Management-Information-System-munotes

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1 1
BASIC INFORMATION CONCEPTS AND
DEFINITION
Unit Structure
1.0 Objectives
1.1 Introduction
1.3 System definition
1.4 Information system definition
1.4.1 Typology of information systems
1.4.2 Transaction processing system (TPS)
1.4.3 Decision support systems (DSS)
1.4.4 Executive support system (ESS)
1.5 Decision making and information systems
1.5.1 Creating an Organizational Structure
1.5.2 Simple Structure
1.5.3 Functional Structure
1.5.4 Multidivisional Structure
1.5.5 Matrix Structure
1.6 Reasons for Changing an Organization’s Structure
1.7 Points to Remember
1.8 Exercises
1.9 References
1.0 OBJECTIVES
 Know and be able to differentiate among the four types of organizational
structure.
 Understand why a change in structure may be needed.
 System definition
 Topology of information system
 Characteristics of information
 Decision Making information System munotes.in

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2 1.1 INTRODUCTION
According to Russell Ackoff a systems theorist and professor of
organizational change, the content of the human mind can be cla ssified
into three categories:
Data represents a fact or an event statement unrelated to other things. Data
is generally used regarding hard facts. This can be a mathematical symbol
or text used to identify, describe, or represent something like temperatur e
or a person. The data simply exists and has no meaning beyond its
existence (in itself). It can exist in any form, usable or not. The data exists
in different formats, such as text, image, sound, or even video.
Information is data combined with meaning. Information embodies the
understanding of a relationship as the relationship between cause and
effect [ 2]. Ex: The temperature dropped 15 degrees, then it started to rain.
A temperature re ading of 100 can have different meanings when combined
with the term Fahrenheit or with the term Celsius. More semantics can be
added if more context for the temperature read is added, such as the fact
that this temperature concerns a liquid or a gas or th e seasonal norm of
20°. In other words, information is data that has meaning through
relational connection. According to Ackoff, information is useful data; it
provides answers to the questions: “who,” “what,” “where,” and “when.”
Knowledge can be seen as information combined with experience,
context, and interpretation. Knowledge constitutes an additional semantic
level derived from information via a process. Sometimes this process is
observational. Ackoff defines it as applying data and information;
knowl edge provides answers to the question “how” For example, what
happens in cold weather for aircraft managers? Observational knowledge
engineers interpret cold by its impact, which is the ice that can form on an
aircraft by reducing aerodynamic thrust and po tentially hampering the
performance of its control surfaces [ 2].
IF temperature < = 0° C THEN cold = true;
Cold IF == right THEN notify personnel to remove ice from aircraft.
Indeed, knowl edge is the appropriate collection of information such that it
intends to be useful. Knowledge is a deterministic process. Memorization
of information leads to knowledge. Knowledge represents a pattern and
provides a high level of predictability regarding what is being described or
will happen next.
Ex: If the humidity is very high and the temperature drops drastically, the
atmosphere is unlikely to hold the humidity so that it rains.
This knowledge has a useful meaning, but its integration in a context wil l
infer new knowledge. For example, a student memorizes or accumulates
knowledge of the multiplication Table. A student can answer 2 × 2
because this knowledge is in the multiplication table. Nevertheless, when
asked for 1267 × 300, he cannot answer correc tly because he cannot dip munotes.in

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3 into the multiplication table. To answer such a question correctly requires
a real cognitive and analytical capacity that exists in the next level …
comprehension. In computer jargon, most of the applications we use
(modelling, si mulation, etc.) use stored knowledge.
1.3 SYSTEM DEFINITION
The system is an aggregated “whole” where each component interacts
with at least one other component of the system. The components or parts
of a system can be real or abstract.
All system compone nts work toward a standard system goal. A system can
contain several subsystems. It can be connected to other systems.
A system is a collection of elements or components that interact to achieve
goals. The elements themselves and the relationships between them
determine how the system works. Systems have inputs, processing
mechanisms, outputs, and feedback mechanisms. A system processes the
input to create the output [ 3].
Input is the activ ity of collecting and capturing data.
Processing involves the transformation of inputs into outputs such as
computation, for example.
Output is about producing useful information, usually in the form of
documents and reports. The output of one system can b ecome the input of
another system. For example, the output of a system, which processes
sales orders, can be used as input to a customer’s billing system.
Computers typically produce output to printers and display to screens. The
output can also be reports and documents written by hand or produced
manually.
Finally, feedback or feedback is information from the system used to
modify inputs or treatments as needed.
1.4 INFORMATION SYSTEM DEFINITION
An information system (IS) is a set of interrelated componen ts that collect,
manipulate, store and disseminate information and provide a feedback
mechanism to achieve a goal. The feedback mechanism helps
organizations achieve their goals by increasing profits, improving
customer service [ 3], and supporting decision -making and control in
organizations [ 4].
Companies use information systems to increase revenues and reduce costs.
In or ganizations, information systems are structured around four essential
elements, proposed in the 1960s by Harold Leavitt ( Figure 1 ). The pattern
is known as the “Leavitt Diamond.”
Technolog y: The IT (Information Technology) of an IS includes the
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4 and telecommunications equipment used to capture, process, store and
disseminate information. Today, most IS are IT -based because modern IT
enables efficient operations execution and effective management in all
sizes.
Task: activities necessary for the production of a good or service. These
activities are supported by the flow of material, information, and
knowledge between the different participants.
Person: The people component o f an information system encompasses all
the people directly involved in the system. These people include the
managers who define the goals of the system, the users, and the
developers.
Structure: The organizational structure and information systems
compone nt refers to the relationship between individuals people
components. Thus, it encompasses hierarchical structures, relationships,
and systems for evaluating people.

1.4.1 Typology of information systems
A company has systems to support the different mana gerial levels. These
systems include transaction processing systems, management information
systems, decision support systems, and dedicated business intelligence
systems.
Companies use information systems so that accurate and up -to-date
information is ava ilable when needed [ 5].
Within the same organization, executives at different hierarchy levels have
very different information requirements, and different types of information
systems have evolved to meet their needs. A common approach for
examining the types of information systems used within organizations is to
classify them according to their roles at different organizational structure
levels, and this approach is called a vertical appro ach. Indeed, the
organization is considered a management pyramid at four levels
(Figure 2 ):
On the lowest level, staff perform routine day -to-day operations such On
the l owest level, staff perform routine day -to-day operations such as
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5 Operational management in which managers are responsible for
overseeing transaction control and deal with issues that may arise.
Tactical managemen t, which has the prerogative of making decisions on
budgets, setting objectives, identifying trends, and planning short -term
business activities.
Strategic management is responsible for defining its long -term objectives
and positioning concerning its compe titors or its industry.

1.4.2 Transaction processing system (TPS)
At the operational level, managers need systems that keep track of the
organization for necessary activities and operations, such as sales and
material flow in a factory. A transaction p rocessing system is a computer
system that performs and records the routine (daily) operations necessary
for managing affairs, such as keeping employee records, payroll, shipping
merchandise, keeping records, accounting and treasury.
At this level, the pri mary purpose of systems is to answer routine
questions and monitor transactions flow through the organization.
At the operational level, tasks, resources, and objectives are predefined
and highly structured. The decision to grant credit to a customer, for
example, is made by a primary supervisor according to predefined criteria.
All that needs to be determined is whether the client meets the criteria.
Management information systems (MIS)
Middle managers need systems to help with oversight, control, decision
making, and administrative activities. The main question that this type of
system must answer is: is everything working correctly?
Its role is to summarize and report on essential business operations using
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6 is synthesized and aggregated, and it is usually presented in reports
produced regularly.
1.4.3 Decision support systems (DSS)
DSS supports decision -making for unusual and rapidly evolving issues, for
which there are no fully pred efined procedures. This type of system
attempts to answer questions such as: What would impact production
schedules if we were to double sales for December? What would the level
of Return on investment be if the plant schedule were delayed by more
than six months?
While DSSs use internal information from TPS and MIS systems, they
also leverage external sources, such as stock quotes or competitor product
prices. These systems use a variety of models to analyze the data. The
system can answer questions such a s: Considering customer’s delivery
schedule and the freight rate offered, which vessel should be assigned, and
what fill rate to maximize profits? What is the optimum speed at which a
vessel can maximize profit while meeting its delivery schedule?
1.4.4 Executive support system (ESS)
ESS helps top management make decisions. They address exceptional
decisions requiring judgment, assessment, and a holistic view of the
business situation because there is no procedure to be followed to resolve
a given issue a t this level.
ESS uses graphics and data from many sources through an interface that
senior managers easily understand. ESS is designed to integrate data from
the external environment, such as new taxes or competitor data, and
integrate aggregate data from MIS and DSS. ESSs filter, synthesize and
track critical data. Particular attention is given to displaying this data
because it contributes to the rapid assimilation of these top management
figures. Increasingly, these systems include business intelligence analysis
tools to identify key trends and forecasts.
1.5 DECISION MAKING AND INFORMATION
SYSTEMS
Decision -making in companies is often associated with top management.
Today, employees at the operational level are also responsible for
individual decisions since information systems make information available
at all company levels.
So decisions are made at all levels of the company.
Although some of these decisions are common, routine, and frequent, the
value of improving any single decision may be small, bu t improving
hundreds or even thousands of “small” decisions can add value to the
business. Not all situations that require decisions are the same. While
some decisions result in actions that significantly impact the organization
and its future, others are much less important and play a relatively minor munotes.in

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7 role. A decision’s impact is a criterion that can differentiate between
decision situations and the degree of the decision’s structuring. Many
situations are very structured, with well -defined entrances and e xits. For
example, it is relatively easy to determine the amount of an employee’s
pay if we have the appropriate input data (for example, the number of
hours worked and their hourly wage rate), and all the rules of relevant
decision (for example, if the ho urs worked during a week are more than
40, then the overtime must be calculated), and so on. In this type of
situation, it is relatively easy to develop information systems that can be
used to help (or even automate) the decision.
In contrast, some decisio n situations are very complex and unstructured,
where no specific decision rules can be easily identified. As an example,
consider the following task: “Design a new vehicle that is a convertible
(with a retractable hardtop), has a high safety rating, and i s esthetically
pleasing to a reasonably broad audience. No predefined solution to this
task finalizing a design will involve many compromises and require
considerable knowledge and expertise.
Examples of Types of decisions, according to managerial level, a re
presented in Table 1 .
Decision level Characteristics of
decisions Examples of decisions
Top Management Unstructured Decide whether or not to come into the market
Approve the budget allocated to capital
Decide on long -term goals
Intermediate management Semi -structured Design a marketing plan Develop a departmental budget Design a website for the company
Operational management Structured Determine the overtime hours
Determine the rules for stock replenishment
Grant credit to customers Offer special offers to customers
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8 1.5.1 Creating an Organizational Structure
Within most firms, executives rely on vertical and horizontal linkages to
create a structure that they hope will match the needs of their firm’s
strategy. Four types of structures are available to executives: (1) simple,
(2) functional, (3) multidivisional, and (4) matrix (“Common
Organizational Structures”). Like snowflakes, however, no two
organizational structures are exactly alike. When creating a structure for
their firm, executives will take one of these types and adapt it to fit the
firm’s unique circumstances. As they do this, executives must realize that
the choice of structure will influence their firm’s strategy and strategic
options in the future. Once a structure is created, it constrains certain
future strategic moves, and supports others. If a firm’s structure is
designed to maximize efficiency, for example, the firm may lack the
flexibility ne eded to react quickly to exploit new opportunities.
Figure : Common Organizational Structures
Executives rely on vertical and horizontal linkages to create a structure
that they hope will match the firm’s needs. While no two organizational
structures are e xactly alike, four general types of structures are available to
executives: simple, functional, multidivisional, and matrix.
Simple Structure Simple structures do not rely on formal
systems of division of labor, and
organizational charts are not generally
needed. If the firm is a sole proprietorship,
one person performs all of the tasks that the
organization needs to accomplish.
Consequently, this structure is common for
many small businesses.
Functional Structure Within a functional structure, employees a re
divided into departments that each handles
activities related to a functional area of the
business, such as marketing, production,
human resources, information technology,
and customer service.
Multidivisional Structure In this type of structure, empl oyees are
divided into departments based on product
areas and/or geographic regions. Jim Pattison
Group, for example, has nine product
divisions; Food and Beverage, Media,
Entertainment, Automotive and Agriculture,
Periodical Distribution and Marketing, Si gns,
Packaging, Forest Products and Port Service,
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9 Matrix Structure Firms that engage in projects of limited
duration often use a matrix structure where
employees can be put on different teams to
maximize creativity and id ea flow. As
parodied in the movie Office Space, this
structure is common in high tech and
engineering firms.

1.5.2 Simple Structure
Many organizations start out with a simple structure. In this type of
structure, an organizational chart is usually not ne eded. Simple structures
do not rely on formal systems of division of labour. If the firm is a sole
proprietorship, one person performs all the tasks the organization needs to
accomplish. Many professions, such as doctors, lawyers, and architects,
find that a simple structure meets the needs of their business. The same is
true for small business owners; for example, on the TV series The
Simpsons, both bar owner Moe Szyslak and Comic Book Guy are shown
handling all aspects of their respective businesses.
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10 If the firm consists of more than one person, tasks tend to be distributed
among them in an informal manner rather than each person developing a
narrow area of specialization. In a family -run restaurant or bed and
breakfast, for example, each person will con tribute as needed to tasks,
such as cleaning restrooms, food preparation, and serving guests
(hopefully not in that order). Meanwhile, strategic decision making in a
simple structure tends to be highly centralized. Indeed, often the owner of
the firm makes all the important decisions. Because there is little emphasis
on hierarchy within a simple structure, organizations that use this type of
structure tend to have very few rules and regulations. The process of
evaluating and rewarding employees’ performance also tends to be
informal.
The informality of simple structures creates both advantages and
disadvantages. On the plus side, the flexibility offered by simple structures
encourages employees’ creativity and individualism. Informality has
potential negativ e aspects, too. Important tasks may be ignored if no one
person is specifically assigned accountability for them. A lack of clear
guidance from the top of the organization can create confusion for
employees, undermine their motivation, and make them dissat isfied with
their jobs. Thus when relying on a simple structure, the owner of a firm
must be sure to communicate often and openly with employees.
1.5.3 Functional Structure
As a small organization grows, the person in charge of it often finds that a
simple structure is no longer adequate to meet the organization’s needs.
Organizations become more complex as they grow, and this can require
more formal division of labour and a strong emphasis on hierarchy and
vertical links. In many cases, these firms evolve from using a simple
structure to relying on a functional structure.
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Within a functional structure, employees are divided into departments that
each handle activities related to a functional area of the business, such as
marketing, production, human reso urces, information technology, and
customer service ( Figure 9.9 “Functional Structure” ). Each of these five
areas would be headed up by a manage r who coordinates all activities
related to her functional area. Everyone in a company that works on
marketing the company’s products, for example, would report to the
manager of the marketing department. The marketing managers and the
managers in charge o f the other four areas in turn would report to the chief
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using a functional structure creates advantages and disadvantages. An
important benefit of adopting a functional structure is that each person
tends to learn a great deal about h is or her particular function. By being
placed in a department that consists entirely of marketing professionals, an
individual has a great opportunity to become an expert in marketing. Thus
a functional structure tends to create highly skilled specialists . Second,
grouping everyone that serves a particular function into one department
tends to keep costs low and create efficiencies. Also, because all the
people in a particular department share the same background training, they
tend to get along with one a nother. In other words, conflicts within
departments are relatively rare.
1.5.4 Multidivisional Structure
Many organizations offer a wide variety of products and services. Some of
these organizations sell their offerings across an array of geographic
regio ns. These approaches require firms to be responsive to local
customers’ needs. Yet, as noted, functional structures tend to be fairly
slow to change. As a result, when they expand, many firms abandon the
use of a functional structure as no longer optimal f or their larger size.
Often the new choice is a multidivisional structure. In this type of
structure, employees are divided into departments based on products,
services, and/or geographic regions.
In the multidivisional form, the firm is divided into semi -autonomous
divisions that have their own support (corporate) structures with each
division being responsible for its own production and maximizing its own
profit. The firm still has a central office that oversees the other divisions
but the central office’ s main responsibility is to develop overall strategies
for the business, not to be responsible for each division’s operations.
A big advantage of a multidivisional structure is that it allows a firm to act
quickly. When Jim Pattison Group made a strategic move such as
acquiring Ocean Foods, only the relevant division (in this case, Food and
Beverage) needed to be involved in integrating the new unit into the
company’s hierarchy. In contrast, if the Group was organized using a
functional structure, the trans ition would be much slower because all the
divisions in the company would need to be involved. A multidivisional
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13 1.5.5 Matrix Structure
Within functional and multidivisional structures, vertical linkages between
bosses and subordinates are central for decision making, communications,
and accountability. Matrix structures, in contrast, rely heavily on
horizontal relationships (Ketchen& Short, 2011). In particular, these
structures create cross -functional teams that each work on a different
project. This offers several benefits: maximizing the organization’s
flexibility, enhancing communication by emphasizing both vertical (top -
down) and horizontal communications across functional lines, and
supporti ng a stronger spirit of teamwork and collaboration. A matrix
structure can also help develop new managers. In particular, a person with
limited managerial experience can become a team leader for a relatively
small project in developing their talents for le ading others.
Using a matrix structure can create difficulties too. One concern is that
using a matrix structure violates the unity of command principle because
each employee is assigned multiple bosses. Specifically, any given
individual reports to a func tional area supervisor as well as one or more
project supervisors. This has the potential to create confusion for
employees because they are left unsure about who should be giving them
direction, especially in setting priorities for their work. Violating t he unity
of command principle also creates opportunities for unsavory employees
to avoid responsibility by claiming to be busy on the other supervisor’s
projects.

Within a matrix structure, you will have multiple bosses, which
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14 1.6 REASONS FOR CHANGING AN ORGANIZATION’S
STRUCTURE
Creating an organizational structure is not a one -time activity. Executives
must revisit an organization’s structure over time and make changes to it if
certain danger signs arise. For example, a structure might need to be
adjusted if decisions with the organization are being made too slowly or if
the organization is performing poorly.
In 2014, Walmart Canada confirmed that it laid off 750 employees across
Canada to re -work its management structure. According to the company,
after testing a new management structure in select stores, 1,300 associates
were promoted to more senior roles and about 200 senior managers were
added.
Procter and Gamble, the world’s largest consumer products manufacturer,
announced in 2014 that it may sell off its iconic Ivory soap brand. A range
of reports pegged Ivory’s 2013 global revenues at $112 million, and its
share of the U.S. bar soap market at 3.4 percent. Even though Ivory
maintains a high profile, it has retreated significantly from its highs of past
decades, and it may be considered an expendable laggard among the high-
performance product mix that P&G’s CEO wants to create. P&G is being
trimmed to concentrate on the seventy to eighty brands that generate more
than $100 million in gross annual revenues. Ivory is just above that
cutline, and projections do not call fo r growth.
1.7 POINTS TO REMEMBER
 Executives must select among the four types of structure (simple,
functional, multidivisional, and matrix) available to organize operations.
Each structure has unique advantages, and the selection of structures
involves a s eries of trade -offs.

 ESS uses graphics and data from many sources through an interface that
senior managers easily understand.

 DSS supports decision -making for unusual and rapidly evolving issues, for
which there are no fully predefined procedures.

 An information system (IS) is a set of interrelated components that collect,
manipulate, store and disseminate information and provide a feedback
mechanism to achieve a goal.

 An important benefit of adopting a functional structure is that each person
tends to learn a great deal about his or her particular function.

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15 1.8 EXERCISES
1. What type of structure best describes the organization of your college
or university? What led you to reach your conclusion?
2. The movie Office Space illustrates two types of structure s. What are
some other scenes or themes from movies that provide examples or
insights relevant to understanding organizational structure?
1.9 REFERENCES
 Business Driven Information Systems - McGraw Hill
 Fundamentals of Information Systems | IT & Systems Te xtbook
 Management and Business Policy: Globalization, Innovation and
Sustainability | Fifteenth Edition | By Pearson
 Strategic management author: pearce
 Management Information Systems: Managing the Digital Firm by Kenneth
Laudon (Author), Jane Laudon (Author)
 https://www.wiley.com
 https://www.academia.edu/9464635/Strategic_Roles_of_information_System
s_Introduction






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16 2
TYPES OF INFORMATION SYSTEM (IS)
Unit Structure
2.0 Objectives
2.1 Introduction
2.2 Introduction to MIS
2.3 Types of Information System (IS)
2.4 Transaction Processing System for Operational Control
2.5 Management Informat ion System for Management Control
2.6 Decision Support System
2.7 Executive Information Systems for Strategic Management
2.8 Knowledge Base Information System
2.9 Artificial Intelligent (Expert System)
2.10 Summary
2.11 Reference for further reading
2.12 MCQ questions for practice
2.0 OBJECTIVES
The main objective of learning this MIS subject is to make students
understand that how MIS can provides the data to identify non -performing
areas and leads to better business productivity and efficiency, better
communication and helps in decision making and most important to get
better knowledge of customer needs.
2.1 INTRODUCTION
The main goal of MIS is to provide information for decision making on
planning, imitating, organizing, and contro lling the operations of the
subsystems of the firm and to provide a systematic organization in the
process.
2.2 INTRODUCTION TO MIS
Management Information System is an integrated system that helps
management with relevant information needed to run their bu siness
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17 The core aim is to make raw data into useful information that helps in
managerial decision making.
2.3 TYPES OF INFORMATION SYSTEM (IS)
An information system contains a set of interconnected components or
devices that’s works together to collect, process, store and breakdown the
information to support decision making in an organization.
The various dimension of Information System are:








Figure (a)
a) Organizational Dimension:
 In any organization the information system is a part and plays a vital
role in decision making.
 It governs the standard operating procedure and culture of any
organization. It includes are as follows:











Figure (b) Dimension of
Information
System Organizational
Dimension
Management Dimension Techno logy Dimension
Operating Standard Functional
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Business Processes
Culture
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b) Management Dimension:
 The business managers always face challenges in the business
environment.
 For decision making the information system provides the tools and
information that are needed by the mangers to allocate, coordinate
and monitor their work, create new products and services and
make long range strat egic decision

c) Technology Dimension:
 To carry out or to execute any function in an organization the
management takes help of technology.
 The technology comprises of computer hardware, software, data
management technology, networking telecom technology.

The information system classified by:















Figure (c)








Information
system
Organizational level
Mode of data
processing
System Objectives
Support System
Types of
Information
System
Transaction Proces sing System (TPS) Management Information System (MIS) Decision Support System (DSS)
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19 Figure (d)
2.4 TRANSACTION PROCESSING SYSTEM (TPS)
 The information system that involves process of data resulting from
any business transaction is called Transaction Process ing System.

 Its aim is to provide transcation in order to update the records and
generate reports which helps in future auditing.

 A transaction is any business related exchange such as payments to
employess sales to customers.

 A transaction is an exhan ge of goods, services, and or communication
between two sides that has an effect on eaxch side.

 In the simplest case ,a conversation between you and a friend is a
transaction.

 You exchnage information and both of you are affected by the
exchange.

 Operat ional managers need system that keep track of the elemnetray
activities and transactions of the organizations, such as sales, receipts,
cash deposits, payroll, credit decisions, and the flow of materials in a
factory.

 TPS are computerized systems that per form and record the daily
routine transactions necessary to conduct the business.

 They serve the organizations operational level.

 The prinicipal purpose of system at this level is to answer questions
and to track the flow of transactions through the orga nizations.

 At the operational level, tasks, resouces and goals are predefined and
highly structured.

 Example of TPS a Payroll TPS where the payroll processing captures
employee payment transaction data such as a time card.

 System ouputs inlcude online and hard copy reports for management
and employee paychecks.

 Other examples sales order entry, hotel reservations, employee record
keeping and shipping.




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20
Employee Data To general ledger



Mana gement Reports


To government agencies
Employee paychecks

Online Qu eries
Figure (e)
 It is an information processing system that captures and processes
every single transaction that takes place within the organziation .

 These transcations include activities involving collection, retreival,
modification, and all other set of activities that trigger the retrieval
of all transactions.

 A transaction processing system is highly reliable, consistent and
efficient.

 The types of transaction processing system are:
a) Batch processing
b) Online transaction processing
c) Example are bil ling system, payroll system, stock control
system.

1) Batch Processing / Batch Mode:

 The Processing of transaction take place over batches.
 These batches can be customized as per organization requirements .
 For example a company may want to process the payro ll of its
employee in a weekly or bi -weekly manner, thus the batches of
employee salaries will be processed over a span of one and two weeks
respectively.
 There is genreally a time delay in this type of processing, examples
include bill generation and chec k clerance.
Payroll
System Employee
/files database PC
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2) Real time processing / Stream processing / online mode:

 under the real time processing, every single transaction is processed
with immediate effect.
 There is no time delay in the real time processing system.
 Example include bank ATMs, traff ic control system.

3) Handling and managing operations:

 It allows multitasking at a wider leven with an unmatched ability to
process thousands of transactions at the same time without any
delay or break down.

4) Tapping the raw markets:
 TPS is a carrier tool for any business since it gives the businesses the
freedom to operate in different segements of the society by
working remotely.
 This operability gives the businesses an opportunity to tap, exist and
grow in newer that are raw and full of opportunities.
Features of (TPS):
1) Reliability :
 It is a highly reliable system that manages and handles the important
transactions of an organization. Since the revenue system is
completely dependent on the TPS, it is crucial to the seamless
working of any organziation.

2) Fast Response:
 rapid response time ensures that your customers do not have to wait
for their transaction to be processed.

3) Similar Structure and integrity:
 Due to its ability to maintain the same method for all transaction
 processed, it protects data and easliy defends any error and for all
transactions processed, it protects data and easily defends any error
and hardware software issues.

4) Authorized control (security):
 TPS allows only the authorized personal to conduct the processing
activities anytime.
 With the recent advancements, the newer veersions even allow
authrized personal to gain access from a remote location as well
but with high and stringent security checks.

5) User friendliness:
 By being user -friendly, it encourages human interaction / interfac e
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22 2.5 MANAGEMENT INFORMATION SYSTEM (MIS)
 The raw data which gets available through the transaction processing
system and converts them into a summarized and into an aggregated
form for the further decision making a re designed using management
information system.

 It is used to guide tactic managers to make semi -structured decisions.

 The output from the transaction processing system is used as input to
the MIS system.

