2. DATA VS INFORMATION
DATA
Data has been derived from Latin term “Datum”, There are collections of facts and collected as the outcome of the
experiment, experience or process in a computer.
According to Davis, “ Data, raw material for information, is defined as groups of non-random symbols, which
represent quantities, actions, objects etc.. Data item in Information Systems are formed from the characters. They
maybe numeric, alphabetic or any special symbols.
INFORMATION
It is a potential function of data. It is derived from the data and very useful to solve a problem. Information is also
known as processed data. When data is processed and presented in meaningful manner in the desired context to the
end user, it is called Information.
According to Davis and Olson, “ Information is data that has been processed into a form thatis meaningful to the
reciepient and is of real or perceived value in current or prospective actions or decisions.”
Information
Processing Information
Data
Processing Knowledge
3. Following factors states few common factors that reflect on the needs and objectives of the information processing −
• Increasing impact of information processing for organizational decision making.
• Dependency of services sector including banking, financial organization, health care, entertainment, tourism and
travel, education and numerous others on information.
• Changing employment scene world over, shifting base from manual agricultural to machine-based
manufacturing and other industry related jobs.
• Information revolution and the overall development scenario.
• Growth of IT industry and its strategic importance.
• Strong growth of information services fuelled by increasing competition and reduced product life cycle.
• Need for sustainable development and quality life.
• Improvement in communication and transportation brought in by use of information processing.
• Use of information processing in reduction of energy consumption, reduction in pollution and a better ecological
balance in future.
• Use of information processing in land record managements, legal delivery system, educational institutions,
natural resource planning, customer relation management and so on.
NEED FOR INFORMATION
4. • Planning − At the planning stage, information is the most important ingredient in decision making. Information
at planning stage includes that of business resources, assets, liabilities, plants and machineries, properties,
suppliers, customers, competitors, market and market dynamics, fiscal policy changes of the Government,
emerging technologies, etc.
• Recording − Business processing these days involves recording information about each transaction or event.
This information collected, stored and updated regularly at the operational level.
• Controlling − A business need to set up an information filter, so that only filtered data is presented to the
middle and top management. This ensures efficiency at the operational level and effectiveness at the tactical and
strategic level.
• Measuring − A business measures its performance metrics by collecting and analyzing sales data, cost of
manufacturing, and profit earned.
• Decision-making − MIS is primarily concerned with managerial decision-making, theory of organizational
behavior, and underlying human behavior in organizational context. Decision-making information includes the
socio-economic impact of competition, globalization, democratization, and the effects of all these factors on an
organizational structure.
5. RELATIONSHIP BETWEEN DATA AND
INFORMATION
Can a computer do thing that we can't do?
Then why do we prefer computer for data processing?
Process
Input Output
Information
Raw Data
Data Processing Cycle
The terms “data” and
“information” are used
interchangeably. However, there is
a subtle difference between the
two.
In a nutshell, data can be a number,
symbol, character, word, codes,
graphs, etc. On the other hand,
information is data put into
context. Information is utilised by
humans in some significant way
(such as to make decisions,
forecasts etc).
A basic example of information
would be a computer. A computer
uses programming scripts,
formulas, or software applications
to turn data into information.
6. Professor Ray R. Larson of the School of Information at the University of California, Berkeley, provides
an Information Hierarchy, which is −
Data − The raw material of information.
Information − Data organized and presented by someone.
Knowledge − Information read, heard, or seen, and understood.
Wisdom − Distilled and integrated knowledge and understanding.
Scott Andrews' explains Information Continuum as follows −
Data − A Fact or a piece of information, or a series thereof.
Information − Knowledge discerned from data.
Business Intelligence − Information Management pertaining to an organization's policy or decision-making,
particularly when tied to strategic or operational objectives.
8. Implications of Information in Business
Information processing has transformed our society in numerous ways. From a business perspective,
there has been a huge shift towards increasingly automated business processes and communication.
Access to information and capability of information processing has helped in achieving greater efficiency
in accounting and other business processes.
A complete business information system, accomplishes the following functionalities −
• Collection and storage of data.
• Transform these data into business information useful for decision making.
• Provide controls to safeguard data.
• Automate and streamline reporting.
9. Accuracy
Accuracy of data plays vital role in helping the decision making.
So as accurate the information will be, better will be decision making. Accuracy of information means the ratio of correct
information to the total information gathered over certain time period.
Validity
Information should be generated with help of reliable and valid data to be helpful in contributing to effective decision
making.
Completeness
Incomplete information gathered and shared with decision maker is of no use as this will contribute to hindrance in decision
making. Information must be complete to contribute in decision making.
Concise
An accurate information will always be centralized and to the point. It should not contain unnecessary details not related to
the event on which decision making is in progress.
CHARACTESITICS/ATTRIBUTES OF INFORMATION
10. Relevant
Information must be relevant to the topic. It should not be messed up with unwanted details to confuse decision makers.
