management information systems information systems in global business today phesto namayala
TRANSCRIPT
Management Information Systems
Information Systems in Global Business Today
Phesto Namayala
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The Organization
• An organization is a person or group of people united for some purpose– to deliver a product, a service, information...
• Many organizations are established for trade – to generate profit, but not necessarily. They may be charities or government departments. They still need management and information systems!
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Organizations
• Organizations process and use information in order to produce outputs for an environment.
• Most organizations are not designed primarily for processing information - they deliver services or products. Examples;
– a newspaper delivers news and opinions,
– The Department of Social and Family Affairs deliver pension and unemployment services.
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Organizations
• The previous definition of an organization implies that introducing new technology changes the way inputs are combined into outputs,
– i.e. a technical rearrangement of machines or workers.
• This has the effect of changing procedures and a lot of information (… information systems).
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Organizations
StructureHierarchyDivision of LabourRules, procedures
ProcessRights/obligationsprivileges/responsibilities
Values, Norms, People
Environmentalresources
Environmentaloutputs
Organization
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Organizations
• Appropriate information systems need to be developed to support the activities of an organization;– day to day activities,
– longer term goals and objectives,
– strategic management.
• An organization needs information about – its own internal activities and operations,
– the markets and industry within which it operates.
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Types of Organizations
• There are four commonly recognized structures for organizations that are sometimes defined as ‘types’:– Functional– Product (sometimes referred to as ‘Project’ as
an alternative)– Bureaucratic– Matrix
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Types of Organizations
• Functional - aligned with the basic managerial functions, such as Purchasing, Sales, Personnel…(i.e. structured with Departments)– These are often hierarchical. It may be difficult to
produce systems that span several functions – (information) systems may overlap departments but may need to be different.
• Product - activities are grouped by output or products.– These often deliver specific expertise but also
duplication of activities if individuals are working independently.
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Types of Organizations
• Bureaucratic – having many detailed rules and procedures;– These are often hierarchical, mechanistic and
impersonal.
• Matrix – a hybrid of ‘Functional’ and ‘Product’.
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Types of Organizations
• Functional diagram
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Types of Organizations
• Product diagram
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Types of Organizations
• Matrix diagram
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Differences in Organizations
• Organizations may have (usually do have) different structures or shapes.
• They have;
– Different goals
– Benefit different groups
– Different leadership styles
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Differences in Organizations
• Different goals; – coercive (military, prison), utilitarian (businesses)
normative (religious groups, universities).
• Benefit different groups;– members (credit union), clients (welfare agency),
owners (business).
• Different leadership styles;– democratic, laissez-faire (leadership absent),
technocratic (technology based), bureaucratic (rule based), authoritarian.
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Differences in Organizations
• Organizations exist in different environments;– turbulence (rapid technology change), complexity
(multiple competitors).
• Perform different tasks– programmed routine tasks (inventory reorder), semi
programmed (production scheduling), unprogrammed (selecting strategy, e.g. consulting).
– Use different techniques & technology.
– craft (woodworker), batch routine (assembly line), continuous process (oil refinery).
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Types of Organizations
Example- entrepreneurial structure
• A simple structure…
• Young, small entrepreneurial firms in fast changing environments.
• Dominated by entrepreneur and managed by single CEO (Chief Executive Officer).
• Information systems are sometimes poorly planned and significantly behind fast-breaking production developments. (Usually because there is no information Systems professional at work continually.)
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Entrepreneurial Structure
Owners
Salespeople
Administration Inventory balancer
The focus is on sales, rather than innovation
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Types of Organizations
Machine bureaucracy
• A large classic bureaucracy.
• It exists in slow changing environment, producing standardized products.
• It is dominated by strategic senior management that centralized information flow and decision authority.
• It is likely to be kept in functional divisions (manufacturing, finance, marketing, human resources… - departments.)
• Information systems tend to be large-scale, well planned but limited to such functions as accounting, finance, simple planning and administration.
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Machine Bureaucracy
Board of Directors
CEO Vice President (VP)
Exec VP
Administration
Operations Engineering Personnel Financial Marketing
R&D
Facilities Planning
R&D = Research and Development
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Types of Organizations
Divisionalized bureaucracy
• A combination of many machine bureaucracies, each producing a different product or service, topped by a central headquarters.
• Suited to slow changing environments and standarised products.
• Organizations are divisionalized so tend to operate in different environments (i.e. for each product or service).
• Information systems are elaborate and complex to support central headquarters’ financial planning, reporting requirements and operational requirements of the divisions.
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Divisionalized BureaucracyPresident
Planning Legal Finance
Division 1
Purchasing
Engineering
Manufacturing
Marketing
Division 2
Purchasing
Engineering
Manufacturing
Marketing
Division 3
Purchasing
Engineering
Manufacturing
Marketing
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Types of Organizations
Professional bureaucracy• Example; a knowledge-based organization selling
professional service.
