Management Principles - Overview

What is Management?
Management is a universal phenomenon. Every individual or entity requires setting objectives,
making plans, handling people, coordinating and controlling activities, achieving goals and
evaluating performance directed towards organizational goals. These activities relate to the
utilization of variables or resources from the environment − human, monetary, physical, and
informational.

Human resources refer to managerial talent, labour (managerial talent, labour, and services
provided by them), monetary resources (the monetary investment the organization uses to finance
its current and long-term operations), physical resources (raw materials, physical and production
facilities and equipment) and information resources (data and other kinds of information).
Management is essentially the bringing together these resources within an organization towards
reaching objectives of an organization.
Management Defined
Management has been defined by various authors/authorities in various ways. Following are few
often-quoted definitions −
Management guru, Peter Drucker, says the basic task of management includes both marketing
and innovation. According to him, Management is a multipurpose organ that manages a business
and manages managers, and manages workers and work.
Harold Koontz defined management as the art of getting things done through and with people in
formally organized groups.

Management is the process of planning, organizing, leading, and controlling an

organization’s human, financial, physical, and information resources to achieve
organizational goals in an efficient and effective manner.

The principles of management are the means by which a manager actually manages, that is, get
things done through others − individually, in groups, or in organizations.
Formally defined, the principles of management are the activities that plan, organize, and control
the operations of the basic elements of [people], materials, machines, methods, money and markets,
providing direction and coordination, and giving leadership to human efforts, so as to achieve the
sought objectives of the enterprise.

Is Management an Art or a Science?

Like any other discipline such as law, medicine or engineering, managing is an art – at least that is
what most people assume. Management concepts need to be artistically approached and practiced
for its success. It is understood that managing is doing things artistically in the light of the realities
of a situation.
If we take a closer look at it, Management, when practiced, is definitely an art but its underlying
applications, methods and principles are a science. It is also opined that management is an art
struggling to become a science.

Management as an Art
The personal ingenious and imaginative power of the manager lends management the approach of
an art. This creative power of the manager enriches his performance skill. In fact, the art of managing
involves the conception of a vision of an orderly whole, created from chaotic parts and the
communication and achievement of this vision. Managing can be called art of arts because it
organizes and uses human talent, which is the basis of every artistic activity.

Management as a Science
Management is a body of systematized knowledge accumulated and established with reference to
the practice and understanding of general truth concerning management. It is true that the science

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underlying managing is not as accurate or comprehensive as physical sciences (such as chemistry
or biology) which deal with non-human entities.
The involvement of the human angle makes management not only complex but also controversial
as pure science. Nevertheless, the study of the scientific elements in management methodologies
can certainly improve the practice of management.

Management as a Science and Art

Science urges us to observe and experiment a phenomenon, while art teaches us the application of
human skill and imagination to the same. In order to be successful, every manager needs do things
effectively and efficiently. This requires a unique combination of both science and art. We can say
that the art of managing begins where the science of managing stops. As the science of managing
is imperfect, the manager must turn to artistic managerial ability to perform a job satisfactorily.

Management Principles - Role of Managers

Every organization has ‘Managers’ who are entrusted with the responsibility of guiding and directing
the organization to achieve its goals.
Managers administer and coordinate resources effectively and efficiently to channelize their energy
towards successful accomplishment of the goals of the organization. Managers are required in all
the activities of organizations. Their expertise is vital across departments throughout the
organization.
Role of Managers
Managers are the primary force in an organization's growth and expansion. Larger organizations
are particularly complex due to their size, process, people and nature of business. However,
organizations need to be a cohesive whole encompassing every employee and their talent,
directing them towards achieving the set business goals. This is an extremely challenging
endeavour, and requires highly effective managers having evolved people management and
communication skills.
The Top Management
The top level executives direct the organization to achieve its objectives and are instrumental in
creating the vision and mission of the organization. They are the strategic think-tank of the
organization.
Senior Management
The General Manager is responsible for all aspects of a company. He is accountable for managing
the P&L (Profit & Loss) statement of the company. General managers usually report to the
company board or top executives and take directions from them to direct the business.
The Functional Manager is responsible for a single organizational unit or department within a
company or organization. He in turn is assisted by a Supervisor or groups of managers within his
unit/department. He is responsible for the department’s profitability and success.
Line and Staff Managers
Line Managers are directly responsible for managing a single employee or a group of employees.
They are also directly accountable for the service or product line of the company. For example, a
line manager at Toyota is responsible for the manufacturing, stocking, marketing, and profitability
of the Corolla product line.
Staff Managers often oversee other employees or subordinates in an organization and generally
head revenue consuming or support departments to provide the line managers with information
and advice.
Project Managers
Every organization has multiple projects running simultaneously through its life cycle. A project
manager is primarily accountable for leading a project from its inception to completion. He plans
and organizes the resources required to complete the project. He will also define the project goals
and objectives and decide how and at what intervals the project deliverables will be completed.

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The Changing Roles of Management and Managers
Every organization has three primary interpersonal roles that are concerned with interpersonal
relationships. The manager in the figurehead role represents the organization in all matters of
formality. The top-level manager represents the company legally and socially to the outside world
that the organization interacts with.
In the supervisory role, the manager represents his team to the higher management. He acts as a
liaison between the higher management and his team. He also maintains contact with his peers
outside the organization.

Mintzberg's Set of Ten Roles

Professor Henry Mintzberg, a great management researcher, after studying managers for several
weeks concluded that, to meet the many demands of performing their functions, managers assume
multiple roles.
He propounded that the role is an organized set of behaviors. He identified the following ten roles
common to the work of all managers. These roles have been split into three groups as illustrated in
the following figure.

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Interpersonal Role
 Figurehead − Has social, ceremonial and legal responsibilities.
 Leader − Provides leadership and direction.
 Liaison − Networks and communicates with internal and external contacts.
Informational Role
 Monitor − Seeks out information related to your organization and industry, and monitors
internal teams in terms of both their productivity and well-being.
 Disseminator − Communicates potentially useful information internally.
 Spokesperson − Represents and speaks for the organization and transmits information
about the organization and its goals to the people outside it.
Decisional Role
 Entrepreneur − Creates and controls change within the organization - solving problems,
generating new ideas, and implementing them.
 Disturbance Handler − Resolves and manages unexpected roadblocks.
 Resource Allocator − Allocates funds, assigning staff and other organizational resources.
 Negotiator − Involved in direct important negotiations within the team, department, or
organization.

Managerial Skills
Henri Fayol, a famous management theorist also called as the Father of Modern Management,
identified three basic managerial skills - technical skill, human skill and conceptual skill.
Technical Skill
 Knowledge and skills used to perform specific tasks. Accountants, engineers, surgeons all
have their specialized technical skills necessary for their respective professions. Managers,
especially at the lower and middle levels, need technical skills for effective task
performance.
 Technical skills are important especially for first line managers, who spend much of their
time training subordinates and supervising their work-related problems.
Human Skill
 Ability to work with, understand, and motivate other people as individuals or in groups.
According to Management theorist Mintzberg, the top (and middle) managers spend their
time: 59 percent in meetings, 6 percent on the phone, and 3 percent on tours.
 Ability to work with others and get co-operation from people in the work group. For
example, knowing what to do and being able to communicate ideas and beliefs to others
and understanding what thoughts others are trying to convey to the manager.
Conceptual Skill
 Ability to visualize the enterprise as a whole, to envision all the functions involved in a given
situation or circumstance, to understand how its parts depend on one another, and
anticipate how a change in any of its parts will affect the whole.
 Creativity, broad knowledge and ability to conceive abstract ideas. For example, the
managing director of a telecom company visualizes the importance of better service for its
clients which ultimately helps attract a vast number of clients and an unexpected increase
in its subscriber base and profits.
Other Managerial Skills
Besides the skills discussed above, there are two other skills that a manager should possess,
namely diagnostic skill and analytical skill.
Diagnostic Skill − Diagnose a problem in the organization by studying its symptoms. For
example, a particular division may be suffering from high turnover. With the help of diagnostic skill,
the manager may find out that the division’s supervisor has poor human skill in dealing with
employees. This problem might then be solved by transferring or training the supervisor.
Analytical Skill − Ability to identify the vital or basic elements in a given situation, evaluate their
interdependence, and decide which ones should receive the most attention. This skill enables the
manager to determine possible strategies and to select the most appropriate one for the situation.

