BUS101 : Business Information Systems

Week 8 : Management information and decision

support systems
Raj Sandu
T3,2022

CRICOS Provider: 03844J Higher Ed: PRV14316

LEARNING OUTCOME

 Define the stages of decision making

 Discuss the importance of implementation and monitoring
in problem solving
 Explain the uses of MIS and describe their inputs and
outputs
 Discuss information systems in the functional areas of
business organizations
 Describe different types of decisions and the decision-
making process.
 Demonstrate how decision-support systems (DSS) differ
from MIS and how they provide value to the business.
2
 CASE STUDY—SOCIAL CAPITAL: THE KEY TO
SUCCESS FOR THE 21ST CENTURY ORGANIZATION
SETTING THE CONTEXT

• When I worked for Wall Data in the mid-1990s, senior

management gave up managing the firm’s computing
infrastructure and hired EDS to take over the IS function.
• From my perspective (a business-unit manager for an offsite
development group), I didn’t think the service was much
better—but it wasn’t worse—and the senior management of
the company no longer needed to devote so much of its
time and attention to infrastructure management.
• Prior to the change to EDS, our group, which was remote
from headquarters, was supported by an individual who
never seemed to be able to get anything done.

4
SETTING THE CONTEXT

• I’ll never forget my shock and dismay when, after the switch
to EDS, I rounded the corner in the hallway one morning
only to run into that same person wearing an EDS shirt! In
fairness to the employee, and in fairness to EDS, his
performance did improve.
• As an aside, I can’t imagine a worse client for an outsourcing
vendor than a company of professional software developers!
Developers aren’t prone to keeping their machines in the
‘standard configuration’.

• I wasn’t involved in the contract negotiation or the

justification of the switch to EDS.
5
SETTING THE CONTEXT

• From this anecdotal experience from a single data point, I’d

say that outsourcing computer infrastructure removes the
highs and the lows from internal support.

• By the way, an outsourcing vendor has an advantage that in-

house staff never has.

• The outsource vendor can say no. It is difficult for in-house

staff to say no, especially to senior management. So the in-
house staff finds itself supporting all sorts of ‘special
situations’ that an outsource vendor avoids. ‘It’s not in the
contract.
6
SETTING THE CONTEXT

• Hiring an organisation’s existing IT/IS staff is common

practice when starting a new outsourcing arrangement.
What are the advantages of this practice to the outsource
vendor? What are the advantages to the organisation?

• Suppose you work for an outsource vendor. How do you

respond to the charge that your managers care only about
how they appear to their employer (the outsource vendor),
not how they actually perform for the organisation?

7
OVERVIEW OF MIS

Management information system (MIS)

• Integrated collection of people, procedures, databases, and
devices
• Provides managers and decision makers with information to
help achieve organizational goals
• Can give the organization a competitive advantage
• Providing the right information to the right people in the
right format and at the right time
• Provides managers with information that supports effective
decision making and provides feedback on daily operations

8
MIS
• Management Information Systems (MIS) is the study of
people, technology, organizations, and the relationships
among them.
• MIS professionals help firms realize maximum benefit from
investment in personnel, equipment, and business
processes.
• MIS is a people-oriented field with an emphasis on service
through technology.
• If you have an interest in technology and have the desire to
use technology to improve people’s lives, a degree in MIS
may be for you.

9
MORE THAN CODING
A common misconception is that MIS only concerns coding (or writing computer
code).
A large portion of the MIS degree focuses on data analysis, teamwork, leadership,
project management, customer service, and underlying business theories.
These aspects of the degree are what set the MIS professional apart from a
computer science specialist.
• Do you enjoy working with people?

• Would you enjoy the chance to work on global problems with people from all over the world?

• Do you enjoy analyzing and solving problems?

• Do you want to create innovative, cutting-edge technology solutions?

• Do you want to learn how to make businesses more efficient, effective and competitive?

10
WHAT KINDS OF PEOPLE PURSUE MIS DEGREES?

The profiles of MIS professionals are varied, but in general, such individuals
possess many of the following traits:
• good problem solving skills
• ability to effectively manage time and resources
• a clear vision of “the big picture” as well as the “small details”
• a desire to work closely with other people
• excellent communication skills
• ability to think strategically about technology
• a desire to take responsibility for developing and implementing their own ideas

11
INPUTS TO AN MIS

Internal data sources

• TPSs and ERP systems and related databases
• Data warehouses and data marts
• Specific functional areas throughout the firm
External data sources
• Customers, suppliers, competitors, and stockholders whose data is not
already captured by the TPS
• Internet
• Extranets

12
OUTPUT OF MIS

• Scheduled report: produced periodically, or on schedule, such as daily, weekly, or monthly

• Key-indicator report: summary of previous day’s critical activities
• Demand report: developed to give certain information at someone’s request
• Exception report: automatically produced when a situation is unusual or requires
management action
• Drill-down reports: provide increasingly detailed data about a situation

13
FINANCIAL & MANUFACTURING MIS

Financial MIS: provides financial information to executives and

others
• Some financial MIS subsystems and outputs
• Profit/loss and cost systems: profit and revenue centres
• Auditing: internal and external
• Uses and management of funds
Manufacturing MIS subsystems and outputs monitor and control the
flow of materials, products and services through the organization
• Design and engineering: CAD systems; Master production scheduling and inventory control
• Methods: EOQ, MRP, JIT ; Process control; Techniques: CAM, CIM, FMS; Quality control and testing

14
MARKETING MIS

Marketing MIS: supports managerial activities in product development,

distribution, pricing decisions and promotional effectiveness
• Subsystems
• Marketing research
• Product development
• Promotion and advertising
• Product pricing
• Sales analysis

