LESSON 1: INFORMATION SYSTEMS knowledge works in an office environment by handling

documents and messages in a variety of forms – text,

During the 1960s, the phrase information system was voice, data and images. Electronic communication
coined to describe that part of any organization which is systems facilitate the exchange of information within the
responsible for the management of organization’s organization and its clientele in the outside world.
informational resources – all its collective knowledge –
and of the systems that make use of these resources. 2. Operational support systems assist in the day-to-day
Many organizations called it Management Information activities of the enterprise by keeping a track of its
System (MIS). resources and commitments such as inventory systems
and other financial systems.
1. It is the study of people, technology, organizations,
and the relationships 3. Management support systems provide summary
among them. information for executives using data automatically
extracted from a database, and assist the various levels
2. It is a people-oriented field with an emphasis on
of management in their tasks. Through such systems,
service through technology.
managers are able to obtain summary reports on past,
3. It is the use of information technology, people, and current and projected activity within their areas of
business processes to responsibility.
record, store and process data to produce information
that decision makers Types of Organizational Information Systems
can be used to make day to day decisions.
The following are the different types on
Organizations are formal social units devoted to the
information systems that support the needs of the
attainment of specific goals. The success of any
organization:
organization is premised on the efficient use and
management of resources which traditionally comprise
1. Executive Information System (EIS) provide top
human, financial, and material resources. Information is
management with ready access to a variety of
now recognized as a crucial resource of any
summarized company data against a background of
organization. Examples of organizations are business
general information on the industry and economy at
firms, banks, government agencies, hospitals, airlines
large.
and others.
2. Decision Support System (DSS) are expressly
Today, computerized processing of transaction data is a
designed for the support of individual and collective
routine activity of large organizations. MIS is now
decision making. The decision support systems allow
user-oriented, user-friendly and user driven with
managers to consider various courses of future action
emphasis on structured programming, ad hoc inquiries
and see projected results in order to plan for future
and real time information access. The growing power of
activities. Executives are able to get an overview of the
knowledge and information work (and workers) in
company’s operations in attractive graphical form and
advanced industrial societies have put new emphasis on
“drill in” on any aspect they want to pursue in more
enhancing the productivity of information workers.
Detail.

Organizations that use information systems for

3. Management and Reporting Systems (MRS),
coordination and decision making have a solid
capable of producing reports for specific time periods,
foundation for success. Increasingly, the successful
are designed for managers responsible for specific
manager is the one who knows how to take advantage
functions in a firm.
of this situation by deploying IT in the most effective
manner. Information is the central to most of the
4. Transaction Processing is the core of IT applications
activities that transpire in an organization. It provides
in business. Most mission-critical information systems for
support to all levels of operations in the organization.
both large and small organizations are essentially
transaction processing systems for operational data
Information System
processing that is needed, for example, to register
1. Support of knowledge workers, through the use of
customer orders and to produce invoices and payroll
office productivity software such as MS Office’s Word,
checks.
Excel and PowerPoint, which support and coordinate
5. Office information systems, which support and 6. Supporting Organizational Memory and Learning
coordinate knowledge work in an office environment by Organizational memory is the means by which
handling documents and messages in a variety of forms knowledge from the past exerts influence on the present
– text, data, image and voice. organizational activities. This memory preserves the
experience the firm has accumulated in delivering its
Information systems offer a set of capabilities that can products and services to the market place.
be exploited to achieve business results. Drawing on
these capabilities by implementing systems that suit 7. Formalizing Organizational Practice
specific business needs enables the firm to respond to Operational systems handle transactions in
the demands of its environment. Following are the every way in an organization. E-mail systems and
principal capabilities of information systems: computer conferencing provide a protocol for the
interaction of people within an organization. IS enhance
1. Fast and accurate data processing, with goodwill of employees.
large-capacity storage and rapid communication
between sites. 8. Differentiation of Products and Services
This is the fundamental property of computer The capabilities to differentiate, customize and
systems interconnected with telecommunications links. individualize the product or service with the use of
This capability is exploited by operational support information in a cost effective fashion may produce a
systems, which process massive volumes of business competitive advantage in the marketplace, thus
transactions. It is also used to derive management enhancing competitive position (increased market share
reports from the voluminous data kept in computer or profits)
storage. This provides organization the ability to respond
faster to the demands of the marketplace. 9. Modeling
A model is a simplified representation of a real
2. Instantaneous Access to Information object or phenomenon. Working with a model helps
In an on-line system, the contents of a computer people concentrate on the relevant aspects of the real
database are available for queries instantaneously. A thing and performed controlled experiments. Modeling
query may be directed to a remote site where the data improves quality of products or services leading to
are actually stored without the user’s awareness. higher customer satisfaction.

