IT For Managers - Block4

Functional and Enterprise Systems 165
Notes
Unit 4: Functional and Enterprise Systems
Structure:
4.1 Introduction to Management Information Systems
4.2 Levels of Management Information Systems
4.3 Structure of Management Information Systems
4.4 Information Systems
4.5 ERP: The business backbone
4.6 Benefits of ERP
4.7 Failures of ERP
4.8 e-CRM
4.9 e-SCM
4.10 Summary
4.11 Check Your Progress
4.12 Questions and Exercises
4.13 Key Terms
4.14 Check Your Progress: Answers
4.15 Case Study
4.16 Further Readings
4.17 Bibliography
Objectives
After studying this unit, you should be able to understand:

z Objectives of Management Information Systems
z Scope of MIS
z Levels of Management Information Systems
z Functions of Management Information Systems
z Features of Information Systems
z Functions of Information Systems
z Benefits of ERP
z Failures of ERP
z Various Modules of ERP
z E-CRM
z Objectives E-SCM
z Importance of E-SCM
z Benefits of E-SCM
Amity Directorate of Distance and Online Education

166 IT for Managers
Notes 4.1 Introduction to Management Information Systems

Management information systems do not have to be computerized, but with today’s
large, multinational corporations, computerization is a must for a business to be
successful. However, management information systems began with simple manual
systems such as customer databases on index cards. As early as 1642, the French
mathematician and philosopher Blaise Pascal invented the first mechanical adding
machine so that figures could be added to provide information. Almost two hundred years
later, Charles Babbage, a professor of mathematics at Cambridge University in England,
wanted to make a machine that would compute mathematical tables. He attempted to
build a computing machine during the 1880s. He failed because his ideas were beyond
his technical capabilities, not because the idea was flawed. Babbage, who is often called
the ‘Father of the Computer’, with the advent of the computer, management information
systems became automated.
In the late 1890s, because of the efforts of Herman Hollerith, who created a punch-
card system to tabulate the data for the 1890 census, it was possible to begin to provide
data processing equipment. The punch card developed by Hollerith was later used to form
a company to provide data processing equipment. This company evolved into International
Business Machines (IBM). Mainframe computers were used for management information
systems from the 1940s, 50s, 60s, and up until the 1970s. In the 1970s, personal
computers were first built by hobbyists. Then Apple computer developed one of the first
practical personal computers. In the early 1980s, IBM developed its PC, and since then,
the personal computer industry has mushroomed. Almost every management information
system revolves around some kind of computer hardware and software.
Management information systems are be coming more important, and MIS personnel
are more visible than in the 1960s and 1970s, when they were hidden away from the rest
of the company and performed tasks behind closed doors. So remote were some MIS
personnel from the operations of the business that they did not even know what products
their companies made. This has changed because the need for an effective management
information system is of primary concern to the business organization. Managers use MIS
operations for all phases of management, including planning, organizing, directing and
controlling.
Management information system deals with information, which is critical for the
success of any business organization. It is imperative for any organization to provide right
information in right quantity, to right person at right time. As an organization expands,
problems associated with right flow of information at different levels in an organization also
increases. The objective of proper data collection and recording, retrieval and its effective
dissemination is achieved by employing management information system.
Management information system is an old management tool, which is being used
by business managers as a means for better management and scientific decision-making.
However, it has attained a new dimension after advent of computers. The computer has
helped in accurate processing of increased volumes of data at high speed, thereby,
permitting the consideration of more alternatives in decision-making process. Management
information systems are those systems that allow managers to make decisions for the
successful operation of businesses.
Management information systems consist of computer resources, people and
procedures used in the modern business enterprise. Management information system also
refers to the organization that develops and maintains most or all of the computer systems
in the enterprise so that managers can make decisions. The goal of the Management
information system for the organization is to deliver information systems to the various
levels of corporate managers. Management information system professionals create and Notes
support the computer system throughout the company. Trained and educated to work with
corporate computer systems, these professionals are responsible in some way for nearly
all of the computers, from the largest mainframe to the desktop and portable PCs. A
management information system as a management support system tool for today’s
manger is defined as a Computer–Based Information System (CBIS), used to produce
scheduled and ad hoc reports to support the ongoing, recurring decision making activities
associated with managing an entire business or a functional area within a business.
To better understand the meaning of management information system, we must
understand first clear our basic concepts on data and information, value of information,
classification of information and understand the meaning of a system, Information system.
Management information systems are systems that take information captured by
TPS and produce reports that management needs for planning and controlling the
business. MIS are possible because the information has been captured by the TPS and
placed in organizational databases.
Definitions of MIS
A proper Management Information System is “structured to provide the information

needed when needed and where needed”, further, the system “represents the internal
communication network of the business providing the necessary intelligence to plan,
execute and control”. – Frederick B. Cornish
Canith defines MIS as an approach that visualize the business organization as a
single entity composed of various interrelated sub-systems working together to provide
timely and accurate information for management decision making, which leads to the
optimization of overall enterprise goals.
“Management Information System is a system of people, equipment, procedures,
documents and communications that collects, validates, operates on and transfers, stores,
retrieves and presents data for use in planning, budgeting, accounting, controlling and other
management processes”. – Schwartz
Computers have become a very vital component of today’s management information
system, so many authors consider computer inseparable from computers.
“MIS as a computer based network containing one or more operating systems,
provides relevant data to management for decision making purposes and also contains
necessary mechanism for implementing changes of responses made by management in
the decision making”. – Thomas R. Prince
G.B. Davis defines, Management Information System as an “integrated man–
machine system for providing information to support the operations, management and
decision making functions in an organization”. The system utilizes computer hardware and
software, manual procedures, management and decision models and a database.
4.2 Levels of Management Information System

Management Information System addresses the use of Information Technology (IT)
to improve individual and organizational performance at two levels –
Level 1: “Better” Tangible Outputs
Information Technology (IT) is used to make the process in producing a tangible
output more efficient and more effective.
168 IT for Managers
Notes Level 2: Intangible Outputs

Management Information System (MIS) involves identifying the key decisions that
are related to reaching objectives, on determining the proper information needed to make
these decisions, and on improving the decision processes employed to make the
decisions. Thus, MIS supports in improving intangible outputs by developing tools and
processes that allow better management decision making.
Goals/Objectives
Decisions
Information Decision Precesses
Data
Fig: The MIS Concept at Level 2: Intangible Outputs

The role of MIS is to recognize information as a resource and then using that resource
for effective and better achievement of organizational objectives.
Scope of MIS
The scopes of MIS are as follows:
(i) To provide a variety of reports and displays to management.
(ii) To provide managerial end user with information products that support much
of their day-to-day decision-making needs.
(iii) To provide information on the contents of the information products specified in
advance by managers.
(iv) To obtain data about the business environment from external sources so as
to process them to server the managers in a better way.
Objectives of MIS
The objectives of MIS are as follows:
(i) To provide requisite information support for managerial functions within the
organisation.
(ii) To make available, right information at the right place at the right time at the
lowest cost.
(iii) To ensure that wrong and unwanted information is not generated; the condition
of data overload is avoided.
Function of MIS
MIS provided for the identification of relevant information needs, the collection of
relevant information, processing of the same to become usable by the business managers,

and timely dissemination of processed information to the users of the information for Notes
properly managing the affairs of an enterprise by informed decisions.
Determination of
information needs
Information use Evaluation, Indexing,

abstraction
Dissemination Storage
Information use
For example, in a competitive market for products manufactured by an enterprise,

its management needs information on the pricing policy of the competitors, especially of
competing products, sales techniques etc., to effectively combat the effect of the
competition. Function of MIS can be shown with the help of above diagram.
The functions of MIS are as follows:
(i) MIS facilitates free flow of information throughout the multilayered organisations.
(ii) MIS may be given a functional subsystems, as production or marketing is, with
the chief information officer becoming part of top management.
(iii) MIS is oriented towards achieving management goals and objectives.
(iv) MIS has a crucial role in keeping the organisation integrated by providing
facilities for information exchanges.
(v) MIS supports many models in its model base so that managers can draw upon
this model base to manipulate data retrieved from the database for analysing
decision situations and generating optimum solutions.
(vi) For effective management of the organisation, several layers of management
have to be created and supported with information and data analysis facilities
which is taken care by management information system.
Characteristics of MIS
Important characteristics of an effective MIS are briefly discussed below:

