Genba Sopanrao Moze College Of Engineering, Balewadi - Pune Department of

MCA, F.Y SEM – I, Information Systems and Engineering Economics

Information System and Engineering Economics

[310905] LECTURE NOTES

MCA I YEAR – SEM (I)(2022-2023)

DEPARTMENT OF MCA

GENBA SOPANRAO MOZE COLLEGE OF ENGINEERING

S. No. 25/1/3, Balewadi-Baner, Pune- 411 045
(Approved by AICTE and Govt. of Maharashtra, Affiliated to Savitribai Phule Pune
University)

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
Unit – III
Management Information System (MIS)
Management Information System (MIS) Definitions, Role of MIS, Structure of MIS based on
management activity and functions. Ethical and Social Issues, Information Systems Security and
Control, Applications of MIS , Customer relationship Management (CRM), Supply chain management
(SCM), Case Studies on Social Media Application and Services, Information Technology
Infrastructure in a Bank, Information Technology Infrastructure in a manufacturing / process industry.

COURSE OBJECTIVES:

To prepare the students to Management Information Systems Applications.

COURSE OUTCOMES:

CO1: Understand the Management Information Systems Applications using in an

Organization.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics Unit 3

Management Information System (MIS)

What is MIS?

MIS is the use of information technology, people, and business processes to record, store and process
data to produce information that decision makers can use to make day to day decisions. The full form
of MIS is Management Information Systems. The purpose of MIS is to extract data from varied
sources and derive insights that drive business growth.

The need for MIS

The following are some of the justifications for having an MIS system.

 Decision makers need information to make effective decisions. Management Information

Systems (MIS) make this possible.
 MIS systems facilitate communication within and outside the organization – employees
within the organization are able to easily access the required information for the day to day
operations. Facilitates such as Short Message Service (SMS) & Email make it possible to
communicate with customers and suppliers from within the MIS system that an organization is
using.
 Record keeping – management information systems record all business transactions of an
organization and provide a reference point for the transactions.

Components of MIS

The major components of a typical MIS long-form (Management Information System) are:

 People – people who use the information system

 Data – the data that the information system records
 Business Procedures – procedures put in place on how to record, store and analyze data
 Hardware – these include servers, workstations, networking equipment, printers, etc.
 Software – these are programs used to handle the data. These include programs such as
spreadsheet programs, database software, etc.

Types of Information Systems

The type of information system that a user uses depends on their level in an organization. The
following diagram shows the three major levels of users in an organization and the type of information
system that they use.

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Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics

Transaction Processing Systems (TPS)

This type of information system is used to record the day to day transactions of a business. An example
of a Transaction Processing System is a Point of Sale (POS) system. A POS system is used to record
the daily sales.

Management Information Systems (MIS)

Management Information Systems abbreviated as MIS, are used to guide tactic managers to make
semi-structured decisions. The output from the transaction processing system is used as input to the
MIS system.

Decision Support Systems (DSS)

Decision support systems are used by top level managers to make semi-structured decisions. The
output from the Management Information System is used as input to the decision support system.DSS
systems also get data input from external sources such as current market forces, competition, etc.

Manual Information Systems VS Computerized Information Systems (MIS)

Data is the bloodstream of any business entity. Everyone in an organization needs information to make
decisions. An information system is an organized way of recording, storing data, and retrieving
information.

In this section, we will look at manual information systems vs. computerized information systems.

Manual Information System

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
A manual information system does not use any computerized devices. The recording, storing and
retrieving of data is done manually by the people, who are responsible for the information system.

The following are the major components of a manual information system

 People –people are the recipients of information system

 Business Procedures –these are measures put in place that define the rules for processing data,
storing it, analyzing it and producing information
 Data –these are the recorded day to day transactions
 Filing system – this is an organized way of storing information
 Reports –the reports are generated after manually analyzing the data from the filing system and
compiling it.

The following diagram illustrates how a typical manual information system works

Advantages and Dis-advantages of a manual information system

Advantages:

The following are the advantages of manual information systems

 Cost effective – it is cheaper compared to a computerized system because there is no need to

purchase expensive equipment such as servers, workstations, printers, etc.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
 –evolving business requirements can easily be implemented into the business
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procedures and implemented immediately

Disadvantages:

The following are some of the disadvantages of a manual information system.

 Time consuming –all data entries need to be verified before filing, this is a time consuming task
when done by humans. Retrieving data from the filing system also takes a considerable amount
of time
 Prone to error – the accuracy of the data when verified and validated by human beings is more
prone to errors compared to verification and validation done by computerized systems.
 Lack of security – the security of manual systems is implemented by restricting access to the
file room. Experience shows unauthorized people can easily gain access to the filing room
 Duplication of data –most departments in an organization need to have access to the same data.
In a manual system, it is common to duplicate this data to make it easy to accessible to all
authorized users. The challenge comes in when the same data needs to be updated
 Data inconsistency – due to the duplication of data, it is very common to update data in one file
and not update the other files. This leads to data inconsistency
 Lack of backups – if the file get lost or mishandled, the chances of recovering the data are
almost zero.

Computerized information system

Computerized systems were developed to address the challenges of manual information systems. The
major difference between a manual and computerized information system is a computerized system
uses a combination of software and hardware to record, store, analyze and retrieve information.

Advantages and Disadvantages of a computerized information system (MIS)

The following are some of the disadvantages of a computerized information system.

Advantages:

The following are the advantages of computerized information systems

 Fast data processing and information retrieval – this is one of the biggest advantages of a
computerized information system. It processes data and retrieves information at a faster rate.
This leads to improved client/customer service
 Improved data accuracy – easy to implement data validation and verification checks in a
computerized system compared to a manual system.
 Improved security – in addition to restricting access to the database server, the computerized
information system can implement other security controls such as user’s authentication,
biometric authentication systems, access rights control, etc.
 Reduced data duplication – database systems are designed in such a way that minimized
duplication of data. This means updating data in one department automatically makes it
available to the other departments
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Department of MCA, F.Y SEM – I, Information Systems and Engineering
 Improved backup systems – with modern day technology, backups can be stored in the cloud
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which makes it easy to recover the data if something happened to the hardware and software
used to store the data
 Easy access to information – most business executives need to travel and still be able to make a
decision based on the information. The web and Mobile technologies make accessing data from
anywhere possible.

Disadvantages:

 It is expensive to set up and configure – the organization has to buy hardware and the required
software to run the information system. In addition to that, business procedures will need to be
revised, and the staff will need to be trained on how to use the computerized information system.
 Heavy reliance on technology – if something happens to the hardware or software that makes it
stop functioning, then the information cannot be accessed until the required hardware or
software has been replaced.
 Risk of fraud – if proper controls and checks are not in place, an intruder can post unauthorized
transactions such as an invoice for goods that were never delivered, etc.

Role of MIS:-

A management information system (MIS) plays an important role in business organizations.

Decision making

Management Information System (MIS) plays a significant role in the decision-making process of any
organization. In any organization, a decision is made on the basis of relevant information which can be
retrieved from the MIS.
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Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
Coordination among the department

Management Information System satisfy multiple need of an organization across the different
functional department.

Finding out Problems

As we know that MIS provides relevant information about every aspect of activities. Hence, if any
mistake is made by the management then MIS, information will help in finding out the solution to that
problem.

Comparison of Business Performance

MIS store all past data and information in its Database. That why the management information system
is very useful to compare business organization performance.

Strategies for an Organization

Today each business is running in a competitive market. An MIS supports the organization to evolve
appropriate strategies for the business to assent in a competitive environment.

Structure of MIS based on management activity and functions

MIS provides useful information to the different levels of management for discharging their function

more effectively and efficiently. In order to understand design of suitable management information

system.

This means that the structure of management information can be expressed in terms of different levels

of management activity. There are three important levels of management namely

strategic management, management control or tactical management and operational management.

These levels of management activity are discussed below.

Strategic Management

The first area of management is strategic planning level or top level management. Top level

management consists of board of directors and other chief executives. They are ranking officers of the

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Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
organization. Top level management develops over all organizational goals, strategies, policies and

objectives through long range strategic planning. They integrate the functions of entire organization.

Strategic managers make decisions that affect the entire organization. Their decisions may also leave a

long term impact in the organization. Here the decision maker develops objectives and allocates

resources to attain these objectives. Decisions of this type are made over a long period of time and

usually involve huge investments. Developing and introducing a new product in the market, the

opening of branches abroad, mergers or acquisition etc. is some of the examples for strategic decisions.

Management Control or Tactical Management

Management control level or middle level management decisions involve financial or [personal

consideration. They make wide ranging decisions for their subordinates on the basis of general guide

lines received from the top level management. They develop medium range plans and defining

objectives of their departments. These managers are responsible for finding the best operational

measures to accomplish the strategic decisions set by the top level management.

They make plans and compare the actual performance with standards. Then they determine variances if

any and take remedial measures to avoid them in future. For example if the top level managers to make

decisions regarding the acquisition of hardware, software and imparting training to staff under him.

