Management Information System

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Management Information System

• MS-07

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Information Technology

• Information Technology applies modern
  technologies to the creation, management and use
  of information. IT includes video recorders,
  CD-ROM, telephones, calculators, and electronic
  cash bills as well as computers.
• Information technology means all computerized and
  auxiliary automated information handling,
  including systems design and analysis, conversion
  of data, computer programming, information
  storage and retrieval, voice, video, data
  communications etc.

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• IT can be used to-
• Perform high speed,high volume,numeric
  computations.
• Provide fast,accurate and inexpensive
  communications within and between organizations.
• Store huge amount of data in easy-to-access way.
• Automate business processes.

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Information Systems

• An Information System (IS) is the system of
  persons, data records and activities that
  process the data and information in a given
  organization, including manual processes or
  automated processes.

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• An Information System can be any organized
  combination of people, hardware, software,
  communications networks, and data resources that
  collects, transforms and disseminates information
  in an organization.

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System ConceptsA Foundation

• A system can be defined as a group of
  interrelated or interacting components forming a
  unified whole.
• System has three basic interacting components or
  functions
• Input
• Processing
• Output
• Two additional components are added
• Feedback and control

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Components of an Information system

• PEOPLE RESOURCESEnd users and IT specialist.
• HARDWARE RESOURCESPhysical devices and
  materials.
• SOFTWARE RESOURCESPrograms and procedures
• DATA RESOURCESProduct descriptions, customer
  records, employee files etc.
• NETWORK RESOURCES-Communication media, network
  access and control software.
• INFORMATION PRODUCTSManagement reports and
  business documents.

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Information system activities

• Input of data resources
• Processing of data into information
• Output of information products
• Information quality
• Storage of data resources
• Control of system performance

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Types of Information Systems

• There are two categories of information systems
• 1.Operations support systems
• 2.Management support systems

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Operations support systems

• Transaction processing systems
• A Transaction Processing System (TPS) is a type
  of information system which collect, store,
  modify, and retrieve the transactions of an
  organization.
• A transaction is an event that generates or
  modifies data that is eventually stored in an
  information system.
• E.g order entry,payroll,shipping records etc.

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• Process control systems-Monitor and Control
  industrial processes.
• E.g a petroleum refinery uses electronic sensors
  linked to computers to continually monitor
  chemical processes and make instant adjustments
  that control the refinery process.

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• Enterprise collaboration systems-
• It enhances team and workgroup communications and
  productivity.
• E.g knowledge workers in the project team may use
  electronic mail to receive electronic messages,
  and videoconferencing to hold electronic meetings
  to coordinate their activities.

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Management support systems

• Decision support systems.
• Executive information systems.
• Management information systems.

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Decision Support System

• Abbreviated as DSS, the term refers to an
  interactive computerized system that gathers and
  presents data from a wide range of sources,
  typically for business purposes. DSS applications
  are systems and subsystems that help people make
  decisions based on data that is culled from a
  wide range of sources.

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• For example A national on-line book seller wants
  to begin selling its products internationally but
  first needs to determine if that will be a wise
  business decision. The vendor can use a DSS to
  gather information from its own resources (using
  a tool such as OLAP) to determine if the company
  has the ability or potential ability to expand
  its business and also from external resources,
  such as industry data, to determine if there is
  indeed a demand to meet. The DSS will collect and
  analyze the data and then present it in a way
  that can be interpreted by humans.

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• DSS Architecture
• The Database
• The database contains information about internal
  data and external data that will contribute to
  the decision making process.

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• The Model Base
• This module contains a set of algorithms that
  makes decisions based on the information in the
  database. This information is then summarized and
  displayed as tables or graphs.
• The Interface
• This is what the user will use to interface with
  the system. This is complimented with an
  interactive help and navigation screen

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Executive Information System

• A software application that presents high level
  information about the performance of the
  organization to senior executives and managers.
• Ways executives (only upper level management) are
  making use of strategic information and
  technology. This term is distinct from Decision
  Support System, which are systems used at all
  levels below the executive level to make
  decisions.

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Management Information System

• The concept of MIS
• Management is the process of getting activities
  completed efficiently and effectively with and
  through other people.
• Management functions
• Planning Organizing Directing
  Controlling

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• Information
• Data are facts and figures that are not
  currently being used in a decision processes and
  usually take the form of historical records that
  are recorded and filed without immediate intent
  to retrieve for decision making.Information
  consists of data that have been retrieved,
  processed or otherwise used for information or
  inference purposes, argument, or as a basis for 
  forecasting or decision making.

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• System can be described simply as a set of
  elements joined together for a common objective.
  A subsystem is part of a larger system. The
  objective of an MIS (Management Information
  System) is to provide information for decision
  making on planning, initiating, organizing, and
  controlling the operations of the subsystems.

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• MIS supports decision making at all levels of the
  organization.
• MIS are made of people, computers, procedures,
  databases, interactive query facilities and so
  on. They are intended to be evolutionary/adaptive
  and easy for people to use.

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Definition of Management information system

• An information collection and analysis system,
  usually computerized, that facilitates access to
  program and participant information. It is
  usually designed and used for administrative
  purposes.
• Planning, development, management and use of
  information technology tools to help people
  perform all tasks related to information
  processing and management.
• An information system that provides information
  to support managerial decision making.