(a) Management oriented: It means that effort for the development of the
information system should start from an appraisal of management needs and
overall business objectives. Such a system is not necessarily for top
management only, it may also meet the information requirements of middle level
or operating levels of management as well.
(b) Management directed: Because of management orientation of MIS, it is
necessary that management should actively direct the system’s development
efforts. Mere one time involvement is not enough. For system’s effectiveness,
it is necessary for management to devote their sufficient time not only at the
stage of designing the system but for its review as well, to ensure that the

170 IT for Managers
Notes implemented system meets the specifications of the designed system. In brief,
management should be responsible for setting system specifications. It must
play a key role in the subsequent trade off decisions that occur in system
development.
(c) Integrated: Development of information should be an integrated one. It means
that all the functional and operational information sub-system should be tied
together into the entity. An integrated information system has the capability of
generating more meaningful information to management. The word integration
here means taking a comprehensive view or a complete look at the inter locking
sub-systems that operate it in a company.
(d) Common data flows: It means the use of common input, processing and output
procedures and media, whenever possible, is desirable. Data is captured by
system analysts only once and as close to its original source as possible. Then,
they try to utilize a minimum of data processing procedures and sub-systems
to process the data and strive to minimize the number of output documents
and reports produced by the system. This eliminates duplication in data
collection, documents and procedures. It simplifies operations and produces an
efficient information system. However, some duplication is necessary in order
to insure effective information system.
(e) Heavy planning element: An MIS usually takes 3 to 5 years and sometimes
even more period to get established firmly within a company. Therefore, a heavy
planning element must be present in MIS development. It means that MIS
designer shouldkeep in view future objectives and requirements of firm’s
information in mind. The designer must avoid the possibility of system
obsolescence before the system gets into operation mode.
(f) Sub–system concept: Even though the information system is viewed as a
single entity, it must be broken into sub-systems which can be implemented
one at a time by developing a phasing plan.
(g) Common database: Database is the mortar that holds the functional systems
together. It is defined as a “superfile” which consolidates and integrates data
records formerly stored in many separate data files. The organization of a
database allows it to be accessed by several information sub-systems and thus,
eliminates the necessity of duplication in data storage, updating, deletion and
protection. Although it is possible to achieve the basic objectives of MIS without
a common database, thus paying the price of duplicate storage and duplicate
file updating, database is a definitecharacteristic of MIS.
(h) Computerized: It is possible to have MIS without using a computer. But use
of computers increases the effectiveness of the system. In fact, its use equips
the system to handle a wide variety of applications by providing their information
requirements quickly. Other necessary attributes of the computer to MIS are
accuracy and consistency in processing data and reduction in clerical staff.
These attributes make in computer a prime requirement in management
information system.
Model of MIS
The basic model of MIS contains database, report writing software and mathematical
models. The database contains the data provided by the subsystems. Both data and
information are entered from the environment. Many a times, MIS gets its data from the
transaction processing system (TPS). So, most Management Information System have
interface with TPS.
ENVIRONMENT DATA Notes

INFORMATION
Organisational Problem
Solves
Report Writing Software Mathematical Models
Database
ENVIRONMENT
Fig: Model of Management Information System
The database contents are used by software that produces periodic and special
reports. The mathematical models simulate various aspects of the firm’s operations. The
software outputs are used by persons who are responsible for solving the firm’s problems.
Types of reports generated by MIS
MIS helps in generating a variety of reports that are useful to managers through the
management reporting system. MIS supports management by providing various types of
reports, which are prepared based on the inputs received from the transaction processing
systems, data obtained from customers , suppliers, external data etc.
The various types of reports generated by MIS are explained below:
1. Periodic scheduled reports are in a pre-specified format and are used for
providing information to managers on a regular basis. For example a daily sales
report, monthly report on students attendance are periodic reports.
2. Exceptional reports are not generated on regular basis but only in exceptional
situations. For example report on students who stop coming classes, report
on customers whose loan installments have been delayed by more than the
cut-off date.
3. Demand reports and responses are also called as ad-hoc reports. These are
generated as and when required by the manager. For example Collage principal
asking for a report on students who have failed in a particular subject.
4. Push reports are the reports which are pushed on to the manger to keep him
informed about a certain situation. For example a faculty pushes the report about
the students who are not performing well to the HOD to keep him updated about
their performance.

172 IT for Managers
Notes Myths about MIS
The study of MIS is about the use of computers

This statement is not true. MIS may or may not be computer based computer is
just a tool to make MIS more effective and efficient. Installing a MIS depends largely on
several factors such as, how critical is the response time required for getting an information,
how big is the organization, and how complex are the needs of the information processing
etc.
More data in reports means more information for managers
This is a misapprehension. It is not the quantity of data, but its relevance, which
is important to managers in the process of decision-making. Data provided in reports
should meet information requirements of the managers. It is the form of data and its manner
of presentation that is important to business managers. Unorganized mass of data creates
confusion.
Accuracy in reporting is of vital importance
The popular belief is that accuracy in reporting should be of high order. At the
operating level, it is true. Other examples, where accuracy is really important can be the
dispensing of medicine, the control of aircraft, the design of a bridge etc. Accuracy,
however, is a relevant but not an absolute ideal. Higher levels of accuracy involve higher
cost. At higher decision levels, great accuracy may not be required. The degree of
accuracy is closely related to the decision problem. Higher management is concerned
with broad decisions on principles and objectives. A fairly correct presentation of relevant
data often is adequate for top management decisions. For a decision on new project
proposal, top management is not interested in knowing the project cost in precise rupee
terms. A project cost estimated at a fairly correct figure is all what it wants.
Constraints in Operating a MIS
MIS systems are complex and expensive pieces of software, and many people are
involved with the design both within the organisation and from outside. MIS failures can
be expensive and bring bad publicity to all parties. They can arise due to:
(i) Inadequate analysis: problems, needs and constraints aren’t understood in
the early stages.
(ii) Lack of management involved in the design: wrong expectations of a new
system/ no-one understands the system.
(iii) Emphasis on the computer system: Need procedures for handling input and
output/select the right hardware and software.
(iv) Concentration on low-level data processing: Information must be easily
accessible and understood.
(v) Lack of management knowledge of ICT systems and capabilities:
managers know what they want from the system but don’t understand the
technology.
(vi) Lack of teamwork: An ICT manager must co-ordinate the accounts, marketing,
sales etc., departments and help everyone understand the benefits of the
system.
(vii) Lack of professional standards: All systems need clear documentation that
all users can understand.

Limitations of MIS Notes

Although MIS is very beneficial to any organization, but it has its own limitations,
some of them are as follows:
1. The quality of the outputs of MIS is basically governed by the quality of input
and processes.
2. MIS is not a substitute for effective management. It means that it cannot replace
managerial judgment in making decisions in different functional areas. It is
merely an important tool in the hands of executives for decision making and
problem solving.
3. MIS may not have requisite flexibility to quickly update itself with the changing
needs of time, especially in fast changing and complex environment.
4. MIS cannot provide tailor-made information packages suitable for the purpose
of every type of decision made by the executives.
5. MIS takes into account mainly quantitative factors and ignores the non-
quantitative factors like morale and attitude of the organization, which have an
important bearing on the decision making process of executives.
6. MIS does not support unstructured decision making, which are non-routine in
nature.
4.3 Structure of MIS

Describing the structure of management information system is a bit challenging since
there is no standard or universally accepted framework of management information system
structure. However, the structure of management information system can be described
by various different approaches, few of them are explained below:
(a) Physical Structure of Management Information System
A management information system (MIS) is an organized combination of people,

hardware, communication networks and data sources that collects, transforms and
distributes information in an organization. An management information system helps
decision making by providing timely, relevant and accurate information to managers. The
physical components of an MIS include hardware, software, database, personnel and
procedures.
(i) Hardware
All physical components of a computer system compose the computer hardware.
Important components include the central processing unit, input/output devices, storage
units and communication devices. Communication can be over fiber-optic cables or
wireless networks.
(ii) Software
Software provides the interface between users and the information system. Software
can be divided into two generic types: system software and applications. The system
software comprises of the operating system, utility programs and special purpose
programs. Applications are developed to accomplish a specific task. For users of
management information system it is much more important to understand the software
than the hardware. Software maintenance can take 50% to 70% of all personnel activity
in the MIS function. When the organization moves to implement an advanced information
system the hardware and software environment becomes more complex.

