MB0044 – Production & Operations Management- Set 2

Course MBA – 2^nd Semester

Subject Production and Operations Management

Assignment MB0044 – Set 2

Q.1. How hardware & software support in various MIS activities of the organization? Explain the transaction stages from manual system to automated systems?

Ans.: Hardware support for MIS

Generally hardware in the form of personal computers and peripherals like printers, fax machines, copier, scanners etc are used in organization to support various MIS activities of the organization.

Advantages of a PC : Advantages a personal computer offers are –

a) Speed – A PC can process data at a very high speed. It can process millions of instructions within fraction of seconds.

b) Storage – A PC can store large quantity of data in a small space. It eliminates the need of storing the conventional office flat files and box files which requires lots of space. The storage system in a PC is such that the information can be transferred from place to another place in electronic form.

c) Communication – A PC on the network can offer great support as a communicator in communicating information in the forms of text and images. Today a PC with internet is used as a powerful tool of communication for every business activity.

d) Accuracy – A PC is highly reliable in the sense that it could be used to perform calculations continuously for hours with a great degree of accuracy. It is possible to obtain mathematical results correct up to a great degree of accuracy.

e) Conferencing – A PC with internet offers facility of video conferencing worldwide. Business people across the globe travel a lot to meet their business partner, colleagues, and customers etc to discuss about business activities. By video conferencing inconvenience of traveling can be avoided.

A block diagram of a computer may be represented as

Input unit is used to give input to the processor. Examples of input unit –Keyboard, scanner, mouse, bar code reader etc.

A processor refers to unit which processes the input received the way it has been instructed. In a computer the processor is the CPU – Central Processing Unit. It does all mathematical calculations, logical tasks, storing details in the memory etc. Output unit is used to give output s from the computer.
Examples of output unit – Monitor, printer, speakers etc.

Organization of Business in an E enterprise – Software Applications in MIS

Internet technology is creating a universal bench or platform for buying and selling of goods, commodities and services. Essentially Internet and networks enable integration of information, facilitate communication, and provide access to everybody from anywhere. And software solutions make them faster and self-reliant as they can analyze data information, interpret and use rules and guidelines for decision-making. These enabling capabilities of technology have given rise to four business models that together work in an E enterprise organization. They are:

• E business

• E communication

• E commerce

• E collaboration

These models work successfully because Internet technology provides the infrastructure for running the entire business process of any length. It also provides email and other communication capabilities to plan, track, monitor and control the business operations through the workers located anywhere. It is capable of linking to disparate systems such as logistics, data acquisition and radio frequency used systems and so on. Low cost connectivity physical, virtual and universal standards of Internet technology make it a driving force to change conventional business model to E business enterprise model.

Internet has enabled organizations to change their business process and practices. It has dramatically reduced cost of data and information processing, its sending and storing. Information and information products are available in electronic media, and is a resident on the network. Once everyone is connected electronically, information can flow seamlessly from any location to any other location. For example, product information is available on an organization website which also has a feature of order placement. An order placed is processed at the backend and status of acceptance, rejection is communicated instantaneously to the customer. Such order is then placed directly on the order board for scheduling and execution. These basic capabilities of Internet have given rise to number of business models. Some of them are given in Table

The Internet and networks provide platform and various capabilities whereby communication, collaboration, and conversion has become significantly faster, transparent and cheaper. These technologies help to save time, resource and enable faster decision making. The technology adds speed and intelligence in the business process improving quality of service to the customer. The business process of serving the customer to offer goods, products or services is made up of the following components.

· Enquiry processing

· Order preparation

· Order placement

· Order confirmation

· Order planning

· Order scheduling

· Order manufacturing

· Order status monitoring

· Order dispatching

· Order billing

· Order receivable accounting

· Order payment processing

The entire process in parts or full can be handled through these technologies and software solutions. It provides important strategic, competitive advantage. Further, the technology is flexible and capable of handling any business models such as:

• Retailing, Trading, Auctioning

• Manufacturing, Distribution & Selling

• Outsourcing, Subcontracting

• Servicing, Training, Learning, Consulting

The resultant effect is the reduction in cost of business operations, improved customer loyalty and retention and better quality offer to the customer. Four major applications mentioned earlier make this achievement possible. We go into details of each one of them.

