Systems Approach & Framework for

Management Information Systems

Dr. Ashok Agarwal

Management Information Systems

A system to provide Relevant Information :

in Right time

in Right format

to all levels of the organizations

to support the Decision Making Process

MIS-DSS/AKA

System

Essential characteristics of a system are “composed of interacting parts, each one having interest of its own.”

(R Ackoff)

Set of components that interact to accomplish some purpose

Sub-systems Interfaces Goal

MIS-DSS/AKA

Some ExamplesUniversity :

Components : Students, Faculty, Staff, Administration Building, Equipment, Ideas and

Procedures.

Goals : * Educating Student

* Producing Research

* Providing service to community

Business Organizations :

Components : Marketing, Productions, Sales, Research, Finance Etc.

Goals : * Stake holders return

* Social objective (?)MIS-DSS/AKA

The System and its Environment

Inputs

Raw materials costsResources

Processes

ProceduresProgramsToolsActivitiesDecisions

Outputs

Performance ConsequencesFinished ProductsServices delivered

Decision maker

System boundary

Environment

Stockholders Banks

Vendors

Com

petit

ors

Government

Customers

Wea

ther

con

ditio

ns

FeedbackFeedback

MIS-DSS/AKA

System Boundary :System separate from environment

• Physical (walls)• Non-physical (Time)

Type of Systems :Open : System Interacting with

its environment.

Closed : No interactions

MIS-DSS/AKA

Systems Characteristics

Control :A standard for acceptable performance.A procedure to measure performance.Comparison actual : AcceptableFeedback

System Efficiency

Efficiency : Measure of I/O Ratio

Effectiveness : Degree to which goals are achieved.

Peter Drucker : Effectiveness doing Right things. Efficiency doing things Right. MIS-DSS/AKA

Systems Characteristics contd…

Decision Process(H. Simon)

Programmed Non-programmed

Decisions Decisions

* Routine * Fuzzy

* Repetitive * Complex non-repetitive

* Standard Solution Exist * No standard solution

MIS-DSS/AKA

Decision Making Process(H. Simon)

Intelligence : Searching for conditions that call for decisions.

Design : Development and Evaluation of alternative courses of Action.

Choice : Selection of a Course of Action.

MIS-DSS/AKA

Reality

Implementation of solution

Simplification

Assumptions

Verification, testing of proposed solution

Choice Phase

Solution to the modelSensitivity analysisSelection of best (good) alternative(s)Plan for implementation

Design Phase

Formulate a modelSet criteria for choiceSearch for alternativesPredict and measure outcomes

Validation of the model

Intelligence Phase

Organizational objectivesSearch and scanning proceduresData collectionProblem identificationProblem ownershipProblem classificationProblem statement

Problem statement

Alternatives

Solution

MIS-DSS/AKA

Planning & Control Systems : A Framework for Analysis (R.Anthony)

Management activity classified into three categories ; Each one different to require distinctive Planning & Control Systems.

Strategic Planning : Defining objectives. Resource needed. Policies relating to acquisitions, use and deposition of resources. Typically top management-innovation/creativity

Management Control : Getting and using resources efficiently & effectively to accomplish

objectives. Involves significant interpersonal interaction.

Operational Control : Process of assuring specific tasks are efficiently & effectively done.

BOUNDARIES QUITE OFTEN VAGUE

MIS-DSS/AKA

Information CharacteristicsParameters Strategic

PlanningManagement

ControlOperational

Control

Accuracy Low High

Level of Detail Aggregate Detailed

Time Horizon Future Present

Frequency of use Infrequent Frequent

Source External Internal

Type of Information

Qualitative Quantitative

Age of Information

Older Current

MIS-DSS/AKA

Factors Affecting Decision Making

Factor Trend ResultsTechnology Increasing

Information/computers Increasing

Structural complexity Increasing

Competition Increasing

International markets Increasing

Political stability Decreasing

Consumerism Increasing

Government intervention Increasing

Changes, fluctuations Increasing

More alternatives to choose from

Larger cost of making errors

More uncertainty regarding the future

Need for quick decisions

MIS-DSS/AKA

Decision Support Systems

Assist managers in their decision making processes. Support RATHER than replace managerial judgment. Improve the effectiveness of decision making rather

than efficiency.

Utilize technology to :

MIS-DSS/AKA

A Framework for MIS (Gorry & Scott Morton)

Type of Decision

Operational Control

Management Control

Strategic Planning

Support Needed

Structured Inventory recording

Linear programming for manufacturing

Plant location

Clerical, EDP or OR models

Semistructured Bond trading Setting market budgets for consumer products

Capital acquisition analysis

DSS

Unstructured Selecting a cover for Time magazine

Hiring managers R&D portfolio development

Human intuition

MIS-DSS/AKA

Implications for Design & Implementation :

The people involved in building DSS for semi-structured decisions need to be different in terms of skills and attitudes compared to those building systems for structured Decisions.

Technology supporting ill-structured problems uses computer power – differently – from large data processing operations.

Models supporting managers decisions may differ from optimization algorithms.

Process by which DSS are constructed – ongoing evolutionary service THAN Delivery of final product.

Managers participation A MUST

MIS-DSS/AKA

Global Organizations Evolving Technology

Internet/Networked structures Seamless dataflow across the company Linkage with External entities (customer-suppliers)

Changing Business Environment Flattening organizational structure Location independence

Ability to operate Globally Business function distributed globally (design, mfg, customer support) 24x7 operations Communications with Suppliers/Distributors.

MIS-DSS/AKA

Individual economy : knowledge & Information based economies.

Hierarchical/centralized : Flattened / Decentralized

Formal Plans : Informal Communication Network

Global Organizations

MIS-DSS/AKA

Digital Firm

All significant business processes and relationships with customers, suppliers and employees are digitally enabled and key corporate assets are managed digitally (Intellectual property, core competencies, financial & human assets)

MIS-DSS/AKA