MIS NOTES

Information Systems is used by the organization for Operational excellence; new products, services,
and business models; customer and supplier intimacy; improved decision making; competitive
advantage; and survival.

Three information system trends that are influencing the way businesses interact with
employees, customers, suppliers, and business partners include emerging mobile digital
platforms, growth of online software-as-a-service, and the growth of cloud computing.

Characteristics of a digital firm

● Significant business relationships with customers, suppliers, and employees are digitally
enabled and mediated.
● Core business processes are accomplished through digital networks spanning the entire
organization or linking multiple organizations.
● Key corporate assets—intellectual property, core competencies, and financial and
human assets—are managed through digital means.
● They sense and respond to their environments far more rapidly than traditional firms.
● They offer extraordinary opportunities for more flexible global organization and
management, practicing time-shifting and space-shifting.

Business Process
A business process is a logically related set of activities that define how specific business tasks are
performed. Business processes are the ways in which organizations coordinate and organize work
activities, information, and knowledge to produce their valuable products or services.

How well a business performs depends on how well its business processes are designed and
coordinated. Well-designed business processes can be a source of competitive strength for a
company if it can use the processes to innovate or perform better than its rivals. Conversely, poorly
designed or executed business processes can be a liability if they are based on outdated ways of
working and impede

Information Systems

An information system is a set of interrelated components that work together to collect, process,
store, and disseminate information to support decision making, coordination, control, analysis, and
visualization in an organization. In addition to supporting decision making, information systems may
also help managers and workers analyze problems, visualize complex subjects, and create new
products.

Relationship between information systems and business processes

Information systems automate manual business processes and make an organization more efficient.
Data and information are available to a wider range of decision makers more quickly when
information systems are used to change the flow of information. Tasks can be performed
simultaneously rather than sequentially, speeding up the completion of business processes.
Information systems can also drive new business models that perhaps wouldn’t be possible without
the technology.

● Organization: The organization dimension of information systems involves

issues such as the organization’s hierarchy, functional specialties, business
 processes, culture, and political interest groups.
● Management: The management dimension of information systems involves
setting organizational strategies, allocating human and financial resources,
creating new products and services, and re-creating the organization if necessary.
● Technology: The technology dimension consists of computer hardware, software, data
management technology, and networking/telecommunications technology.

● Data are streams of raw facts representing events occurring in organizations or the
physical environment before they have been organized and arranged into a form
that people can understand and use.
● Information is data that have been shaped into a form that is meaningful and
useful to human beings.

Type of System Information Inputs Information Outputs Users

Transaction Transactions; daily Detailed reports; Operations
Processing Systems events lists; summaries personnel; first-line
(TPS) supervisors
Management Summary Summary and Middle managers
Information transaction data; exception reports
Systems (MIS) high-volume data;
simple models
Decision-Support Optimized for data Interactive; Professionals, staff
Systems (DSS) analysis, analytic simulations; managers
models, and data analysis
analysis tools
Executive Support Aggregate data; Projections; Senior managers
Systems (ESS) external, internal responses to queries

TPS

Transaction processing systems (TPS) are computerized systems that perform and record daily
routine transactions necessary in conducting business; they serve the organization’s operational
level. The principal purpose of systems at this level is to answer routine questions and to track
the flow of transactions through the organization.

● At the operational level, tasks, resources, and goals are predefined and highly
structured.
● Managers need TPS to monitor the status of internal operations and the firm’s
relationship with its external environment.
● TPS are major producers of information for other types of systems.
● Transaction processing systems are often so central to a business that TPS failure for a
few hours can lead to a firm’s demise and perhaps that of other firms linked to it.
MIS

Middle management needs systems to help with monitoring, controlling, decision making, and
administrative activities.

● MIS provide middle managers with reports on the organization’s current performance.
This information is used to monitor and control the business and predict future
performance.
 ● MIS summarize and report the company’s basic operations using data supplied by TPSs.
The basic transaction data from TPS are compressed and usually presented in reports
that are produced on a regular schedule.
● MIS serve managers primarily interested in weekly, monthly, and yearly results,
although some MIS enable managers to drill down to see daily or hourly data if required.
● MIS generally provide answers to routine questions that have been specified in advance
and have a predefined procedure for answering them.
● MIS systems generally are not flexible and have little analytical capability.
● Most MIS use simple routines, such as summaries and comparisons, as opposed to
sophisticated mathematical models or statistical techniques.