Transformation stage manual systems to automated systems

The manual system which was prevalent in the organizations before industrial revolution was slowly transformed into digital form by means of computer and related electronic instruments. A transformation had to necessarily go through the following stages

a) Appraisal of the procedures

b) Types of documents

c) Storage systems

d) Formulations and coding

e) Verification and validation

f) Review

g) Documentation
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Q.2. Explain the various behavioral factors of management organization? As per Porter, how can performance of individual corporations be determined?

Ans.:
Management organizations:

An organization is a structure that uses the resources from the environment like manpower, raw materials, capital and returns the output like products and services to the environment. It constitutes the rules, policies, responsibilities and procedures that are adopted by the organization.

Behavioral factors

The implementation of computer based information systems in general and MSS in particular is affected by the way people perceive these systems and by how they behave in accepting them. User resistance is a major behavioral factor associated with the adoption of new systems. The following are compiled by Jiang et al. (2000) ; Reasons that employees resist new systems:

1. Change in job content

2. Loss of status

3. Change in interpersonal relationships

4. Loss of power

5. Change in decision making approach

6. Uncertainty or unfamiliarity or misinformation

7. Job security

The major behavioral factors are

1. Decision styles symbolic processing of AI is heuristic; DSS and ANN are analytic

2. Need for explanation – ES provides explanation, ANN does not, DSS may provide partial explanation. Explanation can reduce resistance to change

3. Organizational climate some organizations lead and support innovations and new technologies whereas other wait and lag behind in making changes

4. Organizational expectations – over expectation can result in disappointments and termination of innovation. Over expectation was observed in most early intelligent systems.

5. Resistance to change – can be strong in MSS because the impacts may be significant.

Performance of individual corporations:

Out of many possible interpretations of a strategy an organization adopts in business, it is found that a majority is concerned with competition between corporations. Competition means cultivating unique strengths and capabilities, and defending them against imitation by other firms. Another alternative sees competition as a process linked to innovation in product, market, or technology. Strategic information systems theory is concerned with the use of information technology to support or sharpen an enterprise's competitive strategy. Competitive strategy is an enterprise's plan for achieving sustainable competitive advantage over, or reducing the edge of, its adversaries. The performance of individual corporations is determined by the extent to which they manage the following (as given by Porter) 

a) The bargaining power of suppliers;

b) The bargaining power of buyer;

c) The threat of new entrants;

d) The threat of substitute products; And

e) Rivalry among existing firms.

Porter's classic diagram representing these forces is indicated below.

There are two basic factors which may be considered to be adopted by organization in their strategies:

a) low cost

b) product differentiation

Enterprise can succeed relative to their competitors if they possess sustainable competitive advantage in either of these two. Another important consideration in positioning is 'competitive scope', or the breadth of the enterprise's target markets within its industry, i.e. the range of product varieties it offers, the distribution channels it employs, the types of buyers it serves, the geographic areas in which it sells, and the array of related industries in which it competes. Under Porter's framework, enterprises have four generic strategies available to them whereby they can attain above average performance.

They are:

a) Cost leadership;

b) Differentiation;

c) Cost focus; And

d) Focused differentiation.

Porter's representation of them is indicated below

According to Porter, competitive advantage grows out of the way an enterprise organizes and performs discrete activities. The operations of any enterprise can be divided into a series of activities such as salespeople making sales calls, service technicians performing repairs, scientists in the laboratory designing products or processes, and treasurers raising capital. By performing these activities, enterprises create value for their customers.

The ultimate value an enterprise creates is measured by the amount customers are willing to pay for its product or services. A firm is profitable if this value exceeds the collective cost of performing all of the required activities. To gain competitive advantage over its rivals, a firm must either provide comparable value to the customer, but perform activities more efficiently than its competitors (lower cost), or perform activities in a unique way that creates greater buyer value and commands a premium price (differentiation). As per Borden 1964, quoted in Wiseman 1988many differentiation bases can be classified as 4 P’s as given below:

1. Product (quality, features, options, style, brand name, packaging, sizes, services, warranties, returns) ;

2. Price (list, discounts, allowances, payment period, credit terms) ;

3. Place (channels, coverage, locations, inventory, transport) ; And

4. Promotion (advertising, personal selling, sales promotion, publicity).

The various attributes listed above can be sharpened the firms product by the support of a suitable information technology.
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Q.3. Compare various types of development aspect of Information System? Explain the various stages of SDLC?

