Unit – 3

Systems

3.1 Concepts

A system is an orderly grouping of interdependent components linked together according to a plan to achieve a specific objective.

There are three basic implications to a system:

      Designed to achieve a predetermined objective.

      Interrelationships and interdependence must exist among the components.

      The objectives of the organisation as a whole must have a priority than the objectives of the sub system.

Features:

      Set of components and relationships which are different   from relationships of other components or sets

      Systems have structure defined by components or elements and their composition.

      Systems have behaviour which involve inputs, outputs, processing of material, energy , information or data.

      Systems have interconnectivity, the various parts of the component have functional as well as structural relationships to each other.

Components of a System

Components of System

To effectively deliver the information needed to decision makers, Management Information Systems need to have the necessary components to collect, process, store and retrieve the information whenever it is needed.

To achieve this, these systems use the following four components:

3.2 Control

• It refers to the process of analysis and corrective action. When controlling, you are essentially monitoring whether you are receiving an expected result of a process (or during it) or if the outcome deviates from the expectation.
• If there is a deviation, you take corrective action to ensure the expected results occur.              
• Considering the rise of modern technology, control can be used to foreseeing an error. This has changed the function and made it increasingly important part of the management process.

Consider the process in the forms of steps, that is control in relation to management may appear like this:

• Setting a goal and establishing desired objectives.
• Measuring the achievements of goals and objectives.
• Comparing the achieved goals and objectives with the original goals and objectives.
• Analyzing variances and reporting on them. Determining the underlying causes for the variations.
• Taking corrective action to eliminate the variations.
• Following up and repeating the process.

Implementing Management Control Systems.

For MCS, three core elements can determine the success and the effectiveness of this framework. They are :

The MCS is aligned with the organization’s strategies and goals.

      Before the implementation of the system, you need to understand and outline the current strategies in use, as well as define the objectives the organization wants to fulfill.

      These need to be the overall operational goals and not simply the aims you have for the MCS.

      It’s crucial to ensure the framework you choose to implement is in harmony with these existing processes and objectives.

      If the processes are not aligned, then your MCS will end up being ineffective or insufficient for your needs.

Designed to fit the organizational structure.

      MCS must consider the current organizational structure carefully.

      If you want the management control system to fit of how the company operates and how it has structured these operations, especially in terms of its management.

      The key part of this is the understanding of the decision-making structures currently in place.

      It’s essential to create a management control system, which understands these decision-making structures and enhances them, instead of turning them around or hindering them.

Motivate people through different reward systems.

      The idea of the system is about motivating the managers, as well as the subordinates, to work towards attaining the organizational goals in place.

      The effectiveness of the motivation can be improved by tying a variety of rewards to the achievement of these goals.

      The rewards themselves can change and include a variety of different types, depending on the task achieved or the performance the person displays.

      They can be purely monetary rewards, such as bonuses or increases in salary, or have a more material benefit, such as access to gyms or health clubs or updates on tools and other equipment.

3.3 Types

Physical or Abstract Systems

• Physical systems are tangible entities. We can touch and feel them.
• Physical System may be static or dynamic in nature. For example, desks and chairs are the physical parts of computer center which are static. A programmed computer is a dynamic system in which programs, data, and applications can change according to the user's needs.
• Abstract systems are non-physical entities or conceptual that may be formulas, representation or model of a real system.

Open or Closed Systems

• An open system must interact with its environment. It receives inputs from and delivers outputs to the outside of the system. For example, an information system which must adapt to the changing environmental conditions.
• A closed system does not interact with its environment. It is isolated from environmental influences. A completely closed system is rare in reality.

Adaptive and Non Adaptive System

• Adaptive System responds to the change in the environment in a way to improve their performance and to survive. For example, human beings, animals.
• Non Adaptive System is the system which does not respond to the environment. For example, machines.

Permanent or Temporary System

• Permanent System persists for long time. For example, business policies.
• Temporary System is made for specified time and after that they are demolished. For example, A DJ system is set up for a program and it is dissembled after the program.

Natural and Manufactured System

• Natural systems are created by the nature. For example, Solar system, seasonal system.
• Manufactured System is the man-made system. For example, Rockets, dams, trains.

