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What is a system; explain the types of systems by giving examples. What type of systems are used in the management and why? Ans). Organization Organization is a group of people who process material and informational resources towards a set of multiple common goals including an economic profit for the business by performing financing, design, production and marketing functions to achieve finished goods and their sale at a specified minimum per year. That means in nutshell organization is a group of people working together to achieve one common goal. Organization can also be defined as the formal structure of roles or positions. Organizations are open systems as they have an environment, which can affect the performance of organizations. Every organization has set of policies, procedures, goals, objectives, mission statements, guidelines etc. These all are the tools that are used for the proper functioning of any organization. Mission Statement is the main purpose of the organization, due to which the organization exists. Goals and Objectives are the end results that the organization intends to achieve. The mission or purpose identifies the basic function or task of an enterprise or agency or of any part of it. Every kind of organized operation has, or at least should have if it to be meaningful purposes or missions. Generally the purpose statement of an organization is a statement that tells in nutshell about the reason of the existence of the organization. For example a purpose of manufacturing firm could be to produce surplus with a minimum costs, or a purpose for a service firm could be to deliver the quality service on time, every time thus leaving every customer in a satisfied mode. Organization achieves their purpose by a mixture of many techniques. The main component that helps in achieving the purpose of any organization is management. Management is a combination of five functions namely Planning, Organizing, Staffing, Leading and Controlling. To achieve the purpose, first the organization needs to do proper planning. In this phase objectives of the organization are identified. Objectives are the end results that any organization would like to achieve, various policies, procedures etc are framed that will tell the people of organization how to achieve the purpose. Then next phase is organizing. In this phase all the tasks are identified, all the resources are identified, and then the tasks are grouped and allocated to the resources. Staffing is another important area that means keeping filled all the positions in the organization. Effective leadership is needed in order to carry out all the tasks and at last effective control mechanism is required that will ensure that the tasks being done in an organization will achieve the purpose of the organization. In achieving the purpose of the organization managers needs to take very important decisions. For this to happen there are various information systems that needs to be in place. These information systems like Management Information System; Decision Support System helps managers to take decisions in order to finally achieve the purpose of the organization. Any organization, as a system, can be analyzed in terms of inputs and outputs where inputs are considered to be the causes, which interact to produce an output, which in turn represents the effect. The system acts as a box, and non-physical like material and information and so also the outputs in the form of finished goods. In an organization, a combination of difficult inputs often interacts in complicated ways to produce a desired output. Normally, in an organization which is a complex system, there are a number of subsystems which make up the total system and in such situations, the output of one subsystem becomes the input of another subsystem and so on. Like the outputs of production planning department, which are in the forms of production programs, material requirement etc. Thus every subsystem acts as a processor.
The various departments or the processors constituting an organization cannot operate in isolation as they are interrelated and output of one subsystems acts as input of another subsystem; thus necessitating an integration of various subsystems. The job of management thus is to integrate the subsystems and to achieve the objectives of the organization in an optimum manner. If this integration is not incorporated each function or subsystem will operate to optimize its own objective resulting in sub-optimization for the total system. System Before knowing what is meant by an information system, one must know what is meant by a system. A system is simply a set of components that interact to accomplish some specific purpose. Systems are all around us. For example, you communicate by means of language, a highly developed system of words and symbols that conveys meanings to you and to others. A business is also a system. Its components like marketing, manufacturing, sales research, shipping, accounting and personnel all work together to create a profit that benefits the employees and stockholders of the firm. Every business system depends on the information system for its proper functioning. This system is the means by which the data flows from one person or department to another and can encompass everything from inter-office mail and telephone links to a computer system that generates periodic reports for various users. Information System serves all the systems of a business, linking the different components in such a way that they effectively work towards the same purpose. The purpose of the information system, like any other system in an organization, is to process input, maintain files of data about the organization, and produce information, reports and other outputs. Information System consists of subsystems, including hardware, software and data storage for files and database. Categories of Information System Primarily Information system may be classified in to following categories: 1. Operations Support Systems • Transaction Processing System • Management Information Systems • Enterprise wide Resource Planning System 2. Management Support Systems • Decision Support Systems • Executive Information Systems • Expert System
