MIS 2000

1. MIS 2000 Class 5 Process View of Organization and Information Systems Updated: September 2012

2. Outline • Typology of information systems: Time, User, and Organizational Function Focus • IS Impacts on Process Design (CCCV) • IS Impacts on Process Performance (CVCT) • IS and Organizational Data • Data Quality • Functional and Non-functional Requirements for IS • Summary

3. Typology of Information Systems: Time Focus • IS store & process data into useful outputs * • Outputs and so IS can be: • Past/present focused (recording/tracking; e.g., reports) • Future focused (decision making; e.g., scenarios - key to decision making) Use Procedures Computer hardware & software User Interface System and Application Software Data Information System (a more detailed view)

4. Typology of Information Systems (IS): User Focus • Different systems serve different groups of users. • System types have different level of detail, processing capabilities, and outputs. Executive Management Decisions Support System (DSS) - Strategic decision making Management Information System (MIS) - Mid-range performance control & planning Mid-level Management Transaction Processing system (TPS) - Daily operations control Supervisory Management Office Automation Systems (clerks, others) Communication Systems (everybody) Knowledge Work Systems (professionals) Group Support Systems (teams)

5. IS Types – Basic Concepts Transaction Processing System (TPS)* • TPS is an IS that stores & processes data created in operations (‘transactions’). • TPS is a database with stored queries reflecting daily operations. • Serves supervisory management. • Examples: Customer Order Processing System, Accounting General Ledger, HR payroll, inventory… Queries Queries Queries shorter periods (day, week) Database

6. Management Information System (MIS) • MIS is a system that outputs from TPS, additional queries and reports to reflect the transpired business on longer run (monthly, quarterly, semi-annually). • Reports have graphics for quick managers’ understanding. • Serves mid-level managers. • Examples same as for TPS but different content and format. T P S Special Queries & Reports

7. Decision Support System (DSS) • Support higher management levels in decision making • Uses outputs from TPS and MIS as well as various data from the organizational environment • Outputs contain much less detail than in MIS and TPS, and highly aggregated • Lots of graphical elements (figures, gages). • Screen of DSS called • Executive dashboard • Gauges show important • figures about HR in a • company

8. Typology of Information Systems: Organizational Function Focus • IS based on organizational function (Purchasing, Inventory, Production, • Human Resources, Accounting, Finance, Sales, Marketing, Planning, Research, • Engineering, etc.). • Relationship between User-based and Function-based IS types:

9. Information Systems and Business Processes • Carries • process parts • or whole • manipulation of IS • is how work is done, • whether process is • optimized or not Key role in optimizing process design (CCCF; next slides) IS • Vehicle for • management process data • complementing or • replacing paper trail

10. IS and Process Design - Composition • IS can help to optimize process design. • IS and Process Composition: IS can influence the selection of activities, performers (workers), departments, and organizations to be included in process. • Example: A new Purchasing TPS implemented at Ford made its purchasing order process* leaner. It had (a) different work activities than those used before and brought a (b) 10 fold-reduction of process performers. • Example: A part quality process Kia introduced connected Kia with service shops. Kia became able to determine exactly which parts did not perform well and then to work on improving their quality. MIS at Kia and at service shops were linked via computer network, which in effect extended the process in space and across organizations.

11. IS and Process Design - Complexity • IS and Process Complexity: IS can absorb complexity or simplify process a process looking from the perspective of process performers. This is possible because IS performs some activities and decisions instead of people, which is called automation. • Example: DSS that is usually used by a single person in decision making process, performs very complex calculations that would be difficult even for a group of experts to do. Many organizations. • Example: By transforming transaction data and creating reports automatically, MIS do much of the reporting process that mid-level managers had performed manually in the past. This capability moderates the size of this management level, which in turn can make an organization “flatter” (less hierarchical). Many organizations.

12. IS and Process Design - Coordination • IS and Process Coordination: IS can enhance coordination among the process activities and process performers. • Example: The supply process at Walmart uses inventory management MIS at Walmart stores and its distribution centres, which in turn are connected via computer networks with sales MIS of Walmart’s suppliers. Stores, distribution centers and suppliers are well coordinated and Walmart is able to have its shelves filled continuously with products. • Group decision making process that includes a GDSS makes it possible for decision makers to brainstorm in parallel (at the same time). Each person can type his/her idea at the same time without waiting for turn to speak (as happens in a manual group decision making process). Big user of GDSS used to be IBM. Facilitator drives the session Decision makers

13. IS and Process Design - Flexibility • IS and Process Flexibility: IS can contribute to controlling variation in a process. • Think of variation in terms of (A) availability of options, and (B) deviation from a benchmark. Variation form A may be desirable, while form B may not be. • Example A: Various reservation processes (hotel, travel, university course) could be done with the start activity supported by different IS. So, a customer of the process could use Website, email, or phone to submit booking requests. • Example B: The quality control process in manufacturing rests on controlling variation between a part under production and desired benchmarks of size, shape and other characteristics. In modern car manufacturing, the quality control process is automated via IS that continuously inspect and report on the state of assembly lines.

14. IS and Process Performance • Processes with optimized design (previous slides) perform better in terms of customer value, time, and costs (next slide). • Better performing processes improve organizational performance (profitability, service level, etc.). Relationships between IS, Process and Organization Process Design, Performance Organizational Performance IS

15. Process Design improvement – Process Performance improvement due to IS

16. Functional and Non-functional Requirements for IS • To be able to carry a process or its parts, IS must meet • (a) functional requirements • (b) non-functional requirements. • Functional requirements = doing what an IS is designed for. • Examples: Performing certain, designated activities within a process (e.g., process order, report on product . • Non-functional requirements = speed, user’s effort, reliability. • Examples: speed matching a benchmark, easy to use, high reliability (minimal system downtime). 16

17. IS and Organizational Data • IS are the main vehicle for managing organizational data: • business documents (decisions, financial, market analyses, orders, contracts…) • professional documentation (problem solving guides, engineering drawings, manuals, knowledge repositories, patents…) • communications (messages and memos managed by email, chat, electronic bulletin boards and other communication systems). • Note: Process can contain more data than those managed by the IS that carry the process.

18. Quality of Data • IS is the vehicle for managing process data. • The quality of IS outputs is evaluated in terms of: • Accuracy (reflects factual state of affairs; e.g., accounting standards) • Timeliness (available on time as the business demands; sometimes ASAP*, but not always) • Completeness (all the data required are provided; data entry matters!) • Relevance (correspond to user needs; rule applied when IS designed) • Non-redundant (duplication of data reduced; e.g., relational databases)** • consistent (a piece of data is appears in the same format and content throughout a system; e.g., customer name)

19. Functional and Non-functional Requirements for IS • To be able to carry a process or its parts, IS must meet (a) functional requirements (b) non-functional requirements. • Functional requirements = doing what an IS is designed for. • Examples: Performing certain, designated activities within a process (e.g., process order, report on product . • Non-functional requirements = speed, user’s effort, reliability. • Examples: speed matching a benchmark, easy to use, high reliability (minimal system downtime).

20. Summary • IS types can be differentiated on Time, User, and Organizational Function • Basic IS types serving managers are TPS, MIS and DSS • IS can optimize process design (Composition, Complexity, Coordination, Flexibility) • Improvements of process design reflect in process performance (Customer Value, Cost, Time) • IS manage organizational data, which should meet quality six quality requirements. • To carry processes, IS should meet functional and non-functional requirements.