Importance of Information Systems Necessary for Decision Making For Taking Rational, Timely & Accurate Decisions For

Taking decisions in Complex Decision situations Globalization have added various dimensions that necessitate use of Information Systems. IS is regarded as the fifth important resource besides- Money, Material, Men & Machine. In short Todays business organizations cant survive and grow without properly planned, designed, implemented and maintained Information System.

What is Management Information System

Management Information System is composed of three parts 1. Management 2. Information 3. System Management may be defined as The art of getting things done through and with the people in formally organized groups. A Manager gets the things done by performing different functions in a SYSTEMATIC way and these are Planning Organizing Staffing Directing Controlling

Management Hierarchy
There are broadly three levels of Management Hierarchy Top Management( Strategic Planning) Middle Management( Management control) Operating Management ( Operational control)

Strategic Planning
Policies Plans Budgets Objectives

Management control
Revenue Costs Profits Schedules Measurements

Operational control
Goods Services Performance

Information
One of the Most valuable resource required by the management in order to run the organization. Information is the data that is processed and presented in the form that assists in decision making.
Data Processing Information

Concept of data & Information is a relative one. Information for one may be data for Another. e.g. Withdrawal slip in a bank is a information for data entry operator but data for the bank manager.

Information
Different layers of Management require different types of information

Senior Management Operating Management

1. 2. 3. 4. Unstructured Non-Programmed Futuristic External & Internal 1. 2. 3. 4. 5. Structured Programmed Historical Internal Exact

System
A System may be defined as a set of elements which are joined together to achieve a common objective. The set of elements for a system are: Input process Output Feedback/ Control Environment

1. 2. 3. 4. 5.

Input

Process

Output

Feedback/Control

TYPES of INFORMATION SYSTEMS

Two Types: 1. Manual Systems 2. Computer- based Systems 1. Manual Information Systems Information System is created, operated and managed in manual mode. Example: Inventory Register, Accounts Register/book. Lacks functionalities of Information Technology. Computer based Information systems A Computer based Information System consists of hardware, software, databases, telecommunications, people, and procedures that are configured to collect, manipulate, store, and process data into information. For example Companys Payroll System, Order Entry System Inventory Control System

2.

MIS Defined
A Management Information system (MIS) is an organized collection of People Procedures Software Databases,and Devices that are used to provide routine information to managers and decision makers.

The System gathers data from internal and external sources of the organization; processes it according to the procedure; And supplies Information to assist Manager in taking effective decisions in a speedy manner.

MIS
The focus of MIS is primarily on Operational efficiency of resources. Marketing, production, Finance, and other functional areas are supported by Management Information systems and linked through a common database. Thus MIS is not a single system, rather it is an integrated system where subsystems fit into an overall design. Management Information Systems typically provide standard reports generated from the Transaction Processing Systems.

Nature & Scope of MIS

The discipline of MIS is interdisciplinary. It involves different domains like Accounting Management Computers Organizations Mathematics & Operations Research Behavioral Sciences etc.

Accounting Computer Science

Management Information Systems

Mathematics & Operations Research

Behavioral Sciences

Management

Elements of MIS
Hardware The computer equipment to perform input, processing and output activities. E.g. CPU, monitor, keyboard, Printer, drives, tapes, communication devices, etc. Software Computer programs that direct the operation of the hardware. Software could be 1. System software 2. Application software 3. Utility Software Databases The databases contain all data that is generated and used by application software. Telecommunications and Networks People Analysts, Programmers, System managers, Computer Operators

Elements of MIS (Contd.)

Procedures Procedures include the strategies, policies, methods, and rules for using the MIS.

Types of MIS
Information Systems are developed around the functional areas of business like marketing, finance etc. and are also termed as Functional Information Systems. These may be as Financial Information System Marketing Information System Personnel Information System Production Information System and so on.

Functional Business IS

Financial Information System

Financial Information System provides financial information to all financial managers within an organization and a broader set of people who need to make better decisions.

Financial MIS performs the following functions:

Makes financial data available on a timely basis to shorten analysis turnaround time. Provides easy access to data for both financial and non-financial users, often through the use of corporate intranet. Integrates financial and operational information from multiple sources, including the Internet, into a single MIS. Enables analysis of financial data along multiple dimensions-time, geography, product, plant , customer etc. Analyzes historical and current financial activity. Monitors and controls the use of funds over time. For adhering to legal requirements

Financial MIS aids managers in:

Capital Budgeting Decisions (firm's long term investments ) Financing decisions (such as a decision to issue bonds, Equity Shares, Bank Loans) Dividend decisions (It relates to the amount and timing of any cash payments made to the company's stockholders) Current asset management (managing cash, accounts receivable, and inventories in an organization)

Capital Budgeting Decisions Capital budgeting (or investment appraisal) is the planning process used to determine whether a firm's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures Financing decisions Decisions concerning the liabilities and stockholders' equity side of the firm's balance sheet, such as a decision to issue bonds.

