Management information systems

System
• A System may be defined as a set of elements which
are joined together to achieve a common objective.
• The set of elements for a system are:
1. Input
2. process
3. Output
4. Feedback/ Control
5. Environment
Input Process Output
Feedback
/Control

Information
• One of the Most valuable resource required by the
management in order to run the organization.
•Information is the data that is processed and presented
in the form that assists in decision making.
Data Processing Information
• Concept of data & Information is a relative one.
Information for one may be data for Another.
e.g. Withdrawal slip in a bank is a information for data
entry operator but data for the bank manager.

Information
Senior Management Operating
Management
1. Unstructured
2. Non-Programmed
3. Futuristic
4. External & Internal
1. Structured
2. Programmed
3. Historical
4. Internal
5. Exact
Different layers of Management require
different types of information

Importance of Information Systems
•Necessary for Decision Making
•For Taking Rational, Timely & Accurate Decisions
•For Taking decisions in Complex Decision situations
•Globalization & Liberalization have added various dimensions
that necessitate use of Information Systems
•IS is regarded as the fifth important resource besides- Money,
Material, Men & Machine.
•In short Today’s business organizations can’t survive and
grow without properly planned, designed, implemented
and maintained Information System.

There are broadly three levels of Management Hierarchy
•Top Management( Strategic Planning)
•Middle Management( Management control)
•Operating Management ( Operational control)
Top
Management
Middle
Management
Operating
Management
Strategic Planning
•Policies
•Plans
•Budgets
•Objectives
Management control
•Revenue
•Costs
•Profits
•Schedules
•Measurements
Operational control
•Goods
•Services
•Performance
Management Hierarchy

Types of Information Systems
INFORMATION SYSTEMS
Operations
Support Systems
Management Support Systems
•Transaction
Processing Systems
• Process Control System
•Enterprise Collaboration System
•Management
Information Systems
•Decision Support
Systems
•Executive Information
Systems

Operations Support Systems
The Operations Support Systems are the Information Systems that process
the business transactions ,control industrial processes,and update company’s
databases.
Such Systems don’t produce specific information that can be used by the managers.
The output of these Systems act as input for higher level systems. To generate
useful information, further processing of output from these systems is required.

Transaction Processing
System
 Book Keeping
 Issuance
•Data Gathering
•Data Editing
•Data Manipulation
•Data Storage
•Information Documents
•Error Reports
•Control Reports

Management Information
Systems
PROVIDES INFORMATION
On continuous basis and reports like
 Scheduled Reports
 Exception Reports
 Demand Reports

Decision Support Systems
 PROVIDES SUPPORT IN THE
DECISION MAKING OF MANAGERS

Executive Information System
Executive Information Systems are IS that help senior management take
decision in unstructured problem situations.
EIS find application in decision areas of:
 Monitor company performance
 Track activities of competitors
 Spot & foresee problems
 Identify opportunities
 Forecasting
EIS depend heavily on external sources of data like stock market,
economic databases, news services etc. as well as on internal information.
EIS have highly flexible and user friendly input & output interfaces.
They have drill-down options.

MIS Defined
A Management Information system (MIS) is an organized
collection of
•People
•Procedures
•Software
•Databases,and
• Devices
that are used to provide routine information to managers
and decision makers.
The System gathers data from internal and external sources
Of the organization; processes it according to the procedure;
And supplies Information to assist Manager in taking
effective decisions in a speedy manner.

What is Management Information System
Management Information Information System is composed of three parts
1. Management
2. Information
3. System
Management may be defined as ‘The art of getting things done through
and with the people in formally organized groups.
A Manager gets the things done by performing different functions in a
SYSTEMATIC way and these are
• Planning
• Organizing
• Staffing
• Directing
• Controlling

•The focus of MIS is primarily on Operational efficiency of
resources. Marketing, production, Finance, and other functional
areas are supported by Management Information systems and
linked through a common database.
•Thus MIS is not a single system, rather it is an integrated
system where subsystems fit into an overall design.
•Management Information Systems typically provide standard
reports generated from the Transaction Processing Systems.
MIS

Nature & Scope of MIS
The discipline of MIS is interdisciplinary. It involves different
domains like
•Accounting
•Management
•Computers
•Organizations
•Mathematics & Operations Research
•Behavioral Sciences etc.
Management
Information Systems
Accounting
Mathematics &
Operations Research
Computer Science
Behavioral Sciences Management

Constituents of MIS
MIS constitutes of
• Hardware
The computer equipment to perform input,processing and output
activities. E.g. CPU, monitor,keyboard, Printer, drives, tapes,
communication devices, etc.
• Software
Computer programs that direct the operation of the hardware.
Software could be
System software
Application software
• Databases
The databases contain all data that is generated and used by
application software.