Operational Management

Operational management or lower level management deals with routine activities. They make short

term plans to carry out day to day activities more effectively and efficiently. They are in charge of

small group or subordinates. These managers’ implements policies handed over to them by their

superiors. With in these policies, they make decisions that affect their small units for a short period
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Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
.preparation of pay roll and inventory management are examples of operational control level decisions.

Management level and Information requirement

The information requirement of management depends on the different levels of management. The

model of ‘managerial pyramid’ was popularized by Robert N. Anthony. He contributed new levels of

management on the basis of planning level, management control level and operational control level are

these three revised levels of management.

It true that the top level managers spend more time on strategic decisions than supervisors in the

bottom level of management. While top managers spend very little time, operational supervisors spend

more time to take operational decisions.

The type of information required by managers is directly related to the level of management and
structure of decision situation. The operational management level requires regular detailed reports to
manage the day to day affaires of business.
Three levels of management activity can be differentiated on the basis of the planning aspects for each

level. Different management activities functions will have different information characteristics. The

following table provides different information characteristics by different level of management. It is

based on the work of G. Anthony Gory and Michael Scott Morton in the early 1970’s.

*Information System for operational management

The responsibility of operational level management is to supervise operational activities. Operational

control makes use of pre-established procedures and decision rules. A large percentage of decisions are

programmable. The procedures to follow are quite stable. They supervise the day to day activities.

The informational source of operational control is mainly come from internal data generated from

transactions.

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Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics

* Informational system for tactical management

Management control information is required by managers of departments, profit centers etc to measure

performance, decide control actions,

Formulate new decision rules to be applied by operational personnel. They require only information in

summary form

Management control makes use of both internal &external data.

*Information system for strategic management

The purpose of strategic planning is to formulate strategies to achieve organization goals. They make

long term plans. Strategic planning decisions occur only once in a while. Strategic planning requires

summarized data from a variety of source. They depend upon external data such as competitor’s

policy, market condition, government policies etc. or decision making.

Management information system cannot be applied effectively at the strategic planning level. The

success of the strategic decisions depends on the skills, experience and the judgment ability of human

decision makers in the interpreting data and information. Hence decisions at the strategic level are

unstructured and non programmed.

Therefore it is concluded that many of the changes in the information needs can be attributed to the

degree of decision structure at each level will be more structured , those at the management control

level are semi-structured and those at the strategic level are more unstructured. Therefore the

information system should be designed to meet the information requirements of managers at all levels.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
Ethical and Social Issues:-

Due to the important place social and ethical issues play in the society, it is very natural for people to
want to know the difference between social and ethical issues. Social issues can be defined as
problems or matters which have an influence over a large population. It may affect negatively to a
considerable number of individuals in a particular society as a whole. Ethical issues, on the other hand,
are problems that have been caused by individuals themselves and these have a negative influence over
the individual him/herself as well as over the society. However, social and ethical issues should be
eliminated for a smooth functioning of the social structure.
What are Social Issues?

Social issues, as mentioned above, are problems that affect a larger number of people and the major
thing is that the individuals in the society may not have the control over these problems. Also, social
issues differ from one society to another, depending on several reasons. A social issue may be caused
due to geographical, educational, economical or a political reasons. If we look at some common
examples of social issues, we can see that some of them are applicable universally as well. Social
stratification, poverty, social disorganization, inequality, racism, gender issues are some of most
commonly identified social issues. The nature of these issues may vary from one society to another,
but the cause or the base of the problem may be the same in many cases. It is difficult for individuals to
find solutions for social problems alone. It should be done in a collective manner with the aid of the
government as well. However, an individual problem also has the possibility of turning into a social
issue, if it aggregates the effect over a number of people.

What are Ethical Issues?

Ethics is the moral conduct or the moral philosophy of individuals, through which they identify what is
good and bad or right and wrong. Ethics defines the way how to live in a morally accepted manner.
Ethics can be considered as a universal phenomenon. Each society has its own ethical conduct. Ethical
issues arise in instances where people go against this accepted behavioral pattern. Since ethics show
the right or wrong manner of living, individuals in a society are expected to follow those principles. If
we take an example, protecting the environment is ethical in almost all the societies. However, if one
person or a group of people goes against this, there can be harmful consequences. Ethical issues may
or may not affect the society as a whole. It depends on the issue and the response of the members of
the society as well.

What is the difference between Social and Ethical Issues?

When we look at both social and ethical issues, one similarity we can identify is that both affect
individuals and sometimes the society as well. Also, these may arise due to actions of individuals who
go against the accepted behavioral patterns. In both situations, there may be harmful consequences
towards the society as well as to its members.

• When we look at the differences, we see that social issues always affect the society as a whole but
ethical issues may not be like that always.

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Department of MCA, F.Y SEM – I, Information Systems and Engineering
• Social issues cannot be solved by individuals alone, but ethical issues can be prevented easily.
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• Further, individuals have no control over the social issues but they may have control over the ethical
issues.

• Moreover, ethical issues can be identified and treated easily whereas social issues may take a long
time to come into the vicinity.

• Ethical issues can be addressed with sanctions or incentives, but social issues cannot be solved like
that.

However, it is apparent that both social and ethical issues should be eliminated from societies that
trouble for the smooth functioning of the societies.

Information Systems Security and Control

What are information security controls?

According to NIST(the National Institute of Standards and Technology), security controls are defined
as “the safeguards or countermeasures prescribed for an information system or an organization to
protect the confidentiality, integrity, and availability of the system and its information.”

That means that any countermeasure used to keep a computer, device, network, or safe from a data
breach or another attack is a countermeasure.

That may seem extremely broad, but information security controls are often categorized, both by type
and by the goals of the countermeasure. What does that mean? Below is a listing of information
security controls by type:

 Physical controls: Locks on doors that keep intruders from devices, the ability to remove a
device from a network, and access control to physical equipment are all physical controls.
 Administrative controls: https://securityscorecard.com/solutions/incident-response,
information security awareness, and training are administrative controls.
 Technical controls: Items that use technology to combat attacks, like authentication, antivirus
software, and firewalls are technical controls.
 Legal and regulatory or compliance controls: Privacy legislation or information security
frameworks are legal or regulatory controls.

When controls are classified by a goal, however, the list looks a little different:

 Preventive controls: Intended to prevent an incident from occurring, such as good cyber
hygiene, network segmentation, and user authentication.
 Detective controls: Tools used during an incident to respond to a breach, such as anti-malware
software, a ransomware response plan, or security ratings.
 Corrective controls: After the event, corrective controls limit the extent of any damage caused
by the incident, such as cybersecurity insurance or new response plans.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
What security Economics
controls does my organization need?

No one organization will implement every single information security control. Some may be redundant
and some might not be relevant to your organization or your networks, but every organization needs
some of the above.

There are several security standards and frameworks that provide a starting point for organizations
when it comes to security best practices and controls.

 NIST, mentioned above, offers a free, voluntary cybersecurity framework consisting of

standards, guidelines, and practices to promote the protection of an organization’s critical
infrastructure. It lists more than 100 individual controls a company can use to mitigate risk.

 Another standard, the ISO/IEC 27001, is offered by the International Organization for
Standardization (ISO) and the International Electrotechnical Commission (IEC). Thai
international standard identifies 114 controls in 14 groups, ranging from policies to incident
management.
 The SANS CIS Controls are a recommended set of actions for cyber defense that provide
specific and actionable ways to stop attacks.
 COBIT5 is a proprietary control set published by ISACA which is based on five principles of
security.

These are just a few examples; many regulated industries and sectors are governed by their own
frameworks and control sets.

How can SecurityScorecard help?

SecurityScorecard’s security ratings are technical and detective controls, meaning that they help you
identify any problems with your organization’s security posture before you’re attacked… and that
they’re technical and not physical, like a lock on a door.

SecurityScorecard continuously monitors your complete infrastructure, including your extended

enterprise. Our platform can track both your internal and external adherence to established policies and
practices — we let you capture, report, and remediate security risks in real-time, so you’re never in
danger of falling out of compliance, no matter what framework or standards you adhere to.

Security Control:-

Security controls exist to reduce or mitigate the risk to those assets. They include any type of policy,
procedure, technique, method, solution, plan, action, or device designed to help accomplish that goal.
Recognizable examples include firewalls, surveillance systems, and antivirus software.

Control Objectives First…

Security controls are not chosen or implemented arbitrarily. They typically flow out of an
organization’s risk management process, which begins with defining the overall IT security strategy,
then goals. This is followed by defining specific control objectives—statements about how the
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Department of MCA, F.Y SEM – I, Information Systems and Engineering
organization plans to effectively manage risk. For example, “Our controls provide reasonable
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assurance that physical and logical access to databases and data records is restricted to authorized
users” is a control objective. “Our controls provide reasonable assurance that critical systems and
infrastructure are available and fully functional as scheduled” is another example.

