In partial fulfilment of the requirement for the award of Degree of                     Masters in Business Administration...
TABLE OF CONTENTSSr. No.                   Topics                     Page no.   Remarks   Date1         Introduction of m...
Management Information SystemsA Management Information System (MIS) is a system or process that provides informationneeded...
referred to, in a restrictive sense, as information technology management. That area of studyshould not be confused with c...
Raw data Management Information System Process Useful                                                           Informat...
The characteristics of useful information, is made useful due to 3 maincharacteristics:      Time. Information should be r...
Systems Concepts                                        IntroductionWhen you begin the study of information systems, you s...
improving their performance. For example, youll determine if procedures, personnel, andequipment need to be changed to ach...
Components of System                                  System BoundariesEvery system has a boundary that defines its scope ...
replenished on a timely basis. An inventory control system will provide information on stockto be reordered based on sales...
Interface ProblemsIn the previous section we mentioned that adhering to standards can alleviate some interfaceproblems. Ho...
Interface ProblemsIn the previous section we mentioned that adhering to standards can alleviate some interfaceproblems. Ho...
The good thing about feedback is that it usually increases effort. For example, tennis playersoften perform better when th...
System EntropySystems can run down if they are not maintained. Systems entropy corresponds roughly tochaos or disorder - a...
products and services. The market research subsystem can transmit this information to themanufacturing subsystem that buil...
Information System as a Sub SystemAn information system consists of components that interact to achieve the objective ofpr...
SubsystemsOperational systems, which are designed to provide information about day-to-day activities,are composed of subsy...
In an inventory update procedure, the inputs are sales order transactions and an old inventorymaster file. During the upda...
System Feed BackAn information system provides system feedback to a manager about day-to-day activitiesand about deviation...
The marketing subsystem of the dealership is managed by a sales manager who recruitssalespeople, including experienced vet...
Control ViewFrequently, complexity takes the form of a hierarchy, whereby a complex system iscomposed of interrelated sub ...
• Correctness & Efficiency: Correct in the sense that the design meets all the user      requirements. Efficient is that t...
transformational systems. Systems for determination of sample sizes for audit testing, on theother hand may be decision su...
Formal vs. Informal SpecificationsIn the development of information systems in business, informal specifications throughgr...
Gather data describing the problemThe owner may study the environment, current standards, management, input re-sources, an...
Identify Alternative SolutionsGiven the fact that competitors have dropped their prices on comparable microcom-puters,the ...
Follow up to determine whether the solution is workingThe last step in the systems approach to problem solving is follow-u...
BIBLIOGRAPHY     www.icmrindia.com     www.antonline-education.com     www.wikipedia.org     www.scribd.comRefrence books:...
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System concepts by aman chaudhary

  1. 1. In partial fulfilment of the requirement for the award of Degree of Masters in Business Administration (MBA) ACADEMIC SESSION (2010-2012) SUBMITTED TO: SUBMITTED BY:Mr. Sachleen Singh AMAN DEEP CHAUDHARYA. P. (IT DEPARTMENT) MBAIII ROLL NO: 1043772247636 CT INSTITUTE OF MANAGEMENT & IT JALANDHAR 1
  2. 2. TABLE OF CONTENTSSr. No. Topics Page no. Remarks Date1 Introduction of management information , 4-5 difference between Data and Information2 Diagram of management information 7 system in decision making3 Characteristics of good Information, 8 advantages and disadvantages of MIS4 System concepts introduction 9-105 Components of System 11-156 Information system as a subsystem 167 Subsystem 17-188 System Feedback Interface, System 19-20 Control , Internal control9 Control View 2110 Types Of Information System 22-2311 Formal vs. Informal Specification 24-2712 Bibliography 28 2
  3. 3. Management Information SystemsA Management Information System (MIS) is a system or process that provides informationneeded to manage organizations effectively. Management Information Systems are regardedto be a subset of the overall internal controls procedures in a business, which cover theapplication of people, documents, technologies, and procedures used by managementaccountants to solve business problems such as costing a product, service or a business-widestrategy. Management Information Systems are distinct from regular information systems inthat they are used to analyze other information systems applied in operational activities in theorganization. Academically, the term is commonly used to refer to the group of informationmanagement methods tied to the automation or support of human decision making, e.g.Decision Support Systems, Expert systems, and Executive information systems.At the start, works in businesses and other organizations, internal reporting was mademanually and only periodically, as a by-product of the accounting system and with someadditional statistic(s), and gave limited and delayed information on managementperformance. Previously, data had to be separated individually by the people as per therequirement and necessity of the organization. Later, data was distinguished frominformation, and instead of the collection of mass of data, important, and