Constituents of MIS (Contd.)
• Telecommunications and Networks
• People
Analysts, Programmers, System managers, Computer Operators
• Procedures
Procedures include the strategies, policies, methods, and rules for using
the MIS.

Types of MIS
Information Systems are developed around the functional areas
of business like marketing, finance etc. and are also termed as
Functional Information Systems.
These may be as
•Financial Information System
•Marketing Information System
•Personnel Information System
•Production Information System
and so on.

Financial Information System
Financial Information System provides financial information
to all financial managers within an organization and a
broader set of people who need to make better decisions.
Financial MIS performs the following functions:
•Makes financial data available on a timely basis to shorten
analysis turnaround time.
•Provides easy access to data for both financial and
non-financial users, often through the use of corporate
intranet .
•Integrates financial and operational information from
multiple sources, including the Internet, into a single MIS.
•Enables analysis of financial data along multiple dimensions-
time, geography, product, plant , customer etc.
•Analyzes historical and current financial activity.
•Monitors and controls the use of funds over time.
•For adhering to legal requirements

Financial MIS aids managers in:
•Capital Budgeting Decisions
•Financing decisions
•Dividend decisions
•Current asset management

Financial Information System ( Contd.)
Financial MIS composes of the Inputs
1. Transaction Data: This data includes credit applications,
billing, payment vouchers, stock transfers, cheques,
journal and ledger entries etc.
2. Financial Intelligence : This data is collected from banks,
government, stock markets, etc. which is processed to
determine its impact on the company’s economy.
3. Organizational Plan: Another important input to
Financial MIS, that portrays the objectives of the
company. This needs to be reflected in the output of
Financial MIS, which may be in the form of financial plans.

Business
Transactions
Transaction
Processing
System
Database
Of External
Data
Database
From
TPS
Datawarehouse
FINANCIAL
MIS
•Sorted Data
•Forecasts
•Management Ratios
•Audit &
Control
•Other Financial
Decisions& Plans
•Financial DSS/EIS

Some of the Financial MIS are
• Tally
• BMS
• IFPS

Marketing MIS
It is the MIS that supports managerial activities in marketing as product
development, distribution, pricing decisions, and promotional effectiveness.
The Marketing MIS help managers in marketing activities of:
• Customer Identification: who, when, where, in what quantity,etc.
• Purchase motivation factors: social, economical,
psychological factors of customers.
• Physical distribution: optimum integration of
transportation, warehousing, merchandising.
• Communication function: This function includes
decisions on advertising, personal selling,
sales promotion, publicity, packaging etc.
• Transaction functions : Activities that transfer the
title of ownership as order handling,
invoicing, billing, credit management, policy
& guarantee etc.
• Post transaction Function: Feedback, after sales
service support etc.

Marketing MIS
Business
Transactions
•Internet
•CRM
Transaction
Processing
System
Database
Of External
Data
Database
From
TPS
Datawarehouse
MARKETING
MIS
Marketing DSS
Marketing EIS
Marketing ES

Human Resource Management
Information System
Human Resource MIS are concerned with activities related to
employees and potentiaal employees of the organization.
The HR functions that are facilitated by HRMIS are as:
•Manpower Planning
•Staffing
•Training & Development
•Performance evaluation
•Wage & Salary administration
•Separation activities

Human Resource Management
Information System

Manufacturing Management
Information System
Manufacturing or Production Information System provides
information on production/ operation activities of an
organization and thus facilitates the decision-making process
of production managers of the organization.
Manufacturing MIS facilitate decision making in areas as:
•Product Design: CAD, CAE
•Plant Location & Layout:
•Production Planning & Control:Routing, Scheduling,
Loading
•Quality Control:

Manufacturing Management
Information System

Office Automation System
Office automation refers to the application of computer and
communication technology to office functions.
Office Automation systems improve productivity of
managers at various levels of management by providing
secretarial assistance and better communication facilities.
These systems include facilities for activities as
• Typing
• Mailing
• Scheduling of meetings and conferences
• calender keeping
• retrieving documents
• conferencing
• Production of information( messages, memos,
reports), and so on

Office Automation Systems provide support facilities in
form of:
•Word Processing
•Electronic mail,
•Message Switching,
•Data Storage,
•Data & Voice Communications.
Office Automation System

MIS Characterstics
A Management Information System has the following
Characterstics:
•Systems Approach
MIS follows Systems approach i.e. MIS adopts wholistic
approach to the study of systems and its performance in the light of the
objective of the MIS. It takes comprehensive view or complete look at
the subsystems of the organization.
•Management Oriented
MIS should be designed in Top-down approach. MIS should
be derived from the overall business plan.
•Need based
MIS should cater to specific information needs of managers at
different levels I.e. for strategic planning level, management control
level, and operations control level.

MIS Characterstics( Contd.)
•Exception Based
MIS should be on Exception based reporting Principle and
deviation should be reported to decision maker at the required level.
•Future Oriented
MIS should not merely provide past information but
should provide information based on the future projections
based on which manager may initiate suitable action.
•Integrated
MIS should blend information from different departments or
constitute of different possible subsystems of the organization.
•Long Term Planning
MIS designers should have future objectives and
needs of the company in mind.
•Common Data Flow & Central Database

Decision Support Systems
Application of DSS:
For Inventory Management
To identify Customer buying patterns
Optimizing discounts/price markdowns.
Targeting direct- mail marketing customers
Store location
Evaluation of Potential drilling sites.
Flight Scheduling etc.

Web-Based Decision Support System
The DSS based on Web & Internet can support decision making,by
providing online access to various databases and information pools
along with the software for data analysis.
GE Plastics
Customer Decision Support Systems: In such DSS customers using web
interface to self-serve using the DSS tools of the sponsoring company.
Fidelity Investments
Homes.com, etc.

Group Decision Support System
GDSS is an interactive computer based system to facilitate the solution
of unstructured problems by a set of decision makers working together
as a group.
While Groupware & video-conference tools provide a platform for
communication in group decision, GDSS provides additionally the tools
and technologies explicitly for group decision making.
Components of GDSS
 Hardware
 Software
 People

Group Decision Support System
GDSS software tools include:
Electronic questionnaire
Electronic brainstorming tools
Idea Organizer
Prioritizing tools
Group dictionaries
Stakeholder Identification &Analysis tools
Policy Formation tools

System Development For MIS
System Development includes the all activities of the
development stages of any MIS solution.
It includes activities as :
• Understanding the Management Problem
• Deciding a Plan for a Solution
• Coding the Planned Solution
• Testing the Coded Program

System Development Stages
To develop any system, the project is managed by breaking the
total development process into different sub activities or stages.
These areas:
1. System Investigation
2. System Analysis
3. System Design
4. System Construction
5. System Implementation
6. System maintenance

System Investigation
The organization may be facing any problem and the managers of
the organization may not be very clear about the problem.
The organization would in such case invite a business/system/
information analyst to help in defining and resolving the business
problem in clear form.
System Investigation deals with this stage.
The Investigation stage constitutes of two sub-stages
•Problem Definition
•Feasibility

Problem Definition
One of the MOST IMPORTANT stages in the System
Development Cycle but yet most neglected often.
Tasks performed at this stage are
Prepare a written statement of the objectives
Identify scope of Problem
Discover the causes of Problems, etc.
For example some of the possible definition of Problems may
be as
•The existing system has a poor response time
•Unable to handle load
•Does not provide sufficient information
•Problem of security, etc

Feasibility Study
Feasibility addresses the viability of the intended MIS would be
useful for the organization. It is intended to assess the
various alternatives and identify the most feasible and
desirable system for development
.
Feasibility is assessed in terms of the below categories:
1. Organizational Feasibility: The extent up to which the
proposed MIS supports the strategic plans of the
organization.