…Then Security Controls

Once an organization defines control objectives, it can assess the risk to individual assets and then
choose the most appropriate security controls to put in place. One of the easiest and most
straightforward models for classifying controls is by type: physical, technical, or administrative, and by
function: preventative, detective, and corrective.

Control Types

Physical controls describe anything tangible that’s used to prevent or detect unauthorized access to
physical areas, systems, or assets. This includes things like fences, gates, guards, security badges and
access cards, biometric access controls, security lighting, CCTVs, surveillance cameras, motion
sensors, fire suppression, as well as environmental controls like HVAC and humidity controls.

Technical controls (also known as logical controls) include hardware or software mechanisms used to
protect assets. Some common examples are authentication solutions, firewalls, antivirus software,
intrusion detection systems (IDSs), intrusion protection systems (IPSs), constrained interfaces, as well
as access control lists (ACLs) and encryption measures.

Administrative controls refer to policies, procedures, or guidelines that define personnel or business
practices in accordance with the organization's security goals. These can apply to employee hiring and
termination, equipment and Internet usage, physical access to facilities, separation of duties, data
classification, and auditing. Security awareness training for employees also falls under the umbrella of
administrative controls.

Control Functions

Preventative controls describe any security measure that’s designed to stop unwanted or unauthorized
activity from occurring. Examples include physical controls such as fences, locks, and alarm systems;
technical controls such as antivirus software, firewalls, and IPSs; and administrative controls like
separation of duties, data classification, and auditing.

Detective controls describe any security measure taken or solution that’s implemented to detect and
alert to unwanted or unauthorized activity in progress or after it has occurred. Physical examples
include alarms or notifications from physical sensor (door alarms, fire alarms) that alert guards, police,
or system administrators. Honeypots and IDSs are examples of technical detective controls.

Corrective controls include any measures taken to repair damage or restore resources and capabilities
to their prior state following an unauthorized or unwanted activity. Examples of technical corrective
controls include patching a system, quarantining a virus, terminating a process, or rebooting a system.
Putting an incident response plan into action is an example of an administrative corrective control.

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Department of MCA, F.Y SEM – I, Information Systems and Engineering
Applications ofEconomics
MIS
MIS Application in Business

MIS application in business falls into several different categories that provide information on all forms
of functioning within an organization. Executives and departments within an organization could obtain
any of the following forms of data:

 Business Intelligence System: In BI, all levels of management and executives can print data
and graphs showing information or trends relating to growth, costs, strategic control, efficiency,
risk and performance.
 Executive Information System: An EI system provides the same information as a BI system,
but with greater attention to detail and more confidential information, designed to help top-level
executives make choices that impact the entire organization.
 Marketing Information System: MI systems provide data about past marketing campaigns so
that marketing executives can determine what works, what does not work and what they need to
change in order to achieve the desired results.
 Transaction Processing System: TPS handles sales transactions and makes it possible for
customers to sort search results by size, color or price. This system can also track trends related
to sales and search results.
 Customer Relationship Management System: Keeping up with customers is key to overall
success, and CRMS helps companies know when and how to follow up with customers in order
to encourage an ongoing sales relationship with them.
 Sales Force Automation System: Gone are the days when sales teams must do everything
manually. SFA systems automate much of what must be done for orders and to obtain customer
information.
 Human Resource Management System: HRM systems track how much employees are paid,
when and how they are performing. Companies can use this information to help improve
performance or the bottom line.
 Knowledge Management System: Customers with questions want answers right away and
knowledge management systems allow them to access frequently asked questions or
troubleshoot on their own timetable.
 Financial Accounting System: Financial accounting systems help to track accounts receivable
and accounts payable, in order to best manage the cash flow of a company.
 Supply Chain Management System: SCM systems record and manage the supply of finances,
goods and data from the point of origin domestically or abroad, all the way to its destination in
the hands of a customer.

Who Uses MIS Business Applications?

Whether you recognize it or not, you have probably used an MIS application in your day-to-day life as
a customer. When you sort and filter your search on your favorite clothing site, you are actually using
MIS. Nearly everyone in an organization uses MIS business applications, whether it is the salesperson
using an order screen, the hiring manager choosing a new employee or the CIO making major
reorganizational shifts to keep a company in the black. MIS in company operations makes business as
we know it faster, more accurate and more profitable.
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Department of MCA, F.Y SEM – I, Information Systems and Engineering
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Improving MIS in Company Choices

The better a company's MIS business applications, the easier it is to make key decisions. In order to
improve MIS in company decision making, examine what is working or not in your organization. If
your MIS reports show increasing sales, but you are still in the red, try adjusting your supply chain
management system. If human resources show low productivity, yet increased profit, consider
removing parameters from the human resource management system. When in doubt, MIS consultants
can audit your current systems to help you get the results you are hoping for.

Other Types of Information Systems

Management information systems are used by management for decision making but should not be
confused with other information systems used by a variety of employees. Some other information
systems include the following:

 Decision-Support Systems: Decision-support systems (DSS) are used by management to make

organizational decisions versus the management decisions for which MIS is used. For instance,
while MIS could be used to make decisions about assisting a poorly performing employee, DSS
could be used by executives to create an overall shift in direction based on company and market
trends.
 Knowledge-Worker Systems: Knowledge-worker systems (KWS) are used by employees who
rely on knowledge for performing their basic job tasks, like company engineers, finance experts
and human resources personnel. KWS systems include things like computer-animated drawing
systems, human resources systems, financial workstations and virtual reality systems.
 Office-Automation Systems: Office-automation systems help facilitate the daily operations of
an office setting and include things like the voicemail system, word processing programs and
email. These are basic systems that are used by most employees at every level of an
organization.
 Executive-Support Systems: Executive-support systems merge together MIS and DSS in order
to provide top executives with the data they need to make vital decisions about the direction of
the company as well as employee performance strategies.
 Transactional-Processing Systems: Transactional-processing systems (TPS) are used by
companies to fulfill purchases, place orders, bill clients, track received orders and more. When a
TPS works well, and people use it as intended, it provides accurate information on inventory,
sales rates, cost for materials, order fulfillment and many other details of daily operations. This
information is useful to everyone, from a sales employee to middle management and top
executives.

What MIS Tracks

Management information systems generate reports about all kinds of data that are useful to
management in decision making. This includes reports on things like employee performance, employee
efficiency, the effectiveness of training, completed work and work that still needs to be completed.
MIS can compare employee performance, rank employee performance and compare performance to
projections and expectations.

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For instance, anEconomics
engineering department at a major telecommunications company could have a MIS
that tracks each employee's workload, jobs, job due dates and accuracy percentages. When a manager
runs the MIS report for the week, month or quarter, the report will highlight late jobs, employees
performing below company standards and employees with an overburdened workload. This report is
then discussed at management and team meetings in order to address issues before they become crises.

Objectives of MIS

While the objective of a transactional-processing system is to provide accurate transaction data, and
the objective of office-automation systems is to increase office communication, management
information systems have specific objectives too. While they vary from company to company based on
the data tracked, the following are common objectives:

 Compare actual performance to expected performance.

 Facilitate efficient and timely managerial planning.Reduce costs by highlighting time waste in
the organization.
 Provide data about the performance of employees, management, products, services, money,
materials and equipment.
 Highlight organizational strengths and weaknesses.
 Illuminate product- or material-quality problems in order to reduce material waste.

The role of management information systems in an organization is to provide the most accurate data
possible so that management can make wise and timely decisions in order to increase the bottom line.

Application of MIS

The application of MIS in an organization requires involvement of many key team players, including
systems analysts, information technology specialists, computer programmers, management, executives,
quality-control personnel, help-desk specialists, information security and more. Proper application of
MIS should result in the following advantages:

 Increased Profits: MIS application can result in new product development, changed marketing,
changed packaging, improved customer service, a growing product line, better communication
with different levels of customers, competitive pricing and higher customer retention rates.
 Increased Quality: MIS application contributes to increased quality through reducing waste,
helping in the selection of quality materials and implementing warranties/guarantees that match
material quality.
 Decreased Costs: MIS application helps management become more strategic about material
sourcing, staffing, scheduling, increasing efficiency, improving processes, managing inventory
appropriately and manufacturing goods at the right time.

Role of Management Information Systems in Organizations

The role of management information systems in organization decision-making processes is key to

helping businesses reduce waste and increase profits. MIS reports can be used by individual managers
and groups of managers and can be shown to employees to highlight where they are performing well
and where they need to grow.
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Economics
When management has an accurate report, they do not have to guess about who is doing well or what
needs to be improved or wonder where their blind spots are. The data help them see a clearer, less-
biased picture than they could come up with on their own.

Implementing Management Information Systems

Once management information systems are in place, implementing them into management workflow is
vital to their effectiveness. Management needs to be aware of how to access the data, run regular
reports and find help when they need it. Visual presentations and opportunities for hands-on
exploration of the systems help managers to get used to accessing data before they need to.

Help-desk personnel could choose to host a class or webinar that walks management through every
step needed to navigate through your company's MIS. Due to the importance of MIS data in decision
making, it is imperative that management has a thorough understanding of how and when to best use
the system.