Timeliness
Information should on time. Delayed information is not very useful. For example, if a newspaper publish the breaking news of
today after one month, then would that be so relevant to anyone. That is why to make more impact the information should
follow the timeliness.
Fit for Purpose
The information should focus on the purpose for which it is needed to help in better decision making.
Reliable
The information should always be reliable and thus authentic to help in taking decision on any purpose.
Recent
Latest Information helps in taking best decisions.
Economical
The benefits obtained from the information must be more than the cost of gathering it.
12. Action vs. non action information: Action information is active information that causes an activity or operation,
while the information that communicates only when the status is applied without any operation is called non-action
Recurring vs. non-recurring information: The information that is generated in regular intervals is called recurring
information, whereas non-repetitive in nature is called non-recurring information
Internal vs. external information: all information that produced from internal sources of any organization is called
internal information, though all information that produced from external sources of any organization is called
external information
Planning information: this kind of information is used to set up rules and norms for the strategic, tactical and
operational planning of the organization activities.
Classification by Characteristics
14. Classification by Application
In terms of applications, information can be categorized as −
• Planning Information − These are the information needed for establishing standard norms and specifications in an
organization. This information is used in strategic, tactical, and operation planning of any activity. Examples of such information
are time standards, design standards.
• Control Information − This information is needed for establishing control over all business activities through feedback
mechanism. This information is used for controlling attainment, nature and utilization of important processes in a system. When
such information reflects a deviation from the established standards, the system should induce a decision or an action leading to
control.
• Knowledge Information − Knowledge is defined as "information about information". Knowledge information is acquired
through experience and learning and collected from archival data and research studies.
• Organizational Information − Organizational information deals with an organization's environment, culture in the light of its
objectives. Karl Weick's Organizational Information Theory emphasizes that an organization reduces its equivocality or
uncertainty by collecting, managing and using these information prudently. This information is used by everybody in the
organization; examples of such information are employee and payroll information.
• Functional/Operational Information − This is operation specific information. For example, daily schedules in a manufacturing
plant that refers to the detailed assignment of jobs to machines or machines to operators. In a service-oriented business, it would
be the duty roster of various personnel. This information is mostly internal to the organization.
• Database Information − Database information construes large quantities of information that has multiple usage and application.
Such information is stored, retrieved and managed to create databases. For example, material specification or supplier
information is stored for multiple users.
15. Classification by Management Hierarchy
Based on Anthony's classification of Management, information used in business for decision-making is
generally categorized into three types −
Strategic Information − Strategic information is concerned with long term policy decisions that defines
the objectives of a business and checks how well these objectives are met. For example, acquiring a new
plant, a new product, diversification of business etc, comes under strategic information.
Tactical Information − Tactical information is concerned with the information needed for exercising
control over business resources, like budgeting, quality control, service level, inventory level, productivity
level etc.
Operational Information − Operational information is concerned with plant/business level information
and is used to ensure proper conduction of specific operational tasks as planned/intended. Various
operator specific, machine specific and shift specific jobs for quality control checks comes under this
category.
16. Classification as per Business Function
Transaction Processing System: TPS processes transactions and produces reports. It refers to the automation of basic, repetitive
processing that underpins business operations. It does not afford any information to the user for his/her decision-making.
TPS uses data and produces data as proposed in the coming after or as a result of the diagram.
Previously, TPS was invited as the administration Information System. Data processing was used by manual processes or with simple
machines prior to the invention of computers. The TPS domain is located at the bottom of an organization's management hierarchy.
Management Information System (MIS): As MIS is a well-known information system to organize the information, which processes data
and converts it into meaningful information. A supervision information system uses TPS for its data inputs. The information generated by the
information system may live used for sources of operations, strategic and long-range planning. Short-term planning, supervision control, and
other managerial problem solving encompass processing in assist of a wide range of organizational functions & management processes. MIS
is capable of providing analysis, planning & decision developing support. Marketing, manufacturing, human resources, finance, and
accounting are some of the functional areas of a company.
Decision Support System (DSS): A decision help system (DSS) is an information system a formal request to be considered for a position
or to be allowed to do or have something. That assists decision-making. DSS be inclined with planning, analyzing alternatives, and trial and
error search for the solution. The elements of the decision support system include a database & software. Finance, Production, and marketing
are some of the main application areas of DSS.
Based on how information is processed, DSS can be distinguished from MIS. MIS processes data to restyle it into information. DSS processes
information to support the decision creating process of a manager.
Executive Support System (ESS): Executive Support System (ESS) is a reference of the management information system, which is a
special kind of DSS; An ESS is specially tailored for the ownership of the chief executive of an association to support his decision-making. It
includes various types of decision-making, but it is more specific and adult-oriented.
