CHAPTER

MANAGEMENT SUPPORT SYSTEMS AND IS SECURITY

19

Prof Rupal Choudhari Padmashree Dr. D.Y. Patil Inst. of MCA

19.1 SYSTEM CONCEPT

19.1.1 What is System? A system can be broadly defined as an integrated set of elements that accomplish a defined common objective. It is a set of interacting or interdependent components forming an integrated whole or a set of elements (often called components) and relationships which are different from relationships of the set or its elements to other elements or sets. General Model of System:

INPUT
19.1.2 Types of Systems

PROCESS
Figure 19.1

OUTPUT

1 2 3 4

Deterministic System: A deterministic system operates in predictable manner. The interaction

among the parts is known with certainty Probabilistic System: The probabilistic system can be described in terms of probable behavior, but a certain degree of error is always attached to the prediction of what the system will do. Open system: A system that interacts freely with its environment, taking input and returning output Closed system: A system that is cut off from its environment and does not interact with it 4.1 Organizational: A social unit of people systematically structured and managed to meet a need or to pursue collective goals on a continuing basis. 4.2 Organizational Structure: Mechanistic Organization: A bureaucratic organization; a structure thats high in specialization, formalization, and centralization Organic Organization: A structure thats low in specialization, formalization, and centralization

Figure 19.2: Mechanistic Versus Organic Organization

4.3 Feedback control: Positive Feedback Reinforces the direction in which the system is moving. Causes the system to repeat or amplify an adjustment or action. Negative Feedback Feedback which seeks to dampen or reduce fluctuations around the standard 4.4 Law of Requisite Variety: To control each possible state of the system elements, there must be a corresponding control state. Enumeration Deterministic control response generator Self organizing response system

19. 2 INFORMATION CONCEPTS

19.2.1 Information Data that has been processed into a form that is meaningful to the recipient and is of real or perceived value in current or prospective actions and decisions. 19.2.2 Types of Information 1. Relevant 2. Accurate 3. Complete 4. Reliable 5. Right Person 6. Right Time 7. Right Detail 8. Correct Channel Communication 9. Understandable 10. Up-to-date 19.2.3 Quality and Characteristics of Information

1.

Utility of Information:
Form Utility Time Utility Place Utility Possession Utility

2. Information Satisfaction:
The degree to which the decision maker is satisfied with the output of the formal information system.

3. Error and Bias:

Error may be result of Incorrect data measurement and collection methods Failure to follow correct processing procedures Loss or non processing data Wrong recording or correcting of data Incorrect history files Mistakes in processing procedures Deliberate falsification

19.3 MANAGEMENT INFORMATION SYSTEM

19.3.1 MIS Definition A Management Information System is An integrated user-machine system For providing information To support the operations, management, analysis, and decision-making functions in an organization. The system utilizes Computer hardware & software Manual procedures Models of analysis, planning, control Decision making and A database. 19.3.2 MIS is an integrated system MIS typically provide the basis for integration of organizational information processing. Integration of information avoids inconsistency and incompatible data storing. Information system integration is also achieved through standards, guidelines, and procedures set by the MIS function. The enforcement of such standards and procedures permits diverse applications to share data, meet audit and control requirements and be shared by multiple users. 19.3.3 MIS vs. Data Processing A data processing system processes transactions and produces reports. MIS capable to provide analysis, planning and decision making support. Data processing systems caters information to only clerical and operational levels of management MIS caters information to the all levels of management. Data Processing systems tend to support a single functional area. MIS integrates the information flow between functional areas (Accounting, Production, Marketing etc.) 19.3.4 MIS and other Academic Disciplines Managerial Accounting Operation Research Management and Organization Theory Computer Science 19.3.5 Structure of MIS Based on Management Activity and Functions
1. Organizational Function Subsystems:

Sr. No 1. 2. 3. 4. 5.

Major Functional Subsystem Marketing Manufacturing Logistics Personnel Finance and Accounting

Some Typical Uses Sales forecasting, sales planning, customer and sales analysis Production planning and scheduling, cost control analysis Planning and control of purchasing, inventories and distribution Planning personnel requirements, analyzing performance, salary administration Financial analysis, cost analysis, capital requirements planning, income measurements
Table 19.1

2. Activities Subsystems:
Transaction Processing Operational Control Management Control Strategic Planning

19.4 HUMAN AS A INFORMATION PROCESSOR

19.4.1 Newell - Simon Model Human as an information processor consists of sensory receptors (eyes, ears, nose, skin, tongue) that pick up signals and transmit them to the processing unit (brain with storage). The results of the processing are output responses (physical, spoken, written etc.)

