MANAGEMENT

INFORMATION SYSTEM:
COURSE OVERVIEW

PRM-42
Instructor : H K Misra/ K Anjaria
AGENDA Pedagogy
SESSION-1, MIS, PRM-42
 HOW TO PROCEED?
Text Book is the main source;
 Please keep your text book by your side when the session is in
progress.
Text Book supplied to you provides explanations to the topics and
it guides; do not forget to go through the reference books
Classes would focus on concepts
Cases drawn for the course aim to understand application of
concepts
CR of the batch will deal with common issues and administration of
course for each section they represent.
Ms. Hillary, AA will be the point of contact for the course related
activities/issues.

SESSION-1, MIS, PRM-42

HOW TO PROCEED?
Text Book is used progressively chapter wise
Shall use MIS Book – Laudon and Laudon….
The Reference Book
Follow the session plan as mentioned in TAU
material
TAU material has some additional readings,
cases and “Demo” instructions.
 Demo will be discussed in the class for reference and
appreciation of concept

SESSION-1, MIS, PRM-42

 EVALUATION

Four Quizzes: 30 Percent

No make up quizzes for absentees – no
requests please…..
Mid Term: 20 Percent (Closed Book)
End Term: 30 Percent (Open Book)
Group Tasks: 20 Percent
 Three in each group-maximum
Assignment-I: 10%
Assignment-II: 10%

SESSION-1, MIS, PRM-42

 Introduction
AGENDA
to MIS
SESSION-1, MIS, PRM-42
INTRODUCTION TO MIS COURSE
Pre-requisites
Computing skills will hasten the process of
understanding – but is not essential
Note of Caution
It is not a programming course
Many students may feel that they are aware of many
concepts being discussed / they are experienced and
thus the course is trivial in nature
 In this case please support the instructor in handling the class and
empathize with peers
 Lead the discussions
SESSION-1, MIS, PRM-42
COURSE ORGANIZATION
Segment-I
 Understand Organizations
 Business and Development Orientation
 Management and Controls
 What is so common in Business and Development
Organizations? – Systems’ viewpoints
Segment-II & III
 Systems Approach to Organizations, Systems Thinking
 Data Management Principles
 Concepts of Information Systems, Design and
Development; Systems Development Life Cycles
 MIS Architecture and Model

SESSION-1, MIS, PRM-42

COURSE ORGANIZATION
Segment- IV
 IT Infrastructure Planning
 Databases
 Networks
Segment - V
 Concepts of MIS
 MIS and Technology Barriers
 Forms of MIS: ERP, Expert Systems,
Decision Support Systems
 Architectural Principles and MIS

SESSION-1, MIS, PRM-42

 MIS IS INTERDISCIPLINARY
Shift in traditional thinking
 From ICT Focus to interdisciplinary
focus
 Includes issues related to
organization, management,
technology, and social dimensions
 Holistic views of organization

Disciplines involved in
contemporary MIS
 Computer Science
 OB / HR, Economics, Mathematics,
Statistics,
 Sociology, Psychology

SESSION-1, MIS, PRM-42

HOW MIS CAN BE DESCRIBED?
Multidisciplinary approach
in an Organization to
address decision
challenges at all levels
 Strategic
 Tactical
 Operational

Manage Information
 Gather, store, process and use
 Induce appropriate
technologies

SESSION-1, MIS, PRM-42

 MIS AND SYSTEMS APPROACH

MIS is largely supported by Systems Theory

Systems Theory argues in favour of
 Systems Thinking (Holistic)
 Do not miss the “Forest” for “Trees” (Holistic Approach)
 Relate to the environment
 Cause-Effect principles

Systems Theory has supported in emergence of

 ERP
 E-Commerce/ E-Business
 Web 4.0; Industry 4.0 and beyond
SESSION-1, MIS, PRM-42
 MIS DESIGN
MIS is organization specific
Organizations – they deal with
 People, Process and Technology
 Market

Organization’s need
 Systematic measurements (Internal Controls ….)
 Systemic interfaces with market for management of resources
(factors of production…) and to sustain in the market
 Products and services
 Innovations and Benchmarks

SESSION-1, MIS, PRM-42

 WHY STUDY MIS?
It deals with Information Systems
 Processes, operations, strategy
 Integration of computer systems with organization objectives

It helps in
 Providing Structured-ness in the organization (systematic)
 Dealing with Systemic Issues
 Identifying possible areas for IT intervention

It identifies “Barriers” in introducing IT (may not directly discuss IT management)

Barriers Barriers
Organization Information Information
Systems Technology

SESSION-1, MIS, PRM-42

HOW IS THE COURSE PLANNED?
Barriers Barriers
Organization Information Information
Systems Technology
Segment-I Segment-II & III Segment-IV
Chapters