Office Automation Systems (OAS): Office automation is referenced to the application of computes and communication technology to
office functions. Office automation systems are meant to improvements the productivity of frameworks at various levels of management by
17. LEVELS OF MANAGEMENT IN MIS
Management is intended to operate all management activities due to this it is important for a well-organized
existence. The backbone of any effective company is good management. Managing one's life entails getting things
done to achieve one's goals while managing an organization entails getting things done with and through other
people to achieve its goals. There are three common levels of management in every organization. This can be
divided into three groups:
1. Upper-level management
2. Middle-level management
3. Lower-level management
18. 1) Upper/Top Level Management
Generally, top management involves doing strategic planning for the organization, and the other
two levels provide help in the form of processed data. The following are the core functionalities of
top management in a company:
To develop the organization's policies and goals.
Organizing the enterprise's strategies and assigning good administrators to departments.
Ensuring proper communication between the organization and the people.
The enterprise's goals and wide strategies are defined by top management.
Top management issues guidelines for preparing department budgets, policies, and schedules,
among other things.
It creates the company's business goals and policies.
It appoints middle-level executives, such as departmental managers.
It supervises and oversees the work of all agencies.
It's also in charge of keeping in touch with the outside world.
The top management is therefore accountable to the shareholders for the company's results.
19. 2) Middle-Level Management
The middle level management is in charge of operational work and its control, and also requires strategic
information to do so.
The following are the core functionalities of middle level management in a company:
To carry out the organization's strategies in compliance with top-level management's policies and directives.
To plan the operations of the department.
To serve as an example or source of encouragement for junior managers to increase their productivity.
They carry out the organization's plans in compliance with top management's policies and directives.
Middle level management makes preparations for the organization's sub-units.
They involve with recruiting and give training to lower-level management.
They translate and describe strategies from upper management to lower management.
They are responsible to sends essential reports and data to the top level of management.
They supervise and encourage lower-level managers to boost up their performance.
20. 3) Lower-Level Management
The lower level is responsible for day-to-day operational activity and its control and requires knowledge
to function. The following are the core functionalities of lower level management in a company:
Assigning roles and duties to operational activities.
They ensure consistency and accountability to ensure production quantity.
They convey to the workers the firm's priorities and objectives as set out by higher-level
administrators, as well as suggestions, guidelines, appeals, and information pertaining to employee
issues.
They provide staff with training and guidance on a daily basis.
They provide higher-level supervisors with periodic worker reports.
They assign roles and responsibilities to staff members.
They provide day-to-day guidance and instruction to employees.
They control the quality and quantity of productive products.
They are also tasked with establishing positive relationships within the company.
They convey problems, ideas, worker's opinions and recommendations from employees to higher
level management.
21. MIS AND DECISION MAKING
DECISION-MAKING CONCEPT:
A decision is a choice out of several alternatives (options) made by the decision maker to achieve some objective s in a given
situation. Business decisions are those, which are made in the process of conducting business to achieve its objective in a given
environment. Managerial decision-making is a control point for every managerial activity may be planning, organizing,
staffing, directing, controlling and communicating. Decision-making is the art of reasoned and judicious choice out of many
alternatives. Once the decision is taken, it implies the commitment of resources.
The study of the selecting and identifying the alternatives depending upon the values and the preferences of the decision
makers is termed as the decision-making.
According to Marry Nites, “Decision Making takes place in adopting the objectives and choosing the means and dagain when
a change in the situation creates a necessity for adjustments”.
According to Goerge R Terry, “Decision Making is the selection based on certain criteria fom two and mor alternatives”.
22. The business managers have to take a variety of decision. Some are routine and others are long-term implementation decision. Thus
managerial decisions are grouped as:
(a) Strategic decision
(b) Tactical decision
(c) Operation decision
1. Strategic Decision: these are known as the major decision to influence the whole or major part of the organization. Such decisions
contribute directly to the achievement of common goals of the organization; have a long-range effect upon the organization.
Generally, strategic decision is unstructured and thus, a manager has to apply his business judgment, evaluation and intuition into
the definition of the problem. These decisions are based on partial knowledge of the environmental factors which are uncertain and
dynamic, therefore such decision is taken at the higher level of management.
2. Tactical Decision: tactical decision relates to the implementation of strategic decisions, directed towards developing divisional
plans, structuring workflows, establishing distribution channels, acquisition of resources such as men, materials, and money. These
decisions are taken at the middle level of management.
3. Operational Decision: operational decisions relate to day-to-day operations of the enterprise having a short-term horizon and are
always repeated. These decisions are based on facts regarding the events and do not require much of business judgments.
Operational decisions are taken at a lower level of management.
23. The decision-making process requires creativity, imagination and a deep understanding of human behavior. The process
covers over a number of tangible and intangible factors affecting the decision process. It also requires foresight to predict the
post-decision implication and a willingness to face those implications. All decisions solve a ‘problem’ but over a period of time,
they give rise to a number of other ‘problems.
The need for information system in an organization is to support the decision-making process. The managers must be aware of
problems before a decision can be made. A problem exists when the real situation is different than the expected one. After the
problem has been identified, the cause of the existence of the problem must be identified and then the solution to the problem
has to be found. The decision-making process can be divided into three main phases:
(a) Intelligence: searching the environment for condition calling for decisions. The phase consists of determining that a
problem exists.
