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The most valuable resource Five Main Resources Personnel Material Machines o (including facilities and energy) Money WHY Information Management? Increasing complexity of business activity International economy Worldwide competition Increasing complexity of technology Shrinking time frames Social constraints

Improved computer capabilities Size Speed Who are the Users? Managers Nonmanagers Persons & organizations in the firms environment The Influence of Management Level on Information Source

Strategic planning level

Management control level

Operational control level

Organ containing a network of specialized cells that coordinate the actions of an animal and transmit signals between different parts of its body. The central nervous system of contains the brain, spinal cord, and retina (eye). The peripheral nervous system consists of sensory clusters and nerves connecting them to each other and to the central nervous system. These regions are all interconnected by means of complex neural pathways. Brain sends signals to other cells as electrochemical waves traveling along thin fibres.

Figure 2: Systems of pipeline .

Lesson 1 Evolution of IT Infrastructure: 19502005 The IT infrastructure in organizations today is an outgrowth of over 50 years of evolution in computing platforms. Five stages in this evolution, each representing a different configuration of computing power and infrastructure elements. 1. automated special-purpose machines, 2. 3. 4. 5. General-purpose mainframe and minicomputer computing, Personal computers, client/server networks, Enterprise and Internet computing.

Technology Drivers of Infrastructure Evolution The changes in IT infrastructure have resulted from developments in computer processing, memory chips, storage devices, telecommunications and networking hardware and software, and software design that have exponentially increased computing power while exponentially reducing costs. Lets look at the most important developments.

ELECTRONIC ACCOUNTING MACHINE ERA: 19301950 The specialized machines could sort computer cards, accumulate totals, and print reports. The electronic accounting machine was an efficient processor of accounting tasks, but the machines were large and cumbersome. There were no programmers, and a human machine operator was the operating system, controlling all system resources. GENERAL-PURPOSE MAINFRAME AND MINICOMPUTER ERA: 1959 TO PRESENT The first commercial computers appeared in the early 1950s with the introduction of the UNIVAC computers and the IBM 700 Series. In 1965, the general-purpose commercial mainframe computer came in with the introduction of the IBM 360 series. The 360 was the first commercial computer with a powerful operating system that could provide time sharing, multitasking, and virtual memory in more advanced models.

Mainframe computers eventually became powerful enough to support thousands of online remote terminals connected to a centralized mainframe using proprietary communication protocols and proprietary data lines. The first airline reservation systems appeared in 1959 IBM dominated mainframe computing from 1965 onward and still dominates this $27 billion global market in 2004. The mainframe era was a period of highly centralized computing under the control of professional programmers and systems operators (usually in a corporate data center) This pattern began to change with the introduction of minicomputers produced by Digital Equipment Corporation (DEC) in 1965. DEC minicomputers (PDP-11 and later the VAX machines) offered powerful machines at lower prices than IBM mainframes, making possible decentralized computing, customized to the specific needs of individual departments or business units rather than time sharing on a single huge mainframe.

PERSONAL COMPUTER (PC) ERA: (1981 TO PRESENT) The first personal computers (PCs) appeared in the 1970s (the Xerox Alto, MITs Altair, and the Apple I and II). These machines had only limited distribution to computer enthusiasts. At first using the DOS operating system, a text based command language, and later the Microsoft Windows operating system, the Wintel PC computer (Windows operating system software on a computer with an Intel microprocessor) became the standard desktop personal computer. Today, 95 percent of the worlds estimated 1 billion computers use the Wintel standard. Production of PCs in the 1980s and early 1990s launched a spate of personal desktop productivity software toolsword processors, spreadsheets, electronic presentation software, and small data management programs These were very valuable to both home and corporate users. These PCs were made it possible to link them into networks. CLIENT/SERVER ERA (1983 TO PRESENT) In client/server computing, desktop or laptop computers called clients are networked to server computers that provide the client computers with a variety of services and capabilities. Computer processing work is split between these two types of machines. The client is the user point of entry, whereas the server provides communication among the clients, processes and stores shared data, serves up Web pages, or manages network activities. Today server computers are more powerful versions of personal computers, based on inexpensive Intel chips and often using multiple processors in a single computer box. The simplest client/server network consists of a client computer networked to a server computer, with processing split between the two types of machines. (This is called two-tiered client/server architecture. Whereas simple client/server networks can be found in small businesses, most corporations have more complex, multitier (often called Niter) client/server architectures in which the work of the entire network is balanced over several different levels of servers, depending on the kind of service being requested).