to the point datathat is needed by the organization was stored.Early on, business computers were mostly used for relatively simple operations such astracking sales or payroll data, often without much detail. Over time these applications becamemore complex and began to store increasing amounts of information while also interlinkingwith previously separate information systems. As more and more data was stored and linkedman began to analyze this information into further detail, creating entire management reportsfrom the raw, stored data. The term "MIS" arose to describe these kinds of applications,which were developed to provide managers with information about sales, inventories, andother data that would help in managing the enterprise. Today, the term is used broadly in anumber of contexts and includes (but is not limited to): decision support systems, resourceand people management applications, ERP, SCM, CRM, project management and databaseretrieval application.An MIS is a planned system of the collecting, processing, storing and disseminating data inthe form of information needed to carry out the functions of management. In a way it is adocumented report of the activities that were planned and executed. According to PhilipKotler "A marketing information system consists of people, equipment, and procedures togather, sort, analyze, evaluate, and distribute needed, timely, and accurate information tomarketing decision makers."The terms MIS and information system are often confused. Information systems includesystems that are not intended for decision making. The area of study called MIS is sometimes 3
  4. 4. referred to, in a restrictive sense, as information technology management. That area of studyshould not be confused with computer science. IT service management is a practitioner-focused discipline. MIS has also some differences with Enterprise Resource Planning (ERP)as ERP incorporates elements that are not necessarily focused on decision support.Any successful MIS must support a business Five Year Plan or its equivalent. It must providefor reports based up performance analysis in areas critical to that plan, with feedback loopsthat allow for titivation of every aspect of the business, including recruitment and trainingregimens. In effect, MIS must not only indicate how things are going, but why they are notgoing as well as planned where that is the case. These reports would include performancerelative to cost centre and projects that drive profit or loss, and do so in such a way thatindentifies individual accountability, and in virtual real-time.Professor Allen S. Lee states that "...research in the information systems field examines morethan the technological system, or just the social system, or even the two side by side; inaddition, it investigates the phenomena that emerge when the two interact." Difference between data and information.Data or raw data is the. Basic facts and figures of operational life. Such as output figure,hours worked and so, when taken by itself have no meaning.Information or MIS are the various procedures and methods used to convert the data intouseful information. 4
  5. 5. Raw data Management Information System Process Useful Information  Decisions User Processes Diagram of the Management Information System in decision makingIn the diagram above Raw data refers to the data in its natural form, it does not make sense. MIS process is the translation or conversion of the raw data into understandable information. Useful information this stage is the finished product. Information is ready to be used. User processes this is where the information analyzing of the data is done and the useful information go unto the next stage. Decisions it put to the test, it is used for what it was created for. 5
  6. 6. The characteristics of useful information, is made useful due to 3 maincharacteristics: Time. Information should be readily available. Content. It must be error proof. Form. Information should be easily understood.Steps of a Good MIS The steps to a good MIS must include an organizational planning process inclusive of both tactical and strategic level. Investigation should be made about the information to determine if the information is viable and if it can be used. Appropriate data should be gathered. Data must be summarized before the information is used. Data must be analyzed to ensure the best alternative is used. Accurate information helps to gain best results. Information gathered must be used in the manner suggested to accomplish organizational objectives.Advantages of the MIS Allows managers to manipulate ‘the model ‘built into the system. It helps to enhance the company or organization recruitment ability. Provides information for future budgeting. Managers will also be able to check on the implementation for staffing.Disadvantages of the MIS While data was extensive, it was not necessary constructed in the way that best suit the users.(past)b Maintenance of information is too expensive.eg the super computer in organization. 6
  7. 7. Systems Concepts IntroductionWhen you begin the study of information systems, you should become acquainted with atheoretical framework for understanding their use, development, and effect on organizations;that is, you need to have an understanding of systems concepts as a foundation for furtherstudy. A system is a collection of people, machines, and methods organized to accomplish aset of specific tasks. Information systems-which are a major topic in this text-have the samecomponents and characteristics as systems in general.This lesson introduces the concepts of systems, their characteristics, and their interaction withthe environment. As a manager, youll constantly be dealing with systems, and youll needfeedback about their performance. Information is the feedback you need to determine ifsystems are achieving their objectives, operating with the necessary components, and meetingthe necessary standards. Information systems are designed to give managers the informationthey require as feedback.In this lesson you will learn about the systems approach to problem solving also. As amanager, you will be dealing with many types of systems, and you will be responsible for 7