Development of Information Systems

Ans.:

1. Development and Implementation of the MIS :

Once the plan of MIS is made, the development of the MIS calls for determining the strategy of development. As discussed earlier, the plan consists of various systems and subsystems. The development strategy determines where to begin and in what sequence the development can take place with the sole objective of assuring the information support. The choice of the system or the subsystem depends on its position in the total MIS plan, the size of the system, the user's understanding of the systems and the complexity and its interface with other systems. The designer first develops systems independently and starts integrating them with other systems, enlarging the system scope and meeting the varying information needs. Determining the position of the system in the MIS is easy. The real problem is the degree of structure, and formalization in the system and procedures which determine the timing and duration of development of the system. Higher the degree of structuredness and formalization, greater is the stabilization of the rules, the procedures, decision making and the understanding of the overall business activity. Here, it is observed that the user's and the designer's interaction is smooth, and their needs are clearly understood and respected mutually. The development becomes a method of approach with certainty in input process and outputs.
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b) Prototype Approach :

When the system is complex, the development strategy is Prototyping of the System. Prototyping is a process of progressively ascertaining the information needs, developing methodology, trying it out on a smaller scale with respect to the data and the complexity, ensuring that it satisfies the needs of the users, and assess the problems of development and implementation. This process, therefore, identifies the problem areas, inadequacies in the prototype visàvis Fulfillment of the information needs. The designer then takes steps to remove the inadequacies. This may call upon changing the prototype of the system, questioning the information needs, streamlining the operational systems and procedures and move user interaction. In the prototyping approach, the designer's task becomes difficult, when there are multiple users of the same system and the inputs they use are used by some other users as well. For example, a lot of input data comes from the purchase department, which is used in accounts and inventory management. The attitudes of various users and their role as the originators of the data need to be developed with a high degree of positivism. It requires, of all personnel, to appreciate that the information is a corporate resource, and all have to contribute as per the designated role by the designer to fulfill the corporate information needs. When it comes to information the functional, the departmental, the personal boundaries do not exist. This calls upon each individual to comply with the design needs and provide without fail the necessary data inputs whenever required as per the specification discussed and finalised by the designer. Bringing the multiple users on the same platform and changing their attitudes toward information, as a corporate resource, is the managerial task of the system designer. The qualification, experience, knowledge, of the state of art, and an understanding of the corporate business, helps considerably, in overcoming the problem of changing the attitudes of the multiple users and the originators of the data.
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2. Life Cycle Approach :

There are many systems or subsystems in the MIS which have a life cycle, that is, they have birth and death. Their emergence may be sudden or may be a part of the business need, and they are very much structured and rule based. They have 100% clarity of inputs and their sources, a definite set of outputs in terms of the contents and formats. These details more or less remain static from the day the system emerges and remains in that static mode for a long time. Minor modifications or changes do occur but they are not significant in terms of handling either by the designer or the user of the system. Such systems, therefore, have a life and they can be developed in a systematic manner, and can be reviewed after a year or two, for significant modification, if any.

Examples of such systems are pay roll, share accounting, basic financial accounting, finished goods accounting and dispatching, order processing, and so on. These systems have a fairly long duration of survival and they contribute in a big way as sources of data to the Corporate MIS. Therefore, their role is important and needs to be designed from the view point as an interface to the Corporate MIS.

Table below shows the difference between the two approaches helping the designer select an approach.

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d) Implementation of the Management Information System

The implementation of the system is a management process. It brings about organizational change; it affects people and changes their work style. The process evokes a behavior response which could be either favorable or unfavorable depending upon the strategy of system implementation. In the process of implementation, the system designer acts as a change agent or a catalyst.

For a successful implementation he has to handle the human factors carefully. The user of the system has a certain fear complex when a certain cultural work change is occurring. The first and the foremost fear is about the security to the person if the changeover from the old to new is not a smooth one. Care has to be taken to assure the user that such fears are baseless and the responsibility, therefore, rests with the designer. The second fear is about the role played by the person in the organization and how the change affects him. On many occasions, the new role may reduce his importance in the organization, the work design may make the new job impersonal, and a fear complex may get reinforced that the career prospects may be affected. There are certain guidelines for the systems designer for successful implementation of the system. The system designer should not question beyond a limit the information need of the user.