A multitier client/server network (N-tier) In a multitier client/server network, client requests for service are handled by different levels of servers. At the first level a Web server will serve a Web page to a client in response for a request for service. Web server software is responsible for locating and managing stored Web pages. If the client requests access to a corporate system (a product list or price information, for instance), the request is passed along to an application server. Application server software handles all application operations between a user and an organizations back-end business systems. The application server may reside on the same computer as the Web server or on its own dedicated computer. Client/server computing enables businesses to distribute computing work across a number of smaller, inexpensive machines that cost much less than minicomputers or centralized mainframe systems. The result is an explosion in computing power and applications throughout the firm. (Today Microsoft is the market leader, with its Windows operating systems (Windows Server, Windows XP, Windows 2000), controlling 78 percent of the local area network market) ENTERPRISE INTERNET COMPUTING ERA (1992 TO PRESENT) The success of the client/server model posed a new set of problems for corporations. Many large firms found it difficult to integrate all of their local area networks (LANs) into a single corporate computing environment. Applications developed by local departments and divisions in a firm, or in different geographic areas, could not communicate easily with one another and share data. In the early 1990s, firms moved to networking and software tools that integrate networks and applications throughout the firm into an enterprise wide infrastructure. As the Internet developed into a trusted communications environment after 1995, business firms began networking standard to tie their networks together. IT infrastructure links different types and brands of computer hardware and smaller networks into an enterprise-wide network so that information can flow freely across the organization and between the firm and other organizations. Enterprise networks link mainframes, servers, PCs, mobile phones, and other handheld devices, and connect to public infrastructures such as the telephone system, the Internet, and public network services. The enterprise infrastructure employs software that can link applications and enable data to flow freely among different parts of the business. External vendors provide hardware and software for a comprehensive enterprise infrastructure. The enterprise era promises to bring about a truly integrated computing and IT services platform for the management of global enterprises.

The hope is to deliver critical business information to decision makers when and where they need it to create customer value. This could be everything from getting inventory data to the mobile salesperson in the customers office, to helping a customer at a call center with a problem customer, or providing managers with precise up-to-the-minute information on company performance. Stages in the IT Infrastructure Evolution

Information Systems (IS) and Management Information Systems (MIS) What is IT? IT is "the study, design, development, implementation, support or management of computerbased information systems, particularly software applications and computer hardware", according to the Information Technology Association of America (ITAA). IT deals with the use of electronic computers and computer software to securely convert, store, protect, process, transmit, input, output, and retrieve information. IT professionals perform a variety of duties that range from installing applications to designing complex computer networks and information databases. That includes data management, networking, engineering computer hardware, database and software design, as well as the management and administration of entire systems. It spread farther than the conventional personal computer and network technology, and more into integrations of other technologies such as the use of cell phones, televisions, automobiles. What is IS? Information Systems (IS) is an academic discipline concerned with the strategic, managerial and operational activities involved in the gathering, processing, storing, distributing and use of information, and its associated Information technologies. Information Systems refers to the interaction between algorithmic processes and technology. IS bridges the multidisciplinary business field and the interdisciplinary computer science field that is evolving toward a new scientific discipline. the theoretical foundations of information and computations information systems include people, procedures, data, software, and hardware that are used to gather and analyze digital information It is a network of hardware/software that people and organizations use to collect, filter, process, create, & distribute data (computing). Computer Information System(s) (CIS) is a track within the computer science field studying computers and algorithmic processes, including their principles, their software & hardware designs, their applications, and their impact on society. The history of information systems coincides with the history of computer science that began long before the modern discipline of computer science emerged in the twentieth century. Critical to most information systems are information technologies, which are typically designed to enable humans to perform tasks for which the human brain is not well suited, such as: handling large amounts of information, performing complex calculations, and controlling many simultaneous processes. various types of information systems: transaction processing systems (TPS), office systems, decision support systems (DSS), knowledge management systems, database management systems (DMS), and office information systems. What is MIS? As more and more data was stored and linked man began to analyze this information into further detail, creating entire management reports from the raw, stored data. The term "MIS" arose to describe these kinds of applications, which were developed to provide managers with information about sales, inventories, and other data that would help in managing the enterprise Today, the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems, resource and people management applications, Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Customer Relations Management (CRM), project management and database retrieval application.