• Suitable for slow changing environments and skill sets.
• Dominated by Department Heads with weak centralized authority.
• Professional members create product or service. (Consider systems analysts and programmers of a software company.)
• Example problem; poor central administration system while working with sophisticated knowledge-work support systems.
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Professional Bureaucracy – The Hospital Example
Other examples; law firms, accounting firms, schools.
Board of Trustees
Exec Director
Director of Admin Services
Director of Hosp Services
Director of Nursing
Director of Prof Services
Medicine
Surgery
Radiology
Pediatrics
Executive Committee
Council of Physicians
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Types of Organizations
Adhocracy – the structure is arbitrary• Example; a task force organization.
• Characterized by large groups of specialists organized into short-lived, multidisciplinary task forces focusing on new products.
• High tech firm that must respond to rapidly changing environments or markets (or derive money from government contracts).
• Innovative and flexible – but with weak central management.
• Information systems might be poorly developed at the central level, but often advanced within task force.
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Adhocracy – The Oil Refinery Example
Other examples; research orgs, aerospace companies, medical, electronic, biomedical orgs.
Board of Directors
Exploration
Production
New Resources
Artic Pipelines
Chemicals Logisitics Marketing
Transportatn
Coordination
Corp Affairs
Comptroller
Empl Relations
Medical
Treasurer IT services Purchasing
Build Admin
Travel ArrangEnv Protection
Law
Tax
Research
Bus Dev
Administration & Services
Resource Development Chemicals Materials Petroleum Products
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Business Organizations
• Business organizations vary in size from huge international companies to private individuals, including;
– manufacturing and commercial companies,
– central and local government departments,
– financial institutions,
– administrative organizations,
– service agencies,
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Business Organizations
• Product flow is the flow of raw materials to finished goods.
• Information flow is the creation and movement of the administrative and operational documentation necessary for product flow and for providing a service.
• Business Information Systems support information flow and provide information to companies to assist in achieving their aims.
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Processes within an organization
• A Business Cycle example
PurchasingPurchasing
SalesSales
ProductionProductionCustomerCustomer
SupplierSupplier
orderordermaterialsmaterials
productproductdeliverydelivery
orderorder
materialsmaterials
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Organization Functional Areas/Processes
Main work areas inherent in most companies are• Accounts (including billing, collection, payment,
payroll)
• Personnel (including recruitment, professional development, etcetera.)
• Sales (and Marketing)
• Purchasing
• Inventory / stock control
• Production
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Example - Payroll
Payroll accounting• Dealing with payment of employees.• Requires a personnel administration system
which provides information on employees’ personal details and terms of employment.
• Requires a payroll system;– computation of gross earnings
– computation of deductions and net earnings
– accounting (distribution and updating of ledgers)
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Example - Payroll
Typical documents (electronic or otherwise):• Time reports/time cards• Payslip• Bank direct credit list - Electronic Funds Transfer (EFT)• Cheques• Accounting reports - deduction and cost analyses• End of year documents• Audit and control • Employee wage history
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Example - Sales
Order Control ensures that customer orders are received, processed and fulfilled efficiently and in organised way.
Sales Accounting deals with monetary side of customers orders, invoicing, payment etc.
Typical functions:• Dealing with enquiries re: price, availability…• Checking credit ratings,• Validating orders,• Handling customer complaints,• Checking the status of orders.
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Example - Sales
Typical documents:• Customer orders• Sales invoice• Sales statements (for account customers)• Sales analysis reports
– These may be used to forecast sales and plan marketing activities.
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Example - Marketing
Marketing is the provision of goods and services to meet customer needs.
Typical functions:• Monitoring competitors,• Liaising with existing customers and clients,• Market research,• Identification and follow up of leads,• Product or service promotion.
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Example - Purchasing
Purchasing ensures that materials, equipment, tools, etc are available at the right time, right place and at the right price.
Typical functions:• Obtaining quotations from prospective suppliers,• Placing orders with suppliers and monitoring delivery,• Checking and handling goods received,• Passing details of goods received to accounts,• Checking supplier invoices before payment,• Maintaining supplier details re price, quality etc.
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Example - Purchasing
Typical documents:• Purchase order (PO)• Good Received Note (GRN)• Delivery docket• Purchase invoice• Cheque or credit transfer (EFT)• Purchase records (supplier records)• Purchase analyses - measure supplier
efficiency, costs per work area, job costing…
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Example - Stock Control
Stock (inventory) control is the monitoring and decisions regarding the items held in stock.
• Stock is the buffer between supply (production or external entities) and demand (customers or internal entities if the product is used ‘on-site’.)
• Stock costs money – it is important to minimise the money held in stock and still meet demand – this often leads to JIT inventory control.