Dividend Decision
The Dividend Decision, in Corporate finance, is a decision made by the directors of a company. It relates to the amount and timing of any cash payments made to the company's stockholders. The decision is an important one for the firm as it may influence its capital structure and stock price

Current asset management

Current asset management involves managing cash, accounts receivable, and inventories in an organization. Accounts receivable is the net monetary value realized by an organization through sales.

Financial Information System ( Contd.)

Financial MIS composes of the Inputs 1. Transaction Data: This data includes credit applications, billing, payment vouchers, stock transfers, cheques, journal and ledger entries etc. 2. Financial Intelligence : This data is collected from banks, govt., stock markets, etc. which is processed to determine its impact on the companys economy. 3. Organizational Plan: Another important input to Financial MIS, that portrays the objectives of the company. This needs to be reflected in the output of Financial MIS, which may be in the form of financial plans. Some of the Financial MIS are Tally, BMS,IFPS (Integrated Field Processing System)

Financial Information System

Database Of External Data

Sorted Data Forecasts

Business Transactions

Transaction Processing System

Database From TPS

FINANCIAL MIS

Management Ratios Audit & Control Other Financial Decisions& Plans

Datawarehouse

Financial DSS/EIS

Marketing MIS
It is the MIS that supports managerial activities in marketing as product development, distribution, pricing decisions, and promotional effectiveness.
The Marketing MIS help managers in marketing activities of:

Customer Identification: who, when, where, in what quantity, etc. Purchase motivation factors: social, economical, psychological factors of
customers.

Physical distribution: optimum integration of transportation, warehousing,

merchandising.

Communication function: This function includes decisions on advertising,

personal selling, sales promotion, publicity, packaging etc.

Transaction functions : Activities that transfer the title of ownership as order

handling, invoicing, billing, credit management, policy & guarantee etc.

Post transaction Function: Feedback, after sales service support etc.

Marketing MIS

Marketing MIS
Database Of External Data

Marketing DSS
Business Transactions Internet CRM
Datawarehouse

Transaction Processing System

Database From TPS

MARKETING MIS

Marketing EIS Marketing ES

Human Resource Management Information System

Human Resource MIS are concerned with activities related to employees and potential employees of the organization. The HR functions that are facilitated by HRMIS are as: Manpower Planning Staffing Training & Development Performance evaluation Wage & Salary administration Separation activities

Human Resource Management Information System

Manufacturing Management Information System

Manufacturing or Production Information System provides information on production/ operation activities of an organization and thus facilitates the decision-making process of production managers of the organization. Manufacturing MIS facilitate decision making in areas as:
Product Design: CAD, CAE Plant Location & Layout: Production Planning & Control:Routing, Scheduling, Loading Quality Control:

Manufacturing Management Information System

Office Automation System

Office automation refers to the application of computer and communication technology to office functions. Office Automation systems improve productivity of managers at various levels of management by providing secretarial assistance and better communication facilities. These systems include facilities for activities as
Typing Mailing Scheduling of meetings and conferences Calendar keeping Retrieving documents Conferencing Production of information( messages, memos, reports), and so on

Office Automation Systems provide support facilities in form of:

Word Processing Electronic mail, Message Switching, Data Storage, Data & Voice Communications.

MIS Characterstics
A Management Information System has the following Characteristics: Systems Approach MIS follows Systems approach i.e. MIS adopts wholistic approach to the study of systems and its performance in the light of the objective of the MIS. It takes comprehensive view or complete look at the subsystems of the organization. Management Oriented MIS should be designed in Top-down approach. MIS should be derived from the overall business plan. Need based MIS should provide to specific information needs of managers at different levels i.e. for strategic planning level, management control level, and operations control level. Exception Based MIS should be on Exception based reporting Principle and deviation should be reported to decision maker at the required level.

MIS Characterstics( Contd.)