 The report which is generated are used by the middle management and
operational supervisors. Many different types of report are generated
by the MIS.

 Examples are summary report, on -demand report, ad -hoc reports and
an exception report. Sales management system, Human resource
management system.

Adva ntages:
1) Provide relevant information for facilitating planning and timely
control.

2) Data is available in summarized from which minimize information
loading.

3) Ease in measuring performance helps in encouraging
decentralization in an organization.

4) Impro ve coordination as all departments are aware of course of
action or any changes in plan.

5) Enhance quick, cheap, and efficient communication .

6) Bring down linguistic, geographical and cultural boundaries

7) 24*7 availability of information.

8) Automation hel ps in saving time and papers.

9) Creation of new type of jobs like computer programmer, system
analyzer, software and hardware developer , etc.



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23











Figure (f)
Disadvantages:
1) Require constant monitoring of sensitive d ata.
2) Security issues like hacking always prevail.
3) Quality of output depends on quality of input.
4) Implementation of MIS is costly as requires hardware, software and
training of human resources.
5) Lack of flexibility to upgrade software.
6) Takes only quantitativ e data
7) Increase unemployment
8) Effectiveness decreases due to frequent change in top management
and their policies.

Limitations of MIS:
 MIS is conceived as a data processing and not as an information
processing system.
 MIS is impersonal gives function calle d information not as needed by
the manager.
 Poorly designed MIS may not handle business complexities.
 Requires strict quality control measures to efficiently utilise input,
processing and output procedures.
 MIS is developed without streamlining the transac tion processing
system in the organization.
 Require skilled handling.
 MIS is not a tailor made information package. Advantages of MIS
Better decision making
Data storage
Data security
Data acc ess even from remote location Fast computation
Flexibility
User friendly
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24 2.6 DECISION SUPPORT SYSTEM (DSS)
 Decision Support System allows the decision makes to retrieve the
data and test alternative solutions duri ng the process of problem
solving.
 Decision support systems can be either fully computerized, human
powered or a combination of both.
 It is an interactive user friendly management level, computer system
that combines data and sophisticated analytical model s and tools to
support semi structured and unstructured decision making.
 A DSS does not make decision rather it is a powerful tool that is used
to support decision making.
 Decision support systems (DSS) support management decisions that
are unique and rapi dly changing using advanced analytical models.
 DSS enables companies to segment the customer database with a high
level of precision where it can be used to drive a marketing campaign.
 Based on the results of data mining, a firm can develop specific
market ing campaigns for each customer segment.
 For example, it could target frequent customers living near a store with
coupons for products of interest and with rewards for frequent
shoppers.
Example
1) Oracle Performance Management Application.
2) IBM Decision Opti mization for Watson Studio.
3) Decision Tools Suite
4) Paramount Decision.

The Three key elements of DSS:
1. Organizational data
2. A model
3. A user interface
The characteristic of DSS:
1) Provide rapid access to information.
2) Handle large amount of data from different sou rces.
3) Provide report and presentation flexibility
4) Support drill down analysis
5) Perform complex, sophisticated and comparison using
advanced software packages.
6) Support for decision -makers in semi -structured and
unstructured problems.
7) Support for managers at various managerial levels, ranging
from top executive to line managers.
8) Support for individuals and groups.
9) Support for interdependent or sequential decisions.
10) Support for intelligence, design, choice, and implementation
phases.
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Types of Information System (IS)
25 12) DSSs are adaptive over time.
13) DSS offer users flexibility, adaptability and a quick response .
14) DSS allow users to initiate and control the input and output.
15) DSS operate with little or no assistance from professional
programmers.
16) DSS provide support for decision and problems whose
solutions cannot be specified in advance.
17) DSS use sophisticated analysis and modeling tools.

Advantages
1) Improving personal efficiency.
2) Improving problem solving
3) Facilitating communication
4) Promoting learni ng or training
5) Increasing organizational control.
6) It increased the speed and efficiency of decision making activities.
7) DSS can collect and analyze real time data.
8) It promotes training within the organizations, as specific skills must
be developed to imple ment and run a DSS within an organization.
9) It improves interpersonal communication within the organizations,
through meetings, brainstorming sessions, etc

Disadvantages
1) Limited storage capability.
2) Limited information sharing
3) Difficult
4) Require extensive kn owledge
5) The cost to develop and implement a DSS is a huge capital
investment, which makes it less accessible to smaller
organizations.
6) A DSS may lead to information overload because an
information system tends to consider all aspects of a problem.


Use statistical analysis to identify the top
25%
of frequent shoppers.

Establish correlation between location
and sales
Frequency
\
Verify new customer segments.

Query the database for detailed
information on
each customer segment

Figure (g)
Customer
Data
warehouse
Legacy data
website
transaction
Call centres
data
Third party
data
ERP Data
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Management Information
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26 The components of DSS are:












Figure (h)


1) The DSS Database

 The Database is a collection of records which is collecetd
from number of applications.
 The DSS database can be a small database which resides in
the pc
or a large data wareshouse.
2) DSS Software System:
 Some software system contains the tools which are used to
analyse the data, including OLAP tools, data mining tools,
or a collection of mathematical or analytical models.
 OLAP or data mining tools.

3) User Interface:
 It is used to control the interaction between the users of the
system and the DSS software tools.
 It is verty flexible to use as it is graphical user interface.
2.7 EXECUTIVE INFORMATION SYSTEMS FOR
STRATEGIC MANAGEMENT
 Strategic informa tion systems are the information where basically
different sectors companies use to help to achieve their desire goals
and to get more efficient outcomes.
 Many businesses use these systems to achieve a competitive advantage
on their competitors as their ta rget is to provide a good service as
compare to their competitors.
 For example, a strategic information system can be used to provide a
product at a lower cost than competing organizations.
 A strategic information system can offer competitive advantage to an
organization in the followings ways: DSS
Component
DSS Database
DSS Software System User Interface
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Types of Information System (IS)
27 1) Creating barriers to competitors entry:
 In this strategy, an organization uses information systems to
provide products or services that are difficult to duplicate or that
used to serve highly specialized
 This preve nts the entry of competitors as they find the cost for
adopting a similar strategy very high.
2) Generating databases to improve marketing:
 An information system also provides the companies an edge
over their competition by generating databases to improve the ir
sales and marketing strategies.
 Such systems treat existing information as a resource.
 For example, an organization may use its databases to monitor
the purchase made by its customers, to identify different
segments of the market, etc.
3) Locking in custom ers and suppliers:
 Another way of gaining competitive advantage is by locking in
customers and suppliers.
 In this concept, information systems are used to provide such
advantages to a customer or a supplier that it becomes difficult
for them to switch over to a competitor.
 For example, an organization may develop its information
system and
4) Lowering the cost of the products:
 Strategic information systems may also help organizations lower
their costs, allowing them to deliver the products and services at a
lower price than their competitors can provide.
 Thus such information system can contribute to the survival and
growth of the organizations.
 For example airlines use information systems strategically to lower
costs so that they may counter competitors disco unt fares.
5) Leveraging technology in the value chain:
 This approach pin points specific activities in the business where
competitive strategies can be best applied and where information
systems are likely to have a greater strategic impact.
 This model advoc ates that information technology can be best used
to gain competitive advantage by identifying specific, critical
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28









Figure (i)
Contents of EIS:
1) Easy to understand and collect
2) Should cover each and every aspect
3) Should d epict contribution clearly.
4) Should be user friendly and promote team work
5) Availability
6) Dynamic
7) Reduce workload.
Characteristic of EIS:
 Serves top level executive.
 Future oriented
 Informal source
 Lack of structure
 Less detail
 High degree of uncertainty
 Can access both internal and external data.
 Provides extensive online analysis tools for taking correct decision
 Extract summary data Advantage
Creating barriers to competitors entry Generating databases to improve marketing Locking in customers and suppliers Lowering the cost of the products Leveraging technology in the value chain munotes.in

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Types of Information System (IS)
29  Quickly provides needed information (timely)
 Provides such information in graphical form.
 Supports decision making.
2.8 KNOWL EDGE BASE INFORMATION SYSTEM
 A knowledge based system is a form of artificial intelligence that aims
to capture the knwoledge of human experts to support decision
making.
 A knwoledge based system is a computer base program that reasons
and uses a knowledge base to solve complex problems.
 KBS is a system that draws from knowledge of human experts
caputred in knowledge base to solve problems that normally require
human expertise.
 KBS is more general than expert system.



 It has 3 components:










Figure (j)
Type’s knowledge base system:
a) Procedural knowledge ( describes how to solve problem):
 Its is also known as Impertaive knowledge.
 Provides direction on how to do something.
 Can be directly applied to a task.
 It includes: rules, strat egies, procedures.

Knowledge base Components An inference
engine (also called BRAIN) User interface
(enables the user
to communicate
with knowledge base) Knowledge
base Inference engine
(intelligent engine Database
and facts
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30 b) Declarative knowledge:
 Tells us the facts what things are
 It includes : concepts, facts, objects
 Also called descriptive knowledge.

c) Meta knowledge:
 Its describes knwoledge about another knwoledge
 Used to pick other knwoledge that is b est suited for solving a
problem.

d) Heuristic knwoledge:
 It is representing knwoledge of some experts in a field or subject.
 It desrcibes rules of thumb that guides reasoning process.

e) Structutral knwoledge:
 It is the basic knwoledge to problem soving.
 Its describes the relationships between various concepts includes as
kind of, part of, group of
 It also describes an expert overall mental model of problems.













Figure (k)



Types of
Knowledge
Procedural
knowledge
Declarative
knowledge
Meta
knowledge
Heuristic
knowledge
Struc tural
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31









Figure (l)
2.9 ARTIFICIAL INTELLIGENT (EXPERT SYSTEM)
 A computer program that uses the concepts of artificial intelligence
(AI) technologies to simulate the judgement and behaviour of a human
or an organization that has expert knowledge and experience in
particular field.
 Example Chabot, voic e recognition.
 Example DENDRAL: expert system used for chemical analysis to
predict molecular structure.
 PXDES: an example of expert system used to predict the degree and
type of lung cancer.




user

Figure (m)




User
interface Explanatio
n system
Inference
engine
Knowledg
e base editor Case
specific
data
Knowledg
e base Elements of KMS Strategy
Actors
Management the
knowledge base
Interface
Functionality
Infrastructure
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Management Information
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32 Applications of ex pert system are:
1) Medical diagnosis.
2) Scientific analyses
3) Clinical systems
4) Automobile manufacturing
5) Flight tracking system
6) Robotics
7) Mathematics concepts applications
8) Nuclear power.
Characteristics of Expert system are:
1) Efficient and reliable.
2) Highly responsi ve
3) High performance
4) Reasoning process
5) Increased accessibility.
2.10 SUMMARY
This course will helps the students to understand that everyone who
works in business will learn how to put technology to work and companies
and organziations across industries.
2.11 REFERENCES FOR FURTHER READING
Google.com
Youtube video
2.12 MCQ QUESTIONS FOR PRACTICE
Q1. A DSS stands for.
A. Decision Support System
B. Decisive Support System
C. Developed Support System
D. None of the above
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Types of Information System (IS)
33 Q2. An MIS information comes from the,
A. Internal so urce
B. External source
C. Both internal and external source
D. None of the above
Q3. A back -bone of any organization is its,
A. Information system
B. Sources system
C. Management system
D. None of these
Q4. Which is a characteristic as queries are Information?
A. Transaction Pro cessing System (TPS)
B. Management Information System (MIS)
C. Decision Support System (DSS)
D. Executive Support System (ESS)
Q5. An important characteristic of effective and useful information is/are
A. Accuracy
B. Timeliness
C. Completeness
D. All of the above


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34 3
DETERMINING INFORMATION NEED

Unit Structure
3.0 Objectives
3.1 Needs for an Organization/Individual Manager
3.2 Overview and Use of Data
3.3 The Importance of Information
3.4 How managers use information
3.5 Value of informati on
3.6 Criteria which defines the value of information
3.7 Decision making and Decision making processes
3.8 What is a decision -making model?
3.9 Types of decision -making models
3.10 Steps of Decision Making Process
3.11 Key points
3.12 When to use decisio n-making models
3.13 Questions
3.0 OBJECTIVES
In this unit you will be able to understand the concept of
• Need for information
• Role of information
• Overview and Use of Data
• The Importance of Information
• Steps of Decision Making Process
• Decision Making Models
• When to use decision Making Models munotes.in

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35 3.1 NEEDS FOR AN ORGANIZATION/INDIVIDUAL
MANAGER
Information is very much needed to make right decisions. Management is
faced with an accelerating rate of change and an ever more complex
environment. A multitude of fac tors may need to be considered for a given
decision.
Examples include; planning regulations, local and central government
legislation, the attitudes of employers, customers, trades unions, consumer
groups and so on, the financial consequences of the decisi on,
environmental factors, technological and capacity considerations,
marketing and advertising implications, resource and supply problems etc.
For each and every one of the above examples —and others —the manager
needs relevant information which is informat ion that increases his
knowledge and reduces his uncertainty and thus is usable by the manager
for the intended purpose.
Without relevant information no manager can function effectively. 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 information.
One of the most important processes in managing the activities of an
organisation is making decisions about alternatives. When the informati on
available is not sufficient to make a decision, the manager needs to gather
more information about the alternatives, compare them, and then choose
an alternative. Decisions made without sufficient information are at best
only estimates and typically lea d to poor management performance.
As shown in Fig. 39.3, quality information in the hands of those who can
make good use of it supports appropriate management decision making.
The resulting management performance should then lead to the successful
achievem ent of the organisational objectives.

Thus, information is the common element that holds an organisation
together.


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36 The relationship of the information systems of an organisation to the
decision making within that organisation is given below:


Every organisation is dependent upon informa tion for its survival. In order
for managers to take action that will yield effective results, they need
information that is accurate, timely, complete, concise, and relevant. There
is no assurance that the manager will use this type of information
effecti vely; however, it must be available to be used. In most cases, the
availability of information to a manager will have a strong influence on
the rationale applied in decision making. Managers are often required to
make decisions with information that lacks one or more of the properties
above.
This can have an undesirable impact on the effectiveness and
efficiency of their decisions:
(1) The accuracy of information is the ratio of correct information to total
amount of information produced over a period of time. For example, if
the monthly sales forecasts provided to a plant manager are not
consistently accurate, it is difficult for the manager to make effective
decisions concerning production schedules.
(2) Timeliness of information is a reflection of whether or not the
information arrives in time to be used by a manager in making a
decision. The plant manager must receive the monthly sales forecast in
time to make a decision about the monthly production schedule.
(3) Completeness of information requires that a manager b e provided
with all of the information needed to make a decision. If sales
forecasts cover only two -week periods, it is difficult to make decisions
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37 (4) Conciseness of information is obtained through the summarization of
relevant data. Such data may point out exceptions to normal or planned
activities. A manager who receives concise information is saved a
great deal of time otherwise spent in analysis of information for
decision making.
(5) For information to be relevant, it mus t provide to each involved
manager what he or she needs to know. Information should not be
given to a manager who does not have the authority to make the
decision(s) which should be based on the information.
(6) Information should be produced and provided at a frequency which is
related to the type of decision/activity involved. The frequency may be
an hour, a day, a week, a month etc.
(7) Information should be presented in a style and format readily
understandable by the person concerned. The producer of the
information must be aware of the recipient’s knowledge, literacy level,
experience etc.
A frequent problem in many organisations is that a great deal of
information is generated for no real purpose and should be eliminated.
Apparently there seems to be a tende ncy to generate large quantities of
information on the assumption that a direct relationship exists between the
amount of information and the quality of decisions. This can only be true
if the information is relevant and provided to the right decision make r-that
is, is provided to the right person at the right time.
One useful approach to the effective design and utilisation of an MIS is to
think of information as a basic resource of the organisation as we do
money, materials, personnel, and plant and equip ment.
Thus as a basic resource, information:
1. Is vital to the survival of the organization.
2. Can only be used at a cost.
3. Must be at the right place at the right time.
4. Must be used efficiently for an optimal return on its cost to the
organisation. Each user o f information should consider the cost of the
information relative to its utility for decision making. For example, the
cost of complete information for a decision must be weighed against the
expected value of a decision with incomplete information.
3.2 O VERVIEW AND USE OF DATA
Data allows organizations to more effectively determine the cause of
problems . Data allows organizations to visualize relationships between
what is happening in different locations, departments, and systems.
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38 The Importance of Data
Data is essentially the plain facts and statistics collected during the
operations of a business. They can be used to measure/record a wide range
of business activities - both internal and external. While the data itself may
not be very informative, it is the basis for all reporting and as such is
crucial in business.
Customer data are the metrics that relate to customer interaction. It can be
the number of jobs, the number of enquiries, the income received, the
expenses incurred, etc. In order to know abou t our interactions with the
customer, we need data.
The importance of data cannot be under -stated as it provides the basis for
reporting the information required in business operations.
Data Vs Information
An important distinction to make is the difference between Data and
Information.
Data is the raw facts and statistics, whereas Information is Data that is
accurate and timely; specific and organised for a purpose; presented within
a context that gives it meaning and relevance; and can lead to an increase
in understanding and decrease in uncertainty.
Another way to look at information is as data that has been interpreted and
then presented in a more meaningful context. that allows a business to
make decisions from how to identify what data is relevant for y our
business and how you can collect it.
analysis of information, etc
3.3 THE IMPORTANCE OF INFORMATION
key importance of information - it allows a business to make informed
decisions by presenting data in a way that can be interpreted by
management. In this context, customer information would be useful in
providing metrics surrounding client/customer engagement to determine
better ways to engage or work with your clients.
However, it must be stated that the value of information lies not only in
the info rmation itself, but the actions that arise from the information. For
example, if the information alerts you to poor customer satisfaction, it is
only useful if this creates a change in the way the business deals with
customers. Hence the information proces s should form part of a wider
review process within the business to gain the best outcomes. Information
plays a vital role in just about everything we do in modern society.
Information is facts, data, numbers, images, documents, sound or act of a
person to be delivered to the recipient in order to explain, inform and verify
that the recipient may use such information for any particular purpose. In
other words, information is knowledge that derived from data , which have
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Determining Information
Need
39 information we can find out what we do not know before and it will affect
what we already know. Besides, we can make a right decision. Decisions
are impossible without information and users are constantly seeking more
and better information to support decision making. It also can reduce the
sense of doubt and a sense of uncertainty about the information. For
example, accounting information is very important for a compan y to be able
to determine the profit or loss of the business.
Information is an elusive concept and there is a continuing debate about its
meaning and about its relationship to its correlates such as knowledge,
expertise, the learning process and cognitive psychology. For our practical
purposes, we will use the term in its widest sense to cover all kinds of
facts and understanding having a bearing on organizational management.
Thus, we are concerned with numerical data, factual knowledge, narrative
accounts , opinions and evaluations. We also need to be clear that
information has meaning only when perceived and interpreted by the
human recipient. Information is raw material for the mind, which uses it to
develop skills, knowledge and, ultimately perhaps, wisd om. Practically
speaking, any organization needs information both about its own internal
processes, in order to ensure effectiveness and efficiency, and about its
environment, in order to respond and adapt to the actions, attitudes and
decisions of externa l agencies such as governments, competitors and
social groups. Both types of information must be put together in a co -
ordinated manner so that the actions and decisions of the organization can
be matched closely to its external circumstances. In the remain der of this
article, information processing is considered primarily in the context of
business organizations, and the examples are taken from this sector.
However, it is to be understood that the principles and problems addressed
here are largely common to all types of organization, with only minor
differences of detail and emphasis. The following are examples of the
kinds of information which might be sought by a business:
• What are the rates of output of our various assembly lines?
• How has the unit cost o f manufacturing product X varied over the last
12 months and what has caused the variations?
• What were the profit margins of our different divisions in the last
financial year?
• Should we buy or lease a replacement for machine X and what
information is need ed to make this decision?
• What are the views of staff on the proposed reorganization?
• What are the training needs of the employees who will be working on
the new project?
• What European regulations and standards would apply to our proposed
new product? • Is our new manufacturing process patentable?
• What share of the market is held by our main competitor? How does
this compare with our own share? • What are the likely effects on our
business of the reunification of Germany? • Who are the alternative
supplie rs of raw material Y?
• What are the properties of the new material Z which has just come on
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Management Information
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40 • What are the long -term trends in the age distribution of the population,
and what are the implications for our business?
3.4 HOW MANAGERS USE INFORMATION
It is self -evident that the nature of managerial jobs must determine the
kinds of information the managers use, how and where they find it, and
what they do with it. The traditional view see s the manager’s job in terms
of functions such as planning, organizing, decision making, staffing,
control and budgeting. These are indeed important outcomes of
managerial activity, but they tell us little about what managers actually do,
or how they think about and reflect on their work. There have been several
studies of managers’ work, some of them very influential. Perhaps the best
known is that of Mintzberg, who concluded that all managers’ jobs are
similar and can be described in terms of ten roles in three groups as
follows:
(1) Interpersonal: • Figurehead. • Leader. • Liaison.
(2) Informational: • Monitor. • Disseminator. • Spokesperson.
(3) Decisional: • Entrepreneur. • Disturbance handler. • Resource
allocator. • Negotiator.
All three groups, not just the in formational, depend on the use of
information for their success. Other studies have stressed the importance
of management functions such as communications, human resource
management, agenda setting (determining goals, priorities, etc.) and
network building . In their concern to establish general characteristics of
managers, they overlook, or at least de -emphasize, two key points:
(1) There is considerable variation between managers according to their
seniority. Clearly, there is a world of difference between th e roles and
activities of a chief executive officer and those of a plant foreman, even
though both may be described as managers, using the term in its widest
sense.