174 IT for Managers
Notes (iii) Database

A database is a centrally controlled collection of organized data. Central control
reduces redundancy and duplication of data. Data is stored in an organized and structured
way to facilitate sharing and improve availability to those who need it. The database
improves efficiency of storage by elimination of redundant files and improves efficiency
of processing by providing all required data in a single file rather than separate files.
(iv) Procedures
Three types of procedures are required for an management information system to
operate effectively: user instructions, instructions for input preparation and operating
instructions for MIS personnel who maintain the management information system.
(v) Personnel
The personnel in the MIS function include computer operators, programmers,
systems analysts and managers. Human resource requirements should be assessed by
considering both the present system needs and the future system growth. The quality
of management information system personnel is a key factor in its effectiveness. An MIS
manager needs a combination of both managerial and technical skills.
(b) MIS Structure based on Management Activity
Management Information System supports management activities, which means the

structure of an information system can be classified in terms of hierarchy of management
planning and control activities.
Hierarchy of Management activities:
(i) Strategic Planning – Definition of goals, policies, objectives and general
guidelines for an organization.
(ii) Management control and tactical planning – Acquisition of resources,
tactics, plant location, new products. Establishment and monitoring of budgets.
(iii) Operational planning and control – Effective and efficient use of existing
facilities and resources to carry out activities within budget constraints.
The following sections summarize the characteristics of information system
support for the three levels of hierarchy of Management planning and control.
1. Operational Control: This is a process of ensuring that the operational
activities are carried out effectively and efficiently. A large percentage of
decisions are programmable and the procedure used is quite stable. It makes
use of pre-established procedures and decision rules. Individual transactions are
often important; hence the system must be able to respond to both individual
transactions and summaries of transactions. The data required for this process
is generally current and the sequence of processing is often significant.
Processing support for operational control consists:
(i) Transaction processing – Inventory withdrawal transaction can examine balance
on hand, calculate order quantity, produce action document.
(ii) Enquiry processing – An enquiry for personal files describing the requirement
for a position.
(iii) Report processing – A report showing orders still outstanding after 30 days.
2. Management Control: This system is required by managers of departments,
profit centers to measure performance, decision on control actions, formulate
new decision rules and allocate resources. Summary information is needed and

it must be processed so that trends may be observed, reasons for performance Notes
variations and solutions may be suggested.
The control process requires the following types of information:
(i) Planned performance – To assist managers in finding problems and reviewing
plans and budgets. It projects the effect of current action.
(ii) Variance from planned performance – This report shows performance and
variations from planned performance.
(iii) Problem analysis models to analyze data to provide input for decision making.
(iv) Decision models to analyze a problem situation and provide possible solutions.
(v) Inquiry model to provide assistance to enquiries.
3. Strategic Planning: The purpose of strategic planning is to develop strategies
by which an organization will be able to achieve its objectives. These activities
do not occur on a periodic basis. Data required for strategic planning are
generally for processed summarized data from a variety of sources. Information
system support can provide substantial aid to the process of strategic planning.
– Evaluation of current capabilities based on internal data.
– Internal projection of future capabilities by analyzing past data.
– Fundamental market data on the industry and the competitors.
– Databank of public information regarding industry and competitors.
(c) MIS structure based on Organizational Functions
The structure of information system can also be described in terms of organizational

functions which use information. There are no standard classifications of functions but
a typical set of functions in an organization includes Production, Sales and Marketing,
Finance and Accounting, Logistics and Personal information system. Top management
can also be considered as a separate function. Each of these functions has unique
information needs and each requires information system support designed for it.
Strategic
planning
Management
Control
Operational
Control
Transaction
Processing
Management
Information
Accounting
Production
Finance &
Marketing
Processing
Personnel
Logistics
Sales &
Top

176 IT for Managers
Notes 1. Sales and Marketing: The transactions involved in this subsystem are sales
order, promotion order, etc. Operational activities include hiring and training of
sales force, day to day scheduling of sales and promotion effort, periodic
analysis of sales volume by region, product, customer, etc. Managerial control
concerns comparison of overall performance against planned. Strategic planning
involves new markets and marketing strategies.
2. Production: It includes planning, scheduling and operation of production facility,
employment and training of production personnel, quality control and inspection.
Transactions include production order, assembly order, finished parts tickets,
scrap tickets. Operational control requires reports comparing actual performance
to the production schedule. Management control requires summary report
comparing oval planned performance to standard performance. Strategic
planning includes alternative manufacturing approach and approach to
automation.
3. Logistics: Transaction process includes purchase, manufacturing and receiving
report. Tickets for inventory, shipping and orders. Operational control includes
past-due purchases, shipment, out of stock items. Strategic planning involves
analysis of new distribution strategy, policies etc.
4. Finance and Accounting: Transaction involves credit applications, sales,
payment vouchers, checks, ledgers, stock transfer, etc. Operations include
exception reports, records of processing delays and reports of unprocessed
transactions. Managerial control utilizes information on budget vs. actual costs
of financial resources and processing accounting data. Strategic planning
includes accounting policies for minimizing tax impact, long run strategies to
ensure adequate financing.
5. Information Processing: These is responsible for ensuring that the other
functions are provided the necessary information processing services and
resources. Typical transactions for information processing are requests for
processing, request for corrections or changes in data and programs, reports
of hardware and program performance and project proposals. Operational control
of information processing operations requires information on the daily schedule
of jobs, error rates and equipment failures, for new project development it
requires daily or weekly schedules of programmer progress and test time.
Managerial control over information processing requires data on planned versus
actual utilization, equipment costs, overall programmer performance and
progress compared to schedule for projects to develop and implement new
applications. Strategic planning for information systems involves the organization
of the function, overall information system plan, selection of strategic uses of
information and the general structure of hardware and software environment.
6. Top Management Subsystem: Top management functions separately from the
functional areas. The transactions processed by top management are primarily
inquiries for information and support for decision making. The information for
operational control in the top management includes meeting schedules, contact
file etc. Managerial control by top management uses information which
summarizes the management control being exercised by other functions to
evaluate whether the functions are performing as planned. This requires access
to the plans and actual performance of all the functions. Strategic planning
activities relate to issues like areas of diversification, resources management,
etc. Strategic planning requires information from internal and external source.

Conceptual Structure Notes

The conceptual structure of an information system consists of a group of information
subsystems for different functions. Each subsystem provides support for transaction
processing, operational control, management control and strategic planning. The
conceptual structure includes some unique files for each subsystem plus a common
database. There is unique software for each subsystem and there is common software
used by all subsystems, i.e., a data management system, some software routines,
planning and decision models.
4.4 Information Systems

An information system is an organized combination of people, hardware, software,
communications networks and data resources that collects, transforms, and disseminates
information, to support decision making and control in an organization.
In addition to supporting decision making and control, information system may also
help managers in coordination, analyze problems, create new products etc.
Meaning of Information System
An Information System (IS) is a collection of interrelated components that collect,

process, store and provide as output the information needed to complete a business task.
Example: A payroll system, for example, collects information on employees and their
work, processes and stores that information, and than produces paychecks and payroll
reports for the organization. Then information is provided to manufacturing so the
department can schedule production.
Features of Information system
The process of generation of information must focus on the quality of information

by aiming at improving the degree of each of these attributes. The following are the
essentials of good information system
1. Promptness: Decision making is to be taken within a time frame and therefore.
Information must be available within the desired time frame. It is well said
‘Information delayed is information denied’. Some types of information are
required periodically and should be made available to the user regularly and
timely so as to avoid delay in decision making.
2. Accuracy: It means that information is free from mistake sand errors this implies
that the information is totally correct. It is an essential and important feature
of good information. Increasing the accuracy may have a cos. It is therefore.
It’s Necessary to determine the acceptable levels of accuracy for each type
of information.
3. Precision: Precision is an important virtue of good quality information. Too much
of information sometimes results in dumping of important information in the heap
of details that may not be required at a particular point of time only precise
information is respected and used by the management.
4. Adequacy or Completeness: Adequacy generally refers to the complete and
full detailed information. It means the information must contain sufficient quality
information may be said to be complete if the decision maker can satisfactorily
solve the problem by using the information. If the information is incorrect or
inadequate than it can be quite harmful to the organization.
178 IT for Managers
Notes 5. Unambiguity: Clarity of information is an important attribute of good information.

