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UNIT-1 An information system processes data and provides the relevant information on the past, present and project

future and on relevant events inside and outside the organization. It may be defined as a planned and integrated system for gathering relevant data, converting it in to right information and supplying the same to the concerned executives. The main purpose of an IS is to provide the right information to the right people at the right time. Evolution of Information systems: (This note discusses the evolution of information systems, levels of managementdecision-making and information systems that enhance the value of information.) [Students are encouraged to understand the reasons for the development of an information system and its replacement; these will help you identify the benefits andlimitations of each type of information system.] From EDP to KMS Until the 1960s, the role of most information systems was simple. They were mainly used for electronic data processing (EDP), purposes such as transactions processing, record-keeping and accounting. EDP is often defined as the use of computers in recording, classifying, manipulating, and summarizing data. It is also called transaction processing systems (TPS), automatic data processing, or information processing. Transaction processing systems these process data resulting from business transactions, update operational databases, and produce business documents. Examples: sales and inventory processing and accounting systems. In the 1960s, another role was added to the use of computers: the processing of data into useful informative reports. The concept of management information systems(MIS) was born. This new role focused on developing business applications thatprovided managerial end users with predefined management reports that would givemanagers the information they needed for decision-making purposes. Management information systems provide information in the form of prespecified reports and displays to support business decisionmaking.
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Examples: sales analysis, production performance and cost trend reporting systems. By the 1970s, these pre-defined management reports were not sufficient to meet many of the decision-making needs of management. In order to satisfy such needs, the concept of decision support systems (DSS) was born. The new role for information systems was to provide managerial end users with ad hoc and interactive support of their decision-making processes. Decision Support Systems(DSS) provide interactive ad hoc support for the decision-making processes of managers and other business professionals. Examples: product pricing, profitability forecasting and risk analysis systems. In the 1980s, the introduction of microcomputers into the workplace ushered in a new era, which led to a profound effect on organizations. The rapid development of microcomputer processing power (e.g. Intels Pentium microprocessor), application software packages (e.g. Microsoft Office), and telecommunication networks gave birth to the phenomenon of end user computing. End users could now use their own computing resources to support their job requirements instead of waiting for the indirect support of a centralized corporate information services department. It became evident that most top executives did not directly use either the MIS reports or the analytical modelling capabilities of DSS, so the concept of executive information systems (EIS) was developed. Executive information systems provide critical information from MIS, DSS and other sources, tailored to the information needs of executives. Examples: systems for easy access to analysis of business performance, actions of all competitors, and economic developments to support strategic planning. Moreover, breakthroughs occurred in the development and application of artificial intelligence (AI) techniques to business information systems. With less need forhuman intervention, knowledge workers could be freed up to handle more complex tasks. Expert systems (ES) and other knowledge management systems (KMS) also forged a new role for information systems. ES can serve as consultants to users by providing expert advice in limited subject areas.

Expert systems knowledge-based systems that provide expert advice and act as expert consultants to users. Examples: credit application advisor, process monitor, and diagnostic maintenance systems. Knowledge management systems knowledge-based systems that support the creation, organization and dissemination of business knowledge within the enterprise. Examples: intranet access to best business practices, sales proposal strategies and customer problem resolution systems. The mid- to late 1990s saw the revolutionary emergence of enterprise resource planning (ERP) systems. This organization-specific form of a strategic information system integrates all facets of a firm, including its planning, manufacturing, sales, resource management, customer relations, inventory control, order tracking, financial management, human resources and marketing virtually every business function. The primary advantage of these ERP systems lies in their common interface for all computer-based organizational functions and their tight integration and data sharing needed for flexible strategic decision making. Level of management and decision-making Information System (IS) is a concerned with the strategic, managerial and operational activities involved in the gathering, processing, storing, distributing and use of information, and its associated technologies, in society and organizations. As an area of study, IS bridges the multidisciplinary business field and the interdisciplinary computer science field. Information systems can support a variety of management decisionmaking levels and decisions. These include the three levels of management activity: strategic management, tactical management, and operational management. (i) Strategic management It is typical for a board of directors and an executive committee of the CEO and top executives to develop the overall organization goals, strategies, policies and objectives as part of a strategic planning process. They also monitor the strategic performance of the organization and its overall direction in the political, economic and competitive business environment.
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(ii) Tactical management Increasingly, business professionals in self-directed teams as well as business unit managers develop short- and medium-range plans, schedules and budgets and specify the policies, procedures and business objectives for their subunits of the company. They also allocate resources and monitor the performance of their organizational sub-units, including departments, divisions, process teams and other workgroups. (iii) Operational management The members of self-directed teams or operating managers develop shortrange plans such as weekly production schedules. They direct the use of resources and the performance of tasks according to procedures, and within budgets and schedules they establish for the teams and other workgroups of the organization.