2. Economic Feasibility:
The costs and returns are evaluated to justify the
investment in the system project. The factors
evaluated are
• Cost of H/W, S/W, N/W, Cost of Full
System Investigation, Maintenance, etc
• Benefits in form of targeted objectives of MIS.
Feasibility Study

Feasibility Study
3. Technical Feasibility: It deals as with issues as
whether hardware and software, capable of meeting
the needs of the proposed system can be acquired
or developed, in required time. It concerns regarding
•Does the necessary technology exist?
•Does the proposed equipment have the technical
capacity to hold the data, provide response to
enquiries, regardless of locations
•Can the system be expanded
•Technical surety of accuracy, reliability, ease of
access, data security, etc.

Operational Feasibility
Operational Feasibility contains factors like
management support and willingness, employees,
customers, suppliers willingness to operate, and
adopt the proposed system, etc.It includes
•Support from Management
•Willingness of employees, Customers to adopt
new system and business methods
•Support from suppliers, vendors, external partners, etc.
•Involvement of users in system development
•Meeting regulatory/legal requirement, etc.

Methods of System Preliminary Investigation
1. Reviewing Documents
2. Conducting Interviews

System Analysis
System Analysis is the detailed study of various operations of the
business system/activity, along with its boundaries.
The objective is to determine exactly what must be done to
solve the problem.
System analysis involves detailed study of:
•Information needs of the organization and its
end users.
•Existing Information Systems( their activities,
functions, resources, products)
•The Expected Information System( expected
capabilities)

System Design
System Analysis describes WHAT a MIS should do to meet
information needs of organization and System Design specifies
HOW the System will accomplish these objectives.
System design consists of activities as:
•Use Interface : Interactions between user and
computer systems.
•Data Design: Focuses on structure of database
•Process Design: Programs and procedures of
the MIS

System Construction
Once the system specifications are understood,
required programs are coded, debugged, and
documented.
System Testing
Testing done on new Systems, using test data.
Feedback leads to improved System.

System Implementation
Even a well design System will fail if not
implemented properly. It involves various
activities as:
•Acquisition of H/W & S/W
•Site preparation
•User training
•Installation of the System
•Standardizing the new System in the organization.

System Maintenance
System maintenance involves the monitoring,
evaluating and modifying the system to make
desirable or necessary improvements and remove
residual errors/shortcomings.

System Development Approaches
A System Development approach defines and guides how the
system development activities are to be organized in the overall
system development process. There are four most important system
development approaches.
1. Waterfall Model or SDLC
2. Prototyping Approach
3. Rapid Application Development

Waterfall Model
This is also referred to as SDLC( Software Development Life
Cycle) or Traditional approach .
This approach takes step-by -step approach to system
development activities. Once one stage is completed , only
then next stage is taken up. :

Waterfall Model(Contd.)
Systems Investigation
Understand Problem
Systems Analysis
Understand Solution
Systems Design
Select & Plan Best Solution
Systems Implementation
Place solution into effect
Systems Maintenance & Review
Evaluate Results of Solution

Limitations:
1. Each stage is considered as distinct which may
not be in reality.
2. This model involves freezing of requirements for hardware.
However in large projects the hardware technology may
become obsolete.
3. Involves large documentation and time consuming
4. Users cant easily review the intermediate product and
evaluate whether it meets their requirements.

Prototype Model
In this approach a prototype is developed, instead of
developing the complete system. Users are encouraged to try
the prototype and provide feedback. Iterations are done
until the final system is developed.
Prototyping is done in situations where identification of
requirements is difficult and requirements may change
during the development process.

Investigate & Analyze problem to develop
workable solution
Develop Prototype
Put Prototype in operation
Refine and Modify Prototype
Complete System
System Development Initiated
Prototype ModelPrototype Model

Prototype Model(Contd.)
Advantages:
1. Users can try the system and provide the constructive
feedback during the development process.
2 An operational prototype can be produced in short
periods.
3 Prototyping enables early detection of errors and
omissions.
4 Higher motivation & positive response from users.
Disadvantages:
1. There may be unending refinements desired by users.
2. System documentation is ignored
3. Prototypes are not complete systems and many of the
details are not built in the prototype.

