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MANAGEMENT INFORMATION SYSTEMS

LECTURE 2: COMPONENTS OF INFORMATION SYSTEMS

The components of an Information System (IS) are the essential elements that work together
to collect, process, store, and distribute information. Each component has a specific role and
function that, when combined, support the overall functioning of the system. The main
components include:

1. Hardware

• Description: Physical devices and infrastructure that support computing functions.

• Examples: Computers (servers, desktops, laptops), network equipment (routers, switches),
input/output devices (keyboards, printers), and storage devices (hard drives, cloud storage).
• Role: Hardware forms the backbone of the information system, enabling data processing,
storage, and communication between components.

2. Software

• Description: Programs and operating instructions that direct the hardware on what tasks to
perform.
• Categories:
o Application Software: Programs designed to perform specific tasks for users, such as
word processing (e.g., Microsoft Word), spreadsheets (e.g., Excel), or databases (e.g.,
SQL).
o System Software: Provides a platform for application software to run. It includes
operating systems (e.g., Windows, Linux) and utilities that manage computer
resources.
• Role: Software enables the execution of processes, data manipulation, and provides an
interface for users to interact with the system.

3. Data/ Databases

• Description: Organized collections of data that are stored and accessed electronically.
Databases can be structured or unstructured, depending on the nature of the data.
• Examples: Database Management Systems (DBMS) like Oracle, MySQL, or Microsoft SQL
Server.
• Role: Databases support efficient data storage, retrieval, and management, ensuring data
integrity, security, and accessibility for authorized users.

4. People

• Description: Individuals who interact with the information system, ranging from end-users to
IT professionals.
• Categories:
o Users: People who use the system for various tasks, such as data entry, reporting, or
decision-making.
o IT Professionals: Developers, administrators, and technical support staff who design,
implement, and maintain the system.
• Role: People define the purpose of the system, design workflows, input and interpret data,
and ensure that the system aligns with organizational goals.

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5. Processes/ Procedures

• Procedures: The rules and guidelines that govern the design and use of the IS.

6. Networking Communication

• Networks: The communication pathways that connect different hardware components,

enabling data exchange.

Understanding these components and their interactions is essential for designing,

implementing, and managing an effective information system in any organization.

MIS - Development Process

In MIS, the information is recognized as a major resource like capital and time. If this resource
has to be managed well, it calls upon the management to plan for it and control it, so that the
information becomes a vital resource for the system.

• The management information system needs good planning.

• This system should deal with the management information not with data processing
alone.
• It should provide support for the management planning, decision-making and action.
• It should provide support to the changing needs of business management.

Major challenges in MIS implementation are −

• Quantity, content and context of information − how much information and exactly what
should it describe.
• Nature of analysis and presentation − comprehensibility of information.
• Availability of information − frequency, contemporariness, on-demand or routine, periodic
or occasional, one-time info or repetitive in nature and so on
• Accuracy of information.
• Reliability of information.
• Security and Authentication of the system.
Planning for MIS

MIS design and development process has to address the following issues successfully −

• There should be effective communication between the developers and users of the system.
• There should be synchronization in understanding of management, processes and IT
among the users as well as the developers.
• Understanding of the information needs of managers from different functional areas and
combining these needs into a single integrated system.
• Creating a unified MIS covering the entire organization will lead to a more economical,
faster and more integrated system, however it will increase in design complexity
manifold.

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• The MIS has to be interacting with the complex environment comprising all other sub-
systems in the overall information system of the organization. So, it is extremely
necessary to understand and define the requirements of MIS in the context of the
organization.
• It should keep pace with changes in environment, changing demands of the customers
and growing competition.
• It should utilize fast developing in IT capabilities in the best possible ways.
• Cost and time of installing such advanced IT-based systems is high, so there should not
be a need for frequent and major modifications.
• It should take care of not only the users i.e., the managers but also other stakeholders
like employees, customers and suppliers.

Once the organizational planning stage is over, the designer of the system should take the
following strategic decisions for the achievement of MIS goals and objectives −

• Development Strategy − Example - an online, real-time batch.

• System Development Strategy − Designer selects an approach to system development like
operational verses functional, accounting verses analysis.
• Resources for the Development − Designer has to select resources. Resources can be in-
house verses external, customized or use of package.
• Manpower Composition − The staffs should have analysts, and programmers.

Information system planning essentially involves −

• Identification of the stage of information system in the organization.

• Identification of the application of organizational IS.
• Evolution of each of this application based on the established evolution criteria.
• Establishing a priority ranking for these applications.
• Determining the optimum architecture of IS for serving the top priority applications.