(2) There are real differences between managers performing different
functions. Thus, the pro duction manager and the research manager may
well perform the same ten roles defined by Mintzberg, but may have quite
different approaches to them. Take the case of leadership, for example. A
production manager, faced with the need for close control of out put and
careful work scheduling, may tend towards authoritarianism and direction;
whereas a research manager, coping with open -ended tasks and
indeterminate timescales, may see him/herself as the first among equals,
stimulating debate and encouraging creat ivity. This is partly because in
some influential quarters decision making is seen as synonymous with
management, or at any rate as the activity which defines it most fully.
Moreover, decision making perhaps makes more demand for information
than most othe r managerial activities. Management decisions are about
making choices between alternatives.
• strategic – operational;
• unstructured – structured;
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41 Strategic decisions are those which are concerned with the relationship of
the organi zation to its environment, and affect or involve all or a large part
of the organization. They are often unique, having no precedents, and are
usually taken in the higher reaches of the organization. Operational
decisions largely are confined to one part o f the organization and are
internal matters concerned with the transformation of inputs into outputs.
They are often routine and so procedures for making them may have been
established, that is to say they are programmable. They are usually taken
in the lo wer ranks of the hierarchy. An unstructured decision is “ill -
defined, fuzzy and difficult to tackle”. There are no known rules or
procedures for making it. It may not be clear who should make the
decision, or even whether there is a decision to make. The o utcomes are
unpredictable. A structured decision is “clear, well defined, distinct and
unambiguous”. There are established and agreed procedures for making it.
It is quite clear who the decision maker should be, and the possible
outcomes are predictable. A dependent decision is one which cannot be
taken independently of decisions made in other, perhaps all, parts of the
organization. It may also be dependent on decisions taken in the past,
which have pre -empted some of the options, and it may in turn
predet ermine future decisions. An independent decision can be taken
without taking into account decisions made elsewhere in the organization.
It has no timebased consequences or preconditions of the kind mentioned
above. Often, these dimensions can be used in co mbination. Thus,
strategic decisions normally are unstructured and dependent; whereas
operational decisions usually are structured and independent. Consider the
following examples of decisions. A decision on whether to enter a new
market This decision is s trategic, because its outcome may change the
organization’s relationship with its environment. It affects the position of
the whole organization, and will be taken at the highest level. It is
unstructured, because it is not clear how it should be made. Eve n if the
firm has entered new markets before, the different circumstances may
mean that these earlier experiences offer no safe guidelines for the new
decision. The outcome is quite uncertain. Finally, the decision is
dependent, because it may call for dec isions to be made by all parts of the
organization, concerning a variety of matters, such as new production
methods, new product design, changes in marketing and sales methods,
new organization structure, newly trained labour, and changes in finance.
It also commits the organization to future actions and decisions, perhaps
for several years.
3.5 VALUE OF INFORMATION
The Value of Information (VoI) is a concept from decision analysis: how
much answering a question allows a decision -maker to improve its
decisi on. Like opportunity cost, it’s easy to define but often hard to
internalize. The VoI is sometimes distinguished as Value of Perfect
Information, also called Value of Clairvoyance (VoC) , and Value of
Imperfect Information . They are closely related to the w idely known
expected value of perfect information and expected value of sample
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42 decision situation with perfect information” — “value of current decision
situation” as commonly understood.
For example, consider two army commanders in a war at two different
battle fronts. One of the commanders has an adequate supply of
ammunition, food ration, and drinking water (more than he could desire)
for his battalion and another has exhausted his supp lies. If one were to
approach these two individuals with information about a “drinking water
well” in the surrounding, such information will obviously have greater
value for the one who has exhausted his water supply. For the one who is
thirsty, this infor mation is the most valuable piece of information for him at
that point of time as it will determine if his troops will survive. If by chance
the information reaches this thirsty battalion late and his troops start dying
out of thirst, then the value of the same information becomes zero. So we
can see that the same information can have a different value for different
people at different points in time. Hence, it will be quiet fair to conclude
that value of information is relative. There is no absolute value of
information.
Data is all about the collection of facts in a capsulated form. Multiple -Data
capsules form Information stack which in turn creates knowledge. In a
layman’s term — the knowledge can be described as a mix of information,
understanding, capab ility, experience, skills, and values. The real question
is what we derive out of that knowledge? And, the answer is Wisdom,
which can be described as the ability to think and act using the knowledge
which has been built up on the information stack and dat a capsules.
When applying the Rowley’s DIKW (Data -Information -Knowledge -
Wisdom) pyramid [2] in a business context, the process of moving up from
data to wisdom could be described as business intelligence, mainly because
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43 3.6 CRITERIA WHICH DEFINES THE VALUE OF
INFORMATION
1. Accuracy/precision/correctness — Information should be precise and
close to reality. Also, information should be free of distortion, bias, or
errors.
2. C onsistency — The information should be free of contradictions or
convention breaks.
3. Applicability — Information should be able to be applied directly.
4. Clarity/format — Information should be well, understandable and clearly
presented to the user.
5. Comprehensiveness/completeness — The scope of information should
be adequate. There should be not too much nor too little information
6. Conciseness — The information should be to the point and should void
of unnecessary elements.
7. Convenience — The infor mation should correspond to the user’s needs
and habits
8. Currency — The information should up -to-date and not obsolete
9. Traceability — The background of the information should be traceable,
such as the used data, author(s)
10. Accessibility — The infor mation should be continuously accessible
without not too many obstructions
11. Flexibility — The information should be able to adapt to (the changing
demands of) the user?
12. Integration — The system should allow data to be integrated from
various sources
13. Reliability — The system operation should be reliable
14. Timeliness/Speed — The information should be processed and
delivered rapidly without delays. The information should also match
the user’s working pace
When evaluating information -based products , the efficiency, effectiveness,
context coverage can be measured by using quantitative data. The other
criteria are mainly qualitative and subjective. Do note, the subjective value
approach varies widely with individuals. In the subjective valuation of
information, no probabilities are calculated. The subjective value of
information is the person’s (receiver’s) comprehensive impression about
the information content. To measure all criteria quantitatively surveys with
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44 But, when assessing the value of future information products, it can be
challenging because the information cannot be used yet. When creating
information products it is recommended to keep the usability criteria in
mind. For some criteria, it is possible to measure their value by making
estimations. Thus, we can say that the issue of the value of future
information is a complicated one.
However, the normal mathematical and economical explanation of the VoI
suggests that if an event occurs whose expectatio n was low and
information of its occurrence is known then such information is valuable.
For example, let us say that the reader of this text, a soldier manning the
Doka La pass gets the information that China is going to escalate its troop
movement across the pass and epicenter of the conflict will be the very spot
on which he is located, then that information is more valuable to him than
the information (say) that he has to report at officer’s mess for a dinner
event with his colleagues. In the former case the information is more
valuable to him as he is not expecting it but in the latter case he already
knows the information with certainty and expects it fully and hence the
value of such information is less. All decision mechanisms work on this
model of in formation. This suggests the value of information of an event is
the negative logarithm of the probability of occurrence of the event.
Therefore, the more unlikely the event the more its information tends to
have higher value, if communicated correctly. Th is is also exhibited in our
behavior as eons of evolutions have shaped us in a manner that we tend to
attach more value to unlikely events.
3.7 DECISION MAKING AND DECISION
MAKING PROCESSES
A decision -making process is a series of steps taken by an indivi dual to
determine the best option or course of action to meet their needs. In a
business context, it is a set of steps taken by managers in an enterprise to
determine the planned path for business initiatives and to set specific
actions in motion. Ideally, business decisions are based on an analysis of
objective facts, aided by the use of business intelligence ( BI) and analytics
tools.
In any business situat ion there are multiple directions in which to take a
strategy or an initiative. The variety of alternatives to weigh -- and the
volume of decisions that must be made on an ongoing basis, especially in
large organizations -- makes the implementation of an e ffective decision -
making process a crucial element of managing successful business
operations.
Decision making is a daily activity for any human being. There is no
exception about that. When it comes to business organizations, decision
making is a habit an d a process as well.
Effective and successful decisions make profit to the company and
unsuccessful ones make losses. Therefore, corporate decision making
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45 In the decision making process, we choose o ne course of action from a
few possible alternatives. In the process of decision making, we may use
many tools, techniques and perceptions.
In addition, we may make our own private decisions or may prefer a
collective decision.
Usually, decision making is hard. Majority of corporate decisions involve
some level of dissatisfaction or conflict with another party.
3.8 WHAT IS A DECISION -MAKING MODEL ?
A decision -making model is a system or process which individuals can
follow or imitate to ensure they make the best choice among various
options. A model makes the decision -making process easier by providing
guidelines to help businesses reach a beneficial conclusion.
Decision models also make the decision -making process visible and easily
communicable for everyon e involved, including all managers,
stakeholders and employees. They can be used for a wide variety of
purposes across departments, businesses and industries, but they are
especially useful when selecting software vendors or new tools, choosing
new courses of action or when implementing changes that effect large
amounts of people.
3.9 TYPES OF DECISION -MAKING MODELS
Common types of decision -making models include:
Rational models. Rational decision -making is the most popular type of
model. It is logical and sequential and focuses on listing as many
alternative courses of action as possible. Once all options have been laid
out, they can be evaluated to determine which is best. These models often
include pros and cons for each choice, with the options listed in the order
of their importance.
A rational decision -making model typically includes the following steps:
1. Identify the problem or opportunity.
2. Establish and weigh decision criteria.
3. Collect and organize all related information.
4. Analyze the situation.
5. Develo p a variety of options.
6. Assess all options and assign a value to each one.
7. Decide which option is best.
8. Implement the decision.
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46 Intuitive models. These decision -making models focus on there being no
real logic or reason to the decisi on-making process. Instead, the process is
dictated by an inner knowledge -- or intuition -- about what the right
option is. However, intuitive models are not solely based on gut feelings.
They also look at pattern recognition , similarity recognition and the
importance or prominence of the option.
Recognition primed models. These models are a combination of rational
and intuitive decision -making. Its defining element is that the decision
maker only considers one option instead of weighing all of them.
The recognition primed decision -making process involves:
1. Identifying the problem, including all its characteristics, problem cues,
expectations and business goals.
2. Thinking through t he plan and performing a mental simulation to see if
it works and what modifications might be needed.
3. If the plan seems satisfactory, then the final decision is made, and the
plan is implemented.
In recognition primed models, alternative courses of action are only
considered if the original plan does not produce the intended results. The
success rate of this model correlates to an individual's experience and
expertise.
Creative models. In this decision -making model, users collect
information and insights ab out the problem and create some initial ideas
for solutions. Then, the decision maker enters an incubation period where
they do not actively think about the options. Instead, they allow their
unconscious to take over the process and eventually lead them to a
realization and answer which they can then test and finalize.
Data -driven decision making
Traditionally, decisions were made by business managers or corporate
executives using their intuitive understanding of the situation at hand.
However, intuitive de cision -making has several drawbacks. For example,
a gut -feel approach makes it hard to justify decisions after the fact and
bases enterprise decision -making on the experience and accumulated
knowledge of individuals, who can be vulnerable to cognitive biases that
lead them to make bad decisions. That's why businesses today typically
take more systematic and data-driven approaches to the decision -making
process. This allows managers and executives to use techniques such as
cost-benefit analysis and predictive modeling to justify their decisions. It
also enables lines of business to build process automation protocols that
can be applied to new situations as they arise, removing the need for each
one to be handled as a unique decision -making event.
If designed properly, a systematic decision -making process reduces the
possibility that the biases and blind spots of individuals will result in sub -
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47 makes observing the business impact of decisions a crucial step in case
things go in the wrong direction. The potential for humans to choose the
wrong data also highlights the need for monitoring the a nalytics and
decision -making stages, as opposed to blindly going where the data is
pointing.
3.10 STEPS OF DECISION MAKING PROCESS
Following are the important steps of the decision making process. Each
step may be supported by different tools and techniqu es.

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48 Step 1: Identification of the purpose of the decision
In this step, the problem is thoroughly analysed. There are a couple of
questions one should ask when it comes to identifying the purpose of the
decision.
 What exactly is the problem?
 Why the pro blem should be solved?
 Who are the affected parties of the problem?
 Does the problem have a deadline or a specific time -line?
Step 2: Information gathering
A problem of an organization will have many stakeholders. In addition,
there can be dozens of factor s involved and affected by the problem.
In the process of solving the problem, you will have to gather as much as
information related to the factors and stakeholders involved in the
problem. For the process of information gathering, tools such as 'Check
Sheets' can be effectively used.
Step 3: Principles for judging the alternatives
In this step, the baseline criteria for judging the alternatives should be set
up. When it comes to defining the criteria, organizational goals as well as
the corporate culture should be taken into consideration.
As an example, profit is one of the main concerns in every decision
making process. Companies usually do not make decisions that reduce
profits, unless it is an exceptional case. Likewise, baseline principles
should be i dentified related to the problem in hand.
Step 4: Brainstorm and analyse the different choices
For this step, brainstorming to list down all the ideas is the best option.
Before the idea generation step, it is vital to understand the causes of the
problem and prioritization of causes.
For this, you can make use of Cause -and-Effect diagrams and Pareto Chart
tool. Cause -and-Effect diagram helps you to identify all possible causes of
the problem and Pareto chart helps you to prioritize and identify the causes
with highest effect.
Then, you can move on generating all possible solutions (alternative) for
the problem in hand.
Step 5: Evaluation of alternatives
Use your judgement principles and decision -making criteria to evaluate
each alternative. In this step, ex perience and effectiveness of the
judgement principles come into play. You need to compare each
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49 Step 6: Select the best alternative
Once you go through from Step 1 to Step 5, this step is easy. In addition,
the selection of the best alternative is an informed decision since you have
already followed a methodology to derive and select the best alternative.
Step 7: Execute the decision
Convert your decision into a plan or a sequence of activities. Execute your
plan by yourself or with the help of subordinates.
Step 8: Evaluate the results
Evaluate the outcome of your decision. See whether there is anything you
should learn and then correct in future decision making. This is one of the
best practices that will impr ove your decision -making skills.
Challenges in the decision -making process
Balancing data -driven and intuitive approaches to decision -making is a
difficult proposition. Managers and executives may be skeptical about
relying on data that goes against their intuition in making decisions or feel
that their experience and knowledge is being discounted or ignored
completely. As a result, they may push back against the findings of BI and
analytics tools during the decision -making process.
Getting everyone on boar d with business decisions can also be a
challenge, particularly if the decision -making process isn't transparent and
decisions aren't explained well to affected parties in an organization. That
calls for the development of a plan for communicating about de cisions
internally, plus a change management strategy to deal with the effects of
decisions on business operations.
Decision -making models can also be used to avoid these vario us
challenges by creating a structured, transparent process.
3.11 WHEN TO USE DECISION -MAKING MODELS
Even when rules and procedures are set up to make business decision -
making more systematic, there can still be room for intuition on the part of
decision -makers. For example, after gathering data about different
alternatives, more than one might seem similarly advantageous, or
management might find itself lacking certain information needed to make
a decision with full confidence. This is a good use case for incorporating
an intuitive decision -making model into the process.
On the other hand, decisions that happen frequently and have clear optimal
outcomes benefit from a structured, rational decision -making models. This
approach to business problem -solving use s clearly prescribed steps and,
usually, data analytics software to evaluate the available options and arrive
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50 Sometimes involving more people in the dec ision -making process can pay
off. This is known as participatory decision -making; in the business world,
it involves managers seeking input and feedback on decisions from the
workers they oversee. The participatory approach has the potential
advantage of g enerating many ideas for solving a business problem; it also
helps to engage employees.
Decision management
Decision management -- also known as enterprise decision management
(EDM) or business decision management (BDM) -- is a process or set of
processes that aims to improve the decision -making process by using all
available information to increase the precision, consistency and agility of
decisions. The processes also focuses on making good choices by taking
known risks and time constraints into considera tion.
Decision models and Decision support systems (DSS) are key elements of
decision management. Decision management processes also use business
rules, business intelligence (BI), continuous improvement, artificial
intelligence (AI) and predictive analytics to access the capabilities of big
data and meet the needs of modern day user expectations and operational
requirements.
Decision management systems treat decisions as reusable assets and
introduce technology at decision points to automate the decision -making
process. Decisions may be fully automated, or they m ay be presented as
possible choices for a human to select.
Increasingly, organizations who deal with financial services, banking and
insurance are integrating decision -making software into their business
process systems as well as their customer -facing applications. This
approach is especially useful for high -volume decision -making because
automating such decisions can enable more efficient, information -based
and consistent res ponses to events .
3.12 KEY POINTS
• When it comes to making decisions, one should always weigh the
positive and negative business consequences and should favour the
positive out comes.

• This avoids the possible losses to the organization and keeps the
company running with a sustained growth. Sometimes, avoiding
decision making seems easier; especially, when you get into a lot of
confrontation after making the tough decision.

• But, making the decisions and accepting its consequences is the only
way to stay in control of your corporate life and time.
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51 • Value of Information (VoI) is a concept from decision analys is: how
much answering a question allows a decision -maker to improve its
decision
• When applying the Rowley’s DIKW (Data -Information -Knowledge -
Wisdom) pyramid [2] in a business context, the process of moving up
from data to wisdom could be described as bus iness intelligence,
mainly because business data has the potential to result in business
knowledge and wisdom.
3.13 QUESTIONS
(1) Explain importance of information in Decision Making?
(2) Explain steps of decision Making process?
(3) What is decision Making Model?
(4) Explain different types of decision Making Models?







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52 4
MIS ACROSS THE FUNCTIONS OF THE
MANAGEMENT AND SECTORS
Unit Structure
4.0 Objectives
4.1 Introduction
4.2 Introduction to MIS
4.3 MIS across the functions of the Management and sectors
4.4 Marketing Information Systems
4.5 Manufacturing Information Systems
4.6 Human Resource information Systems
4.7 Financial Information Systems
4.8 Information System Required across the Sectors
4.9 Summary
4.10 Reference for further reading
4.11 Bibliography
4.0 OBJECTIV ES
The main objective of learning MIS is to helps various business sectors to
make better decision based on the data information available. It helps to
understand the complex computing problems and to apply the various
logic and other relevant information to identify the solutions.
4.1 INTRODUCTION
The main goal of MIS is used to help the students to understand the types
and components of MIS and its various sectors specific business solutions.
This course will make aware about the various possible option that can be
applied while decision making.
4.2 INTRODUCTION TO MIS
Management Information System is a process that provides necessary
information which helps in taking appropriate decision in the
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53 It has a cleared defined protocol where it he lps in deciding the guideline
policies and best practices to deal with various decisions making in the
organizations.
4.3 MIS ACROSS THE FUNCTIONS OF THE
MANAGEMENT AND SECTORS
 There are various sectors in business world where the information
system plays a v ital role in decision making.
 MS is used or utilised by every level of a management.
 It focuses on the strategic goals and objectives for the management.
 It’s also provides an effective system to analyse costs and revenue
and further reviews effectively an d efficiently to bring a balance in
finance and costs.
 MIS is sustaining either through manual systems or automated
system or a combination of both.
 It also plays an accretive role in identifying, locating, measuring,
tackling, and limiting risks.
 It set d own a framework which includes set of rules and regulation
for the management to bring a clear and concise communication
between employees.
 It provides an impartial system for collecting, assessing, and
aggregating information for a business.
4.4 MARKETING INFORMATION SYSTEMS
 Marketing is usually that area of a company which requires lots of
attention.
 Company sales depend on marketing so company must use
adequate solutions for the more effective promotion of their
products.
 For this purpose companies rely on marketing information system.
 Marketing information system allows a company to use all relevant
information for developing its marketing strategies more
effectively.
 It refers to the systematic collection, analysis, interpretation, storage
and dissemina tion of market information, from both the internal and
external sources, to the marketers on a regular and continuous basis.
 It distributes the relevant information to the marketers who can
make the efficient decision related to the marketing operations li ke
pricing, packaging, new product development, distribution,
promotion, etc.

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54






Figure (a)
Components of MIS are:
1) Internal reports:
 The most basic information systems used by marketing managers is
the internal records system.
 Included in the internal system are reports on orders, sales, prices,
inventory levels, receivables, payable, and so on.
 By analyzing this information marketing managers can spot important
opportunities and problems.
2) Marketing Intelligence:
 A marketing inte lligence system is a set of procedures and sources
used by managers to obtain their everyday information about relevant
developments in the marketing environment.
 Marketing managers often carry on marketing intelligence by reading
books, newspaper and trad e publications, talking to customers,
suppliers, distributors and talking with other managers and personnel
within the company.
3) Marketing Research:
 Marketing research is the systematic design, collection, analysis, and
reporting of data and findings relev ant to a specific marketing
situation facing the company.
4) Marketing Decision Support System:
 A growing number of organizations are using a marketing decision
support system to help their marketing managers make better
decisions.
 A marketing decision suppo rt system (MDSS) is a coordinated
collection of data, systems, tools and techniques with supporting
software and hardware by which an organization gathers and interprets Marketing
managers
Analysis
Planning
Implementing
Controlling Assessing
information
needs
Distributing
information Internal
reports Marketing
intelligence
Marketing
decision
support Marketing
research Marketing
environment
Target markets
Marketing
channels
Publics
Macro -
environment
forces
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55 relevant information from business and environment and turns into a
basis for marketin g action.
 Example please refer the diagram given below:








Figure (b)
4.5 MANUFACTURING INFORMATION SYSTEMS
 Manufacturing or production information system provides
information on production or operating activities of an organization
and thus facilitates the decision making process of production
managers of an organization.
 Production is an act of transformation in which inputs are processed
and transformed into outputs.
 Manufacturing is an impo rtant functional area of an organization
which is engaged in producing goods from raw material.










SAP Production
Sales and
Marketing Human Resource Planning
Inventory
management
Reporting Finance and
Accountin g
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56
















Figure (c)

1) Production Data:
 Data gathered and processed on production is used in every aspect of
productio n control and also for billing and other rated areas.

2) Inventory Data:
 It includes inventories of raw materials, work in process and finished
goods.
 It is important as running out of stock at certain critical times may
shut down production lines leading t o losses.

3) Vendor Data:
 It shows sources of raw materials.
 Though this data is normally maintained by purchase department,
the manufacturing personnel should also be aware of the origins of
the raw material and should know what new items are offered by th e
vendors.
Sources of
manufacturing
data
Production Data
Inventory Data
Vendor Data
Marketing Data
Labour, union and
Engineering Data External
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57 4) Marketing Data:
 Marketing output is the feedback information for the manufacturing
department.
 When marketing specifies what is required, only then it is
manufactured.
 Therefore, it is important to integrate the two.

5) Labour, union and Engine ering Data:
 Labour is the core of manufacturing awareness about labour market,
labour union and personnel performance is a must for proper
production scheduling and plant utilization.

6) External Environment Data:
 Knowledge of raw material prices and availa bility of labour is most
important for manufacturing department.
 If the production manager anticipates rise in prices of raw materials,
it would be wise to stock up the materials.












Figure (d)
Outputs of manufacturing information systems:
1) Product Design:
 It is also known as product engineering, includes the entire
development of product through initial stages until actual
manufacturing starts.

2) Facility design:
 It includes plant location and layout.
 Plant location determines the establishment of an organization at a
particular place.
 It is an important decision because:
 Location of plant partially determines operating and capital costs.
 Each prospective location implies a new allocation of capacity to
respective market area.

3) Production:
 It includes planning, directing and controlling of the material supply
and other production processing activities. Outputs of manufacturing
information systems
Product Design
Facility design
Production
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58  Production planning includes:
 Preparing procurement plans for material and personnel.
 Establishing invent ory control procedures.
 Preparing work authorization.
 The task of production planning is accomplished through: -
















Figure (e)

1) Routing:
 It is the determination of path or route over which each price i s to
travel in the process of transformation of raw materials into the
finished product.

2) Scheduling:
 It is about deciding when each operation in a production process is to
be carried out.

3) Loading:
 It is to know when a particular equipment or machine wi ll be
available for work on each order or item.
 Loading provides information about whether the work load is greater
or less than the capacity of equipment.

4) There are two types of production methods:










Figure (f) Task of production planning
Routing
Scheduling
Loading
Types of
production methods
Job shop Production Process Production Quality
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59 a) Job shop Production:
 In whi ch each other taken by the firm is considered to be a job and
accordingly a cost is tagged.

b) Process Production:
 In which goods are produced data mass scale for general
consumption.

 As new order arrives, they are filed on the basis of priority.

 For such system, a reorder level is to be identified for the goods
stock.

5) Quality Control or Quality Assurance:
 Quality control ensures that the final product is of satisfactory
quality.

 It is concerned with detecting existing quality deficiencies and
rectifyin g them.

 Quality assurance is concerned with the prevention of future quality
problems.

 This requires a discrete definition of each step of a process and
ensuring that we stick to them.

 Various techniques which are used in controlling the quality of a
product include inspection, statistical quality control, and control
charts, etc.
4.6 HUMAN RESOURCE INFORMATION SYSTEMS
 It is a systematic way of storing data and information for each
individual employee to aid planning, decision making and
submitting of re turns and reports to the top management.

 A method, by which an organization collects, analyses and reports
the information about people and job.

Objectives of HRIS:
 To offer sufficient comprehensive and ongoing information about
people and jobs.
 To suppl y up to date information at a reasonable cost.
 To offer data security and personal privacy.




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Figure (i)
1) Planning:
 Setting up the process.
 Feasibility study.
 Selecting a team for implementing HRIS.

2) Analysis:
 Defining the requirem ent.
 Vendor selection.
 Negotiation.

3) Designing:
 Examine the flow of information.
 Assembling the sub systems.
 Identifying the gaps.

4) Implementing:
 Training the people.
 Collecting the data.
 Implementing the system.

5) Maintenance :
 Time to time checkups.
 Audit ing to ensure.








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Figure (j)

1) Job description:
 Produce printout that describes the jobs according to the specification
and input by the user.

2) HR Planning:
 Forecasting the actual demand calculating the surplus and sh ortage
based on department and projects.

3) Recruitment and Selection:
 Applicant tracking
 Job person matching.

4) Training and Development:
 Identify training needs, setting skills levels.
Application of HRIS Job Description HR Planning
Recruitment and selection Training and Development Performance Appraisal Compensation
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62 5) Performance Appraisal:
 Performance assessment.
 Goal accomplishment
 Rewa rd management.

6) Compensation:
 Tracks analyse and report of salaries.
 Automated bonus and pay grade structure reports.

7) Succession Planning:
 Report candidate who are eligible and necessary experience for the
position.
Benefits of HRIS:
 Higher speed of retri eval and processing of data.
 Reduction in duplication of efforts leading to reduced the cost.
 Ease in classifying and reclassifying data.
 Better analysis leading to more effective decision making.
Limitations of HRIS:
 It may be expensive in terms of financ e and manpower.
 It may be inconvenient for organization where people don’t have the
understanding using the system.
 It may not suitable for organization people lack data management
skills.
Top of mind for HR leaders:
 Create an aligned and personalised tale nt experience.
 Find and hire the right people for the job and company culture.
 Accelerate time -to-impact with new hire on boarding.
 Drive talent success with professional development.
 Optimize HR programs with insightful people analytics.
4.7 FINANCIAL INF ORMATION SYSTEMS
 Financial information means any information which can be
 Measured in terms of money.
 Bring change in the financial position of the entity.
 The finance function of a business is responsible for obtaining
money needed by the business and pl anning the use of that money.
 Financial information system support financial managers in decision
concerning:
 The financing of business.
 The allocation and control of financial resources within a business.

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Figure (k)

1) Transaction:
 It mea ns dealing between two persons / parties having a monetary
impact on the financial statement / position of an entity.
 Dealing between two persons and parties.
 Measurable in terms of money.
 Bring change in the financial position of an entity.

2) Events:

 Loss of inventory by fire.
 Fluctuation gain / loss.

3) Conditions:
 Are some adjustments to already recorded transaction?
 Provision for debtors’ creditors.
 Provision for discount on debtors / creditors.

Data Inputs Is Ou tput












Figure (l)
Sources of
Financial
Information
Transactions Events Conditions
Transactional Data Forecasting Data
Financial Intelligence Data Strategic Plans Forecast
Funds Management Audit and Control Other Areas
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64
1) Transactional Data:

 This data includes the transactions of revenue and expense incurred
from each functional area.
 This data is captured through TPS.

2) Forecasting Data:
 For structured planning, an organizat ion needs forecasting data from
each functional area, which can be used to compare the actual
transaction with the anticipated as per the forecast.
 This is also made available through TPS and MIS.

3) Financial Intelligence Data:
 An organization needs to gath er the data from the financial
communities like banks, government, stock market, etc.
 This data helps to monitor the pulse of the nation’s economy and
helps in analysing the trend that may affect the organizations
economy.

4) Strategic Plans:
 It is an import ant indicator and measurement scale for any kind of
financial transaction as it charts the future of the organization.

5) Forecasting:
 It involves business and economic trends and financial
developments.
 Financial forecasting shows the estimated source and a mounts of
cash flowing into or out the organization.

6) Funds Management:
 It combines the financial forecast with income and disbursement
 related to external sources is often called the financial plan.

7) Auditing and Control:
 Auditing is an inspection that d etermines whether things are working
according to the guidelines.
 A financial audit verifies the accuracy of an organizations financial
accounting records.

Financial Information System (Financial Decisions)
1) Estimation of requirement of funds:
 A business must make a financial forecast.
 It is a careful estimation of funds and the time at which these funds
would be required.
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2) Capital Structuring decision:
 Funds can be procured from different sources for different periods.
 Each sources has its own cost and risk.
 A business must select an optimum mix of different sources of
capital.

3) Capital budgeting decision:
 The capital budgeting process involves evaluating the profitability
and financial impact of proposed capital expenditure.
 In this decision funds are allocated to long term assets which would
yield returns in future

4) Dividend decisions:
 This decision relates to the dividend policy of the organization.
 A decision whether the organization should distribute all profits or
retain them or distribute a port ion and retain the balance has to be
taken by the financial manager.
 He has to ensure there are adequate surplus in future for growth after
distribution of dividends.

5) Tax management:
 Tax planning involves taking full advantage of rebates, concessions,
exemptions. Deductions, allowances and other reliefs.

6) Current asset management:
 In order to safeguard the organization against liquidity or insolvency
current assets of the organization should be effectively managed.

















Figure ( m) Financial
Decisions
Estimation of requirement of funds Capital Structuring decision Capital budgeting decision Dividend decisions
Tax management
Current asset
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66 4.8 INFORMATION SYSTEM REQUIRED ACROSS
SECTORS
 Data are basic values or facts and are organised in a database.
 Information actually consists of data that has been organized to help
answers and to solve problems.
 An information system is defined as the s oftware / hardware that
help organise and analyse data.
 The purpose of an information system is to 9erpturn raw data into
useful information that can be used for decision making in an
organization.
 There are some general types of information systems.
 For e xample, a database management system (DBMS) is a
combination of software and data that makes it possible to organizes
and analyse data.
 DBMS software is typically not designed to work with a specific
organization or a specific type of analysis.
 There are a number of specified information systems that have been
specifically designed to support a particular process with an
organization or to carry out very specific analysis tasks.
 For example, enterprise resource planning (ERP) is an information
system used t o integrate the management of all internal and external
information across an entire organization.











