Literature Review on Management Information Systems (MIS) and Recommendations for an MIS Framework for Helectron Company - Management Essay Example
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Management Information Systems
Management Information Systems or MIS is a general term for the academic discipline focusing on the utilization of people, technologies and procedures – known collectively as the information system – to answer complex business needs. This field is useful in management by objectives (MBO) and in monitoring of key performance indicators (KPI), as well as in gathering and processing of specific data for decision making. It can be used not only in business processes and operations but also in the development of decision-making and competitive strategies. It can also be seen as a system or process that supplies data important for effective organizational management. These information become essential parts of prudent and reasonable business decisions (Management Information Systems, 1995). One definition of MIS is that “research in the information systems field examines more than just the technological system, or just the social system, or even the two side by side; in addition, it investigates he phenomena that emerge when the two interact” (Lee, 2001).
Although often confused with, MIS is strictly different from other known fields utilizing computer resources. MIS is also known as information technology management and is mostly a business administration discipline with emphasis on integrating computer systems with the vision of the organization. This is different from computer science which is mostly theoretical and usually covers software programming. Information Technology service management is also a different field that is a practitioner-focused field focusing on the general domain. It is also different from Enterprise Resource Planning (ERP) (Wikipedia, 2007).
A manager of an organization has five traditional functions:
(1) planning the direction of a company takes;
(2) organizing resources like people, space, equipment and services;
(3) coordinating the activities of all departments;
(4) decision-making about the organization, products or services made or sold, the employees and use of information technology; and
(5) controlling, monitoring and supervising the activities of others.
Because it is the management information system functions to provide managers the necessary information in carrying out these five functions, the most accurate definition of MIS is: “The role of a management information system is to convert data from internal and external sources into information that can be used to aid in making effective decisions for planning, directing and controlling” (Topic 2: Management Information Systems, n.d.).
Internal sources may be in the form of number of units produced and sales figures from specific product lines which are usually taken from within the company network. External data may be intelligence data from competitors taken from articles in the press, leaks and sometimes even industrial espionage, information regarding population and market, economic and social factors and government legislation which may all affect independently or as a whole the operations of the company. This information may altogether be acquired through formal channels in which procedure is adopted or via informal information networks such as chance meetings, articles and news coverage (Topic 2: Management Information Systems, n.d.).
Information produced by an MIS may be categorized into three levels:
(1) operational – daily decisions;
(2) tactical – decisions with a short to medium term effect; and
(3) strategic – long term decisions that will affect the future of the company.
The framework and function of the management information system may differ based on the nature of the organization it is used for.
The three main components of the modern management information system includes: (1) hardware; (2) software; (3) peopleware. Hardware includes as electronic and mechanical components of the information system that may be used for gathering, storing and processing of data. These usually include computers, printers, telephones, switchboards, faxes and network equipment. Software include the programs and protocol that control the hardware components to perform the operations necessary for gathering, storing and processing functions of the system. These may include database systems, email programs, spreadsheets and document encoders and even security software and virus checkers. Peopleware will include the humans who will maintain and run these two components. These will include system analysts, computer programmers, support specialists, computer technicians, network managers and of course, the MIS managers (Canlas and Gonzales, n.d.).
There are various available posts for the peopleware component of the management information system and each differs based on the nature of their work. The computer and information systems manager work to plan, coordinate and direct research and coordinate the computer-related activities of the firm. They also participate in the determination of both technical and business goals. Some specific managers include the chief technology officer that assesses how the most innovative technologies can be utilized for the benefit of the organization. MIS directors manage information systems and computing resources for the benefit of the organization through planning and direction of work. They handle user services, hardware and software upgrading and help in ensuring the availability, continuity and security of data. Project managers prepare requirements, budgets and schedules for the firm’s specific information technology projects. LAN/WAN (local area network/ wide area network) cover design and administration of the network that connects all the hardware, software and peopleware components of the information system (Bureau of Labor Statistics, 2006).
The management information system usually provides service to the organization through the various units and departments. For the sales unit, it could provide analysis for the basic sales information such as the best selling products and other trends which could then be used to develop new and better marketing strategies. It could also provide information on who is the best in the sales force which could be used in training and staff development strategies. For the finance unit, it could allow for more efficient fund management, integration of auditing records and automatic generation of financial reports which could help in budgeting decisions at a faster pace. For the production and operations department, it could help establish a more efficient inventory system and tracking and integration process that would make production from raw materials to finished goods faster and with less human intervention. For the human resource management department, it would help in more efficient storage, retrieval and processing of employee records and other data. This is important for compensation and benefits tracking, training and information dissemination. Finally, resource planning would greatly benefit from the integration of all these units into a system known as the Enterprise Resource Planning system which allows for automatic information flow through the network to the central management in real time. The unparalleled efficiency and real-time information provided by management information systems will increase company productivity and even company profit exponentially (Canlas and Gonzales, n.d.).
General Model Frameworks
Because the framework of a management information system is built specifically for the structure and needs of a specific company, it is impossible to cite a single efficient model for all firms. However, there are three known general model frameworks from which most MIS frameworks are based.
The most common and traditional of the three frameworks is the systems life cycle. In this framework, each stage must first be accomplished before the next is started (Kokol, 1993).
Figure 1: Flowchart diagram of systems life cycle framework
Although this is fairly easy to set-up, the main drawback is that other stages will not be able to access information gathered from stages not preceding it. Another risk is that one stage will prove to be a bottleneck for the system and will greatly affect the efficiency of the whole system. However, this is an effective information system since information is provided only on a need-to-know basis. The stages are highly compartmentalized and there is no danger of overwhelming information that could burden the productivity of affected stages (Topic 2: Management Information System, n.d.).
Another known model framework is the waterfall model. This framework has a built-in reworking mechanism for earlier stages based on pertinent information received in the later stages.
