TOPIC 3 TYPES OF INFORMATION SYSTEM (MANAGEMENT)

Information System for Management

People make decisions all the time. A decision is a selection among several courses of action. For example, in the car buying decision, someone has to decide whether to buy a Ford, a Honda, a Toyota or some other make of car. We need information while making decision to help reduce the uncertainty. With better information, a decision maker is more certain about the outcome of the decision. For example, if someone has information about the repair records of the models of cars he or she considering, they can be more certain about the reliability of the car the buy. With good information, uncertainty can be reduced and the outcome from the decision is more likely to be satisfactory. Information systems can improve the effectiveness of management decision-making by providing decision makers with information related to the decisions for which they are responsible. Such information systems can be used for personal as well as business decisions. For example, if someone makes a car purchasing decision, he or she can use a computerized library information system to search for articles and reviews of the cars in which they are interested. A business manager making a product-selection decision can use a sales analysis information system to examine sales trends and a marketing information system to look at marketing research data.

There are eight types of information system for management: a. Office Automation System (OAS) b. Knowledge Management System (KMS) c. Expert System (ES) d. Management Information System (MIS) e. Decision Support System (DSS) f. Executive Information System (EIS)

g. Business Intelligent (BI) h. E-Business / E-Commerce

3.1

Office Automation System(OAS)

OAS could also be considered as computer-based information system that collects, process, store and transmit electronic message, document and other form of communication among individual, work group and organizations. OAS provides individuals effective ways to process personal and organizational data, perform calculations, and create documents. e.g. word processing, spreadsheets, file managers, personal calendars, presentation packages, electronic mail, desktop publishing, telecommunication and document image processing. . They are used for increasing personal productivity and reducing "paper warfare". OAS software tools are often integrated (e.g. Word processor can import a graph from a spreadsheet) and designed for easy operation.

OAS Subspecies:

a. Communication systems helps people work together by sharing information in many different forms Teleconferencing (including audio conferencing, videoconferencing), electronic mail, voice mail, fax computer conferencing,

b. Groupware system helps teams work together by providing access to team data, structuring communication, and making it easier to schedule meetings. For sharing information, controlling work flows, communication/integration of work

What are the effects of office automation?

Office automation reduces the number of clerical workers carrying out routine tasks Large firms no longer have to employ typists Office employees become more flexible and as a result one person can now do the jobs of several people Receptionists can spend more time with clients Managers need not necessarily delegate typing, with the secretary's role being redefined to include more Public Relations work

Example of OAS a. Document Imaging Processing (DIP) Used in industry to convert printed documents into an electronic format so that they can be stored, organized and retrieved more easily

b. Electronic Document Management System (EDMS) Convert document into a digital format which allows storage, retrieval and manipulation of the document on computer.

c. Workflow Management System (WMS) System for the automation of the movement and processing of information in a business according to a set of procedural rules.

Management level of OAS

Level of Management Operational

Activities

Key in operational data Convert data into computer format Doing clerical work Email to communicate with strategic level and management level

Tactical

Convert data into computer format Email to communicate with client, strategic level, operational level, etc Memo for operational level Email to communicate with business partner, client, strategic level, operational level, etc

Strategic

Audio conference and video conferencing with client, business partner, etc.

3.2

Knowledge Management System(KMS)

It is an information system that provides capabilities for organizing, storing, accessing and sharing organizational knowledge. It provides capabilities for organizing, storing, accessing and sharing organizational knowledge. It also provides capabilities of using groupware to facilitate sharing of explicit and implicit knowledge among employees. It may also use expert system to provide expert knowledge.

Organization Knowledge

Knowledge is the understanding that a person has gained through education, experience, discovery intuition and insight. Knowledge can be divided into 2:

Explicit knowledge It can be stated or written in a form someone else can understand. For example an athletic store managers knowledge of what to

do when the quantity of shoes is too low. Implicit knowledge It cannot be expressed easily but is understood by the individual. For example an athletic shoe store managers knowledge that a certain quantity of a particular type of shoe is too low.

