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1. MANAGEMENT
INFORMATION
SYSTEM
By,
Ikhlaq

2. History of IT in business
 Manual transactions
 MS-Office
 Business Software (Accounting)
 Computer Communications( WWW, Internet, E-
commerce etc
 Data, Information, Knowledge ,processes
, organization. DSS, ES, KM, Data mining and Data-
warehousing, Business Intelligence.
 Future of IT

3. Cont……
 IT related and managerial solutions and business
strategies are being used to make business more
effective , efficient and competitive.
 Typically a business has two resources
 1-Physical resources.
(Personnel, Material, Machines (including facilities
and energy) and Money. They build physical system of
an organization.
 2- Virtual resources. (Information (including
data) also known as conceptual resources. They build
physical system of an organization.

4. Cont….
 Physical recourses and virtual recourses are used to
cope with business problems/pressures.
 Data and information is used to represent the physical
resources.
 Virtual systems to represent/control physical systems
 Computers are not being used merely to manage
physical firm (As virtual systems) but are also have a
big breakthrough in business applications.
 H/W and S/W are physical sources, also machines
,materials and human resources are physical resources.

5. Chapter Preview
 Marketplace pressures faced by today’s businesses
and various tactical and strategic responses.
 The distinction between data, information, and
knowledge.
 The characteristics of high quality information.
 The components of an information system.
 The capabilities organizations aspect of information
systems.
 How computer technology is applied to business problems and
pressures.
 Business processes are required to be more effective and
efficient competitively.
 In which areas and level of businesses, an IS may have big
impact.
 Opportunities to use information systems strategically.
 All about “Information Processing Life Cycle”

6. Learning Objectives
Describe The characteristics of the digital
economy and e-business.
Discuss the relationships among business
pressures, organizational responses, and
information systems.
Describe strategic information system
(SISs) and how information technology
helps companies improve their competitive
positions.

7. Digital Economy
 An economy based on electronic goods and services
produced by digital technologies, electronic
business and traded through electronic
commerce. That is, a business with electronic
production and management processes and that
interacts with its partners and customers and conducts
transactions through Internet and Web
technologies.
 Also sometimes called the Internet economy, the new
economy, or the Web economy .

8. Infrastructure for e-business
e-business/ e-commerce the conducting of
business functions (e.g., buying and selling goods
and services, servicing customers, collaborating
with business partners) electronically, in order to
enhance an organization’s operations.
The infrastructure for e-business is network
computing, known as the internet, or to its
counter part within organizations, called an
intranet, many companies link their intranet to
those of their business partners over networks
called extranets.

9. Today’s pressure on Business Environment
 Pressure on business environment is characterized
by:
 Rapid Change and changing work force
 Global competition for trade and labor
 Business Complexity
 Global Economy “traditional barriers”
 Hyper-competition
 Customer orientation
 Information overload
 Innovative technologies

10. Cont……
Need for the real time operations (Information
float) High performance telecom services can
reduce it.
Technological innovation and obsolescence
(CAD/CAM)
Social responsibility (Issue of regulation and
deregulation)
Ethical issues
Digital divide
Market research
Globalization/internationalization.

11. Traditional Management
CEO Condensed reports
Commands
Finance Marketing Accounting HRM MIS
Analyze data
Layers of middle managers
Collect
data
Customers

12. Some Key Definitions
 Data: raw facts; collected, not organized.
 Information: data organized in a meaningful way.
 Knowledge Consists of information that has been
organized to convey
understanding, experience, accumulated learning, or
expertise as it applies to current business problems or
processes.
 Knowledge is used to generate new information required
for a business solution.
 Knowledge workers create information and knowledge and
integrate it into the businesses.

13. Data and Information
 Data consists of facts and figures that are relatively
meaningless to user. E.g. the number of hours worked
for each employee in the company
 Information is processed data that are more
meaningfully. E.g. the hours works for each employee
multiplied by the hourly rate, the out put information
is the gross earning

14. Data and information

15. Data, Information, and Knowledge

16. Data Vs Information Vs Knowledge
Data Knowledge Information
Simple observations Data with relevance Valuable information
of the world: and purpose: from the human mind:
•Easily captured •Requires unit of includes reflection,
•Easily structured analysis synthesis, context
•Easily transferred •Needs consensus on •Hard to capture
meaning electronically
•Compact,
quantifiable •Human mediation •Hard to structure
necessary •Often tacit
•Often garbled in •Hard to transfer
transmission •Highly personal to
the source
More human contribution
Greater value

17. Knowledge
 Knowledge is information organized, processed and
analyzed to make derstandable and applicable to problem
solving and decision making.
 A knowledge consists of
concepts, theories, heuristics, methods, procedures and
relationships that defines how the information is used to
solve a problem or make a decision..
 Knowledge consists of information that has been organized
and processed to convey understanding
,experiences, accumulated learning or expertise as it
applies to a current business problem or a process.
 The information that is processes to extract critical
implications and to reflect past experiences and expertise
provides the solution to a business problem.
 Knowledge base contains knowledge for understanding
,formulating and solving a specific class of problems in
intelligent systems.