Operations Support systems focuses on the operations of the enterprise. The basic objective of these systems is to improve the operational efficiency of the enterprise. As these systems are concerned primarily with operations, they use internal data primarily for managers at the lower level. OPERATIONS SUPPORT SYSTEMS 1). Transaction Processing System The most fundamental computer based system in an organization pertains to the processing of business transactions. Transaction Processing Systems (TPS) are aimed at improving the routine business activities on which all organizations depend. A transaction is any event or activity that affects the organization. Common transactions include placing orders, billing customers, hiring employees and depositing checks. The type of transactions varies from organization to organization. But handling or processing transactions are the major activity of any organization. Standard operating procedures, which can facilitate handling of transactions, are often embedded in computer programs that control the entry of data, processing of details, and storage and presentation of data and information. These systems provide speed and accuracy and can be programmed to follow routines without any variance. Example of TPS is Financial Accounting System in Accounts department, Calls Tracking System in Call Center etc. 2). Management Information Systems (Used at Manager’s level) MIS assist managers in decision-making and problem solving. They draw on data stored as a result of transaction processing, but they may also use other information that is developed internally and outside the firm. We know that in any organization decisions must be made on many issues that recur regularly and requires a certain set of information to make the decision. This information can be provided by managing management information systems. These systems are designed to support often recur; it is possible to study the decision factors and variables and develop reports that will useful in formulating future decisions. MIS aims at meeting the information needs of managers, particularly with regard to the current and pas operations of the enterprise and sometimes provides on-line link to individual transactions as well. The focus of MIS is the internal environment. Example of MIS is the final marketing and sales reporting tool, total calls statistics to the managers, performance reports of the staff to the managers. This is based on the inputs from the TPS. 3). Enterprise Resource Planning ERP system integrates all the processes of the organization with customer satisfaction and plans the management of the resources of an enterprise. These solutions help in focusing on production capacities, managing logistics and working out financial consequences of each decision rather than just computing costs. Example of ERP systems are Sapient, PeopleSoft, JD Edwards etc. MANAGEMENT SUPPORT SYSTEM (Used in Management) Management Support Systems focus on managerial uses of information resources. These system provide information to managers; for planning and decision making. 1). Decision Support Systems Not all decisions are of recurring nature. Some occur only once or recur infrequently. Decision Support Systems (DSS) provide information to managers who must make judgments about particular situations. These systems support decision-makers in situations that are not well structured that is, in those situations where it is difficult to identify information needs in advance.
Decision support systems must, therefore, have greater flexibility than other information systems. The typical areas of application of DSS in production and finance functions of business are: Production: Procurement Analysis, Cost estimation and analysis, production planning and scheduling Finance: Capital Budgeting, Financial Planning and analysis, tax planning, strategic financial planning etc. Examples are Just In Time manufacturing process and TQM and Kanban system of inventory control. 2). Executive Information Systems DSS are designed to cater to the information needs of managers at middle to top levels. They relate to rule-based work doing modeling and analysis of data in order to make it useful in decision making. However, at the top of managerial level, there is a need to focus more on packaging and delivery of information than on generation of information. The top manager deserves better environment for information access than that provided by DSS. The top executives need fast access to up-to-date, concise information and exception reports with facilities to personalized information and analysis. The information systems designed to cater to such needs of top executives and called Executive Information System. Following are few examples where EIS is required. Executive Briefing Personalized Analysis Exception Reporting Model Based Analysis. 3). Expert Systems: These systems incorporate expertise in order to aid managers in diagnosing problems or in problem solving. The increasing complexities and dynamism in the emerging business environment require greater interaction of functional managers with the experts so as to get the timely advice. The typical areas of application of expert system in business include: • • • Make or buy decisions New product launch decisions Determining credit limits.