Future Oriented MIS should not merely provide past information but should provide information based on the future projections based on which manager may initiate suitable action. Integrated MIS should blend information from different departments or constitute of different possible subsystems of the organization. Long Term Planning MIS designers should have future objectives and needs of the company in mind. Common Data Flow & Central Database

Types of Information Systems

INFORMATION SYSTEMS

Operations Support Systems Transaction Processing Systems Enterprise Resource Planning Systems

Management Support Systems

Office Automation Systems

Management Information Systems Decision Support Systems Executive Information Systems Expert Systems

Text Processing Systems Electronic Document Management Systems Electronic Message Communication Systems

Operations Support Systems

The Operations Support Systems are the Information Systems that process the business transactions ,control industrial processes,and update companys databases.
Such Systems dont produce specific information that can be used by the managers. The output of these Systems act as input for higher level systems. To generate useful information, further processing of output from these systems is required.

Enterprise Resource Planning Systems

A Single Information System that performs processing of all or most of the business transactions and has characteristics as I) Automation II) Integration.
The design of such system is specially made to incorporate all the processes of the company.( e.g. Marketing, Accounts, HR, Production etc are mapped in the ERP) More complex in design, Implementation and Maintenance. It has a single database.

Decision Support Systems

Application of DSS:
 For Inventory Management  To identify Customer buying patterns  Optimizing discounts/price markdowns.  Targeting direct- mail marketing customers  Store location  Evaluation of Potential drilling sites.  Flight Scheduling etc.

Web-Based Decision Support System

The DSS based on Web & Internet can support decision making,by providing online access to various databases and information pools along with the software for data analysis. GE Plastics

Customer Decision Support Systems: In such DSS customers using web interface to self-serve using the DSS tools of the sponsoring company. Fidelity Investments Homes.com, etc.

Group Decision Support System

GDSS is an interactive computer based system to facilitate the solution of unstructured problems by a set of decision makers working together as a group.
While Groupware & video-conference tools provide a platform for communication in group decision, GDSS provides additionally the tools and technologies explicitly for group decision making.

Components of GDSS  Hardware  Software  People

Group Decision Support System

GDSS software tools include:
Electronic questionnaire Electronic brainstorming tools Idea Organizer Prioritizing tools Group dictionaries Stakeholder Identification &Analysis tools Policy Formation tools

Executive Information System

Executive Information Systems are IS that help senior management take decision in unstructured problem situations. EIS find application in decision areas of:  Monitor company performance  Track activities of competitors  Spot & foresee problems  Identify opportunities  Forecasting
EIS depend heavily on external sources of data like stock market, economic databases, news services etc. as well as on internal information EIS have highly flexible and user friendly input & output interfaces. They have drill-down options.

Knowledge Management System

Knowledge is the ability of person to understand the situation and act effectively. Competition & Market forces demand that organizations today can be competitive if they manage the knowledge and continuously upgrade as per changing requirements. Knowledge Management is the process of capturing, maintaining and updating continuously the companys expertise both internal as well as external where-ever it resides- in computers, in peoples heads, on paper or thru external sources- and distributing efficiently wherever it can help produce the biggest payoff.

Knowledge Management System

Knowledge Management Systems involve the tasks of definition, acquisition, construction, storage, delivery and application of the knowledge so as to maintain and improve the competitiveness of the organization..

KMS Architecture
KMS architecture deals with three main functions as : Knowledge Identification Knowledge Generation Knowledge Delivery KMS Knowledge Identification
Definition & Categorization Surveying & Locating Build Knowledge Structure

Knowledge Generation
Processing for Acquisition Manupulating & Modelling Creation of KDB

Knowledge Delivery
Access Control Application Methods Storage & Security

KMS Tools
The tools for KMS are as: Database management tools -For data management and seeking knowledge thru SQL queries Data Warehousing, Data mart, Data Mining tools Process Modeling and Management tools -For recording standard processes for knowledge use Search Engine tools Document Management tools-like Lotus Notes Web based tools- Internet& Intranet

System Development For MIS

System Development includes the all activities of the development stages of any MIS solution. It includes activities as : Understanding the Management Problem Deciding a Plan for a Solution Coding the Planned Solution Testing the Coded Program

System Development Stages

To develop any system, the project is managed by breaking the total development process into different sub activities or stages. These areas: 1. 2. 3. 4. 5. 6. System Investigation System Analysis System Design System Construction System Implementation System maintenance

System Investigation
The organization may be facing any problem and the managers of the organization may not be very clear about the problem. The organization would in such case invite a business/system/ information analyst to help in defining and resolving the business problem in clear form. System Investigation deals with this stage. The Investigation stage constitutes of two sub-stages Problem Definition Feasibility

Problem Definition
One of the MOST IMPORTANT stages in the System Development Cycle but yet most neglected often. Tasks performed at this stage are
Prepare a written statement of the objectives Identify scope of Problem Discover the causes of Problems, etc.

