Management Information System

Session 2nd Dated: -14-03-2010BY: - Neeraj Gupta

Figure 1.3 Several subsystems make up this corporate accounting system.

Classification of IS

Information Systems

Operations Support System

Management Support System

Transaction processing systems

Process control systems

Office automation systems

Management information systems

Decision support systems

Executive information systems

Enterprise Information System Information systems can be grouped into business function

categories; however, in the real world information systems are typically integrated combinations of functional information systems.

Functional business systems are composed of a variety of types of information systems (transaction processing, management information, decision support, etc) that support the business functions of: Accounting Finance Marketing Productions/operations management Human resource management Manufacturing Information Systems Cross-functional Information systems Transaction Processing Systems

Information Systems in Business ISs in Functional Business Areas

Accounting Record business transactions, produce periodic financial statements,

and create reports required by law Finance

Organize budgets, manage the flow of cash, analyze investments, and make decisions that could reduce interest payments and increase revenues

Marketing Analyze demand for various products in different regions and

population groups Human Resources

Help with record keeping and employee evaluation Manufacturing

Allocate resources such as personnel, raw material, and time Control inventory, process customer orders, prepare production

schedules, perform quality assurance, and prepare shipping documents

An Organization’sMIS

FinancialMIS

MarketingMIS

HumanResources

MIS

Etc.

AccountingMIS

Drill down reports

Exception reports

Demand reports

Key-indicator reports

Scheduled reports

Databasesof

externaldata

Databasesof

validtransactions

Transactionprocessing

systems

Businesstransactions

Businesstransactions

ExtranetExtranet

InternetInternet

Figure 9.3

Etc.

Quality control reports

Process control reports

JIT reportsOperationaldatabases

Databasesof valid

transactionsfor each

TPS

Transactionprocessing

systems

Businesstransactions

Businesstransactions

Internet orExtranet

Internet orExtranet

Figure 9.6

ManufacturingMIS

Businesstransactions

Databases ofexternal data

Databases ofinternal data

ManufacturingDSS

ManufacturingES

Manufacturingapplications

databases

Customers,Suppliers

MRP reports

Production schedule

CAD output

Sales by customer

Sales by salesperson

Sales by productOperationaldatabases

Databasesof valid

transactionsfor each

TPS

Transactionprocessing

systems

Businesstransactions

Figure 9.9

MarketingMIS

Databases ofexternal data

Databases ofinternal data

ManufacturingDSS

ManufacturingES

Marketingapplications

databases

Pricing report

Total service calls

Customer satisfaction

Benefit reports

Salary surveys

Scheduling reportsOperationaldatabases

Databasesof valid

transactionsfor each

TPS

Transactionprocessing

systems

Businesstransactions

Figure 9.12

HumanResource

MIS

Databases ofexternal data

Databases ofinternal data

ManufacturingDSS

ManufacturingES

Humanresource

applicationsdatabases

Training test scores

Job applicant profiles

Needs and planningreports

Accounting

Figure 3.3 Accounting information systems include features that reflect up-to-date performance of the organization in financial terms.

Information Systems in Business

Financial MIS: - Provides financial information to all financial managers within an organization.

Manufacturing MIS: -Provides ways to reduce the time taken to complete various processes of manufacturing using the newer technologies.

Marketing MIS: -Supports managerial activities in product development, distribution, pricing decisions, and promotional effectiveness

HR MIS: -Concerned with all of the activities related to employees and potential employees of the organization

Accounting MIS: -Provides aggregated information on accounts payable, accounts receivable, payroll, and other applications.

Information Systems in Business

Cross Functional MIS: -Many e-business applications are integrated cross-functional enterprise applications like enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM), which also reengineers the business processes involved. Enterprise collaboration systems (ECS) support and enhance communication and collaboration among the teams and workgroups in an organization.

Transaction Processing Systems: Online transaction processing systems play a vital role in e-commerce. Transaction processing involves the basic activities of (1) data entry, (2) transaction processing, (3) database maintenance, (4) document and report generation, and (5) inquiry processing.

Sales and Marketing Information System They need

information about: Customers End-users Resellers Competitors, Government

regulations Other forces

in the marketplace

Activities or functions of Marketing IS Assessing Information Needs

Developing Information

Information Analysis

Distributing Information

Activities or functions of Marketing IS Interactive Marketing Targeted Marketing

Community Content Context Demographic/Psychographic Online Behavior

Manufacturing IS

Information system helps in these manufacturing activities: Plant activity scheduling Material requirement assessment Material reallocation between orders Dynamic inventory management Grouping work orders by "characteristics" Resource qualification for task completion

Computer Integrated manufacturing used to: - Simplify Automate Intregrate

Goal of CIM Agile Flexible Total Quality management

Results CIM Implementing such manufacturing concepts enables a company to quickly

respond to and fulfill customer requirements with high-quality products and services.

Manufacturing IS Uses of computers in manufacturing include:

Computer-aided Engineering (CAE) Computer-aided Design (CAD) Computer-aided Process Planning (CAPP) Material Requirements Planning (MRP) Manufacturing Resource Planning (MRP-II) Computer-aided Manufacturing (CAM)

Manufacturing execution systems: MES are performance monitoring information systems for factory floor operations. They monitor, track, and control the five essential components involved in a production process: Materials, Equipment, Personnel, Instructions and specifications,

Production facilities. MES includes:

Shop floor scheduling and control systems Machine control systems Robotics control systems Process control systems

Benefits of CIM Increased efficiency through:

Work simplification and automation, Better production schedule planning Better balancing of production workloads in production capacity

Improved utilization of facilities, higher productivity, better quality control through: Continuous monitoring Feedback and control of factory operations, equipment and robots.