(b) Design: during this phase, a set of alternative solution is generated and tested for feasibility.
(c) Choice: in this phase, the decision-maker select one of the solution identified in the design phase.
Thus, the decision process follows the sequence from intelligence to design and from design to choose. It is possible to get back
from one phase to another and the whole process may be repeated.
25. • Senior management. Senior management is concerned with general yet timely information on changes in
the industry and society at large that may affect both the long-term and near-term future of the firm, the
firm’s strategic goals, short-term and future performance, specific bottlenecks and trouble affecting
operational capabilities, and the overall ability of the firm to achieve its objectives.
• Middle management and project teams. Middle management is concerned with specific, timely
information about firm performance, including revenue and cost reduction targets, and with developing
plans and budgets to meet strategic goals established by senior management. This group needs to make
important decisions about allocating resources, developing short-range plans, and monitoring the
performance of departments, task forces, teams, and special project groups. Often the work of middle
managers is accomplished in teams or small groups of managers working on a task.
• Operational management and project teams. Operational management monitors the performance of each
subunit of the firm and manages individual employees. Operational managers are in charge of specific
projects and allocate resources within the project budget, establish schedules, and make personnel
decisions. Operational work may also be accomplished through teams.
• Individual employees. Employees try to fulfill the objectives of managers above them, following
established rules and procedures for their routine activities. Increasingly, however, employees are granted
much broader responsibilities and decision-making authority based on their own best judgment and
information in corporate systems. Employees may be making decisions about specific vendors, customers,
and other employees. Because employees interact directly with the public, how well they make their
decisions can directly impact the firm’s revenue streams.
27. Decisions can be classified as structured, semistructured, and unstructured.
Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and insights
into the problem definition. Each of these decisions is novel, important, and nonroutine, and there is no well-
understood or agreed-on procedure for making them.
Structured decisions, by contrast, are repetitive and routine, and decision makers can follow a definite procedure
for handling them to be efficient.
Many decisions have elements of both and are considered semi structured decisions, in which only part of the
problem has a clear-cut answer provided by an accepted procedure.
In general, structured decisions are made more prevalently at lower organizational levels, whereas unstructured
decision making is more common at higher levels of the firm.
Senior executives tend to be exposed to many unstructured decision situations that are open ended and evaluative
and that require insight based on many sources of information and personal experience. For example, a CEO in
today’s music industry might ask, “Whom should we choose as a distribution partner for our online music catalog
—Apple, Microsoft, or Sony?” Answering this question would require access to news, government reports, and
industry views as well as high-level summaries of firm performance. However, the answer would also require
senior managers to use their own best judgment and poll other managers for their opinions.
28. Middle management and operational management tend to face more structured decision scenarios, but their
decisions may include unstructured components. A typical middlelevel management decision might be “Why is
the order fulfillment report showing a decline over the last six months at a distribution center in Minneapolis?”
This middle manager could obtain a report from the firm’s enterprise system or distribution management system
on order activity and operational efficiency at the Minneapolis distribution center. This is the structured part of the
decision. But before arriving at an answer, this middle manager will have to interview employees and gather more
unstructured information from external sources about local economic conditions or sales trends.
Rank-and-file employees tend to make more structured decisions. For example, a sales account representative
often has to make decisions about extending credit to customers by consulting the firm’s customer database that
contains credit information. In this case the decision is highly structured, it is a routine decision made thousands
of times each day in most firms, and the answer has been preprogrammed into a corporate risk management or
credit reporting system.
The types of decisions faced by project teams cannot be classified neatly by organizational level. Teams are small
groups of middle and operational managers and perhaps employees assigned specific tasks that may last a few
months to a few years. Their tasks may involve unstructured or semistructured decisions such as designing new
products, devising new ways to enter the marketplace, or reorganizing sales territories and compensation systems.
30. Following are the important steps of the decision-making process. Each step may be supported by different tools and
techniques.
Step 1 − Identification of the Purpose of the Decision
In this step, the problem is thoroughly analyzed. There are a couple of questions one should ask when it comes to identifying
the purpose of the decision.
• What exactly is the problem?
• Why the problem should be solved?
• Who are the affected parties of the problem?
• Does the problem have a deadline or a specific time-line?
Step 2 − Information Gathering
A problem of an organization will have many stakeholders. In addition, there can be dozens of factors involved and affected
by the problem.
In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders
involved in the problem. For the process of information gathering, tools such as 'Check Sheets' can be effectively used.
Step 3 − Principles for Judging the Alternatives
In this step, the baseline criteria for judging the alternatives should be set up. When it comes to defining the criteria,
organizational goals as well as the corporate culture should be taken into consideration.
As an example, profit is one of the main concerns in every decision-making process. Companies usually do not make decisions
that reduce profits, unless it is an exceptional case. Likewise, baseline principles should be identified related to the problem in
hand.
31. Step 4 − Brainstorm and Analyze the Choices
For this step, brainstorming to list down all the ideas is the best option. Before the idea generation step, it is vital to
understand the causes of the problem and prioritization of causes.
