ গরত যদওয়ল হরয় থলরকক

– Leadership
– Hardworking
– Dedicated To Works
– Well Theoretical Knowledge
– Good Team Player
– Innovative
– Can Work Under Pressure
– Positive Attitude To Challenges
– Self Motivated
– Extrovert
– Confident
– Having Good Intuition Power
– Analytical Ability
– Dynamic
আপরলর Strong Points গলল রক রক তল Already যভরব যফরলরছর। এখর আপরলর এই Special গর গলল
রদরয় রকভলরব Bank এর Value Add কররবর রররয় আবলররল ভলবরত বসনর। খনব Seriously Analysis করর।
আবলররল বরল এই Question এর Answer রদরত আপরর সলধলরণত ২-৩ Minute এর যবরশ সময় পলরবর রল।
তলই রচরল যলখলর কথল মলথলয় আরলর দরকলর যরই। আপরলর Special গর গলল রক আরম জলরর রল, আপরর
রকভলরব Bank এর Value Add কররবর তলও আরম জলরর রল। সবই আপরর জলররর বল আপরলরক জলররত হরব।
তরব আরম আপরলরক রকছন Example রদরত পলরর যল আপরলরক এই রবষরয় আরও রচনল কররত সলহলযখ কররব।

– Banking Sector Is One Of The Fast Growing Industry In The World. The
Policy, Structure, Nature Of Services, Technology Etc. Are Always Changing
With The Demand Of Time. I Think, In This Regard I Can Make A Contribution
To Your Bank Because I Am Innovative, Adaptable With The Changes, And
Keep Always Update Myself About What Is Happening Around The World.
– I Am Very Much Extrovert, Helpful And Friendly In Nature. These Help Me To
Build And Continue A Strong Relationship With The Customers. And You
Know, Customer Satisfaction Is The Best Marketing For A Bank.
– The Success Of Bank Depends On Effective Team Work. In Broad Sense, No
One Is More Or Less Important In Team Work. In This Regard, I Can Say I Am
A Good Team Player. I Always Values Others Opinion, Thought, Contribution.
Besides I Am Disciplined And Obedient What Can Help To Accomplish The
Success Of My Team.
– Banking Job Is Much Challenging Than Other Job. I Have A Positive Attitude
To Challenges, I Am Hardworking In Nature And Will Be Dedicated To My
Works. I Can Also Work Under Pressure. So There Is A Good Possibility Of
Flawless Outcome From Me.
– I Have Good Intuition Power, I Can Haldle Any Situation Confidently. I Think
This Will Help Me To Manage All The Odd Situations Facing In My Practical Job
Experience And Safe The Goodwill Of My Bank.
অররক কথলয় বরল যফলললম। তরব Fresher যদর জরখ সবরথরক Important কথল এখর বলরবল। আপরর
Fresher, সরতখকলর অরথরই আপরর অররক গরর গণলরনত হরবর Bank তল কখররলই ভলরব রল। মলরনষ রহসলরব
আমলরদর মরধখ রকছন ভলল গর থলকল দরকলর যসইগলল থলকরলই হরব। এর বলইরর একজর ভলল Official বলরলরত
Bank আপরলরক Trained Up কররব। শধন আপরলর মরধখ ভলল রকছন করলর ইচল কতটল পবল VIVA Board
তল যদখরত চলই। রররজরক খনব যবরশ জলরহর রল করর Decision যরবলর দলরয়ত তলরদর উপর যছরড় রদর। তলই,
Finish করলর আরগ এই ধরররর রকছন কথল বলরত পলররর।

– Sir, I Am Fresher And I Have No Prior Job Experience. But I Have

Good Theoretical Knowledge. I Am Sincere And Passionately Curious
To Learn New Things. If You Give Me The Opportunity To Work In
Your Esteem Bank, In Sha Allah I Will Prove Myself In Positive Way.
যশষ কথল, হবনহ এই Points গলল রল বরল, আপরলর Characteristics, Nature Of Banks, এবস
Situation অরনযলয়য় Answer যদওয়লর যচষল কররবর।

রকছনরদর ধরর একটল Question রররয় অরররকর সলরথ Discussion কররত হরয়রছ। VIVA Board রবরভন
Common Subjective Question করর থলরক। এর মরধখ অরখতম Question হরলল, Why Do You
Choose Banking As Your Career?