15
HRM MIS

Human resource MIS: concerned with activities related to employees and

potential employees
• Subsystems
• Human resource planning
• Personnel selection and recruiting
• Training and skills inventory
• Scheduling and job placement
• Wage and salary administration
• Outplacement

16
DECISION MAKING

•Business value of improved decision making

• Improving hundreds of thousands of “small” decisions adds up to large annual value for the business
•Types of decisions:
• Unstructured: Decision maker must provide judgment, evaluation, and insight to solve
problem
• Structured: Repetitive and routine; involve definite procedure for handling so they do not
have to be treated each time as new
• Semistructured: Only part of problem has clear-cut answer provided by accepted procedure

17
DECISION MAKING

• Senior managers:
• Make many unstructured decisions
• E.g. Should we enter a new market?
• Middle managers:
• Make more structured decisions but these may include unstructured components
• E.g. Why is order fulfillment report showing decline in Minneapolis?
• Operational managers, rank and file employees
• Make more structured decisions
• E.g. Does customer meet criteria for credit?

18
INFO REQUIREMENT FOR DECISION MAKING

Senior managers, middle managers, operational managers, and

employees have different types of decisions and information
requirements.

19
STAGES

Four stages of decision making

1. Intelligence
• Discovering, identifying, and understanding the problems occurring in the organization
2. Design
• Identifying and exploring solutions to the problem
3. Choice
• Choosing among solution alternatives
4. Implementation
• Making chosen alternative work and continuing to monitor how well solution is working

20
CONT.
The decision-making process can be broken down into four stages.
DECISION MAKING AND INFORMATION SYSTEMS
Information systems can only assist in some of the roles played by
managers
Classical model of management
• Five functions of managers
• Planning, organizing, coordinating, deciding, and controlling
More contemporary behavioral models
• Actual behavior of managers appears to be less systematic,
more informal, less reflective, more reactive, and less well
organized than in classical model
• Mintzberg’s behavioral model of managers defines 10
managerial roles falling into 3 categories

22
ROLE

• Interpersonal roles: Figurehead

Leader
Liaison
• Informational roles: Nerve center
Disseminator
Spokesperson
• Decisional roles: Entrepreneur
Disturbance handler
Resource allocator
Negotiator
DECISION MAKING AND INFORMATION SYSTEMS

Three main reasons why investments in information technology do not

always produce positive results

1. Information quality
High-quality decisions require high-quality information
2. Management filters
Managers have selective attention and have variety of biases that reject
information that does not conform to prior conceptions
3. Organizational culture
Strong forces within organizations resist making decisions calling for major
change

24
SYSTEMS OF DS

Four kinds of systems for decision support

• Management information systems (MIS)
• Decision support systems (DSS)
• Executive support systems (ESS)
• Group decision support systems (GDSS)

25
FLOW

The main components of the DSS are the DSS

database, the user interface, and the DSS
software system. The DSS database may be a
small database residing on a PC or a large data
warehouse.
MODEL FOR DECISION SUPPORT

Abstract representation that illustrates components or

relationships of phenomenon; may be physical, mathematical, or
verbal model
• Statistical models
• Optimization models
• Forecasting models
• Sensitivity analysis models

27
SENSITIVITY ANALYSIS

The below table displays the results of a sensitivity analysis of the effect of changing the
sales price of a necktie and the cost per unit on the product’s break-even point. It answers
the question, “What happens to the break-even point if the sales price and the cost to make
each unit increase or decrease?”
PIVOT TABLE

Using spreadsheet pivot tables to support decision making

I. Online Management Training Inc. (OMT Inc.), sells online management training books
and streaming online videos to corporations and individuals
1. Records of online transactions can be analyzed using Excel to help business decisions,
e.g.:
• Where do most customers come from?
• Where are average purchases higher?
• What time of day do people buy?
• What kinds of ads work best?
PIVOT TABLE

Using spreadsheet pivot tables to support decision making

I. Online Management Training Inc. (OMT Inc.), sells online management training books
and streaming online videos to corporations and individuals
1. Records of online transactions can be analyzed using Excel to help business decisions,
e.g.:
• Where do most customers come from?
• Where are average purchases higher?
• What time of day do people buy?
• What kinds of ads work best?
VISUALISATION

Data visualization tools: Help users see patterns and relationships in large amounts of
data that would be difficult to discern if data were presented as traditional lists of text

Geographic information systems (GIS):

Category of DSS that use data visualization technology to analyze and display data in form of
digitized maps.

Used for decisions that require knowledge about geographic distribution of people or other
resources, e.g.:
• Helping local governments calculate emergency response times to natural disasters
• Help retail chains identify profitable new store locations
CONT

California’s South Coast Air Quality

Management District (AQMD) is responsible
for monitoring and controlling emissions in
all of Orange County and the urban portions
of Los Angeles, Riverside, and San
Bernardino counties. Displayed is a map
produced with ESRI GIS software tracking
particulate matter emissions from building
construction activity in a two-by-two
kilometer area.
WEB-BASED CUSTOMER DECISION-
SUPPORT SYSTEMS (CDSS):
• Support decision-making process of existing or potential customer,
• Use Web information resources and capabilities for interactivity and
personalization to help users select products and services. e.g. search
engines, intelligent agents, online catalogs, Web directories, newsgroup
discussions, other tools,
• Automobile companies that use CDSS to allow Web site visitors to
configure desired car,
• Financial services companies with Web-based asset-management tools
for customers.
REFERENCE

Ralph Stair, George Reynolds, Thomas Chesney 2021  Principles of

Business Information Systems, 4th Ed, Cengage Publication Australia

34