IM 201

INFORMATION MANAGEMENT

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Lesson 02. Organizations and Information System

An organization is a formal collection of people and resources such as money, materials,

machines and other equipment, data and information in decision making to accomplish a set of goals.
It will be convenient and efficient if there are Information systems that will support and work within all
part of an organizational process.

Lesson Objectives:
At the end of this lesson, you will be able to:
• Distinguish the members of an organization.
• Determine the flow of information within an organization.
• Identify the basic types of business information systems and discuss who uses them, how they
are used and what kind of benefits the deliver.

Getting Started:
An organizational chart is a graphical representation of an organizations structure. It is used to illustrate
the reporting relationships and the chain of command within an organization. How well do you know
the College officials? Think of CCC’s organizational chart and briefly explain what is the role and
responsibilities of each member of the organizational chart.

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Discussion:

COARSE
GRANULARITY

DOWN /
UP / UPWARD
DOWNWARD Executive
Current State Management
Strategies,
of the Strategic Decisions
goals and
organization
directives
IN / INWARD
Middle Management

GRANULARITY
INFORMATION
AND OUT /
Tactical Decisions OUTWARD
Customers,
suppliers, and
Operational Management other partners
Operational Decisions

Non-Management Employees
On-the-job Decisions

FINE
GRANULARITY
HORIZONTAL
Between functional business units and work teams

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Management Levels

1. Top-level managers, or top managers, are also called senior management or executives. These
individuals are at the top one or two levels in an organization, and hold titles such as: Chief
Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operational Officer (COO), Chief
Information Officer (CIO), Chairperson of the Board, President, Vice president, Corporate head.
Top-level managers make decisions affecting the entirety of the firm. Top managers do not
direct the day-to-day activities of the firm; rather, they set goals for the organization and direct
the company to achieve them. Top managers are ultimately responsible for the performance
of the organization, and often, these managers have very visible jobs.

2. Middle-level managers, or middle managers, are those in the levels below top managers.
Middle managers' job titles include: General manager, Plant manager, Regional manager, and
Divisional manager. Middle-level managers are responsible for carrying out the goals set by top
management. They do so by setting goals for their departments and other business units. Middle
managers can motivate and assist first-line managers to achieve business objectives. Middle
managers may also communicate upward, by offering suggestions and feedback to top
managers. Because middle managers are more involved in the day-to-day workings of a
company, they may provide valuable information to top managers to help improve the
organization's bottom line.

3. First-level managers are also called first-line managers, supervisors or operational managers.
These managers have job titles such as: Office manager, Shift supervisor, Department manager,
Foreperson, Crew leader, Store manager. First-line managers are responsible for the daily
management of line workers; the employees who actually produce the product or offer the
service. There are first-line managers in every work unit in the organization. Although first-level
managers typically do not set goals for the organization, they have a very strong influence on
the company. These are the managers that most employees interact with on a daily basis, and
if the managers perform poorly, employees may also perform poorly, may lack motivation, or
may leave the company.

4. Non-managerial employees are employees who are not managers and do not have any
supervisors, team leaders and clerical staff reporting to them. Non managerial employees don’t
have the power to make important decisions: only managers are involved in budgeting.

Information based of its flow in an organization

1. Upward. Upward information flows describe the current state of the organization based on its
daily transactions. When a sale occurs, for example, that information originates at the lowest
level of the organization and is passed upward through the various levels.

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2. Downward. Strategies, goals, and directives that originate at a higher level are passed to lower
levels in downward information flows. The upper level of an organization develops the strategies;
the middle levels of an organization convert those strategies into tactics; and the lower levels of
an organization deal with the operation details.

3. Horizontal. Information flows horizontally between functional business units and work teams. The
goal here is to eliminate the old dilemma of the “right hand not knowing what the left hand is
doing”. All units of your organization need to inform other units of their processes and be
informed by the other units regarding their processes.

4. Inward/Outward. Information is communicated from and to customers, suppliers, distributors,

and other partners for the purpose of doing business. These flows of information are really what
electronic commerce is all about.

Types of Information Systems

The most common types of information systems used in business organizations are those
designed for electronic and mobile commerce, transaction processing, management information,
and decision support. In addition, some organizations employ special-purpose systems such as virtual
reality. These systems are discussed in separate sections in this module and explained more in detail.
This is to show you the relevance of various information system in a business organization.

1. Transaction Processing System (TPS) is an organized collection of people, procedures, software,

databases and devices used to perform and record business transactions and any business-
related exchange such as payments to employees, sales to customers, and payments to
suppliers.

2. Enterprise Resource Planning System (ERP) is a set integrated programs that manages the vital
business operations for an entire multisite, global organizations; it can replace many
applications with one unified set of programs, making the system easier to use and more
effective

3. Management Information System (MIS) an organized collection of people, procedures,

software, databases and devices that provides routine information to managers and decision
makers; focuses on operational efficiency in different departments such as manufacturing,
marketing, production and finance; the focus is to “do things right”

4. Decision Support System (DSS) is an organized collection of people, procedures, software,

databases and devices that support problem-specific decision making; the focus is making
effective decisions to “do the right thing”

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5. Expert System gives the computer the ability to make suggestions and function like an expert in
a particular filed, helping enhance the performance of the novice user; allow organizations to
capture the wisdom of experts and specialist, therefore years of experience and specific skills
are not completely lost when a human expert dies, retires or leaves for another job

6. Electronic Commerce (E-Commerce) involves any business transaction executed electronically

between companies (business to business or B2B), companies to consumers (business to
consumer or B2C), consumer and other consumer (consumer to consumer, C2C), business and
the public sector, and consumers and the public sector that offers opportunities for businesses
of all sizes to market and sell at a low cost worldwide, allowing them to enter the global market.

7. Mobile Commerce (M-Commerce) is the use of mobile, wireless devices to phone orders and
conduct business; it relies on wireless communications that managers and corporations use to
place orders and conduct business with handheld computers, portable phones, laptop
computers connected to a network and other mobile devices.

8. Supply Chain Management System (SCMS) helps determine what supplies are required for the
value chain, what quantities are needed to meet customer demand, how the supplies should
be processed (manufactured) into finished goods and services, and how the shipment of
supplies and products to customers should be scheduled, monitored and controlled

9. Customer Relationship Management System (SCMS) helps the company manage all aspects of
customer encounters, including marketing and advertising, sales, customer service after the
sale, and programs to retain loyal customers

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The figure above illustrates how these components are integrated to form the wide variety of
information systems found within an organization. Starting at the bottom of the figure, you see that the
IT components of hardware, software, networks (wireline and wireless), and databases form the
information technology platform. IT personnel use these components to develop information systems,
oversee security and risk, and manage data. These activities cumulatively are called information
technology services. The IT components plus IT services comprise the organization’s information
technology infrastructure. At the top of the pyramid are the various organizational information systems.

Information systems perform these various tasks via a wide spectrum of applications. An
application (or app) is a computer program designed to support a specific task or business process. (A
synonymous term is application program.) Each functional area or department within a business
organization uses dozens of application programs. For instance, the human resources department
sometimes uses one application for screening job applicants and another for monitoring employee
turnover. The collection of application programs in a single department is usually referred to as a
departmental information system (also known as a functional area information system). For example,
the collection of application programs in the human resources area is called the human resources
information system (HRIS). There are collections of application programs that is, departmental
information systems in the other functional areas as well, such as accounting, finance, marketing, and
production/operations.

Learning Module on IM201 – Information Management