MIS 2000

Class 5

Process View of Organization and Information Systems

Updated: September 2012

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

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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) Information System

(a more detailed view)

Computer hardware & software

System and Application Software

Data

Use Procedures

User Interface

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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.

Transaction Processing system (TPS) - Daily operations control

Supervisory Management

Mid-levelManagement

Management Information System (MIS) - Mid-range performance control & planning

ExecutiveManagement

Decisions Support System (DSS) - Strategic decision making

Knowledge Work Systems

(professionals)

Communication Systems

(everybody)

Group Support Systems (teams)

Office Automation Systems

(clerks, others)

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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…

IS Types – Basic Concepts

Transaction Processing System (TPS)*

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Queries

Database

QueriesQueries shorter periods (day, week)

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 SSpecial Queries &

Reports

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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).

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Screen of DSS calledExecutive dashboard

•Gauges show important figures about HR in a company

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Typology of Information Systems: Organizational Function Focus

Organizational Function-based IS

User-based IS Type

Human Resources IS (HRIS)

TPS MIS DSS

Database of travel claims with some queries

More queries and reports on travel claims in past month, drawn from TPS database

Module with if-then rules that processes MIS reports and identifies deviations from organization’s rules.

• 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:

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Information Systems and Business Processes

IS

Key role in optimizing process design (CCCF; next slides)

Vehicle for management process data • complementing or replacing paper trail

Carriesprocess parts

or whole• manipulation of IS

is how work is done, whether process is optimized or not

IS and Process Design - Composition

IS can help to optimize process design.IS can help to optimize process design.

IS and Process Composition: IS can influence the selection of activities, IS and Process Composition: IS can influence the selection of activities, performers (workers), departments, and organizations to be included performers (workers), departments, and organizations to be included in process.in process.

• Example: A new Purchasing TPS implemented at Ford made its Example: A new Purchasing TPS implemented at Ford made its purchasing order process*purchasing order process* leaner. It had (a) different work activities leaner. It had (a) different work activities than those used before and brought a (b) 10 fold-reduction of process than those used before and brought a (b) 10 fold-reduction of process performers. performers.

• Example: A Example: A part quality process part quality process Kia introduced connected Kia with Kia introduced connected Kia with service shops. Kia became able to determine exactly which parts did service shops. Kia became able to determine exactly which parts did not perform well and then to work on improving their quality. MIS at 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 Kia and at service shops were linked via computer network, which in effect extended the process in space and across organizations.effect extended the process in space and across organizations.

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IS and Process Design - Complexity

IS and Process Complexity: IS can absorb complexity or simplify process IS and Process Complexity: IS can absorb complexity or simplify process a process looking from the perspective of process performers. This is a process looking from the perspective of process performers. This is possible because IS performs some activities and decisions instead of possible because IS performs some activities and decisions instead of people, which is called people, which is called automationautomation..

• Example: DSS that is usually used by a single person in Example: DSS that is usually used by a single person in decision decision making processmaking process, performs very complex calculations that would be , performs very complex calculations that would be difficult even for a group of experts to do. Many organizations. difficult even for a group of experts to do. Many organizations.

• Example: By transforming transaction data and creating reports Example: By transforming transaction data and creating reports automatically, MIS do much of the reporting process that mid-level automatically, MIS do much of the reporting process that mid-level managers had performed manually in the past. This capability managers had performed manually in the past. This capability moderates the size of this management level, which in turn can moderates the size of this management level, which in turn can make an organization “flatter” (less hierarchical). Many make an organization “flatter” (less hierarchical). Many organizations. organizations.

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IS and Process Design - Coordination

IS and Process Coordination: IS can enhance coordination among the IS and Process Coordination: IS can enhance coordination among the process activities and process performers. process activities and process performers.

• Example: The Example: The supply processsupply process at Walmart uses inventory at Walmart uses inventory management MIS at Walmart stores and its distribution centres, management MIS at Walmart stores and its distribution centres, which in turn are connected via computer networks with sales MIS of which in turn are connected via computer networks with sales MIS of Walmart’s suppliers. Stores, distribution centers and suppliers are Walmart’s suppliers. Stores, distribution centers and suppliers are well coordinated and Walmart is able to have its shelves filled well coordinated and Walmart is able to have its shelves filled continuously with products. continuously with products.

• Group decision making processGroup decision making process that includes a GDSS makes it that includes a GDSS makes it possible for decision makers to brainstorm possible for decision makers to brainstorm in parallel (in parallel (at the same at the same time). Each person can type his/her idea at the same time without 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 waiting for turn to speak (as happens in a manual group decision making process). Big user of GDSS used to be IBM.making process). Big user of GDSS used to be IBM.

