UNIT 10 MANAGEMENT OF INFORMATION
        RESOURCES AND CONTROL SYSTEMS
Structure
10.0     Objectives
10.1     Introductio...
A significant part of an individual’s working and personal time is spent on searching for,
recording and absorbing informa...
manager, and, in the 1960’s the same position was renamed as Electronic Data Processing
Manager. During this period, the d...
Figure I: Hierarchy of Systems
The above narrative description has been graphically depicted in Figure I. This figure, whi...
If a report does not have an element of utility, why generate it or ask for it, unless it is a statutory
requirement. Sinc...
The first time the organisation buys and installs a computer system, the MIS function in the
organisation has entered this...
After the management has been able to provide the control guidelines to the MIS function, the
organisation starts thinking...
It is towards the end of the third stage that the information technology becomes a turning point
for the strategic perform...
The overall objectives of planning for MIS have changed from linking processing strategy with
business strategy in 1970s t...
10.6 INFORMATION REQUIREMENTS, ANALYSIS AND
     CRITICAL SUCCESS FACTOR (CSF) METHOD

Once the overall MIS goals and stra...
10.7 RESOURCE ALLOCATION AND CHARGING FOR SERVICES

Allocation of resources is one of the important issues related to the ...
Organisational Mission                             Information Acquisition Plan
Organisational Objectives                 ...
Formal models, may be well used, in providing such strategic decision support. For instance,
models may ‘automatically’ re...
This team of managers, supported by their staff, is charged with arriving at conclusions
concerning a specified approximat...
2) Evaluate Critical Success Factor Method for the purpose of Information Requirement
   Analysis.

    ………………………………………………...
An operational function is a class of any one or more types of actions, carried on by the same or
different functional uni...
Public        Public formal            Public
                                                             informal


    ...
Control                                      Organising

                                 Organising
       Control       ...
persuasive,
                                                       administrative

 11.     Number of people          Few ...
•     For enhancing capabilities of the MIS function beyond providing services to a select user
      group or limited ran...
Another crucial issue is the positioning of the MIS function in an organisation. It would always
be better to put this fun...
The whole organisation could be thought of as an information network, both formal and informal,
connecting various decisio...
Storage                              :        A mechanism into which data can be entered, in
                             ...
1) An activity centre is where certain actions or activities take place which change the level or
   state of the system. ...
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MANAGEMENT OF INFORMATION RESOURCES AND CONTROL SYSTEMS (Unit10)

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MANAGEMENT OF INFORMATION RESOURCES AND CONTROL SYSTEMS (Unit10)

  1. 1. UNIT 10 MANAGEMENT OF INFORMATION RESOURCES AND CONTROL SYSTEMS Structure 10.0 Objectives 10.1 Introduction 10.2 Information, Organisation and the System View 10.3 Concept, Structure and MIS Growth 10.4 Strategic Planning for MIS 10.5 Top Management Interest and A Corporate MIS Plan 10.6 Information Requirements, Analysis and Critical Success Factor (CSF) Method 10.7 Resource Allocation and Charging for Services 10.8 Information Resource Assessment 10.9 Management Steering Committees and Information Network 10.10 Role of MIS at Various Management Levels 10.11 Desirable Characteristics of MIS 10.12 Let Us Sum Up 10.13 Key Words 10.14 Clues to Answers 10.0 OBJECTIVES After going through this Unit, you should be able to: • understand the growth process related to MIS function in an organisation, • relate the issues concerned with Information Resource Management in the organisations with available frameworks, • comprehend and conceptualise the systems basically using a classification of input, processor, output, control and the environment, • appreciate and understand the management functions at various levels in the context of relationships between management and informational needs, and • define clearly the concept of management information. 10.1 INTRODUCTION Information has already been recognised as one of the crucial corporate resources. The significance of producing more information; information processing and making information available to users is being realised more and more in the recent years. Whether it is industry, commerce, banking, education, economics or tourism, information is needed everywhere. The investors need information on the financial health of the organisation before extending any credit facility to the organisation; the government agencies need information for national planning and industrial control. The organisations have long since realised the need for the availability of information resource for the interested groups as well as individuals on time. 144
  2. 2. A significant part of an individual’s working and personal time is spent on searching for, recording and absorbing information. Information is ‘live’ as it is required to be updated all the time, and it is renewable. Information is substitutable and transportable and can be made to travel nearly at the speed of light in a communication networks. Today, information gets doubled in just five years. The exponential growth of information all around makes it necessary that it is properly collected, stored and retrieved in various fields so that it could be usefully exploited where and when needed. Information resources have to be managed and management of Information has emerged as a specialisation in its own way. The management of information resource has also been subjected to a lot of thinking. Organisations have been made to think seriously about the growth and development of this function as an independent support function rather than as part of a major function, such as, finance and accounting. Serious thought has been given to the involvement of the users in the information processing activity as well as to the conversion of the function to a profit centre by developing and implementing change-out systems for the services rendered to the user groups. To develop an understanding about the information resource management in an organisation and other related issues, the present Unit discusses various concepts related to the information systems management. Here, we are interested in a system for providing the necessary management information. Thus, we need to conceptualise a management information system (MIS). Before describing explaining each term, let us give a crude definition of sub-systems which may be composed of further sub-systems. We could carry on this refinement till we arrive at the so called ‘black box’ level which is some perceptible manageable level. Just as a system is made up of sub or sub-sub-systems it itself is part of a super or supra system. This could be termed as the environment in which the system operates. The forces in the environment impinge on the system while the system itself exerts pressure outwardly on the environment thereby having some sort of a dynamic equilibrium at the boundary which separates the environment from the system. Whether the MIS is computer based or non-computer based, it ought to focus on managerial effectiveness and in the earlier Units you have been introduced to the various aspects related to MIS. However, once again in this Unit certain issues related to MIS, which have not been discussed earlier, are to be taken up to complete your knowledge on MIS. Issues related to Information resources and control systems have also been discussed in this Unit. 10.2 INFORMATION, ORGANISATION AND THE SYSTEMS VIEW The organisational factors play a major role in what type of information is to be processed and communicated to the decision-makers. These factors include nature of the organisation, category of the organisation, structure of the organisation, size of the organisation and the management style followed in the organisation. Information is the primary tool that will help the management, its products and services in the competitive environment. It should be clearly understood that the information technology and quality information are not the goals but merely the competitive weapons that support the organisations in their activities. Without quality information, organisations are operating in a world of uncertainty, and quality information could be produced by taking a number of steps and making sure that the information generated and presented to the decision-makers is accurate, timely and relevant. There has been a subtle but definite shift in the way the MIS function is looked upon in an organisation. This change is characterised by the change in the nomenclature of the titles under which the function exists in various organisations. Initially, the executive looking after the function of data processing with the help of the computer was referred to as the computer 145