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For example, when adding a new product to the existing product line, a manager may analyze the
advantages and risks in doing so and make a recommendation to the board of directors, who
make the final decision.
Diagnostic skill enables managers to understand a situation, whereas analytical skill helps
determine what to do in a given situation.

The P-O-L-C Framework

The primary challenge faced by organizations and managers today is to creatively solve business
problems. The principles of management are guidelines using which managers can tackle
business challenges.
The principles of management have been categorized into the four major functions of planning,
organizing, leading, and controlling popularly known as the P-O-L-C framework.
The P-O-L-C Framework
 Defining Organization Vision & Mission
 Setting Goals & Objectives
Planning
 Strategizing
 Plan of Action to Achieve Goals

 Formulate Organizational Structure

Organizing  Resource Allocation
 Job Design

 Leadership & Direction

Leading  Motivation
 Coordination & Communication

 Process & Standards

Controlling  Review & Evaluation
 Corrective Action
Planning
Planning is the first and the most important function of management that involves setting objectives
and determining a course of action for achieving those objectives. Planners are essentially the
managers who are best aware of environmental conditions facing their organization and are able to
effectively analyze and predict future conditions. It also requires that managers should be good
decision makers.
Planning involves selecting missions and objectives and the actions to achieve them, it requires
decision making, i.e. choosing future courses of action from among alternatives.
Planning means determining what the organization’s position and situation should be at some time
in the future and deciding how best to bring about that situation. It helps maintain managerial
effectiveness by guiding future activities.
Planning as a process typically involves the following steps −
 Selection of goals for the organization.
 Establishment of goals for each of the organization’s sub-units.
 Establishment of programs for achieving goals in a systematic manner.
Types of Planning
 Strategic planning involves analyzing competitive opportunities and threats, as well as the
strengths and weaknesses of the organization. It also involves determining how to position
the organization to compete effectively in their environment.
 Tactical planning is creating the blueprint for the lager strategic plan. These plans are often
short term and are carried out by middle-level managers.
 Operational planning generally covers the entire organization’s goals and objectives and
put into practice the ways and action steps to achieve the strategic plans. They are very
short terms usually less than a year.
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Organizing
Once a manager has created a work plan, the next phase in management cycle is to organize the
people and other resources necessary to carry out the plan. Organizing should also consider the
resources and physical facilities available, in order to maximize returns with minimum expenditure.
Organizing may be referred to as the process of arranging and distributing the planned work,
authority and resources among an organization’s members, so they can achieve the organization’s
goals.
Organizing involves the following steps −
 Creating the organizational structure − The framework of the organization is created
within which effort is coordinated allocating human resources to ensure the accomplishment
of objectives. This structure is usually represented by an organizational chart, which is a
graphic representation of the chain of command within an organization.
 Making organizational design decisions − Decisions are made about the structure of an
organization.
 Making job design decisions − Roles and responsibilities of individual jobs, and the
process of carrying out the duties is defined.
Organizing at the level of a particular job involves how best to design individual jobs so as to most
effectively utilize human resources. Traditionally, job design was based on principles of division of
labor and specialization, which assumed that the more narrow the job content, the more proficient
the individual performing the job could become.
Leading
Organizations as they grow, develop complex structures with an increasing need for co-ordination
and control. To cope and manage such situations, leadership is necessary to influence people to
cooperate towards a common goal and create a situation for collective response.
Leading entails directing, influencing, and motivating employees to perform essential tasks. It also
involves the social and informal sources of influence to inspire others. Effective managers lead
subordinates through motivation to progressively attain organizational objectives.
Personality research and study of job attitudes in Behavioral Science provides important insight on
the need for coordination and control. Thus it becomes important for leadership to create harmony
among individual efforts to collectively work towards organizational goals.
Controlling
Managers at all levels engage in the managerial function of controlling to some degree. Two
traditional control techniques are budget and performance audits. An audit involves a physical
examination and verification of the organization’s records and supporting documents. A budget audit
provides information about where the organization is with respect to procedures followed for
financial planning and control, whereas a performance audit might try to determine whether the
figures reported are a reflection of actual performance.
Controlling involves measuring performance against goals and plans, and helping correct deviations
from standards. As a matter of fact, controlling facilitates the accomplishment of plans by ensuring
that performance does not deviate from standards.
Controlling is not just limited to organization’s financial state, but also spans across areas like
operations, compliance with company policies and other regulatory policies, including many other
activities within the organization.
The management functions thus most effectively cover the broad scope of a manager’s duties and
responsibilities. Though the nature and complexities faced by businesses have undergone a vast
change over the years, the functions of management remain the same.

MIS - Introduction
To the managers, Management Information System is an implementation of the organizational
systems and procedures. To a programmer it is nothing but file structures and file processing.
However, it involves much more complexity.

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The three components of MIS provide a more complete and focused definition,
where System suggests integration and holistic view, Information stands for processed data,
and Management is the ultimate user, the decision makers.
Management information system can thus be analyzed as follows −
Management
Management covers the planning, control, and administration of the operations of a concern. The
top management handles planning; the middle management concentrates on controlling; and the
lower management is concerned with actual administration.
Information
Information, in MIS, means the processed data that helps the management in planning, controlling
and operations. Data means all the facts arising out of the operations of the concern. Data is
processed i.e. recorded, summarized, compared and finally presented to the management in the
form of MIS report.
System
Data is processed into information with the help of a system. A system is made up of inputs,
processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.
Definition
Management Information System or 'MIS' is a planned system of collecting, storing, and
disseminating data in the form of information needed to carry out the functions of management.
Objectives of MIS
The goals of an MIS are to implement the organizational structure and dynamics of the enterprise
for the purpose of managing the organization in a better way and capturing the potential of the
information system for competitive advantage.
Following are the basic objectives of an MIS −
 Capturing Data − Capturing contextual data, or operational information that will contribute
in decision making from various internal and external sources of organization.
 Processing Data − The captured data is processed into information needed for planning,
organizing, coordinating, directing and controlling functionalities at strategic, tactical and
operational level. Processing data means −
o making calculations with the data
o sorting data
o classifying data and
o summarizing data
 Information Storage − Information or processed data need to be stored for future use.
 Information Retrieval − The system should be able to retrieve this information from the
storage as and when required by various users.
 Information Propagation − Information or the finished product of the MIS should be
circulated to its users periodically using the organizational network.
Characteristics of MIS
Following are the characteristics of an MIS −
 It should be based on a long-term planning.
 It should provide a holistic view of the dynamics and the structure of the organization.
 It should work as a complete and comprehensive system covering all interconnecting sub-
systems within the organization.
 It should be planned in a top-down way, as the decision makers or the management should
actively take part and provide clear direction at the development stage of the MIS.
 It should be based on need of strategic, operational and tactical information of managers of
an organization.
 It should also take care of exceptional situations by reporting such situations.

