Management Information Systems
The Information Systems Life Cycle
Implementation of Information Systems
Organisations comprise human and technological resources to achieve certain goals.
For some organisations the "goal" is to make money. In other organisations (e.g. schools, hospitals, prisons) the goal could be quite different.
The "three pillars" of any organisation are:
People (e.g. education, training, employee
attitudes)
Organisation (e.g. strategy, policy, culture, bureaucracy)
Technology (e.g. hardware, software, telecommunications, information systems)
According to a 1997 DTI survey, successful businesses are led by visionary, enthusiastic champions of change, they unlock the potential of their people by investing in them and by involving them. They know their customers. They regularly introduce improved products and services. They exceed their customers' expectations.
Division of Labour
Means that different individuals are responsible for different things. In small businesses, one person may have several roles. A "sole trader" is a self-employed individual who is responsible for an entire business.
Span of Control
Means the number of employees who are directly supervised by one person. Too wide a span of control leads to a lack of control. Too narrow a span is wasteful.
People
Motivated staff are more productive than unmotivated staff (according to Heathcote anyway, but see http://news.bbc.co.uk/hi/english/business/newsid_1386000/1386484.stm for an alternative view).
Successful companies view people as a resource rather than a cost.
"Training is the epicentre of empowerment". Successful companies "use training as a competitive weapon".
Organisation
Traditionally there is a pyramid structure with layers of management from the top down. The recent trend is to have a less hierarchical structure in organisations and, consequently "wasteful" layers of management have disappeared.
Most businesses are divided into "departments i.e. production, sales and marketing, personnel (responsible for training and hiring), finance and accounting.
External pressures on an organisation can include customers, competitors, government regulations, pressure groups etc.
Chain of Command
The path through the levels of management from the MD (Managing Director) downwards.
In the "Pyramid Structure", roles are clearly defined. Each layer of the pyramid is responsible to the layer above. The military, schools and the civil service are typical examples of structured organisations. The problems of this structure are:
This type of organisation can be slow to change
Decisions can be slow to make and even slower to be implemented.
Senior staff can be remote
A "horizontal structure" has become increasingly popular. There are fewer layers and problems can, therefore, be moved up the line more quickly. More people are directly answerable to the MD and, therefore, more decisions are taken by middle management. Employees have more responsibility and this leads to greater motivation. Problems are:
Individual departments can become isolated from each other.
Fewer levels in the organisation may mean fewer promotion opportunities.
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From Hierarchies to Networking Business hierarchies for years followed the old pyramidal top-to-bottom structure, where management's main purpose was to 'keep track' of the workers. With the advent of the computer, however, 'tracking' employees became much easier, leaving management free for more productive work. 'Networks' employ the horizontal system of management, where people interact and share ideas, information and resources. Hence, networks offer what bureaucracies never can deliver - precisely this direct, horizontal link with people. In the network environment, 'rewards' come by empowering others, not climbing over them. Megatrends - John Naisbitt, 1982 |
Levels of the Structure
Strategic - Senior people like Chief Executives, MDs, Marketing Directors, etc. have to take strategic decisions.
Tactical - Middle management (e.g. Area Sales Director, Factory Manager) have to take tactical decisions.
Operational - (e.g. Foreman, shift leaders, the workforce) have to take operational decisions.
In general, the more senior the manager, the less detailed the information needed.
In a football club, the Chairman has a strategic role, the Coach has a tactical role, the team captain has an operation role.
In a war, a General might decide to "take" a particular hill (strategic), the middle ranking officers will decide how to take it (tactical) and the junior officers will lead men from A to B hopefully without getting shot.
Technology
Managers need Management Information Systems to help them monitor and control the performance of the organisation and plan for the future.
Knowledge Workers (these can include office workers and also includes "professionals" e.g. accountants, lawyers, teachers, engineers etc) need facilities like word processing, spreadsheets, databases etc. to help them with their work. They also need communication tools, e.g. Email, video conferencing, fax machines.
Production Workers might use data processing systems (otherwise known as transaction processing systems). Transactions are the events that are recorded when goods are bought and sold. There are two types: batch systems (where transactions are processed in a "batch") and online systems (where data is processed as soon as it is generated (could be used for an airline reservation system).
Effect of IT
IT has led to a flatter structure because:
Organisations need to be dynamic.
IT enables managers to monitor more people.
Many low level jobs have disappeared (e.g. robots have replaced production workers, automated data entry has replaced many secretaries) and, therefore, some levels of the pyramid have disappeared altogether.
IT systems can now take decisions that used to be taken by middle managers.
