Transcript Lecture 1 - bhecker.com

Management Information
Systems
Information Systems in Global
Business Today
Lecture 1
The Organization
• An organization is a person or group of people
united for some purpose
– to deliver a product, a service, information...
• Many organizations are established for trade –
to generate profit, but not necessarily. They may
be charities or government departments. They
still need management and information systems!
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Organizations
• Organizations process and use information in
order to produce outputs for an environment.
• Most organizations are not designed primarily
for processing information - they deliver services
or products. Examples;
– a newspaper delivers news and opinions,
– The Department of Social and Family Affairs
deliver pension and unemployment services.
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Organizations
• The previous definition of an organization
implies that introducing new technology changes
the way inputs are combined into outputs,
– i.e. a technical rearrangement of machines or
workers.
• This has the effect of changing procedures and
a lot of information (… information systems).
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Organizations
Organization
Environmental
resources
Structure
Hierarchy
Division of Labour
Rules, procedures
Process
Rights/obligations
privileges/responsibilities
Environmental
outputs
Values, Norms, People
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Organizations
• Appropriate information systems need to be
developed to support the activities of an
organization;
– day to day activities,
– longer term goals and objectives,
– strategic management.
• An organization needs information about
– its own internal activities and operations,
– the markets and industry within which it operates.
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Types of Organizations
• There are four commonly recognized structures
for organizations that are sometimes defined as
‘types’:
– Functional
– Product (sometimes referred to as ‘Project’ as
an alternative)
– Bureaucratic
– Matrix
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Types of Organizations
• Functional - aligned with the basic managerial
functions, such as Purchasing, Sales,
Personnel…(i.e. structured with Departments)
– These are often hierarchical. It may be difficult to
produce systems that span several functions –
(information) systems may overlap departments
but may need to be different.
• Product - activities are grouped by output or
products.
– These often deliver specific expertise but also
duplication of activities if individuals are working
independently.
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Types of Organizations
• Bureaucratic – having many detailed rules and
procedures;
– These are often hierarchical, mechanistic and
impersonal.
• Matrix – a hybrid of ‘Functional’ and ‘Product’.
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Types of Organizations
• Functional diagram
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Types of Organizations
• Product diagram
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Types of Organizations
• Matrix diagram
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Differences in Organizations
• Organizations may have (usually do have)
different structures or shapes.
• They have;
– Different goals
– Benefit different groups
– Different leadership styles
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Differences in Organizations
• Different goals;
– coercive (military, prison), utilitarian (businesses)
normative (religious groups, universities).
• Benefit different groups;
– members (credit union), clients (welfare agency),
owners (business).
• Different leadership styles;
– democratic, laissez-faire (leadership absent),
technocratic (technology based), bureaucratic (rule
based), authoritarian.
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Differences in Organizations
• Organizations exist in different environments;
– turbulence (rapid technology change), complexity
(multiple competitors).
• Perform different tasks
– programmed routine tasks (inventory reorder), semi
programmed (production scheduling), unprogrammed
(selecting strategy, e.g. consulting).
– Use different techniques & technology.
– craft (woodworker), batch routine (assembly line),
continuous process (oil refinery).
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Types of Organizations
Example- entrepreneurial structure
• A simple structure…
• Young, small entrepreneurial firms in fast changing
environments.
• Dominated by entrepreneur and managed by single
CEO (Chief Executive Officer).
• Information systems are sometimes poorly planned
and significantly behind fast-breaking production
developments. (Usually because there is no
information Systems professional at work
continually.)
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Entrepreneurial Structure
Owners
Administration
Inventory
balancer
Salespeople
The focus is on sales, rather than innovation
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Types of Organizations
Machine bureaucracy
• A large classic bureaucracy.
• It exists in slow changing environment, producing
standardized products.
• It is dominated by strategic senior management that
centralized information flow and decision authority.
• It is likely to be kept in functional divisions (manufacturing,
finance, marketing, human resources… - departments.)
• Information systems tend to be large-scale, well planned but
limited to such functions as accounting, finance, simple
planning and administration.