MIS differs from TPS in that MIS deals with summarized and compressed data from the TPS.

Although MIS have an internal orientation, DSS will often use data from external sources, as well
as data from TPS and MIS. DSS supports “what-if” analyses rather than a long-term structured
analysis inherent in MIS systems. MIS are generally not flexible and provide little analytical
capabilities. In contrast, DSS are designed for analytical purposes and are flexible.

Decision-support systems (DSS)

Decision-support systems (DSS) support nonroutine decision making for middle managers.

● DSS provide sophisticated analytical models and data analysis tools to support
semistructured and unstructured decision-making activities.
● DSS use data from TPS, MIS, and external sources, in condensed form, allowing decision
makers to perform “what-if” analysis.
● DSS focus on problems that are unique and rapidly changing; procedures for arriving at a
solution may not be fully predefined.
● DSS are designed so that users can work with them directly; these systems include
interactive, user-friendly software.

Executive support systems (ESS)

Executive support systems (ESS) help senior managers address strategic issues and long-term
trends, both in the firm and in the external environment.

● ESS address nonroutine decisions requiring judgment, evaluation, and insight because
there is no agreed-on procedure for arriving at a solution.
● ESS provide a generalized computing and communications capacity that can be applied
to a changing array of problems.
● ESS are designed to incorporate data about external events, such as new tax laws or
competitors, but they also draw summarized information from information from internal
MIS and DSS.
● ESS are designed for ease-of-use and rely heavily on graphical presentations of data.

Enterprise applications

An organization operates in an ever-increasing competitive and global environment. The

successful organization focuses on the efficient execution of its processes, customer service, and
speed to market. Enterprise applications provide an organization with a consolidated view of its
operations across different functions, levels, and business units. Enterprise applications allow an
organization to efficiently exchange information among its functional areas, business units,
suppliers, and customers.

Enterprise systems, supply chain management systems, customer relationship

management systems, and knowledge management systems

Enterprise systems integrate the key business processes of an organization into a single central
data repository. This makes it possible for information that was previously fragmented in
different systems to be shared across the firm and for different parts of the business to work
more closely together.

Business benefits include:

● Information flows seamlessly throughout an organization, improving coordination,

efficiency, and decision making.
● Gives companies the flexibility to respond rapidly to customer requests while producing
and stocking only that inventory necessary to fulfill existing orders.
● Increases customer satisfaction by improving product shipments, minimizing costs, and
improving a firm’s performance.
● Improves decision making by improving the quality of information for all levels of
management. That leads to better analyses of overall business performance, more
accurate sales and production forecasts, and higher profitability.

In short, supply chain management (SCM) systems help businesses better manage relationships
with their suppliers. Objective of SCM: Get the right amount of products from the companies’
source to their point of consumption with the least amount of time and with the lowest cost.
SCM provide information to help suppliers, purchasing firms, distributors, and logistics
companies share information about orders, production, inventory levels, and delivery of
products and services so that they can source, produce, and deliver goods and services
efficiently. SCM helps organizations achieve great efficiencies by automating parts of these
processes or by helping organizations rethink and streamline these processes. SCM is important
to a business because through its efficiency it can coordinate, schedule, and control the delivery
of products and services to customers.

Business benefits include:

● Decide when and what to produce, store, and move

● Rapidly communicate orders
● Track the status of orders
● Check inventory availability and monitor inventory levels
● Reduce inventory, transportation, and warehousing costs
● Track shipments
● Plan production based on actual customer demand
● Rapidly communicate changes in product design

Customer relationship management (CRM) systems enable a business to better manage its
relationships with existing and potential customers. With the growth of the Web, potential
customers can easily comparison shop for retail and wholesale goods and even raw materials, so
treating customers better has become very important.

