Basic Ideas

Problems in business are undesirable situations To solve problems, managers must make decisions to resolve the undesirable situation Decisions involve selecting a solution from among several alternatives. Good decisions require information Information systems produce information (among other things)
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 Data are defined as raw facts (dates, monetary amounts, names, addresses, account numbers, prices, etc.) Information is processed data put into some context. Contextual elements include things like relevance, completeness, accuracy, or timeliness). A system is a set of components that work together to produce a common goal (or goals) An information system is a set of components whose goal is to produce information that benefits an organization
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Characteristics of Management Information

Needs to be new Needs to be True It is required to be about something The transmission of Information is always through regular communication channels All rules of effective communication are relevant to Information transmission

The Organizational Pyramid

Categories of Systems
Operational Level System:Supports operational managers by keeping track of elementary activities and transactions of the organization

 Management Level System :Serves the monitoring , control, decision making and administrative activities of middle managers. It provides periodic reports. They focus on less structured decisions They often answer what if questions

 Strategic Level :- Helps senior management tackle and address strategic issues and long term trends.
Their concern is matching changes in the external environment with existing organizational capability

Characteristics of Information at Different Managerial Levels

Different management levels have different information needs Information needed by different managerial and operational levels varies in
the time span covered level of detail Source other characteristics over a broad spectrum

Characteristics of Information at Different Managerial Levels

Data Range
Amount of data from which information is extracted

Time Span
How long a period the data covers

Level of Detail
Degree to which information is specific

Characteristics of Information at Different Managerial Levels

Source: Internal vs. External
Internal data: collected within the organization External data: collected from outside sources Media, newsletters, government agencies, Internet

Structured and Unstructured Data

Structured data: numbers and facts easily stored and retrieved Unstructured data: drawn from meetings, conversations, documents, presentations, etc. Valuable in managerial decision making

Information System

Components of an IS include :

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Ways to Organize Information Systems

By the groups they serve Operational level Management level Strategic level

By functional area Sales and marketing Manufacturing and production Finance and accounting Human resources

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The Four Major Types of Information Systems

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Transaction-Processing Systems (TPS)

TPS are the basic business systems that serve the operational level of the organization. TPS is a computerized system that performs and record daily transactions necessary to conduct business. Ex: - Sales order entry , Hotel Reservation Systems , Payroll

TPS
Entry point for recording data Critically important to the functioning of the organization mostly for predefined, structured tasks usually has high volumes of input and output provides data to systems which summarize the data into information for the use of higher levels of management

needs to be fault-tolerant.

TPS
Managers need TPS to monitor the status of internal operations and the firms relation with the external environment
Operation managers use TPS for adhoc reports

Typical Applications of TPS

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Management Information System (MIS)

MIS serve the management level of the organization, providing managers with reports and online access to the organizations current performance and historical records. MIS are oriented almost exclusively to internal events MIS serves the functions of planning, controlling, decision making, or problem solving at the management level Data collected by a TPS is usually the basis for an MIS
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MIS
MIS summarizes and reports on the Companys operations.
Transaction data from TPS is compressed and presented in the form of report MIS serves managers primarily interested in weekly , monthly and yearly results. MIS provides answers to routine questions

Management Information Systems (MIS)

A sample MIS report

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MIS
TPS
Order Processing System ORDER FILE Materials Resource Planning System PRODUCTION MASTER FILE General Ledger System ACCOUNTING FILES UNIT PRODUCT COST PRODUCT CHANGE DATA EXPENSE DATA MIS FILES MANAGERS SALES DATA

MIS

MIS

REPORTS

Decision Support Systems (DSS)

DSS also serve the management level of the organization.
It helps managers make decisions that are unique , rapidly changing and not easily specified in advance They address problems where the procedure for arriving at a solution may not be fully predefined in advance It support more complex and nonroutine decisionmaking and problem-solving activities. It uses information from TPS and MIS

DSS
DSS has more analytical power then other systems
They use a variety of models to analyze data They are interactive users can change assumptions , ask new questions and include new data

DSS
For example a bank loan officer verifying the credit of a loan applicant an engineering firm that has bids on several projects and wants to know if they can be competitive with their costs.

Executive Support Systems (ESS)

Provide timely, concise information about organization to top managers Senior managers use ESS They address non routine decisions requiring judgment , and insight. Combination of MIS and DSS designed specifically for upper levels of management

ESS
Employ most advanced graphics software Makes use of less analytical models
Ex:- What are the competitors doing? In what business should we be ?

Office Automation System

The term office automation refers to all tools and methods that are applied to office activities which make it possible to process written, visual, and sound data in a computer-aided manner. Office automation provide elements which make it possible to simplify, improve, and automate the activities of a company It also includes the following activities:
exchange of information management of administrative documents handling of numerical data meeting planning and management of work schedules

 The backbone of office automation is a LAN, which allows users to transmit data, mail and even voice across the network.
All office functions, including dictation, typing, filing, copying, fax, telephone and record management operations, fall into this category.

 The term "office suite" refers to all software programs which make it possible to meet office needs. In particular, an office suite therefore includes the following software programs:
word processing a spreadsheet a presentation tool a database a scheduler

 Generally, there are three basic activities of an office automation system:

data storage of information, data exchange, data management