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Management Information Systems
A Management Information System (MIS) converts data from INTERNAL AND EXTERNAL SOURCES into information in an APPROPRIATE FORM to managers at DIFFERENT LEVELS in an organisation to enable them to make effective DECISIONS or to MONITOR/CONTROL the performance of their employees.
What is the most important resource in any organisation? (clue: the answer is not "people")
Example: a chocolate factory needs to decide how many bars to make in a particular week. They could see:
The number currently in stock
Outstanding orders to be delivered
The sales of each type of chocolate bar last week
The sales of each type this time last year
Information comes from internal and external sources. Internal information includes data from transaction processing. External information includes market research, intelligence gathering about the activities of competitors, information about social trends, economic factors, government legislation, and so on. This information can be obtained by "interpersonal networking", the media or by industrial espionage. In some large organisations, a whole department can exist to gather external information. An important feature of the MIS will be to put this information into a form that is useable by the managers.
The traditional information flow in an organisation is through notice boards, newsletters and memos. Technological systems include Email, Intranets, collaboration software e.g. Lotus Notes and computer databases.
The traditional functions of managers are planning, organising (resources, space and equipment), coordinating, decision making and controlling (monitoring and supervising the activities of others.
Decisions can be structured or unstructured. Structured decisions are those for which there is an established procedure to be followed e.g. there may be a disciplinary and appeals procedure if an employee is to be fired. Structured decisions are usually those that are routine and repetitive. Unstructured decisions are those that require some degree of insight and judgement. For example, "should we try to increase the number of customers who hold a store card". Unstructured decisions are often taken over a period of time and a MIS can help by providing quick high-quality information.
An MIS is not just used by people called "managers". They can be used by anyone who needs to:
Plan
Organise
Make decisions
Forecast
Control
Co-ordinate
Strategic Information - Senior managers need to make long-term planning decisions e.g. an Ice cream company wants to save costs by closing one of its six factories. A strategic decision is required about which one to close. To make this decision, senior managers need internal information (e.g. the labour costs of each factory) and external information (e.g. the present site value of each factory).
Tactical Information - Middle managers often require tactical information e.g. a factory manager in an ice cream company might need to decide whether or not to run an extra shift during the summer months. He could use data modelling to see whether or not this would be profitable.
Operational Information - Operations managers are usually responsible for the production side of an organisation e.g. an automated re-ordering system can be used for stock control purposes.
Example of a shoe shop: A shop manager (operational) might need a daily list of all shoes sold. The Regional Manager (tactical) might want a weekly or monthly report showing sales figures in each region. The Marketing Manager (strategic) of the company might want to forecast sales trends over the next few years.
Exception Reports are commonly used. For example, the Head of Sixth Form might want to see a list of under-performing students. She could get a list of all students who scored less than 30% in their exams.
Decision Support Systems help decision-making but they do not themselves make decisions. For example, spreadsheets with "what if" capabilities can be used to model and test out different scenarios.
Expert Systems (also called Knowledge-based systems) are used to emulate human reasoning. They are usually limited to a specific area of expertise (see ICT1 for examples, advantages and disadvantages).
EIS (Executive Information Systems) are used by executives who can view graphs and charts. They can click on "hotspots" and get much more detailed information. They can click through several layers to pin-point exactly the information they want. This prevents "information overload". It is crucial that the manager gets only the information he needs. It is important that the system is very easy to use. (case study in Mott and Leeming textbook p.141).
Desirable characteristics of a MIS
A MIS should be flexible enough to allow different users to access data in different ways.
It should be capable of supporting users with a range of skills and knowledge.
It should be quick and easy to use.
It should protect the user against "information overload".
Data Mining/Data Warehousing
A "data warehouse" is an enormous store of data, which has usually been collected over a long period of time. This data could be details of customers and records of transactions. An information system can employ "data mining" to drill into the data. This involves looking for meaningful patterns in the data i.e. trends and changes, which can be identified by managers to give their organisations a competitive advantage.
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The Information Systems Life Cycle
In the early days of computers,
the people who used the computers were those who were interested in them i.e.
computer enthusiasts who saw programming as a creative art.
Too often, they didn’t spend enough time talking to the people for whom
they were building the systems. From
the field of engineering came the idea of a life cycle of specification, design,
testing, etc. This is where the
term “software engineering” comes from.
| From Forced Technology to High
Tech/High Touch
In the past, technology has been forced upon us with little regard as to how we would interact with it. For this reason, some forms of technology have been sent back to the shop. Now, computers have become more 'user friendly' and the ways in which we use any number of high-tech articles are increasingly being refined and simplified. Whenever new technology is introduced, it must be coupled with human response. The more high technology around us the more the need for human touch, though technology will never take the place of nor liberate us from personal discipline and responsibility. Megatrends - John Naisbitt, 1982 |
Preliminary Survey
This is to decide whether or not a new system is needed.