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Other Information Systems

• Work flow system-
• A workflow system is a rule based management
  system that directs,coordinates and monitors
  execution of an interrelated set of tasks
  arranged to form a business process.

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• Enterprise resource planning- Applications used
  by large organizations to manage inventory,
  resources, and business processes across
  departments in the enterprise.

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• Expert systems-
• These are man-machine systems with specialized
  problem-solving expertise. The "expertise"
  consists of knowledge about a particular domain,
  understanding of problems within that domain, and
  "skill" at solving some of these problems.

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Computer aided decision making

• A decision support system , also called computer
  aided decision support system is used when the
  problem is complex and information needed to make
  the best decision is difficult to obtain and use.
• An information system that helps a manager in
  making a decision is called a CADS.
• It is designed with the help of decision
  makers.it aids in decision making but does not
  make any decision.it is used for doing a thorough
  risk analysis of a project.

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Framework for designing MIS

• Strategic Management of a Business-
• There are many methodologies for strategic
  management-
• 1.Strategic planning
• 2.Management control
• 3.Operation control

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Strategic planning

• It is a process of deciding objectives of the
  organization,determining the possible shifts in
  objectives,deciding on the resources used to
  attain these objectives and the policies.

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Management control

• It is the process by which managers assure that
  the resources are obtained and used effectively
  and efficiently to attain the objectives of the
  organizations.

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Operation control

• It is the process of assuming that specific tasks
  are carried out effectively and efficiently.

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Simons framework of decision making

• This framework is divided into three stages-
• Intelligence-this is the stage in which the
  decision maker recognizes that there is a problem
  or opportunity that requires him to make a
  decision.
• Design-the decision maker determines the
  alternatives that are available to him to resolve
  the problem or exploit the opportunity.
• Choice-in this stage,the alternative generated
  in stage-2 is singled out to be pursued.

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Important determinants of MIS design

• According to Zani,the important determinants of
  MIS design are-
• Opportunities and risks
• Company strategy
• Company structure
• Management and decision making process
• Available technology
• Available information sources

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Factors facilitating implementation of MIS

• Involvement of top management in the
  computerization effort,in defining the purpose
  and goals of computers within the organization.
• Selection of an EDP (enterprise development
  program)manager who has the political skill to
  involve managers in choosing application areas.
• A computer staff,which has interdisciplinary
  skills in computers and management.
• A balanced expenditure on hardware and software.

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Organization and Information System two way
relationship

• A system is an assembly of elements arranged in
  logical order to achieve certain objectives.An
  organization is also a system.the organization
  must change as system to stay in tune with the
  goals.
• MIS should be designed viewing the organization
  as a system.MIS design should give due weightage
  to the human side of organization and its
  culture.
• MIS should be designed to give reports to
  decision maker.

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Data, information and knowledge

• Data-data is raw material.e.g
• 1 50,000
• 2 28,000
• Information is processed data.e.g
• Account no Money withdrawn Date
• 1. 50,000 13/2/08
• 2. 28,000 25/2/08

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• Knowledge-
• Knowledge is the awareness and understanding of a
  set of information that help decision-making.

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Characteristics of information

• Accurate
• Complete
• Economical
• Flexibility
• Reliable and verifiable
• Relevant
• Simple
• Timely
• Accessible and secure

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Value and cost of information

• Value of information is measured in terms of
  benefits to the organization.The benefits may be
  tangible or intangible.
• Example of tangible benefit- 5 increase in
  sales is a tangible benefit,which corresponds to
  Rs.50,000.if the cost of information that led to
  this additional profit is Rs.20,000.then the
  value of the information is Rs.30,000.

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• Example of intangible information-
• For instance some kind of information may help
  consumers to connect to a company better.
• The employees may feel respected if more
  information is shared with them.

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Methods used to access value of information

• 1.cost-benefit analysis-
• A technique used to compare the various costs
  associated with an investment with the benefits
  that it proposes to return.
• Identification of IT cost
• Direct cost-Hardware cost,software cost,training
  cost,maintenance cost etc.
• Indirect cost-management cost,employee
  training,employee time etc.
• Identification of benefits-
• Reduced manufacturing cost.,Additional new
  customers,better quality control,reduced
  inventory cost,increased sales etc.

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• Example Cost Benefit Analysis
• As the Production Manager, you are proposing the
  purchase of a 1 Million stamping machine to
  increase output. Before you can present the
  proposal to the Vice President, you know you need
  some facts to support your suggestion, so you
  decide to run the numbers and do a cost benefit
  analysis. You itemize the benefits. With the new
  machine, you can produce 100 more units per hour.
  The three workers currently doing the stamping by
  hand can be replaced. The units will be higher
  quality because they will be more uniform. You
  are convinced these outweigh the costs.
• There is a cost to purchase the machine and it
  will consume some electricity

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• 2.Return on investment
• This method tries to quantify additional profits
  that are generated as a percentage of the
  investment in information system technology.

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• 3.earning growth-
• 4.market share-
• 5.customer awareness and satisfaction.

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Factors contributing to the success of MIS

• The project scope should be stable and
  well-understood.
• Support from management.
• The objectives of MIS must must be in tune with
  the objectives of the organization.
• The system should be user friendly.
• MIS should be developed with clear objective that
  must be documented before the development
  commences.
• Data is important aspect of MIS.data policy such
  as what data will be included,who will provide
  the data,who will validate the data etc should be
  clearly defined.
• The concerned people should be adequately
  trained.