  3. 3. manager, and, in the 1960’s the same position was renamed as Electronic Data Processing Manager. During this period, the department was also named as the EDP Department. It is during the seventies and eighties that the function has been recognised as MIS function and the manager is called the MIS Manager. There are other titles also given to the information processing function. Some of the common ones are Management Services Division, Corporate Services Division and Information Resource Management. A change that has occurred in recent years is the adoption of the so called ‘systems approach’. In the past, managers, decision-makers and problem-solvers attempted piecemeal solutions, thinking in an isolated compartmentalised fashion independent of other operational units in the organisation. Today besides professional managers, political administrators have also become aware of the need for adopting an integrated holistic perspective by adopting the systems approach to problem conceptualisation and decision-implementation. Today we find everyone talking of systems — the transport system, educational system, healthcare delivery system, defence system, economic system, communication system, management information system, transaction processing system, decision support system, computer systems, etc. We are in the midst of an era of systems so to say. But what exactly do we mean by a system? A system is an organised or complex whole. It is an entity, conceptual or physical, which consists of interdependent parts or components. It is this interdependency which is a characteristic of the parts of the system. It is an interlocking complex of processes characterised by many reciprocal cause effect pathways. A system is a complex of elements or components directly or indirectly related in a casual network. This brings in the notion of some type of feedback and control to see whether or not the system is in a position to achieve the goals/purpose/objectives of the system. Any system must have an objective or a set of objectives or a hierarchical set of objectives. In a large context, a system is an assembly of procedures, processes, methods, routine techniques, etc. united by some form of regulated interaction to form an organised whole. In fact no system, unless it be a totally closed system, can exist in isolation. A system is made up of sub-systems which may be composed of further sub-systems. We could carry on this refinement till we arrive at the so called ‘black box’ level which is some perceptible manageable level. Just as a system is made up of sub or sub-sub-systems, it itself is part of a super or supra system. This could be termed as the environment in which the system operates. The forces in the environment impinge on the system while the system itself exerts pressure outwardly on the environment thereby having some sort of a dynamic equilibrium at the boundary which separates the environment from the system. Super or supra system The system under consideration Other Systems Sub system-1 Sub system-2 Sub system-N Sub-sub system (SSS-1) SSS-2 SSS-M Black Box BB-2 BB-Q BB-1 146
  4. 4. Figure I: Hierarchy of Systems The above narrative description has been graphically depicted in Figure I. This figure, while depicting the Hierarchy of systems, shows that every system is a part of another system. The inter-linking of sub-systems and systems make a system work better and gives the best results in a given situation and system. 10.3 CONCEPT, STRUCTURE AND MIS GROWTH Few concepts have been more vague than an MIS as understood in its definition and scope. Many experts think that an MIS is the computerisation of clerical work. This is incorrect. Others hope that some day it might be possible to have an all knowing expert computer system which will provide answers and decisions for complex problems when a manager/executive simply presses a few buttons. This view would perhaps remain a dream. An MIS is a means for connecting the managed operating systems by exchange of information. An MIS is more than a set of ideas or concepts. It is an operational system performing a variety of functions to produce outputs which are useful to the operating personnel and management of an organisation. Managers have always had ‘sources’ of information, the MIS provides a system of information. It is imperative to realise that a systems approach to managing is necessary to compete in today’s world. The systems approach to management must precede the design and use of an MIS. The computer is only a component, or a tool of the MIS, not the MIS itself or the central focus of MIS. Management must take an active part in the design of the MIS. Technical knowledge of the computer, though preferable, is not necessary for the manager to perform his or her role in the design of MIS. Davis and Olson define MIS as an integrated user machine system for providing information to support operations, management and decision-making functions in an organisation. The system, if it is computer based, utilities computer hardware and software, manual procedures, decision models and preferably a data base. A data base is a centrally controlled integrated collection of logically organised data. The underlying concept of a data (bank) base is that data needs to be managed in order to be available for processing and have appropriate quality and value. Over time, the concept of a single highly integrated system was demonstrated to be too complex to implement. The MIS concept is now veering around to that of a federation of sub-systems developed and implemented as needed but conforming to the overall plan. Thus, rather than a single global MIS, an organisation may have many related information systems which serve managerial needs in various ways. MIS is also an organised method of providing past, present and projected information relating to internal operations of an organisation and external intelligence by good environmental scanning techniques. All organisations have some kind of information system even though some systems might be nothing more than filing cabinets and an accounts ledger. An information system should have a systematic formal assemblage of components that performs data processing operations to : • meet the legal and transactional data processing requirements, • provide information to managers at all levels for carrying out their functions effectively, and • provide a variety of useful reports, as required to internal and external constituents. 147
