CBMS4303 Topic 2 Short Notes (Open University Malaysia)

CBMS4303 Short Notes September 2011 | Lorna Timbah, PPW Sabah

CBMS4303: Management Information Systems

Table of Contents Topic 2: System Concept ............................................................................................................................... 2

Objectives ................................................................................................................................................. 2

2.1 Model .................................................................................................................................................. 2

2.2 General model system ........................................................................................................................ 2

2.2.1 Physical System ............................................................................................................................ 2

2.2.2 Conceptual system ....................................................................................................................... 3

2.2.3 Environment ................................................................................................................................. 5

2.2.4 Problem Solving ........................................................................................................................... 6

2.3 System approach ................................................................................................................................. 7

2.4 Preparation phase ............................................................................................................................... 8

2.5 Definition phase .................................................................................................................................. 8

2.6 Solution phase ................................................................................................................................... 10


Topic 2: System Concept

Objectives 1. Define four (4) types of models and their usage in business;

2. Identify four (4) information dimensions;

3. Apply the concept of management through exceptions;

4. Apply the general model system to understand organisations; and

5. Apply the system approach to solve problems.

2.1 Model Model: representation of things like an object, a concept or real activity known as entity, used to

represent problems, which need to be solved in a form easily understood.

Types of model –

1. Physical model - representation of 3D entities that can be seen by the naked eye, remodeled to

a smaller scale that the original. E.g.: house or car model.

2. Narrative model – oral / written communication with detailed explanation; most popular model

because it covers every aspect of business communication.

3. Graphical model – visualization of entity via graphs, charts, forms, symbols, and lines. E.g. data

flow diagram (DFD), entity relationship diagram (ERD), flowchart, structure chart.

4. Mathematical model – formula or mathematical equation consisting of a few variables and

constants. E.g. calculation of profit represented by profit = sale – cost

These models can be combined or used separately to suit the circumstances. They help make

understanding and communication easier since entities are presented in a simple form.

2.2 General model system The general model is the foundation for info systems in every firm. If you can understand the

fundamental concept of the general model system, you can easily understand the entire concept of the

general model system and organisational structures. You only need to add or to modify the general

model system with the current types of information systems and the organisational structure when

analysing and designing the information system.

2.2.1 Physical System

A firm’s physical system transforms input to output. Input resources are extracted from the

environment, processed to form the output resources and then returned to the same environment.

Since interaction exists between the firm and its environment through physical resources, the firm’s

physical system can be classified as an open system. E.g. in the process of producing cooking oil, palm oil

is extracted from the firm’s environment while the cooking oil is marketed to the customers who live

within the environment.


Types of flows in a physical system consists of –

1. Material flow – suppliers send input (raw materials, components), firm stores and transforms

materials to become products, outputted by delivering and marketing to the customers.

2. Personnel flow – flow of manpower and managed by the human resources department, from

recruitment to job placement, then to retirement and/or resignation. Personnel are employed

from the environment and they return to their environment.

3. Machinery flow – explains how machines are supplied by the suppliers, assigned to different

departments or areas in the firm for a specific period and then returned to the environment

when they are in a bad condition or are replaced by new ones. E.g. computers, printers, fax

machines.

4. Monetary flow – financial input resources are obtained from stakeholders (owners, bank,

individuals, profit from customers, govt loans/grants), transformed to finance the operations of

the firm, then return to the environment as output resources to repay loans, as investment or as

donations.

2.2.2 Conceptual system

Open loop system: a system with no feedback loop or control mechanism.

Closed loop system: a system with feedback loop and control mechanism.

In the firm, Information assists management to evaluate the firm’s performance.

Management = control mechanism

Information = feedback which comes from input, transformation and output information.

Information processor: information-producing mechanism (a system or procedure) that produces

information from gathered data (input, transformation, output processes).

Input resources

Transformation process

Output resources

Information processor

Management

Data

Information Information

Firm’s boundary


Information dimensions used to evaluate information processor output –

1. Relevant

Information is relevant if the contents can fulfill the requirement of the problem faced

without any support from other unrelated information.