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Systems view

• A system is an organized or complex whole.it is
  entityconceptual or physical which consists of
  interdependent parts or components.
• A system is made up of sub-systems,which may be
  composed of further sub-systems.

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Role of MIS at various management levels

• Management can be seen as structured into three
  hierarchical levels namely ,top level,middle
  level and bottom level or strategic,tactical and
  operational levels.
• Top management establishes the policies,plans,and
  objectives of the company as well as budget
  framework under which the various departments
  will work.

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• Middle-level managers are responsible for
  carrying out the goals set by top management.
  They do so by setting goals for their departments
  and other business units. Middle managers can
  motivate and assist first-line managers to
  achieve business objectives. Middle managers may
  also communicate upward, by offering suggestions
  and feedback to top managers. Because middle
  managers are more involved in the day-to-day
  workings of a company, they may provide valuable
  information to top managers to help improve the
  organization's bottom line.

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• The bottom level or the operational level has the
  responsibility of producing goods and services to
  meet the revenue ,profit and other goals which in
  turn will enable the organization achieve its
  objectives.
• The hierarchical view of management is important
  for two reasons
• 1.Information needs tend to be different at
  different levels of management and
• 2.The amount of time devoted to any given
  function varies considerably with the level.

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• In the context of MIS,management can be defined
  as the process of
• Selection of objectives
• Allocation of resources,
• Determining operational plans and schedules
• Keeping control of progress and
• Evaluate through feedback.

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MIS as a technique for making programmed decisions

• MIS is used as a technique for making programmed
  decisions as the decision can be made using the
  rule,procedure or quantitative method.
• E.g an organization may have a fixed re-order
  point and fixed re-order quantity irrespective of
  the demand.

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Decisions Assisting Information Systems

• If the problem is complex, the solution cannot be
  arrived at using a set of rules or procedures.
• The decision support system that assists decision
  maker in making a non-programmed decision is
  referred to as decision support system.decision
  support system system presents various views of
  the data.
• Views reports may present detail according to
  the needs of the user.
• One user may prefer graph and another may prefer
  data in tabular form.

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System vulnerability and abuse

• There are many threats to information systems
  such as hardware failure, software failure, user
  errors, program changes,theft of data,equipment
  and other problems.
• System vulnerabilities differ from person to
  person
• User-identification,authentication and subtle
  software modification.
• Programmerdisable protective features,reveals
  protective measures.
• Maintenance staff-disable hardware
  devices,user-stand-alone utilities.
• Operator-doesnt notify supervisor,reveals
  protective measures.

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Controls to protect system vulnerability

• Input / output controls-it deals with entry of
  people who use the system and the data that is
  entered into the system.
• People identification systems as finger print
  identifier,retina,scanner voice entry and
  magnetic card is also used.
• Use of well chosen passwords.
• For data entry,the data forms may be used to
  validate data before entry, identifying the
  person and date of data entry.
• Data Base management system provides data
  abstraction.

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Auditing information systems

• Information system must be audited and reviewed
  to make sure that it is operating and being used
  as intended.
• The system is audited for its performance, use,
  cost, benefit and other design criteria such as
  planned activity for which resources are
  allocated and time frame is set.

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Auditing report must cover following factors

• Objective-Is in tune with organizational goal.
• Hardware/software/network/dbms-are these being
  used as intended.
• Staff-Is staff sufficient and sufficiently
  trained.
• Safety-Are enough controls present to ensure
  safety.
• Cost benefit-Is cost as intended.

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Ethics In Information Systems

• Ethics-derived from a Greek word ethos which
  means way of living.
• Definition-This is a branch of philosophy which
  is concerned with human conduct,more specifically
  the behavior of individuals in society.
• what is morally right or wrong.

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Code of ethics for computing machinery

• Access computing and communication resources only
  when authorized.
• Honor contracts, agreements and assigned
  responsibilities.
• Accept and provide appropriate professional
  review.
• Strive to achieve the highest quality.

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Information rights,privacy and freedom in an
information society

• Privacy deals with the collection and use or
  misuse of data.
• The employer can use information technology to
  monitor the employees.the time spent by an
  employee on computer can be recorded along with
  his activities.the employer can use this data to
  estimate number of breaks an employee takes.he
  can also reveal company data to monitor employees
  emails.

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Limiting logical access to computer systems

• Change your password frequently and choose
  password carefully.
• Data can be encrypted.
• Use of biometrics.(method to code and scramble
  data).
• Upgrade software.
• Guest logins should be avoided.
• Install strong user authentication and encryption
  capabilities.
• Remote logins also create problems.

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Disaster recovery plan

• Hardware backup-hardware backup can be done by
  by-
• Hot site-A hot site is a duplicate of the
  original site of the organization, with full
  computer systems as well as near-complete backups
  of user data.
• Cold site-provides the infrastructure but not
  processing power and data.
• Software backup-strategy which is used is make
  copies of software and keep them safely.

