Management

Information
Systems
| Faculty | Sushant Sharma |
SUSHANT SHARMA

MIS: A Definition:
An MIS is
An integrated (computer-based) usermachine system
For providing information
To support decision-making functions
In an organization

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Learning Goals

Understanding System
&Environment

Data &Information Technical

&Business dimensions

Functional Information Systems

Models of File Organization

Data structures Models

Understanding System
Development Life Cycle

Components of Computer based

Information systems

Business applications of
various Information Systems

Benefits of Increased capabilities

of IT
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What is Management Information System?

Subset of the overall internal control procedures, in a business,

which covers the application of people, documents,
technologies and procedures used by management
accountants to solve business problems such as costing a
product, service or a business wide strategy.

Distinct from regular information systems - analyze other

information systems applied in operational activities in the
organization.

The system utilizes:

Computer hardware and software

Manual procedures
Models for decision-making, and
A database
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Systems
A SYSTEM is a set of interrelated and
interdependent elements such as people, resources,
concepts, and procedures intended to perform an
identifiable function or to serve a goal.

System Levels (Hierarchy): All systems are

subsystems interconnected through interfaces

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The Structure of a System

Three Distinct Parts of Systems
Inputs
Processes
Outputs

Systems
Are surrounded by an environment
Frequently include a feedback mechanism
A human, the decision maker, is usually
considered part of the system

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Business System

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Closed and Open Systems

A Closed System is totally independent of other systems and

subsystems: Do not interact, or exchange any inputs or outputs
with its environment

An Open System is very dependent on its environment

:Interacts with its environment, exchanges inputs and outputs

a continuum

Defining manageable boundaries is closing the

system
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Six stages of processing

Input: Data capturing - collecting and entering the data into the
information system.
Data Processing:

here the data is manipulated into

information using mathematical, statistical and other tools.

Output: the information is displayed or presented.
Storage: data and information are maintained for later use.
Retrieval
Dissemination of MI finished product of MIS
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Information
Processed data, presented in a form which assists
decision-makers
May contain an element of surprise, reduce
uncertainty
May provoke a manager to initiate action
Data and Info relative concepts
Recency
Producer-consumer relationship

Often used interchangeably

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Characteristics of useful informationTechnical Dimensions

Response Time : Time lapse between the time when query is made and
the time when the results are actually produced . Least response time
preferred . Achieved through capabilities of hardware &software.

Relevant: the information must be pertaining to the problem at hand.

Capacity Condensed and precise reports in the form of analysis of trend

instead of tabular formats.

Complete: partial information is often worse than no information.

Accurate: erroneous information might lead to disastrous decisions.

Recency /Current/Validity : decisions should be based on the latest

information available, because what was a fact yesterday might no longer
be one today.

Economical: in business setting ,the cost of obtaining information must be

considered as one cost element involved in any decision.

Security : Users security and privacy of data to be ensured

Interrelations of data elements Sharing of data across the organizations

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Characteristics of useful informationBusiness Dimensions

Structuredness: The information is structured if it can be discretely defined, for
example, the daily invoice is structured information as it clearly states the need.
However, information of high-income group people is unstructured as it does not
clearly state the income limit of the high income group.
Programmability: It is the ease with which the process of performing a task can
be defined. The approval of a supplier on the basis of the lowest quote is a
decision which can be explained to anyone; thus, it is programmable. However, a
decision to approve tenders on the basis of product quality is a vague thing to
explain and can not be easily programmed.
External Scope: Information is external if it belongs to the environment outside
the system boundaries e.g., the data about sales of a competitor gives external
information, whereas the data about the sales of our department generates
internal information.
Time Scope: Information may deal with the future or the past of the company.
Accordingly, it is termed as futuristic or historical. The financial projections for the
next quarter refer to futuristic dataSUSHANT
whereas
the profits and loss statement for the
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financial year present historical data.

What is IS?
IS a set of interrelated components working
together to collect, retrieve, process, store, and
distribute information for the purpose of facilitating
planning, control, coordination, analysis, and
decision making in business organizations
Input-process-output perspective-Accepts inputs
and processes data to provide information to
decision makers and helps decision makers
communicate their results
People-organization-technology perspective
Is often at the heart of many organizations
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Technology the means by which data is transformed and organized for business use:
Hardware
Software
Database
Telecommunication
People the users of IS
Organization -- a collection of functional units working together to achieve a common goal
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MAIN COMPONENTS OF INFORMATION SYSTEMS

Computer software, is the collection of computer programs and related data that provide
the instructions telling a computer what to do and how to do it
Computer hardware refers to the physical parts of a computer and related devices.
Internal hardware parts of a computer are often referred to as components. External
hardware devices are usually called peripherals
TELECOMMUNICATIONS-Science and technology associated, in general, with
communications at a distance. A telecommunications system requires a analogy or digital
transmitter, a compatible receiver, and a physical (cable or wire) or non-physical
(wireless) connection
People -Information systems professionals who analyze organizational information
needs, design and build information systems, prepare computer programs
Procedures refers to rules for achieving optimal and secure operations in data
processing
Data refers to representation of facts, concepts, or instructions in a formalized manner
suitable for communication, interpretation, or processing by humans or by automatic
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means

Management
Information
System
-Types
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1. TRANSACTION PROCESSING SYSTEM

This could
be a
Purpose
call out area.

Updating the appropriate database records as soon as a transaction

(order, payment, etc.) is entered into the computer. It may also imply
that confirmations are sent at the same time.

Backbone of an
organization because they
update constantly

At any given moment, someone may need an inventory balance, an

account balance or the total current value of a financial portfolio

Also called "online

transaction processing"
(OLTP), the

OLTP market is a demanding one, often requiring 24x7 operation and

the most reliable computers and networks.

manual example

A manual example of transaction processing would be that every time

you purchased an item, you added the amount paid to a running total.
Contrast with "batch processing,"

CHARACTERSTICS OF A TRANSACTION
PROCESSING SYSTEM
Rapid Processing
This could be a
call out area.

Reliability

Standardization

Controlled Access

The rapid processing of transactions is vital to the success of any

enterprise now more than ever, in the face of advancing technology
and customer demand for immediate action. TPS systems are designed
to process transactions virtually instantly to ensure that customer data is
available to the processes that require it.

