CHAPTER 1
INTRODUCTION TO MANAGEMENT INFORMATION SYSTEMS
1.1 What is a management information system (MIS)?
Introduction
In this unit we are going to discuss the meaning and some important aspects of management information system. According to the Systems Approach of Management, an organization is a sum of the interrelated parts or sub systems. The management is responsible to make relations amongst these Sub-Systems into a total system. For this purpose Management Information System (MIS) becomes an unavoidable part of any organization. Management Information System is a systematized cyclic pattern of communication. By this
System, organizations cannot achieve their goals. System This is an organized grouping of components having certain interrelationships and working collectively to achieve a set of objectives. The system approach is a method or framework which helps us to analyze and
explore the operations and interactions which exist in the systems around us.
Any given system possesses the follow characteristics or attributes:-
1. Organization – This is the arrangement of components that help to achieve objectives.
2. Central objective – Among the interacting components there has to be goals or objectives focused by all.
3. Interaction – This is the manner in which each component functions with other components of the system.
4. Interdependence – This means that parts of the organization or system depend on one another.
5. Integration – This is concerned with how a system is tied together.
Elements of a System
1. INPUT – These are components that are required to be processed so as to give the output. This includes raw materials, energy and human labor.
2. OUTPUT – This is the product of processing e.g. goods or a service.
3. PROCESSING – This is the transformation or conversion procedure of input into output. i.e. production department or factory.
4. CONTROL – this element guides the system. In an organization this is the decision making body that controls the pattern of activities, governs input, processing and output e.g the management of a company.
5. FEEDBACK – Control in a dynamic system is achieved by feedback which is the measure of output against the standard.
6. ENVIRONMENT – This is the source of external elements that interact with the system or exert pressure e.g. customers, suppliers, government policies and competition.
7. BOUNDARY – This are the limits that identity its components, processes and interrelationships when it interfaces with another system e.g. in a company the invoicing function could be undertaken by the sales department whereas in another it’s undertaken by the Account department.
Meaning of MIS
MIS consists of three words, that is Management, Information and System. On the basis of these three words MIS can be defined as a system, which supplies information to Management. Actually, MIS is a process of providing necessary information to management. It helps in planning, controlling and in taking different managerial decisions. MIS is the structured, formal, systematic part of communication system. MIS is an assemblage of personnel and facilities, organized into an integrated system by which relevant, adequate and timely information is supplied to the executives.
It is to be mentioned that in respect of a large enterprise, MIS can be built around electronic computers. MIS is not new, but only its computerization is new. Before the invention of computer, MIS techniques had existed to supply operations. The computer has added one or more dimensions such as speed, accuracy and increased volume of data.
Some definitions of MIS are given below
According to Kennevans, MIS is an organised method of providing past, present and projection information relating to internal operations and external intelligence.
According to Gordon B. Davis, MIS is an integrated man/machine system for providing information to support the operations management and decision making functions of an organization.
According to Robert G. Mardick, goel E Ross and gomes R.Claggett, MIS is the System intended to provide information for decision making, planning, organizing and controlling the operations of the subsystems of the firm and to provide a Synergistic organization in the process.
Definition of MIS
MIS
Any telecommunications and/or computer related equipment or interconnected system or sub-systems of equipment that is used in the acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission or reception of voice and/or data, and includes software, firmware and hardware.
Also, a MIS is an IS that provides information to the management to enable them plan, coordinate, control monitor and make decision by providing routine, summarizes and exceptional report.
The focus is on the design and operation of the MIS which means that the information system is viewed as a means of processing data, i.e. the routine facts and figures of the organization, into information which is then used for decision making. It is changes in decision behavior which distinguish data from information.
The Figure 1.1 summarizes this approach.
This means that MISs are qualitatively different from data processing systems and that management involvement and interaction between information specialists and management are the key features of successful MIS design.
Therefore, MIS can be defined as:
A system to convert data from internal and external sources into information and to communicate that information, in an appropriate form, to managers at all levels in all functions to enable them to make timely and effective decisions for planning, directing and controlling the activities for which they are responsible. To be successful an MIS must be designed and operated with due regard to organization and behavioral principles as well as technical factors. Management must be informed enough to make an effective contribution to systems design and information specialists (systems analysts, accountants, operations researchers and others) must become more aware of managerial functions and needs so that, jointly, more effective MISs are developed.
Characteristics of MIS
The management information system has the following characteristics processes User processes Information Flows Data Decisions flows
1) System approach: MIS is based on the System approach. It is a step by step approach to the study of system and its performance. Performance is made in the light of the objective which has been constituted for that purpose.