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  It should be able to make forecasts and estimates, and generate advanced information,
thus providing a competitive advantage. Decision makers can take actions on the basis of
such predictions.
 It should create linkage between all sub-systems within the organization, so that the
decision makers can take the right decision based on an integrated view.
 It should allow easy flow of information through various sub-systems, thus avoiding
redundancy and duplicity of data. It should simplify the operations with as much
practicability as possible.
 Although the MIS is an integrated, complete system, it should be made in such a flexible
way that it could be easily split into smaller sub-systems as and when required.
 A central database is the backbone of a well-built MIS.
Characteristics of Computerized MIS
Following are the characteristics of a well-designed computerized MIS −
 It should be able to process data accurately and with high speed, using various techniques
like operations research, simulation, heuristics, etc.
 It should be able to collect, organize, manipulate, and update large amount of raw data of
both related and unrelated nature, coming from various internal and external sources at
different periods of time.
 It should provide real time information on ongoing events without any delay.
 It should support various output formats and follow latest rules and regulations in practice.
 It should provide organized and relevant information for all levels of management: strategic,
operational, and tactical.
 It should aim at extreme flexibility in data storage and retrieval.
Nature and Scope of MIS
The following diagram shows the nature and scope of MIS −

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 MIS - Enterprise Resource Planning
ERP is an integrated, real-time, cross-functional enterprise application, an enterprise-wide
transaction framework that supports all the internal business processes of a company.
It supports all core business processes such as sales order processing, inventory management
and control, production and distribution planning, and finance.

Why of ERP?
ERP is very helpful in the following areas −
 Business integration and automated data update
 Linkage between all core business processes and easy flow of integration
 Flexibility in business operations and more agility to the company
 Better analysis and planning capabilities
 Critical decision-making
 Competitive advantage
 Use of latest technologies
Features of ERP
The following diagram illustrates the features of ERP −

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Scope of ERP
 Finance − Financial accounting, Managerial accounting, treasury management, asset
management, budget control, costing, and enterprise control.
 Logistics − Production planning, material management, plant maintenance, project
management, events management, etc.
 Human resource − Personnel management, training and development, etc.
 Supply Chain − Inventory control, purchase and order control, supplier scheduling,
planning, etc.
 Work flow − Integrate the entire organization with the flexible assignment of tasks and
responsibility to locations, position, jobs, etc.
Advantages of ERP
 Reduction of lead time
 Reduction of cycle time
 Better customer satisfaction
 Increased flexibility, quality, and efficiency
 Improved information accuracy and decision making capability
 Onetime shipment
 Improved resource utilization
 Improve supplier performance
 Reduced quality costs
 Quick decision-making
 Forecasting and optimization
 Better transparency
Disadvantage of ERP
 Expense and time in implementation
 Difficulty in integration with other system
 Risk of implementation failure
 Difficulty in implementation change
 Risk in using one vendor

MIS - Customer Relationship Management

CRM is an enterprise application module that manages a company's interactions with current and
future customers by organizing and coordinating, sales and marketing, and providing better
customer services along with technical support.
Customer Relationship Management is a comprehensive strategy and process of acquiring,
retaining, and partnering with selective customers to create superior value for the company and the
customer. It involves the integration of marketing, sales, customer service, and the supply-chain
functions of the organization to achieve greater efficiencies and effectiveness in delivering customer
value.
Why CRM?
 To keep track of all present and future customers.
 To identify and target the best customers.
 To let the customers know about the existing as well as the new products and services.
 To provide real-time and personalized services based on the needs and habits of the
existing customers.
 To provide superior service and consistent customer experience.
 To implement a feedback system.

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Scope of CRM

Advantages of CRM
 Provides better customer service and increases customer revenues.
 Discovers new customers.
 Cross-sells and up-sells products more effectively.
 Helps sales staff to close deals faster.
 Makes call centers more efficient.
 Simplifies marketing and sales processes.
Disadvantages of CRM
 Some times record loss is a major problem.
 Overhead costs.
 Giving training to employees is an issue in small organizations.

MIS - Decision Support System

Decision support systems (DSS) are interactive software-based systems intended to help
managers in decision-making by accessing large volumes of information generated from various
related information systems involved in organizational business processes, such as office
automation system, transaction processing system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the analytical models.
A decision support system helps in decision-making but does not necessarily give a decision itself.
The decision makers compile useful information from raw data, documents, personal knowledge,
and/or business models to identify and solve problems and make decisions.
Programmed and Non-programmed Decisions
There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work, where −
 These decisions have been taken several times.
 These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations, so −
 It would be a new decision.
 There will not be any rules to follow.
 These decisions are made based on the available information.
 These decisions are based on the manger's discretion, instinct, perception and judgment.
For example, investing in a new technology is a non-programmed decision.
Decision support systems generally involve non-programmed decisions. Therefore, there will be
no exact report, content, or format for these systems. Reports are generated on the fly.
Attributes of a DSS
 Adaptability and flexibility
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  High level of Interactivity
 Ease of use
 Efficiency and effectiveness
 Complete control by decision-makers
 Ease of development
 Extendibility
 Support for modelling and analysis
 Support for data access
 Standalone, integrated, and Web-based
Characteristics of a DSS
 Support for decision-makers in semi-structured and unstructured problems.
 Support for managers at various managerial levels, ranging from top executive to line
managers.
 Support for individuals and groups. Less structured problems often requires the
involvement of several individuals from different departments and organization level.
 Support for interdependent or sequential decisions.
 Support for intelligence, design, choice, and implementation.
 Support for variety of decision processes and styles.
 DSSs are adaptive over time.
Benefits of DSS
 Improves efficiency and speed of decision-making activities.
 Increases the control, competitiveness and capability of futuristic decision-making of the
organization.
 Facilitates interpersonal communication.
 Encourages learning or training.
 Since it is mostly used in non-programmed decisions, it reveals new approaches and sets
up new evidences for an unusual decision.
 Helps automate managerial processes.
Components of a DSS
Following are the components of the Decision Support System −
 Database Management System (DBMS) − To solve a problem the necessary data may
come from internal or external database. In an organization, internal data are generated by
a system such as TPS and MIS. External data come from a variety of sources such as
newspapers, online data services, databases (financial, marketing, human resources).
 Model Management System − It stores and accesses models that managers use to make
decisions. Such models are used for designing manufacturing facility, analysing the
financial health of an organization, forecasting demand of a product or service, etc.
Support Tools − Support tools like online help; pulls down menus, user interfaces,
graphical analysis, error correction mechanism, facilitates the user interactions with the
system.
Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows −
 Text Oriented DSS − It contains textually represented information that could have a
bearing on decision. It allows documents to be electronically created, revised and viewed
as needed.
 Database Oriented DSS − Database plays a major role here; it contains organized and
highly structured data.
 Spreadsheet Oriented DSS − It contains information in spread sheets that allows create,
view, modify procedural knowledge and also instructs the system to execute self-contained
instructions. The most popular tool is Excel and Lotus 1-2-3.
 Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written
for performing certain calculations and particular program type.
 Rules Oriented DSS − It follows certain procedures adopted as rules.

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  Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the
example.
 Compound DSS − It is built by using two or more of the five structures explained above.