For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram helps you
to identify all possible causes of the problem and Pareto chart helps you to prioritize and identify the causes with the
highest effect.
Step 5 − Evaluation of Alternatives
Use your judgment principles and decision-making criteria to evaluate each alternative. In this step, experience and
effectiveness of the judgment principles come into play. You need to compare each alternative for their positives and
negatives.
Step 6 − Select the Best Alternative
Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best alternative is an
informed decision since you have already followed a methodology to derive and select the best alternative.
Step 7 − Execute the decision
Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the help of
subordinates.
Step 8 − Evaluate the Results
Evaluate the outcome of your decision. See whether there is anything you should learn and then correct in future
decision making. This is one of the best practices that will improve your decision-making skills.
32. MODELS OF DECISION MAKING
The decision-making process though a logical one is a difficult task. All decisions can be categorized into the following three basic
models.
(1) The Rational/Classical Model.
(2) The Administrative or Bounded Rationality Model
3) The Retrospective Decision-Making Model.
1. The Rational/Classical Model:
The rational model is the first attempt to know the decision-making-process. It is considered by some as the classical approach to
understand the decision-making process. The classical model gave various steps in decision-making process which have been
discussed earlier.
Features of Classical Model:
1. Problems are clear.
2. Objectives are clear.
3. People agree on criteria and weights.
4. All alternatives are known.
5. All consequences can be anticipated.
33. 6. Decision makes are rational.
i. They are not biased in recognizing problems.
ii. They are capable of processing ail relevant information
iii. They anticipate present and future consequences of decisions.
iv. They search for all alternatives that maximizes the desired results.
2. Bounded Rationality Model or Administrative Man Model:
Decision-making involve the achievement of a goal. Rationality demands that the decision-maker should properly understand the
alternative courses of action for reaching the goals.
He should also have full information and the ability to analyse properly various alternative courses of action in the light of goals
sought. There should also be a desire to select the best solutions by selecting the alternative which will satisfy the goal
achievement.
Herbert A. Simon defines rationality in terms of objective and intelligent action. It is characterised by behavioural nexus between
ends and means. If appropriate means are chosen to reach desired ends the decision is rational.
Bounded Rationality model is based on the concept developed by Herbert Simon. This model does not assume individual
rationality in the decision process.
Instead, it assumes that people, while they may seek the best solution, normally settle for much less, because the decisions they
confront typically demand greater information, time, processing capabilities than they possess. They settle for “bounded
rationality or limited rationality in decisions. This model is based on certain basic concepts.
34. a. Sequential Attention to alternative solution:
Normally it is the tendency for people to examine possible solution one at a time instead of identifying all possible solutions and
stop searching once an acceptable (though not necessarily the best) solution is found.
b. Heuristic:
These are the assumptions that guide the search for alternatives into areas that have a high probability for yielding success.
c. Satisficing:
Herbert Simon called this “satisficing” that is picking a course of action that is satisfactory or “good enough” under the
circumstances. It is the tendency for decision makers to accept the first alternative that meets their minimally acceptable
requirements rather than pushing them further for an alternative that produces the best results.
Satisficing is preferred for decisions of small significance when time is the major constraint or where most of the alternatives are
essentially similar.
3. Retrospective decision model (implicit favorite model):
This decision
-making model focuses on how decision-makers attempt to rationalise their choices after they have been made and
try to justify their decisions. This model has been developed by Per Soelberg. He made an observation regarding the job choice
processes of graduating business students and noted that, in many cases, the students identified implicit favorites (i.e. the
alternative they wanted) very early in the recruiting and choice process. However, students continued their search for additional
alternatives and quickly selected the best alternative.
35. Herbert Simon’s Model of Decision-Making
Herbert Simon made key contributions to enhance our understanding of the decision-making process. In fact, he pioneered the
field of decision support systems. According to (Simon 1960) and his later work with (Newell 1972), decision-making is a process
with distinct stages. He suggested for the first time the decision-making model of human beings. His model of decision-making
has three stages:
• Intelligence which deals with the problem identification and the data collection on the problem.
• Design which deals with the generation of alternative solutions to the problem at hand.
• Choice which is selecting the ‘best’ solution from amongst the alternative solutions using some criterion.
The figure given below depicts Simon’s decision-making model clearly.
36. Intelligence Phase
This is the first step towards the decision-making process. In this step the decision-maker identifies/detects the problem or
opportunity. A problem in the managerial context is detecting anything that is not according to the plan, rule or standard. An
example of problem is the detection of sudden very high attrition for the present month by a HR manager among workers.
Opportunity seeking on the other hand is the identification of a promising circumstance that might lead to better results. An
example of identification of opportunity is-a marketing manager gets to know that two of his competitors will shut down
operations (demand being constant) for some reason in the next three months, this means that he will be able to sell more in the
market.