'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. In a way it is a documented report of the activities that were planned and executed. IS & MIS?

These two terms MIS and IS are confused. IS includes systems that are not intended for decision making. MIS is for decision making. MIS is sometimes referred to as information technology management. MIS area of study should not be confused with computer science. IT service management is a practitioner-focused discipline. Any successful MIS must support a businesss Five Year Plan or its equivalent. It must provide for reports based up performance analysis in areas critical to that plan, with feedback loops that allow for finalizing of every aspect of the business, including recruitment and training. MIS must not only indicate how things are going, but why they are not going as well as planned where that is the case. These reports would include performance relative to cost centers and projects that drive profit or loss, and do so in such a way that identifies individual accountability, and in virtual real-time. We in this class not study IS or IT but MIS: how to use IS in management. This is management emphasized approach than IS emphasized. We need a good management knowledge to use various IS products in decision making-process. We have to move from pen & paper technology to digital pen & paper technology -information technology. Why? What is Information?

Information as a concept has many meanings, from everyday usage to technical settings. The concept of information is closely related to notions of constraint, communication, control, data, instruction, knowledge, meaning, mental stimulus, pattern, perception, and representation. According to Russell Ackoff, a systems theorist and professor of organizational change: 1. Data: symbols 2. Information: data that are processed to be useful; provides answers to "who", "what", "where", and "when" questions 3. Knowledge: application of data and information; answers "how" questions 4. Understanding: appreciation of "why" 5. Wisdom: evaluated understanding. Data: data is raw. It simply exists and has no significance beyond its existence (in and of itself). It can exist in any form, usable or not. It does not have meaning of itself. In computer literature, a spreadsheet generally starts out by holding data. Data and information do not mean the same thing. Data is derived from the Latin datum, laterally a given or fact, which take a form of a number, a statement, or a picture. Data is the raw material in the production of information. Information: information is data that has been given meaning by way of relational connection. The "meaning" can be useful. It is facts or conclusions that have meaning. To become meaningful data is manipulated through tabulations, statistical analysis etc,.

In computer literature, a relational database makes information from the data stored within it.

(A relational database matches data by using common characteristics found within the data set. The resulting groups of data are organized and are much easier for many people to understand) For example, a data set containing all the real-estate transactions in a town can be grouped by the year the transaction occurred; or it can be grouped by the sale price of the transaction; or it can be grouped by the buyer's last name; and so on. Knowledge: knowledge is the appropriate collection of information, such that it's intent is to be useful. Knowledge is a deterministic process. When someone "memorizes" information, then they have accumulated knowledge. This knowledge has useful meaning to them, but it does not provide for an integration such as would infer further knowledge. For example, elementary school children memorize, or amass knowledge of, the "times table". They can tell you that "2 x 2 = 4" because they have amassed that knowledge (it being included in the times table). But when asked what is "1267 x 300", they cannot respond correctly because that entry is not in their times table. To correctly answer such a question requires a true awareness and analytical ability that is only encircled in the next level... understanding. In computer literature, most of the applications we use (modeling, simulation, etc.) exercise some type of stored knowledge. Understanding: understanding is a probabilistic process. It is the process by which I can take knowledge and create new knowledge from the previously held knowledge. The difference between understanding and knowledge is the difference between "learning" and "memorizing". People who have understanding can undertake useful actions because they can create new knowledge, or in some cases, at least new information, from what is previously known (and understood). Understanding can build upon currently held information, knowledge and understanding itself. In computer literature, AI systems (artificial Intelligence) possess understanding in the sense that they are able to create new knowledge from previously stored information and knowledge. Wisdom: wisdom is an extrapolative and non-deterministic, non-probabilistic process. It calls upon all the previous levels of consciousness (sense), and specifically upon special types of human programming (moral, ethical codes, etc.). It is the essence of philosophical searching. Unlike the previous four levels, it asks questions to which there is no (easily-achievable) answer, and in some cases, to which there can be no humanlyknown answer period. Wisdom is therefore, the process by which we also see clearly , or judge, between right and wrong, good and bad.

I personally believe that computers do not have, and will never have the ability to posses wisdom. Wisdom is a uniquely human state, or as I see it, wisdom requires one to have a soul, for it resides as much in the heart as in the mind. And a soul is something machines will never possess (or perhaps I should reword that to say, a soul is something that, in general, will never possess a machine).