Rapid Application Development
Rapid Application Dvelopment( RAD) employs tools, techniques
and methodologies to speeded the application development processs.
For example Powerbuilder by Sybase, and other tools by IBM,
Oracle, etc. are used for RAD.
RAD reduces paper-based documentation, automatically generates
program source code, and facilitates user participation in the design
and development activities. Using RAD entire systems are developed
in less than 6 months.
RAD is also known as Extreme Programming,
Agile Development, Joint Application Development.

Rapid Application Development(Contd.)
Advantages:
1. This approach completes the application in lesser time.
2. Documentation produced a s a by-product of project tasks.
3. RAD involves team work and lots of interaction between users
and stakeholders with the system developers.
Disadvantages:
1.This approach puts high pressure on system developers and
other project participants.
2. This approach requires system analysts and users to be skilled
in RAD system development tools & techniques.
3. RAD requires very high involvement & time of stakeholders
and users affecting their routine functions.

Knowledge-Creating
Companies
• Consistently creating new business
knowledge, disseminating it widely
throughout the company, and quickly
building the new knowledge into their
products and services.

Knowledge Management System
Knowledge is the ability of person to understand
the situation and act effectively.
•Competition & Market forces demand that
organizations today can be competitive if they
manage the knowledge and continuously upgrade
as per changing requirements.
•Knowledge Management is the process of capturing,
maintaining and updating continuously the
company’s expertise both internal as well as external
where-ever it resides- in computers, in peoples
heads, on paper or thru external sources- and
distributing efficiently wherever it can help
produce the biggest payoff.

Types of Knowledge
• Explicit Knowledge – data, documents,
things written down or stored on
computers
• Tacit Knowledge – the “how-tos” of
knowledge, which reside in workers

Knowledge Management System
Knowledge Management Systems involve the
tasks of
•definition,
•acquisition,
•construction,
•storage,
•delivery and
•application of the knowledge
so as to maintain and improve the competitiveness of
the organization..

Levels of Knowledge Management

KMS Architecture
KMS architecture deals with three main functions as :
•Knowledge Identification
•Knowledge Generation
•Knowledge Delivery
KMS
Knowledge
Identification
Knowledge
Generation
Knowledge
Delivery
•Definition &
Categorization
•Surveying &
Locating
•Build Knowledge
Structure
•Processing for
Acquisition
•Manupulating &
Modelling
Creation of KDB
•Access Control
•Application
Methods
•Storage &
Security

KMS Tools
The tools for KMS are as:
Database management tools
-For data management and seeking knowledge thru SQL queries
Data Warehousing, Data mart, Data Mining tools
Process Modeling and Management tools
-For recording standard processes for knowledge use
Search Engine tools
Document Management tools-like Lotus Notes
Web based tools- Internet& Intranet

Strategy and Strategic Moves
• Strategy: plan to gain advantage over
enemy
• Business strategy is plan to outperform
competitors
– Done by creating new opportunities, not only
beating rivals
• Strategic Advantage: Using strategy to
maximize company strengths

Why Study Strategic IT?
• Technology is no longer an afterthought in
forming business strategy, but the actual
cause and driver.
• IT can change the way businesses
compete.

Strategic View of Information
Systems
• Information systems are vital competitive
networks.
• Information systems are a means of
organizational renewal.
• IS are a necessary investment in technologies
that help a company adopt strategies and
business processes that enable it to reengineer
or reinvent itself in order to survive and succeed
in today’s dynamic business environment.

What is IT?
A bunch of networks and computers
OR
Hardware plus the software that mediates and manages human
knowledge or information

Does IT Matter?
How important is IT to GE?
– Business imperative
– Lifeblood for productivity
– 20% return on technology investments and
GE invests $2.5 to $3 billion a year

Does IT Matter?
Paul Strassman, former CIO of General Foods, Xerox,
Pentagon, and NASA
Information technology today is a knowledge-capital
issue.
Look at the business powers – most of all Wal-Mart,
but also companies like Pfizer or FedEx. They’re all
waging information warfare.

Strategic Information Systems
Definition:
Any kind of information system that uses information
technology to help an organization gain a competitive
advantage, reduce a competitive disadvantage, or meet
other strategic enterprise objectives.

