Information & Business Economic Analysis

1. Discuss the need for an efficient Management Information System with regard to any organization. What are the benefits of Southside’s new system?

Introduction

We are living in a time of great change and working in an Information Age. Managers have to assimilate masses of data, convert that data into information, form conclusions about that information and make decisions leading to the achievement of business objectives. For an organization, information is as important resource as money, machinery and manpower. It is essential for the survival of the enterprise.

Before the widespread use of computers, many organizations found difficulties in gathering, storing, organizing and distributing large amounts of data and information. Developments in computer technology made possible for managers to select the information they require, in the form best suited for their needs and in time they want. This information must be current and in many cases is needed by many people at the same time. So it has to be accurate, concise, timely, complete, well presented and storable. Most firms nowadays depend on IT.

The term management information system (MIS) made its first appearance in U.S. navy report on the use of computers to construct a single integrated system to manage all navy resources.

A management information system (MIS) is a subset of the overall internal controls of a business covering the application of people, documents, technologies, and procedures by management accountants to solve business problems such as costing a product, service or a business-wide strategy. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive information systems.

MIS combines tech with business to get people the information they need to do their jobs better/faster/smarter. MIS professionals work as systems analysts, project managers, systems administrators, etc., communicating directly with staff and management across the organization." “A system to convert data from internal and external sources into information and communicate that information in an appropriate form, to managers at all levels in all functions to enable them to make timely and effective decisions for planning, directing and controlling the activities for which they are responsible.”(Bee and Bee, 1999)

An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. In a way it is a documented report of the activities those were planned and executed.

According to Philip Kotler "A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers."

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Information & Business Economic Analysis

Management information systems are those systems that allow managers to make decisions for the successful operation of businesses. Management information systems consist of computer resources, people, and procedures used in the modern business enterprise. MIS also refers to the organization that develops and maintains most or all of the computer systems in the enterprise so that managers can make decisions. The goal of the MIS organization is to deliver information systems to the various levels of corporate managers. MIS professionals create and support the computer system throughout the company. Trained and educated to work with corporate computer systems, these professionals are responsible in some way for nearly all of the computers, from the largest mainframe to the desktop and portable PCs.

Its purpose is to help managers to solve structured problems. But it should also fulfill a number of other purposes:· It should provide a basis to analyze warning signals that can originate both externally and internally; this is the main function of data base;· It should automate routine operations thus avoiding human work in the processing tasks;· It should assist management in making routine decisions;· It should provide the information necessary to make non-routine decisions;· It should serve as a strategic weapon to gain competitive advantages.

Computer-based or manual system transforms data into information useful in the support of decision making. MIS can be classified as performing three functions:

(1) To generate reports-for example, financial statements, inventory status reports, or performance reports needed for routine or non-routine purposes.

(2) To answer what-if questions asked by management. For example, questions such as "What would happen to cash flow if the company changes its credit term for its customers?" can be answered by MIS. This type of MIS can be called Simulation.

(3) To support decision making. This type of MIS is appropriately called Decision Support System (DSS). DSS attempts to integrate the decision maker, the data base, and the quantitative models being used.

When information systems are designed to provide information needed for effective decision making by managers, they are called management information systems. MIS is a formal system for providing management with accurate and timely information necessary for decision making.

The system provides information on the past, present and project future and on relevant events inside and outside the organization. It may be defined as a planned and integrated system for gathering relevant data, converting it in to right information and supplying the same to the concerned executives. The main purpose of MIS is to provide the right information to the right people at the right time.

A management information system is an integrated man – machine systems that provides information to support the planning and control function of manager in an organization. For .example, an organization often processes a lot of data which it is required by law to furnish to various government regulatory agencies. Such a system, while it may have interfaces with an MIS, would not be a part of it, instances of such systems is salary disclosures and excise duty statements.