Designed to ensure that not only do transactions never slip past the net,
but that the systems themselves remain operational permanently. TPS
systems are therefore designed to incorporate comprehensive
safeguards and disaster recovery systems.

Transactions must be processed in the same way each time to maximize

efficiency. To ensure this, TPS interfaces are designed to acquire
identical data for each transaction, regardless of the customer.

Since TPS systems can be such a powerful business tool, access must be
restricted to only those employees who require their use. Restricted access
to the system ensures that employees who lack the skills and ability to
control it cannot influence the transaction process.

Employees
Corporate
databases
of
internal
data

Business
transactions

Transaction
processing
systems

Databases
of
valid
transactions

Databases
of
external
data

Management
information
systems

Corporate
intranet

Application
databases

Drill-down reports
Exception reports
Demand reports
Key-indicator reports

Operational
databases

Input and
error list

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Scheduled
reports

Decision
support
systems
Executive
support
systems

Expert
systems

2. MANAGEMENT REPORTING SYSTEM

This could
be a
Purpose
call out area.

Inputs to the System

DESIGNED TO SUPPORT THE MANAGEMENT Provide managers with pre-defined types of information for relatively
structured type of decisions .
.
Regular, routine operations
Planning &Control Functions -Control, organize and plan better

Output, or reports, are usually generated through accumulation of transaction

processing data
Data acquired from outside the organization
Data provided by business partners, suppliers&customers
Information systems support all levels of management, from those in charge of
short-term schedules and budgets for small work groups to those concerned with
long-term plans and budgets for the entire organization.

Examples

Provide routine, detailed, and voluminous information reports specific to each

managers areas of responsibility. Generally, these reports focus on past and
present performance, rather than projecting future performance.
To prevent information overload, reports are automatically sent only under
exceptional circumstances or at the specific request of a manager.
Provides reports with fixed and standard formats. Hard-copy and soft-copy reports
Uses internal data stored in the computer system . End users can develop custom reports
Requires formal requests from users

Outputs of a
Management Information System
Inputs: Information from the TPS
Outputs: hard and softcopy reports
1. Scheduled reports
Produced periodically, or on a schedule (daily, weekly, monthly)
2. Key-indicator report
Summarizes the previous days critical activities
Typically available at the beginning of each day
3. Demand report
Gives certain information at a managers request
4. Exception report
Automatically produced when a situation is unusual or requires
management action

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Scheduled Report Example

Daily Sales Detail Report
Prepared: 08/10/xx
Order
#

Customer
ID

Sales
Rep ID

Ship
Date

Quantity

Item #

Amount

P12453

C89321

CAR

08/12/96

144

P1234

3,214

P12453

C89321

CAR

08/12/96

288

P3214

5,660

P12453

C03214

GWA

08/13/96

12

P4902

1,224

P12455

C52313

SAK

08/12/96

24

P4012

2,448

P12456

C34123

JMW

08J/13/96

144

P3214

720

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Key Indicator Report Example

Daily Sales Key Indicator Report

This
Month

Last
Month

Last
Year

Total Orders Month to Date

Rs1,808

Rs1,694

Rs1,014

Forecasted Sales for the Month

Rs2,406

Rs2,224

Rs2,608

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Demand Report Example

Daily Sales by Sales Rep Summary Report

Prepared: 08/10/xx
Sales Rep ID

Amount

CAR

Rs42,345

GWA

Rs38,950

SAK

Rs22,100

JWN

Rs12,350

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Exception Report Example

Daily Sales Exception Report ORDERS OVER Rs10,000
Prepared: 08/10/xx
Order
#

Customer
ID

Sales
Rep ID

Ship
Date

Quantity

Item #

Amount

P12453

C89321

CAR

08/12/96

144

P1234

Rs13,214

P12453

C89321

CAR

08/12/96

288

P3214

RS15,660

P12453

C03214

GWA

08/13/96

12

P4902

Rs11,224

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Outputs of a Management
Information System
Earnings by Quarter (Millions)
Actual
Drill Down Reports
Provide detailed
data about a
situation.

Forecast

Variance

2ND Qtr 1999

Rs12.6

Rs11.8

6.8%

1st Qtr 1999

Rs10.8

Rs10.7

0.9%

4th Qtr 1998

Rs14.3

Rs14.5

-1.4%

3rd Qtr 1998

Rs12.8

Rs13.3

-3.0%

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Structured vs. Unstructured Problems

Structured problems lend themselves to
programmed decisions
The implication is that a repeatable process
can be employed and these can be
automated
Unstructured problems require unprogrammed
decisions
Can be addressed (or partially addressed) with
Decision Support Systems

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The Decision-Making Process

Systematic Decision-Making Process (Simons
Model)

Intelligence
Design
Choice
Implementation
Modeling is Essential to the Process

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Simons Model
External

Intelligence

ES
Design

Internal

AI, EIS

Problem Identification

Qualitative
Analysis

DSS

Quantitative
Analysis

GDSS

Choice

Decision

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ES

DbDSS,
MbDSS

1. Data Management Subsystem

2. Model Management Subsystem
3. Knowledge Management Subsystem
4. User Interface Subsystem
5. The User

Data
Management

Model
Management

Knowledge
Management

User Interface

User
DSS Architecture components
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Other
Systems

 Intelligence phase
Reality is examined
The problem is identified and defined
Design phase
Representative model is constructed
The model is validated and evaluation criteria are
set
Choice phase
Includes a proposed solution to the model
If reasonable, move on to the
Implementation phase
Solution
to
the
original
problem
Failure: Return to the modeling process
Often Backtrack / Cycle Throughout the Process
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1. The Intelligence Phase

Scan the environment to identify problem situations or
opportunities
Identify organizational goals and objectives
Determine whether they are being met
Explicitly define the problem
Classify the problem
Decompose into sub-problems
Is it my problem (ownership)
Can I solve it
Outcome: Problem statement
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Problem or Symptom?