Figure 2: Flowchart diagram of waterfall framework
One drawback of the waterfall model is that the end user is not engaged in the development stages so it is an extra requirement for analysts and programmers to take into consideration the requirements set by the end-users (Topic 2: Management Information Systems, n.d.).
The third model framework is the prototyping framework. In this framework, end users have significant input even at the development stages. The most important advantages for utilizing this model include: (1) detection of misunderstanding between developers and end users in early stages; (2) user detection of missing functions and inconsistencies regarding requirements; (3) quicker building of demonstration systems; (4) training option even before system is finished.
Design and implement
Figure 3: Flowchart diagram of prototyping framework
There are also several prototyping methods. Some of these are:
1. Piloting – feasibility testing of proposal
2. Modeling – building a small-scale model based on user’s requirements
3. Throw-away prototyping – building prototypes for user scrutiny which will later be disposed once it passes user standards
4. Evolutionary prototyping – building prototypes that are used as stepping stones for the next steps towards the final solution
However, as with any system, it also has its disadvantages and risks. This system is susceptible to poor and sloppy coordination by ineffective and incompetent project managers. Time consumption is significantly increased with more frequent consultations with end users. The final system may become complete different from the original specifications (Topic 2: Management Information Systems, n.d.).
In the feasibility study stage of the framework, the system analyst reassesses the scope and objectives to see if the problem that is tackled by the system is still worth solving. The study takes into account five key factors:
1. Technical feasibility to identify whether the necessary technology is available to implement the system
2. Economic feasibility to determine the cost-effectiveness of the system
3. Legal feasibility to evaluate whether the system adheres to regulations set by relevant legislation
4. Operation feasibility to determine the availability of work practices and procedures for the implementation of the new system and the social factors that may affect employees
5. Schedule feasibility to set-up the appropriate time frame for the implementation of the system
(Topic 2: Management Information System, n.d.).
If the feasibility study yields positive results, the next stage would be requirement analysis. This will be performed through interviews with pertinent staff on all affected levels of the organization, surveys to supplement interviews, examination of relevant documentation and observation of existing protocol. It would also be necessary to establish costs and benefits implications.
The next stage is system design. It would take into account the hardware profile (which hardware equipment are available and accessible), software profile (which software programs are available for utilization), inputs (what type of information is necessary), outputs (what is the end result), user interface (will the interface be user-friendly), modular design structure (will the system be divided into compartmentalized sub-units), test plan and data (will the system hold up to demanding data and circumstances), conversion plan and documentation (Topic 2: Management Information System, n.d.).
In the implementation stage, the system is encoded and tested with actual hardware and cabling. End users are trained and master files are converted for the needs of the new system. There are several methods for the conversion process. These include: (1) direct changeover which replaces old files with new ones – reduces duplication but increases susceptibility to disruptions due to the new system; (2) parallel conversions which creates two systems that together – reduces disruptions caused by system errors but increases duplication; (3) phased conversion which introduces new units to the system individually; and (4) pilot conversion which introduces the new system in a few departments at a time and gradually covers the entire organization (Topic 2: Management Information System, n.d.). Finally, since all machines and systems may have flaws, post-implementation review and maintenance are important. System maintenance may be: perfective, adaptive or corrective.
General Advantages and Effectiveness
The general advantages of investment in a good and up-to-date MIS investment include:
1. support a core competency
2. enhance distribution channel management
3. help build brand equity
4. boost production process and flexibility in the output level
5. leverage learning curve advantages
6. impact mass customization production processes
7. leverage IT investment in computer aided design (CAD)
8. expand E-commerce
9. leverage stability
10. improve B2B commerce in the global economy
Although a sound MIS will not necessarily cut costs, it would reduce the chances of erroneous decisions from being taken based on inaccurate and untimely information. This will in turn reduce internal misallocations resulting in reduced operation costs that could translate into higher profits (Management Information Systems, 1995).
The more specific advantages differ based on the field of service the company provides since management information systems are supposed to provide a customized system to supplement the organization.
Common goals that must be set for the benefit of the organization include:
1. Enhancement of communication within the company
2. Delivery of complex materials across the network within the firm
3. Provision of an objective system for storing and consolidating information
4. Reduction of costs due to labor-intensive manual operations
5. Support for strategic goals and direction
Some indicators for an effective MIS include the following:
– Enhancement of overall decision making through supply of up-to-date and even real-time facts and information
– Enhancement of job performance throughout the firm
– Enhancement of monitoring capabilities of the management
– Assurance of meeting the proper presentation formats and time frames necessitated by operations and senior management
– Running under a combination of manual and automated systems as specified by the needs of the firm
– Achieving the business-specific goals and delivery of products and services through it support
– Accessibility at all relevant levels as established by the senior management
– Provision of overall risk assessment, monitoring and management capabilities
(Management information systems, 1995).
Management information systems are open to improvement to increase its effectiveness and usefulness to the firm. One requirement for a sound MIS is the establishment of a culture of system ownership. An “owner” is defined as a user who is aware of customer and constituent needs and exercises authority in funding and budgeting for new projects. This ownership develops pride for the processes available within the framework of the firm and improves accountability (Management Information Systems, 1995).
The following phases must be included in the development of an MIS:
– Appropriate analysis of system alternatives, approval points as the system is developed or acquired and task organization
– Program development and negotiation of contracts with equipment and software vendors
– Development of user instructions, training and testing of system
– Installation and maintenance of the system
(Management Information Systems, 1995)
Risks and circumstances for potential failure
A risk is a statement of the likelihood or expectation that certain events and circumstances may reflect negatively on the earnings and capital of the corporation. Since MIS is used to asses, process and manage risk, an ineffective, inaccurate and incomplete system would lead to even higher risks in many more areas such as in credit quality, liquidity, market and pricing, interest rates and foreign currency. It may also affect the operations of the company manifesting in flawed monitoring of fiduciary, consumer, fair-lending and other compliance-related activities. Poorly programmed and non-secure systems may be open to manipulation by external forces that could disrupt the flows built within the system and lead to erroneous decisions, impaired planning and even losses in gains and capital (Management Information Systems, 1995).