Just In Time - JIT - computer systems monitor supply and demand continuously and trigger rapid resupply when necessary. This requires close cooperation with suppliers.
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Example - Stock Control
Typical functions:• Maintenance of stock level records• Issue of stock• Identifying and monitoring reorder levels• Managing outstanding orders• Stock valuation (stock check) and reconciliation
Information systems complexity depends on the number of stock items, turnover rate and the number of dispersed stores.
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Example - Stores Control
Stores control is the methods of operating the stores or warehouses, i.e. storage space, handling equipment, security, packaging, labelling.
• It is determined by – size, weight and value of stock items
– flammability, stability (e.g. shelf-life) and identification.
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Example - Stores Control
Typical documents:• Materials request, • Purchase requisition • Inventory transfer
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Example - Production
Production designs and develops the product.
Production planning covers what to make and how to make it.
Production control ensures planning is achieved by monitoring and control of machines, processes and people involved in production.
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Example – Production
• These areas generate a huge amount of raw data and require considerable amount of information to control.
• Production is an area subject to considerable automation
• CIM - Computer Integrated Manufacture
• CAD/CAM – Computer Aided Design/Computer-Aided Manufacture
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Example – Production
Information required for production control:• Material requirements per time period (‘Man’ Hours or
Unit Time).• Quantities of components and subassemblies per period.• Amounts of equipment, machines, tools required per
stage.• Amount of labour category required per stage.• Progress of each job, reason for delays.
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Example – Distribution
Distribution receives the finished goods from production and ships the product to the customer.
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Information Flow
Sales
Purchasing
Accounts
Distribution
Inventory
Receiving/Goods Inwards
Customers
Suppliers
Employees
payslip, P60sales orderscustomerinvoice
PO
delivery docket
Production
purchaserequisition
MR
shipping order
shippingnotice sales
notice
goodsreceived Notice(GRN)
Purchase Order (PO)inventorytransfer
supplierpayment
transfer notice
time cards
supplierinvoice
supplierinvoice
payment
Typical Manufacturing organization Information Flow
MR = manufacturing requisition
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Information Flow
Billing
Customers
Collection
Payment
Employees
Payroll
Suppliers
payslips, P60timecardscustomer
invoice
payment
customerpayment
notice
payment
supplierinvoice
Purchasing
Sales
salesnotice
Receiving
GRN
Information Flow within Accounts
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Management of Organizations
• The traditional view models organizations as having three levels of management;
• Strategic• Tactical• Operational
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Management of organizations
• Strategic level management is responsible for overall strategy and direction -– typically, top level management.
• Tactical or middle level management ensure policies for achieving the strategic objectives are carried out -– typically, heads of departments.
• Operational level management are responsible for the day to day activities -– typically, foremen, supervisors, team leaders…
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Business Information
Information types: Strategic (trends, patterns,Information types: Strategic (trends, patterns,decision making)decision making)
Information types:Information types: Middle/Tactical (summary,Middle/Tactical (summary,prediction and control)prediction and control)
Information types:Information types: Operational (summary, Operational (summary, short term, real time)short term, real time)
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Information for Strategic Management
• ‘Strategic’ information:– Answers questions like “What markets should we
be in?” or “Where do we locate the new factory?”
– Is highly selective and summarised and usually in graphical form
– Likely to originate outside the organization
– Has value for a longer period
– Requires high degree of experience and judgement in its application
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Information for Strategic Management
Decisions based on this information tend to be unstructured.
Example - patterns of expenditure from market surveys or trade publications, market availability and penetration figures.
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Management Information
Management Information for monitoring and control:– Answers questions like “Of what (product/service)
are we selling most?” or “Are the sales team meeting their targets?”
– Needs to be condensed and summarised information in the form of reports, graphs and tables, forecasts.
– Is usually derived from information collected at operational level.
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Management Information
– Is shorter term information (months), concerned with the departmental level.
– Example - sales analyses, sales forecasts, production schedules.
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Operational Information
Operational Data for enabling and recording routine business activity:– Answers questions like “What is the stock level
for a given product?” or “Can this customer be given credit?”
– Is very detailed, highly specific and generated internally.
– Is short term (hourly, weekly), used for decisions concerned with immediate situation.
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Operational Information
– Structured decisions
– Examples - stock levels, customer order details, overdue purchase orders.
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Information Purpose and Example of Systems
• Strategic Management– modelling and simulation for decision support,– financial models and profit margin change simulations.
