Management Information System-MBA721

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 Chapter One
Introduction to Management Information System

 Information System
 Types of Information Systems
 Why IT needed in most Organization?
 Contemporary Approach to IS
 Challenges of IS
 Enterprise Applications

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 Information System(IS)
• Information:
• Processed data that have been shaped into meaningful and
useful form to human beings to make appropriate decision
• Data:
• are streams of raw facts representing events occurring in
organizations or the physical environment and have not been
processed
• System:
• an interrelated set of components that work together within an
identifiable boundary to achieve a common goal/objective
• Information System:
• a set of interrelated components that collect, process, store,
retrieve and distribute information to support decision making
and facilitates an organization tasks. 3
 Information System (Cont’d)
• IS is an arrangement of people, data, process, communications, and
information technology that interact to support and improve day-to-day
operations in a business as well as support the problem solving and decision-
making needs of management and users.

• IS includes Hardware, Software, Documentation and training materials,

Specific job role, Controls(security) and People

• Three activities in an information system (Input->Processing->Output)

 Types of Information System(IS)(Reading
Assignment)
• Transaction Processing System(TPS)
• Knowledge Work System (KWS) and Office automation System
• Management Information System(MIS)
• Decision Support System(DSS)
• Expert Support System (ESS)

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 Types of Information System(cont’d)
• IS can also be divided based on the major business processes as:
a) Sales and Marketing Systems: responsible for identifying customers, determine
what they need, planning and developing products and services to meet their needs
and advertising these products and services and selling them. Ex: e-commerce
applications
System Description Organization level

Order processing Enter, process and track orders. Operational Level

Market Analysis Identify customers & markets using Data or demographics, markets Knowledge level
consumer behavior & trends.

Pricing analysis Determine prices for products & Management level

services.

Sales trend forecasting Prepare 5-year sales forecast Strategic level

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 Types of Information System(cont’d)
b) Manufacturing and Production System: responsible for actually
producing the firm’s goods and services

System Description Organization level

Machine control Control the action of machines & Equipment Operational Level

Computer aided design (CAD) Design new products using the computer Knowledge level

Production planning Decide when and how many products should be produced Management level

Facilities location Decide where to locate new production facilities  Strategic level
 Types of Information System(cont’d)
c) Finance and Accounting System:
• Finance is responsible for managing the firm’s financial assets, such as cash,
stocks, bonds, and other investments, in order to maximize the return on these
financial assets
• Accounting is responsible for maintaining and managing the firm’s financial
records-receipts, depreciation, payroll to account for the flow of funds in a firm
System Description Organization level

Account receivable Track money owned the firm Operational Level

Portfolio Analysis Design the firms portfolio of investments Knowledge level

Budgeting Prepare short term budgets Management level

Profit planning Plan long term profits Strategic level

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Types of Information System(cont’d)

Types of Information System(cont’d)

d) Human Resource System: responsible for attracting, developing,

and maintaining the firm’s workforce
System Description Organization level

Training & Development Track employee training, skills & performance appraisals Operational Level

Career pathing Design career paths for employees Knowledge level

Compensation analysis Monitor the range & distribution of employee wages, salary & Management level
benefits.

Human resource planning Plan the long term labor force needs of the organization. Strategic level
 Levels of a Firm
• Organizations have a structure that is composed of different levels
and specialties
• The structure shows division of labor

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 Level of Firm(Cont’d)
• Senior management makes long-range strategic decisions about products and
services as well as ensures financial performance of the firm.
• Middle management carries out the programs and plans of senior
management
• Operational management is responsible for monitoring the daily activities of
the business.
• Knowledge workers, such as engineers, scientists, or architects, design products
or services and create new knowledge for the firm
• Data workers, such as secretaries or clerks, assist with scheduling and
communications at all levels of the firm
• Production or service workers produce the product and deliver the service
• Business functions(tasks) - sales and marketing, manufacturing and production,
finance and accounting, and human resources
 Why IT needed in most organization?
• Four powerful worldwide changes had altered the business environment:
1. Emergence and Strengthening of the Global Economy
• To survive in the competitive world a firm need to operate globally and have a
powerful Information and Communication System.
2. Transformation of industrial, information-based services economies and societies
information knowledge
• In developed countries, industrial economics are transformed to knowledge
and information based economics. IT companies lead the world
• IS optimizes the flow of Knowledge and information within the organization,
help management maximize the firms knowledge resources and in turn
enhance productivity, quality of service, decision making and profitability

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 Why IT needed in most organization? (cont’d)

3. Transformation of Business Enterprise

• new style of business firm transform a hierarchical, centralized,
structured arrangement of specialist to a flattened (less hierarchical),
decentralized, flexible arrangements of generalist that rely on nearly
instant information to deliver specific markets or customers
4. The Emerging Digital Firm
• In a digital firm nearly all of the organization’s significant business
relationships with customers, suppliers and employees are digitally
enabled and mediated
 The Emerging Digital Firm
• Four major system that help to define the digital firm
• Supply Chain Management System:- automate the relationship between a
supplier and customer and its supplies in order to optimize the planning,
sourcing, manufacturing and delivery of products and services

• Customer Relationship Management system :- create a coherent integrated

view of all of the relationships a firm maintains with its customers

• Enterprise System:- Integrated enterprises-wide information systems

that coordinate key internal processes of the firms, integrated data from
manufacturing and distribution ,finance, sales, and human resource.

• Knowledge Management System: System that supports the creation,

capture, storage of knowledge in the firm and use by the firm expertise
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 The Emerging Digital Firm(cont’d)
• From business perspective managers use IS to improve decision making, enhance
organizational performance and ultimately increase firm profitability and
strategic position.

• All information systems can be described as organizational and management

solutions to challenges posed by the environment that will help create value for
the firm.
 Contemporary Approach to IS
• Management Information System(MIS) is a group of connected and
cooperating sub-system to achieve one goal.
• MIS used for processing data needed by management in the process of decision
making when conducting its function.
• MIS is an organized, diverse and automated information system that is
concerned with the process of gathering ,storing and transferring
relevant information to support the management operations in an
organization
• MIS provides central storage of all the business information and is
used across all levels in an organization.

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 Challenges of IS
1. The Strategic Business Challenge
• Realizing the digital firm: how can business use IT to become competitive,
effective and digitally enabled?
• Creating a digital firm and obtaining benefits is a long and difficult journey for
most organization.
• Despite heavy information technology investment, organizations are not
realizing significant business value from their system, nor are they becoming
digitally enabled.
2. The Globalization Challenge
• How can firms understand the business and system requirements of global
economic environment?-dynamic

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 Challenges of IS(cont’d)

3. The Information Architecture and Infrastructure Challenge

• How can organizations develop an information architecture and
information technology infrastructure that can support their goals when
business conditions and technologies are changing so rapidly?

4.  The Information System Investment Challenge

• How can organization determine the business value of information system?

5. The Responsibility and Control Challenge

• How can organizations ensure that their information systems are used in as
ethically and socially and responsible manner?-security and privacy
IT Infrastructure and IS Architecture

Fig 1.1. IT Infrastructure and IS Architecture 19

 Enterprise Application
• Enterprise systems - integrates the key business processes of an entire firm
into a single software system that allows information to flow throughout the
organization
• focus primarily on the internal business processes and support all management
levels but may include transactions with customers and vendors
• address the problem of organizational inefficiencies created by isolated islands
of information systems, business processes and technology
• Provide managers with more precise and timely information for coordinating the
daily operations of the business.

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