2) Management oriented: Under MIS, necessary information is provided to each manager at the right time, in right form and a relevant one, which is required by the management by providing information in taking effective managerial decision.
3) Future oriented: MIS is designed and developed keeping in view the future position of the business.
Therefore, MIS should provide useful information on the basis of projections based on which future action can be taken.
4) Integrated: MIS is designed in taking a comprehensive view or looking at the complete picture of the interlocking sub-systems that operate within the company. It considers all aspects of production, marketing, accounting, financing, management etc.
5) Common-data followed: MIS deals with the common data that are available in the business. MIS provides data and information for taking effective managerial decision, which must select the real picture of the business.
6) Long term planning: MIS is prepared for long term planning of the business. So, the designer should avoid the outdated data and information in designing and developing time of MIS. The designer should consider the present situation and future trend of the business activities, when MIS is designed.
7) Control database: Another important characteristic of MIS is that it always based on centralized data and information. It is because of this fact that MIS is to supply data and information in such a way so that the management can take its important decision.
Functions of MIS
The main purpose of MIS is to provide the management with the necessary information for decision making. In order to achieve this purpose MIS is to perform the following functions.
1) Collection of data: The first function of MIS is to collect necessary data from both internal and external sources of the organization. The data of the organization which have already been gathered are kept in some physical medium such as a paper form or entering it directly into computer system.
2) Processing data: After storing the data, the next important function of MIS is to process the same. In the processing, the data are converted to require management information, calculating company, sorting, classifying and summarizing etc. are the necessary activities to be done for processing the data.
3) Storage of information: Under the MIS, necessary data and information are carefully stored, so that it can save time for searching the same. Generally, data and information are stored by reserving and organizing them in the form of files, records and databases for future use
4) Retrieval of information: Another function of MIS is to retrieve the information to meet the exact management information demands. So retrieval should be done as per the requirement of the management users.
5) Disseminating: Disseminating is the last function or finished product of MIS. By disseminating the data and information are divided and distributed to the users in an organization. This can be done through reports or outline through computer terminals periodically.
Components of MIS and their relationship
A management information system is made up of five major components namely people, business processes, data, hardware, and software. All of these components must work together to achieve business objects. People – these are the users who use the information system to record the day to day business transactions. The users are usually qualified professionals such as accountants, human resource managers, etc. The ICT department usually has the support staff who ensure that the system is running properly. Business Procedures – these are agreed upon best practices that guide the users and all other components on how to work efficiently. Business procedures are developed by the people i.e. users, consultants, etc.
Data – the recorded day to day business transactions. For a bank, data is collected from activities such as deposits, withdrawals, etc.
Hardware – hardware is made up of the computers, printers, networking devices, etc. The hardware provides the computing power for processing data. It also provides networking and printing capabilities. The hardware speeds up the processing of data into information.
Software – these are programs that run on the hardware. The software is broken down into two major categories namely system software and applications software. System software refers to the operating system i.e. Windows, Mac OS, and Ubuntu, etc. Applications software refers to specialized software for accomplishing business tasks such as a Payroll program, banking system, point of sale system, etc.
Role of Information in an Organization
In addition to the general function of improving knowledge, information assists management in several ways
including:
The reduction of uncertainty: uncertainty exists where there is less than perfect knowledge. Rarely, if ever, is there perfect knowledge but relevant information helps to reduce the unknown. This is particularly relevant in planning and decision making.
As an aid to monitoring and control: by providing information about performance and the extent of deviations from planned levels of performance, management is better able to control operation.
As a means of communication: managers need to know about developments, plans, forecasts, and impending changes and so on.
As a memory supplement: by having historical information about performance, transactions, results of past actions and decisions available for reference, personal memories are supplemented.
As an aid to simplification: by reducing uncertainty and enhancing understanding, problems and situations are simplified and become more manageable.
Characteristics of good Management Information System
The purpose of a management information system is to help executives of an organization make decisions that advance the organization’s goals. An effective MIS assembles data available from company operations, external inputs and past activities into information that shows what the company has achieved in key areas of interest, and what is required for further progress. The most important characteristics of an MIS are those that give decision-makers confidence that their actions will have the desired consequences.
Relevance
The information a manager receives from an MIS has to relate to the decisions the manager has to make. An effective MIS takes data that originates in the areas of activity that concern the manager at any given time, and organizes it into forms that are meaningful for making decisions. If a manager has to make pricing decisions, for example, an MIS may take sales data from the past five years, and display sales volume and profit projections for various pricing scenarios.