Porter’s Competitive Forces Model
To survive and succeed, a business must
develop and implement strategies to
effectively counter the:
• Rivalry of competitors within its industry
• Threat of new entrants into an industry and its
markets
• Threat posed by substitute products which
might capture market share
• Bargaining power of customers
• Bargaining power of suppliers

Competitive Forces and Strategies

Initiative #1: Reduce Costs
• Customers want to pay little for service
• Reduce costs to lower price
• Automation greatly reduces costs
• Web can automate customer service

Initiative #2: Raise Barriers to
Market Entrants
• Less competition is better for company
• Raise barriers to entrants to lower
competition
• Techniques include obtaining copyrights
and patents on inventions, techniques,
and services
• Building unmatchable information systems
blocks entrants

Initiative #3: Establish High
Switching Costs
• Switching costs: incurred when customer
stops buying from company and starts
buying from another company
– Explicit: charge customer for switching
– Implicit: indirect costs over period of time
• High switching costs locks in customers

Initiative #4: Create New
Products or Services
• Having unique product or service gives
competitive advantage
• First mover: organization that is first to
offer a new product or service
– Superior brand name, better technology, more
experience
• Critical mass: body of clients that is large
enough to attract other clients

Initiative #4: Create New Products or
Services (continued)
EBay created a new service that established it as an industry leader

Initiative #5: Differentiate
Products or Services
• Product differentiation: persuading customers
that product is better than competitors’
– Achieved through advertising
– Exemplified by brand name success
– Promotes brand name
– Develop new IT features to differentiate product and
service
EX: Google did not offer an original service, but the
service has grown superior to other Web search
services

Initiative #6: Enhance Products
or Services
• Enhance existing products or services to
increase value to consumer
• Many products and services have been
enhanced by the Web
EX: Dell continues to enhance its service to
maintain the competitive advantage of its
online order site

Initiative #7: Establish Alliances
• Alliance: two companies combining
services
– Makes product more attractive
– Reduces costs
– Provides one-stop shopping
• Affiliate program: linking to other
companies and rewarding the linker for
click-throughs

Initiative #8: Lock in Suppliers
or Buyers
• Accomplished by achieving bargaining
power
• Bargaining power: leverage to influence
buyers and suppliers
– Achieved by being major competitor or
eliminating competitors
– Uses purchase volume as leverage
• Lock in clients by creating high standards

Interneterprise Information
Systems
Definition:
• Information systems implemented on an
extranet among a company and its
suppliers, customers, subcontractors, and
competitors with whom it has formed
alliances.
• E.g. CISCO

A business that:
• can anticipate customers’ future needs.
• responds to customer concerns.
• provides top-quality customer service.
Customer-focused Organization

MIS in Customer Focused Business

MIS RISKS
The Security Issues that emerge from MISs are as:
1. Secrecy
2. Privacy
3. Confidentiality
4. Destruction
5. Theft of Information
6. Computer Wastages

The Reasons that affect the security threats
to MIS are as:
•Destruction
•Deletion
•Bugs Infection
•Theft
•Corruption

Sources of MIS Threats
Threats to MIS can be caused by different sources
and these are
Failure of System:
Hardware
Software
Network
Telecommunication

Human Actions:
Illegal access
Theft
User Errors
Program changes
Natural Calamities
Fire
Earthquakes
Floods & rains
Sources of MIS Threats

Security Controls
Security Controls that can be used by the
organizations to counter the security threats.These
may be the combination of below:
•Access Controls Systems
•Hardware & Software Controls
•Fault Tolerant Computer Systems
( Mirroring/ Clustering)
•Monitoring the Usage/Security Monitors
•Biometrics
•Anti Virus Protection tools
•Firewalls
•Cryptography
•Disaster management Plan
•Employees’ Conduct & Performance Audit

MIS Security Plan
MIS Security Management system is designed to
meet security threats and involves:
•Identification of threat sources & possibilities
of its occurrence.
•Protecting the Information and MIS from
unauthorized access
•Ensure the privacy of individual & personal
information
•Check the misuse of information and MIS
•Provide methods and systems to recover from
damage and to put the MIS on normal track

How Much Security Is Enough Security?
Two costs to consider
–Cost of potential damage
–Cost of implementing preventative measure