1-3

Organization Information Systems Technology

Structure Infrastructure Infrastructure
Structure
Chapters
Chapters
4-8
12-14
Organization MIS Technology

Architecture Architecture Architecture

Chapters

9-11
Organization MIS Model IT Model

Model

35% 45% 20%

Segment V: MIS Plan (15-16)

SESSION-1, MIS, PRM-42

UNDERSTANDING BUSINESS
ORGANIZATIONS CHAPTER-1

(MIS PERSPECTIVE)
 UNDERSTANDING ORGANIZATIONS FOR MIS
Organizations
 are Complex
 structures, market links,
financing etc..
 have Life Cycles
 do have human elements

Organizations evolve
out of
 Social factors
 Economic compulsions

SESSION-1, MIS, PRM-42

UNDERSTANDING ORGANIZATIONS FOR MIS
Organizations
evolve out of collective advantages
Go beyond individuals
Sharing returns
Managing complex situations in groups
Assure protection of common
interests / objectives / goals
have advantages of domain expertise
Enhancement of productivity / quality
SESSION-1, MIS, PRM-42
 EVOLUTIONS IN ORGANIZATIONS
Sl.No. Classic Organization (Pre-1945AD) Post Modern Era (post 1945AD)
1. Centralized Decentralized
2. Hierarchical Inter-functional
3. Command and control Facilitating and empowered
4. Traditional system and process a) Technology mediation
b) Knowledge influenced systems
and processes
5. Factor of production centric Economy of complementarities and
post modernism
6. Localizing focus Globalization
7. Individualized economic focus Networks and socially embedded
8. Product orientation Market orientation
9. Mass production Mass customization
10. Process specific Innovation orientation

SESSION-1, MIS, PRM-42

SYSTEMIC VIEWS: POST MODERN ERA
In Post-Modern Era
More uncertain market
High entry barriers
There Is No Alternative “TINA”
 Adjustments to Organization Structure (functional, divisional,
matrix..)
 Fit between form of organization and performance
 CSR
 diversifications, acquisitions, mergers
 Induction of IT
 BPR / Supply Chains
 Value Additions
SESSION-1, MIS, PRM-42
 EXISTENCE OF ORGANIZATIONS
Society and Organizations - Co-existence is the IDEAL
situation
 They need groups
 They resolve conflicts
 They deal with individuals
Organizations harness
 Collective power
 Stakeholders / stock holders
 Manage economies of scale and integration

SESSION-1, MIS, PRM-42

 EXISTENCE OF ORGANIZATIONS
Organizational existence is
influenced by
 Motivation of individuals
 Futuristic visions
 Availability of resources
 Power to address uncertainties

Organization's existence is
a continuous phenomenon
and it needs
 dynamic capabilities
 to manage events quickly to Systems approach includes these attributes through
come to steady state Life Cycle Studies

SESSION-1, MIS, PRM-42

 LIFE CYCLE MANAGEMENT (LCM) IN ORGANIZATIONS

LCM
is an integrated framework covering
performance of goods and services towards
more sustainable forms of production and
consumption.
Comprises
analyses (analytical tools, checklists, methods and
techniques)
practice (policy, procedural tools)
proactive management of economic, social and
environmental performance
SESSION-1, MIS, PRM-42
 ORGANIZATIONAL EXISTENCE AND LIFE CYCLES
Stage of life Organizational Issues
Cycle
Inception Understanding the market
Providing Structure
Growth Resource Management, Control
over Cost, Margin and Market
Share
Maturity Formalization of Standard
Operating Procedures and
Deliverables; Benchmarking
Performance
Decline Market Behaviour, Adaptation to
internal and external pressure,
Liability of complacency
(Across all these stages, information management is unique in nature)
Information Strategies
Business Intelligence for
identification of products, services,
processes and measurements
Enterprise information and retrieval
Empowering individuals with
benchmarks on productivity,
customer and market orientation
Restructuring information
management principles to align with
market requirements and inception
phase begins
SESSION-1, MIS, PRM-42
MANAGING ORGANIZATIONAL CONTINUITY

Continuity is influenced by life cycles of

Products
Processes
Organization structures
Systems
Information……

SESSION-1, MIS, PRM-42

 WHAT SHOULD BE DONE FOR ORGANIZATIONAL
CONTINUITY??

Manage Information
Market oriented decisions and process re-engineering
Benchmarks – sector specific
Employee motivation
Habit to learn from failures
I (information) = i(D, S, t)
i- interpretation
D- Data,
S-Pre-Knowledge --- this needs expertise…
t- time
SESSION-1, MIS, PRM-42
 INFORMATION BARRIERS FOR
ORGANIZATIONAL LIFE CYCLE(OLC)
Inception Growth Maturity Decline

Decision/ Information Barriers

•How to establish shared
vision among employees?
•How to manage influence of
regulating authority?
•How to identify market
drivers?
•How to establish standards
across organization
•How to maintain •How to build trust and
effective supply chain? transparency in the
•How to create and retain supply chain?
market leadership? •How to manage
•How to maintain competition?
information symmetry? •How to innovate?

