Hsvj1z5Q3K1438351440

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NATIONAL OPEN UNIVERSITY OF NIGERIA

SCHOOL OF EDUCATION

COURSE CODE: LIB 810

COURSE TITLE: MANAGEMENT INFORMATION SYSTEM

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LIBS 810 MANAGEMENT INFORMATION SYSTEM

COURSE TEAM----DEVELOPER-PROF ZAKARI MOHAMMED A B U Zaria

WRITER- DR NURUDEEN M MAIFATA A B U Zaria

EDITOR PROF ZAKARI MOHAMMED A B U Zaria

MODULE 1

UNIT 1: OVERVIEW OF MANAGEMENT INFORMATION SYSTEMS

UNIT 2: MEANING OF MANAGEMENT INFORMATION SYSTEM (MIS)

UNIT 3: INFORMATION TECHNOLOGY

UNIT 4: SYSTEMS CONCEPT

UNIT 5: INFORMATION SYSTEMS, ORGANIZATIONS AND STRATEGY

MODULE 2

UNIT 1: COMPONENTS OF MANAGEMENT INFORMATION SYSTEM

UNIT 2: TYPES OF MANAGEMENT INFORMATION SYSTEM

UNIT 3: INFORMATION TECHNOLOGY AND INFORMATION PROCESSING

UNIT 4: MANAGING DATA RESOURCES

MODULE 3

UNIT 1: KNOWLEDGE MANAGEMENT

UNIT 2: ARTIFICIAL INTELLIGENCE

UNIT 3: INFORMATION SYSTEMS IN GLOBAL BUSINESS TODAY

UNIT 4: ELECTRONIC COMMERCE

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MODULE 4

UNIT 1: THE STRATEGIC ROLE OF INFORMATION SYSTEM AND INF.S.ORG

UNIT 2: DEVELOPING BUSINESS SYSTEMS

UNIT 3: IMPLEMENTING BUSINESS SYSTEMS

MODULE 5

UNIT 1: ETHICAL ISSUES AND FUTURE OF INFORMATION SYSTEMS

UNIT 2: TELECOMMUNICATIONS AND THE NEW INFORMATION ARCHITECTURE

UNIT 3: INFORMATION SYSTEMS SECURITY

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MODULE 1

UNIT 1: OVERVIEW OF MANAGEMENT INFORMATION SYSTEMS

CONTENTS

1.0 Introduction 2.0 Objectives

3.0 Main Content

3.1 Management

3.1.1 Process

3.2 Managerial Functions

3.2.1 Planning

3.2.2 Organising

3.2.4 Controlling

3.3 Levels of Management

3.3.1 Top or Strategic Level of Management

3.3.2 Middle or Tactical Level of Management

3.3.3 Lower or Operational Level of Management

3.4 System

3.4.1 Open Systems

3.4.2 Close Systems

3.5 Data

3.5.1 Data Processing

3.5.2 Characteristic of Data

3.6 Information

3.6.1 Characteristics of Good Information

3.6.3 Functions of Information

4.0 Conclusion

5.0 Summary

6.0 Tutor Marked Assignment 7.0 References/Further Readings

1.0 INTRODUCTION

Management Information Systems are foundation for conducting business today. In many

organizations, survival and even existence is difficult without extensive use of information

technology. We must bear in mind that in the application of management information system in

organization, we are dealing with the concept of management and technology, and how we can

harmoniously use the duo to achieve effective medium for analyzing organizational information.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

Define management, information and systems

List managerial levels and functions

Distinguish between data and information

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Describe how data are processed to give information.

Identify the characteristics of good information and functions of information.

3.0 MAIN CONTENT

3.1 Management

The complexity of management is such that the word carries a number of acceptable meanings.

The term management may therefore, be applied in different ways, its meaning discernible from

content. McFarland (1974) defines management as that process by which managers create, direct, maintain and operate purposive organizations through systematic coordinated cooperative

human effort. In their own way Brech et al (1972) say management is concerned with seeing that jobs get done and done efficiently. While according Fayols in (Cole: 1986) he defined management as: to forecast, plan, organize, command, coordinate and control.

In Fayols view to forecast plan mean to examine the future and drawing a plan of action. To organize means building a structure of both material and human in an organization. To command

means maintaining activities among employees. To control means to ensure everything is in

conformity with the plan and standard.

From the above, it may be deduced that managerial action can direct and control to a great extent

the nature, degree and pace of change within the organization. It also shows that the process of

management is rooted in the action of people at work.

3.1.1 Process

A process is a systematic way of doing things, process management is the ensemble of activities

of planning and monitoring the performance of process. Hence, we define management as a

process because all managers regardless of their particular attitude or skills engage in certain

related activities in order to achieve their objectives. In order to achieve the objectives of the

organizations, there is need for assessing an organizations goals and creating a realistic, detailed

plan of action for meeting those goals and it is necessary to bring together all available resources

called Six Ms of management i.e. men, machine, material, methods, money and market. These basic steps in the process which involve creating a road map that outlines that each task the

organization must accomplish to meet its overall objectives.

3.2 Managerial Functions

The major functions of management include the following:

3.2.1 Planning

In designing an environment for effective performance of individuals working together in

groups, the most essential task is to see that purposes and objectives, and method of attaining

objectives are clearly understood. If group effort is to be effective, people must know what they

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are expected to accomplish. This is the planning function that is the basic of all the managerial

functions.

George (1964)defines planning as the selecting and relating of fats and the making and using of

assumptions regarding the future in the visualization and formulation of proposed activities

believed necessary to achieve desired results, this is to say, in planning, a manager uses facts,

reasonable premises and constraints and from all of these he visualizes and formulates what the

necessary activities are, how they will be conducted and what will be their contribution to

achieving desired results.

Effective planning is based on facts not emotions or wishes. Planning is intellectual in nature, it

is a mental work. Planning can also be simply put as the process of setting objectives and putting

up the necessary steps to achieve the objects.

3.2.2 Organizing

Hodgets m. Richard (1992), in Bagobirin and Kassah (2009)define organization as the process of assigning duties and coordinating efforts among all organization personnel to ensure

maximum efficiency in the attainment of objectives. This implies that the jobs that need to be

done are grouped together into departments. This is done so that each employee would know

precisely what he should do and what is expected from him. Organizing can also be defined as

that part of managing that involves establishing an internal structure of roles for people in an

enterprise to fill.

In looking at organization as a process, several fundamental inputs must be considered which

Koontz and Weilrich(1984) in Bagobirin and Kassah (2009) outlined as follows:

(i) The structure must reflect objectives and plans because enterprise activities are derived from these.

(ii) The structure must reflect the authority available to enterprise managers; this depends upon such social institutions as private properly, representative government and sanctions

individuals in operating a business, a university or any group venture.

(iii) Organization structure must reflect its environment. The structure must be designed to work to permit contributions by members of a group and to help people gain objectives

efficiently in a changing future. In this sense a workable organization structure can never

be either mechanical or static.

(iv) The organization must be staffed with people obviously, the activity groupings and authority provisions of an organization structure must take into account peoples limitations and customs, that is, the kind of people who are to be employed.

3.2.3 Coordination

Coordination is a process combining activities in a consistent and harmonious way to ensure

efficiency and effectiveness in an organization. George R. Terry (1964) defines coordinating as

the orderly synchronization of efforts to provide the proper amount, timing and directing of execution resulting in harmonious and unified action to a stated objective. It can be viewed as the effort to find the winning combination from the basic resources on hand.

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Coordination deals with unifying the effort of people and is concerned with:

(i) The amount of these efforts, both as to quantity and quality. (ii) The timing of these efforts. (iii) The directing of or determining the causes of these efforts.