  8. 8. improving their performance. For example, youll determine if procedures, personnel, andequipment need to be changed to achieve objectives. Or youll need to assess the effect ofnew equipment on current work methods, procedures, and organization. The systemsapproach to problem solving will help you deal with these kinds of tasks. Systems ConceptsLet us see the very simple meaning of any system. A system is a set of inter-dependentcomponents (some of which may be systems in their own right), which collectivelyaccomplish certain objectives.In other terms we can say that a system is an integrated set of components, or entities, thatinteract to achieve a particular function or goal. Systems have characteristics such asboundaries, outputs and inputs, methods of converting inputs into outputs, and systeminterfaces. Systems are composed of interrelated and interdependent subsystems.Examples of systems are all around us-in fact; an excellent example is your class. Thecomponents of the classroom situation, including an instructor, the students, textbooks, andfacilities, all interact to make the accomplishment of learning goals possible.Example: A Classroom SystemA business is also a system. A business uses resources such as people, capital, materials, andfacilities to achieve the goal of making a profit. Business procedures, such as order handling,marketing research, financial planning, and manufacturing, are the interactions that need tobe managed to achieve this objective. 8
  9. 9. Components of System System BoundariesEvery system has a boundary that defines its scope of activities. For example, the activities inyour class include lectures, discussion, continuous evaluation, grading, and preparation ofassigned course work. These activities may represent the boundary of the system for which ateacher is responsible. Within the system of the classroom, the teacher is responsible fororganizing class time, assigning homework to students, and evaluating student progress. Theboundary, then, delineates an area of responsibility. When defining a system, you mustestablish a boundary.Systems and Sub SystemsSystems may consist of numerous subsystems, each of which has elements, interactions, andobjectives. Subsystems perform specialized tasks related to the overall objectives of the totalsystem. For example, an educational system may consist of individual courses that aresubsystems. Each course provides specific knowledge that is a part of the overall educationalsystem and contributes to its goals.Outputs and InputsThe inner workings of a system or subsystem are organized to produce outputs from inputs.In this conversion process, some value or utility should be added to the inputs. For example, atraining program should produce trained employees with certain skills, knowledge, orbehavior from its inputs-untrained employeesThe outputs of one subsystem usually become inputs into the next. The outputs of a course inintroductory data processing concepts, for instance, become inputs into the next course inJava programming.As you would expect, the outputs of a subsystem have to adhere to certain standards to beacceptable to the next. If students coming out of the introductory data processing course dontunderstand basic concepts of file organization and file processing, they wont have theprerequisite skills needed for Java. If they were not permitted to enter Java until they meetcertain standards, though, the problem would be alleviated. The more exactly standards areadhered to; the easier it will be to interface the two courses, or subsystems. Subsystem InterfaceAn interface is a connection at system or subsystem boundaries. An interface serves as amedium to convey the output from one system to the input of another system. An examplewill help clarify this concept. Two typical business systems that interface with each other areinventory control and purchasing. If inventory levels drop below a certain level, thenadditional stock of these items should be purchased. Purchasing will need to know whatquantity of a particular item to obtain to replenish the stock and information on sales andinventory turnover to learn which items are in greatest demand so these items can be 9
  10. 10. replenished on a timely basis. An inventory control system will provide information on stockto be reordered based on sales and inventory turnover trends. 10
  11. 11. Interface ProblemsIn the previous section we mentioned that adhering to standards can alleviate some interfaceproblems. However, you might encounter other types of interface problems. Sometimes theoutput of one subsystem is not sufficient to accommodate the needs of the next subsystem.For example, the production subsystem may not be able to produce enough stock to meetsales demands during certain peak periods. One way of handling this interface problem isthrough the use of slack resources. In this situation a business can build excess inventoryduring slack times to meet the demand for inventory at peak times.Another system interface problem can occur between the authoring subsystem and theeditorial subsystem in the development of a textbook. Authors who wait until the last minuteto finish their writing may not be able to produce a manuscript fast enough to meetproduction schedules, which involve editing, artwork, layout and design, typesetting, andproofreading tasks. The publisher can avoid this problem in several ways. First, the publishercan ask the author to complete several chapters before production activities begin. Thisprocedure is