MGT 6302 – Management Information

Systems
Lecture Handouts and Assignment I
Mr. AMASM Bandara
A SYSTEM APPROACH TO ORGANIZATIONS
 Lecture Plan
• What is a system?
• Major components of a system
• Systems thinking
• Examples of systems
• Closed Systems vs. Open Systems
• Open Loop Systems vs. Closed Loop Systems
• Organization as an Open System
• Organizational Sub Systems
• Role of Management in Organizational System
• A system we can simply define as an organized collection of
parts (or sub systems) that are highly integrated to
accomplish an overall goal.
 Examples of systems
• Human Body: A Complex system with unbelievable
characteristics – A collection of numerous sub
systems – designed to handle various tasks

Respiratory Digestive Nervous Skeletal Circulatory

System System System System System
 Examples of systems
• Any form of organization can be considered as a
system
– University System
– Transport System
– Family
– School
– Etc.
 Examples of systems
• Most of the equipments that we use in day-to-day
activities
– Vehicles
– Computers
– Refrigerators
– Washing Machines
– Etc.
 Systems thinking
• Is an extension of “Scientific Thinking”
– Scientific thinking tries to break a large problem in to a
set of small problems (Elements)
• Focuses on relationships between elements.
– For instance, “you” can be considered as an element of
many systems
• Your Family
• University
– Within you there are many systems
 Systems thinking
• A problem with you could be caused by either of
these systems
• Therefore, you tend to observe your problem
through many systems
• The Systems thinking allows you to perceive a
problem in various perspectives.
Major components of a system

– INPUTS
– TRANSFORMATION PROCESSES
– OUTPUTS

INPUTS PROCESSES OUTPUT

 Closed Systems vs. Open Systems
• Systems can be considered in two ways:
– Closed or
– Open
• Open systems exchange information, energy, or
material with their environments.
– Biological and social systems are inherently open
systems;
– mechanical systems may be open or closed.
 System Boundaries
• Systems have boundaries which separate them
from their environments.
• The concept of boundaries helps us understand the
distinction between open and closed systems.
– The relatively closed system has rigid, impenetrable
boundaries
– The open system has permeable boundaries between
itself and a broader supra-system.
 Breakout Room Task 1
• Time 10 minutes

• Discuss whether the organizations can be identified as open

systems or closed systems?
• Prepare for a 3 minutes presentation.
Organization as an Open System

Processing
 Open Loop Systems vs. Closed Loop Systems
OPEN LOOP CLOSED LOOP
 Feedback
• The concept of feedback is important in
understanding how a system maintains a steady
state.
• Information concerning the outputs, or the process
of the system is fed back as an input into the
system, perhaps leading to changes in the
transformation process and/or future outputs.
 Organizational Sub Systems
• Any organization can be considered as a collection
of subsystems.
– Accounting Sub System
– Marketing Sub System
– Etc.
 Breakout Room Task 2
• Time 15 minutes

• Discuss among the group members and prepare a list of sub

systems that may be identified in a typical business
organization
• Identify the inputs, processes, and outputs for each sub
system.
• Make a 5 minutes presentation
 Role of Management
• Basically, management acts as the control
mechanism of the organization system.
• It observes the inputs, processes and outputs
closely
• Identify any deviation
• The information gathered through this process will
be used for
– Control purposes
– As an input for future operations
 PROCESS OF MANAGEMENT

• Planning
• Organizing
• Leading
• Controlling
ROLE OF MANAGEMENT
Interdependency of organizational subsystems
 Breakout Room Task 3
• Time 15 minutes

• Develop a model identifying all the informational and other

interdependencies between the organizational sub systems
that your group has listed in the previous task.
• Make a 5 minutes presentation
 business process

• Business process : tasks, rules, behaviors that been developed

to produce business results.
• eg.
– Developing new product
– Creating market plan
– Hiring an employee
• Considered source of competitive strength
• IS automate many business process
 Firms invest heavily in IS to achieve 6 strategic business
objectives (why firms use IS?).