18. Types of Knowledge
 Tacit knowledge is personal, context-specific and hard
to formalize and communicate
 A knowledge developed and internalized by the knower over a
long period of time . . . incorporates so much accrued and
embedded learning that its rules may be impossible to
separate from how an individual acts. ‘knowing how’
 Explicit knowledge can be easily collected, organized
and transferred through digital means.
 A theory of the world, conceived of as a set of all of the
conceptual entities describing classes of
objects, relationships, processes, and behavioral norms.
Often referred to as ‘knowing that’, or declarative
knowledge.

19. What is Knowledge Management?
 Knowledge Management is process of knowledge
base and capturing, storing, knowledge
discovery, Facilitating the knowledge sharing
processing and integrating for the purpose of
problem solving and decision-making in businesses.

20. Knowledge Key Concepts
 Knowledge identification – what is important?
 Knowledge discovery and analysis – finding and organizing
knowledge.
 Knowledge acquisition – going and getting needed knowledge by
asking or promoting idea generation
 Establishment of organizational knowledge bases – storing and
organization corporate knowledge
 Knowledge distribution and use – ensuring that those who need
knowledge can access it
 Knowledge assets - regarding markets, products, technologies, and
organizations that a business owns or needs to own
 Best practices - collection of the most successful solutions and case
studies
 Intellectual capital – Cumulative/A massed collection of knowledge
by an organization over the years
 Knowledge system - collects knowledge, stores it in a
database, maintains the database, and disseminates the knowledge
to users
 Competitive intelligence - collection of competitive information

21. Implementing Knowledge Management
 Reorganize as knowledge-based organizations
 Created a new position, chief knowledge officer
(CKO)
 creating knowledge management infrastructure
 building a knowledge culture
 making it pay off
 Facilitate organizational learning
 learn from their experiences in order to survive
 Other officers are CEO,CFO,COO,CIO,CTO

22. Promoting Idea Generation
 Key source of knowledge is creative idea generation
by individuals or groups
 Software tools (GDSS) can promote productive idea
generation for groups
 Software tools also available for individuals to help
stimulate creative production of ideas

23. What Makes Information Useful (GIGO)?
 It is accurate  It is relevant
 Free of errors  Applies to the issue under
 It is complete study
 Includes everything needed  It is timely
 Available when needed
 It is flexible
 Can be viewed in various  It is verifiable
ways  Basis for results can be traced
 It is reliable  It is accessible
 Results are always consistent  All those who need the
 it confirms validity
information can get to it
 It is secure
 Free from contamination
(accidental or deliberate)

24. Data Visualization
 Analyzed data can be even more useful if
presented using Data Visualization techniques
 Visual Interactive Modeling – graphic display of
decision consequences
 Visual Interactive Simulation – simulation model is
animated and can be viewed and modified by decision
maker
 Geographic Information Systems – display data related
to geographic location using digitized maps
 Global Information systems: A system that consists of
a networks that cross national boundaries.
 VR & AR

25. Information Specialists
 Employee who are full time responsible for developing
and operating information systems.
 System analyst is an expert who works with user in
developing system at defining problems and in
preparing written documentation of how the
computer will assist in solving the problem.
 Database administrator works with user and system
analyst in creating the data needed to produce the
information needed by users

26. Information Specialists
 Network specialist works with user and system
analyst in establishing the data communication
network that ties together widespread computing
resources.
 Programmers use the documentation prepared by
the system analyst to create the software program
that lead the computer to transform data into
information needed by users.
 Operators operates the computing equipment and
using software program.

27. Information Infrastructure
 Information Infrastructure:
 The physical & Virtual facilities, services and
management that support all organizational computing
resources.
 Computer hardware
 General-purpose software
 Networks and communications facilities
 Databases
 Information management personnel

28. Cont…
 Information Infrastructure (continued)
 Defines
integration, operation, documentation, maintenance, an
d management of computing resources.
 Defines how specific computing resources are
arranged, operated, and managed.

29. Information Architecture
 A High-level plan that defines
 The organization’s information requirements
 The way these requirements are being satisfied.
 Blueprints for future directions
 This architecture includes planning the drawing
,purpose, and building constraints.
 It can be divided into 2 major parts
 Organizational objectives and problems
 Existing infrastructure
 Information architecture is different from computer
architecture which only describes the hardware needs of
computer system
 Computer architecture involves several
processors, whereas the information architecture is just
like planning a house.

30. What is Information processing
cycle
 Input
 Procedures/Processes
 Output
 Disseminate Results

31. What is an Information System?
 A system that collects, analyzes processes, stores,, and
disseminates information for a specific purpose..
Data Calculations
Process
Collect Produce
And
Instructions Inputs Outputs
Transform Reports
Store

32. Information system
An IS Collects, processes, stores, analyses and
disseminates information for a specific purpose.
It includes inputs, outputs, mechanism, to control these
Also includes the feedback to control all these
A set of interrelated components that collect(or
retrieve), process, store, and distribute information to
support decision making and control in an organization
 What is a system: A set of components which
systematically interact with each other and have
same objective.