For example some of the possible definition of Problems may be as The existing system has a poor response time Unable to handle load Does not provide sufficient information Problem of security, etc

Feasibility Study
Feasibility addresses the viability of the intended MIS would be useful for the organization. It is intended to assess the various alternatives and identify the most feasible and desirable system for development . Feasibility is assessed in terms of the below categories: 1. Organizational Feasibility: The extent up to which the proposed MIS supports the strategic plans of the organization.

Feasibility Study
2. Economic Feasibility: The costs and returns are evaluated to justify the investment in the system project. The factors evaluated are

Cost of H/W, S/W, N/W, Cost of Full

System Investigation, Maintenance, etc

Benefits in form of targeted objectives of MIS.

Feasibility Study
3. Technical Feasibility: It deals as with issues as whether hardware and software, capable of meeting the needs of the proposed system can be acquired or developed, in required time. It concerns regarding Does the necessary technology exist? Does the proposed equipment have the technical capacity to hold the data, provide response to enquiries, regardless of locations Can the system be expanded Technical surety of accuracy, reliability, ease of access, data security, etc.

Operational Feasibility
Operational Feasibility contains factors like management support and willingness, employees, customers, suppliers willingness to operate, and adopt the proposed system, etc.It includes Support from Management Willingness of employees, Customers to adopt new system and business methods Support from suppliers, vendors, external partners, etc. Involvement of users in system development Meeting regulatory/legal requirement, etc.

Methods of System Preliminary Investigation 1. Reviewing Documents 1. Conducting Interviews

System Analysis
System Analysis is the detailed study of various operations of the business system/activity, along with its boundaries. The objective is to determine exactly what must be done to solve the problem. System analysis involves detailed study of: Information needs of the organization and its end users. Existing Information Systems( their activities, functions, resources, products) The Expected Information System( expected capabilities)

System Design
System Analysis describes WHAT a MIS should do to meet information needs of organization and System Design specifies HOW the System will accomplish these objectives. System design consists of activities as: Use Interface : Interactions between user and computer systems. Data Design: Focuses on structure of database Process Design: Programs and procedures of the MIS

System Construction
Once the system specifications are understood, required programs are coded, debugged, and documented.

System Testing
Testing done on new Systems, using test data. Feedback leads to improved System.

System Implementation
Even a well design System will fail if not implemented properly. It involves various activities as: Acquisition of H/W & S/W Site preparation User training Installation of the System Standardizing the new System in the organization.

System Maintenance

System maintenance involves the monitoring, evaluating and modifying the system to make desirable or necessary improvements and remove residual errors/shortcomings.

System Development Approaches

A System Development approach defines and guides how the system development activities are to be organized in the overall system development process. There are four most important system development approaches. 1. 2. 3. 4. Waterfall Model or SDLC Prototyping Approach Rapid Application Development Spiral Model

Waterfall Model

This is also referred to as SDLC( Software Development Life Cycle) or Traditional approach . This approach takes step-by -step approach to system development activities. Once one stage is completed , only then next stage is taken up. :

Waterfall Model(Contd.)
Systems Investigation Understand Problem

Systems Analysis Understand Solution Systems Design Select & Plan Best Solution Systems Implementation Place solution into effect Systems Maintenance & Review Evaluate Results of Solution

Limitations:
1.

Each stage is considered as distinct which may not be in reality.

2. This model involves freezing of requirements for hardware. However in large projects the hardware technology may become obsolete. 3. Involves large documentation and time consuming 4. Users cant easily review the intermediate product and evaluate whether it meets their requirements.

Prototype Model
In this approach a prototype is developed, instead of developing the complete system. Users are encouraged to try the prototype and provide feedback. Iterations are done until the final system is developed. Prototyping is done in situations where identification of requirements is difficult and requirements may change during the development process.

Prototype Model
System Development Initiated

Investigate & Analyze problem to develop workable solution Develop Prototype Put Prototype in operation Refine and Modify Prototype Complete System

Prototype Model(Contd.)
Advantages: 1. Users can try the system and provide the constructive feedback during the development process. 2 An operational prototype can be produced in short periods. 3 Prototyping enables early detection of errors and omissions. 4 Higher motivation & positive response from users. Disadvantages: 1. There may be unending refinements desired by users. 2. System documentation is ignored 3. Prototypes are not complete systems and many of the details are not built in the prototype.