  5. 5. If a report does not have an element of utility, why generate it or ask for it, unless it is a statutory requirement. Since the facts are too many and keeping track of them means getting bogged down in day-to-day routine matters, the managers do not have sufficient time for creative and innovative work and for decision-making of a strategic nature. It is, therefore, imperative to ask for ‘exception’ reports. Perhaps it is well to introduce a brainstorming session of executives involved at different levels to specify what they are looking for, what is to be done, by whom, by what data and in what form? It would be worth creating confidence and mutual trust about not reporting normal things. Perhaps some type of a selective information management could be pursued somewhat similar to the selective inventory management of value based ABC analysis and critically based VED (Vital, Essential, and Desirable) form. For studying the growth of the MIS activity in an organisation we could apply the model developed by Richard Nolan in 1979, popularly known as the Stage Growth Hypothesis. This six-stage model very clearly explains the stage by stage development of the MIS function in an organisation. This model provides a framework for the analyst to understand the reasons for success or failure of the MIS function in an organisation and also assists in developing solutions to take the functions ahead. According to this model, there are distinctive features associated with each and every stage of the growth of the MIS function in an organisation from which the decision-makers can understand the growth pattern and use the MIS function to the strategic advantage of the organisation. Figure II depicts the framework suggested by Nolan. In this figure, the horizontal axis shows the stages of growth, and the vertical axis shows the growth processes of the MIS function. The curve on the graph shows the trend of the MIS budgets. It could be noted that the budget curve shows an upward trend till the third stage, and becomes more level towards the beginning of the fifth stage onwards. The different stages discussed in the model are as under: Growth Processes Application Portfolio DP Organisations D P Planning and Control User Awareness DP Expenditure Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Initiation Contagion Control Integration Data Admn. Maturity Figure II: Nolan Six Stage Growth Model Stage-1 : Initiation 148
  6. 6. The first time the organisation buys and installs a computer system, the MIS function in the organisation has entered this phase. Since most medium and large-sized companies have installations of the computer systems, this stage is already reached as far as the majority of the organisations are concerned. During this stage, the following features may be distinctive : a) Functional cost reduction applications; b) Specialist DP organisation for technological learning; c) Lack of strict planning and control in the MIS function; d) Hands-off training for user awareness. Stage-2 : Contagion The second stage involves a rapid proliferation of the computer resource all over the organisation, sometimes based on the actual organisational needs and sometimes just to add some equipment to feel important in the organisation. This is the phase when most of the organisational units feel that they should have an access to the computer hardware, develop software and have the trained manpower working in their units. Every unit head wishes to have some computer resource controlled exclusively by himself or herself. Due to this non-planned proliferation, the MIS function grows disproportionately and, there is, absolutely no control on the MIS budgets resulting in confusion in the organisation. The budgets go shooting up without any controls. The applications are developed in an independent manner, and this results in duplicated efforts and systems. This stage is marked by the following characteristics : a) Proliferation of applications, b) User-oriented departmental programmers, c) More relaxed planning and control of MIS function, d) Users are superficially enthusiastic without sincere involvement. Stage-3 : Control It is towards the end of the second stage that the management gets conscious of the fact that the benefits being derived are not in proportion to the actual expenditure on the MIS activity, and the organisation starts exercising control and some restraint in sanctioning the budgets. The management takes serious interest in planning the function, and it results in a better control on the activity. The MIS budgets get checked with the result that the users also get aware of the fact that information technology should be used to some meaning rather than just have some infrastructure under them. The major highlights of this stage are : a) Upgradation of the documentation and modification of existing applications, b) Middle level management to look after the MIS function, c) Formalised planning and control of MIS function, d) Users are involved with some accountability imposed on them. Stage-4 : Integration 149
  7. 7. After the management has been able to provide the control guidelines to the MIS function, the organisation starts thinking in terms of integrated applications so as to avoid the duplication of efforts and systems, as well as, providing better levels of integrity to the systems and data. Data- based systems are used and the applications are designed as subsystems of the organisational systems, unlike the earlier ones interfunctional and intrafunctional integration is ensured through the database. Capable database management systems are used to manage the data, and the data communication facilities are used to transfer data from one location to another. The budgets, once again, start looking high. This stage is marked by the following characteristics : a) Retrofitting the existing applications using data base technology, b) Establishing the computer utility and the user accounts teams, c) Tailor-made planning and control systems, d) The user accountability to learn and involve in the systems. Stage-5 : Data Administration With the integration of the applications using a data base environment in the fourth stage, the MIS function in the organisation undergoes a major change in the functional outlook. The technical expertise looses over to the management process and responsiveness to the users, and the data becomes the most crucial resource in the organisation to be managed. Since the data is being stored, used, manipulated and processed from integrated files in the database, the function of the database administrator to plan, supervise, provide, control and secure the data becomes most important. The stage is characterised by the following features : a) The application are further integrated as per the organisational requirements, b) The data-processing organisation is for the data administration, c) The systems are based on data and system sharing basis, d) The user becomes effectively accountable for the MIS systems. Stage-6 : Maturity It is almost impossible to attain the sixth stage of maturity when everything has been achieved, and the MIS systems will never fail themselves or fail the organisations. The applications by this stage have been incorporated into the organisational functioning and these are as per the strategic requirements of the organisation. The technology has become an integral part of the organisational thinking, philosophy and systems. Some of the major features related to this stage are : a) Integration of application mirrors the organisational strategic choices, b) The emphasis is on the data resource management rather than on the system management, c) Data resource has become the key factor in strategic planning, d) The users and data-processing professionals share the responsibility of the MIS function, jointly and willingly. 150
  8. 8. It is towards the end of the third stage that the information technology becomes a turning point for the strategic performance of the organisation and the full benefits of the information technology are realised by the organisation. Some of the organisations are able to go beyond this point, but some organisations may never reach this point at all. Such organisations can never have the advantages of the technology, and may find it difficult to survive in the competitive environment. Check Your Progress – 1 1) Explain ‘Black Box’ level. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… 2) What do you understand by Stage Growth Hypothesis? ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… 10.4 STRATEGIC PLANNING FOR MIS Planning of the MIS effort is very crucial for organisations. Absence of proper planning may result in the sky-rocketing of MIS budgets, thereby leading to a resource crunch during the later stages of MIS growth. In the initial stages, the application development projects and operations of completed application systems are the focus of the planning efforts. As the MIS activities grow in an organisation, the planning shifts its attention from operational planning to strategic planning. For operational planning of MIS, common techniques such as structural flow, charting, structured programming and walk throughs are used. For managerial and strategic planning of MIS, formation of steering committees composed of key executives from the user and MIS groups is a common practice. These steering committees are generally created to monitor proper functioning of MIS activity towards the achievement of long range organisational goals. Organisations commonly face the following problems in MIS planning : a) The MIS plan may not be compatible with the overall strategies and objectives of the organisation, b) The framework of MIS structure may be difficult to design, c) Allocations of development resources to various applications may be difficult, d) Project management, to control time and cost schedules, may be lacking. 151