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Computer virus and prevention

• A computer virus is a computer program that can
  copy itself and infect a computer without
  permission or knowledge of the user.
• Some viruses are programmed to damage the
  computer by damaging programs, deleting files, or
  reformatting the hard disk

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Types of viruses

• Boot Sector Viruses Boot Sector Viruses are an
  older type of virus and not so common. They used
  to infect a computer's startup program so that
  the virus would become active as soon as the
  computer started up.

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• File Viruses File viruses attach themselves to
  other software. When the software is run, the
  virus first loads itself into memory so that in
  can further infect other files or begin damaging
  the computer

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• Worms Worms duplicate themselves and use
  communications such as email to spread.
• Trojan Horses Trojan Horses are programs that
  claim to perform a particular function but in
  fact do something different. E.g. they could
  infect your computer with a virus or erase your
  files.

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Information systems and functional area
applications

• Knowledge is considered to be supreme source for
  all other activities.well appreciated strategic
  decisions are the outcome of good
  knowledge.acquirement of knowledge at one point
  of time and continuous updating keeps a person
  fit for business survival in the competitive
  environment.
• Information enriches the knowledge.
• Role of information and knowledge in managerial
  decision making is inevitable in nature.
• In managerial functions ,knowledge integrates the
  activities of different departments and enable
  the decision maker to take right decisions.

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Information from data

• Information is defined as the processed form of
  data.the raw data collected about any phenomenon
  may be used to generate the required information.
• When processing the data,following things should
  be considered-
• Data should be accurate.
• Data should be relevant.
• Data should be time sensitive.

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Generation of information from data

• The different stages in the processing of
  information are-
• Summarizing-It means bringing the data into
  required form of tables or some other format so
  that the further treatment of data is possible
  because the data collected may be in the form of
  questionnaire, schedules, note or in some other
  format.
• E.g the sales data obtained from different sales
  centers may be required to classify on the basis
  of various parameters like urban, sub-urban,
  rural etc.to study in detail about the factors
  affecting the sales.

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Data Trimming

• Data trimming is the condensation or
  consolidation of statistical data for retrieving
  information.
• E.g production department in a manufacturing
  company has the data on the no.of units demanded
  in a year, the no. of times ordered, the quantity
  supplied etc about its product.
• The company may be interested to find out various
  parameters associated with the production like
  the optimum quantity to be produced,the lead time
  for the order etc.

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Presentation

• The process of depicting the statistical results
  in the desired form like charts, diagrams etc is
  called presentation.
• The presented results will reveal the information
  in a better way.

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Indexing

• Indexing or codification of the results is
  required for further processing of information
  like storage and retrieval,modification,
  converting into electronic mode for communication
  etc.
• The codification is the base for presenting the
  information on web pages.

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Types of information

• Information retrieved from raw data can be
  classified in different categories-
• Facts-these are accurate information.
• Assumptions-the information generated without
  any certainty is called assumption.
• Collateral and fragmentary information-this type
  of information cannot be directly retrieved.this
  information need to be investigated for
  acceptance.
• Irrelevant-that has no relevance.

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Information in managerial functions

• Operational level-In this level organization
  gets in contact with public for
  information,procurement and dissemination all
  types of inputs available from various sources
  are gathered at this level.
• The routine office work like maintaining inward
  register, maintaining of public relations,
  understanding the external requirement etc. are
  done at this level.

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• At middle level of management, the input obtained
  from internal and external sources of information
  will be processed for strategic decisions.
• This level consist of middle level managers.
• The role of middle level decision process is
  considered to be very crucial because the output
  received from this level is taken as input for
  tactical decisions.

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• Top management-
• The highest level in this hierarchy is the
  tactical decisions.this is the decision making
  group which should ultimately supported by the
  online information.

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Information systems in management

• A collection of components that work together to
  realize some objective forms a system.
• There are three main components of every system,
  namely input, processing and output.
• In business information system, it receives input
  as data and instructions, process them under the
  defined instructions and gives output.
• The inputs to the system may be from a data file,
  internet source, or manual feed.
• The system further interacts with humans or
  computers to support the operational and
  managerial decisions making of an organization.

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The managers should be aware of the information
systems because

• The amount to be spent on the information system
  should have a positive effect on profit making.
• It increases business awareness, promotes
  business re-engineering and enable total quality
  management to the managers.
• If the managers are not acquainted with the
  information systems, significant amount will be
  wasted on automating ineffective process.

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Implications about the system development and
management on information

• Information system will contribute substantially
  to the managers in their effective decision
  making to achieve the organizational objectives.
• It will enrich the org.to meet the competitive
  challenges.
• Adequate knowledge from the past experience will
  help the managers to integrate the business
  strategy.
• It will provide sufficient awareness about the
  external components.
• It is required to take right decisions in right
  time.

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System developmenta strategic planning process

• Development of an information system requires
  adequate planning.
• System development involves cost, component,
  feasibility etc.
• The planning process consists of strategic
  planning which provides general guidance on
  long-term objectives and operating plans deals
  with short term objectives.

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Strategic planning for the system development

• The strategic planning for the system development
  involves the following steps-
• 1.Initiation-begins when the need or opportunity
  is identified.concept planning is created.
• 2.System concept development-defines the scope
  and boundary of the system.it includes cost
  benefit analysis,risk management plan,
  feasibility study etc.
• Planning-develops a project management plan,
  provides a basis for acquiring the resources
  needed to achieve a solution.