Q2). Explain the difference between Data and Information. Why different information is required by three distinct levels of management. Ans). The terms data and information are often used interchangeably when referring to two distinct concepts. Data are raw facts in isolation which when placed in meaningful context by a data processing oration allows interfaces to be drawn. These interfaces relate to the measurement and identification of people, events and objects. The basic purpose of capturing and processing data is to produce the information. The wealth of data can be burden is quantities of data are processed without an informational objective. Information is substantially different from data, in that data are raw, unevaluated messages. Information is the increase in knowledge obtained by the recipient by matching proper data elements to the variables of a problem. Information is the aggregation or processing of data to provide knowledge or intelligence. Information is an occurrence or a set of occurrences, which carry messages, and when perceived by the recipient via any of the senses will increase their state
of knowledge. The primary function of information is to increase the knowledge or reduce the uncertainty of the user. The information that is disseminated to the user may be the result of inputting data in to, and processing a decision model. There are three levels of management in any organization. These levels are Strategic, Tactical and Operational. • Strategic Level 1. At this level, management has to make the decisions in great deal of uncertainty and the decisions are very much future oriented. 2. These decisions establish the long range plans for the organization. This level of management has to evolve strategies for achieving these goals. Thus at this level, the management is concerned for establishing the objectives, the LRP, Policy making, Organizing and attaining an overall effectiveness for the entire organization. The activities of this level of management could be determination of the product, selection of the market, plant expansion and diversification etc. 3. The source of data needed is in the environment external to the enterprise, and data is scarce. 4. Large scale of resources is at risk. 5. Major uncertain future events affect such decisions. 6. Essentially creative, imaginative and therefore human processes with many ambiguities. 7. This entails largely a planning activity. • Tactical Level 1. This is the second level of management, which is responsible for making the tactical decisions. The decisions made here are mainly for the short term activities and concern the allocation of the resources for achieving the objectives of the organization set in the strategic plans prepared by the strategically level of management. 2. As compared to strategically level of management, this level of management takes the decision not entirely in a state of uncertainty but has a very small potential for programmed decision-making. 3. This entails mix of planning and controlling activities. 4. Examples are formulation of budget, ash flow analysis, plant lay out etc. 5. Decisions about how to utilize resources and their subsequent control. 6. The decision maker is looking ahead days or weeks. 7. The necessary data is typically generated within the organization. 8. The scale of risk is small and degree of uncertainty is smaller. 9. Decision requires human mental activity to recognize needs. Technical/Operational Level
1. The main characteristics of the management at this level are that the standards of the results, to be achieved by each of the decisions taken by managers, are deterministic and fixed. 2. The operational level of management is responsible for ensuring that specific tasks are implemented in an effective and efficient manner. Thus the prime responsibility of the management aspect is on limited scale. 3. Concerned with taking immediate action e.g. operating a lathe, paying the wages etc. 4. Time horizon is short, typically hours or minutes. 5. The decision maker tends to by in close touch with his resources. 6. Very few uncertainties. 7. The scale of risk is very low. 8. The decision process is straight forward
Classification Of Information Dependence on external source Dependence on internal source Information on line Information on real time Reporting Periodically Descriptive/ Historical in Value Current Performance Futuristic Simulated Strategic V High Moderate Moderate V High V High Low Moderate V High V High
Levels of Management Tactical Operational Moderate V Low High High V High V High Moderate High High High V High V High V High V High High V High Low Low
Q3). Identify and list any three responsibilities of the CEO of a manufacturing organization. Also list three decisions, which she/he has to take as part of this responsibility. Ans). According to me following are the three main responsibilities of the CEO of a manufacturing organization. 1). Formulation of Objectives, Goals, Policies, Procedures for the organization. Representing organization in front of public and board members. In undertaking this responsibility, CEO has to exhibit his leadership and decision making attributes. In this way he is responsible towards the public, members of boards and organization. 2). The main target of the CEO is to be most cost effective. He monitors various information systems to get the information about the Product Delivery. The targeted manufactured units, the timelines and the quality of the product. The main aim of a CEO is to get the surplus with minimum cost and maximum quality. CEO monitors the same and takes any corrective action is required. He also verifies the policies, objectives being set for product manufacturing, delivery, warehousing, raw materials etc. Modifications are made if required. He also oversees the cost and budgeting aspects 3). The third and not the least he is responsible to the biggest asset of the company namely people. He sees that the people in the organization are motivated. There is a proper organizational structure in place with the policies and procedures are being implemented. Three Important decisions that the CEO has to take in order to take as part of the responsibilities are as follows: 1). TO create, drop or modify an objective, goal, policy or procedure of a company. Suppose a CEO finds that there is a policy in the company due to which the production is suffering, he might drop the policy. Suppose CEO has introduced another objective of an organization, now after some time CEO finds that the new objective has hindered the growth of the old objectives, and then CEO might want to drop or modify the new objective.
