UnitI Basic of Management Theory Practices Information System

Unit-I Basic of Management Theory & Practices ØInformation System: Information system is an interrelated components that collect, process, store and distribute information to support decision making and control in an organization. ØThey contain information about significant people, places, and things.

IS Ø IS plays role in • Collecting data or information • Organizing data or information • Storing data or information • Communication of data or information

• Information means data that have been shaped into a form that is meaningful and useful to humans beings. • Data are streams of raw facts representing events occurring in org. or physical environment before being in a form understandable to humans. 3 activities in IS produce the information are input, output, and processing.

Information Systems In Organizations Ø This Information System collects, stores and processes data to give an organization real time useful and accurate information. Ø This Information System encompasses data gathering information from people and machines that collect, process, output and store data.

Examples • Examples of information systems include transaction processing systems, customer relationship systems, business intelligence systems and knowledge management systems. • Information technologies use software, hardware, data and procedures to process large amounts of information and to perform complex calculations. • Transaction processing systems, such as online air ticket booking systems, collect data from users and generate an airline ticket and a bill.

Examples(Cont. . ) • Customer relationship systems track customer activities, purchasing trends, product defects and customer inquiries. They allow customers to interact with companies for service, product feedback and problem resolutions. • Business intelligence systems predict future sales patterns, summarize current costs and forecast revenues. • Knowledge management systems analyze, organize and share knowledge with organization members for innovation and improved performance.

Role of Information Systems In Organizations • Information systems play a vital role in an organizations’ overall performance. • They provide many advantages to their users which range from simple transaction processing at the operational level to difficult tasks such as making important and competitive decisions at the strategic level of the organization.

Role of Information Systems in Organization • Indentify the problems • Assist in decision making • Perform Comparison among various parameters • Redefine organizational boundaries as per the requirements of the information system and the organization.

Information Systems Serve 3 Roles

1. Support strategies for competitive advantage • Gaining competitive advantage is critical for organizations. Baltzan and Phillips (2010, p. 16) define competitive advantage as a product or service that an organization’s customers value more highly than similar offerings from its competitors’ (in other words, you have something useful (i. e. products, services, capabilities) that your competitors do not have). Competitive advantages are typically temporary as competitors often seek ways to duplicate the competitive advantage (Baltzan & Phillips 2010, p. 16). In order to stay ahead of competition, organizations have to continually develop new competitive advantages.

1. Support strategies for competitive advantage(Contd. . ) • To survive and succeed, a business must develop and implement strategies to effectively counter the above five competitive forces. O’Brien and Marakas (2011, p. 49) suggest that organizations can follow one of five basic competitive strategies, which are based on Porter’s three generic strategies of broad cost leadership, broad differentiation, and focused strategy. The five competitive strategies are: cost leadership, differentiation, innovation, growth, and alliance.

Table : Competitive Strategies & Roles of Information Systems Competitive Strategy Roles of Information Systems 1. Cost Leadership Organizations can use information systems to fundamentally shift the cost of doing business (Booth, Roberts & Sikes 2011) or reduce the costs of business processes or/and to lower the costs of customers or suppliers, i. e. , using online business to consumer & business to business models, e-procurement systems to reduce operating costs. 2. Organizations can use information systems to develop Differentiati differentiated features or/and to reduce competitors’ on differentiation advantages, i. e. , using online live chatting systems and social networks to better understand serve customers; using technology to create informediaries to offer value-added service and improve customers’ stickiness to your website/business(Booth, Roberts, and Sikes 2011); applying advanced and established measures for online operations to offline practices (i. e. , more accurate and systematic ways of measuring efficiency and effectiveness of advertising) (Manyika 2009).

Table : Competitive Strategies & Roles of Information Systems Competitive Strategy Roles of Information Systems 3. Innovation Organizations can use information systems to identify and create (or assist in creating) new products and services or/and to develop new/niche markets or/and to radically change business processes via automation (i. e. , using digital modelling and simulation of product design to reduce the time and cost to the market. 4. Growth Organizations can use information systems to expand domestic and international operations or/and to diversify and integrate into other products and services 5. Strategic Alliance Organizations can use information systems to create and enhance relations with partners via applications, such as developing virtual organizations and inter-organizational information systems.

Role of Information Systems In Organizations(Cont. . ) • Three fundamentals roles Information systems support business processes and operations. Secondly, they support decision making of employees and managers and lastly, they support strategies for competitive advantage. • These three fundamental roles encompass any other roles played by information systems in an organization. Information systems support business processes and operations of an organization in many ways.