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• Requirement analysis-analysis user needs and
  develop user requirements.create a detailed
  functional requirement.
• Design-transform detailed requirements into
  complete, system design document.
• Development-convert a design into complete
  information system.includes acquiring and
  installing systems environment,creating and
  testing databases, coding etc.

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• Integration and test-demonstrates that the
  developed system conforms to requirements as
  specified in the functional requirement document.
• Implementation-implementation of the system into
  a production environment, resolution of problems
  identified in the integration and test phase.
• Operational maintenance-describes tasks to
  operate and maintain information systems in
  production environment.
• Disposition-describes end of the system
  activities.

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Typical planning process of system development

• Management objectives
• Need for the system
• Planning for system
• Designing the system
• Implementation
• Evaluation

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Programmed and non-programmed decisions

• Programmed decisions are standard decisions which
  always follow the same routine.
• They can be written down into a series of fixed
  steps which anyone can follow.
• The situations in which analytical methods of
  decision making is possible.

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• Non-programmed decisions-these are non standard
  and non-routine.each decision is not quite the
  same as any previous decisions.
• Strategic decisions-these effect the long term
  direction of the business.
• E.g whether to take over company A or B.
• Tactical decisions-these are medium term
  decisions about how to implement strategy.
• E.g what kind of marketing to have, how many
  extra staff to recruit.

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• Operational decisions-these are short term
  decisions also called administrative decisions
  about how to implement the tactics.
• E.g which firm to use to make deliveries.

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Levels of decision making

• Strategic decision-owners and board of
  directors.
• Tactical decisions-managers
• Operational decisions-most employees.

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Environmental and competitive information systems

• The information systems developed for business
  purposes should take into account all the
  conditions which effect the business
  transactions.
• The two major factors responsible for the
  business changes are-
• 1.Environmental conditions(local or global)
• 2.Comparative factors.
• For e.g for production department the assignment
  of the jobs to machines or machines to operators
  in production environment is important.

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Content of Information

• If the organization is goal oriented the analyst
  must be clear as to what information exactly need
  to be collected , stored and analyzed.
• Only that information need to be collected which
  has decision making contribution.
• The information collected and processed must be
  consistent with the level of the organization to
  which it is presented.

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Information systems in functional areas and
decision making

• Marketing-Marketing is the management process
  whereby all the resources of organization are
  utilized to provide products and services to the
  selected customer group.
• As per the American Marketing Association
  marketing is defined as the process of planning
  and executing the conception, pricing, promotion
  and distribution of goods and services to the
  ultimate customer.

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Functions of marketing

• Forecasting and sales planning
• Market research
• Advertising
• Operation and control of information required for
  market

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Marketing Information System

• The information management provides output to
  marketing activities.
• To fulfill the objectives of marketing, periodic
  tasks pertaining to collection of data, analysis
  and presentation in the form of required reports
  need to be performed.
• Definition-The integrated approach, comprising
  the data input, generation of marketing
  information and supply of output in the required
  format is called marketing information system.

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• Marketing information system consists of
  following sub-systems-
• Marketing research-
• Inputs-
• Prices of products and sales figures
• Industrial infrastructure, marketing production
  strength and weakness.
• Industrial advertising drive and impact
• Advertising budget and actual spending
• Sales performance analysis of various brands

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• Output-
• Reports on industry wide sales performance.
• Review of marketing strategy,advertising and
  pricing policies.
• Market share of the company

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• Marketing planning-
• Inputs-summarized data from market research.
• Outputs-
• Review of sales forecast.
• Product mix strategic reports.
• Market mix strategic reports.

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• Sales analysis-
• Inputs-
• Sales data by region/ product/ personnel in the
  terms of quantity and value.
• Outputs-
• Sales reports region/ product/ personnel.

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• Marketing control-
• Inputs-sales data of various products of a
  company.
• Marketing expense data.
• Summarized output of sales analysis consisting of
  Sales performance data.
• Sales transaction data.
• Outputs-
• Variance analysis
• Age analysis
• Tactical reports on desirable and undesirable
  trends.

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Advantage Of Information Systems To Marketing

• Data available Tools employed Output
• Sales forecasting methods expected
  production
• Advertisement optimization methods profit
  maximization
• Territorial data methods of market penetr market
  expansion
• Consumer pref brand switching tools market
  segment

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Operation Management

• It deals with the operational activities like
  production, project scheduling etc.
• The important objectives of operation management
  are-
• Inventory management
• Project scheduling
• Transportation cost minimization
• Assignment jobs
• Sequencing the jobs
• Queuing

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• Inventory management-
• Inventory management deals with the-
• Managing your stocks on quantity and value basis
• Plan, enter and check any goods movement.
• Carry out physical inventory.

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Important activities to be carried out for better
control over inventory

• Managing stocks by quantity-The user can
  directly obtain an overview of the current stocks
  of any material.
• For any material, not only the stocks in the
  warehouse are shown, but also the stocks ordered
  but not yet delivered, reserved for production
  for the customer, and the stocks in quality
  inspection can be monitored.