  9. 9. The overall objectives of planning for MIS have changed from linking processing strategy with business strategy in 1970s to linking the information technology strategy with the business strategy in 1980s. 10.5 TOP MANAGEMENT INTEREST AND A CORPORATE MIS PLAN For successful growth of the MIS activities in any organisation, the top management’s continuous interest as well as involvement is crucial. Not only that the top management should be involved in computerisation, it should also insist on having a corporate plan for MIS activities. The top management involvement could be in the following areas : • Providing appropriate infrastructural facility, • Linking MIS with business activities, • Monitoring the level of user awareness and understanding, • Making strategies that can be understood among users, • Monitoring the financial/capital requirements of all application areas on a time frame basis, • Providing flexibility for future designs, • Reviewing major system changes, and • Establishing overall schedules for implementation. One of the greatest hurdles to using information technology for strategic purposes, has been the inability of the top management to appreciate and manage the information systems. Mostly it has been due to the lack of understanding on part of the top management and a fear of uncontrollability of information systems, which leads to a lower level of interest. Corporate Systems Plan Organisation Structures Application Operations Equipment & Staff Needs Charging Control Figure III: Framework for Managing IR (Information Resource) For the top management to be involved in information processing activities, a framework for managing information systems has been suggested as shown in Figure III. Positive top management actions are needed in all these areas to avoid decisions by default. Since information technology affects the entire business from organisation structure to product market strategies, chief executives should not skip the corporate policy decisions by delegating or postponing. 152
  10. 10. 10.6 INFORMATION REQUIREMENTS, ANALYSIS AND CRITICAL SUCCESS FACTOR (CSF) METHOD Once the overall MIS goals and strategy have been laid down, the next stage is to ascertain organisational information requirements. Information requirements are vital for MIS planning, application, identification and planning an information structure. Three levels at which the information requirements need to be established for the design and implementation of CBIS have been identified as: i) Organisation level to define the overall information system, and to specify a portfolio of applications and data bases. ii) Database level to specify data models and other specifications. iii) Traditional approaches adopted by system analysts to assess information requirements. These are as follows: a) Asking questions from the users by available methods, b) Deriving from an existing system, or from descriptions in textbooks/hand books, c) By object system analysis, d) Experimentation with an evolving information system. John F. Rockart, while advocating the CSF approach, evaluated the existing four methods of determining executive information needs, viz., the by-product technique, the null approach, the key indicator system and the total study process. These four techniques have their relative merits and demerits, and to overcome the disadvantages, the Research Team at Sloan School of Management, suggested a creative approach termed as CSF approach for information requirement analysis. Its application was found effective and response-provoking amongst the executives. As a part of the exercise, the executive goals and the CSFs are identified and reviewed to the satisfaction of both the executives and the system analysts. The CSFs for any business are the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organisation. These are a few areas where the things “must go right”, for the business to flourish. The CSFs must receive constant and consistent attention from the management as well as individual managers. CSFs differ from company to company and from manager to manager and like organisations may have differing CSFs. There are four prime sources for identifying the CSFs as listed below: • Structure of the particular industry, • Competitive strategy, industry position and geographical location of the company, • Environmental factors, • Temporal organisational factors needing immediate attention. The CSFs are generally not meant for strategic planning, since the data requirements are impossible to pre-plan. The CSF method centres around information needs for management control where data requirements could be defined and pre-planned. Most executives have four to eight CSFs. 153
  11. 11. 10.7 RESOURCE ALLOCATION AND CHARGING FOR SERVICES Allocation of resources is one of the important issues related to the MIS function in an organisation. It is during this stage that we prioritise the applications and decide on their implementation schedules. The following four factors should be kept in mind while allocating resources to different applications: • Quantifiable returns, • Judgmental benefits, • Institutional factors or constraints, • System priority factors. Intangible benefits, such as, improved levels of service, better financial control, standardisation and better quality of information are also considered important while considering resource allocation. It is an accounting approach for allocating costs of information systems to their users. There are two different ways of charging the users for the information services: • Charging by allocation of costs to the users as corporate overhead, and • Charging for services the individual users get. The second approach is based on the user’s willingness to buy the information services and willingness to pay for the new system development. The reasons for having a charge-out system include cost assignment, control, incentives and budgeting. The different techniques which are used for allocating costs are: a) No charge-out, b) Complete Charge-out, c) Partial Charge-out. 10.8 INFORMATION RESOURCE ASSESSMENT Let us look at Figure IV. The lower arrow in the Figure represents Information Resource Assessment (IRA) — a process of using information and knowledge to support the development of the organisation’s strategic business direction. In effect, it is the mirror image of “Strategic Planning for Information Resource”, in the sense that it is the process through which information and knowledge are used to identify the strategic comparative advantages and a create and evaluate new strategies, i.e., to influence change in the “Organisational Strategy Set”. IR Strategy Set Strategy Planning for IR Role of Information and IS in the Organisation IR Mission Organisational Strategy Set IR Objectives IS Design-Development Strategies 154
