Computers enable information to be produced and manipulated very
effectively. For example, wide-area networks allow information to
be distributed over great distances at high speed. All
organisations depend on the creation and use of information. Data
must be collected and sorted, calculations and processing earned
out and resulting information must be disseminated to a range of
people.
The arrival of IT-based information techniques has speeded up the
data collection process. Large amounts of data can be processed,
analysed and the information generated can be communicated very
quickly. Electronic links improve communications and reduce the
need for paper, Decision making can be speeded up and an
increased confidence in decisions created.
Data processing systems
The first commercial computing systems,
developed in the 1950s and 1960s, were data processing systems
that replaced the manual clerical procedures that were currently
in use. Computers were able to carry out processes such as
calculating and sorting more quickly, accurately and consistently
than humans.
The first examples of such systems were developed for activities
such as the production of the payroll for employees and billing
systems. The earliest systems input and stored data on punched
cards. Over the years, magnetic media (tape followed by disk)
took over the storage role and a range of input media such as
OCR, MICR and key-to-disk were used to input the data. Huge,
high-speed line printers were used to produce paper outputs:
payslips, bills and long lists
of transaction details for internal use on continuous, perforated
paper. These data processing functions are still carried out in
the most up-to-date systems.
A data processing system is designed to process the data
generated by the day-to-day business operations of a company.
Examples include systems for accounting, invoicing, stock control
and order entry. For example, a clerk processing a customer order
needs to know whether the item is in stock, what the price of the
item is, what discount, if any, the customer should be given, as
well as customer details such as address and credit status.
Data processing systems are, in the main, tools for the
operational level of an organisation. Their development over the
years has had a major effect on the number and type of jobs at
this level. Such a system by itself does not provide the kind of
information necessary to help tactical or strategic decisions to
be taken by middle or senior management. However, the information
needed for such decisions can be produced from the data gathered
for these operational systems. Information systems were developed
to enable managers to make use of the information.
An example of a data processing system is a payroll system for a
large company. Data concerning overtime from time sheets is
entered via a keyboard. A program is run that reads the time
sheet data and accesses a staff file for necessary data (such as
basic salary, tax code) so that pay details can be calculated.
Pay slips are printed for distribution to employees and the
necessary data is transferred electronically to the appropriate
banks to initiate the transfer of funds.
Information systems
An information system is a system that processes data to
produce information in such a way that it can be used to help in
decision making. In many systems, data processing and information
systems operate together at the same time. An example of such
would be an airline booking system. Flight bookings are made
using an on-line system through which seats can be reserved for
passengers. The system produces tickets, and boarding cards as
well as various lists. For example, the catering company would
need to know the exact dietary requirements of the passengers for
a particular flight.
The flight booking system also provides an information system for
the customer, travel agent and airline. The airline can find out
the percentage of seats sold. Using the on-line system, the
customer can gain information on the availability of seats for a
range of flights. This can help her to make a decision.
A payroll data processing system could be transformed into an
information system by adding reporting facilities to the
day-to-day functions of inputting timesheet data and outputting
cheques and payslips. The reports could include a summary of the
total wage bill, broken down into departments.
In a school or college, a timetabling system that produced
summaries of class sizes, staff workload and room utilisation as
well as allocating students to classes and printing individual
timetables, would be an information system.
Management Information Systems
A management information system (MIS) is an information
system that aims to provide a manager with all the information
needed to make decisions
associated with her job as effectively as possible. Management
information systems are a subset of information systems. Like any
information system, it converts data into information. The data
can come from both internal and external sources. The rapid
growth in the use of database systems within organisations has
allowed MIS to develop. An MIS is usually based on data from one
or more databases.
Management is not an activity that is only performed by people
who are called managers. It is carried out at all levels of an
organisation: strategic, tactical or operational. Management
involves a range of functions: decision making, planning,
co-ordinating, controlling, directing and forecasting.
An MIS converts data into information for a manager. The data is
usually already held in the computer as a result of data
processing activities. It is important that the information is
produced to the correct level of detail.
For example, an operations manager of a chocolate factory needs
to decide the number and types of bars to be made in a particular
week. The following information would help him make this
decision:
This information could be created from the data collected as part of the day-to-day operational data processing system.