Figure (n)
4.9 SUMMARY
This course will helps the students to understand that how MIS plays a
vital role in decision making in any org anizations. With the help of MIS a
business manager can take appropriate planning and control of various
departments and its management. Components
of
Information Systems Computer hardware
Computer software
Databases
Network
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67 4.10 REFERENCE FOR FURTHER READING
Goggle.com
You tube
MCQ FOR PRACTICE
Q1. Which of the following is true for CBT
a. It stands for Computer Based Training
b. It is a form of E -learning
c. All of the above
d. None of the above
Q2. A talent management plan aims at developing which of the following
quality (ies) in employees:
a. Knowledge
b. Skills
c. Abilities
d. All the ab ove
Q3. Which of the following is not a focus of Wage and Salary
programme?
a. Conducting easy performance appraisals
b. Improvising performance of workers
c. Controlling pay costs
d. establishing individual training requirements
Q4. Which of the following deals further with data security, safety and
data validation?
a. Data transferring
b. Data processing
c. Data managing
d. Data storage
Q5. As per which of the following methods, the human resource is valued
on the basis of the contribution they are likely to make to the
organisation till retirement.
a. Asset Multiplier Method
b. Replacement Cost Method
c. Economic Value Method
d. None of the above
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68 5
STRATEGIC ROLES OF IS USE OF
INFORMATION FOR CUSTOMER
BONDING AND BUSINESS ALLIANCE
BREAKING
Unit Structure
5.0 Objectives
5.1 Introductions to IS
5.2 Types of Information System strategic
5.3 Uses of Strategic information system
5.4 What is Customer Bon ding?
5.5 Ways to Strengthen Your Bond With Customers
5.6 Business Alliance Breaking
5.7 Reasons for alliance failure
5.8 Points to remember
5.9 CASE Study: The Strategic Alliance Between Renault and Nissan
5.10 Renault: Before and After the Alliance
5.11 Questions
5.12 References
5.0 OBJECTIVES
 Know and be able to understand Strategic Role of IS
 Conditions/actions to ensure the successful deployment of strategic
information systems
 Ways to Strengthen the bond between your business and your
customers
 Ways t o ensure successful strategic alliances
 Reasons for alliance failure
 Case Study: The Strategic Alliance Between Renault and Nissan
5.1 INTRODUCTION TO IS
Strategic information system provides a connection between demands of
organization and latest information technology . This tactic helps an
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69 meet its challenging requirements to the continuous variation in the
corporate environment
Strategic Information Systems are systems that help organiz ations alter
their business strategies, plans or structure. They are also used to hasten
the reaction time of the environmental changes and aid the organization to
achieve a competitive advantage over its competitors. Strategic
information systems are the traditional or conventional information
systems used in innovative ways. The essential purpose of the strategic
information systems is to help organizations to do things better. They also
aim to develop and maintain the IS/IT systems that support the busin ess
operations in an effective way.
In the light of today’s global economy, the organizations face several
challenges such as globalization, privatization, stiff competition and more
demanding customer expectations, coupled with daily advancement in
inform ation and communication technologies. In this environment, the top
managers should understand and realize that the IS/IT is not merely a
resource to support day -to-day operations. They should also realize that
the clever use of IS/IT can significantly chan ge an organization’s long
term strategic position in national and global markets. Therefore, it
becomes increasingly imperative that the managers create new and
different strategies including the change of top management for long -term
planning and strategi c decision -making versus the operational decision -
making. Subsequently, if the organizations wish to remain successful and
to be competitive, the managers need to consider Information Systems
(ISs) as a tool utilized to gain competitive advantages, in orde r to
overcome the other competitive organizations. So, the information systems
that help seize opportunities of gain competitive advantages are often
called Strategic Information Systems (SIS). The strategic information
system can be defined as an informat ion system that creates or enhances
the company’s competitive advantage or changes the industry structure by
fundamentally changing how business is conducted. It is conventional
information systems used in innovative ways. It can be any kind of
informatio n systems (such as TPS, MIS, DSS, EIS, OAS, ERP, etc.) that
helps an organization:
1. Gain a competitive advantage
2. Reduce a competitive disadvantage
3. Meet other strategic organization objectives.
Hence, any IS having the ability to change the goals, processes , products,
or environmental relationships to help an organization gain a competitive
advantage or reduce a competitive disadvantage is a strategic IS In
addition, the SIS involves using information technology to develop
products, services, and capabilitie s that give a company strategic
advantage over the competitive forces it faces in the global marketplace.
The advances in information provision have led organizations to attempt
to develop IS or IT strategies align with their business strategies to achieve
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70 produce high quality products and services, accelerate communication and
data sharing, improve performance and prod uctivity, and make
management more efficient and effective. Moreover, it gives the managers
the ability to adjust, control and monitor all business processes which
accordingly will accelerate the processes of the decision -making.
Laudon confirms that the t op management must understand that not all
strategic information systems are profitable, they can be expensive to
build and easily copied by other firms so that strategic advantage is not
always sustainable. Strategic information systems have to be built o n the
strengths of the company that cannot be easily imitated. It has been
determined that lasting, sustainable competitive advantage can be gained
from strategic information systems only if an organization possesses other
resources as well. Such resources include :
1. A well -developed and flexible information technology platform or a
database to obtain the advantages
2. Continual investment to maintain those advantages, Therefore, some
of the recommended conditions/actions should be followed before
the developme nt and implementation of strategic information
systems in the Organization. These proposed conditions/actions
ensure the successful deployment of strategic information systems,
which are as follows:

 Active support of senior organization management —not ju st MIS
management — in the discovery of strategic opportunities and in the
implementation process.
 Integration of planning for the strategic use of information systems
into the overall organization strategic planning process.
 Direct reporting by those re sponsible for strategic use of information
systems to the business managers of the area to be affected by the
new system.
 Placement of control mechanisms in the hands of these business
managers.
 Readiness for strategic use of information systems, implyi ng the
successful use of the MIS and technological platform already in
place and experience with technological innovation.
Importance of Strategic information system
Strategic information system provides a connection between demands of
organization and lat est information technology. This tactic helps an
organization to get hold of the market by utilizing Information tech to
meet its challenging requirements to the continuous variation in the
corporate environment.
5.2 TYPES OF INFORMATION SYSTEM STRATEGIC:
1. Operation support system
The primary purpose of this system is to keep a check on transactions,
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71 facilitate internal and external talks, and it updates the central main
database of the org anization.
1. Management Support System
These systems facilitate and provide precise information and data to the
manager for easy routines, decision -making processes. Decision support
system which helps to solve particular issues related problems.
5.3 USES OF STRATEGIC INFORMATION SYSTEM:
1. Cost Leadership Strategy
Information systems are said to support this strategy if the company able
to reach a position lowest costs in the industry, by way of business process
engineering, lowering costs from suppliers, an d reduce costs to customers.
For the example most of retail company who create promotion of the retail
product to attract customers to buy the product cheaper than the other
companies.
2. Differentiation Strategy
Information systems are said to support thi s strategy if they can provide
products or services unique and able to provide more value to customers
compared to other competitors, namely by way of: utilizing information
technology to create products or services that are different, and reduce the
advan tages of differentiation from competitors.
3. Focus Strategy
Information systems are said to support this strategy if they can help the
company focusing on specific products or services within the organization.
4. Innovation Strategy
Information systems ar e said to support this strategy if they can find
specific ways in doing business is by providing products or services with
the latest innovations. For the example Apple Product that offers a lot of
features and high qualities software in their smartphone, smartwatch, or
laptop. Even the price is more expensive than similar products, but the
people are willing to buy because of the high quality and the innovation.
5. Alliance Strategy
Information systems are said to support this strategy if they can create
cooperative relationships which benefits both suppliers and other
companies even with competitors.
6. Growth Strategy
Information systems are said to support this strategy if they able to
develop and diversify market.

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72 7. Quality Strategy
Information syste ms are said to support this strategy if they able to help
improve the quality of the product or service.
5.4 WHAT IS CUSTOMER BONDING ?
Customer bonding is, just as the term implies, the process through which a
company or organization makes connections with its customers. The goal
of customer bonding is to develop a relationship and sense of community,
including the customers so that they:
 Feel welcomed
 Are more likely to continue patronizing the company (and
its products or services)
 Are more likely to reco mmend the company to friends and family
This relationship is the product of positive one -on-one contact, mutually
beneficial engagement, the sincere interest and participation of the
company in the life and lifestyle of the consumer, a blend of customer
loyalty and corporate support, and a common sense of mission. By
engaging in consumer bonding, businesses can create a sense of loyalty
and raise sales. However, along the way, they have an inclination to search
out that there are varieties of other benefits that come from bonding with
customers. As an example, getting regular customer feedback can help an
organization improve its products or services, thereby making them more
appealing to consumers.
Bonding is the response of the client to the manner in whic h the vendor
addresses adversity. When someone on the vendor side takes their
problem or issue seriously and works effectively to produce a successful
result, customers love it. Customer retention is crucial for any business
because a loss of customers is tantamount to a decrease in revenue; losing
too many customers may mean a company’s demise. In most markets
today, customers expect that they’re buying an entire product defined
because of the thing itself plus the warranties, service, support, goodwill,
and pleasant disposition of the staff. They also buy into what they hope
would be a group of other consumers that will be able to offer support and
guidance, a kind word, or real insight.
The retention of customers is a huge part of every business’s success . The
firm becomes more competitive when customer retention increases. The
concept is pretty simple:
Loss of Customers = Loss of Revenue
The main aim, of course, is to attract clients and to raise profits in doing
so. Indeed, a more sophisticated definitio n of the partnership is that it is
not at all between the consumer and the seller or, at best, it is just part of
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73 The “share -of-mind” art of receivin g consumers includes creating an idea
of personal connection with the goods and/or services of the business.
Consciousness reflects the weakest component of a relationship since it is
non-interactive and relies solely on the understanding of the client. A
company doesn’t know the premise for a customer’s positive or negative
reaction to communication or advertising message at this stage of the link.
Customers are also drawn off from a corporation for several reasons.
These reasons include:
 Attracting compan ies with identical products or services; market
players use different strategies to attract consumers, such as cheaper
rates or additional services
 Being disappointed with customer service
 Being disappointed with the goods or services
 No longer wanting or needing the goods and/or services a company
offers
Marketing has a special role in what looks like service to an untrained eye,
because marketing is the leading user of social media in many businesses
and the community that, at the moment, can do the most to make other
departments understand the social benefits. A customer defines a service
product as fulfilling one or more essential personal needs, such as self -
satisfaction, reputation, or belonging. A customer will perceive the
business as having values a nd preferences similar to his own and start
developing a relationship with the business
One of the determinant factors of a company’s success is the company’s
ability to cohere customers . The ability of employees to cohere customers
can influence marketin g performance improvement (Hajli & Lin, 2016 ).
Increasing the ability to cohere customers is of substance and should not
be delayed anymore. Therefore, all parties on customer networks must
collaborate to achieve maximum results. Customers will feel attached to
the company if the company can meet the needs and desires of customers
(Dubihlela & Khosa, 2014 ). As customers are satisfied with the
company’s services, they will find it difficult to move to compete for
products. Customers tend to make repeated purchases. This repurchase has
a positive impact on marketing performance.
Marketing performance is an indicator of success for a profit -oriented
organization.
Marketing performance can increase organizational performance (Chari et
al., 2014 ). Therefore, marketing perform ance must be improved. The form
of marketing performance can increase company profits. Providing quality
products can meet customers’ needs and desires as a way to increase
company profits. Besides, increasing market segmentation can improve
marketing perf ormance. In a broad sense, market segmentation can
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74 Improving marketing performance is an absolute requirement to keep a
company growing unless it can not exist (Yao et al., 2013 ). Small and
medium business actors need to pay attention to the tastes of customers so
that the company can be developed considerably. To realize t his
requirement, the company seeks to do many things, for example, by
tracing customers who are disappointed with the use of company products.
Entrepreneurs can find out parts of products that do not connect to the
customers’ interests. Employers can evalu ate and make improvements.
Companies or small and medium businesses can function as ghost
shopping by sending some of their marketing staff to act and disguise
themselves as buyers. To support maximum marketing performance, it is
important to strengthen re lational capital. Good collaboration is also
required for small and medium business actors in collaboration with
company internal employees or employees, suppliers, customers and
industry associations. This collaboration is mainly concerned with
marketing performance. However, previous studies indicate that there is a
controversy between relational capital and marketing performance. Some
researchers claim that relational capital has a positive effect on marketing
performance (Tayles et al., 2007 ; Wang et al., 2016 ). On the other hand,
some researchers state that relational capital does not have a si gnificant
positive impact on marketing performance (Rasa, 2012 ; Smirnova et
al., 2011 ).
5.5 W AYS TO STRENGTHEN YOUR BOND WITH
CUSTOMERS
It takes more than just providing quality products and services to have a
successful business —your reputation can be made or shattered by your
customer service.
In the age of the Internet, it is easier than ever t o say the wrong thing, and
the results can be much more damaging than in days past. Fifteen years
ago, if a manager or CEO said the wrong thing in a magazine or
newspaper, it had a negative impact on their profile, but now news of a
major faux pas can spre ad across the internet in a matter of hours.
Likewise, treating customers poorly can attract negative attention and can
chase potential customers away —perhaps into the arms of your
competitors. While money can buy you slick presentations, the best
webinars , and celebrity endorsements, no amount of funding can buy you
the respect and loyalty of a strong customer base.
How can you strengthen the bond between your business and your
customers?
1: Treat your Customers as People, not just Money Dispensers
Busines ses can easily make the mistake of taking customers for granted;
large corporations and small firms alike can begin to view their customers
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75 This is a huge problem in the long term. Focus on treating people as you
would like to be treated: pay attention to their comments across social
media (see below), conduct surveys (with incentives), and provide plenty
of contact options —live chat, phone numbers, email addresses, and
submission forms should all be readily accessibl e.
Research conducted by Aspect Software revealed that 77 percent of U.S.
consumers view businesses with multiple communication channels as
being easier to deal with, and 74 percent say these companies offer better
service. Aim to be one of these companies.
2: Embrace the Speed, Simplicity, and Effectiveness of Social Media
Social media has changed the way most of us communicate. Whereas
texting replaced the phone call (a problem for some, a welcome cha nge for
most), social media has replaced the text. Sending a message through
Facebook or Twitter is quick, simple, and allows you to attach additional
media with less fuss than when sending texts.
You should already be using social media to communicate wit h customers,
but avoid spreading yourself too thin across them all: find the networks
with the greatest concentration of customers and focus on them. While you
may want to maintain profiles on a wide variety of networks, don't just
share the same posts acr oss them all; tailor your posts to the biggest active
demographic.
Encourage your customer service operators to aim for fast responses: the
longer customers (existing or potential) have to wait for answers to
questions or complaints, the less likely they a re to trust you. You should
also make sure you're responding to feedback: listen on social media as
much as you talk, if not more so.
3: Make Communications as Simple as Possible
You need to talk to your customers where they are – and today they spend
much of their time using social and mobile applications and perusing
websites. It’s kind of odd to expect these customers to pick up a separate
phone and start all over again when they want to talk to you.
Today’s real -time communications technologies, includ ing new WebRTC
capabilities built -in to browsers like Chrome and Firefox, make it easy for
you to include voice and video right in the context of your own
applications and websites.
And the numbers show that your customers are spending more and more
of the ir Internet time on mobile devices – so you need a strong mobile
application strategy. Luckily there are toolkits available that allow you to
embed voice and video right into your mobile applications too. And
companies like Agora.io can also provide services in the cloud to help you
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76 Allowing customers to enjoy audio or video calls with real customer
service representatives from within your applications will help them put a
face and personality on your business.
4: Make Honesty Your Policy
The internet has given consumers more of a voice and also made they
much more business savvy. If a company is lying or trying to con them,
they will make sure others find out about it across social media, blogs, and
other outlets.
Building a stronger bond with your customers comes down to trust: if your
target demographic feels they have little or no reason to take you at your
word, why should they continu e to give their money to you instead of to
your competitor?
When communicating with customers (via social media, email, phone, or
Web RTC), show compassion towards their specific needs and
circumstances. Maintain your integrity by delivering products, serv ices, or
responses when you say you will and focus on leaving a good impression
on customers rather than chasing the next dollar.
If you need to give something for free to maintain loyalty and boost your
reputation, do it.
5: Focus on Inbound Marketing Rather than Outbound
Outbound marketing is, essentially, based around interrupting (or even
intruding upon) your customers' days: whether this is through TV ads,
non-requested marketing emails, unauthorized text messages, or pop -ups
on unrelated websites, su ch tactics seem to annoy more than entice.
If a member of the public receives so many intrusive ads from a company,
they will be left with a bad taste in their mouth, and as a result, they will
be highly unlikely to seek out your business anytime soon.
Inbound marketing (also known as “pull marketing”, rather than the
standard “push” -based practices employed by some companies) can be
much more rewarding and build trust with your customers.
How can you try this for your business? Create valuable content to s olve
clients' problems: blog posts, downloadable e -books, videos, podcasts, and
more can all offer helpful information (such as providing insights into
production processes, assistance with a particular piece of software, or
anything else relevant to your business).
If this material is good enough, customers may also share it with others,
leading more traffic your way and potentially boosting conversion rates.
According to research, inbound marketing costs an impressive 62 percent
less than outbound marketing on a lead -by-lead basis.
Building stronger bonds with your customers is vital to ensure longevity
and loyalty, so inv est time, effort, and resources into discovering what munotes.in

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77 they want. The more you can tailor your services and/or products to your
target demographic, the more of a return you are likely to receive.
5.6 WAYS TO ENSURE SUCCESSFUL STRATEGIC
ALLIANCES
Businesse s often work together on projects, Business Exponential, advises
entrepreneurs about the ways they can get off the hamster wheel and run
like a well -oiled machine. Her advice can often mean forming alliances
with other firms.
"Alliances can be tricky," Kau fman sighs. Alliances must foster mutual
benefits and can exist only as long as they are advantageous to both
parties. The concept of gaining a marketplace advantage by teaming up
with another company whose products or services fit well with your own
is no t only seductive, but it's also critical for an increasing number of
businesses.
Here are some rules of the road.
1) Identify the Need: "First, determine why you would work together,"
Kaufman points out. Do your companies have complementary skills or are
you adding extra capacity to each other? Understand the strengths and
weaknesses of each firm. Determine how the alliance fits into your
business plan. Be clear with yourself about why you're entering into the
partnership and what you expect to gain.
2) Evaluate Partners: Even when you know someone or get a referral from
a trusted advisor, researching a prospective partner is crucial. It's not just
the capabilities the other company brings to the table. You must feel
comfortable with the work style of the po tential alliance. Once you've
determined the other firm has complementary skills, it's critical that you
look objectively at management styles, work ethics and values, and
identify where potential clashes could occur. Key questions to ask:
 How are decision s made? Who owns the relationship with the client?
 Who is paying whom? If you're not in charge of payment, how fast
will they pay you and other vendors?
 What is the company's work ethic? At what pace is work done? Is it
similar to yours?
 How competitive or aggressive is the company? How does that
compare to you?
Answering these questions honestly leads to a better match. Some
companies, for instance, are known for their tight rein on employees or the
long hours they keep. If your work style isn't similar to theirs, you could
be headed for problems. While it's smart to get references from people
who have worked with your potential strategic partner, references often
fear legal retribution so they may not provide a full picture of the
company, commented Kaufma n. "Do a Google search to see if there are
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78 3) Establish Joint Objectives and Goals: Developing key objectives and
goals that reflect what both parties expect to gain is critical. Be sure that
expectations a re realistic in light of the resources both parties are willing
to put forth, and make adjustments as needed. Nothing sours an alliance
faster than the notion that one party is giving everything while the other is
getting a free ride. Strategic partnership s have to foster an environment in
which both parties gain something; otherwise, they're not partnerships.
4) Define Roles and Responsibilities: "Many problems can be avoided by
setting expectations upfront," Kaufman advises. Assess each company's
strength s, and define responsibilities accordingly – especially in the area
of management. Many alliances fail because of poor management
relationships, so document clearly what's expected. Be specific: Decide
how many people from each company will be involved in the alliance and
what their particular roles will be. Each party has to dedicate resources to
the relationship, and both parties need someone within their organization
who will champion the cause.
5) Develop a Good Communications Process: Clear communicati on is key
to creating an enduring partnership. "This is one of the key pieces that
often gets overlooked," said Kauffman. Disappointments and
misunderstandings can be avoided by establishing an effective process for
working with your partner. The relations hip must be developed to the
point where both parties can be honest when evaluating progress and
offering recommendations for improvement — both of which should be
done on a regular basis. For example, you might want to exchange weekly
sales reports.
6) Develop Conflict -Resolution Systems: An alliance is rarely a match
made in heaven. Misunderstandings, compromises, and disagreements are
natural. "Determine how you will voice them when you feel your partner
isn't responsive," said Kaufman. When misalignment s arise, resolve them
as quickly as possible. It's best to meet in neutral territory where both
parties can speak openly and honestly. Then, focus on creating solutions
rather than placing blame. Be prepared for the possible break -up of the
relationship. " Have an exit process worked out in advance."
7) Build on Trust: Strategic alliances are built on trust, dedication, and
mutual interests. They require the respect and interaction of people in each
organization. And, like good personal relationships, they r equire effort to
build. Once they're in place, however, you can count on them.
Each party has to feel that he or she is giving something and getting
something in return. If you haven't taken the time to think through how
both sides will benefit, don't purs ue an alliance at this time.
8) Demonstrate Commitment: The alliance needs to assume a position of
status and importance. Both partners must be willing to nurture and care
for it. This means that the top people in both organizations must be
supportive. The point of any strategic alliance should be to make an
impact, and you can't do that without active engagement at the top. It also
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79 willingness to go beyond contractual obligations. C ommitted partners
dedicate resources and energy, and face risks to make the venture work.
9) Be Patient: Strategic alliances take time to develop and maintain. When
you're starting, don't make judgments about potential partners if they seem
reluctant. Figu re out how to stand out from the crowd.
10) Formalize with an Agreement: A written document formalizes what
you have agreed to. It is an outline of expectations and protects you and
your alliance if those expectations aren't met. If a disagreement arises,
there is a document you can refer back to in order to get the relationship
back on track.
5.7 BUSINESS ALLIANCE BREAKING
Partnerships are great, but the needs of your organizations might not
match up forever Sometimes the strongest of alliances simply don’ t last —
even when there’s a clear industry benefit to keeping a united front.
According to a recent global survey on post -merging integration carried
out by A.T. Kearney almost 70 per cent of the mergers world -wide have
failed to achieve the expected benefi ts and create value for the companies
and their shareholders. In South -east Asia, the proportion of success of
mergers is only 24 per cent.
The study covering all 1,000 significant mergers of $50 million and above
in the past ten years looked at key parame ters like market capitalization
and profitability prior to the deal and two years after the deal was closed.
The survey noted that if a merger was unable to deliver the expected
benefits within 18 -24 months, the likelihood of its ever delivering them
went down.
According to the study, mergers failed to yield the expected benefits
because of execution rather than strategic resources. As much as 58 per
cent of the respondents identified under communication as the main
problem.
But other problems identified by the respondents in the survey included
too many compromises in the new organisational structure, inadequate
strategic thinking, absence of master plans, lack of momentum, lack of top
management commitment and lack of speed in implementation.
Many more rea sons may be ascribed to failure of alliances. However, the
true causes of alliance failure can often be hidden behind their partnership.
This is possible particularly when the skills and competencies of one of
the partners are tacit and deeply embedded in complex organizational
process making it difficult to learn or emulate while those of the other
partner are explicit and embodied in specific individual machines or
drawings making it easy to emulate.
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80 the partners forget about any positive relationship evolving. For all
outward appearances, both Apple and IBM made every effort to convey
that both ingredients wer e present in their blossoming strategic alliance.
Cultural assumptions can sometimes make it very difficult to recognize or
acknowledge who has formal decision rights. For example, when Honda
invested heavily in an extensive relationship with British autom aker
Rover, workers and managers of the two companies developed very
positive working relationships for more than a decade.
Another strategic aspect of alliance planning is to identify and choose the
most potent partner. While doing so, due consideration n eeds to be
accorded to the partner’s expectations, business processes, financial,
technological, managerial and marketing strengths, and its behaviour so as
to ensure that the partner’s aspirations are in sync with those of the firm
and his business streng ths complement and supplement the firm’s existing
competencies leading to synergistic benefits to the alliance venture.
Such an analysis will result in evolution of commonly agreed vision,
mission, corporate objectives and strategies for the realization of which
alliance partners would be striving relentlessly. Alliance among BPL,
Birla, AT&T and Tata, for example, has had shared vision of creating
mobile giant.
This project provides opportunity to the partners to work together and
learn from each other and furnishes basis for measuring performance.
There should be an agreement between the partners regarding the
resources -financial and physical -to be deployed by each partner in the
venture. Issues like ownership and management should be settled so as to
avoid any possibility of break out of the alliance in future.
Specific agreement has also to be made about the continuing independence
for the alliance partners. This will maintain and deepen the relations.
These details along -with others should be gingerly di scussed and finalized
otherwise alliance may soon be found in deep trouble.
So as to ensure that the alliance works successfully, the management
should evolve suitable structure, develop effective communication system,
design appropriate incentive system a nd secure commitment of the
organizational people. So as to effectuate alliance strategies and realize the
vision, stunningly alacer and agile structure, that meets the needs of the
alliance and not the needs of individual partners needs to be developed.
5.8 REASONS FOR ALLIANCE FAILURE
Earlier research indicates that alliances fail for a variety of reasons:
 Differences in culture
 Incompatible objectives
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81  Poor alliance leadership
 Overestimated mar ket potential
Proper preparation, alliance management & communication can prevent
most of these reasons. The ASAP report hints to the fact that ASAP
members have a better success rate than non -members do. These
companies have made investments in building u p the skills and
competencies before approaching alliances. Subsequently, they create and
manage alliances in a structured way, often based on an alliance life cycle
based methodology.
Also, the report shows that companies new to alliances, and hence less
experienced, potentially have a higher failure rate than organizations with
an established, experienced alliance management capability.
5.9 CASE STUDY: THE STRATEGIC ALLIANCE
BETWEEN RENAULT AND NISSAN
Renault and Nissan are two major automobile brands wo rking
independently as well as are in a 19 -year old alliance where Renault holds
43.4 percent stake in Nissan and Nissan owns 15 per cent in Renault. The
Renault -Nissan Alliance is the first of its kind involving Japanese and a
French company. Renault w as identified for modern design and Nissan for
the excellence of its engineering. The two companies had just decided to a
most important strategic alliance in which Renault would take for granted
$5.4 billion of Nissan’s Debt in return for a 36.6% equity s hare in the
Japanese company. Before the alliance it was concluded that the combined
company would be the world’s largest car -maker.
In the case of Renault -Nissan, it is preferable to have an alliance than
merger for many reasons. Alliances would facilitat e more than mergers the
entrance for companies to new geographical phases where there are some
restrictions on foreign investments. The two companies had their own
capabilities in their own market. Renault for instance, already existed in
Europe and North America, and was well -known for its design and
marketing. At the same time Nissan was the powerhouse engineering in
Japan, Europe and North America. Therefore, there was a good chance for
Renault to enter the Japanese market where there are many barriers f rom
the Japanese government.
synergy however, is vital for alliance. Alliance would be more rational
when the two firms look for further synergy in their financial,
technological aims. This synergy between two companies was the key
element for choosing Ni ssan-Renault alliance. According to Carlos Ghosn,
the manager of the Renault -Nissan alliance: “we said from the beginning
that we were not looking for a merger, but rather to get greater value from
synergy between the two companies”. According to Ghosn, th e reason for
choosing alliance rather then merger was that both companies were
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82 yet they chose it because they thought it would give them more
opportunities to develop.
However, despite the advantages Nissan -Renault gained from the alliance,
they faced challenges. One of the challenges is whether the alliance would
lead to an increase or decrease in the price share. This was a real challenge
for Nissan, whose share price fell when it ent ered the alliance.
Furthermore, the two companies had a challenge of cross -culture
problems. However, with their ability to focus on the work objective they
were able to succeed.
5.9.1 Renault: Before and After the Alliance
The alliance between Renault an d Nissan was an outstanding paradigm of
a successful alliance around the world. However, before 1999, the
prospective of forming an alliance between these two firms was not such
rosy.
From Renault’s point of view, various factors were strengthening the
former opinion. Firstly, Renault was recovering during 1996 and 1998 -9
turning losses of US$680 million into combined profits of US$1.65
billion. Moreover, the failure to merge with Volvo in 1995 had left its
mark on the company and any further attempts to a new alliance were
confronted distrustfully. In addition, the fact that both firms were playing
a dominant role in the auto industry of their countries was indicating that a
potential alliance was going to collapse in a decision -making stalemate.
Neverthele ss, the supporters of the latter argument were gainsaid. The
mutual benefits that they were going to absorb from the alliance laid aside
the potential problems and both parties focused on the success of the
alliance. This was a crucial challenge, which the y managed to handle by
learning to trust each other, be truthful and honest during the negotiations.
Additionally, by forming joint study teams, in order to test their
companies’ ability to work cooperatively, they minimized the cultural
stereotypes and se t the base for exploiting joint synergies. The two
companies were so complementary in terms of geography, product ranges
and personality that inevitably the future was foreboding promising.
Besides, this process gave Renault an advantage over competitive s uitors
such as Ford and Daimler -Chrysler , which focused only on finding
synergies on past and current advantages rather than on a prospective
productive future.
On this basis, Renault, through the alliance with Nissan, achieved to gain
international structure which enabled it to de al successfully with the
changes which were taking place on the world automobile stage. Thereby,
Global synergies and the expansion of its production to foreign , until
then, markets like Japan, North America and Asia enhanced its potential
and made it a c ountable member in the auto industry.