Coordination can also be seen as the process of integrating the objectives and activities of the

separate unit (departments or functional areas) of an organization in order to achieve

organizational goal efficiently.

3.2.4 Controlling

The real test of any manager is the result that he achieves. Nothing is accomplishing unless

efforts bring about results. To apply the real test to any manager necessitates a criterion by which

results can be evaluated and, if required corrective measures adopted. If the other fundamental

functions of management were performed perfectly, there would be little need for controlling.

However, very rarely, if ever, is perfect planning achieved, organizing above any possible

reproach and coordinating a hundred percent (100%) effective. Some mistakes, loss of efforts,

friction and misdirected effort, may results and make for deviations from the intended goals.

George (1964) defined controlling as determining what is being accomplished, that is, the performance, evaluating the performance, and if necessary applying corrective measures so that

performance takes place according to plans.

Cole (1996) notes that if planning represented the route map for the journey, then organizing

represented the means by which one could arrive at the chosen destination. We can now add that

controlling ensured that the travelers know how well they are progressing along the route, how

correct their map is, and what deviations, if any, they need to make to stay on course.

SELF ASSESSMENT EXERCISE

Define the term management and vividly explain the functions of management.

3.3 LEVELS OF MANAGEMENT

Managers are classified by their levels within the organization. There are three basic

management levels: top managers, middle managers and first-line managers as shown in figure

1.1

Top Management

Middle Managers

First-Line Managers

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Fig. 1.1 Levels of Management

3.3.1 First-Line Managers

In general first-line manager are directly responsible for the production of good or services. They

may be called sales managers, section or production supervisors; depending on the organization.

This level of management is the link between the production or operations of each department

and the rest of the organization. However, first-line manager in most companies spend little time

with higher management or with people from other organizations. Most of their time is spend

side-by-side with the people they supervise.

3.2.2 Middle Manager

Middle managers received broad, general strategies and policies from top managers and translate

them into specific goals and plan for first-line-managers to implement. Middle managers

typically have titles such as department head, plant manager and director of finance.

3.3.3 Top Mangers

The overall direction and operations of an organization is the responsibility of top managers.

Typical titles of top managers are chief executive officer, president, chairman, division president

and executive vice president. Top managers develop goals, policies, and strategies for the entire

organization.

3.4 SYSTEM

Systems are composed of interrelated parts or sub-systems and the system can only be explained

as a whole. This is known as holism or synergy. Holism states that any whole is more than the

sum of its individual parts.

There are many definitions of the term system. A comprehensive one is that used by the Open University:

A. System is an assembly of part where: 1. The parts or components are connected together in an organized way. 2. The parts or components are affected by being in the system (and are changed by leaving

it).

3. The assembly does something. 4. The assembly has been identified by a person as being of special interest (Carter et al

1984).

This definition contains the essential elements of parts, relationships and objectives. It is very

broad and can apply to any of the systems around us, such as: The university, railway, hospital,

manufacturing company etc. A system could be open or closed.

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3.4.1 Open Systems

An open system is a system which interacts with it environment. It receives inputs and influences

from the environment and in turn, passes back outputs and influenced to the environment. All

social organizations are open systems. They that organization adapts to changes in the

environment is the key element in an organizations success and indeed its very survival.

Organizations as open systems attempt to monitor and anticipate environment disturbances.

3.4.2 Close Systems

A close system is the one that is isolated from its environment. Close systems are self-contained

so that the external environment does not influence the behavior of the system, nor does the

system influence its environment. The idea can only strictly be applied to mechanical and

physical systems as all social systems have some interaction with their environment.

Closed systems are required for stability and consistency, whereas open systems are required for

uncertain conditions. Closed systems are designed for efficiency, open systems for survival.

Fig. 1.2 Model of an Open System

3.5 DATA

Data is unprocessed facts and figures. Plain collected data, as raw facts cannot help in decision

making. However, data is the raw material that is organized, structured and interpreted to create

useful information system.

Data is defined as groups of non-random symbols in the form of text, images, voice representing qualities, action and objects.

3.5.2 DATA CHARACTERISTICS

a. They are facts obtained by reading, observation, counting, measuring and weighing etc. which are then recorded

b. Data are derived from external and internal sources (activities with firm). c. Data may be produced as an automatic by-product of some routine but essential operation

such as the production of an invoice or alternative a special counting or measuring

procedure must be introduced and the result recorded.

d. The source of data need be given considerable attention because if the sources of the data flawed, any resulting information will be worthless.

Conversion or Process

Outputs Environment

Inputs Environment

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3.5.1 Data Processing

Data or processing systems perform the essential role of collecting and processing the daily

transactions of the organizations. Data processing is necessary to ensure that the day-to-day

activities of the organization are processed, recorded and acted upon. Files are maintained which

provide both the current data for transaction, for example the amount invoiced and cash received

during the month for statement preparation, and which also serve as a basis for operational and

tactical control and for answering enquiries.

Fig. 1.3 Data Processing Systems

3.6 INFORMATION

Information is interpreted data; created from organized structured and processed data in a

particular context, information can be recorded as signs, or transmitted as signals. Information is any kind of event that affects the state of a dynamic system that can interpret the information.

Conceptually, information is the message (utterance or expression) being conveyed. Therefore, in

a general sense, information is knowledge communicated or received concerning a particular fact or circumstance.

SELF ASSESSMENT EXERCISE 2

1. Define the following term: (i) Data (ii) Information

2. List 4 characteristics of Data

3.6.1 Characteristics of Good Information

Good information is that which is used and which create value. Experience and research shows

that good information has numerous qualities which are:

1. Relevance: Information must be relevant to the problem being considered. Too often reports, messages, tabulations etc. contain irrelevant parts which most prevent the user of

the information to get the actual meaning of what the sender wants.

2. Accuracy: Information should be sufficiently accurate for it to be relied upon by the manager and for the purpose for which it is intended.

3. Completeness: Ideally, all the information required for a decision should be available. However, in practice, this is not often obtainable. What is required is that the information

is complete in respect of the key elements of the problem. This suggests that there should

be interaction between information provides and users to ensure that the key factors are

identified.

4. Confidence in the source: For information to have value it must be used. For it to be used managers must have confidence in the source. Confidence is enhanced:

Data Processes Output

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a. The source has been reliable in the past b. There is good communication between the information producer and the manager. 5. Communication to the right person: All persons have a defined sphere of activity and

responsibility and should receive information to help them carry out their designated

tasks. In practice this is not always as easy as it sounds. It is quite common for

information to be supplied to the wrong level in the organization. a superior may not pass

it on the person who needs it whilst subordinates may hold onto information in an attempt

to make themselves seem indispensable.

3.6.2 Functions of Information a. Reduction of Uncertainty: Uncertainty exist where there is less than perfect knowledge.

Rarely, if ever is there perfect knowledge but relevant information help to reduce the

unknown.

b. And an aid to monitoring and control: By providing information about performance and the extent of deviations from planned level of performance, management are better

able to control operation.

c. As a means of communication: Managers need to know about developments, plans, forecasts, impending changes and so on.

d. As a memory supplement: By having historical information about performance, transactions, results of past actions and decisions available for reference, personal

memories are supplemented.

e. As an aid to simplification: By reducing uncertainty and enhancing understanding, problems and situations are simplified and become more manageable.

4.0 CONCLUSION

MIS exists in organization in order to help them implement the organizational structure and

dynamics of the enterprise for the purpose of managing the organization in a better way and

capturing the potential of the information system for competitive advantage.

5.0 SUMMARY

Management Information System is seen as a way of evaluating, analyzing and processing an

organization data to produce meaningful and useful information from which the management can

take decision to ensure future growth and development of the organization.