another example of using slack resources.Second, the publisher can ask the author to adhere to certain standards for input into theproduction subsystem. For example, the author can create and store all text using a wordprocessing package that can be transported to a computer-based typesetting system withoutreeking.Third, the author could hire a library researcher, photo researcher, and typist to provide asupport subsystem to expedite the development of manuscript. This method creates a newsubsystem to solve a system interface problem.System and its EnvironmentThe systems environment consists of people, organizations, and other systems that supplydata to or that receive data from the system. Not surprisingly, different managers perceive theenvironment differently. A sales manager, for example, may envision the system environmentto be the companys customers and vendors of the products and services being marketed. Onthe other hand, the owner of the business may perceive the environment to include the firmscompetitors, financial institutions that provide resources for expansion, and governmentagencies with jurisdiction over company plans and products. Moreover, various kinds ofsystems may interact with the environment in different ways 11
  12. 12. Interface ProblemsIn the previous section we mentioned that adhering to standards can alleviate some interfaceproblems. However, you might encounter other types of interface problems. Sometimes theoutput of one subsystem is not sufficient to accommodate the needs of the next subsystem.For example, the production subsystem may not be able to produce enough stock to meetsales demands during certain peak periods. One way of handling this interface problem isthrough the use of slack resources. In this situation a business can build excess inventoryduring slack times to meet the demand for inventory at peak times.Another system interface problem can occur between the authoring subsystem and theeditorial subsystem in the development of a textbook. Authors who wait until the last minuteto finish their writing may not be able to produce a manuscript fast enough to meetproduction schedules, which involve editing, artwork, layout and design, typesetting, andproofreading tasks. The publisher can avoid this problem in several ways. First, the publishercan ask the author to complete several chapters before production activities begin. Thisprocedure is another example of using slack resources.Second, the publisher can ask the author to adhere to certain standards for input into theproduction subsystem. For example, the author can create and store all text using a wordprocessing package that can be transported to a computer-based typesetting system withoutreeking.Third, the author could hire a library researcher, photo researcher, and typist to provide asupport subsystem to expedite the development of manuscript. This method creates a newsubsystem to solve a system interface problem.System and its EnvironmentThe systems environment consists of people, organizations, and other systems that supplydata to or that receive data from the system. Not surprisingly, different managers perceive theenvironment differently. A sales manager, for example, may envision the system environmentto be the companys customers and vendors of the products and services being marketed. Onthe other hand, the owner of the business may perceive the environment to include the firmscompetitors, financial institutions that provide resources for expansion, and governmentagencies with jurisdiction over company plans and products. Moreover, various kinds ofsystems may interact with the environment in different ways. System FeedbackA system needs feedback to do its job. Feedback is an indicator of current perfor-mance rateswhen compared to a set of standards. With effective feedback, continuing adjustments in theactivities of a system can be made to assure that the system achieves its goals. Measuringperformance against a standard is an effective control mechanism. Employees need feedbackto learn how well they are achieving job goals. Students receive grades or other kinds ofevaluations from instructors that show whether the students are meeting course objectives. 12
  13. 13. The good thing about feedback is that it usually increases effort. For example, tennis playersoften perform better when they are keeping score. When salespeople receive positivefeedback, it increases their motivation to achieve a sales quota. Negative feedback may alsoserve a useful purpose. Negative feedback is designed to correct or guide activities that arenot consistent with achieving the goals of the system. If salespeople are not achieving quotas,they may want to rethink current sales techniques or reorganize their time. Similarly, ifstudents receive low grades, they may need to improve study habits, obtain tutoring, or enrolin courses that better match their abilities or backgrounds. 13
  14. 14. System EntropySystems can run down if they are not maintained. Systems entropy corresponds roughly tochaos or disorder - a state that occurs without maintenance. If employees do not haveopportunities to learn new concepts and techniques, the skills they apply to performing jobtasks will become out of date. The process of maintaining a system is a process of decreasingentropy or increasing orderliness. Sending automobile mechanics to training classes to learnnew diagnostic techniques is an example of decreasing entropy. Orderliness can be achievedthrough preventive maintenance checks, such as a yearly physical examination for anemployee or a routine tune-up for an automobile, and then taking action as a result of theseregular checks. These checks provide valuable feedback to help detect faults or problemswhen none have been anticipated. Diagnostic tools for equipment and machinery help preventdowntime, which may cause delays in production