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83 5.9.2 Nissan: Before and After the Alliance
Nissan’s history starts from the early of 1933. Nissan is a Japanese
automobile manufacturer which achieves, through the years to have strong
market presence in Asia and US . Except for the fact that Nissan was a
highly emblematic symbol of Japan’s industrial strength, had also a
number of strong points such as technological and engineering
competence, and also was good at making large cars.
In late March 1999 Nissan and Rena ult sign an agreement for a Global
Alliance. Aim for this agreement was to provide an advantage and achieve
profitable growth in both companies. However, Nissan was nearly
bankrupt and faced significant debt problem when the alliance formed.
One of the maj or reasons for this debt and financial difficulty was the fact
that Nissan invested a lot of money in different companies and this has a
result, Nissan not be in position to invest money in the company and its
products. Therefore the company for a long tim e did not have any profit
and this made the debt for Nissan in 1999 to reach the US $22 billion.
Furthermore, during the same year (1999), the domestic market share had
fallen from 17.4% to 13%.
Have in mind this and after that Daimler Chrysler and Ford re fused the
idea of a partnership and broken of the alliance talk with Nissan, the
company resorted to the strategic alliance with Renault, where both
companies had clear idea of what they wanted. The alliance was vital for
the two companies as Nissan needed Renault’s cash in order to reduce its
debt problem and Renault wanted to learn from Nissan’s success in US
and Asia which was essential for the expansion in its market. During the
period of social initiation process, of six months, many advantages arose
over competitors as they carried out static analytical evaluations and they
focused on finding collaborations based on their past and current strengths
rather than on jointly future.
In order to accomplish this, Nissan had change significantly to redeem its
profitability and competitiveness . First Nissan quit the investments in
other companies, in other words the keiretsu which is “a Japanese
traditional rule” that requires all the companies in Japan to have long -term
purchasing relationship, intense collaboration and frequent exchange of
personnel and technology between companies and selected suppliers. The
personal management also had changed and whereas Nissan in the past
appraised their employees based on the period that they were working for
the company, now they changed the criteria of evaluation by looking on
the performance of each employee . Further they set up a common
language i.e. English and they have created nine Cross -functional teams.
By the implementation of the above changes, Nissan manage to cut down
in purchasing cost, to reduce suppliers, to close overlapping outlets and
plants and finally to reduce the work force.
Through the alliance of Nissan and Renault, the benefits that arose were
obvious and determinant. Transparent bench -marking allows two
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84 platform and shared purchasing strategy had delivered huge cost of
savings . Noticeable is the fact that in order to preserver corporate
identities they decide to remain as separate managements, separate brands
and separate companies while every decision was affecting both brands.
The operation recommendation which arise from this alliance case provide
valuable elements on how two companies, that are in the same situation
like Renault and Nissan which show strength in different compete nce and
regions of the world (Nissan had strong presence in Asia and US while
Renault had presence in Europe), can approach the growing and
competitive auto manufacturing global market.
Therefore, the success of this alliance is also interrelated with the synergy
among the two companies and the framework of equality help the transfer
of knowledge between foreign engineering teams.
5.10 POINTS TO REMEMBER
 Strategic information system provides a connection between
demands of organization and latest informati on technology . This
tactic helps an organization to get hold of the market by utilizing
Information tech to meet its challenging requirements to the
continuous variation in the corporate environment
 Strategy = Formulation of basic organizational missions, purposes
and objectives; Policies and program strategies to achieve them; and
the methods needed to ensure that Strategies are implemented to
achieve organizational ends.
 Customer bonding is the process through which a company gets
closer to its customers; the goal is to make customers feel welcome,
valued, and heard at all times.
 Customer retention is vital to any company because a loss of
customers equals a decline in revenue; losing too many customers
could mean the demise of a company.
 Setting up a cust omer feedback page on a website or a telephone
system with a customer service agent enables customers to
express concerns or ask questions and to feel heard and valued.
 Alliances must foster mutual benefits and can exist only as long as
they are advantageo us to both parties.
 Strategic Alliances help both the entities in agreement to
gain/leverage from the expertise possessed by another one. Since it
does not necessitate the creation of a new entity, both the entities can
continue to undertake their core act ivity independent of SA. Entering
the right kind of SA reduces the costs and, in a way, enhances the
shareholders’ value.
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85 5.11 QUESTIONS
 Study and discuss the Alliance between any two companies.
 What is strategic Alliance?
 How customer Bonding is importan t for Business Growth?
 What Factor’s for Breaking business Alliance?
5.12 REFERENCES
 Strategic Management and Business Policy: Globalization,
Innovation and Sustainability | Fifteenth Edition | By Pearson
 Strategic management author: pearce
 Management Inf ormation Systems: Managing the Digital Firm
by Kenneth Laudon (Author), Jane Laudon (Author)
 https://www.wiley.com
 https://www.academia.edu/9464635/Strategic_Roles_of_information_
Systems_Introduction






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86 6
BUSINESS PROCESS REENGINEERING
PROCESS
Unit Structure
6.0 Objectives
6.1 Introduction to Business Process Reengineering Process
6.2 Business Process Re -engineering Steps
6.3 What are the Advantages of Implementing BPR in your Business?
Benefits
6.4 Busin ess Process Reengineering: Benefits and Challenges
6.5 Challenges that impact the implementation of business Process
Reengineering include:
6.6 Examples of Business Process Reengineering
6.7 What Is a Virtual Business?
6.8 How the Business Process Reengine ering works? | Methodology
6.9 Pros and Cons of Virtual Businesses
6.10 How does internet technology improve customer service
6.11 Strategically Building Knowledge and Creating Company
6.12 Seven Knowledge Levers
6.13 Creating Successful Knowledge Strategi es
6.14 Strategic challenges
6.15 E -Business Applications for business competitive advantages
6.16 Points to Remember
6.17 Questions
6.18 References
6.0 OBJECTIVES
 To understand the Concept of Business Process Reengineering Process
 Explanation of How Busi ness Process Reengineering works?
 Challenges that impact the implementation of business Process
Reengineering
 What Is a Virtual Business?
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87 6.0 INTRODUCTION TO BUSINESS PROCESS
REENGINEERING
Business Proces s Reengineering involves the radical redesign of core
business processes to achieve dramatic improvements in productivity,
cycle times and quality . In Business Process Reengineering, companies
start with a blank sheet of paper and rethink existing processe s to deliver
more value to the customer.
Business process re -engineering (BPR) is the act of changing an
organization’s major functions with the goal of increasing efficiency,
improving product quality, and/or decreasing costs. This starts with an in -
depth analysis of the business’ workflows and identifying key areas that
need improvement. People who do this kind of work, often referred to as
BPR specialists, are hired by companies to facilitate transitions to more
standardized processes.
Business process r e-engineering definition is fundamental rethinking and
redesigning of business processes so as to attain vivid improvements in all
the critical aspects like service quality, process outcome, cost, and process
speed.
Business process reengineering (BPR) int ents to cut down the enterprise
costs and reduce the redundancies and repetitions within the process on a
large scale. Business process reengineering gained popularity in the world
of business in the 1990s. The concept was introduced inspired by an
article called ‘Reengineering Work: Don’t Automate, obliterate’,
published in the Harvard Business review by Michael Hammer.
He developed this concept because he observed that most business houses
were integrating new technologies with the pre -existing fundamenta lly
inefficient processes. Nobody even bothered to think of creating
something new and different, based on the advanced new technologies.
They used technology just as a means to automate their existing systems
and processes, rather than modifying anything in the process. This can be
thought of as using technology in order to “upgrade” a horse with lighter
horseshoes to make them run faster, instead of building a car.
The process of Business Process Reengineering (BPR) start just with a
blank sheet of paper, where you rethink and observe everything about the
existing processes to make it more value -aided and beneficial for
customers.
This new system is primarily focused on increasing emphasis on the
customer needs and values. organizations work to minimize th e layers
within an organization and cut down the unproductive activities in two
major areas:
1. Redesign and redraft functional organizations into cross -functional
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88 2. Effectively use technology for the improvement in data distribution
and decision -making.
And more and more technological advancements every day, BPR is
gaining a lot more popularity and relevancy with each passing day.
5.2 BUSINESS PROCESS RE-ENGINEERING STEPS
business process re -engineering is not an easy task to perform. BPR works
to chang ing the complete course of the said processes at the core. This
makes it extremely risky, laborious, costly and time -consuming process.
You need to be capable enough to manage and carry out each and every
step carefully and successfully. You may face many failures in your
attempts to make a reasonable and beneficial change in the processes.
Here are certain steps to follow for efficient Business Process Re -
engineering:
 Step #1: Identify the Need for Change and Communicate
For small startups, this step is pr obably very easy. You can go for BPR
when you realize that your product is receiving a huge user drop -off rate.
Then, the next thing to do is informing the co -founder, suggest a direction
to spindle and you are good to go for the further steps.
For a large business, the first step is the biggest hurdle itself. You will
always find individuals who are satisfied and happy with the existing ways
of working. These individuals can be both, from management side and the
employees. The management will most probably be afraid of getting their
investments sunk, and the employees might see it as a job security threat.
Before anything else, you will have to make up their minds and convince
them why the change is required for the firm. This shouldn’t be difficult if
your company isn’t doing well.
Perform a thorough research and try answering these questions in case of
dilemma: Which of the processes might not be efficient? Where are you
lagging behind of your competition? Are you even part of the competition
or is the con dition worse?
 Step #2: Build a Great Team of Experts
Business process re-engineering demands a team of highly motivated, and
skilled team of individual s who has the potential to carry out all the
needed steps involved.
The team of experts majorly consists of:
Senior Manager : For supervision and calling out the shots for taking
major decisions. If your BPR team doesn’t have anybody onboard from
the senior management, then they will have to get their approval for every
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89 Operational Manager : He is the one who is aware of the ins -and-outs of
the process. Their process knowledge can prove to be a great asset to build
a new, effective and more eff icient process.
Reengineering Experts: They are the ones who expertise in the field
from IT to manufacturing. They will discover where and how the right
changes should be implemented to yield the best outcomes. The changes
might be anything – software, wor kflows, hardware, etc.
 Step #3: Define Key Performance Indicators (KPI) for the
Inefficient Processes
After the team is ready and you are all set to launch the initiative, there
will be the need to define the correct Key Performance Indicators (KPIs).
BPR is introduced to optimize your process. Formulate BPR strategies that
can bend as per your business requirements and, not the other way around.
KPIs usually differ a lot depending on the type of process you’re
optimizing. And the following are the most typ ical ones:
Manufacturing
Cycle Time – The total time taken from initiating to concluding a process.
Changeover Time – Time in between required to shift the line from
making one product to the next.
Rate of Defect – The total percentage of defective product s manufactured.
Inventory Turnover – The time taken in the manufacturing process to
convert inventory into products.
Planned VS Emergency Maintenance – The proportion of the times when
planned maintenance and emergency maintenance happened.
IT
Mean Time to Repair – The average time spent to repair the app, software,
or system after any emergency.
Support Ticket Closure rate – The ratio of number of support tickets
closed by the support team to the number opened.
Application Development – The time spent on c ompletely developing a
new application from the scratch.
Cycle Time – The time required to get the network back up after a security
fissure.
Perform business process mapping to know exactly where the KPIs need
to be defined in the individual processes. Use the step -by-step strategy to
perform BPR effectively.
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90 You can map out the processes using 2 ways:
1. Process Flowcharts – It is the m ost basic technique. Just grab a pen
and a blank paper and jot down the processes stepwise.
2. Business Process Management (BPM) Software – Technology makes
anything easy! Using a BPM software for process analysis makes
everything clearer and easier to work w ith.
For example, you can use BPM software, process digitization, setting
deadlines, etc. Such software will most probably lead you to optimize the
said processes since it allows easier collaboration among the employee s.
 Step #4: Reengineer and Compare KPIs of the Processes
After the all the above steps, it is important to perform A/B testing to
check the working and efficiency of the new process. Start by
implementing the modifications and solutions on a significantly small
scale.
Now all you are left to do is – put up your theories into practice and see
how the KPIs are holding up. Once you realize that the new solution
works better, and start scaling the solution gradually. Eventually put it into
action within other c ompany processes as well.
If the new solution doesn’t prove to be that fruitful, then you need to start
the process all over again. The cycle of finding loopholes and solutions to
them repeats until you form a desirable, effective process.
5.3 WHAT ARE THE ADVANTAGES OF
IMPLEMENTING BPR IN YOUR BUSINESS?
|BENEFITS
There are many benefits of business process re -engineering to your
business. Some of them are as follows:
1. Cost -cutting and reducing cycle times
Business Process Reengineering eliminates all the un productive and futile
activities within an organization. This drastically reduces the costs and
cycle times for the employees performing them. With team reorganization
the need for management layers is eradicated.
This also enhances the flow of information eliminating the errors and
rework efforts required due to multiple handoffs.
2. Improve work, product and service quality
Business Process Reengineering minimizes work fragmentation and
establish clear responsibility and ownership of the processes. This impa cts
the overall process effectively. Performance measurement can be
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91 Let’s look at some of the tangible benefits of business process re -
engineering :
 Integration within the organization.
 Empowered employees.
 Reduction in the process steps.
 Natural order of process steps followed.
 Process transparency increases.
 Drastic reduction in the manufacturing costs.
5.4 BUSINESS PROCESS REENGINEERING: BENEFITS AND
CHALLENGES
Business Process Reengineering can be defined as the process of
recreating a core business process with the aim of improving the
product/service output, quality and reducing wastage and cost
incurred.
What exactly it involves is the analysis of company workflows, finding
processes that are not meeting the requirements or inefficient which
you are attempting out ways to get rid of them or change them.
With pandemic hitting every business hard, organizations of all sizes
and types are faced wit h intense competition. To stay afloat in this
competitive environment, these organizations look for the way out to
increase efficiency and improve their bottom line by turning to process
improvement through Business Process Reengineering.
Business Process Reengineering can be as simple as shaping unclear
processes and continually looking for areas of improvement and
making critical changes which can be as complicated as reengineering
ventures.
Let us dig into some of the benefits of Business Process Reengin eering
implementation:
 Flexibility
The only thing that is permanent is change and even organizations fall
in this criteria and are regularly faced with the need for change.
Changes may become essential because of many reasons like new
regulations, technolo gical innovations, market demands or the advent
of new ways of working.
One of the key features of Business Process Reengineering is that it
promotes the design of processes with minimum costs. Most of the
related processes can be easily customized to suit the requirements of
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92  Enhancement of Productivity
Business Process reengineering focuses on the automation of a lot of
repetitive elements within regular business workflow. The business
process improvements basically include removal of pr ocess
bottlenecks, initiation of parallel processing, and complete elimination
of redundant steps. All these improvements can be easily achieved
with Business Process Reengineering, which will thereby allow
employees to spend more time on important activit ies. Since the
support functions have been handled, it can result in increased
productivity and reduced waste.
 Reduced Risks
The visibility of business processes in the business process
reengineering allows for concentration on inefficiencies. It gives
organizations the opportunity to work more efficiently whereby they
can save their resources. Business Process Reengineering is also
responsible for the creation of better - designed, executed and
monitored processes which tends to reduce the operational risks like
fraud.
 Transparency
There are certain industry regulations which the organizations need to
comply with. Business process reengineering ensures that the
organizations remain transparent and implement the regulatory
requirements at ease through which d elays in compliance and any
associated fines and penalties can be prevented. When you integrate
compliance into the process life cycle, you automatically make the
organizational processes transparent and visible to all your employees.
 Employee Contentment
Business process reengineering removes a lot of red tape in the
organizations, thereby allowing employees to focus 100% on their
work. This process automation eliminates a lot of repetitive work
which again makes access to information easier and results in
increased productivity and a happier workforce.
 Improved Customer’s Attention
With simplified processes and increased productivity, employees get
enough time to focus better on the customer. The employees will be in
a better position to respond to custome r’s proposals instantly, build
solutions faster and customize their requirements. Business process
reengineering is responsible for bringing people and technology
together that again in a way, increases customer satisfaction. Also,
employees are able to de liver the right results for customers and
related stakeholders.
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93  Consistency
With Business Process Reengineering, every task can be executed
exactly the way it was planned and designed. There will be no
requirement to reinvent the wheel as similar problems can be
addressed in the same way even if the roles get changed. Also,
exceptional situations and responses are noted down to ensure that
they are handled appropriately.
 Durability
With the change in the organizational conditions, the business
processes re quire to adapt to those changes and deliver the expected
results. Business Process Reengineering helps in smooth adaptation
while maintaining control and managerial oversight as well.
 Evaluation
Processes, when measured and evaluated end -to-end and compare d to
the expected results, can help in managing people well. Business
Process Reengineering provides reporting and analytical tools which
can help in making executive decisions. It also helps in streamlining
and quantifying processes that can help the orga nization to optimize its
workflows.
 Integration of Technology
Business Process Reengineering bridges the gap between users and IT
by using various standards of business process management. The focus
should always be on processes and not on applications tha t support
them.
5.5 CHALLENGES THAT IMPACT THE
IMPLEMENTATION OF BUSINESS PROCESS
REENGINEERING INCLUDE :
 Lack of knowledge
The team you are working with must be clear on where to implement the
reengineering processes and apparently why. Proper prioritizati on of
different business process for reengineering must be considered .
The employees must be trained appropriately or retouched with
substantial business process reengineering programs to gain the
required knowledge in the field. In case the implementation is done on
wrong processes, it could result in wastage of resources. The business
can see the correct process implementation only through proper
training, guidance and knowledge transfer.
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94  Irregularity throughout the implementation and opting wrong
direct ion
Business Process Reengineering cannot be carried out with an instant
competitive advantage. The entire process must be followed bit by bit
for the visible growth. But this does not adhere that reengineering has
to be done for every process in the organ ization, there might be some
exception where it is not suitable.
Also, once the company achieves the desired benchmark, the business
process reengineering practice should not be discontinued because an
irregular reengineering process can hinder a lot of op portunities and
growth that comes along. There should be predefined objectives and
expectations in place.
 Inappropriate Team Formulation
A constant look must be put on for latest updates, if any, by the well -
defined team on various process reengineering pr actices. Not just the
correct knowledge but the inclusion of the right set of the team is vital
both for the operation and management.
The team must be properly structured in which at least a senior or
operation manager be allocated who is expert in busine ss process
knowledge. You can complete the team with experienced engineers for
every single field such as from manufacturing or IT. This will enable
constant supervision in the right set direction.
 Wrong placement of resources
Lack of essential resources c an completely disrupt the bridge between
the organization and the reengineering process, so getting this right is
the first step. You must see to it that proper resources are readily
available when there is a requirement.
The list of things you must check beforehand is skilled human
resources, sufficient funds, correct set of Business process
reengineering tools, vast knowledge of the processes, experienced
players in the system, timely approval and you are good to go.
 Faulty analysis and lack of support fr om team members
The process milestones should always be analyzed and established in
advance. You must ensure that the data and essential information for
the procedure is accessible to the entire team. Make the team abreast
of the priorities so that the wor k is well -coordinated without wasting
any time.
The work carried out must be relevant, and the team members should
be more transparent on why a specific process is required instead of
focussing on how the process can be undertaken. Often businesses face
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95 The responsibility lies on the organization as a whole and not just the
Business Process Reengineering team for a particular decision made.
Hence, it can be precisely said that failure may b e the result of lack of
organizational readiness for change, lack of purpose to move past the
traditional methods and age -old comfort zone, lack of commitment,
leadership and efficient planning.
When employees in the company are not skeptical about the Bus iness
Process Reengineering success only then, they can develop
understanding toward working on a particular goal.
5.6 EXAMPLES OF BUSINESS PROCESS
REENGINEERING
The past decade witnessed significant changes in the technological
front, and with the pandemi c, the development of new technologies
became more evident. Many companies started carrying out business
process reengineering activities. While there are a few catastrophic
business reengineering examples, there are successful examples too in
history. For d, an automobile manufacturing company, is one of the
famous among all.
The American automobile industry was undergoing a phase of
depression in the year 1980. As a cost -cutting measure, Ford decided
to scrutinize some of its departments in search of ineff icient processes.
In the process, they found out that their accounts payable department
was overly crowded, consisting of around 500 people which was not at
all required.
Ford management then outlined their goal and decided on to reduce
clerical staff in t he account payable department. Launching of
Business Process Reengineering enabled them to figure out the reason
why that particular department was overstaffed.
They analysed the workflow and completely recreated the process
digitally and warded off the ol d manual payable process.
Similarly, you will find that large banks like HDFC vamped off the
clerical staff by introducing Chatbot named EVA, which was India’s
first and largest artificial intelligence -powered banking chatbot to
serve customers in a better way.
Eliminating the unwanted processes and introducing new initiatives is
what Business Process Reengineering is all about.
5.7 WHAT IS A VIRTUAL BUSINESS ?
A virtual business is any business that conducts all or most of its business
via the internet. It may or may not have some kind of physical presence —
such as an office or warehouse —but there isn't a physical location that
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96 Here are the basics of virtual business, some examples of industries that
are particularly well -suited to go vir tual, and the pros and cons of making
the switch.
A virtual business is one that focuses on its digital capabilities to scale
back its physical presence. While virtual businesses are united in their
efforts to move work online, they all retain different le vels of physical
operations.
In the most extreme example, all employees work virtually, and the
"headquarters" is wherever the CEO lives. In less extreme examples,
virtual businesses may still have a headquarters where employees work, or
they may have a wa rehouse where employees prepare packages to ship to
customers.
At a bare minimum, virtual businesses are defined by the lack of a
physical location where customers can interact with the company face -to-
face.
As anyone who has worked in an office can attest to, the vast majority of
work can be completed with a computer. Virtual businesses take
advantage of that by trimming unnecessary costs. This could
include outsourcing nearly all of its business functions such as product
development, marketing, sales, and shipping.
One of the easiest costs for many companies to cut is the overhead that
comes with retail space. Businesses can sell their products online for a
fraction of the cost that would come with opening a physical retail store.
Therefore, it's not surpr ising that virtual retailing is the most common
form of virtual business. The earliest examples of consumer -facing e-
commerce might be traced back to CompuServe's Electronic Mall, w hich
was unveiled in 1984.1 In 1994, the introduction of SSL security protocols
made it much easier for the average consumer to stay safe while using
their credit card to buy things online.2
The flurry of commercial activity swelled into what became known as the
Dot-Com Bubble, b ut even after that bubble burst, companies like
Amazon, eBay, and Priceline persevered.3
While the shift to virtual in the retail industry has been among the most
noticeable trends of the digital era, many other industries are making the
same leap. In gen eral, the more work that's done on a computer, the easier
that business can shift to a virtual business, so the IT sector has embraced
many aspects of virtual business.
Software development firms commonly hire developers who don't live
near the company's h eadquarters. They complete their section of code
from home, send it to colleagues, and communicate about projects via
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97 Customer service centers have another business model that lends itself to
virtual business. Customer service representatives can answer calls and
emails from home.
5.8 HOW THE BUSINESS PROCESS REENGINEERING
WORKS ? | METHODOLOGY
Business Process Reengineering (BPR) is a sensational initiative for
change. Its methodology is based on five core areas, which a re laid as
follows:
 Refocus: Align company values with the customer needs and demands.
 Redesign: Draft and design core processes to enable improvements
using information technology (IT).
 Reorganize: Convert individual teams into cross -functional teams to
hold up end -to-end responsibility of a process.
 Rethink: Think about the basic organizational needs and issues people
facing with the current system.
 Improve: Keep in mind all the business processes across the
organization and work to improve them.
5.9 PRO S AND CONS OF VIRTUAL BUSINESSES
Pros
 Brick -and-mortar cost savings
 Flexibility
 Happier employees
 Larger employee base
Cons
 Lack of institutional cohesiveness
 Potential communication issues
 Increased likelihood of lost productivity
Pros Explained
 Brick -and-mortar cost savings : Reducing the need for employee
workspace and retail space saves money on overhead costs
associated with physical businesses —also known as brick -and-
mortar businesses. These costs include commercial building leases,
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98  Flexibility : A less rigid organization can react faster to changes in
the marketplace.
 Happier employees : Working from home creates a
better work/life balance for staff.
 Larger employee base : Since employees can work anywhere,
organizations can provide employment in rural locations or areas
of high unemployment.
Cons Explained
 Lack of institutional cohesiveness : Employees being located in
diverse regions, with po ssible language and cultural differences,
can cause a lack of cohesive company identity and culture.
 Potential communication issues : A lack of face -to-face
interaction between employees and teams can cause
communications -related issues.
 Increased likelihoo d of lost productivity : It's harder to ensure
consistent productivity from employees who lack self -discipline
when they're working from How can internet technology improve
business processes?
It’s no mystery that technology has brought impressive changes. Most
businesses wouldn’t be able to run profitably without keeping up with
changing technologies. But with internet and information technologies
changing and developing constantly, you need to know what technologies
are available to help your business work more smoothly and generate
higher income .
The internet hasn’t only changed the ways that business’s function, it has
also changed the ways people think. Consumers interact with brands and
products differently to how they used to. Marketing has had to adap t very
quickly over the past few decades as new avenues have become available.
And businesses have had to change the way they function, interact with
clients, and network in order to keep up.
Internet technology, when used correctly, will allow businesses to
implement faster and more efficient processes. From strategising to
marketing and beyond, internet technology covers every aspect of
business. This guide will help you understand what internet technologies
are available, how they help businesses, and ho w you can use them to
improve your business processes.
With a better understanding of what internet technology is, we can start to
apply it to business processes to improve business functionality. But to
apply it properly, we need to fully understand busi ness processes.
A business process is a series of steps carried out in any business to
achieve a goal. These can be written into policy, done out of habit, or
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99 In larger businesses, t hese processes are broken down into smaller parts
with different employees working on individual steps. In a small business
or start -up, processes may be completed from beginning to end by the
same person.
Once you have broken your process down into steps, you can start to see
how each step can be made more efficient. This is often a good starting
place when self -auditing your business to improve productivity. It is also
the best place to start when looking for ways to introduce new internet
technologies. T his is because different software, programs, apps, and
developments will have been created to help specifically with different
steps in the business process.
With so many capabilities, the internet has many uses – not all of these
will be beneficial to you r business. Some internet technology will also
benefit some business while being redundant in others. It all comes down
to your business and what your business truly needs.
Some of the more popular internet technologies for businesses include:
– Communication tools: Especially with people working from home,
communication tools including chat functionality, shared timelines or
project goal maps, and video conferencing have all become vital to a lot of
businesses. Online communication allows a more n atural flow of
communication than phone calls or emails alone. A lot of software has
also been created specifically for businesses and allows colleagues or team
members to see when someone is busy, if they’re on a call, or if they are
available to chat.
– Shared files: sharing documents in cloud storage allows multiple
people to access the same data in real time and see changes as they are
being made. This can clear up a lot of confusion and save time when it
comes to looking through multiple versi ons of the same document to find
the most up -to-date one.
Social media: Once viewed as a sap on time in the office, the business
world has changed its view on social media and now recognises the vital
role it can play in market research, increasing custom er interaction,
boosting conversions, and improving brand recognition. Most social media
platforms also offer business capabilities designed specifically to help
businesses use their platforms to become more efficient and profitable.
– CRM softwar e: Managing databases is much safer online because
developers can put far more defences into their software and keep them
updated. Online CRM also allows you to store more information, know
that it is GDPR and data protection law compliant, and rest assure d that
there is backup in case you lose any information. Stored information is
also easier to find which makes business run more smoothly and customer
relations more manageable.
– Market research: with online quizzes, surveys, and interaction tool s
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100 exactly who chooses to interact with your business, how long they stay on
your page, or ask them for opinions on your product. Gathering the data
and compiling it is easier and larg er datasets can be gathered than is
possible with in -person market research.
How does internet technology improve productivity?
In business processes, one unproductive or slow step can slow down the
whole process, jeopardising projects and timelines.
Inter net technologies allow supervisors to monitor how staff are spending
time, what they are working on, and how work is progressing. There are
multiple task management tools available to help you track daily, weekly,
and monthly responsibilities and targets t o keep your team on track.
You can also use various technologies to set up reminders and prompts for
certain tasks. This helps you and your staff stay on top of emails and other
daily tasks while still making space for unique projects.
How does internet te chnology improve flexibility?
Within your business process there is always flexibility. If your systems
are too rigid they won’t allow for unexpected changes and will break
down when challenges arise. Every step in the process requires a certain
level of f lexibility and adaptability.
Internet technologies have brought in flexibility in numerous ways, the
most obvious being in the way people work. A decade ago most
workforces would have needed to work from the same building and at the
same time for business to run smoothly. With new internet technologies,
those same workforces can work from anywhere and at any time and still
be as productive – if not more – than they were before. This kind of
flexibility works in both the business’ and the employees’ favour, and that,
in turn, gives better service to your customers.
With improved communication, there is also more scope for quick
adjustments to any aspect of work. Queries can be dealt with more
efficiently, problems can be solved collaboratively and effectively , and
there can be more flexibility overall in the way your business runs.
5.10 HOW DOES INTERNET TECHNOLOGY
IMPROVE CUSTOMER SERVICE
No business can run without customers or clients, and customers are often
the focus of many steps in the business process . If customers are not at the
forefront of your mind when developing services and products, your
business is unlikely to be successful.
Internet technologies allow you to engage more meaningfully with
customers at all points along your business process. St arting with market
research and brand engagement and leading to after -sale and customer
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101 interact with businesses. Using technology like artificial intelligence
online chatbots, online cust omer support, and social media, you can help
your customers stay connected and feel heard. The simple act of making
your business available for interaction can often set you apart from aloof
competition.
More frequently now, people are turning to brands th ey trust. A large part
of that trust is built on a perceived relationship. Using internet technology
to improve overall customer service and communication will enhance your
business and lead to greater success.
How does internet technology improve marketin g?
Marketing is key in any business and a lot of time will be spent on
working out the best leads or most appropriate campaign. In bigger
businesses, entire marketing teams will be devoted to the marketing
process which includes properly understanding cust omer needs and
keeping abreast of changing trends and advertising opportunities. If the
marketing part of your business process breaks down, you are unlikely to
make sales and your business will suffer.
Internet technology has the advantage of being highly intuitive as well as
being able to gather and process mass data quickly and efficiently. With
these tools fully accessible to businesses, you can not only understand
your market, but very easily create marketing campaigns that target the
exact area of the market you are interested in – be it existing customers or
new market areas.
Software is available for building websites without existing coding
knowledge, and eye -catching graphic design tools are available for
creating promotional materials. In addition , most social media platforms
allow you to advertise for free, or give you the option of targeted
marketing for a fee. This means you can make the marketing work for you
on whatever budget you are operating on.
How does internet technology improve safety?
Keeping physical data is risky. Businesses that only use physical data run
the risk of losing information if it is not stored in at least two different
places in case of fire or other damage. Physical data is also often difficult
to handle and it can take a long time to pull up specific information,
especially if a lot of people are involved in the filing and handling of data.
With strict laws around data protection, it can also be difficult to properly
protect physical data.
Internet technology makes handl ing data easy and secure, which protects
your business and your customers. Advanced coding is used to restrict
access to files that need to be protected, while allowing a select few to
access the information that is needed. Software designed for business d ata
is also designed with an understanding of business and legal needs so you
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102 Most software also comes with encryption on passwords, files, and
messages. Encryption makes it difficult for hackers to access the
information that is stored and adds another layer of protection.
Because data is used in every step of any process, having the right
technology to gather, store, handle, and delete data can save you a lot of
time and a lot of money.
5.11 STRATEGICALLY BUILDING KNOWLEDGE AND
CREATING COMPANY –
Managing your company's knowledge more effectively and exploiting it in
the marketplace is the latest pursuit of those seeking competitive
advantage. Knowledge and other forms of 'intellectual c apital' are the
'hidden assets' in a company. They do not appear on the balance sheet in
annual reports, yet they underpin value creation and future earnings
potential. Knowledge intensive companies, like Microsoft and Glaxo
Wellcome, have market values at least 10 times the value of their physical
assets.
The Knowledge Advantage
How can companies use knowledge to secure a strategic advantage? In a
nutshell, its about generating greater value through the knowledge in
products, people and processes:
Knowledg e in Products : 'Intelligent' or 'smart' products can command
premium prices and be more beneficial to users. One example is the
'intelligent' oil drill that bends and weaves it way to extract more oil than
ever from the pockets of oil in underground format ions.
Knowledge in People : "Our most valuable asset", according to many
company reports, although the actual way they are treated and managed
often belies this. 'Learning Organisation' programmes, such as that at
Anglian Water, is one way of nurturing and applying underutilised talent.
Knowledge in Processes : In many companies there are often differences
in performance levels of 3:1 or more among different groups performing
the same process. Closing such a gap saved Texas Instruments the cost of
one new sem iconductor fabrication plant (a $1billion investment).
These are not the only ways that companies are creating strategic
advantage through knowledge but give a flavour of what is possible.
Others include active management of your intellectual property port folio
of patents and licences, and creating new businesses that exploit your
internally generated information and knowledge.
Two Thrusts of Strategy
What strategies are companies adopting to maximise the returns on their
knowledge asset? In a year long stu dy of international best practice two
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103 knowledge that already exists within the firm, for example by sharing best
practices. Very often leading managers comment: "if only we knew what
we k new". Too frequently people in one part of the organisation reinvent
the wheel or fail to solve customer's problems because the knowledge they
need is elsewhere in the company but not known or accessible to them.
Hence, the first knowledge management initi ative of many companies
(between a third and a half according to surveys) is that of installing or
improving an Intranet.
The second major thrust of knowledge focussed strategies is that of
innovation, the creation of new knowledge and turning ideas into v aluable
products and services. This is sometimes referred to as knowledge
innovation. Many managers mistakenly believe this is about R&D and
creativity. Our