3. Means of Coordination 10. Automation

Coordination is rooted in sharing information and Computerized information systems can fully
communicating. Coordination brings part of an automate a certain business functions by replacing
organization or several collaborating organizations human labor. It reduces the need for routine human
together in a common effort. IS enhance the ability to labor while changing the nature of the labor required
communicate and collaborate within the firm and with hence increasing productivity which means lower cost
customers and suppliers. per unit output.
Because of these capabilities of information
4. Boundary Spanning systems, the MIS departments of many organizations
Information systems increasingly sere to link an are facing increased pressure to deliver real time
organization to an outside world. The electronic data financial and operational data to top management who
interchange (EDI) systems and communications through want to be able to react more quickly to changing
the World Wide Web replace the exchange of paper business conditions.
transaction records by computer-tocomputer electronic However, many IT departments are struggling to
messaging, resulting in economy, speed and reliability of meet demands due to constraints in legacy system
Information. developed under obsolete technologies and half-baked
enterprise application integration efforts that haven’t
5. Support for Decision Making been aligned with corporate business processes. The
By informing managers and permitting them to challenges facing IT managers who are trying to install
select from among alternative courses of action, realtime data access capabilities extend beyond
information systems support both the structured and technology to issues such as the quality and timeliness
unstructured decision making process. of information.
Despite the capabilities of information systems, MIS The key considerations for investing in information
departments often have trouble communicating to senior systems management solutions are:
management the value IT investments can deliver to
their organization. Below are some of the reasons: 1. Acquisition and Development Cost – favor products
with reasonable acquisition cost, simple, predictable
1. IT plans are difficult to articulate – One of the pricing scheme and reasonable maintenance fees.
biggest mistakes IT made during 1990s was there was Beware of products that have low entry-level prices
not enough focus on architecture and building a plan that followed by high a-la-carte pricing for items such as
integrate well at reasonably low cost. Many companies consoles and additional management features.
have rolled out enterprise resource planning systems
that are applied to legacy applications populated with 2. Time to Value – Products that can easily be
outdated information. implemented in a short period of time (days or weeks)
should be considered over those that require extensive
2. Inability to justify IT spending – Many IT executives customization by outside consultants. A rapid time to
do a poor job of communicating and marketing to senior value translates into a rapid return on investment.
management the value of information technology Products that installs rapidly, automatically discovering
investment to organization. What IT department typically management services in a matter of minutes results in
does is bundle up projects around technology and asks realization of ROI in a short time, particularly compared
the chief financial officer for money without articulating with competitive products.
benefit. The CIO must be able to justify the expenditure
in business terms that everyone can understand. 3. Total Cost of Ownership (TCO) – Solutions with low
acquisition costs, reasonable maintenance fees, and low
3. IT and business goals not compatible – According implementation costs result in a lower total TCO.
to a Gartner Research survey of 1500 chief information Requires no dedicated server hardware, and its
officers (CIOs), the two most critical management issues architecture has a low impact on the network. Return on
are integrating a business and IT strategies, and Investment (ROI) – is calculated as the costs subtracted
providing leadership to senior executives. It doesn’t from the reward derived from a particular investment. A
matter how good your system is. If you are not putting in proper choice of information systems management
good information, it will appear like a failure. solution will reward IT with positive ROI and all of the
criteria discussed above are key factors to consider.
4. Faltering Business = Faltering CIO – Industry
analysts believe that how a business fares in its industry LESSON 2: DECISION SUPPORT SYSTEMS
is an indicator of how well the CIO is performing, Managers spend much time gathering and analyzing
especially if the business is IT-dependent. The role of data to be able to arrive at an educated decision. All
CIO is so laden with critical responsibilities that demand information systems discussed in Lesson 1 support
for them exceed supply. Few have technical expertise, decision making, even directly.
management ability and financial knowledge to run the
IT bloodstream of a major enterprise. Information has a great impact on decision making, and
hence its value is closely tied to the decisions that result
5. Poor knowledge of business process – IT often from its use. Information does not have an absolute
fails to link business value to pieces of infrastructure. universal value. Its value is related to those who use it,
when it is used and in what situation it is used. In this
6. Surprises from the CIO – Analysts also say sense, information is similar to other commodities.
problems arise when a CIO has a habit of springing
last-minute surprises on management. The best CIOs Information supports decisions, decisions trigger actions
meet the majority of their target dates and budgets. They and actions affect the achievement or performance of an
alert their management colleagues to changes and have organization. If we can measure he difference in
a revised plan at the ready. CIOs reluctant to tell difficult performance, we can trace the impact of information,
truths are a major hindrance. provided that the measurements are carefully performed,
the relationships among variables are well defined and
possible effects of irrelevant factors are isolated.
Simon (1997) describes the process of decision 2. The end result is greater effectiveness and
making in four steps: productivity – both for the presenter and audience
1. The intelligence stage encompasses collection, members.
classification, processing and presentation of data
relating to the organization and its environment. This is 1. Interactive conferences, seminars and exhibitions
necessary to identify situations calling for decision. 2. Delegate and shareholder voting sessions
3. Classroom training and interactive distance learning.
2. During the decision stage, the decision maker outlines 4. Group decision support and strategic planning
alternative solutions, each of which involves a set of 5. Focus group research
actions to be taken. The data gathered during the 6. Employee and customer survey
intelligence stage are now used by statistical and other 7. Advertising testing
models to forecast possible outcome for each 8. Assessment and auditing
alternative. Each alternative can also be examined for 9. Market research tool
technological, behavioral and economic feasibility. 10. Learning System