33. Function of IS
 Input – the collection of raw data for
processing information system
 Processing – the conversion of data
into information for more meaningful
 Output – the distribution of processed
information
 Feedback – output that is returned to
help evaluate or correct input

34. Major Capabilities of Information System
Perform high-speed, high-volume, numerical
computation.
Provide fast, accurate, and inexpensive
communication within and between organizations.
Automate both semiautomatic business processes and
manual tasks..
Increase the effectiveness and efficiency of people
working in groups in one place or in several
locations, anywhere.
Facilitate work in hazardous environment .
Fast, intelligent ,accurate processing of business
transactions.
Large capacity storage, retrieval, analysis, and data and
fast access to data spread around the world.

35. Capabilities of Information Systems
Increase communication Computer to Computer or
human to human.
Reduce information overload
Span organizational boundaries
Support and improve decision making & problem
solving.
Span boundaries in-side organization
Distinctive capabilities for providing competitive
advantage. e.g. airlines, online banking

36. Information systems are more than
computers

37. Functions of an information system

38. IS Terms
 Open system: Connected to its environment by means of
resource flows.
 An open system interacts with its environment by means of
its physical recourses flows.
 Closed system: Not connected to its environment. They
usually exist in tightly controlled laboratory systems.
 A closed system does not interact with
customers, managers or any one else.
 Information system is a virtual/conceptual system as well
as an open system.
 A physical system is also an open system.

39. Cont…
 Open and closed loop systems
 Not all systems are able to control their own
operations. A system without the control
mechanism, feedback loop, and objective elements is
called an open loop system.
 A system with the following three control elements is
called a closed loop system.
 Control mechanism
 Feedback loop
 Objective elements

40. An Open loop System

41. A Closed Loop System

42. What is a subsystem & Super Sys?
 A subsystem is simply a system within a system. This
means that systems exist on more than one level and
can be composed of subsystems or elemental parts.
 What is a Super System? (not frequently used)
 When a system is part of a larger system, the larger
system is the super system.

43. Fig

44. What is Meant by a (CBIS)
 Computer-based Information Systems
 An information system using computer and
telecommunications technology to perform its
intended tasks.
 Use computer hardware and software to process
and disseminate information
 Fixed definitions of data and procedures for
collecting, storing, processing, disseminating, a
nd using these data
 Can be computer-based or manual
 MIS is a first information oriented system.

45. CBIS MODEL

46. The Components of CBIS are as follows
 Hardware
 Set of devices such as processor, monitors, keyboards, printers that will
accept the data process them and displays them
 Software
 Set of computer programs, that enables the hardware to function to
process data
 Data bases
 An organized collection of related files or records that stores data and the
associations among them
 Network
 A connecting system that permits the sharing or resources among different
computers
 Procedures
 The strategies, policies, methods and rules for using the information system
 People
 The most important element in information systems, including who work
for it or uses it

47. Components of CBIS
Backup data
Restart job
Virus scan

48. Components of IS
 Hardware, Input and output devices
 Software, A set of computer programs that enables to
process data.
 Database, Organized collection of files or records
that stores and associate the data.
 Network, Connecting systems to share resources
among different computers.
 Procedures, strategies, methods and rules for using
IS
 People. Who work with IS or use outputs of IS

49. Types of CBIS
 MIS: Management Information System
 TPS: Transaction Processing Systems (Priory known as EDP and
accounting information system and then AIS accounting information
system)
 EIS: Executive information system
 Enterprise-wide system (A network of different information systems)
 DSS: Decision Support System
 GSS: Group support system
 ES
 OAS: Office automation system
 GIS
 ERP
 IOS: Inter-organizational information system.
 Connect two or more organizations having a common interest or business
need.
 Important in facilitating e-commerce.
 Intelligent systems/Intelligent agents
 SIS: Strategic information system.

50. Cont….
 HRIS: Human resource information system
 MKIS; Manufacturing information system
 FIS: Financial information system.
 ESS: Executive support system.
 AIS: Accounts Information system

51. Types of Business pressures
Market Pressure:
 The global economy and strong competition
 The changing nature of the workforce
 Market research
 Powerful customers/Customer orientation/Order fulfillment and customer services..
Technology Pressures:
 Technological Innovation and Obsolescence
 Information Overload.
 Need for real time operations
Societal Pressure:
 Social responsibility
 Government regulation and Deregulation
 De-Centralization
 Spending for social programs
 Protection Against Terrorist Attacks.
 Ethical Issues
 Labor pressures.