Accuracy
A key measure of the effectiveness of an MIS is the accuracy and reliability of its information. The accuracy of the data it uses and the calculations it applies determine the effectiveness of the resulting information. The sources of the data determine whether the information is reliable. Historical performance is often part of the input for an MIS, and also serves as a good measure of the accuracy and reliability of its output.
Usefulness
The information a manager receives from an MIS may be relevant and accurate, but it is only useful if it helps him with the particular decisions he has to make. For example, if a manager has to make decisions on which employees to cut due to staff reductions, information on resulting cost savings is relevant, but information on the performance of the employees in question is more useful. The MIS has to make useful information easily accessible.
Timeliness
MIS output must be current. Management has to make decisions about the future of the organization based on data from the present, even when evaluating trends. The more recent the data, the more these decisions will reflect present reality and correctly anticipate their effects on the company. When the collection and processing of data delays its availability, the MIS must take into consideration its potential inaccuracies due to age and present the resulting information accordingly, with possible ranges of error.
Completeness
An effective MIS presents all the most relevant and useful information for a particular decision. If some information is not available due to missing data, it highlights the gaps and either displays possible scenarios or presents possible consequences resulting from the missing data. Management can either add the missing data or make the appropriate decisions aware of the missing information. An incomplete or partial presentation of information can lead to decisions that don’t have the anticipated effects.
Approaches to system classification
There are two broad categories.
a). The pre-specific processing of day to day transactions ,known as data processing or transaction processing and the production of regular reports analysis and information for planning control and decision making directly by the computer.
b). the use of computers by the end –users themselves .They include managers, accountants, office staff, sales people executive etc.
Both produce management information. The key difference is that the pre specified systems supply pre- determined outputs and reports so there is less flexibility. This means that great care must be taken in analyzing and determining management’s real information .On the other hand, with the end user computing there is more flexibility and interaction so that the emphasis becomes one of supporting the end user rather than the production of a specified report.
Information systems can be classified by:
(a) Organizational level Supported
That is, information systems that support managers at different levels of the organization. This classifies IS as transaction processing systems (TPS, to support operational level), management information systems (MIS, to support middle/tactical level), and Executive information system (EIS, to support the senior level management).
(b) Functional area supported
These are information systems that support operations and management of different functions within an organization. They include: financial management systems, human resource management systems, marketing management systems etc.
(c) Support provided.
They are classified according to the support they provide. They include:
Data processing systems/transaction processing systems
Management information systems
Executive information systems
(d) Management activity supported
Executive support systems (ESS)
They are designed to help senior management make strategic decisions. An ESS gathers analyses and summarizes the key internal and external information used in the business. ESS typically involves lots of data analysis and modeling tools, such as “what-if” analysis, to help strategic decision-making. A good way to think about an ESS is to imagine the senior management team in an aircraft cockpit, with the instrument panel showing them the status of all the key business activities.
Management information systems (MIS)
They are primarily concerned with internal sources of information. MIS usually take data from the transaction processing systems (see below) and summarize it into a series of management reports.
MIS reports tend to be used by middle management and operational supervisors.
Decision support systems (DSS)
Specifically designed to help management make decisions in situations where there is uncertainty about the outcomes of those decisions.
DSS use tools and techniques to help gather relevant information and analyze the options and alternatives. DSS often involves use of complex spreadsheet and databases to create “what-if” models.
Knowledge management systems (KMS)
Exist to help businesses create and share information. They are typically used in businesses where employees create new knowledge and expertise, which can then be shared by other people in the organization to create further commercial opportunities. Good examples include firms of lawyers, accountants and management consultants.
KMS are built around systems which allow efficient categorization and distribution of knowledge. For example, the knowledge itself might be contained in word processing documents, spreadsheets, PowerPoint presentations. Internet pages etc. To share the knowledge, a KMS would use group collaboration systems, such as an intranet.
Transaction processing systems (TPS)
They are designed to process routine transactions efficiently and accurately.
A business will have several TPS; for example:
Billing systems to send invoices to customers
Systems to calculate the weekly and monthly payroll and tax payments
Production and purchasing systems to calculate raw material requirements
Stock control systems to process all movements into, within and out of the business
Office automation systems
Try to improve the productivity of employees who need to process data and information.
Perhaps the best example is the wide range of software systems that exist to improve the productivity of employees working in an office (for example, Microsoft Office XP), or systems that allow employees to work from home or while on the move.