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Machine Bureaucracy
Board of Directors
CEO
Vice President (VP)
Administration
Exec VP
Operations
Engineering
Personnel
Financial
Marketing
R&D
Facilities
Planning
R&D = Research and Development
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Types of Organizations
Divisionalized bureaucracy
• A combination of many machine bureaucracies, each
producing a different product or service, topped by a central
headquarters.
• Suited to slow changing environments and standarised
products.
• Organizations are divisionalized so tend to operate in different
environments (i.e. for each product or service).
• Information systems are elaborate and complex to support
central headquarters’ financial planning, reporting
requirements and operational requirements of the divisions.
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Divisionalized Bureaucracy
President
Planning
Division 1
Legal
Division 2
Finance
Division 3
Purchasing
Purchasing
Purchasing
Engineering
Engineering
Engineering
Manufacturing
Manufacturing
Manufacturing
Marketing
Marketing
Marketing
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Types of Organizations
Professional bureaucracy
• Example; a knowledge-based organization selling
professional service.
• Suitable for slow changing environments and skill sets.
• Dominated by Department Heads with weak centralized
authority.
• Professional members create product or service. (Consider
systems analysts and programmers of a software company.)
• Example problem; poor central administration system while
working with sophisticated knowledge-work support systems.
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Professional Bureaucracy – The Hospital Example
Board of Trustees
Executive Committee
Council of Physicians
Exec Director
Director of
Admin Services
Director of
Hosp Services
Director of
Nursing
Director of
Prof Services
Medicine
Surgery
Radiology
Pediatrics
Other examples; law firms, accounting firms, schools.
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Types of Organizations
Adhocracy – the structure is arbitrary
• Example; a task force organization.
• Characterized by large groups of specialists organized into
short-lived, multidisciplinary task forces focusing on new
products.
• High tech firm that must respond to rapidly changing
environments or markets (or derive money from government
contracts).
• Innovative and flexible – but with weak central management.
• Information systems might be poorly developed at the central
level, but often advanced within task force.
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Adhocracy – The Oil Refinery Example
Board of Directors
Resource Development
Chemicals
Exploration
New Resources
Production
Artic Pipelines
Materials
Chemicals
Petroleum Products
Logisitics
Marketing
Transportatn
Coordination
Administration & Services
Corp Affairs
Empl Relations
Treasurer
IT services
Purchasing
Comptroller
Medical
Law
Research
Build Admin
Env Protection
Tax
Bus Dev
Travel Arrang
Other examples; research orgs, aerospace companies, medical, electronic,
biomedical orgs.
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Business Organizations
• Business organizations vary in size from huge
international companies to private individuals,
including;
– manufacturing and commercial companies,
– central and local government departments,
– financial institutions,
– administrative organizations,
– service agencies,
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Business Organizations
• Product flow is the flow of raw materials to
finished goods.
• Information flow is the creation and movement of
the administrative and operational
documentation necessary for product flow and
for providing a service.
• Business Information Systems support
information flow and provide information to
companies to assist in achieving their aims.
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Processes within an organization
• A Business Cycle example
Supplier
materials
order
order
Purchasing
materials
Customer
Production
delivery
Sales
product
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Organization Functional Areas/Processes
Main work areas inherent in most companies are
• Accounts (including billing, collection, payment,
payroll)
• Personnel (including recruitment, professional
development, etcetera.)
• Sales (and Marketing)
• Purchasing
• Inventory / stock control
• Production
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Example -
Payroll
Payroll accounting
• Dealing with payment of employees.
• Requires a personnel administration system
which provides information on employees’
personal details and terms of employment.
• Requires a payroll system;
– computation of gross earnings
– computation of deductions and net earnings
– accounting (distribution and updating of ledgers)
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Example -
Payroll
Typical documents (electronic or otherwise):
•
•
•
•
•
•
•
•
Time reports/time cards
Payslip
Bank direct credit list - Electronic Funds Transfer (EFT)
Cheques
Accounting reports - deduction and cost analyses
End of year documents
Audit and control
Employee wage history
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Example -
Sales
Order Control ensures that customer orders are
received, processed and fulfilled efficiently and in
organised way.
Sales Accounting deals with monetary side of
customers orders, invoicing, payment etc.
Typical functions:
•
•
•
•
•
Dealing with enquiries re: price, availability…
Checking credit ratings,
Validating orders,
Handling customer complaints,
Checking the status of orders.