One important feedback tool to determine the vulnerability of a management information system to risks is to look at the usefulness of the MIS. The five elements that must be considered are:
1. Timeliness – current (and possibly real-time) information must be disseminated to users at the fastest possible time; gathering, editing, processing, summarizing, correcting and adjusting data must be performed in break-neck speed
2. Accuracy – automated and manual internal controls must be established to allow for error detection, editing, balancing and disposal if necessary; audit programs could be employed to reduce manual checks
3. Consistency – compilation and processing of data must be consistent and uniform to ensure reliability; distortions may result from variations in data collection ad dissemination; standardized procedures must be applied to all areas covered by the management information system including peopleware and an effective monitoring system must be used to ensure this will work
4. Completeness – complete and pertinent information must be summarized to prevent information overload
5. Relevance – information that is inappropriate, unnecessary and excessively detailed must be disposed or edited to suit the requirements for decision making
(Management Information Systems, 1995)
Common problems with MIS that result to failures and disruptions include:
– Inadequate analysis
– Lack of management involved in design
– Emphasis on computer system
– Concentration on low-level data processing
– Lack of management knowledge of information and communications technology systems and capabilities
– Lack of teamwork
– Lack of professional standards
(Topic 2: Management Information Systems, n.d.).
Some current points of debate in the field of management information systems include the inclusion of human computer interaction as a factor in the development of the system and the importance of object-oriented concepts in the understanding of the information system.
Current frustrations with information technology include that it lacks consideration of the significance of human computer interaction in business applications. There is a need to emphasize on the relevance and utility of information systems from the consumer point of view (Patrick, 2003). Since software is a major component of the information system and influences the work organization, job content and design and decision latitude, it is important to integrate human computer interaction into the system life cycle framework of the organization (Clegg, et al, 1997 and Eason, 1997). Some experts have noted that failures of management information systems are caused by “faulty design choices” that stem from a lack of understanding on the human and social factors relating to system use (Bostrom and Heinen, 1977).
The setting-up of an information system is usually based on the information systems development methodology (ISDM) which compiles system development assumptions, strategies, principles and guidelines, multi-step procedures on what to and how to and other important techniques and methods. Some of these system development assumptions are taken from the four paradigms developed by Burrell and Morgan (1979). These are divided into two based on epistemological (knowledge acquisition) and ontological (society and technology) approaches. Under the epistemological assumptions are the subjectivist which necessitates understanding of human life through the exploration of subjective experiences of individuals and the objectivist which uses methods and models from the natural world to examine human-based systems. Under the ontological approach, are the order which views the social world as stable and functional and the conflict which perceives the social world as constantly changing, full of conflict and disintegration. These four paradigms may be integrated together by pair forming four functional paradigms: functionalism (objective-order), social relativism (subjective-order), radical structuralism (objective-conflict) and neohumanism (subjective-conflict) (Burrell and Morgan, 1979 and Hirschheim and Klein, 1989).
Although these paradigms are often difficult to use since current approaches cannot be definitively categorized using this system, these are useful and important because the concerns of human computer integration are addressed through these views. For example, the traditional structured approach that takes little consideration of human-computer integration falls under the functionalist paradigm while the more modern approaches that apply prototyping, joint application development and other techniques are covered by the functionalist paradigm with a subjectivity dimension. Neohumanism approaches work to improve human understanding and rationality of action through emancipation of interests and freedom from unnecessary natural and social constraints (Hirschheim and Klein, 1989). The understanding of the human perspective in a management information system is a necessity for the success of the MIS.
Another issue is the integration of object-oriented concepts in the management information system development. New MIS systems must be created away from the mainframe-based and geared towards the client-server environment (Kachmarik, n.d.).
Software and system engineering and development is a relatively young field that currently requires tremendous creativity and labor-intensive methods. There is a need to industrialize this process of development to allow for more commercially viable software products and system components. These manufactured software components are more readily available and reusable. This approach is beyond simply using snippets of code but creating standalone system components that need only be integrated with others to create a new system. This is possible if an object-oriented approach is applied in system development (Jacobson, 1996).
MIS in Education
Because management information systems can be customized and adjusted to fit the specific goals of an organization, it can easily be used for the benefit of educational institutions.
Academic institutions invest significant amounts of resources to set-up and maintain a management information system. It is therefore necessary to ensure that these investments are safeguarded by maximizing the utility of the information system.
The Department of Education and Skills (DfES) envisions the 21st century education system in terms of the following aims:
1. Personalization and choice
2. Flexibility and independence
3. Opening up services
4. Staff development
The DfES recognizes that to achieve these goals, effective use of current and future information and communication technologies in setting up a management information system is necessary. It sees the following as the system-wide contribution of this utilization:
1. transforming teaching, learning and child development, enabling children and learners of all ages to meet their highest expectations
2. connecting with hard-to-reach groups in new ways
3. opening up education to partnerships with other organizations
4. moving to a new level of efficiency and effectiveness in our delivery
As a whole, the single most important contribution of a system-wide MIS is the provision of managers at the institutional level of tools to allow for improvement of efficiency and effectiveness in the broadest perspective and to improve the overall performance of the school as a learning institution (School Management Information Systems and Value for Money, 2005).
Six priorities were set by the DfES for the MIS systems set-up for the schools. These are:
1. An integrated online information service for all citizens
2. Integrated online personal support for children and learners
3. Establish a leadership and development package for organization capability in Information Communication Technology
To improve the current MIS systems established, consultations were made with both providers and consumers of MIS set-up and maintenance services to determine current barriers and issues of concern.