Data represents a fact or statement of event without relation to other things. Data Manipulation

LECTURE- 4-0- Computer and Business Management A Personal Computer System Individuals, small business firms, and medium scale firms often use simple computer systems. It is quite economical to use because it requires relatively a limited initial capital and small operating cost. The maintenance is also easy. A structure of such a system is given Figure 5.4. It is basically a Personal Computer system (PC). All the important elements required for processing data are included in this whole system. For example, the key board, mouse, scanners and optical disk drives are included which are used for entering inputs to the computer system. Internal and external memory devices and processor are installed for processing, releasing and storing inputs and outputs. All devices for releasing outputs, e.g., printers, speakers, and optical disk drives have also been included in it. This is a complete system which helps an individual to process get his data inputs conveniently. All the key elements in this computer system are shown and labeled. (We have not included the Internet Facility that helps users to link with the external environment which is a very common element of a computer system). However, depending on the size and the volume of transactions people can add more and more facilities and get his/her computer system more advanced. You can go through Figure 5.4 personally and get familiarized with it. Figure 5.4 Main Components of a Computer System
1. Scanner 2. CPU (Microprocessor) 3. Main memory(RAM) 4. Expansion cards 5. Power supply unit

We discussed in brief the effects of IT on Business. We learnt that the organizational structure of a firm is subject to change vertically and horizontally with the introduction of IT. The fast growing information technology and the process of Globalization have intensified the competitiveness which has brought in pressure for change in the contemporary environmental settings of the firm. In micro sense, the modern firm is forced to change; it absorbs these effects by changing itself continually. The industry too is subject to change, accordingly. In macro sense, the entire economic structure of the

country -- production, exchange and consumptionis subject to change. All in all, the modern world economy is changingrejecting old fashioned concepts and accepting new values and ideas. This process of change stipulated by IT revolution and Globalization produce costs and benefits to society and business: individuals, firms, consumers at large. Society-wise, the employment structure has changed. The downsizing of labour force at firm levels, the lowering prospects for older population in the work force, losing privacy, individualization of workers and loosing prospects for group behaviour are some social costs produced by the above changes. The social interactions between consumers and the employees are gradually disappearing at work places. Employees are operating in lonely environments and, at the same time, customers are also experiencing loneliness in these new purchasing environments. Especially, e-commerce deprives the customers trying-out or touching products before buying them! However, there had been little empirical research undertaken by scholars to investigate the direct and indirect effects of the concept of computerized firm. There are social gains in the introduction of microcomputer system. It has helped the young entrepreneurs to start-up new businesses. The advent of low-cost yet powerful microcomputers and easy to use applications software recently allows any small enterprise to computerise itself at or near the time of its creation. Computerisation and information systems sophistication were found to be positively related to the organisational development of young firm when they are small but not when they are very small Louis Raymond (1992). E-government concept, that is the use of computer in government functions have helped detecting overpayments and fraud, reducing staff, providing more individualised services, improving policy analysis, improving management information, promoting institutional reform, improving information for frontline staff, and improving working conditions. The commercial benefits derived by business appear to be greater than that of costs. The information flow within the firm is faster than before that reduces the cost of information. Prior to the advent of computers the firms produced information manually which is time-consuming and error prone. The number of personnel involved, the remuneration paid and working-space at firm level are relatively small. The networking of computer systems helps fast flow of information within strata. All these enhance communication efficiency and the volume of production of the firm lowering cost of production. Firm level Changes: IT has changed management practices, organisational structures, decision makings styles, communication pattern, and employer-employee relationships in firms. Horizontally, it has moved towards the concept of e-commerce changing its marketing practices, meeting places, computeroriented product designing and the means of stimulating consumer tastes. This is an ongoing process and changes in the above fields are continuing.