  12. 12. Organisational Mission Information Acquisition Plan Organisational Objectives Model Development Plan Organisational Comparative Advantages Organisational Strategies Implementation Other Strategies Attributes Information Resource Assessment Information and Decision Support Systems Data Bases Model Bases Model Bases Figure IV: Operationalising Information as a Strategic Resource (Source: Management Information Systems: The Technology Challenge, edited by Nigel Piercy; Croom Helm London & Sydney Nichols Publishing Company New York; 1987, p.240) Figure IV shows that this influence does not come directly from the Information Resource (IR) Strategy Set, but rather from the Information Systems (IS) databases and model-bases that have been created to implement the ‘IR Strategy Set’. The basic IRA process is one of identifying information that is crucial, or potentially crucial, to the organisation’s strategy set. This may be of the nature of ‘new’ information, that has not previously been used to advantage, or it may be information that has been re-evaluated and updated. Such information and knowledge may be put to use in creating information products or in developing new and more effective business strategies, objectives, or organisational missions. One variety of IRA influences the creation of information that is available to the firm through its IS. However, the creation of information products is only one of the ways in which information can be made to be a strategic resource. King and Cleland, (1978) have developed a technique of ‘strategic databases’ that may be used to illustrate the way in which IRA can be conducted. The basic idea is that much of the data on which the organisation’s strategy may be based is often routinely collected and analysed as ‘data’, rather than as strategic ‘information’. The distinction between data and information may appear to be pedantic, but it is a useful one to be made in this instance. As you are already aware, data are the numbers, letters and other symbols that are used to represent events, activities, entities, etc. (The best-known set of organised data may be the telephone directory) Information is data that has been evaluated for some use or purpose. (For instance, a name and phone number on a message that says that your offer to purchase a tour package has been accepted, is information rather than data). Information is clearly required for the effective support of strategic planning and for the making of vital decisions in an organisation. Yet, many of the processes that are directed towards decision-support utilise and present data rather than information. Illustrative of this, are the strength-weakness assessments that are frequently made by a firm in support of its strategic decision-making and planning. Most concepts of strategic management and planning incorporate strength-weakness assessment as an important determinant of strategy. According to these concepts, the firm should base its future strategy on its primary strengths and avoid basing strategy, even implicitly on weakness. To implement this concept, many firms charge staff planners with doing a ‘staff study’ of strengths and weaknesses. The predictable result of such a study, is often a voluminous report, that more represents data than information. The same is true in other areas of critical information that are essential to the development of an effective business strategy. Environmental opportunities and risks are routinely assessed and reported in the form of voluminous data that are not easy to use in the strategy-making process. Indeed, it may be argued, that such reports cannot realistically be directly used in strategy formulation and assessment. 155
  13. 13. Formal models, may be well used, in providing such strategic decision support. For instance, models may ‘automatically’ review companies for their ‘acquisition potential’ – the degree to which their acquisition would serve to enhance the goals of the firm. However, the effective use of such models requires the input of criteria that can only be generated by the organisation’s managers. These ‘acquisition criteria’, like strength and weaknesses, environmental opportunities, and a variety of other strategic information, must be developed through the organisational processes that are here termed as ‘IRA’. The ‘Strategic data base’ represent one way to implement IRA. They are concise statements of the most significant strategic parameters that will guide the use of the models that are in the IS and their application to the development of strategy. A set of criteria to be used in the evaluation of the acquisition of the candidates is a strategic database (SDB), if it is developed through an organisational process that ensures that the different points of view of the managers of various functions and product-market groups have been taken into account, that there is a reasonable degree of organisational consensus concerning it, and that it is accepted by the organisation’s managers. To illustrate this, consider, for example, the traditional process that might be used in an organisation to conduct a strength-weakness assessment. This approach commonly relies on staff analysts, who gather data and prepare documents which are to serve as background information for the support of planning activities and strategic choices. Because the planners and analysts, who perform these tasks, often have neither the managerial expertise nor the authority to make the significant choices that are involved in any information evaluation process, the typical output of such an exercise is a document, which seems to have been prepared on the basis of ‘not leaving anything out’. Such an emphasis on ensuring that nothing relevant is omitted rather than on attempting to distinguish the most strategically relevant information from the mass of the less relevant serves only to perpetuate the existing state of affairs regarding the informational support provided to managers at all levels; top executives and planners are deluged with irrelevant information, while, at the same time, they are unable to find the elements of information which are crucial to the identification of comparative advantages and to the determination of strategy. The ‘strategic-database’ approach to implementing IRA, on the other hand, involves the institutionalisation of ongoing processes in which task forces, each of which is made up of managers representing various of the parochial interests within the organisation, are charged with gathering and evaluating the data in strategic areas, such as, strength-weakness analysis, acquisition criteria, etc. In effect, these task forces use the information resources of the organisation to change and up-date its organisational strategy set. Such ‘strategic databases’ produce and represent information in its most valuable form rather than data since, in this process, large quantities of data have been evaluated and condensed to a form which can be feasibly used in the direct support of strategic decision-making. The strength-weakness, SDB, may be used as an illustration. A task force, composed of key managers in each of the major functional and product sub-units of the organisation, is charged with developing a concise consensus list of the most important strengths on which the company (business) should base its future and the most significant weaknesses on which it should avoid having its future become dependent. Thus, a team is given the job of producing the strength-weakness ‘answers’, and of making the strategic information choices of those strengths and weaknesses on which the future will depend. 156
  14. 14. This team of managers, supported by their staff, is charged with arriving at conclusions concerning a specified approximate number (usually from 10 to 15) of the most important strengths and weaknesses which should influence the future of the organisation. The development of conclusions on the 10 to 15 most important organisational strengths and weaknesses can be, as any experienced manager knows, is a difficult task when it involves managers representing various organisational interests and points of view. Developing a twenty page list of strengths and weaknesses could be accomplished relatively easily, but a list of the 10 to 15, most significant ones requires substantial analysis, debate and negotiation among the various individuals and interest areas that are involved. This is so because of both, the judgements which are needed, and the potential organisational impact which such a list will inevitably have as it is used in the development of strategy. The strength-weakness, SDB, that may be so developed, is clearly a substantial basis for assessing potential comparative advantages, and for evaluating proposed strategies. For instance, once such an SDB is in place, proposed strategies can be screened using it as a standard, in a somewhat mechanical fashion, just as a proposed acquisition candidate might be ‘automatically’ screened using an ‘acquisition criteria’ SDB that has been similarly developed. In the case of the strength-weakness SDB, this would be done through the routine application of a set of questions like: a) Which specific strength of our firm does the proposed strategy build on? b) What is the relative importance of each strength to using the proposed strategy in achieving the firm’s goals? c) Does the proposed strategy, implicitly or explicitly, assume the existence of some strength that the firm does not possess? d) Is the proposed strategy explicitly or implicitly dependent on any weakness, though it may be primarily based on strengths? This illustration of a strength-weakness SDB process illustrates the information resources assessment process of Figure IV. It is a routine organisational process that is used to translate the informational resources of the organisation into sources of potential strategic comparative advantage. It is, in effect, the mirror-image of the ‘strategic planning for information resources’ process, which makes the reverse transformation to ensure that business strategies are supported by appropriate information and knowledge bases. Check Your Progress – 2 1) List the problems commonly faced in MIS planning. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… 157