Importance of Decision Making

Managers regularly make decisions that impact the daily lives of their employees, so having accurate
data is important. Changes introduced by management have the power to alter someone's life by:

 Increasing or decreasing stress levels.

 Increasing or decreasing workload.
 Increasing or decreasing ease of job performance.
 Increasing or decreasing job task understanding.
 Giving or taking away livelihood.

The large impact of managerial decisions on the everyday lives of people as well as on the company's
bottom line means that decisions cannot be made lightly or without adequate information.

Decision-Making Processes

Many companies train their managers to make decisions using a structured decision-making process.
While these processes vary slightly from organization to organization, a basic seven-step process is
common:

1. Identify the problem.

2. Gather data related to the problem.
3. Identify possible solutions to the problem.
4. Consider pros and cons of each solution.
5. Choose the solution that minimizes risks while increasing benefits.
6. Execute your plan, adjusting as needed.
7. Review the effectiveness of your plan to help inform future decisions.

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Importance of Economics
MIS in Decision Making

The importance of MIS in decision making can be seen throughout the typical corporate decision-
making process. MIS reports typically alert management about problems by highlighting poor
performance, lower than expected sales, problems in efficiency and so forth.

These same reports allow managers to gather data related to the problem by looking at trends over a
certain period of time and seeing where improvements can be made. This information empowers
managers to brainstorm a wide variety of possible solutions to the given problem so that they can
consider the pros and cons of each one. This makes it possible for management to choose and execute
a plan to solve the problem.

Future MIS reports should show improvement in the problem areas so that managers can accurately
evaluate the success of their given plan and make adjustments going forward.

Proactive Versus Reactive Decision Making

The importance of MIS in decision making lies in its ability to help managers become proactive versus
reactive decision makers. Without proper data, crises can build in the background and then explode,
causing managers to go into survival mode and make reactive decisions that Band-Aid the problem
rather than prevent it in the first place.

The role of management information systems in organization leadership is to give a heads up about
growth areas before major crises emerge so that they can make proactive decisions. This results in
crisis prevention so that the company can focus on growth.

Goal Setting and MIS

Because MIS provides a plethora of information that helps with proactive decision making, it is also
helpful for goal setting and review. When your management team sets goals for the week, month,
quarter or year, those can be programmed into your management information system. Then, it is easy
to track actual performance against your goals and then either increase or decrease your goals in the
future to make them more probable and make profit margins more accurate.

For instance, if your sales team sets a goal to do $25,000 in sales this month but is only able to come
up with $15,000 in sales when working efficiently, you can try setting a different goal next month.
Maybe you set a goal for $20,000 and then run a customer special to make that more achievable and
find that your team does $19,000.

You know that the following month is busy for sales, and so that month your team does $21,000 in
sales and can be reasonably certain that $20,000 is a pretty accurate prediction of team sales going
forward. The information used to set these numbers and adjust them all comes from your MIS report
showing total sales and employee-performance trends.

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Limitations of Economics
MIS in Decision Making

While the role of MIS in decision making is vital to the health of most businesses, it's not without
limitations. Management information systems measure data but cannot always accurately collect
information on things like team morale, job satisfaction and other abstract dynamics at play in the
workplace. Human resources specialists, corporate psychologists and good old-fashioned relationship
building can help make up for the blind spots of MIS.

Customer relationship Management (CRM) :-

Customer Relationship Management (CRM) is often referred to as a process, strategy, or

software/technology that enables organizations to manage relationships with their customers,
vendors, and suppliers.

The buyer’s journey has evolved through the years and running a business today has become more
complex than ever. Business owners and salespeople must keep in touch with their customers, follow-
up with prospects, identify upselling and cross-selling opportunities, and initiate customer retention
programs while ensuring that the company revenue continues to increase.

CRM enables business owners and salespeople by helping them streamline the sales process, improve
interdepartmental collaboration, and maintain business relationships.

In this article, we will look at the concept of CRM, different tools and types of CRM software, and
the basic terminology used in CRM. We will also discuss essential CRM features, benefits, steps to
create a strategy and how to go about choosing the right CRM for your organization.

What Is Customer Relationship Management (CRM)?

Customer Relationship Management (CRM) is often referred to as a process, strategy, or

software/technology that enables organizations to manage relationships with their customers, vendors,
and suppliers.

In this article, we will look at CRM as a technology that helps businesses maintain customer
dataOpen track customer interactions, and improve customer relationships.

A CRM software system performs the following activities:

1. Collects customer data from multiple sources and applications and stores it in a centralized
location
2. Automates repetitive sales, marketing, and customer service processes
3. Tracks prospects and customers through their purchase journey
4. Identifies upselling and cross-selling opportunities
5. Promotes interdepartmental collaboration

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What Are the Types of CRM Software?

Representation of the Types of CRM Software

Holistically, we can segregate CRM tools in two categories, viz.

1. Based on installation/implementation
2. Based on functionality

Let’s look at each of them in brief:

1. CRM Software Based on the Type of Installation

We can further segregate this type of category into two types:

1. On-premise CRM Software: Companies that handle sensitive customer information such as
financial or healthcare institutions prefer on-premise CRM software. These systems incur a hefty
upfront investment as it includes infrastructure as well as software development costs.
These CRM systems are rigid in terms of functionality as adding a new feature is often
expensive. Further, the organization itself must take care of data maintenance, security, and
disaster recovery plans. Organizations can outsource these services to a third-party vendor, but
they incur additional costs depending on your requirements.
2. Cloud-based CRM Software: A business can use web-based/cloud CRM at a monthly
recurring cost.
Compared to on-premise CRMs, cloud CRMs are more flexible and budget-friendly as these
CRMs are device-agnostic, and the service provider offers maintenance and data security.
These CRMs take a one-size-fits-all approach. Therefore, customizations may not always be
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possible. Economics
And since your data is stored at the vendor’s servers, you are at the mercy of the
vendor in case of a server outage.

2. CRM Software Based on Functionality

There are three types of CRM tools based on their functionality:

1. Operational CRM: These CRMs help businesses run their routine sales, marketing, and
customer service operations. An operational CRM system enables you to track the customer
journey through activities such as contact management, lead generation, lead scoring, and
marketing automationOpens w
2. Analytical CRM: Analytical CRMs collect and analyze heaps of customer data and help
businesses make data-driven decisions. These CRMs offer data management, customer
acquisition, and retention activities through data mining, sales forecasting, conversion
attribution, etc.
3. Collaborative CRM: Collaborative/strategic CRM software enables organizations to share
customer data across internal departments and external stakeholders (vendors, partners, etc.) to
enhance Customer Experience (CX). While operational and analytical CRMs are also capable of
information sharing, collaborative CRMs emphasize, particularly on the CX aspect.

The Essential CRM Glossary

Before we delve further into CRM, let’s understand the meaning of commonly used terms in the CRM
realm. You may not come across all the terms mentioned here in this article, but it’s worth to know
these terms as you continue to learn about CRM:

1. 360-degree Customer View: This is an exhaustive view of a customer, including their contact
details, past communication, campaign history, and other pertinent information.
2. Automation: Sales and marketing activities such as email campaigns, contact management,
activity tracking, etc. that can be constantly monitored by the system.
3. Contact: An entry that stores an entity’s name, email address, phone number, physical address,
and other information. The entity could be a customer, prospect, company, partner, or a vendor.
4. Contact Management: It refers to organizing, updating and storing contact information in the
CRM software.
5. Dashboard: It’s the landing page when a user logs into the CRM software. The dashboard
displays crucial analytics information and sales data and navigation options.
6. Deal: Also known as an opportunity, a deal is a potential sale that has moved to the last stage of
the sales funnel.
7. Integrations: This is a feature that lets you connect the CRM software with other software
applications in your MarTech stack to enable seamless data import and export. For example, you
can integrate your CRM system with a Marketing Automation Platform (MAP)Opendow
social media management tool, etc. to get a holistic picture of the customer.
8. Lead: A lead has expressed their interest in your offerings. Leads are generally at the first stage
of the sales funnel.
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Economics Lead conversion signifies the conversion of a lead into a customer
9. Lead Conversion:
10. Lead Management: Lead management/nurturing activities help users stay in touch with leads
to ensure that they don’t drop-off from the sales funnel.
11. Pipeline: Sometimes referred to as a funnel, a pipeline shows various stages of the purchase
journey. A pipeline is generally divided into four stages, viz. lead generation, qualification,
proposal, and sale.
12. Prospect: A prospect is a sales-ready lead that is interested in your product and can purchase it.

8 Essential CRM Features

Choosing a CRM system can be confusing because not all CRMs are the same, and each offers vastly
different features compared to its contemporaries. So, if you’re looking to buy a CRM, but can’t
decide, this section will help you understand the eight essential features you need in a CRM software.