Rapid Application Development

Rapid Application Dvelopment( RAD) employs tools, techniques and methodologies to speeded the application development processs. For example Powerbuilder by Sybase, and other tools by IBM, Oracle, etc. are used for RAD. RAD reduces paper-based documentation, automatically generates program source code, and facilitates user participation in the design and development activities. Using RAD entire systems are developed in less than 6 months. RAD is also known as Extreme Programming, Agile Development, Joint Application Development.

Rapid Application Development(Contd.)

Advantages: 1. This approach completes the application in lesser time. 2. Documentation produced a s a by-product of project tasks. 3. RAD involves team work and lots of interaction between users and stakeholders with the system developers.

Disadvantages: 1.This approach puts high pressure on system developers and other project participants. 2. This approach requires system analysts and users to be skilled in RAD system development tools & techniques. 3. RAD requires very high involvement & time of stakeholders and users affecting their routine functions.

Spiral Model

Developed by Boehm, this is the recent approach to System development. This model suggests that the various activities involved in system development should be organized like a spiral. Each cycle of spiral consists of four stages represented by one quadrant each. This approach is suitable for high-risk and large projects.

Spiral Model

Planning

Risk Analysis

User Evaluation

Engineering

System Analysis

System Analysis involves the identification, understanding and examining the system for achieving pre-determined goals/ objectives of the system. The objectives of System Analysis are as: To know how existing system works To identify the users requirements in the new proposed System

System Analysis

System Analysis is the process of collecting and interpreting facts, identifying problems, and using the relevant information to suggest improvements in the system either through modifications in the existing systems or changing the system altogether.

System Analysis leads to Requirement Determination or Software Requirement Specification(SRS)

Software Requirements Specifications

SRS is the starting point of System Development Process. SRS constitutes of three activities Requirement Anticipation Requirement Investigation Requirement Specification

Software Requirements Specifications

SRS leads to details on 1. The basic process 2. The data which is used or produced during the process 3. Various constraints 4. Performance controls

Software Requirements Specifications ( Contd.)

The activities involved in SRS are as: 1. Understand the Process:as The purpose of the business activity, The Steps which and where are these performed; The persons performing them; The frequency, time and user of the resulting information. 2. Identify Data Used and Information Generated : 3. Determining Timing, Frequency and Volume 4. Know Performance Controls

Techniques of SRS
Interview Questionnaire Record Review Observation

Knowledge Management System

Knowledge is the ability of person to understand the situation and act effectively. Competition & Market forces demand that organizations today can be competitive if they manage the knowledge and continuously upgrade as per changing requirements. Knowledge Management is the process of capturing, maintaining and updating continuously the companys expertise both internal as well as external where-ever it resides- in computers, in peoples heads, on paper or thru external sources- and distributing efficiently wherever it can help produce the biggest payoff.

Types of Knowledge Explicit Knowledge data, documents, things written down or stored on computers Tacit Knowledge the how-tos of knowledge, which reside in workers

Knowledge Management System

Knowledge Management Systems involve the tasks of definition, acquisition, construction, storage, delivery and application of the knowledge so as to maintain and improve the competitiveness of the organization..

Levels of Knowledge Management

KMS Architecture
KMS architecture deals with three main functions as : Knowledge Identification Knowledge Generation Knowledge Delivery KMS Knowledge Identification
Definition & Categorization Surveying & Locating Build Knowledge Structure

Knowledge Generation
Processing for Acquisition Manupulating & Modelling Creation of KDB

Knowledge Delivery
Access Control Application Methods Storage & Security

KMS Tools
The tools for KMS are as:
Database management tools -For data management and seeking knowledge thru SQL queries Data Warehousing, Data mart, Data Mining tools Process Modeling and Management tools -For recording standard processes for knowledge use Search Engine tools Document Management tools-like Lotus Notes Web based tools- Internet& Intranet

Strategy and Strategic Moves Strategy: plan to gain advantage over enemy Business strategy is plan to outperform competitors
Done by creating new opportunities, not only beating rivals

Strategic Advantage: Using strategy to maximize company strengths

Why Study Strategic IT?

Technology is no longer an afterthought in forming business strategy, but the actual cause and driver. IT can change the way businesses compete.

Strategic View of Information Systems

Information systems are vital competitive networks. Information systems are a means of organizational renewal. IS are a necessary investment in technologies that help a company adopt strategies and business processes that enable it to reengineer or reinvent itself in order to survive and succeed in todays dynamic business environment.