A Conventional Firm and the Flow of Information A conventional firm may be understood by referring to an old firm in the banking industry. The conventional firm too performs functions as a system to increase its stakeholder value. The internal organization of this system comprises of people of different skill levels; skilled, semi-skilled and unskilled, who perform different functions to produce banking services to the customers. There are managers, administrators, and people at operational level engaging in different activities. The tasks of each are defined and each is provided with certain authority and responsibility. There is a hierarchical structure of this organisation in delegating authority and responsibility within the firm. The authority (the power or right to give orders or make decisions) flows from the manager to the peon, from the top to the last level of an internal organization. The person at the top of the organization, the manager in the bank, delegates authority (transfers power) to his subordinates. The authority is distributed according to the tasks assigned to the individuals of the firm. Each carries some responsibility depending upon his capacity and the level of the internal organization he belongs to. In the bank the manager has overall responsibility to mobilize resources to achieve the goal of the bank. The decision making tasks are fundamental and these are performed at the managerial levels. These decisions are executed at the middle and operational levels of the organization. For example, the senior management of the bank decides on a new rate of interest (both buying and selling) and the middle level of management implements this decision through the operational level. People at the operational level lend and borrow money to/from the customers accordingly. The correct shape of the firm and the correct distribution of authority help better reach the overall objective of the firm. Let us look at the shape of an internal organizational structure with the hierarchical structure of the old firm. There are typically two types of hierarchical structures, tall and flat pyramidal structures. Tall ones are common in the manufacturing organizations and flat ones in services industries.

Figure -1.2 Tall (pyramid) hierarchy

Figure 1.3 Flat (horizontal) hierarchy

Chief Executive Board of Directors Executive Senior managers Managers Junior Managers Supervisors Assistants

The two pyramids above show how commands are passed through different levels of the organization. In figure 1.2 there is a long chain of command. In figure 1.3 it is only a short chain of command where the command goes quickly to the last level. In a structure with tall hierarchy each manager has a small number of employees under his control and they can be closely supervised. The information flows quite slowly in a tall hierarchy as it has to go through many levels. On the other hand, the flatter hierarchy has quicker travel of information between management and workers and therefore is less costly. Decision making is easier with relatively few managers. Figure 1.4 The Business Environment of the Modern Firm
Shareholders / owners Labour unions Competitors


Management The


Modern Firm Technology

Financial Institutions

Global community . Govt.

12. Competitive Advantage Porters (1985) concept of competitive advantage gained popularity in the 1980s and thereafter in the era of globalisation. He emphasised the importance of change in management so as to earn competitive advantage at the new world market environment. A firm can restructure its resources and management practices to achieve two types of advantages, namely, cost advantages and differentiation advantages. If the firm can deliver the same product at a lower cost than its competitors the firm can earn cost advantage and generate profits higher than its competitors. Also, if the firm can introduce the same product with some differentiations compared to the products of the competitors, the firm can earn differentiation advantage and generate profits higher than competitors.

On one hand, research on management is increasingly concentrated on this new concept of competitive advantage, developing new management techniques to use in firms. One such new approach is the concept of strategic management. It is an approach of formulating, implementing and evaluating decisions that will enable an organization to achieve its objectives (we will be discussing this concept in later chapters). On the other hand, the large firm sector is investing a large sum on Research & Development (R&D) to invent new products and technology for the society. The special feature of these new products has been that they are embedded with a large component of information technology. The computer revolutionised the production processes, adding Information technology (IT) as a resource component in production functions. The Information systems (IS) now assist management to achieve strategic advantages in competitive businesses. Information Systems approach in business is a fast spreading management concept today. Management now relies very much on computer-based information processing systems to administer, program and forecast activities of the firm. With the use of computer-based information processing systems the firms are now operating in networks which are vertically and horizontally integrated by Information Systems. In these extended networks, the information flows fast helping quick decision making and implementation. The Information Systems have hastened the flow of information within the structure. At the same time, the hierarchical structure of the modern firm has become flat as many low level jobs disappear with computer technology (e.g. robots have replaced production workers, automated data entry has replaced many secretaries) and, therefore, some levels of the pyramid have disappeared altogether. The modern organizational structure takes the form of a flat (horizontal) hierarchy as in Figure 1.3 above. The Systems Concept and the Flow of Information 1. Introduction This course on Management Information Systems covers a wide range of topics using the concept of systems approach 2. A simple system Let us begin with the concept of a system. The easiest way of understanding a system is by learning about a refrigerator which is quite familiar to all of us. Figure 1.1 describes the mechanism of a refrigerator. The input is the electricity that goes into the system of the refrigerator. The electricity performs some functions in the black box1 and produces a service (output). This system helps produce required level of cooling to preserve food. There are feedbacks in this system, three controlling points (valves), which monitor the structure. At point 1, the voltage level is set and checked and the variations in electricity voltage are controlled until the correct voltage is confirmed. (The stabilizer monitors the variation of voltage). At point 2, the electricity supply is controlled and monitored by itself to maintain the required cooling level set by the user at point 3.