Thus, we see that either in the case of a problem or for the purpose of opportunity seeking the decision-making process is initiated
and the first stage is the clear understanding of the stimulus that triggers this process. So if a problem/opportunity triggers this
process then the first stage deals with the complete understanding of the problem/opportunity. Intelligence phase of decision-
making process involves:
Problem Searching: For searching the problem, the reality or actual is compared to some standards. Differences are measured & the
differences are evaluated to determine whether there is any problem or not.
Problem Formulation: When the problem is identified, there is always a risk of solving the wrong problem. In problem
formulation, establishing relations with some problem solved earlier or an analogy proves quite useful.
Design Phase
Design is the process of designing solution outlines for the problem. Alternative solutions are designed to solve the same
problem. Each alternative solution is evaluated after gathering data about the solution. The evaluation is done on the basic of
criteria to identify the positive and negative aspects of each solution. Quantitative tools and models are used to arrive at these
solutions. At this stage the solutions are only outlines of actual solutions and are meant for analysis of their suitability alone. A
lot of creativity and innovation is required to design solutions.
37. Choice Phase
It is the stage in which the possible solutions are compared against one another to find out the most suitable solution. The ‘best’
solution may be identified using quantitative tools like decision tree analysis or qualitative tools like the six thinking hats
technique, force field analysis, etc.
This is not as easy as it sounds because each solution presents a scenario and the problem itself may have multiple objectives
making the choice process a very difficult one. Also uncertainty about the outcomes and scenarios make the choice of a single
solution difficult.
38. Information System
Information systems are interrelated components working together to collect, process, store, and disseminate information to
support decision making, coordination, control, analysis, and visualization in an organization.
IS is integration of the following elements:-
1. Procedure
2. Resources
3. People
According to James A O’Brien, “An IS can be any organized combination of people, hardware, software, communication
networks and data resources that stores and retrieve , transfor and disseminate information in an organisation”.
Process
Input Output
Store
39. Types of Information Systems
What information a cashier need?
Transaction
Information
Management
Information
Decision Support
Information
Executive
Information
What information a stores person needs?
What information an accounts clerk needs?
What information a supermarket manager need?
What information a stores manager needs
What information a Marketing Director needs
What Information does the CEO needs
Transaction
Processing System
(TPS)
Management
Information System
(MIS)
Decision Support
System (DSS)
Executive
Information System
(EIS)
40. CEOs, Governing boards
Director Marketing, Director
Operation
Sales Manager, Showroom
Manager
Stores Manager
Cashier, sales reps, accounts
clerks
Executives
Managers
Workers
ES / EIS
DSS
Management
Information
Systems
(MIS)
Transaction
Processing
Systems
(TPS)
41. TRANSACTION PROCESSING SYSTEM
A transaction is a simple process that takes place during business operations. The transaction processing system (TPS) manages
the business transactions of the client and therefore helps a company's operations. A TPS registers, as well as all of its
consequences, a non-inquiry transaction itself in the database and generates transaction-related documents.
TPS manages and records transactions. It is the automation of the simple, repetitive processing used to support business
operations.
Many real-time advantages for every company are offered by transaction processing systems. TPS uses data and creates reports as
shown in the diagram below. To find out the key insights for decision-making, it offers graphical or condensed textual data.
TPS was previously referred to as the Management Information System. Data processing was conducted manually or with simple
machines before computers. TPS's domain is at the lowest level of an organization's management hierarchy.
A transaction processing system is a form of computer processing that takes place in the presence of a computer user and allows a
user request or transaction to be answered immediately. Some examples of processing systems for transactions include,
ATM transactions
Credit Card system
Electronic Commerce
Online Payments
Online Trading Stocks
Self-checking stations
42. TPS is needed to conduct business in nearly any organization today. TPSs bring data into the databases of the organization; these
systems are also a basis on which management-oriented information systems are based.
Transaction Processing Activities
The processing of individual transactions depends, of course, to some extent on their nature. The transaction processing general
elements include,
1. Capturing and validating data
2. Transaction-steps of processing
3. Maintenance of the database
43. DECISION SUPPORT SYSTEM (DSS)
A Decision Support System (DSS) is an application for information systems that helps to make decisions. DSS is widely used in
the planning, analysis and search for solutions for errors. A database, model base & applications are the components of the
decision support system. Production, finance, and marketing are the main areas of operation of DSS.
Decision Support System (DSS) characteristics
DSS always support to,
Various decision-making mechanisms and types.
Effective design and implementation support.
Semi-structured and unstructured decision-makers.
Assist at all-level to management.
Individual and group assistance.
DSS model
Depending on the information processing, DSS can be distinguished from MIS. DSS collects information to support a manager's
decision-making process. User’s store and access data using the user interface to translate it into information, MIS processes data.
44. User interface: User interfaces are the points of access in which users interact with designs. The user interface is the process of
creating interfaces with a focus on looks or style in software or computer devices. Designers aim to create user-friendly, user-
friendly projects. UI design typically refers to graphical user interfaces but also involves other interfaces such as voice-
controlled interfaces.