and cost thousands of dollars in lostbusiness. System Stress and ChangeSystems change over time. Some of these changes occur because of identified prob-lems,new business opportunities, and new management directives. Systems may also change as aresult of stresses. The achievement levels needed to meet existing goals may change. Forexample, because of reduced profit margins on sales, a division sales manager may insist on asales increase of 10 percent instead of 7 percent to achieve the same profits. The tendency isto localize the stress so that only one subsystem, in this case the division sales force, feelsmost of the pressure for adjusting to new demands.It is easier to deal with change within one subsystem than within the total system becausestress may require rethinking existing work methods and organization. In this case the salesmanager may have to develop more effective procedures to improve the profitability of sales.The sales manager may recommend cutting down calls to smaller customer accounts andsubstituting telemarketing to service their needs. Salespeople might need to reallocate theirtime so they can pay special attention to customers who purchase the most profitable productlines and encourage customers who purchase less profitable lines to look at high-marginproducts. All these procedures require a close analysis of the current system, changes in workprocedures, and effective time management. Systems concepts in BusinessNow that you have a general picture of how a system works, it will be helpful to look moreclosely at business systems. The systems approach is a way of analyzing business problems.This approach views the business organization as a system of interrelated parts designed toaccomplish goals. Each subsystem is both a self-contained unit and a part of a larger system.Managers must understand the goals of the total system and design the function andsubsystems within the total system to accomplish the goals.More specifically, management is the practice of organizing resources including people,materials, procedures and machines to achieve objectives. In other words, it entailsorganizing subsystems to accomplish specific tasks. Using a system approach, a managerorganizes various activities of the business into separate organizational subsystems.To consider an example, the market research subsystem of the business may obtaininformation from the customers about modifications that about to be made in the firm’s 14
  15. 15. products and services. The market research subsystem can transmit this information to themanufacturing subsystem that builds product design changes into its processes. Finally, themarketing subsystem sells the finished products to the customers. If technical problemsoccur, the service subsystem may need to provide follow-up support. 15
  16. 16. Information System as a Sub SystemAn information system consists of components that interact to achieve the objective ofproviding information about day-to-day activities that managers can use to control businessoperations. Information systems can also provide information to enable managers to allocateresources and establish long-range business plans. An information system contains suchelements as hardware, software, personnel, databases, and procedures to accomplish itsobjectives. The hardware consists of the computer and computer-related activities. Softwareconsists of the instructions that the hardware uses to process information. Software includesboth application software and system software. Application software consists of the programswritten to support specific business functions, such as order entry, inventory control, andaccounts receivable. System software enables the hardware to run application software.System software consists of the programs that handle such functions as sorting data,converting programs into the machine language the computer can understand, and retrievingdata from storage areas. 16
  17. 17. SubsystemsOperational systems, which are designed to provide information about day-to-day activities,are composed of subsystems that accomplish specialized tasks. A mail-order business, forexample, needs a system to process customer orders. The order-processing system actuallyconsists of subsystems set up to handle incoming orders, update inventory levels, and billcustomers. Other subsystems are created to purchase new stock, to handle accounts payabletransactions, and to apply cash receipts from customers to outstanding accounts receivablebalances. Each subsystem performs a specialized task that supports the business objectives ofincreasing sales and providing customer service. You can see how these subsystems areorganized in the following figure.If one of these subsystems breaks down, the overall business will feel the effect. For example,if the mail-order company does not maintain sufficient inventories, customers may becomefrustrated with constant back orders and shift their business to other companies. Outputs and InputsAn information system, like any other system, receives inputs of data and instructions,processes the data according to these instructions, and produces outputs. This information-processing model can be used to depict any information system. An inventory update systemis shown below. Advertising MR Sales HRM Finance Marketing XYZ Co Sales Transaction Old Inventory Master Inventory Update Sales Listing Reorder Report 17
  18. 18. In an inventory update procedure, the inputs are sales order transactions and an old inventorymaster file. During the update procedure, the item quantities for each item on a sales ordertransaction are subtracted from the existing inventory level for that item in stock. The newinventory level is then written to the new inventory master file. The outputs of this system arean updated inventory master file, a reorder report, and a sales listing. A reorder report listsany items in inventory that have fallen below their desired inventory level and provides apurchasing manager with feedback about items that need to be reordered. 18