Making decisions involves the use of both explicit and implicit knowledge.

Knowledge Management

Knowledge management is the process of managing organizational knowledge. It involves several activities:

An organization must determine what knowledge it has and acquire the knowledge that it is lacking. Explicit knowledge needs to be organized and recorded in a way that makes it usable by others in the organization that does not have that knowledge. Knowledge needs to be communicated to those who need it and share among the employees in an organization.

Knowledge Management Software The software used in Knowledge Management System are as following: Groupware Wincite Grapevine KnowledgeX

Example of KMS

a. Knowledge Management Practices at Toyota Motors The case discusses the various Knowledge Management (KM) practices at Toyota Motors, the world's most profitable automobile company. It also describes how Toyota enables wide knowledge sharing not just within the organization but also across its supply chain. It details the practices that make Toyota a true learning organization. It further explores the role of traditional organizational practices in the company's KM efforts. The case concludes with a discussion on how KM has contributed to Toyota's exemplary performance

Level of Management for KMS

Level of Management Operational

Activities

Handle content and knowledge management Using the knowledge Messaging Computer-mediated collaboration Electronic task management Video conferencing & visualization etc

Tactical

Finding and creating knowledge Data mining Web browsing Search and retrieval

Strategic

Packaging Knowledge Documents management Intelligent agents

3.3

Expert System(ES)

It gives expert advice to the decision maker. An expert system mimics the way a human expert would analyze a situation and then recommend a course of action. The system accomplishes task by incorporating human expert knowledge and by using this knowledge to analyze specific problems. ES consists of hardware and software that stores knowledge and makes inferences, similar to those of a human expert Expert systems use techniques from the artificial intelligence (AI) to mimic human intelligence by using a computer. Artificial Intelligence System include people, procedures, hardware, software, data and knowledge needed to develop computer systems and machines that demonstrate the characteristics of intelligence.

Characteristics of intelligent behavior: The ability to learn from experiences and apply knowledge acquired from experience Handle complex situation Solve problems when important information is missing Determine what is important React quickly and correctly to a new situation Understand visual images Process and manipulate symbols Be creative and imaginative Use heuristics

Expert Advice

People are experts in particular area due to the formal education or specialized training. Expert advice is used in all levels of a business but it is required for structured problems at the operational and tactical levels.

Component of Expert System

a. Knowledge base

A component of an ES that stores all relevant information, data, rules, cases and relationships used by the ES. ES Must be developed for each unique application.

Structure of knowledge base

Some tools & techniques that can be used to create a knowledge base base: Assembling human experts integrate the knowledge of individuals with similar expertise Using fuzzy logic help computers evaluate the imperfect or imprecise conditions they encounter and make educated guesses based on the likelihood or probability of correctness of the decision Using rules conditional statement that links given conditions to actions or outcomes.

Using cases use cases in developing a solution to a current problem or situation.

b. Inference engine

Part of ES that seeks information and relationships from the knowledge base and provides answers, predictions and suggestions the way a human expert would.

c. Explanation facility

Allow user or decision maker to understand how the ES arrived at certain conclusions or results

d. Knowledge base acquisition facility

Provides convenient and efficient means of capturing and storing all the components of the knowledge base.

e. User interface

To make the development and use of an ES easier for users and decision makers

Level of Management for ES

Level of Management Operational Tactical Strategic

Activities

Short term decision making (day-to-day operations) Short term and long term decision making Long term Decision making

3.4

Management Information System(MIS)

Management information system (MIS) is a system or process that provides information needed to manage organizations effectively. Management information systems are regarded to be a subset of the overall internal controls procedures in a business, which cover the application of people, documents, technologies, and procedures used by management accountants to solve business problems such as costing a product, service or a business-wide strategy. MIS are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization It supports management decision-making by providing information in the form of reports and responses to queries to managers at different levels of an organization.

Management Information Systems Structure

The users of MIS are managers at each levels of decision-making. The user then request information from the system and the information returned in the form of reports and query. The data in MIS comes from both internal and external. The MIS software consists of application software to manipulate data in database.