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Economics

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Economics Representation of the Essential CRM Features

1. Contact Management

All the essential information related to a lead/customer’s contact such as their name, email address,
phone number, work details, past communications, etc. should be easily accessible and modifiable.

2. Lead Management

Keeping track of leads can often be tedious if you’re still relying on spreadsheets or other incompatible
tools. The lead management owfeature gives you an overview of your leads with their status, lead
score, etc. By clicking on an entry, you can view their profile, recent activities on your website, prior
communication, complaints, and so on.

3. Pipeline Management

The pipeline management feature gives you a visual representation of your current leads and deals. The
deals are segregated according to the stage of the sales pipeline. This makes it easy for salespeople to
understand the status of each lead and helps them decide which leads to pursue.

4. Sales Automation

The sales department is possibly already taxed with too much work. The addition of repetitive
administrative tasks such as sending invoices or following-up with a cold lead can negatively impact
their productivity.

With the sales automation feature, salespeople can automate repetitive tasks so that they can focus on
hitting the sales target. Automation workflows are initialized based on triggers or rules. For example, if
a lead hasn’t replied after three days, the follow-up workflow will be activated wherein a reminder
email will be automatically sent to the contact.

5. Sales Forecasting

A CRM tool processes tons of data daily. The sales forecasting feature uses this data to predict future
sales. This way, salespeople can get an approximate understanding of their pipeline and how efficiently
they can push sales. Salespeople can effectively use this information and convert hot leads.

6. File Storage and Sharing

Rather than relying on external file storage applications, salespeople can store important and frequently
required files such as quotes, feature sheets, sales scripts, etc. in a centralized repository and share
them with co-workers instantly.

7. Email Management

You can integrate your email with CRM so that you don’t have to jump between multiple tabs to send
an email. With the email management feature, you can send emails right from the CRM interface,
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of the lead, mention a remark, and prioritize emails. This way, you won’t miss out on
mark the status Economics
connecting with any of your leads.

8. Reporting and Analytics

This feature summarizes sales performance in a single dashboard. You can customize or create new
types of reports based on your requirements and export them in different formats.

3 CRM Best Practices to Consider

1. Is Your CRM Tool Device-Agnostic (Mobile CRM)?

In this age, the CRM needs to device agnostic. Entrepreneurs and salespeople are no longer desk-
bound, and therefore, mobile CRM is the need of the hour. Mobile CRM enables users to access
customer data from mobile or tablet devices if they have an internet connection.

Mobile CRM allows salespeople to manage downtime efficiently and provides a boost in productivity.

2. Does Your CRM Tool Offer Social CRM Capabilities?

As businesses go omnichannel, the MarTech stack needs to go omnichannel as well. Social CRM
allows organizations to get a complete view of their customers and their interactions in a single
window.

Social CRM provides organizations with a 360-degree view of their customers by collecting customer
data from different sources. Along with social media management and social selling features, social
CRM also empowers customer-facing departments with sentiment analysis and social listening features
to know more about the brand and its customers.

3.Complexity and Scalability

If you’re a solopreneur, sales is not the only task you perform during your workday. Therefore, make
sure that the CRM you choose brings efficiency rather than complexity.

Similarly, if you’re a thriving startup, see the scalability aspect of the CRM of your choice. Also,
ensure that the cost is in proportion of the growth; otherwise, you may overspend your marketing
budget.

5 of the Best CRM Tools for Your Business

Implementing a CRM tool that fits perfectly in your business framework is challenging. CRM software
helps you manage customer interactions and becomes a central node for other departments to
collaborate with sales. Therefore, it’s imperative to ensure that the CRM tool of your choice satisfies
all these criteria.

In this section, we will look at five top CRM software that you can evaluate and adopt.

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Note: Since most of the following tools offer the basic features such as email, calls, SMS, social CRM,
reports, etc., we are focusing on the other tools here.

1. HubSpot CRMOpens a new window

HubSpot’s free CRM is a top-notch system for startups or anyone looking to get acquainted with CRM
tools.

HubSpot CRM helps you manage your sales pipeline, create automated email sequences for your leads,
communicate with your prospects via live chat or emails, and track customer interactions across email,
social media, or calls.

HubSpot CRM is free for contacts up to 1,000,000. As your company grows, you can upgrade to other
marketing, sales, and customer service packages, or you can integrate other third-party products with
the tool.

2. Zoho CRMOpens a new window

Zoho CRM is one of the products from Zoho’s exhaustive business suite. Zoho CRM offers features
that are suitable for both SMBs and large-scale organizations. The CRM application comes with sales
automation, pipeline management, marketing automation, and process management features. You can
connect with your leads across different platforms through a single interface.

Zia – Zoho’s AI bot helps businesses with identifying trends, predicting sales, and data enrichment
activities.

Companies can get started with Zoho CRM for as low as $18/month and upgrade as they move along.

3. FreshsalesOpens a new window

Freshsales is a sales CRM by Freshdesk. Features such as event tracking, phone, emails, workflows,
etc. enable you to track your leads and deals across their purchase journey.

Like HubSpot and Zoho CRM, Freshsales offers mobile CRM and a range of products for business,
making it easy to build a comprehensive MarTech stack.

Freshsales is perfect for SMBs and mid-market enterprises, and you can get started with the tool for
$18/month.

4. Salesforce Sales CloudOpens a new window

Salesforce Sales Cloud is a CRM tool offered by Salesforce. The CRM tool covers the entire purchase
journey and includes features such as account and contact management, opportunity management, lead
management, intuitive workflows, file sharing, and sales forecasting.

Business owners and salespeople can manage their sales activities on the go through mobile CRM.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
Beginners can opt for the Salesforce Essential plan at $25/user/month (paid annually). Users can avail
add-ons such as Sales Cloud Einstein (Salesforce’s AI tool) and Pardot (Salesforce’s marketing
automation platform) at an additional subscription fee.

5. MailchimpOpens a new window

Mailchimp is primarily a MAP that also offers specific CRM capabilities. Mailchimp is perfect for
freelancers, startups, and SMBs as it provides the ideal blend of features that are useful for both sales
and marketing departments.

Mailchimp has a free plan for a list size up to 2000 contacts with bare essential CRM features and paid
plans starting $9.99/month.

Mailchimp is widely used among startups and SMBs because of its capability to integrate with other
enterprise CRMs such as Salesforce.

Creating a CRM Strategy in 5 Steps

Having a CRM strategy in place ensures smooth operations of your CRM efforts. Here is a 5-step
framework to create a successful CRM strategy for your organization.

Step 1: Know Your Business Goals

It is essential to decide on your goals to optimally use the CRM application as a business enabler.
Knowing business objectives will make it easy for you to craft a CRM strategy. For instance, if your
business objective is to boost annual revenue by 10% through new customer acquisition and by 25%
through customer retention, you can plan the activities to be executed to reach the objectives.

When you map these activities with sales objectives, you can identify how CRM can facilitate
achieving the goals.

Step 2: Involve Your Employees

There are two aspects to this step.

First, you need to communicate with your employees on how the CRM implementation is going to
benefit them and actively involve them right from the beginning. This is particularly helpful as people
working on the grassroots level can immensely help in the tactical area.

Second, as CRM is not restricted exclusively to the sales department, you need to promote
interdepartmental collaboration between the customer-facing departments and break down the
proverbial silos.

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Step 3: Revisit Economics
the Buyer’s Journey

Start by evaluating the customer data stored in your current systems. This step will give you an
understanding of what data you’re collecting and the additional data points you need to gather through
the CRM.

Revisit the buyer’s journey to visualize how a lead converts into a customer. Each stage of the buyer’s
journey should be connected to its equivalent stage in the sales pipeline. Knowing this will help you to
understand the activities that lead to deal closure.

Step 4: Pick the Right CRM

Understand the features you need in a CRM software and gain clarity on choosing the right CRM tools.
Ideally, try the five CRM tools mentioned in this article to find the right fit. Simultaneously, identify
their top competitors and pilot test the ones that suit your requirements.

Remember, don’t rush into buying a solution just yet. Use the trial period of each CRM provider to
evaluate them thoroughly, and finalize a tool based on the features compatible with your existing
ecosystem, one that suits your requirements, is easy to use, and has integration capabilities.

Step 5: Keep Improving Your CRM Practices

It’s unlikely that you’ll hit the sweet spot in the first go, especially when it comes to implementing a
CRM or a MAP. You might run into challenges initially but keep tweaking the process until everything
is streamlined. You can also reduce the trial and error step by hiring a CRM consultant from the initial
stages of implementation.

5 Benefits of a CRM

Here are the five benefits of implementing CRM software at your organization.

Representation of the
Benefits of CRM

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1. De-silos Customer Facing Departments

An organization can be customer-centric when its customer facing departments work together. As you
can integrate your MAP and customer support software with CRM, it promotes interdepartmental
collaboration and allows organizations to serve their customers better.

2. Improves Communication with Customers

As you track each lead through the different stages of the sales pipeline, you can deliver the right
message at the right time.