2). CEO might take a decision to add a new product in the product line or to drop the prices of any existing product or to face lift the look and feel of an existing product or to enhance the manufacturing capacity or make the timelines stricter. CEO might take any decision related to the budgets allocated in the organization. 3). CEO might introduce a new policy that will motivate people and drop the attrition rate of the company. CEO may drop some already existing schemes. CEO might take some actions that will motivate people like awards etc. CEO might take a decision to increase the strength of the company or to involve in some sought of mergers and acquisitions etc. Q4). Do you agree that understanding Information needs is the first step towards developing a workable MIS? What are the various types of Information Needs, explain with examples of each. Ans). Understanding of information need is fundamental and necessary to good MIS design. Too many companies spend lavish amounts of hardware and software without first determining the real information needs of the managers in critical areas such as problems, alternatives, opportunities and plans. Unless the managers can provide the specifications for what they want from an information system, the design efforts will produce less than optimum result. Too often system design begins without a clear-cut statement of objectives and information needs, although these should be stated as clearly and precisely as possible. Information need assessment would be complete when following are identified: • • • • The nature of information. Frequency at which required Source of origin Their inter-relationships are established.
Nature of information required depends upon the purpose or use. In order that the decisions made by the manager result in the economic use of resource and are congruent with the objectives of the organization, the manager has to have full information about the alternatives. Also he must get the information periodically if the decisions are periodic or as and when it is required. The information may either be from internal sources or external sources. Both internal and external information must cover not only past performance but also future trends and forecasts. Different levels of management may require the same information required by lower levels of management is more detailed and is given constantly at frequent intervals whereas at higher levels of management the type of information required is aggregated one and is needed at different frequency levels. There are various types of information needs at the managerial level. These are as follows: • Current Comfort Information – This informs about the current situation or achievement levels that are tuned to expectations. This includes information like clients served, targets achieved, etc. Status Information or Progress Information – Keeps informed about the current problem, crisis and changes Warning Information – Signals that change for good or worse are occurring (Stock Price, Turnovers, Client complaints etc). Planning Information – Description of projects/programs due in future, knowledge of anticipated developments
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Internal Operations Information – Indications of how organization/programs are performing Externally Intelligence – Information, gossips and opinions about activities in the environment of organization. Competition, political changes, emerging social policies etc. Externally distributed information – Annual report before release, publicly distributed material about the organization like media reports etc.
Q5). What is the vision process named after Davenport, how does it help the systems analysts in developing MIS, which can be, related the organizational objectives? Ans). Vision Process is named because of summit it convened in downtown Davenport in US regarding long-term vision for the city of Las Vegas. In this process, more than 300 people from on-campus and the community came. There were 12 vision teams that came up with recommendations for their respective areas. These were put in to a draft report. Sally Crino led the visioning. The vision 2020 teams were formed. The key to the long-term impact of vision 2020 was to link the recommendations to the strategic process. The purpose of the committee was to formulate ideas and a vision for the new master plan from the outset of the process and not at the end. It was also to participate in the formulation of ideas and vision. Business Process Reengineering (BPR) is defined by Hammer and Champy as 'the fundamental reconsideration and radical redesign of organizational processes, in order to achieve drastic improvement of current performance in cost, service and speed'. Value creation for the customer is the leading factor for Business Process Reengineering and information technology often plays an important enabling role. Davenport and Short (1990) prescribe a five-step approach to Business Process Reengineering: 1. Develop the business vision and process objectives: Business Process Reengineering is driven by a business vision, which implies specific business objectives such as cost reduction, time reduction, output quality improvement. 2. Identify the business processes to be redesigned: most firms use the 'High- Impact' approach which focuses on the most important processes or those that conflict most with the business vision. Lesser number of firms uses the 'Exhaustive approach' that attempts to identify all the processes within an organization and then prioritize them in order of redesign urgency. 3. Understand and measure the existing processes: for avoiding the repeating of old mistakes and for providing a baseline for future improvements. 4. Identify IT levers: awareness of IT capabilities can and should influence Business Process Reengineering. 5. Design and build a prototype of the new process: the actual design should not be viewed as the end of the Business Process Reengineering process. Rather, it should be viewed as a prototype, with successive iterations. The metaphor of prototype aligns the Business Process Reengineering approach with quick delivery of results, and the involvement and satisfaction of customers. As a 6th step of Business Process Reengineering some mention to adept the organizational structure and governance model towards the newly designed primary process.