SESSION-1, MIS, PRM-42

 PRODUCT LIFE CYCLE MANAGEMENT (PLC)
Stage of PLC Organizational Issues
Development Make your product known
and establish a test period
Introduction Acquire a strong market
position
Growth Maintain your market
position and build on it
Maturity Defend market position from
competitors and improve
your product
Decline Product innovation and
improvement
Information Imperatives
Information sharing through web
technologies; Computer aided modelling,
design and engineering
E-Commerce, E-Cataloguing, E-
Business, Machine Learning
Click-n-Mortar Services, e-Supply Chain
(Lean)
Decision Support Systems for competitor
analyses on pricing and Market
Behaviour through data warehousing and
mining, Business Analytics
Customer interfaces through e-
commerce activities as explained in
stage-I. Processing of information
gathered through all the previous stages
for effective modelling and decision
making
SESSION-1, MIS, PRM-42
 INFORMATION BARRIERS FOR PLC
Development Introduction Growth Maturity Decline

Decision/ Information Barriers

•What to produce? • When to • Who should • How to maintain market

introduce? collaborate for supply share?
•What the product chain?
should deliver? •How much to •How to innovate for
produce? •How to build trust and
•For whom should it be transparency in the •Better quality of
produced? •What price supply chain? service?
should it have?
•Is there any •How to manage •Customer
competition? •How should it be competition? satisfaction?
produced?
•How to innovate? •Process
improvement?

SESSION-1, MIS, PRM-42

 PROCESS LIFE CYCLE MANAGEMENT
Process precedes information
Three Pillars of Organization
People
Process
Technology
Process is influenced by
People (ownerships)
Technology (improvements)
Process should not be a “black box”. It should work on standards,
mature to be transparent and measurable
SESSION-1, MIS, PRM-42
LIFE CYCLES OF ORGANIZATION STRUCTURE
Organizations build their own structure for
Role Clarity
Accountability
Decision Making
Mintzberg said that
 Managers are information processors
There needs to be standardization in information flow
Structural changes are due to external influencers and
internal competencies
SESSION-1, MIS, PRM-42
LIFE CYCLES OF SYSTEMS IN ORGANIZATIONS
Systems in organization work on
General Systems Theory
 Reductionist Approach (Complex problems can be reduced to
smellers ones and relate each smaller ones to the whole.
 Argues in favour of Organic systems (Dynamic) instead of
Mechanistic systems (Formalized) More discussions in later
chapters
Cybernetics
 Feedback loop to attain steady state through corrective action
Systems Thinking
 Non-linearity in predictions
SESSION-1, MIS, PRM-42
 LIFE CYCLES OF SYSTEMS IN ORGANIZATIONS

Systems Life Cycle is influenced by

Structural changes
Leadership changes
Technologies adopted to manage systems
Products used for systems
Services generated (outsourcing?)

SESSION-1, MIS, PRM-42

MANAGING STEADY STATE IN OLC

Steady State across all decision

points….
Budget and variances
 Cost
 Margin
 Volume / Turnover

Reference Points
Standards
Benchmarks
SESSION-1, MIS, PRM-42
FOR YOUR ATTENTION…………

Go through first TWO articles in

TAU titled
Difference between IS,CS,IT
 “Information Systems Engineering: What is
it?”

SESSION-1, MIS, PRM-42

 Understanding
Organizations
(Business & Development)
Development Organizations

Session-3, chapter-2-MIS, PRM 42 2

Development Measures through Growth
◼ Development brings in change:
❑ qualitative, innovative,
❑ multi-dimensional, discontinuous,
❑ irreversible, non-elastic
◼ Development is non-linear
◼ Growth is
❑ elastic, linear, continuous, reversible
◼ However, growth is part of development
process

Session-3, chapter-2-MIS, PRM 42 3

 Understanding Development

Total Demand = ∑ ∑deconomic + ∑ dsocial + ∑decological

Session-3, chapter-2-MIS, PRM 42 4
 Understanding Development Organizations

◼ Development Organizations
❑ relate to Society in terms of
◼ poverty,
◼ environmental sustainability ,

◼ bringing synergies among different

agencies.
❑ More concerned with
◼ Quantity and quality in development
(What about Business Organizations?)