Types of DSS
Following are some typical DSSs −
 Status Inquiry System − It helps in taking operational, management level, or middle level
management decisions, for example daily schedules of jobs to machines or machines to
operators.
 Data Analysis System − It needs comparative analysis and makes use of formula or an
algorithm, for example cash flow analysis, inventory analysis etc.
 Information Analysis System − In this system data is analyzed and the information report
is generated. For example, sales analysis, accounts receivable systems, market analysis
etc.
 Accounting System − It keeps track of accounting and finance related information, for
example, final account, accounts receivables, accounts payables, etc. that keep track of the
major aspects of the business.
 Model Based System − Simulation models or optimization models used for decision-
making are used infrequently and creates general guidelines for operation or management.

MIS - Knowledge Management System

All the systems we are discussing here come under knowledge management category. A
knowledge management system is not radically different from all these information systems, but it
just extends the already existing systems by assimilating more information.
As we have seen, data is raw facts, information is processed and/or interpreted data, and
knowledge is personalized information.
What is Knowledge?
 Personalized information
 State of knowing and understanding
 An object to be stored and manipulated
 A process of applying expertise
 A condition of access to information
 Potential to influence action
Sources of Knowledge of an Organization
 Intranet
 Data warehouses and knowledge repositories
 Decision support tools
 Groupware for supporting collaboration
 Networks of knowledge workers
 Internal expertise
Definition of KMS
A knowledge management system comprises a range of practices used in an organization to
identify, create, represent, distribute, and enable adoption to insight and experience. Such insights
and experience comprise knowledge, either embodied in individual or embedded in organizational
processes and practices.
Purpose of KMS
 Improved performance
 Competitive advantage
 Innovation
 Sharing of knowledge
 Integration
 Continuous improvement by −
o Driving strategy

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 o Starting new lines of business
o Solving problems faster
o Developing professional skills
o Recruit and retain talent

Activities in Knowledge Management

 Start with the business problem and the business value to be delivered first.
 Identify what kind of strategy to pursue to deliver this value and address the KM problem.
 Think about the system required from a people and process point of view.
 Finally, think about what kind of technical infrastructure are required to support the people
and processes.
 Implement system and processes with appropriate change management and iterative
staged release.
Level of Knowledge Management

MIS - Content Management System

A Content Management System (CMS) allows publishing, editing, and modifying content as well
as its maintenance by combining rules, processes and/or workflows, from a central interface, in a
collaborative environment.
A CMS may serve as a central repository for content, which could be, textual data, documents,
movies, pictures, phone numbers, and/or scientific data.
Functions of Content Management
 Creating content
 Storing content
 Indexing content
 Searching content
 Retrieving content
 Publishing content
 Archiving content
 Revising content
 Managing content end-to-end
Content Management Workflow
 Designing content template, for example web administrator designs webpage template for
web content management.
 Creating content blocks, for example, a web administrator adds empower CMS tags called
"content blocks" to webpage template using CMS.
 Positioning content blocks on the document, for example, web administrator positions
content blocks in webpage.
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  Authoring content providers to search, retrieve, view and update content.
Advantages of CMS
Content management system helps to secure privacy and currency of the content and enhances
performance by −
 Ensuring integrity and accuracy of content by ensuring only one user modifies the content
at a time.
 Implementing audit trails to monitor changes made in content over time.
 Providing secured user access to content.
 Organization of content into related groups and folders.
 Allowing searching and retrieval of content.
 Recording information and meta-data related to the content, like author and title of content,
version of content, date and time of creating the content etc.
 Workflow based routing of content from one user to another.
 Converting paper-based content to digital format.
 Organizing content into groups and distributing it to target audience.

MIS - Executive Support System

Executive support systems are intended to be used by the senior managers directly to provide
support to non-programmed decisions in strategic management.
These information are often external, unstructured and even uncertain. Exact scope and context of
such information is often not known beforehand.
This information is intelligence based −
 Market intelligence
 Investment intelligence
 Technology intelligence
Examples of Intelligent Information
Following are some examples of intelligent information, which is often the source of an ESS −
 External databases
 Technology reports like patent records etc.
 Technical reports from consultants
 Market reports
 Confidential information about competitors
 Speculative information like market conditions
 Government policies
 Financial reports and information
Features of Executive Information System

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Advantages of ESS
 Easy for upper level executive to use
 Ability to analyse trends
 Augmentation of managers' leadership capabilities
 Enhance personal thinking and decision-making
 Contribution to strategic control flexibility
 Enhance organizational competitiveness in the market place
 Instruments of change
 Increased executive time horizons.
 Better reporting system
 Improved mental model of business executive
 Help improve consensus building and communication
 Improve office automation
 Reduce time for finding information
 Early identification of company performance
 Detail examination of critical success factor
 Better understanding
 Time management
 Increased communication capacity and quality
Disadvantage of ESS
 Functions are limited
 Hard to quantify benefits
 Executive may encounter information overload
 System may become slow
 Difficult to keep current data
 May lead to less reliable and insecure data
 Excessive cost for small company

MIS - Business Intelligence System

The term 'Business Intelligence' has evolved from the decision support systems and gained
strength with the technology and applications like data warehouses, Executive Information
Systems and Online Analytical Processing (OLAP).
Business Intelligence System is basically a system used for finding patterns from existing data
from operations.
Characteristics of BIS
 It is created by procuring data and information for use in decision-making.
 It is a combination of skills, processes, technologies, applications and practices.
 It contains background data along with the reporting tools.
 It is a combination of a set of concepts and methods strengthened by fact-based support
systems.
 It is an extension of Executive Support System or Executive Information System.
 It collects, integrates, stores, analyses, and provides access to business information
 It is an environment in which business users get reliable, secure, consistent,
comprehensible, easily manipulated and timely information.
 It provides business insights that lead to better, faster, more relevant decisions.
Benefits of BIS
 Improved Management Processes.
 Planning, controlling, measuring and/or applying changes that results in increased
revenues and reduced costs.
 Improved business operations.
 Fraud detection, order processing, purchasing that results in increased revenues and
reduced costs.
 Intelligent prediction of future.

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Approaches of BIS
For most companies, it is not possible to implement a proactive business intelligence system at
one go. The following techniques and methodologies could be taken as approaches to BIS −
 Improving reporting and analytical capabilities
 Using scorecards and dashboards
 Enterprise Reporting
 On-line Analytical Processing (OLAP) Analysis
 Advanced and Predictive Analysis
 Alerts and Proactive Notification
 Automated generation of reports with user subscriptions and "alerts" to problems and/or
opportunities.
Capabilities of BIS
 Data Storage and Management −
o Data ware house
o Ad hoc analysis
o Data quality
o Data mining
 Information Delivery
o Dashboard
o Collaboration /search
o Managed reporting
o Visualization
o Scorecard
 Query, Reporting and Analysis
o Ad hoc Analysis
o Production reporting
o OLAP analysis

MIS - Enterprise Application Integration

An organization may use various information systems −
 Supply Chain Management − For managing suppliers, inventory and shipping, etc.
 Human Resource Management − For managing personnel, training and recruiting talents;
 Employee Health Care − For managing medical records and insurance details of
employees;
 Customer Relationship Management − For managing current and potential customers;
 Business Intelligence Applications − For finding the patterns from existing data from
business operations.
All these systems work as individual islands of automation. Most often these systems are
standalone and do not communicate with each other due to incompatibility issues such as −
 Operating systems they are residing on;
 Database system used in the system;
 Legacy systems not supported anymore.
EAI is an integration framework, a middleware, made of a collection of technologies and services
that allows smooth integration of all such systems and applications throughout the enterprise and
enables data sharing and more automation of business processes.
Characteristics of EAI
 EAI is defined as "the unrestricted sharing of data and business processes among any
connected applications and data sources in the enterprise."
 EAI, when used effectively allows integration without any major changes to current
infrastructure.
 Extends middleware capabilities to cope with application integration.