Business benefits include:

● CRM systems provide information to coordinate all the business processes that deal with
customers in sales, marketing, and service to optimize revenue, customer satisfaction,
and customer retention. This information helps firms identify, attract, and retain the
most profitable customers; provide better service to existing customers; and increase
sales.
● CRM systems consolidate customer data from multiple sources and provide analytical
tools for answering questions such as: What is the value of a particular customer to the
firm over his/her lifetime?
● CRM tools integrate a business’s customer-related processes and consolidate customer
information from multiple communication channels, giving the customer a consolidated
view of the company.
● Detailed and accurate knowledge of customers and their preferences helps firms
increase the effectiveness of their marketing campaigns and provide higher-quality
customer service and support.

Knowledge management systems (KMS) enable organizations to better manage processes for
capturing and applying knowledge and expertise. These systems collect all relevant knowledge
and experience in the firm, and make it available wherever and whenever it is needed to
improve business processes and management decisions. They also link the firm to external
sources of knowledge.

Business benefits include:

● KMS support processes for acquiring, storing, distributing, and applying knowledge, as
well as processes for creating new knowledge and integrating it into the organization.
● KMS include enterprise-wide systems for managing and distributing documents,
graphics, and other digital knowledge objects; systems for creating corporate knowledge
directories of employees with special areas of expertise; office systems for distributing
knowledge and information; and knowledge work systems to facilitate knowledge
creation.
● KMS use intelligent techniques that codify knowledge and experience for use by other
members of the organization and tools for knowledge discovery that recognize patterns
and important relationships in large pools of data.

Intranets and extranets

Because intranets and extranets share the same technology and software platforms as the
Internet, they are easy and inexpensive ways for companies to increase integration and expedite
the flow of information within the company (intranets alone) and with customers and suppliers
(extranets). They provide ways to distribute information and store corporate policies, programs,
and data. Both types of nets can be customized by users and provide a single point of access to
information from several different systems. Businesses can connect the nets to transaction
processing systems easily and quickly. Interfaces between the nets and TPS, MIS, DSS, and ESS
provide input and output for users.
 IS for Competitive Advantage
Porter’s competitive forces model

This model provides a general view of the firm, its competitors, and the firm’s
environment. Porter’s model is all about the firm’s general business environment. In this
model, five competitive forces shape the fate of the firm:
● Traditional competitors
● New market entrants
● Substitute products and services
● Bargaining Power of Customers
● Bargaining Power of Suppliers

Some firms do better than others because they either have access to special resources that
others do not, or they are able to use commonly available resource more efficiently. It
could be because of superior knowledge and information assets. Regardless, they excel in
revenue growth, profitability, or productivity growth, ultimately increasing their stock
market valuations compared to their competitors.

Four competitive strategies enabled by information systems that firms can pursue.

The four generic strategies, each of which often is enabled by using information
technology and systems include:
● Low-cost leadership: Lowest operational costs and the lowest prices.
● Product differentiation: Enable new products and services, or greatly change the
customer convenience in using existing products and services.
● Focus on market niche: Enable a specific market focus and serve this narrow
target market better than competitors.
● Strengthen customer and suppliers: Tighten linkages with suppliers and develop
intimacy with customers.

Information systems support for each of these competitive strategies

● Low-cost leadership: Use information systems to improve inventory management,
supply management, and create efficient customer response systems. Example:
Walmart.
● Product differentiation: Use information systems to create products and services
that are customized and personalized to fit the precise specifications of individual
customers. Examples: Google, eBay, Apple, Lands’ End.
● Focus on market niche: Use information systems to produce and analyze data for
finely tuned sales and marketing techniques. Analyze customer buying patterns,
tastes, and preferences closely in order to efficiently pitch advertising and
marketing campaigns to smaller target markets. Examples: Hilton Hotels,
Harrah’s.
● Strengthen customer and supplier intimacies: Use information systems to
facilitate direct access from suppliers to information within the company. Increase
switching costs and loyalty to the company. Examples: IBM, Amazon.com.
The basic principle of IT strategy for a business is to ensure the technology serves the
business and not the other way around. The more successfully a firm can align its IT with
its business goals, the more profitable it will be. Businesspeople must take an active role
in shaping IT to the enterprise. They cannot ignore IT issues. They cannot tolerate failure
in the IT area as just a nuisance to work around. They must understand what IT can do,
how it works, and measure its impact on revenues and profits.

Define and describe the value chain model.