research found no shortage of creativity in organizations. The real
challenge is not to lose these creative ideas and to allow them to flow
where they can be used. This needs better innovation, knowledge
conversion and commercialisation processes. This thrust of strategy is the
most difficult, yet ultimately has the best potential for improved company
performance. It is effective commercialisation of ideas that has taken
companies like Netscape and Formula One to multi -million dollar
corporations in just a few years.
The Knowledge Dimension
One of the practical problems of developing knowledge strategie s or
adding a knowledge dimension to other strategies is the complex nature of
knowledge. As we now know from many disappointing artificial
intelligence initiatives of the 1970s, you cannot easily package knowledge
into a black box and have it perform mira cles. A potentially worrying
trend about today's knowledge management movement is that IT
managers, information professionals and software suppliers are jumping
on the bandwagon and merely substituting the word 'knowledge' for
'information'. That is not to say that information is unimportant, since a
good IT infrastructure, good information management (in the library
sense) and effective information solutions, such as data mining, decision
support tools, document management and groupware, are essential
foundations. However, they do not go far enough.
The difficulty comes, not through handling 'explicit' knowledge, but 'tacit'
knowledge which is harder to express and codify. Very often the most
valuable knowledge that an organisation has is in the heads of it s people,
and those of its stakeholders, especially customers. However, "people
walk", so forward looking companies continually to seek ways of locking
it in to their organisation. The two complementary approaches are:
Converting it to a more explicit form - in documents, processes, databases
etc. This is often referred to as "decanting the human capital into the
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104 since it's the main emphasis of many European and US knowledge
programm es.
Enhancing tacit knowledge flow through better human interaction, such
that the knowledge is diffused around the organisation and not held in the
heads of a few. In Japan various 'socialisation' activities support this kind
of knowledge flow, that by it s very nature also sparks the generation of
new ideas and knowledge. Add some basic elements of good human
resource management, including a stimulating environment, personal
development plans, motivation and suitable reward and recognition
systems (such as knowledge sharing awards and stock options), then there
is less chance of your best knowledge workers wanting to leave.
6.12 SEVEN KNOWLEDGE LEVERS
Lever Key Activities Example
Customer
Knowledge Developing deep knowledge sharing relationships.
Understanding the needs of your customers' customers. Articulating unmet needs. Identifying new opportunities. Steelcase - an office products manufacturer has totally redefined its market into knowledge worker productivity through opening a customer knowledge channel from its product end -users into its R&D.
Stakeholder
Relationships Improving knowledge flows between suppliers, employees, shareholders, community etc. using this knowledge to inform key strategies. Toshiba collects comparative data on suppliers ranking 200 quantitative and qualitative factors. It has an active suppliers network and association where knowledge is shared and suppliers are integrated into future strategies.
Business
Environment
Insights Systematic environmental scanning, including political, economic, technology, social and environmental trends. Competitor analysis. Market intelligence systems. Smith Kline Beecham have evolved a virtual library that delivers market updates, patent information and a wealth of externally sourced material to the desk tops of its research scientists.
Organizational
Memory Knowledge sharing. Best practice databases. Directories of expertise. Price Waterhouse is typical of several consultancies who have knowledge databases to allow munotes.in

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105 Online documents, procedures and discussion forums. Intranets. sharing of company knowledge. In addition to the Knowledge View SM they have knowledge centres that provide human analysts and navigators. It helps them solve customer problems faster. Knowledge in Processes Embedding knowledge into business processes and management decision making. CIGNA made their best underwriting knowledge available as guidance screens in their computerised underwriting processes. This helped them turn a loss into a profit. Knowledge in Products and Services Knowledge embedded in products. Surround products with knowledge e.g. in user guides, and enhanced knowledge -intensive
services. Campbell Soup's "Intelligent Quisine" (IQ) delivers weekly packages of nutritionally designed, portion controlled meals to those suffering hypertension or high cholesterol. Knowledge in People Knowledge sharing fairs. Innovation workshops. Expert and learning networks. Communities of knowledge practice. Tetra Pak Converting Technologies has learning networks, where people from across the organisation, pool, update and develop their expertise in key technologies such as laminating and printing.

6.13 CREATING SUCCESSFUL KNOWLEDGE
STRATEGIES
The table shows domains of the business where the knowledge dimension
can be used a s a strategic lever, either to add value to products and
services or to improve organisational performance. For example, several
surveys show customer knowledge heading the list of an organisation's
most important knowledge i.e. knowledge of their needs, t heir relationship
with you, and mutually beneficial opportunities. Note that such a lever
goes far beyond the normal practice of customer satisfaction surveys.
However, as a strategist you will know that it is people and processes,
rather than the content of a strategy, that will determine its ultimate
success. Our analysis of organisations that exhibit best practice in
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106 Clear and explicit links to business strategy. Is the knowledge strategy
something separate or is it simply another layer or view of existing
business strategy? How does knowledge or know -how add value to your
business strategy? Conversely, what exploitable knowledge products,
processes or expertise emanate from your business s trategy?
Knowledgeable about knowledge - real understanding of the knowledge
advantage. How much is knowledge discussed in your organisation? How
well is it understood? Is the knowledge dimension a key element of every
product plan, marketing plan, strateg ic initiative, annual budget, and
personal development plan?
A compelling vision and architecture. Is the knowledge facet of your
business framework that guides management decisions? Would an
investor give you millions for your intangible ideas?
Knowledge leadership and champions. Are there enthusiastic proponents
of the knowledge agenda throughout your business? Does your CEO
visibly reiterate the importance of your organisational knowledge to your
business success?
Systematic knowledge processes. Do you h ave systematic processes for
capturing knowledge (both external and internal), organising it, and
sharing it throughout your organisation? Do you have processes that
enhance knowledge creation and innovation? Do you have policies and
procedures to protect your knowledge assets?
A well -developed knowledge infrastructure (both 'hard' and 'soft'). Are
people and information readily accessible through your computer and
communications networks? Do these networks extend outside the
organisation - to customers, su ppliers, and world -class experts? Can you
find what or who you want quickly and efficiently? Does your culture
promote innovation and learning? Are your organisation structures flexible
and adaptive? Are your personnel systems geared to recognising and
rewarding individual and team knowledge contributions.
Appropriate bottom line measures. Do you measure the contribution of
knowledge? Do you value your intangible assets? Do you balance
financial performance indicators, with non -financial measures that
under pin value creation? Do you measure knowledge flows? Do you use
some of the new metrics, like those in Skandia's Navigator or Karl Erik
Sveiby's Intangible Assets Monitor?
6.14 STRATEGIC CHALLENGES
The term “strategic challenges” refers to those pressures that exert a
decisive influence on an organization's likelihood of future success. These
challenges frequently are driven by an organization's future competitive
position relative to other providers of similar products.
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107 The five most common challenges in executing a strategic plan are:
1. Poor goal setting.
Strategic goals are often large and complex objectives that almost always
require many resources scattered across many departments and locations
to accomplish them. Establishing clear goals across teams will result in
more clarity on priorities and responsibilities.
Recommendation: Ensure that your entire organization has adopted a goal -
setting methodology. The objectives and key results (aka “OKRs") method
is emerging as the new standard, but using SMAR T (goals — specific,
measurable, attainable, relevant and timely) is better than nothing. Ensure
that there are established best practices for writing goals. Each manager
should be responsible for his or her team’s goals. If no best practices are
being foll owed, use OKRs.
2. Lack of alignment.
Even with proper goal -setting, teams and people can be challenged with a
lack of alignment that typically causes prioritization issues and
collaboration conflict that can derail the day -to-day work to achieve the
strategic goal. The biggest cause of strategic misalignment is the
nonstrategic work that people are so used to doing. Often nonstrategic
objectives become the priority, as they are routine and often the most
easily attained.
Recommendation: By establishing cl ear alignment on who is working on
which strategic objective, as well as what each of those objectives are will
empower those people to drive the priority over nonstrategic objectives.
This is especially true if you can see the alignment straight through t he
hierarchical structure.
3. Inability to track progress.
Many organizations are still using spreadsheets to track objectives. This
can work between a manager and employee, however, these systems do
not make it easy to aggregate results or create transpa rency. Worse, their
use limits the ability to real -time manage the attainment of strategic goals.
Recommendation: Consider using strategy execution platforms such as
Tanics, Achieve It or Rhythm Systems to change the way this game is
played. Managers and e mployees, especially millennials, expect clear
direction in real time on why and what is important. By improving
alignment, transparency, collaboration and manageability an organization
can immediately realize higher efficiency as well as more results.
Knowing the score lets an organization and every person connected with
that strategic goal adjust their game to maximize the outcome.
4. People not connected to the strategy.
People in general like order and routine, so we are more likely to fall into
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108 results. Unfortunately, strategic goals are rarely this easy and small in
scope, so how do we get people working differently? The best way is to
connect people more closely to strategy by a ligning professional goals
with personal interests. For example, learning new skills, having more
responsibility, working with different people and teams, working outside
their department on what we refer to as “strategy teams.”
Recommendation: Let people create their own strategic goals initially to
capture their ambition and preference. Managers then work at trying to
align that employees’ goal with the larger strategic plan. Shift the focus
from “an employee working inside a department” to “an employee
working towards a company’s strategic goal as part of a strategic team.”
5. No measurements or leading indicators .
The old proverb, “You manage what you measure,” is paramount to
strategy execution. Without measurement, how do you manage the people
and issu es that can derail a strategic goal? You must set measurable goals,
track them and manage them Having leading indicators like predictive
analytics stimulates the management discussions at all levels.
Changing how your organization executes strategy may s eem like a
complicated and challenging change management project, but it can be
done relatively quickly and incrementally with immediate results. Start at
the top. Executives have the most to gain and can certainly lead by
example. Implement these best pra ctices to start the transformation.
Make the strategic goals clear. Use a methodology like OKRs to give the
goals more structure.
Set executive goals and demonstrate the leadership team’s focus on
strategy.
Make all strategic goals transparent to ever yone. Show how each
executive’s goals weave together.
Use technology, as transparency and real -time tracking cannot be
accomplished otherwise.
6.15 E -BUSINESS APPLICATIONS FOR BUSINESS
COMPETITIVE ADVANTAGES
Studying the evolution of business organizatio ns has received much of
attention in organization theory and MIS research Because organizations
are not internally self-sufficient, they require resources from the
environment, and thus become inter dependent with those elements of the
environment with which they transact. Organizational and ecological
theorists argued that organizations develop internal and external strategies
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109 As information technologies developed, novel ways of business process
redesign emerged. Most organizations today use Internet technolog y to
redesign their processes in ways that provide new competitive
advantage. Through the infrastructure of existingB2B exchanges in the e -
marketplaces, many organizations will eventually be able to integrate
activities of their value chain encompassi ng suppliers, customers, and
distribution channels within an industry or across industries. The potential
of e-business is so great that many believe that e-business is the new
economy that decides the success of future business organizations.
Major succes s factors for e-business include:
3. Internet technology fully integrated into the company’s overall
strategy.
4. Competitive advantage maintained in both operational efficiency and
distinctive strategic positioning.
5. Basis of competition not shifted from traditional competitive
advantage, such as cost, profit, quality, service, and features.
6. Company’s strategic positioning well maintained.
7. Support from top management.
8. Buyer behavior and customer personalization.
9. Quick time to market.
10. Right systems infrastructur e.
11. Good cost control.
12. Good e -business education and training to employees, management
and customers.
13. Customers and partners expectations well -managed.
14. Good products and services offered by e -business.
15. Current e-business systems expanded to cover entire sup ply chain.
16. New competitors and market shares tracked.
17. Website of high quality that meets or exceed user expectations.
18. Company’s virtual marketplace established.
6.16 POINTS TO REMEMBER
 A virtual business is one that moves a significant portion of its
busin ess online.

 Virtual businesses usually don't have any physical storefront that
customers can visit, and they may also allow employees to work
digitally from home.

 Retail and IT sectors are two industries that have embraced the shift to
virtual business.