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Information & Business Economic Analysis

Generally, MIS deals with information that is systematically and routinely collected in accordance with a well-defined set of rules. Thus, and MIS is a part of the formal information network in an organization. Normally, the information provided by an MIS helps the managers to make planning and control decisions. Now, we will see, what is planning and control. Every organization in order to function must perform certain operations. For Example, a car manufacturer has to perform certain manufacturing activities; a wholesaler has to provide water to its area of jurisdiction. All these are operations that need to be done. Besides these operations, an organization must make plans for them that it must decide on how many and what type of cars to make next month or what commissions to offer retailers or what pumping stations to install in the next five years.

Also an organization must control the operations in the light of the plans and targets developed in the planning process. The car manufacturer must know if manufacturing operations are in line with the targets and if not, he must make decisions to correct the deviation or revise his plans. Similarly the wholesaler will want to know the impacts that his commissions have had on sales and make decisions to correct adverse trends.

Effective management information systems are needed by all business organization because of the increased complexity and rate of change of today’s business environment. For Example, Marketing manager need information about sales performance and trends, financial manger returns, production managers needs information analyzing resources requirement and worker productivity and personnel manager require information concerning employee compensation and professional development? Thus, effective management information systems must be developed to provide modern managers with the specific marketing, financial, production and personnel information products they required to support their decision making responsibilities.

An MIS provides the following advantages.

1. It facilitates planning: MIS improves the quality of plants by providing relevant information for sound decision making. Due to increase in the size and complexity of organizations, managers have lost personal contact with the scene of operations.

2. In Minimizes information overload: MIS change the larger amount of data in to summarize form and there by avoids the confusion which may arise when managers are flooded with detailed facts.

3. MIS Encourages Decentralization: Decentralization of authority is possibly when there is a system for monitoring operations at lower levels. MIS is successfully used for measuring performance and making necessary change in the organizational plans and procedures.

4. It brings Coordination: MIS facilities integration of specialized activities by keeping each department aware of the problem and requirements of other departments. It connects all decision centers in the organization.

5. It makes control easier: MIS serves as a link between managerial planning and control. It improves the ability of management to evaluate and improve performance. The used computers has increased the data processing and storage capabilities and reduced the cost.

6. MIS assembles, process, stores, retrieves, evaluates and disseminates the information.

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Information & Business Economic Analysis

Further information about MIS can be found at the Bentley College Journal of MIS and the US Treasury’s MIS handbook, and an example of an organizational MIS division can be found at the Department of Social Services for the state of Connecticut.

To function effectively as an interacting, interrelated, and interdependent feedback tool for management and staff, MIS must be "useable." The five elements of a useable MIS system are: timeliness, accuracy, consistency, completeness, and relevance. The usefulness of MIS is hindered whenever one or more of these elements are compromised.

TimelinessTo simplify prompt decision making, an institution's MIS should be capable of providing and distributing current information to appropriate users. Information systems should be designed to expedite reporting of information. The system should be able to quickly collect and edit data, summarize results, and be able to adjust and correct errors promptly.

AccuracyA sound system of automated and manual internal controls must exist throughout all information systems processing activities. Information should receive appropriate editing, balancing, and internal control checks. A comprehensive internal and external audit program should be employed to ensure the adequacy of internal controls.

ConsistencyTo be reliable, data should be processed and compiled consistently and uniformly. Variations in how data is collected and reported can distort information and trend analysis. In addition, because data collection and reporting processes will change over time, management must establish sound procedures to allow for systems changes. These procedures should be well defined and documented, clearly communicated to appropriate employees, and should include an effective monitoring system.

CompletenessDecision makers need complete and pertinent information in a summarized form. Reports should be designed to eliminate clutter and voluminous detail, thereby avoiding "information overload."

RelevanceInformation provided to management must be relevant. Information that is inappropriate, unnecessary, or too detailed for effective decision making has no value. MIS must be appropriate to support the management level using it. The relevance and level of detail provided through MIS systems directly correlate to what is needed by the board of directors, executive management,departmental or area mid-level managers, etc. are in the performance of their jobs.