  19. 19. System Feed BackAn information system provides system feedback to a manager about day-to-day activitiesand about deviations from planned activity. The manager can use this information tosupervise daily operations, such as credit checking and billing, and to reorganize resources toachieve objectives more effectively. In the inventory control example, one of the outputs wasa reorder report indicating which inventory items need to be reordered. A purchasingmanager could use this report to reorder additional stock on a day-to-day basis.Middle managers might want feedback about which items in inventory are moving rapidlyand which items are moving slowly so they can reallocate the investment in inventory tominimize waste and maximize profitability. The information systems providing feedback thatcan be used to allocate resources effectively, such as inventory and personnel, are calledtactical systems. Subsystem InterfaceAs with other systems, interfaces exist between the subsystems of an information sys-tem.Again, the outputs of one subsystem become the inputs into the next. For example, theoutputs of a sales order entry system become the inputs into an invoicing system. If theoutputs of one system are not correct, however, the next subsystem will be affected. If theprice of an item is entered incorrectly during order entry, then the charges to the customermay be incorrectly calculated during billing. Internal ControlsGood information systems also have internal standards to make sure that data are processedaccurately. Input controls, for example, ensure that input data are valid before they areprocessed. Another type of control is a password security procedure designed to protectagainst unauthorized access and update of data. All in all, standards make sure the systemworks properly. Without controls, the data printed out on reports may be inaccurate, andmanagers may not be able to trust the information system to provide valid results. Ifunauthorized users update data files or if input data are not valid, managers may not evenknow that the output generated in reports is invalid, and thus they may make decisions usingerroneous information. The Structure of an EnterpriseAs we know, the entire enterprise has been organized into subsystems, including themarketing subsystem, the service subsystem, and the administrative subsystem. Themarketing subsystem promotes and markets microcomputer products and services. When cus-tomers have problems with their microcomputers or need preventive maintenance, they usethe service subsystem. Finally, the administrative subsystem takes care of billing customers,purchasing equipment and supplies from vendors, paying vendors, and handling accountingactivities. 19
  20. 20. The marketing subsystem of the dealership is managed by a sales manager who recruitssalespeople, including experienced veterans and new trainees, to demonstrate and sell theequipment. These salespeople are trained to follow certain procedures, such as givingequipment demonstrations and making follow-up calls. These procedures are an importantpart of the "system" of selling microcomputer hardware and software. When they are notfollowed, profitability suffers.The sales manager needs an information system to provide feedback on how the system isworking. On a day-to-day basis, he may receive information about salespeople who havesuccessfully closed sales, about customers who are complaining, and about technicalproblems with equipment. This feedback makes it possible to review the procedures andactivities of the current system. For example, if a particular A Contextual viewAny system operates by interacting with its environment. The contextual view describesgraphically the interaction of the system with the various entities in its environment. Theinteractions consist of data flows from and to such entities. The contextual view clarifies theboundary of the system and its interfaces with the environment in which it operates. Contextual ViewA Control viewAny system must manipulate certain variables in order to achieve its objectives. It determinesthe manipulation needed by processing its outputs/states in relation to certain controlparameters. 20
  21. 21. Control ViewFrequently, complexity takes the form of a hierarchy, whereby a complex system iscomposed of interrelated sub systems that have in turn their own subsystems, and so on, untilsome lowest level of elementary components is reached. The choice of what components in asystem are primitive is relatively arbitrary and is largely up to the discretion of the observerof the system. Intra-component linkages are generally stronger than inter-component linkages(components of a system are loosely coupled, but components themselves are cohesive).Hierarchical systems are usually composed of only a few different kinds of subsystems invarious combinations and arrangements (same components can be reused). A complex systemdesigned from scratch never works and can not be patched up to make it work. You have tostart over, beginning with a system that works.Some basic concepts & strategies in the study of systems • Abstraction: We have developed an exceptionally powerful technique for dealing with complexity. We abstract from it. Unable to master the entirety of a complex object, we choose to ignore the inessential details, dealing instead with the generalized, idealized model of the object. • Formality: Rigor at each stage in the development of a system. • Divide and conquer: Divide a complex problem into a set of simpler problems that can be solved. • Hierarchical ordering: Order the simplification of the problem in ``divide & conquer" in hierarchies. • Cohesion & coupling: Modularise the system such that interactions within components (cohesion) is maximised and interactions between components (coupling) is minimised. This way, the impact of errors, when they arise, is localised and does not cascade through the system. Diagnosis of offending components is also made easier. • Information hiding: Each module (or subsystem) must have available to it just the information that is needed by it. • Conceptual integrity: Consistency in design. • Completeness: Ensuring that the design meets all the specifications. • Logical independence: Emphasis on the statement of system objectives in terms of logical functions independent of physical implementation. 21