2. Accurate

Information must be accurate without errors. It is important especially in issues involving

money. Forecast and performance reports must also be produced accurately by using the

accurate information.

3. On Time

Information must always available when it’s needed. Past and latest information can help

the manager make the better decision.

4. Complete

Information must be comprehensive and complete but not excessive to the point of being

irrelevant to the problem being solved.

Standards: measurement of a firm's performance, stated in specific terms and can be measured

quantitatively in the form of money, numbers, percentage and such.

Managers need information that can explain what is achieved by a firm's department or unit and

performance standards that should be obtained by the departments. Every system must have objectives

(the overall goals that need to be achieved), and every system has at least one objective.

Objectives are stated in general and something more specific must be determined to measure whether

the system's objectives can be achieved.

Management compares the firm's standard and performance to control the physical system. The

difference between them will confirm whether action must be taken.

Conceptual system

Physical system


Two management techniques to help managers execute their tasks effectively and efficiently –

1. Management by Exception

This technique is applied when a manager takes an action only if an activity occurs out of

fixed performance and norms.

As long as the firm’s activity is within the performance parameter (standard), the firm can

be considered stable.

This technique is implemented by comparing the actual standard and performance of the

system produced by the information processor.

This technique can be executed by CBIS.

2. Critical Success Factors (CSF)

This technique is used to identify several main factors which bring success to a particular

function.

Usually the firm determines several CSFs that need to be completely fulfilled.

CBIS supports CSF by producing the information to the manager.

CSF and management by exception are similar in terms of the emphasis on certain parts of the system as

compared to the entire system. The difference is that CSF remains constant in the long term while

management by exception can change according to time.

2.2.3 Environment

The environment completes the general system model; physical resources enter the physical process

and conceptual resources (Information and data) enter the information processor to be stored or used

by the manager. These resources can flow to or from the environment.

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2.2.4 Problem Solving

Decision-making: an action taken when choosing a decision or strategy that a manager feels would give

a better solution to the problem.

For better problem–solving, a manager should deal with several problem solving elements that must be

identified as shown in the figure below.

Standards show a desired situation which is the performance that needs to be achieved by a firm while

information shows the current situation, that is, the actual achievement of the form. The manager must

obtain both these information to know whether a problem exists or not.

Problems occur when there is a difference (either high or low) between standards and information.

Therefore, a problem is referred to as something that can give an advantage or disadvantage to the firm.

If performance > standards, it may be better to increase standards to maintain good

performance

If performance < standards, if the firm’s performance cannot achieve the standard, investigate

the reasons why the problem occur

When the problem is identified, the manager needs to determine several alternative solutions by using

the information from other staff or his or her own experience. IS can be used to evaluate each

alternative, by considering internal and external constraints.

Problem

Solver

(Manager)


Internal constraint: the limited resources in a firm.

External constraint: constraints from the firm’s environment which limit the flow of the resource to and

from the firm.

Solutions can be achieved with the presence of every solution element which is understood by the

manager.

Problems and symptoms

Symptom is the situation caused by the problem. The manager can always observe the symptom as

compared to the problem. To understand the cause of the problem, the symptom needs to be studied

profoundly.

Problem structure

Most problems often faced by the manager are combinations of structured and non-structured

problems.

Structured problem: a problem that has certain elements, whereby relationship between the elements

can be clearly understood and seen, e.g. profit = sale-cost.

Semi-structured problem: a problem that has parts of elements or relationships that are understandable

and parts that are not understandable.

Unstructured problem: a problem not understood by the manager and do not have elements or

relationships that are understood by the problem solver, e.g. human behavior.

2.3 System approach System approach: a guide to solving a problem step-by-step to ensure the problem can be understood,

an alternative solution is identified and the solution chosen is effective.

The 3 phases of system approach is –

1. Preparation

2. Definition

3. Solution

Decisions are made in every step of the Definition and Solution phases.