The sales manager for the same company will require information on products sold rather than products produced. He will need to be able to compare the performances of different members of the sales force. The information will need to be in summary form - perhaps represented graphically.
To make effective use of the information, a
manager will need to receive it in an appropriate form and at a
suitable level of detail. The amount of detail will usually
relate to the level of management using it.
Strategic information
Strategic information is used by senior managers such as
directors-and the chief executive in a business or head teacher
and governors in a school or directors of a charity. Long-term
planning is a key function at this level of management and most
decisions made will reflect this. An overview of the operation of
the whole organisation is required so that an assessment can be
made of how well objectives are being met. Actual costs and
profits need to be compared with forecasts for all sections of
the business. An MIS can produce projections and predictions
based on current data, both internal and external, that relates
to the business.
The nature of strategic management means that the information
that is required at this level can be very varied both in content
and in timing. There will be a need for some regular reporting,
but depending on the decision to be made, other, one-off,
information maybe needed. External sources will often play a
major role at this level. Many organisations are developing
Executive Information Systems (EIS) which allow management access
to information from wide ranging sources in a variety of forms.
For example, a company that produces and sells ice cream and
other associated products has six factories located in different
parts of the United Kingdom. The senior management may wish to
close down one factory to reduce costs. This would be a strategic
decision and would need a wide range of information. An example
of internal information would be the increase in labour costs at
each factory. External information would include the present site
value of each factory.
Tactical Information
Middle managers, typically department heads, regional or
functional managers, have roles that are tactical. Such a manager
would be responsible for a certain section of a business and
would be responsible to a senior manager. She would be likely to
have a number of operational managers reporting to her. In an
organisation with geographical specialisation, such a manager
could be responsible for a sales region, a specific factory or
group of shops. In an organisation that specialises functionally,
a middle manager could be in charge of training, customer
accounting or IT Services.
Much of the information needed by such managers relates directly
to the operational performance of the organisation and is used
for monitoring and controlling purposes. For example, sales
figures for each of the company's sales representatives. Regular
reports to assist making tactical decisions are common at this
level in a variety of forms: tabular, graphical and pictorial.
The information is usually prepared on a routine basis, perhaps
weekly or monthly. A factory manager of the ice cream company
might consider running an extra shift during the summer months.
Such a decision would he a tactical one, based on tactical
information.
Exception reports, for example a list of all sales figures which
fall below their target level provide tactical level managers
with a powerful tool in establishing areas for further
investigation. Successful decision making at this level often
depends
upon accurate forecasting. (For example, cash flow forecasts.)
Modelling the situation with different data can enhance this.
Decision Support Systems (DSS) are useful here (see page 000).
Operational information
Operational managers are closely involved at the productive
end of the operational. A supervisor may oversee the workforce on
a particular production line. He may need to work out rotas and
rest breaks, monitor the rate of production, ensure that hold-ups
due to machine failure or delay in the arrival of spare parts are
minimised and ensure that the quality of the finished product is
maintained within acceptable levels.
Consider the role of a manager of a small retail shoe shop that
is part of a large national chain. She will need to organise
staffing rotas, balance the till at the end of the day, re-order
stock, monitor sales on a daily, weekly and monthly basis.
Operational information is needed by such managers to help them
in their decision making on a day-to-day level. Nowadays, many
operational decisions, such as when to re-order stock are made
automatically by the computer software. The re-ordering can
itself be initiated automatically. Simple lists and charts will
play a major part in operational information. Such a list could
be produced by sorting the transaction data that has been
processed as part of the normal data processing function.
At the operational level, information is characterised by a high
level of detail. For example, in the shoe shop chain, the local
shop manager might require a daily, itemised list of all shoes
sold, sorted into types, styles and quantities. The regional
manager (tactical level) would require a weekly or monthly
summary report showing the total sales for each shop in her
region. At a strategic level, the marketing manager might wish to
forecast sales trends over the next few years.
DEVELOPMENTS WITHIN MIS
As the power of computers has rapidly increased alongside the
developments in communications, there has been a growth in the
developments of specialised management information systems for
different levels of users. Although these are becoming popular,
they are by no means universally used in organisations and many
problems still remain with their implementation.