The value chain model highlights specific activities in the business where competitive
strategies can best be applied and where information systems will most likely have a
strategic impact. The model identifies specific, critical leverage points where a firm can
use information technology most effectively to enhance its competitive position. The
value chain model views the firm as a series of basic activities that add a margin of value
to a firm’s products or services. The activities are categorized as either primary or support
activities. Primary activities are most directly related to production and distribution of the
firm’s products and services, which create value for the customer. Support activities make
the delivery of primary activities possible and consist of organization infrastructure. A
firm’s value chain can be linked to the value chains of its suppliers, distributors, and
customers.

value chain model helps to identify opportunities for information systems.

Information systems can be used at each stage of the value chain to improve operational
efficiency, lower costs, improve profit margins, and forge a closer relationship with
customers and suppliers. Organizations can use information systems to help examine how
value-adding activities are performed at each stage of the value chain. Information
systems can improve the relationship with customers (customer relationship management
systems) and with suppliers (supply chain management systems) who may be outside the
value chain but belong to an extended value chain. Information systems can help
businesses track benchmarks in the organization and identify best practices of their
particular industries. After analyzing various stages in the value chain, an organization
can devise a list of candidate applications for information systems

Value web
A value web is a collection of independent firms that use information technology to
coordinate their value chains to collectively produce a product or service. It is more
customer driven and operates in a less linear fashion than the traditional value chain. The
value web is a networked system that can synchronize the business processes of
customers, suppliers, and trading partners among different companies in an industry or in
related industries.

Information systems enable value webs that are flexible and adaptive to changes in supply
and demand. Relationships can be bundled or unbundled in response to changing market
conditions. Firms can accelerate their time to market and to customers by optimizing their
value web relationships to make quick decisions on who can deliver the required products
or services at the right price and location. Information systems make it possible for
companies to establish and operate value webs.
The Internet has nearly destroyed some industries and severely threatened others. The
Internet has also created entirely new markets and formed the basis of thousands of new
businesses. The Internet has enabled new products and services, new business models,
and new industries to rapidly develop.

Because of the Internet, competitive rivalry has become much more intense. Internet
technology is based on universal standards that any company can use, making it easy for
rivals to compete on price alone and for new competitors to enter the market. Because
information is available to everyone, the Internet raises the bargaining power of
customers, who can quickly find the lowest-cost provider on the Web.

Synergies and core competencies

A large corporation is typically a collection of businesses that are organized as a

collection of strategic business units. Information systems can improve the overall
performance of these business units by promoting synergies and core competencies.

The concept of synergy is that when the output of some units can be used as inputs to
other units, or two organizations can pool markets and expertise, these relationships lower
costs and generate profits. In applying synergy to situations, information systems are used
to tie together the operations of disparate business units so that they can act as a whole.

A core competency is an activity for which a firm is a world-class leader. In general, a

core competency relies on knowledge that is gained over many years of experience and a
first-class research organization or simply key people who stay abreast of new external
knowledge. Any information system that encourages the sharing of knowledge across
business units enhances competency.

Network economics

In a network, the marginal costs of adding another participant are almost zero, whereas
the marginal gain is much larger. The larger the number of participants in a network, the
greater the value to all participants because each user can interact with more people.

The availability of the Internet and networking technology has inspired strategies that
take advantage of the abilities of the firm to create networks or network with one another.
In a network economy, information systems facilitate business models based on large
networks of users or subscribers that take advantage of network economies. Internet sites
can be used by firms to build communities of users that can result in building customer
loyalty and enjoyment and build unique ties to customers, suppliers, and business partners

Virtual company
A virtual company uses networks to link people, assets, and ideas, enabling it to ally with
other companies to create and distribute products and services without being limited by
traditional organizational boundaries or physical locations. One company can use the
capabilities of another company without being physically tied to that company. The
virtual company model is useful when a company finds it cheaper to acquire products,
services, or capabilities from an external vendor or when it needs to move quickly to
exploit new market opportunities and lacks the time and resources to respond on its own.
DATABASES & ADVANCES in DATABASES
Problems of the traditional file environment

Problems with the traditional file environment include data redundancy and confusion,
program-data dependence, lack of flexibility, poor security, and lack of data sharing and
availability. Data redundancy is the presence of duplicate data in multiple data files. In
this situation, confusion results because the data can have different meanings in different
files. Program-data dependence is the tight relationship between data stored in files and
the specific programs required to update and maintain those files. This dependency is
very inefficient, resulting in the need to make changes in many programs when a common
piece of data, such as the zip code size, changes. Lack of flexibility refers to the fact that
it is very difficult to create new reports from data when needed. Ad-hoc reports are
impossible to generate; a new report could require several weeks of work by more than
one programmer and the creation of intermediate files to combine data from disparate
files. Poor security results from the lack of control over data. Data sharing is virtually
impossible because it is distributed in so many different files around the organization.

