Management Information

System
Module I – Introduction to
Information Systems
 Why IS?
• Success in today’s dynamic business
environment depends heavily on maximizing
the use of Internet based technologies and
Web enabled information systems to meet the
competitive requirements of customers,
suppliers and other business partners in a
global market place. Information systems and
their technologies must be managed to support
the business strategies, business processes and
organizational structures and culture of a
business enterprise.
 What is a System?

• System is a set of interrelated components,

with a clearly defined boundary, working
together towards a common goal by accepting
inputs and producing outputs in an organized
transformation process.
System Diagram

Processing Output

Feedback
• Input involves capturing and assembling
elements like raw materials, data to be
organized and processed.
• Processing involves transformation processes
that convert input to output like
manufacturing, mathematical calculations.
• Output involves transferring elements that
have been produced to their ultimate
destination like finished products, human
services and management information.
A system with feedback becomes self-
monitoring and self regulating. Hence
feedback is the data about the performance of
a system. A customer feedback about vehicle
performance to a car dealer helps him
improve the quality of service.
 Characteristics of a system
• System cannot exist in a vacuum. It has to exist
and function in an environment.
• Several systems can exist in a single
environment. Some of these systems may be
connected to one another by means of a shared
boundary otherwise called as interface.
• Control involves monitoring and evaluating
feedback to determine whether a system is
moving towards the achievement of a goal.
 Types of systems
• Systems are of two types. Open and closed
systems.
• A system that interacts with other systems in
its environment is called an open system.
• A system that does not interact with other
systems in its environment is called a closed
system.
 What is an Information System?
• An information system can be defined as a set
of interrelated components that collect or
retrieve, store and distribute information to
support decision making and control in an
organization.
• It also helps in analysis of problems, visualize
complex subjects and creating new products.
• Information systems are an integral part of
organizations.
• Organizations have a structure that is composed
of different levels and specialties.
• Based on authority and responsibility a business
firm could be organized as Operational, Tactical
and Strategical Managements.
• Information systems serve each of these levels.
 Many business processes are tied to a specific
functional area. Based on the major business
functions or specialized tasks performed by
business organizations a business firm could
be categorized as
• Sales and Marketing
• Manufacturing and Production
• Finance and Accounting and
• Human Resources.
 Business Processes
• Information systems are all about improving
business processes which lie at the very heart
of a business.
• Business process refer to the manner in which
work is organized, coordinated and focused to
produce a valuable product or service.
• They are workflows of material, information
and knowledge – sets of activities.
• Performance of a business firm depends on how
well its business processes are designed and
coordinated.
• Business processes can become liabilities if they
are based on outdated ways of working that
impede organizational responsiveness and
efficiency.
• Information systems enhance business processes
a)by increasing the efficiency of existing processes
and (b) by enabling entirely new processes that
are capable of transforming the business.
 Manufacturing & Production

• Assembling the product

• Checking for quality
• Producing bills of materials

Sales & Marketing

• Identifying customers
• Making customers aware of the product
• Selling the product
 Finance & Accounting
• Paying creditors
• Creating financial statements
• Managing cash accounts

Human Resources
• Hiring employees
• Evaluating employees’ job performance
• Enrolling employees in benefits plans
Information Systems and Business
The vital roles that information systems can
perform for a business enterprise are:
• Support of its business processes and
operations.
• Support of decision making by its employees
and managers.
• Support of its strategies for competitive
advantage.
1. Business processes – Record customer
purchases, keep track of inventory, pay
employees, evaluate sales trends.
2. Decision making – What lines of merchandise
to be added or discontinued, What kind of
investment to make are done after analysis.
3. Competitive advantage – Install touch screen
kiosks, Free home delivery, Links to online
shopping etc.
 Information System Resources
Basic IS model shows that an information
system consists of five major resources:
• People
• Hardware
• Software
• Data
• Networks
• People Resources – Systems analysts,
programmers, system operators, end users.
• Hardware Resources – Computers, Monitors,
printers, Scanners, Pen Drives, Magnetic
tapes
• Software Resources – Operating system
programs, Word processing, data entry,
payroll programs.
• Data Resources – Product descriptions,
customer records, employee files, inventory
databases.
• Network Resources – Communications
processors, Network access and control
software.
 Evolution of Information Systems
• The business applications of information
systems have expanded significantly over the
years.
Data processing – 1950s – 1960s
During this period the role of most
information systems was simple transaction
processing, record-keeping and traditional
accounting applications.
 Management reporting – 1960s – 1970s

The concept of Management Information

systems was conceived. This gave end users
predefined management reports that would
give managers the information they needed
for decision making process.
 Decision support – 1970s – 1980s
• The concept of decision support systems was
born because pre specified information
products produced by MIS were not
adequately meeting many of the decision
making needs of management.
• The new role was to provide managerial end
users with ad hoc and interactive support of
their decision making process.
• This support would be tailored to the unique
decision making styles of managers for
specific problems.
Strategic and End user Support – 1980s – 1990s

• End user computing systems was born with the

rapid development of microcomputer
processing power, application software
packages and telecommunications networks.
• End users could use their own computing
resource to support their job requirements
instead of waiting for the indirect support of
centralized corporate information services
departments.
• Executive information systems was developed
to give top executives an easy way to get the
critical information they want, when they
want it, tailored to the formats they prefer.
• Because most top corporate executives did
not directly use either the reports of
management information systems or the
analytical modeling capabilities of DSS.
• Expert systems were developed to provide
knowledge based expert advice to end users.
• Development and application of artificial
intelligence techniques occurred to business
information systems.
• They include intelligent software agents that
can be programmed and deployed inside a
system to intelligently act on behalf of the
owner system functions that can adapt
themselves based on the immediate needs of
the user, advanced robotics, virtual reality
applications where AI will replace human
intervention.
 Electronic business and commerce – 1990s – 2000s
• The rapid growth of the Internet, intranets,
extranets and other interconnected global
networks dramatically changed the capabilities of
information systems in business at the beginning
of the twenty first century.
• Internet based and Web – enabled enterprise and
global electronic business and commerce systems
are becoming commonplace in the operations and
management of today’s business enterprises.
• E-business is the use of Internet technologies
to work and empower business processes,
electronic commerce and enterprise
collaboration within a company and with its
customers, suppliers and other business
stakeholders.
• Any online exchange of information, money,
resources, services or any combination
thereof falls under the e–business umbrella.
• The Internet, Intranet and Extranets have
become the primary information technology
infrastructure that supports the e-business
applications of many companies.
• The concept of a strategic role for information
systems also called as strategic information
systems came up in 1990s.
• In this concept, information technology
becomes an integral component of business
processes, products and services that help a
company gain a competitive advantage in the
global market place.
• Then came the revolutionary emergence of
enterprise resource planning systems. (ERP)
 ERP systems
• This organization specific form of strategic
information system integrates all facets of a
firm including its planning, manufacturing,
sales, resource management, customer
relations, inventory control, order tracking,
financial management, human resources and
marketing – virtually every business function.
• The primary advantage of the ERP systems lies
in their common interface for literally all
computer based organizational functions and
tight integration and data sharing necessary
for strategic decision making.
IS Infrastructure Information systems

Operations support Management support

systems systems

Transaction Process Enterprise

processing control collaboration
systems systems systems

Management Decision Executive

Information Support Information
Systems systems systems