LESSON 1: INFORMATION SYSTEMS knowledge works in an office environment by handling

documents and messages in a variety of forms – text,

During the 1960s, the phrase information system was voice, data and images. Electronic communication
coined to describe that part of any organization which is systems facilitate the exchange of information within the
responsible for the management of organization’s organization and its clientele in the outside world.
informational resources – all its collective knowledge –
and of the systems that make use of these resources. 2. Operational support systems assist in the day-to-day
Many organizations called it Management Information activities of the enterprise by keeping a track of its
System (MIS). resources and commitments such as inventory systems
and other financial systems.
1. It is the study of people, technology, organizations,
and the relationships 3. Management support systems provide summary
among them. information for executives using data automatically
extracted from a database, and assist the various levels
2. It is a people-oriented field with an emphasis on
of management in their tasks. Through such systems,
service through technology.
managers are able to obtain summary reports on past,
3. It is the use of information technology, people, and current and projected activity within their areas of
business processes to responsibility.
record, store and process data to produce information
that decision makers Types of Organizational Information Systems
can be used to make day to day decisions.
The following are the different types on
Organizations are formal social units devoted to the
information systems that support the needs of the
attainment of specific goals. The success of any
organization:
organization is premised on the efficient use and
management of resources which traditionally comprise
1. Executive Information System (EIS) provide top
human, financial, and material resources. Information is
management with ready access to a variety of
now recognized as a crucial resource of any
summarized company data against a background of
organization. Examples of organizations are business
general information on the industry and economy at
firms, banks, government agencies, hospitals, airlines
large.
and others.
2. Decision Support System (DSS) are expressly
Today, computerized processing of transaction data is a
designed for the support of individual and collective
routine activity of large organizations. MIS is now
decision making. The decision support systems allow
user-oriented, user-friendly and user driven with
managers to consider various courses of future action
emphasis on structured programming, ad hoc inquiries
and see projected results in order to plan for future
and real time information access. The growing power of
activities. Executives are able to get an overview of the
knowledge and information work (and workers) in
company’s operations in attractive graphical form and
advanced industrial societies have put new emphasis on
“drill in” on any aspect they want to pursue in more
enhancing the productivity of information workers.
Detail.

Organizations that use information systems for

3. Management and Reporting Systems (MRS),
coordination and decision making have a solid
capable of producing reports for specific time periods,
foundation for success. Increasingly, the successful
are designed for managers responsible for specific
manager is the one who knows how to take advantage
functions in a firm.
of this situation by deploying IT in the most effective
manner. Information is the central to most of the
4. Transaction Processing is the core of IT applications
activities that transpire in an organization. It provides
in business. Most mission-critical information systems for
support to all levels of operations in the organization.
both large and small organizations are essentially
transaction processing systems for operational data
Information System
processing that is needed, for example, to register
1. Support of knowledge workers, through the use of
customer orders and to produce invoices and payroll
office productivity software such as MS Office’s Word,
checks.
Excel and PowerPoint, which support and coordinate
5. Office information systems, which support and
coordinate knowledge work in an office environment by
handling documents and messages in a variety of forms
– text, data, image and voice.
Information systems offer a set of capabilities that can
be exploited to achieve business results. Drawing on
these capabilities by implementing systems that suit
specific business needs enables the firm to respond to
the demands of its environment. Following are the
principal capabilities of information systems:
1. Fast and accurate data processing, with
large-capacity storage and rapid communication
between sites.
This is the fundamental property of computer
systems interconnected with telecommunications links.
This capability is exploited by operational support
systems, which process massive volumes of business
transactions. It is also used to derive management
reports from the voluminous data kept in computer
storage. This provides organization the ability to respond
faster to the demands of the marketplace.
2. Instantaneous Access to Information
In an on-line system, the contents of a computer
database are available for queries instantaneously. A
query may be directed to a remote site where the data
are actually stored without the user’s awareness.
3. Means of Coordination
Coordination is rooted in sharing information and
communicating. Coordination brings part of an
organization or several collaborating organizations
together in a common effort. IS enhance the ability to
communicate and collaborate within the firm and with
customers and suppliers.
4. Boundary Spanning
Information systems increasingly sere to link an
organization to an outside world. The electronic data
interchange (EDI) systems and communications through
the World Wide Web replace the exchange of paper
transaction records by computer-tocomputer electronic
messaging, resulting in economy, speed and reliability of
Information.