Deterministic or Probabilistic System

• Deterministic system operates in a predictable manner and the interaction between system components is known with certainty. For example, two molecules of hydrogen and one molecule of oxygen makes water.
• Probabilistic System shows uncertain behavior. The exact output is not known. For example, Weather forecasting, mail delivery.

Social, Human-Machine, Machine System

• Social System is made up of people. For example, social clubs, societies.
• In Human-Machine System, both human and machines are involved to perform a particular task. For example, Computer programming.
• Machine System is where human interference is neglected. All the tasks are performed by the machine. For example, an autonomous robot.

Man–Made Information Systems

• It is an interconnected set of information resources to manage data for particular organization, under Direct Management Control (DMC).
• This system includes hardware, software, communication, data, and application for producing information according to the need of an organization.

Man-made information systems are divided into three types −

• Formal Information System − It is based on the flow of information in the form of memos, instructions, etc., from top level to lower levels of management.
• Informal Information System − This is employee based system which solves the day to day work related problems.
• Computer Based System − This system is directly dependent on the computer for managing business applications. For example, automatic library system, railway reservation system, banking system, etc.

3.4 Handling Complexity

• Complexity management can be understood as the application of complexity theory to the practice of management.
• Thus it draws upon the key insights and ideas from complexity science and uses them to try and manage complex organizations.
• Some of the examples of the complex organizations include, cities, international politics, multinational corporations, global logistics networks or healthcare systems.

These are all complex organizations since they are highly interconnected,  

Interdependent and autonomous.
                                         

The factors for handling complexity are:

Systems Thinking

• Systems thinking is a holistic way of looking at the world, this paradigm puts forward that the parts to a system can be properly understood and managed when taken in relation to the whole system.
• Systems thinking looks between the parts and the context or environment within which something exists.
• In complex organizations there is no real boundary to them and this makes them quite different in nature ,because they have no real boundary it is more relevant to talk about them as systems, or networks of connections
• Instead of directly aligning the actions of the members towards the desired global outcome, we create the context or platform within which the members can interact so as to coordinate locally and out of this we will get the emergence of some global organization.
• Thus for managers this means creating the context that facilitates the process of self- organization to take place, we can’t directly control the outcome to the system but we can influence the initial conditions.
• This can be done by creating a conducive context that represents an attractor towards coordination and cooperation between members.
• The big idea here is that of collaboration, we no longer have control but we can enable the context and conditions for collaboration.

Nonlinearity

• Nonlinearity is created when we put two or more things together and they become interdependent, they can work together constructively or inversely and they can counteract each other.
• When the connectivity within a system is increased the parts to the organization become more interdependent .
• Look for linear cause and effect interactions to describe events, and in reality  by using a simple linear cause and effect descriptions of events when they don’t really work, so that we don’t have to deal with the complexity of a situation.
• Look at maps of the world divided up into nation states when this simple linear model hides the much more complex set of networks that make up our global economy and society.

Networks

• Network theory is another central part of complexity science as it deals with the highly interconnected architecture of real-­world complex systems, such as transportation networks, financial markets or ecosystems.
• With the reduction in transaction cost that IT enables, these networked organizations are able to harness new value sources and access whole new markets that were previously not possible within the closed formal organization
• With the rise of the Internet, we are seeing the birth of new forms of network organizations and the so­ called access economy.
• These networked platforms are instead able to harness the small, but when combined vast productive capabilities of the so ­called crowd, or the mass of people that were previously not productive enough to organize formally, are now able to set up their own networks of collaboration.             
• Hyper-connectivity is unlocking a vast amount of untapped productivity of the crowd on the long tail, it also has the potential to do the same to virtually every product around us.

Adaptation

• But when things get more nonlinear and complex, ergodicity doesn’t really hold, as the system evolves we get nonlinear interactions between events that have not even emerged yet.

• In a word, it requires business agility, agile organizations and we are currently seeing how the idea of enterprise agility has gone from nowhere to being identified as one of the few top­-level strategic enterprise capabilities

3.5 Classes

The discipline of MIS can be categorized in the following  classes:

Transaction Processing System

TPS processes transaction and produces reports. It represents the automation of the fundamental, routine processing used to support business operations. It does not provide any information to the user to his/her decision making. TPS uses data and produces data as shown.