Figure 19.3

19.4.2 Limitations of Human as an Information Processor Limitations of Human as a Information Processor 1. Limitations on Short Term Memory (George Miller: 7+2) 2. Just Noticeable Differences(Webers Law) 3. Errors in Handling Probabilistic Data Lack of intuitive understanding of the impact of sample size on sampling variance Lack of intuitive ability to identify correlation and causality Biasing heuristics for probability estimation Lack of capability for integrating information 19.4.3 Characteristics of Human Information Processing Need for Feedback Psychological Need for Redundant Data Information Overload Individual Difference Non-Verbal Information Input

19.5 INFORMATION SYSTEMS FOR FUNCTIONAL AREAS

The Functional areas where information system is required are as follows:

1.

Finance:
Provides financial information to all financial managers within an organization. The Financial subsystems are: Profit/loss and cost systems Auditing Internal auditing External auditing Uses and management of funds

2. Marketing:
Supports managerial activities in product development, distribution, pricing decisions, and promotional effectiveness. Marketing research Product development Promotion and advertising Product pricing

3. Production and Inventory subsystems:

Design and engineering Master production scheduling Inventory Control Manufacturing resource planning Just-in-time inventory and manufacturing Process control Computer-integrated manufacturing (CIM) Quality control and testing

4. Personnel:
Concerned with all of the activities related to employees and potential employees of the organization Human resource planning Personnel selection and recruiting Training and skills inventory Scheduling and job placement Wage and salary administration

Figure 19.4

19.6 DECISION MAKING SYSTEM AND MODELING

19.6.1 Modeling Process 1. Static Models: Static models take a single snapshot of a situation. During this snapshot everything occurs in a single interval. For example: A decision on whether to make or buy a product is a static in nature. A quarterly or annual income statement is static and so is the investment decision. Most static decision-making situations are presumed to repeat with identical conditions. During a static analysis, stability of the relevant data is assumed. 2. Dynamic Models: Dynamic models represent scenarios that change over time: For example: A 5 year profit and loss projection in which the input data, such as costs, prices and quantities change from year to year. The Dynamic models are also time-dependent. For Example: How many checkout points should be open in a supermarket? Dynamic simulation, in contrast to steady-state simulation, represents what happens when conditions vary from the steady-state over time. The methodology is used in plant control design. Dynamic models are important because they use, represent or generate trends and patterns over time. They also show averages per period or comparative analysis, such as profit this quarter against a profit in the same quarter of last year. Furthermore, once static model is constructed to describe a given situation, it can expand to represent the dynamic nature of the problem. For Example: The transportation model describes a static model of product distribution. It can further expanded to dynamic network flow model to accommodate inventory and back ordering. However, this expansion typically increases the models complexity and makes it harder, if not impossible, to solve.

19.6.2 Sensitivity Analysis Sensitivity analysis attempts to access the impact of a change in the input data or parameters on the proposed solution (the result variable). It follows flexibility and adaptation to changing conditions and to the requirements of different decision making situations. It provides a better understanding of the model and the decision making situation. It attempts to describe and permits the manager to input his or her data so that confidence in the model increases. Sensitivity analysis tests relationships such as: The impact of changes in external (Uncontrollable) variables and parameters on outcome variables. The impact of changes in decision variables on outcome variables. The effect of uncertainty in estimating external variables. The effect of different, dependent interactions among variables. The robustness (strength) of decision under changing conditions. Sensitivity Analysis is used for: Revising models to eliminate too large sensitivities Adding details about sensitive variables or scenarios. Obtaining better estimates of sensitive external variables. Altering the real-world system to reduce actual sensitivities. Allows monitoring of actual results continuously and closely. 19.6.3 Heuristic Programming Heuristics are decision rules governing how a problem should be solved. Heuristic searches are stepby-step procedures that are repeated until a satisfactory solution is found.

Advantages of Heuristics:
They are simple to understand, and therefore easier to implement and explain. They help train people to be more creative and develop heuristics for other problems. They save formulation time. They save computer programming and storage requirements. They save computational time. Some problems are so complex that they can be solved only with heuristics. They often produce multiple acceptable solutions. They can incorporate intelligence to guide the search. An optimal solution cannot be guaranteed. Sometimes the solution found is very poor. There may be too many exceptions to the rules. Heuristics are not as general as algorithms. Hence they can be used only for specific situation for which they are intended.

Limitations of Heuristics:

19.6.4 Simulation To simulate means to assume the appearance of the characteristics of reality. In MSS, simulation is a technique for conducting experiment (such as what-if-analyses) with a computer on a model of a management system.

Characteristics of Simulation:
Simulation is not strictly a type model; Models in general represent reality; whereas Simulation typically imitates it. Simulation is a technique for conducting experiments. Simulation is a descriptive rather than normative method. Simulation is usually used only when problem is too complex to be treated by numerical optimization techniques.