The responses of the providers can be categorized into three issues. These are the following:
1. Competition and choice
– There is very little competition and choice for schools in the MIS market
– Pricing and bundling strategies employed by the dominant provider make it very cheap for schools to order for new functionality thus preventing the successful entry of new competition into the market.
– Switching costs are also very high thus providing another impediment to competition.
– Market growth is low.
2. Efficiency and effectiveness
– There are inefficiencies within the current school MIS systems. There is a need to transform current models into centralized, scalable, multi-school databases capable of web delivery founded on industry-standard architecture
– Competitive pressure is insufficient to allow for rapid and significant innovation
3. Statutory returns
– Statutory returns requirements are too high and disproportionate for small providers thus manifesting in their declining product enhancement programs
(School Management Information Systems and Value for Money, 2005).
The responses from Local Education Authorities (LEA) that acted as consumers of MIS systems have been categorized in six categories. These are:
1. Quality of MIS software
– There were no issues over qualities and promptness of product deliveries based from user responses although this is not conclusive because the number of respondents did not correspond to a statistically significant figure.
– There was widespread re-engineering although significant improvements were not very common.
– Improvement is necessary in the areas of production, development and delivery timescales. Support is also a necessity given the number of bugs often present in the software.
2. Benefits flowing from product enhancements
– Very few respondents concurred with the statement that additional benefits were derived from increased functionality and enhancements for the MIS.
– Software products were usually of poor quality.
– New features provided for LEA MIS systems were irrelevant.
– Data cleansing is an over-due necessity.
– Support teams are fully engaged in providing software fixtures thus reducing their time allocated for implementing new features.
– Changes in the user interface and loss of existing functionality reduced usability.
3. Issues relating to pricing visibility
– There is a need for establishment of longer term pricing horizon.
– Cost of MIS systems is not an issue because they are passed on to academic institutions.
– Address impediments to choice in the market.
4. Issues relating to contract management
– Products taken from other competitors violate current contract management arrangements.
– Expectations must be set clearly in contract management arrangements.
5. Competition and choice in the marketplace
– There are significant barriers to effective choice. These have been categorized into technical, financial, procurement and support aspects.
– The structure of the current market is not vibrant enough to keep existing players active and this is influencing their exploration of alternatives.
– Timescales and complexity related to MIS systems per LEA increased support for the establishment of a national framework.
6. Statutory returns process
– Improvement is necessary in making statutory returns more proportionate and efficient.
(School Management Information Systems and Value for Money, 2005).
A “do nothing” approach to the current situation would result in continued unchecked upward pressure on costs, continued poor service to schools regarding the timeliness and quality of software, a disproportionate share of the ongoing burden of technical testing remaining with LEA support teams and schools and few if any levers through which to drive the adoption of supplier-independent technical interoperability standards (School Management Information Systems and Value for Money, 2005).
For the 22319 schools with MIS systems, 1286 support staff is present. Of this, 515 are technical staff, 256 are administrative staff and 515 are MIS support staff. Basic cost for every MIS employee is added with 15-20% for employment-related costs, 10% for accommodation- related costs, 25% for travel and subsistence costs, 15% for supplies and services and 20% for training courses, equipment and facilities. For technical staff, the cost of employment reaches £41,250; for administrative staff, £16,875; and for MIS support staff, £57,750. 274191 computer resources are available for 22319 schools (School Management Information Systems and Value for Money, 2005).
It is important to look at the current issues and trends in the establishment of MIS systems in various institutions so that it could be used as a learning model to demonstrate the necessary elements that should be part of procurement, development and maintenance of MIS systems.
The Data Services program of the British Educational Communications and Technology Agency (Becta) and DfES (2006) have developed a set of functional requirements for any management information system to be utilized by a school or academic institution. In these requirements, it is assumed that: (1) openly available xml schemas define exchange formats; (2) common open protocols are used; (3) main users are administrators, teachers and senior management; and (4) requirements for primary and secondary schools are different. The requirements set are:
– The system must be remotely accessible even outside and away from the organization. This access must be through the internet and most be accessible anytime and anywhere for different types of users.
– The system interface must be accessible to users. It must be open for customization and users must be required to follow accessibility guidelines. Information for the end user must be presented in an understandable format.
– The system must be able to allow admission information transport into and out of the system.
– The system must be able to provide compilation of assessments and support for management. This assessment information must be summative and high-level for use at the school-wide, regional and even national levels. Assessment information on individual students must be stored by the platform while key stage and national curriculum assessment must be accessible through the system. Information on exams and coursework results must be made accessible at appropriate levels.
– Technical support must be provided for the measurement and recording of attendance. The system provider must include sufficient information to comply with statutory requirements for auditing, DfES returns and term reports.
– The system must be able to recognize and verify unique users. All users must be provided user names and passwords that will regulate the access of the user based on their level in the organization. Unauthorized access must be prevented.
– The system must be able to manage behavior information. Individual student behavior records with both negative remarks and positive achievements must be stored and processed by the system. As required by the DfES, exclusions must also be stored and made accessible through the system.
– Learner information must remain consistent in the system. Duplication, inconsistencies and errors must be minimized by the system.
– All stored data must remain secure. The system must conform to existing relevant legislation including the requirements of the Data Protection Act of 1998 especially on personal data.
– Users with specific privileges must be able to access relevant information. Users may be allocated more than one role on any level. Clearances must be provided for all users at different levels for various types of data available in the system. These clearances shall allow or restrict reading and writing of data.
– Exchange of learner information must be made through the system. The system should include support for provision of statutory information to the DfES and other duly designated authorities. It must allow transfer of records even across institutions.
– Users must be allowed to send messages across the network to intended groups or individuals.