যখর যকউ আমলরক রজজলস করর, ‘ভলয়ল, এই Question ( Why Do You Choose Banking As Your
Career?) এর জরখ Suitable Answer রক হরব?, তখর তলরক রজজলস করর, আসরলই যকর আপরর
Banking Sector এ আসরত চলর?
তলরদর সহজ সরল উতরক
– Banking Sector Is One Of The Most Growing Sectors
– High Remuneration
– Smart Working Environment
– Academic Background
– Well Training Program
– Effective Networking
– To Be Banker Is My Dream
– Social Recognition etc.
৯৫% যকরতই সবলই এই ধরররর Point গলল উরলখ করর।
তলরদর Answer জলরলর পর আরম আমলর Viewpoint যথরক রকছন কথল বরল। Subjective Question!! তলই
পরতখরকই তলরদর রররজর Idea যথরকই Answer যদবলর যচষল করর। আরমও যতমরর করর, যরদও আরম চলই তলরল
তলরদর মত কররই বলনক।

বখরকগত Benefits, Development, Dream etc. এর কথল আমরল অবশখই বলরবল। তরব আর একটন
Broad Sense এ আমরল রচনল কররত পলরর। উপররর Point গললর সলরথ রররচর Point গলল রবরবচরল কররত
পলরররক

– Banking Is Called The Blood Circulation Of Economy. Without Development

Of Banking Sector, Development Of Economy Can’t Be Possible. And I Will
Feel Proud If I Make Any Contribution To Our Banking Sector As Well As To
Our Economy.
– As A Developing Country, We Need More Stable Money Market, More
Investment In Proper Way. I Think Banking Sector Is One Of Best Platform To
Serve My Country As It Works To Ensure Proper Utilization Of Limited
Resources.
– Bank Is Not Only Linited To Deposit Collection And Credit Disbursement But
Also It Has Expanded Its Scope To Raise Social Awareness, Helps To Spread
Quality Education, Remittances Collection, Business Expansion, Policy
Making, International Business, Green Economy, Financial Inclusion,
Monetary Policy Implementation, Utility Bill Payment & Collection, Women
Empowerment, Agriculture Development etc. And This Indicates That There
Is Huge Scope For Learning.
– A Banker Has To Know The Nature, Structure, Cycle, Strength, Weakness,
Threats And Opportunity Of The Business With Which He/She Has A Dealings.
Through His/Her Practical Job Experience, He/She Know The Every Kind Of
Businesses Very Well. I Think This Opportunity To Analysis All kind Of
Business Is Only Available In Banking Sector.
– A Good Banker Somehow Is A Lawyer. A Banker Has To Know Laws,
Regulations, Policy Directly Or Indirectly Related To Banking Activities. Since,
Bank Has The Relation To Every Sector, So A Banker Has To Know The Laws,
Policy Of Particular Sector With Which He/She Has A Dealing. In Addition To,
Banking Sector Is Used For International Business, International Money
Supply, So There Is A Necessity To Know About The International Laws And
Practices.
এতরকছন বললর দরকলর যরই। এর মরধখ যথরক যয Point গলল আপরর Suitable মরর কররর তল গহর কররত
পলররর বল এর বলইররও আপরলর যকলর ভলবরল থলকরত পলরর। আপরর যয রবষয়গলল বলল উরচৎ বরল মরর কররর
তলই বলরবর। রররজর মত করর বলরবর।

Core Risks Of A Bank

Bangladesh Bank has identified 6 core risks for management of the
banks and has provided the necessary guidelines for their
implementation. The risks are:
1. Credit risk
2. Foreign exchange risk
3. Asset liability/balance sheet
4. Money laundering risk
5. Internal control and compliance risk
6. ICT risk
The prime objective of the risk management is that the bank takes well
calculated business risk to safeguard its capital, financial resources and
growth of sustainable profitability.

CREDIT RISK can be described as potential loss arising from the failure of a
counter party to perform with agreed terms with the bank.

FOREIGN EXCHANGE RISK is defined as the potential change in earnings

arising due to unfavourable change in exchange rates.

BALANCE SHEET RISK is defined as potential changes in earnings due to

changes in rate of interest and exchange rates which are not trading nature.

MONEY LAUNDERING RISK is defined as the loss of reputation and expenses

incurred as penalty for being negligent in prevention of money laundering.

INTERNAL CONTROL AND COMPLIANCE RISK arises from error and fraud in
operating activities due to lack of standard internal processes, people and
systems.

ICT RISK arises from unauthorized access to internal server, illegal tempering
and malicious actions in information systems.