2. The Design Phase

Generating,
developing,
possible courses of action

and

analyzing

Includes
Understanding the problem
Testing solutions for feasibility
A model is constructed, tested, and validated

Modeling
Conceptualization of the problem
Abstraction to quantitative and/or qualitative forms
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Types of Decisions
Type of structure - Nature of task
Structured

Unstructured

Level of decision making - Scope

Strategic
Managerial
Operational

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3. The Choice Phase

Search, evaluation, and recommending an appropriate solution to

the model

Specific set of values for the decision variables in a selected

alternative
The problem is considered solved after the recommended
solution to the model is successfully implemented

Search Approaches

Analytical Techniques
Algorithms (Optimization)
Blind and Heuristic Search Techniques

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4. The Implementation Phase

There is nothing more difficult to carry out, nor more
doubtful of success, nor more dangerous to handle, than
to initiate a new order of things (Machiavelli [1500s])
*** The Introduction of a Change ***

Important Issues

Resistance to change
Degree of top management support
Users roles and involvement in system development
Users training
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(3) Concept of Decision

Support Systems (DSS)
Scott Morton [1971]
DSS are interactive computer-based systems, which help
decision makers utilize data and models to solve
unstructured problems [1971]
Keen and Scott Morton [1978]
Decision support systems couple the intellectual resources
of individuals with the capabilities of the computer to improve
the quality of decisions. It is a computer-based support
system for management decision makers who deal with
semi-structured problems.
DSS: means different things to different people
There is no universally accepted definition of DSS

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Working Definition of DSS

A DSS is an interactive, flexible, and adaptable
CBIS, specially developed for supporting the
solution of a non-structured management problem
for improved decision making. It utilizes data, it
provides easy user interface, and it allows for the
decision makers own insights
DSS may utilize models, is built by an interactive
process (frequently by end-users), supports all the
phases of the decision making, and may include a
knowledge component

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Components of a DSS architecture

The database (or

knowledge base),

The user
interface.

The model (i.e.,

the decision
context and
user criteria),
and

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(A) The Data Management

Subsystem

DSS database
Database management system
Data directory
Query facility

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DSS In Focus: The Capabilities of DBMS in a DSS

Captures/extracts data for inclusion in a DSS database
Updates (adds, deletes, edits, changes) data records and files
Interrelates data from different sources
Retrieves data from the database for queries and reports
Provides comprehensive data security (protection from
unauthorized access, recovery capabilities, etc.)
Handles personal and unofficial data so that users can experiment
with alternative solutions based on their own judgment
Performs complex data manipulation tasks based on queries
Tracks data use within the DSS
Manages data through a data dictionary

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DSS Database Issues

Data warehouse
Special independent DSS databases
Extraction of data from internal, external and
private sources
Web browser access of data
Multimedia databases
Object-oriented databases
Commercial database management systems
(DBMS)

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(B) The Model Management

Subsystem
Mirrors the database management
subsystem

Model Management Issues

Model level: Strategic, managerial (tactical)
and operational, model building blocks
Modeling languages
Model execution, integration

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DSS In Focus : Major Functions (Capabilities) of the MBMS

Creates models easily and quickly, either from scratch or from existing
models or from the building blocks.
Allows users to manipulate the models so they can conduct
experiments and sensitivity analyses ranging from what-if to goal
seeking.
Stores, retrieves, and manages a wide variety of different types of
models in a logical and integrated manner.
Accesses and integrates the model building blocks.
Catalogs and displays the directory of models for use by several
individuals in the organization.
Tracks models data and application use.
Interrelates models with appropriate linkages with the database and
integrates them within the DSS.
Manages and maintains the model base with management functions
analogous to database management: store, access, run, update, link,
catalog, and query.
Uses multiple models to support problem solving.
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(C )The Knowledge Management

Subsystem

Provides expertise in solving complex unstructured

and semi-structured problems
What models to use, how, interpreting results
Reasoning, handling uncertainty, learning from data
Expertise provided by an expert system or other
intelligent system (AI techniques)
Leads to intelligent DSS
Example: Data mining

Data Mining for Decision Support

Software analyzes vast amounts of data

Attempts to discover patterns, trends, & correlations
May perform regression, decision tree, neural network, cluster
detection, or market basket analysis

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(D) The User Interface (Dialog)

Subsystem
Includes all communication between a
user and the MSS
To most users, the user interface is the
system

Managers
Staff specialists
Intermediary:
1.Staff assistant
2.Expert tool user
3.Business (system)
analyst
4.Group DSS Facilitator
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Distinguishing DSS from

Management Science and MIS
DSS is a problem solving tool and is
frequently used to address ad hoc and
unexpected problems
Different than MIS
DSS evolve as they develop

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Differences in System Characteristics

Dimensions

TPS

MIS

DSS

Type of
users

Clerical and
supervisory

Middle
Management

All levels
including top
mgmt. and
professionals.
Decision,
flexibility
Strategic
planning,
integrated
problems

Focus

Data
Information
transactions
Applications Payroll, sales Sales
data, inventory forecasting,
Production
control,

Groups
Most major decisions in medium and large
organizations are made by groups
Conflicting objectives are common
Variable size
People from different departments
People from different organizations
The group decision making process can be very
complicated
Consider Group Support Systems (GSS)
Organizational DSS can help in enterprise-wide
decision making situations
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4. EXECUTIVE INFORMATION SYSTEM

Purpose

This could be a
call out area.

Features

Users

Critical information readily available in a highly summarized and

convenient form.
Type of management information system intended to facilitate and
support the information and decision-making needs of senior executives
by providing easy access to both internal and external information
relevant to meeting the strategic goals of the organization. It is
commonly considered as a specialized form of a Decision Support
System (DSS)

The emphasis of EIS is on graphical displays and easy-to-use user interfaces.

They offer strong reporting and drill-down capabilities. In general, EIS are
enterprise-wide DSS that help top-level executives analyze, compare, and
highlight trends in important variables so that they can monitor performance
and identify opportunities and problems. EIS and data warehousing
technologies are converging in the marketplace.

This assistance is important for the chief executive officer, senior and executive vice
presidents, and the board of directors to monitor the performance of the company, assess the
business environment, and develop strategic directions for the future. In particular, these
executives need to compare their organizations performance with that of its competitors and
investigate general economic trends in regions or countries for potential expansion. Often
relying on multiple media, executive information systems give their users an opportunity to
drill down from summary data to increasingly detailed and focused information.