When should Business Process Reengineering be used? Although it is difficult to give generic advice on this, some factors that can be considered are: - is the competition outperforming the company by factors? - are there many conflicts in the organization? - is there an extremely high frequency of meetings? - excessive use of non-structured communication? (memos, emails, etc) - is a more continuous approach of incremental improvements not possible? (see: Kaizen). When Kaizen is compared to Business Process Reengineering is it clear the Kaizen philosophy is more people-oriented, more easy to implement, requires long-term discipline. Business Process Reengineering on the other hand is harder, technology-oriented, enables radical change but requires major change management skills. Understand & Improve The Process Overview Understand & Improve The Process converts current processes and products into integrated and improved processes and products intended to serve the needs of the customer. The primary outputs are process improvements, improved products and an associated set of process performance measures, which specify how the process is expected to behave. An additional output is a set of technology needs that is used by Develop Technology Solutions to define and develop technologies, which are required to support and enhance the redesigned processes. The technology needs are integrated into the Transformation Plan for implementation. Feedback from customers, suppliers, and external processes concerning the process is transformed under the control of required product features and process requirements. Additional control stems from process control development [Guha 1993]. Culture limits the range of process improvements and the schedule of implementation. This process is performed by people involved in the transformation process and supported and championed by the Steering Team. Understand & Improve The Process translates current process performance into desired performance. Assuming all work is a process, improving process performance is critical to realizing the vision. Understand & Improve The Process identifies and bounds current processes, analyzes current performance, designs an improved process and implements that process according to a plan which is in support of the Transformation Plan and the vision [Davenport 1990, Guha 1993, Harrington 1993, Parker 1993, Talwar 1993, Ulis 1993, Womack 1996]. Understand & Improve The Process incorporates process requirements from the customer, which ensures a customer focus in process improvement efforts. Linking process improvement to customer desires ensures that resources are allocated to pursue the vision. Customers define their desired and required product attributes that translate into process requirements during Understand the Product. Using these requirements as a guide, new processes are designed to satisfy customer needs. Understand & Improve The Process develops a competitive advantage through both innovative and incremental improvement. Understand & Improve The Process identifies, analyzes, designs and implements processes to pursue the vision and develop a competitive advantage. This four-step algorithm can be performed using incremental or innovative methods. Incremental methods focus on improving the current process. Continuous improvement is the theme of incremental methods. These methods are characterized by extensive data collection and analysis of current performance. Innovative methods focus on designing new processes. Radical change is the theme of innovative methods. These methods are characterized by a clean slate approach, which emphasizes the importance of ignoring the current process and developing a new process with no preconceived ideas [Grover 1994, Hall 1993, Hammer 1990, Harrington 1993]. Each method has merit and should be investigated. Many scholars agree that a hybrid approach using elements from both
approaches yields the best results [Davenport 1994, Harrington 1993, Moad 1994]. The desired result of using either of the methods is to develop processes that support the vision. Understand & Improve The Process focuses on vision required metrics. The identify, analyze, design and implement cycle is focused on metrics which are directly tied to achieving the vision. During the Develop Vision and Strategy activity, metrics are developed that define the desired future condition described by the vision. These metrics guide the development of new and improved processes to ensure that all enterprise resources are focused towards the vision. Metrics that are typically used to describe the vision are concerned with resources, quality, service and time. Thus enterprises usually attempt to reduce cost, improve quality, improve delivery and reduce cycle time. Improvement in these areas often helps the enterprise reach the vision by improving customer satisfaction [Ulis 1993]. Bound Processes & Identify Relationships Bound Processes & Identify Relationships transforms current processes into bounded processes and identified relationships. The process is conducted by the Steering Team and people involved in the transformation process. Controls include product requirements identified by customers, process requirements specified in the transformation plan, the environment and the transformation plan. Bound Processes & Identify Relationships identifies exchange points and relationships between processes. Three types of knowledge are required to establish process boundaries and identify the relationships these boundaries have with other processes in the enterprise: 1) knowledge of the customers/suppliers, 2) product knowledge, and 3) knowledge of the process requirements. The generation of this information is performed by other activities within Integrate & Improve Enterprise. These three types of information are required to adequately define the inputs and outputs of the process. These inputs and outputs can be thought of as products themselves. The inputs