– The system should be capable of producing the necessary reports. Statutory reports and reports to parents must be produced and available for printing. The reports may be in interoperable formats ready for export and exchange. Customization of reports may be included.
– Special education needs management must be supported by the system. It shall produce the necessary statutory special needs information requested by users from relevant levels.
– The system must allow the submission of all statutory returns in digital format as defined by the DfES and other relevant agencies.
– The system must be able to support information. The information about the usage of the system must also be provided. Summarized reports on use of system and software must also be produced and available in different formats for output.
– Timetable management must be provided by the system. It shall support the use of calendars and timetables at appropriate levels.
– The system must be able to provide support for staff management. It must be able to produce statutory school workforce information and maintain human resource records.
– The system must also be able to provide recording and management of assets. The system must be able to track equipment and other resources.
– Coursework managing must be within the capabilities of the system. Schools must be able to record and submit student coursework through the system.
– The system should give support for curriculum planning. It must include production of medium- and long-term reports for effective planning and integration with lesson planning.
– Dinner money management should also be a capability of the system. It should be able to record payments made through dinner money.
– The system should allow efficient document management by providing a means of identifying and tracking versions of important documents.
– The system must be compatible with the Consistent Financial Reporting (CFR) and allow for strategic multi-year budgeting.
– Library management must also be integrated in the system although this may not be a requirement for primary schools.
– Options for students must be managed by the system. It must be able to record, process and later provide the option choices at appropriate school levels.
– The system must be capable of supporting the creation and maintenance of electronic portfolios accessible internally and available for exchange with relevant institutions.
– The system must support web services protocol and must adhere to applicable standards.
(Functional requirements for information management including MIS, 2006).
Given the complexities of an organization such as a school and the stakes in having an efficient MIS for the school, extensive and explicit requirements such as those stated above are necessary.
MIS in Microfinance
For the past five to ten years, microfinance institutions are beginning to set-up management information systems. They have become aware that these information systems are very beneficial to formal and informal financial institutions in managing huge amounts of information (Mainhart, 1999).
Information is one of the core components of microfinance. These institutions handle tremendous amounts of data that are critical to business including basic client information and even detailed analyses of portfolio statistics. The sheer amount of data must be stored, manipulated and presented to system users for sound decision making (Mainhart, 1999).
Sound MIS systems for microfinance institutions must transform raw data from different and incoherent sources retrieved by hand or by computer into consistent and concise information ready for analysis in decision making (Mainhart, 1999).
Mainhart (1999) proposed a step-by-step methodology to accurately measure the effectiveness and efficiency of an MIS system for a typical microfinance institution. The first step is organizing an appraisal team to perform the evaluation of the system. This team of at least two people must have information technology expertise, functional expertise and institutional expertise. This team must have access to key personnel such as end users and system analysts and developers. They must also have access to detailed information on the business and the organization. This is important since the management information system must be built to meet the special needs of the organization and customized to achieve the goals of the company. System documentation must also be accessed by the appraisal team such as manuals, reports, screens and operation schedules for a more focused and complete assessment. It must also receive detailed system information such as database information, demonstration, source code and testing. Site visits must of course be performed to understand better the complexity of the system. The appraisal team will then rate the system by the categories and subcategories that follow.
The first category is functionality and expandability which measures how much the software product in the system is able to satisfy the requirements of the various types of microfinance programs and whether it can grow and evolve at the same rate as the microfinance institution expands and adds functions, services and customers. It is important that the system be able to cover the complexity of the microfinance industry which will include but will not be limited to village banking, solidarity groups and individual lending. The system may draw from known institution models like credit unions, cooperatives, non-governmental organizations and banks. The system must take into account the fact that the institution runs in diverse social, political, economic, regulatory and legal environments in the ever-competitive world. Subcategories to further refine the appraisal of this category include:
– Functional, completeness, appropriateness and integration
· Accounting package
· Portfolio tracking
· Deposit monitoring
· Client information system
– Expandability and Institutional Growth
· Customer-centric vs. Account-centric
· Institutional types
· Lending methodologies
· Loan interest types
· Savings and deposit account types
· Deposit interest types
· Payment types
· Payment frequencies
· Multiple braches and/or regions
· Multiple languages
· Multiple currencies
The second category is usability which measures how much the user interface of the system allows users to do their tasks effectively and efficiently with little or no occurrence of errors. This must include availability and utility of user documentation, screen layouts and navigational aids, on-line help and prompts. This is important since it would directly affect revenue sources of the firm. For example, an ineffective user interface would significantly decrease company desirability to the client. This category may traditionally be assessed with client and end user surveys. Subcategories for assessment refinement are:
– Ease of use and user-friendliness
– User interface
The third category is reporting which focuses on the extent covered by built-in reports over management and operations requirements, accuracy of available data and visual appeal and utility of the reports. The report editing and creation, exporting of data and spreadsheets and further manipulation are also taken into account. Subcategories for refinement of evaluation include:
– Report generation
The fourth category covers standards and compliance which examines the adherence to industry, government and supervisory standards and regulations. It must follow the generally accepted accounting principles (GAAP) and International Accounting Standards (IAS). It must meet regulations at the local, regional and national levels. Increasing commercialization necessitates increasing adherence to regulations. Subcategories for refinement of assessment include:
– Accounting soundness and standards
– Governmental and supervisory adherence
The fifth category is administration and support. It must assess the capabilities of the system provider to support and maintain the MIS for the organization. Support involves installation, conversion, error correction, user queries and periodic software improvements. Some indicators that could be used are years in business, number of staff, location of support offices, number of installed systems, existence of system documentation and operations manuals and training materials and plans. Security in the form of detection and prevention of unauthorized entry, safeguards against accidental or intentional data damage and falsification of records and hacking must be considered as well. Recovery from crashes, software reliability, validity and safety of data and backing up and restoring data are also important aspects in this category. Initial and continued staff support and maintenance is also taken into consideration. Subcategories for refined assessment are:
– Backup and recovery
– Fault, tolerance and robustness
– End-of-period processing
– Support infrastructure and maintenance
– Version control ad upgrade strategy
The sixth category is technical specifications and correctness which analyzes programming components of the system, type of network and hardware for usage and implications on future performance of the system. Speed and storage requirements are assessed as indicators of over-all performance. Subcategories for refined evaluation and assessment include the following:
– Technology and architecture
– Number and date handling
Finally, the last category covers cost which takes into account all costs associated with operations of the management information system such as purchasing, installing and operating the system. Base price, maintenance agreements, installation and training, conversion, upgrades and maintenance releases are important in determining this. The subcategory for refinement is
– Pricing and costs
The assessment of the current information system is really important for the company’s continued growth and development.