EXECUTIVE INFORMATION SYSTEMS - EIS

Business Content

Strategic Planning
Uses External data (External Environment)
Unstructured Problems + Executive Experience
For example: Policy formation for Labor strike
Where decisions taken are not the results of series of steps
in some order

Presentation content

Drill down reporting

Exceptional reporting
Graphical summary
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5. KNOWLEDGE BASED SYSTEMSSYSTEMS-

Purpose

This could be a
call out area.

Methods to simulate the

expert performance

EXPERT SYSTEMS

A software that attempts to reproduce the performance of one or more human

experts , most commonly in a specific problem domain

1) Creation of "knowledgebase" which uses some knowledge representation formalism to

capture the Subject Matter Experts (SME) knowledge and
2) a process of gathering that knowledge from the SME and codifying it according to the
formalism, which is called knowledge engineering.
3) Expert systems may or may not have learning components but a third common element
is that once the system is developed it is proven by being placed in the same real world
problem solving situation as the human SME, typically as an aid to human workers or a
supplement to some information system.
Use of "confidences/certainty factors. A human, when reasoning, does not always conclude
things with 100% confidence: he might venture,

Feature

Individuals involved
with expert systems

These numbers are similar in nature to probabilities, but they are not the same: they are
meant to imitate the confidences humans use in reasoning rather than to follow the
mathematical definitions used in calculating probabilities.
1. End-user; the individual who uses the system for its problem solving assistance.
2. Problem domain expert who builds and supplies the knowledge base providing the
domain expertise,
3. Knowledge engineer who assists the experts in determining the representation of their
knowledge, enters this knowledge into an explanation module and who defines the inference
technique required to obtain useful problem solving activity. Usually, the knowledge engineer
will represent the problem solving activity in the form of rules which is referred to as a rulebased expert system. When these rules are created from the domain expertise, the
knowledge base stores the rules of the expert system.

Types of File Organization

1. Pile Files

This could be a
call out area.

2. Sequential File

Adopted when -records in any logical order or fields of records are not welldefined.
Files created by punching the documents in the order they arrive.
Location of record can be done by sequentially searching the records till the
desired value of the key attribute is reached. Addition of new records is very
simple. New records are added at the end of the file. Changes or deletions are
possible.
The file may be reorganized periodically to remove the holes created by the
deletion of records.
Files on sequential access media are generally organized in the sequential mode.
Records arranged in the ascending or descending order of the values of a key attribute in
the record.
Sequence of records in the file can be changed by sorting the file. Updating and processing
of records on a sequential access media is carried out in a batch mode. Transactional
changes are collected in a batch periodically. For example, transfers, promotions,
retirements which lead to changes in the personnel file data can be collected on monthly
basis. These transactions collected in a batch are then recorded in transaction file. The
transaction file is arranged in the same sequence as the master file to be updated. The
additions, deletions and changes are then carried out in the records of the master file and
the updated records are then written on the new updated master file.
1.

Sequential File Methods

2.

3.
4.

Four Methods:Sequential Search: Each record is read one after another starting from the first record
in the file till the desired key attributed value is reached.
Binary Record: Binary search reduces the search time considerably. In binary search,
the first record to be read is the one in the middle of the file. Example in 200 records,
the 100th record will be read first. By this way, we can decide whether the desired
record lies in the first half of the file. The process is repeated many times till the
desired record has been localized to small area, say 5 or 10 records. This area of 5 or
10 records is then searched sequentially to locate the desired record.
Probing: Probing is done where the approximate range in which the desired record
may lie can be ascertained from the value of the key attribute.
Skip Search: In skip search, records are accessed in a periodic order. Say, every 20th
record is read till the value of the key attribute exceeds the desired value.

Types of File Organization

3. Indexed Sequential File

This could be a
call out area.

4. Indexed File (Inverted

File)

Delay in search in sequential file can be reduced by providing an index to the file. Such a
file is indexed sequential file. The index of the file contains a pointer record for one group
of records in a main file. The index file can be searched by the sequential search or binary
search method. Files can be indexed on the key attribute in which they are sequenced or
non-sequenced. Addition of records are made in the overflow areas. For this purpose,
some sectors in the area forming the group can be kept blank. The added record is chained
to the records immediately preceding and immediately following the added record in the
sequence by providing a pointer to the added record.
One index is maintained for each key attribute of the record.
The index file contains the value of the key attribute followed by the addresses of all the
records in the main file with the same value of the key attribute. Addition of records in the
main file can be made at the end of the file since it is not maintained in any sequence.
However, corresponding entries have to be made in all the index files for the key attributes
of the record.

5. Direct File

This method is generally used where the range of the key attribute value is large compared
to the number of records. Direct files are maintained in any particular sequence. Instead,
the value of the key attribute is converted in to sector address by a predetermined
relationship. The predetermined relationship converts the value of the key attribute into
the sector address for the storage and retrieval of the record.
The ratio of the number of records stored to the total capacity of the file is called the
loading factor. High loading factor leads to too many collisions thereby increasing the
search time for the records and vice-versa.

6. Multiring File

Where lists of records with specified key attribute value are desired frequently, multiring
files are useful. The directory file, like the one in the inverted file organization, contains
the pointer to the first record with specified key attribute value. The first record contains
the address of the second record in the chain and the second contains the address of the
third record. When the last record in the chain contains pointer to the first record, the
records are said to form a ring. A number of such rings for different key attribute values
and for different attributes can be formed. The directory provides entry point to the rings.

Structure of Data-Base
Models of Data Structure
1. Hierarchical model
2. Network Model
3. Relational Model

Hierarchical Model:
Relationship between entities is stored in the form of a tree which has a root. The root may have a
number of branches and each branch may have a number of sub-branches and this may continue for any
number of levels.
The record at the lower level is called the child of the next higher level and the higher level record is
called the Parent of its child records. For example a project may consist of sub-projects of work centres
and each work centre may have a number of employees in it.

Network Model:
The relationships are stored in the form of sets; each set having one owner and a number of members.
For example, to indicate the employee working in a work-centre, the work-centre will be the owner of the
set and each employee a member of that set.
A entity may be a member of more sets and the owner of a set may be member in another set and viceversa.