DECISION SUPPORT SYSTEMS
Systems called Decision Support Systems
(DSS) help decision-making but they do not themselves make
decisions. They are particularly valuable when making one-off
unstructured decisions that cannot by their nature be produced on
a routine basis from an information system. DSS are used at the
strategic or tactical management levels. They enable a manager to
explore a range of alternatives under a variety of conditions,
For example, a manager may wish to know the effects on profits if
sales increase by 5 to 15 per cent and costs increase by 5 to 12
per cent
DSS are hands-on, interactive systems. They need to be user
friendly and easy to use so that managers can use them with
confidence whenever needed. Examples of DSS include spreadsheets
with their what-if capacity for modelling and testing out
different scenarios, and statistical packages.
A decision support system is a system designed to help someone
reach a decision by summarising all the available relevant
information. Some of this information may be held in the
company's database, and some may be external to the company.
External information could include current interest rates, the
price of oil, population trends, or details of new competitors
starting up in the area.
Decision support systems often include query languages to enable
managers to make spontaneous requests from databases, spreadsheet
models that enable what if calculations to be made, and graphics
to provide a clear representation of the available information.
Executive information systems
Most management information systems will provide summary,
statistical information suitable for senior management. Often,
however, such summarising hides crucial detail, The need for such
detail would be impossible to predict as it depends on specific
circumstances. This lack of appropriate detail could result in
incorrect decisions.
Executive Information Systems (EIS) (also known as Executive
Support Systems (ESS)) provide aggregated information for senior
managers. The manager can display the information in more detail
by clicking on hot spots. Such a system would bring together
information from a range of internal and external sources.
For example, a senior manager is reviewing company expenditure
over the past year, comparing with the estimated budget. This
information is displayed in a graphical form. She then notices
that one department is well over budget, and decides to
investigate further. A click of the mouse on the appropriate
figure results in the details of the budget and expenditure of
the department in question is displayed. It appears that the
overspend is greatest in the raw materials expenditure, so our
manager clicks on this figure to reveal that prices are as
estimated but the department has produced more raw materials than
planned. The manager can investigate sales and stock levels to
find out whether these extra purchases were necessary.
An ETS could also provide access to newspaper articles, economic
indicators and are usually linked to e-mail systems. An EJS is a
simple, easy to use interface, which sit on top of huge
databases. The manager is able to view a high level, overall
summary of data and then drill down' by selecting a particular
figure or hot spot, and see more detailed displayed. This
drilling down can be continued to greater levels of detail.
A key feature of an EIS would be the quality of its presentation.
Such systems are designed to be used by managers at the highest
level of an organisation. Many such people are unused to using IT
and are not prepared to invest much time into learning to use
complex and unfriendly systems.
Currently there is a huge growth in the development of Intranets
within organisations. An Intranet uses the same browser software
that is used to access the Internet, such as Netscape or
Microsoft Explorer. The information available on an Intranet is
internal to the organisation. A well-managed Intranet can provide
a very useful tool for sharing information,
Expert systems
An expert system is a computer program that tries to emulate
human reasoning. It does this by combining the knowledge of human
experts on a given subject, and then following rules that it has
been given to draw inferences. To use the system, the user sits
at a terminal and answers questions posed by the computer. The
program eventually reaches a diagnosis or decision and will also
tell the user how it has reached a particular conclusion.
Expert systems are also called knowledge-based systems and are
able to store and manipulate knowledge so that they can help a
user to solve a problem or make a decision.
An expert system is limited to a specific area of expertise such
as the causes of a car's failure to start. It is typically rule
based although it is able to work with uncertain or incomplete
data. An expert system does not replace a human but delivers
advice for a course of action based on the data given. This
advice mimics the advice that the actual expert or experts who
provided the knowledge for the system would have made. An expert
system is able to explain its reasoning to the user.
An expert system is made up of a knowledge base that contains the
facts and rules provided by a human expert; a means of applying
that knowledge (usually called an inference engine') and a means
of communicating with the user (the human-computer interface').