Capabilities of database management systems (DBMS)

A database is a collection of data organized to service many applications efficiently by

storing and managing data so that they appear to be in one location. It also minimizes
redundant data. A database management system (DBMS) is special software that permits
an organization to centralize data, manage them efficiently, and provide access to the
stored data by application programs.

A DBMS can reduce the complexity of the information systems environment, reduce data
redundancy and inconsistency, eliminate data confusion, create program-data
independence, reduce program development and maintenance costs, enhance flexibility,
enable the ad hoc retrieval of information, improve access and availability of information,
and allow for the centralized management of data, their use, and security.

A DBMS includes capabilities and tools for organizing, managing, and accessing the data
in the database. The principal capabilities of a DBMS include data definition language,
data dictionary, and data manipulation language.
● The data definition language specifies the structure and content of the database.
● The data dictionary is an automated or manual file that stores information about
the data in the database, including names, definitions, formats, and descriptions of
data elements.
The data manipulation language, such as SQL, is a specialized language for accessing and
manipulating the data in the database.

Relational DBMS

The relational database is the primary method for organizing and maintaining data in
information systems. It organizes data in two-dimensional tables with rows and columns
called relations. Each table contains data about an entity and its attributes. Each row
represents a record and each column represents an attribute or field. Each table also
contains a key field to uniquely identify each record for retrieval or manipulation.
Three operations of a relational DBMS

In a relational database, three basic operations are used to develop useful sets of data:
select, project, and join.
● Select operation creates a subset consisting of all records in the file that meet
stated criteria. In other words, select creates a subset of rows that meet certain
criteria.
● Join operation combines relational tables to provide the user with more
information that is available in individual tables.
● Project operation creates a subset consisting of columns in a table, permitting the
user to create new tables that contain only the information required.

Non-relational databases

There are four main reasons for the rise in non-relational databases: cloud computing,
unprecedented data volumes, massive workloads for Web services, and the need to store
new types of data. These systems use more flexible data models and are designed for
managing large data sets across distributed computing networks. They are easy to scale
up and down based on computing needs.

They can process structured and unstructured data captured from Web sites, social media,
graphics. Traditional relational databases aren’t able to process data from most of those
sources. Non-relational databases can also accelerate simple queries against large
volumes of structured and unstructured data. There’s no need to predefine a formal
database structure or change that definition if new data are added later.

Normalization
Normalization is the process of creating small stable data structures from complex groups
of data when designing a relational database. Normalization streamlines relational
database design by removing redundant data such as repeating data groups. A well-
designed relational database will be organized around the information needs of the
business and will probably be in some normalized form. A database that is not normalized
will have problems with insertion, deletion, and modification.

entity-relationship diagram
Relational databases organize data into two-dimensional tables (called relations) with
columns and rows. Each table contains data on an entity and its attributes. An entity-
relationship diagram graphically depicts the relationship between entities (tables) in a
relational database. A well-designed relational database will not have many-to-many
relationships, and all attributes for a specific entity will only apply to that entity. Entity-
relationship diagrams help formulate a data model that will serve the business well. The
diagrams also help ensure data are accurate, complete, and easy to retrieve

Big data
Traditional databases rely on neatly organized content into rows and columns. Much of
the data collected nowadays by companies don’t fit into that mold.
Big data describes datasets with volumes so huge they are beyond the ability of typical
database management system to capture, store, and analyze. The term doesn’t refer to any
specific quantity of data but it’s usually measured in the petabyte and exabyte range. It
includes structured and unstructured data captured from Web traffic, e-mail messages,
and social media content such as tweets and status messages. It also includes machine-
generated data from sensors.