Relational Model: In this approach, both the entity

records and relationship
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Project no.

Name

Location

Budget

E1

E2

E3

Employee
Employee no.

Name

Designation

Pay

E1

E2

E3

E4

E5

E6

E7

E8

E9

Project - Employee

Records are stored in the form of tables

called relation. For example, if we want to
store the project records, the employee
records and the relationship between the
project and the employee indicating the
percentage of the employee time devoted to
that project, it may be stored in the form of
three tables.
Relational approach is more amenable to
mathematical theory by considering each
table as a mathematical relation, each row of
the table considered as a tuple and each
column in the row as the attribute drawn from
a population domain. For the reason the
relational approach is superior to other
approaches.

Project no.

Employee no.

% Time

P1

E1

20

P1

E3

28

P1

E7

35

P2

E1

25

P2

E4

40

P2

E9

32

P3

E3

15

P3

E7

30

E9

20

P3

SUSHANT SHARMA

Advantages of Data-Base Systems

i.

Redundancy controlled: In traditional file systems, each application has its own private files. Many of the data items in a file may be common to
other files i.e., the same data items in a file may be stored in a number of files. Apart from wastage of storage space, multiple updation are required
for a single transaction in the real system. This is avoided by maintaining only one copy of the data in the data-base system and interlinking them
by logical relationships. Even if, multiple copies have to be maintained due to technical reasons, this fact is known to the data-base system and the
copies are updated automatically with the single user entry.

ii.

Inconsistency Avoided: updation of separate application files for the same real transaction leads to inconsistency of data because different
application file are updated at different points according to schedule. Two separate files may, thus, indicate different status of the same data at a
given point of time. For example, the record file may show that employee A is posted in department X while at the same time the department
record file may indicate that he is posted in department Y. Control of redundancy automatically solves the problem of inconsistency, in the database system.

iii.

Integrity of Data: Inconsistency between two entries representing the same facts is an example of lack of integrity of data. Even if the redundancy is
controlled, there may still be in accuracies in data. For example an employee may be shown posted in two separate departments in the department
wise file or an employee may be shown to have worked for 200 hours in a week. The central control of data provided in the data-base system helps
to control such inaccuracies in data and maintain its integrity.

iv.

Integrated View of Data: Integration of related files in the data-base system provides an integrated view of data. The data needs of a top
management query, like the proportion of a department budget for pay and allowances spent on a specific project, may cut across various
applications. Such queries are extremely difficult to answer in a traditional file system.

v.

Unstructured information Needs: Information needs of unstructured management decisions are not known in advance and cannot be preprogrammed. Since the related data are centralized and the relationship structure among entities is built into the data-base, it is more suited to
handle unstructured queries.

vi.

Enforcement of Standards: With central control of the data-base, the Data-Base Administrator can ensure that desired standards are followed in
the representation of data. Standardizing of data formats is particularly important for interchange or migration of data between systems.

vii.

Security Restrictions: The Data-base Administrator, having complete jurisdiction over the operational data, can ensure that access to the databases is available only to the authorized users. He can define different authorization checks for each type of access viz., retrieve, modify, delete
etc., to each piece of information in the data-base.

viii. Data independence: It is a crucial advantage of the data-base system over the traditional file system. Most traditional file systems are highly datadependent. This means that the way the data are organized and the way it will be accessed is dictated by the needs of the specific application. The
knowledge of the storage organisation and the access strategy is built into the application software. For example, if the data are organized in the
indexed sequential manner, this fact has to be known to the application software and the procedures for retrieval and updating of data are built in
the application software keeping this fact in view. A change in the storage structure or access strategy of data will drastically affect the application
software. It was found in some of the traditional systems that
organizations
were spending as much as 6% of their programmers time on the
SUSHANT
SHARMA
modifications of the existing application software and only 40% on the development of new software.

TRANSFORMATION OF BUSINESS

GLOBALIZATION Global Market Environment

KNOWLEDGE-BASED ECONOMIES More jobs
in sales ,education& services than factories
PRODUCTIVITY
NEW PRODUCTS & SERVICES
KNOWLEDGE AS AN ASSET
TIME-BASED COMPETITION
SHORTER PRODUCT LIFE
TURBULENT ENVIRONMENT
LIMITED EMPLOYEE

SUSHANT SHARMA

 TRANSFORMATION OF ENTERPRISE
FLATTENING- Squeezing Functional
Hierarchy
DECENTRALIZATION- Distributed Work Load
FLEXIBILITY- Offers openness of working
hours& decision making for employees
convenience
LOCATION INDEPENDENCE Gives
Possibilities of Mobile and virtual offices
LOW TRANSACTION COSTS
EMPOWERMENT
COLLABORATIVE WORK People work in
coordination
SUSHANT SHARMA

INCREASED CAPABILITY OF IT
Technology Features

Description

Processing capability

Increase in computing power and reduction in prices

of hardware has given rise to the availability of
machines to masses.

Portable Computing

Computers are available in handy sizes, which can

be ported, plugged and played at any place. This
adds to the services of mobile business persons,
e.g., directors, managers, sales persons.

Global Networking

Information network infrastructure has advanced to

the extent that today you can access any computer
from any where in the world.

Enterprise Networking

Easy work flow automation can be done to reduce

paper work and speed up the processing of
documents in the offices.

Distributed Computing

This feature facilitates the requirements for

empowerment and decentralization of work to
employees.

Graphical User Interface

Easy to learn graphical interfaces have saved the

users from the unpleasant task of memorizing
commands. Now, end users can operate the
software with great ease. New, fascinating form of
data presentations have given a boost to the usage
of the systems.
SUSHANT SHARMA

 MIS is an integrated collection of functional

information systems, each supporting
particular functional areas.

SUSHANT SHARMA

Internet

An Organizations
MIS
Financial
MIS

Business
transactions

Transaction
processing
systems

Business
transactions

Extranet

Databases
of
valid
transactions

Databases
of
external
data

Accounting
MIS

Drill down reports

Exception reports
Demand reports

Marketing
MIS

Human
Resources
MIS

Key-indicator reports
Scheduled reports

Etc.