A new system may be needed because:
The existing system may be obsolete due to technological developments
The organisation's competitors may have a better system
The current system may no longer be suitable for its purpose (e.g. because the organisation may have changed)
The current system may be inflexible
The current system may be expensive to maintain
If the preliminary survey decides that a new system is needed, the objectives of the new system will be established at this stage.
Feasibility Study
A Feasibility Study is carried out when a new system is considered. This considers the scope and the objectives of the proposed system. The five factors to be looked at are TELOS, which means:
Technological Feasibility - does the
technology exist>
Economic Feasibility - Is it affordable, do the benefits outweigh the
costs?
Legal Feasibility - is there any legal impediment (e.g. the DPA)
Operational Feasibility - how will the new system affect people's working
lives?
Schedule Feasibility - can the new system be implemented in the desired
time-frame?
Considering all these factors, the Systems Analyst will write a Feasibility Report that will be sent to management. He will recommend whether or not to proceed. Management make the final decision. If they approve the project, the Requirements Analysis will proceed.
Requirements Analysis
The Requirements Analysis is a detailed investigation into the current system and the requirements of the users.
Staff at all levels in the organisation will be interviewed, business documents will be examined, carefully planned questionnaires will be sent out, a "time and motion" study could be carried out to see where efficiency could be improved.
The Systems Analyst then uses this data to chart the flow if information and data around the organisation. This will establish what the new system will do (but not how it will do it). The Requirements Analysis will show exactly what the new system will do in considerable detail. Decisions will be taken about the hardware/software platform to use and what configurations will be needed. There will be an analysis of the costs and benefits of organisational changes.
Again, the Systems Analyst makes a recommendation either to proceed or to abandon the project. The system needs to be approved by management.
System Design
This specifies:
Hardware and software to be used
Inputs (data entry screens, default values, etc.)
Outputs (report layouts, screen designs etc.)
The User Interface
Testing Plan
Conversion Plan
Documentation
HCI (the "look and feel" of the system)
Data validation
Security features
A prototype could be developed and piloted by part of an organisation. Doing this familiarises users with the look and feel of the new system and it can help iron out misunderstandings between developers and users. Missing functions can be detected. Alternatively, the prototype can be used for training purposes.
Implementation
This involves coding and testing the new system, installation, training and the conversion process.
Methods of Conversion
Direct Changeover (e.g. done over a weekend) is fast and efficient but there is great disruption if the system turns out to be less than perfect.
Parallel Conversion is where the old system continues to be used alongside the new system for a few weeks. This means staff have double the work to do. However, the great advantage is that results from the old system can be tested against results from the new system.
Pilot Conversion is where part of the organisation pilots the new system and evaluates it.
Post Implementation Review
Often shortcomings are only noticed when the system is being used. System Maintenance will then begin and this completes the systems life-cycle.
Maintenance can be:
"Perfective" e.g. improvements, add-ons, new reports and queries
"Adaptive" i.e. the system changes to meet the changing needs of the
users
"Corrective" i.e. to solve problems with the system
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Implementation of Information Systems
Implementation means preparing people for the introduction of the new system and then actually introducing it.
Developers often think that a system is successful because "it works", even if nobody actually uses it. Other criteria are much better indicators. These include:
high level of use
high level of user satisfaction
accomplishment of the original objectives
appropriate nature of use (e.g. user who thought his CD ROM tray was a beverage holder)
Institutionalisation of the system
Why do information systems fail? (see Heathcote 219, Mott and Leeming 145, McWeeney 5)
The analysis could go wrong because too little time was spent researching the problem. Objectives may have been unclear. There may have been inadequate involvement with the users.
If flexibility is not built in to the design stage, the system may not be able to meet the changing needs of users.
The design should take account of future needs.
Too much focus on low-level processing tasks and not enough on the information flow.
Management could over-specify their requirements, resulting in unrealistic or excessive demands.
In the implementation stage, common mistakes are not providing enough training, poor documentation and a badly thought-out conversion process.
It is vital that management, at all levels, are involved in the design of the system.
Management need to understand that IT does not always bring benefits.
The system should be built around the information needs of the managers rather than being based upon what the computer can easily produce.
Inadequate teamwork and a lack of professional standards.