3. Brings Efficiency Through Automation

From the time a lead fills-in a form to following-up with them, everything is automated. Also, since the
data is fetched automatically from multiple sources, there’s no need to invest time manually entering
data. Salespeople can focus on what matters the most — closing more deals.

4. Helps Make Data-driven Decisions

As all customer data is centralized in one place along with sales analytics, the sales team can
accurately identify their prospects’ needs and understand what is working and what’s not. Armed with
this knowledge, sales teams can make decisions backed by actionable data.

5. Boosts Revenue

A 360-degree view of customers enables organizations to understand their requirements. Using this
information, organizations can introduce upselling, cross-selling, and customer retention programs.

How to Choose a CRM for Your Organization?

Now that you know the essentials of the CRM software let’s look at how to go about selecting a CRM
system for your business. The CRM market has products for different categories, ranging right from
freelancers or solopreneurs to large corporations.

In this section, we will guide you with specific pointers that will allow you to choose a CRM that
works perfectly for your organization.

1. Who Will Use the CRM System?

In a solo venture, there will be only one person using the CRM system, whereas, in a startup, people
from sales and marketing departments might use the CRM. At a large corporation, the CRM might be
used exclusively by salespeople, while marketers use a MAP.

You will be able to identify what you need in a CRM by understanding who will use it and benefit
from it.

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2. What Are the Current Sales Use Cases?

What is your current sales strategy and/or process? Knowing how you approach your potential
customers and how they find you will help you enlist the activities you perform to bring new
customers on board. Another way to do this is to identify the various sales and marketing channels you
are using to reach out to your target audience.

After taking stock of these two aspects, you’ll have some clarity on the sales activities and their
corresponding features to look for in the CRM.

3. What Are the Integration Capabilities of the CRM?

You will need to check whether the CRM system you’ve selected offers integrations for the existing
tools in your martech stack. This is particularly crucial as you’d be connecting with the same customer
across multiple touchpoints.

If it doesn’t offer integration with a particular tool, then either see if the CRM provides a similar
feature or look for alternatives.

A simple way to avoid integration difficulties is to check brands that offer multiple products under the
same umbrella. For example, HubSpot, Zoho, Freshworks, etc. provide numerous products under their
brand name. So, you can choose the tools that you need and integrate more products as your company
grows.

4. What Is the Cost?

CRM has multifaceted utility, so the costs of CRM systems might seem to be off the charts when you
see them in the absolute sense. Therefore, consider the cost aspect after you’ve answered the above
three questions so that you can see the payoff to the investment you’re making.

Of course, CRM incurs not just monetary investment but also of the time and all the changes you must
make in the existing environment.

Tip: Start with the free plan to gauge its compatibility. If the free plan doesn’t cater to your
requirements, opt for the trial period offered by most of the cloud-based CRMs.

Who Needs CRM Software?

A CRM software is adopted across B2B and B2C organizations of different sizes, serving different
sectors and industries. Here is how a CRM solution helps three types of organizations:

1. SMBs

Small and medium scale businesses’ sales departments have precise requirements and may not need
audacious features. CRMs for SMBs are aware of this and hence offer features that let SMBs automate
repetitive tasks so that stakeholders can focus on increasing revenue.

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2. Startups Economics

Startups are chaotic in their rapid growth stage. CRMs tame this chaos, bring order to sales and
marketing departments, and offer intuitive integration and reporting features. This allows startups to
measure their progress without having them spend too much time on learning the tool.

3. Enterprises

Enterprises always look to go big, and they require a robust number cruncher with cross-functional
collaboration capabilities minus any complexities. Analytical and collaborative CRMs help enterprises
achieve just that.

Who Uses CRM Software?

Marketers, salespeople, and customer service professionals require different utilities of a CRM system.
Let’s look at how CRM is useful to each one of them:

1. Marketers

Marketers collect customer data from multiple sources, such as lead generation forms, surveys, social
media, etc. By integrating the CRM system with a MAP, marketers can supercharge marketing efforts
through drip marketing campaigns, social media ad campaigns, and so on.

2. Salespeople

Salespeople are always on their toes needing to communicate with every prospect and customer on a 1-
on-1 basis. A CRM tool provides a central repository where they can get to know their customers at
greater depth, profile them as hot/warm/cold leads and create real-time sales reports that give them a
quick overview of the sales performance.

3. Customer Service Professionals

By integrating the customer support application with the CRM, you get a composite view of your
customers and enables customer service executives proactively solve customer queries. The use of
social CRM allows them to communicate with customers via social media, calls, text, chat, etc.

Supply chain management (SCM) :-

What Is Supply Chain Management (SCM)?

Supply chain management is the management of the flow of goods and services and includes all
processes that transform raw materials into final products. It involves the active streamlining of a
business's supply-side activities to maximize customer value and gain a competitive advantage in the
marketplace.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
Key Takeaways

 Supply chain management (SCM) is the centralized management of the flow of goods and
services and includes all processes that transform raw materials into final products.
 By managing the supply chain, companies can cut excess costs and deliver products to the
consumer faster and more efficiently.
 Good supply chain management keeps companies out of the headlines and away from expensive
recalls and lawsuits.
 The five most critical elements of SCM are developing a strategy, sourcing raw materials,
production, distribution, and returns.
 A supply chain manager is tasked with controlling and reducing costs and avoiding supply
shortages.

1:36
Explaining Supply Chain Management (SCM)
How Supply Chain Management (SCM) Works

Supply chain management (SCM) represents an effort by suppliers to develop and implement supply
chains that are as efficient and economical as possible. Supply chains cover everything from
production to product development to the information systems needed to direct these undertakings.

Typically, SCM attempts to centrally control or link the production, shipment, and distribution of a
product. By managing the supply chain, companies can cut excess costs and deliver products to the
consumer faster. This is done by keeping tighter control of internal inventories, internal production,
distribution, sales, and the inventories of company vendors.

SCM is based on the idea that nearly every product that comes to market results from the efforts of
various organizations that make up a supply chain. Although supply chains have existed for ages, most
companies have only recently paid attention to them as a value-add to their operations.

5 Parts of SCM

The supply chain manager tries to minimize shortages and keep costs down. The job is not only about
logistics and purchasing inventory. According to Salary.com, supply chain managers “oversee and
manage overall supply chain and logistic operations to maximize efficiency and minimize the cost of
organization's supply chain."1

Productivity and efficiency improvements can go straight to the bottom line of a company. Good
supply chain management keeps companies out of the headlines and away from expensive recalls and
lawsuits. In SCM, the supply chain manager coordinates the logistics of all aspects of the supply chain
which consists of the following five parts.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Planning Economics

To get the best results from SCM, the process usually begins with planning to match supply with
customer and manufacturing demands. Firms must predict what their future needs will be and act
accordingly. This relates to raw materials needed during each stage of manufacturing, equipment
capacity and limitations, and staffing needs along the SCM process. Large entities often rely on ERP
system modules to aggregate information and compile plans.

Sourcing

Efficient SCM processes rely very heavily on strong relationships with suppliers. Sourcing entails
working with vendors to supply the raw materials needed throughout the manufacturing process. A
company may be able to plan and work with a supplier to source goods in advance. However, different
industries will have different sourcing requirements. In general, SCM sourcing includes ensuring:

 the raw materials meet the manufacturing specification needed for the production of goods.
 the prices paid for the goods are in line with market expectations.
 the vendor has the flexibility to deliver emergency materials due to unforeseen events.
 the vendor has a proven record of delivering goods on time and in good quality.

Supply chain management is especially critical when manufacturers are working with perishable
goods. When sourcing goods, firms should be mindful of lead time and how well a supplier can
comply with those needs.

Manufacturing

At the heart of the supply chain management process, the company transforms raw materials by using
machinery, labor, or other external forces to make something new. This final product is the ultimate
goal of the manufacturing process, though it is not the final stage of supply chain management.

The manufacturing process may be further divided into sub-tasks such as assembly, testing, inspection,
or packaging. During the manufacturing process, a firm must be mindful of waste or other controllable
factors that may cause deviations from original plans. For example, if a company is using more raw
materials than planned and sourced for due to a lack of employee training, the firm must rectify the
issue or revisit the earlier stages in SCM.

Delivering

Once products are made and sales are finalized, a company must get the products into the hands of its
customers. The distribution process is often seen as a brand image contributor, as up until this point,
the customer has not yet interacted with the product. In strong SCM processes, a company has robust
logistic capabilities and delivery channels to ensure timely, safe, and inexpensive delivery of products.

This includes having a backup or diversified distribution methods should one method of transportation
temporarily be unusable. For example, how might a company's delivery process be impacted by record
snowfall in distribution center areas?

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Returning Economics

The supply chain management process concludes with support for the product and customer returns. Its
bad enough that a customer needs to return a product, and its even worse if its due to an error on the
company's part. This return process is often called reverse logistics, and the company must ensure it
has the capabilities to receive returned products and correctly assign refunds for returns received.
Whether a company is performing a product recall or a customer is simply not satisfied with the
product, the transaction with the customer must be remedied.