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• Managing stocks by value-
• Stocks are managed not only on quantity basis but
  also by value.
• The stock value for inventory management
• The account assignment for cost accounting

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• Planning,entry and proof of goods movement
• External movements(Goods receipt from external
  procurement,goods issued for sales orders) and
  internal movements (goods receipt from
  production, withdrawal of material for internal
  purposes, stock transfer etc)
• Physical inventory.
• Invoice verification.
• Warehouse management.

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Financial Management

• Financial accounting deals with collection,
  recording, and evaluation of financial data.
• Accounting is considered as an information system
  because it has inputs of financial data,
  processing by evaluation and outputs through
  financial reports.

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The importance of financial system for different
users in managerial area

• Nature of information for management-
• Cost planning and cost control of
  operations,profitability of the firm,strategic
  and tactical decisions.
• Nature of information for shareholders and
  investors-
• Profitability of the firm,soundness of the
  investment,growth prospectus of the firm.

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• Nature of information for creditors-
• Liquidity of the firm,profitability and financial
  soundness.
• Nature of information for employees-
• Statement of salaries, wages and bonus.
• Nature of information for government-managing
  the industrial economy of country,collection of
  sales, excise and other taxes.
• Nature of information for consumers and public-
• Financial growth of the firm, social role of the
  firm in different sectors.

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• Financial information system must be classified
  into -
• Financial accounting system-to provide
  information to government, investors and other
  parties in the form of reports.
• Management accounting system-to provide reports
  to mangers for strategic and tactical decisions.
• Cost accounting system-to provide information
  about cost planning and control operations to the
  managers.

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The objectives of implementing financial
accounting systems

• Maintaining account books
• Preparation of general ledger.
• Generating accounts receivable and accounts
  payable statements.
• Generating profit and loss account and balance
  sheet.
• Generating updated financial data for other
  systems.

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Inputs to the system

• Cash vouchers
• Bank vouchers
• Sale vouchers
• Purchase vouchers
• Journal vouchers

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Output from the system

• Account books like cash books,bank book and sale
  book etc.
• Trial balance
• Trading account
• Profit and loss account
• Balance sheet
• Accounts receivable statement
• Account payable statement

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Human resource management

• Human resource management is a process which
  brings people and organization together so that
  the goals of each can be met.
• HRD management emphasizes an optimum utilization
  of human resources by formulating consistent and
  coherent policies.

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The information system on HRD

• The information system on HRD is restricted to
  personnel management systems whose role is to
  assist-
• Recruitment
• Placement
• Training and development
• Compensation
• maintenance

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Human resource management sub-system

• In human resource management, the personnel
  manager has the responsibility of executing many
  activities pertaining to recruitment,
  training,retirement benefits etc.
• Planning, executing and controlling of these
  activities about the existing employees is
  carried out by personnel manager through the
  information system called personnel information
  system.

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Major sub-systems of HRM

• 1.Recruitment.
• 2.Retention.
• 3.Retirement.

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Recruitment

• Recruitment is a process searching prospective
  applicants and stimulating them to apply for the
  jobs in an organization.
• It is a positive process as it attracts suitable
  applicants to apply for available jobs.

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Process of recruitment

• Finalizing the requirement for various posts.
• Publicity as per requirement.
• Receipt of application
• Initial screening
• Interviews
• Final selection
• Issuing appointment letter

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• Requirement of information system-
• Development of proper information system can give
  the necessary inputs for generation of reports
  for different sub-systems of the HRM.

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Retention

• The act of retaining something.
• Means simply keeping customers and not losing
  them to competitors. Modern companies realize
  that it's far more expensive to find new
  customers than keep existing ones, and so put
  sufficient investment into looking after and
  growing existing accounts.

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Retirement

• Retirement is the point where a person stops
  employment.
• Personnel department keeps track of retiring
  employees and completes all the formalities
  necessary and issues orders for providing
  retirement package through account department.

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Advantages of computerization

• Keeping records
• Listings
• Manpower planning
• Labor turnover analysis
• Career development
• Recruitment
• Training
• Salary administration.
• Job evaluation
• Absence and sickness

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Marketing management sub-system

• Marketing management is a business discipline
  focused on the practical application of marketing
  techniques and the management of a firm's
  marketing resources and activities.
• Marketing managers are often responsible for
  influencing the level, timing, and composition of
  customer demand in a manner that will achieve the
  company's objectives

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Major Marketing Sub-systems

• Sales management
• Sales forecasting
• Advertising and promotion
• Marketing research

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Sales Management

• Sales, or the activity of selling, forms an
  integral part of commercial activity.
• Sales management system provides information to
  help sales mangers and plan and monitor the
  performance of the sales activities.
• It produces sales analysis reports on-
• Product sales trends
• Product profitability on product-by-product basis
• The performance of each sales region
• Sales persons performance

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Sales forecasting

• Estimates of future sales arrived at by past
  experience and market research.Reasons for
  undertaking sales forecasts
• Businesses are forced to look well ahead in order
  to plan their investments, launch new products,
  decide when to close or withdraw products and so
  on. The sales forecasting process is a critical
  one for most businesses. Key decisions that are
  derived from a sales forecast include
• - Employment levels required- Promotional mix-
  Investment in production capacity

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Types of sales forecasting

• Types of forecasting
• There are two major types of forecasting, which
  can be broadly described as macro and micro
• Macro forecasting is concerned with forecasting
  markets in total. This is about determining the
  existing level of Market Demand and considering
  what will happen to market demand in the future.
• Micro forecasting is concerned with detailed unit
  sales forecasts. This is about determining a
  products market share in a particular industry
  and considering what will happen to that market
  share in the future.

