Management Information System UNIT-I
Management Information System UNIT-I
Management Information System UNIT-I
Any business, big or small, must have a system in place to collect, process, store and share data.
In the past, these tasks required a lot of time and paperwork. Today, companies use modern
technology to streamline and automate these operations. Information systems are now playing a
crucial role in data processing and decision making. When used correctly, they can positively
impact an organization's overall performance and revenue
What Is an Information System?
At the most basic level, an information system (IS) is a set of components that work together to
manage data processing and storage. Its role is to support the key aspects of running an
organization, such as communication, record-keeping, decision making, data analysis and more.
Companies use this information to improve their business operations, make strategic decisions
and gain a competitive edge.
Information systems typically include a combination of software, hardware and
telecommunication networks. For example, an organization may use customer relationship
management systems to gain a better understanding of its target audience, acquire new customers
and retain existing clients. This technology allows companies to gather and analyze sales activity
data, define the exact target group of a marketing campaign and measure customer satisfaction.
The Benefits of Information Systems
Modern technology can significantly boost your company's performance and productivity.
Information systems are no exception. Organizations worldwide rely on them to research and
develop new ways to generate revenue, engage customers and streamline time-consuming tasks.
With an information system, businesses can save time and money while making smarter
decisions. A company's internal departments, such as marketing and sales, can communicate
better and share information more easily.
Since this technology is automated and uses complex algorithms, it reduces human error.
Furthermore, employees can focus on the core aspects of a business rather than spending hours
collecting data, filling out paperwork and doing manual analysis.
Uses and Applications
There are different types of information systems and each has a different role. Business
intelligence (BI) systems, for instance, can turn data into valuable insights.
This kind of technology allows for faster, more accurate reporting, better business decisions and
more efficient resource allocation. Another major benefit is data visualization, which enables
analysts to interpret large amounts of information, predict future events and find patterns in
historical data.
Organizations can also use enterprise resource planning (ERP) software to collect, manage and
analyze data across different areas, from manufacturing to finance and accounting. This type of
information system consists of multiple applications that provide a 360-degree view of business
operations. NetSuite ERP, PeopleSoft, Odoo and Intacct are just a few examples of ERP
software.
Like other information systems, ERP provides actionable insights and helps you decide on the
next steps. It also makes it easier to achieve regulatory compliance, increase data security and
share information between departments. Additionally, it helps to ensure that all of your financial
records are accurate and up-to-date.
In the long run, ERP software can reduce operational costs, improve collaboration and boost
your revenue. Nearly half of the companies that implement this system report major benefits
within six months.
At the end of the day, information systems can give you a competitive advantage and provide the
data you need to make faster, smarter business decisions. Depending on your needs, you can opt
for transaction processing systems, knowledge management systems, decision support systems
and more. When choosing one, consider your budget, industry and business size. Look for an
information system that aligns with your goals and can streamline your day-to-day operations.
Since the terminology which is applied to these strategic planning outputs generally varies from
company to company and between business firms and public agencies, it is useful to define and
illustrate the elements of the organizational strategy set used in this article. No inference should
be drawn that these are proposed as the "correct" descriptions, or that the definitions used here
are universally appropriate; rather, the delineations are useful for fully developing the MIS
Strategic Planning process. The organization’s mission The broadest strategic planning which
must be done by an organization is that of its mission. An organization’s mission statement tells
what it is, why it exists, and the unique contribution it can make. The mission answers the
organization’s basic question, "What business are we in?" Some people consider such questions
idle academic nonsense; to them, their mission --the business that they are in m is clear: "We
make widgets," or "We run railroads." It became increasingly apparent during the 1960’s that
such thinking was too limited. Organizations which felt that they knew their business
disappeared in vast numbers from the scene. Today’s business, however bright its growth
prospects may appear, may not exist in its current form in only a few years.