52. Market Pressures
 The Global Economy and Hyper competition
 Developing Countries are preferred. Traditional barriers.
 Globalization and internationalization/International market place.
 Cross cultural Impact
 The Changing Nature of the Workforce
 Diverse and versatile Workforces, Increasing no of
females, minorities, and physically challenged persons work in all
types of the positions.
 Changing Traditional Work Environment.
 Need for Real Time operations.
 Fast, accurate, operations. Automated and intelligent
 Powerful Customers
 Knowledgeable Customers

53. Technology Pressures
 Technological Innovation and Obsolescence
 Has huge impact ranging from genetic engineering to food
processing.
 Need for the real time operations,Today's companies don’t have the
luxury of information float.
 Information float is the time between when a business event occurs
and when the info captured about the event reaches the necessary
decision makers.
 Information Overload
 Huge amount of information available to the consumers
 The amount of information doubles every year and most of it is free
 The information and knowledge generated and stored inside
organization are also increasing
 So every one feels the pressure of this huge knowledge ,which becomes
sometimes difficult to choose the best among so much knowledge

54. Societal Pressures
 Social Responsibility
 Social Responsibility Act
 Government Regulation and Deregulation
 Deregulation intensifies competition.
 Issues of health, safety ,environment pollution and equal opportunity
,licensing, copyright.
 It is a matter of general public interest.
 Protection Against Terrorist Attacks
 Strong systems for security and attack pattern detection.
 Ethical Issues
 Are not cut and dried
 Email monitoring, Sharing Customer data, Revealing personal
information
 Ethics is the business context refers to standards and values for judging
whether a particular conduct in the workplace is right or wrong
 These issues are very important because they can damage the reputation
of an organization as well as the persons.
 The situation is critical when it comes between the countries

55. Cont…
 Labor pressures
 Labor costs differ from one country to another.
 In addition companies pay high fringe and environment
protection costs. So that they have difficulty in competing in
developed countries.
 For this it requires good communication ,between the
languages and cultural issues
 The issue becomes more complex when Govt.involves
through laws of taxes, subsidies, import/export policies.
 Decentralization
 A social process in which businesses and industry moves from
urban centers to outlying districts .It is spread of power away
from the center to local branches or governments .
 Digital Divide

56. Organizational Responses
 Pressures provoke proactive and reactive
organizational responses.
 Business responses to pressures may involve use of
Information Technology and Information Systems, also
some strategic business plans
 In some cases, IT is the only solution to business
pressures.
 Knowledge of IT capabilities is essential to today’s
business people.

57. Directions of Organizational Responses
Business Responses
Managerial IT/MIS
-Business Strategic plans
-Data/Information/Knowledge
management
-IT resources

58. Business Pressures and Organizational
Responses

59. Organizational responses
 Developing Business strategic plans (SBP) for
systems using IT and IS.
 Customer focused services and products and order
fulfillment.
 Continuous improvement efforts (JIT and TQM)
E.g. e-commerce, e -business, e-marketing.
 Business process reengineering BPR
 Empowering employees and fostering collaborative
work and KM.
 Global marketplace analysis
 Business alliances/Mergers

60. Cont……
 Reviving up employees financial energies
(Motivational theories on customer and employee)
 Business alliances (Supply chain management SCM
 Using CBIS at different levels of business processes.
 E-commerce, Use of computing and communication
in business e.g. Internet ,WWW, E-commerce and
Expert systems, business intelligence, E-marketing, E-
banking, E-business etc.
 Use of CAD/CAM
 Data mining and data warehousing
 Critical mass /Mass customization.

61. Cont… is a strategy of producing customized
 Make-to-Order
products and services
 Mass Customization
 In mass production they produce a large quantity of identical items
 In mass customization they produce a large quantity of items that
fit the desires of each customer.
 Business Alliances : Joining hands with the competitors
/companies to improve services.
 Electronic Business and E-Commerce is the newest and
most promising strategy.
 Business Process Re-Engineering: organization
fundamentally and radically re designs its business process.

62. Customer relation ship marketing in action
 Make it easy for customers to do business with you
 Focus on end-customer for your products and services
 Redesign your customer –facing business processes form
the end customer’s view.
 Wire your company for the profit :design a comprehensive
,evolving electronic business architecture.
 Adopt a customers-focused approach and prevent losing
customers to competitors.
 To pay more attention to customers and their preferences
 Foster customer loyalty. In e-commerce, especially this is
the key to the profitability.

63. Continuous improvement
 They also make continuous efforts to improve their
productivity and quality
 Productivity is the ratio of outputs to inputs.
 They improve this ratio by increasing outputs, reducing
costs, increasing output faster than cost or combination
of both
 Just in time
 This is inventory approach, it attempts to reduce costs
by scheduling materials and parts to arrive at the
workstation exactly when they are required
 It minimizes the space and cost

64. TQM( Total Quality Management)
 It is organized effort to improve quality whenever
possible
 IT can enhance it by improving data
monitoring, collection, analysis, and reporting,
 Another expect is the decision making power to select
the best alternate course of action
 However this task is difficult in large organizations, but
there is always survival to the fittest

65. Empowering employees
 Giving employees the authority to act and make
decisions on their own is a strategy used by many
companies
 Managers delegate authority to self-directed teams
who can execute the work faster and with fewer delays
then were possible in the traditional organizations.
 IT supports it but also supports the centralized control