Information must be unambiguous and should be communicated in such a way
that it conveys the same meaning to different levels of management.
6. Timeliness: Timeliness is important information essential. This explains that
information should reach the managers or users within the prescribed time for
effective decision making. Information must be delivered at the right time the
right place to right person or user.
7. Exception bored: In moderns business the organizations are exception based
organization. This means the management and mangers are provided with only
those items of information that are of particularly interacted to the management.
This type of information is quite useful in saving time and resources of the top
management.
8. Availability: Information always should available in right time and right place
to take the decisions. If information is not readily available at the time of decision
making the information that information is considered to destroy.
9. Format: For making and information useful it should be made available in a
form which suits the recipient most. Information may be communicated in visual
written or verbal form.
10. Frequency: Frequency of useful information should be based on the actual
requirements of a management or managers. The requirements depend on the
recipient’s organizations positions and his interaction with other departments.
Functions of Information system
Functions of information system are describing below:

(i) Information system help managers, works analysis problems, visualize complex
subjects and create new products.
(ii) Information system will contain information about people, place and things with
the organization.
(iii) It will contain data that have been shaped into a form, which are meaningful
and useful to human beings.
(iv) Information system will produce information so that organizations will take
decisions, control operators and analyze problems.
(v) Information system will encompass the understanding of the management and
organizational dimensions of system.
(vi) Information system is used for building and managing system.
(vii) Information system designates a specific category of serving management level
functions.
(viii) Information system is saving as foundation for new services and products.
Process of Information system
The basic activities that occur in any information system would involve:
(a) Inputting Raw Data: Data about business transaction and other events must
be captured and prepared for processing by data entry activities such as
recording, editing, typing. For example, optical scanning of bar-coded tags in
the retail outlets.

Control of System Performance Notes
Processing Output
Input of Data
Data of Information
Resouces
Products
Storage of Data Resources
Fig: Process of Information System
(b) Processing of Data into Information: Data once entered is subjected to

processing activities like calculating, sorting, classifying, summarizing etc. For
example, in a payroll system, calculating net salary involves processing like
deduction of taxes, addition of commission earned etc.
(d) Output of Information Product: Information thus produced by processing
activity needs to be transmitted to appropriate end user. This is done by the
output activity. Information produced by the Information Systems may be in the
form of text, images, videos, forms, reports etc. For example, manager might
see reports about the sales performance.
(e) Storage of Data Resources: Data and information are required to be stored
for future reference. For example, maintaining the records of the customer,
employees, products etc.
(f) Control of System Performance: Controlling is to keep a check on the
performance of the information system. An information system should produce
feedback about its input, processing, output and storage activities, which must
be monitored and if the system is not in-line with the achievement of its goals,
then the corrective control action needs to be taken. For example, generating
audio signals to indicate proper entry of sales data.
Users of Information Systems

1. Support Business Processes: Information systems that support the business
processes and operations at the many retail stores. For example, most retail
stores now use computer-based information systems to help them record
customer purchases, keep track of inventory, pay employees, buy new
merchandise, and evaluate sales trends. Store operations would grind to a halt
without the support of such information systems.
2. Support Decision Making: Information systems also help store managers and
other business professionals make better decisions, for example, decisions on
what line of merchandise need to be added or discontinued, or on what kind
of investment they require, are typically made after an analysis provided by
computer based information systems. This not only supports the decision
making of store managers, buyers, but also helps them look for ways to gain
an advantage over other retailers in the competition for customers.
3. Support Competitive Advantage: Gaining a strategic advantage over
competitors requires innovative application of information technologies. For
example, store management might make a decision to install touch-screen
180 IT for Managers
Notes kiosks in all of their stores, with links of their e-commerce website for online
shopping. This might attract new customers and build customer loyalty because
of the ease of shopping and buying merchandise provided by such information
systems. Thus, strategic information systems can help provide products and
services that give a business a comparative advantage over its competitors.
Components of Business Information Systems
The physical components of any Information System are:

(i) Operating personnel (ii) Data
(iii) Hardware (iv) Software
(v) Procedures (vi) Networking
Actors/Active Agents
Instructors
Software
Hardware Data Procedures People
Programs
Machine Human
Acts as a bridge between

machine and human
Fig: Components of Information System
(i) Operating Personnel
Operations personnel refers to personnel who support the maintenance and operation
of system, system security and peripheral services, such as the maintenance operating
system, application software, hardware devices and internet security etc. for services
operations.
(ii) Data
Data are facts, set of symbols to represent objects, events, activities and quantities.
The word ‘data’ is the plural of the word ‘datum’, which means fact. Therefore, data means
any collection of facts. Data can be considered as the raw material of information. The
data may be numerical such as sales report, inventory figures etc., or non-numerical like
customer’s names, addresses etc.
(iii) Hardware
All physical components of a computer system compose the computer hardware.
Important components include the central processing unit, input/output devices, storage
units and communication devices. Communication can be over fiber-optic cables or
wireless networks.
(iv) Software
Software provides the interface between users and the information system. Software
can be divided into two generic types: system software and applications. The system
software comprises of the operating system, utility programs and special purpose
programs. Applications are developed to accomplish a specific task. For users of
management information system it is much more important to understand the software

than the hardware. Software maintenance can take 50% to 70% of all personnel activity Notes
in the MIS function. When the organization moves to implement an advanced information
system the hardware and software environment becomes more complex.
(v) Procedures
Three types of procedures are required for an management information system to
operate effectively: user instructions, instructions for input preparation and operating
instructions for MIS personnel who maintain the management information system.
(vi) Networking
A network is any collection of independent computers that communicate with one
another over a shared network medium.A computer network is a collection of two or more
connected computers. When these computers are joined in a network, people can share
files and peripherals such as modems, printers, tape backup drives, or CD-ROM drives.
When networks at multiple locations are connected, people can send e-mail, share links
to the global Internet, or conduct video conferences in real time with other remote users.
As companies rely on applications like electronic mail and database management for core
business operations, computer networking becomes increasingly more important.
4.5 ERP: The Business Backbone

Enterprise resource planning integrates internal and external management information
across an entire organization, embracing finance/accounting, manufacturing, sales and
service, customer relationship management. ERP systems automate this activity with an
integrated software application. Its purpose is to facilitate the flow of information between
all business functions inside the boundaries of the organization and manage the
connections to outside stakeholders.
ERP systems experienced rapid growth in the 1990s because the year 2000 problem
and introduction of the Euro disrupted legacy systems. Many companies took this
opportunity to replace such systems with ERP.
Configuring an ERP system is largely a matter of balancing the way the customer
wants the system to work with the way it was designed to work. ERP systems typically
build many changeable parameters that modify system operation.
ERP (Enterprise Resource Planning) is the evolution of Manufacturing Requirements
Planning (MRP) II. From business perspective, ERP has expanded from coordination of
manufacturing processes to the integration of enterprise-wide backend processes. From
technological aspect, ERP has evolved from legacy implementation to more flexible tiered
client-server architecture.
Inventory Management and Control 1960s: Inventory Management and control is
the combination of information technology and business processes of maintaining the
appropriate level of stock in a warehouse. The activities of inventory management include
identifying inventory requirements, setting targets, providing replenishment techniques and
options, monitoring item usages, reconciling the inventory balances and reporting inventory
status.
Material Requirement Planning (MRP) 1970s: Materials Requirement Planning
(MRP) utilizes software applications for scheduling production processes. MRP generates
schedules for the operations and raw material purchases based on the production
requirements of finished goods, the structure of the production system, the current
inventories levels and the lot sizing procedure for each operation.