1. Not to forget that his role is to offer a service and not to demand terms.

2. Remember that the system design is for the use of the user and it is not the designer's prerogative to dictate the design features. In short, the designer should respect the demands of the user.

3. Not to mix up technical needs with the information needs. He should try to develop suitable design with appropriate technology to meet the information needs. The designer should not recommend modifications of the needs, unless technically infeasible.

4. Impress upon the user the global nature of the system design which is required to meet the current and prospective information need.

5. Not to challenge the application of the information in decision making. It is the sole right of the user to use the information the way he thinks proper.

6. Impress upon the user that the quality of information depends on the quality of input.

7. Impress upon the user that you are one of the users in the organization and that the information is a corporate resource and he is expected to contribute to the development of the MIS.

8. Ensure that the user makes commitment to all the requirements of the system design specifications. Ensure that he appreciates that his commitments contribute largely to the quality of the information and successful implementation of the system.

9. Ensure that the overall system effort has the management's acceptance.

10. Enlist the user's participation from time to time, so that he is emotionally involved in the process of development.

11. Realize that through serving the user, he is his best guide on the complex path of development.

12. Not to expect perfect understanding and knowledge from the user as he may be the user of a Non computerized system. Hence, the designer should be prepared to change the system specifications or even the design during the course of development.

13. Impress upon the user that the change, which is easily possible in manual system, is not as easy in the computer system as it calls for changes in the programs at cost.

14. Impress upon the user that perfect information is nonexistent; His role therefore still has an importance in the organization.

15. Ensure that the other organization problems are resolved first before the MIS is taken for development. 16. Conduct periodical user meetings on systems where you get the opportunity to know the ongoing difficulties of the users.

16. Train the user in computer appreciation and systems analysis as his perception of the computerized information system will fall short of the designer's expectation. Implementation of the MIS in an organization is a process where organizational transformation takes place. This change can occur in a number of ways.
The Lewin's model suggests three steps in this process. The first step is unfreezing the organization to make the people more receptive and interested in the change. The second step is choosing a Course of action where the process begins and reaches the desired level of stability, and the third step is Refreezing, where the change is consolidated and equilibrium is reinforced. Many a times,

This process is implemented through an external change agent, such as a consultant playing the role of a catalyst. The significant problem in this task is the resistance to change. The resistance can occur due to three reasons, viz., the factors internal to the users of information, the factors inherent in the design of the system and the factors arising out of the interaction between the system and its users. The problem of resistance can be handled through education, persuasion, and participation. This itself can be achieved by improving the human factors, and providing incentives to the users, and eliminating the organizational problems before implementing the system.
SDLC
System development cycle stages are sometimes known as system study. System concepts which are important in developing business information systems expedite problem solving and improve the quality of decision making.
The system analyst has to do a lot in this connection. They are confronted with the challenging task of creating new systems and planning major changes in the organization. The system analyst gives a system development project, meaning and direction. The typical breakdown of an information systems life cycle includes a feasibility study, requirements, collection and analysis, design, prototyping, implementation, validation, testing and operation. It may be represented in the form of a block diagram as shown below:

A) Feasibility study It is concerned with determining the cost effectiveness of various alternatives in the designs of the information system and the priorities among the various system components.

b) Requirements, collection and analysis It is concerned with understanding the mission of the information systems, that is, the application areas of the system within the enterprise and the problems that the system should solve.

c) Design It is concerned with the specification of the information systems structure. There are two types of design: database design and application design. The database design is the design of the database design and the application design is the design of the application programs.

d) Prototyping A prototype is a simplified implementation that is produced in order to verify in practice that the previous phases of the design were well conducted.

e) Implementation It is concerned with the programming of the final operational version of the information system. Implementation alternatives are carefully verifies and compared.

f) Validation and testing It is the process of assuring that each phase of the development process is of acceptable quality and is an accurate transformation from the previous phase.

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Q.4. Compare & Contrast E-enterprise business model with traditional business organization model? Explain how in E-enterprise manager role & responsibilities are changed? Explain how manager is a knowledge worker in E-enterprise?

