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Management Information System (5567)
Assignment # 01
What is the relationship between an organization and its information systems in Pakistan? Explain how is this relationship changing over time? Spawning of New Business: Information, I.T. and the resultant Information Revolution are giving birth to completely new industries in three distinct ways: a. The Information Revolution makes new business technologically feasible. b. Information/I.T. also spawns new business by creating derived demand for new products. c. Information and Information Technology help create/spawn business within old ones. By enabling a firm to spawn a new business, information confers competitive advantage to the firm as it can offer a bundle of goods/services. "New Ways of Doing the Things" : Information and I.T. facilitate evolution/development of new ways of doing old things differently. This difference makes the difference and confers competitive advantage on a firm. In order to understand the specific use of information for competitive advantage we would consider the uses under two types: a. Functional Uses b. Strategic Uses. a. Functional Uses 1. Information helps lower cost in any/all parts of "Value Chain". Value Chain is basically a system of interdependent activities which are connected by linkages. Information not only affects how individual activities are performed, but through new information flows, it is also greatly enhancing a company's ability to exploit linkages between activities, both within and outside the company. Competitive advantage is considered as a function of cost/value chain. 2. Information and Information Systems help in: i. Facilitating product delivery ii Adding value to quality; and iii. Improving product quality Information helps transform the physical processing component of activities into information component leading to value addition Information bestows organizations with speed and ability to move quickly into the market, thereby giving the organization the first mover's competitive advantage. It also enables organizations to command a competitive premium Information helps organizations to enhance: i. Quality of their services Quality of their operations ii. Quality of their products iii
Information can help simplify: i. Products ii. Product Processes iii Production Cycle Time Information helps organization Meet benchmarking standards i Improve customer service Improve quality and precision of design and product
b. Strategic Uses Information gives organizations new ways to out-perform their rivals. A firm can use four basic competitive strategies to deal with the competitive forces 1. Product differentiation 2. Focused differentiation 3. Developing right linkages to customers and suppliers 4. Becoming a low-cost product A firm may/can achieve competitive advantage by pursuing one or more of these strategies simultaneously. It is here where information helps an organization in gaining a competitive advantage. The new intensity of information makes it possible for more precise development of strategies, planning, forecasting and monitoring. Information facilitates availability of extensive data, both internal and external, thereby facilitating a more comprehensive analysis and adding value for/to: (i) Problem Solving (ii) Decision-Making. Information and I.T. help increase/improve an organization's abilities to co-ordinate its activities regionally, nationally and globally. This, in turn, helps unlock/unleash the powers of broader geographical scope to create competitive advantage. Information enables organizations to "Think Globally, Act Locally". Information yields strategic opportunities and enables change the rules of the competition very fast, almost overnight, and bestows competitive advantage. Information and I.T. (powerful computers, software and networks) help organizations become more flexible and responsive; eliminate management layers, separate work from location and restructure work-flows, giving additional competitive advantage to organizations. Information and I.T. help organizations acquire Strategic Flexibility. Strategic Flexibility is "a set of capabilities firms use to respond to various demands and opportunities that are a part of dynamic and uncertain competitive, environment". MIS and Information Concepts MIS should provide the information which has a surprise value and which reduces the uncertainty. It should simultaneously build the knowledge base. While designing MIS, due regard should be given to the communication theory of transmitting the information from the sources of the destination. MIS should use the redundancy of data and information as a measure to control the error in communication Information is a quality product for organization. The quality can be ensured if the inputs to the MIS are controlled on the factors of impartiality, validity, reliability, consistency and age. MIS should give regard to the information used for planning, performance control and knowledge database. Recognizing that the information may be misused if it falls into wrong hands, the MIS design should have the features of filtering, blocking, suppressions and delay delivery.
TYPES OF INFORMATION Information is to be used for decision making. The process of decision making is generally divided into three types: 1. 2. 3. 1. Strategic Level Tactical Level Operational Level Strategic Level For Strategic decision making, one needs strategic information, which is holistic, unstructured and draws heavily from the external environment. It would also require more futuristic inputs like the emerging technologies, competition, consumer preferences, socio-eco-political changes etc. as these inputs would be used for long-term planning. 2. Tactical Level Tactical information would be used for medium/short-term planning by the Middle Management, Budgets, forecasts, analysis, cash/funds flow projections are part of the tactical information. Such an information is mostly from internal environment and partly from external environment like customer perceptions, competitors' strategy, pricing etc. It has medium term impact. 3. Operational Level Operational information is mainly for/from operating people ranging from a 'shift' to a day or a week or a month. It is basically about what is currently happening around within the organization and is mainly drawn from internal sources. It also covers a specific product, specific activity and a smaller group/number of people. Part from the three types as stated above, we could also divide information into Planning Information and Control Information. The planning and control information could be differentiated as in table 5.2. Table 5.2 Difference between planning and control information Planning Information Control Information It covers the whole organization It has a longer time span It looks for and analyses trends/patterns Used for working futuristic trends/forecast. It is concerned with small, specific part of organization. It has a shorter time span It looks for specific details for functional activity. Used for assessing actual performance vis-a-vis budgeted.
INFORMATION REQUIREMENT : Information Requirements Decisions There are four reasons which make it difficult to btain a correct and complete set of information requirements: The constraints on humans as information processors and problem solvers. The variety and complexity of information requirements. The complex patterns of interaction among users and analyst in defining requirements. Unwillingness of some users to provide requirements. Information requirement is a detailed statement of the information needs that a new system must satisfy. It involves identifying who needs what information, where, when and how. Information requirement analysis carefully defines the objectives of the new or modified system and develops a detailed description of the functions that the new system is expected to perform. Requirements must consider economic, technical and time constraints as well as the goals, procedures and decision processes of the organization. Information Requirements At Different Levels Information requirements need to be established at three levels for the purpose of developing implementing organizational information system. The three levels are as follows: 1. Organizational Information Requirements. 2. The requirements for each database defined by data models and other specifications. I The detailed information requirements for an application. I. Organizational Level Information Requirement Information requirements are required at the organization-wide level for information system planning, identifying applications and planning an information architecture. It is, however, imperative that the organization has a clear understanding of both its long- term and short-term information requirements. The process of organization-level information requirement determination obtains, organizes and documents a complete set of high level, strategic requirements. These requirements are then factored into data bases and sub-systems, which can be scheduled for development. Obtaining organizational information requirements would mainly consist of the following steps: • • • Defining underlying sub-systems Developing manager by sub-system matrix Defining and evaluating information requirement for organizational sub- systems.