Middleware Model: A decision support system may compromise various models where a particular function is performed by
each model. The choice of models to be included in a family of decision support systems depends on consumer specifications
and DSS purposes. Remember that the DSS program provides the predefined models (or routines) that can be used to build
new models to support specific decision styles.
Database: Database is just like a container that stores data in a systematic manner. Databases support users to store and
manipulation of data whenever required.
45. Characteristics of a DSS
• Support for decision-makers in semi-structured and unstructured problems.
• Support for managers at various managerial levels, ranging from top executive to line managers.
• Support for individuals and groups. Less structured problems often requires the involvement of several
individuals from different departments and organization level.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for variety of decision processes and styles.
• DSSs are adaptive over time.
46. Benefits of DSS
• Improves efficiency and speed of decision-making activities.
• Increases the control, competitiveness and capability of futuristic decision-making of the organization.
• Facilitates interpersonal communication.
• Encourages learning or training.
• Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up new evidences for an unusual decision.
• Helps automate managerial processes.
Components of a DSS
• Database Management System (DBMS) − To solve a problem the necessary data may come from internal or external database. In an
organization, internal data are generated by a system such as TPS and MIS. External data come from a variety of sources such as
newspapers, online data services, databases (financial, marketing, human resources).
• Model Management System − It stores and accesses models that managers use to make decisions. Such models are used for
designing manufacturing facility, analyzing the financial health of an organization, forecasting demand of a product or service, etc.
• Support Tools − Support tools like online help; pulls down menus, user interfaces, graphical analysis, error correction mechanism,
facilitates the user interactions with the system.
47. Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows −
Text Oriented DSS − It contains textually represented information that could have a bearing on decision. It allows
documents to be electronically created, revised and viewed as needed.
Database Oriented DSS − Database plays a major role here; it contains organized and highly structured data.
Spreadsheet Oriented DSS − It contains information in spread sheets that allows create, view, modify procedural
knowledge and also instructs the system to execute self-contained instructions. The most popular tool is Excel and
Lotus 1-2-3.
Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written for performing certain
calculations and particular program type.
Rules Oriented DSS − It follows certain procedures adopted as rules.
Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the example.
Compound DSS − It is built by using two or more of the five structures explained above.
49. Executive Information System (EIS)
An Executive Information System (EIS) is a kind of decision support system (DSS) used in organizations to help executives in
decision making. It does so by providing easy access to important data needed in an organization to achieve strategic goals.
An EIS usually has graphical displays on a user-friendly interface.
Executive information systems can be used for monitoring company performance in many different types of organizations as
well as for identifying opportunities and problems.
Early executive information systems were developed on mainframe computers as computer-based programs to provide the
description, sales performance and/or market research data for senior executives of a company. Executives, however, were not
all literate or confident about the computers. Also, EIS data endorsed only executive-level decisions that did not necessarily
support the entire company or enterprise.
Current EIS data is available on local area networks (LANs) throughout the company or enterprise, facilitated by personal
computers and workstations. Employees can access company data to help make decisions in their workplaces, departments,
divisions, etc. This enables employees to provide relevant information and ideas above and below the level of their company.
Executive support systems are intended to be used directly by senior managers to support unscheduled strategic management
decisions. Often such information is external, unstructured and even uncertain. Often, the exact scope and context of such
information are not known in advance.
This information is based on data,
Business intelligence
Financial intelligence
Data with technology support to analyze
50. Advantages of EIS
•Trend Analysis
•Improvement of corporate performance in the
marketplace
•Development of managerial leadership skills
•Improves decision-making
•Simple to use by senior executives
•Better reporting method
•Improved office efficiency
Disadvantage of EIS
•Due to technical functions, not to easy to use by
everyone
•Executives may encounter overload of information
•Difficult to manage database due to the large size
of data
•Excessive costs for small business organizations
51. Office Automation Systems
•The term office automation is a method that is used for office activities and makes it possible to process the data using a
computer system. An office automation system can be considered as a tool that majorly includes a word processing
application, a spreadsheet application, a presentation application, and a database management system.
•With implementation, an office automation system will enable the automation of most of the administrative work in the
office and would also concentrate on the more repeatable and routine aspects of individual and group work.
•An office automation system is a mechanism that allows data transformation from one system to another on its own
without human interference and inaccuracies. These tools may be used to capture, organize, and process the data to
achieve day-to-day activities. It is an automated process, explicitly supporting business activities and processes. Office
automation is intended to provide elements that make it possible to simplify, develop, and automate the organization of
the activities of a company or a group of people.
•A basic building block of Office Automation Systems described below –
52. Office automation systems make it simple for office staff to handle day to day organizational activities like E-mail, word
processing, electronic filing, scheduling, calendaring, and other technical support resources. Personal digital assistants (PDAs)
were also introduced as the concept of groupware apps, which became important when more people started to bring digital
assistants such as PDAs. It is made up of word processing, telecommunications, and data processing, which handles office
information, official communication, and reports, as well as the processing of documents.
The most commonly used application areas of office automation are as follows -
Exchange of information.
Management of administrative records.