182 IT for Managers
Notes Manufacturing Requirements Planning (MRP II) 1980s: Manufacturing Requirements

Planning or MRP utilizes software applications for coordinating manufacturing processes,
from product planning, parts purchasing, inventory control to product distribution.
Enterprise Resource Planning (ERP) 1990s: Enterprise Resource Planning or ERP
uses multi-module application software for improving the performance of the internal
business processes. ERP systems often integrate business activities across functional
departments, from product planning, parts purchasing, inventory control, product
distribution, fulfillment, to order tracking. ERP software systems may include application
modules for supporting marketing, finance, accounting and human resources.
In 1990 Gartner Group first employed the acronym ERP as an extension of material
requirements planning (MRP), later manufacturing resource planning and computer-
integrated manufacturing. Without supplanting these terms, ERP came to represent a
larger whole, reflecting the evolution of application integration beyond manufacturing. Not
all ERP packages were developed from a manufacturing core. Vendors variously began
with accounting, maintenance and human resources. By the mid-1990s ERP systems
addressed all core functions of an enterprise. Beyond corporations, governments and non-
profit organizations also began to employ ERP systems.
Enterprise resource planning integrates internal and external management information
across an entire organization, embracing finance/accounting, manufacturing, sales and
service, customer relationship management. ERP systems automate this activity with an
integrated software application. Its purpose is to facilitate the flow of information between
all business functions inside the boundaries of the organization and manage the
connections to outside stakeholders.
ERP systems can run on a variety of hardware and network configurations, typically
employing a database as a repository for information. ERP which is an abbreviation for
Enterprise Resource Planning is principally an integration of business management
practices and modern technology. Information Technology (IT) integrates with the core
business processes of a corporate house to streamline and accomplish specific business
objectives. ERP having the three most important components; Business Management
Practices, Information Technology and Specific Business Objectives.
In simpler words, an ERP is a massive software architecture that supports the
streaming and distribution of geographically scattered enterprise wide information across
all the functional units of a business house. It provides the business management
executives with a comprehensive overview of the complete business execution which in
turn influences their decisions in a productive way.
At the core of ERP is a well-managed centralized data repository which acquires
information from and supply information into the fragmented applications operating on a
universal computing platform.
Information in large business organizations is accumulated on various servers across
many functional units and sometimes separated by geographical boundaries. Such
information islands can possibly service individual organizational units but fail to enhance
enterprise wide performance, speed and competence.
The term ERP originally referred to the way a large organization planned to use its
organizational wide resources. ERP systems were used in larger and more industrial types
of companies. The use of ERP has changed radically over a period of few years. Today
the term can be applied to any type of company, operating in any kind of field and of
any magnitude.

Today's ERP software architecture can possibly envelop a broad range of enterprise Notes
wide functions and integrate them into a single unified database repository. For instance,
functions such as Human Resources, Supply Chain Management, Customer Relationship
Management, Finance, Manufacturing Warehouse Management and Logistics were all
previously stand alone software applications, generally housed with their own applications,
database and network, but today, they can all work under a single umbrella the ERP
architecture.
In order for a software system to be considered ERP, it must provide a business
with wide collection of functionalities supported by features like flexibility, modularity and
openness, widespread, finest business processes and global focus. That integrated
approach can have a tremendous payback if companies install the software correctly.
Example: Take a customer order, typically, when a customer places an order, that
order begins a mostly paper-based journey from in-basket to in-basket around the
company, often being keyed and re-keyed into different departments' computer systems
along the way. All that lounging around in in-baskets causes delays and lost orders and
all the keying into different computer systems invites errors. Meanwhile, no one in the
company truly knows what the status of the order is at any given point because there
is no way for the finance department, for example, to get into the warehouse's computer
system to see whether the item has been shipped. "You'll have to call the warehouse"
is the familiar refrain heard by frustrated customers.
ERP vanquishes the old stand alone computer systems in finance, HR, manufacturing
and the warehouse and replaces them with a single unified software program divided into
software modules that roughly approximate the old stand alone systems. Finance,
manufacturing and the warehouse all still get their own software, except now the software
is linked together so that someone in finance can look into the warehouse software to
see if an order has been shipped. Most vendors' ERP software is flexible enough that
you can install some modules without buying the whole package. Many companies, for
example, will just install an ERP finance or HR module and leave the rest of the functions
for another day.
Meaning of ERP
Enterprise Resource Planning covers the techniques and concepts employed for the
integrated management of businesses as a whole, from the viewpoint of the effective use
of management resources, to improve the efficiency of an enterprise.
Accounting oriented, relational database based, multi-module but integrated, software
system for identifying and planning the resource needs of an enterprise is called Enterprise
Resource Planning (ERP). ERP is most frequently used in the context of software. As
the methodology has become more popular, large software applications have been
developed to help companies implement ERP in their organization.
Definitions of ERP
Enterprise Resource Planning is a process by which a company (often a

manufacturer) manages and integrates the important parts of its business. An ERP
management information system integrates areas such as planning, purchasing, inventory,
sales, marketing, finance, human resources etc.
Enterprise resource planning systems are commercial software systems that can
be defined as customizable, standard application software which integrates business
solutions for the core processes (e.g. product planning and control, warehouse

184 IT for Managers
Notes management) and the main administration function (e.g. accounting, human resource
management) of an enterprise.
ERP is the acronym for enterprise resource planning which provides infrastructure
support for integration management of businesses and function through various tools and
techniques and concepts aimed at optimum utilization of organizational resources.
ERP is primarily an enterprise wide system which encompasses corporate vision,
objectives, attitudes beliefs, values, operating style and people who make the organization.
ERP is a computerized environment with a holistic view of the enterprise, aimed at
seamless flow of information across the departmental barriers where by optimal planning
and management of the resources is possible in the most efficient manner.
Characteristics of ERP
The characteristics of ERP are:

1. An integrated system that operates in real time, without relying on periodic
updates.
2. A common database, which supports all applications.
3. A consistent look and feel throughout each module.
4. Installation of the system without elaborate application/data integration by the
Information Technology (IT) department.
5. Information and data are held in a common integrated database.
6. It provides one user-interface for the entire organization.
7. It facilitates product planning.
8. It helps in materials and parts purchasing.
9. It provides the platform for inventory control.
10. It helps in distribution and logistics.
11. It helps production scheduling.
12. It helps in capacity utilization.
13. It helps in order tracking.
14. It helps in planning for finance and human resources.
Reasons for the growth of ERP
Prior to evolution of the ERP model, each department in an enterprise had their own
isolated software application which did not interface with any other system. Such isolated
framework could not synchronize the inter-department processes the productivity, speed
and performance of the overall organization. These led to issues such as incompatible
exchange standards, lack of synchronization, incomplete understanding of the enterprise
functioning, unproductive decisions and many more.
Example: The financial could not coordinate with the procurement team to plan out
purchases as per the availability of money. Deploying a comprehensive ERP system
across an organization leads to performance increase, workflow synchronization,
standardized information exchange formats, complete overview of the enterprise
functioning, global decision optimization, speed enhancement and much more.
ERP systems experienced rapid growth in the 1990s because the year 2000 problem
and introduction of the Euro disrupted legacy systems. Many companies took this

opportunity to replace such systems with ERP. This rapid growth in sales was followed Notes
by a slump in 1999 after these issues had been addressed.
ERP systems initially focused on automating back office functions that did not
directly affect customers and the general public. Front office functions such as customer
relationship management dealt directly with customers, or e-business systems such as
e-commerce, e-government, e-telecom and e-finance, or supplier relationship management
became integrated later, when the Internet simplified communicating with external parties.
ERP II was coined in the early 2000s. It describes web-based software that allows
both employees and partners such as suppliers and customer real-time access to the
systems. Enterprise application suite is an alternate name for such systems
Reasons for the growth of ERP are as follows:
1. Industry best practices.
2. Easy and faster implementation.
3. Good cost predictions.
4. Existing clients acquire more licenses and modules.
5. The number of employees using the ERP system is increasing.
6. ERP clients who have started with the basic modules are going for subsequent
applications.
7. Trend to replace customized system with standard application packages.
8. Manufacturing companies are significantly investing in technology solutions to
improve their manufacturing operations.
9. Manufacturers are increasingly implementing ERP solutions to ensure that
decision makers have the required information visibility across the value chain.
10. It provides competitive advantages.
Why ERP is so Important?
Enterprise Resource Planning is important for the following reasons:

1. Enhance productivity.
2. Enhance flexibility.
3. Enhance customer responsiveness.
4. It maximizes the efficiency of business process across the entire organization.
5. Plant manufacturing can produces product faster.
6. Increase on time delivery.
7. Increase productivity.
8. Increase ability to forecast demand to supplies.
9. Increase order capacity.
10. It improves Customer Relationship Management.
11. Eliminate costs.
12. It helps to standardize business processes.
13. It enables company to manage relationship with vendors.
14. It lowers cost for purchased items.
15. Better resource management.
16. Enhances inventory turns.

