MODULE – 1

ORGANISATION & INFORMATION

SYSTEM
SYSTEM:
A system is a collection of elements/components that interact with
each other to accomplish the defined goal
Eg: University system
Banking system

University system:
 The components are: admission, teaching, examination, evaluation

 Each of these components interacts to train and graduate the student

 
Information System (IS):
An information system is a set of interrelated elements that collect (input)
data, manipulate (process) data and disseminate (output) information and
provide a reaction (feedback) to meet the objective

If an information system is automated using computer as machine, then it is

referred as Computer Based Information System (CBIS) and is the blend
of Information System and Computer System (Hardware & Software)

Information Technology:
Refers to the technology of
 storing
 processing
 communicating
 sharing
 protecting/securing
Data/information across geographical locations

Makes use of
 Computer (hardware/software) technology
 Storage technology

 Communication technology
In general, a system has 3 basic elements;

 Input
 Processing
 Output
 ENVIRONMENT
Suppliers Customers

ORGANISATION

Processing
Classify
Input Output
Arrange
Calculate

Feedback

Regulatory Agencies Stockholders Competitors

Changing Environment and its impact on business:

Any change in the environment will introduce some sort of pressure/stress on system
to undergo change in the system

If changes are not accommodated in the system, the system starts decaying and
terminates finally

The changes are accommodated by:

- changing the goal set of the system (new goals)
- changing the levels in achieving the goals
Types of changes in environment:
- Economical (Capital, Labor, Price change, Fiscal policy, customers)
- Technological
- Social
- Political
 Hardware

Business strategic
Objectives Data
Business Processes Software Managem
ent

Business Firm Information System

Telecomm
unication
 Operational Excellence

 New Products, Services & Business Models

 Customer & Supply Intimacy

 Improved Decision making

 Competitive advantage

 Survival
Operational Efficiency
E.g. Wal-Mart, the largest retailer on Earth, exemplifies the power of
information system coupled with brilliant practices & supportive mgt to
achieve world class operational efficiency
In 2005, Wal-Mart attained more than $285 billion in sales- nearly one-tenth of
the retail sales in the US- because of its Retail Link System, which digitally
links its suppliers to Wal-Mart’s 5,289 stores worldwide.
New Products, Services & Business Models
A business model describes how a company produces, delivers & sells a product or services
to create wealth
E.g. Apple transformed an old business model of music distribution in to online, legal
distribution model on its own iPod technology platform.
Customer & Supplier Intimacy
E.g. Mandarin hotel in Manhattan & other high end hotels exemplify the us of
information systems && technologies to achieve customer intimacy. These hotels use
computers to keep track of guest’s preferences such as their preferred room temperature,
check-in time, television programs & stores all that data. Individual rooms in the hotel are
networked to a central network server computer so that they can be remotely monitored
or controlled.
When the customer enters at the hotels, the system automatically changes the room
conditions based on customer’s profile.
Improved Decision making
E.g. Verizon Corpn, one of the largest regional Operating companies in the US, uses a
web-based digital dashboard to provide managers with precise real-time information on
customer complaints, network performance for each locality served, & line outages etc.
Using these information managers immediately allocate resources to affected areas &
restores service .
Competitive Advantage
Doing things better than your competitors, charging less for superior products &
responding to the customers & suppliers in real time will add up to higher sales &
higher profits
E.g. Dell Computer- Dell Computer has shown consistent profitability during its life
span of 25 years. A large part of Dell’s operational efficiency results from “mass
customization” staying close to the customers by using Web-based order entry model
that can build & ship a customizes PC to any of its millions of consumers only in few
days.
Survival
Introduction of ATMs
MIS – Definitions

MIS is defined as a system which provides information support for decision-

making in the organisation

MIS is defined as the system of man & machine for providing the
information to support the operations, the management & the decision-
making functions in the organization

MIS is defines as a system based on database of the organisation evolved for

the purposed of providing information to the people in the organisaton .
In order to have a better grip on the activity of information processing, it is
necessary to have a formal system which should take care of the following
points:
 Handling of voluminous data & transaction

 Confirmation of the validity of data

 Complex processing of data

 Quick search & retrieval

 Mass storage

 Communication of he information to the user on time

 Fulfilling the changing needs of information

Levels of Organisation &Activities

Senior Management

Middle Management
Scientists & knowledge
Workers, Managers

Operational management
Production & Service Workers
Senior Management- makes long-term strategic decisions about products &
services as well as ensures financial performance of the firm.

Middle management- carries out the programs & plans of senior

management
Knowledge workers such as engineers, managers, architects, design
products /services &create new knowledge for the firm

Operational Management- Data workers such as secretaries/clerks, assist

paper work at all level of the firm. Production worker produce the product
& deliver the service.
Technology
Computer hardware is the physical equipment used for input, processing & output
activities in an information system.

Computer software consists of the detailed , programmed instructions that control &
coordinate the computer hardware components in an information system.

