Value – Ed, December 2020, PM Batch

Chapter – 3

Information systems and

Data analytics
Information needs at different levels

Management information requirements in an organization can be classified into three different levels:
strategic, tactical and operational

Strategic level of management - requires information from internal and external sources in order
to plan the long-term strategies of the organization

Tactical level of management - requires information (in a summarized form) and instructions
from the strategic level of management, together with routine and regular quantitative
information from the operational level of management.

Operational level of management - requires information and instructions from the tactical level
of management. Most of the information here is obtained from internal sources, which must be
detailed and precise.
Transaction Processing Systems (TPS)

Records historic information and represents the simple automation of manual systems

It captures, processes, stores and output the low level transaction data

In other words,

❖ A TPS records all the daily transactions of the organization and summarizes them, so
that they can be reported on a routine basis

❖ These systems are used mainly by operational managers to make basic decisions

❖ Example, a TPS used to record the sales for a bookstore

Management information systems (MIS)

Converts internal and external data into useful information which is then communicated to managers at all
levels and across all functions

Management information systems is used in almost all types of organizations above a small size

For example:
❖ Car manufacturing systems - summarize the sales of motor vehicles, to assist in trend analysis and
hiring of new workers

❖ Firm of accountants - Summarizing work performed on different audit engagements to assist in fee
negotiation

❖ Training company – provides the details of students registered on to different courses to indicate the
size of lecture rooms required and number of lecturers for each subject

❖ Manufacturing company - Provision of stock ageing analysis to determine the amount of stock
provision in the financial statements
Features of a MIS
MIS provides:

❖ Support for decision making at all management levels

❖ On-line access to the transaction processing systems of the organization, to give

summary information on the performance of the organization

❖ An internal rather than external focus, with detail being provided internally about the
organization itself, rather than externally generated information about competitors or
the overall economic environment

❖ More detailed information about the organization’s operations, or individual

transactions, through a ‘drill down’ facility

❖ Relatively simple summary reports and comparisons, and does not contain the more
detailed mathematical models or statistical techniques found in a DSS, for example
Types of MIS

Database systems - process and store information, which becomes the organiszation’s memory

Direct control systems - monitor and report on activities such as output levels, sales ledger and credit
accounts in arrears

Enquiry systems – provide specific information such as the performance of a department or an

employee

Support systems - provide computer-based methods for conducting analyses, forecasts and
simulations
Decision Support Systems (DSS)

Computer based systems which enable managers to confront ill-structured problems by direct
interaction with data and problem-solving programs. It provides access to summary performance
data, using graphics to display and visualize the data in a very easy to use fashion

Characteristics of a DSS:

❖ Providing support for decision making, especially for semi-structured or unstructured decision
making
❖ Supporting all stages in the decision-making process
❖ Supporting decisions that are inter-dependent as well as independent
❖ Supporting a variety of decision-making processes
❖ User friendly

It assists in gathering information and identification of situations requiring decisions, designing possible solutions,
making a choice of solution. It uses a 'what if' analysis’ to predict the results for each scenario.
DSS - Tools and elements

Tools
❖ Spreadsheets
❖ Expert systems
❖ 4GLs. (4th generation languages – a form of query language)
❖ Databases
❖ Statistical programs

Elements
❖ Language sub-system which does not require significant programming ability to use
❖ Problem processing sub-system which includes spreadsheet, graphics, statistical analysis
❖ Knowledge sub-system which includes a database function
❖ Expert systems which hold specialist knowledge, allowing non-experts to interrogate them for
information, advice and recommended decisions. These can be used at all levels of management
Executive Information Systems (‘EIS’)

Provide strategic managers with flexible access to information from the

entire business, as well as relevant information from the external
environment
 Expert systems (‘ES’)

An expert system is a software system with two basic components:

❖ a knowledge base and
❖ an inference engine

Knowledge base - a structured database which stores the knowledge and experience of a number of
experts

Inference engine - draw on the knowledge base in an organised way

The operating software or ‘inference engine’ uses a mixture of rule-based logic and ‘fuzzy logic’ to infer a solution from the
knowledge base
Enterprise resource planning system (ERPS)

❖ ERP Systems are installed on a Database Management System which integrates data from all
operations within the organization, e.g. operations, sales and marketing, human resources and
purchasing, into one single system.

❖ Software companies like SAP and Oracle have specialized in the provision of ERP systems across
many different industries

❖ These systems offer:

• On-line/real-time information throughout all the functional areas of the organization
• Standard data across the entire organization
• Common data files for all functions, thereby saving duplication
Customer Relationship Management (CRM) Systems

Consists of processes, which a company uses to track and organize its contacts with its current
and prospective customers.

Stages of developing and maintaining appropriate customer relationships:

Phase 1 – Selection of customers to be targeted

Phase 2 – Acquisition of new customers
Phase 3 – Retention of an existing customer
Phase 4 – Extension of sales (by reselling the same product, cross selling to existing customer
and up-selling to upgrade a sale to a customer
Phase 5 - After-sales service
Big Data

Big Data includes much more than simply financial information and can involve other
organizational data which is operational in nature along with other internal and external data
which is often unstructured in form

The three V’s in Big Data:

❖ Velocity
❖ Volume
❖ Variety (in terms of formats of available data)
Data which may input into Big Data

❖ Social network traffic

❖ web server logs
❖ traffic flow monitoring
❖ satellite imagery
❖ streamed audio content
❖ banking transactions
❖ audio downloads
❖ web pages content
❖ government documentation
❖ GPS tracking
❖ telemetry from consumer and commercially operated vehicles
❖ financial market data
Big Data Management and analytics

Provides for the storage, administration and control of vast quantities of both structured and
unstructured data to ensure that the data stored is of high quality and is accessible

Some points of concern:

❖ Big Data sources may not fit into currently available data warehouses
❖ Big Data analytics may require more advanced software tools than those commonly used in
traditional data mining

Solution:

Open source technologies such as Hadoop are increasingly utilized to manage the constantly
evolving data processing requirements of Big Data

Hadoop is an open source programming framework which enables the processing of large data sets by utilising multiple
servers simultaneously
Value – Ed, December 2020, PM Batch

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