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  Uses application logic layers of different middleware systems as building blocks.
 Keeps track of information related to the operations of the enterprise e.g. Inventory, sales
ledger and execute the core processes that create and manipulate this information.

Need for Enterprise-wise Integration

 Unrestricted sharing of data and business processes across an organization.
 Linkage between customers, suppliers and regulators.
 The linking of data, business processes and applications to automate business processes.
 Ensure consistent qualities of service (security, reliability etc.).
 Reduce the on-going cost of maintenance and reduce the cost of rolling out new systems.
Challenges of EAI
 Hub and spoke architecture concentrates all of the processing into a single server/cluster.
 Often became hard to maintain and evolve efficiently.
 Hard to extend to integrate 3rd parties on other technology platforms.
 The canonical data model introduces an intermediary step.
 Added complexity and additional processing effort.
 EAI products typified.
 Heavy customization required to implement the solution.
 Lock-In − Often built using proprietary technology and required specialist skills.
 Lack of flexibility − Hard to extend or to integrate with other EAI products!
 Requires organization to be EAI ready.
Types of EAI
 Data Level − Process, techniques and technology of moving data between data stores.
 Application Interface Level − Leveraging of interfaces exposed by custom or packaged
applications.
 Method Level − Sharing of the business logic.
 User Interface Level − Packaging applications by using their user interface as a common
point of integration.

MIS - Business Continuity Planning

Business Continuity Planning (BCP) or Business Continuity and Resiliency Planning (BCRP)
creates a guideline for continuing business operations under adverse conditions such as a natural
calamity, an interruption in regular business processes, loss or damage to critical infrastructure, or
a crime done against the business.
It is defined as a plan that "identifies an organization's exposure to internal and external threats
and synthesizes hard and soft assets to provide effective prevention and recovery for the
organization, while maintaining competitive advantage and value system integrity."
Understandably, risk management and disaster management are major components in business
continuity planning.
Objectives of BCP
Following are the objectives of BCP −
 Reducing the possibility of any interruption in regular business processes using proper risk
management.
 Minimizing the impact of interruption, if any.
 Teaching the staff their roles and responsibilities in such a situation to safeguard their own
security and other interests.
 Handling any potential failure in supply chain system, to maintain the natural flow of
business.
 Protecting the business from failure and negative publicity.
 Protecting customers and maintaining customer relationships.
 Protecting the prevalent and prospective market and competitive advantage of the
business.
 Protecting profits, revenue and goodwill.

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  Setting a recovery plan following a disruption to normal operating conditions.
 Fulfilling legislative and regulatory requirements.
Traditionally a business continuity plan would just protect the data centre. With the advent of
technologies, the scope of a BCP includes all distributed operations, personnel, networks, power
and eventually all aspects of the IT environment.
Phases of BCP
The business continuity planning process involves recovery, continuation, and preservation of the
entire business operation, not just its technology component. It should include contingency plans
to protect all resources of the organization, e.g., human resource, financial resource and IT
infrastructure, against any mishap.
It has the following phases −
 Project management & initiation
 Business Impact Analysis (BIA)
 Recovery strategies
 Plan design & development
 Testing, maintenance, awareness, training
Project Management and Initiation
This phase has the following sub-phases −
 Establish need (risk analysis)
 Get management support
 Establish team (functional, technical, BCC - Business Continuity Coordinator)
 Create work plan (scope, goals, methods, timeline)
 Initial report to management
 Obtain management approval to proceed
Business Impact Analysis
This phase is used to obtain formal agreement with senior management for each time-critical
business resource. This phase has the following sub-phases −
 Deciding maximum tolerable downtime, also known as MAO (Maximum Allowable Outage)
 Quantifying loss due to business outage (financial, extra cost of recovery, embarrassment),
without estimating the probability of kinds of incidents, it only quantifies the consequences
 Choosing information gathering methods (surveys, interviews, software tools)
 Selecting interviewees
 Customizing questionnaire
 Analysing information
 Identifying time-critical business functions
 Assigning MTDs
 Ranking critical business functions by MTDs
 Reporting recovery options
 Obtaining management approval
Recovery Phase
This phase involves creating recovery strategies are based on MTDs, predefined and
management-approved. These strategies should address recovery of −
 Business operations
 Facilities & supplies
 Users (workers and end-users)
 Network
 Data center (technical)
 Data (off-site backups of data and applications)
BCP Development Phase
This phase involves creating detailed recovery plan that includes −
 Business & service recovery plans
 Maintenance plan
 Awareness & training plan

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  Testing plan
The Sample Plan is divided into the following phases −
 Initial disaster response
 Resume critical business ops
 Resume non-critical business ops
 Restoration (return to primary site)
 Interacting with external groups (customers, media, emergency responders)

Final Phase
The final phase is a continuously evolving process containing testing maintenance, and training.
The testing process generally follows procedures like structured walk-through, creating checklist,
simulation, parallel and full interruptions.
Maintenance involves −
 Fixing problems found in testing
 Implementing change management
 Auditing and addressing audit findings
 Annual review of plan
Training is an ongoing process and it should be made a part of the corporate standards and the
corporate culture.

MIS - Supply Chain Management

Supply chain management is the systemic, strategic coordination of the traditional business
functions and tactics across these business functions - both within a particular company and
across businesses within the supply chain- all coordinated to improve the long-term performance
of the individual companies and the supply chain as a whole.
In a traditional manufacturing environment, supply chain management meant managing movement
and storage of raw materials, work-in-progress inventory, and finished goods from point of origin to
point of consumption.
It involves managing the network of interconnected smaller business units, networks of channels
that take part in producing a merchandise of a service package required by the end users or
customers.
With businesses crossing the barriers of local markets and reaching out to a global scenario, SCM
is now defined as −
Design, planning, execution, control, and monitoring of supply chain activities with the objective of
creating net value, building a competitive infrastructure, leveraging worldwide logistics,
synchronizing supply with demand and measuring performance globally.
SCM consists of −
 operations management
 logistics
 procurement
 information technology
 integrated business operations
Objectives of SCM
 To decrease inventory cost by more accurately predicting demand and scheduling
production to match it.
 To reduce overall production cost by streamlining production and by improving information
flow.
 To improve customer satisfaction.
Features of SCM

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Scope of SCM

SCM Processes
 Customer Relationship Management
 Customer Service Management
 Demand Management
 Customer Order Fulfilment
 Manufacturing Flow Management
 Procurement Management
 Product Development and Commercialization
 Returns Management
Advantages of SCM
SCM have multi-dimensional advantages −
 To the suppliers −
o Help in giving clear-cut instruction

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 o Online data transfer reduce paper work
 Inventory Economy −
o Low cost of handling inventory
o Low cost of stock outage by deciding optimum size of replenishment orders
o Achieve excellent logistical performance such as just in time
 Distribution Point −
o Satisfied distributor and whole seller ensure that the right products reach the right
place at right time
o Clear business processes subject to fewer errors
o Easy accounting of stock and cost of stock
 Channel Management −
o Reduce total number of transactions required to provide product assortment
o Organization is logically capable of performing customization requirements
 Financial management −
o Low cost
o Realistic analysis
 Operational performance −
o It involves delivery speed and consistency.
 External customer −
o Conformance of product and services to their requirements
o Competitive prices
o Quality and reliability
o Delivery
o After sales services
 To employees and internal customers −
o Teamwork and cooperation
o Efficient structure and system
o Quality work
o Delivery