Identify common business functions and processes in an organization and their relationship to MIS.
A business process or business method is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart as a sequence of activities. A function model or functional model in systems engineering and software engineering is a structured representation of the functions (activities, actions, processes, operations) within the modeled system or subject area. Example of a function model of the process of "Maintain Reparable Spares" in IDEF0 notation. A function model, also called an activity model or process model, is a graphical representation of an enterprise's function within a defined scope. The purposes of the function model are to describe the functions and processes, assist with discovery of information needs, help identify opportunities, and establish a basis for determining product and service costs .
• a company thrives by successfully managing three principal areas: 1. Marketing: selling product. 2. Production/Operations: making product. 3. Finance/Accounting: collecting data, managing accounts payable/ receivable, measuring performance. • The purpose of production is to transform raw materials into a saleable product, or to transform the inputs to a company into its outputs. • a company’s “operations” are primarily the resources/processes which are directly associated with the transformation or production of the product. • operations management is the control of these resources/processes. The example is about a company that sells electronic products. it is assumed that all companies adopt same procedure with little bit changing according to their requirements. This specific process describes the activities that occur when a customer, who purchased a product, wants to return the product because of a problem. In this instance, the company has the option to either repair the product or exchange it for a new one.
The example of functions and processes in an organization is described in Table 4-1.
The real-time business process activities generate operational data. That data is used to understand the results, in terms of time and cost of the activity. That data is also used to generate a historical data source for potential subsequent analysis. This data can be stored in a real-time operational data store during the life of the process and then transferred to the enterprise data warehouse as history data.. It is only through the use and proactive monitoring and management of defined business processes that organizations can be confident about the attainment of these goals. Managing the business processes Business Process Management enables an enterprise to be flexible and responsive to everchanging On Demand Business through the optimization and automation of business processes to: Identify and eliminate redundancies and bottlenecks Decouple business integration logic from the implementation code Increase portability and decrease costs by use of industry standards Minimize manual tasks Process name Returned Product Inspection. Inputs Returned Products and customer information. Outputs Determination that either a new or repaired product should be given to the customer.Event Product enters the inspection activity.Process descriptions When the product arrives, the inspector inspects the product per the appropriate documented procedure. This requires a product identification number. Following the inspection, the product is either repaired and returned to the customer, or scrapped. Other activities in the process determine whether a new exchange product or a refund is sent to the customer.Resources Inspector and inspection document.Performance metrics Time and cost to inspect the product and either repair the product or scrap the product. 62 Improving Business Performance Insight Quickly implement new business rules and processes Monitor and manage process performance, using KPIs and alerts When describing business process management, there are two primary perspectives. One is relative to the Management Disciplines and the other is relevant to the Technology Platform. Management Disciplines: Business process management is a major initiative in industry today and is seen as a valuable approach for gaining better insight about, and control over, business operations. Significant effort by management is expended in developing business strategies and goals and distributing them
throughout the company. The problems have historically come when trying to monitor and manage the execution of those strategies. This is because many organizations do not have the processes or anagement tools in place to accomplish it. Another issue is that planning and budgeting cycles are not flexible or fast enough to satisfy the fast changing business requirements. Plans and budgets are many times out of date before they are completed. This can happen for many reasons, one of which might be that inappropriate and non-integrated tools and methods have not kept up with current practices. There are many companies, for example, that base their complete planning process on a series of spreadsheets linked together over different computers, and even departments. What is required are specialized software solutions developed specifically to define, develop, monitor, and manage business processes.Business process management replaces traditional views of business based on organizations conceived of functional and departmental areas, with their metrics and procedures based on cross-functional core processes aligned with high level business objectives and enterprise strategy. This is because traditional views can present problems when they need to expand the business process across organizations within the enterprise. It is not possible to have global visibility of the enterprise when processes and measurements have only an organizational focus.
Technology platform: This approach provides a convergence through integration and enhanced technology to help streamline the business transformation. It provides a set of software tools needed to optimize performance, make abstract performance goals more concrete, connect them to process data, automate and monitor process activities, and provide a platform for agile performance improvement. This approach also perceives IT as a facilitator of the business.With business process management, the organizations transfer business strategies to the business processes so that each component is involved in the fulfillment of the corporative objectives. The components that can be used are suppliers, clients, technology, and workers. This implies that those involved in decision making in the organization obtain information in time and formats to enable them to determine the best direction for the business. These organizations can model and analyze the end-to-end process as whole. They provide modeling tools that allow business analysts to document and define measures for the existing, and proposed new, processes. Business process management is all about making the processes that are core to your business work better.Business process management also combines business processes, information, and IT resources, aligning your organization’s core assets of people, information, technology, and processes, to create a simple integrated view. This includes the real-time intelligence of both its business measurements and IT system
performance. This integration of resources allows your organization to obtain business information faster, respond more quickly to market trends and competitive threats, and improve operational efficiencies for better business results. Business process management enables your organization to operate more effectively and efficientl
You have been asked by the Chief Executive Officer (CEO) of your organization to evaluate the presence and weighting of factors that may inhibit the development of (IOS) Inter Organizational System in your local environment. Briefly review these and consider how your organization (or any other with which you are familiar) should approach a perceived need for new or increased IOS.