Decision support systems – expert systems
APPROACHES TO INFORMATION SYSTEMS
Social-technical Systems
The socio-technical view of organizations was developed by Trist and the Tavistock Institute and arose from consideration that any production system requires both a technological organization, i.e. the equipment, processes, methods, etc. and a work organization relating to those who carry out the necessary tasks to each other, i.e. the social system. Based on this view an organization is not just a technical or social system but is the structuring of human activities round various technologies.
The technologies involved determine the technical sub-systems and vary widely. Consider, for example, the differing skills, procedures, machinery, equipment and the layout of facilities required in an electronics company, a car manufacturer, a hospital or a computer bureau.
In addition to the technical sub-system, every organization has a social subsystem which consists of the aspirations, expectations, interactions and value systems of the members. The two sub-systems – the technical and the social -cannot be looked at separately but must both be considered as interrelating within the organization. Socio-technical theory suggests that the organization consists of four interrelated elements – tasks, people, structure and technology as shown in Figure below:
More traditional approaches to Organizations and their problems have tended to concentrate on one or other of the sub-systems with little or no recognition of the other.
Social-Technical View of IS
Contemporary Approaches to Information Systems
The study of information systems deals with issues and insights contributed from technical and behavioral
disciplines. The technical approach emphasizes mathematically based, normative models to study information systems, as well as the physical technology and formal capabilities of these systems. The behavioral approach, a growing part of the information systems field, does not ignore technology, but tends to focus on non-technical solutions concentrating instead on changes in attitudes, management and organizational policy, and behavior.
MIS combines the work of computer science, management science, and operations research with a practical
Technology
Tasks
Structure People
MIS orientation toward developing system solutions to real-world problems and managing information technology resources. It is also concerned with behavioral issues surrounding the development, use, and impact of information systems, which are typically discussed in the fields of sociology, economics, and psychology In the sociotechnical view of systems, optimal organizational performance is achieved by jointly optimizing both the social and technical systems used in production. Adopting a sociotechnical systems perspective helps
to avoid a purely technological approach to information systems. Technology must be changed and designed, sometimes even “de-optimized,” to fit organizational and individual needs. Organizations and individuals must also be changed through training, learning, and planned organizational change to allow technology to operate and prosper. Information systems are sociotechnical systems. Although they are composed of machines, devices, and “hard” physical technology, they require substantial social, organizational, and intellectual investments to make them work properly. Since problems with information systems—and their solutions—are rarely all technical or
behavioral, a multidisciplinary approach is needed.
A Sociotechnical Perspective on Information Systems
In a sociotechnical perspective, the performance of a system is optimized when both the technology and the organization mutually adjust to one another until a satisfactory fit is obtained.
System Approach or System Theory
The systems approach is a method or framework which helps us to analyze and explore the operation and interactions which exist in the systems around us. In other words; this is an approach to problem solving e.g. trying to structure an organization or analyze an information system. It involves trying to establish the objectives of the system through considering the relationship with its environment, identifying its component and the interaction features of the system.
Systems And Adaptability
To be successful and to remain in existence, organizations must be flexible and adapt to change. This means change not only in the Organization’s relationship with the external environment but also in its internal methods and structures. Successful Organizations are characterized by their internal openness and their readiness to accept that yesterday’s methods and products are very unlikely to be suitable for tomorrow. Recognizing the need for change, initiating change and managing change successfully are the hallmarks of good quality management. Organizations do not automatically adjust to change.
Adaptation only occurs as a result of management decisions and action. Successful change is change that is planned and considered. This means that the effects on the Organization as a whole must be considered when making a change to part of the Organization. It will be recalled that a key element of the systems approach is that changes in parts of a system affect the system as a whole. Thus, to make successful changes one must be aware of the interactions which exist in the
Organization.
Systems theory recognizes that open systems can achieve their objectives in a variety of ways using varying inputs, processes and methods. This is known as equifinality.
Features of the systems approach;
a) Holism or synergy- All systems are composed of interrelated parts or sub-systems and the system can only be explained as a whole (Holism or synergy). This is known as holism or synergy. Holism states that any whole is more than the sum of its individual parts. When the appropriate parts are combined, properties appear from the whole which the parts alone do not possess. These are known as emergent
properties. Examples of emergent properties are:
Taste: a property of water not the constituent hydrogen and oxygen atoms.
Growth: a property arising from the combination of seeds and soil.