5. Support for Decision Making
By informing managers and permitting them to
select from among alternative courses of action,
information systems support both the structured and
unstructured decision making process.
6. Supporting Organizational Memory and Learning
Organizational memory is the means by which
knowledge from the past exerts influence on the present
organizational activities. This memory preserves the
experience the firm has accumulated in delivering its
products and services to the market place.
7. Formalizing Organizational Practice
Operational systems handle transactions in
every way in an organization. E-mail systems and
computer conferencing provide a protocol for the
interaction of people within an organization. IS enhance
goodwill of employees.
8. Differentiation of Products and Services
The capabilities to differentiate, customize and
individualize the product or service with the use of
information in a cost effective fashion may produce a
competitive advantage in the marketplace, thus
enhancing competitive position (increased market share
or profits)
9. Modeling
A model is a simplified representation of a real
object or phenomenon. Working with a model helps
people concentrate on the relevant aspects of the real
thing and performed controlled experiments. Modeling
improves quality of products or services leading to
higher customer satisfaction.
10. Automation
Computerized information systems can fully
automate a certain business functions by replacing
human labor. It reduces the need for routine human
labor while changing the nature of the labor required
hence increasing productivity which means lower cost
per unit output.
Because of these capabilities of information
systems, the MIS departments of many organizations
are facing increased pressure to deliver real time
financial and operational data to top management who
want to be able to react more quickly to changing
business conditions.
However, many IT departments are struggling to
meet demands due to constraints in legacy system
developed under obsolete technologies and half-baked
enterprise application integration efforts that haven’t
been aligned with corporate business processes. The
challenges facing IT managers who are trying to install
realtime data access capabilities extend beyond
technology to issues such as the quality and timeliness
of information.
Despite the capabilities of information systems, MIS
departments often have trouble communicating to senior
management the value IT investments can deliver to
their organization. Below are some of the reasons:
1. IT plans are difficult to articulate – One of the
biggest mistakes IT made during 1990s was there was
not enough focus on architecture and building a plan that
integrate well at reasonably low cost. Many companies
have rolled out enterprise resource planning systems
that are applied to legacy applications populated with
outdated information.
2. Inability to justify IT spending – Many IT executives
do a poor job of communicating and marketing to senior
management the value of information technology
investment to organization. What IT department typically
does is bundle up projects around technology and asks
the chief financial officer for money without articulating
benefit. The CIO must be able to justify the expenditure
in business terms that everyone can understand.
3. IT and business goals not compatible – According
to a Gartner Research survey of 1500 chief information
officers (CIOs), the two most critical management issues
are integrating a business and IT strategies, and
providing leadership to senior executives. It doesn’t
matter how good your system is. If you are not putting in
good information, it will appear like a failure.
4. Faltering Business = Faltering CIO – Industry
analysts believe that how a business fares in its industry
is an indicator of how well the CIO is performing,
especially if the business is IT-dependent. The role of
CIO is so laden with critical responsibilities that demand
for them exceed supply. Few have technical expertise,
management ability and financial knowledge to run the
IT bloodstream of a major enterprise.
5. Poor knowledge of business process – IT often
fails to link business value to pieces of infrastructure.
6. Surprises from the CIO – Analysts also say
problems arise when a CIO has a habit of springing
last-minute surprises on management. The best CIOs
meet the majority of their target dates and budgets. They
alert their management colleagues to changes and have
a revised plan at the ready. CIOs reluctant to tell difficult
truths are a major hindrance.
The key considerations for investing in information
systems management solutions are:
1. Acquisition and Development Cost – favor products
with reasonable acquisition cost, simple, predictable
pricing scheme and reasonable maintenance fees.
Beware of products that have low entry-level prices
followed by high a-la-carte pricing for items such as
consoles and additional management features.
2. Time to Value – Products that can easily be
implemented in a short period of time (days or weeks)
should be considered over those that require extensive
customization by outside consultants. A rapid time to
value translates into a rapid return on investment.
Products that installs rapidly, automatically discovering
management services in a matter of minutes results in
realization of ROI in a short time, particularly compared
with competitive products.
3. Total Cost of Ownership (TCO) – Solutions with low
acquisition costs, reasonable maintenance fees, and low
implementation costs result in a lower total TCO.