Advantages of Simulation:

A great amount of time compression can be attained giving the management some feel as to the long-term (1 to 10 year) effects of many policies quickly. Simulation is descriptive rather than normative. This allows manager to pose what-if questions. Manager can use trial-and-error approach for problem solving. Using simulation the decision can be made faster, cheaper, more accurately, and with less risk. The manager can experiment to determine which decision variable and which parts of the environment are really important, and with different alternatives. The model is built from the managers perspective. An optimal solution cannot be guaranteed, but relatively good ones are generally found. Simulation model construction can be slow and costly process. Simulation models are problem specific; hence solutions or inferences are usually not transferable to other problems. Simulation software sometimes requires special skills because of the complexity of the formal solution method. Due to simplicity of simulation software, analytical methods are often overlooked by managers.

Disadvantages of Simulation:

19.7 MANAGEMENT SUPPORT SYSTEMS OVERVIEW

19.7.1 Decision Making Phases Process of choosing amongst alternative courses of action for the purpose of attaining a goal or goals. The four phases of the decision process are: 1. Intelligence Scan the environment Analyze organizational goals Collect data Identify problem Categorize problem Programmed and non-programmed Decomposed into smaller parts Assess ownership and responsibility for problem resolution 2. Design Develop alternative courses of action Analyze potential solutions Create model Test for feasibility Validate results Select a principle of choice Establish objectives Incorporate into models Risk assessment and acceptance Criteria and constraints 3. Choice Principle of choice Describes acceptability of a solution approach Normative Models Optimization

 Effect of each alternative Rationalization More of good things, less of bad things Courses of action are known quantity Options ranked from best to worse Sub optimization Decisions made in separate parts of organization without consideration of whole 4. Implementation Putting solution to work Vague boundaries which include: Dealing with resistance to change User training Upper management support 19.7.2 Decision Support System (DSS) DSS as a Model-based set of procedures for processing data and judgments to assist manager in his decision-making. Little (1970). DSS were meant to be an adjunct to decision makers to extend their capabilities but not to replace their judgment. The Key Characteristics and Capabilities of DSS are: 1. Semi structured and unstructured problems 2. Support managers at all levels 3. Supports individual and groups 4. Interdependent or sequential decisions 5. Support Intelligence, Design , Choice and implementation phase 6. Support variety of decision making and decision making styles

Figure 19.5: DSS Support

19.8 EXECUTIVE INFORMATION AND SUPPORT SYSTEMS

19.8.1 What is EIS? An Executive Information System (EIS) is a computer based system that serves the information needs of top executives. It provides rapid access to timely information and direct access to management reports.

The need for EIS:

Need for timely information Need for improved communication Need for access to operational data Need for access to corporate database Need for rapid status updates on various business activities. Need for ability to identify historical trends Need to reduce the paper cost Need for faster access to information. 19.8.2 Characteristics of EIS

1. Informational Characteristics:
Flexibility and ease of use Provide timely information with short response time and quick retrieval. Produces Correct, Timely, Relevant, Complete, and Validated information. Contains sophisticated, Self-help, User-friendly GUI Facilities access from many places Provides secure reliable, confidential access and access procedure. Has short response time. It customized tailor-made to suit the management style of individual executive. Provides support for defining overall vision, Mission and Strategy as it has strategic/ futuristic orientation. Provides support for Strategic Management (Strategic Planning, Organization, Control, Staffing etc.) Can help with risk/ uncertainty situations. Is linked with value-added business processes. Support the need/ access for/ to the external database Have the capabilities like Drill Down, Exception reporting and Critical Success Factors identification. Has a high Result/ Performance orientation.

2. User-interface/ Orientation Characteristics:

3. Managerial/ Executive Characteristics:

19.9 EXPERTS SYSTEM 19.9.1 Expert System Expert systems are the most exciting computer applications to emerge during 1980s. The Expert System technology basically derives from the research discipline of Artificial Intelligence a branch of computer science concerned with the design and implementation of programs which are capable of emulating human cognitive skills such as problem solving, visual perception and language understanding. An Expert System is a computer program that represents and reasons with knowledge of some specialist subject with a view to solving problems or giving advice. The Three Major ES Components are: Knowledge Base Inference Engine User Interface 19.9.2 Problems and Limitations of Expert Systems Knowledge is not always readily available

 Expertise can be hard to extract from humans Each experts approach may be different, yet correct Hard, even for a highly skilled expert, to work under time pressure Expert system users have natural cognitive limits ES work well only in a narrow domain of knowledge 19.9.3 Benefits of Expert Systems Increased Output and Productivity Decreased Decision Making Time Increased Process(es) and Product Quality Reduced Downtime Capture Scarce Expertise Flexibility Easier Equipment Operation Elimination of Expensive Equipment Operation in Hazardous Environments Accessibility to Knowledge and Help Desks Integration of Several Experts' Opinions References:
1. 2. 3. 4. Management Information System by A.K. Gupta Decision support systems and Intelligent systems by Efraim Turban, Jay E. Aronson, Ting-Peng Liang Decision Support Systems: Concepts and Resources for Managers by Daniel J. Power Principles of Information Systems by Ralph M. Stair, George Reynolds, George W. Reynolds

Keywords: System, Information, Management Information System, Decision making, Management Support System