What is IT?
A bunch of networks and computers OR Hardware plus the software that mediates and manages human knowledge or information

Does IT Matter?
How important is IT to GE? Business imperative Lifeblood for productivity 20% return on technology investments and GE invests $2.5 to $3 billion a year

Does IT Matter?
Paul Strassman, former CIO of General Foods, Xerox, Pentagon, and NASA

Information technology today is a knowledge-capital issue.

Look at the business powers most of all Wal-Mart, but also companies like Pfizer or FedEx. Theyre all waging information warfare.

Concluding Remarks
Michael Dell, CEO of Dell Computers Anything in business can be either a sinkhole or a competitive advantage if you do it really, really bad or you do it really, really well.

Strategic Information Systems

Definition: Any kind of information system that uses information technology to help an organization gain a competitive advantage, reduce a competitive disadvantage, or meet other strategic enterprise objectives.

Porters Competitive Forces Model

To survive and succeed, a business must develop and implement strategies to effectively counter the: Rivalry of competitors within its industry Threat of new entrants into an industry and its markets Threat posed by substitute products which might capture market share Bargaining power of customers Bargaining power of suppliers

Competitive Forces and Strategies

Initiative #1: Reduce Costs

Customers want to pay little for service Reduce costs to lower price Automation greatly reduces costs Web can automate customer service

Initiative #2: Raise Barriers to Market Entrants

Less competition is better for company Raise barriers to entrants to lower competition Techniques include obtaining copyrights and patents on inventions, techniques, and services Building unmatchable information systems blocks entrants

Initiative #3: Establish High Switching Costs

Switching costs: incurred when customer stops buying from company and starts buying from another company
Explicit: charge customer for switching Implicit: indirect costs over period of time

High switching costs locks in customers

Initiative #4: Create New Products or Services

Having unique product or service gives competitive advantage First mover: organization that is first to offer a new product or service
Superior brand name, better technology, more experience

Critical mass: body of clients that is large enough to attract other clients

Initiative #4: Create New Products or Services (continued)

EBay created a new service that established it as an industry leader

Initiative #5: Differentiate Products or Services

Product differentiation: persuading customers that product is better than competitors
Achieved through advertising Exemplified by brand name success Promotes brand name Develop new IT features to differentiate product and service

Initiative #5: Differentiate Products or Services (continued)

Google did not offer an original service, but the service has grown superior to other Web search services

Initiative #6: Enhance Products or Services

Enhance existing products or services to increase value to consumer Many products and services have been enhanced by the Web

Initiative #6: Enhance Products or Services (continued)

Dell continues to enhance its service to maintain the competitive advantage of its online order site

Initiative #7: Establish Alliances

Alliance: two companies combining services
Makes product more attractive Reduces costs Provides one-stop shopping

Affiliate program: linking to other companies and rewarding the linker for click-throughs

Initiative #7: Establish Alliances (continued)

Strategic alliances combine services to create synergies

Initiative #8: Lock in Suppliers or Buyers

Accomplished by achieving bargaining power Bargaining power: leverage to influence buyers and suppliers
Achieved by being major competitor or eliminating competitors Uses purchase volume as leverage

Lock in clients by creating high standards

Value Chain Analysis

Input
Process

Output

ADDED VALUE

Value Chain is a series of activities that include inbound logistics, warehouse and storage, production, finished goods storage, outbound logistics, marketing & sales, and customer service. Value Chain Analysis refers to understanding the value chain activities i.e. the activities performed in the transformation process and identify the areas where additional value may be generated at one or more value chain activities. MIS/SIS helps in Value Chain Analysis Process and Value Addition to the Value chain.

Porters Value Chain Model(SIS Framework)

Porters Model has divided organizations activities in two categories: Primary Activities: 1.Inbound Logistics 2.Operations 3.Outbound Logistics 4.Marketing 5.Service Support Activities: 1. Administration 2. Human Resources 3. Technology 4. Procurement Process

Porters Value Chain Model

Porters Value Chain Model

This model can be used to design MIS can be used to gain competitive advantage by identifying specific, critical leverage points in the Value Chain activities.

MIS & BPR

IT facilitates and enables Business Process Reengineering

Interneterprise Information Systems

Definition: Information systems implemented on an extranet among a company and its suppliers, customers, subcontractors, and competitors with whom it has formed alliances. E.g. CISCO

Virtual Company

Customer-focused Organization A business that: can anticipate customers future needs. responds to customer concerns. provides top-quality customer service.

MIS in Customer Focused Business

Knowledge-Creating Companies
Consistently creating new business knowledge, disseminating it widely throughout the company, and quickly building the new knowledge into their products and services.