6.0 TUTOR-MARKED ASSIGNMENT

1. What are the functions of information in an organization?

2. Distinguish between data and information?

2. Define management and explain its role in a modern organizations?

4. Discuss managerial levels and explain their functions?

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7.0 REFERENCES/FURTHER READINGS

Bagobiri, Y.E. and Kassah V. (2009) Principles of Management (2nd

Ed.) Kaduna; Wonderful

Press.

Cole, G.A. (1986) Management Theory and Practice, (2nd

Ed.) London: Menthen.

George R. Terry (1964) Principles of Management, Richard D. Irwin, Inc. Homewood Illinois,

USA. Ghost Prentice Hall, Plc.

Koslowski. P. (ed.), (2010) Elements of a Philosophy of Management and Organization, Studies

in Economic Ethics and Philosophy, Springer-Verlag Berlin Heidelberg.

Simon, H. A. (1960)The New Science of Management Decision. NewYork: Harper & Row.

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MODULE 1

UNIT 2: MEANING OF MANAGEMENT INFORMATION SYSTEM (MIS)

CONTENTS

1.0 Introduction 2.0 Objectives 3.0 Main Content

3.1 Definition of Management Information System (MIS)

3.2 Objectives of MIS

3.3 Characteristics of MIS

3.4 MIS Need for Information Systems

3.5 Planning/Design of MIS

3.6 Problems with MIS

3.7 Goals of MIS

3.8 Role of the MIS

3.9 MIS and Computer

3.10 The Challenges of Information

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 Reference/Further readings

1.0 INTRODUCTION

This unit examines how management information systems can support management decision

making and it also dwells on the details of what management information systems in

organization encompass.

2.0 OBJECTIVES


1. Define Management Information Systems (MIS) 2. Mention Characteristics of MIS 3. Highlight Objectives of MIS 4. State the Problems with MIS

3.0 MAIN CONTENT

3.1 Management Information System

Lucey (2005) defined management information systems as: - a system using formalized

procedures to provide management at all levels in all functions with appropriate information

based on data from both internal and external sources, to enable them to make timely and

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effective decisions for planning, directing and controlling the activities for which they are

responsible.

Management information systems can be described as tools that help managers organize and

make decisions from their data. More simply, effective MIS aids communication. Unsurprisingly,

its still true that people generally accomplish more together than they do apart, and the old concept collaboration and communication is still at the core of business. Management

information systems strive to efficiently collect, format and communicate information to a wide

variety of people.

More so, Management Information System (MIS) is a computer-based system for collecting,

storing, processing and providing access to information used in the management of an

organization (Chartered Management Institute 2003).

3.2 OBJECTIVES OF MIS

Goals of an MIS are to implement the organizational structure and dynamics of the enterprise for

the purpose of managing the organization in a better way and capturing the potential of the

information system for competitive advantage.

Following are the basic objectives of an MIS:

1. Capturing Data: Capturing contextual data, or operation information that will contribute in decision making from various internal and external sources of organization.

2. Processing Data: The captured data is processed into information needed for planning, organizing, coordinating, directing and controlling functional of strategies, tactical and

operational level.

3. Information System: Information or processed data need to be stored for future use. 4. Information Retrieved: The system should be able to retrieve this information from the

storage as and when required by various users.

5. Information Propagation: Information or the finished product of the MIS should be circulated to its users periodically using the organizational network.

3.3 CHARACTERISTICS OF MIS

Following are the characteristics of an MIS

1. It should be based on a long-term planning. 2. It should provide a holistic view of the dynamics and structure of the organization. 3. It should work as a complete and comprehensive system covering an interconnecting sub-

system within the organization.

4. It should be planned in a top-down way, as the decision makers or the manager should actively take part and provide clear direction at the development stage of the MIS.

5. It should be based on need of strategic, operational and tactical information of manager of an organization.

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6. It should be able to make forecasts and estimates and generate advanced information, this providing a competitive advantage. Decision makes can take actions on the basis of such

predictions.

7. It should create linkage between all subsystems within organization, so that the decision makers can take the right decision based on integral view.

3.4 MIS NEED FOR INFORMATION SYSTEM

Managers make decisions. Decision making, generally takes a fourfold path:

1. Understanding the need for decision or the opportunity. 2. Preparing alternative course of actions 3. Evaluating all alternative course of actions. 4. Deciding the right path for implementation.

3.5 PLANNING FOR MIS

MIS design and development process has to address the following issues successfully:

1. There should be effective communication between the developers and users of the system.

2. There should be synchronization in understanding of management, processes and IT among users as well as the developers.

3. Understanding of the information needs of manager from different functional areas and combining the needs into a single integrated system.

4. Creating a unified MIS covering the entire organization will lead to a more economical, faster and more integrated system, however, it will increase in design complexity

manifold.

5. The MIS has to be interacting with the complex environment comprising all other sub-systems in the overall information system of the organization. So it is extremely

necessary to understand and define the requirements of MIS in the context of the

organization.

6. It should keep pace with changes in environment, changing demands of the customers and growing competition.

7. It should take care of not only the users i.e. the managers but also other stakeholders like employees, customers and suppliers.


Explain factors to be considered in planning MIS?

3.6 PROBLEM WITH MIS

There are abundant problems associated with MIS because the computer equipment used has had

relatively little success in providing management with the information it needs. The typical

reasons discovered for this include the following:

1. Lack of management involvement with the design of MIS

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2. Narrow and or inappropriate emphasis of the computer system 3. Undue concentration on low level data process applications particular in the accounting

area.

4. Lack of knowledge of computers. 5. Poor appreciation by information specialist of managements true information

requirement and organization problems

6. Lack of top management support.

3.7 GOALS OF MIS

An institution Management Information System (MIS) should be designed to achieve the

following goals:

1. Enhance communication among the institution. 2. Deliver complex material throughout the institution. 3. Provide an objective system for recording and aggregating information 4. Reduce expenses related to labour intensive manual activities. 5. Support organizations strategic goals and direction. Because MIS supplies decision

makers with facts, it supports and enhances the overall attainment of organizational goals.

3.8 ROLE OF THE MANAGEMENT INFORMATION SYSTEMS (MIS)

The role of the MIS is an organization can be compared to the role of heart in the body. The

information is the blood and MIS is the heart. In the body the heart plays the role of supplying

pure blood to all the elements of the body including the brain. The heart works faster and

supplies more blood when needed. It regulates and controls the incoming impure blood,

processes it and sends it to the destination in the quantity needed. It fulfils the needs of blood

supply to human body in normal course and also in crisis.

The MIS plays exactly the same role in the organization. The system ensures that an appropriate

data is collected from the various sources, processed and sent further to all the needy

destinations. The system is expected to fulfill the information needs of an individual, a group of

individuals, the management functionaries; the managers and the top management.

The MIS satisfies the diverse needs through a variety of systems such as query systems, analysis

systems, modeling system and decision support systems, the MIS helps in strategic planning,

management control, operational control and transaction processing.

The MIS helps the clerical personnel in the transaction processing and answers their queries on

the data pertaining to the transaction, the status of a particular record and references on a variety

of documents. The MIS helps the junior management personnel by providing the operational data

for planning, scheduling and control, and help them further in decision making at the operational

level to correct an out of control situation. The MIS helps the middle management in short term

planning, target setting and controlling the business functions. It is supported by the use of the

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management tools of planning and control. The MIS helps the top management in goal setting,

strategic planning and evolving the business plans and their implementation.

The MIS plays the code of information generation, communication, problem identification and

helps in the process of decision making. The MIS, therefore, plays a vital role in the

management, administration and operation of an organization.

3.9 MANAGEMENT INFORMATION SYSTEM AND COMPUTER

Translating the real concept of the MIS into reality is technically, an infeasible proposition unless

computers are used. The MIS relies heavily on the hardware and software capacity of the

computer and its ability to process, retrieve and communicate with no serious limitations.