Session-3, chapter-2-MIS, PRM 42 5

Understanding Development Organizations
◼ Technology can change the type of
organization
❑ Example
◼ free-to-air channel to a paid channel for TV broadcasting
(Changes from public good to club good)
◼ paid toll-booths in highways/expressways

(Changes from public good to club good)

◼ Today we have the possibilities of “Hybrid”
organizations

Session-3, chapter-2-MIS, PRM 42 6

 Understanding Development Organizations

◼ Development Organizations need to ensure

development of
❑ Individuals
❑ Communities
❑ Environment
◼ Development needs to be sustainable in
terms of
❑ Economic
❑ Social
❑ Environmental

Session-3, chapter-2-MIS, PRM 42 7

 Development Triggers - Growth
◼ Business recognizes growth as an indicator
❑ Growth is measured by
◼ labour force, capital, volume of trade and consumption
◼ Development is measured by factors of
growth:
Development:
❑ production techniques, Identify the “latent” and make it active
❑ administrative systems,
❑ economic policy,
❑ social values
❑ Empowerment

Session-3, chapter-2-MIS, PRM 42 8

Understanding Development Organizations

◼ Life Cycles of Development Organizations

are influenced by life cycles of
❑ Individuals
❑ Communities

❑ Society

(What about Business Organizations?)

Session-3, chapter-2-MIS, PRM 42 9

Single System of Interface for Development

Session-3, chapter-2-MIS, PRM 42 10

Dual System of Interface for Development

Session-3, chapter-2-MIS, PRM 42 11

Life Cycle of Development Organizations

1. People come together

with a common motive
2. Growth, but lack of trust
3. Growth with trust
4. Maturity with trust
5. Complacency affecting trust
6. Decline
7. Dead

Session-3, chapter-2-MIS, PRM 42 12

CASES

◼ Case on (Refer the Text Book)

❑ Convenience store (single system – Business /
Commerce)
❑ First generation development organization (single
system)
❑ Case on NGO (dual system)

Session-3, chapter-2-MIS, PRM 42 13

ORGANIZATIONAL MANAGEMENT &
CONTROL
(BUSINESS VS. DEVELOPMENT
ORGANIZATIONS )
Session - 3
 ORGANIZATIONAL DECISIONS

Decision Style Rationale for Decision Styles

Reactive Collaborative Resolutions
Explicit and Tacit Knowledge based Problem Solving tools – Structured
Approaches
Preventive Intelligence Gathering through information retrieval techniques and
searches for best practices
Designed parametric evaluation mechanisms through benchmarking,
Structured Approaches to Problems
preparing choices and alternatives with explicit and tacit knowledge

Proactive Intelligence Gathering through information retrieval techniques and

searches for best practices
Infusing Systems Thinking
Probabilistic Decision Modelling for managing uncertainty, Unstructured
Environment
2

SESSION-3, CHAPTER-3-MIS, PRM 42

 ORGANIZATIONAL DECISIONS
 Decisions are also quantitative and qualitative
 Quantifiable decisions can be
 Routine
 Hierarchical

 Qualitative decisions are mostly

 Modelled (strategic)
 Based on tacit knowledge
 Based on knowledge repositories (Pattern analyses)

SESSION-3, CHAPTER-3-MIS, PRM 42

ORGANIZATIONAL CONTROLS
(MINTZBERG MODEL)

*Five Basic Parts

*Assign Responsibility
*Create Coordination
Mechanism
*Standardize Work
*Standardize Output
*Managers are Information
Processors
*Information Flows as per
Hierarchy
*Information Sharing is
also needed

SESSION-3, CHAPTER-3-MIS, PRM 42

 ORGANIZATIONAL CONTROLS
(INFORMATION BASED)
Organization Structure Representation Effects on Managing Information
Types
(Example: HH Enterprises) Information is centralized. Roles are reactive
Simple Structures Support Staff Techno-structure in nature since few people control information.
(Stress on MIS is high)
Information Management is domain specific.
(Example: Collector’s Office) Information remains in islands leaving scope
Machine Bureaucracy to integrate. But the strength in this structure
is that standards emerge with clarity. Roles
Support Staff Techno-structure are well clarified.
(Stress on MIS is the Least)
Each individual remains in isolation since they
(Example: A Consulting Organization) are experts by themselves. Information flow is
Professional very seldom in nature. Support staff are
Bureaucracy marginalized since their work is minimal in
managing information. (Stress on MIS is high)
Each division is a replica of the organization.
(Example: A Group Company-Conglomerate) Information flow across divisions is minimal.
Divisionalized But upward movement to apex in the
(Heterogeneous organization is very frequent. Each division
Products/Services) may have independent task to perform.
(Stress on MIS is Low)
This is complex since knowledge is the main
(Example: Cooperatives
Adhocracy issue. Information remains secondary and
supportive in nature. Knowledge workers5 are
(entrepreneurial, with a focus on the main employees and are mobile. (Multiple
risk-taking, innovation, and “doing structures Emerge to define Organization)
things first”) (Stress on MIS is high)
ORGANIZATIONAL ARRANGEMENT & DECISION
STYLE

 Approaches
(1) Resource Based Views (RBV) – Internal Capabilities
 Cost leadership
 Resource utilization (optimized)
 Internal resource adjustments keeping in view the external influences
 Should identify core-competencies (cannot be copied by others!!!!)