Management Information System

MIS is an information system which processes data and converts it into information. A management information system uses TPS for its data inputs. The information generated by the information system may be used for control of operations , strategic and long-range planning. Short-range planning management control and other managerial problem solving. It encompasses processing in support of a wide range of organizational functions and management process. The functional areas of business may be marketing, production, human resource, finance and accounting.

Decision Support System(DSS)

It is an information system application that assists decision-making. DSS tends to be used in planning, analyzing, alternatives, and trail and error search solution.The elements of the DSS include database, model base and software. The application areas of DSS are Production, finance and Marketing.

Executive Support Systems

It is an extension of management information system. An ESS is specially tailored for the use of chief executive of an organization to support his decision-making but it is more specific and person oriented

3.6 General Model of MIS

A model is an abstraction of something it represents (some phenomenon), called an entity. For example, if a model represents a firm, then the firm is an entity.

Types of Models:

It is a model that exists in three-dimensional form.

It is created by verbal or written description. Also, these can be created anywhere without much resources hence they are most popular.

It uses symbolic notations and mathematical equations to represent a system. It can be represented by 3D also.

Following are the types of mathematical models:

• Influence of time :

Static Model does not include time as a variable whereas Dynamic Model allows the changes of system attributes to be derived as function of time.

• Degree of Certainty:

A probability is a chance of occurring something will happen. Probabilities ranges from 0 to 1. A model that includes probabilities is called Probabilistic model other it is called Deterministic Model.

• Ability to Achieve Optimization

Optimizing Model selects the best solution among the alternatives. It permits the manager to enter a set of decisions once this step is completed the model will project an outcome.

Steps of Model Construction

Components of MIS Model:

• Organizational Problem Solvers

Outputs are used by the persons who are responsible for solving the firm’s problems.

• Database :

The contents are used by software that produces report as well as mathematical model.

• Mathematical Model

It produces information as a simulation of firm’s operation.

• Report Writing Software

Produces both periodic and special report.

• Environment

Great importance to the firm. It is the very existence of the firm’s existence.

Advantages

• Learning Experience
• Provides Predictive power
• Less Expensive than trial and error method
• Speed allows consideration of more options.

Disadvantages

• Difficult to model a business system.
• High degree of mathematical skills.

3.7 Implementation Problems

• Testing
• Conversion
• Documentation

Testing

Testing Guidelines

Test different aspects of the system, e.g., response time, response to boundary data,response to no input, response to heavy volumes of input

•       Test anything that could go wrong or be wrong about a system
•       Test the most frequently used parts of the system at a minimum

The people who create the test cases should not be the same people as those who coded and tested the system

Use debugging tools, e.g., symbolic debugger

Conversion:

Types of documentation

System documentation à maintenance programmers

Records detail information about a system's design specifications, functionality (external), and internal workings (internal), e.g., DFDs, ERDs, Structured English, Structure Chart, Pseudocode.

User documentation 

Records information about an application system, how it works, and how to use it, e.g., user manual, procedure manual

Documentation standard

      Compatible

      Comprehensible

      Informative

      Adequate

      Structured

      Maintainable

Training guidelines 

      Consider who will be the trainer and trainee

      Establish measurable objectives

      Use appropriate training methods

      Select suitable training site

      Use understandable training materials

3.8 MIS and System Concept

• The MIS is an arrangement of data processing and information systems in an orderly manner to support the management in achieving the business objectives.

• The MIS boundaries cross the limits of the organization and draw the data from the source external to the organization. It works on the principle of control by exception.

• MIS is designed to provide the information which is exceptional in nature form the point of view of business. The exceptions could be abnormal events, surprising developments, shocking news, or something that was not consistent with the exceptions.  

• The MIS must catch all such points and reports then to the concerned management. It must, therefore, recognize all such possible points and provide a measure for comparison with the actual performance. Unless such a feature is included, the MIS will be supplying merely data and not information.

• The MIS provides a system for data processing and data analysis.  It uses a number of applications and business models, operational research models and applications and business models, operational research models and application packages to produce the information.  

• The MIS has a provision to display the information and also print it in a report format.  It also provides a facility to store the intermediate results, which are used in a number of other systems. The MIS is a combination of the deterministic and the closed systems, and the probabilistic and the open systems.