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Facilitator drives thesession

Decision makers

IS and Process Design - Flexibility

IS and Process Flexibility: IS can contribute to controlling variation in a process. 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 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. a benchmark. Variation form A may be desirable, while form B may not be.

Example A: Various Example A: Various reservation processes reservation processes (hotel, travel, university course) (hotel, travel, university course) could be done with the start activity supported by different IS. So, a 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 customer of the process could use Website, email, or phone to submit booking requests. booking requests.

Example B: The Example B: The quality control processquality control process in manufacturing rests on in manufacturing rests on controlling variation between a part under production and desired controlling variation between a part under production and desired benchmarks of size, shape and other characteristics. In modern car benchmarks of size, shape and other characteristics. In modern car manufacturing, the quality control process is automated via IS that manufacturing, the quality control process is automated via IS that continuously inspect and report on the state of assembly lines.continuously inspect and report on the state of assembly lines.

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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.).

ISProcessDesign,Performance

OrganizationalPerformance

Relationships between IS, Process and Organization

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Process Design Aspect impacted by IS

Time Cost Customer Value

Composition augmentation

Savings in process time at Ford

Labor reduced at Ford

Quality improved at Kia

Complexity reduction

Savings in decision making process

Savings on mid-level management

Coordination improvement

- Savings in Walmart’s sourcing process- Savings in group decision making at IBM

Savings in opportunity costs at IBM*

- Satisfied customer at Walmart- Satisfied group member at IBM

Flexibility control - Automated quality control in car manufacturing (mfg.) faster than manual

- Less fallout due to better quality control in car mfg.

- Process options- Quality of cars raised

Process Design improvement – Process Performance improvement due to IS

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Functional and Non-functional Requirements for ISFunctional and Non-functional Requirements for IS

• To be able to carry a process or its parts, IS must meet To be able to carry a process or its parts, IS must meet

(a) functional requirements(a) functional requirements

(b) non-functional requirements. (b) non-functional requirements.

• Functional requirements = doing what an IS is designed for. Functional requirements = doing what an IS is designed for.

– Examples: Performing certain, designated activities within a Examples: Performing certain, designated activities within a process (e.g., process order, report on product .process (e.g., process order, report on product .

• Non-functional requirements = speed, user’s effort, reliability.Non-functional requirements = speed, user’s effort, reliability.

– Examples: speed matching a benchmark, easy to use, high Examples: speed matching a benchmark, easy to use, high reliability (minimal system downtime).reliability (minimal system downtime).

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IS and Organizational Data

IS are the main vehicle for managing organizational data:IS are the main vehicle for managing organizational data:

– business documents (decisions, financial, market analyses, business documents (decisions, financial, market analyses, orders, contracts…)orders, contracts…)

– professional documentation (problem solving guides, professional documentation (problem solving guides, engineering drawings, manuals, knowledge repositories, engineering drawings, manuals, knowledge repositories, patents…)patents…)

– communications (messages and memos managed by email, communications (messages and memos managed by email, chat, electronic bulletin boards and other communication chat, electronic bulletin boards and other communication systems).systems).

• Note: Process can contain more data than those managed by Note: Process can contain more data than those managed by the IS that carry the process. the IS that carry the process.

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Quality of Data

• IS is the vehicle for managing process data.IS is the vehicle for managing process data.• The quality of IS outputs is evaluated in terms ofThe quality of IS outputs is evaluated in terms of:

1. Accuracy (reflects factual state of affairs; e.g., accounting standards)

2. Timeliness (available on time as the business demands; sometimes ASAP*, but not always)

3. Completeness (all the data required are provided; data entry matters!)

4. Relevance (correspond to user needs; rule applied when IS designed)

5. Non-redundant (duplication of data reduced; e.g., relational databases)**

6. consistent (a piece of data is appears in the same format and content throughout a system; e.g., customer name)

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Functional and Non-functional Requirements for ISFunctional and Non-functional Requirements for IS

• To be able to carry a process or its parts, IS must meet To be able to carry a process or its parts, IS must meet

(a) functional requirements(a) functional requirements

(b) non-functional requirements. (b) non-functional requirements.

• Functional requirements = doing what an IS is designed for. Functional requirements = doing what an IS is designed for.

– Examples: Performing certain, designated activities within a Examples: Performing certain, designated activities within a process (e.g., process order, report on product .process (e.g., process order, report on product .

• Non-functional requirements = speed, user’s effort, reliability.Non-functional requirements = speed, user’s effort, reliability.

– Examples: speed matching a benchmark, easy to use, high Examples: speed matching a benchmark, easy to use, high reliability (minimal system downtime).reliability (minimal system downtime).

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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.

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