The variety of the hardware having distinct capabilities makes it possible to design the MIS for a

specific situation. For example, if the organization needs a large database and very little

processing, a computer system is available for such a requirement. Support the organization has

multiple business location at long distances and if the need is to bring the data at one place,

process and then send the information to various location, it is possible to have a computer

system with a distributed data processing capability. If the distance is too long, then the computer

system can be hooked through a satellite communication system. The ability of the hardware to

store data and process it at a very fast rate helps to deal with the data volumes, its storage and

access effectively. The ability of the computer to sort and merge helps to organize the data in a

particular manner and process it for complex lengthy computations.

Since the computer is capable of digital, graphic, word image, voice and text processing, it is

exploited to generate information and present it in the form which is easy to understand for the

information user.

The ability of a computer system to provide security of data brings a confidence in the

management in the storage of data on a magnetic data in an impersonal mode. The computer

system provides the facilities such as READ ONLY where you cannot delete to UPDATE. It

provides an access to the selected information through a password and layered access facilities.

The confidence nature of the data and information can be maintained in a computer system. With

this ability, the MIS becomes a safe application in the organization.

The software, an integral part of a computer system, further enhances the hardware capability.

The software is available to handle the procedural and non-procedural data processing. For

example, if you want to use a formula to calculate a certain result, an efficient language is

available to handle the situation. If you are not to use a formula but have to resort every time to a

new procedure, the non-procedural languages are available.

The software is available to transfer data from one computer system to another. Hence, you can

compute the results at one place and transfer them to a computer located at another place for

some other use. The computer system being able to configure to the specific needs helps design a

flexible MIS.

The advancement in computers and the communication technology has the distance, speed,

volume and complex computing an easy task. Hence, designing the MIS for a specific need and

simultaneously designing a flexible and open system becomes possible, thereby saving a lot of

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drudgery of development and maintenance of the system. The concept of user-friendly systems

and the end user computing is possible, making information processing a personalized function.

However, the application of the management principles and practices in todays complex business world is possibly only when the MIS is based on computer system support.


Give three reasons for using computer for MIS in the organization?

3.10 THE CHALLENGE OF INFORMATION SYSTEMS

Increasingly, information systems are bringing about changes in business goods, relationship

with customers and suppliers and internal operations. Building, operating and maintaining

information systems are challenging activities for a number of reasons. We believe there are five

key challenges that managers should heed;

1. In the Strategic Business Challenge: How can businesses use information technology to

design organizations that are competitive and effective?

Technical change moves much faster than humans and organizations are changing. The power of

computer hardware and software has grown much more rapidly than the ability of organization to

apply and use this technology. To stay competitive, many organizations actually need to be

redesigned. They will need to use information technology to simplify communication and

coordination, eliminate unnecessary work, and eliminate the inefficiency of out model

organization structures. If organization merely automates what they are doing, they are largely

missing the potential of information technology. Organization need to rethink and redesign the

way they design, produce, delivery and maintain goals and services.

2. The Globalization Challenge: how can firms understand the business and system

requirements of a global economic environment? The rapid growth in international trade and the

emergence of a global economy call for information systems that can support both producing and

selling goods in many different countries. In the past, each regional office of a multinational

corporation focused on solving its own unique information problems. Given language, cultural

and political differences among countries, this focus frequently resulted in chaos and the failure

of central management controls. To develop integrated multinational information systems,

business must develop global hard ware and communications standards and create cross-cultural

accounting and reporting structures (Roche, 1992; Buss, 1982).

3. The information Architecture: How can organizations develop an information architecture

that supports their business goals? While information technology can suggest some new ways of

doing business, firms still need to have a clear idea of their business goals and how these can

best be supported by information systems. Many organizations cannot meet their goals because

they are crippled by fragmented and incompatible computer hardware, software,

telecommunication networks and information system. Integrating these islands of information into a coherent architecture is now a priority.

4. The Information Systems Investment Challenge: How can organization determine the

business value of information system? A major problem raised by the development of powerful

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inexpensive computers involves not technology but rather management and organization. Its one thing to use information technology to design, delivery and maintain new products. Its another thing to make money doing it. How can organizations obtain a sizeable payoff from their

investment in information systems?

Engineering massive organizational and system changes in the hope of positioning a firm

strategically is complicated and expensive. Is this an investment that pays off? How can you tell?

Senior management can be expected to ask these question: Are we receiving the kind of return on

investment form our systems that should be? Do our competitors get more? While understanding

the costs and benefit of building a single system is difficult enough, it is daunting to consider

whether the entire system effort is wroth it. Imagine then, how a senior executive must think when presented with a major transformation in information architecture a bold venture in

organizational change costing tens of millions of dollars and taking many years.

5. The responsibility and Control Challenge: How can organizations design systems that

people can control and understand? How can organizations ensure that their information systems

are used in an ethically and socially responsible manner?

Information systems are so essential business, government and daily life that organization must

take special steps to ensure that they are accurate, reliable and secure. Automated or semi-

automated systems that malfunction or are poorly operated can have extremely harmful

consequences. A firm invites disaster if it uses systems that dont work as intended, that dont deliver information in a form that people can interpret correctly and use, or that have control

rooms where control dont work or where instruments give false signals. The potential for massive fraud, error, abuse and destruction is enormous.

Information systems are so essential to business, government and daily life that organizations

must take special steps to ensure that they are accurate, reliable and secure. Automated or semi-

automated systems that malfunction or are poorly operated can have extremely harmful

consequences. A firm invites disaster if it uses systems that dont work as intended, that dont deliver information in a form that people can interpret correctly and use, or that have control

rooms where controls dont work or where instruments give false signals. The potential for massive fraud, error, abuse and destruction is enormous. Information systems must be designed

so that they function as intended and so that human can control the process.

4.0 CONCLUSION

In general MIS is an information system that evaluates analyzes and processes an organizations

data to produce meaningful and useful information on which the management will take right

decision to ensure future growth of the organization.

5.0 SUMMARY

In this unit you have learnt about the importance of MIS in an organization as well as the various

challenges of MIS.

20


1. (a) What is Management Information System?

(b) Discuss the characteristics of MIS

2. What are key challenges to the success of MIS in organization?

3. Outline the objectives of MIS in an organization?


Bagobiri, Y.E and Kassah, V. (2009), Principle of Management (2nd

Ed) Wonderful Press,

Kaduna.

Harsh, Stephen B., L. J. Connor, and G. D. Schwab. (1981). Managing the Farm Business.

Prentice-Hall, Inc., Englewood Cliffs, New Jersey.

House, William C. (1983). Decision Support Systems A Data-Based, Model-Oriented User-Developed Discipline. Petrocelli Books, Inc. New York, NY.

Landon, K.C. and Laudon J.P (1996) Management Information Systems: Organization and

Technology, (4th

Ed.) Prentice Hall Inc, Upper Saddled River, New Jersey.

Lucey, T. (2005) Management Information Systems, 9th Ed. Thomson Learning, High Holborn,

50-51 Bedford Row, London

21

MODULE 1

UNIT 3: INFORMATION TECHNOLOGY

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Definition of Information Technology

3.2 Application of IT in Information Systems

3.2.1 Data Processing/Transaction Processing System

3.2.2 Office Support System

3.2.3 End-User Computing

3.3 The Impact of IT on Organizations

3.4 Technology and Job Changes

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

This unit helps you to see the connection between Information Technology (IT) and MIS in

business performance. The use of Information and Communication Technologies (ICT) by

individuals and organizations dominates the business world.