Software Procurement
Software can be acquired in different ways.
These are
1. Make the Software
2. Buy the Off-the –Shelf software
3. Combination of the above
4. Outsourcing
5. ASP ( Application Service Providers)

Buy the Software
The company buys the software developed by
vendors in that application area. These are also
referred to as off- the -shelf software products.
Reasons/ Advantages for this type of procurement:
• Lower cost of development
• Faster acquisition
• Tested product
• Known Costs
• Doest not require IT development skills
• Upgradations available from vendors

Steps in Procurement thru Buy Option:
1. Review Needs, Requirements, and Costs
2. Negotiate & Acquire the Software
3. Modify or Customize Software
4. Acquire software interfaces
5. Test the Software
6. Monitor and Maintain the Software

Disadvantages of Buy Option:
1. Dependence on Vendor
2. High cost of maintenance
3. Fit with the Company’s Requirements
4. Employee learning & Motivation

Make the Software
In this option company performs all the activities
of system analysis to system development and
maintenance.
Reasons / Advantages:
1. Software meets the specific requirements.
2. Customized Changes in the software possible
3. Software acts as core competence
4. Potential for commercialization of the developed
software product
5. Higher learning environment in the company

Business
Process
IT
Technology
Customer
Purchases
Deal
Structure
Fixed Cost
Product
40s-50s
60s-70s
80s-90s
00s
15-20
10-12
5-8
10-20
8-10
3-5
Application
IT Solution
Business
Outcomes
Variable
costs
IT
Outsourcing
BPOContinuous 1 - 3
IT & Business Process Life

IS Outsourcing
IDC Defines IS Outsourcing as a long term
contractual arrangement in which the service
provider takes ownership of and responsibility for
managing all or part of a client’s IS operations or
department based on a service level agreement
IS OUTSOURCING DEFINED

Information System Outsourcing
services
• System integration
• Facility management
• Contract programming
• Software support
• Network maintenance
• Minicomputer/Mainframe/ Workstation/PC
maintenance

• Total outsourcing
• Total insourcing
•Selective Sourcing/Smart
TYPES OF SOURCING

WHAT TO OUTSOURCE
Non-Core, Non Critical
•Security
•Cafeteria
•Laundry
Likelihood to OutsourceHigh
Core Business
•Managing marketing
Image/Trademark
•Canning for patents
•Find/Sell new products
•Manufacture products
•IS
Likelihood to Outsource : LOW
Non-core, Yet Critical
• Accounting
•Supply chain Management
•HR Administration
•Claims Administration
•IS
Likelihood to
Outsource:Medium -High

DRIVERS FOR OUTSOURCING
Outsourcing IT leads to low running costs
Outsourcing IT has low setup cost.
Outsourcing IT has low set-up time
Shortage of skilled manpower
Expertise of outsourcer
Organisation needs to focus on core function rather that
IT activities
Low Down time
Improved output/performance of Inf. System
Better service to users
High cost of maintaining and updating IT employees
Availability of network bandwidth and technology

Application Service Providers
An ASP provides contract-based service to supply
and host software and computing applications,
data storage, reporting tools, upgrades, and
technical support to its clients using a web
platform via the Internet or an extranet.
Applications are generally leased on need basis
with flexible monthly fixed rates ranging
anywhere from $ 10 to $ 10,000 per month and
variable according to usage.

Advantages:
•Faster adoption of the software
•No hassles in system development & Maintenance
•Companies can focus on their core functions
Disadvantages:
•Dependence on ASP vendors.
•High Costs
•Customized application may not be possible
•Changes in software difficult

System Implementation
Implementation is the process of installing a newly
developed MIS at the organization’s site. This may
involve either installing new system in case there
is no earlier system OR installing modified system..
Implementing the MIS means putting the new
system into operation.

The various stages in MIS Implementation are as:
1. Planning the Implementation
2. Acquisition of Facilities and Space Planning
3. Acquisition of Hardware & Software
4. User Training & Hiring
5. Data Preparation
6. Installation
7. Testing
8. Changeover
9. User Acceptance
System Implementation Stages

Implementation Planning
It is the blue –print of the MIS Implementation and
is the detailed plan of implementing the MIS
in the organization. The pre-implementation
activities as:
•Identifying MIS team and managing the project team,
•Scheduling the implementation activities,
•Control mechanism, etc
Gantt Charts and Network diagrams are used to
monitor/schedule the implementation activities.