Reduced investments in production inventories and facilities Work simplification Just-in-time inventory policies Better planning and control of production Better planning and control of finished goods requirements

Improved customer service Reducing out-of-stock situations Producing high-quality products that better meet customer requirements

HRIS Designed to support:

Planning to meet the personnel needs of the business. Development of employees to their full potential. Control of all personnel policies and programs.

Traditionally, businesses used computer-based information systems to: Produce pay checks and payroll reports Maintain personnel records Analyze the use of personnel in business operations.

Many firms have gone beyond these traditional personnel management functions and have developed human resource information systems (HRIS) that also support: Recruitment, selection and hiring, Job placement, Performance

appraisals, Employee benefit analysis, Training and development, Health, safety, and security

HRIS

HRM and internet HRM and Corporate intranet Staffing the organization Training and development

Cross Functional Enterprise System Information systems typically are integrated combinations of cross-functional business systems. Such systems support business processes, such as: Product development Production Distribution Order management Customer support etc.

Enterprise Application Architecture Enterprise Application architecture translates the logical design into a physical structure that includes hardware, software, network support, and processing methods. The end product of the systems design phase is the preparation of the system design specification document.

Design Checklist Enterprise resource planning Initial cost and TCO Scalability Web integration Legacy interface requirements Security Processing options

Enterprise Application Integration Many companies have moved from functional mainframe legacy systems to integrated cross-functional enterprise applications. This typically has involved installing: Enterprise resource planning (ERP) s/w Supply chain management (SCM) s/w Customer relationship management (CRM) s/w

It enables users to: - model business processes involved in interactions that should occur

between business applications. Provide middleware that performs data conversion and coordination,

application communication & messaging services, & access to application interfaces involved.

Integrate a variety of enterprise application clusters by letting them exchange data according to rules derived from the business process models developed by users.

Integrate the front-office and back-office applications of an e-business, so they work together in a seamless, integrated way. This is a vital capability that provides real business value to an e-business enterprise that must respond quickly and effectively to business events and customer demands.

Enterprise Collaboration Systems Communicate: Sharing information with

each other. Coordinate: Coordinating our individual work

efforts and use of resources with each other. Collaborate: Working together cooperatively

on joint projects and assignments.

Transaction Processing Systems (TPS) Primary purpose is to record, process, validate, and store transactions that take place in the various functional areas/of a business for future retrieval and use.

Types of Transactions Internal transaction-Internal to a company and related

to internal working of an organisation External transaction-External to a company and related

with external sources

Characteristics & Features of TPS Characteristics: - It records internal and external transactions for a company. It is a

repository of data that is frequently accessed by other systems It performs routine, repetitive tasks. It is mostly used by lower-level

managers to make operational decisions Transactions can be recorded in batch mode or online. In batch mode,

the files are updated periodically; in online mode, each transaction is recorded as it occurs.

There are six steps in processing a transaction. They are data entry, data validation, data processing and revalidation, storage, - output generation, and query support.

Features: - Supports different tasks by imposing a set of rules and guidelines that

specify how to record, process, and store a given transaction. The data life-line for a company because it is the source of data for

other information systems The main link between the organization and external entities TPS exist for the various functional areas in an organization, such as

finance, accounting, manufacturing, production etc.

Decision Support Systems

Used for unstructured problems Characteristics

Data from multiple sources internal and external to organization

Presentation flexibility Simulation and what-if capability Support for multiple decision approaches Statistical analysis

Decision Making Systems

Applications Where time is critical Where participants are geographically dispersed Where authority obstructs communication Military Business Government

DSS

Supplements an MIS Pulls information from variety of databases Interactive Non-routine decision-making Model – mathematical representation of real-life

system Simulation – using a computer model to reach a

decision about a real-life situation

Management Information System Use recorded transactions and other data to produce information for problem solving and decision making.

Data + Organization Set of formal business systems designed to

provide information for an organization Routine information for routine decisions

Operational efficiency Use transaction data as main input Databases integrate MIS in different functional areas

MIS vs. DSS

MIS Planned reporting Standard, scheduled, structured, and routine Constrained by the organizational system

DSS Decision making Unstructured and by request Immediate and friendly

Executive Information System (EIS) Executive Support Systems (ESS) supply the necessary tools to senior management. The decisions at this level of the company are usually never structured and could be described as "educated guesses." Executives rely as much, if not more so, on external data than they do on data internal to their organization.

The Role of ESS in the Organization Alleviate information overload for executives Select most relevant data for analysis

Drilling down

Consolidate and summarize data

Display data graphically

Benefits of EIS

Provide necessary information Gives summarized data as wanted by

executives Get information in graphic form

Advantages and Disadvantages of EIS Advantages: -

Simple for high-level executives to use Operations do not require extensive computer experience

Provides timely delivery of company summary information Provides better understanding of information Filters data for better time management Provides system for improvement in information tracking

Disadvantages: - Computer skills required to obtain results Requires preparation and analysis time to get desired information Detail oriented Provides detailed analysis of a situation Difficult to quantify benefits of DSS How do you quantify a better

decision? Difficult to maintain database integrity Provides only moderate support of external data and graphics

capabilities

Functional Perspectives of Information System

Sales and Marketing Systems Manufacturing and Production Systems Finance and Accounting Systems Human Resources Systems

Interrelationships among Systems

That’s all for Today!