  22. 22. • Correctness & Efficiency: Correct in the sense that the design meets all the user requirements. Efficient is that the system accomplishes the objectives with minimum computing resources. Types of Information SystemsInformation systems can be classified in many ways, but for our purposes here, we willconsider their classifications based on the mode of processing, on the system objectives, andon the nature of interaction of the system with its environment.Classification by mode of processing • Batch processing systems: The transactions are collected as they occur, but processed periodically, say, once a day or week. • On-line batch systems: The transaction information is captured by on-line data-entry devices and logged on the system, but it is processed periodically as in batch processing systems. • On-line Real-time systems: The transaction data capture as well as their processing in order to update records (and generate reports) is carried out in real-time as the transaction is taking place. Classification by System Objectives • Transaction Processing Systems: Their objective is to process transactions in order to update records and generate reports, i.e., to perform score-keeping functions. • Decision Support Systems: Their objective is to support the managerial decisions. Usually, these systems are based on a model of the decision-making domain, and utilize techniques from management science, finance or other functional areas of business in order to build such models. These systems are also used often for attention-directing purposes, i.e., for directing the attention of managers to a problematic aspect of operations. • Expert Systems: These systems incorporate expertise in order to aid managers in diagnosing problems or in problem solving. Classification based on the nature of interaction with environment • Transformational Systems: These are systems that transform inputs received from the environment in order to generate reports (output). • Reactive Systems: These are systems characterized by being, to a large extent, event- driven, continuously having to react to external and internal stimuli.The components of accounting systems such as payroll, general ledger are, it should beobvious, usually batch processing systems, and also transaction processing systems that are 22
  23. 23. transformational systems. Systems for determination of sample sizes for audit testing, on theother hand may be decision support systems. Systems aiding provision for doubtful accounts(or loan loss reserves for financial institutions) may be expert systems.Specification of Information SystemsSpecification of any system before its development is crucial. Specifications perform forinformation systems the same function that blue-prints and engineering specificationsperform for physical structures. Specifications serve as benchmarks for evaluating designs aswell as their implementation. 23
  24. 24. Formal vs. Informal SpecificationsIn the development of information systems in business, informal specifications throughgraphical modelling have been used at least since late 70s. We shall be studying many ofthese modelling tools. Recently, formal specification languages (such as Larch, VDM, Z,FOOPS and OBJ) have been developed. While their use in business systems development isin its very early stages, they are expected to play an important role in the future. These formalspecification techniques attempt to mathematically specify structure, function, and behaviourof information systems.Components of specificationsSpecification of an information system is given by their: • Structure: How it is organised. • Function: What it does. • Behaviour: How it responds to events and stimuli. • Data: Its meaning and organization.Most tools co-ordinate information systems projects through a project or system dictionary.The function of the dictionary is to standardise the use of terms throughout the organisationand to serve as a repository of all common information in the project. It enforces consistencyas well as (relative) completeness of the specifications, and facilitates verification &validation of such specifications. It also serves as a means of communication between thedifferent persons on the information systems building team. The figure below shows thevarious components of the specifications and the modelling techniques utilised. We will bestudying some of those techniques in this course.We can understand how the systems approach works by applying it to a problem that themicrocomputer dealer might experience.Define the ProblemThe first step in the systems approach to problem solving is to define the problem. Definingthe problem is one of the most important parts of the system study, because if the wrongproblem is identified, the entire effort to change the system will be off track. At the outset,some of the problems that are identified may be symptoms of the real problem. In order todistinguish between symptoms and problems, it is necessary to gather data describing theproblem. Lets say that in this case the owner is concerned about the fact that many of thesalespeople are not meeting their quotas. She decides to start a systems study by collectingmore information about the problem. 24