MIS - Strategic Business Objectives

Strategic planning for an organization involves long-term policy decisions, like location of a new
plant, a new product, diversification etc.
Strategic planning is mostly influenced by −
 Decision of diversification i.e., expansion or integration of business
 Market dynamics, demand and supply
 Technological changes
 Competitive forces
 Various other threats, challenges and opportunities
Strategic planning sets targets for the workings and references for taking such long-term policy
decisions and transforms the business objectives into functional and operational units. Strategic
planning generally follows one of the four-way paths −
 Overall Company Strategy
 Growth orientation
 Product orientation
 Market orientation
In this chapter, let us discuss the Strategic Business Objectives of MIS with regards to the
following aspects of a business −
 Operational Excellence
 New Products, Services and Business Models
 Services and Business Models
 Customer and Supplier Intimacy
 Improved Decision-making

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  Competitive Advantage, and Survival
Operational Excellence
This relates to achieving excellence in business in operations to achieve higher profitability. For
example, a consumer goods manufacturer may decide upon using a wide distribution network to
get maximum reach to the customers and exposure.
A manufacturing company may pursue a strategy of aggressive marketing and mass production.
New Products, Services, and Business Models
This is part of growth strategy of an organization. A new product or a new service introduced, with
a very fast growth potential provides a mean for steady growth business turnover.
With the help of information technology, a company might even opt for an entirely new business
model, which will allow it to establish, consolidate and maintain a leadership in the existing market
as well as provide a competitive edge in the industry.
For example, a company selling low priced detergent may opt for producing higher range
detergents for washing machines, washing soaps, and bath soaps.
It involves market strategies also that includes planning for distribution, advertisement, market
research and other related aspects.

Customer and Supplier Intimacy

When a Business really knows their Customers and serves them well, 'the way they want to be
served', the Customers generally respond by returning and buying more from the firm. It raises
revenues and profits.
Likewise with Suppliers, the more a Business engages its Suppliers, the better the Suppliers can
provide vital information. This will lower the cost and bring huge improvements in the supply-chain
management.
Improved Decision Making
A very important pre-requisite of strategic planning is to provide the right information at the right
time to the right person, for making an informed decision.
Well planned Information Systems and technologies make it possible for the decision makers to
use real-time data from the marketplace when making informed decisions.
Competitive Advantage and Survival
The following list illustrates some of the strategic planning that provides competitive advantage
and survival −
 Planning for an overall growth for the company.
 Thorough market research to understand the market dynamics involving demand-supply.
 Various policies that will dominate the course and movement of business.
 Expansion and diversification to conquer new markets.
 Choosing a perfect product strategy that involves either expanding a family of products or
an associated product.
 Strategies for choosing the market, distribution, pricing, advertising, packing, and other
market-oriented strategies.
 Strategies driven by industry-level changes or Government regulations.
 Strategies for change management.

MIS - System Development Life Cycle

Like any other product development, system development requires careful analysis and design
before implementation. System development generally has the following phases −
Planning and Requirement Analysis
The project planning part involves the following steps −
 Reviewing various project requests
 Prioritizing the project requests
 Allocating the resources
 Identifying the project development team

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The techniques used in information system planning are −
 Critical Success Factor
 Business System Planning
 End/Mean Analysis
The requirement analysis part involves understanding the goals, processes and the constraints of
the system for which the information system is being designed.
It is basically an iterative process involving systematic investigation of the processes and
requirements. The analyst creates a blueprint of the entire system in minute details, using various
diagramming techniques like −
 Data flow diagrams
 Context diagrams
Requirement analysis has the following sub-processes −
 Conducting preliminary investigation
 Performing detailed analysis activities
 Studying current system
 Determining user requirements
 Recommending a solution
Defining Requirements
The requirement analysis stage generally completes by creation of a 'Feasibility Report'. This
report contains −
 A preamble
 A goal statement
 A brief description of the present system
 Proposed alternatives in details
The feasibility report and the proposed alternatives help in preparing the costs and benefits study.
Based on the costs and benefits, and considering all problems that may be encountered due to
human, organizational or technological bottlenecks, the best alternative is chosen by the end-
users of the system.
Designing System Architecture
System design specifies how the system will accomplish this objective. System design consists of
both logical design and physical design activity, which produces 'system specification' satisfying
system requirements developed in the system analysis stage.
In this stage, the following documents are prepared −
 Detailed specification
 Hardware/software plan
Building or Developing the System
The most creative and challenging phase of the system life cycle is system design, which refers to
the technical specifications that will be applied in implementing the candidate system. It also
includes the construction of programmers and program testing.
It has the following stages −
 Acquiring hardware and software, if necessary
 Database design
 Developing system processes
 Coding and testing each module
The final report prior to implementation phase includes procedural flowcharts, record layout, report
layout and plan for implementing the candidate system. Information on personnel, money,
hardware, facility and their estimated cost must also be available. At this point projected cost must
be close to actual cost of implementation.
Testing the System
System testing requires a test plan that consists of several key activities and steps for programs,
strings, system, and user acceptance testing. The system performance criteria deals with
turnaround time, backup,file protection and the human factors.
Testing process focuses on both −

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  The internal logic of the system/software, ensuring that all statements have been tested;
 The external functions, by conducting tests to find errors and ensuring that the defined input
will actually produce the required results.
In some cases, a 'parallel run' of the new system is performed, where both the current and the
proposed system are run in parallel for a specified time period and the current system is used to
validate the proposed system.
Deployment of the System
At this stage, system is put into production to be used by the end users. Sometime, we put system
into a Beta stage where users' feedback is received and based on the feedback, the system is
corrected or improved before a final release or official release of the system.
System Evaluation and Maintenance
Maintenance is necessary to eliminate the errors in the working system during its working life and
to tune the system to any variation in its working environment. Often small system deficiencies are
found, as system is brought into operation and changes are made to remove them. System
planner must always plan for resources availability to carry on these maintenance functions.

MIS - Development Process

In MIS, the information is recognized as a major resource like capital and time. If this resource has
to be managed well, it calls upon the management to plan for it and control it, so that the
information becomes a vital resource for the system.
 The management information system needs good planning.
 This system should deal with the management information not with data processing alone.
 It should provide support for the management planning, decision-making and action.
 It should provide support to the changing needs of business management.
Major challenges in MIS implementation are −
 Quantity, content and context of information − how much information and exactly what
should it describe.
 Nature of analysis and presentation − comprehensibility of information.
 Availability of information − frequency, contemporariness, on-demand or routine, periodic or
occasional, one-time info or repetitive in nature and so on
 Accuracy of information.
 Reliability of information.
 Security and Authentication of the system.
Planning for MIS
MIS design and development process has to address the following issues successfully −
 There should be effective communication between the developers and users of the system.
 There should be synchronization in understanding of management, processes and IT
among the users as well as the developers.
 Understanding of the information needs of managers from different functional areas and
combining these needs into a single integrated system.
 Creating a unified MIS covering the entire organization will lead to a more economical,
faster and more integrated system, however it will increase in design complexity manifold.
 The MIS has to be interacting with the complex environment comprising all other sub-
systems in the overall information system of the organization. So, it is extremely necessary
to understand and define the requirements of MIS in the context of the organization.
 It should keep pace with changes in environment, changing demands of the customers and
growing competition.
 It should utilize fast developing in IT capabilities in the best possible ways.
 Cost and time of installing such advanced IT-based systems is high, so there should not be
a need for frequent and major modifications.
 It should take care of not only the users i.e., the managers but also other stakeholders like
employees, customers and suppliers.