Information System Requirements

The following diagram illustrates a brief sketch of the process of information requirement
analysis −

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The following three methodologies can be adopted to determine the requirements in developing
a management information system for any organization −

• Business Systems Planning (BSP) − this methodology is developed by IBM.

o It identifies the IS priorities of the organization and focuses on the way data is
maintained in the system.
o It uses data architecture supporting multiple applications.
o It defines data classes using different matrices to establish relationships among
the organization, its processes and data requirements.
• Critical Success Factor (CSF) − this methodology is developed by John Rockart of MIT.
o It identifies the key business goals and strategies of each manager as well as that
of the business.
o Next, it looks for the critical success factors underlying these goals.
o Measure of CSF effectiveness becomes an input for defining the information
system requirements.
• End/Means (E/M) analysis − this methodology is developed by Wetherbe and Davis at the
University of Minnesota.
o It determines the effectiveness criteria for outputs and efficiency criteria for the
processes generating the outputs.
o At first it identifies the outputs or services provided by the business processes.
o Then it describes the factors that make these outputs effective for the user.
o Finally it selects the information needed to evaluate the effectiveness of outputs

Information System Analysis and Design

System analysis and design follows the typical System/Software Design Life Cycle (SDLC) as
discussed in the previous chapter. It generally passes through the following phases −

• Problem Definition
• Feasibility Study
• Systems Analysis
• System Design
• Detailed System Design
• Implementation
• Maintenance
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In the analysis phase, the following techniques are commonly used −

• Data flow diagrams (DFD)

• Logic Modeling
• Data Modeling
• Rapid Application Development (RAD)
• Object Oriented Analysis (OOA)

Technology for Information Systems

The technology requirement for an information system can be categorized as −

• Devices
• Data center systems − It is the environment that provides processing, storage,
networking, management and the distribution of data within an enterprise.
• Enterprise software − These are software system like ERP, SCM, Human Resource
Management, etc. that fulfill the needs and objectives of the organizations.
• IT services − It refers to the implementation and management of quality IT services by
IT service providers through people, process and information technology. It often includes
various process improvement frameworks and methodologies like six sigma, TQM, and so
on.
• Telecom services
System Test Planning and Execution

The system should be fully tested for errors before being fully operational.

The test plan should include for each test −

• Purpose
• Definition
• test inputs
• detailed specification of test procedure
• details of expected outputs

Each sub-system and all their components should be tested using various test procedures and
data to ensure that each component is working as it is intended.

The testing must include the users of the system to identify errors as well as get the feedback.

System Operation

Before the system is in operation, the following issues should be taken care of −

• Data security, backup and recovery;

• Systems control;
• Testing of the system to ensure that it works bug-free in all expected business situations;
• The hardware and software used should be able to deliver the expected processing;
• The system capacity and expected response time should be maintained;
• The system should be well documented including;
o A user guide for inexperienced users,

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o A user reference or operations manual for advanced users,

o A system reference manual describing system structures and architecture.

Once the system is fully operational, it should be maintained throughout its working life to
resolve any glitches or difficulties faced in operation and minor modifications might be made to
overcome such situations.

Factors for Success and Failure

MIS development projects are high-risk, high-return projects. Following could be stated as
critical factors for success and failure in MIS development −

• It should cater to a specific, well-perceived business.

• The top management should be completely convinced, able and willing to such a system.
Ideally there should be a patron or a sponsor for the system in the top management.
• All users including managers and other employees should be made an integral part of the
development, implementation, and use of the system.
• There should be an operational prototype of the system released as soon as possible, to
create interest among the users.
• There should be good support staff with necessary technical, business, and interpersonal
skills.
• The system should be simple, easy to understand without adding much complexity. It is
a best practice, not to add up an entity unless there is both a use and user for it.
• It should be easy to use and navigate with high response time.
• The implementation process should follow a definite goal and time.
• All the users including the top management should be given proper training, so that they
have a good knowledge of the content and function of the system, and can use it fully for
various managerial activities such as reporting, budgeting, controlling, planning,
monitoring, etc.
• It must produce useful outputs to be used by all managers.
• The system should be well integrated into the management processes of planning,
decision-making, and monitoring.