2.4 Preparation phase The steps in this phase do not have to be executed sequentially.

Step 1– View the Firm as a System

You must imagine the firm as a system by using the general system concept. You must map your firm

using the general system model.

Step 2– Identify the system’s environment

You must identity the firm’s environment which consists of customers, suppliers, competitors, owners or

stock holders, unions, financial community, government and global community.

Step 3– Identify Every Sub-System in the Firm

Sub-systems in the firm can be viewed from many aspects. Sub-systems which can be easily understood

by manager are departments or units in the firm. Every department can be looked upon as a separate

system. Sub-systems in the firm can also be viewed as management levels. These sub-systems have a

‘superior and subordinate’ relationship and are connected by the low of decision information and

decisions. Decisions and orders made by top level management are channeled to the entire

organisation. Hence, the manager can see the importance of information clearer through this

management hierarchy.

2.5 Definition phase

Step 4 - Continue from System Level to Sub-System

Briefly, this step aims to detect sub-systems that contain the source of the problem.

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When a manager wants to understand a problem, he will initiate the analysis at the system under his

responsibility, consisting of the firm or one of the firm’s units. The analysis will continue according to

system’s hierarchy on every level. Systems can exist at every level of the firm and analysis can start at

any sub-system.

Firstly, the manager studies the status of the firm in its relationship with the environment.

Does the firm have a balanced relationship with its environment?

Does the flow to and from the firm’s environment occurs as it should?

Has the system achieve its objective in producing products and services to its environment?

Then, the manager analyses the system from the aspect of the sub-system.

Is every sub-system working together with other sub-systems to achieve the system’s objective?

Step 5 - Analysis of System Parts According to Certain Sequences

The manager studies every level of the system by sequences that are arranged according to priority as in

the figure below. Through this, the problem in the fifth element cannot be solved if there is a problem in

the fourth element.

First element – Evaluate the standard. The standard for system performance is determined in

quantitative such as amount, percentage and finance . Elements in the standards are analysed to ensure

the following criteria are met:

a) Have a valid value

b) Realistic

c) Easily understood

d) Can be measured


Second element - Compare system output with standard. The system output is compared with the

standard.

Third element - Evaluate management. Organisation structure and management are analysed, such as

quality and quantity of cooperation between teams, sufficient number of people, skills and capability

within the management.

Fourth element – Evaluate the information processor. Unreachable or insufficient information may

exist.

Fifth element – Evaluate the inputs and input resources. At this level, the conceptual system is no

longer of concern, and the problem exists within the physical system. Both physical resources and the

resources flowing through the input element from the environment are analysed.

Sixth element – Evaluate the transformation process for incomplete procedures and processes. The

efficiency of the transformation process can be increased with the help of technologies such as robots,

machines and computers.

Seventh element – Evaluate the output resources, focusing on the output as well as the physical

resources in the output elements like warehouses, manpower and machines during delivery and

transport, etc.

2.6 Solution phase

Step 6: Identify alternative solutions

Alternative solutions are identified to get the best solution for the problem. Managers usually use past

experiences or intuition in this step. Managers always solve problems as a group, such as brainstorming.

Step 7 – Evaluate alternative solutions

Every alternative solution must be evaluated using the same evaluation criteria (measure of how well an

alternative would solve the problem to see its advantages and disadvantages). This stage analyses how

each alternative can solve the problem in the best possible way and the extent to which each alternative

fulfills the system's objectives.

Step 8 - Choose the Best Solution

Mintzberg identified three methods which can be used by the manager for this purpose.

a) Analysis of the alternative is made systematically by considering the effects that the alternative has

towards the firm’s aims.

b) Consideration - the thought process of a manager.

c) Bargaining - Discussions between a group of managers.

Step 9 - Executing the Solution

The solution is executed by taking a certain action.


Step 10 – Follow-Up to Ensure the Solution is Effective

The manager must continuously monitor the situation after the solution is executed to ensure it can

solve the problem as expected.

END OF TOPIC 2 NOTES

Education

CBMS4303 Topic 2 Short Notes (Open University Malaysia)