1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
 1. Operational excellence:
• IS Improvement of efficiency of operation to attain higher
profitability

• IT tool to achieve greater efficiency and productivity

• Examble: Wal-Mart’s RetailLink system links suppliers to stores

for superior replenishment system
 2. New products, services, and business
models
– Business model: describes how company produces, delivers,
and sells product or service to create wealth
– Information systems and technology a major enabling tool for
new products, services, business models
• E.g. Apple’s iPod, iTunes and Netflix’s Internet-based DVD rentals
 3. Customer and supplier intimacy
– Serving customers well leads to customers returning, which
raises revenues and profits
• E.g. High-end hotels that use computers to track customer preferences
and use to monitor and customize environment
– Intimacy with suppliers allows them to provide vital inputs,
which lowers costs
• E.g. J.C.Penney’s information system which links sales records to
contract manufacturer
 4. Improved decision-making
– Without accurate information:
• Managers must use forecasts, best guesses, luck
• Leads to:
– Overproduction, underproduction of goods and services
– Misallocation of resources
– Poor response times
• Poor outcomes raise costs, lose customers
– IS provide real-time data for making decisions
– E.g. Verizon’s Web-based digital dashboard to provide managers with
real-time data on customer complaints, network performance, line
outages, etc.
 5. Competitive advantage
– Achieve higher sales and profit through using IS by:
• Doing things better
• Charging less for superior products
• real time Responding
– Using the internet is competitive advantage
– E.g. Dell: Consistent profitability over 25 years; Dell remains one of the
most efficient producer of PCs in world.
– But Dell has lost some of its advantages to fast followers-- HP
 6. Survival
– Information technologies are necessity of doing business
– May be:
• Industry-level changes, e.g. Citibank’s introduction of ATMs
• Governmental regulations requiring record-keeping
– E.g. Toxic Substances Control Act, Sarbannes-Oxley Act
 Dimensions (boarders) of IS

– Understanding of IS dimensions is IS literacy

– Where computer literacy is focus on primarily on knowledge of IT
– MIS try to achieve this boarders, deals with behavioral and technical
issues surrounding development, use and impact of IS in the firm.
Contemporary Approaches to Information Systems
 Technical approach:
• Emphasizes mathematically based models
• Computer science theories of commutation ,data storage
• management science: models of DM and practices
• operations research: optimizing selected parameters of org.
 Behavioral approach
• : Behavioral issues such strategic business integration, implementation...
• Psychology: how decision makers use formal information
• Economics: how IS change the control and cost structures
• Sociology: how system affect individuals and groups
Systems from a constituency perspective

– Transaction processing systems: supporting operational

level employees
– Management information systems and decision-support
systems: supporting managers
– Executive support systems: supporting executives
 Interrelationships Among Systems