The organization’s objectives Once the organization’s mission has been determined, its
objectives -- desired future positions or "destinations" that it wishes to reach m should be
selected. These destinations may be stated in either quantitative or qualitative terms, but they
should be broad and timeless statements, as opposed to specific, quantitative goals, or targets.
For instance, among the stated objectives of PPG Industries are: "1) . . . to increase earnings per
share to attain a continuing return of 14.5%or more on stockholder’s equity and to provide
consistently increasing dividends [the prime objective]. "2) . . . to employ the least number and
highest quality of people necessary to accomplish the prime objective and to provide them with
the opportunities to develop and apply their fullest abilities. "3)... to have the company accepted
as dynamic, responsible, professionally managed, profit oriented corporation engaged in exciting
and important fields of business, with the ability to meet successfully the economic and social
challenges of the future."
The organization’s strategy
The organization’s strategy is the general direction in which it chooses to move in order to
achieve its goals and objectives. For instance, one company has stated that it: "... has heavy
investment, a good reputation, great skills and experience, a viable organization, and, in some
instances, a .special situation in the.., industries." and that it will: "... exploit these strengths
and .... not diversify at the present time, into unrelated industries." A more detailed strategy for
another firm includes the following: "... increase U.S. market penetration through the
development of a regional manufacturing capability and the development of secondary
distribution channels." Another company’s strategy calls for a: "... low-price, low-cost product
achieved through product standardization..." together with: "... the development of new products
on a similar basis in a posture of defensive innovation against the technological progress of
competitors."
The MIS Strategy Set
The MIS strategy elements, which are the substance of strategic planning for the MIS, are system
objectives, system constraints, and system design strategies. System objectives System
objectives define the purpose which the MIS is to serve. For instance, system objectives may be
stated in terms that are similar to, but much more specific than, organizational objectives -- e.g.,
"to permit the payment of 98% of invoices by the due date" is a system objective stated in
activity terms. Also, system objectives may be stated in direct information and communication
terms -- e.g., "to collect, and process all routing and cost information and provide it in a timely
fashion to the dispatcher." The most sophisticated variety of system objectives are stated in
decision-oriented terms -- e.g., "to permit the determination of the best routing no more than one
hour after the tentative routing choice has been implemented."
Strategic planning
3.Classify and group the necessary work activities into manageable units.
A manager can group activities based on four models of departmentalization: functional,
geographical, product, and customer.
Types of Plan:
Planning is a pervasive function of management, it is extensive in its scope. So all managers
across all levels participate in planning. However, the plans made by the top level manager will
differ from the ones that lower managers make.Plans also differ from what they seek to achieve and
what methods will be used to achieve them. So let us look at the types of plans that managers deal
with.
Objectives
This is the first step in planning the action plan of the organization. Objectives are the basics of
every company and the desired objective/result that the company plans on achieving, so they are the
endpoint of every planning activity.
For example one of the objectives of an organization could be to increase sales by 20%. So the
manager will plan all activities of the organization with this end objective in mind. While framing
the objectives of the organization some points should be kept in mind.
Objectives should be framed for a single activity in mind.
They should be result oriented. The objective must not frame any actions
Objectives should not be vague, they should be quantitative and measurable.
They should not be unrealistic. Objectives must be achievable.
Strategy
This obviously is the next type of plan, the next step that follows objectives. A strategy is a
complete and all-inclusive plan for achieving said objectives. A strategy is a plan that has three
specific dimensions
i. Establishing long-term objectives
ii. Selecting a specific course of action
iii. allocating the necessary resources needed for the plan
Forming strategy is generally reserved for the top level of management. It actually defines all future
decisions and the company’s long-term scope and general direction.
Policy
Policies are generic statements, which are basically a guide to channelize energies towards a
particular strategy. It is an organization’s general way of understanding, interpreting and
implementing strategies. Like for example, most companies have a return policy or recruitment
policy or pricing policy etc.
Policies are made across all levels of management, from major policies at the top-most level to
minor policies. The managers need to form policies to help the employees navigate a situation with
predetermined decisions. They also help employees to make decisions in unexpected situations.
