ACS-1803 Introduction to Information Systems

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ACS-1803Introduction to Information Systems

• Instructor Kerry Augustine

Management Information Systems Frameworks Part
1 Lecture Outline 5
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Learning Objectives

1. Describe the characteristics that differentiate
   the operational, managerial, and executive levels
   of an organization
2. Explain the characteristics of the three
   information systems designed to support each
   unique level of an organization Transaction
   Processing Systems (TPS), Management Information
   Systems (MIS), and Executive Information Systems
   (EIS)

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The Nature of Managerial Work
Management   - the process of directing tasks
and directing resources to achieve
organizational goals   - management functions
planning, organizing, directing, motivating,
controlling...  
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The Nature of Managerial Work

• Planning
• Planning at different levels
• Long-term mission and vision
• Strategic goals
• Tactical objectives
• Most important planning activities
• Scheduling
• Budgeting
• Resource allocation

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The Nature of Managerial Work
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The Nature of Managerial Work

• Control
• Managers control activities by comparing plans to
  results.

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The Nature of Managerial Work

• Decision Making
• Both planning and control call for decision
  making
• The higher the level of management
• The less routine the managers activities
• The more open the options
• The more decision-making involved

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The Nature of Managerial Work

• Management by Exception
• Managers review only exceptions from expected
  results that are of a certain size or type to
  save time.

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The Organizational Pyramid
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The Organizational Pyramid

• Senior (Executive) Managers
•  
• - make long-term decisions about products /
  services to produce control direction
•  
•  
• Middle Managers
•  
• they carry out programs and plans of senior
  managers control resources
• budgeting, monthly scheduling, personnel plans

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The Organizational Pyramid

• Operational Managers
•  
• monitor firm's daily activities control
  activity
• daily scheduling, inventory handling.
•  
• Managers need to make decisions, often under
  uncertainty each level of management has
  different information needs.

• there is often a need for efficiency and
  effectiveness
• - efficiency doing things right with minimum
  input
• effectiveness doing right things, to satisfy
  main org. goal
• killing mosquito with sledge hammer -
  effective, but not efficient

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The Organizational Pyramid
Executive Level Strategic planning and
responses to strategic issues occur here.
Executive decisions are usually unstructured and
are made using consolidated internal and external
information
Managerial Level Monitoring and
controlling of operational activities and
executive information support occur here.
Managerial decisions are usually semistructured
and are made using procedures and ad hoc tools
Operational Level Day-to-day business
processes and interactions with customers occur
here. Operational decisions are usually
structured and are made using established
policies and procedures
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New Realities in Business

• more organizations are becoming
  information-based
• more network-based, rather than hierarchical
  organizations
• people drawn into process teams to accomplish
  projects
• companies are beginning to pay more attention to
  customers and their preferences
• instead of mass production, we have more
  customization

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New Realities in Business

• - Information technology (hardware and
  application software) makes customization
  possible on a larger scale
• customer service is more critical
• innovative approaches to competition based on
  increasing IT capability
• - world-wide communication enable businesses to
  operate in global markets programmers in India
  work with project leaders in USA on large
  software development projects

• business process re-engineering
• radical redesign of how businesses carry out
  certain activities
• - IT is a critical factor in changing business
  processes

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A View of the Future

• more organizations will function as networks of
  specialists
• what constitutes "work" will require more
  high-ordered thinking and constant learning, and
  less of a "9 to 5 mentality
• - especially needed will be the capacity for
  critical thinking and innovation will produce
  critical and innovative information systems

- more and more organizations are becoming
information-based - e.g., insurance, banking -
not as much factory work   - information
technology is playing a much more influential
(central) role in business
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Information Systems Literacy
- the main way in which computers serve business
is through specifically designed computer-based
information systems which address the
information needs of different areas of
business - examples of information systems -
inventory control system in a warehouse -
airline reservation system - payroll system -
be SURE to have a good intuitive appreciation of
what Is an information system for a business
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Management Information Systems (MIS)

• Single set of hardware, software, databases,
  telecommunications, people, and procedures
• That are configured to collect, manipulate,
  store, and process data into information
• Technology infrastructure
• Includes all hardware, software, databases,
  telecommunications, people, and procedures
• Configured to collect, manipulate, store, and
  process data into information

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Management Information Systems (continued)
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Components of an Information-based System

• Application components
• - outer menu screens, input screens query
  screens, reports
• - inner data files (on disk),
• - programs (data-gtinformation)
•  
• - application components are most directly
  related to the business situation that the system
  supports

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Components of an Information-based System

• The Information System and the Database
• The information system needs raw data which is
  stored on disk as a relational database
• This database is managed by dbms software
• The system calls the dbms (behind the scenes) and
  the dbms extracts data from the database
• Programs which are part of the information system
  then transform the raw data to useful information

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The Database System and MIS

• The combination of the database, the DBMS, and
  the application programs that access the database
  is referred to as a database system.
• The database system coupled with a set of
  hardware, software, telecommunications, people,
  and procedures makes up a management information
  system (MIS).