2.0 OBJECTIVES


1. Define Information Technology (IT) 2. Explain application of IT in information management.

22

3.0 MAIN CONTENT

3.1 INFORMATION TECHNOLOGY

Information Technology is the technology which supports the activities involving the creation,

storage, manipulation and communication of information with their related methods,

management and applications. Lucey (2005) supplied a useful definition given by the

Department of Trade and Industry: The acquisition, processing, storage and dissemination of

vocal, pictorial, textual and numeric information by a micro-electronics based combination of

computing and telecommunications. Information technology is a broad term which covers all

aspects of the use of computer technology.

In short, IT is the medium by which information is passed across to all levels of management

either internally or from external sources. Some of the IT facilities include computers of various

types, scanners, printers, servers and processors, photocopiers etc. and other devices for

information acquisition and dissemination such as teleconferencing/video conferencing, network,

Teletext, facsimile, internet, E-mail and voice mail etc.

3.2 APPLICATION OF IT IN INFORMATION SYSTEM

There are major areas of IT application in information system. The three areas are:

1. Data processing (or transaction processing) 2. Office support system. 3. End user systems

3.2.1 Data Processing or Transacting Processing Systems

Data or transaction processing systems perform the essential role of collecting and processing the

daily transactions of the organization, hence the alternative term, transaction processing.

Typically these include all forms of ledger keeping, accounts, receivable and payable, invoicing,

credit control, rate demands and stock movement. Transaction processing is essential to keep the

operations of the organization running smoothly and provides the base for all other internal

information support.

Transaction processing is necessary to ensure that day-to-today activities of the organization are

processed, recorded and acted upon. Files are maintained which provide both the current data for

transactions, for example the amount invoiced and cash received during the month for statement

preparation, and which also serve as a basis for operational and tactical control and for answering

enquiries.

Transaction, processing can be sub-divided into:

a. Current activity processing. b. Report processing c. Inquiry processing.

23

3.2.2 Office Support Systems

The type of office supports systems used influences information available for management.

Office support systems or office automation technologies are now used for virtually all everyday

information processing tasks in offices and business organizations. They enable people to

perform their own work, such as letters and report writing, store and process data through

databases and communicate through email. Office automation technologies include a wide array

of software application tools such as spreadsheets (e.g. excel), word processors (e.g. word) and

desktop publishing tools (e.g. publisher), presentation packages (e.g. PowerPoint) and database

systems (e.g. Microsoft Access).

These technologies also enable members of a group to interact with each other and organize their

work. They can communicate with each other through email, fax and teleconferencing and they

plan and coordinate their activities through schedules. As these technologies improve

communication and the sharing of information, they have enabled teleworking (the process

where staff work at locations other than the company office, usually at home) and video

conferencing to become a reality.

24

Fig. 1.4 ICT based Office Support Systems

3.2.3 End User Systems

These systems seek to provide management with direct assistance with their work. Examples

include: decision support systems, expert systems, executive information systems.

The introduction of personal computers, terminals, networks, user-friendly software, databases,

etc. has altered the position dramatically and has led to the growth of end-user computing and the

consequent availability of personalized information for management rather than oust the pre-

specified output of computer processing, important though these outputs often are;

End-user computing may be broadly defined as; The direct, hands on approach to computers by users-non indirect use through systems professionals. Users may include managers, office staff,

sales people, production workers and others. With the spread of end-user computing, employees and managers are able to access data and analyse it directly themselves in an

individual manner.

Microform systems, disk storage, view

data/teletext

Electronic mail, teleconferencing, communicaiton,

networks, telephones, data/facsimile transmission

Micros, VDUS, disk storage

Word processing,

copying, desktop publishign

Office Support Systems

Telecommunications

Computing

25

They are able to explore and investigate, carry out various types of analysis, obtain assistance in

decision making, monitor operations and results in more specific ways and generally enhance the

ways in which they carry out their work.

3.3 THE IMPACT OF IT ON ORGANIZAITONS

Technology, which includes ICT, influences organizations in a variety of ways. In summary,

technology alters the skills requirements for individuals and it changes jobs and the way they are

done. It can also alter relationships between individuals and departments within the organization

and may affect some relationships outside the organization, e.g. with customers, suppliers and

clients. It is likely to be major factor in determining the type of information available and how

the information is used and consequently how the organization operations.

3.4 TECHNOLOGY AND JOB CHANGES

Technology simplifies and reduces tasks needing manual skills and strength especially in

factories and all forms of production. Properly applied, it can increase productivity. The use of

reprogrammable robots for such tasks as welding, spraying, materials handling and others helps

to eliminate dirty or hazardous and repetitive work. Robots and Computer Aided Manufacturing

(CAM) as well as reducing costs, improve quality and consistency of finished products. The use

of technology requires enhanced problem-solving skills and the ability to interpret data and is

thus likely to lead to a widening gulf between skilled and unskilled workers. Routine tasks

requiring a low level of skill are disappearing fast. As an example, the copy typists has all but

disappeared from many offices. The availability of word processors, flexible printers and

photocopies have effectively eliminated copy typing.

4.0 CONCLUSION

Office support systems cover different types of aids including, word processing, electronic mail,

data transmission, microform system etc. Electronic transmission is supplementing traditionally

based communication.

5.0 SUMMARY

ICT systems affect how the organizations operates, how it is managed and its structure and

culture.


(1) Outline some of the implications that ICT may have for organization?

(2) What work do data processing/transaction processing system do?

26


Cole, G.A. (1986) Management Theory and Practices, 2nd

Edition.




Laudon, K. & Laudon, J. (2006) Management Information Systems: Managing the Digital Firm,

9th ed. Prentice Hall.

Lucey, T. (2005) Management Information Systems, 9th Edition Thomson Learning, High

Holborn, 55-5, Bedford Row London.

27

MODULE 1

UNIT 4: SYSTEMS CONCEPTS

CONTENTS

1.0 Introduction 2.0 Objectives 3.0 Main Content 3.1 Definition of System 3.2 Features of the System 3.3 Closed Systems and Open Systems 3.4 Systems and Adaptability. 3.5 Shared and Overlapping System. 3.6 Socio-technical systems 4.0 Conclusion 5.0 Summary 6.0 Tutor-Marked Assignment 7.0 Reference/Further Readings.

1.0 INTRODUCTION

The system approach is a method or framework which helps us to analyze and explore the

exploration and interactions which exist in the systems around us.

2.0 OBJECTIVES

At the end of this unit you should be able to:

(1) define a system (2) know the main features of the systems approach (3) distinguish between open and closed systems.

3.0 MAIN CONTENT 3.1 DEFINITION OF SYSTEM

Systems are composed of interrelated parts or sub-systems and the system can only be

explained as a whole. This is known as holism or synergy. Holism states that any whole

is more than the sum of its individual parts.

A comprehensive definition of system is that used by the Open University:

A system is an assembly of part where:

1. The part or components are connected together in an organized way.

28

2. The parts or components are affected by being in the system (and are changed by leaving it).

3. The assembly does something. 4. The assembly has been identified by a person as being of special interest (Carter et al

1984).

This definition contains the essential elements of parts, relationships and objectives. It is very

broad and can apply to any of the systems around us such as: The university, railway, hospital,

manufacturing company, an information system, a local authority. In effect, any arrangement

which involves the handling, processing or manipulating of resource of whatever type can be

represented as a system.

3.2 FEATURES OF THE SYSTEMS APPROACH

The systems approach has many facets of which the following are the most important.

(a) All systems are composed of interrelated parts or sub-systems and the system can only be explained as a whole. This is known as holism or synergy. Holism states that any whole is

more than the sum of its individual parts. When the appropriate parts are combined,

properties appear from the whole which the parts alone do not possess. These are known

as emergent properties. Examples are:-

Taste: A property of water not the constituent hydrogen and oxygen atoms.