Lack of time or resources.
Management need to plan for any change in working practices.
Testing not thorough enough (e.g. the system crashes under peak-time demands)
The design is not thorough enough and then the main programmer leaves for another job.
Factors in Successful Implementation
User involvement and user enthusiasm
Training
Proper management of the system development process to prevent cost overruns/delays etc.
Management support (means that changes in work habits and any organisational changes are more likely to be accepted by the staff)
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What is a Business Strategy?
Every business should have a business strategy - this is a long-term plan which shows the direction the business is taking. The business strategy provides an agreed set of objectives for the business.
To formulate a business strategy, a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) may be carried out to identify internal and external factors that have an impact on the business.
Threats might include competitors who can come up with better products or over-reliance on a particular supplier. IT can be used to improve security and this can prevent competitors stealing product ideas.
A business strategy might, for example, include plans for new products and new markets, it might involve selling the business or buying other businesses.
A business strategy is important because it allows resources to be targeted and also because it allows the shareholders, customers, banks and employees (the "stakeholders" of the business) to see that the business is taking account of their interests.
Formulating an Information System Strategy
The Information Systems Strategy is one part of the business strategy. It will inevitably require resources and it may require a change in working practices within the organisation.
The I.T. strategy is concerned with the planning, introduction and use of IT resources for the benefit of the whole organisation.
In formulating this strategy, it is important to identify the information needs of the organisation. It must be led by the needs of the organisation and not by the availability of the technology.
See Ford case study p.224
The main factors that contribute to the success of an IT strategy are commitment from senior management, adequate resources and sufficient training.
End-User Computing
End-users are the people who extract information from the management information system. Traditionally, the computer professionals within the organisation developed the computer systems and controlled the output. Nowadays end-users have got much more involved. They can have access to productivity applications, which they can use to develop their own systems e.g. a business manager may create a spreadsheet to work out forecasts.
The "monopolist" approach is to strictly control end-user development. The "laissez-faire" approach is to encourage end-user systems development to expand.
Advantages of the Monopolist Approach:
It can ensure that the whole organisation is using a common system - no incompatibility issues.
Data files and staff can transfer between departments.
It ensures that systems are developed by experts who will produce efficient systems with proper documentation
It allows the control of data and reduces the threat to data security
Advantages of the Laissez-Faire Approach:
Needs of end-users can be met without waiting for time or funds to become available
The organisation can unleash the creativity/talent of its workforce
End-users will get the system they want if they develop it themselves
Using ICT to Gain a Competitive Advantage
An important part of the information systems strategy is to show how ICT can be used to gain a competitive advantage. This can be achieved by:
ICT can be used to keep costs low - How?
ICT can be used to produce better products - How?
ICT can be used to develop new products - How?
ICT can be used to keep customers, thereby gaining repeat business - How?
See Wal-Mart Case Study p.226
Facilities Management
IT costs can be unpredictable, so instead of investing in their own IT system, a business could decide to lease the system. They would pay a fixed monthly fee and all repairs and maintenance would be the responsibility of the facilities management company. This is an ideal solution for smaller businesses.
Upgrades
Upgrades can irritate and confuse. They can also be costly, especially when it turns out that existing files, software or hardware might be incompatible with the new version of an application. Upgrades may result in a need for extra training and extra support.
Security and Disaster Policies
See Topics 10-11
Archiving of Information
Information may need to be kept. An information management policy might dictate what information should be kept and for how long.
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Ford Dealership (p.207)
Information system for Ford Dealerships is linked to the central plant at Dagenham. It allows any dealer in the country to track down exactly the car the customer wants. Production managers can see exactly what cars have been ordered and can adjust production accordingly. The system has clear advantages for the dealer, the customer and the management.
Seven Reasons why Management Information Systems Fail
John Walsh of BEBC P. 208
Talbots (Heathcote p.213)
Women's clothing chain in the US has a database of seven million names including information about customers' sizes. They can forecast what sizes sell well in particular stores and they can plan new store openings.
Tiptree Book Distributors (Heathcote p.220)
Disastrous implementation of a new system. "It took 27 years to build up a reputation as the best distributor in the country and seven weeks to lose it." Read about what went wrong!
Ford's Information Systems Strategy (Heathcote p.224)
What benefits do they hope ICT will bring to their organisation?
Wal-Mart (Heathcote p.226)
Example of an information systems strategy that used ICT to gain a competitive advantage.
Other MIS case studies in the Mott and Leeming textbook are:
p.137 - Data Warehousing
p.146 - Passport Agency (example of a computer disaster)
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