Managing the E enterprise

Due to Internet capabilities and web technology, traditional business organization definition has undergone a change where scope of the enterprise now includes other company locations, business partners, customers and vendors. It has no geographic boundaries as it can extend its operations where Internet works. All this is possible due to Internet and web moving traditional paper driven organization to information driven Internet enabled E business enterprise. E business enterprise is open twenty four hours, and being independent, managers, vendors; customers transact business anytime from anywhere. Internet capabilities have given E business enterprise a cutting edge capability advantage to increase the business value. It has opened new channels of business as buying and selling can be done on Internet. It enables to reach new markets across the world anywhere due to communication capabilities. It has empowered customers and vendors / suppliers through secured access to information to act, wherever necessary. The cost of business operations has come down significantly due to the elimination of paper driven processes, faster communication and effective collaborative working. The effect of these radical changes is the reduction in administrative and management overheads, reduction in inventory, faster delivery of goods and services to the customers.

In E business enterprise traditional people organization based on 'Command Control' principle is absent. It is replaced by people organization that is empowered by information and knowledge to perform their role. They are supported by information systems, application packages, and decision support systems. It is no longer functional, product, and project or matrix organization of people but E organization where people work in network environment as a team or work group in virtual mode. E business enterprise is more process driven; Technology enabled and uses its own information and knowledge to perform. It is lean in number, flat in structure, broad in scope and a learning organization.

In E business enterprise, most of the things are electronic, use digital technologies and work on databases, knowledge bases, directories and document repositories. The business processes are conducted through enterprise software like ERP, SCM, and CRM supported by data warehouse, decision support, and knowledge management systems. Today most of the business organizations are using Internet technology, network, and wireless technology for improving the business performance measured in terms of cost, efficiency, competitiveness and profitability. They are using E business,

Ecommerce

Solutions to reach faraway locations to deliver product and services. The enterprise solutions like ERP, SCM, and CRM run on Internet (Internet / Extranet) & Wide Area Network (WAN). The business processes across the organization and outside run on E technology platform using digital technology. Hence today's business firm is also called E enterprise or Digital firm. The paradigm shift to E enterprise

Has brought four transformations, namely:

· Domestic business to global business.

· Industrial manufacturing economy to knowledge based service economy.

· Enterprise Resource Management to Enterprise Network Management.

· Manual document driven business process to paperless, automated, electronically transacted business process.

These transformations have made conventional organization design obsolete. The basis of conventional organization design is command & control which is now collaborates & control. This Change has affected the organization structure, scope of operations, reporting mechanisms, work practices, workflows, and business processes at large. The comparison between conventional Organization design and E enterprise is summarized in Table

Comparison between Conventional Design and E Organization

In E enterprise, business is conducted electronically. Buyers and sellers through Internet drive the market and Internet based web systems. Buying and selling is possible on Internet. Books, CDs, computer, white goods and many such goods are bought and sold on Internet. The new channel of business is well known

as Ecommerce. On the same lines, banking, insurance, healthcare are being managed through Internet E banking, E billing, E audit, & use of Credit cards, Smart card, ATM, E money are the examples of the Ecommerce application. The digital firm, which uses Internet and web technology and uses E business And Ecommerce solutions, is a reality and is going to increase in number. MIS for E business is different compared to conventional MIS design of an organization. The role of MIS in E business organization is to deal with changes in global market and enterprises. MIS produces more knowledge based products.

Knowledge management system is formally recognized as a part of MIS. It is effectively used for strategic planning for survival and growth, increase in profit and productivity and so on. To achieve the said benefits of E business organization, it is necessary to redesign the organization to realize the benefits of digital firm. The organization structure should be lean and flat. Get rid of rigid established infrastructure such as branch office or zonal office. Allow people to work from anywhere. Automate processes after reengineering the process to cut down process cycle time. Make use of groupware technology on Internet platform for faster response processing. Another challenge is to convert domestic process design to work for international process, where integration of multinational information systems using different communication standards, country specific accounting practices, and laws of security are to be adhered strictly. Internet and networking technology has thrown another challenge to enlarge the scope of Organization where customers and vendors become part of the organization. This technology offers a solution to communicate, coordinate, and collaborate with customers, vendors and business partners. This is just not a technical change in business operations but a cultural change in the mindset of managers and workers to look beyond the conventional organization. It means changing the organization behavior to take competitive advantage of the E business technology.