Data Management technology consists of the software governing the organisation of

data on physical storage media

Networking & Telecommunication technology consisting of both physical devices

& software, links the various pieces of hardware & transfers the data from one
physical location to another.

The world’s largest used network is the Internet.

Data:

The term ‘data’ represent Facts or figures about an event/object/entity

Eg:USN, Name, Branch, DOB, Sex... etc,

Represents data about the entity/object student
Acc#, prev_bal, amt_credited, new BAL... Etc,
Represents data about the event of bank transaction
Information:
Information is the data that has been processed into a form that is
meaningful to the recipient in order to take appropriate actions/decisions

E.g.: Summing all the marks and finding the average of marks scored by students
to declare the class obtained.
Searching all the customers in the bank who have not remitted the last 3
installments towards loan to send reminder
Terms data and information are interchangeably used in many context but in
reality the two are different

In a vague way, data is like the raw material for processing and information is like
the finished product of processing
Information of one processing may become data for another processing
Attributes of data:

The quality of data/information depends on the attributes

associated with it
- Accuracy
- Timeliness
- Completeness
- Reliability
- Relevance
- Source
Levels of People:

3 levels of people are involved in any typical organization

- Operational level Management

- Middle level Management

- Top level Management

Operational management involved in
•planning
•scheduling
•controlling and
•decision making for routine operations

Unit manager, supervisor

Eg: production of number of items to be manufactured/fabricated per unit to meet
the production target
Middle management involved in
•short term planning
• setting targets
•controlling
•business functions

Production manager, purchase manager

E.g.: A production mangers sets the target for production of number of items for next
quarter based on demand from the marketing division and plan to ship the same
across business centers.
Top management involved in
•goal setting
•strategic planning
•evolving business plans
•implementation of plans
Managing Director, CEO, CAO, CE, Chairman

Eg: Planning for production of new product

 THE BUSINESS INFORMATION VALUE CHAIN
Business Processes

Supply Chain Enterprise Customer Knowledge

Management Management Management Management

Firm Profitability &

Strategic Position

Data Transformation Dissemination

Collection & in to
Storage business system

Modeling &
Planning Coordinating Controlling
Decision Making

Information Processing activities Management Activities

Programmed decisions:
These decisions are characterized by large volume of data and
predefined
•rules
•procedures
•Algorithms

Decisions can automated easily

Handled by operational management

Decisions are structured and frequency for decision is frequent

The result of the decision guarantees optimal solution

Non-programmed decisions:
These decisions do not have pre-established
•rules
•procedures
•algorithms
•data requirements are not known advance

Cannot be automated easily and completely

Environmental, social, technical information is required which keep changing with

respect to time, geographical location
Unstructured decisions due to change in type of parameters and number of
parameters keep changing

The outcome of the decision will not guarantee optimal solution but it may be
near to optimal solution

E.g: Decision Support systems – interactive information systems that

support/help in taking unstructured/ non-programmed decisions
JIT – Just-In-Time production decisions
TQM – Total Quality Management decisions
 Accounting

 Finance

 Personnel

 Public relations

 Sales

 Market research

 Production

 Purchasing
Accounting-
Profit/loss statement, cash flow, inventory control, payroll, cost control, cost
allocation& expense classification.
Users
 Mgt seeks information relevant to its decision making such as data on

investments in new projects, current financial position of the firm & the
control of expenses.

 Plant managers seek information relevant t material, labour & Overhead

costs.

 Sales managers needs the information about contribution margin to

different states.
Finance
Finance dept ins in charge of activities related to borrowing, funding &
ascertaining necessary liquidity.

Data related to capital structure, no. of shareholders, & the maturity date of
debit & treasury stocks must be available.

Data related to prime interest rates, capital & market conditions must be
maintained

Users
Top Mgt
Public Relations

 Bridges the gap between the outside world & the organisation.

 Union contract negotiations, scholarship & educational; contributions &

service rendered to the community are the typical information aspects
maintained by the dept.
Sales
Data in the sales dept are used to produce a flow indicative information
pertaining to regional & total sale forecasts, actual ales, performance
reports etc.

Users
 Sales managers use periodic report with breakdown sales by products in

evaluating the contribution margin of each territory.

 The Mgt must be given information on significant deviations from

predetermined forecasts.

 The Accounts dept receives daily documentary evidences & information

related to cash & credit sales.
Market research

MR dept gathers information pertaining to the firm’s market potential,

consumer behaviour & competitive circumstances.

Mgt must be furnished with information pertinent to mkt strategy & trends.

E.g. A manufacturer has designed software for the users of a major hardware
manufacturer.
The firm’s ability to achieve its sales forecast was hindered when the MR
dept failed to predict & account for a major modification that took place in
the hardware feature which made the firm's products quite obsolete.
Production
 Data relating to utilization of materials, scheduling priority, equipments &
facilities.