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Advertising and promotion information system

• Marketing managers need information to help them
  achieve sales objectives at the lowest possible
  cost for advertising and promotions.
• Sales analysis provided by the sales information
  system can assist the advertising and promotion
  group by highlighting the trends that may
  influence the allocation and promotion and
  advertising expenditure.

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• The market research information system can supply
  the promotion and advertising information system
  with information about market size and about
  characteristics for each product for the market.
• The promotion and advertising information system
  acts as a storehouse of information that helps
  managers build on past experience with promotion
  and advertising.

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Market research

• The activities undertaken by an organization to
  determine the nature of its customers and
  competitors, as well as the demand for its
  products or services along with the features that
  customers prefer in similar products or services.

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Use of computers in marketing management

• Computers help the market research activity
  collect, analyze and maintain information on a
  wide variety of market variables that are subject
  to continuous change.
• This includes information on customers,
  competitors, market economic and demographic
  trends etc.

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• The main benefits derived from computer-based
  marketing information system are-
• Control of market cost.
• Diagnosis for poor sales performance
• Management of fashion goods
• Forecasting
• Promotional planning and long-range corporate
  planning.
• purchasing

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Transaction Processing Systems

• A Transaction Processing System (TPS) is a type
  of information system. TPS collect, store,
  modify, and retrieve the transactions of an
  organization.
• A transaction is an event that generates or
  modifies data that is eventually stored in an
  information system.

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• A transaction processing processing system
  receives data from an input source like a
  customer and or a barcode or any other data
  capturing device.
• The system then performs the transaction, checks
  its validity and report it in the form of summary
  or executive report to the management.
• E.g ATM

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• Batch processing systems-
• In batch processing, a batch of requests is
  stored and then executed all at one time.It can
  take place without a user being present.
• E.g billing of credit card

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Need of information system

• To deal with huge amount of transactions.
• For speed and accuracy.
• Lesser cost.
• To handle simultaneous users at a time.

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Production/Operation Systems

• Production and Operations Management ("POM") is
  concerned about the transformation of production
  and operational inputs into "outputs" that, when
  distributed, meet the needs of customers.
• The job of coordinating and controlling all the
  activities required to make a product.
• A production system is a comprehensive inventory
  and manufacturing control system in which no
  materials are purchased and no products are
  manufactured until they are needed.

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Operation management

• Operations management focuses on carefully
  managing the processes to produce and distribute
  products and services.
• It consists of a range of areas dealing with the
  design, operation, and control of production
  systems and sub-systems.
• Operation management is responsible for the
  translation of resources into products or
  services that customers will buy.
• It is interconnected with the other company
  functions like HR,finance etc.

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Process linked to production or operation manager

• New product development
• Manufacturing and production
• Supply chain and logistics
• Quality management
• Facility management

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Inventory management system

• An inventory management system is an integrated
  package of software and hardware used in
  warehouse operations, and elsewhere, to monitor
  the quantity, location and status of inventory as
  well as the related shipping, receiving, picking
  and put away processes.
• Inventories are maintained to avoid the stock out
  of a product that results in stopping of the
  progress of the production process.

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Types of inventory management systems

• Dependent-dependent demand inventory is defined
  as the inventory of items that are unfinished
  goods such as components etc.Dependent demand
  inventory must be calculated.
• Independent-this is defined as the inventory of
  finished goods.independent demand inventory must
  be forecasted.

140
Dependent demand inventory system

• The dependent demand inventory system is of three
  types-
• Just-In-time manufacturing, or JIT-It is a
  management philosophy aimed at eliminating
  manufacturing wastes by producing only the right
  amount and combination of parts at the right
  place at the right time.

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• MRP systems -MRP can help in planning and
  determining the supply needs and timeliness for
  new manufacturing process.they help in predicting
  delivering times, responding to changes, and have
  better control over the different phases of
  production.
• Hybrid of both.

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Independent demand inventory system

• The independent demand inventory system is of
  following types-
• The economic order quantity models helps in
  finding the optimal level of inventory.
• The production economic order quantity model- It
  helps in determining the optimal size of a
  population lot when sales and production takes
  place simultaneously.

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Computerized maintenance management

• Provides for the planning and control of
  activities associated with maintenance activities
  of a plant or facility.
• Benefits of IT enabled maintenance-
• Reduction in downtime
• Reduction in maintenance cost
• Reduction in breakdowns
• Improved diagnoses of machine problems.
• Better utilization of maintenance resources like
  men, material etc.

144
Financial management systems

• This is the management related to the financial
  structure of the company and therefore to the
  decisions of source and use of the financial
  resources.
• Financial management is used to know profit or
  loss and financial position of the firm(assets
  and liabilities).

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• Financial information system-
• It is managing the financial resources and data
  through computers.
• Main work of financial management-
• Cash management
• Financial modeling
• Advance purchasing

146

• Cash management-It deals with managing the cash,
  investing the temporarily available cash,payment
  of obligations etc.
• Organizations use computers to help collect,
  analyze and report data about cash requirements
  and reserves.