The knowledge base will store knowledge in different forms,
namely FACTS and RULES. For example:
THE STANDARD CAR RENTAL IS �30 PER DAY -
FACT
IF THE CAR IS A LUXURY MODEL, ADD �10 PER DAY - RULE
IF THE CAR IS HIRED FOR THREE DAYS DEDUCT 20 PER CENT - RULE
IF THE CAR IS HIRED FOR SEVEN DAYS DEDUCT 30 PER CENT - RULE
IF THE DRIVER HAS A LOYALTY CARD DEDUCT ANOTHER 10 PER CENT -
RULE
THE SHOWROOM IS OPEN SEVEN DAYS A WEEK - FACT
Knowledge like this can be stored in a
knowledge base, and the expert system should then be able to make
deductions.
If we supply the information about when Mrs Miggins wishes to
hire a car, the expert system should guide us through a series of
relevant questions and work out the charge.
In practice, such as in a system that calculates the level of
income support for an individual, there may be hundreds or
thousands of facts and rules. When the program (the inference
engine) runs, it does not simply start at the first rule and then
run through them all in a axed order. Instead it makes deductions
as it goes along, finding out what else it needs to know before
providing an answer.
USES OF EXPERT SYSTEMS
Expert systems are best suited to where a well- defined set
of rules exists or can be written down. Expert systems have been
used in such fields as medical diagnosis, fault diagnosis in a
steel rolling mill, classifying, debugging, prediction, planning,
geological prospecting, processing Social Security claims and
quantity surveying.
Developing an expert system, by prototyping
The person who carries out the tasks of defining a problem,
constructing a suitable system, acquiring the knowledge to go
into the system and developing the system is called a knowledge
engineer. His job is similar to that of a systems analyst.
Acquiring the rules and facts from an expert is not a simple
task. Many rules' that an expert uses to make decisions are very
complex and not always consciously acknowledged. There are always
many exceptions or special cases that need to be included.
Expert systems are nearly always built using prototyping, whereby
a trial model is developed so that users can try it out and
evaluate it.
Expert systems allow expertise that is in short supply to be more
widely shared. When particular experts are no longer available,
their expertise is still available. An expert system that is
based on the knowledge of a number of experts could provide
better advice than an individual expert. The demand for human
experts might decrease. For example, an expert system that dealt
with all the legal aspects of house conveyancing might make it
unnecessary for house buyers to employ a solicitor.
There are a number of dangers associated with the use of expert
systems. If the knowledge engineer does
not do an adequate job, the advice given by the expert system
could be inaccurate and inappropriate. If the advice given by the
system is used without any interpretation, it could be wrong.
A number of experts systems have been developed in the field of
law to enable the user to pose legal problems or check the
legality of a possible decision or action, The knowledge base of
legal facts and rules from Acts of Parliament and case law is
built up by consulting a number of law practitioners
Success or failure of MIS
In spite of many technical advances and the investment of
huge amounts of money, time and effort, many management
information systems have not fulfilled their promise and have
failed to provide the management with the information that they
need. Just as with any information processing system, careful
planning is needed if it is to he successful.
It is vital that the management is involved with the design of
the system, They are to be the users, and it is therefore crucial
that any system meets their real needs. However, for this
involvement to be useful and realistic, the management will need
to have an up to date knowledge of current information technology
systems and their capabilities. They will need to be able to make
informed decisions, and not be blinded by the IT experts'
knowledge and use of jargon. Some form of training may be
necessary. An inadequate knowledge of the capabilities of current
technology may result in management making inappropriate or
excessive demands from the system. When the system inevitably
fails to meet their high expectations they will be disillusioned
and may not then use the system. It is important to understand
that IT does not always bring benefits.
It is equally important that the IT experts spend adequate time
getting to know the information needs of the managers. This can
only be achieved once a thorough understanding of the
organisation has been achieved and a detailed analysis made of
the system. Systems development should be the result of a true
partnership between management and IT professionals. Managers do
not always know what information they need and IT specialists do
not always know enough about the process of management and the
business in question.
Many management information systems have failed to provide
adequate information as too much emphasis has been placed on the
lower level data processing applications. A poor system will be
produced if there is too much emphasis on the computer system and
inadequate attention given to the whole system and the data flow
throughout the organisation. The system should be designed around
the information needs of the managers rather than be based upon
what the computer can easily produce.
Inadequate teamwork and a lack of professional standards can lead
to unmet deadlines and a system that does not function as was
intended.
Not all MIS systems are implemented successfully. Factors influencing success or failure include: