UNIT: 1 BASICS OF MANAGEMENT THEORY

Topic 1: Role of Information Systems in Organizations

1.1 Definition of IS:

An information system is a software system to capture, transmit, store, retrieve, manipulate, or
display information, thereby supporting people, organizations, or other software systems.

1.2 Overview of Information system:

 Information systems have become the backbone of most organizations.

 Banks could not process payments, governments could not collect taxes, hospitals could not treat
patients, and supermarkets could not stock their shelves without the support of information systems.
 In almost every sector education, finance, government, health care, manufacturing, and businesses
large and small information systems play a prominent role.
 Example, when we visit a travel agency to book a trip, a collection of interconnected information
systems is used for checking the availability of flights and hotels and for booking them. When we
make an electronic payment, we interact with the bank’s information system rather than with
personnel of the bank.

1.3 Importance of Information System in Organization

To gain the maximum benefits from your company's information system, you have to exploit all its
capacities. Information systems gain their importance by processing the data from company inputs to
generate information that is useful for managing your operations. To increase the information
system's effectiveness, you can either add more data to make the information more accurate or use the
information in new ways.

 Communication :-

 Part of management is gathering and distributing information, and information systems can make this
process more efficient by allowing managers to communicate rapidly.
 Email is quick and effective, but managers can use information systems even more efficiently by
storing documents in folders that they share with the employees who need the information.

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 This type of communication lets employees collaborate in a systematic way.

 Operations :-
 Information systems can offer more complete and more recent information, allowing you to operate
your company more efficiently.
 You can use information systems to gain a cost advantage over competitors or to differentiate yourself
by offering better customer service. Sales data give you insights about what customers are buying and
let you stock or produce items that are selling well. With guidance from the information system, you
can streamline your operations.

 Decisions
 The company information system can help you make better decisions by delivering all the
information you need and by modeling the results of your decisions.
 A decision involves choosing a course of action from several alternatives and carrying out the
corresponding tasks.
 When you have accurate, up-to-date information, you can make the choice with confidence. If more
than one choice looks appealing, you can use the information system to run different scenarios.
 For each possibility, the system can calculate key indicators such as sales, costs and profits to help you
determine which alternative gives the most beneficial result.
 Records
 Your company needs records of its activities for financial and regulatory purposes as well as for
finding the causes of problems and taking corrective action.
 The information system stores documents and revision histories, communication records and
operational data.
 The trick to exploiting this recording capability is organizing the data and using the system to process
and present it as useful historical information.
 You can use such information to prepare cost estimates and forecasts and to analyze how your actions
affected the key company indicators.

1.4 Types of Information Systems in an Organization

 Transaction Processing Systems

Transaction processing systems meet the data collection, storage, processing and outputting
functionalities for the core operations of a business. TPS information systems collect data from user
inputs and then generate outputs based on the data collected. An example of TPS system could be an

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 online air ticket booking system. In such a system, travelers select their flight schedule and favorite
seats (the input), and the system updates the seats available list, removing those selected by the
traveler (the processing). The system then generates a bill and a copy of the ticket (the output). TPS
information systems can be based on real-time or batch processing, and can help business owners
meet demand without acquiring additional personnel.
 Customer Relationship Management Systems
Business owners use customer relationship systems to synchronize sales and marketing efforts. CRM
systems accumulate and track customer activities, including purchasing trends, product defects and
customer inquiries. The capabilities of typically CRM information systems allow customers to
interact with companies for service or product feedback and problem resolutions. Businesses may
also use CRM systems internally as a component of their collaboration strategies. As such, CRM
information systems allow business partners to interact with each other as they develop ideas and
products. Collaboration can occur in real time even when business partners are in remote locations.
 Business Intelligence Systems
Business intelligence systems can be complex as they identify, extract and analyze data for various
operational needs, particularly for decision-making purposes. BIS information systems may provide
analyses that predict future sales patterns, summarize current costs and forecast sales revenues.
Business intelligence systems collect data from the various data warehouses in an organization and
provide management with analyses according to lines of business, department or any breakdown that
management desires. For example, financial institutions use BIS systems to develop credit risk
models that analyze the number and extent of lending or credit given to various sectors. These
systems may use various techniques and formulas to determine the probability of loan defaults.
 Knowledge Management Systems
Knowledge management systems organize and dissect knowledge and then redistribute or share it
with individuals of an organization. The purpose of these information systems is to bring innovation,
improve performance, bring integration and retain knowledge within the organization. Although KMS
information systems are typically marketed to larger enterprises, small businesses can also benefit
from harvesting knowledge. KMS information systems serve as a central repository and retain
information in a standard format. These systems can help business owners maintain consistency and
enable speedy responses to customer and partner inquiries.
1.5 The Three Fundamental Roles of Information Systems in Business
Organizations strive to be market leaders in their given industry. In climates where factors such as
recession, inflationary pressures and increased competition can hinder the achievement of this goal,
companies look for strategies that lead to competitive advantages. One such strategy is the adoption

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 of information systems within the company. Information systems help a company make adequate use
of its data, reduce workload and assist with compliance with various mandatory regulations.
 Information Storage and Analysis
At the date of publication, many companies no longer manage their data and information manually
with registers and hard-copy formats. Through the adoption of information systems, companies can
make use of sophisticated and comprehensive databases that can contain all imaginable pieces of data
about the company. Information systems store, update and even analyze the information, which the
company can then use to pinpoint solutions to current or future problems. Furthermore, these systems
can integrate data from various sources, inside and outside the company, keeping the company up to
date with internal performance and external opportunities and threats.
 Assist With Making Decisions
The long-term success of a company depends upon the adequacy of its strategic plans. An
organization’s management team uses information systems to formulate strategic plans and make
decisions for the organization's longevity and prosperity. The business uses information systems to
evaluate information from all sources, including information from external references such as Reuters
or Bloomberg, which provide information on the general economy. This analysis of and comparison
to market trends helps organizations analyze the adequacy and quality of their strategic decisions.
 Assist With Business Processes
Information systems aid businesses in developing a larger number of value added-systems in the
company. For example, a company can integrate information systems with the manufacturing cycle to
ensure that the output it produces complies with the requirements of the various quality management
standards. Adoption of information systems simplifies business processes and removes unnecessary
activities. Information systems add controls to employee processes, ensuring that only users with the
applicable rights can perform certain tasks. Further, information systems eliminate repetitive tasks
and increase accuracy, allowing employees to concentrate on more high-level functions. Information
systems can also lead to better project planning and implementation through effective monitoring and
comparison against established criteria.
 Considerations
Implementing information systems within an organization can prove to be costly. Implementation
costs include not only installation of the systems but also employee training sessions. In addition,
employees may see the adoption of information systems as an unwarranted change and, thus, may
resist this change. Resistance to change can hinder business operations and can cause employee
turnover. Companies should have leadership in place to assess the adequacy of the decision to have an
information system and to guide the company through the transition phase and weigh information
systems cost against the potential benefits.

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 1.6 Types of Information System

 Personal Information System

Such an information system can manage and store information for a private person. Examples are an
address book or address database and an audio CD collection.

 Enterprise Information System

An enterprise information system is tailored toward the support of an organization. We distinguish
between generic types and technologies of information systems and information systems for certain
types of organizations. The former class of enterprise information systems supports functionality that
can be used by a wide range of organizations. Examples are workflow management systems,
enterprise resource planning systems, data warehouse systems, and geographic information systems.
In contrast, information systems for certain types of organizations offer functionality that is tailored
toward certain industries or organizations. Examples are hospital information systems, airline
reservation systems, and electronic learning systems.
 Enterprise Resource Planning Systems :-
An enterprise resource planning (ERP) System is an information system that supports the main
business processes of an organization for example, human resource management, sales, marketing,
management, financial accounting, controlling, and logistics. In the past, each business process was
encapsulated in a separate information system. As most of these business processes use related data,
much redundant data had to be stored within the respective information systems. The increasing
number and complexity of information systems forced organizations to spend much effort in
synchronizing the data of all information systems.
 Procurement Systems :-

A procurement system is an information system that helps an organization automate the purchasing
process. The aim of a procurement system is to acquire what is needed to keep the business processes
running at minimal cost. With the available inventory, the expected arrival of ordered goods, and
forecasts based on sales and production plans, the procurement system determines the requirements
and generates new orders. At the same time, it tracks whether ordered goods arrive. The key point is
to order the right amount of material at the right time from the right source. If the material arrives too

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 early, money for buying the material and warehouse space to store the material will be tied up. If, in
contrast, the material arrives too late, then production is disrupted. Hence, the goal is to balance
reducing inventory costs with reducing the risk of out-of-stock situations

 Manufacturing Systems :-
Manufacturing systems support the production processes in organizations. Driven by information,
such as the bill of materials (BOM), inventory levels, and available capacity, they plan the production
process. With increasing automation of production processes, manufacturing systems have become
more and
more important. For example, most steps in the production line of a car, such as welding the auto
body, are performed by robots. This requires precise scheduling and material movement and, hence, a
manufacturing system that supports these processes.
Material requirements planning (MRP) is an approach to translate requirements (i.e.,the number of
products for each period), inventory status data, and the BOM intoa production plan without
considering capacities. Successors, such as manufacturing resources planning