An Interorganizational System (IOS) is one which allows the flow of information to be automated between organizations in order to reach a desired supply-chain management system, which enables the development of competitive organizations. This supports forecasting client needs and the delivery of products and services. IOS helps to better manage buyer-supplier relationships by encompassing the full depths of tasks associated with business processes company-wide. In doing these activities, an organization is able to increase the productivity automatically; therefore, optimizing communication within all levels of an organization as well as between the organization and the supplier. For example, each t-shirt that is sold in a retail store is automatically communicated to the supplier who will, in turn, ship more t-shirts to the retailer. Organizations might pursue an IOS for the following reasons: 1. 2. 3. 4. 5. 6. Reduce the risk in the organization Pursue economies of scale Benefit from the exchange of technologies Increase competitiveness Overcome investment barriers Encourage global communication
The most common form of IOS is Electronic Data Interchange, which permits instantaneous computer-to-computer transfer of information. Organizations are compelled to develop interorganizational relationships (IORs) to enable a range of activities such as supplying goods, research and development (R&D), and outsourcing. The use of information technology can facilitate a smooth flow of information from one organization to another using interorganizational systems (IOSs) - automated information
systems shared by more than one organization and allowing information flow across organizational boundaries. IOSs can reduce the costs of communications and at the same time extend the possibilities of coordination. 2. Transaction Cost Economics The Theory Transaction cost economics (TCE) concentrates on the make or buy decision. The theory argues that it is more efficient for an organization to buy a standard product externally from a special supplier who is an expert in producing that product than to produce the product internally. Nonetheless, buying products on the market can be less attractive when certain conditions apply such as for example when the organization needs a specific customized product. The organization is forced to internalize production under these conditions. TCE justifies why and predicts when an organization chooses to internalize the production process or conduct market exchange to acquire the product. TCE identifies two types of costs that have to be considered to determine whether a transaction should take place externally on the market or internally within the firm: production costs and transaction costs. On the one hand, acquiring a product on the market is argued to lower production costs and to raise transaction costs. The production costs decline due to the economies of scale and specialization advantages the supplier benefit from. The transaction costs raises due the required negotiations and monitoring within the market. On the other hand, producing a product internally increases the production costs and lowers transaction costs. Hence, the organization will choose the most attractive alternative that minimizes the total costs. IOS Literature Using The TCE Theory IOS Research applying the TCE has tried to investigate the impact of IOS on the transaction structure. Malone  proposed the ‘electronic markets hypothesis, which argues that information technology will reduce the information coordination costs and this will encourage the use of electronic markets. He contends that eventually electronic markets will obtain the preference above electronic hierarchies for coordinating economic activities. Clemons et al  disagreed and proposed the ‘move to the middle hypothesis, where they argue that information technology in the form of IOS will reduce coordination costs, operation risks and opportunism risks. Because of these reductions, it will be more efficient to create long-term relationships with a smaller number of suppliers. Gurbaxani and Whang  focused on three types of costs: external and internal coordination costs and operating costs. They argue that information technology has shrunk external and internal coordination costs and improve the operational efficiency. Consequently, the use of both electronic markets and electronic hierarchies will be increased. Moreover, they content that the general impact of information technology will largely depend on the factors specific to the organization and the industry. TCE has enabled scholars to justify the formation of many IORs and the use of IOSs within these relationships. The limited focus of TCE on short term cost minimization results in the ignorance to consider other important criteria such as social issues and learning within the relationship. These criteria can have a significant impact on the relationship. 3. Incomplete Contracts The Theory A complete contract is a contractual agreement between economic agents that specifies the
responsibilities of each party in every possible situation or contingency. Williamson [36,37] and Maskin and Tirole  reason that contracts are almost never complete. As discussed earlier, Williamson  argues that the cost of contracting and subsequently enforcing these contracts depends on the chosen governance structure, i.e. market or hierarchical. Grossman and Hart  contend that each governance structure involve a different type of contractual rights: specific and residual rights. If it is too costly to stipulate all the specific rights in the contract, then all the rights will be transferred excluding few rights that are mentioned in the contracts. Therefore, ownership is important in the incomplete contract theory. Ownership dictates the destiny of an asset in contingencies not described in the contract, that is to say ownership is the purchase of the residual rights of control [3, 13]. Because contracts are almost never complete, owners have a relatively stronger position compared with non-owners because they mostly acquire the residual income streams due to their strong negotiating position. The failure to attain complete contracts underlines the importance of IOS ownership as portrayed by the case of the Airline Computer Reservation Systems (CRS’s). The CRS’s were traditionally owned by the individual airlines and American Airways and United Airlines were leading and affecting the market. Smaller airlines contended that American and United should divest their CRS’s to create independent intermediaries. This ownership structure would serve competition better and encourage higher levels of investment, and eventually higher economic surplus. The incomplete contract theory was used by Bakos and Brynjolfsson  to determine the optimal strategy for buying organizations that use IOS. They argue that buying organization can maximize their profits by reducing their bargaining power through limiting commitments to a small number of suppliers. Even though this is apparently inconsistent, the reduction in the number of suppliers is required to persuade suppliers to conduct noncontractible investments. This is explained by the rationale that when a suppliers perceive a particular buyer to be dependent and willing to enter a long term relationship, then the supplier will be more willing to conduct asset specific investments. Another IOS related application of incomplete contracts theory is regarding the ownership structures in electronic networks. Bakos and Nault  argue that if there are one or more essential assets for the functioning of the IOS, then all the assets of the IOS should be owned together. Hence, common ownership by all participants is optimal when an IOS requires essential assets, such as a common IT infrastructure. Furthermore, they argue that when essential assets and indispensable participants are absent, sole ownership will not be the optimal ownership structure. Therefore, if IOS partners want to prevent any single party from controlling the IOS, then they should make certain that the IOS doesn’t need any essential assets and if there are such assets, then they should be owned by everyone. 