The various types of systems in the organization have interdependencies. TPS are major producers of
information that is required by many other systems in the firm, which, in turn, produce information
for other systems. These different types of systems are loosely coupled in most business firms, but
increasingly firms are using new technologies to integrate information that resides in many different
systems.
Figure 2-10
 Problem:
• Different kinds if IS in a firm work together
• The challenge to get them all work together as one corporate
system(information integration )
• Solution: applications (systems) that span functional areas,
focus on:
• Execute, coordinate business process
• Integrate group of process
• Focus on management of resources and customer service
 Solution: Enterprise applications
• Include all levels of management
• Execute business processes across firm
• Span functional areas
ERP System Modules/ Components
Source: Oracle
Finance and accounting module
• allows businesses to understand their current financial state
and future outlook
• Key features
– tracking accounts payable (AP) and accounts receivable (AR) and
managing the general ledger
– creating and storing crucial financial documents like balance sheets,
payment receipts and tax statements.
– automated billing, vendor payments and account reconciliation.
– financial planning and analysis and run scenario plans.
Procurement module
• Helps an organization secure the materials or products it needs
to manufacture and/or sell goods.
• Key features
– Maintains a list of vendors.
– Automate requests for a quote, then track and analyze the quotes
that come in.
– Preparing and sending out purchase orders.
– Tracking purchase orders
– Automatically updating inventory levels once, the order arrives.
Manufacturing Module
• Also known as production management or manufacturing
execution system (MES).
• Key features:
– Planning the production and enlisting the requirements such as raw
materials and machinery capacity.
– Updating the status of goods-in-progress and help companies track
actual output against forecasted production.
– Calculating the average time to produce an item and comparing
supply with forecasted demand to plan adequate production.
Inventory management module
• Enables inventory control by tracking item quantities and
location.
• Key features:
– Provides a complete picture of current and incoming inventory
– Managing inventory costs
• An inventory management application can consider sales
trends against available products.
• It can help prevent stockouts and delays, which enhances
customer service.
Order management module
• Tracks orders from receipt to delivery.
• Key features:
– Direct all orders to the warehouse, distribution center or retail store
after customers place an order.
– Track the progress of orders as they’re prepared, fulfilled and shipped
to the customer and prevents orders from being lost
– Enables on-time delivery and cut unnecessary expenses for expedited
shipping.
Warehouse management module
• Guide warehouse employees through all warehouse processes
based on the layout of the facility.
• Key features:
– Planning labor requirements based on expected order volume
– Supporting different picking strategies such as batch picking, wave
picking and zone picking
– Predicting the most efficient pick path.
• This module is generally integrated with inventory and order
management modules.
Supply chain management module
• Tracks each step in the movement of supplies and goods
throughout the supply chain, from sub-suppliers to suppliers to
manufacturers to distributors to retailers or consumers.
• Supply chain management can include a wide array of modules
like procurement, inventory management, manufacturing,
order management and warehouse management.
• However, it may have functionality beyond the core capabilities
of those modules.
Customer relationship management (CRM)
module
• This stores all customer and prospect information including the
the company’s communication history.
• A CRM improves customer service enabling the access to all
the information they need when working with a customer.
• Key features:
– managing sales leads and opportunities.
– Tracking communication with prospects and suggest which customers
should be targeted for certain promotions.
– Customer segmentation
Service resource management module
• Allows an organization to plan and manage projects.
• Services-based businesses often use this module.
• Key features:
– Tracking the status of projects,
– Managing human and capital resources
– Expenses and timesheets preparation
– Facilitating the collaboration between teams
– Preparing and sending bills to clients
Human resource management (HRM) module
• This module encompasses all the features of workforce
management application.
• Key features:
– Maintaining detailed records on all employees and stores documents
such as performance reviews, job descriptions and offer letters.
– Tracking working hours, OT, leave, and benefits information.
– Eliminates the duplication or inaccurate data.
Ecommerce module
• This module allows companies to quickly launch a business-to-
business (B2B) or business-to-consumer (B2C) ecommerce
website.
• Key features:
– User-friendly tools that allow employees to easily add new items,
update product and change the look and feel of the website.
– Integration with other ERP applications including payment, order and
inventory feeds.
Marketing automation module
• This module manages marketing campaigns across digital
channels like email, web, social media and SMS.
• Key features:
– Automate email generation based on campaign rules
– Advanced customer segmentation features to provide only the
relevant messages.
– Generating detailed reports on the performance of campaigns to
shape future marketing plans and spend.
• These applications increase leads, customer loyalty and, over
time, sales.
How to select the correct modules for an
organization?
 Individual Assignment 1 (10 marks)
– Deadline: March 13, 2022
– Email your answers to: shanaka.amila@gmail.com subject Line of the email should
indicate as MGT6302 – MIS – Assignment 1 – ‘Your registration number’

1. Select an organization of your choice

2. Study the organizational processes and prepare a list of
organizational sub systems including the inputs, processes
and the outputs of each subsystem.
3. Prepare an information flow diagram for the organization.
4. If the management of the organization is planning to purchase
an ERP solution, recommend the suitable modules to be
included with suitable justifications.