Procedure
Procedures are the next types of plan. They are a stepwise guide for the routine to carry out the
activities. These stepwise sequences are to be followed by all the employees so the activities can be
fulfilled in an organized manner.
The procedures are described in a chronological order. So when the employees follow the
instructions in the order and completely, the success of the activity is pretty much guaranteed.
Take for example the procedure of admission of a student in a college. The procedure starts with
filling out an application form. It will be followed by a collection of documents and sorting the
applications accordingly.
Rules
Rules are very specific statements that define an action or non-action. Also, rules allow for no
flexibility at all, they are final. All employees of the organization must compulsorily follow and
implement the rules. Not following rules can have severe consequences.
Rules create an environment of discipline in the organization. They guide the actions and the
behaviour of all the employees of the organization. The rule of “no smoking” is one such example.
Program
Programmes are an in-depth statement that outlines a company’s policies, rules, objectives,
procedures etc. These programmes are important in the implementation of all types of plan. They
create a link between the company’s objectives, procedures and rules.
Primary programmes are made at the top level of management. To support the primary program all
managers will make other programs at the middle and lower levels of management.
Methods
Methods prescribe the ways in which in which specific tasks of a procedure must be performed.
Also, methods are very specific and detailed instructions on how the employees must perform every
task of the planned procedure. So managers form methods to formalize routine jobs.
Methods are very important types of plan for an organization. They help in the following ways
give clear instructions to the employees, removes any confusion
Ensures uniformity in the actions of the employees
Standardizes the routine jobs
Acts as an overall guide for the employees and the managers
Budget
A budget is a statement of expected results the managers expect from the company. Budgets are
also a quantitative statement, so they are expressed in numerical terms. A budget quantifies the
forecast or future of the organization.
There are many types of budgets that managers make. There is the obvious financial budget, that
forecasts the profit of the company. Then there are operational budgets generally prepared by lower-
level managers. Cash budgets monitor the cash inflows and outflows of the company.
Developing an Information System Development Process:
Systems-Development Life Cycle
The first development methodology we are going to review is the systems-development life
cycle (SDLC). This methodology was first developed in the 1960s to manage the large software
projects associated with corporate systems running on mainframes. It is a very structured and
risk-averse methodology designed to manage large projects that included multiple programmers
and systems that would have a large impact on the organization.
SDLC waterfall
Various definitions of the SDLC methodology exist, but most contain the following phases.
1. Preliminary Analysis. In this phase, a review is done of the request. Is creating a solution
possible? What alternatives exist? What is currently being done about it? Is this project a
good fit for our organization? A key part of this step is a feasibility analysis, which
includes an analysis of the technical feasibility (is it possible to create this?), the
economic feasibility (can we afford to do this?), and the legal feasibility (are we allowed
to do this?). This step is important in determining if the project should even get started.
2. System Analysis. In this phase, one or more system analysts work with different
stakeholder groups to determine the specific requirements for the new system. No
programming is done in this step. Instead, procedures are documented, key players are
interviewed, and data requirements are developed in order to get an overall picture of
exactly what the system is supposed to do. The result of this phase is a system-
requirements document.
3. System Design. In this phase, a designer takes the system-requirements document created
in the previous phase and develops the specific technical details required for the system.
It is in this phase that the business requirements are translated into specific technical
requirements. The design for the user interface, database, data inputs and outputs, and
reporting are developed here. The result of this phase is a system-design document. This
document will have everything a programmer will need to actually create the system.
4. Programming. The code finally gets written in the programming phase. Using the system-
design document as a guide, a programmer (or team of programmers) develop the
program. The result of this phase is an initial working program that meets the
requirements laid out in the system-analysis phase and the design developed in the
system-design phase.
5. Testing. In the testing phase, the software program developed in the previous phase is put
through a series of structured tests. The first is a unit test, which tests individual parts of
the code for errors or bugs. Next is a system test, where the different components of the
system are tested to ensure that they work together properly. Finally, the user-acceptance
test allows those that will be using the software to test the system to ensure that it meets
their standards. Any bugs, errors, or problems found during testing are addressed and
then tested again.