  15. 15. 2) Evaluate Critical Success Factor Method for the purpose of Information Requirement Analysis. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… 10.9 MANAGEMENT STEERING COMMITTEES AND INFORMATION NETWORK Due to active involvement of human beings, organisational powers, needs and politics in the functioning of the MIS department, a steering committee composed of senior personnel from various user groups, such as, the finance and EDP function proves to be a better alternative to prepare the priority list for allocation of resources. Though this method also suffers from major disadvantages, such as, the time wasted on meetings and negotiations and powerful group politicking, some of the experts have considered the steering committee approach as the most suitable approach to get the best results in the MIS function. The user involvement can be ensured by having their representatives on the steering committee. A steering committee formed under the chairmanship of the chief executive with 5-10 members (may be less in small organisations) has been found to be an effective experience. Invariably we find information flowing from one place to another, from one decision-maker to another in an organisation. Perhaps it is this phenomenon which motivated Forrester to conceptualise an organisation as an Information Network. He observes that enterprises are very complex multiloop interconnected systems. Decisions are made at multiple points throughout the system at various hierarchical levels. Each resulting action generates information that may be used at several, though not necessarily at all decision points. This structure of cascaded and interconnected information feedback loops, when taken together, describe the total system. The interlocking network of information channels emerges at various points to control physical processes such as the hiring of employees, the building of factories, and the production of goods and/or services. Every action point in the system is backed up by a local decision point whose information sources reach into other parts of the organisation and the surrounding environment. Management is a process of converting information into action-a process analogous to decision- making. Forrester conceptualises six information feedback networks in an industrial setting namely, materials, orders, money, personnel, capital equipment and information. A policy is a rule that states how the day-to-day operating decisions are made. Decisions are the result of applying the policy rules to the particular conditions that prevail at any moment. In essence, therefore, there is essentially an activity centre where certain actions or activities take place which change the level or state of the system. These activities are carried out because of higher level direction received from the managers at the decision centres which have their own set of decision procedures or norms. The combination of an activity centre plus decision centre is termed a functional unit because it performs a function. The functional unit is represented in Figure V, which shows the flow of information. Hence the information system could be designed to provide information to each functional unit, in fact at each of the strategic planning level, management control level and operational level. The information system for related functional units can be clustered into an information sub-system. 158
  16. 16. An operational function is a class of any one or more types of actions, carried on by the same or different functional units which regulate the inflow and/or outflow to or from sequence of levels as a group. A management control centre is one or more management people together with their supporting staff which acts as a decision centre for a group of functional units or for a group of subordinate management control centres. An information sub-system is a special operational function unit and MIS is an operational function whose parts (corresponding to functional units) are information sub-system of other operation functions. We could also think of an Operational Control Module as that part of an information sub-system which supports the functional units of an operational function. A Management Control Module is that part of an information sub-system which supports the management control centres of an operational function. Parts of information sub-systems, termed modules, are the basic entities which help in adopting a modular approach to an MIS design. The use of modules is desirable because it allows improved project control. The modules can be written and tested separately allowing more efficient planning and implementation in phases. Goals, policies, objectives Other decision Decision Other decision centres centre centres Decisions Activity Centre Actions Level or state of systems Figure V: Flow of Information in a Functional Unit The Non-formal Element An MIS model has to reflect formal and informal flow of communication of messages/data/information. At the bottom is the physical system – the workers and all equipment and facilities used to produce the products and/or services. Internal data generated here is passed on to the information processing resources (which could be manual or computer based, preferably making use of a data base) which generate internal information formally. The internal and external environmental information is passed on to the appropriate executives/managers who also acquire on their own internal and external information on an informal, non-formal manner. Gordon Davis has conceptualised the various MIS components chart as shown in Figure VI. 159
  17. 17. Public Public formal Public informal Private Private formal Private Informal Formal Informal page Figure VI: Davis’ MIS Formal & Informal Components Part of the MIS is available for use by anyone in the organisation, and part is private, restricted to only the person establishing it. The computer resource (in case of computer based MIS) is a part of the public MIS, whereas the information that an executive receives from telephone calls, letters and memos sent on a personal basis are examples of the private MIS. Likewise, part of the MIS is formal and part is informal. The formal MIS is prescribed by procedure such as computer programme. The informal MIS has no spelled-out routine. The size of the four boxes in Figure VI are what it ought to be like – the largest being public-formal and the smallest being private- informal (which in an ideal case ought to be at the zero level which perhaps will never occur). Attention must be directed also to the informal organisation structure. Management should try to identify information needs that are not being fulfilled by the formal system and to incorporate as many of these flows as possible into the formal MIS. Certainly those informal power centres of the organisation that can influence the success of the MIS should be identified and included in the design effort. One often wonders whether an MIS should straightaway be superimposed on the existing organisation structure. 10.10 ROLE OF MIS AT VARIOUS MANAGEMENT LEVELS Some say that management can be understood by observing what managers do. Managers get the work done through others. Management can also be understood by the type of functions a manager performs (see course MTM-01). In fact management is a process of achieving an organisation’s goals and objectives by judiciously making use of resources of men, materials, machines, money, methods, messages and moments (the last two in the context of information being a vital resources to the manger/decision-maker). Management can also be seen as structured into three hierarchical levels namely, top level, middle level and bottom level or strategic, tactical and operational levels, respectively. Although lines of demarcating are not absolute and clear-cut, one can usually distinguish certain layers within the organisation which are characterised by classical pyramidical type of structures. Top management established the policies, plans and objectives of the company as well as a budget framework under which the various departments will operate. These factors are promulgated and passed down the middle management. They are translated into specific revenue, cost and profit goals particularly if each department works under a cost or profit centre concept. These are reviewed, analysed and modified in accordance with the overall plans and policies until agreement is reached. Middle management then issues the specific schedules and measurement yardsticks to the operational management. 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 organisation achieve its overall plans and objectives. Planning Planning 160