The last but not the least important is the challenge to organize and implement information architecture and information technology platforms, considering multiple locations and multiple information needs arising due to global operations of the business into a comprehensive MIS.
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Q.5. What do you understand by service level Agreements (SLAs)? Why are they needed? What is the role of CIO in drafting these? Explain the various security hazards faced by an IS?

Ans.: A service level agreement (frequently abbreviated as SLA) is a part of a service contract where the level of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery time (of the service) or performance. As an example, internet service providers will commonly include service level agreements within the terms of their contracts with customers to define the level(s) of service being sold in plain language terms (typically the (SLA) will in this case have a technical definition in terms of MTTF, MTTR, various data rates, etc.)

A service level agreement (SLA) is a negotiated agreement between two parties where one is the customer and the other is the service provider. This can be a legally binding formal or informal "contract" (see internal department relationships). Contracts between the service provider and other third parties are often (incorrectly) called SLAs — as the level of service has been set by the (principal) customer, there can be no "agreement" between third parties (these agreements are simply a "contract"). Operating Level Agreements or OLA(s), however, may be used by internal groups to support SLA(s).

The SLA records a common understanding about services, priorities, responsibilities, guarantees, and warranties. Each area of service scope should have the "level of service" defined. The SLA may specify the levels of availability, serviceability, performance, operation, or other attributes of the service, such as billing. The "level of service" can also be specified as "target" and "minimum," which allows customers to be informed what to expect (the minimum), whilst providing a measurable (average) target value that shows the level of organization performance. In some contracts, penalties may be agreed upon in the case of non-compliance of the SLA (but see "internal" customers below). It is important to note that the "agreement" relates to the services the customer receives, and not how the service provider delivers that service.

SLAs have been used since late 1980s by fixed line telecom operators as part of their contracts with their corporate customers. This practice has spread such that now it is common for a customer to engage a service provider by including a service-level agreement in a wide range of service contracts in practically all industries and markets. Internal departments (such as IT, HR, and Real Estate) in larger organization have adopted the idea of using service-level agreements with their "internal" customers — users in other departments within the same organization. One benefit of this can be to enable the quality of service to be benchmarked with that agreed to across multiple locations or between different business units. This internal benchmarking can also be used to market test and provide a value comparison between an in-house department and an external service provider.

Service-level agreements are, by their nature, "output" based — the result of the service as received by the customer is the subject of the "agreement." The (expert) service provider can demonstrate their value by organizing themselves with ingenuity, capability, and knowledge to deliver the service required, perhaps in an innovative way. Organizations can also specify the way the service is to be delivered, through a specification (a service-level specification) and using subordinate "objectives" other than those related to the level of service. This type of agreement is known as an "input" SLA. This latter type of requirement is becoming obsolete as organizations become more demanding and shift the delivery methodology risk on to the service provider.

Role of CIO in drafting SLA’S

One of the major responsibilities of the CIO is to establish the credibility of the systems organization. The systems department should not only focus on providing better service to the various lines of business but also help businesses operate better. If the CIO wants to be taken seriously, he needs to do what other executives do and have his own business metrics and performance measurements, so that he can effectively measure his internal business performance. Other business departments have them, but CIOs generally do not because IT has always been viewed as a cost center. Measurements in IT tend to be vague and lacking in context. For example, 'I had 14 projects last year, and I did them well.' But there is no real business measurement there. How many projects should the manager have had? Did he really have the capacity to handle 14 projects? A CIO should explore running their area more like a service operation rather than a cost center, and develop metrics that track the performance of the information systems staff, as well as the equipment comprising the applications, infrastructure, and networks under the CIO's control. The first step, they say, is to implement service level agreements (SLAs) with business units. It sets the expectation on the technical areas of the CIO's operations. At a minimum, they should set up what is expected and what levels of service the equipment will provide. The underlying SLAs should be some sort of a chargeback system with business units, particularly when it comes to apportioning staff time. If information systems are now providing a service, the staff needs to understand where the service is being used to be properly remunerated or to demonstrate where the value is.