147

• Financial modeling-
• It helps the financial manager or analyst to
  generate fro forma statements that show financial
  impact of different proposals, such as adding a
  new product to current line, or opening a new
  warehouse.
• Through financial modeling many possible outcomes
  can be evaluated in a time that is not possible
  manually.

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• Advanced purchasing-
• Computer based systems monitor the data about
  price and quantity discounts, product quality and
  reliability and speed of delivery.
• On the basis of this data computer programmes can
  calculate vendor ranking and economic purchase
  quantities for individual items and store product
  information that help buyers evaluate vendor
  performance and negotiate favorable contracts
  with suppliers.

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Functions of financial systems

• It ensures that all the business transactions are
  recorded in proper books of account.
• Planning and controlling all expenditure.
• Controlling the receipt and payment of cheques.
• Safeguarding the assets of business in respect of
  plant and machinery, stocks, debtors and cash.
• Preparation of periodic reports for performance,
  results etc.

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Integrated applications

• Integration-Integration means combination.
• In computer terminology, Integration is a broad
  term for any software that serves to join two
  separate and usually already existing
  applications.
• Integrated software applications for business
  gives ability to integrate the diverse
  information sources pertaining to your business
  into single framework.

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ERP

• Applications used by large organizations to
  manage inventory, resources, and business
  processes across departments in the enterprise
• Software used by companies to plan and manage the
  basic commercial functions of their business,
  such as budgeting, accounting, human resources,
  material flows, etc

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CRM

• The strategies, processes, people and
  technologies used by companies to successfully
  attract and retain customers for maximum
  corporate growth and profit.
• It entails all the aspects of interaction a
  company has with its customers.

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SCM

• Supply Chain Management is the management of the
  entire value-added chain, from the supplier to
  manufacturer right through to the retailer and
  the final customer.
• The management of a supply chain of goods as a
  process from supplier of raw materials or
  components to the manufacturer, to the
  distributor to the wholesale buyer to the end
  consumer.

154
BPR

• The process of radically changing or
  re-engineering a process. BPR is used when
  businesses are out of time, ie, if they do not do
  something they will be out-of -business or have
  huge financial problems, or when people perform
  processes so differently that there is no one
  clear process.
• Its aim is to improve performance and utilize the
  resources in an effective way.

155
Advantages and business utility

• Integration helps in business growth.
• It helps in faster decision making.
• Increases efficiency.
• It enables the businesses to get the information
  in real-time.

156

• A typical business solution is an integration of
  ERP,BPR,SCM and CRM.
• While ERP can take care of functions like
  accounts ,production planning, payroll and
  marketing etc.
• BPR can be used simultaneously to cut down the
  non value-added business process and paperwork.
• These systems are enablers of change in the
  business.
• With the help of these systems business can
  compete better.
• These systems if combined with web will help to
  reach customers most cost effectively.

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Business software solutions from SAP

• SAP is the world leader in business software
  solutions, with industry specific products for
  every aspect of operations.
• Its solutions are build on such technologies that
  it will integrate with any system.
• It enables to preserve the previous investment
  and do not have to change while migrating to SAP.

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SAP business solutions

• SAP solutions are installed at more than 60,000
  customer locations in 120 countries.
• Nearly two-thirds of SAP customers have annual
  revenues of 500 million or less.
• Developed and supported by 28,700 professionals.
• 19,000 organizations worldwide run SAP software
  solutions.

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Business software solutions from People Soft

• People Soft offers solutions that are ideally
  suited from company wide functions such as human
  resources, finance, marketing etc.
• It works on pure internet architecture that makes
  integration easier.
• People Soft solutions are available fro many
  industries like financial, government, customer
  relationship management,SCM etc.

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Building information systems

• Information system is a set of people
  ,procedures, and resources that collects,
  transforms and distributes information in an
  organization.
• Four kinds of organizational changes are enabled
  by information systems.These are
• Automation, rationalization, re-engineering and
  paradigm shift.

161
Computer based information system and its
classification

• A computer based information system uses the
  resources of people,hardware and software to
  perform input, processing, output, storage and
  control activities that convert data resources
  into information products.
• Three basic interacting components of a system-
• Input
• Processing
• output

162

• There are two additional components of a
  system.these are-
• Feedback and control.
• Feedback is data about the performance of a
  system.
• Control involves monitoring and evaluating
  feedback to determine whether a system is moving
  forward the achievement of its goal.

163
Major concepts of information systems

• People, hardware, software and data are four
  basic resources of information systems.
• People resources include end users and
  specialist,hardware resources consists of
  machines and media, software resources includes
  programs and procedures, data resources can
  include data, model, and knowledge bases.
• Data resources are transformed by information
  processing activities into variety of information
  products for end users.
• Information processing consists of input,
  processing output, storage and control
  activities.

164
Types of information systems

• Office automation systems-
• A computer-based information system that
  collects, processes, stores and transmits
  electronic messages, documents and other forms of
  office.
• E.g spreadsheets
• Text and image processing systems
• Presentation packages

165

• Communication systems-
• Electronic communications systems help people
  work together by exchanging or sharing
  information in many different forms.
• E.g Teleconferencing-
• Interactive electronic communication between two
  or more people at two or more sites, which make
  use of voice, video, and/or data transmission.

166

• Messaging systems-
• E.g email, voice mail, fax etc.