186 IT for Managers
Notes 17. Decrease the level of inefficiencies.

18. It provides data consistency.
19. It helps in making a right decision.
20. Extend business using the Internet.
21. It helps to access information.
22. It helps in communicating to various stake holders.
4.6 Benefits of ERP

1. It will provide the companies in India the facility to have information available
freely.
2. It helps in generating of enquiry report easier.
3. It is easier for the organization to follow.
4. It helps the businesses to develop refined analysis.
5. It helps in innovation.
6. It enhances employment.
7. Improved customer care service.
8. Enhance product values.
9. It enhances profitability.
10. It enhances asset turnover.
11. It enhances potential effect on stock value.
Various Modules of ERP
ERP software is made up of many software modules. Each ERP software module
mimics a major functional area of an organization. Common ERP modules include modules
for product planning, parts and material purchasing, inventory control, product distribution,
order tracking, finance, accounting, marketing and HR. Organizations often selectively
implement the ERP modules that are both economically and technically feasible.
ERP Production Planning Module
In the process of evolution of manufacturing requirements planning (MRP) II into ERP,
while vendors have developed more robust software for production planning, consulting
firms have accumulated vast knowledge of implementing production planning module.
Production planning optimizes the utilization of manufacturing capacity, parts, components
and material resources using historical production data and sales forecasting.
ERP Purchasing Module
Purchase module streamlines procurement of required raw materials. It automates
the processes of identifying potential suppliers, negotiating price, awarding purchase order
to the supplier and billing processes. Purchase module is tightly integrated with the
inventory control and production planning modules. Purchasing module is often integrated
with supply chain management software.
ERP Inventory Control Module
Inventory module facilitates processes of maintaining the appropriate level of stock
in a warehouse. The activities of inventory control involves in identifying inventory
requirements, setting targets, providing replenishment techniques and options, monitoring
item usages, reconciling the inventory balances and reporting inventory status. Integration

of inventory control module with sales, purchase, finance modules allows ERP systems Notes
to generate vigilant executive level reports.
ERP Sales Module
Revenues from sales are live blood for commercial organizations. Sales module
implements functions of order placement, order scheduling, shipping and invoicing. Sales
module is closely integrated with organizations' commerce website. Many ERP vendors
offer online storefront as part of the sales module.
ERP Market in Module
ERP marketing module supports lead generation, direct mailing campaign and more.
ERP Financial Module
Both for-profit organizations and non-profit organizations benefit from the implementation
of ERP financial module. The financial module is the core of many ERP software systems.
It can gather financial data from various functional departments and generates valuable
financial reports such balance sheet, general ledger, trail balance and quarterly financial
statements.
ERP HR Module
HR (Human Resources) is another widely implemented ERP module. HR module
streamlines the management of human resources and human capitals. HR modules
routinely maintain a complete employee database including contact information, salary
details, attendance, performance evaluation and promotion of all employees. Advanced
HR module is integrated with knowledge management systems to optimally utilize the
expertise of all employees.
Advantages of ERP Systems
The fundamental advantage of ERP is that integrating the myriad processes by which
businesses operate saves time and expense. Decisions can be made more quickly and
with fewer errors. Data becomes visible across the organization. Tasks that benefit from
this integration include.
1. Sales forecasting allows inventory optimization.
2. Order tracking, from acceptance through fulfillment.
3. Revenue tracking, from invoice through cash receipt.
4. Matching purchase orders, inventory receipts and costing.
ERP systems centralize business data, bringing the following benefits:
1. They eliminate the need to synchronize changes between multiple systems
consolidation of finance, marketing and sales, human resource and manufacturing
applications
2. They enable standard product naming/coding.
3. They provide a comprehensive enterprise view. They make real-time information
available to management anywhere, any time to make proper decisions.
4. They protect sensitive data by consolidating multiple security systems into a
single structure.
5. A perfectly integrated system chaining all the functional areas together.
6. The capability to streamline different organizational processes and workflows.
7. The ability to effortlessly communicate information across various departments.

188 IT for Managers
Notes 8. Improved efficiency, performance and productivity levels.

9. Enhanced tracking and forecasting.
10. Improved customer service and satisfaction.
Disadvantages of ERPSystems
1. Customization is problematic.
2. Re-engineering business processes to fit the ERP system may damage
competitiveness and/or divert focus from other critical activities.
3. ERP can cost more than less integrated and/or less comprehensive solutions.
4. High switching costs increase vendor negotiating power vis a vis support,
maintenance and upgrade expenses.
5. Overcoming resistance to sharing sensitive information between departments
can divert management attention.
6. Integration of truly independent businesses can create unnecessary dependencies.
7. Extensive training requirements take resources from daily operations.
While advantages usually outweigh disadvantages for most organizations implementing
an ERP system, here are some of the most common obstacles experienced:
1. The scope of customization is limited in several circumstances.
2. The present business processes have to be rethought to make them
synchronize with the ERP.
3. ERP systems can be extremely expensive to implement.
4. There could be lack of continuous technical support.
5. ERP systems may be too rigid for specific organizations that are either new
or want to move in a new direction in the near future.
4.7 Failures of ERP

1. No clear objectives: A very common mistake most of the institutions looking
out for ERP implementation is the lack of a clear goal. Without a clear and
sure definition of the expected success, the problems to be targeted, financial
benefits expected, the end result will be vague.
2. Lack of proper user-training: The process of ERP implementation shouldn’t
be done in a hurry, more specifically the training part. Since the erp system
offers complete automation of most of the departments functioning in your
institution, the training has to be apt, to the depth, for the right amount of time
and should include all possible users in the institution.
3. ERP implementation is not a cost: It’s an investment: Most educational
institutions fail to realize that ERP implementation is an investment that’ll yield
profit in the long run. In turn, they look out for vendors who offer the lowest quote,
thus overlooking the expected benefits or results.
4. Change management: A very common reason for ERP implementation failure
is the inability to manage the change that’s coming up with the new
implementation. Adapting to the change the system brings about is a smart
move rather than pointing out the difference between the old system and the
new one.
5. Poor management of the project: Managing an ERP implementation project
in your institution is not an easy task. A good management team or a leader

is needed, who can look over the entire implementation process- scheduling Notes
things, proper communication between all the right people, etc is .
6. Absence of data accuracy: If proper and accurate data is not transferred to
the new ERP system implemented in your institution, the system would lose
its credibility with the end-users.
7. Overlooking technical difficulties: Hardware difficulties, interface problems
with the management process in the institution, ‘bugs’ in the software can lead
to a bad experience with ERP implementation.
4.8 e-CRM
Customer Relationship Management (CRM) is a way to identify, acquire, and retain
customers – a business’ greatest asset. By providing the means to manage and coordinate
customer interactions, CRM helps companies maximise the value of every customer
interaction and in turn improve corporate performance.
Electronic customer relationship management (E-CRM) is the application of Internet-
based technologies such as emails, websites, chat rooms, forums and other channels
to achieve CRM objectives. It is a well-structured and coordinated process of CRM that
automates the processes in marketing, sales and customer service.
Meaning of CRM
Customer Relationship Management (CRM) is a technology-enabled business

strategy whereby companies level-average increased customer knowledge to build
profitable relationships, based on optimising value delivered to and realized from their
customers.
CRM recognizes that customers who are the core of a business and that a company’s
success depends on effectively managing relationships with them. It focuses on building
long-term and sustainable customer relationships that add value both for the customer
and the company.
CRM is the industry term for the set of methodologies and tools that help an
enterprise manage customer relationships in an organized way. It is a process or
methodology used to learn more about customers’ needs and behaviours in order to
develop stronger relationships with them.
Definitions of CRM
CRM means “an integrated effort to identify, maintain and build up a network with
individual customers and to continuously strengthen the network for the mutual benefit
of both sides through interaction, individualization and value-added contracts over a period
of time”.
Customer Relationship Management (CRM) is a fusion of a series of function, skills,
processes and technologies which together allows companies to more profitably manage
customers as tangible assets.
Customer Relationship Management is a comprehensive strategy and process of
acquiring, retaining and partnering with selective customers to create superior value for
the company and the customer.