Structure of an Information System: A management information system (MIS) is an organized combination of people, hardware, communication networks and data sources that collects, transforms and distributes information in an organization. The physical components of an IS include hardware, software, database, personnel and procedures. Hardware All physical components of a computer system compose the computer hardware. Important components include the central processing unit, input/output devices, storage units and communication devices. Communication can be over fiber-optic cables or wireless networks. Software Software provides the interface between users and the information system. Software can be divided into two generic types: system software and applications. The system software comprises of the operating system, utility programs and special purpose programs. Applications are developed to accomplish a specific task. For users of MIS it is much more important to understand the software than the hardware. Software maintenance can take 50 to 70 percent of all personnel activity in the IS function. When the organization moves to implement an advanced
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information system the hardware and software environment becomes more complex. Database A database is a centrally controlled collection of organized data. Central control reduces redundancy and duplication of data. Data is stored in an organized and structured way to facilitate sharing and improve availability to those who need it. The database improves efficiency of storage by elimination of redundant files and improves efficiency of processing by providing all required data in a single file rather than separate files. This also improves efficiency of information retrieval. Procedures Three types of procedures are required for an MIS to operate effectively: User instructions, instructions for input preparation and operating instructions for MIS personnel who maintain the MIS. Personnel The personnel in the IS function include computer operators, programmers, systems analysts and managers. Human resource requirements should be assessed by considering both the present system needs and the future system growth. The quality of MIS personnel is a key factor in its effectiveness. An IS manager needs a combination of both managerial and technical skills. IS classification based on management styles: First of all, let's describe the basic mechanisms of interaction between people, a sort of materials used for joining the bricks of management hierarchy, our company, family and state relations. There are three of them: I can order someone to do something - "authoritarizm", I can ask someone to do something on certain conditions or without them "compromise", I can wait until my partner takes the initiative and performs corresponding actions - "consensus". Consensus Consensus is a Japanese style of decision-making, i.e. keep discussing until the decision appears and becomes obvious, or until any participant takes the responsibility for some decision. Thus, the decision is accepted only in case it is clear for all the participants or at least for several ones.
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This system of decision-making is the most effective one from the point of view of the minimization of risk. It is characterized by a strong discipline of its participants, and consequently high product quality. However this system is rather slow, having a high risk of refusal and breakdown in strong dynamic processes. As a rule, such management systems are used on the top management level. One of the important criteria of its use is almost equal social position of the participants. However, the last thesis is not always obligatory, but the involving of less socially provided members requires professional growth prospects (career - it is like the Japanese experience, is not it?). In Russia this system is used as a means of operation for one of the two reasons: either it does not suggest any growth prospects, or the latter do not assume growth of social well-being. Human factor in the given system almost does not influence the decision making, because the decision, even though accepted by one person, is supposed to represent the essence of a collective product of thinking, because every member believes in the correctness of accepted decisions. The automatic control systems of similar processes should be flexible. For the systems of OLAP type, including a lot of factors, when it is important to collect as more information as possible on the examined phenomenon, it is highly recommended to use Data Mining technologies. However, the latter can be best applied for very simple and mobile interfaces. In other cases it is possible to involve analysts, who can use the listed tools, operatively collect the indispensable data and prepare qualitative reports or reviews. Compromise "You give me - I give you ", i.e. a decision is accepted at the level of some compromises. The decision can be right or wrong, and the one responsible for it will either be rewarded or not. This system of decisionmaking is very dynamic and operative and guarantees a social growth to its participants. This system represents the basis of any young business. However, this principle cannot always give the best results due to the subjectivity of both problem statement and the evaluation of product quality (are the best results so necessary, given the limited time of the product use?). This is a typical principle according to which the American society works, where everything has it own cost, where professional rises and falls depend on correct and timely accepted decisions, and the latter is very well paid.
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This method is strongly subjective, being dependent on certain people and used as a rule for building average management levels. It is the area where a conservative way of thinking can bring only good (for example, doctors, teachers, etc.). Here there are lots of automation devices available. ERP systems are characterized by typified information, habitual interfaces, strict forms of reporting and accounting, as the rules of the game are strictly determined and conservative. Authoritarizm: Authoritarizm is the style of management accepted in the military forces. The responsibility for accepted decisions lays at the top level of hierarchy, while the bottom levels of hierarchy implicitly carry out the orders of the higher ones. This style of management is highly operative not only in terms of time, but also in terms of the scale of ranks (otherwise it would not be used in the army), it is also completely subjective and conservative. The efficiency of this principle depends entirely on the accurate and detailed statement of the problem on higher levels. The given system requires strong rules and algorithms for performance of various actions; otherwise the system stays idle or carries out false commands. Along with that the system is conservative and has a slight feedback, as the principles of management in military forces have hardly changed for many years. The automated control systems here should have conservative interfaces and information fillings, as any failure can ruin the whole system. It is also important to mention a subsystem that creates the rules according to which the orders are transformed in the scale of ranks. If you automate the technological process and forget about the rules, in some time the system may stop working properly and even cause some damage. Imagine what may happen if the rules reverse a driver's reaction to the traffic light colors, but the automatic control system remains unchanged. It will be wrong to say, that any of the three listed systems is ideal from the point of view of management and decision-making. Each of them is good enough only in case it is properly used in specific time and conditions. That means that the style of management may change if the external changes occur. For example, in crisis period the transition from the compromise to the authoritative system for the bottom management
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staff can significantly increase labor productivity (this method was used by lots of enterprises during the Second World War). Unfortunately, there are not so many companies in the world, which have the rules of control systems usage. It is quite clear, that a skilled manager, using his own experience, applies principles of management style variation. However, it is rather dangerous to make a manager the only one responsible for it, as it has often caused the crash of many companies. The manager accepts a wrong decision, and using the authoritative principle, forces the whole company's structure to work accordingly. On the other hand, if the consensus principle is used, a sluggish decisionmaking can provoke an effect of delay. In this case no one will be responsible for the company's crash - it will be regarded as a bad destiny. It is necessary to mention that while creating management algorithms it is important to determine the management concepts accepted in the company. I mean that one staff member can understand something well, while for another one it may be not so apparent. All the three principles are usually applied in different management levels.

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