 Sales and Marketing Systems:-

Sales and marketing systems need to process customer orders by taking into account issues such as
availability. These systems are driven by software addressing the fourp’s: product, price, place, and
promotion. Organizations undertake promotional activities and offer their products at competitive
prices to boost sales, but a product that is not available or not at the right location cannot be sold. One
prominent example of a promotional activity is a bonus card in supermarkets. Customers who register
for a bonus card get a discount or a voucher. Bonus cards are an instrument for organizations to
obtain personal data about their customers (e.g., age, address) and data about the buying behavior of
customers (i.e., what they buy and when they buy it). These data are collected and processed by an
information system. The
information extracted from these data can help to improve marketing and to determine the range of
products to offer. New technologies are increasingly used to support sales over the Internet.
Electronic commerce uses the Internet to inform (potential) customers, to execute the purchase
transaction, and to deliver the product. Again, this functionality is typically embedded in an ERP
system. To manage the contact with their customers, organizations use dedicated customer
relationship management (CRM) systems . A CRM system has a database to store all customer-
related information, such as contact details and past purchases.

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 Delivery Systems
A delivery system is an information system that supports the delivery of goods to customers. The task
of these systems is to plan and schedule when and in what order customers receive their products.
Consider, for example, a transportation company with hundreds of trucks. The planning of trips, the
routing of these trucks, and reacting to on-the-fly changes require dedicated software. Creating an
optimal schedule is a complex optimization problem. As circumstances—for example, traffic jams
and production problems—may force rescheduling, contemporary delivery sys- tems aim to find a
good solution rather than a theoretical optimum solution. More and more delivery systems offer
tracking-and-tracing functionality; for example, customers of package delivery companies, such as
UPS, can track down the location of a specific parcel via the Internet.

 Finance Systems
Among the oldest information systems are finance systems. These systems support the flow of money
within and between organizations. Finance systems typically provide accounting functionality to
maintain a consistent and auditable set of books for reporting and management support. Another
important application of finance systems is the stock market. At a stock market, dedicated
information systems are essential to process the operations. Again, the functionality of finance
systems is absorbed by ERP systems. The origin of the SAP system, for example, was in finance
rather than production planning.

 Product Design Systems

Enterprise information systems not only support the production of products, they also support the
design of products. Examples are computer-aided design (CAD) Systems and product data
management (PDM) Systems CAD systems support the graphical representation and the design of
product specifications. PDM systems support the design process in a broader sense by managing
designs and their document tation. Typically, there are many versions of the same design, and designs
of different components need to be integrated. To support such complex concurrent engineering
processes, PDM systems offer versioning functionality.

 Workflow Management Systems

A Workflow refers to the automation of a business process, in whole or in part. Each activity of the
workflow is implemented as software. The workflow logic specifies the order of the activities. A
workflow management system (WfMS) is an information system 10 Chapter 1 that defines, manages,

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 and executes workflows. The execution order of the workflow’s activities is driven by a computer
representation of the workflow logic. The ultimate goal of workflow management is to make sure that
the proper activities are executed by the right people at the right time (Aalst and Hee 2004).

 Business Intelligence Systems

A business intelligence system provides tools to analyze the performance—that is, the efficiency and
the effectiveness—of running business processes. These tools extract information on the business
processes from the data available in an organization. Different tools and techniques exist, among
them business performance management, business activity monitoring, querying and reporting, data
mining, and process mining.

 Public Information System

Unlike personal information systems, public information systems can manage and store information
that can be accessed by a community. Public libraries, information systems for museums, Web-based
community information systems, and Web-based stock-portfolio information systems are examples of
public information systems

1.7 The Integrated View of an Information System

 Customers are the actors that interact with the information system through the exchange of
products or services.
 These products are being manufactured or assembled in business processes that use
participants, information, and technology.
 Participants are the people who do the work.
 Information may range from information about customers to information about products and
business processes.
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  Business processes use technology, and new technologies may enable new ways of doing work.
 Customers and participants are examples of agents
 Business processes play a central role in larger information systems. A business process
describes the flow of work within an organization

1.8 The Life Cycle of an Information System

 There are total 10 phases of information system life cycle .