66. Hierarchical Organizational Structure
Headquarters
Division A Division B Division C
Administrative
Services
Plant 1 Plant 2 Plant 3
Top
managers Accounting Finance Marketing POM HRM CRM
Middle
managers
Supervisory
First line
managers
Operating
Employees

67. The General System Model Of The Firm
 The figure shows the flow of resources from the environment
,through the firm and back to the environment.
 It presents all types of organizations functional in the form of a
system.
 It involves the flow of physical resources and virtual resources for
all types of organizational structures.
 The physical flow include flow of personal ,material ,machine
and money.
 Virtual flow involves flow of data, information and decisions.
 Firm control mechanism contribute the firm to control its own
operations including performance standards to meet its
objectives, the firms, management and information processing
the transform data into information.
 The feed back loop is composed of virtual resources .Data are
gathered from the firm and the environment and entered in to
the firm processor, which is transformed into the information
,eventually information is provided to managers to make
decisions to effect necessary changes in the physical system.

68. Environment
Standards
Info &
Information
Decisions Data
Information
Management
Process
Data
Physical Physical
Resources Resources
Input Transformation Output
Resources Process Resources

69. What managers Do
 They plan, What they are to do
 They organize to meet the plan
 They staff their organization with the necessary
resources. e.g. IT/IS and managerial resources.
 After having the resources they direct the resources
to execute the plan.
 Finally they control the resources.

70. Management Levels
 High level (strategic)
 Long-range view
 Planning
 Middle level (tactical)
 Carry out the plan
 Assemble the material
 Hire the resources
 Organize and staff
 Low level (operational)
 Supervisor
 Directing and controlling

71. IS Support Overview

72.  Strategic Planning Level
 The strategic planning level involves mangers at the top of the
organizational
 hierarchy. The term strategic indicates the long-term impact of top
managers decisions on the entire organization. The term executive
is often used to describe a manager on the strategic planning level.
 Top level managers eg president, vice president chief
executives, MD ,CIO,CKO,MEMBERS OF CORPORATE
EXECUTIVE COMMITTEE, IS STEERING COMMITTEE etc.
 Management Control Level
 These managers include middle managers, regional
managers, product directors, and divisional heads. Their level is
called “management control level” due to their responsibility of
putting plans into action and ensuring the accomplishment of
goals.

73. Cont…
 Control level managers/Tactical level managers
 They are responsible to put strategic plans in to actions
and ensure the goals are met..
 Operational Control Level or Lower-level
 Lower level managers are persons responsible for
carrying out the plans specified by managers on upper
levels. Their level is called the “operational control level”
because this is where the firm’s operations occur.
 These are departmental heads, supervisors and project
leaders. they are responsible for plan accomplishment
,specified by managers on upper level

74. IMPLEMENTATION LEVELS OF IS
KIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIOR MANAGERS
MANAGEMENT LEVEL MIDDLE MANAGERS
KNOWLEDGE LEVEL KNOWLEDGE &
DATA WORKERS
OPERATIONAL OPERATIONAL
LEVEL MANAGERS
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
MARKETING & ENGINEERING RESOURCES
74

75. People in Organizations

76. All managers perform these functions, however with varying
emphasis as shown below.

77. Where managers are found
 Managers on the strategic level place greater emphasis
on environmental information than do managers on
the lower levels. Managers on the operational control
level regard internal information as vital.
 The second figure shows that strategic planning-level
managers prefer information in a summary
format, whereas operational control-level managers
prefer detail.

78. Management level fig 2.1
Environment information
Internal Information

79. Management level fig 2.2
Summary Information

80. CEC
 Note :Corporate executive committee is responsible for
strategic business planning and its responses. It also
provides the top –level oversight of information
recourses to the firm.
 It guides the IS steering committee, usually chaired by
the CIO.

81. Business Environment
 It refers to the combination of all
societal, legal, economic, physical and political
factors that effect business activities in any way.
 SOCIETY Government
Financial
Global
Communit
Communit
y
y
Suppliers THE FIRM
Customers
Labor
Unions
Stakeholders Competitors
Owners

82. BPR
Business process
reengineering/re-design is to change
the technological, human ,managerial and processing
dimensions of a business. Some restructuring of
management realignments, mergers, consolidations
and operational integrations take place.
Knowledge Workers: Create
information and knowledge and integrate them into
the businesses.

83. BI
 Business intelligence refers to the analysis performed
by DSS, ES, EIS, data mining and intelligent systems.
 BI describes a verity of activities to pull together all
the data required to make a sound business
decision, regardless of where the data originate.
 One ultimate use of the data gathered and processed
in the data life cycle for business intelligence.
 An Intelligent system is an IS typically employing
AI, whose output resembles the human thought
process and is used to support decision making e.g.
neural computing, fuzzy logic, speech
understanding, robotics, sensory systems and case
based reasoning.