CONTROL: Around Cost

SESSION-3, CHAPTER-3-MIS, PRM 42 6

 ORGANIZATIONAL ARRANGEMENT &
DECISION STYLE
*complementary to RBV
(2) Porter’s Five *coordinates among buyers,
Forces Model suppliers
*need to align external forces
And internal capabilities

CONTROL:
• No Control on Competitors
• Least on Buyers
• Moderate on Suppliers
YET decisions are to be taken
SESSION-3, CHAPTER-3-MIS, PRM 42 7
ORGANIZATIONAL ARRANGEMENT & DECISION
STYLE

(3) Chaos Theory CONTROLS:

 Organizations are influenced by structural changes Decisions on
Structural life cycle
 Too many frequent changes in structures create “Chaos”
 Decision styles are influenced as discussed in Mintzberg’s Theory
 Technology can play a major role to virtually manage roles and
responsibilities if standardization emerges
(4) Micro-economic Theory CONTROL:
• Audits on
 Information is factor of production
Information
 Total productivity can influence organizational existence flow/loss
• Audits on
SESSION-3, CHAPTER-3-MIS, PRM 42
Performance 8
ORGANIZATIONAL ARRANGEMENT & DECISION
STYLE

(5) Transaction Cost Theory

CONTROLS:
 Generically transaction cost increases with transactions • Track points of
 Technology induction can optimize cost of transaction services/ Cost

 Internal and External interfaces

(6) Agency Theory

 Cost of coordination among “Agents” can be optimized with technology
induction
 Cost can be a dampening factor in the chain if transparency is not pursued
 Technology can be a prime mover in this situation
(Example: IT enabled Supply Chains) CONTROLS:
• Decisions on 9

SESSION-3, CHAPTER-3-MIS, PRM 42 Agency Cost/ Opportunity Cost

ORGANIZATIONAL ARRANGEMENT & DECISION
STYLE

(7) Network Theory CONTROLS:

• Decisions on COST of
 Collaborations / Agent-based Network systems
networks
(8) Contingency Theory
 There is nothing called the best, but OPTIMIZED solution
CONTROLS:
• Decisions on
 Organizations need to be dynamic/adaptive Opportunity Costs
(9) Organizations can pursue
 Creative destruction (New Products destroy the old ones --- Hand Pulled Rickshaw Vs.
Mechanized)
 Innovative product cycles with upward mobility
CONTROLS:
• Decisions on Prod.
 Destructive creation
LC/Proc. LC
 Defense Production leading to destructive situations, but organization thrives
SESSION-3, CHAPTER-3-MIS, PRM 42 10
 DISTINGUISHING FEATURES OF BUSINESS
AND DEVELOPMENT ORGANIZATIONS

 Can these organizations follow similar

 Structures?
 Processes?
 Standards in roles, accountability?
 Life cycles?
 Decisions?
SESSION-3, CHAPTER-3-MIS, PRM 42 11
 DISTINGUISHING FEATURES OF BUSINESS
AND DEVELOPMENT ORGANIZATIONS
Interfaces with External Environment like Vendors, Stock Holders

Traditional Organization Domains What would happen

Interfaces with External Environment like Customers, Market

if development
Accounts Human
Operations organizations adopt
this view?
Finance Production Marketing Sales Materials and
and Costing Resource
Maintenance

Process Process Process Process Process Process Process Process

#11-1n #21-2n #31-3n #41-4n #51-5n #61-6n #71-7n #81-8n

Domain Specific Information Systems

Operations
Accounts Human
Finance Production Marketing Sales Materials and
and Costing Resource
Maintenance

SESSION-3, CHAPTER-3-MIS, PRM 42

Traditional View of Processes 12
DISTINGUISHING FEATURES OF BUSINESS AND
DEVELOPMENT ORGANIZATIONS
What would happen
if development
organizations adopt
this view?