Acquisition of Facilities and Space
Acquisition of facilities as computer room, office, etc.
Space planning and Layout of following required as:
• Computer centres,
• Printers,
• Network Cabling
• People and their movement,
• No. & Type of exits,
• Storage areas,
• Airconditioning,
• Safety equipments & Measures, etc

Acquisition of Hardware & Software
Hardware & Software procurement is a detailed and
exhaustive exercise and involves
• Requirement Analysis,
• Procurement mode (Inhouse OR off-the-shelf OR
thru ASP)
• Inviting vendor quotations ( Tender process in
public / large contracts)
• Comparison of Different offerings( Technical &
Financial aspects)
• Negotiations
• Delivery & Installation
• Post installation review

User Training & Hiring
User training is very important for the success of MIS
implementation. Training of varying nature
is to be given to different levels of employees:
data entry operators/clerks, supervisors, managers /
senior management in the use of MIS. Technical
training is given to IT employees for maintenance etc.
People with skills not in the organization may be
hired, These may be from management as well as
technical background in the new set up.

Data Preparation
Data Preparation refers to the activity of converting
data that have been earlier in the manual processes
into computer form according to the designed
structure of MIS.
Normally outsourced or made by temporary staff.
Once old data turned into MIS system, new data is
handled by the new computerized MIS system.

Installation
Installation is the process of physically placing the
computer equipment on the site, install & configure
the software so as to make it operational.
IS manager is generally responsible for the
installation, though some of the installation
activities are performed by vendors.

Testing
Testing is performed at system construction stage.
However testing is performed at implementation
with actual data.Testing is performed on individual
components of the MIS as well as whole system.
•Equipment
•Forms
•Programs
•Work procedures
•Out puts & Reports

Testing is done from the perspectives of:
•Accuracy
•Range of inputs
•Frequency of inputs
•Operating conditions
•reliability
Testing

Changeover to New MIS
Chageover is the event of switching to new MIS
from the current system.
If there is no existing old system, then there is
straight-over implementation in one go.
However if there is existing system, there are four
approaches for changeover:
1.Direct Conversion
2. Phase-in-approach
3. Pilot start-up
4. Parallel start-up

User Acceptance
The stage at which, user takes the final ownership
from the vendor and subsequently vendor is not
responsible for the problems in the MIS.
This is done in the form of user- acceptance
document.

System Maintenance
System Maintenance refers to the stage that
involves checking, changing, and enhancing the
system to make it more useful in achieving user
and organizational goals.

System Maintenance
Reasons for Maintenance:
•Changes in business processes
•New requests from stakeholders,customers,
users, and managers
•Bugs or errors in the program
•Technical and hardware problems
•Corporate mergers and acquisitions
•Government regulations
•Changes in the operating system or hardware
on which the application runs.

Types of Maintenance
1. Corrective Maintenance
This type of maintenance involves removal of errors in the
program that may have creped into the system because of faulty
design or wrong assumption. In this processing or performance
failures are repaired.
2. Adaptive Maintenance
In Adaptive maintenance, program functions
are changed to enable the information system to
satisfy the information needs of the users.
For example
•Changes in organization’s procedures,
objectives, goals, policies
•Change in information needs of managers
•Change in system controls and security needs.

3. Perfective Maintenance
This maintenance involves adding new programs or
modifying the existing programs to enhance the
performance of the information system.
Reasons for Perfective maintenance may be :
•Changes in economic and competitive conditions;
•New technology

System maintenance can be understood under four
ategories depending upon the change in the systems.
. Slipstream Upgrade
. Patch
. Release
. Version
Classification of Maintenance

1. Slipstream Upgrade
A minor upgrade – typically a code adjustment or
minor bug fix, which may not be announced.
2. Patch
A minor change to correct a problem or make a
small enhancement. It is usually an addition to an
existing program.

3. Release
A Release is a significant change in the program
which may involve change in design and
documentation.
4. Version
A Version involves major changes, usually
encompassing new features.

Management information systems

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