 Periodic reports are generated & informed to the plant managers

 Control of manufacturing cost is the primary objective

 Quality Control dept must be furnished with periodic reports containing

the no. of units produced & no. of production batches in order to determine
the sample sixe for quality production.
Purchasing
Purchasing dept is responsible for receiving a constant flow of RMs
machinery, equipments & office supplies.

Purchase dept collect the information about various sources of supplies,

favourable bids, terms of delivery & quantity discounts.

Users
 The accounts payable division needs documentary evidence supporting

various supplier claims

 Warehouse-keepers must be furnished with copies of purchase acquisition

forms relating to inflow of raw materials & supplies.
 Government

 Auditor

 Shareholders & Prospective Investors

 Customer
Government- It requires various reports in periodic intervals about
income, tax matters & other regulations.

Auditor
An external auditor is responsible for determining the validity of the firm’s
financial statements.

He seeks multipurpose information about A/Cs receivable, A/Cs payable,

petty cash vouchers, depreciation schedules & inventory evaluation sheets
etc with supporting evidence.
Shareholders & Prospective Investors
They are interested in information relating to the interim & annual earnings,
earmarking of retained earnings, & projections of future expansion.

Investors want to be informed about material decisions affecting the firm,

asset valuation etc

Customer
Functional Business Processes

FUNCTIONAL AREA BUSINESS PROCESSES

Manufacturing Assembling the product
Checking the 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
Remuneration & enrolling employees in benefit plans
 THE ORDER FULFILLMENT PROCESS

Generate Submit
Sales order Order

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Accounting
Check Generate
credit Approve Credit
invoice

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Manufacturing

Assemble Ship
product Product

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TYPES OF BUSINESS INFORMATION SYSTEM(FUNCTIONAL
PERSPECTIVE)
Sales & Marketing system

S& M information helps the senior mgt to monitor trends affecting new products & sales
opportunities, support planning for new products & services,& monitor the performance of the
competitors.

S&M system aid the middle mgt by supporting Mktg research & analyzing advertising &
promotional campaigns, pricing decisions, & sales performance.

S&M system assists operational mgt in locating & contacting prospective customers, tracking
sales
EXAMPLES OF SALES & MKTG INF ORMATION SYSTEM

SYSTEM DESCRIPTION GROUP SERVED

Order processing Enter, process, & track orders Operational mgt & employees

Pricing analysis Determining prices for products Middle management

& services
Sales trend Forecasting Prepare five years sales forecasts Senior management
Manufacturing & Production Systems

The M&P System deals with the planning, development & maintenance of production facilities,
the establishment of production goals, the acquisition, storage & availability of production
materials & the scheduling of equipments, facilities, materials 7 labour required to fashion
finished products.

Senior Mgt uses M&P system s that deal with the firm's long-term manufacturing goals, such as
whether to locate new plants or whether to invest in new Mfrg technology

M&P System for middle mgt analyze & monitor manufacturing & production costs & resources.

Operational mgt uses manufacturing & production system that deals with the status of
production task.

Examples of Manufacturing & Production Systems

SYSTEM DESCRIPTION GROUP SERVED

Machine Control Controls the actions of machines Operational mgt s

& equipments
Production planning Decides when & how many Middle management
products should be produced
Sales trend Forecasting Prepare five years sales forecasts Senior management
 Finance & Accounting Systems

The finance function is responsible for managing the firm's financial assets, such as stocks,
bonds & other investment to maximise the returns on these financial assets

The Accounting function is responsible for maintaining & managing the firm’s financial records-
receipts, disbursements, depreciation, payroll- the account for flow of fund in the business

Examples of Finance & Accounting Information system

SYSTEM DESCRIPTION GROUP SERVED

Accounts receivable Tracks money owed the firm Operational mgt

Budgeting Prepares short-term budget Middle management

Profit planning Plans long term profits Senior management

Human Resources System

The HR function is responsible for attracting, developing & maintaining the firm’s workforce.

HRIS support activities such as identifying potential employees, maintaining complete records on existing
employees, & creating programs to develop employee's talents & skills.

HRIS helps Senior mgt identify the human resources requirements(skills, educational level, types of
positions, no. of positions & cost) for meeting the firm’s long-term plans.

Middle mgt uses HRIS to monitor & analyze the recruitment, allocation & compensation of employees

Operational mgt uses HRIS system to track the recruitment & placement of the firm’s employees.

Examples of Human resources Information Systems

SYSTEM DESCRIPTION GROUP SERVED

Training & Development Tracks employee training, skills Operational mgt

Compensation analysis
HR Planning
& performance appraisals
Monitors the range & distribution Middle management
of employee wages, salaries &
benefits
Plans the long-term labour force Senior management
needs of the organisation
CONCLUSION
“SURVIVAL OF THE FITTEST”

Gone are the days of running a business without implementation of an

effective MIS.

To cope up with the competition & changing business environment & to

retina ac competitive position in the mkt, it is very much essential for
every organisation to implement an effective MIS to carry out its activities
in a speedy, efficient & effective way.