 The life cycle model includes phases that address change and redesign of existing enterprise
information systems. It aim at being more generic and consider information systems rather than
enterprise information systems.
 When considering the development process of an information system, however, we interpret the
information system in a more narrow sense in which just the software is taken into account.
 Information systems typically have two development processes. In the first development process, a
generic information system is implemented; in the second development process, this system is
customized.
 For example, for an ERP system, software vendors, such as SAP, implement new releases of their ERP
system for other organizations. The implementation of the ERP system is guided by the development
process of the software vendor. After an organization purchases an ERP system, this ERP system
passes through the development process of the organization. In this second development process, the
ERP system needs to be installed, configured, customized, and introduced in the organization.

Fig.2
The life cycle model of an enterprise information system.

 For example, the information system of a bank may be composed of selected components of an ERP
system and of self-developed software components that provide specific functionality.

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 In this case, the development process for building the information system for the bank includes a
software development process similar to that of software vendors. Because of their tremendous
complexity, existing information systems are usually redesigned and iteratively improved rather than
replaced by a new system.
 As a consequence, the development process of an information system contains phases, such as
maintenance and improvement.

Topic 2: The Information System Manager & His Challenges

2.1 Introduction
 Information systems managers (IS Manager) implement information technology in an organization,
overseeing a team of IT professionals.
 The role encompasses information systems planning, installation, and maintenance, including hardware
and software upgrades.
 IS a manager may focus on a specific issue such as network security or Internet services, or they may
coordinate all technology operations.
 Information systems managers generally start their careers with a BS in computer science or
management information systems.
 An MBA in information technology management offers additional business expertise and a powerful
advancement credential.
 IS managers can earn an information technology degree through an online or campus program.
Computer and information systems managers earned a median annual wage of $113,720 in 2009.

2.2 Common Problems in Management Information Systems

Management information systems are powerful tools that can help you make valid decisions and
discover trends in the data your company generates. If you specifically address the most common
issues when you look for a program that satisfies your needs, you can obtain a system that helps you
improve the performance of your company.
 Goals
Before you can discuss what kind of system you want with potential suppliers, you have to decide
what you want the system to do. Some management information systems only track fundamental
company data and display it on screen and in reports. Others have trend-analysis capabilities and can
run scenarios to help you with decisions. A common problem is purchasing a system that lacks
features you need. Another is that it produces results that are not relevant to your operations. You can
avoid these pitfalls by setting clear goals and making sure the purchased system can meet them.
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 Maintenance
A key problem for management information systems is the provision of the raw data input and the
maintenance of up-to-date information. Your company already generates data on sales, revenue,
expenses, payments and other fundamental business information. Marketing departments often have
additional databases. The right management information system for your company can use this data in
either its current form or import it from a standard format. In this way, the data in the system is
always the same data as the company working level is using and generating. If the management
information system requires extra processing, the data will be less current and less valuable.
 Use
Usability is a major problem for management information systems. A powerful system perfect for the
data of your company is wasted if your employees don't use it. Management information systems fail
because their user interface is too complicated, it's too hard to get useful results or the results are not
in a useful form when the system generates them. Before selecting your system, you have to check for
these issues. The reports have to be easy to understand and relevant for your company. Users have to
be able to generate the reports they want with a minimum of training and with little effort.
 Changes
An important management information system characteristic is the ability to adapt to changes in your
company. The available information may change, the reports you want may vary and often the
personnel using the system changes. The system you put in place has to allow for revisions in the
inputs and outputs, either easily enough through your own IT staff, or at agreed rates by the supplier.
There has to be a simple method of adding and deleting user accounts that you can handle internally,
because old, active accounts can be a security problem.

2.3 The challenges s of management information systems

 Operational Challenges
Perhaps designing information systems software may have become easier than what it was in the past,
however, operational challenges have become even more demanding. Some of the key operational
challenges facing today’s information system’s development include:
 Bad Communication: Lack of understanding/planning for customer, organization and other
stakeholders requirements/needs for the project.
 Unclear Requirements: When requirements are not clearly identified, this will lead to change
of requirements during middle of the project which will increase project delivery time and anger
many customers.
 Increasing Cost: All of this will lead to added labor and project cost. Thus making the project
less profitable and takes away interest from stakeholders.
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 Delayed Project Delivery: The result of what mentioned above will cause project milestones
to be pushed back and a potential software with less functionality than what agreed upon in the
beginning agreement with the client.
 Market Pressure: Another important aspect is the rapid development of software to meet the
ever-changing market demands.
In order for the project to succeed from an operational perspective all stakeholders including the end-
user (customers), managers who influence direction and budget, and software developers must be in
full collaboration to ensure successful delivery of the new information system.
 