4. Adoption Theory The Theory Adoption generally refers to the decision of any individual or organization to make use of an innovation . IOS adoption research has been influenced by the broad organizational adoption approach  significantly [6, 27]. This approach emphasizes that adoption can be based on the perceived characteristics of the innovation. Rogers  identified five characteristics that can either facilitate or impede the adoption of an innovation. First, relative advantage is the extent to which the innovation is perceived better than that it is replacing. Second, compatibility is the perceived consistency of the values, needs, and experiences of potential adopters with the innovation. Third, complexity is the extent to which an innovation is difficult to understand. Fourth, triability refers to the extent to which an innovation can be experimented on before a full commitment must be made. Finally, observability is the degree to which the benefits of the proposed innovation are visible. These characteristics are primarily
. Resource Dependence Theory The Theory The roots of resource dependence theory (RDT) can be found in an article by Emerson in 1962 where he illustrated the analogy between power and dependence across all forms of social relationships . Emerson argued that the dependence of a party B on party A is a function of availability and motivational investment and is directly comparative to the power of A over B. In economic expressions, this is known as supply and demand. The theory of Emerson was later applied by Pfeffer and Salancik  to analyze the relationship between the organization and its external environment. They distinguished between general structural characteristics that describe the entire environment and particular relationships among identifiable social actors. The three most elemental structural characteristics of the environment are concentration, munificence, and interconnectedness. Concentration is the level of diffusion of power and authority within the environment, munificence is the level of availability or shortage of critical resources, and interconnectedness is the number and configuration of connections between organizations. These three structural characteristics shape the general relationships between social actors. On an individual level, the degree of dependence that an individual organization faces is determined by the importance of the externally controlled resources to the success of the focal organization, the degree of discretion that the external environment has over the resource allocation of that resource and finally the number of alternatives to that particular resource. IOS Typologies In the IOS literature, many typologies for classifying IOSs have been proposed. For example, Choudhury (1997) describes three types of IOSs: electronic dyad, electronic monopoly and multilateral IOS. On the other hand, Kumar and van Dissel (1996) suggest an interdependence-based typology for IOS (based on pooled, sequential and reciprocal dependency) while Benjamin et al. (1990) classify IOSs based on transaction processing versus task support. Finally, Premkumar (2000) identifies three levels of sophistication in IOS implementations (lowest to highest): communication, coordination and cooperation. Discrete stages with intervening processes The discrete stages depicted in the three figures reflect a clear consensus in the literature regarding the major stages of an IOS implementation (see Table 1). Many studies (e.g., Hart & Saunders 1997, 1998; Crook & Kumar 1998; Massetti & Zmud 1996) have focused on “use” (by initiator and/or adopter), but this concept has a strong parallel with both “internal “and “external” diffusion. Similarly, some studies have focused on realizing benefits from such implementations using concepts like “implementation success” (Premkumar et al 1994), “organizational performance” (Ramamurthy et al 1999), “impact” (Iacovou et al. 1995) and “strategic payoff” (Chatfield & Yetton 2000), but again, these concepts have a strong parallel with “realized value”. More importantly, the figures highlight the existence of intervening processes between these discrete stages Interorganizational Systems (IOS). Lately, the growing importance and easy accessibility of the Internet have propelled IOS to a new height. Undoubtedly, IOS can have a great impact on organizational performance and industry structure. However, IT such as the Internet is readily available to all companies, and most IOS concepts can be easily replicated. Followers often enjoy newer and better technology that enables them to offer comparable services in a short
time and possibly at a lower cost. Late adopters can also learn from the experience of innovators and thus avoid problems and hiccups along the way. How, then can organizations achieve competitive advantages from IOS? This paper examines a number of successful IOS such as the SABRE reservations system from American Airlines, the Apollo reservations system from United Airlines, the ASAP Express from Baxter Healthcare Corporation, and the Wal-Mart Supply Chain system. These are some of the rare few that have managed to sustain competitive advantages (albeit some for a short period of time) as other companies installed similar electronic capabilities. The factors that contribute to the success of these systems
Identify different generic approaches to strategy for effective use of IS in organizations. Apply Supply-and-Demand Chain Management techniques to B2B and B2C analysis.
The discipline of MIS can be categorized in the following 6 classes: i) Transaction Processing System (TPS) ii) Management Information System (MIS) iii) Decision Support System (DSS) iv) Executive Support System (ESS) v) Office Automation Systems (OASs), and vi) Business Expert Systems (BESs) Transaction Processing System TPS processes transaction and produces reports. It represents the automation of the fundamental, routine processing used to support business operations. It does not provide any information to the user to his/her decision-making. TPS uses data and produces data as shown in the following diagram. Data Processing Data
Previously, TPS was known as Management Information System. Prior to computers, data processing was performed manually or with simple machines. The domain of TPS is at the lowest level of the management hierarchy of an organization. Management Information System (MIS) MIS is an information system, which processes data and converts it into information. A management information system uses TPS for its data inputs. The information generated by the information system may be used for control of operations, strategic and long-range planning. Short-range planning, management control, and other managerial problem solving. It encompasses processing in support of a wide range of organizational functions & management processes. MIS is capable of providing analysis, planning & decision making support. The functional areas of a business may be marketing, production, human resource, finance and accounting. Decision Support System (DSS)
A decision support system (DSS) is an information system application thatassists decisionmaking. DSS tends to be used in planning, analyzing alternatives, and trial and error search for solution. The elements of the decision support system include a database, model base & software. The main application areas of DSS are Production, finance and marketing.