Requires no dedicated server hardware, and its
architecture has a low impact on the network. Return on
Investment (ROI) – is calculated as the costs subtracted
from the reward derived from a particular investment. A
proper choice of information systems management
solution will reward IT with positive ROI and all of the
criteria discussed above are key factors to consider.
LESSON 2: DECISION SUPPORT SYSTEMS
Managers spend much time gathering and analyzing
data to be able to arrive at an educated decision. All
information systems discussed in Lesson 1 support
decision making, even directly.
Information has a great impact on decision making, and
hence its value is closely tied to the decisions that result
from its use. Information does not have an absolute
universal value. Its value is related to those who use it,
when it is used and in what situation it is used. In this
sense, information is similar to other commodities.
Information supports decisions, decisions trigger actions
and actions affect the achievement or performance of an
organization. If we can measure he difference in
performance, we can trace the impact of information,
provided that the measurements are carefully performed,
the relationships among variables are well defined and
possible effects of irrelevant factors are isolated.
Simon (1997) describes the process of decision
making in four steps:
1. The intelligence stage encompasses collection,
classification, processing and presentation of data
relating to the organization and its environment. This is
necessary to identify situations calling for decision.
2. During the decision stage, the decision maker outlines
alternative solutions, each of which involves a set of
actions to be taken. The data gathered during the
intelligence stage are now used by statistical and other
models to forecast possible outcome for each
alternative. Each alternative can also be examined for
technological, behavioral and economic feasibility.
3. In the choice stage, the decision maker must select
one of the alternatives that will best contribute to the
goals of the organization.
4. Past choices can be subjected to review during
implementation and monitoring to enable the manager to
learn from mistakes. Information plays an important role
in all four stages of decision process.
Two Major Categories of DSS
a. Enterprise-wide DSS are linked to large data
warehouse and serve many managers in a company. It
can range from fairly simple system to complex data
intensive and analytically sophisticated executive
information system.
b. Desktop DSS such as spreadsheets, accounting and
financial models can be implemented in Microsoft Excel.
Another DSS tool, simulation, is usually implemented in
desktop packages
Electronic Decision Support System Tools
A Decision Support System covers a wide
variety of systems, tools and technologies that support
decision making. Electronic Decision Support Tools
make meetings and training session more measurable
through interactions to make them more valuable.
No two meetings, focus groups or training rooms
are alike. Even the needs of presenter differ, plus
everybody has a different budget. Meaningful interaction
between a presenter and the audience improves
attentiveness and interest, improves comprehension and
increases retention and recall.
1. Direct involvement and instant feedback promotes
more effective communication.
2. The end result is greater effectiveness and
productivity – both for the presenter and audience
members.
1. Interactive conferences, seminars and exhibitions
2. Delegate and shareholder voting sessions
3. Classroom training and interactive distance learning.
4. Group decision support and strategic planning
5. Focus group research
6. Employee and customer survey
7. Advertising testing
8. Assessment and auditing
9. Market research tool
10. Learning System
Management Reporting Systems
Management reporting system (MRS) are the
most elaborate of the management oriented MIS
components. Indeed, some writers call MRS
“management information systems”, the name we
reserve for the entire area of informational support of
operations and management.
The main objective of MRS is to provide lower
and middle management with printed reports and inquiry
capabilities to help maintain operational and
management control of enterprise.\
MRS provide the following report forms:
1. Scheduled (Periodic) Reports- These reports are
furnished in a daily, weekly, bi-weekly, or other basis
depending on the decision making need. A weekly sales
analysis report may be used by the sales manager to
assess the performances of sales districts or individual
sales people. A brand manager responsible for a
particular product might obtain weekly sales report
containing information useful in his or her decision
making – showing regional sales and sales to various
market segments, for example.
2. Exceptional Reports- An exception report is a
document that states those instances in which actual
performance deviated significantly from expectations,
usually in a negative direction. The intent of the report is
to focus management attention on just those areas
requiring immediate action.
3. Demand (Ad Hoc) Reports- Ad hoc reporting is the
creation of dynamic, real-time reports by users on an
as-needed basis. Since empowering end users with ad
hoc reporting functionality enables them to answer
business questions at the moment they occur, users
move from static reporting to dynamic queries, asking
and answering questions about their data.