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Example -
Sales
Typical documents:
•
•
•
•
Customer orders
Sales invoice
Sales statements (for account customers)
Sales analysis reports
– These may be used to forecast sales and plan
marketing activities.
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Example -
Marketing
Marketing is the provision of goods and services
to meet customer needs.
Typical functions:
•
•
•
•
•
Monitoring competitors,
Liaising with existing customers and clients,
Market research,
Identification and follow up of leads,
Product or service promotion.
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Example -
Purchasing
Purchasing ensures that materials, equipment, tools,
etc are available at the right time, right place and at
the right price.
Typical functions:
•
•
•
•
•
•
Obtaining quotations from prospective suppliers,
Placing orders with suppliers and monitoring delivery,
Checking and handling goods received,
Passing details of goods received to accounts,
Checking supplier invoices before payment,
Maintaining supplier details re price, quality etc.
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Example -
Purchasing
Typical documents:
•
•
•
•
•
•
•
Purchase order (PO)
Good Received Note (GRN)
Delivery docket
Purchase invoice
Cheque or credit transfer (EFT)
Purchase records (supplier records)
Purchase analyses - measure supplier
efficiency, costs per work area, job costing…
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Example -
Stock Control
Stock (inventory) control is the monitoring and
decisions regarding the items held in stock.
• Stock is the buffer between supply (production or
external entities) and demand (customers or internal
entities if the product is used ‘on-site’.)
• Stock costs money – it is important to minimise the
money held in stock and still meet demand – this
often leads to JIT inventory control.
Just In Time - JIT - computer systems monitor supply and demand
continuously and trigger rapid resupply when necessary. This
requires close cooperation with suppliers.
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Example -
Stock Control
Typical functions:
•
•
•
•
•
Maintenance of stock level records
Issue of stock
Identifying and monitoring reorder levels
Managing outstanding orders
Stock valuation (stock check) and reconciliation
Information systems complexity depends on the number
of stock items, turnover rate and the number of
dispersed stores.
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Example -
Stores Control
Stores control is the methods of operating the
stores or warehouses, i.e. storage space,
handling equipment, security, packaging,
labelling.
• It is determined by
– size, weight and value of stock items
– flammability, stability (e.g. shelf-life) and
identification.
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Example -
Stores Control
Typical documents:
• Materials request,
• Purchase requisition
• Inventory transfer
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Example -
Production
Production designs and develops the product.
Production planning covers what to make and how
to make it.
Production control ensures planning is achieved by
monitoring and control of machines, processes and
people involved in production.
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Example –
Production
• These areas generate a huge amount of raw data
and require considerable amount of information to
control.
• Production is an area subject to considerable
automation
• CIM - Computer Integrated Manufacture
• CAD/CAM – Computer Aided
Design/Computer-Aided Manufacture
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Example –
Production
Information required for production control:
• Material requirements per time period (‘Man’ Hours or
Unit Time).
• Quantities of components and subassemblies per period.
• Amounts of equipment, machines, tools required per
stage.
• Amount of labour category required per stage.
• Progress of each job, reason for delays.
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Example –
Distribution
Distribution receives the finished goods from
production and ships the product to the
customer.
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Information Flow
Customers
customer
invoice
sales orders
shipping
notice
Employees
time
cards
payment
payslip, P60
Accounts
sales
notice
Sales
supplier
invoice
shipping order
supplier
payment
Production
transfer
notice
Purchasing
MR
Distribution
purchase
requisition
supplier
invoice
Inventory
goods
received
Notice
Typical Manufacturing
(GRN) inventory
organization Information
transfer
Purchase Order (PO)
PO
Flow
Receiving/Goods
Inwards
delivery docket
Suppliers
MR = manufacturing requisition
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Information Flow
Customers
Employees
timecards
customer
invoice
payslips, P60
Payroll
Billing
sales
notice
payment
Payment
customer
payment
notice
Sales
Collection
payment
supplier
invoice
Purchasing
Information Flow within Accounts
GRN
Suppliers
Receiving
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Management of Organizations
• The traditional view models organizations as
having three levels of management;
• Strategic
• Tactical
• Operational
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Management of organizations
• Strategic level management is responsible for
overall strategy and direction – typically, top level management.