User Interface Fig: Elements of DSS DSS can be differentiated from MIS on the basis of processing the information. MIS processes data to convert it into information. DSS processes information to support the decision making process of a manager. Executive Support System (ESS) Executive Support System (ESS) is an extension of the management information system, which is a special kind of DSS; An ESS is specially tailored for the use of chief executive of an organization to support his decision-making. It includes various types of decision-making but it is more specific and person oriented. Office Automation Systems (OAS) Office automation refers to the application of computes and communication technology to office functions. Office automation systems are meant to improve the productivity of managers at various levels of management of providing secretarial assistance and better communication facilities. Office activities may be grouped under two classes, namely i) Activities performed by clerical personnel (clerks, secretaries, typist, etc.,) and ii) Activities performed by the executives (managers, engineers or other professionals like economist, researches etc.) In the first category, the following is a list of activities. a) Typing b) Mailing c) Scheduling of meetings and conferences, d) Calendar keeping, and e) Retrieving documents The following is a list of activities in the second category (managerial category) a) Conferencing. b) Production of information (messages, memos, reports, etc.) and controlling performance
Business Expert Systems: These systems are one of the main types of knowledge-based information systems. These systems are based on artificial intelligence, and are advanced information systems. A business expert system is a knowledge based information system that uses its knowledge about a specific, complex application area to act as an expert. The main components of an expert system are: a. Knowledge Base b. Interface Engine c. User Interface Rules, facts Knowledge Base User Interface Logic Interface Engine
A management information system has the following characteristics: 1). System approach: The information system follows a System’s approach. The system’s approach implies a wholistic approach to the study of the system and its performance to achieve the objective for which it has been formed. 2). Management oriented: For designing of MIS top-down approach should be followed. Top-down approach suggests that the system development starts from the determination of the management needs and overall business objectives. Management oriented characteristic of MIS also implies that the management actively directs the system development efforts. 3). Need based: MIS design and development should be as per the information needs of managers at different levels that are strategic planning level, management control level and operational control level. Exception based: MIS should be developed on the exception based reporting principle, which means an abnormal situation, that is the maximum, minimum or expected values vary beyond the limits. In such cases there should be exception reporting to the decision-maker at the required level. Future oriented: Besides exception based reporting, MIS should also look at the future. In other words MIS should not merely provide past or historical information, rather it should provide information on the basis of projections based on which actions may be initiated. Integrated: Integration is significant because of its ability to produce more meaningful information. For example, in order to develop an effective production scheduling system, it is necessary to balance such factors as: set-up costs, work force, overtime rates, production capacity, inventory level, capital requirements and customer services. Integration means taking a comprehensive view of the subsystems that operate within the company. Common data flows: Because of the integration concept of MIS, there is an opportunity to avoid duplication and redundancy in data gathering, storage and dissemination. System designers are aware that a few key source documents account for much of the information flow. For example, customer’s orders are the basis for billing the customer for the goods ordered, setting up accounts receivables, initiating production activity, sales analysis, sales forecasting etc. Different MIS functions.
MIS is set up by an organization with the prime objective to obtain management information to be used by its managers in decision-making. Thus, MIS must perform the following functions in order to meet its objectives. Data Capturing: MIS captures data from various internal and external sources of an organization. Data capturing may be manual or through computer terminals. End users, typically record data about transactions on some physical medium such as paper form or enter it directly into a computer system. Processing of data: The captured data is processed to convert it into the required management information. Processing of data is done by such activities as calculating, comparing, sorting, classifying and summarizing. Storage of information: MIS stores processed or unprocessed data for future use. If any information is not immediately required, it is saved as an organizational record. In this activity, data and information are retained in an organized manner for later use. Stored data is commonly organized into fields, records, files and databases. Retrieval of information: MIS retrieves information from its stores as and when required by various users. As per the requirements of the management users, the retrieved information is either disseminated as such or it is processed again to meet the exact demands. Dissemination of MI: Management information, which is a finished product of MIS, is disseminated to the users in the organization. It could be periodic, through reports or on-line through computer terminals
Apply Supply-and-Demand Chain Management analysis.What is Supply Chain Management?
Supply Chain management is the process of managing the movement of goods from suppliers to buyers. Supply Chain Management (SCM), also known as supply chain integration or supply chain optimization, is the process of optimizing a company's internal practices in interacting with suppliers and customers in order to bring products to market more efficiently. SCM functions encompass demand forecasting, sourcing and procurement, inventory and warehouse management, distribution logistics, and other disciplines. e Business “The digital enablement of transactions and processes within a firm, involving information systems under the control of the firm, which doesn’t include the company’s revenue” For example, a company’s inventory management system and warehousing do not affect its revenue directly, such as its sales strategies and models. It comes under the domain of e-Business. Although e-Business has been defined as an electronic information management system for a company’s internal needs,. e-Business is used to manage a firm’s internal information. However, in order to be effective e-Business also needs to be supported by huge amounts of external information. In this instance, a manufacture’s inventory management needs to know
from its suppliers the time-line for putting the materials on the production line. On the other hand, the production time-line relates to the products’ shipment date. Then those solutions extend to the customers and customers’ customers and complete the business. By this theory, e-Commerce could be seen as the rear end of e-Business. Given this point of view, it does not only make e-Commerce’s field smaller, it makes e-Commerce a part of e-Business. People are still arguing about the
The Major types of eBusiness There are several types of business methods in today’s e-business scopes, such as “Business-to Consumer (B2C), Business-to-Business (B2B), Consumer-to- Consumer (C2C), Peer-to-Peer and Mobile, or m-Commerce” Business to Consumer (B2C) The B2C model can be easily seen from many web sites because it sells the products, information and service to consumers and gains the revenue. The B2C model involves a business selling directly to consumers via a web site. This direct selling is the main reason that companies create these web sites. Also from these web sites’ revenue models, online businesses can be sorted into five different categories such as “advertising revenue model, transaction fee revenue model, subscription revenue model, sales revenue model and affiliate revenue model” (Laudon & Traver, 2001, p.61). Advertising is the most familiar way for a web site to make profits. It means a web company provides the service for other companies or web companies to put the advertisements on its web site and receives payment from those companies. For example, Yahoo.com has an ad on the top of its home page. Other web sites utilizing advertising revenues allow businesses to place listings on the site for a fee. This is an advertising revenue model. Advertising revenue models also often works in conjunction with other models. For example, web sites with a subscription revenue model may primarily sell subscriptions. At the same time, they also often sell advertising space. Major retail sites with a sales revenue model also often include an advertising revenue model as part of their retail model. Amazon.com is a good example, where they are primarily a retail site with a sales revenue model. When using the subscription revenue model, a company provides its customers the service to reach information such as consumer reports, online newspapers, and online magazines. Subscription revenue models also include web sites that provide customers with access to work opportunities. . The sales revenue model of brick-and-click retailers can actually take two forms. The first is the same as for click-and-click retailers, with the web site designed to create revenues by selling products. The second involves the web site supporting the retail store, such as by providing resources and information or by promoting the products that sell via the retail store. A good example is the motor vehicle web sites such as Toyota.com and Honda.com. These web sites are not designed for the actual sale of vehicles, since few people are likely to make such a major purchase over the Internet. However, these sites are designed to provide the resources and information that potential customers are looking for. By providing this information, these web sites support the sales revenue model, while the actual purchase is made via the retail store Business to Business (B2B)