Level of Management for MIS

Level of Management Operational Tactical Strategic

Activities

provide evidence of business transactions enable effective and efficient utilization of resources information for routine decision making, problem

solving, and service delivery identify and manage risks support research and development support consistent and rapid decision making evaluation of resources usage project scheduling problem solving operational planning Evaluate and document achievements. external factors that influence the direction strategic planning and policy information organization for strategically positioning the quality, performance and

3.5

Decision Support System(DSS)

Decision-support systems ("DSS") are specifically designed to help management make decisions in situations where there is uncertainty about the possible outcomes of those decisions. It helps managers make decisions by analyzing data from a database and providing the results of the analysis to the manager. It is being used for making decisions at the tactical and strategic level management.

Function of Decision Support System

a. DSS should provide support for decision making, but in particular semistructured and unstructured decisions. b. DSS should focus on every levels of management decision making - it should integrate across all levels in recognition of the overlap between operational, tactical and strategic decisions. c. DSS should support all phases of decision making process outlined above.

Management Decision Support

A DSS includes several ways of analyzing data. Manager can select the form of analysis that she or he wants as following

a)

Statistical Calculation

Data is manipulated to determine the characteristics of the data or to draw conclusions from the data. For example a manager has data about different types of shoes sold for each of the past five years. He or she can calculate the average yearly sales for each type, which is one way of characterizing the data. b) Mathematical Modeling

A model is a representation of reality. The models are used for decisionmaking to stimulate the real world by using sets of the mathematical equations. For example an inventory flow simulation so that a manager can try different inventory reordering decisions. By trying different strategies, a manager can use the model to determine the least expensive inventory reordering policy.

Decision Support System Structure

DSS database

Users (Decision Makers)

DSS Software

DSS model base

The users of a DSS are managers (Tactical and strategic level). The users requests analysis of data from the system. The DSS database contains data that is analyzed to produce the output. It comes from both internal and external sources. The DSS model base contains the mathematical models and statistical calculation routines that used to analyze data from the database. The DSS software provides capabilities to access data in the database and to use models from model base to analyze the data.

Level of Management for DSS

Level of Management Operational Tactical Strategic

Activities

Promotes learning or training Generates new evidence in support of a decision support the solution of problems that require judgment by the problem solver Helps automate the managerial processes Analyze, compare, and highlight trends in important variables so that they can monitor performance and identify opportunities and problems.

Reveals new approaches to thinking about the problem space

3.6

Executive Information System(EIS)

It is a system specifically designs for the information needs of strategic managers. It provides information and support that is most appropriate and useful for top level managers. EIS also known as an Executive Support System (ESS), it provides executives information in a readily accessible, interactive format. They are a form of MIS intended for top-level executive use. An EIS/ESS usually allows summary over the entire organization and also allows drilling down to specific levels of detail. EIS is designed to help senior management make strategic decisions. It gathers, analyses and summarizes the key internal and external information used in the business.

Features of Executive Information System

Provide summary information to enable monitoring of business performance Used mainly for strategic decision making, but may also provide features that relate to tactical decision making

Provide a drill-down feature which gives a manager the opportunity to find out more information necessary to take a decision or discover the source of a problem.

Provide analysis tools Must be integrated with other facilities to help manage the solving of problems and the daily running of the business

Integrate data from a wide variety of information sources, including company and external sources such as market and competitor information

Designed according to the needs of managers who do not use computers frequently.

Executive Information Needs

Manager at strategic level need summarized and not detailed information. However, they also need to focus on the details of particular aspects of information. The manager can get detailed information through a process called drilling down. Drilling down is the process of finding detailed information that is used to produce summary information. Managers at the highest level need both internal information and external information.

ESS may include any of the following capabilities: a) b) On line access to reports The ability to query the MIS database for information not usually received in reports c) d) The ability to access external database The ability to analyze and summarized data from reports and queries, and to view the results of the analysis graphically. e) f) g) h) The ability to drill down to detailed information Electronic mail (e-mail) to communicate with employees. An electronic appointment calendar Basic word processing capabilities for writing notes, memos, and another simple communications.