The second part of the IT operations equation is computer equipment, and CIOs must have a firm handle on how that equipment is being used. There are software’s to help with the people picture, and there are other products that can monitor hardware performance, such as network and server uptime. One of the major roles of the CIO is to make the organization information systems savvy and increase the technological maturity of the information systems organization. A major part of the CIO's job is to make the users aware of the opportunities arising as a result of technical innovations, how this can help them perform better, and familiarizing them with computers and information systems applications. The information systems management also has the job of helping the end users adapt to the changes caused by information systems, and to encourage their use. Finally, CIOs need to institute life cycle management with their applications and computer equipment. Most IT organizations do not have any idea of the life cycle of an application – how long they want it to last, and when it needs to be refurbished, replaced, or disposed of. Lacking this knowledge, it is easy for applications to linger long after they should be gone, and for companies to spend far too much money on maintaining ailing applications.

Security Hazards faced by an Information system:

Security of the information system can be broken because of the following reasons:

i) Malfunctions: In this type of security hazard, all the components of a system are involved. People, software and hardware errors course the biggest problem. More dangerous are the problems which are created by human beings due to the omission, neglect and incompetence.

ii) Fraud and unauthorized access: This hazard is due to dishonesty, cheating or deceit. This can be done through

a) Infiltration and industrial espionage

b) Tapping data from communication lines

c) Unauthorized browsing through lines by online terminals, etc.

iii) Power and communication failure: In some locations they are the most frequent hazards than any other else because availability of both of them depends upon the location. Sometimes communication channel are busy or noisy. There are power cuts and sometimes high voltage serge destroys a sensitive component of the computer.

iv) Fire hazard: it can happen because of electrical short circuits, flammable liquids etc.

v) Sabotage and riots: sometimes the employees destroy the computer centre in case of strike, lockout or there may be chances of riots in the area.

vi) Natural Disasters: Natural disasters are not controllable. They are not frequent hazards but if they happen they destroy the things or ruin them. Examples are earthquake, floods, tornadoes and lightening.

vii) General hazards: this category covers many more hazards which are not covered anywhere and difficult to define and come spontaneously.
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Q.6. Case Study: Information system in a restaurant.

Ans.: Case Summary:

A waiter takes an order at a table, and then enters it online via one of the six terminals located in the restaurant dining room. The order is routed to a printer in the appropriate preparation area: the cold item printer if it is a salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink. A customer’s meal check-listing (bill) the items ordered and the respective prices are automatically generated. This ordering system eliminates the old three-carbon-copy guest check system as well as any problems caused by a waiter’s handwriting. When the kitchen runs out of a food item, the cooks send out an ‘out of stock’ message, which will be displayed on the dining room terminals when waiters try to order that item. This gives the waiters faster feedback, enabling them to give better service to the customers. Other system features aid management in the planning and control of their restaurant business. The system provides up-to-the-minute information on the food items ordered and breaks out percentages showing sales of each item versus total sales. This helps management plan menus according to customers’ tastes. The system also compares the weekly sales totals versus food costs, allowing planning for tighter cost controls. In addition, whenever an order is voided, the reasons for the void are keyed in. This may help later in management decisions, especially if the voids consistently related to food or service. Acceptance of the system by the users is exceptionally high since the waiters and waitresses were involved in the selection and design process. All potential users were asked to give their impressions and ideas about the various systems available before one was chosen.

Questions to be analysed:

1. In the light of the system, describe the decisions to be made in the area of strategic planning, managerial control and operational control? What information would you require to make such decisions?
2. What would make the system a more complete MIS rather than just doing transaction processing?
3. Explain the probable effects that making the system more formal would have on the customers and the management.

Solution:

1. A management information system (MIS) is an organized combination of people,     hardware, communication networks and data sources that collects, transforms and distributes information in an organization. An MIS helps decision making by providing timely, relevant and accurate information to managers. The physical components of an MIS include hardware, software, database, personnel and procedures.

Management information is an important input for efficient performance of various managerial functions at different organization levels. The information system facilitates decision making. Management functions include planning, controlling and decision making. Decision making is the core of management and aims at selecting the best alternative to achieve an objective. The decisions may be strategic, tactical or technical. Strategic decisions are characterized by uncertainty. They are future oriented and relate directly to planning activity. Tactical decisions cover both planning and controlling. Technical decisions pertain to implementation of specific tasks through appropriate technology. Sales region analysis, cost analysis, annual budgeting, and relocation analysis are examples of decision-support systems and management information systems.