MIS RISKS
The Security Issues that emerge from MISs are as: 1. Secrecy 2. Privacy 3. Confidentiality 4. Destruction 5. Theft of Information 6. Computer Wastages

The Reasons that affect the security threats to MIS are as: Destruction Deletion Bugs Infection Theft Corruption

Sources of MIS Threats

Threats to MIS can be caused by different sources and these are Failure of System: Hardware Software Network Telecommunication

Sources of MIS Threats

Human Actions: Illegal access Theft User Errors Program changes Natural Calamities Fire Earthquakes Floods & rains

Security Controls
Security Controls that can be used by the organizations to counter the security threats.These may be the combination of below: Access Controls Systems Hardware & Software Controls Fault Tolerant Computer Systems ( Mirroring/ Clustering) Monitoring the Usage/Security Monitors Biometrics Anti Virus Protection tools Firewalls Cryptography Disaster management Plan Employees Conduct & Performance Audit

MIS Security Plan

MIS Security Management system is designed to meet security threats and involves: Identification of threat sources & possibilities of its occurrence. Protecting the Information and MIS from unauthorized access Ensure the privacy of individual & personal information Check the misuse of information and MIS Provide methods and systems to recover from damage and to put the MIS on normal track

How Much Security Is Enough Security?

Two costs to consider Cost of potential damage Cost of implementing preventative measure

Software Procurement
Software can be acquired in different ways. These are 1. Make the Software 2. Buy the Off-the Shelf software 3. Combination of the above 4. Outsourcing 5. ASP ( Application Service Providers)

Buy the Software

The company buys the software developed by vendors in that application area. These are also referred to as off- the -shelf software products. Reasons/ Advantages for this type of procurement: Lower cost of development Faster acquisition Tested product Known Costs Doest not require IT development skills Upgradations available from vendors

Steps in Procurement thru Buy Option:

1. 2. 3. 4. 5. 6.

Review Needs, Requirements, and Costs Negotiate & Acquire the Software Modify or Customize Software Acquire software interfaces Test the Software Monitor and Maintain the Software

Disadvantages of Buy Option: 1. 2. 3. 4. Dependence on Vendor High cost of maintenance Fit with the Companys Requirements Employee learning & Motivation

Make the Software

In this option company performs all the activities of system analysis to system development and maintenance. Reasons / Advantages: 1. 2. 3. 4. Software meets the specific requirements. Customized Changes in the software possible Software acts as core competence Potential for commercialization of the developed software product 5. Higher learning environment in the company

IT & Business Process Life

Business Process
40s-50s
15-20

IT Technology

Customer Purchases
Product

Deal Structure
Fixed Cost Variable costs IT Outsourcing BPO

10-20

60s-70s

10-12

8-10

Application IT Solution

5-8

3-5

80s-90s

00s

Continuous

1-3

Business Outcomes

IS OUTSOURCING DEFINED IS Outsourcing

IDC Defines IS Outsourcing as a long term contractual arrangement in which the service provider takes ownership of and responsibility for managing all or part of a clients IS operations or department based on a service level agreement

Information System Outsourcing services System integration Facility management Contract programming Software support Network maintenance Minicomputer/Mainframe/ Workstation/PC maintenance

TYPES OF SOURCING
Total outsourcing Total insourcing Selective Sourcing/Smart

WHAT TO OUTSOURCE
Non-core, Yet Critical Accounting Supply chain Management HR Administration Claims Administration IS Likelihood to Outsource:Medium -High

Core Business Managing marketing Image/Trademark Canning for patents Find/Sell new products Manufacture products IS Likelihood to Outsource : LOW

Non-Core, Non Critical Security Cafeteria Laundry Likelihood to OutsourceHigh

DRIVERS FOR OUTSOURCING

Outsourcing IT leads to low running costs Outsourcing IT has low setup cost. Outsourcing IT has low set-up time Shortage of skilled manpower Expertise of outsourcer Organisation needs to focus on core function rather that IT activities Low Down time Improved output/performance of Inf. System Better service to users High cost of maintaining and updating IT employees Availability of network bandwidth and technology

Application Service Providers

An ASP provides contract-based service to supply and host software and computing applications, data storage, reporting tools, upgrades, and technical support to its clients using a web platform via the Internet or an extranet.

Applications are generally leased on need basis with flexible monthly fixed rates ranging anywhere from $ 10 to $ 10,000 per month and variable according to usage.