Big data contains more patterns and interesting anomalies than smaller data sets. That
creates the potential to determine new insights into customer behavior, weather patterns,
financial market activity, and other phenomena.

Hadoop: Open-source software framework that enables distributed parallel processing of

huge amounts of data across inexpensive computers. The software breaks huge problems
into smaller ones, processes each one on a distributed network of smaller computers, and
then combines the results into a smaller data set that is easier to analyze. It uses non-
relational database processing and structured, semistructured and unstructured data.

In-memory computing: rather than using disk-based database software platforms, this
technology relies primarily on a computer’s main memory for data storage. It eliminates
bottlenecks that result from retrieving and reading data in a traditional database and
shortens query response times. Advances in contemporary computer hardware technology
makes in-memory processing possible.

Analytic platforms: Uses both relational and non-relational technology that’s optimized
for analyzing large datasets. They feature preconfigured hardware-software system
designed for query processing and analytics.

Components of a contemporary business intelligence infrastructure

Business intelligence (BI) infrastructures include an array of tools for obtaining useful
information from all the different types of data used by businesses today, including semi-
structure and unstructured big data in vast quantities. Data warehouses, data marts,
Hadoop, in-memory processing, and analytical platforms are all included in BI
infrastructures.

Powerful tools are available to analyze and access information that has been captured and
organized in data warehouses and data marts. These tools enable users to analyze the data
to see new patterns, relationships, and insights that are useful for guiding decision
making. These tools for consolidating, analyzing, and providing access to vast amounts of
data to help users make better business decisions are often referred to as business
intelligence. Principal tools for business intelligence include software for database query
and reporting tools for multidimensional data analysis and data mining.

Online analytical processing (OLAP)

Data warehouses support multidimensional data analysis, also known as online analytical
processing (OLAP), that enables users to view the same data in different ways using
multiple dimensions. Each aspect of information represents a different dimension.
 OLAP represents relationships among data as a multidimensional structure, which can be
visualized as cubes of data and cubes within cubes of data, enabling more sophisticated
data analysis. OLAP enables users to obtain online answers to ad hoc questions in a fairly
rapid amount of time, even when the data are stored in very large databases. Online
analytical processing and data mining enable the manipulation and analysis of large
volumes of data from many perspectives, for example, sales by item, by department, by
store, by region, in order to find patterns in the data. Such patterns are difficult to find
with normal database methods, which is why a data warehouse and data mining are
usually parts of OLAP.

Data mining & how it differs from OLAP

Data mining provides insights into corporate data that cannot be obtained with OLAP by
finding hidden patterns and relationships in large databases and inferring rules from them
to predict future behavior. The patterns and rules are used to guide decision making and
forecast the effect of those decisions. The types of information obtained from data mining
include associations, sequences, classifications, clusters, and forecasts.

Text mining and Web mining

Conventional data mining focuses on data that have been structured in databases and files.
Text mining concentrates on finding patterns and trends in unstructured data contained in
text files. The data may be in e-mail, memos, call center transcripts, survey responses,
legal cases, patent descriptions, and service reports. Text mining tools extract key
elements from large unstructured data sets, discover patterns and relationships, and
summarize the information.

Web mining helps businesses understand customer behavior, evaluate the effectiveness of
a particular Web site, or quantify the success of a marketing campaign. Web mining looks
for patterns in data through:
● Web content mining: Extracting knowledge from the content of Web pages.
● Web structure mining: Examining data related to the structure of a particular Web
site.
● Web usage mining: Examining user interaction data recorded by a Web server
whenever requests for a Web site’s resources are received.

How users can access information from a company’s internal databases through the
Web

Conventional databases can be linked via middleware to the Web or a Web interface to
facilitate user access to an organization’s internal data. Web browser software on a client
PC is used to access a corporate Web site over the Internet. The Web browser software
requests data from the organization’s database, using HTML commands to communicate
with the Web server. Because many back-end databases cannot interpret commands
written in HTML, the Web server passes these requests for data to special middleware
software that then translates HTML commands into SQL so that they can be processed by
the DBMS working with the database. The DBMS receives the SQL requests and
provides the required data. The middleware transfers information from the organization’s
internal database back to the Web server for delivery in the form of a Web page to the
user. The software working between the Web server and the DBMS can be an application
server, a custom program, or a series of software scripts