Growth: A property arising from the combination of seeds and soy.

Obsolescence: likely to arise from consideration of financial, technical and personal factors. A machine may still work but may be too expensive or dangerous to run or may

no longer be required for current production.

(b) Systems are hierarchical in other parts of subsystems are made up of other smaller parts. For example, the accounting systems of an organization may be a subsystem of the

information system which itself a subsystem of the planning system, which is a sub-

system of the organization as a whole.

(c) The parts of a system cannot be altered without affect the parts. Many organizational problems stem from ignoring this principle. For example, a departmental procedure or

form might be changed without considering the ripple effects on the other departments

affected with dire consequences.

(d) The sub-systems should work toward the goal of the higher systems and not pursue their own objectives independently. Where sub-systems to pursue their own objectives to the

detriment of higher objectives, then a condition of sub-optionality is said to exist and, in

general, MIS designers seek to avoid sub-optimality wherever possible. Ideally, there

should be goal congruence between all the subsystems that make up the system as a

whole. Goal congruence simply means that the objectives of the subsystems should align

with the objectives of the system, or organization as a whole.

Three key features of a systems, namely the transformation process, system boundaries and the

environment of the systems.

29

3.2.1 The Transformation Process

All systems are composed of the same basic elements; inputs, processes and outputs.

Systems theory gives a much more embracing meanings to the terms inputs and outputs than

would normally be considered. For example, the inputs to a production system include; raw

materials, labour (skills, quantity) equipment and plant facilities, job specifications, standards of

all types, maintenance facilities, power supplies, etc. A similar, almost endless list could be given

for the output side of the system.

Fortunately, it is not usually necessary (or possible) to consider all possible inputs and outputs.

The usual procedure when analyzing systems is:

(a) To choose those outputs with which we are concerned. These are usually those outputs most relevant to the system objectives; and

(b) To choose those inputs for examination and control which are considered to have significant effects on the output considered important.

In all systems other than physical or mechanical ones, the transformation process is controlled by

information. In the simplest case, information on the output of the system is used as a basis for

control of the input of the system. This is known as feedback or information feedback.

3.2.2 System Boundaries

The features which define the extent of a system are its boundaries. In mechanical, physical and

biological systems, the boundaries are readily identifiable as they tend to arise naturally. With

any form of social organizations, boundaries are not obvious and often change to meet differing

demands. In social organizations, there are many transfer across boundaries of ideas, people,

materials and information within organizations boundaries are determined by management and

vary from organizations to organizations. For example, in one organization the sales department

may be responsible for invoicing whereas, in another, invoicing may be within the boundary of

the accounting department.

3.2.3 The Environment of Systems

In the widest sense, a systems environment is all those elements not in the system. The environment can be defined as those external elements whose changes in attitudes, behavior or

properties affect the state of the system and those external elements which are changed by the

systems behavior. In effect, this means that the relevant environment of any system comprises those elements with which it has some connotation or relationship.

3.3 Closed Systems and Open Systems

Open Systems

An open system is a system which interacts with it environment. It receives inputs and influences

from the environment and in turn, passes back outputs and influenced to the environment. All

social organizations are open systems. The organization that adapts to changes in the

environment is the key element in an organizations success and indeed its very survival.

30

Organizations as open systems attempt to monitor and anticipate environment disturbances.

Closed Systems

A close system is the one that is isolated from its environment. Closed systems are self-contained

so that the external environment does not influence the behavior of the system, nor does the

system influence its environment. The idea can only strictly be applied to mechanical and

physical systems as all social systems have some interaction with their environment.

Closed systems are required for stability and consistency, whereas open systems are required for

uncertain conditions. Closed systems are designed for efficiency, open systems for survival.

3.4 Systems and Adaptability

To be successful and to remain in existence organizations must be flexible and adapt to change.

This means change not only in the organizations relationship with the external environment but also in its internal methods and structures. Successful organizations are characterized by their

internal openness and their readiness to accept that yesterdays methods and products are very unlikely to be suitable for tomorrow. Recognizing the need for changing, initiating change and

managing change successfully are the hallmark of good quality management. Organizations do

not automatically adjust to change.

Adaptation only occurs as a result of management decision and action. Successful change is

change that is planned and considered, this means that the effects on the organization as a whole

must be considered when making a change to part of the organization.

3.5 Shared and Overlapping Subsystem

Sub-system can belong to more than one system and there is a need to recognize the overlap and

to design operations and processes accordingly. The recognition of overlap is particularly

important when changes are made in one of the systems which share the same sub-system.

An example of a shared subsystem is shown in figure 1.5

Fig. 1.5. Sub-system overlap

Overlap is often an efficient and economical management. For example, a central purchasing

subsystem used by various companies in a group may be able to obtain greater discounts and

may aid the standardization of parts and materials. A centralized computer facility may be shared

by all departments within an organization with a reduction in overall cost. However, such

overlaps are likely to increase communication difficulties and may have longer response times.

National Warehouse system

The company warehouse subsystem

The company system The local distribution system

31

Because of the need to coordinate activities and to obtain numerous approach for change. Such

structures may be less flexible in rapidly changing condition.

Kate and Kahn; identified five sub-systems within organizations. These can be summarized as

follows:

1. Production or technical sub-systems: These deals with the basic tasks of the organization, i.e. the production of goods or the production of services.

2. Supportive sub-systems. These maintain the relationship between the production subsystem and the external environment, i.e. the procurement of inputs and the disposal

of outputs.

3. Maintenance sub-systems. These provide the rules, rewards and roles of those who work in the organization.

4. Adaptive subsystems; whereas the above the subsystems are concerned with the present organization, the adaptive sub-system is concerned with the future, i.e. new markets, new

products, new methods etc.

5. Managerial subsystems. These consist of the controlling and coordinating activities which govern all the subsystems which make up the total system. These include;

coordination, decision making, planning and control.

3.6 Socio-Technical Systems

The socio-technical view of organization was developed by Trust and the Tavistock Institute and

arose from consideration that any production system requires both a technical organization, i.e.

the equipment, processes, methods etc. and a work organization relating to those who carry out

the necessary tasks to each other, i.e. the social system. Based on this view on organization is not

just a technical or social system but is the structuring of human activities found various

technologies. The technologies involve determine the technical sub systems and very widely.

Consider, for example, the differing skills, procedures, machinery, equipment and the layout of

facilities required in an electronic company, a car manufacturer, a hospital or a computer bureau.

In addition to the technical subsystem, every organization has a social sub system which consists

of the aspirations, expectations, interactions and value systems of the members. The two sub-

systems-the technical and the social- cannot be looked at separately but must both be considered

interrelating within the organization. Socio-technical theory suggests that the organization

consists of four interrelated elements-tasks, people, structure and technology as shown in figure

1.6

32

Fig. 1.6 Socio-Technical view of organizations

More traditional approaches to organizations and their problems have tended to concentrate on

one or other of the subsystems with little or no recognition of the other. For example, the

production engineering/management science approach to organizational problems concentrated

on the economic technical sub system and on fairly mechanistic techniques for quantifying

decision making, control and of planning production.

The human relations and behavioural schools concentrated on the social subsystem and

considered motivation, aspirations, group dynamics and other related factors with scant regard to

the technologies involved. The socio-technical view consider each of the primary subsystems and

its interrelationships and effects on each other and thus makes a genuine attempt at a

comprehensive understanding of the systems we call organizations.

4.0 CONCLUSION

Systems in the organization help in the analysis of a problem that the organization will try to

solve with an information system. Systems concepts help you understand technology,

application, development and management in organization.

5.0 SUMMARY

The systems view is that the whole is greater than the sum of the individual parts and all systems

comprises of inputs, processes and outputs. Parts or sub systems cannot be altered without other

parts.