Advantages:
Faster adoption of the software No hassles in system development & Maintenance Companies can focus on their core functions

Disadvantages:
Dependence on ASP vendors. High Costs Customized application may not be possible Changes in software difficult

System Implementation
Implementation is the process of installing a newly developed MIS at the organizations site. This may involve either installing new system in case there is no earlier system OR installing modified system.. Implementing the MIS means putting the new system into operation.

System Implementation Stages

The various stages in MIS Implementation are as: 1. 2. 3. 4. 5. 6. 7. 8. 9. Planning the Implementation Acquisition of Facilities and Space Planning Acquisition of Hardware & Software User Training & Hiring Data Preparation Installation Testing Changeover User Acceptance

Implementation Planning
It is the blue print of the MIS Implementation and is the detailed plan of implementing the MIS in the organization. The pre-implementation activities as: Identifying MIS team and managing the project team, Scheduling the implementation activities, Control mechanism, etc Gantt Charts and Network diagrams are used to monitor/schedule the implementation activities.

Acquisition of Facilities and Space

Acquisition of facilities as computer room, office, etc. Space planning and Layout of following required as: Computer centres, Printers, Network Cabling People and their movement, No. & Type of exits, Storage areas, Airconditioning, Safety equipments & Measures, etc

Acquisition of Hardware & Software

Hardware & Software procurement is a detailed and exhaustive exercise and involves Requirement Analysis, Procurement mode (Inhouse OR off-the-shelf OR thru ASP) Inviting vendor quotations ( Tender process in public / large contracts) Comparison of Different offerings( Technical & Financial aspects) Negotiations Delivery & Installation Post installation review

User Training & Hiring

User training is very important for the success of MIS implementation. Training of varying nature is to be given to different levels of employees: data entry operators/clerks, supervisors, managers / senior management in the use of MIS. Technical training is given to IT employees for maintenance etc. People with skills not in the organization may be hired, These may be from management as well as technical background in the new set up.

Data Preparation
Data Preparation refers to the activity of converting data that have been earlier in the manual processes into computer form according to the designed structure of MIS. Normally outsourced or made by temporary staff. Once old data turned into MIS system, new data is handled by the new computerized MIS system.

Installation
Installation is the process of physically placing the computer equipment on the site, install & configure the software so as to make it operational. IS manager is generally responsible for the installation, though some of the installation activities are performed by vendors.

Testing
Testing is performed at system construction stage. However testing is performed at implementation with actual data.Testing is performed on individual components of the MIS as well as whole system. Equipment Forms Programs Work procedures Out puts & Reports

Testing

Testing is done from the perspectives of: Accuracy Range of inputs Frequency of inputs Operating conditions reliability

Changeover to New MIS

Chageover is the event of switching to new MIS from the current system. If there is no existing old system, then there is straight-over implementation in one go. However if there is existing system, there are four approaches for changeover: 1.Direct Conversion 2. Phase-in-approach 3. Pilot start-up 4. Parallel start-up

User Acceptance
The stage at which, user takes the final ownership from the vendor and subsequently vendor is not responsible for the problems in the MIS. This is done in the form of user- acceptance document.

System Maintenance

System Maintenance refers to the stage that involves checking, changing, and enhancing the system to make it more useful in achieving user and organizational goals.

System Maintenance
Reasons for Maintenance:
Changes in business processes New requests from stakeholders,customers, users, and managers Bugs or errors in the program Technical and hardware problems Corporate mergers and acquisitions Government regulations Changes in the operating system or hardware on which the application runs.

Types of Maintenance
1. Corrective Maintenance This type of maintenance involves removal of errors in the program that may have creped into the system because of faulty design or wrong assumption. In this processing or performance failures are repaired. 2. Adaptive Maintenance In Adaptive maintenance, program functions are changed to enable the information system to satisfy the information needs of the users. For example Changes in organizations procedures, objectives, goals, policies Change in information needs of managers Change in system controls and security needs.

3. Perfective Maintenance
This maintenance involves adding new programs or modifying the existing programs to enhance the performance of the information system. Reasons for Perfective maintenance may be : Changes in economic and competitive conditions; New technology

Classification of Maintenance
System maintenance can be understood under four categories depending upon the change in the systems. 1. 2. 3. 4. Slipstream Upgrade Patch Release Version

1. Slipstream Upgrade A minor upgrade typically a code adjustment or minor bug fix, which may not be announced. 2. Patch A minor change to correct a problem or make a small enhancement. It is usually an addition to an existing program.

3. Release A Release is a significant change in the program which may involve change in design and documentation. 4. Version A Version involves major changes, usually encompassing new features.