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Once the organizational planning stage is over, the designer of the system should take the
following strategic decisions for the achievement of MIS goals and objectives −
 Development Strategy − Example - an online, real-time batch.
 System Development Strategy − Designer selects an approach to system development like
operational verses functional, accounting verses analysis.
 Resources for the Development − Designer has to select resources. Resources can be in-
house verses external, customized or use of package.
 Manpower Composition − The staffs should have analysts, and programmers.
Information system planning essentially involves −
 Identification of the stage of information system in the organization.
 Identification of the application of organizational IS.
 Evolution of each of this application based on the established evolution criteria.
 Establishing a priority ranking for these applications.
 Determining the optimum architecture of IS for serving the top priority applications.

Information System Requirements

The following diagram illustrates a brief sketch of the process of information requirement analysis
−

The following three methodologies can be adopted to determine the requirements in developing a
management information system for any organization −
 Business Systems Planning (BSP) − this methodology is developed by IBM.
o It identifies the IS priorities of the organization and focuses on the way data is
maintained in the system.
o It uses data architecture supporting multiple applications.
o It defines data classes using different matrices to establish relationships among the
organization, its processes and data requirements.
 Critical Success Factor (CSF) − this methodology is developed by John Rockart of MIT.
o It identifies the key business goals and strategies of each manager as well as that of
the business.
o Next, it looks for the critical success factors underlying these goals.
o Measure of CSF effectiveness becomes an input for defining the information system
requirements.
 End/Means (E/M) analysis − this methodology is developed by Wetherbe and Davis at the
University of Minnesota.
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 o It determines the effectiveness criteria for outputs and efficiency criteria for the
processes generating the outputs.
o At first it identifies the outputs or services provided by the business processes.
o Then it describes the factors that make these outputs effective for the user.
o Finally it selects the information needed to evaluate the effectiveness of outputs
Information System Analysis and Design
System analysis and design follows the typical System/Software Design Life Cycle (SDLC) as
discussed in the previous chapter. It generally passes through the following phases −
 Problem Definition
 Feasibility Study
 Systems Analysis
 System Design
 Detailed System Design
 Implementation
 Maintenance
In the analysis phase, the following techniques are commonly used −
 Data flow diagrams (DFD)
 Logic Modeling
 Data Modeling
 Rapid Application Development (RAD)
 Object Oriented Analysis (OOA)
Technology for Information Systems
The technology requirement for an information system can be categorized as −
 Devices
 Data centre systems − It is the environment that provides processing, storage, networking,
management and the distribution of data within an enterprise.
 Enterprise software − These are software system like ERP, SCM, Human Resource
Management, etc. that fulfil the needs and objectives of the organizations.
 IT services − It refers to the implementation and management of quality IT services by IT
service providers through people, process and information technology. It often includes
various process improvement frameworks and methodologies like six sigma, TQM, and so
on.
 Telecom services
System Test Planning and Execution
The system should be fully tested for errors before being fully operational.
The test plan should include for each test −
 Purpose
 Definition
 test inputs
 detailed specification of test procedure
 details of expected outputs
Each sub-system and all their components should be tested using various test procedures and
data to ensure that each component is working as it is intended.
The testing must include the users of the system to identify errors as well as get the feedback.
System Operation
Before the system is in operation, the following issues should be taken care of −
 Data security, backup and recovery;
 Systems control;
 Testing of the system to ensure that it works bug-free in all expected business situations;
 The hardware and software used should be able to deliver the expected processing;
 The system capacity and expected response time should be maintained;
 The system should be well documented including;
o A user guide for inexperienced users,

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 o A user reference or operations manual for advanced users,
o A system reference manual describing system structures and architecture.
Once the system is fully operational, it should be maintained throughout its working life to resolve
any glitches or difficulties faced in operation and minor modifications might be made to overcome
such situations.
Factors for Success and Failure
MIS development projects are high-risk, high-return projects. Following could be stated as critical
factors for success and failure in MIS development −
 It should cater to a specific, well-perceived business.
 The top management should be completely convinced, able and willing to such a system.
Ideally there should be a patron or a sponsor for the system in the top management.
 All users including managers and other employees should be made an integral part of the
development, implementation, and use of the system.
 There should be an operational prototype of the system released as soon as possible, to
create interest among the users.
 There should be good support staff with necessary technical, business, and interpersonal
skills.
 The system should be simple, easy to understand without adding much complexity. It is a
best practice, not to add up an entity unless there is both a use and user for it.
 It should be easy to use and navigate with high response time.
 The implementation process should follow a definite goal and time.
 All the users including the top management should be given proper training, so that they
have a good knowledge of the content and function of the system, and can use it fully for
various managerial activities such as reporting, budgeting, controlling, planning, monitoring,
etc.
 It must produce useful outputs to be used by all managers.
 The system should be well integrated into the management processes of planning,
decision-making, and monitoring.

MIS - Managerial Decision-Making

Concept of Decision-Making
Decision-making is a cognitive process that results in the selection of a course of action among
several alternative scenarios.
Decision-making is a daily activity for any human being. There is no exception about that. When it
comes to business organizations, decision-making is a habit and a process as well.
Effective and successful decisions result in profits, while unsuccessful ones cause losses.
Therefore, corporate decision-making is the most critical process in any organization.
In a decision-making process, we choose one course of action from a few possible alternatives. In
the process of decision-making, we may use many tools, techniques, and perceptions.
In addition, we may make our own private decisions or may prefer a collective decision.
Usually, decision-making is hard. Majority of corporate decisions involve some level of
dissatisfaction or conflict with another party.
Let's have a look at the decision-making process in detail.
Decision-Making Process
Following are the important steps of the decision-making process. Each step may be supported by
different tools and techniques.

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Step 1 − Identification of the Purpose of the Decision
In this step, the problem is thoroughly analysed. There are a couple of questions one should ask
when it comes to identifying the purpose of the decision.
 What exactly is the problem?
 Why the problem should be solved?
 Who are the affected parties of the problem?
 Does the problem have a deadline or a specific time-line?
Step 2 − Information Gathering
A problem of an organization will have many stakeholders. In addition, there can be dozens of
factors involved and affected by the problem.
In the process of solving the problem, you will have to gather as much as information related to the
factors and stakeholders involved in the problem. For the process of information gathering, tools
such as 'Check Sheets' can be effectively used.
Step 3 − Principles for Judging the Alternatives
In this step, the baseline criteria for judging the alternatives should be set up. When it comes to
defining the criteria, organizational goals as well as the corporate culture should be taken into
consideration.
As an example, profit is one of the main concerns in every decision making process. Companies
usually do not make decisions that reduce profits, unless it is an exceptional case. Likewise,
baseline principles should be identified related to the problem in hand.
Step 4 − Brainstorm and Analyze the Choices
For this step, brainstorming to list down all the ideas is the best option. Before the idea generation
step, it is vital to understand the causes of the problem and prioritization of causes.
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For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-
Effect diagram helps you to identify all possible causes of the problem and Pareto chart helps you
to prioritize and identify the causes with the highest effect.
Then, you can move on generating all possible solutions (alternatives) for the problem in hand.
Step 5 − Evaluation of Alternatives
Use your judgment principles and decision-making criteria to evaluate each alternative. In this
step, experience and effectiveness of the judgment principles come into play. You need to
compare each alternative for their positives and negatives.
Step 6 − Select the Best Alternative
Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best
alternative is an informed decision since you have already followed a methodology to derive and
select the best alternative.
Step 7 − Execute the decision
Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with
the help of subordinates.
Step 8 − Evaluate the Results
Evaluate the outcome of your decision. See whether there is anything you should learn and then
correct in future decision making. This is one of the best practices that will improve your decision-
making skills.
Process and Modeling in Decision-Making
There are two basic models in decision-making −
 Rational models
 Normative model
The rational models are based on cognitive judgments and help in selecting the most logical and
sensible alternative. Examples of such models include - decision matrix analysis, Pugh matrix,
SWOT analysis, Pareto analysis and decision trees, selection matrix, etc.
A rational decision making model takes the following steps −
 Identifying the problem,
 Identifying the important criteria for the process and the result,
 Considering all possible solutions,
 Calculating the consequences of all solutions and comparing the probability of satisfying the
criteria,
 Selecting the best option.
The normative model of decision-making considers constraints that may arise in making decisions,
such as time, complexity, uncertainty, and inadequacy of resources.
According to this model, decision-making is characterized by −
 Limited information processing - A person can manage only a limited amount of information.
 Judgmental heuristics - A person may use shortcuts to simplify the decision making
process.
 Satisfying - A person may choose a solution that is just "good enough".
Dynamic Decision-Making
Dynamic decision-making (DDM) is synergetic decision-making involving interdependent systems,
in an environment that changes over time either due to the previous actions of the decision-maker
or due to events that are outside of the control of the decision-maker.
These decision-makings are more complex and real-time.
Dynamic decision-making involves observing how people used their experience to control the
system's dynamics and noting down the best decisions taken thereon.
Sensitivity Analysis
Sensitivity analysis is a technique used for distributing the uncertainty in the output of a
mathematical model or a system to different sources of uncertainty in its inputs.
From business decision perspective, the sensitivity analysis helps an analyst to identify cost
drivers as well as other quantities to make an informed decision. If a particular quantity has no