Core Competencies:

Every market leading enterprise will have at least one core competency – that is, a function they perform better than their competition. By building an exceptional management information system into the enterprise it is possible to push out ahead of the competition. MIS systems provide the tools necessary to gain a better understanding of the market as well as a better understanding of the enterprise itself.

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Information & Business Economic Analysis

Enhance Supply Chain Management:

Improved reporting of business processes leads inevitably to a more streamlined production process. With better information on the production process comes the ability to improve the management of the supply chain, including everything from the sourcing of materials to the manufacturing and distribution of the finished product.

Quick Reflexes:

As a corollary to improved supply chain management comes an improved ability to react to changes in the market. Better MIS systems enable an enterprise to react more quickly to their environment, enabling them to push out ahead of the competition and produce a better service and a larger piece of the pie.

MIS which meets the five elements of use ability is a critical ingredient to an institution's short- and long-range planning efforts. To achieve sound MIS, the organization's planning process should include consideration of MIS needs at both the tactical and strategic levels. For example, at a tactical level MIS systems and report output should support the annual operating plan and budgetary processes. They should also be used in support of the long term strategic MIS and business planning initiatives. Without the development of an effective MIS, it is more difficult for management to measure and monitor the success of new initiatives and the progress of ongoing projects. Two common examples of this would be the management of mergers and acquisitions or the continuing development and the introduction of new products and services.

Management needs to ensure that MIS systems are developed according to a sound methodology that encompasses the following phases:• Appropriate analysis of system alternatives, approval points as the system is developed or acquired, and task organization.• Program development and negotiation of contracts with equipment and software vendors.• Development of user instructions, training, and testing of the system.• Installation and maintenance of the system.

Depending on the size and complexity of its MIS system, an institution may need to use different manuals for different users such as first-level users, unit managers, and programmers.

MIS which meets the five elements of use ability is a critical ingredient to an institution's short- and long-range planning efforts. To achieve sound MIS, the organization's planning process should include consideration of MIS needs at both the tactical and strategic levels. For example, at a tactical level MIS systems and report output should support the annual operating plan and budgetary processes. They should also be used in support of the long term strategic MIS and business planning initiatives. Without the development of an effective MIS, it is more difficult for management to measure and monitor the success of new initiatives and the progress of ongoing projects. Two common examples of this would be the management of mergers and acquisitions or the continuing development and the introduction of new products and services.

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Information & Business Economic Analysis

Management needs to ensure that MIS systems are developed according to a sound methodology that encompasses the following phases:

• Appropriate analysis of system alternatives, approval points as the system is developed or acquired, and task organization.

• Program development and negotiation of contracts with equipment and software vendors.

• Development of user instructions, training, and testing of the system.

• Installation and maintenance of the system.

Depending on the size and complexity of its MIS system, an institution may need to use different manuals for different users such as first-level users, unit managers, and programmers.

Before the real-time integrated system was developed, Southside Electric used six databases to store information on outages, dispatches, electricity usage, geographic mapping, billing and accounts receivable—and the databases were not connected to each other.

In 2005, Southside Electric set out to build a real-time integrated system. The goal was to have all databases appear as if they were one, and to create a system that linked all departments and functions to provide employees with reliable information. The utility turned to a service-oriented architecture (SOA) to aggregate and integrate information from the separate databases. The systems integrated include a customer information system (CIS), geographic information system (GIS), automated meter reading, financial management, materials management and mobile data.

The benefits of Southside’s new system was that the information gathered from the field was updated across systems in real time, eliminating the need for manual data transfer processes that used to take a half-hour to complete. The automated updates also reduced the risk of errors associated with repetitive manual data entry, so technicians have the most accurate information.

It has been seen that before the new software was deployed, workers would take service order off a printer and place the order in a supervisor's tray. The supervisor would sort and prioritize orders, and place them in a serviceman's tray. The serviceman would pick up the service order, and begin the service call. Upon completion, the serviceman would bring the service order to the office, where a clerk would document that the work had been completed and so on.