190 IT for Managers
Notes Benefits of an E-CRM
Benefits of an E-CRM system include:

i. Service level improvements: Using an integrated database to deliver
consistent and improved customer responses
ii. Revenue growth: Decreasing costs by focusing on retaining customers and
using interactive service tools to sell additional products
iii. Productivity: Consistent sales and service procedures to create efficient work
processes
iv. Customer satisfaction: Automatic customer tracking and detection will ensure
enquiries are met and issues are managed. This will improve the customer’s
overall experience in dealing with the organisation
Implementation of an E-CRM System
When approaching the development and implementation of E-CRM there are

important considerations to keep in mind:
i. Define customer relationships: Generate a list of key aspects of your
customer relationships and the importance of these relationships to your
business.
ii. Develop a plan: Create a broad Relationship Management program that can
be customized to smaller customer segments. A suitable software solution will
help deliver this goal.
iii. Focus on customers: The focus should be on the customer, not the technology.
Any technology should have specific benefits in making customers’ lives easier
by improving support, lowering their administrative costs, or giving them reasons
to shift more business to your company.
iv. Save money: Focus on aspects of your business that can contribute to the
bottom line. Whether it is through cutting costs or increasing revenue, every
capability you implement should have a direct measurable impact on the bottom
line.
v. Service and support: By tracking and measuring the dimensions of the
relationship, organisations can identify their strengths and weaknesses in the
relationship management program and continually fine tune it based on ongoing
feedback from customers.
4.9 e-SCM
Electronic Supply Chain Management (e-SCM) is an optimization of business
processes and business value in every corner of the extended enterprise - right from your
supplier’s supplier to your customer’s customer.
Electronic supply chain management is most commonly referred to as e-supply chain
management. It combines the concepts of electronic business (e-business) and supply
chain management (SCM), and depicts how trade channel members are working together
to optimize resources and opportunities.
It uses e-business concepts and Web technology to manage beyond the enterprise,
both upstream and downstream. This strategic approach unites all the steps in the
business cycle, from initial product design and procurement of raw materials, through

shipping, distribution, and warehousing right up to the point when the finished product Notes
is delivered to the customer.
An e-SCM solution can bring about a dramatic reduction in your costs, and integrate
your enterprise closely with all the other players involved in your processes. And, in doing
this, it goes one big step beyond a mere ERP solution.
Objectives E-SCM
(i) Providing information availability and visibility.
(ii) Enabling single point of contact of data.
(iii) Allowing decisions based on total supply chain information.
(iv) Enabling collaboration with supply chain partners.
Importance of E-SCM
1. Electronic data interchange to facilitate speed and quality of information
interchange,
2. Gathering information directly from the source, rather than have one accountant
talk to another,
3. Suppliers determining order quantities and order items for buyers,
4. Developing different payments triggers, such as paying for inventory when
received or used.
5. Elimination of invoices saving administrative work,
6. Using barcode labels to help eliminate invoices and facilitate improved quality
of information,
7. Automating the matching of goods ordered and received.
Benefits of E-SCM
The following are the benefits of E-SCM

(i) Improved relations with channel partners.
(ii) Better control over budgeting and investments.
(iii) Tie together all the players in the extended enterprise, from raw materials to
final point of distribution.
(iv) Give real-time market information to these players, allowing them to anticipate
and adjust their operations in response to market conditions.
(v) Help eliminate costly stockpiling against demand spikes, freeing up resources
and reducing costs.
(vi) Lower costs, improve speed and increase the accuracy of data sharing within
the extended enterprise.
(vii) A truly integrated supply chain creates value-for the enterprise, its supply chain
partners, and its shareholders.
(viii) The magnitude of change differs from slight to significant process change to
the creation of competitive advantage.
(ix) E-SCM is particularly relevant to diversified business houses with complex
supply chain networks, to companies with wide distribution systems and to
enterprises that depend on a large number of out-sourced products.

192 IT for Managers
Notes Infrastructure for E-SCM
The key activities just described use a variety of infrastructure and tools. The following
are the major infrastructure elements and tools of e-supply chains:
1. Electronic data interchange (EDI). EDI is the major tool used by large
corporations to facilitate supply chain relationships. Many companies are
shifting from traditional EDI to Internet-based EDI.
2. Extranets. These are described in Online their major purpose is to support inter-
organizational communication and collaboration. For details on success factors
for using extranets in e-SCM.
3. Intranets. These are the corporate internal networks for communication and
collaboration.
4. Corporate portals. These provide a gateway for external and internal
collaboration, communication and information search.
5. Workflow systems and tools. These are systems that manage the flow of
information in organizations.
6. Groupware and other collaborative tools. Many tools facilitate collaboration and
communication between two parties and among members of small as well as
large groups. Various tools, some of which are collectively known as groupware,
enable such collaboration. Blogs and wikis are beginning to play an important
role. A major purpose of these tools is to provide visibility to all, namely, let
people know where items are and when they arrive at certain locations.
7. Identification and tracking tools. These tools are designed to identify items and
their location along the supply chain. From a traditional bar code system, we
are moving to RFID, Wireless and GPS technologies are also increasing in
popularity.
4.10 Summary
Management Information System is a system of people, equipment, procedures,
documents and communications that collects, validates, operates on and transfers, stores,
retrieves and presents data for use in planning, budgeting, accounting, controlling and other
management processes.
An information system is an organized combination of people, hardware, software,
communications networks and data resources that collects, transforms and disseminates
information, to support decision making and control in an organization.
Operations personnel refers to personnel who support the maintenance and operation
of system, system security and peripheral services, such as the maintenance operating
system, application software, hardware devices and internet security etc. for services
operations.
Enterprise Resource Planning is a process by which a company (often a
manufacturer) manages and integrates the important parts of its business. An ERP
management information system integrates areas such as planning, purchasing, inventory,
sales, marketing, finance, human resources etc.
Customer Relationship Management (CRM) is a fusion of a series of function, skills,
processes and technologies which together allows companies to more profitably manage
customers as tangible assets.

Electronic supply chain management is most commonly referred to as e-supply chain Notes
management. It combines the concepts of electronic business (e-business) and supply
chain management (SCM) and depicts how trade channel members are working together
to optimize resources and opportunities.
Electronic customer relationship management (E-CRM) is the application of Internet-
based technologies such as emails, websites, chat rooms, forums and other channels
to achieve CRM objectives. It is a well-structured and coordinated process of CRM that
automates the processes in marketing, sales and customer service.
4.11 Check Your Progress
I. Fill in the Blanks

1. Management information systems usually serve managers interested in weekly,
monthly and yearly results, not __________activities.
2. An information system always requires __________even if only a pencil.
3. Classification is one of the types of information yielded from ____________.
4. Database is a ________ component.
5. _____________ is a process by which a company manages and integrates the
important parts of its business.
II. True or False

1. A management information system is an organized combination of people,
hardware, communication networks and data sources that collects, transforms
and distributes information in an organization.
2. Information systems that monitor the elementary activities and transactions of
the organizations areoperational-level systems.
3. CRM software is focused on supporting communication, collaboration and
coordination.
4. A systems theory of organization sees the firm as a network of resource flows.
5. Projections and responses to queries are information output characteristics
associated with MIS.
III. Multiple Choice Questions