6. Implementation. Once the new system is developed and tested, it has to be implemented
in the organization. This phase includes training the users, providing documentation, and
conversion from any previous system to the new system. Implementation can take many
forms, depending on the type of system, the number and type of users, and how urgent it
is that the system become operational. These different forms of implementation are
covered later in the chapter.
7. Maintenance. This final phase takes place once the implementation phase is complete. In
this phase, the system has a structured support process in place: reported bugs are fixed
and requests for new features are evaluated and implemented; system updates and
backups are performed on a regular basis.
The SDLC methodology is sometimes referred to as the waterfall methodology to represent how
each step is a separate part of the process; only when one step is completed can another step
begin. After each step, an organization must decide whether to move to the next step or not. This
methodology has been criticized for being quite rigid. For example, changes to the
requirementsare not allowed once the process has begun. No software is available until after the
programming phase.
Again, SDLC was developed for large, structured projects. Projects using SDLC can
sometimes take months or years to complete. Because of its inflexibility and the availability of
new programming techniques and tools, many other software-development methodologies have
been developed. Many of these retain some of the underlying concepts of SDLC but are not as
rigid.
Rapid Application Development
4. Cutover. In this step, which is similar to the implementation step of the SDLC, the system
goes live. All steps required to move from the previous state to the use of the new system
are completed here.
As you can see, the RAD methodology is much more compressed than SDLC. Many of the
SDLC steps are combined and the focus is on user participation and iteration. This methodology
is much better suited for smaller projects than SDLC and has the added advantage of giving users
the ability to provide feedback throughout the process. SDLC requires more documentation and
attention to detail and is well suited to large, resource-intensive projects. RAD makes more sense
for smaller projects that are less resource-intensive and need to be developed quickly.
Agile Methodologies
Agile methodologies are a group of methodologies that utilize incremental changes with a focus
on quality and attention to detail. Each increment is released in a specified period of time (called
a time box), creating a regular release schedule with very specific objectives. While considered a
separate methodology from RAD, they share some of the same principles: iterative development,
user interaction, ability to change. The agile methodologies are based on the “Agile Manifesto,”
first released in 2001.
The characteristics of agile methods include:
small cross-functional teams that include development-team members and users;
So what does it mean that you can only address two of the three? It means that you cannot
complete a low-cost, high-quality project in a small amount of time. However, if you are willing
or able to spend a lot of money, then a project can be completed quickly with high-quality results
(through hiring more good programmers). If a project’s completion date is not a priority, then it
can be completed at a lower cost with higher-quality results. Of course, these are just
generalizations, and different projects may not fit this model perfectly. But overall, this model
helps us understand the tradeoffs that we must make when we are developing new products and
services.
User involvement in the field of information system development is usually considered as vital
mechanism to enhance system quality and ensure successful system implementation. The
importance of user orientation in innovation activities is emphasized in business filed as well as
in political and societal discussions.
The Traditional Model: There are various models of user involvement and its impact on user
information satisfaction and system usage which have been explicitly tested in previous research.
The traditional model theorizes that user involvement leads to increases in both user information
satisfaction and system usage. Apparently, involvement will lead users to develop good
understanding of the system, and it will be better tailored to their specific needs. Therefore, they
will be more motivated to use the system and be more gratified with it than if they had not been
involved in its design. Several studies have explored the relation between user involvement and
system usage. It has been found that there are mixed results regarding the relationship between
user involvement and user information satisfaction. Several studies reported a significant positive
relationship.
It is assumed that the user involvement will enhance system usage and user information
satisfaction is consistent with the theories of participative decision making and planned
organizational change. Ives and Olson debated that user involvement can be regarded as a special
case of participative decision making; involvement may lead to improved system quality as well
as increased user acceptance, reflected in increased use of satisfaction with the system.