Obsolescence (Uselessness): likely to arise from consideration of financial, technical and personnel factors. A machine may still work but may be too expensive or dangerous to run or may no longer be required for current production.
b) Systems are hierarchical in that the parts of sub-systems are made up of other smaller parts. For example, the accounting systems of an organization may be a sub-system of the information system which is itself a sub-system of the planning system, which is a sub-system of the organization as a whole. Progressing down the hierarchy increases the detail but reduces the area whilst moving upwards
provides a successively broader view.
c) The parts of a system cannot be altered without affecting other parts. Many organizational problems stem from ignoring this principle. For example, a departmental procedure or form might be changed
without considering the ripple effects on the other departments affected, with dire consequences.
d) The sub-systems should work towards the goal of their higher systems and not pursue their own objectives independently. If sub-systems pursue their own objectives to the determent of higher objectives (organization), this condition is known as sub-optimally i.e.
they aren’t performing optimally.
e) Organizational systems contain both hard and soft properties. Hard properties are those that can be assessed in some objective way. Examples are; the number of components in a storage bin, the amount of PAYE tax a person will pay. The soft aspects of a system are a matter of individual values or taste. They cannot be assessed by any objective standard or measuring process. Examples are: the appearance of a product, the suitability of a person for a job, any problem containing a political element and so on.
Entropy
Entropy is the term for the disorder or chaos in a system. Totally closed systems naturally deteriorate and the total entropy in a system, without inputs, always increases. Entropy can be countered by bringing in information and other stimuli from the system’s environment. This helps the system to adapt and lower its entropy. Such a process is known as introducing negative entropy.
Interconnections
Each sub-system has many inputs and outputs resulting in several interconnections within the same system. Such interconnection of interfaces increases the cohesion between them. It thus increases the complexity of making it difficult to manage, co ordinate and modify e..g Changing the system that products customer details may affect other sub-system in the sales ledger module.
A system with 4 sub-systems will have 6 possible interconnections in the formula n (n-1) where n is the number of sub-systems.
General formula to give number of interconnections where n is the number of sub system is given by N (N-1)
Decoupling:
This is the tight connection between sub-components e.g. resources and facilities need to be finely balanced, parts and documentation must be available and there must be good flow of information. The solution is to decouple or looser or reduce the intensity of interactions so that the sub-systems can operate with a degree of
independence.
Decoupling can be done in the following three ways:-
(i) The use of inventories, buffers or waiting lives consisting of stock or work in progress (W.I.P) e.g. in a computer system a printer has a buffer.
(ii) Have extra and flexible resources e.g. have extra personnel for several jobs e.g. Benetton clothing inc. it provides undyed goods and other dyes then before shipment.
(iii) Standardization – The existence of standard specifications an procedures to ease communications e.g. when the receiving sub-system knows what to expect. However decoupling has its own cost.
Data and Knowledge Management
Management do not always know what information they need and information specialists often do not know enough about management to be able to produce relevant information for the managers they serve. There is no doubt that better communication between management and information specialists, plus a wider knowledge by both groups of MIS principles would greatly facilitate the task of developing relevant and appropriate information systems. There is, unfortunately, no simple checklist of essential features which, if
followed, will automatically produce the perfect MIS. What is required is an awareness and understanding of key principles and function so that the design, implementation and operation of the MIS is the result of informed decisions and judgments rather than haphazard development without regard to real organizational requirements. The nature of data, information knowledge and communications The processing of data into information and communicating the resulting information to the user are the very essence of an MIS. Data is the term for collections of facts and figures: hours worked, invoice values, part numbers, usage rates, items received, etc. These basic facts are stored, analyzed, compared, calculated and generally worked on to produce messages in the form required by the user i.e. the manager, which is then termed information.
The full explanation of what is meant by information is dealt with in detail in the next chapter, but at this stage information can be briefly defined as data that have been processed and communicated in such a way as to be useful to the recipient. Members of management use the information produced together with the information already within their heads, called knowledge, to plan, control, and make decisions or to modify the produced information so as to share the new knowledge with others in the organization. Knowledge management, which is the tools and techniques for collecting, managing and disseminating knowledge within the organization, is of increasing importance in today’s high-technology business environment.
Data lifecycle process and the knowledge discovery
Business doesn’t run on data, but they do run on information and knowledge on how to put that information to use successfully. Knowledge has always been an underlying component of a business. This knowledge is continuously derived from data.
The transformation of data into knowledge may be accomplished in several ways. It starts with data collection from various (several) sources. These details are stored in a database. This data can be pre-processed and stored into a data warehouse. To discover knowledge the processed data may go through a transformation that makes them ready for analysis. The analysis is done with data mining tools which looks for patterns and supports data interpretation. The result of this is generated knowledge. This knowledge is then presented to the user and is thus stored in a knowledge base.