Level of Management for EIS

Level of Management Operational

Activities

control focuses on day-to-day operations, and the central idea of this process is effectiveness and efficiency

Tactical

Provide strong reporting and drill-down capabilities. Provides information Offers efficiency to decision makers evaluation of vendors and buyers, the evaluation of purchased materials and parts, and analysis of critical purchasing areas timely delivery of company summary

Strategic

Identify where a problem or opportunity exists Providing easy access to both internal and external information relevant to meeting the strategic goals of the organization.

Provides timely delivery of company summary information make judgments about risk and uncertainty of a project and its impact on the company in short term and long term

3.7

Business Intelligent(BI)

Business Intelligence (BI) refers to computer-based techniques used in spotting, digging-out, and analyzing business data, such as sales revenue by products and/or departments or associated costs and incomes. Business Intelligence often aims to support better business decision-making. Business Intelligence also is a process for increasing the competitive advantage of a business by intelligent use of available data in decision making. This process is pictured below.

The five key stages of Business Intelligence: 1. Data Sourcing 2. Data Analysis 3. Situation Awareness 4. Risk Assessment 5. Decision Support

Extracting electronic information from text documents, databases, images, media files and web pages. Synthesising useful knowledge from collected data using data mining, text understanding and image analysis techniques. Linking the useful facts and inferences and filtering out irrelevant information. Identifying reasonable decisions or courses of action based on the expectation of risk and reward. Employing semi-interactive software to identify good decisions and strategies.

Level of Management for BI

Level of Management Operational Tactical

Activities

clerk recorded customer features Managerial Data Encompasses Hard and Soft Data Measures the operational reliability for meeting a customer request Technology enables organizations to transform data stored in core business systems into useful information Analyzing the vast amount of internal transaction data and external data about customers and competitors to track performance and manage the business more effectively

Strategic

Provide statisticians and Corporate Analysts Ensure the payoff of investments in BI systems by making the masses accountable for data-driven action and results. - Accountability could be in the form of rewards, penalties Or simply, a mandated workflow

Support better business decision-making

3.8

E-Business / E-Commerce

Electronic Commerce (e-commerce) is the use of networks especially the internet to promote and sell goods and services. An Electronic Commerce (e-commerce) system is an information system that provides e-commerce capabilities for an organization.

Types of Electronic Commerce

There are several types of e commerce:

a)

Business to Consumer (B2C) Electronic Commerce

It involves a business selling its goods or services electronically to the final consumer, which is usually an individual. B2C e commerce companies operate in several ways as following: Direct marketers sell the products they produce Indirect marketers Use other companies to sell their products Full cybermarketers Only sell their products electronically Partial cybermarketers Sell electronically Electronic Distributor Fill the orders they take from their own stock Electronic Brokers Send the orders they receive to manufacturers or wholesalers that fill the orders Normally involves the use of internet and the World Wide Web their products traditionally and

b)

Business to Business (B2B) Electronic Commerce

It involves one business selling its goods or services electronically to other businesses. There are several types of B2B: Supplier Oriented Marketplace A supplier company provides e commerce capabilities for other businesses to order its products. Buyer Oriented Marketplace The business that wants to purchase the products request quotation or bids from other companies and the buyer will select the winning supplier from the submitted bids. Intermediary Oriented Marketplace A third business will acts as intermediary between the supplier and buyer. It will provides e commerce capabilities for suppliers and buyers. B2B use the public Internet or it may use a private extranet set up by company.

c)

Consumer Consumer (C2C) Electronic Commerce

One consumer sells a product or service to another consumer through an intermediary e commerce business. The intermediary will provides a website for consumer to advertise the products.

d)

Intrabusiness or Organizational Electronic Commerce

Involves transactions between departments, regions, subsidiaries or other unit of business. The transactions are using the intranet.