1. An information system always_____
(a) Transforms inputs to information
(b) Is computer based
(c) Requires hardware even if only a pencil
(d) All the above
2. Information systems can facilitate supply chain management by: _____
(a) tracking the status of orders
(b) rapidly communicating orders
(c) providing product specifications
(d) All the above

194 IT for Managers
Notes 3. Information systems that monitor the elementary activities and transactions of
the organizations are:
(a) management-level systems
(b) operational-level systems
(c) knowledge-level systems
(d) strategic-level systems
4. Tracking employee training, skills, and performance appraisals is an example
of a human resource information system operating at the: _____
(a) operational level
(b) management level
(c) knowledge level
(d) strategic level
5. Econometric models include techniques from_____
(a) Economics
(b) Statistics
(c) Mathematics
(d) All the above
4.12 Questions and Exercises
I. Short Answer Questions

1. What is Management Information Systems?
2. Give the meaning of information systems.
3. Define ERP.
1. What do you mean by e-CRM?
1. What is e-SCM?
II. Extended Answer Questions

1. Describe the Objectives of Management Information Systems.
2. What are the Scope of MIS?
3. Explain the Levels of Management Information Systems.
4. Explain the Structure and Functions of Management Information Systems.
5. Describe the Features of Information Systems.
6. What are the Functions of Information Systems?
7. Explain the Benefits of ERP.
8. Describe the Failures of ERP
9. Discuss various Modules of ERP.
10. Explain the benefits of an E-CRM.
11. Explain the Implementation of an E-CRM System.
12. What are the Objectives E-SCM?
13. Explain the Importance of E-SCM.
14. What are the Benefits of E-SCM?

4.13 Key Terms Notes

z IS: An Information System is a collection of interrelated components that collect,
process, store and provide as output the information needed to complete a
business task.
z Data: are facts, set of symbols to represent objects, events, activities and
quantities. The word ‘data’ is the plural of the word ‘datum’, which means fact.
z ERP: Enterprise Resource Planning covers the techniques and concepts
employed for the integrated management of businesses as a whole, from the
viewpoint of the effective use of management resources, to improve the efficiency
of an enterprise.
z Customer Relationship Management: CRM is a technology-enabled business
strategy whereby companies level-average increased customer knowledge to
build profitable relationships, based on optimising value delivered to and realized
from their customers.
z e-SCM: Electronic Supply Chain Management is an optimization of business
processes and business value in every corner of the extended enterprise - right
from your supplier’s supplier to your customer’s customer.
4.14 Check Your Progress: Answers

I. Fill in the Blanks
1. hardware
2. day-to-day
3. data mining
4. DSS
5. Enterprise Resource Planning
II. True or False
1. True
2. True
3. False
4. True
5. False
III. Multiple Choice Questions
1. (c) Requires hardware even if only a pencil
2. (d) All the above
3. (b) operational-level systems
4. (a) operational level
5. (d) All the above
4.15 Case Study

A Book house offers books on various subjects in science and technology. The owner
of the book house maintains inventory of ` 20 lakhs or more. It is also observed that there
are some slow moving titles since last year, which result in dead stock. To clear this
dead stock, a reduction sale was organized. The revenue generated out of this sale was
less than the list price. During last year, inventory carrying accounts for interest cost.

196 IT for Managers
Notes The owner is interested to computerize to avoid such cases in future. The existing
monthly stock report provides a stock statement by titles. It gives status of opening
balance, receipts, sales and balances.
Questions:
a. Evaluate existing system.
b. Explain information needs to design suitable MIS.
c. Advice various output requirements, so that reports can be useful to control the
business.
d. Suggest new technologies to coordinate stocking, billing, accounting and
decision making.
4.16 Further Readings

1. Turban, Rainer and Potter (2003). Introduction to information technology. John
Wiley and sons.
2. Sinha, P.K., PritiSinha (2002). Foundation of computing. BPB Publications.
3. James, A. O’Brien (2005). Introduction to Information Systems. TMH
4. Norton P (2010), Introduction to Computers, Tata McGraw-Hill
5. Potter T (2010), Introduction to Computers, John Wiley & Sons (Asia) Pvt Ltd
6. Morley D & Parker CS (2009), Understanding Computers – Today and Tomorrow,
Thompson Press
7. Jawadekar, WS (2009); Management Information System; Tata McGraw Hill
8. Mclead R & Schell G (2009), Management Information Systems; Pearson
Prentice Hall
9. O’Brein, JA (2009); Introduction to Information Systems; Tata McGraw Hill
4.17 Bibliography
1. Kenneth C. Laudon and Jane Price Laudon, Management Information Systems
– Managing the digital firm, PHI Learning / Pearson Education, PHI, Asia, 2015.
2. Rahul de, MIS in Business, Government and Society, Wiley India Pvt Ltd, 2012
3. Haag, Cummings and Mc Cubbrey, Management Information Systems for the
Information Age, McGraw Hill, 2005. 9th edition, 2015.
4. Robert Schultheis and Mary Summer, Management Information Systems – The
Managers View, Tata McGraw Hill, 2012.
5. Turban, McLean and Wetherbe, Information Technology for Management –
Transforming Organisations in the Digital Economy, John Wiley, 6th Edition,
2008.
6. Raplh Stair and George Reynolds, Information Systems, Cengage Learning,
12th Edition, 2016
7. Corey Schou and Dan Shoemaker, Information Assurance for the Enterprise –
A Roadmap to Information Security, Tata McGraw Hill, 2007.
9. Gordon Davis, Management Information System : Conceptual Foundations,
Structure and Development, Tata McGraw Hill, 23st Reprint 2014.
10. James O Brien, Management Information Systems – Managing Information
Technology in the E-business enterprise, Tata McGraw Hill, 2014.
±±±±

IT For Managers - Block4

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

IT For Managers - Block4

Uploaded by

Copyright:

Available Formats

Functional and Enterprise Systems 165

Unit 4: Functional and Enterprise Systems

After studying this unit, you should be able to understand:

Amity Directorate of Distance and Online Education

Notes 4.1 Introduction to Management Information Systems

A proper Management Information System is “structured to provide the information

4.2 Levels of Management Information System

Notes Level 2: Intangible Outputs

Information Decision Precesses

Fig: The MIS Concept at Level 2: Intangible Outputs

Amity Directorate of Distance and Online Education

Information use Evaluation, Indexing,

For example, in a competitive market for products manufactured by an enterprise,

Important characteristics of an effective MIS are briefly discussed below:

Amity Directorate of Distance and Online Education

ENVIRONMENT DATA Notes

Report Writing Software Mathematical Models

Types of reports generated by MIS

Amity Directorate of Distance and Online Education

Notes Myths about MIS

The study of MIS is about the use of computers

Constraints in Operating a MIS

Amity Directorate of Distance and Online Education

Limitations of MIS Notes

4.3 Structure of MIS

(a) Physical Structure of Management Information System

A management information system (MIS) is an organized combination of people,

Amity Directorate of Distance and Online Education

Notes (iii) Database

(b) MIS Structure based on Management Activity

Management Information System supports management activities, which means the

Amity Directorate of Distance and Online Education

(c) MIS structure based on Organizational Functions

The structure of information system can also be described in terms of organizational

Amity Directorate of Distance and Online Education

Amity Directorate of Distance and Online Education

Conceptual Structure Notes

4.4 Information Systems

Meaning of Information System

An Information System (IS) is a collection of interrelated components that collect,

Features of Information system

The process of generation of information must focus on the quality of information

Notes 5. Unambiguity: Clarity of information is an important attribute of good information.

Functions of Information system

Functions of information system are describing below:

Process of Information system

Amity Directorate of Distance and Online Education

Control of System Performance Notes

Storage of Data Resources

Fig: Process of Information System

(b) Processing of Data into Information: Data once entered is subjected to

Users of Information Systems

Components of Business Information Systems

The physical components of any Information System are:

Acts as a bridge between

Amity Directorate of Distance and Online Education

4.5 ERP: The Business Backbone

Amity Directorate of Distance and Online Education

Notes Manufacturing Requirements Planning (MRP II) 1980s: Manufacturing Requirements

Amity Directorate of Distance and Online Education

Enterprise Resource Planning is a process by which a company (often a

Amity Directorate of Distance and Online Education