Traditional View of Organization

SESSION-3, CHAPTER-3-MIS, PRM 42 13
 Functional Orientation

Products and services

BUSINESS AND
DEVELOPMENT
Organization structures influence business ORGANIZATIONS
COMMON
ORIENTATION
Organization and economic theories are
applicable

P&L account and EPS are used as

measurement tools

SESSION-3, CHAPTER-3-MIS, PRM 42 14

 DISTINGUISHING FEATURES OF BUSINESS AND
DEVELOPMENT ORGANIZATIONS

 Business  Development
 Commercially focused  May not be
 For-Profit is the core commercially viable
value, CSR (has dual (for intermediaries)
systems but independent )  Not-for-profit is the
core, also needs
returns on investment
(Dual systems)
SESSION-3, CHAPTER-3-MIS, PRM 42 15
 DISTINGUISHING FEATURES OF BUSINESS AND
DEVELOPMENT ORGANIZATIONS
 Business
 Measurements and controls
are in economic terms
 Stock holders are interested in
investments
 Under Companies Act
 Unified effort to maximize
profit despite having multiple
products and services
SESSION-3, CHAPTER-3-MIS, PRM 42
 Development
 Certain forms need measurements
and controls are mostly in intangible
terms
 Stock holders are part of management
 Legal forms are many like societies
act, cooperative act, PC act
 Faces challenges to identify core
competencies to manage their
organizations (Unification may not
work)
16
Systems Approach
to Organizations
SEGMENT-II
CHAPTER-4
What MIS attempts do?
Barriers
Barriers

Organization Systems Technology

Understand, organize and address barriers

CHAPTER-4-MIS-PRM42
 General Systems Theory
Organizational MIS
Across Functions…
(Systemic)

Organization as systems!! Strategic….

 Systemic Views
Organization

 Systematic Views Tactical…

Function..1 Function..n

What is a System? Operational… Process..1 Process..n

 Is an association of some
components (Do organizations have Transactions… Transaction..1 Transaction..n

components?)
 Has goal/objectives (Do organizations
have components?)
 Has control mechanism (organization
also needs controls on resources!!) Function specific System of
MIS (Systematic)

CHAPTER-4-MIS-PRM42
 General Systems Theory

 What is a System?
System needs a structure to relate its
components (organization also has structure)
System’s components:
Input (organizational resources and environment)
Process (organizational structures and operating
procedures)
Output (organizational steady state)

CHAPTER-4-MIS-PRM42
 Organization and Systems – The Link

Organizational Organizational Organizational

Organization
can be treated
Resources Structures Performance
Organization Purview as a “system”
RBV

Organizational Organizational Organizational

Memory
Inputs Processes
Systems Purview
Market

Environmental Organizational Organizational

Inputs Feedback Steady State
Organization Purview

CHAPTER-4-MIS-PRM42
Systems
Approach

CHAPTER-4-MIS-PRM42
Systems Approach
Systems have components
Components need to interact
N= n(n-1)/2
N->no. of interconnections, n-> components
Two ways for systems approach
◦ Functional Approach (it uses Mintzberg model with functions as inputs)
◦ Traditional Approach (Table 4.1)
◦ Mechanistic systems
◦ Organic systems

CHAPTER-4-MIS-PRM42
 Functional Approach
Function: Layers:
*Domain Specific *input from
*Can provide specialist Mintzberg model
services
*Explicit Knowledge
*Provides standards

CHAPTER-4-MIS-PRM42
 Organizational Layers
Organizational Organizational issues Systems Issues Technology Issues
Layer
Strategic Organization Structure, Environmental Feedback Technology Selection for
(Pro-active/ Decision Style, Maintenance mechanism, Procedures Systems, knowledge and
Systemic/ of organization culture, for internal resource Intelligence Management
Systems Thinking) Formalization of management and external
Informal, organizational Performance interfaces, Systems MIS supports this layer
directional Indicators Modelling
Tactical Establishment of process, Process modelling Preparation of process
(Systematic/ process parameters related to and data models to
Preventive and organizational performance, optimize costs on
Reactive) Process interface transactions, agency and
Formal and mechanisms as per the coordination
prepare SoPs organization structure,
establishing role clarity in
organization as per MIS is Strong in this Layer
organization structure
Operational Identification of transactions Identification of modes of Induction of technology for
(Systematic/ and taking ownerships transaction, mapping the managing transactions
Reactive) frequencies and volume of
Highly formal and transaction, formalizing
follow SoPs transaction cycles,
MIS is Strong in this Layer generation of information

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Organizational Decisions- no Direct Solutions
Theory of Bounded Rationality
Simon stated that --- Individual vs
Organization --- there are decisions----
◦ Involves three “steps”:
◦ (i) the listing of all possible behavioral alternatives;
◦ (ii) the determination of all the consequences that will follow, in
the future, to the adoption of each of these alternatives (in a
deterministic way or in the form of distributions of probabilities);
◦ (iii) the comparison of the alternatives, that should be evaluated by
the sets of consequences following each one of them, according to
the preestablished ends (utility, profit or any other specified pay-off
function).

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 Systems
Thinking –
Getting into
Systemic
Views

CHAPTER-4-MIS-PRM42
 Overview
Systems Thinking
◦Reaction to an event would depend
on:
◦Understanding “Cause-Effect”
◦Identifying stakeholders
◦Effect on their relationships
◦It opposes short term views of a problem

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 Overview

Has “Systems Thinking” Helped?

