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University of Wales

Prifysgol Cymru

MBA

Managing Information SystemsLecturer: Mr. Cilliers Diedericks

Student ID: 4748

Words : 3295

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The ultimate goal of any Management Information System (MIS) is

optimization (Jackson D. Ford 1987).

An integrated MIS should achieve optimization by performing the following

three main functions for the organisation that it is applied into:

1. Provide information across various departments

2. Facilitate decision making at the three tiers of management

3. Serve as efficient means for managing business processes

Organisations can either provide service or manufactured goods as their

product or more commonly a combination of both.

For this essay you are required to look at the application of integrated MIS in a

service based or a manufacturing based organisation and critically evaluate

how this has helped them to improve their performance in the context of the

three main functions defined for an integrated MIS above.

Table of Contents

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Introduction..

...........................................4

The IT Productivity Paradox..

............................................5

Key Systems Applications and their interrelationship..

....................6

Unified Manageability Architecture an integrated MIS in

Dell...........7

Dells integrated MIS providing information across various

departments while facilitating decision making at the three

tiers of management...........................9

Dells integrated MIS serving as an efficient means for

managing business

processes.....................................................................................

...12

Conclusion Challenges &

Recommendations...14

Indexes............................................

....16

References...................................................................................

......................18

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Introduction

Organisational decision making has become more complex because of the ever-changing

external environment. Globalisation forces like technology, political & legal, social &

cultural, economical, ecological and many others all seen to be constantly changing while

affecting businesses and changing the way business is done referred to as the Behavioural

Theories. Companies need to develop a sustainable competitive advantage by focusing on a

core capability.

The latest business trend is outsourcing (Doh, 2005; Mol et al, 2005) which can only be

successful if there is a strong relationship management (Tompkins et al., 2006). Managing

relationships within, in between organisations and most importantly across the supply chain

members across different borders can largely be enhanced through the use of IT (Wang et al.,

2006).

Dell has been chosen for this assignment to show how successful the implementation of IT

has been in its worldwide operations, through its exceptional virtual and integrated value

chain consisting of its customers, supplier, distributors, business partners etc. (Figure 1).

Figure 1: A virtually integrated value chain e.g. Dell (Source: Laudon & Laudon, 2006)

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A brief overview on Dell can be seen in Index 1.This assignment sheds some light on how the

application of an integrated MIS in Dell has brought optimization and consequently how it

has helped the company to improve its performance by providing information across various

departments, facilitate decision making at the three tiers of management and how it has

served as an efficient means for managing business processes. An important characteristics of

IS integration is the degree to which organisations can share databases through the

coordination of activities. During that process, different business units will also need access

to the right data about the activities of different departments (Goodhue et al., 1992 cited in

Bhatt, 2000).

A manager can effectively design and manage information systems of a company only by

analysing it closely for example its common and unique features. The structure of Dell for

example, classified as a divisional bureaucracy (ranks 33rd on the Fortune500 2009 list)

would be of great help to a manager in understanding its information systems across and

along that structure. According to Joan, (1998), Dells performance in the global IT has

earned the company production efficiencies like flexibility and improved speed.

The IT Productivity Paradox

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With a change of the full implementation of IT in a company, significant changes can be

brought to the products, markets, and society as a whole (Chan, 2000). On the contrary,

according to Carr (2003), IT cannot be used as a differentiating factor to outdo competitors.

He claimed that IT can be purchased in the marketplace, can easily be imitated and is thus

just a mere commodity based on the Internet which most companies can freely get access to.

Dell has defied Chans claims by being highly successful through the use of IT as a

differentiator to outperform its rivals. Also many well known studies by leading researchers

have found that IT/IS can bring a significant positive effect to a firms productivity

(Brynjolffson and Hitt, 1996; Guimares 1997; Dewan and Kraemer 1998). Based on all these

differed views, Brynjolfsson, (1993) brought forward the IT productivity paradox which

reveals the optimistic and pessimistic views of IT as a contribution to business value.

To optimize the returns from IT Investments, it needs to be complemented with social assets

(e.g. internet, IT training, rule & regulations), managerial assets (e.g. flexible management

and knowledge based decision making) and organizational assets (e.g. culture, efficient

business processes). Several studies show that if IT is complemented with the other assets,

superior returns would accumulated and vice versa (Brynjolfsson and Hitt, 2000; Davern and

Kauffman, 2000; Brynjolfsson, 2003; Marchand, 2004). That is where Dell comes in.