Depending on the results, a new system may have to be made to replace the old one. Reasons for building a new management information system include:
1. Current system is unable to deliver required results.
2. Technological developments have made the system components outdated and obsolete.
3. Current system is too inflexible and too expensive for maintenance and continued operation.
(Topic 2: Management Information System, n.d.).
MIS in Small and Medium Enterprises
The past decade has seen the rise of management information systems usage for small and medium enterprises. This is an important development since these enterprises are major stakeholders and contributors to overall market and economy health and stability.
It is very important to consider that small and medium-sized enterprises (SMEs) make up most companies in major industries and economies of even the most industrialized nations. Small firms are important even for high technology and capital intensive industries usually dominated by larger corporations. In the United States alone, 97% of all enterprises are considered small businesses (Keats and Bracker, 1988). 98% of companies in all European Union member states have less than 200 employees (Felstead and Leighton, 1992).
As compared to larger corporations, SMEs are much more simpler in structure and require less specialized operations (Carson et al., 1995; Mintzberg, 1979) with very limited human, financial and material resources (Welsh and White, 1981). Because of these, SMEs have a propensity to steer away from expensive and large-scale investments in information technologies and information systems. Organizational readiness to adopt e-commerce is very low because managers have a low level of knowledge of the internet and other technologies necessary (Mehrtens et al., 2001).
The resource-based theory regards knowledge and technology as information system resources. SMEs usually possess specific information system competencies that could potentially allow them to set-up their own management information system. The resource-based theory explains how firms can achieve competitive advantage. It focuses on costly-to-copy attributes of an organization as an important method in obtaining superior performance (Barney, 1991; Conner, 1991; Hamel and Prahalad, 1996). Valuable, expensive and rarely accessible resources need long learning process to be unique and difficult to imitate. Competitive advantage is received when a firm has a different resource that gives it an edge above the rest (Conner, 1991). Competencies in information systems are seen as such resources. Without such competencies, the company has no ability to set up a management information system. IS competencies at the organizational level contribute to establish an IS capability at the business level. High investments in information technologies are not the sole factor in the development of a successful management information system (Bharadwaj, 2000).
Peppard and Ward (2004) listed six macro competencies that cover 26 specific IS competencies. These are:
Business strategy – identify advantageous uses of information systems and technologies
Technology innovation – incorporate new and emerging technologies in long term business plans
Investment criteria – establish criteria for decision making in investments for IT
Information governance – define information management policies
Define the IS contribution (IS strategy)
Prioritization – ensure portfolio of investments provide maximum returns from available and accessible resources
IS strategy alignment – ensure IS development plans are integrated in long term strategic plans at the organizational and functional levels
Business process design – determine how IS can provide best practice for operational processes and organizational procedures
Business process improvement – identify knowledge required to satisfy strategic objectives via management processes
Systems and process innovation – conduct relevant research and development activities to determine how IS and IT could be used to facilitate new business transactions, products and services
Define the IT capability (IT strategy)
Infrastructure development – define and design information, application and technology architectures and structures necessary for resource management
Technology analysis resources – identify technology trends and prepare necessary recommendations for acquisition of technologies
Sourcing strategies – set-up criteria and processes to assess and evaluate supply options
Benefits planning – identify and plan to realize management information system investment benefits
Benefits delivery – monitor, measure and assess advantages derived from use and investment in information systems
Managing change – make business and organizational restructuring to maximize benefits without negative effects on stakeholders
Applications development – develop, acquire and implement management information systems and technology to satisfy business requirements
Service management – define arrangements and performance criteria to satisfy business requirements
Information asset management – set-up and perform process that allow data information and knowledge management activities to satisfy organizational needs and met corporate policies
Implementation management – ensure that new processes and procedures are implemented effectively together with new technologies
Apply technology – Develop new and improved technologies in the most cost effective manner to receive maximum benefits with minimum costs
Supplier relationships – manage supplier contract agreements and develop value added relationships for maximum benefits
Technology standards – develop and adhere to appropriate standards, controls, regulations and procedures for use of IT and associate resources
Technology acquisition – develop and apply procurement policies and procedures for organization set-up of infrastructure components and specialized technologies and services
Asset and cost management – ensure technology and application assets are effectively managed and cost of acquisition and ownership are minimized while maximizing benefits
IS/IT staff development – recruit, train and deploy relevant staff and ensure technical, enterprise and personal abilities and competencies satisfy the organizational needs
It is important for SMEs to identify their IS strengths and competencies to determine the focus of their thrust in the establishment of an effective, efficient, responsive and flexible management information system.
MIS in Heavy Industries
A management information system is important in almost every industry and heavy industrial companies such as the Weirton Steel Corporation are no exception. It was used not only to supplement its main production operations but also boost other areas of the company.