84. Data Mining and Analysis
Concerns
 Ethical Issues
 Valuable data-mined information may violate
individual privacy
 Who is accountable for incorrect decisions that are
based on DSS?
 Human judgment is fallible
 Job loss due to automated decision making?
 Legal Issues
 Discrimination based on data mining results
 Data security from external snooping or sabotage
 Data ownership of personal data

85. Business Strategic Plan
 Statement of the firms over all mission, the goals that
follow the mission and the broad steps necessary to
reach the mission ,for the business success and
survival.
 It is a long range goals that describe the IT and IS
initiatives needed to achieve the goals of organization.
 A typical business strategic plan has following
missions
• Efficiency
• Effectiveness
• Competitiveness.

86. Examples of Business Processes
Functional Area Business Process
Manufacturing and production Assembling the product
Checking for quality
Producing bills of materials
Sales and marketing Identifying customers
Making customers aware of the product
Selling the product
Finance and accounting paying creditors
Creating financial statements
Managing cash accounts
Human resources Hiring employees
Evaluating employees' job performance
Enrolling employees in benefits plans

87. Operations, Tactics, Strategy
Sector Operations Tactics Strategy
Production • Machine settings • Rearrange work area • New factory
• Worker schedules • Schedule new products • New products
• Maintenance sch. • Change inventory method • New industry
Accounting • Categorize assets • Inventory valuation • New GL system
• Assign expenses • Depreciation method • Debt vs. equity
• Produce reports • Finance short/long term • International taxes
Marketing • Reward salespeople • Determine pricing • Monitor competitors
• Survey customers • Promotional campaigns • New products
• Monitor promotions • Select marketing media • New markets

88. Environmental Resource flow
 A firm is connected to its environmental elements
by environmental resource flow.
 Environmental resource flow is the flow of supply
chain.
 Common flow includes exchange of money flow to
stakeholders ,material flow to
customer, information flow from customer and
raw material flow from suppliers.
 Less common flow is money flow from the
Gov, material flow to suppliers and personal flow
to competitors.

89. Supply chain
 Flow of materials, information, payments, and
services, from suppliers through factories and
warehouses, to end customers
 Includes all organizations and processes that
create and deliver products, information, and
services to the end customers
 It includes many tasks such as purchasing, payment
flow, material handling, production planning, logistics
etc.
 Supply chain management -
planning, organizing, coordinating, and
controlling all activities in the supply chain

90. Simplified Supply Chain
 SCM
Internal Downstream
Upstream
Organization’s Distributors
material production
processes, including
information materials
Suppliers
handling, inventory
money
management, manuf
acturing, quality Retailers
control
Customers

91. Activities of SCM
 Forecasting the customer demand
 Scheduling the production
 Establishing transportation networks
 Ordering replenishments stock from the suppliers
 Receiving stock from suppliers
 Managing inventory (Raw material, work in process and
finished goods)
 Executing the products
 Transporting the resources to customers
 Tracking the flow of resources from suppliers, through the
firm and to the customers.
 ERP software like SAP/Oracle help flow of supply chain.

92. Using IT Strategically
 Businesses today must understand how IT can
reshape and refine business strategy
 Porter’s Strategic Analysis Model
 Helps in understanding strategic forces affecting organizations in
particular industries
 IT can be applied to strengthen and support a specific business
strategy
 Value Chain
 Helps in identifying ways IT can improve the quality and
efficiency of organizational processes

93. SIS
 A system that will provide strategic advantage in
meeting organizational objectives ,increasing
market shares, or preventing competitors from
entering a market and so will significantly impact
an organization’s operations, success and survival.
 Strategic Systems: enable organizations to
 Increase market share and/or profits.
 Better negotiate with suppliers
 Prevent competitors from entering their territory, E.g.. Tracker Systems
in cars. Courier Services
 Organizations implement systems that will impact the
operations, success, survival.

94. Competitive Advantage
 Firms strive to obtain an advantage over their
competitors.
 Firms achieve advantages by providing services and
products at a low price, providing high quality products
and providing customized services or products.
 Firms also achieve competitive advantages by using
their virtual resources as well as using their physical
resources.

95. Porter’s Value chain
 Porter believes that firm achieves competitive
advantages by creating Value Chain.
 He illustrates that the primary and support activities
can contribute to the MARGIN.
 MARGEN is the value of the firm’s products and
services, as perceived by the firm’s customer, minus
their costs.
 An increased margin is the objective of the value
chain.
 Firm creates value by performing Vale Chain activities.

96. Porter’s Value Chain Model
 There are two types of value activities in Value Chain.
 1-Primary value chain activities that manage the flow of
physical resources through the firm that include
 Inbound logistics
 Operations
 Outbound logistics
 Marketing and sales operations
 Service activities.
 2-Support value chain activities that influence the primary
activities that include.
 Firm infrastructure
 HRM
 Technology development
 Procurements

97. Properties of Value Chain activities
 Each value activity whether primary or support
contains following three essential ingredients
 Purchased inputs
 Human resources
 Technology
 Similarly each activity uses and creates
information
 For example information specialists in services
unit may combine purchased commercial
database, leased computing equipment and
custom-developed programs to produce decision
support information for the executives of the firm.