Etc.

Figure 9.3
SUSHANT SHARMA

Financial MIS
Finance information system help organize
budgets, manage cash flow, analyze
investments, and make decisions that
could reduce interest payments and
increase
revenues
from
financial
transactions
Provides financial information to all
financial managers within an organization.
SUSHANT SHARMA

Databases of
internal data

Databases of
external data

Financial
DSS

Business
transactions
Transaction
processing
systems

Databases
of valid
transactions
for each
TPS

Financial
MIS

Financial
applications
databases

Business
transactions
Financial statements
Internet or
Extranet

Business
transactions

Operational
databases

Uses and management

of funds

Financial
ES

Financial statistics
for control
Customers,
Suppliers

Figure 9.3
SUSHANT SHARMA

Inputs to the Financial

Information System
Strategic plan or corporate policies
Contains major financial objectives and often projects
financial needs.

Transaction processing system (TPS)

Important financial information collected from almost
every TPS - payroll, inventory control, order
processing, accounts payable, accounts receivable,
general ledger.
External sources
Annual reports and financial statements of
competitors and general news items.
SUSHANT SHARMA

Financial MIS Subsystems

and Outputs
Financial subsystems

Profit/loss and cost systems

Auditing
Internal auditing
External auditing
Uses and management of funds

SUSHANT SHARMA

SUSHANT SHARMA

Financial Information Systems

Payroll link to human resources system
Accounts payable link to purchasing and
inventory
Patient accounting, billing, accounts
receivable
Cost accounting, including allocating
overhead
General ledger
SUSHANT SHARMA

Financial Information Systems

(continued)

Budgeting
Internal auditing
Forecasting
Planning financial investments
Cash flow vs. cash need

Financial statements
Financial reporting for top management
SUSHANT SHARMA

Finance
The job of financial managers is to manage
money as efficiently as possible by:
Collecting payables as soon as possible
Making payments by the latest time allowed by
contract or law
Ensuring that sufficient funds are available for
day-to-day operations
Taking advantage of opportunities to accrue the
highest yield on funds not used for current
activities
SUSHANT SHARMA

Finance
Cash Management
Financial ISs help balance the need to accrue
interest against the need to have cash
available.
Cash management systems (CMS): Handle
cash transactions specifically.
Electronic fund transfer (EFT): The electronic
transfer of cash from one bank account to
another.
SUSHANT SHARMA

Finance
Investment Analysis and Service
Analyze and project the prices of a
specific stock or bond.
Transmit
buy
and
sell
orders
electronically.
Provide clients with a detailed statement.
Monitor account information and news
online.
SUSHANT SHARMA

Marketing MIS
Marketing information system help analyze demand for
various products in different region and population
groups in order to more accurately market the right
product to right producer.
Marketing ISs provide information that helps
management decides how many sales representatives to
assign to specific products in specific geographical area
Supports managerial activities in product development,
distribution, pricing decisions, and promotional
effectiveness
SUSHANT SHARMA

Schematic

Databases of
internal data

Business
transactions

Transaction
processing
systems

Databases of
external data

Databases
of valid
transactions
for each
TPS

Marketing
MIS

Manufacturing
DSS

Marketing
applications
databases

Sales by customer
Sales by salesperson
Operational
databases

Sales by product

Manufacturing
ES

Pricing report
Total service calls
Customer satisfaction

Figure 9.9
SUSHANT SHARMA

Inputs to Marketing MIS

Strategic plan and corporate policies
The TPS
External sources:
The competition
The market

SUSHANT SHARMA

Marketing MIS Subsystems and

Outputs

Marketing research
Product development
Promotion and advertising
Product pricing

SUSHANT SHARMA

What is marketing information

system ?
Marketing information consists of people,
equipment and procedures to gather, sort,
analyze, evaluate and distribute needed,
timely and accurate information to marketing
decision makers.

Marketing decision makers use the data to

identify and solve marketing related problems.
SUSHANT SHARMA

Marketing Information system supplies

three types of information.
Recurrent Information
Monitoring Information
Requested Information

SUSHANT SHARMA

 Recurrent Information
This is the data that an MIS supplies
periodically about the market share of a
specific product and customers awareness
of companys brands. The data may be
supplied on weekly, monthly or yearly
basis.

SUSHANT SHARMA

 Monitoring Information
This is the data obtained from the regular
scanning of certain sources. Marketing
managers may need data related to
competition or the industry. It is essential so
that marketing managers can be alert and
identify potential problems

SUSHANT SHARMA

 Requested Information
This information is developed in response
to some specific request by the marketing
manager. Secondary data or primary data
through survey research are collected in
response to the specific request. The MIS
supplies the requested information for
decision making.

SUSHANT SHARMA

Marketing Information system

External data

Marketing
Research
division

Internal data

Requested
information

SUSHANT SHARMA

Marketing
Information
system

Marketing
Managers
Division

Sources of Marketing Information .

The MIS information inputs come from different
sources, viz., both within and outside firms .
Some of the commonly used internal sources of
information are:
Sales Analysis- The marketing information
system retrieves sales information and put them
in usable and disaggregated form. It detects
various marketing strengths and weaknesses.
Computer assisted sales analysis uncovers
significant details for management needs.
SUSHANT SHARMA

Cost Analysis-The cost analysis is possible

with the effective accounting system. The
classification and analysis of the cost of
production, cost of distribution and selling
may provide adequate information for the
management purposes .
Financial Records- The financial records &
publications may provide
adequate
opportunities for management of sales &
marketing activities .Many companies
prepare periodical final statement to
observe the balance of each item of
financial records.
SUSHANT SHARMA

Marketing
Environment

Customer
Needs

Why
Information
Is
Needed
Strategic
Planning

SUSHANT SHARMA

Competition

Importance of marketing information system

Anticipation Of Customer Demand-Every

marketer needs up-to-date knowledge about
consumer needs and wants.
Systematic Approach-Expanding markets
and competitive marketing environment
require adequate market intelligence system.
Economic indicator-Marketers must have
latest information on the changing trends of
supply, demand and prices
SUSHANT SHARMA