• Information systems support business processes and operations of an organization in many ways. • In a hotel for instance, customer check - ins and check-outs are done by computers and software which makes work easy unlike the traditional method of using notebooks and paper to record such information. Customers can now even make their own bookings through the hotels website instead of visiting the hotel in person to do so, which may lead to pressure on front office staff. • Systems have now been developed to gather customer information easily and quickly. Now, because of information systems, the various departments of an organization work together with ease. The housekeeping department of a hotel can now inform the front office about which rooms are ready for use and which are not, without personal interactions of staff as a result of information systems.

• Information systems types like Management Information System (MIS), Decisions Support Systems (DSS) and Executive Information Systems (EIS) are specially designed to help management of an organization in their decision making process. • These systems generate typical reports and graphs on issues such as trend of orders, customer analysis, product profitability, finished stock positions and forecasts, accident and absentee reports, job evaluation reports and many more. Managers and employees use these reports and graphs as a basis for their decisions.

• For example, decisions on which meals that need to be added or removed from a hotel menu may be taken by the food and beverage manager after a typically analysis is made by the help of a Decisions Support System. Finally, information systems also support strategies for competitive advantage. Competition in today’s business is keen and what will become important is how quickly companies can convert their reams of information.

Components of Information Systems

Information Technology & Information Systems • IT refers to all of the computer based information systems used by organizations and their underlying technologies. • IS is a set of interrelated components that collect, manipulate data and information. • Ex: ATM’s, railway reservation system

Information System Manager and his challenges • Information system manager implements information in an organization with the team of IT professionals. • The role involves planning, installing , maintenance and focus on issues such as network security and to coordinate all activities/ operations.

Roles and Responsibilities • Hardware and software upgrades • Implementation of network • Assign and review work of developers , system analyst etc. • Providing data security and control

Challenges • Control over complexities in changing business landscape, application environments, project management. • Need to be responsible for tactical maintenance of systems and initiatives, monitoring the key metrics and effecting changes to meet business needs as they arise.

Information Systems and Management Strategy Management strategies are techniques that are used to direct and control an organization to achieve a set of goals. They include strategies for leadership, administration and business execution. 1. Strategic Management: This is a top level management including CEO and top executives to flourish overall organizational goals, policies and objectives as planning process. 2. Tactical Management: This involves mid-level management including selfdirected teams as well as managers to prepare preliminary schedules , budgets and business objectives. 3. Operational Management: This is core management which works together in a team by using the policies , rules, schedules and budgets to bring into effect for achieving short term goals

1. Strategic Management For example, a for-profit technical college wishes to increase enrollment of new students and graduation of enrolled students over the next three years. The purpose is to make the college known as the best buy for a student's money among five forprofit technical colleges in the region, with a goal of increasing revenue. In this case, strategic management means ensuring that the school has funds to create high-tech classrooms and hire the most qualified instructors. The college also invests in marketing and recruitment and implements student retention strategies. The college’s leadership assesses whether its goals have been achieved on a periodic basis.

Examples • What will EMPLOYMENT LEVELS be in FIVE YEARS? • What are the LONG-TERM INDUSTRY COST trends? • What PRODUCTS should we be making in FIVE YEARS?

• Strategic decisions are long term, complex decisions made by senior management. These decisions will affect the entire direction of the firm. • Tactical decisions are medium term, less complex decisions made by middle managers. They follow on from strategic decisions and aim to meet the objectives stated in any strategic decision. For example in order to become the market leader, a firm may have to launch new products/services or open new branches. • Operational decisions are day to day decisions made by junior managers that are simple and routine. This could involve the regular ordering of supplies

Example • • • support operational managers by keeping track of the elementary activities and transactions of the organization, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow of materials in a factory. The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization. How many parts are in inventory? What happened to Mr. Williams's payment? How many hours worked each day by employees on a factory floor.

Concepts of Information Systems • An information system (IS) is an organized system for the collection, organization, storage and communication of information. • The main object of an information system is to provide information to its users. Information systems vary according to the type of users who use the system.

Example: End User, Data Entry Person, Manager, Programmer, DB Administrator, Cashier, Secretary, Professor.

Transaction Processing System (TPS) • Supports Operations • Updates Operational Databases • Examples: – ATM Machine System – Banking Transactions – Cash Register System – Point of Sale Transactions – Accounting System – Checking Account Transactions

Management Information System (MIS) • Analysis & Reporting • Charts, Graphs, Summary Tools • Converts raw data from transaction processing system into meaningful form • Examples: – Spreadsheet (Excel) – One of the first and most basic • provides information for managing an organization • Extract and summarize data from TPSs • Allow managers to monitor & direct the organization • Provide accurate feedback

Decision Support System (DSS) – Designed to help decision makers – Provides interactive environment for decision making