Credit Risk Grading:

To justify the creditworthiness of borrower of a bank, mainly following risks
are considered:

1. Financial Risk-50% (leverage, liquidity, profitability, coverage)

2. Business/Industry risk-18% (size of business, age of business, business

outlook, industry growth, market competition, entry/exit barriers)

3. Management risk-12% (experience, second line/succession, team work)

4. Security risk-10% (primary security coverage, collateral coverage,
support/guarantee)

5. Relationship risk-10% (account conduct, utilization of limit, compliance of

covenants/conditions, personal deposits)

[According To: Credit Risk Grading Score Sheet]

Big Data can be divided into following three categories.

1. Structured Data
2. Unstructured Data
3. Semi-structured Data

Structured Data
The data that has a structure and is well organized either in the form of tables or in
some other way and can be easily operated is known as structured data. Searching
and accessing information from such type of data is very easy.
For example, data stored in the relational database in the form of tables having
multiple rows and columns. The spreadsheet is an another good example of
structured data.

Unstructured Data
The data that is unstructured or unorganized Operating such type of data becomes
difficult and requires advance tools and softwares to access information.
For Example, images and graphics, pdf files, word document, audio, video, emails,
powerpoint presentations, webpages and web contents, wikis, streaming data,
location coordinates etc.

Semi-Structured Data
Semi-structured data is basically a structured data that is unorganised. Web data
such JSON(JavaScript Object Notation) files, BibTex files, .csv files, tab-delimited text
files, XML and other markup languages are the examples of Semi-structured data
found on the web.
Due to unorganized information, the semi-structured is difficult to retrieve, analyze
and store as compared to structured data. It requires software framework like
Apache Hadoop to perform all this.

Strategic planning is an organization’s process of defining its strategy, or direction, and making
decisions on allocating its resources to pursue this strategy. Generally, strategic planning deals, on
the whole business, rather than just an isolated unit, with at least one of following three key
questions:

 “What do we do?”

 “For whom do we do it?”

 “How do we excel?”

For example, the first and third questions are those that motivate an acquisition. Acquisitions are
thus strategic choices. Typically strategic choices look at 3 to 5 years, although some extend their
vision to 20 years (long term). Because of the time horizon and the nature of the questions dealt,
mishaps potentially occurring during the execution of a strategic plan are afflicted by significant
uncertainties and may lie very remotely out of the control of management (war, geopolitical shocks,
etc.). Those mishaps, in conjunction to their potential consequences are called “strategic risks”.
Untapped opportunities can also be seen as strategic risks, but in this post we will not analyze those
upward-risks aspects.

Tactical planning is short range planning emphasizing the current operations of various parts of the
organization. Short Range is generally defined as a period of time extending about one year or less
in the future. Managers use tactical planning to outline what the various parts of the organization
must do for the organization to be successful at some point one year or less into the future. Tactical
plans are usually developed in the areas of production, marketing, personnel, finance and plant
facilities. Because of the time horizon and the nature of the questions dealt, mishaps potentially
occurring during the execution of a tactical plan should be covered by moderate uncertainties and
may lie closer to the control of management (next year shipping prices, energy consumption, but not
a catastrophic black-out, etc.) than strategic ones. Those mishaps, in conjunction to their potential
consequences are called “tactical risks”.

Operational planning is the process of linking strategic goals and objectives to tactical goals and
objectives. It describes milestones, conditions for success and explains how, or what portion of, a
strategic plan will be put into operation during a given operational period.
An operational plan addresses four questions:

 Where are we now?

 Where do we want to be?

 How do we get there?

 How do we measure our progress?

Operational risks are those arising from the people, systems and processes through which a
company operates and can include other classes of risk, such as fraud, legal risks, physical or
environmental risks. Operational risk are those resulting from inadequate or failed internal
processes, people and systems, or from external events (man-made or natural hazards). A tailings
dam failure, an open pit slide, a black-out (man-made or natural external hazard), and explosion in a
processing plant are all operational hazards generating operational risks.

Since upper Management generally have a better understanding of the organization as a whole than
lower level managers do, upper Management generally develops strategic plans. Because lower
level managers generally have better understanding of the day-to- day organizational operations,
generally they develop tactical and operational plans. Because strategic plans are generally longer
term and are surrounded by more uncertainties in terms of their occurrence and consequences (one
exception example: tailings management planned until closure, and after closure) strategic plans are
generally less detailed than tactical plans. Thus the following can be inferred for a list of “top
hazards” discussed in a report we reviewed recently:

Strategic, tactical, and operational planning example.

However, despite their differences, strategic, tactical and operational planning are integrally related.
Manager need both tactical and strategic planning program, and these program must be closely
related to be successful. Thus, it can be inferred that Entreprise Risk Management (ERM) should
deal very closely with these relations and the use of multiple Probability Impact Graph (PIG)
matrices with multiple arbitrary scales is definitely not a rational, transparent solution.