  25. 25. Gather data describing the problemThe owner may study the environment, current standards, management, input re-sources, andinternal procedures to gain an understanding of the problem. The first place the owner mightlook is the environment. The environment of the microcomputer dealer includes its vendors,its customers, its competitors, and the local community. From this investigation, the ownermight learn that local competitors are selling comparable microcomputers at prices 10 percentto 15 percent less the firm can offer. Next, the owner might look at the dealerships standards to determine if they are validin the face of the competitive environment. It might turn out that a goal of increasing grosssales by 10 percent for the year is unrealistic when the competition is cutting prices. Anotherarea the owner can analyze is management. The owner needs to learn if the sales manager isdoing a good job. If the sales manager is not providing salespeople with effective training andfeedback regarding their performance, they may feel frustrated.Input resources are another area that should be analyzed. The owner needs to find out if newsales and technical representatives are being recruited and if these employees are trained todemonstrate computer equipment and software. If new recruits lack knowledge of thetechnical features of the equipment, for example, they will fail to win new business. If salesmaterials are not kept up-to-date, customers may not learn about new product features. Workmethods and procedures also need to be studied. If salespeople are not trained to follow up onnew prospects, the company could lose valuable business. If technical support personnelcannot diagnose and solve service problems on a timely basis, customers may hesitate topurchase more equipment.One of the major problems identified in this case is that competitors are charging lower pricesfor comparable products. Many of the difficulties the dealer has identified are symptoms ofthis fundamental problem. To address it, the owner has to identify and evaluate somealternatives. 25
  26. 26. Identify Alternative SolutionsGiven the fact that competitors have dropped their prices on comparable microcom-puters,the owner needs to identify some alternatives responses. These alternatives might include thefollowing: Alternative 1: Investigate alternative manufacturers of microcomputers to obtainproducts at a lower cost per unit. Alternative 2: Decrease the cost of sales by introducing mail-order sales supported bytelemarketing. Use salespersons for large accounts only. Cutting the cost of sales effortswould make it possible to reduce machine prices to a more competitive level Alternative 3: Differentiate the dealerships products by offering on-line diagnosticsupport services for machine failure, service response time within 5 hours on a 24-hour basis,and annual service checks.Each alternative supports a slightly different strategy. Finding lower-cost manu-facturedgoods represents a cost-cutting strategy. The second alternative, using mail order sales andtelemarketing, also supports a low-cost strategy because the cost of mail-order sales would beless than the cost of a large sales staff. Finally, introducing on-line diagnostic supportservices provides a "value added" feature. Upgraded technical support would justify slightlyhigher equipment costs.Evaluate the AlternativesThe owner evaluates the extent to which each alternative enables the organization to achieveits objectives. As we saw, the owners objective was to increase the overall performance ofsales personnel. Purchasing lower-cost products from suppliers would enable the owner to cutprices, as suggested in the first alternative, but would create difficulty at the service end ifthese microcomputer products were less reliable. This strategy might make it more difficultfor salespeople to meet their objectives. Introducing a mail-order program would cut the costof sales overhead. How ever, the mail-order program would require creating a database ofcustomer prospects and developing specialized promotional materials. This strategy mightfree sales representatives to concentrate on direct sales to high-potential accounts while usinga less costly strategy to maintain the business of smaller accounts.The final alternative would offer customers additional levels of service and technical supportthat add value to the firms products. Because service is one of the key criteria formicrocomputer selection, this strategy might work. However, it is costly and might not satisfythe needs of economy-conscious small businesses that represent a large potential marketshare.Select and Implement the Best AlternativesLets say that the owner decides to develop and implement a mail-order program to re-ducethe cost of sales overhead to smaller accounts and to enable sales personnel to focus on highpotential accounts. This new strategy would require the owner to recruit new customerservice representatives or train current employees for telemarketing. The owner would alsohave to develop and establish customer prospect databases, as well as a system for shippingmerchandise, billing, and authorizing credit transactions. 26
  27. 27. Follow up to determine whether the solution is workingThe last step in the systems approach to problem solving is follow-up. In the case of the mail-order sales alternative, the owner needs to determine if the system is meeting its goals. If not,she has to make changes in management, standards, resources, and procedures to achieve theobjectives. 27
  28. 28. BIBLIOGRAPHY www.icmrindia.com www.antonline-education.com www.wikipedia.org www.scribd.comRefrence books:- Management Information System- w.s. javadekar Management Information System-Gorden b Davis Management Information System – Neeraj Bhageliya 28

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