“Before the Internet, business-to-business transactions were referred to simply as trade or the procurement process. The term total inter-firm trade refers to the total flow of value among firms. Today we use the term B2B Commerce to describe all types of computer-enabled interfirm trade such as the use of the Internet and other networking technologies to exchange value across organizational boundaries”( Laudon & Traver, 2001, P654). Companies have been using electronic technologies such as Automated Order Entry System B2B commerce since the mid-1970s. In the first stage of B2B e-business, companies could use telephone modems to send orders or requests to suppliers to reach the goal of time to market and also reduce the cost of inventories. These systems really benefited customers, resulting in cheaper product prices. By the late 1970s, Electronic Data Interchange (EDI) entered into B2B commerce. In this stage of B2B e-Business, companies could share the database with each other through invoices, purchase orders, shipping bills, product stocking numbers (SKUs), and settlement information among a small number of firms. Industries could exchange information and make B2B commerce from seller-side solutions become buyer-side solutions. Because sellers could receive more information from their suppliers, it not only helped their customers but also helped sellers reduce the cost of serving their customers. In the mid-1990s, web technologies broke into B2B commerce. Many companies have since built up their B2B commerce web site for their customers. A B2B commerce web site looks very much like the B2C commerce web site such as, Wal-mart.com, Amazon.com, and Towerhabby.com. The B2B web sites are not for the public as are B2C web site; it is only available to business partners or suppliers and companies. Because these web sites help industry reduce the costs of managing their orders and use less employees to take care of customers, Laudon & Traver (2001) believe that there will be significant growth of B2B commerce from the year 2001 to 2006 and that this type of commerce will grow from about 4% to about 36% of total inter-firm trade in the United States. B2B commerce also extends to organizations that operate with the various departments of the company existing as separate companies. This is commonly referred to as a network structure. With the aid of information technology, the various companies interact to complete the various transactions necessary for overall functioning of the network. A similar type of B2B commerce occurs with virtual organizations, where a virtual organization is defined as "an organization that coordinates economic activity to deliver value to customers using resources outside the traditional boundaries of the organization" (Ball & McCulloch, 1999, p. 609). A virtual organization has one central office that coordinates the activities of the various functions necessary for the operation of the business. These various functions are performed by various companies that act as contractors. For example, a virtual organization may contract one company to manufacture a product, another todistribute the product, another to market the product, and another to manage the financial affairs related to the product. This gives the virtual organization the opportunity to be flexible, as none of the companies are actually owned by the central office. This aspect also means that it is a way to operate a business with low risk and with a low input cost. With the business world changing rapidly and not showing any signs of slowing down, the virtual business may become a popular form in the future. In addition, the Internet and computerenabled communication make the virtual business more and more feasible.
Why are SISP methodologies which existed in the 20th century no longer as appropriate for the new Internet economy? What do you see as the major problems in adopting the new SISP model for the extended business network? How best you implement this model in an EVN: top down or bottom-up?
SISP Methodologies In the course of Information Systems Planning, modeling of the current and future organizational information needs is done to identify any existing gaps. From these models, strategies and project plans are developed to migrate the current information systems and technologies to their desired future. Hoffer identifies three key activities of this modeling process. These include describing the current situation, describing the target situation, trends and constraints and finally developing a transition strategy and plans. These three activities can be paralleled to those of Corporate Strategic planning as shown below:
In performing SISP, it is good to use a methodology to guarantee its quality. This methodology must provide an appropriate context for the planning effort because users find it very difficult to respond effectively to non-contextual requests for the definition of information system needs [. There are two broad categories of SISP methodologies: impact and alignment methodologies. Impact methodologies emphasizes on the use of Information Technology to help meet business objectives and gain competitive advantage while alignment methodologies aligns Information Systems objectives with organizational goals Alignment methodologies have overlapping areas with conventional systems analysis process. These include: systems requirements determination and studying current procedures and
systems. Examples of impact methodologies are Customer Resource Life Cycle and Value Chain Analysis. In the alignment category examples are IBM’s Business Systems Planning (BSP), Information Engineering (IE) and Total Information Systems Management. A quality information systems plan must exhibit five characteristics before it is rendered useful These characteristics are: 1. Timely - A plan that is created long after it is needed is useless. 2. Useable - The plan must be useable. It must be so for all the projects as well as for each project. 3. Maintainable - The plan must be maintainable. New business opportunities, new computers, business mergers, etc. all affect the plan. 4. Quality - While the plan must be a quality product, no plan is ever perfect on the first try. As the plan is executed, the metrics employed to derive the individual project estimates become refined. 5. Reproducible - The plan must be reproducible. That is, when its development activities are performed by any other staff, the plan produced should essentially be the same. Implementing SISP Strategic Information Systems Planning activities require substantial resources in terms of managerial time and budget. Because of this fact, many organizations encounter problems in attempting to conduct a SISP. In order to successfully implement SISP the following framework of eight tenets has been developed 1. 2. 3. 4. 5. 6. 7. 8. Develop Business and IS strategy concurrently Use Top-Down and Bottom-Up listening and communication Develop a high level plan with broad Principles, not specific actions Top Management support is essential Use opportunistic methods Mandate proactive implementation Build in a frequent review process and contingency planning IT Leaders are technology scouts and interpreters
The process of developing a successful Strategic Information Systems plan goes through various phases. This process should be within the framework of the tenets mentioned above. The figure below shows these stages . Stages of Information Systems Planning:
There are a number of obstacles that managers can face when implementing SISP methodologies. There are a number of obstacles that managers can face when implementing SISP methodologies. Implementation problems usually revolve around resource requirements; process difficulties usually from different methodology limitations on analysis; and output shortcomings from a failure to develop all the encompassing integrated strategic plans. The most severe problem is the failure to secure management support for carrying out Strategic Information Systems Planning process. This is so because SISP is essentially a top-down process which is highly dependent on managements support. The most severe problem is the failure to secure management support for carrying out Strategic Information Systems Planning process Measuring success of SISP SISP benefits cannot be reduced to such simple financial measures as return on investment, payback, or internal rate of return. The reason for this is that SISP produces many difficult-toasses benefits]. SISP success can be measured using two measures. The first measure can be viewed as the degree of attainment/fulfillment of SISP objectives. As was mentioned earlier SISP has several key objectives grouped into four dimensions – Alignment, Analysis, Cooperation and Improvement. The extent to which these objectives are fulfilled by SISP thus offers one means of assessing its success. The other measure of SISP success is planner satisfaction in terms of the study’s resources, process, output and implementation Conclusion Due to increasing volatility of information technology, uncertainty and fierce business competition, organizations need a guiding framework on how to best invest their scarce resources. Strategic Information Systems Planning is essential for organizations to succeed in such environments especially when intending to implement information systems. It can bring about remarkable impact on information Systems practices, resources and management by transforming the process of IS projects identification. Because information systems often are classified as capital investments, it is essential that development projects be driven by enterprise planning initiatives such as SISP. SISP planning should be done moderately and be
seen as an on-going activity. Information Systems should be continuously repositioned and enhanced in order to reap long term sustainable benefits.