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LECTURE 3: INFORMATION SYSTEMS IN ORGANIZATIONS

Information Systems (IS) play a critical role in organizations by supporting business

processes, enhancing competitive advantage, and driving operational efficiencies. Let’s
explore these aspects in more detail:

1. Business Processes and Information Systems

• Definition: A business process is a set of coordinated activities or tasks that help achieve a
specific organizational goal, such as producing a product or providing a service.
• Role of Information Systems:
o IS supports business processes by automating tasks, reducing manual work, and
increasing efficiency.
o It integrates different business functions (e.g., sales, marketing, finance, HR) and
facilitates communication and collaboration across departments.
o Examples: Enterprise Resource Planning (ERP) systems streamline core business
processes like order processing, production planning, and inventory management.
• Impact: When aligned effectively with business processes, IS can reduce costs, increase speed,
improve quality, and provide better customer service.

2. Information Systems for Competitive Advantage

• Definition: Gaining a competitive advantage means creating a position that allows a firm to
outperform its competitors. This can be achieved through cost leadership, differentiation, or
niche focus strategies.
• How IS Provides Competitive Advantage:
o Operational Efficiency: Automating processes and integrating data across the
organization to reduce costs and improve efficiency. Example: Automated supply chain
management systems like those used by Walmart.
o Innovation: Creating new products or services using IS. Example: Uber’s use of mobile
and GPS technologies to create a ride-hailing service.
o Customer and Supplier Intimacy: Using IS to improve communication and service
delivery, thereby enhancing customer loyalty. Example: Amazon's recommendation
engine that suggests products based on customer behavior.
o Decision Support: Information systems like Business Intelligence (BI) and Analytics
platforms help organizations make informed, data-driven decisions.
• Frameworks for Analysis:
o Porter’s Five Forces Model: Analyzes competitive environment to identify how IS can
be used to counteract each force (e.g., using CRM to reduce buyer power).
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o Value Chain Analysis: Identifies how IS can create value in each activity of the
organization’s value chain (e.g., using ERP to optimize logistics and operations).

3. Case Studies on the Use of Management Information Systems (MIS) in Business

• Example 1: Zara (Retail Industry)

o Challenge: Keeping up with rapidly changing fashion trends and managing inventory
efficiently.
o Solution: Implemented a just-in-time (JIT) inventory system integrated with an
information system that collects sales data and sends it directly to the production
team.
o Outcome: Reduced lead time for bringing new products to market, minimized overstock
and out-of-stock situations, and improved overall profitability.
• Example 2: FedEx (Logistics and Courier Services)
o Challenge: Managing the logistics of delivering millions of packages globally.
o Solution: Implemented a sophisticated tracking and routing information system called
COSMOS (Customer Operations Service Master Online System) to monitor all
packages in real time.
o Outcome: Improved customer satisfaction through real-time package tracking,
efficient routing, and reduced delivery times.

• Example 3: Procter & Gamble (Consumer Goods Industry)

o Challenge: Enhancing decision-making processes and product development strategies.
o Solution: Adopted a Decision Support System (DSS) and collaboration tools that use
predictive analytics and consumer insights.
o Outcome: Reduced product development cycles and improved market responsiveness,
leading to better product-market fit and customer satisfaction.

These examples illustrate how organizations can strategically use MIS to optimize
operations, make better decisions, and maintain a competitive edge in their respective
industries.

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ENTERPRISE RESOURCE PLANNING SYSTEMS

ERP is an integrated, real-time, cross-functional enterprise application, an enterprise-wide

transaction framework that supports all the internal business processes of a company.

It supports all core business processes such as sales order processing, inventory management
and control, production and distribution planning, and finance.

Why of ERP?

ERP is very helpful in the follwoing areas −

• Business integration and automated data update

• Linkage between all core business processes and easy flow of integration
• Flexibility in business operations and more agility to the company
• Better analysis and planning capabilities
• Critical decision-making
• Competitive advantage
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• Use of latest technologies

Features of ERP

The following diagram illustrates the features of ERP −

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Scope of ERP
• Finance − Financial accounting, Managerial accounting, treasury management, asset
management, budget control, costing, and enterprise control.
• Logistics − Production planning, material management, plant maintenance, project
management, events management, etc.
• Human resource − Personnel management, training and development, etc.
• Supply Chain − Inventory control, purchase and order control, supplier scheduling,
planning, etc.
• Work flow − Integrate the entire organization with the flexible assignment of tasks and
responsibility to locations, position, jobs, etc.

Advantages of ERP
• Reduction of lead time
• Reduction of cycle time
• Better customer satisfaction
• Increased flexibility, quality, and efficiency
• Improved information accuracy and decision making capability
• Onetime shipment
• Improved resource utilization
• Improve supplier performance
• Reduced quality costs

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• Quick decision-making
• Forecasting and optimization
• Better transparency
Disadvantage of ERP
• Expense and time in implementation
• Difficulty in integration with other system
• Risk of implementation failure
• Difficulty in implementation change
• Risk in using one vendor

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