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bearing on a decision or prediction, then the conditions relating to quantity could be eliminated,
thus simplifying the decision making process.
Sensitivity analysis also helps in some other situations, like −
 Resource optimization
 Future data collections
 Identifying critical assumptions
 To optimize the tolerance of manufactured parts
Static and Dynamic Models
Static models:
 Show the value of various attributes in a balanced system.
 Work best in static systems.
 Do not take into consideration the time-based variances.
 Do not work well in real-time systems however, it may work in a dynamic system being in
equilibrium
 Involve less data.
 Are easy to analyze.
 Produce faster results.
Dynamic models −
 Consider the change in data values over time.
 Consider effect of system behavior over time.
 Re-calculate equations as time changes.
 Can be applied only in dynamic systems.
Simulation Techniques
Simulation is a technique that imitates the operation of a real-world process or system over time.
Simulation techniques can be used to assist management decision making, where analytical
methods are either not available or cannot be applied.
Some of the typical business problem areas where simulation techniques are used are −
 Inventory control
 Queuing problem
 Production planning
Operations Research Techniques
Operational Research (OR) includes a wide range of problem-solving techniques involving various
advanced analytical models and methods applied. It helps in efficient and improved decision-
making.
It encompasses techniques such as simulation, mathematical optimization, queuing theory,
stochastic-process models, econometric methods, data envelopment analysis, neural networks,
expert systems, decision analysis, and the analytic hierarchy process.
OR techniques describe a system by constructing its mathematical models.
Heuristic Programming
Heuristic programming refers to a branch of artificial intelligence. It consists of programs that are
self-learning in nature.
However, these programs are not optimal in nature, as they are experience-based techniques for
problem solving.
Most basic heuristic programs would be based on pure 'trial-error' methods.
Heuristics take a 'guess' approach to problem solving, yielding a 'good enough' answer, rather
than finding a 'best possible' solution.
Group Decision-Making
In group decision-making, various individuals in a group take part in collaborative decision-making.
Group Decision Support System (GDSS) is a decision support system that provides support in
decision making by a group of people. It facilitates the free flow and exchange of ideas and
information among the group members. Decisions are made with a higher degree of consensus
and agreement resulting in a dramatically higher likelihood of implementation.
Following are the available types of computer based GDSSs −

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  Decision Network − This type helps the participants to communicate with each other
through a network or through a central database. Application software may use commonly
shared models to provide support.
 Decision Room − Participants are located at one place, i.e. the decision room. The
purpose of this is to enhance participant's interactions and decision-making within a fixed
period of time using a facilitator.
 Teleconferencing − Groups are composed of members or sub groups that are
geographically dispersed; teleconferencing provides interactive connection between two or
more decision rooms. This interaction will involve transmission of computerized and audio
visual information.

MIS - Security & Ethical Issues

Security of an Information System
Information system security refers to the way the system is defended against unauthorized
access, use, disclosure, disruption, modification, perusal, inspection, recording or destruction.
There are two major aspects of information system security −
 Security of the information technology used − securing the system from malicious cyber-
attacks that tend to break into the system and to access critical private information or gain
control of the internal systems.
 Security of data − ensuring the integrity of data when critical issues, arise such as natural
disasters, computer/server malfunction, physical theft etc. Generally an off-site backup of
data is kept for such problems.
Guaranteeing effective information security has the following key aspects −
 Preventing the unauthorized individuals or systems from accessing the information.
 Maintaining and assuring the accuracy and consistency of data over its entire life-cycle.
 Ensuring that the computing systems, the security controls used to protect it and the
communication channels used to access it, functioning correctly all the time, thus making
information available in all situations.
 Ensuring that the data, transactions, communications or documents are genuine.
 Ensuring the integrity of a transaction by validating that both parties involved are genuine,
by incorporating authentication features such as "digital signatures".
 Ensuring that once a transaction takes place, none of the parties can deny it, either having
received a transaction, or having sent a transaction. This is called 'non-repudiation'.
 Safeguarding data and communications stored and shared in network systems.
Information Systems and Ethics
Information systems bring about immense social changes, threatening the existing distributions of
power, money, rights, and obligations. It also raises new kinds of crimes, like cyber-crimes.
Following organizations promote ethical issues −
 The Association of Information Technology Professionals (AITP)
 The Association of Computing Machinery (ACM)
 The Institute of Electrical and Electronics Engineers (IEEE)
 Computer Professionals for Social Responsibility (CPSR)
The ACM Code of Ethics and Professional Conduct
 Strive to achieve the highest quality, effectiveness, and dignity in both the process and
products of professional work.
 Acquire and maintain professional competence.
 Know and respect existing laws pertaining to professional work.
 Accept and provide appropriate professional review.
 Give comprehensive and thorough evaluations of computer systems and their impacts,
including analysis and possible risks.
 Honor contracts, agreements, and assigned responsibilities.
 Improve public understanding of computing and its consequences.
 Access computing and communication resources only when authorized to do so.

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The IEEE Code of Ethics and Professional Conduct
IEEE code of ethics demands that every professional vouch to commit themselves to the highest
ethical and professional conduct and agree −
 To accept responsibility in making decisions consistent with the safety, health and welfare
of the public, and to disclose promptly factors that might endanger the public or the
environment;
 To avoid real or perceived conflicts of interest whenever possible, and to disclose them to
affected parties when they do exist;
 To be honest and realistic in stating claims or estimates based on available data;
 To reject bribery in all its forms;
 To improve the understanding of technology, its appropriate application, and potential
consequences;
 To maintain and improve our technical competence and to undertake technological tasks
for others only if qualified by training or experience, or after full disclosure of pertinent
limitations;
 To seek, accept, and offer honest criticism of technical work, to acknowledge and correct
errors, and to credit properly the contributions of others;
 To treat fairly all persons regardless of such factors as race, religion, gender, disability, age,
or national origin;
 To avoid injuring others, their property, reputation, or employment by false or malicious
action;
 To assist colleagues and co-workers in their professional development and to support them
in following this code of ethics.

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