• Tactical or middle level management ensure
policies for achieving the strategic objectives are
carried out – typically, heads of departments.
• Operational level management are responsible
for the day to day activities – typically, foremen, supervisors, team leaders…
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Business Information
Information types: Strategic (trends, patterns,
decision making)
Information types: Middle/Tactical (summary,
prediction and control)
Information types: Operational (summary,
short term, real time)
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Information for Strategic Management
• ‘Strategic’ information:
– Answers questions like “What markets should we
be in?” or “Where do we locate the new factory?”
– Is highly selective and summarised and usually in
graphical form
– Likely to originate outside the organization
– Has value for a longer period
– Requires high degree of experience and
judgement in its application
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Information for Strategic Management
Decisions based on this information tend to be
unstructured.
Example - patterns of expenditure from market
surveys or trade publications, market
availability and penetration figures.
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Management Information
Management Information for monitoring and
control:
– Answers questions like “Of what (product/service)
are we selling most?” or “Are the sales team
meeting their targets?”
– Needs to be condensed and summarised
information in the form of reports, graphs and
tables, forecasts.
– Is usually derived from information collected at
operational level.
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Management Information
– Is shorter term information (months), concerned
with the departmental level.
– Example - sales analyses, sales forecasts,
production schedules.
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Operational Information
Operational Data for enabling and recording
routine business activity:
– Answers questions like “What is the stock level
for a given product?” or “Can this customer be
given credit?”
– Is very detailed, highly specific and generated
internally.
– Is short term (hourly, weekly), used for decisions
concerned with immediate situation.
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Operational Information
– Structured decisions
– Examples - stock levels, customer order details,
overdue purchase orders.
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Information Purpose and Example of Systems
• Strategic Management
– modelling and simulation for decision support,
– financial models and profit margin change
simulations.
• Middle Management
– monitoring and control of current information,
– production planning, sales forecasting, market
research.
• Operational Management
– transaction processing,
– Stock Control, Payroll, Accounting
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Characteristics of Information Required
Operational
Management
Middle
Management
Strategic
Management
Time
Scales
Immediate
Long
Term
Level of
Detail
Highly
detailed
Summarised
Source
Internal
External
Degree of
Uncertainty
Certain
Uncertain
Frequency
Frequent
Infrequent57
MIS, DSS, EIS Systems
• Management Information System (MIS) computer system that provides management
information;
– A user will normally have to access one or more
databases to get the information required.
• Decision Support System (DSS) supports
decision making i.e. provides information on
demand (ad hoc) and as simply as possible.
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MIS, DSS, EIS Systems
• Simple DSS systems provide information for
manager to make decision - Sophisticated
systems analyse data according to algorithms
and produce recommendations.
• It is necessary for DSS to have access to a wide
range of software and large corporate databases
so that facilities needed to make decision can be
accessible.
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MIS, DSS, EIS Systems
• MIS/DSS usually have graphical interface - need
to provide information in simple and easily
assimilated presentation;
– graphs and histograms,
– drill down and hot spots features.
• Simulation DSS - allows interactive modelling;
– values can be changed to see effect on business.
– ‘What if…’ scenarios.
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MIS, DSS, EIS Systems
• Executive Information Systems (EIS) are
integrated systems to suit senior management;
– senior management historically have been
resistant to systems - but this has changed a lot in
recent years – out of necessity.
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MIS, DSS, EIS Systems
• Executive Information Systems provide;
– decision support, (DSS)
– information retrieval from corporate databases, ad
hoc reporting,
– powerful display and multimedia capabilities,
– presentation facilities, e.g. PowerPoint,
– communications, e.g. e-mail, fax,
– organizational support, electronic diary, etc.
• The user interface is important. (Executives do not ‘hack’.)
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Where to Next?
• The management of organizations often
has several levels.
• Each level deals with somewhat different
information and data – so they have
different information systems
requirements.
• The structure of those systems can be
identified and designed by the process of
systems analysis.
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End of Lecture 1
• By the way…
– What is information?
– What is a system?
– What are Management Information Systems?
• We will look at these topics next.
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