The Weirton Steel Corporation has pushed for new management information system development and outsourcing to improve its performance as a company. A feasibility study, assessment and evaluation of the previous internal system (as is part of any of the model frameworks earlier stated) found that there lack of accountability was a big issue for project priority and cost and that the previous management information system was viewed as an exclusive staff function instead of a more open and accessible service function. Although external service providers offered accountability, discipline and service as the main benefits, the Weirton Steel Corporation categorically resolved to improve its internal organizational management information system and transform it into a world-class information provider with services that maximize people, process and technology. This new plan was known as the Customer Service plan and it was started in 1994. The first changes were organizational in nature and later on, the system was outfitted with the latest technologies in information and communication (Best practice: MIS customer service, 2006).
In this undertaking, a steering committee of the senior managers of the manufacturing, business and management information system departments was formed to oversee the operations of the customer service unit. The committee took over project prioritization procedures, allocated additional resources for the project needs, measured and evaluated the management information system performance based on initial and evolving objectives, implemented the innovative chargeback mechanism and continues to create and evolve annual business unit plans to form a more solid corporate systems plan (Best practice: MIS customer service, 1999).
The next step was to assign application owners and service coordinators to specific business areas and areas of concern. Application owners are basically the primary end users that manage the strategic direction of the system (group of applications) and all the software and hardware components that affect the system. They must manage this system for business applications and processes. They must consider the business justification of the project requests and act on them based on this criterion. On the other hand, service coordinators handle and oversee management information systems advisers that also coordinate delivery of services to assigned business units for the application owner. They basically cover the technical side of the application software and hardware systems. They act as the liaison between the business unit and the management information system unit. They also handle technical consultations in customer support and training and make sure service level arrangements are fulfilled. The two managers usually meet informally, communicate frequently and hold formal discussions regularly (Best practice: MIS customer service, 2006).
The new management information system covers the usual internal needs plus the four possible customer service requests: emergency; ad hoc; software; and hardware. Emergency requests are usually about work stoppage and other business and safety critical issues. These are to be immediately resolved upon approval of the application owner. Ad hoc requests that usually require only 30 minutes or less to resolve are informally acted upon without formal approval from the application manager and often does not require chargeback. Hardware requests undergo formal prioritization, evaluation, allocation and approval. All hardware needs including computers, telephones, facsimiles, copiers, fax machines, printers, network servers, cables, physical moves and transfers and security are covered by this request. Software requests also undergo the tedious process of prioritizations, evaluation, allocation and approval plus a baseline document for projects that will need more than one week. Projects requested through this channel are categorized by number of hours. 320-hour activities will be considered minor and will be funded by business unit resources. Activities beyond the 320-hour mark will be taken as major projects that will have to compete for priority in company resources (Best practice: MIS customer service, 2006).
Customer focus is the main thrust of the new and improved management information systems. Annual customer satisfaction ratings are used to assess the performance of the system and used to find possible areas of improvement. The MIS unit handles training, documentation and train-the-trainer programs that give control of technology to end users and clients. This strategy has proven very successful. It removed the initial need to rely on external management information system providers and has transformed the management information system into an effective and efficient business-motivated function of the company. Decision-making has drastically improved removing nice-to-have and non-critical projects because of the structure of the system. Users are provided more choice and control and are allowed to provide strategic solutions to help the developers. The Weirton Steel Corporation data center has recently been recognized as part of the top 25% in a national survey of major corporations administered and analyzed by the Mark Levon Company. The MIS department has turned from an ineffective belly-up system into a recognized profit center and indispensable asset to the organization (Best practice: MIS customer service, 2006).
This model of effective, efficient, responsive and customer focused management information system is truly worth noting and using for other systems.
MIS in Energy Utility Industry
Management information systems have long ago proved its worth in allowing for effective management of energy utility companies given the broad types of information covered by the operations of these types of companies. Because of the continually evolving field of information and communications technology, it is often important to update not only the peopleware and organizational structure as was done in WSC but also to improve on hardware and software components of the system.
One case is that with the Scottish and Southern Energy, one of the largest energy utility companies in the United Kingdom with a customer base of up to six million. It was formed from a merger of the Southern Electric and the Scottish Hydro-electric companies in 1998 which gave the whole conglomerate a healthy four million client base for electricity and one million for gas. It has since managed the largest electricity distribution network. The company owns 10% of the whole country’s generation capacities and half of the renewable generation assets. Scottish and Southern Energy has a long standing reputation of being among the most efficient and successful energy companies in the British market. The deregulation of the industry has allowed the corporation to further expand through acquisitions. The rapid growth of the company necessitated for major changes in the management information system serving its needs and its six million clients (Customer solution case study, 2005).
The utility company wanted to differentiate its financial reporting system from the mainframe to allow for more efficient generation of internal reports and other demands necessitated by the corporate giant. Business intelligence is an important issue for utility companies in order to remain on the edge with consumer choices ever increasing. Therefore, it is important to invest in tools to not only gather more new clients but also sustain the huge client base of the company. The chief technology officers of the SSE took up the challenge of finding alternatives to the existing IBM DB2 system of the company. It chose Microsoft SQL Server 2000 as the core system because of its lower development and maintenance costs despite the high system quality. It moved to further its technological tools by adopting Microsoft technologies for its existing management information system. The main goal was to allow management of administrative access to data which is important for the overall functioning of the corporation. The SQL Server used the Microsoft Windows Server 2003 operating which was a complete, web-enabled database and analysis package. It also supported XML and query functions across the Internet and beyond the existing firewalls. The COBOL data processing code was also replaced by the Microsoft .Net Framework (Customer solution case study, 2005).
The benefits provided by this change in hardware and software components were outstanding. The new database improved storage capacity and speed. The peak workload is at 2152 transactions per second which is the highest among utility companies and seventh for all companies in the world. Reports, that previously required 40 minutes, were finished in four (Customer solutions case study, 2005).