Key Systems Applications and their interrelationship

Traditionally IT was mainly characterised by the Office Automation System (OAS) involving

word-processing programs and desktop publishing. It then spread beyond clerical support

with the introduction other IT applications such are the Transactional Processing Systems

(TPS), Decision Support Systems (DSS), Management Information System (MIS) and

Executive Support Systems (ESS). Due to diversification of the information communication

systems (ICS) including videotext, email and some vertical and horizontal integration oftechnologies, the primary functions of these systems which were helping and facilitating of

business processes have changed.

These enterprise systems (ES) allowed bypassing of the traditional organisational hierarchy

by allowing interdepartmental linkages and by cutting across the three tiers of management

leading to better integration and achievement of synergy. Intelligence has also been added to

the information systems (e.g. Intelligence Support Systems (ISS), Data Warehousing Systems

(DWS) and Knowledge management system (KMS). The pyramid below (Figure 3) shows

the specific categories of systems serving each organizational level and their value to the

organization. A brief definition of each of these systems is given in Index 2.

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Figure 3: The specific categories of systems serving each organizational level and their value

to the organization (Source: Laudon & Laudon, 2006)

All the key systems above are interrelated to each other while helping to maximise efficiency

and effectiveness of the overall companys performance (Figure 3).

Figure 3: Interrelationship of systems

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Source: Laudon & Laudon, 2006

Unified Manageability Architecture (UMA) an integrated MIS in Dell

The roles, efficacy and integration all the key applications shown above are going to be

analysed based on the Dell Company. Named as the Unified Manageability Architecture

(UMA), Dells integrated management system has been described as a layered management

model to organize and plan the required aspects to manage products both for in-band and out-

of-band managers as well as for increased public access. It has been designed for increased

manageability and interoperability at a lower cost (Transaction cost theory) and more

efficient decision making at the different levels of the structure. The companys system

management hierarchy is shown in Figure 3 below.

Every PC that Dell manufactures is already sold, (Chen & Popovich, 2003). This statementholds because the structure of Dell is designed as such that it allows the company to

customize software, hardware, peripherals as well as services which are provided directly to

the customers (Michael S. Dell, 1994). Unlike many companies which have lost track of their

customers, Dell has instead seen customers as a driving force and has therefore established

connections with new and existing customers to increase their long term loyalty by using IT

based customer relationship management (CRM) applications.

Figure 3: Dells System Management Hierarchy called the Unified Manageability

Architecture (an integrated MIS)

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Source: www.dell.com

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Dells integrated MIS providing information across various departments

while facilitating decision making at the three tiers of management

Dells hierarchy is divided into three main layers namely the operational, the tactical and the

strategic level. The operation level of Dells system is called the Platform management whichconsists of all configurations, monitoring and all diagnostics. That level being highly

dependent on TPS, allows for more accurate and quicker accessibility to information help to

deal with customers queries. Since a bigger emphasis is being laid on the sales and marketing

function, the main TPS application systems for that department are Sales order information

system (Sales Management), Market research (market research), and Pricing system (mainly

for pricing, promotion and new products).

The tactical level of management named the Group management is broken down into scheme

and function. The different functions include provisioning, change management, job

scheduling and event automation. The CRM application links the front office that is sales,

marketing and customer service (operational level of management), to the back office that is

account & finance, operations, transport & logistics and the HR functions (tactical level of

management) with the companys customer touch points which include the Internet, sales

direct mail, e-mail, telemarketing operations, call centres, advertising.

At that level, the lives of middle managers are made easier as the Customer Relationship

Management (CRM) system interacts with KMS, MIS and DSS to extract, manipulate and

retrieve data quickly for various analyses such as profitability, customer profiling and

customer retention modelling which then lead to efficient and effective decision making in

Dell. Dell has successfully been able to use its KMS where people exchange and share

personal or public or organisational knowledge for further research (E.g. Idea Storm

(customers interaction) and Employee Storm (staff interaction) in Dell).