There are 3 areas in the organization. They are strategic, managerial and operational control.

Strategic decisions are characterized by uncertainty. The decisions to be made in the area of strategic planning are future oriented and relate directly to planning activity. Here basically planning for future that is budgets, target markets, policies, objectives etc. is done. This is basically a top level where up-to-the minute information on the food items ordered and breaks out percentages showing sales of each item versus total sales is provided. The top level where strategic planning is done compares the weekly sales totals versus food costs, allowing planning for tighter cost controls. Executive support systems function at the strategic level, support unstructured decision making, and use advanced graphics and communications. Examples of executive support systems include sales trend forecasting, budget forecasting, operating plan development, budget forecasting, profit planning, and manpower planning.

The decisions to be made in the area of managerial control are largely dependent upon the information available to the decision makers. It is basically a middle level where planning of menus is done and whenever an order is voided, the reasons for the void are keyed in which later helps in management decisions, especially if the voids are related to food or service. The managerial control that is middle level also gets customer feedback and is responsible for customer satisfaction.

The decisions to be made in the area of operational control pertain to implementation of specific tasks through appropriate technology. This is basically a lower level where the waiter takes the order and enters it online via one of the six terminals located in the restaurant dining room and the order is routed to a printer in the appropriate preparation area. The item’s ordered list and the respective prices are automatically generated. The cooks send ‘out of stock’ message when the kitchen runs out of a food item, which is basically displayed on the dining room terminals when waiter tries to order that item. This basically gives the waiters faster feedback, enabling them to give better service to the customers. Transaction processing systems function at the operational level of the organization. Examples of transaction processing systems include order tracking, order processing, machine control, plant scheduling, compensation, and securities trading.

The information required to make such decision must be such that it highlights the trouble spots and shows the interconnections with the other functions. It must summarize all information relating to the span of control of the manager. The information required to make these decisions can be strategic, tactical or operational information.

Advantages of an online computer system:

1. Eliminates carbon copies

2. Waiters’ handwriting issues

3. Out-of-stock message

4. Faster feedback helps waiters to service the customers

Advantages to management:

1. Sales figures and percentages item-wise

2. Helps in planning the menu

3. Cost accounting details

2. If the management provides sufficient incentive for efficiency and results to their customers, it would make the system a more complete MIS and so the MIS should support this culture by providing such information which will aid the promotion of efficiency in the management services and operational system. It is also necessary to study the keys to successful Executive Information System (EIS) development and operation. Decision support systems would also make the system a complete MIS as it constitutes a class of computer-based information systems including knowledge-based systems that support decision-making activities. DSSs serve the management level of the organization and help to take decisions, which may be rapidly changing and not easily specified in advance.

Improving personal efficiency, expediting problem solving (speed up the progress of problems solving in an organization), facilitating interpersonal communication, promoting learning and training, increasing organizational control, generating new evidence in support of a decision, creating a competitive advantage over competition, encouraging exploration and discovery on the part of the decision maker, revealing new approaches to thinking about the problem space and helping automate the managerial processes would make the system a complete MIS rather than just doing transaction processing.

3.  The management system should be an open system and MIS should be so designed that it highlights the critical business, operational, technological and environmental changes to the concerned level in the management, so that the action can be taken to correct the situation. To make the system a success, knowledge will have to be formalized so that machines worldwide have a shared and common understanding of the information provided. The systems developed will have to be able to handle enormous amounts of information very fast.

An organization operates in an ever-increasing competitive, global environment. Operating in a global environment requires an organization to focus on the efficient execution of its processes, customer service, and speed to market. To accomplish these goals, the organization must exchange valuable information across different functions, levels, and business units. By making the system more formal, the organization can more efficiently exchange information among its functional areas, business units, suppliers, and customers.

As the transactions are taking place every day, the system stores all the data which can be used later on when the hotel is in need of some financial help from financial institutes or banks. As the inventory is always entered into the system, any frauds can be easily taken care of and if anything goes missing then it can be detected through the system.
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