 Significance of Analysing Competition-Marketer

cannot survive without having information regarding
nature , character and size of competition to be met.
Development of Technology-Marketers must have
latest information regarding technological development.
Understanding the Consumer-Information system can
establish proper two way flow of information and
understanding between marketers and consumer.
Marketing Planning-Marketing plans and programmes
are based upon information supplied by economic
forecasts and market research.
SUSHANT SHARMA

SYSTEM DEVELOPMENT LIFE

CYCLE METHODOLOGY

SUSHANT SHARMA

SYSTEM PLANNING
1Mechanized Vs Non Mechanized IS
2Centralization Vs Decentralization of computing facilities
3Batch mode Vs real Time mode of Info. Processing
4Independent Vs Modular method of designing IS
1, PERFORM COST -BENEFIT ANALYSIS
BENEFITS Reduction in staff , Improved Processing speed per unit of workload, ready access to info, reduction in
expenditure to store ,analyze and organize massive business data
DISADV:- Equipment Cost, Enhancement in the cost More skilled and higher paid staff, technical involvement of professional
programmers, expenses encountered for formatting and reproduction of data

System Feasibility Test /Evaluation of complete System Plan

1Based Checking ability to meet user needs/ Use of resources to generate benefits, Impact on user organization, Workability of
the system ---- Check scope and complexity of computerization

System Design Information base according to Sources, characteristics, Purpose1Sources can be single/dual . Eg. Accounts deptt. (single source) .Inventory IS (dual) Stores and Purchase depts.
2Purpose- User how it will be used and when it will be used
3Characteristics of Info- Size, variability , volatility &activity

DEVELOPMENT STAGE SOFTWARE BASED

1Decide coding language based on nature of application area, quantum of data to be handled, and amount of calculation,
basic software language availability to handle any language (BASIC, COBOL, FORTRAN, PASCAL, C, ORACLE, and
JAVA etc.
2Decide on capacity of computer ( 8 Bit/ 16 Bit)
3Utility Part of basic software transfer of data from card reader to tape drives , from disk drive to the printer etc. Larger the
computer, more the utilities reducing writing of programs to some extent due to sorting and merging facility.
4Multiprogramming facility with lesser files on the disk for limited memory space and tape disk facilities.

SUSHANT SHARMA

DEVELOPMENT STAGE PROCESS BASED

1Understanding Physical flow of data and current usage
2Decide outputs attributes- Format /frequency/presentation/ items of output info, level of aggregation
3Decide input requirement source, agency for collection , format, frequency of collection , items of data ,
4Developing Logical questions with Yes /No results leading to further progress and back tracking
5Develop codification sheet for writing programs
6Removal of errors from the program(debugging) and their integration into system design
7Testing with sample data
8Ensuring computerized system to deliver results before discontinuing the manual system
9Development of Manuals
1Comprehensive training and instructions to the user.

System Audit
1Identifying Locations of control points for system errors and reasons for selection of these points on the basis of frequency of
error ,magnitude of error ,cost of error detection
2Develop Audit trait a series of well defined provisions which permit a person to follow and verify the system process.
3Establish steps for System recovery issue , system processing alternatives ,system security , systems restart

IMPLEMENTATION STAGE
1Obtaining Input - Output from the computer- 2 -way Process . test run and parallel run
2Documentation System Manual , operation manual and user manual
System Manual indicated complex design of IS showing different elements of computerization linked through flowchart, types of output, and
formats of input.rief outline of IS
Operational Manual Technical instructions for the actual computer operations different job steps
User Manual brief outline of IS, its major benefits, Inputs needed and outputs expected.
3User Training
4Modification to the installed system Continuous Process for the professional so that IS is updated and meaning for the user for changes in the environment

Process Evaluation
1Design of the system and quality of programming determine Time taken by processing
2Utilization of hardware resources- different memory partitions &allocating input output devices to each partition
3Lack of debugging leads to time run and again- Best check- Lay down permissible no of development runs before sending it of production runs

Product Evaluation
1Ensure acceptable quality of output report and continue to be use in

SUSHANT SHARMA

COMPUTER SOFTWARES

SUSHANT SHARMA

System software
Computer program -designed to run a computers hardware and application program
System software is the interface between the hardware and user applications.
Example Operating System - Manages all the other programs in a computer.
System Software have direct control and access to your computer hardware , and
memory locations . They perform I/O operations on various memory locations , and
control the hardware , to make the application software do a task .
Examples :
1) Microsoft Windows
2) Linux
3) Unix
4) Mac OSX
5) DOS
6) BIOS Software
7) HD Sector Boot Software
8) Device Driver Software i.e Graphics Driver etc
9) Linker Software
10) Assembler and Compiler Software

SUSHANT SHARMA

Application software
Run under System Software , and are made to do a specific task i.e ( Word
Processing etc) , which have indirect access to the hardware (i.e Behind System
Software) .
Unlike system software, an application program performs a particular function for the
user. Examples (among many possibilities) include browsers, email clients, Word
Processor and spreadsheets
Examples :
Web browser, word processing software, spreadsheet software, database software, presentation
graphics software.
1) Opera (Web Browser)
2) Microsoft Word (Word Processing)
3) Microsoft Excel (Spreadsheet software)
5) MySQL (Database Software)
6) Microsoft Powerpoint (Presentation Software)
7) iTunes (Music / Sound Software)
8) VLC Media Player (Audio / Video Software )
9) World of Warcraft (Game Software)

SUSHANT SHARMA

What is the Internet?

The Internet is a public network offering a variety of facilities including:
The World Wide Web (WWW): Used to display hypertext documents and
interactive hypermedia, allow input into forms, and deliver distributed database
applications.
e-mail: Useful for inter- and intra- organisational communication, and FTP (File
Transfer Protocol): for exchanging files.
The Internet can be of business value through:
marketing: development and promotion of products and services,
sales: processing of business transactions, and
service: provision of information.

Marketing
Internet advertising / brand development /
corporate image.
Product Differentiation: Use of the Internet
to offer unique features and electronic
services and to create institutional
distinctiveness.
Product Innovation and Growth: Creation
of new products and services, and new
markets; Mass customisation of
products; Global expansion.
Delivering attractivevalue-laden
content at a reasonable price. This entails
the provision of easily accessible, regularly
updated, diverse and elegant content.