  18. 18. Control Organising Organising Control Staffing Coordinating Staffing Coordinating Top Level Bottom Level Planning Organising Control Staffing Coordinating Middle Level Figure VII: The Allocation of Managers’ Time The hierarchical view of management is important for two reasons: information needs tend to be different at different levels of management and the amount of time devoted to any given function varies considerably with the level as can be seen in Figure VII. The job content at various management levels is further elaborated in Table 1. Table 1: Job Content of Management Levels Sl. Top Middle Operating No Character Management Management Management 1. Focus on planning Heavy Moderate Minimum 2. Focus on Control Moderate Heavy Heavy 3. Time Frame 1 – 5 Years Upto a year Day to day 4. Scope of activity Broad Entire functional Single sub- function or area subtask 5. Nature of activity Relatively Moderately Highly structured unstructured structured 6. Level of complexity Very complex, Less complex, Straightforward many variables better defined variables 7. Job measurement Difficult Less difficult Relatively easy 8. Result of activity Plans, policies Implementation End product and strategies schedules, performance yardsticks 9. Type of information External Internal, reasonable Internal, historical; accuracy high level of accuracy Efficient, effective 10. Mental attributes Creative innovative Responsible, Efficient, effective 161
  19. 19. persuasive, administrative 11. Number of people Few Moderate number Many involved 12. Department divisional Intra-division Intra-division, Intra-dependent interaction Inter department In the context of MIS, management can perhaps be best defined as a process of a) selection of objectives, b) judicious allocation of resources, c) determining operational plans and schedules, d) keeping control of progress, and e) evaluation through feedback. Each of these areas require certain decisions to be made. Thus, we take strategic decisions at the top level, tactical decisions at the middle and operational decisions at the junior level. As can be seen from Table 1, the type of problems and decisions at the junior level are quite deterministic and structured and we can have programmed decisions. But as we move to higher level, situations become fuzzy, ambiguous and unstructured, and thus we are faced with non-programmed decisions. We find that with the introduction of computers, we have gone about routine EDP type of an activity for the essentially programmed decisions that take place at the operating level. Perhaps with the rapid advances that are taking place in the field of electronics, communication and computers, we might have good progress in the field of AI (Artificial Intelligence) and accordingly devise knowledge based expert systems which would be helpful at the strategic level to cater to non-programmed complex type of decision-making situations. Though the classic pyramidical structure is generally acceptable, unfortunately in the modern complex organisation this neat, militaristic, configuration seldom(!) fits the reality. Under conditions facing modern management the strategy and the control tend to become more remote from the resources that are geographically spread and organisationally diverse. Between the decision-maker and the resources lie systems – of people and data handling equipment – that can distort, delay, amplify, and dampen messages. External to the enterprise, interest groups – in government, consumers, labour representatives and other national and international agencies are involved in an information exchange. The modern manager must be capable of managing his or her information systems for strategic planning, management control and operational control. The following guidelines for fitting the MIS function into the overall organisation could be of help to the organisation : • The level of reporting has a correlation with the performance of the MIS function. The organisation where MIS function reports to Chief Executive has showed a higher success rate, and 162
  20. 20. • For enhancing capabilities of the MIS function beyond providing services to a select user group or limited range of services, it is very important to have MIS as an independent function. 10.11 DESIRABLE CHARACTERISTICS OF MIS It would be proper if we recall the desired characteristics of information, i.e., accuracy, timeliness, objectivity, relevance, conciseness, etc. You will discover that some of these characteristics are also the desirable characteristics of a good, effective and efficient MIS. The process of developing an MIS is never ending as organisations strive to take advantage of new technology and methodology. Indeed, even the newly-emerging computer systems concept of ‘information resource management’ (IRM) merely ‘upgrades’ the computer system and its attendant information to the position of a resource that is to be husbanded and administered, much as are other organisational resources. This pervasiveness of computers and the increasing familiarity of people at all levels of the organisation with them will, inevitably lead to a wide variety of new computer applications. More importantly, however, it will lead to the amplification and acceleration of a phenomenon that is already beginning to be experienced – the creation of a comparative business advantage through information. The evolutionary process followed in achieving an MIS is called the MIS life-cycle which consists of phases in a sequence of planning, analysis and design, implementation, operation and control. The manager is ultimately responsible both for developing and using it. The information specialists ought to serve as valuable technical assistants. No doubt, the information specialists play a vital role in the development of MIS. They often trigger the manager’s interest in a new system by informing the manager of a new technology or method. Though the specialists recommend a particular system design, it is the manager’s responsibility to approve its implementation. Once the manager makes the decision, it is the information specialists’ task to implement the system. The MIS would have to preferably cater to the management/leadership styles also. If there could be greater user-involvement at all stages of the MIS life-cycle, then the end results would tend to be superior. The system should help each executive in his or her decision-making process for problem identification, generation and evaluation of alternative courses of action, to acquire necessary feedback on implementing his or her decision and help him or her to take corrective action. The MIS should develop the much needed management information rather than facts. It should provide relevant data in a summarised form to the higher echelons, viz., the system should be integrated through a centralised data base to cut down on redundancies, overlaps and costs. Apart from the appropriateness of information at different levels, it is important to recognise that different types of information are required for planning, control, and other managerial functions. It might become necessary to computerise your system especially if you are dealing with a large complex organisation or if you find that the existing manual based MIS is not in a position to provide you with timely information. Make sure that the reports churned out from the MIS are relevant and meaningful. They should be easy to understand and read with good documentation. It is a good practice to distribute the reports only to those that genuinely need and make use of it. The MIS should be robust but at the same time it should be flexible and sensitive enough to cater to relevant changes in technologies, methodologies and the changed parameters. There should be some type of a review undertaken periodically to assess the worth of the MIS. 163