◦Business Paradigm
 Automation of various processes
 ERP, Banking Solutions etc…
 Web Technologies….
 Internet Solutions
◦Weather Forecast and Analyses
◦Rural Services
◦Governance and E-Governance
◦Education Systems
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Approach to
Systems
Thinking

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 The Traditional Approach
Traditional systems analysis is
◦ Monolithic
◦ Looks at problems in isolation
◦ Incremental
◦ Problem specific
Advantages:
◦ Can be handled efficiently
◦ Can improve upon
Disadvantages
◦ Short term, needs corrections very often
CHAPTER-4-MIS-PRM42
Systems Thinking Approach

It looks for events and arrests its recurrence

It may ask for a “World View”
It is strategic in nature
Perhaps all the stakeholders need to exercise their power to
contribute
◦ Democratic/political/social
◦ Relationship management
Advantages
◦ Long term view
◦ Pattern can be forecast and embedded in the system
Disadvantages
◦ Difficult to reflect all requirements
CHAPTER-4-MIS-PRM42
 An Example
State encounters “Famine” – This is an event
Scenario-I
State announces schemes – State is “Reactive”
Scenario-II
◦ State helps people and study the causes
◦ State tries to analyze patterns and cause-effects of
famine on “Livelihoods”
◦ State plans for alternate livelihood opportunities
(In scenario-II, state has a “systems thinking Approach”)

CHAPTER-4-MIS-PRM42
 Systems Thinking Tools for Analyses
Behaviour Over Time (BOT)

Fish-Bone Diagram
Effect

Cause

Effect

CHAPTER-4-MIS-PRM42
What is Systems Thinking?
◦Effective in seeing the “Big Picture”
rather than just their “parts”.
◦Identify recurring challenges and fix
them
◦Deal with “Problems” whose solutions
are not “Obvious”. (Problems with
obvious solutions can be managed
systematically.)

CHAPTER-4-MIS-PRM42
What is Systems Thinking?
Systems Thinking as a Special Language
◦ It emphasizes
◦ wholes rather than parts, and stresses the role
of interconnections.
◦ circular feedback (for example, A leads to B,
which leads to C, which leads back to A) rather
than linear cause and effect (A leads to B, which
leads to C, which leads to D, . . . and so on).
(For Example: Increase in Subsidy ->Likely increase in political affinity ->
Likely increase in Subsidy)

CHAPTER-4-MIS-PRM42
Systems Thinking-
Examples
 Traditional Systems - Examples
Example of a Car Manufacturing
Business
Traditional Thinking
Economic View
Cost (Unit)
Price (Unit)
Volume of Sales
Profit
Break Even
CHAPTER-4-MIS-PRM42
 Break-Even Analyses

 Break even point ( BEP) is the point where the revenue is equal to total cost.
 At BEP, the company makes neither profit nor loss.
 This point is important to determine the price of a product such that the
company still gains net profit.

BEP=TFC/(SPUP-VCUP)
BEP= Break Even Point
TFC=Total Fixed Cost
SPUP= Sales Price Per Unit Production
VCUP= Variable Cost of Unit Production

CHAPTER-4-MIS-PRM42
 Another Example of
Traditional Systems
 Economic Order Quantity (EoQ) for Inventory Management
 Rules:
Calculate Ordering Cost,:
Ordering Cost = (Annual Demand / Order Quantity) *
cost per order
Calculate Carrying Cost = (Order Quantity / 2 )* Annual
Holding Cost per unit
 Calculate Total Cost = Ordering Cost + Carrying Cost
Find out Least Total Cost (use small function)
Calculate EOQ (Use offset and match function to find out
the order quantity for least total cost)

CHAPTER-4-MIS-PRM42
 Why EoQ?

D: The demand for the product in quantity per unit time.

Q*: The order quantity. This is the variable we need to optimize
C: The order Cost
h: Holding cost per unit. For storing X units, the holding cost is Xh.

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 What Systems Thinking Does
Here?
 Case of BEP
Takes a view of economic value
Concentrates on production and sales

 Case of EoQ
Takes a view on Inventory of raw material, finished goods
Concentrates on inventory holding costs

 Way Forward? (Holistic Approach through Systems Thinking)

Can we combine these two issues for a better cause?
What is the effect of BEP and EoQ on profit?
What is the effect of BEP and EoQ on Employee Productivity, Employee stock option, employee
satisfaction, etc.?