Many consider customer returns as an interaction between the customer and the company. However, a
very important part of customer returns is the intercompany communication to identify defective
products, expired products, or non-conforming goods. Without addressing the underlying cause of a
customer return, the supply chain management process will have failed, and future returns will likely
persist.

SCM vs. Supply Chains

A supply chain is the network of individuals, companies, resources, activities, and technologies used to
make and sell a product or service. A supply chain starts with the delivery of raw materials from a
supplier to a manufacturer and ends with the delivery of the finished product or service to the end
consumer.

SCM oversees each touchpoint of a company's product or service, from initial creation to the final sale.
With so many places along the supply chain that can add value through efficiencies or lose value
through increased expenses, proper SCM can increase revenues, decrease costs, and impact a
company's bottom line.

Types of Supply Chain Models

Supply chain management does not look the same for all companies. Each business has its own goals,
constraints, and strengths that shape what its SCM process looks like. In general, there are often six
different primary models a company can adopt to guide its supply chain management processes.

 Continuous Flow Model: One of the more traditional supply chain methods, this model is often
best for mature industries. The continuous flow model relies on a manufacturer producing the
same good over and over and expecting customer demand will little variation.
 Agile Model: This model is best for companies with unpredictable demand or customer-order
products. This model prioritizes flexibility, as a company may have a specific need at any given
moment and must be prepared to pivot accordingly.
 Fast Model: This model emphasizes the quick turnover of a product with a short life cycle.
Using a fast chain model, a company strives to capitalize on a trend, quickly produce goods, and
ensure the product is fully sold before the trend ends.
 Flexible Model: The flexible model works best for companies impacted by seasonality. Some
companies may have much higher demand requirements during peak season and low volume
requirements in others. A flexible model of supply chain management makes sure production
can easily be ramped up or wound down.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
 EfficientEconomics
Model: For companies competing in industries with very tight profit margins, a
company may strive to get an advantage by making their supply chain management process the
most efficient. This includes utilizing equipment and machinery in the most ideal ways in
addition to managing inventory and processing orders most efficiently.
 Custom Model: If any model above doesn't suit a company's needs, it can always turn towards a
custom model. This is often the case for highly specialized industries with high technical
requirements such as an automobile manufacturer.

Example of SCM

Understanding the importance of SCM to its business, Walgreens Boots Alliance Inc. decided to
transform its supply chain by investing in technology to streamline the entire process. For several years
the company has been investing and revamping its supply chain management process. Walgreens was
able to use big data to help improve its forecasting capabilities and better manage the sales and
inventory management processes.2

This includes the 2019 addition of its first-ever Chief Supply Chain Officer, Colin Nelson. His role is
to boost customer satisfaction as the company increases its digital presence. Beyond that, in 2021, it
announced it would be offering free two-hour, same-day delivery for 24,000 products in its stores.34

What Is a Supply Chain Management Example?

Supply chain management is the practice of coordinating the various activities necessary to produce
and deliver goods and services to a business’s customers. Examples of supply chain activities can
include designing, farming, manufacturing, packaging, or transporting.

Why Is Supply Chain Management Important?

Supply chain management is important because it can help achieve several business objectives. For
instance, controlling manufacturing processes can improve product quality, reducing the risk of recalls
and lawsuits while helping to build a strong consumer brand. At the same time, controls over shipping
procedures can improve customer service by avoiding costly shortages or periods of inventory
oversupply. Overall, supply chain management provides several opportunities for companies to
improve their profit margins and is especially important for companies with large and international
operations.

How Are Ethics and Supply Chain Management Related?

Ethics has become an increasingly important aspect of supply chain management, so much so that a set
of principles called supply chain ethics was born. Consumers and investors are invested in how
companies produce their products, treat their workforce, and protect the environment. As a result,
companies respond by instituting measures to reduce waste, improve working conditions, and lessen
the impact on the environment.

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
What Are the 5Economics
Elements of Supply Chain Management?

Supply chain management has five key elements—planning, sourcing raw materials, manufacturing,
delivery, and returns. The planning phase refers to developing an overall strategy for the supply chain,
while the other four elements specialize in the key requirements for executing that plan. Companies
must develop expertise in all five elements to have an efficient supply chain and avoid expensive
bottlenecks.

What Element of the Marketing Mix Deals With Supply Chain Management?

Place is the marketing mix element that deals with supply chain management as it involves the
processes that take goods and services from their raw beginnings to the ultimate destination—the
customer.

Information Technology Infrastructure in a Bank:-

Banking environment has become highly competitive today. To be able to survive and grow in the
changing market environment banks are going for the latest technologies, which is being perceived as
an ‘enabling resource’ that can help in developing learner and more flexible structure that can respond
quickly to the dynamics of a fast changing market scenario. It is also viewed as an instrument of cost
reduction and effective communication with people and institutions associated with the banking
business.

The Software Packages for Banking Applications in India had their beginnings in the middle of 80s,
when the Banks started computerising the branches in a limited manner. The early 90s saw the
plummeting hardware prices and advent of cheap and inexpensive but high powered PC’s and Services
and banks went in for what was called Total Branch Automation (TBA) packages. The middle and late
90s witnessed the tornado of financial reforms, deregulation globalisation etc. coupled with rapid
revolution in communication technologies and evolution of novel concept of convergence of
communication technologies, like internet, mobile/cell phones etc. Technology has continuously
played on important role in the working of banking institutions and the services provided by them.
Safekeeping of public money, transfer of money, issuing drafts, exploring investment opportunities
and lending drafts, exploring investment being provided.

Information Technology enables sophisticated product development, better market infrastructure,

implementation of reliable techniques for control of risks and helps the financial intermediaries to
reach geographically distant and diversified markets. Internet has significantly influenced delivery
channels of the banks. Internet has emerged as an important medium for delivery of banking products
and services.

The customers can view the accounts; get account statements, transfer funds and purchase drafts by
just punching on few keys. The smart card’s i.e., cards with micro processor chip have added new
dimension to the scenario. An introduction of ‘Cyber Cash’ the exchange of cash takes place entirely
through ‘Cyber-books’. Collection of Electricity bills and telephone bills has become easy. The
upgradeability and flexibility of internet technology after unprecedented opportunities for the banks to

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
reach out to its Economics
customers. No doubt banking services have undergone drastic changes and so also the
expectation of customers from the banks has increased greater.

IT is increasingly moving from a back office function to a prime assistant in increasing the value of a
bank over time. IT does so by maximizing banks of pro-active measures such as strengthening and
standardising banks infrastructure in respect of security, communication and networking, achieving
inter branch connectivity, moving towards Real Time gross settlement (RTGS) environment the
forecasting of liquidity by building real time databases, use of Magnetic Ink Character Recognition and
Imaging technology for cheque clearing to name a few. Indian banks are going for the retail banking in
a big way

The key driver to charge has largely been the increasing sophistication in technology and the growing
popularity of the Internet. The shift from traditional banking to e-banking is changing customer’s
expectations.

E-Banking:

E-banking made its debut in UK and USA 1920s. It becomes prominently popular during 1960,
through electronic funds transfer and credit cards. The concept of web-based baking came into
existence in Eutope and USA in the beginning of 1980.

In India e-banking is of recent origin. The traditional model for growth has been through branch
banking. Only in the early 1990s has there been a start in the non-branch banking services. The new
pribate sector banks and the foreign banks are handicapped by the lack of a strong branch network in
comparison with the public sector banks. In the absence of such networks, the market place has been
the emergence of a lot of innovative services by these players through direct distribution strategies of
non-branch delivery. All these banks are using home banking as a key “pull’ factor to remove
customers away from the well entered public sector banks.

Many banks have modernized their services with the facilities of computer and electronic equipments.
The electronics revolution has made it possible to provide ease and flexibility in banking operations to
the benefit of the customer. The e-banking has made the customer say good-bye to huge account
registers and large paper bank accounts. The e-banks, which may call as easy bank offers the following
services to its customers:

 Credit Cards/Debit Cards

 ATM
 E-Cheques
 EFT (Electronic Funds Transfer)
 DeMAT Accounts
 Mobile Banking
 Telephone Banking
 Internet Banking
 EDI (Electronic Data Interchange)

Benefits of E-banking:

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
To the Customer:

 Anywhere Banking no matter wherever the customer is in the world. Balance enquiry, request
for services, issuing instructions etc., from anywhere in the world is possible.
 Anytime Banking — Managing funds in real time and most importantly, 24 hours a day, 7days a
week.
 Convenience acts as a tremendous psychological benefit all the time.
 Brings down “Cost of Banking” to the customer over a period a period of time.
 Cash withdrawal from any branch / ATM
 On-line purchase of goods and services including online payment for the same.

To the Bank:

 Innovative, scheme, addresses competition and present the bank as technology driven in the
banking sector market
 Reduces customer visits to the branch and thereby human intervention
 Inter-branch reconciliation is immediate thereby reducing chances of fraud and misappropriation
 On-line banking is an effective medium of promotion of various schemes of the bank, a
marketing tool indeed.
 Integrated customer data paves way for individualised and customised services.