Data and information defined
a) Data are facts, events, transactions and so on which have been recorded. They are the input raw materials from which information is produced.
b) Information is data that have been processed and communicated in such a way that they can be interpreted and understood by the recipient.
Data Characteristics
Data are facts obtained by reading, observation, counting, measuring, weighing, etc., which are then recorded.
Frequently they are called raw or basic data and are often records of the day-to-day transactions of the organization.
Data are derived from both external and internal sources and whilst most external data are in readily usable and concrete forms.
Data Quality (DQ)
This is the quality of data that will determine its usefulness as well as the decisions.
There are various problems associated with data quality and can be categorized into the following:-
(i) Intrinsic data quality
– Accuracy
– Objectivity
– Believability
– Reputation
(ii) Accessibility data quality
– Accessibility
– Security
(iii) Contextual data quality
– Value added
– Timelines
– Relevance
– Completeness
– Volume
(iv) Representation data quality
– Ease of understanding
– Concise representation
– Consistent representation
One of the major issues of DQ is data integrity. Older filing system may lack integrity i.e. changes made in one file is one place may not be made in the file in another place or department i.e. there is conflict of data.
Data Warehousing, Mining & Analysis
In today’s fast faced and highly competitive market, the access of data is critical. The most successful companies are those that can respond quickly and flexibly to market changes and opportunities and that the key to this response is the effective and efficient use of data and information. For this an organization requires a system that is able to support:-
a) End-users easy access the data.
b) Decision being made quickly.
c) Accurate and effective decision making.
d) Flexible decision making.
The purpose of a data warehouse is to establish a data repository that makes data accessible and really acceptable.
The data is organized within the warehouse as a relational database so that it’s easy for users to access.
The data are organized by subject such as the vendor, product and functional area.
Adamant is a replicate subset of a data warehouse and is dedicated to a functional or regional area e.g. many companies have marketing adamant or adamant for foreign operations.
Characteristics of data warehousing
(i) Organization – Data are organized by detailed subject e.g. price level to support relevant decisions.
(ii) Consistency – data has to be consistent in the relevant database.
(iii) Time variance – Data should be kept for a period of 5 to 10 years to allow forecasting and comparison over time.
(iv) Non-volatile – Data shouldn’t change once entered in a warehouse.
(v) Relational – Data, should be stored in a relational structure to ease retrieval.
(vi) Client /server – the data warehouse uses the client /server architecture mainly to provide the end-user an easy access to its data.
Advantages of data warehousing
1. Provides a frame-work for presenting the company with the unique opportunity to restructure its I.T strategy.
2. It provides a consolidated view of the corporate data (company’s data) which is better than providing many smaller views.
3. Allows information processing to be off-loaded from experience operational systems onto low cost servers.
Data warehousing is suitable for organizations which have the following:-
(i) A large amount of data needed to be access by end-user.
(ii) The operational data stored in different systems.
(iii) An information based approach to management should be in use
(iv) There is a large and diverse customer base.
(v) The same data are represented differently in different systems.
(vi) The data are stored in highly technical formats that are difficult to decode
(decipher).
(vii) Extensive end-user computing is performed.
Strategic uses of data warehousing
a) Airline – they can be used for crew assignment, mixing of fares and route profitability.
b) Investment and insurance – this are used in customer tendency analysis, market
movement analysis and risk management.
c) Retail –chain (supermarkets) – these are used for trend analysis, buying pattern analysis and pricing policy.
Knowledge discovery in database (KDD)
The process of extracting useful knowledge from volumes of data is known as knowledge discovery in databases (KDD).
This is supported by the following technologies:-
1. Massive data collection
2. Powerful multiprocessing computers
3. Data mining algorithms (procedures).
Stages in the evolution of knowledge discovery
Online analytical processing: (OLAP)
This refers to the searching of end-user activities such as the DSS modeling using spreadsheet and graphics which are done online.
The objective of this is to look for conditions and patterns, trends and exceptional characteristics.
1. Access very large amount of data e.g. several years of sales data.
2. Analyze the relationship between many types of business elements such as sales, products, region and channels.
3. These involve aggregated (averaged) data such as sales volumes, budgeted shillings or pounds and pounds speat.
4. Compare aggregated data over time periods e.g. monthly, quarterly and yearly.
5. Present data is different perspectives such as sales by region v/s sales by product or by product within each region.
6. It involves complex calculations between data elements such as expected profits calculated as a function of the sales revenue for each type of sales channels (mode of distribution).