This unique core competence through the production of competitive knowledge in turn helps

the DSS in bringing new products and services to life. The DSS does not involve any

professional programming but does supports decision making by gathering data through user

controls inputs and outputs and through the use of sophisticated modelling tools. The MIS

application helps with structured and semi-structured decisions as it uses high volume past

and present data, process them using simple models and the output are normally in the forms

of summary reports like the Annual Reports of a company.

The strategic level referred to as the Enterprise systems management is divided into longer

term planning which includes resource management and business management for strategic

level managers. For the strategic level of management, the CRM system helps with data

analysis tools and advanced data consolidation in the form of summarised or more detailed

report while interacting with the ESS. At that level, CRM application also works together

with other applications such as DWS and Enterprise Resource Planning (ERP) systems.

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DWS collects islands of customer data in Dell by combining all databases and all operation

based systems such as HR, Sales & Marketing and TPS, financials data, inventory,

purchasing systems to allow Dells strategic decision makers to have instant access to

information transformed by Expert Systems (ES) allowing what if questions to be asked to

be able to forecast and plan well ahead of time.

Below is an example of what happens when a customer puts in an order at the initial stage of

the operational level and how data is then passed on to various departments while at the same

time facilitating decision making at the three tiers of management.

A customer initiates the sales process from keyboard-to-server (other ways include face-to-

face, ear-to-ear sales). Through the internet Dells customers can choose the configuration of

their own system from a combination of thousand of hardwares and softwares accompanied

by a user friendly system which gives out progress updates and delivery dates (Chen &

Popovich, 2003). At the tactical level, the accounts department receives the data from the

TPS at the operational level, verifies the financial credit charge instantly and send the

information back to the TPS to confirm the order with the customer to be delivered in five

working days.

Data collected from the TPS is also passed on to the manufacturing department/ business unit

in the form of a print out of the order and manufacturing begins within hours. Once checked

and inspected, the computer is boxed in the packaging department who then send it off to the

distribution and logistics department/centres. From there, the computer is shipped to an agile

supplier who matches up with the computer with the correct monitor by data received from

the TPS through the purchase order and sent to the customer through a next day delivery.

At the strategic level, data and information is gathered from all the different departments and

from all the different system at those levels to help, support, forecast and plan (e.g. through

sales trends) the future for the overall company or even industry. This overall system of Dell

is a work of art based on three guiding principles which is the key to success:

Standards Based Non-proprietary and openly available Scalable and Flexible

Industry Adoptable consistent with other complementary standards

In present day through its IS, Dell has created its customised leagile (lean-agile hybrid

created by Naylor et al. 1999) supply chain while benefiting from the four key business

metrics of the Mason-Jones et al. (2000) model namely quality, lead-time, cost and

availability, Christopher and Towill, (2000). Dell needs to remember that the importance of

these key metrics changes with time especially if new market winners emerge. Dell also

satisfies Johansson et al. (1993) equation shown below which is expressed in terms of value

delivery in a business:

Total value = Quality * Service levelCosts * Lead-time

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Christopher and Towill, (2000), also mentioned two decoupling points behind the success of

a leagile supply chain which is material and information. According to these authors,

information should lie as far as possible upstream in the supply chain and that is the furthest

point where the real actual demand penetrates (TPS). This theory shows the importance of IS

which allows the right data and information to become accessible in the correct format to theright department as well as right level of management and how the overall performance of a

company can be improved.

Several companies tried to copy Dells integrated system approach. Compaq has tried to

change from indirect to direct distribution channels but without any luck. The main reason

behind this is Dells capital asset (integrated information system) which includes a set of

systems that support and serve the custom configuration process and the agile ability to

respond to its customers in a timely manner and which cannot be easily imitated (Chou et al,

2004).

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achieved. Such a model has nurtured innovations which were mainly associated with the

integration of KMS, SCM and CRM.

Many authors have agreed with the benefits which can be reaped when teaming up with

competitors like inter-partner learning (Dussage et al, 1999), greater force and power to forge

into new markets while pooling resources together (Johnsen and Johnsen, 1999). But on the

other side there is always the threat of trust and fear of over-sharing crucial corporate

information and knowledge which might threaten the market position of one company if used

by competitors (Bernal et al, 2002). Such relationships are normally bonded by networks

sharing but sometimes those complex interdependencies of networks (for e.g. industry hubs)

cannot be controlled or coordinated but can only be managed (Ford et al, 1998).