Once the required level is reached the system stops itself consuming electricity. At point 3, the user sets different levels of cooling (depending upon the required level of cooling for different types of foods). This system is an automated process and the refrigerator provides services uninterruptedly.
We use the word black box to refer to a situation when the exact workings of a given system are not understood by or accessible to outsiders.

Figure -1.1 System of Refrigerator- closed- loop

- Input(Electricity voltage)

-The system(Refrigerator with different Functions) 2

- Output(Preserving food by cooling)

A system is an organized collection of parts (or subsystems) that are highly

integrated to accomplish an overall goal. The system has various inputs, which go through certain processes to produce certain outputs, which together, accomplish the overall desired goal for the system. So a system is usually made up of many smaller systems, or subsystems There are varieties of systems which range from simple to advanced ones. The refrigerator is a simple, closed system. It is a closed-loop system. It has control elements and feedback loops (the lines going from points (1), (2) and (3) to input cell). The three control elements at points 1, 2 and 3 control the system and produce different levels of outputs. The feedback loops pass on new commands produced at the above three points back to the processing level. 3. Complicate Systems The human body is a complicate system with different organs, each performing different tasks and integrating into the main system of the human body. There are many sub-systems in it. For example, blood circulation is a subsystem which is controlled by the heart. The respiratory system is another which is coordinated by lungs, which in turn is interlinked with blood circulation. The nervous system is another which monitors and controls the body. Each subsystem has its own boundaries of sorts, and includes various inputs, processes, outputs and outcomes geared to accomplish an overall goal for the subsystem. All the above subsystems are interwoven and produce a task for the human body to function. Other examples for such complex systems are driving a vehicle, mechanism in a market, social system prevailing in a village and internal organization of a firm. Figure 1.2 The Human Body A complicate system
The nervous system The blood circulation system

The respiratory system


The Subsystems

The human body which is a natural system contains systems, subsystems and even sub-subsystems. The order and arrangements of subsystems located in the human body produce different tasks that result in the production of an efficient human behaviour to work in a highly complex world order. Three such subsystems were identified in Figure 1.2. A subsystem is a system within a system. These are interconnected with some order or rules for them to perform collectively and efficiently. You can recognize that there are sub-subsystems in each of the organs in the human body to support the subsystem and finally to the main system. In the blood circulatory subsystem, for example, the heart is one subsystem which performs a different function while another sub-subsystem of arteries carries blood to different points in the body. Sub-subsystems like liver, kidneys help the main sub-system, the blood circulatory system, to perform its functions efficiently. We should internalise the concept of systemic thinking for us to develop systemic insight into complex situations and problems in management or even problems that you come across in the home front. The system approach helps planning. Problems can be structured as systems for planning purposes. Different outcomes will be forecast by the system once the commands are changed in the feedback system as in the case of changing command at point 3 in the refrigerator. The change in commands or even adding another subsystem into the system changes the outcome that will be delivered. In the nervous system, if you need the mind to make better decisions, you will have to add the knowledge earning subsystem into it! A system in which there is no feedback. A system where water is pumped from a water well, pond, lake or other surface source for use in a pump. Open-loop control systems (e.g., automatic toasters and alarm clocks) are those in which the output has no effect on the input. 1. A system of learning process of MIS using closed loops

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Firm as a system

Now let us move from the natural system of the human body to an artificial entity, say, a firm. A firm is an artificial entity made up of human and physical resources. Just like in the human body, these resources can be organized into a complex system, incorporating systems, subsystems and subsubsystems. A complex system can be formed by combining humans with humans and humans with physical elements using the systems approach we learnt previously. The business systems approach considers a business as a system of interrelated factors of strategy, owners, investors, management, workers, finance, processes, products, suppliers, customers, and competitors. The primary goal of this system is to increase stakeholder value. This can be achieved through dynamic balancing of competing elements; the customer satisfaction, competitive market forces, internal cost and growth of the firm. Human elements work as a team in this organization, interacting with physical elements inachieving the above goals. The management determines the strategies and activities to achieve the goals.