• Middle Management– monitoring and control of current information,– production planning, sales forecasting, market
research.• Operational Management
– transaction processing,– Stock Control, Payroll, Accounting
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Characteristics of Information Required
TimeTimeScalesScales
Level of Level of DetailDetail
SourceSource
Degree of Degree of UncertaintyUncertainty
FrequencyFrequency
OperationalOperational MiddleMiddle Strategic StrategicManagementManagement ManagementManagement Management Management
ImmediateImmediate
Highly Highly detaileddetailed
InternalInternal
CertainCertain
FrequentFrequent
LongLongTermTerm
SummarisedSummarised
ExternalExternal
UncertainUncertain
InfrequentInfrequent
Information Systems Fundamentals
An Information System is a set of (primarily) electronic components that collect, analyze and disseminate data and information to meet an objective.
• Data: raw facts, e.g. text, image, audio, video. By itself, data cannot help us make decisions
• Information: aggregation, analysis and selection of data that enables organizations to meet objectives. Some characteristics of information: – accurate– reliable– relevant– verifiable– valuable
Information Systems Fundamentals (cont’d)
• System: a collection of elements or components that interact to accomplish goals. Composed of:– Inputs– Processing mechanisms– Outputs– Feedback/assessment
• Many processes, whether or not they have a significant IS component, can be viewed as systems:– Personnel management– University admissions– Production and inventory management– Criminal justice system
Information Systems Fundamentals (cont’d)
• Organizations may be classified according to the systems they employ:– Simple vs. complex– Open vs. closed– Stable vs. dynamic– Adaptive vs. nonadaptive– Permanent vs. temporary
• System performance can be measured along three dimensions:– Efficiency– Effectiveness– Equity (fairness)
Information Systems Fundamentals (cont’d)
• Systems are designed, implemented and managed using models: abstractions of reality that allow us to apply principles assumed to hold true for many different systems
• Model types:– Narrative model, e.g. verbal descriptions of model features, goals,
resources– Physical model, e.g. prototypes, mock-ups– Schematic model, e.g. graphs and flowcharts– Mathematical, e.g. equations and relations
• All models are based on assumptions, e.g. market conditions, legal restrictions, physical performance limitations. Assumptions must be well-known and consistent
Information Systems Components• Inputs: raw data
– May be physical, electronic or conceptual
– May use a manual or automated process
• Processing: conversion of inputs to outputs– May be comprised of computations, data storage, choosing
alternatives
– May be a manual or automated process
• Outputs: information used to make decisions– May be delivered in paper form or electronically
– Outputs of one system may be inputs to another system
• Feedback/assessment: outputs used to improve system performance– Can flag for incorrect processing
– Cue for managerial interventions
– Supply estimates of future input values (forecasting)
Computer-Based IS Components• Hardware, computer equipment used for
– input– processing– outputs
• Software, computer programs that run on hardware:– systems software– applications software
• Databases: specialized applications software designed to organize data and information on an organization’s operations
• People: IS personnel and users• Procedures: rules for developing and using the IS
Business Information Systems• Transaction processing: automation of routine, labor-intensive
processes– payroll– customer purchases– accounts payable
Transaction processing systems have historically been mainframe-based, often run in batch, using older, less flexible technology.
• E-commerce: commercial transactions conducted electronically– business-to-business– business-to-consumer– public sector-to-business– public sector-to-customer
Value of E-commerce is estimated at $434 billion, with about 20% of total devoted to business-to-customer transactions
Business Information Systems (cont’d)
• Management information systems: collection of people, procedures, software, hardware and databases designed to generate information for management decisions about organization strategy. MISs may comprise:– Marketing MIS– Financial management MIS– Operations MIS– Transaction processing systems
• Decision support systems: an MIS intended to address specific, complex decision problems requiring interaction of managerial and machine expertise. Composed of:– Database– Models– User interface– Reporting
MIS Demo: Workforce Training Information System (Fall 1998)
• Policy context– Increase in spending on local constuction– Need to remedy lack of minority participation in construction– Increased gov’t funding for organizations that can show
positive results from job training programs
• Desired features– Registration information on all program participants– Assignment of participants to training program classes– Recording personal and class outcomes
• Implementation– Relational database application using Microsoft Access97– Web pages describing project teams, problem and solution
using Microsoft FrontPage98 (http://pirate.heinz.cmu.edu)
Information System Development• Analysis and Design
– problem definition– justification of solution approach– system requirements– project team– conceptual application model
• Implementation– Prototyping– Large-scale development– Testing– Deployment
• Maintenance and Review– Evaluation of delivered product– Customer support– Upgrades
Careers in Information Systems/Information Technology
• Operations– systems maintenance– LAN operations– data entry
• Systems Development– systems analysis– hardware/software development
• Support– data administration– Web development/maintenance
• Interface– IS analysis in functional areas: engineering, planning and
management– Participation in multi-disciplinary teams bridging policy and IS
Heinz MSPPM/MAM IS/IT training is oriented towards interface and systems development careers
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End of Lecture 1
• By the way…
– What is information?– What is a system?– What are Management Information Systems?
• We will look at these topics next.