Involvement is seen as a necessary condition for decreasing resistance and increasing acceptance
of planned change.
It can be supposed that the empirical evidence is diverse regarding the relationships between user
involvement, system usage, and user information satisfaction. Nonetheless, the empirical support
which has been found for these relationships is reliable with theories of participative decision
making and organizational change.
Traditional model
Though the theoretical literature is clear with regard to the causal relationship
between user involvement, system usage, and user information satisfaction, it is
silent regarding the causal relationship between system usage and user
information satisfaction. Building on the traditional model of user involvement
and its outcomes, two competing models of the relationship between system usage
and user information satisfaction development. In both models, use of the system
is expected to be voluntary.
Model I conjectures that user involvement will lead to both system usage and user
information fulfilment but as system usage increases it leads to improved user
information satisfaction. This model is based on the conviction that system use
leads users to be more acquainted with the system and to ascertain new uses for it
which will, in turn, lead to enhanced user satisfaction with the system.
Model II suggests that user involvement will also lead to both system usage and
user information satisfaction but that the more satisfied the user is with the system
the more he or she will be inclined to use it. This model assumes that as use
demonstrates that a system meets a user's needs, satisfaction with the system
should increase, which should further lead to greater use of that system.
Contrariwise, if system use does not fulfil the user's needs, satisfaction will not
increase and further use will be evaded.
Alternatemodels:
.
Significance of User Involvement
User involvement is an important aspect in the system development. Many
methodologies concern with users in the development phases. It embodies the view of users, not
systems analysts, programmers, or the data services organization . It has several important
aspects in information system development.
In the system development, especially in the initial (feasibility) study and design phases, system
developers need to observe the existing problems and identify the requirements for the new
system. Because usually except system developers who have worked in the current system for a
long period, most developers are not familiar with the current system, they cannot have thorough
understanding of the system environment.
Subsequently if they want to understand the current system, best way is to communicate with
the end-users of the current system. Beyer and Holtzblatt (1995) claim that users are experts in
their work and a thorough understanding of the requirements is reached only by promoting
effective communication with them during the requirements definition process. It is obliging to
establish a channel between the users and system developers for exchanging the information.
However, because of limited fund and time requirements, it is incredible to involve all users in
the process. So, system developers have to select users carefully aiming to get most valuable
information.
Another importance of user involvement is that it can help the system developers to get fast and
easy methodologies .It means system developers can assess and verify data from the secondary
sources to recognise users' requirements, thus, system developers can apply more appropriate
methodology. Additionally, user involvement can lead to the simpler methods to design and
validate the system software functionality.
User involvement can offer the more reliable ways to organize features into menus and dialog
boxes based on user data . In the earlier system development methodologies, system developers
seldom to consider the users' working habits, when the new system is applied in the environment,
end-users always have problem to manipulate although system developers believe the system is
reliable and easy to use.
User involvement can reduce or even eliminate the clash between users and system developers in
the system function views. By cooperating with users, system developers find data and
information direct from the users; understand needs of the users and help users to have an initial
understanding of the new system. After further negotiation with the users, system developers and
users can get consensus on the new system.
However users can be considered as the experts of the current system environment, so
developers can know ordinary language used in the environment from users. If system
developers can use the same "language" to communicate with the users, system development
efficiency can be sped up.
Major issues of user involvement: There are many issues associated with user involvement:
Context of user involvement: Since last decades, it has been observed that many information
technology (IT) systems have unsuccessful to deliver the benefits expected by the users.
Insufficient involvement of users in the design process is cited as a major factor contributing to
this underperformance between expectation and reality. All approaches to system design involve
users in the design process. The difference between the various approaches lies in the degree to
which users are able to influence the system design. In these methodologies users make a
considerable contribution to the project but often do not influence key decisions. The danger
remains that the eventual IT development will fail to reflect passably real human and
organizational needs. Dissatisfaction and two decades of experience of IT failing to deliver the
expected rewards have led to increasing attempts to involve users in a more influence role.