Impact of IT on the Service Quality:

The most visible impact of technology is reflected in the way the banks respond strategically for
making its effective use for efficient service delivery. This impact on service quality can be summed
up as below:

 With automation, service no longer remains a marketing edge with the large banks only. Small
and relatively new banks with limited network of branches become better placed to compete
with the established banks, by integrating IT in their operations.
 The technology has commoditising some of the financial services. Therefore the banks cannot
take a lifetime relationship with the customers as granted and they have to work continuously to
foster this relationship and retain customer loyalty.
 The technology on one hand serves as a powerful tool for customer servicing, on the other hand,
it itself results in depersonalising of the banking services. This has an adverse effect on
relationship banking. A decade of computerization can probably never substitute a simple or a
warm handshake.
 In order to reduce service delivery cost, banks need to automate routine customer inquiries
through self-service channels. To do this they need to invest in call centers, kiosks, ATM’s and
Internet Banking today require IT infrastructure integrated with their business strategy to be
customer centric.

Impact of IT on Banking System:

The banking system is slowly shifting from the Traditional Banking towards relationship banking.
Traditionally the relationship between the bank and its customers has been on a one-to-one level via

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
the branch network. This was put into operation with clearing and decision making responsibilities
concentrated at the individual branch level. The head office had responsibility for the overall clearing
network, the size of the branch network and the training of staff in the branch network. The bank
monitored the organisation’s performance and set the decision making parameters, but the information
available to both branch staff and their customers was limited to one geographical location.

Traditional Banking Sector

The modern bank cannot rely on its branch network alone. Customers are now demanding new, more
convenient, delivery systems, and services such as Internet banking have a dual role to the customer.
They provide traditional banking services, but additionally offer much greater access to information on
their account status and on the bank’s many other services. To do this banks have to create account
information layers, which can be accessed both by the bank staff as well as by the customers
themselves.

The use of interactive electronic links via the Internet could go a long way in providing the customers
with greater level of information about both their own financial situation and about the services offered
by the bank.

The New Relationship Oriented Bank

Impact of IT on Privacy and Confidentiality of Data:

Data being stored in the computers, is now being displayed when required on through internet banking
mobile banking, ATM’s etc. all this has given rise to the issues of privacy and confidentially of data
are:

 The data processing capabilities of the computer, particularly the rapid throughput, integration,
and retrieval capabilities, give rise to doubts in the minds of individuals as to whether the
privacy of the individuals is being eroded.
 So long as the individual data items are available only to those directly concerned, everything
seems to be in proper place, but the incidence of data being cross referenced to create detailed
individual dossiers gives rise to privacy problems.
 Customers feel threatened about the inadequacy of privacy being maintained by the banks with
regard to their transactions and link at computerised systems with suspicion.

Aside from any constitutional aspect, many nations deem privacy to be a subject of human right and
consider it to be the responsibility of those who concerned with computer data processing for ensuring
that the computer use does not revolve to the stage where different data about people can be collected,
integrated and retrieved quickly. Another important responsibility is to ensure the data is used only for
the purpose intended.

Why is a good IT infrastructure important for discrete manufacturing companies?

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
Manufacturing costs are controlled and minimised when there is no latency between material flow and
information flow. Especially, in the practice of demand-based manufacturing, wherein the vendors that
supply accessories to OEMs are based on JIT (just-in-time) or in-line sequencing methodologies, it is
absolutely imperative that a good information technology infrastructure is put in place.

What about process manufacturing companies?

A good IT infrastructure in the process industry is absolutely necessary for not violating regulatory or
safety norms, to improve performance and quality via real-time process monitoring, and finally,
improve reliability via appropriate maintenance, driven by up-to-date information on equipment status.

Can you explain what a good IT information infrastructure should have?

A good IT information infrastructure in manufacturing has five levels. The lowest level is the ‘control
systems layer' which directly controls the equipment used for producing the product. At this level, the
information gathered is control data and the output signal achieved from the said device/equipment for
a certain input and controller.

The second level is the ‘supervisory control layer,' wherein, ‘Supervisory Controllers and Data
Acquisition systems' (SCADAs) are installed for exercising supervisory control and acquisition of
process data and information.

The third layer is that of the manufacturing execution systems – a ‘production management functional
layer' encompassing product life cycle management (including computer-aided design), management
of all production operations such as scheduling of production, dispatch of production orders, data
collection on production orders, production reporting and analysis, tracking materials and genealogy,
etc.

The fourth layer is the ‘plant to enterprise connection layer' wherein the business processes of the plant
are connected to the business processes of the enterprise. The connection is established by a business
rules engine that establishes the link between plant systems and enterprise systems for information
sharing, analysis and reporting.

The final layer is the ‘enterprise application layer' which has all of the enterprise level applications
such as ERP, enterprise asset management, supply chain management, customer relations
management, etc.

A good infrastructure will seamlessly tie in one layer with the other so that all of the layers are
interconnected in real time.

Now, how do we implement this infrastructure?

The technologies that are used for various applications include, but are not limited to, state-of-the-art
in Web 2.0, database programming, service-oriented architecture, systems and network analysis,
wireless communication, enterprise mobility, design, and application of new technologies in the
domain areas of artificial intelligence, operations research, global optimisation, theory of constraints,

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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
Economics
simulated annealing, stochastic predictive modelling and so on. Real-time and non-real-time operating
systems are used, based on the mission-criticality of the operations.

Would you like to describe the goal of this infrastructure?

The main goal of this IT infrastructure is to enable zero latency within and between business processes
that have stakeholders that are distributed across the organisation.

For instance, maintenance is a function that not only concerns the maintenance organisation within the
company but has an impact on production (via the need for availability), inventory (for spares),
purchasing (for procurement of spares, tools), finance (for budgeting, asset replenishment,
replacement, etc.), logistics (for scheduling, dispatching and executing maintenance work orders),
corporate executive management (business strategy for ensuring lower manufacturing cost, and/or
increasing reliability in order to get better return on production assets) and so on.

This concept of achieving a unified synthesis of existing business processes, knowledge, data, etc.,
within the company, which are buried in disparate applications, divisions and departments using a zero
latency infrastructure is now called ‘enabling a real-time enterprise.'

By using the real-time enterprise infrastructure, a manufacturing organisation can assist its
management and labour to maximise performance efficiency, manufacturing effectiveness, quality,
reliability, and thereby increase the competitive advantage leading to better market share and better
return to shareholders.

Information Technology Infrastructure in a manufacturing industry:-

Manufacturing companies have huge investments in setting up their infrastructure to produce goods.
This involves a huge cost especially for the machinery and equipment implemented. An additional
investment in an IT infrastructure would immensely add to the cost of goods manufactured. Hence it is
imperative that these costs are kept under control.

Level 1 – Control Systems

This is the layer that will be present on the production floor and consists of the machines, robots and
other participating devices. These operate based on the data inputs and feeds that are remotely
provided to them. With the advent of Internet of Things (IoT) and similar technologies, dependence on
humans in the factory has reduced drastically. Conversely, there is an increased dependency on robust
IT systems that are securely interlinked with proper failsafe mechanisms. Proper functioning of this
layer ensures that the resultant manufactured product will be consistently error free.
Level 2 – Supervisory Control
This is the second layer and plays an important role in monitoring and controlling the below layer. This
is responsible for data collection as a control measure. This layer is also referred to as SCADA
(Supervisory Controllers and Data Acquisition) systems.
Level 3 – Production Management
This is the layer responsible for the management and execution of the production
life cycle and is responsible for these functions:
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 Genba Sopanrao Moze College Of Engineering, Balewadi - Pune
Department of MCA, F.Y SEM – I, Information Systems and Engineering
 Economics
Design including CAD
 Production Scheduling
 Order Dispatch
 Order Data Collection
 Reporting and Analytics
 Tracking Materials

Level 4 – Plant to Enterprise Connection

Product manufacturing is supported by business processes of the manufacturing plant which in turn
need to be linked to the business processes of the company or enterprise. This layer is responsible for
maintaining the connection and/or sync between the two for sharing information and business
processes, analytics and reporting.
Level 5 – Enterprise Application
This is the top level that is manned by high level business processes and applications like Enterprise
Resource Planning (ERP), Enterprise Asset Management (EAM), Supply Chain Management (SCM),
Vendor Management, Customer Relationship Management (CRM) (to name a few) systems. All these
systems need to be seamlessly integrated with each other to ensure smooth flow of data and processes
resulting in seamless operations across units, departments, facilities and geographies.

Unit 3: Management Information System (MIS)

Q 1) Define MIS ,Explain Role of MIS, Structure of MIS based on management activity and functions.

Q 2) Write a short note on - Supply Chain Management (SCM).

Q 3) What is Customer Relationship Management? Explain the challenge in Customer Relationship

Management.

Q 4) Explain Structure of MIS based on Social activity?

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