Data mining:
It derives its name from the similarities between searching for value business information in a large database and mining on a mountain for mineral ores. This is the going via immerse volumes of data to generate business opportunities.
Characteristics of data mining
1. Involves discovery of data buried deep within very large databases sometime stored for several years.
2. The data is consolidated in a data warehouse, the internet and the intranet.
3. The environment has a client /serves architecture.
4. Data mining tools help remove the information one buried and corporate files.
5. The miner is often the end-user empowered by data drills and other power query tools to ask adhoc questions and get answers quickly with little or no programming skills.
6. Data mines can use several tools and techniques.
7. Data mining yields 5 types of information:-
(i) Association information
(ii) Sequences information
(iii) Classification information
(iv) Cluster information
(v) Forecasting information.
8. Because of the large amounts of data its sometimes necessary to use parallel processing for data mining.
Data visualization refers to the representation of data by technologies such as digital images; graphical user interfaces or animations visualization software packages often use capabilities for self-guided exploration and visual analysis of large amounts of data.
Data mining can also be applied in:-
1. Identifying individuals or organization most likely to respond to direct mailing.
2. Determining which products or services are commonly purchases together (complementary products) e.g. bread and blue band.
3. Predicting which customers are likely to switch to competitors.
4. Identifying which transactions are likely to be fraudulent.
5. Identify common characteristics of customer who purchase the same products.
What is information?
Information is data that have been interpreted and understood by the recipient of the message. It will be noted that the user not just the sender is involved in the transformation of data into information. There is a process of thought and understanding involved and it follows that a given message can have different meanings to different people. It also follows that data which have been analyzed, summarized or processed in some other fashion to produce a message or report which is conventionally deemed to be ‘management information’ only because information is understood by the recipient.
In summary, information is knowledge and understanding that is usable by the recipient. It reduces uncertainty and has surprise value. It must tell the recipient something not already known and which could not be predicted. If a message or report does not have these attributes, as far as the recipient is concerned, it contains merely data not information. This is a crucial point not always fully appreciated by information specialists. Ideally, managers should be able to define the type of information they require and the MIS should be able to
supply it. In practice, of course, it does not happen like this and managers have to use whatever information is available, from whatever source. As Drucker said: “The manager will never be able to get all the facts he should have. Most decisions have to be based on incomplete knowledge – either because the information is not available or it would cost too much in time and money to get it. There is nothing more treacherous or alas, more common, than the attempt to make precise decisions on the basis of coarse and incomplete information.
(Drucker, Management: Tasks, Responsibilities, Practices, 1993)
In spite of the difficulties of producing it, managers need relevant and timely information to assist them to plan, to control and to make decisions. Relevant information is information which:
A. increases knowledge
B. reduces uncertainty
C. is usable for the intended purpose.
A worthwhile extension to the well-known adage that ‘management get things done through people’ would be that, ‘management get things done through people, by using relevant and timely information’.
Although all managers need information they do not all need the same type of information. The type of information required is dependent on many factors including: the level of management, the task in hand,nconfidentiality, urgency, etc.
Information classifications
Information has many characteristics and can be classified in numerous ways including:
by source: e.g. internal, external, primary, secondary, Government
by nature: e.g. quantitative, qualitative, formal, informal
by level: e.g. strategic, tactical, operational
by time: e.g. historical, present, future
by frequency: e.g. continuous (real time), hourly, daily, monthly, annually
by use: e.g. planning, control, decision making
by form: e.g. written, aural, visual, sensory
by occurrence:e.g. at planned intervals, occasional, on demand
by type: e.g. detailed, summarized, aggregated, abstracted.
ORGANIZATION’S STRUCTURE, CUTLURE AND CHANGE
These are 4 basic forms of organization structure:-
1. Hierarchy of Authority
This is illustrated as a pyramid. In this structure each position has authority commonly associated with it and a span of control. (These are the number of sub ordinates working under a particular authority). This may be narrow or wide giving raise to Tall and Flat structure.
3. Formulation: Extent to which rules and procedures exist to handle organizational activities. An indication of formalization is the extent to which decisions can be programmed.
4. Centralization: This refers to the organizational structure where decision making occurs either at the top level or low level.
Organization culture can be perceived as:-
1. Either using High technology or low technology.
2. Either a price leader or a price follower.
3. Produce high quality or low quality goods.
4. They are industry innovators or imitators.
5. Either selective marketer or mass marketers.
6. Risk takers or risk evaders.
Managers seek to change the culture of the organization. What they try to do is shape the way people behave, feel, contribute, interact and perform as employees of the organization. This is usually called leadership. They initiate debates and set priorities. New polices, methods and roles are introduced to shape behaviors, encourage, promote and require – to push certain expectations of performance in the business and thus to control.