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Components of an Information-based System

• B. Technical components
• - hardware, system software, telecommunication
  technology
• - these "house" the application components
•   
• C. Organizational components
• who does what where and how with this system, in
  the organization?
• e.g., when an order is phoned in to a warehouse,
  who does what

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Levels of the Organization
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Basic Systems Model
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Who, What, Why Organizational Level
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A Framework for Information Systems
- different organizational levels require
different kinds of information system support
  Operational Systems (TPS)  - collect,
validate, and record transactional data what
does this mean??   e.g., order is accepted by a
warehouse (on credit)   - record data about what
was ordered (order entry) - adjust inventory
level - produce packing slip and shipping
label - generate an invoice to be sent to
customer
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A Framework for Information Systems
Characteristics of Operational Systems   -
repetitiveness - predictability - emphasis on
past - very detailed data - accuracy of data
input is very high (checking) - data come
entirely from internal sources - format of data
input and information output is highly
structured Apply the above to a familiar
situation   Operational systems are often used by
clerical workers and low level management
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System Description Transaction Processing Systems
TPSs are a special class of information system
designed to process business events and
transactions

• Architecture Components
• Source Documents these contain the event or
  transaction information to be processed by system
• Data Entry Methods
• Manual a person entering a source document by
  hand
• Semiautomated using a capture device to enter
  the source document (e.g. a barcode scanner)
• Fully Automated no human intervention, one
  computer talks or feeds another computer (e.g.
  automatic orders from inventory systems)
• Processing transactions can be either
• Online processed individually in real-time
• Batch grouped and processed together at a later
  time

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System Example Payroll System (TPS)
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System Architecture Transaction Processing System
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Who, What, Why Managerial Level
Tactical /
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A Framework for Information Systems
Tactical Systems (MIS, MRS)  - in operational
systems, transaction data are captured and stored
(in a database) - here, transaction data are
summarized, aggregated, and analyzed
for additional insight for middle managers   -
generate a variety of reports - summary
reports totals, averages, key data - total
regular and overtime hours worked for each plant
for the week, by job classification what
resource will this info. help to control?
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A Framework for Information Systems
- list of weekly sales , by salesperson, by
product and by sales region such information
would be difficult to produce without a
computer   - exception reports warn managers
when results from a particular operation exceed
or do not meet an organizational standard   -
list of all plants that have logged more
overtime hours than expected for the week   -
list of all sales personnel whose sales fall in
the top and bottom 10 of the organization
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A Framework for Information Systems

• ad hoc reports "spur-of-the-moment" unplanned
• needed by manager to solve a unique problem
• a list of the total number of employees absent
  during the week, arranged by plant and by job
  title, along with the hours or days missed
• - if an exception report has shown high overtime
  earnings at some plants, then a manager might ask
  for a report showing the production record of
  each plant for the week to help investigate why
  there was an overtime problem.

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A Framework for Information Systems

• - may ask for ad hoc reports / queries to
  investigate if there may be a relationship
  between family income and credit difficulty or
  between age and credit difficulty extra
  insight
• periodic nature info. from such systems is
  sometimes produced periodically e.g., a branch
  credit manager may receive a weekly
  report showing the total dollar amount of
  accounts
• gt 60 days overdue
• gt 90 days overdue
• - in hands of collection agency

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A Framework for Information Systems
- can use data from other branches or from
previous periods for comparison - is situation
normal or does situation warrant special
management actions?   - may produce unexpected
findings - people in certain types of
positions with certain types of employers have
more credit difficulty   e.g., oil industry is
laying off power engineers   - look at how many
such people are our customers - how can we
assist their credit difficulties?
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A Framework for Information Systems
 - information from such systems is often
comparative rather than just descriptive   -
e.g., compare actual bad debts with standard   -
output from such systems is more flexible a
manager can choose what query (on the screen) he
/she wants and in what format  
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A Framework for Information Systems
- some of the information produced by such
systems come not from internal, but external
sources (on-line subscriptions?)   - compare
overdue account information of our company with
that of the entire industry   Tactical
information systems differ from operational
information systems in that their purpose is not
to support the execution of operational tasks,
but to help the manager control these
operations   can you give your own example
and explain it clearly enough?
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A Framework for Information Systems

• Tactical information systems differ from
  operational information systems in the
• - the amount of detail produced as output
• the comparative nature of the information
• the rigidity of the structure of the information
• regularity with which information is produced
  (e.g. ad hoc)