 BPR includes three phases; analysis phase, design phase, and
implementation phase. It is also referred to as business process
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110  E-commerce known as electronic commerce is the process of buying
and selling of goods and services. It refers to the online purchase of
goods with the use of the internet in around all over the globe. To
execute the sale of electronic products or services you need to fill all
the data online.
6.17 QUESTIONS
1. Explain Business Process Re-engineering Steps?
2. Explain how Business Process Re-engineering works?
3. Explain concept of Virtual Business?
4.What are various Pros and Cons of virtual Business?
5 Explain E-Business Applications for business competitive
advantag es
6.18 REFERENCES
 Strategic Management and Business Policy: Globalization,
Innovation and Sustainability | Fifteenth Edition | By Pearson
 Strategic management author: pearce
 Management Information Systems: Managing the Digital Firm
by Kenneth Laudon (Author), Jane Laudon (Author)
 https://www.wiley.com
 https://www.academia.edu/9464635/Strategic_Roles_of_informati
on_Systems_Introduction

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111 7
MANAGING INFORMATION SYSTEMS
Unit Structure
7.0 Objectives
7.1 Managing information systems
7.1.1 How a MIS works
7.1.2 Types of MIS
7.1.3 MIS vs. IT management
7.1.4 Importance of MIS
7.2 What is enterprise management?
7.2.1 Benefits of an Enterprise Ma nagement System
7.2.2 EMS vs. ERP systems
7.3 Information Resources Management (IRM)
7.3.1 Information Resources Management (IRM) Concept
7.3.2 Benefits of Information Resources Management (IRM)
7.4 What do you mean by management technology?
7.4.1 Signific ance of technology management
7.4.2 Management IS planning Methodologies
7.4.3 What Is A Strategic Planning Model?
7.4.4 The Four Main Types of Critical Success Factors
7.4.5 Five Steps to Identify and Develop Your CSFs
7.5 Computer Aided Planning Tools.
7.5.1 Why Computer Aided Process Planning(CAPP)?
7.5.2 Steps of Process Planning in Manufacturing
7.5.3 Process Planning in Different Environments
7.5.4 Requirements for Process Planner
7.5.5 Computer -Aided Process Planning (CAPP)
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112 7.5.7 Generative Computer Aided Process Planning (G CAPP)
7.5.8 Variant CAPP
7.5.9 Retrieval CAPP
7.6 Key points
7.7 Questions
7.8 References
7.0 OBJECTIVES
 To understand the concept of MIS
 Understand concept of working of MIS
 IS Met hodologies
 Critical Success factors effecting Business Systems
 Concept of computer Aided Planning
7.1 INTRODUCTION TO INFORMATION SYSTEMS
A management information system (MIS) is a set of systems and
procedures that gather data from a range of sources, com pile it and
present it in a readable format. Managers use an MIS to create reports
that provide them with a comprehensive overview of all the information
they need to make decisions ranging from daily minutiae to top -level
strategy. Today's management info rmation systems rely largely on
technology to compile and present data, but the concept is older than
modern computing technologies.
MIS is an organized integration of hardware and software technologies,
data, processes, and human elements. It is a softwar e system that focuses
on the management of information technology to provide efficient and
effective strategic decision making. MIS is the acronym for Management
Information Systems. MIS is a set of procedures which, when executed,
provides information to support decision making.
MIS (management information systems) is the department controlling
hardware and software systems used for business -critical decision -making
within an enterprise.
The MIS department was originally the whole of information technology .
From the 1960s to the early 1980s, practitioners and business schools
referred to MIS, rather than IT. In the early days, enterprise computing's
main role was to help the CEO and CFO with information systems
management for a few key run -the-business task s, such as order entry,
accounting and budgeting. No enterprise applications existed;
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113

These systems were business -critical, meaning a business would fail if it
had to go back to manual accounting. If MIS failed, the business was in
danger. The CFO oversaw MIS, ensuring the developers and
administrators delivered what accounting needed.
In the 1980s, with the advent of personal computers that ran spreadsheets,
the sc ope of computing's responsibilities began to change. Personal
spreadsheets took business -critical processes out of the domain of upper
management; MIS needed to service a wider range of users -- deploying
external, as well as internal, software programs. T he name of the
department changed to reflect this new set of internal customers,
becoming information systems (IS). The MIS department became one,
still-vital part of the overall IS department.
7.1.1 How a MIS works
In addition to serving as a department w ithin a company, MIS refers to
computer software that is used to store, organize and analyze information.
Management information systems are used to track sales, inventory,
equipment and related business information. In the past, management
information sys tems ran on mainframe computers. As computing systems
evolved, MIS moved to run on client/server systems. Today, it’s common
for MIS to run in the cloud or in a hybrid cloud .
7.1.2 Types of MIS
The four types of MIS are:
 Transaction Processing System (TPS) , which processes the
routine transactions associated with a business. Example transactions
include payroll processing, order processing, such as for an e -commerce
business, and invoicing.
 Management Support Systems (MSS), which store and organize
data, enabling end users to generate reports and analyze data to address
business needs and inform planning. A data warehouse is an example of a
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114  Decision Support Systems (DSS) , which analyze business data to
assist managers with decision making. For example, a DSS could project
revenue figures based on new product sales assumptions.
 Expert Systems , which provide managers with insights and
advice, using artificial intelligence ( AI) to simulate the expert knowledge
of a human in a particular field.
7.1.3 MIS vs. IT management
In the 1990s, the rise of the enterprise application brought about a new set
of IS tasks. Companies succeeded by providi ng better services to the
consumer than competitors, via a proper mix of enterprise applications and
homegrown ones. The applications handled a wider range of functions
than the original MIS department: order entry, accounting and budgeting,
but also enterprise resource planning , supply chain management and sales
force automation . Many of these tasks were not solely the property of the
IS department -- outside vendors, outsourcers and line -of-business
computing departments all claimed a share of enterprise computing.
Information systems became more of a strategic director of the software
and underlying hardware technologies in the enterprise's architecture, and
less of a controlling central entity. Again, the name changed to reflect the
new ro le: information technology, or IT, rather than IS. Again, the original
MIS department became a smaller part of the overall whole.
Today, the term management information systems is used broadly in
various contexts. These include, but are not limited to:
 Decision support systems
 Resource and people management applications
 Project management
 Database retrieval applications.
Although the boundaries between MIS and IT management ha ve become
fuzzy over the years, typically, MIS still covers systems that are critical to
the company's ability to survive, including accounting and order entry.
Upper management should understand the importance of MIS in the
context of enterprise revenue.
In many businesses, MIS handles legacy software and hardware, coded by
programmers long since retired, who left no documentation for the
systems. This is equally a role of IT management and business
coordination. The enterprise upgrades or modernizes these systems only
very carefully, and with high appreciation of the risks involved. Therefore,
the importance of MIS, and the people who support it and know its quirks,
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115 7.1.4 Importance of MIS
MIS, both the department and the software system, can help companies
gain a competitive advantage. The data managed by an MIS system can
help managers make better decisions related to sales, manufacturing,
resource allocation and more. Both the MIS de partment and the software
systems help organizations increase productivity by enabling workers to
spend more time on productive tasks.
The MIS department plays an important role in providing these support
services within an organization:
 Governance , which involves systems and controls over employees’
use of computing systems. This MIS department defines, manager and
enforces rules on how (and whether) employees can access the company’s
technologies and network infrastructure. MIS is responsible for IT
secur ity, as well as enforcing codes of conduct related to computer
systems use.
 Infrastructure , which refers to the technology systems that support
the day -to-day functioning of the business, such as phones, desktop/laptop
computers, servers, application softw are and cloud computing. The MIS
department provides internal help desk and support services, assisting
employees and troubleshooting issues related to the infrastructure.
 Data management , which involves the provisioning and management
of systems that enable employees to access and update critical business
data. The MIS department is responsible for ensuring the availability and
security of the data management systems.
7.2 WHAT IS ENTERPRISE MANAGEMENT?
Enterprise management is a term used for modern examples of ERP that
allow businesses to manage vital day -to-day processes such as inventory
management, accounting, human resources and customer relationship
management ( CRM). An Enterprise Management System (EMS) is a
comprehensive software package that caters to the many needs of larger
organizations. The term is sometimes used interchangeably with
Enterprise Resource Planning (ERP) but the latter is more a type of EMS,
rather than a synonym.
EMS solutions typically support the core business processes, the flow of
information, a variety of reports, and data analytics.
Because of the high implementation costs of the system and the fact that
small and medium -sized companies are less complex, Enterprise
Management Systems were usually not suitable for smaller businesses.
Enterprise management supports how different business units work by
sharing information through a shared database.
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116 There are three primary types of enterprise management systems:
 Customer Relationship Management (CRM ) is software that
manages a company’s interactions with existing and potential customers.
The ultimate goals of CRM are to keep businesses connected to customers,
streamline their processes, and improve their profitability.
 Enterprise Resource Planning (ERP) facilitates processes across
multiple business functions. It allows organizations to eliminate
discrepancies and duplications while sharing and ac cessing data in real -
time.
 Supply Chain Management (SCM) is software that manages the
flow of goods, data, and finances related to a product. It begins with the
purchase of raw materials and continues to the final delivery of the
product.
7.2.1 Benefits of an Enterprise Management System:
 Easier business planning
Enterprise systems make it possible to create business plans with ease and
track how well your company is doing in pursuing its goals.
You can check your production, keep an eye on expenses, or loo k at
customer satisfaction statistics. It’s usually just a matter of viewing a
dashboard that compiles the information into charts and tables.
Most systems can alert you to potential issues, such as a sudden increase
in defects or low inventory.
 Better productivity and flexibility
One of the primary benefits of EMS is that it automates specific processes,
which makes your employees more productive. For instance, they can do
payroll, send out sales emails, and replenish inventory automatically.
Another signi ficant advantage is that the system organizes information in
one place for instant access regardless of the location. Every employee can
retrieve the data needed to do the job even if they work from home or do
fieldwork.
 Improved record -keeping and complia nce
Using EMS also assists with record -keeping and compliance. Because of
its integrated security system, the risk of loss or theft of data is mitigated,
and the information that’s stored there is always available if you need
proof of your business’s perfo rmance for any regulatory body.
7.2.2 EMS vs. ERP systems
Although some people continue to use the terms Enterprise Management
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117 Mainly, an EMS can include ERP as part of the package, but the ERP
itself is a standalone application with individual modules that address
various business functions.
EMS covers all the critical business functions in one package, transferring
information from one section to another quickly and accurately.
An ERP system will check inventory and help with back -office features,
as well as assist in planning, production, and management.
The EMS will go beyond that to monitor competitors, suggest new market
areas and ways of attracting ne w customers, and keep an eye on the
external relationships of the organization.
The basics of an ERP solution
As mentioned earlier, enterprise resource planning (ERP) is typically one
application with a set of modules. The software focuses on three core
resources:
 Human resources
 Inventory, facilities, and asset management
 Financial, including payroll, accounts payable and receivable, and
general ledger
ERP software is designed to optimize the internal processes within a
company. It provides employees with accurate real -time data and reports,
and it assists managers by contributing timely information to aid them in
their decision -making process.
ERP software begins its work when an order arrives. The system
immediately checks the inventory for available mate rials. It then plans
production and manages those materials. The system monitors all
processes until the products are shipped and delivered.
EMS is more data -focused
Enterprise management systems are large -scale software packages that
track and control the complex operations of a business. They are used as a
central command center, automating the organization and making it
convenient to prepare reports and make decisions.
Here’s what an effective Enterprise Management System does:
 Stores business data in a usable format that can be retrieved quickly
 Automates the customer service process
 Secures customer data
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118  Streamlines supply chain management
 Ensures regulatory compliance
 Allows scalability of IT capabilities
 Gives real -time access to data
So it would make sense to take advantage of an EMS any way you can if
you want to gain a competitive edge over your rivals. Not only does it
make the workflow so much more effective, it will also allow you to scale
your business in the smoothest way possible.
7.3 INFORMATION RESOURCES MANAGEMENT
(IRM)
Information Resources Management (IRM) is the process of
managing information resources to accomplish agency missions and to
improve agency performance, incl uding the reduction of information
collection burdens on the public. When standardized and controlled,
these resources can be shared and reused throughout an agency, not
just by a single user or application.
Definition: Information Resource Management (IR M) is a technique of
managing information as a shared organizational resource.
Information Resources Classes
There are three (3) classes of information resources:
1. Business Resources: Enterprises, Business Functions, Positions (Jobs),
Human/Machine Resource s, Skills, Business Objectives, Projects, and
Information Requirements .
2. System Resources: Systems, Sub -Systems (business processes),
Administrative Procedures (manual procedures and office automation -
related), Computer Procedures, Programs, Operational Ste ps, Modules,
and Subroutines.
3. Data Resources: Data Elements, Storage Records, Files (computer and
manual), Views, Objects, Inputs, Outputs, Panels, Maps, Call
Parameters, and Data Bases
7.3.1 Information Resources Management (IRM) Concept
The concept of RM is actually no different in intent than Materials
Resource Planning (MRP) as used in manufacturing. Both are concerned
with the efficient and cost -effective use of resources. The classification
and control of resources are the main objectives. Resources a re classified
to prove their uniqueness so that redundancy is not introduced and to
promote sharing. Control is required to collect, inventory, and retrieve
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119 7.3.2 Benefits of Information Resources Management (IRM)
One of the important benefits of IRM is the cataloging and cross -
referencing information resources is a model of the enterprise, including
how it is organized and how it operates. Other benefits include:
 All information resources are controllable, permitting the ability to
design integrated systems and perform an “impact analysis” of a
proposed resource change.

 The simplified search of information resources for reuse. The
redundancy of resource definition is eliminated.

 Complete and current documentation of all information resources, in
an organized and meaningful way.

 Communications within the organization are improved since
developers and users would use standard and common definitions for
information resources, all of which would be in standard and commo n
definitions for information resources, all of which would be in
standard business terminology.
7.4 WHAT DO YOU MEAN BY MANAGEMENT
TECHNOLOGY ?
Management of Technology (MOT) as a field links “ engineering, science,
and management disciplines to plan, devel op, implement technological
capabilities to shape and accomplish the strategic and operational
objectives of an organisation Technology management or management
of technology (MOT) can be viewed from many different perspectives
since the word technology it self is subject to various interpretations.
However, the author of this editorial approaches the topics from different
experiences that are associated with different environments and
backgrounds. It is hoped that this editorial will present the many facets of
technology management. The two words of management and technology
not only carry the burden of many different meanings, but also present
additional sophistication due the anthropological diversity. To many,
MOT means managing engineering and technology . To others, MOT
indicates managing knowledge and information, managing research and
development, managing manufacture and operation, managing the
activities of engineers and scientists or managing the functional activities
without concern for the total of activities that encompass the business
concepts to commercialization process. According to Gaynor (1996), these
interrelated activities must be integrated into a technology system. MOT
means not only managing the system, but also managing the pieces, whic h
involves integrating the “pieces” into an acceptable “whole” by focusing
attention on the interdependence of the pieces. However, these
elaborations are only part of the process of MOT by this editorial.
According to the 1987 workshop report of National Research Council
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120 advantage bridging “the knowledge and practice gap” between science,
engineering and business management (Khalil, 2001). Management of
Technology (MOT) as a field links “en gineering, science, and
management disciplines to plan, develop, implement technological
capabilities to shape and accomplish the strategic and operational
objectives of an organisation.” The NRC report summarises important
contributions to industry that m anagement of technology knowledge can
make as follows:
 How to integrate technology into the overall strategic objectives of
organization
 How to get into and out of technologies faster and more efficiently
 How to assess/evaluate technology more efficiently
 How best to accomplish technology transfer
 How to reduce new product development time and costs
 How to manage large, complex and interdisciplinary or inter -
organisational projects/systems
 How to manage the organisation's internal use of technology
 How to l everage to effectiveness of technical professionals.
To put it in a simple way, technology management is about getting people
and technologies working together to do what people are expecting, which
is a collection of systematic methods for managing the pr ocess of applying
knowledge to extend the human activities and produce defined products.
Effective technology management synthesizes the best ideas from all
sides: academic, practitioner, generalist or technologist.
7.4.1 Significance of technology managem ent
It is argued that there are three major factors strategically in modern
organisations that underpin the creation of competitive advantages. The
first of these is strategic leadership. The effective leadership ensures that
the enterprise will develop it self in the right direction and the production
of product will meet the demand of the market. The second factor is
having a staff with motivation and empowerment. They are the driving
forces of the organisation. The third factor is the proper management of
technology. It is important that the company's technology be appropriately
and properly managed so as to achieve effective and competitive status
(Harrison and Samson, 2003).
Leadership and motivation of employees have been widely recognised as
success fa ctors. There have been significant additions to theories and
practice regarding improvement in the management of people. Therefore,
strategically, the remaining battle -field being competitive depends on
proper management of technology. To put it differentl y, the strategic issue
will be how a company could develop, acquire, share and manage
technology appropriately and effectively.
It is interesting that this argument has been in congruence with the
American historical experience. The USA experienced an incr easing
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121 industry sectors in the 1970s and 1980s. This became a concern not only
to industries, but also to government and educational interests. To identify
reasons of the decline in US in dustrial competitiveness and to formulate a
response to the challenges within global competition, serious work and
efforts had been contributed in the search for explanations and solutions.
Discussions were initiated by major establishments such as The Nat ional
Research Council (NRC), the National Science Foundation (NSF), the
American Association of Engineering Societies, the Accreditation Board
for Engineering and Technology, the American Assembly of Collegiate
Schools of Business, Oak Ridge associated Un iversities and others. A
series of workshops were organised and attended by experts for the
discussion of changing paradigms in business and technology. A resulting
consensus was that great attention and significant amount of efforts should
be directed tow ards making improvement in the Management of
Technology and in conducting research and developing educational
programs in this emerging field of knowledge.
Khalil (2001) highlights that efforts to improve the US position in the
global economy were being in fluenced by the understanding that more
organisations, including government agencies, high educational
institutions, enterprises and founding agencies, become aware of issues
involved in the international arena. Today, rapid changes in the technology
and b usiness environment continue to occur. These changes require
continuous updating of methods and techniques of business practice. For
example, measuring the value of a business according to assessment of
physical assets or based on traditional accounting or finance formulas are
inadequate in the knowledge economy. Education and training institutions
need to take into consideration the changing environment in technology
and business and respond by changing their programs accordingly. Khalil
(2001) argues that international business and engineering schools need to
have consideration of incorporating into their curricula educational
modules recognizing the importance of the knowledge era and the
technology revolution. The intangible assets such as intellectual c apital,
intellectual properties, service innovation, information technology and
many of today's rapidly growing arenas should be recognized.
Furthermore, many of the existing models and the traditional programmes
need to take into account the appropriatene ss and effectiveness of
technology and innovation as well as the volatilities of the environment in
which the technology is created and applied.
In addition, in the twenty -first century, technology assumes a great
importance in advancing every aspect of hu man endeavours. MOT
assumes even greater importance in the capacity building of countries,
companies and individual to embrace technological changes in order to
advance their competitive status in a global marketplace. It has been
recognized that the inter est in the field of management of technology has
mushroomed since the inception of the movement to introduce MOT as a
new field of study and research in the 1980s. The application of MOT
principles has made a significant impact on the wealth creation abili ty of
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122 New endeavours in management of technology
It has to be acknowledged that there are a number of endeavours to
embrace the challenges that the world is facing in terms of management of
technology. The Int ernational Association for Management of Technology
(IAMOT), founded in the early eighties, has become the leading and
largest international professional association solely devoted to the
promotion of management of technology education, research and
applic ation. IAMOT is currently undertaking a major initiative to create
guidelines for academic programs in MOT and certification/accreditation
guidelines to recognize the quality of academic programs. This promises
to be a strong step towards establishing form al management of technology
education globally on a sound academic basis.
In addressing the Chinese experience in terms of management of
technology, Li -Hua and Khalil (2006) argues that appropriate
infrastructures, strategies and mechanism for management o f technology
needs to be established in order to support the diffusion of management of
technology principles throughout China. The conceptual framework for
the future direction and needs has been proposed based on the USA
research and education experience s over the past two decades. It is
debatable whether business and engineering schools need to introduce
MOT curricula following the USA model or develop a new model shaped
by the Chinese culture. It draws upon the experience of the USA in
Management of Tec hnology over the past two decades and projects what
may be needed for China to continue its development and economic
growth in the future.
It is however evident that current situation in China in terms of MOT
presents both opportunities and challenges not only to Chinese business,
but also to the Western business. Today, increased levels of competition
discussed in this editorial in the wake of China's entry into the WTO have
resulted in experimentation and risk -taking as ways of doing business in
China. Ho wever, the uncertainties and ambiguities prevalent in the
Chinese business environment, in particular, in the area of technology
management, are neither well understood nor effectively negotiated by the
international investment community. In addition, the complexities of
technology and knowledge transfer have led to misunderstanding in the
operation and the implementation of international joint venture projects in
China. Therefore, as to the international investors, China's business
environment continues to present many challenges, particularly in how to
manage effective business networks and ensure smooth knowledge
transfer, especially in international joint venture projects.
7.4.2 Management IS planning Methodologies
Strategic planning is an integral part of any business’ success, and it will
ensure your business is heading in the right direction. Furthermore, it
helps outline your objectives as it's crucial to helping business owners
make their everyday decisions.
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123 With the best strategic planning method ology in place, your business will
be proactive as opposed to being reactive. You will seamlessly increase
your operational efficiency with proper strategic planning and projects.
Your profitability and market share will increase significantly. Your
busine ss will be more relevant in its respective industry since you will
serve your customer base better. However, as important as strategic
planning is, many businesses have yet to emulate this opportunity. Also, a
single strategic model isn’t better than other models.
7.4.3 What Is A Strategic Planning Model?
It refers to how a business creates a plan and implements it to make its
operations better and further meet its business goals. Your business can
benefit a great deal by having a well -defined strategic pla nning model in
place.
For instance, a good strategic planning model will ensure all departments
of a business work harmoniously. Moreover, it allows busi nesses to
achieve their targets in the long -run.
Every business leader should know the basics of strategic planning to
enable them to come up with an appropriate strategic planning model.
Such basics include developing your business’ strategic goals, as well as
their potential impacts. You have to define your goals while creating your
plan. Factor in defining your key goals, long -term goals, operational goals,
and company go als. The basics further include crafting strategies for the
development of your strategic planning model .
Some suitable strategic methodologies you should emulate in y our
strategic planning process:
Basic Planning Methodology
The strategic planning methodology is also referred to as the simple
strategic planning model. Businesses that utilize this structure include
startups or businesses that have little knowledge in st rategic planning.
Moreover, the model is ideal for smaller companies that lack resources to
execute complex strategic planning methodologies.
It also focuses on developing your business’ mission, vision statement and
core values. Business leaders can use the model to outline the steps they
should take to achieve their business goals. Basic strategic planning
methodology can further enable business leaders to monitor the progress
of their businesses.
The main advantage of using this strategic planning mode l is that it helps
you create a solid mission statement that perfectly describes why your
business exists. Furthermore, you can use it as a resource to select your
company’s intermediate goals in regard to what you should accomplish
first.
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124 implement certain strategies. You can effectively monitor your progress
while using this model.
Goal -based Strategic Planning Methodo logy
Businesses that start with using basic strategic planning methodology shift
to goal -based strategic planning methodology over time. The model is
suitable for established organizations or businesses seeking for more
complex strategic planning methodol ogies. It is the most frequently used
strategic planning model.
It starts with an analysis of a business’ weaknesses, threats and
opportunities. Goal -based strategic planning methodology also focuses on
your business’ internal and external factors and thr eats and competition.
Next, you can use the strategic planning model to identify issues and goals
which you can use to prioritize your business objectives.
Alignment Strategic Planning Methodology
The methodology helps you craft a strong relation between your business’
mission and resources. The model can be a perfect tool for your business,
especially if you are striving to fine tune your objectives and identify why
you aren’t achieving your goals.
This model helps you outline your business’ resources. It further helps
business owners establish the specific aspects of their businesses that are
working appropriately, and which aspects need some adjustments. Finally,
you can include these adjustments in your business plan. This step is the
most important s tep in making an effective business plan.
Organic Strategic Planning Methodology
The strategic planning methodology doesn’t use linear methodological
approaches, unlike other strategic planning models. Organic strategic
planning methodology uses an appro ach that strategic planning experts
call story boarding. This approach allows business owners to develop
unique business ideas. It can prompt you to be active on matters that affect
your business.
The planning models start with clarifying your business’ c ultural values
through dialogues and storyboarding techniques. Next, the strategic
planning methodology focuses on articulating a business’ vision. The
accomplishments of this methodology translate into a business’ goals.
Scenario Strategic Planning Metho dology
This is another common strategic planning methodology to consider. It is
more of a strategic planning technique rather than a strategic planning
methodology. The m ethodology is highly effective in identifying issues,
goals and external environments. It is useful for businesses that are
preparing for a variety of scenarios that are the result of external forces of
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125 The strategic pl anning model starts with establishing vulnerabilities that
could possibly affect a business. After identifying possible vulnerabilities ,
you can look into strategies you can use for responding to the prevailing
vulnerabilities.
2. Balanced Scorecard
The strategic planning methodology entails considering your business’
objectives, initiatives and measures. You can develop this model by using
programs such as Google Sheets, PowerPoint and Excel. The strategic
planning methodology gives you comprehensive de tails into your
business’ initiatives and measures.
3. Strategy Mapping
The strategic planning methodology is a tool that is used for
communicating a strategic plan. The tool is suitable for achieving high -
level business goals. It helps communicate -high-level details across your
business in an easy -to-understand model. The strategic planning model
offers an array of benefits including:
 A simple and straightforward visual representation that is easy for
organization and businesses to refer to during the dev elopment process
 It helps unify all company goals into one business strategy and
comprehensive plan
 It can help you determine your key basic steps and goals
 It helps you establish how your business objectives affect others in real
time
7.4.4 Critical Succ ess factors Business Systems Planning
Information system planning has been one of the critical issues in an
organization. Besides assisting the organization to achieve its objective,
information system planning has been used by organization to identify its
higher payback towards implementing it. In achieving this, organizations
should clearly understand the factors that critically importance in the
system development for their organizations
CRITICAL SUCCESS FACTORS
A. Skills
The success of an organi zation depends on many factors and
one of it is the human factors. In order to make sure that the
organization can increased their competitiveness in regards to
competitive environment, skills worker or em ployee is needed.
Papalexandris & Nikandrou (2000) in their study found out that there are
four main categories of skills that is demand by the
organizations which are technical skills, human skills and
conceptual skills and one of the skills included in the technical area is
project planning. Further, Teo (2003) concluded that a managerial
IT skill is important to provide a sustainable advantage of the IT.
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126 skills, the more likely the information system planning will be
success.

B. Cooperation from other departments
For some organization, the information sys

CRITICAL SUCCESS FACTORS

A. Skills
The success of an organization depends on many factors and
one of it is the human factors. In order to make sure that the
organization can increased their competitiveness in regards to
competitive environme nt, skills worker or employee is needed.
Papalexandris & Nikandrou (2000) in their study found out that there are
four main categories of skills that is demand by the
organizations which are technical skills, human sk ills and conceptual
skills and one of the skills included in the technical area is project
planning. Further, Teo (2003) concluded that a managerial IT
skill is important to provide a sustainable advantage of the IT.
Therefore, the authors suggest that the higher the human resource
kills, the more likely the information system planning will be
success.
What Are Critical Success Factors?
Essentially, critical success factors or CSFs are the elements of an
organization or project that are vital to its success.
The concept of CSFs (also known as Key Results Areas or KRAs) was
first developed by management consultant D. Ronald Daniel, in his article,
"Management Information Crisis." [1]
John F. Rockart, of MIT's Sloan School of Management, built on and
popularized the concept almost two decades later. He defined CSFs as:
"The limited number of areas in which results, if they are satisfactory, will
ensure successful competitive performance for the organization. The y are
the few key areas where things must go right for the business to flourish.
If results in these areas are not adequate, the organization's efforts for the
period will be less than desired."
Rockart also concluded that CSFs are "areas of activity that should receive
constant and careful attention from management." [2]
7.4.5 The Four Main Types of Critical Success Factors
four main types of CSFs that businesses need to consider:
 Industry factors result from the specific characteristics of your
industry. These are the things that you must do to remain competitive
within your market. For example, a tech start -up might identify innovation
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127  Environmental factors result from macro -environmental influences
on your organization. For example, the busines s climate, the economy,
your competitors, and technological advancements. A PEST Analysis can
help you to understand your environmental factors better.

 Strategic factors result from your organization's specific
competitive strategy. They might include the way your organization
chooses to position and market itself. For example, whether it's a high -
volume, low -cost producer; or a low -volume, high -cost one.

 Temporal factors result from your organization's internal changes
and development, and are usually short -lived. Specific barriers, challenges
and influences will determine these CSFs. For example, a rapidly
expanding business might have a CSF of increasing its international sales.