 Technical Challenges
The other main and important part of information system’s development challenges are the technical
challenges. Technical challenges determine the true system functionality, reliability and availability.
Today’s information systems challenges include:

 Knowing the Technical needs: This is about understanding programing languages, the
frameworks, the systems and the algorithms needed for a particular information system to be
successful. An important factor today is making sure that your web based information system works
on all browsers and devices. It is also about knowing your developers programming expertise and
using that to your advantage.
 Right Design Patterns: Identifying the right design patterns for your information system
software and establishing an actual design review, quality evaluation criteria and design management
is something highly neglected today because of the time and effort it takes.
 Quality Control: Sometimes codes are not built with a "sanity in mind" which can lead to
significant challenges in the future. Building quality and maintainable code that can scale to multiple
systems to serve millions and millions of customers is a key challenge today if addressed can save the
company from catastrophes and put them ahead of their competition.
 Security: Security is highly important especially with today’s cyber warfare and attacks.
Ensuring no leaks are open during information system development is key in safeguarding your
customer and employee private data. Educating your employees about reverse engineering is also
another key important thing that developers and technical staff overlook.
 Always Debugging: You're always on the lookout in fixing logical errors, debugging those
infinite loops or divide by zero bugs in the code. According to Linu’s law, always have enough
eyeballs to lookout for bugs in the system
The challenges and problems of management information systems

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 If all the existing barriers are divided into humanistic, organizational and environmental factors, the
major drawbacks and the reasons of failure and using MIS in public organizations are as following:
Humanistic factors
 The lack of information of the managers and users as they don’t know exactly what they want
and what their information needs are.
 The lack of understanding of the needs of the users by designers (the lack of correct definition
of the needs and their analysis)
 The lack of information of the managers and users about the collaboration method with the de-
signer team.
 The lack of participation of the managers and users in system design.
 The lack of understanding of the managers of software and information systems.
 The lack of information of most of the analysts and programmers (designers) with new system
work environment.
 The lack of acceptance of the system executers and resistance against the change.
 The lack of accuracy in the data collected
 Organizational factors
 The lack of good conditions for participation and collaboration of the managers, users and
system directors
 The lack of consistency and complexity of the existing manual systems.
 The lack of existing systems and methods analysis before the system design
 The lack of evaluation of the existing power
 Bad condition of educating the specialized forces
 The lack of human resources with management and computer fields and other required
specializations (the problems of absorbing human resources)
 Inadequate education of the users
 Inadequate and incomplete documentation
 Unsuitable implementation of the system

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 Environmental factors
 The lack of quality criterion of the existing information systems in Iran
 The lack of suitable consultants for designing the system and software
 The lack of procedures and methodology and stages of creating the system
 The lack of evaluation of environmental aspects in management information systems
 The lack of suitable use of mass media to develop the culture of using computer and
information systems.
 The lack of holding suitable MA training courses in the universities and the lack of
suitable education of human resources in this regard.
 The lack of ratification of the suitable rules in Islamic council parliament and
government board and the considerable problem in this regard.
 The lack of serious consideration and adequate investment in this regard.

2.3 Information Systems and Management Strategy

 This approaches information systems from the executive and operational management
perspective.
 It assumes a familiarity with the fundamentals of business and information systems
from a technological point of view, as would be covered in a foundation course in this area.
 The emphasis of the course will be on understanding concepts, characteristics and
factors, particularly from technological and non-technological perspectives, that are likely to
impact the effectiveness and success of information systems in business environments.
 The aim of the course is therefore to provide students with a balanced view and deeper
understanding of developing information systems strategy and managing information systems
from organizational and technical perspectives so that they have a theoretically sound, but
nevertheless practically oriented foundation, from which to successfully tackle information
systems projects, initiatives and implementations.

Learning Outcomes
Upon successful completion of the requirements for this course, students will be able to:

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 Operationally manage and coordinate IT systems within small, medium and large
corporate enterprises
 Develop, implement and coordinate IT systems strategies and plans within small,
medium and large corporate enterprises
 Resource, finance, plan and control corporate IT systems
Topic 3: Case Studies-Information Systems in the Indian Railways

 https://content.pivotal.io/case-studies/indian-railways
 www.veteranstodaymoney.com/.../management-information-systems-in-indian-railway .
 nisg.org/files/documents/UP1418303129.pdf
Topic 4: Case Study –Information System n an E-commerce Organization

 https://www.linkedin.com/.../20140605221629-3101310-the-impact-of-e-commerce
 https://en.wikibooks.org/wiki/Introduction_to...Information_Systems/E-Commerce

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