6. An example - a bank as a System Let us use an example of a hypothetical bank (assume that it exists in Sri Lanka!) to elaborate the concept of systems approach. (Throughout this course we use the bank as an example in discussing MIS). In relation to Figure 1.1, it is the bank vision (increase stakeholder value) that goes as an input into the bank system and it is processed at point (1) by the Board of Directors and is forwarded for implementation. This processed vision is implemented at different levels in the bank structure the black box. The problems arising at the level of implementation are fed back at point (2) to the point (1). Finally, the revised version of vision helps produce a banking service. At point (3) the feedbacks of customers can also be directed to point (1) in the structure. A System, Sub-systems and sub-subsystems of a Keels Super Market

Sub-subsystems of depts. With items

Dept 1

Payment Counters


Dept 6 Dept 5 Dept 4 Dept 3 Dept 2



Assistance Security IT dept. Supervision


Observe the way how a customer once entered the Super market passes through different sub systems in the system. See the way how sub and sub-subsystems of monitoring sub process take part in the total system The sub and sub-subsystems helps the super market to fulfil its objectives. Transactions are taken place in the sub system of marketing departments efficiently on the basis of self-services. This is a cost effective system. Customer Relations Management (CRM) Practices can best be implemented with it. Monitoring Dept is monitoring all activities efficiently using IT department. Disadvantages: the self-servicing can lead to shop-lifting. Chances for frauds initiated by workers. Electricity and communication bills can be high.


Software provides the user with operating instructions to work with hardware. These instructions are carried out by the computer processor. According to the computer system the user can give processor specific instructions through software to get his work like image creation and editing, work processing, data processing etc done using the computer. The Interdependence between organisations and Information Systems

Information Organisation Systems


Strategic Business Plan


Hardwar e

Databas e

Telecom municati

Figure 6.1 describes the link between the organisation and the information system of a modern firm. The modern firm has to develop its Strategic Business Plan to suit with the current and future business environments. The development of this plan and its implementation are to be made with the help of its computer system. The computer system uses its computer hardware, database, software and telecommunication network to get the business plan developed and implemented. The software plays the intermediary function in the above relationship between organisation and hardware. The organisation of this firm interacts with the computer system using software to get a business plan developed and implemented. The most important component in the information system in Figure 6.1 is the database. The other three components hardware, telecommunication and software collectively use database to produce information required for the plan. The software assists the management of large scale firms in production. The firms with automated production functions use the relationship in Figure 6.1 for manufacturing products/services. For Example, there are special software that is used for Computer Added Designing (CAD) and Computer-added Manufacturing (CAM) in large firm sectors like Toyota, Cannon etc. Even surveyors in Sri Lanka use CAD for the preparation of survey plans and maps.

2. Types of Software Basically there are two types of software, namely, system software and application software. Figure 6.2 describes the different uses of each of the above. Figure 6.2 Types of Software Computer Software

System Software

Application Software

System Management Programmes

System Development Programs

General- Purpose Application

Special- Purpose Application Programs

2.1 System Software We, in management discipline, need knowledge about how the computer works and how it can be made use in business. We do not intend therefore to go into details but only to acquire a basic knowledge on system software. It is software which manages and controls computer hardware. We learnt previously that the physical computer consists of mechanical, magnetic, electronic, and electrical components. But we need a mode to access to this physical element and to use it as a computer system described in Figure 5.1. The system software fulfils this requirement. You can recall the process how inputs- raw data and lists of instructions are entered into the computer system for the production of information described in Figure 5.1. The user gives instructions to the computer system using software. These instructions instruct the already executed operating systems to execute various functions. Thus, the system software works out to incorporate various capabilities of the computer in performing tasks that benefit the user. The operating system is software which is to be fed initially to the computer system. It serves as a tool for a person to interact with the computer. Assume that you visit a computer Dealer in your area and buy a new computer. You will notice that it will not respond to your commands immediately. Your new computer is just a machine. The first thing what you have to do is to feed an operating system into it. It will then start responding to your command. This software is responsible for managing and coordinating activities and sharing resources of the computer system shown in Figure 5.1. It is the system that coordinates various operations of the CPU: controls inputs/outputs, stores resources and provides various support services for the user to execute his programmes. It also allows you to access other resources in your computer system such as disk drives, key board, screen and printers. A few examples of operating systems that popularly used are MS DOS (Microsoft Disk Operating System), MS Windows 95, MS Windows 2000, Windows XP, Linux.