Technology

People

Tasks

Structure

33


1. What are the key features of the system approach?

2. Give several alternative definitions of a system?

3. What is the transformation process?

4. What is an open system?

5. What is a socio-technical system?

8.0 REFERENCE/FURTHER READING






Lucey T. (2005) Management Information System, 9th Ed. Thomson learning, High Holborn, 50-

51 Bedford Row, London.

Laudon, K.C. and Laudon, J.P. (1996) Management Information Systems: Organization and

Technology, 4th Ed. Prentice-Hall Inc, Upper Saddle River, New Jersey. W

34

MODULE 1

UNIT 5: INFORMATION SYSTEMS, ORGANIZATIONS AND STRATEGY

CONTENTS

1.0 Introduction 2.0 Objectives 3.0 Main Content 3.1 Organizations and Information Systems 3.2 What is an Organization

3.2.1 Features of an organizations 3.3 How Information Systems Impact Organizations

3.3.1 Economic Impact 3.3.2 Organizational and Behavioural Impact

3.4 Using Information Strategies to Achieve Competitive Advantage 3.4.1 Porters Competitive Forces Model

3.5 Information Systems Strategies 3.6 Conclusion 3.7 Summary 3.8 Tutor-Marked Assignment 3.9 References/Further Readings

1.0 INTRODUCTION

Information Systems are a part of organizations and it influence one another. Information

systems are built by managers to serve the interests of the organization.

2.0 OBJECTIVES

At the end of this unit you should be able to:

1. Identify and describe important features of organizations that managers need to know about.

2. Evaluate the impact of information systems on organizations 3. Assess the challenges posed by strategic information systems and management solution.

3.0 MAIN CONTENT

3.1 ORGANIZATIONS AND INFORMATION SYSTEMS

Information systems and organizations influence one another. Information systems are built by

managers to serve the interests of the business firm. At the same time, the organization must be

aware of and open to the influences of information systems to benefit from new technologies.

The interaction between information technology and organization is complex and is influenced

by many mediating factors, including the organizations structure, business processes, politics, culture, surrounding environment and management decisions (see figure 1.7) you will need to

understand how information systems can change social and work life in your organization. You

35

will not be able to design new systems successfully or understand existing systems without

understanding your own business organization.

Fig. 1.7 The interaction between information technology and organization

The complex two-way relationship is mediated by many factors, not the least of which are the

decisions mad-or not made-by managers. Other factors mediating the relationship include the

organizational culture, structure, politics, business processes and environment.

As a manager, you will be the one to decide which system will be built, what they will do, and

how they will be implemented. You may not be able to anticipate all of the consequences of these

decisions. Some of the changes that occur in business firms because of New Information

Technology (IT) investment cannot be foreseen and have results that may or may not meet your

expectations. Who would have imagined ten years ago, for instance, email and instant messaging

would become a dominant form of business communication and that many managers would be

inundated with more than 200 email messages each day (Walker, 2004)?

3.2 WHAT IS AN ORGANIZATION?

An organization is a stable, formal social structure that takes resources from the environment and

processes them to produce outputs. This technical definition focuses on three elements of an

organization. Capital and labour are primary production factors provided by the environment.

The organization (the firm) transforms these inputs into products and services in a production

function. The products and services are consumed by the environments in return for supply

inputs.

An organization is more stable than informal group (such as a group of friend that meets every

Friday or lunch) in term of longevity and routines. Organizations are formal legal entit ies with

internal rules and procedures that must abide by laws. Organizations are also social structures

Mediating factors Environment Culture Structure Business processes Politics Management decision

Information Technology Organizations

36

because they are a collection of social elements, much as a machine has a structure-a particular

arrangement of values, canes, shafts and other parts.

A more realistic behavioural definition of an organization is that it is a collection of rights,

privileges, obligations and responsibilities that is delicately balanced over a period of time

through conflict and conflict resolution. In this behavioural view of the firm, people who work in

organization develop customary ways of working; they gain attachments to existing

relationships; and they make arrangement with subordinates and superiors about how work will

be done, the amount of work that will be done, and under what conditions work will be done.

Most of these arrangements and feelings are not discussed in any formal rule book.

How do these definitions of organizations relate to information systems technology? A technical

view of organizations encourages us to focus on how inputs are combined to create outputs when

technology changes are introduced into the company. The firm is seen as infinitely malleable,

with capital and labour substituting for each other quite easily. But the more realistic behavioural

definition of an organization suggests that building new information systems, or rebuilding old

ones, involves much more than a technical rearrangement of machine and workers-that some

information systems change the organizational balance of rights, privileges, obligations,

responsibilities and feelings that have been established over a long period of time.

Changing these elements can take a long time, be very disruptive and require more resources to

support training and learning. For instance, the length of time required to implement effectively a

new information system is much longer than usually anticipated simply because there is a lag

between implementing a technical system and teaching employees and managers how to use the

system.

Technological change requires changes in who owns and control information, who has the right

to access and update the information; and who makes decisions about whom, when and how.

This complex view forces us to look at the way work is designed and the procedures used to

achieve outputs.

3.2.1 Features of Organizations

All modern organizations have certain characteristics. They are bureaucracies with clear-cut

divisions of labour and specialization. Organizations arrange specialists in a hierarchy of

authority in which everyone is accountable to someone and authority is limited to specific

actions governed by abstract rules or procedures. These rules create a system of impartial and

universal decision making. Organization try to hire and promote employees on the basis of

technical qualifications and professionalism (not personal connections). The organization is

devoted to the principle of efficiency; maximizing output using limited inputs. Other features of

organization include; Business processes, organizational culture, organizational politics,

surrounding environments, structure, goals, constituencies and leadership styles. All of these

features effect the kinds of information systems used by organizations.

37

3.3 HOW INFORMATION SYSTEMS IMPACT ORGANIZATIONS

Information systems have become integral, online, interactive tools deeply involved in the

minute-to-minute operations and decision making of large organizations. Over the last decade,

information systems have fundamentally altered the economies of organizations and greatly

increased the possibilities for organizing work. Theories and concepts from economics and

sociology help us understand the changes brought about IT.

3.3.1 Economic Impact

From the point of view of economics, IT changes both the relative costs of capital and the costs

of information. Information system technology can be viewed as a factor of production that can

be substituted for traditional capital and labor. As the cost of information technologies decreases,

it substituted for labour, which historic lay has been a rising cost. Hence, information technology

should result in a decline in the number of middle managers and clerical workers as information

technology substitute for their labour (Laudon, 1990).

IT also obviously affects the cost and quality of information and changes the economics of

information. Information technology helps firms contract in size because it can reduce transition

costs-the costs incurred when a firm buys on marketplace what it cannot make itself.

Information Technology, especially the use of networks can help firms lower the cost of market

participation (transaction costs), making it worthwhile for firms to contract with external

suppliers instead of using internal sources.

3.3.2 Organizational and Behavioural Impacts

Theories based on the sociology of complex organizations also provide some understanding

about how and why firms change with the implementation of new IT applications.

IT flatters organization-large, bureaucratic organizations, which primarily developed before the

computer age are often inefficient, slow to change and less competitive than newly created

organizations. Some of these large organizations have downsized, reducing the number of

employees and the number of levels in their organizational hierarchies. Behavioural researchers

have theorized that information technology facilitates flattening of hierarchies by broadening the

distribution of information to empower lower-level employees and increased management

efficiency. IT pushes decision-making rights lower in the organization because lower-level

employees receive the information they need to make decisions without supervision. (This

empowerment is also possible because of higher educational levels among the workforce, which

give employees the capabilities to make intelligent decisions). Because managers now receive so

much more accurate information on time, they become much faster at making decisions, so fewer

managers are required. Management costs decline as a percentage of revenues and the hierarchy

becomes much more efficient.