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A Framework for Information Systems
Where are most of the raw data used for tactical
systems usually captured?   Sometimes,
operational systems are "extended" with tactical
system components things are not always as
'clear cut' in real life   Tactical information
systems are used mostly by middle management
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System Description Tactical Information Systems

• Tactical Information Systems or Management
  Information Systems (MISs) are used by managerial
  employees to support recurring decision making in
  managing a function or the entire business
• Supported Activities
• Scheduled Reporting - the system produces
  automatically based on a predetermined schedule.
  Some include
• Key Indicator High-level summaries to monitor
  performance (e.g. Monthly Sales Report)
• Exception Highlights situations where data is
  out of normal range (e.g. Monthly Late Shipments)
• Drill Down Provides lower-level detail
  aggregated in a summary report (printed only if
  needed)
• Ad Hoc Reporting unscheduled reports that are
  usually custom built to answer a specific
  question (e.g. sales data by person report to
  identify issues)

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System Architecture Management Information System
Tactical /
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Who, What, Why Executive Level
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A Framework for Information Systems

• Strategic Systems/ Executive Information Systems
• - provide top managers with information that
  assists them in making long-range planning
  decisions for the organization
• used to set long-term organizational goals
• middle managers then need to allocate resources
  to meet these organizational goals
• - produced regularly, but more often on ad hoc
  basis

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Strategic Systems / Executive Information Systems
 - may have "drill down" capacity  - may produce
considerable graphic output
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System Description Strategic/ Executive
Information Systems

• Strategic Systems, also called Executive
  Information Systems (EIS) or Executive Support
  Systems (ESS) or, are special purpose information
  systems to support executive decision-making
• System Details
• These systems use graphical user interfaces to
  display consolidated information and can deliver
  both
• Soft Data - textual news stories or
  non-analytical data
• Hard Data facts, numbers, calculations, etc.
• Supported Activities
• The activities supported by these kinds of
  systems include
• Executive Decision Making
• Long-range Strategic Planning
• Monitoring of Internal and External Events
• Crisis Management
• Staffing and Labour Relations

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System Architecture Executive Information Systems
Strategic /
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System Example Executive Reporting Drill-down
(EIS)
Second Level Data Drill Down
First Level Graphical Summary
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IS and Business Strategy

• Which information systems should a business
  develop?
• Those that match the organizations strategy

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• Business Strategy

Business Strategy
Improve Profitability Reduce Costs
Reach Global Markets
Solidify Business Relationships/ Improve Customer
Service
Maximize Technology Benefits
Streamline Business Processes
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Executive Information Systems (EIS)
Questions What kind of tactical information
would be useful to a branch manager of a
Coca-Cola or Pepsi distributorship? (sample
answer) Sales - by product line - this year vs
last year - comparative analysis of sales by
account for last 5 years    
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Executive Information Systems (EIS)
What kind of strategic information would be
useful to the president of a four-year liberal
arts college? - demographic data - no. of 18-year
olds who are planning to enter college over the
next 10 years Other - age distributions of the
overall population - characteristics of student
population - gender, socio-economic status
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Executive Information Systems (EIS)

•  Categorize each decision as strategic planning,
  tactical or operational
• Rejecting credit for a company with an overdue
  account
• (Operational)
• Analyzing sales by product line within each
  geographic region, this year to date vs. last
  year to date
• (Tactical)
• Using a simulation model to forecast
  profitability of a new product, using projected
  sales data, competitive industry statistics, and
  economic trends
• (Strategic)
• Comparing planned vs. actual expenses for
  department staff
• (Tactical)
• Allocating salespeople's time to the highest
  potential market prospects
• (Tactical)

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The more detailed the data the closer it is to
the data from which it is derived - less
processing is involved in generating it - e.g.,
daily total sales in the shoe dept. vs annual
total for an entire chain of stores- internal
vs external data internal data collected within
organization, e.g. through Transaction processing
systems external data comes from sources
outside org.
Executive Information Systems (EIS)
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Executive Information Systems (EIS)
Structured and Unstructured Data - structured
numbers and facts that can be conveniently stored
in files and databases (Often from
transactions) - unstructured meeting notes,
textual, graphical, - the higher the manager,
the less structured the decisions
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Executive Information Systems (EIS)

• Characteristics of Effective Information
• tabular vs. graphical (may depend on
  personality)
• certain info better grasped when presented
  graphically (trends, pie chart proportions
• - when trying to solve complex problems, many
  prefer tabular data so they can extract what info
  
• they deem necessary
• many systems allow users to set their
  preferences
• can also have graphs within tables etc.

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Executive Information Systems (EIS)
- can bring vast amounts of detailed information
into a process years of past expenditure data
can assist with next year's budget   - allows
the tracking of task status, inputs and outputs
project management reporting system   - can
connect two parties without an intermediary
ordering through the Web   (not exhaustive)