3. In the choice stage, the decision maker must select Management Reporting Systems
one of the alternatives that will best contribute to the Management reporting system (MRS) are the
goals of the organization. most elaborate of the management oriented MIS
components. Indeed, some writers call MRS
4. Past choices can be subjected to review during “management information systems”, the name we
implementation and monitoring to enable the manager to reserve for the entire area of informational support of
learn from mistakes. Information plays an important role operations and management.
in all four stages of decision process. The main objective of MRS is to provide lower
and middle management with printed reports and inquiry
Two Major Categories of DSS capabilities to help maintain operational and
a. Enterprise-wide DSS are linked to large data management control of enterprise.\
warehouse and serve many managers in a company. It
can range from fairly simple system to complex data MRS provide the following report forms:
intensive and analytically sophisticated executive
information system. 1. Scheduled (Periodic) Reports- These reports are
furnished in a daily, weekly, bi-weekly, or other basis
b. Desktop DSS such as spreadsheets, accounting and depending on the decision making need. A weekly sales
financial models can be implemented in Microsoft Excel. analysis report may be used by the sales manager to
Another DSS tool, simulation, is usually implemented in assess the performances of sales districts or individual
desktop packages sales people. A brand manager responsible for a
particular product might obtain weekly sales report
Electronic Decision Support System Tools containing information useful in his or her decision
A Decision Support System covers a wide making – showing regional sales and sales to various
variety of systems, tools and technologies that support market segments, for example.
decision making. Electronic Decision Support Tools
make meetings and training session more measurable 2. Exceptional Reports- An exception report is a
through interactions to make them more valuable. document that states those instances in which actual
performance deviated significantly from expectations,
No two meetings, focus groups or training rooms usually in a negative direction. The intent of the report is
are alike. Even the needs of presenter differ, plus to focus management attention on just those areas
everybody has a different budget. Meaningful interaction requiring immediate action.
between a presenter and the audience improves
attentiveness and interest, improves comprehension and 3. Demand (Ad Hoc) Reports- Ad hoc reporting is the
increases retention and recall. creation of dynamic, real-time reports by users on an
as-needed basis. Since empowering end users with ad
1. Direct involvement and instant feedback promotes hoc reporting functionality enables them to answer
more effective communication. business questions at the moment they occur, users
move from static reporting to dynamic queries, asking
and answering questions about their data.