Sales

Service
Online, instantaneous quoting.

Faster customer service

Faster transaction speeds

Customers engage inselfservice therebyreducing administrative and

processing overheads. For example,
customers can check their own account
information, track parcels, and perform
interactive needs analyses, without
needing human assistance.

Secure transactionsand order

processing
Automatic integration and
communication with back-office workflow
system.
Improved user interfaces that
areintuitive and hide the complexity of
the underlying technology
Automated reminders and re-ordering

Provision of any time of day or night

services and facilities to customers and
employees around the globe transcends
the limitations of time and place.
Availability of real-time, up-todateinformation.

Dynamic adaption to customer behaviour

Reduced lead times

Quicker time to market.

Reduced consumer search and selection

cost
Feedback from clients

Business Advantages
Cost Advantages. The Internet can decreased the marginal costs of marketing, sales, and service.
Improving the information metabolism of firms. New Internet information technologies, such as e-mail filtering, can help reduce coordination costs and mitigate the information overload, thereby speeding up the "information metabolism" of firms - that is, the ability of firms to
take in, move, digest, and respond to data. The Internet provides a useful and low-cost mechanism for information storage, transport, and
processing. The Internet thus becomes an avenue for improving communication and co-ordination and streamlining business processes.
Improving the effectiveness, and thus profitability, of management decisions and actions. The Internet can add value by providing
managers (including human managers and software agents) with relevant and reliable information, in the right format, anywhere, and in realtime. For example, managers can do market research through transaction analysis and can view up-to-the-minute management reports.

Intranet -private network that uses Internet software and standards to connect internal
employees. The Intranet is effectively an in-house version of the Internet. The Intranet
is fast becoming the network platform of the future. It is also becoming the dominant
environment for developing corporate applications.
Process Re-engineering

Enterprise Applications

The Intranet can be of business value as a means for

connecting
staff
and
improving
internal
communication and co-ordination. The Intranet
provides a means of connecting business units across
multiple
computing
platforms.
The
Intranet
thus facilitates effective re-engineering by allowing
business processes to be built across organisational
barriers. Effective re-engineering streamlines the
internal value chain and can drastically reduce costs
and lead times, and improve flexibility and customer
service.

The Intranet is well-suited to a variety ofenterprise

applications including:
workflow applications
human resource applications
Examples of human resource applicationsinclude
use
of
the
Intranet
for
performance
management and benefit scheme administration. For
instance, staff could tailor their own benefits package
without creating additional paperwork for the Human
Resources department. The Intranet can also be
aneffective training and information dissemination tool,
providing employees with access to up-to-date
information and tutorials.

Replacing Traditional Client/Server Applications

The Intranet is an ideal mechanism for replacing traditional, platform-specific client/server applications.
Traditional client/server applications promote 'islands of automation' within companies, by restricting interdepartmental communication and causing rework, duplicate data capture, and errors as data is passed between
different applications and operating systems. Intranets, which are platform independent, promote crossfunctional co-operation, electronic integration, and business synergy.

What is an Extranet?
The trend towards integrating with business partners means that Intranets
are no longer strictly private networks, and companies are granting access
to suppliers, vendors, customers, and other business partners. This
extension of the Intranet to permit controlled access to specified third
parties has been termed an Extranet.
Extranets can fully support all transactions between business partners, as
well as provide value-added information. Extranets are appropriate for
infrequent, ad hoc transactions, and short-term trading relationships as well
as for regular transactions and long-term trading relationships.

The Extranet can be of business value as a means of connecting buyers and sellers. The advantages to be
found are:
Extranets promote value chain integration. Extranets, which are inter-organisational networks, permit
closer integration of adjacent steps in the value-chain, and allow joint, interpenetrating processes at the
interface between value-added stages. Barriers between the organisation and business partners and
customers are lowered. Electronic integration leads to greater efficiency, data integrity and fewer
errors as data need only be entered once, at its source. For example, the customer fills in an order form online, and the order details are automatically written to the database or electronically forwarded to the
workflow system. Tighter coupling of business partners results in time savings and faster, more costeffective client service. Integration can also lead to the elimination of duplicate tasks and resources. Finally,
integration can result in entirely new business models through intermediation and disintermediation.
Extranets provide the benefits of Electronic Data Interchange (EDI). Electronic Data Interchange (EDI)
is the inter-process communication of business information in standardised electronic form. Amongst the
benefits of EDI are:
Reduced time and expense of paperwork. EDI provides fast, inexpensive, reliable connections to
suppliers and customers. Fully digital information exchange eliminates paperwork.
Improved speed and efficiency in filling orders (i.e. reduced cycle and order fulfilment times)
Quicker transfer of business documents
Faster customer service
Fewer errors
Automatic audit trails
Expanded customer/supplier base
Reduction of manual, labour-intensive activities
Automatic integration with internal business workflow systems

Extranets help improve customer relations and foster a better understanding of customer needs.
This is achieved through transparent customer tracking and transaction analysis, personalization, direct
feedback from customers, and pro-active provision of information to customers. Client and supplier services
are improved and become more cost effective, especially as clients and suppliers engage in self-service.
For instance clients can perform a computerised analysis of their needs, can check their own account
information, or can track the status of orders and deliveries without needing human assistance.
Extranets can help to lock in partners and customers. Information gathered on customer needs and
behaviours represents a switching barrier as "customers would need to teach a competitor all that
information".
Extranets reduce inventory and improve inventory turnover rates.
Extranets reduce procurement costs and time. Extranets reduce search, selection,
and transaction costs. The purchasing process is thus quicker, more convenient, and cheaper. The use of
advanced computerised search engines as part of the Extranet helps customers to quickly locate the
cheapest or most appropriate products.
Extranets have global reach. Because the Internet is used as the platform for the Extranet, the Extranet
network has global reach.
Extranets enhance the firm's flexibility. Because the Internet is an open, public, ubiquitous network it is
easy and cheap for new trading partners to connect to the Extranet network (which has the Internet as its
foundation).
Extranets improve management decisions through up-to-the-minute management reporting on
transactions and web-site activities.