99. Strategic plan for business areas
 Fully committed executives in strategic plans also see a
need for developing respective strategic plans for each
business area.
 In this approach each area has its independent plan
which may have influence with the strategic plans of
other areas.
 However such approach do not ensure that business
areas will work together well.

101. Strategic Planning for Information
Resources SPIR
 SPIR involves a concurrent/repetitive
development of strategic plans for information
services and the firm, so that the firm’s plan
reflects the support to be provided by the
information services.
 IS plan reflects future demands for the systems
support.
 SPIR may be different for different organizations
,but all SPIR have following two core elements.
 Objectives to be achieved by each category of system during the
time period covered by the plan.
 The information resources necessary to meet the objectives.

102. The following figure illustrates the manner in which each planning process
influences the other.

105. EXPANDING VALUE CHAIN
 Management must alert to the additional advantages by
linkage of firm’s value chain to those of other
organizations. Such linkage results in IOS.
 Firm can also take advantage of its value chain by linking to
those of its suppliers by implementing systems that make
input resources available when needed e.g. JIT.
 A firm can also link its value chain with those of its
distribution channel members, creating a VALUE SYSTEM.
 When the buyers of a firm ‘s product are
organizations, their value chain can also be linked to those
of the firm and its channel members.

107. Dimensions of Value Chain
 Strategic advantage
 It has a fundamental effect in shaping the firm’s operations. E.g.
conversion of existing data in to standard database and access via web
applications, use of custom tailored software instead of proprietary
software.
 Tactical advantage
 When a firm implements a strategy in a perfect way than its competitors
, it achieves a tactical advantage. e.g. customer services can be extended
to offer customer direct access to the information resulting customer
satisfaction.
 Operational advantage
 Operation advantage deals with every day transactions and processes.
this is where the IS interacts directly with the processes. eg a web
browser is an IS and it has Cookies in order to have direct interaction
with the processes of client.

108. Challenges from Global Competitors
and MNC
 MNC is a firm that operates across the
products, markets, nations and culture.
 It consists of a parent company having a group of
its subsidiaries ,which are geographically
dispersed.
 It must not be confused with the limit of global
competitors.
 Developed countries like USA and China are
outsourcing some of their operations, India is
major destination.

109. Cont….
 Special Need for Information Processing in an
MNC
 All firms need for information processing and
coordination, but it is crucial for MNC because
MNC is an open system that seeks to minimize its
uncertainty in its environment.
 Uncertainty is a difference between the amount of
information required to perform a task and the
information already processed by an organization.
 Hence making good use of IT can cope
uncertainty.

110. Cont……
 The special Need for Coordination in an MNC.
 Coordination in a key to achieve competitive
advantage in global marketplace.
 How ever companies are unable to gain strategic
control of their world wide operations and manage
them in a globally coordinated manner will not
succeed in the international economy.
 So MNC faces grater restrictions than a national
company eg because of conflicting business
practices, cultural differences, governmental policies
impositions and currency differences.
 However developing a GIS is very effective in
competing global challenges.

111. ADVENTAGES OF MNC
 There are many advantages of Coordination in
MNC
 Flexibility in responding to competitors in different countries
and markets.
 Ability to keep abreast of international market needs.
 Knowledge sharing across the globe.
 Reduced cost of operations.
 Increased efficiency and effectiveness
 Ability to achieve and maintain the diversity in the firms
products and in how products are produced and distributed.

112. WHAT IS A GIS
 MNC attempts GIS to overcome its problems
 Term coined are “Global Information System”
 A system that consists of network hat cross national boundaries.
 Constraints of GIS
 Politically Imposed Constraints
 IT infrastructure in owned by governmental authorities, Difference
between governmental national policies for data
processing, Crossing boundaries barriers for goods, product
licensing , Taxes and customs etc.
 Cultural and Communication Barriers
 Business practices, development of cross cultural
products, Language differences, value differences, Color
differences, racial differences, Various religious aspects.
 Restriction on hardware/Software purchase and Import
 In case of foreign import and equipment may cause problem of
interoperability / incompatibility.

113. Cont….
 Restrictions on data Processing and communication
 Data and information dissemination across the world arises the issue of
IPR, Privacy and confidentiality, data protection and security issues etc.
Maintenance of TDF (Transborder data flow)
 Technological problems
 Poor Information technology infrastructure, software copy right and
piracy are used in certain countries.
 Lack of Support from Subsidiary Managers
 Managers of subsidiary think that they can run their offices on their own
without help of parent company, Similarly foreign office managers
consider that the GIS is surveillance. Middle managers are having fear to
be by –passed in they will be completely dependent on GIS.So they avoid
support and feed back to the parent company.
 NOTE : However such problems can be minimized by
implementation of Good KM and SPIR (Making strategy for
enterprise)

114. What can we do with the stored data?
 Online analytical processing (OLAP)
 Analytical Processing - the activity of analyzing
accumulated/aggregated data.
 It involves the storage of the data in a
multidimensional form to facilitate the presentation
of an almost infinite number of data views.