  21. 21. Another crucial issue is the positioning of the MIS function in an organisation. It would always be better to put this function under an independent charge with its chief directly reporting to the chief executive. However, in some cases a decentralised user group reporting to chief executive is also suggested. In fact, this positioning will depend on the nature of the organisation. Check Your Progress – 3 1) What do you understand by the term “functional Unit”? ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… 2) List a few desirable characteristics of MIS. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… 10.12 LET US SUM UP The Unit discussed various issues related to the management of information resources in organisations and we have also tried to conceptualise management information and control systems. Systems concepts and systems approach were also discussed along with certain concepts of management in the context of MIS. A manager is primarily a decision-maker and a problem- solver. Information is one of the prime resource inputs to his or her decision-making. It becomes necessary to provide the right type of information to the right decision-maker at the right time. Thus, the need for an effective system to provide information to management at all levels. We studied Nolan’s Six Stage Growth Hypothesis to show how the MIS function grows in an organisation. Initially, the organisations commit their financial resources little realising that these commitments have to be carried on even subsequently. The control stage on this model explains the relevance of management intervention in the functioning of the MIS department, so as to develop certain control measures to avoid the unplanned growth of the MIS resource. It is during the second part of the growth cycle from the fourth stage onwards that the actual benefits of technology could be realised in organisations. Top management interest is indicated by way of steering committees, set up to forward the cause of the MIS function and the relative organisational position of the chief of MIS function. A policy for charging for the services rendered to the users could be in the interest of the MIS function, because only then the function can justify its existence. Critical success factor analysis has been identified as the best approach to assess the need for this function in any organisation. 164
  22. 22. The whole organisation could be thought of as an information network, both formal and informal, connecting various decision centres at various levels. Managers at different levels perform different managerial functions and hence require different types of information. A conceptual framework outlining the desirable features of MIS have been described which could lead you toward the design of an MIS, if you do a little more reading on the subject. 10.13 KEY WORDS Analysis : The methodical study of a problem. Especially the modularising of a problem into smaller and simpler problems. Usually used in a nonbusiness sense (such as numerical analysis, operations analysis) unless combined with a business term. Audit : Examination and verification of records. Business System : A system used to accomplish some business goal. Typical business system include accounts receivable systems, payroll systems, banking systems and so on. Central Processing Unit : Directs the operation of other units in a computer and performs the data manipulation and computations needed to effect the desired transformation of the input data. Frequently written CPU. When the word computer is used to mean less than a complete computing system, it generally denotes the CPU. The computers referred to as mainframe. Communication System : Used to convey data from one point to another. Consists of a message source, message channel and message receiver. Also called data transmission system, data communication system and the like. Data Base : Some number of files. Most data bases have names (corporate data base, financial data base, production data base and so on). Implementation : The step in the system life-cycle where a system design is constructed as a real business system. Installation : The step in the system life-cycle where a new business system is put into use. Also used to mean a business or computing facility. Management by Exception : A principle of management where attention is focused only on performance. The phrase used in connection with the presumed action required where reports on performance differ from original projections. Characteristically these reports bring out ‘favourable’ and ‘unfavourable’ variances, the latter being the basis for ‘Management by exception’. Modular System : A system composed of distinct sub-systems. The sub-systems are called modules. 165
  23. 23. Storage : A mechanism into which data can be entered, in which it can be held, and from which it can be retrieved at a later time. Loosely any mechanism that can store data. Systems Analysis : The step in the system life-cycle where a detailed study is made of the need and its solutions and the environment in which they must exist. Systems Life-Cycle : The sequence of steps through which a typical business system passes; need, conception, feasibility study, system analysis, design, implementation testing installation or conversion, production maintenance and cessation. 10.14 CLUES TO ANSWERS Check Your Progress – 1 1) A system is made up of sub-systems which may be composed of further sub-systems. We could carry on this refinement till we arrive at the ‘black box’ level which is some perceptible manageable level. Read carefully Sec. 10.2 and expand the above answer. 2) For studying the growth of the MIS activity in an organisation we could apply the model developed by Richard Nolan in 1979, popularly known as the Stage Growth Hypothesis. This is a six-stage model which very clearly explains the stage by stage development of the MIS function in an organisation. Read Sec. 10.3 to answer in detail. Check Your Progress – 2 1) Organisations commonly face the following problems in MIS planning: a)The MIS plan may not be compatible with the overall strategies and objectives of the organisation, b) The framework of MIS structure may be difficult to design, c)Allocations of development resources to various applications may be difficult, and d) Project management to control time and cost schedule, may be lacking. Read Sec.10.4 to know more about MIS planning. 2) The Research team at Sloan School of Management, suggested a creative approach termed as CSF approach for information requirement analysis. Its application was found effective and response-provoding amongst the executives. As a part of the exercise, the executive goals and the CSFs are identified and reviewed to the satisfaction of both the executives and the system analysts. Read carefully Sec. 10.6 and answer in details. Check Your Progress – 3 166
  24. 24. 1) An activity centre is where certain actions or activities take place which change the level or state of the system. These activities are carried out because of higher level direction received from the managers at the decision centres which have their own set of decision procedures or norms. The combination of an activity centre plus decision centre is termed as Functional Unit because it performs a function. Read carefully Sec. 10.9 and answer with figure. 2) A few desirable characteristics of MIS are: a)Accuracy, timeliness, objectivity, relevance, conciseness, etc. are the desired characteristics of information. Of these characteristics some are also the desirable characteristics of a good, effective and efficient MIS. b) The MIS should develop the much needed management information rather than facts. c)The reports churned out from the MIS should be relevant and meaningful. d) The reports should be easy to understand and read with good documentation. Read carefully Sec. 10.11 and expand the above answer. 167

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