Only high-tech companies that align their business models with the hypercompetitive future

(one in which horizontal, not vertical, business models offer strategic advantage) will

succeed. Those that dont will falter, (Kapur et al, 2003). That is one of the reasons why just

like IBM, Dell Computer has successfully been able to hold steady or declined slightly

compared to other companies which plummeted down by forty percent or more during the

mid-2000 when the economy was stumbling. At the same time, Dell believes more in a

vertically connected enterprise than a vertically integrated enterprise (Michael S. Dell,

1994).

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Conclusion Challenges and Recommendations

Most of the challenges of the Enterprise System can be deduced from the key factors driving

realization of ES values (Davenport et al, 2004) pictured below in figure 2. The ES allows

management to have an enterprise-wide view of how a company is performing on the overall.

The unfortunate side of it is requires massive amount of time to be spent, huge amount of

investment and high upfront costs and it comes with the daunting difficulties faced in the

extensive implementation. Even after implementation, problems crop up when it comes to

integrate, optimize and informate.

Figure 4: Key factors driving the realizing of ES values (Source: Davenport et al, 2004)

The major sufferers are the bigger companies which need to integrate hundreds and

sometimes even thousands of different systems applications serving different levels of the

management tiers and the various business units/functions involved. What companies need to

do before engaging in such massive integration is weighing their needs of integration against

the large-scale difficulties which are going to accumulate. Is it really worth it?

Though integration brings money savings, quicker communications and improved decision

making, integration is much more complex as it is an ongoing process which can take years

to be completely automated (Bernal et al, 2002). To surmount this problem, recommendation

s include the implementation of centralised shared services while some companies have gone

beyond that by sharing hardware, softwares or core business processes with other firms

(Bernal et al, 2002). Another approach Hagel, (2002) is the employment of Enterprise

Application Integration (EAI) web services or tools to make applications compatible to each

other. If not, then organisations need to collaborate and agree on key information and

business processes which is often a painful process.

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Customisation of ES can bring optimization through more efficient alignment between

required processes and systems . To achieve it, companies need to make sure that non-IT

employees and managers are properly educated about the implications of the new system on

the processes and allow them to get use to the system. ((Bernal et al, 2002)). Just like

managers have to live with the system before optimization occurs, the same applies to theprocess of informate which is an evolutionary process where managers and professionals

must learn how to sift out good business information from a massive amount of transactional

data and how to make the most efficient use of those data or information.

Organisations seeking to deal with that kind of problem should implement new ES functions

such as performance measurement applications for e.g. a balanced scorecard application to

track performance while handling information requests quicker and to generate new insights

into operations through the analysis of management information. Data warehouses, portals

and adhoc reporting functionality for employees are also useful and allow the company to

come up with improved quality data.

Dell has been able to realize and accelerate value from its ES as that company has invested

the time and resources needed to get a critical mass of implementation and capitalize on

better integration, seamless flows of data and information between departments, business

units and geographies. Also unlike many firms trying to play safe by adopting a bifocal

approach on short term and long term benefits, Dell has instead wisely prioritized its benefits

and consequently created corresponding action plans to achieve them. Its integrated MIS has

successfully achieved its ultimate goal of optimization (Jackson D. Ford, 1987).

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Indexes

Index 1: Dell Corporation Ltd

The UK computer hardware market is dominated by the major international producers, HP,

Dell, IBM, Canon, Sun Microsystems and others. Dell Corporation Ltd is part of the US giantDell Inc and markets and distributes computer hardware products in the UK. It holds the

second position behind HP (23%) with a market share of 21 %. Dell as a global computer

hardware supplier and peripheral specialists focuses almost entirely on computer

hardware/peripheral production and sales across many end-user sectors. Dell Inc develops

and manufactures servers, networking systems, storage products, workstations and other

peripherals along with computer software and services.

Customers are diverse, from householders and students to large conglomerates and

government departments. Dell is a leading provider to small- and medium-sized businesses

internationally. The company sells its products and services to customers through sales

representatives, telephone-based sales, retailers and directly online, as well as through various

indirect sales channels. Dell products are sold through 40,000 commercial sales partners and

in 30,000 consumer retailers globally.