What do you see as the major problems in adopting the new SISP model for the extended business network? How best you implement this model in an EVN: top down or bottom-up? SISP defined Key Issues in SISP Methodologies Failure to secure top management commitment for carrying out the final plan. Requirement for substantial further analysis after the completion of the IS plan and difficulty in finding a good team leader. IS planners are not particularly satisfied with their methodologies. If the objective of the SISP exercise is to align IS objectives with business goals, then detailed, lengthy and complex SISP may be of limited value SISP refers to the process of identifying a portfolio of computer-based applications that will assist an or-animation in executing its business plans and consequently realizing its business goals. SISP also entails the definition of databases and sys-tems to support those applications. SlSP may mean the selection of rather prosaic applications, almost as if from a list, that would best fit the cur-rent and projected needs of the organization. This assumes that information systems planners kno their organization’s goals, plans and strategy; such an assumption may be unfounded (Lederer and Mendelow, 1987). On the other side of the dichotomy, SISP can also entail searching for applications with a high im-pact and the ability to create an advantage over competitors. SISP can help organizations use information systems in innovative ways to build barriers against new entrants, change the basis of competition, generate new products, build in switching costs, or change the balance of power in supplier relationships (McFarlan, 1984). As such, SISP promotes innovation and creativity, and might employ idea-generating techniques such as brainstorming MIS objectives with organizational goals and the latter as attempting to "impact" organizational strategies (p. 268 Frequently applied methodologies Organizations generally apply one of a number of methodologies in order to perform these SISP studies. Three popular methodologies include Business Systems Planning (IBM, 1975; Lederer and Putnam, 1986), Strategic Systems Planning (Holland Systems, 1986), and Information Engi-neering (Martin, 1982). They are described briefly as illustrative methodologies and will be alluded to in the research findings. These three were selected because, together, they accounted for half of the responses to the survey. Business Systems Planning (BSP), developed by IBM, involves top-down planning with bottom-up implementation. In this methodology, a firm recognizes its business mission, objectives and functions, and how these determine its business processes. The processes are analyzed for their data needs, and data classes are then identified.
Databases are developed by combining similar data classes. The final BSP plan describes an overall information system architecture as well as the installation schedule of individual systems. Strategic Information Systems Planning Methodologies The task of strategic information systems planning is difficult and often time organizations do not know how to do it. Strategic information systems planning is a major change for organizations, from planning for information systems based on users’ demands to those based on business strategy. Also strategic information systems planning changes the planning characteristics in major ways. For example, the time horizon for planning changes from 1 year to 3 years or more and development plans are driven by current and future business needs rather than incremental user needs. Increase in the time horizon is a factor which results in poor response from the top management to the strategic information systems planning process as it is difficult to hold their attention for such a long period. Other questions associated with strategic information systems planning are related to the scope of the planning study, the focus of the planning exercise corporate organization vs. strategic business unit, number of studies and their sequence, choosing a strategic information systems planning methodology or developing one if none is suitable, targets of planning process and deliverables. Because of the complexity of the strategic information systems planning process and uniqueness of each organization, there is no one best way to tackle it. Vitale, et al. (1986) classify SISP methodologies into two categories: impact and alignment. Impact methodologies help create and justify new uses of IT, while the methodologies in the “alignment” category align IS objectives with organizational goals. These two views of SISP are shown in figure 1
A. Impact Methodologies 1. Value Chain Analysis: The concept of value chain is considered at length by Michael Porter (1984). According to him, ‘every firm is a collection of activities that are performed to design, produce, market, deliver, and support its product. All these activities can be represented using a value chain.’ Porter goes on to explain that information technology is one of the major support
activities for the value chain. “Information systems technology is particularly pervasive in the value chain, since every value activity creates and uses information. .. The recent, rapid technological change in information systems is having a profound impact on competition and competitive advantage because of the pervasive role of information in the value chain. ..Change in the way office functions can be performed is one of the most important types of technological trends occurring today for many firms, though few are devoting substantial resources to it. .. A firm that can discover a better technology for performing an activity than its competitors thus gains competitive advantage” (Porter, 1985). A typical value chain is summarized in the figure 2.
‘Balanced Scorecard’ in relation to developing an effective organizational strategy but he does not fully understand these concepts. He has asked you to summarize for him the essential differences between the Portfolio Analysis and BSC approach. List five major differences and summarize these. Balanced scorecard methodology is an analysis technique designed to translate an organization's mission statement and overall business strategy into specific, quantifiable goals and to monitor the organization's performance in terms of achieving these goals. Portfolio analysis deals only with financial performance The Balanced Scorecard seeks to measure a business from the following perspectives: * Financial perspective - measures reflecting financial performance, for example number of debtors, cash flow or return on investment. The financial performance of an organization is fundamental to its success. Even non-profit organizations must make the books balance. Financial figures suffer from two major drawbacks: o They are historical. Whilst they tell us what has happened to the organization they may not tell us what is currently happening, or be a good indicator of future performance. o It is common for the current market value of an organization to exceed the market value of its assets. Tobin's-q measures the ratio of the value of a company's assets to its market value. The excess value can be thought of as intangible assets. These figures are not measured by normal financial reporting. * Customer perspective - measures having a direct impact on customers, for example time taken to process a phone call, results of customer surveys, number of complaints or competitive rankings. * Business process perspective - measures reflecting the performance of key business processes, for example the time spent prospecting, number of units that required rework or process cost. * Learning and growth perspective - measures describing the company's learning curve -- for example, number of employee suggestions or total hours spent on staff training. Purpose of the Balanced Scorecard Kaplan and Norton found that companies are using the scorecard to: * Clarify and update strategy * Communicate strategy throughout the company * Align unit and individual goals with strategy * Link strategic objectives to long term targets and annual budgets * Identify and align strategic initiatives * Conduct periodic performance reviews to learn about and improve strategy Source(s): Wikipedia The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was
originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. "The BSC retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation." The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives.