115. Features of OLAP
 Analysis by end users from their
desktop, online, using tools like spreadsheets.
 Analyze the complex relationships between
many types of business elements (Large data
sets)
 Compare aggregated data over hierarchical time
periods (monthly, quarterly, annually)
 Present data in different perspectives
(Retrospective)
 Involve complex calculations between data
elements.
 Respond quickly to users requests

116. What can we do with the stored
data?
 Data mining – intelligent search of data stored in
data marts or warehouses
 Find predictive information
 Discover unknown patterns
 End users perform mining tasks with very powerful
tools
 Mining tools apply advanced computing techniques
(learning, intelligence)
 Data warehousing

117. Moore’s Law
 The term moor’s Law was coined by one of the founder
of Intel in 1960.
 It states the power of computer doubles about every
year with the same cost ,which was increased to 18
months latter on.
 18 months =1.5 years
 15 years=15/1.5=10
 210=1024

118. Moor’s Law Application
 By same law after 30 years Comparison of salaries
the power of computer
purchased will be Year Friend You
30/1.5=20
1 $40,000 $5000
 220=1024*1024=1048576
3 $57,600 $20,000
with same cost and so on…
6 $99,533 $80,000
 Your friend hired at
9 $171,993 $320,000
$40,000 with 20% increase
every year 12 $297,203 $1280,000
15 $513,567 $5120,000
 You hired at $5000 with
double salary every 1.5
years.

119. Role of information in problem solving and
decision making
 A problem is a condition or an event that is harmful or
potentially harmful to a firm or that is beneficial or
potentially beneficial for the firm.
 Problem solving
 A process of problem identification of causes and then
repetitively analyzing and choosing different
alternatives and finally to make some decision to solve
the problem.

120. Classification of problems
 A structured problem is a problem if it consists of
elements and relationships among the elements
which are understood by the problem solver.
 A Semi-structured problem is a problem if it
consists some of its elements and relation ships
among the elements which are understood by the
problem solver and some that are not understood
by the problem solver.
 An un-structured problem is a problem if it
consists of elements and relation ships among the
elements which are not understood by the
problem solver.

121. Solving Structured and Unstructured
problems
 Structured problems lend themselves to programmed
decisions
 Unstructured problems require un-programmed
decisions

122. Problem solving Activities
 Identification of problem (where is problem ,what is
problem, Definition of problem, Data gathered on scope, Constraints
identified.
 1-Internal constraints e.g. limited resources
 2-Environmental constraints eg pressures to restrict resource flow
 Classification of problem into a standard category
 Causes evaluation
 Intelligence activity (brain storming, critical
thinking, creative, thinking, reasoning, argumentation, logic, analysis, f
orecasting and judgments)
 Design Activity Invent ,develop a most plausible course of action
towards problem solving). Construct a standard mathematical model
e.g. selecting a model
 Choice activity (Involves the selection of best alternative that actually
solves the faced problem. Find potential solutions
 Reviewing the selected choice for further refinement and
recommendation of the solution.

123. States of problem
 Process of problem solving
Internal
Constraints
Current State Desired State
Environmental
Constraints

124. Elements of Problem Solving Process
PROBLEM
Desired Alternative
STANDARDS State Solutions
Problem
Solver
INFORMATION Constraints
Current
State
Solution

125. Problem
Identify
Information
Intelligence
Design Information
Choice Information
Solution
Information
Review

126. Thinking about decisions…
 A Framework for Computerized Decision
Support
 Problem Structure
 Decision making processes fall along a continuum that ranges
from highly structured to highly unstructured decisions
 Nature of Decisions
 Strategic planning decisions - the long-range goals and
policies for resource allocation.
 Management control decisions - the acquisition and efficient
utilization of resources in the accomplishment of
organizational goals.
 Operational control decisions - the efficient and effective
execution of specific tasks.

127. Decision Support Framework

128. Thinking about decisions…
 Structured decisions have long been supported by
computers
 Classes of structured decisions have been addressed
mathematically with Management Science models
 Types of decisions
 Programmed decisions: Usually
repetitive and routine decisions, also
can be automated
 Non-Programmed Decisions :Are novel
and unstructured, unusually
consequential.

129. Decision Levels
Decision Description Example Type of Information
Level
Strategic Competitive New product External events,
advantage, become a that will change rivals, sales, costs
market leader. Long- the industry. quality, trends.
term outlook.
Tactical Improving operations New tools to Expenses, schedules,
without restructuring cut costs or sales, models,
the company. improve forecasts.
efficiency.
Operations Day-to-day actions to Scheduling Transactions,
keep the company employees, accounting, human
functioning. ordering resource
supplies. management,
inventory.

130. Decision Making Process
REALITY
Examination
 Validation of
Intelligence Phase
the Model
Design Phase
Verification, Testing of
 Proposed Solution
Choice Phase
SUCCESS Implementation
of Solution
FAILURE 

131. Thank You