to a process are the products being provided by "supplier" processes. The process outputs can in turn be considered as products supplied to subsequent "customer" processes which require these products as inputs. Identifying the suppliers and customers and understanding how products flow between the "supplier" processes, the process under investigation, and "customer" processes will determine how this process is integrated with the other processes within the system. Document and Analyze Process Document and Analyze Process transforms current process performance metrics and process feedback into an understanding of process performance and a set of technology needs. The process is conducted by the Steering Team and people involved in the transformation process. Controls include technology development feedback, process controls, the environment and the transformation plan. Document and Analyze Process develops an understanding of process performance. Document and Analyze Process is a structured and methodical process that examines the process in hard and soft metrics. Hard metrics are numerical and quantified. These metrics can be counted or measured using scientific instruments. Hard metrics are those that the enterprise maintains for shop floor control, such as efficiency, cycle time, quality, and work-in-process. Soft metrics are subjective and qualitative. These metrics are opinions or situational and are measured with surveys or interviews. Soft metrics are attitudes, norms of behavior, quality of worklife issues, communication levels and other cultural issues that could have an impact on the process. In combination, hard and soft metrics provide a well rounded description of the process. Design Improved Process
Design Improved Process transforms current process performance into an improved process design. The process is conducted by the Steering Team and people involved in the transformation process. Controls include cultural competencies, the environment and the transformation plan. Design Improved Process creates an improved process. Design Improved Process follows the four step process of design : 1) Preparation, 2) Incubation, 3) Illumination, and 4) Resolution to create a process design [Kim 1990]. The design is intended to create a process that performs to levels required by the transformation plan to reach the vision and satisfy the customer. Preparation entails examining the process analysis, customer required and desired attributes, and performance measures required by the vision. Incubation involves searching for alternative designs. Illumination is the process that combines the information and alternatives into an innovative configuration. The new configuration could be a radical departure from the present design or just an incremental improvement. The extent of the change from the old design to the new design depends on the needs of the enterprise. Design Improved Process identifies technologies to facilitate the new design. Current research has shown a close relationship between business process design and the implementation of technology solutions [Davenport & Short 1990]. Process design and the capabilities of technical solutions have a recursive relationship consistent with continuous improvement philosophies. Each is the key to thinking about the other. Thinking about the adoption of technical solutions should be in terms of how it supports new or redesigned processes. Processes should be considered in terms of the capabilities information technology can provide. As the business processes and feedback mechanisms are evaluated and designed, supporting technologies will be identified. These technology needs will feed Develop Technology Solutions which will implement systems designed to support the associated processes and feedback mechanisms. During the technology solution development effort, system/solution feedback is often required to insure that the system development effort is on track. Design Improved Process has three primary outputs: (1) A process design and a set of performance measures and goals relating to how the process must perform, (2) design feedback to the A332 Document and Analyze Process function and (3) the identification of potential technical solutions which can assist in the execution of the required process. The process improvement activities must be consistent with enterprise strategy and relies heavily on the experience and ingenuity of all those who impact or are effected by the output of the process. Implement Improved Process Implement Improved Process transforms the improved process design into an integrated and improved process. The process is conducted by the Steering Team and people involved in the transformation process. Controls include cultural competencies, the environment and the transformation plan. Implement Improved Process activates the process design into reality. This process coordinates all the resources necessary to implement the new process design in the enterprise. Coordination requires planning to ensure success. Thus a planning cycle is conducted with the same method described in A14 Develop & Deploy Integrated Transformation Plan. Implementation is the function within Integrate & Improve Enterprise where failure is most likely to occur. This function requires people within the enterprise to change their behavior and daily activities. Change is a difficult process and people are resistant to it. Implementing new process design typically required people involved to work extra hours and make sacrifices to their individual goals and performance. Implementation uncovers the flaws in a design. A design may not account for all requirements of the process. New requirements may arise that were previously unknown. As a design is installed, the new requirements or short comings of the design will become apparent. The degree to which those involved with the implementation can compensate for these problems, often determines the success of the implementation.