Critica l success factors are derived from your organization's mission and
objectives. They set out what you need to do to be successful and tend to
be universal across organizations. For example, they might include things
like:
 Increasing profits.
 Improving emplo yee engagement.
 Improving talent acquisition and retention.
 Becoming more environmentally -friendly.
Once you've identified your CSFs, you can use them to develop more
specific Key Performance Indicators (KPIs). These are the specific criteria
that managers and organizations use to measure performance, and they
often differ from organization to organization.
KPIs provide the data that enable a business to decide whether CSFs have
been met, and if goals have been achieved. KPIs can also be used at
different l evels of a business – they can be used to clarify strategic,
business -wide targets, or even to drill down into team and personal
objectives.
7.4.6 Five Steps to Identify and Develop Your CSFs
To identify and develop CSFs for your organization, follow these five
steps:
1. Research Your Mission, Values and Strategy
First, take some time to look through your organization's mission , values
and strategy. What are the challenges and key prioriti es that your
organization needs to be focusing on right now?
If you're unsure, or want to gain some background, do a PEST
Analysis to gain a better understanding of the external market fa ctors that
are influencing your organization right now. Follow this up with a SWOT
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128 market challenges, and to assess yo ur organization's strengths and
weaknesses. This all -round approach should help you to clarify what
improvements need to be made and where.
2. Identify Your Strategic Objectives and Candidate CSFs
Identify your organization's key strategic goals – these ar e usually linked
to your mission and values . Then, for each objective, ask yourself, "How
will we get there?" There may be a number of things that need to happen
for you to achieve each o f your strategic objectives. These are your
"candidate" CSFs.
For example, if one of your strategic goals is to "reduce waste over the
next year," you will likely need a number of critical success factors to help
you to achieve this, such as:
 Reducing carb on emissions.
 Investing more in renewable energy sources.
 Improving the efficiency of supply chains.
 Developing "green" offices and processes.
3. Evaluate and Prioritize Your CSFs
Now, work through your candidate CSF's and identify only those that are
truly essential to your success.
As you work through each candidate CSF, you may see that some are
linked or are interdependent. For example, if have two CSFs – "to increase
your share of the market" and "to attract new customers," the latter would
take priori ty, as it is only by attracting new customers that you will likely
increase your market share.
Prioritizing your candidate CSFs in this way will enable you to really
focus in on the areas that your business must succeed in. You may find
that some candidate CSFs are not a priority at all, in which you case you
can cross them off your list.
4. Communicate Your CSFs to Key Stakeholders
Once you've identified your key CSFs, you now need to think about who
is best placed to help you to achieve them. What departm ents or people
will need to be accountable for them? What activities or operations will be
key in helping you to achieve your CSFs? Do any activities or roles need
to be changed or developed to do this?
Once you've done this, communicate your key CSFs to t he relevant
people. Make sure that everyone is clear on what they are, why you need
to achieve them and how you hope to succeed. Get feedback from these
key stakeholders, too – they are often best placed to identify any
roadblocks or issues that may need to be overcome to achieve success.
They may also be able to offer some great ideas of their own about how to
meet your CSFs.
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129 5. Monitor and Measure Your Progress
Think about how you will monitor and measure each of your CSFs. This
can be tricky as CSFs are often very broad and may require input from
several different departments and stakeholders across the business.
One way to effectively monitor and measure your progress is by setti ng a
number of different KPIs against each of your Critical Success Factors.
For example, if one of your CSFs is to reduce your carbon emissions, you
might create a KPI to fill in some detail, such as "Reduce carbon
emissions by 30 percent by 2035."
It's a lso a good idea to put in place monitoring systems to keep track of
your progress. This might mean assigning accountability for this task to a
specific person or department. This person will be responsible for
gathering data and regularly monitoring the or ganization's progress toward
specific CSFs and KPIs.
So, you would need to think about how this person would gather data on
your organization's carbon emissions going forward, where they should
store that data, and how regularly they would need to update i t.
7.5 COMPUTER AIDED PLANNING TOOLS.
Process planning can be defined as an act of preparing, processing
documentation for the manufacturing of a piece, part of an assembly is
called Process Planning.
It can be defined as an act of preparing processing do cumentation for
the manufacturing of a piece, part or an assembly, etc. is called as
process planning. If process planning was done by using a computer it
is called Computer -Aided Process Planning (CAPP).
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130 7.5.1 Why Computer Ai ded Process Planning(CAPP)?
 Understand the interactions between the part, manufacturing, quality,
and cost.
 Systematically produce accurate and consistent process plans.
 Reduce the cost and lead time of process planning.
 Skill requirements of process plann ers are reduced.
 Increased productivity of process planner.
 Easily interface with other application programs for further analysis.
Parts of Computer -Aided Process
1. Generative Computer Aided Process Planning (G CAPP) .
2. Variant Computer Aided Process Planning (Variant CAPP) .
3. Retrieval Computer Aided Process Planning (Retrieval CAPP) .
Topics of Today
Process planning can be defined as an act of preparing, processing
documentation for the manufacturing of a piece, part of an assembly is
called Process Planning. In this article, I will be explaining about Process
planning, Computer -Aided Process Planning (CAPP), Generative
CAPP, Variant CAPP, Retrieval CAPP, and all its features in a detailed
manner.
In order to know about Computer Aided Process Planning, you must know
about Process Planning First which was mentioned below.
7.5.2 Steps of Process Planning in Manufacturing:
 Analysis of part requirements
 Selection of raw workpiece
 Determining manufacturing operations and their sequences
 Selection of machine tools
 Selection of tools, work holding devices , and inspection equipment
 Determin ing machine conditions (cutting speed, feed, and depth of cut)
 Manufacturing times (setup time, lead time, and processing time).
Two important areas in the life cycle of a product are design and
manufacturing. Process planning serves as an integral link between design
and manufacturing. i.e.
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131  Process Planning in Design
 Process Planning in Manufacturing
Process planning consists of preparing a set of instructions that describe
how to fabricate a part or build an assembly which will satisfy engineering
design specifications.
The resulting set of instructions may include any or all of the
following:
 Operation sequence
 Machines
 Tools
 Materials
 Tolerances
 Cutting parameters
 Processes (such as how to heat -treat)
 Jigs
 Fixtures
 Time standards
 Setup details
 Inspection criteria
 Gauges
 Graphical representations of the part in various stages of completion.
7.5.3 Process Planning in Different Environments:
 In tool -room type manufacturing, “make a part as per drawing” is
sufficient
 In a metal -forming type of operations, the process planning
requirements are embedded directly into the die.
 Process planning is fairly trivial
 Job-shop type manufacturing requires most detailed process
planning
 Design of tools, jigs, fixtures and manufacturing sequence is
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132 7.5.4 Requirements for Process Planner:
 Must be able to analyze and understand part requirements.
 Have extensive knowledge of machine tools, cutting tools, and
their capabilities.
This is the detailed explanation of Process Planning. Now, le t's discuss
Computer -Aided Process Planning.
7.5.5 Computer -Aided Process Planning (CAPP):
It can be defined as an act of preparing processing documentation for
the manufacturing of a piece, part or an assembly, etc. is called as
process planning. If proce ss planning was done by using a computer it
is called Computer -Aided Process Planning(CAPP).
This post mainly focuses on, the structure of Computer -Aided Process
Planning (CAPP) in a detailed manner.
COMPUTER -AIDED PROCESS PLANNING(CAPP) METHOD:
 It can syst ematically produce accurate and consistent process
plans.
 It can reduce the cost and lead time of process planning.
 Less skilled process planners may be employed.
 It increases the productivity of process planners.
 Manufacturing cost, manufacturing lead tim e and work standards
can easily be interfaced with the CAPP system.
7.5.6 Why Computer Aided Process Planning(CAPP)?
 Understand the interactions between the part, manufacturing,
quality, and cost.
 Systematically produce accurate and consistent process plan s.
 Reduce the cost and lead time of process planning.
 Skill requirements of process planners are reduced.
 Increased productivity of process planner.
 Easily interface with other application programs for further
analysis.
This is the detailed explanation of Computer -Aided Process Planning.
Now, let's discuss the parts of it. They are:
1. Generative Computer Aided Process Planning (G CAPP) .
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133 3. Retrieval Computer Aided Process Planning (Retrieval CAPP) .
The deta iled explanation of all these process planning is as follows:
7.5.7 Generative Computer Aided Process Planning(G CAPP):
A system which automatically synthesizes a process plan for a new
component is called Generative Computer Aided Process Planning. It
synthesizes the process information to create a process plan for a new part
automatically without human intervention
Characteristics of Generative Computer Aided Process Planning(G
CAPP):
 No existing standard plans.
 Able to generate process plans for both n ew and existing parts.
 Process plans are generated by means of:
o Decision logic.
o Formulas.
o Technology algorithms.
o Geometry based data.
o Geometry -based coding scheme.
o Process knowledge in the form of decision logic and data to
perform uniquely the main decisi ons for converting apart from raw
materials to a finished state.
7.5.8 Variant CAPP:
A process plan for a new part is created by recalling, identifying and
retrieving the existing plan for a similar part and making necessary
modifica tions for the new part. In this article, I am going to discuss
Advantages and limitations of VARIANT CAPP (VCAPP) in a detailed
manner.
Steps involved in VARIANT CAPP are as follows:
 Define the coding system.
 Group the parts into part families.
 Develop a s tandard process plan.
 Retrieve and modify the standard plan.
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134 7.5.9 Retrieval CAPP:
 Based on the principles of GT.
 Also called a VARIANT Computer Aided Process Planning (Variant
CAPP ).
 GT: Group Technology.
 The concept of grouping parts together depending up on their
similarities in operation sequence or geometry is called Group
technology.
 Experts’ knowledge and standard process plans as per GT are needed
as a database.
 Considerable work is required to collect and organize data.
Salient points of VARIANT CA PP:
 Easy to build, learn and use.
 Experienced process planners are still required to edit the process plan.
 Cannot be used in an entirely automated manufacturing system
without additional process planning.
7.6 KEY POINTS
 MIS stands for Management Informati on System. It is a collection of
people, procedures, data, and information technology that aids
managers to make informed decisions.
 Computerized information systems are more efficient compared to
manual information systems. Manual information systems are
cheaper compared to computerized information systems.
 Transaction processing systems (TPS) are by operational staff to
record day to day business transactions, and they are used to make
structured decisions
 Management Information Systems (MIS) are used by middle -level
managers to make semi -structured decisions
 Decision Support Systems are used by top level managers, and they
help top level managers to make unstructured decisions.
 Computer -Aided Process Planning can be defined as an act of
preparing processi ng documentation for the manufacturing of a
piece, part or an assembly by using a computer.
 Critical Success Factors (also known as Key Results Areas or KRAs)
are the areas of your business or project that are vital to its success.
 Identifying and communic ating CSFs within your organization is
essential to ensure that your business or project stays focused on
what needs to be done to achieve success. It can also help you to
avoid wasting effort and resources on less important areas of the
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135
7.7 QUE STIONS
1. Explain significance of technology management ?
2. Explain types of MIS?
3. What Is A Strategic Planning Model?
4. Explain Four Main Types of Critical Success Factors?
5 Explain Five Steps to Identify and Develop Your CSFs?
6. Explain COMPUTER -AIDED Process Planning(CAPP) Method?
7.8 REFERENCES
 Strategic Management and Business Policy: Globalization, Innovation
and Sustainability | Fifteenth Edition | By Pearson
 Strategic management author: pearce
 Management Information Systems: Managing the Digital Firm
by Kenneth Laudon (Author), Jane Laudon (Author)
 https://www.wiley.com
 https://www.academia.edu/9464635/Strategic_Roles_of_information_
Systems_Introduction




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136 8
INFORMATION SYSTEM DEVELOPMENT
AND SECURITY
Unit Structure
8.0 Objectives
8.1 Introduction to MIS
8.2 Information System Development and Security
8.3 Information System Development Process and Models
8.4 Sensitize Students to the need for information s ecurity.
8.5 Concepts such as
8.5.1 Confidentiality
8.5.2 Integrity
8.5.3 Availability
8.6 Types of Threats and Risk
8.7 Overview of some the manual
8.8 Procedural and automated controls in real life IT environments
8.9 Computer Crime - Privacy issues.
8.10 Summary
8.11 Reference for further reading
8.12 Bibliography
8.0 OBJECTIVES
 The main objective of learning this MIS is to provide information for
decision making on planning and controlling the operations of the
organizations.
 The meaning of management in MI S meant to cover the planning,
control, and administration of the organizations.
 Information means the processed the data that helps the management
in executing the planning, controlling and operations.
8.1 INTRODUCTION TO MIS
 The main goal of MIS is to he lp the organizations to design,
implement and evaluate a computing -based solution to meet a given
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137  It also helps in analysing a situation in which it provides all the
relevant information about t he situation and then executing the
decision.
1.2 INFORMATION SYSTEM DEVELOPMENT AND
SECURITY

Information System Development:

 In MIS, information is considered as a major resource such as time
and capital.
 These resources need to be handled carefully a nd it is required by the
management for decision making.
 So this information becomes vital resource for the system.
 The management information system needs good planning.
 The system should deals with the management information system
and not with the data processing system in the organization.
 It supports the management in better planning and decision making
and actions.
 It should support the management planning and its needs as per the
changing take place in the organizations.

Major challenges in MIS Impl ementation are:

 The quantity, content, and context of information that how much
data is required and what exact data should be described.
 Then change in the nature of analysis and presentation of
information.
 The accuracy of information.
 The reliability of information.
 The authentication and security of the system.

Planning of MIS: MIS development and design process has to be
undergo to addressed these issues:

 There is being an effective way of communication among the users
and the developer’s teams.
 There is a proper synchronization in knowing the process
management and the IT teams as well the users and the developer’s
teams.
 There should be proper understanding of information needs and
challenges amongst the managers from different functional areas an d
the combing these needs into single interrelated system as a whole.
 There should be a proper utilization of fast growing change in IT
capabilities in the best possible ways.
 The time and cost required for installing the IT based systems is
high, which s ays that there should be no need for frequent change
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Management Information
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138  It should take care of not only the systems, users but also the
employees, stakeholders, customers and its suppliers.

Once the organization planning is over, the designing of th e system
should take place for the achievement of MIS goals and its objectives.

 The Strategy for Development: example an online and real time
batch processing.
 System Development Strategy: the designers should select an
appropriate approach for the syste m development process like
operational verses functional and accounting verse analysis .
 Resources required for the Development Process: resources
selection should be appropriate and should be done by the designer
so that waste of resources should be taken place in the process of
development.
 The manpower (staff) should good analysts and programmers .












Figure (a)
Information system planning essentially involves
 Identification of the stage of information system in the organization.
 Identifi cation 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
priori ty applications.





Figure (b)
Planning
Strategy for Development System Development
Strategy
Resources required for
the Development Process
Strategic
Planning Requiremen
t Analysis Resourc
e AllocatiProtectiv
e Planning munotes.in

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139 Information System Requirements:
 There are three methods involve in determining the requirement in
developing a management information system for any organization













Figure (c)

1) Business Sys tems Planning (BSP):
 This method is developed by IBM.
 It determines the priorities of the organization and focuses the data
which is maintained in the system.
 It uses data architecture which is supported by the different
applications.
 It defines data clas ses and different matrices which are used to define
relationships among the organization.

2) Critical Success Factor (CSF):
 It defines the key business goals and its strategies for each manager
and its business.
 It also takes the critical success factors for achieving the business
goals.

3) End / Means Analysis (E/M):
 It determines the outputs and services which is provided by the
business processes.
8.3 INFORMATION SYSTEM DEVELOPMENT
PROCESS AND MODELS
 In MIS, the information is recognized as a major resource like
capital and time.
 To manage properly this resource the management has to plans for it
and control it, so that the information becomes a vital resource for
the system.
 It requires good planning. Information System Business
Systems Planning (BSP) Critical Success Factor (CSF) End / Means
Analysis (E/M)
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Management Information
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140  It deals with the management information and not with the data
processing.
 It should provide the management with good support for the
management planning, decision making and actions.
 It should provide the support to the changing needs and requirement
of the business management.
 System development requires a car eful analysis and design before
the implementation of the system.
 The requirement analysis involves in understanding the
organizational goals, processes and the constraints of the system for
which the information system is being designed.
 The following are the phases of the system implementation:
















Figure (d)











Figure (e)
Planning and Requirement Analysis Reviewing various project requests Prioritizing the project
requests
Allocating the
resources Requests Identifying the project
develop ment team Techniques used in Information System Critical Success Factor team Business System Planning End/Mean Analysis munotes.in

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Information System
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141  The requirement analysis has the following sub -processes:



















Figure (f)
Technology for Information Systems:
 The techno logy requirement for any organizations are
a) Devices.
b) Data center systems: it is an environment which provides processing
of data, storage, networking, management and the distribution of
data within an enterprise or system.
c) Enterprise software: the software like ERP, SCM, Human Resource
Management, etc. which is used to fulfil the needs and objectives of
the organizations goals.
d) IT services: it is related to the implementation and management of
quality of IT services by IT service providers through people,
process and information technology.
e) It includes various process improvement frameworks and
methodologies like sigma, TQM.
f) Telecom services.
Information System Analysis and Design:
 System analysis and design follows the typical System/Software
Design Life Cy cle (SDLC). It generally passes through the following
phases :





Requirement
Analysis sub -
Conducting preliminary Performing detailed analysis activities Studying current Determining user requirements Recommending a solution munotes.in

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142
















Figure (g)
















Figure (h)







SDLC Phases
Problem Definition Feasibility Study Systems Analysis System Design Detailed System
Design Implementation Maintenance
Analysis Phase Techniques Data flow diagrams (DFD) Logic Modelling Data Modelling Rapid Application
Development (RAD) Object Oriented
Analysis (OOA) munotes.in

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Information System
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143
















Figure (i)
8.4 SENSITIZE STUDENTS TO THE NEED FOR
INFORMATION SECUR ITY

 Providing training and making aware about the knowledge to
efficiently use the tools and become better defenders of the
organization.
 This may helps them to assist them to better manage other tools
which are not meant for security.
 To give protection to any information from a range of threats.
 Ensure business continuity.
 Minimizes financial loss.
 Optimizes return on investments.
 Increases business opportunities.
8.5 CONCEPT SUCH AS CONFIDENTIALITY,
INTEGRITY, AVAILABILITY
Information Security:
 An info rmation security is not about the securing the information
from unauthorized access.
 It is a good practice of preventing the unauthorized access, use,
disclos ure, disruption, modification, inspection, recording, or
destruction of information.
 The informati on can be a physical one or electronic one.
 The information can be any users’ details like name, or profile on
social media, the data ion mobile phone, your biometrics etc.
 The information security programs are build on three objectives that
are known as C IA: System Test Planning Purpose Definition Test inputs Detailed
specification of test procedure Details of
expected
outputs
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144









Figure (j)
1) Confidentiality:
 It is meant to hide the information of any users from unauthorized
access.
2) Integrity:
 It is used to maintain accuracy and completeness of data.
 It is used to secure the data by unauthorized data editing.

3) Availability:
 It is used to make the data available whenever required by the users.
 For example any one needs to access the information of a particular
employee to check whether the employee has outstand the number of
leaves, in that case it requires col laboration from different
organizational teams like network operations, development
operations.
8.6 TYPES OF THREATS AND RISK
 Many areas of engineering and infrastructure have developed their
own disciplines and terminology for risk analysis.
 Widely for al l information assets of an enterprise.
 During the development of new products or system for example in
the area of software security.
 Therefore calculate risk as a function thereof informally,


1) Vulnerability :
 Vulnerabilities are weakness of a system tha t could be accidentally
or internally exploited to damage assets.
 Vulnerability scanner provides a systematic and automatic way of
identifying system vulnerabilities.
 It can be rated according to their impact.


Risk = Assets*threats* vulnerabilities Information Security Programs Confidentiality Integrity
Availability
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145 2) Threats:
 Threats are actions by adversaries who try to exploit vulnerabilities
to damage assets.
 It is possible danger to the system.

3) Risks:
 Having rated values of assets, the critically of vulnerabilities and the
likelihood of threats, can give the result of calculating risks.

4) Counter Measures:
 The result of a risk analysis is prioritized list of threats, together with
recommended countermeasures to mitigate risk.
 Risk analysis tools usually come with a knowledge base of
countermeasure for the threats they can identify.
 Information security threa ts is something related like

1) Software attack.
2) Theft of intellectual property.
3) Identity theft.
4) Theft of equipment or information.
5) Information extortion.
Threat:
 In any events or certain circumstance where there is a potential to
harm the information sys tems through unauthorized access,
destruction, disclosure, modification of data of denial of service.
Software attack:
 Software is attack by virus, worms, Trojan horses etc. Many times it
is believed that malware, worms, Trojan horse are the same but
actually they all are different.
 Only one thing is similar in all theses virus is that they all are
malicious software and they all behaves very differently.
Malware:
 It is a combination of two terminology that is malicious and software.
 It is implemented u sing the program code which is designed2zx4r
to perform malicious operation on the system.
 It can be divided into two parts:







Figure (k)
Malware Infection Malware munotes.in

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Management Information
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146 Malware on the basis of the infection methods are as follows:
1) Virus:
 Virus has the ability to replicate themselves by getting into the
program on the host computer like songs, video etc. and they it will
travel on the way to internet.
 The creeper virus was first detected by ARPANET example like file
virus, macro virus, boot sector vi rus , stealth virus, etc

2) Worms:
 It is reverse replicating in nature.
 They can easily travel from one network to another if they target
machine available in the network.
 These are less harmful in nature for example consumes hard disk
space.

3) Trojan:
 The c oncept of Trojan is completely different from other virus and
worms.
 The main target is to conceal them into the software.
 For example FTP Trojans, proxy Trojans, Remote Access Trojans
etc.

4) Bots:
 It is an advance form of worms.
 It is automated processes.
 It is designed to interact over the network.













Figure (l)




Malware Infection Virus Worms Trojan Bots munotes.in

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Information System
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147 Malware on the basis of Action are as follows:















Figure (m)
1) Adware:
 It is not malicious in nature.
 It can violate the privacy of the users.
 They normally come with attached with free -to-use software or
reside in the individual programs.
 They examine the interest of the users and display the relevant ads.
 It embeds the malicious code into the software and examines the
activity of the users.

2) Spywar e:
 It is a program that monitors the activity of the users on the machine
and reveals the collected information to an interested party.
 Common example of spyware is KEYLOGGER.
 Keylogger is basically used to record the user keystrokes with
timestamp.
 It col lects the information like username, passwords, credit card
details etc.

3) Ransomeware:
 It tries to encrypt the files or will try to lock the computer making it
accessible either fully or partially.

4) Scareware:
 It acts like as it is helping the users to fix the problems and once the
software is executed it will infect the system or it will completely
destroy the system.
 Then the software will display messages stating that they are trying
to solve the problems and tell you to pay them to fix the problems.

Malware Actions Adware Spyware RansomwarScareware Rootkits Zombies munotes.in

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Management Information
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148 5) Rootkits:
 It is used to gain the access to the system root and try to administrate
the privileges in the user system.
 Once it’s get the access to the root the attacker can do anything from
stealing to the private files to private data of the user.

6) Zombies:
 It is similar to spyware.
 The pattern of infection is similar to spyware but they don’t spy and
steal information.
8.7 OVERVIEW OF SOME MANUAL
 The processes refer to Work Practices or workflow.
 It is a repeated step to accomplish business objectives.
 IT infrastructure could include:

1) Helpdesk and service management.
2) Incident reporting and management.
3) Change requests process.
4) Request fulfilment.
5) Access management.
6) Identify management.
7) Service level and third party services management.
8) IT procurement process .

 Network Infrastructure:

1) Cabling, data and voice network and equipment.
2) Telecommunication services including VoIP services, ISDN, video
conferencing.
3) Server computers and associated storage services.
4) Operating software for server computers.
5) VPNs and vir tual environments.
6) Remote access services.
7) Wireless connectivity.

 Application software:

1) Finance and assets system, including accounting package, inventory
management, HR systems, Assessment and reporting systems.
2) Software as a service (Saas) instead of s oftware as a packaged or
custom made product etc.

 Physical security components:

1) CCTV cameras.
2) Clock in system and biometrics. munotes.in

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149 3) Environ mental Management System: Humanity Control,
Ventilation, Air Conditioners, Fire Control Systems.
4) Electricity and power b ackup.

 Access devices:

1) Desktop computers.
2) Laptops, ultra -mobile laptops and PDAs.
3) Thin client computing.
4) Digital cameras, Printers, Scanners, Photocopier etc.


































Figure (n)




Information, Integrity,
Confidentiality, Availability Information security policy
Organization of Information
Security
Assets Management
Human Resource S ecurity
Physical Security
Communication & Operation Management Access Control
System Development & Maintenance Accident Management Business Continuity Planning Compliance munotes.in

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150 8.8 PROCEDURAL AND A UTOMATED CONTROLS IN
REAL LIFE IT ENVIRONMENT
 In any business environment where the processes, operations,
accounting and decision making are carried out with the help of
computer systems are called as Automated Environment.
 Nowadays in every organization computer system are almost being
used to carry out their business processes.
 The main goal of automated environment is to carry out the task
with less manual intervention and more system oriented.
 The level or range of complexity of any organizations is d epends
upon on the level of use of automated environment.

Charactertics of Automated Environment in IT environment are:































Figure (o)


Automated Environment
Entitle faster business operation Validity in data
processing and
comp utation
Capacity to execute
large number of
transactions
Deployment
between business operations Greater
security and controls Rare human error Provides Updated
information
Prov ides good
connectivity and
Networking capability munotes.in

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151 8.9 COMPUTER CRIME - PRIVACY ISSUES
 Computer crime refers to committing i llegal activities such as
committing fraud, trafficking and intellectual property, stealing
identifies and violating the privacy of an individual entity.

 It is a target of illegal activity.

 The attacker has main objective to deny the owners or legal user s of
the system.

 These are malicious code that tries to infect the system for processing
illegal activity.

 It can be protected or we can say to eliminate the impact using
Antivirus software.
































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152
Example of computer crime is:














































Figure (m) Computer crime Child Cracking Copyright Cyber terrorism Cyber squatting Cyber bully or
Cyber stalking Creating Denial of Service attack Doxing Espionage Fraud Harvesting Human Identity theft Illegal sales Intellectual Phishing or vishing theft Intellectual
property theft
Intellectual property theft Spamming Spoofing theft munotes.in

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153 8.10 SUMMARY
 MIS has created an impact on the organizations function
performance, and productivity.
 Information system and information technology have be come very
important part of any successful business and is regarded as a major
functional area.
 A well established management information system supports the
organization at different levels.
8.11 REFERENCE FOR FURTHER READING
https://www.geeksforgeeks.org/what -is-information -security/?ref=lbp
https://www.tutorialspoint.com/ma nagement_information_system/mis_de
velopment_process.htm
https://www.slideshare.net/ahmedmoussaa/information -security -8332632
https://sgp1.digitaloceanspaces.com/cakart/5973/study_contents/Chapter_
6__Audit_in_an_Automated_Environment.pdf
8.12 BIBLIOGRAPHY
https://www.geeksforgeeks.org/what -is-information -security/?ref=lbp
https://www.tutorialspoint.com/management_informati on_system/mis_de
velopment_process.htm
https://www.slideshare.net/ahmedmoussaa/information -security -8332632
https://sgp1.digitaloceanspaces.com/cakart/5973/study_contents/Chapter_
6__Audit_in_an_Automated_Environment.pdf









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