What Portfolio Analysis Is Portfolio analysis is a systematic way to analyze the products and services that make up an association's business portfolio. All associations (except the simplest and the smallest) are involved in more than one business. Some of these include publishing, meetings and conventions, education and training, government representation, research, standards setting, public relations, etc. Each of these is one of the association's strategic business units (SBUs). Each business consists of a portfolio of products and services. For example, an association's publishing business might include a professional journal, a lay magazine, specialized newsletters geared to different member segments, CDs, a website, social networking sites, etc. Portfolio analysis helps you decide which of these products and services should be emphasized and which should be phased out, based on objective criteria. Portfolio analysis consists of subjecting each of the association's products and services through a progression of finer screens. During a time of cutbacks and scarce resources, it is essential to screen out programs and services that are not essential to most members. Those that appeal to a more limited segment can be funded by those desiring the product or service rather than by dues. Advantages and Disadvantages of Portfolio Analysis Portfolio analysis offers the following advantages: 1. 2. 3. It encourages management to evaluate each of the organization's businesses individually and to set objectives and allocate resources for each. It stimulates the use of externally oriented data to supplement management's intuitive judgment. It raises the issue of cash flow availability for use in expansion and growth.
Portfolio analysis does, however, have some limitations. 1. 2. It is not easy to define product/market segments. It provides an illusion of scientific rigor when some subjective judgments are involved.
Considering both its advantages and disadvantages, portfolio analysis should be regarded as a disciplined and organized way of thinking about asset allocation. It is only a subjective tool, however, and is not a substitute for the ultimate professional judgment of the responsible decision-makers.
be assigned widely different weights for the same dimension. 5. An Integrated DEA–BSC model Two main factors of productivity meaning efficiency and effectiveness should be improved together, so that it can raise productivity. If an organization has high efficiency but doesn’t gain effectiveness then it does not move in through its strategy. Otherwise the effort of organization doesn’t result in profitability and goal achievement. On the other hand if the organization’s effort is efficient but not to be effective, it moves slowly to achieve determined long term goals. Since the effectiveness and strategy achievement measured by BSC and efficiency of an organization measured by DEA technique, so both factors of productivity (effectiveness and efficiency) can be measured by combining two models simultaneously. As a result, organization’s perspectives can be defined and promoted by BSC technique, and then with regard to these perspectives, which organization is seeking to achieve will be seen in horizon. Then inputs/outputs of ideal organization will be defined as which the organization has the best factors as a result to succeed. If the ideal organization enters to competitive arena with the others using DEA technique, it will definitely get the best point in terms of efficiency (1of 1) because it has the most proper factors to succeed. But the other organizations compare themselves to the ideal organization in terms of efficiency. While their efficiency is less than 100 percent they will try to approach to the ideal organization’s specification by prcess changes, procedure revision, and using the other approaches in order to raise output. (Come closer to the ideal unit). The decision makers have been always concerned about the definition of ideal unit. On the other hand one of DEA disadvantages is calculating relative efficiency and comparing DMUs with each other. By definition of ideal DMU, we will be able to compare the efficiency of other units to that of ideal point absolutely. One simple way to define an ideal unit is to choose minimum of inputs of one type and select maximum output of its type as ideal unit specifications. So the model will be ormulated as (A4). To provide a new model, ideal unit specification and relevant constraint shold be added to model, so unlike CCR model, efficient units (with the highest point) will not in result in several but one. Conclusion In this paper, BSC and DEA methods which have been approved as powerful tools to analyze and evaluate the performance in management science have been used. Then by combination of two models and applying it to real situation, the decision makers will be aware from the deviation of real performance of organizations in comparison with the determined strategic plan. The integrated DEA–BSC model addresses three common goals that firms are trying to accomplish: 1) Achieving strategic objectives (effectiveness goal). 2) Optimizing the usage of resources in generating desired outputs (efficiency goal); and 3) Obtaining balance. The model is applicable for evaluating organizations (e.g., venture capital funds), as well as in non -profit organizations, such as government agencies charged with selecting R&D projects. The integrated model we represent in this paper has capabilities of both DEA and BSC methods. If the efficiency of total units doesn’t reach 1, this subject can lead to double motivation for the other organizations to make efforts in order to decrease inputs and
raise outputs to get closer to the ideal organization. Any organization as ideal one is outstanding from strategic point of view, so the other organizations try to follow it in order to achieve both effectiveness and efficiency. The integrated DEA-BSC method advantages are as below: a) Definition of ideal unit: This item states that the efficiency of an organization can seldom reach to the highest point because inputs and outputs of ideal unit have been obtained through the best inputs and outputs selection of real organizations (artificially) but these results appeared in ideal organization, have come into a real existence in different organization. Therefore this matter causes to motivate continuous effort in order to acquire more efficiency and progress. b) Next advantage of ideal unit shows real specifications (inputs/outputs): The specifications have occurred to the real one before and simultaneous combinations of them have been taken place in ideal organization (artificially). As a result this matter avoids presenting unreal figures. In addition, other organizations won’t be hopeless to achieve highest level. c) The improvement of ranking system: unlike CCR model, efficient units (with the highest point) will not in result in several but one. So other organizations can be ranked based on ideal organization (efficient unit). This advantage causes to rank organizations more accurately and fairly. d) Motivating the other organizations: Only those organizations can perform efficiently (with the efficiency point of 1) that apply creativity and innovationto their processes, so these organizations strive enough to accomplish their routine activities greatly and achieve continuous improvement. This advantage makes the organization’s staff to be motivated and in addition, to emphasize on continuous improvement and benchmarking.
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