During its fiscal Year (FY) 2009, it accumulated revenue of $61.1bn and employed 78,900

employees. During 2008-2009, Dell reduced its global workforce by 9,000 people to cut costs

following a drop in demand in 2009 with the largest decline in business markets. Most of the

employees are mainly involved in sales, marketing and distribution because everything else is

outsourced from low-cost usually Asia-based manufacturing countries. Assembly operations

for Europe are based in the Republic of Ireland, where Dell is the country's largest exporter

and second-largest company overall.

Current and Future Developments

Throughout 2008/2009, Dell has been developing its capabilities in existing product lines and

acquiring new technologies, particularly in servers, storage, services and software. They are

developing more into enterprise computing including data centres; secure, energy-efficient

virtualized servers; high-performance, standards-based storage solutions optimized for

virtualization; new managed and Internet-based cloud services; and infrastructures for other

cloud providers.

In October 2009, Dell launched the new Inspiron 11z, which is the thinnest and lightest

Inspiron Dell offers. It falls between a netbook and laptop in offering both portability and

strong functionality. The new laptop is based on the Intel's ultra low voltage chips. In

September 2009, Dell announced that it has agreed to buy Perot Systems, an IT services

company, for $3.9bn. The acquisition is part of Dell's strategy to expand beyond PCs and into

services. Perot Systems specializes in services for infrastructure, business processes,

technology, applications and consulting.

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Index 2 : A brief and explanation of each of the six key systems applications of a business.

As a manager, it is very important to know exactly how information systems can help an organisation.He/ She needs to understand which types of information systems are available to a company and whatthey can do.

The six major types of Information Systems are:

Executive Support System (EES)

Decision Support System (DSS)

Management Information System (MIS)

Knowledge Management System (KMS)

Office Automation System (OAS)

Transaction Processing System (TPS)

ESS

Executive information systems (EIS) are user-friendly computerized systems designed specifically toprovide selected and summarized information from diverse sources in a form that permits access,analysis and presentation to assist top level management, (Collier & Dixon, 1994).

DSS

DSS help managers make decisions that are unique, rapidly changing, and not easily specified inadvance. They address problems where the procedure for arriving at a solution may not be fully

predefined in advance thus having more analytical power than any other systems, (Laudon &Laudon, 2006).

MIS

A commonly cited definition is provided by Davis and Olsen (1985), who describe an MIS as anintegrated, user machine system for providing information to support operations, management, anddecision making functions in an organisation, (Davenport et al, 2004).

KMS

Knowledge management systems collect all relevant knowledge and experience in the firm and makeit available wherever and whenever it is needed to support business processes and managementdecisions. They also link the firm to external sources of knowledge, (Laudon & Laudon, 2006).

OAS

Office information systems (OIS) are concerned not only with the administrative process of thecompany (document processing, electronic mail and executive support systems electronic diaries,directories, memorandum files, etc.), but also with access to wider information sources (Collier &Dixon, 1994).

TPS

A transaction processing system is a computerized system that performs and records the daily routinetransactions necessary to conduct business. Examples are sales order entry, hotel reservation systems,

payroll, employee record keeping, and shipping, (Laudon & Laudon, 2006).

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Management Review, Vol. 10 No.5, pp.13-18.

Walters and Rainbird (2007); Cooperative innovation: a value chain approach, Journal of

Enterprise Information Management, Vol 20, Issue 5, pp 595-607

Wang et al, (2006); "A virtual integration theory of improved supply-chain performance",

Journal of Management Information Systems, Vol. 23 No.2, pp.41-64.

Books:

Laudon & Laudon, (2006) Management Information Systems: Managing the Digital Firm, 9 th

edition, Prentice Hall, Azimuth Interactive Inc.

Websites:

www.dell.co.uk

www.dell.comwww.marketingweek.co.uk

http:content.dell.com/us/en/corp/d/press-releases/2010-02-16-dell-ms-integration-tools.aspx

http;//money.cnn.com/magazines/fortune/fortune500/2009/full_list

Other:

Key Note, Computer Hardware 2010

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http://www.dell.co.uk/http://www.dell.com/http://www.marketingweek.co.uk/http://www.dell.co.uk/http://www.dell.com/http://www.marketingweek.co.uk/

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KCB ID: 4748UoW ID: 0811867059438

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