38

3.4 USING INFORMATION SYSTEMS TO ACHIEVE COMPETITIVE

ADVANTAGE

In almost every industry you examine, you will find that some firms do better than most others.

Firms that do better than others are said to have a competitive advantage over others. They either have access to special resources that others do not, or they are able to use commonly

available resources more efficiently-usually because of superior knowledge and information

assets. In any event, they do better in terms of revenue growth, profitability or productivity

growth (efficiency) all of which ultimately in the long run translate into higher stock market

valuations than their competitors.

3.4.1 Porters Competitive Forces Model Arguably, the most widely used model for understanding competitive advantage is Michael

Porters Competitive forces model (See figure 1.8).

Fig. 1.8 Porters Competitive Forces Model

In Peters competitive forces model, the strategic position of firm and its strategies determine not only by competition with its traditional direct competitors but also by four forces in the

industrys environment: new market, entrants, substitute products, customers and suppliers. 1. New market entrants: In a free economy with mobile labour and financial resources,

new companies are always entering the market-place. In some industries, there are very

low barriers to entry, whereas in other industries, entry is very difficult. For instance, it is

fairly easy to start a pizza business or just about any small retail business, but it is much

more expensive and difficult to enter the computer chip business, which has very high

capital costs and requires significant expertise and knowledge that is hard to obtain. New

companies have several possible advantages; they are not locked into old plants and

equipment, they often hire younger workers hw are less expensive and perhaps more

innovative, they are not encumbered by old, worn-out brand names, and they are more hungry (more highly motivated) than traditional occupants of an industry.

2. Substitute Product and Services: In just about every industry, there are substitute that your customers night use if your prices become too high. New technologies create new

substitutes all the time. Even oil has substitutes: Ethanol can substitute for gasoline in

cars; vegetable oil for diesel fuel in trucks; and wind, solar cola and hydropower for

industrial electricity generation.

3. Customers: A profitable company depends in large measure on its ability to attract and retain customer (while denying them to competitors) and charge high prices. The power

of customers grows if they can easily switch to a competitors products and services, or if

New Markets Entrants

Suppliers

Substitute products

Customers

The Firm Competitors

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they can force a business and its competitors to compete on price alone in a transparent

marketplace where there is little product differentiation, and all prices are known

instantly (such as the internet). For instance in the used college textbook market on the

internet, students (customers) can find multiple suppliers of just about any current college

textbook. In this case, online customers have extraordinary power over used-book firms.

4. Supplies: The market power of suppliers can have a significant impact on firm profits, especially when the firm cannot raise prices as fast as can suppliers. The more different

suppliers a firm has, the greater control it can exercise over suppliers in terms of price,

quality and delivery schedules. For instance, manufacturers of laptop PCs almost always

have multiple competing suppliers of key components, such as key boards, hard drives

and display screens.

3.5 Information Systems Strategies

There are four generic strategies, each of which often is enabled by using information technology

and systems: low-cost leadership, product differentiation, focus on market niche, and

strengthening customer and supplier intimacy. (Laudon, 2006).

1. Low-Cost Leadership Use information to achieve the lowest operational costs and the lowest prices.

2. Product Differentiation. Use information systems to enable new products and services, or greatly change the customer

convenience in using your existing products and services. For instance, google continuously

introduces new and unique search services on its website, such as google maps. Manufacturers

and retailers are using information systems to create products and services that are customized

and personalized to fit the precise specifications of individuals customers. 3. Focus on Market Niche Use information systems to enable a specific market focus, and serve this narrow target market

better than competitors. Information systems support this strategy by producing and analyzing

data fine-tuned sales and marketing techniques. Information systems enable companies to

analyze customer buying patterns, tastes and preferences closely so that they efficiently pitch

advertising and marketing campaigns to smaller and smaller target markets

4. Strengthen Customer and Supplier Intimacy Use information systems to tighten linkages with suppliers and develop intimacy with customers.

Chrysler Corporation uses information systems to facilitate direct access from suppliers to

production schedules, and even permits suppliers to decide how and when to ship suppliers to

Chrysler factories. This allows suppliers more lead time in producing goods. On the customer

side, Amazon.com keeps track of user preference for book and CD purchases, and can

recommend titles purchased be other to its customers. Strong linkages to customers and suppliers

increase switching costs (the costs of switching from one product to a competing product), and

loyalty to your firm.

5.0 CONCLUSION

Information systems often change the organization as well as its products, services and operating

procedures, driving organizations into new behavioural patterns. Successfully using information

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systems to achieve a competitive advantage is challenging and requires precise coordination of

technology, organizations and management.

5.0 SUMMARY

Mangers need to understand certain essential feature of organizations to build and use

information systems successfully. All modern organizations are hierarchical, specialized and

impartial, using explicit routines to maximize efficiency. The introduction of a new information

system will affect organizational structure, goals, and work design, competition between interest

groups, decision making, and day to day behavior.


1(a) What is an organization?

(b) Compare the technical definition of organizations with the behavioral definition?

2. Identify and describe the features of organizations that help explain differences in

organizations use of information systems?

3. Describe the major economic theories that help explain how information systems affect

organization?

4. What is porters competitive forces model? And what does it explain about competitive advantage?

5. What are four competitive strategies?


Cole, G.A. (1986) Management Theory and Practice, (2nd

Ed.) London: Menthen.



Koslowski. P. (ed.), (2010) Elements of a Philosophy of Management and Organization, Studies

in Economic Ethics and Philosophy, Springer-Verlag Berlin Heidelberg.

Laudon, K.C and Laudon, J.P. (2006)Management Information Systems: Managing the Digital

Firm (10th Ed.) Pearson Prentice-Hall Inc,Upper Saddle River, New Jersey.

OBrien, J.A. (2004). Management Information Systems Managing Information Technology in the Business Enterprise (6

th Ed.). McGraw Hill Iriwin, Inc., New York.

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MODULE 2

UNIT 1: COMPONENTS OF MANAGEMENT INFORMATION SYSTEM

CONTENTS

1.0 Introduction 2.0 Objectives 3.0 Main Content

3.1 Management 3.2 Information 3.3 System

4.0 Conclusion 5.0 Summary 6.0 Tutor-Marked Assignment 7.0 References

1.0 INTRODUCTION

To the Managers, Management Information System is an implementation of the organization

systems and procedures

The three components in MIS gives a more complete and focused definition, where system

suggest integration and holistic view, information stands for processed data and management is

the ultimate user, the decision makers.

2.0 OBJECTIVES

At The end of this unit you should be able to:

(1) State the three components of MIS (2) Define the three components of MIS

(a) Management (b) Information (c) Systems

3.0 MAIN CONTENT

3.1 MANAGEMENT

Management covers the planning, control and administration of the operations of a concern. The

top management handle planning; the middle management concentrates on controlling; and the

lower management is concerned with actual administration.

The complexity of management is such that the word carries a number of acceptable meanings.

The term management may therefore, be applied in different ways its meaning discernible from

content. McFarland (1974) defines management as that process by which managers create, direct, maintain and operate purposive organizations through systematic coordinated cooperative

human effort. While according Fayols in (Cole: 1986) he defined management as: to forecast, plan, organize, command, coordinate and control.

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In Fayols view to forecast plan mean to examine the future and drawing a plan of action. To organize means building a structure of both material and human in an organization. To command

means maintaining activities among employees. To control means to ensure everything is in

conformity with the plan and standard.

From the above, it may be deduced that managerial action can direct and control to a great extent

the nature, degree and pace of change within the organization. It also shows that the process of

management is rooted in the action of peop

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