In other words culture is organizational terms is broadly the social and behavioral manifestation and experiencing of whole range of issues such as:-
1) The way work is organized and experienced.
2) How authority is exercised and distributed.
3) How people are and feel rewarded organized and controlled.
4) The values and work orientation of the staff.
5) The degree of formalization, standardization and control through systems.
6) The value placed on planning, analysis, logic and fairness etc
7) How much initiative, risk taking, scope of individuality and expression is given.
8) Rules and expectations about such things as informality in interpersonal relations,
dressing etc.
9) Emphasis given to rules, procedures, specifications of performance and results, team or individual working.
We are born in a culture; we take up employment in a culture. We might therefore argue that the culture of an organization affects the type of people employed, their career aspirations, their education backgrounds and their status in society.
Organizational power is the ability to obtain and utilize human and material resources to accomplish objectives. Organizational change is the natural growth and decline in the process within the organization which may be caused by unstable goals and project
changes etc.
The following factors have led to changes in the business environmental as a result of
information systems solution:
1. The emergency of global economy (Globalization):-
This involves management and control in a global market place, competition is the world market global work groups and global delivery systems. Today, information systems provide the communication and analytical power that firms need for
conducting trade and managing businesses on a global sale. Controlling involves communicating with distributions and suppliers operating 24 hours a day in different national environment, servicing local and international reporting needs, therefore business needs powerful information systems in response. Globalization and I.T also threatens the domestic business firm as customers can
shop in a worldwide market. This increased competitor and forces firms to play in an open and unprotected worldwide market.
2. Transformation of industrial economies (industrialization).
Major industrial powers are being transformed from industrial economies to knowledge and information based economies while manufacturing has been mainly to how wage countries (cheap labor). Knowledge and information intense products require a greater deal of leaving and knowledge to produce. This has led to enhanced productivity, new products and services, shorter product life cycles and a turbulent environment. And as such across all industries information and technology that delivers it has become critical.
Information systems are needed to optimize the flow of information and knowledge within the organization to help management maximize the firm’s knowledge resources. And because of the productivity of the employees, this would be dependent on the quality of the system servicing them and it’s critical to the survivor of the firm.
3. Transformation of the business enterprise
There has been a transformation in the organization and management of funds. The traditional business firm is hierarchical, centralized and structured with an arrangement of specialist flat typically rely on a fixed set of standards and a set of operating procedures (SOPs). The new style of a business firm is flattered, decentralized, flexible arrangement of generalists who rely on instant information to deliver mass produced products and services uniquely suited to specific markets and customers. The traditional management group relies on formal plans, a rigid division of labor, formal rules and appeals to loyalties to ensure the proper operation of the firm. For this to be
possible an organization requires powerful information systems.
The Networked Enterprise
Computing power is during organizations into networked enterprises, allowing information to be instantly distributed within and outside the organization.
New ways of conducting business electronically have emerged
1) Flattering organization – this has led to organizations to have fewer levels of management with low level employees being given greater decision making authority. Networked computers have made it possible for employees to work together so a team.
2) Separating work form location – Communication technology has eliminated distance as a factor for many types of work in many situations. Sales personnel can spend more time in the field with the customer and still have up-to-date information while carrying much less paper work. Networked information says are allowing companies to co-ordinate geographically located branches and more so coordinate other organizations as virtual organizations. These are organizational using networks and linking people, assets and ideas to create and distribute products and services without being limited by traditional boundaries or physical locations.
3) Organization of workflows – Information systems have progressively replaced manual work procedures with automated procedure and work flows. This has reduced the cost of operations in many companies. This has also led to an increase in the flexibility of the organization. Companies can use communication technology to organize and increase the ability to respond to changes in the market place and take opportunities when they arise.
4) The Changing Management Process:
Information systems are providing powerful capabilities to help in the process of management. Managers can obtain information on their organizations performance down to the level of specific transactions just about anywhere in the organization at any time. These organizations use enterprise resource planning system (ERPS) which is able to integrate the different facets within the company such as manufacturing, planning, and sales and finance so that they can become more coordinated by sharing information with each other.
Examples of ERP systems available include;-
– Macula – SAP – Scala – JBA – Oracle
– Mavisino – Baan – Sun system – JD Edwards
5) Redefining Business Boundaries
Networked information systems can enable transactions such as payments and purchase orders to be exchanged electronically among different companies thereby reducing the cost of obtaining products and services outside the firm.