We can summarise the basic functions of the operating system in the following form: Figure 6.3 The Operating System User interface

Resource managemen t

Task managemen t

File managemen t

Other functions

There are three user interfaces offered by the operating system. We can (1) give commands to the computer system, (2) choose different menus and (3) access to graphical uses offered by operating systems. Figure 6.4 provides an illustration of choosing a command in Excel Menu to add three numbers and find answer as 1194 quite easily. It also describes how a graph can be drawn to see the trend of the given three numbers choosing the Manu Chart. The operating system provides these facilities to end-users. Figure 6.4- Illustration of Excel Menu and Access to Chart Menu

According to Figure 6.3, four more functions are provided by the operating system, namely, resource management, task management, file management and other functions. The resource management assures the efficient use of hardware resources. The CPU, RAM, Secondary Storage devices and Input/output devices are to be managed for ensuring an efficient computer system. Remember we noted earlier the importance of maintaining an adequate RAM level for the efficient running of programmes in the computer system. This is ensured by the resource management function of the operating system. Similarly, under the task management the operating system coordinates the execution of different tasks allocating appropriate CPU time for individual task. While you are running Microsoft Word programme you can also access to Microsoft Excel and run another programme and at the same time you can access to internet Search Engine and browse a file that you are interested. The operating system provides facilities for all these.

The file management function of the operating system controls the creation, deletion, and access of files of information and programmes. It monitors storage facilities in secondary storage devices; hard disks, floppy disks and other magnetic disks. It coordinates the maintenance of directories of files in secondary storage devices. It helps the users with facilities to access such files and open them for the use. The operating system provides other supportive services to the end users. It stores various programmes for virus protection, e.g., Norton Utilities. Other facilities like data backup, data recovery, and file de-fragmentation are provided by the operating system.

3. System Management Programmes and System Development Programmes 3.1 System Management Programmes According to Figure 6.2, there are two different types of system software programmes, namely, System Management Programmes and System Development Programmes. The System Management Programmes are to assist end-users. When an end-user uses the computer to process his data there are programmes that assist and manage hardware, software, network and data resources of the computer systems. These are the operating systems, database management systems, network management programmes, application servers, Performance and Security Monitors and various system utilities which help end-user to use the computer system quite efficiently. These programmes even tend to free system administrators from many of routine system management activities and operational tasks so that administrators can devote more of their IT skills to fulfilling the needs of their main business problems. 3.2 System Development Programmes More and more new software programmes are being developed regularly in the discipline of computer science. The ultimate objective of these is to assist users for convenient use of computer systems. IT Researchers, Computer Scientists, Computer Programmers, Translators, Editors participate in developing new software to provide more and more facilities to the users. The computer-aided software engineering (CASE) takes the lead in developing new system development programmes. There is a growing body of software development organizations, many of them are in the defence industry. 4. Application Software A user can directly use application software with the capabilities of the computer to get his tasks performed. Typical examples for application software are Office programme and video games. There are numerous number of such application software have been developed in the past. Some of these programmes are already attached in the computer or software of the programmes is provided to you at the time when you are buying a computer. These are application software independent from operating system software. The application software can be broadly divided into two main categories as general purpose application programmes and special purpose application programmes. 4.1 General- Purpose Application Programme The typical examples for general purpose application software are the Microsoft Word for word processing, Microsoft Spreadsheet for data processing and media players for listening music and watching movies in the computer. We can develop databases using Excel Spreadsheets, analyse them,

run statistical programmes that are in-built, produce graphs, and study trends with the assistance of Microsoft Spreadsheet. We learnt in BBA 223 to use Microsoft Excel Solver and Gold Seek to solve problems in Management Sciences. Many microcomputer users in different disciplines like medical, science, engineering, education, business use this general purpose application software in their work. The term application suite is used to denote a group of programmes that are available in a package to solve common problems. The Office Suites and Lotus SmartSuite are most popular application suites which includes graphics, mathematics and other applications. This is also known as productivity suites designed with various facilities and common functions such as spell checking for the clerical workers and knowledge workers to use in business. 4.2 Special- Purpose Application Programmes In addition, there is user-written software which is written by a specific user or users for a specific purpose than general purpose. Some computer programmers attached to business firms write mini-programmes regarding sales, interest payments or balance sheet items in the accounting department using Microsoft Word Macros for the purpose of easing work of the firm. Generally, the user-written software consists of small programs. At times, these small user-written programs become popular among other users. There are companies and research groups consisting of software engineers who write special application programmes using DOS/WINDOWS to assist new and established businesses in their day-to-day activities like invoicing, sales report writing, inventory control. There are large number of companies produce customize software or custom software specific to the business requirements. This software makes the business actions easier, precise and time saving.