Handling of results.
Meeting arrangements, preparation, and control of job schedules.
Office automation features
Office automation functionality could include -.
It eliminates the manual effort to complete basic chores.
Avoiding mistakes by computers or devices.
Decreasing the time taken to process an object.
Provides key insights into the process efficiency metrics.
Gaining greater access to the method and finding possible bottlenecks.
Controlling the company by making sound decisions based on results.
Enhancement in business activities with sound improvement.
Data organization, storage and its management.
53. Group Decision Support System (GDSS)
GDSS is the abbreviation for Group Decision Support System. It is a system that supports decision-making and has been
designed and structured in such a way so that the members constituting a group can interact with each other to arrive at
a particular decision. It provides support for various group decision-making activities such as file sharing, integration of
the individual opinions with that of the group, communication, modelling of group actions and any other action which
requires interaction of the group members.
The decision support systems that have been mentioned till now facilitate a single person to take decisions by providing
computerized support. These decisions fall into the unstructured or semi-structured category. Most of the decisions that
have to be taken in the organisation are generally a group effort rather than taken by a single person.
A group decision support system (GDSS) is an interactive computer-based system that facilitates a number of decision-
makers (working together in a group) in finding solutions to problems that are unstructured in nature. They are designed
in such a way that they take input from multiple users interacting simultaneously with the systems to arrive at a decision
as a group.
The tools and techniques provided by the group decision support system improve the quality and effectiveness of the
group meetings. Groupware and web-based tools for electronic meetings and videoconferencing also support some of
the group decision making processes, but their main function is to make communication possible between the decision-
makers.
The main characteristic of the Group Decision Support Systems or GDSS is to support exchange and flow
of information and ideas seamlessly between various members of the decision-making group. It also maintains the
privacy of the members.
54. Features of Group Decision Support System(GDSS) :
1) Ease of Use :
It consists of an interactive interface that makes working with GDSS simple and easy.
2) Better Decision Making :
It provides the conference room setting and various software tools that facilitate users at different locations to make decisions
as a group resulting in better decisions.
3) Emphasis on Semi-structured and Unstructured Decisions :
It provides important information that assists middle and higher level management in making semi-structured and
unstructured decisions.
4) Specific and General Support :
The facilitator controls the different phases of the group decision support system meeting (idea generation, discussion, voting
and vote counting, etc.) what is displayed on the central screen and the type of ranking and voting that takes place, etc. In
addition, the facilitator also provides general support to the group and helps them to use the system.
5) Supports all Phases of the Decision Making :
It can support all the four phases of decision making, viz intelligence, design, choice, and implementation.
6) Supports Positive Group Behavior :
In a group meeting, as participants can share their ideas more openly without the fear of being criticized, they display more
positive group behavior towards the subject matter of the meeting.
55. Components of Group Decision Support System
(GDSS) :
1) Hardware :
It includes electronic hardware like the computer, equipment used for networking,
electronic display boards and audiovisual equipment. It also includes the conference
facility, including the physical set up – the room, the tables, and the chairs – laid out
in such a manner that they can support group discussion and teamwork.
2) Software Tools :
It includes various tools and techniques, such as electronic questionnaires, electronic
brainstorming tools, idea organizers, tools for setting priority, policy formation tool,
etc. The use of these software tools in a group meeting helps the group decision-
makers to plan, organize ideas, gather information, establish priorities, take decisions
and document the meeting proceedings. As a result, meetings become more
productive.
3) People :
It compromises the members participating in the meeting, a trained facilitator who
helps with the proceedings of the meeting, and an expert staff to support the
hardware and software. The GDSS components together provide a favorable
environment for carrying out group meetings.
56. Advantages of Group Decision Support System (GDSS) :
1) More Information in Less Time :
It is possible to gather huge amount of information in a very short time period as GDSS facilitates the members of the
team to work parallel.
2) Greater Participation :
The risks associated with conformity pressure and groupthink is greatly decreased when the members of the group
work in a GDSS because the members are able to express their thoughts freely. This is due to the anonymity feature
extended by GDSS.
3) More Structure :
In a GDSS environment the discussions are much more concentrated and focused. Irrelevant degradations are greatly
reduced.
4) Automated Documentation :
Comments are preserved forever and the system provides the result without any delay. Excellent graphics makes
viewing more attractive.
57. Disadvantages of GDSS :
1) Cost :
A significant amount of cost may be associated with putting up the infrastructure consisting of the
room, network connectivity and the software.
2) Security :
This risk arises when the facility for setting up GDSS has been rented. There are chances that
information gets leaked to the peers by a low-level employee.
3) Technical Failure :
The system must be properly implemented to reduce the risk associated with loss of connectivity and
power loss. It is highly dependent on LAN/WAN infrastructure and bandwidth.
4) Keyboarding Skills :
If the members get frustrated, they might participate less.
5) Training :
There is variation in the learning curve of the user in various situations.
6) Perception of Messages :
MIS-interpretations may occur in case the members communicate less verbally.