But now, when the service order comes in, it is displayed on the mobile system in a service technician's vehicle where the serviceman does the work, completes the service order electronically in the vehicle and posts the data immediately on all databases.

2. What are the steps involved in designing a Management Information System? Do you think Southside’s new system will enable it to formulate more effective strategies? Discuss.

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Information & Business Economic Analysis

STEPS IN DEVELOPING MIS

After facilitating an understanding of basic concepts and elements of MIS, the following are the steps involved in creating a MIS.

Preliminary Investigation

In this phase, the agency needs to critically assess its current system in order to justify the cost and time involved before deciding on having a new MIS. The facilitator needs to clarify the MIS need not always involve computers. However, if there are computers the work gets accelerated. In preliminary investigation, the following things are taken into consideration.

· The problem

· Magnitude and scope

· Alternatives

· Viability and cost effectiveness

Requirements Analysis

The methods and means of ascertaining the information needs to be addressed by MIS. Further, the mechanisms for gathering information from primary and secondary sources are to be determined by agencies. A critical factor is ascertaining MIS needs of primary and secondary users.

· Knowing the primary and secondary users

· Ascertaining user needs

· Primary and secondary sources of information

· Design, development and implementation needs

System Design

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Information & Business Economic Analysis

The facilitator explains basics of a MIS system elucidating the inputs, the processing and the outputs. While inputs include information provided by front-line workers, the outputs could be various types of reports, including those sent periodically to funders. The procedures define how and in what format the information will be inputted and by whom and at what intervals. The storage could be manual or electronic or both. Design specifies the operational parameters at a drawing board stage. One of the inputs for MIS could be information from a client database.

Other stages

The facilitator systematically discusses the different steps in MIS development in a universalized perspective. In other words, it needs to be specified that these steps need to be tailored to one’s own situation. In the acquisition stage, hardware is procured after appraisals and cost analysis. Draw attention to the need to ensure compatibility between what is being acquired and what is already available within the agency. The implementation step is a crucial one consuming considerable amount of time in MIS development. Here the application development is done customized to the agency’s needs. The procedure and user manuals are developed and personnel are oriented in using MIS. The software is installed once it is tested and debugged.

Acquisition/procurement

· Compatibility

· Cost effectiveness

· Performance standards

· After sales service

· Configuration

· Portability

Implementation/installation

· Application development

· Testing

· Debugging – logical and syntactical

· Procedure and user manual preparation

· Orientation and training

Maintenance and up gradation

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Information & Business Economic Analysis

WHAT COULD BE THE ROLE OF MIS COORDINATOR IN DEVELOPING A MANAGEMENT INFORAMTION SYSTEM

· Interact with user groups

· Identify the needs of users of MIS

· Designing of reporting formats

· Identify systems of information flow

· Ensure smooth flow of information within and outside the organization

· Time management – tracking inputs/reports

· Act as interface among sections and management tiers

· Identify training needs of staff in MIS jointly with application developer.

· Organize monthly/periodic meetings to assess performance, maintain minutes and follow-up on the decisions.

· Interface with the various divisions/units in the organization for information sharing.

Southside’s new system will enable to formulate more effective strategies:

It’s seen that before the new software was deployed, a worker would take a service order off a printer and place the order in a supervisor's tray. The supervisor would sort and prioritize orders, and place them in a serviceman's tray. The serviceman would then pick up the service order, and begin the service call. Upon completion, the serviceman would bring the service order to the office, where a clerk would document that the work had been completed and so on.

But now, when a service order comes in, it is displayed on the mobile system in a service technician's vehicle and then the serviceman does the work, completes the service order electronically in the vehicle and posts the data immediately on all databases.

Here it’s been seen that coordinating all activities in the supply chain brings proper control over the functioning of the organization. Southside should minimize costs, inventory, and cycle time and should maximize profits. The use of internet and software solutions will help the organization to keep a track of whatever happens in the organization.

Southside should coordinate all the processes that involve customers. They should maximize the value of the firm to all customers and value of the customer to the firm.

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