CHAPTER-4-MIS-PRM42
Systems Thinking: A Holistic View
Presentation of the Model:
Sales- [[Cost of Goods Sold] + [Overheads]]= [Profit]

Discussions:

1. Will the profit be influenced by “stock”? ( + ive or –ve)

2. Will the stock influence “cost of goods sold”? ( + ive or –ve)

3. Will Creditors influence “profit”? ( + ive or –ve)

Generally speaking :

the linear equation could be

“y = ao + a1X1 + a2X2 + . . . + anXn ”
where

y = dependent variable

Xi = independent variables
ai = coefficients (or weighting factors) for each of the independent
variables
Influences could be Cause-Effect

CHAPTER-4-MIS-PRM42
 Essence of Systems Thinking

 Chaos
◦ Is the pattern Linear/ Non Linear!
 Linear thinking is “Absurd”!, it does not exist in real
world.
If assumed, it may lead to Chaos
 Expansive: Not Reductionist
◦ Reductionist means reducing some behavior through
identifiable measures ( Better Sales would have Better
Margin!!)
Systems Thinking cannot depend on this Cause-effect
alone!
◦

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 Usefulness of Systems Thinking

➢ Reinforcing
 Continuous (Once successful may lead to do same things with more vigor!)
 Archetypes (Structure/Patterns- Experts!)
◦ Complexity can be reduced to small and predefined structure and
pattern with proved relationships
(Example: Car fails to start!, check battery, starter, fuel and go on..)
Time
◦ Delays (minimum…)
◦ Timeline (Longitudinal Analysis)
(Example: verifying response time in Railway reservation system/ ATM!)
Through use of technology
◦ When to do it?
Example: Technology intervention in ticketing, round the clock?, who should issue tickets- Outsource, departmental?

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 When to Use Systems Thinking?
 When thinkers stop appreciating role of “Forest” while
addressing problems for “Trees”
 Problem is Complex
 Recurrence of Events
 Issues are part of larger Structure
 Non-Obvious Problems
( confirmatory, It might exist somewhere- Not to reinvent the wheel)

 Problems with multiple perspectives; may not have “Obvious

Solutions”
 Problems/Challenges are in “Circular Referencing”
 When there is a pattern

CHAPTER-4-MIS-PRM42
Systems:
The Base for
Systems
Thinking

CHAPTER-4-MIS-PRM42
Systems: How it works?
Systems Types Description Examples
Closed Do not interact with environment for Atoms and molecules.
existence
Open Organic and must interact with their Human organism,
environment in order to maintain Furnace, Fridge
their existence
Reactive Systems react to an event Thermal sensor controls a
compressor in
Refrigerator
Responsive Regulating Thermal Sensors having
Thresholds
Optimizing Simulations Critical Path Methods,
EoQ
Adaptive Continuous Aviation Controls
Deterministic Predictable in inputs and delivery Computer programmes,
machines
Probabilistic/Stochastic Considers past trends and predict Inventory controls
Self-Organizing Method of adaptation is uncertain Social groups

CHAPTER-4-MIS-PRM42
Systems Life Cycles
Entropy
◦ Is the normal phenomenon in a system
◦ Refers to LOSS

Entropy needs to be “Negated”

◦ Possible through cybernetics
◦ System needs to attain “Steady State”

Open systems address entropy seamlessly

Entropy, if not addressed, will enforce system’s termination (life cycle
would end)

CHAPTER-4-MIS-PRM42
Steady State and Entropy in Systems

Example of STEADY STATE:

◦ Competitor changes price
◦ Change is recorded by the system
◦ Processing is done
◦ Verification is done based on the output
◦ Price is changed suitably – (This is the steady state)

Example of Entropy
◦ Competitor changes price
◦ Changes are recorded
◦ Process ignores the change
◦ This ignorance is called Entropy

Capturing “change” in competitors price is called as negative entropy (INFORMATION)

Systems should resist entropy

Refer to TAU material for details on entropy

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Cybernetics

CHAPTER-4-MIS-PRM42
 Cybernetics
It is a control component in the system
Feedback is the main requirement to control
◦ Needs capture expected behaviour of the system without getting into details
◦ Based on +ive or –ive variations with respect to the expected behaviour

CHAPTER-4-MIS-PRM42
Cybernetics
Tow Types of Cybernetics:
◦ Management Cybernetics
◦ Organization can be managed with certain variables that system can
understand
◦ Ex: Targeted Sales Turnover vs. Production Capacity
◦ Mostly internal control with machine turnover as an input
◦ Mostly internal control with push sales

Organizational Cybernetics
◦ Needs to go beyond push sales with better marketing
procedures, feedback from market, mass customization
with internal preparedness

CHAPTER-4-MIS-PRM42
Role of Cybernetics
Customers Regulatory Agencies

Feedback Feedback

Outputs:
Inputs: Products &
Organization
resources Services

Feedback Feedback Feedback

Suppliers Stockholders Competitors

CHAPTER-4-MIS-PRM42
Thanks!!

CHAPTER-4-MIS-PRM42