Another benefit is low cost total ownership. Instead of requiring more investment, the move to migrate to the SQL Server actually protected existing investments of the company on information technologies. The SQL Server also provided SSE unparalleled efficiency, powerful libraries and up-to-date object oriented languages (Customer solutions case study, 2005).
Finally, it provided the whole management information system unprecedented scalability, robustness and reliability. The new system for financial reports that was detached from the mainframe provided more reliable data and reports at breakneck speeds for external or internal use. The flexibility of the server system in place allows for the continued growth and expansion of the company without the risk of outgrowing its vital management information systems (Customer solutions case study, 2005).
This is also a model case for building a company framework of a management information system because it provides insights on the importance of state-of-the-art hardware and software components.
The objective of this paper is to recommend a possible management information system network for the Helectron company based on existing models and best case frameworks.
The Helectron S.A. is a company established on the foundations of the Techneco Hellas S.A. It claims to be the most reliable choice for integrated information technology services (since 1986) and automation systems (since 2000) in Northern Greece. It is based in the city of Thessaloniki and its state-of-the-art offices cover a total floor area of 500 m2. It has set a goal to achieve top reputation as becoming an industry leader among Greek companies in system automation with a very high degree of specialization and extensive know-how that continues to be developed and enriched. One division of the company is composed of doctorate degree holders and graduate engineers is deployed exclusively by Helectron to provide innovative, groundbreaking integrated office automation solutions for industry, smart energy management for buildings, environmental controls and water resource management. The services of this company range from initial design and installation, training, maintenance, future and long-term upgrades to extension of existing automation applications.
The strategic choice for limited employment of the best is no coincidence. The competitive global market demands operating cost reductions with increased productivity, optimized management and reduced wastage of energy for success in the business and social arenas. The sheer range of services provided for automation systems are all satisfactory in producing solutions to the requirements of the modern world. It is one of the first Greek companies to invest in extensive automation system applications. It is from this experience that Helectron provides tried and tested solutions to business organizations that require aid in setting up their own IT technologies and automation systems.
Its workforce is composed of only 40 employees. It is made up of information technology experts, automation system engineers, sales, administration and financial service executives. The highly trained staff is composed of university qualified employees that make up 70% of the workforce and 10% of these have finished postgraduate studies in information technology and automation systems. Total Quality Management standards apply in the employment of the best experts in IT. The policy of Helectron is customer-centered service. The support departments of the company are in close communication and coordination with commercial departments to ensure all company staff members are aware of the needs and problems that emerge and are always ready to provide immediate, up-to-date, integrated solutions to its clients’ problems.
In the development of any project, the company uses a specific, proper, tried and tested methodology that will ensure the success of the project. The following progressive stages are used in project development:
1. Need and problem identification
2. Approach design – proposal
3. Pilot solution development – acceptance
5. Installation – Training – Support
Continued research and development activities within the company and monitoring of international developments keep Helectron at the cutting-edge of the information technology and automation systems technologies. The primary concern of the company is to keep the staff at the helm of all developments to ensure it is able to apply these modern and advanced technologies in the integrated solutions it provides for its clients. Most Helectron executives are certified by Microsoft, Hewlett Packard, CISCO, Singular Software and Siemens. They are also strategic partners of the company to ensure the training and briefing of the staff is at its best.
The quality of services and products is important in the operations of Helectron and is based on the long-term relationships it builds with its client base. It is certified for and operates in accordance with strict quality control standards of ISO 9001:2000. The internal structure and staffing of the company is kept flexible and responsive to the needs of a project and requirements of the clients.
In the information technology sector, Helectron provides commercial accounting applications, business operation automation, networks and infrastructure projects, new technologies, support and consultancy services, total services and software, hardware and other consumables. Some important clients of the company in this sector include: Aristotle University of Thessalonkiki, Domotechniki S.A., Ianos S.A., Interlife Insurance S.A., Linea S.A., Halkidiki Fertilisers, I. Boutaris & Son Wineries S.A., Oxford Company S.A., Babinis Supermarket, Souroti S.A., Technomat S.A., Houtos Catering S.A. and Macedonia Foundries.
In the automation systems sector, it provides services in integrated, innovative automation system solutions, integrated services, industrial solutions, environment and water treatment solutions and smart building management. Its roster of projects include: STRIMON Tomato Products and Rice, Siemens – Egnatia Road, Egnatia Road – AEGEK – PANTECHNIKI, EKO – Hellenic Petroleum, Interplast, Souroti S.A., Allatini, Haitoglou – Hartel S.A., Protecta, Neodent Dental Equipment, Federation of Agricultural Cooperatives of Thessaloniki, SEVATh, Thessaloniki Water Supply Company, Central Macedonia Region, Municipality of Orestida and Thessaloniki Port Authority S.A.
For the model framework to be used by Helectron for its management information system, the best would be the prototyping framework. This framework allows for more end user involvement in the development of the project. The nature of the projects undertaken by Helectron for its clients necessitates constant communication with the client to ensure the project remains on track with the intended use. Although the problem of uncoordinated activities and too much time consumption may arise, this is less likely given the focus provided by this relatively small company to each of its projects.
The framework must incorporate human-computer integration and object-oriented concepts. This is because the size of the company makes it necessary for all members of this elite and expert group to use the system with high frequency. Also, the project-driven system of Helectron’s services makes it beneficial to employ object-oriented concepts in its management information system.
It is possible for this system to be set-up by Helectron’s employees themselves given their technical expertise and experience in doing the same for their clients. This will allow Helectron invulnerability to market forces for external service providers that may increase costs for the company.
Since the thrust of the company’s services is in client-relations and the policy of the company is customer-centered, it is important to emulate the system employed by WSC that allows for a very effective, efficient, flexible and responsive customer service wing within its management information system. Having such an effective branch will be very beneficial to the company, improving its reputation and its capability to attract more customers and projects.
The company qualifies as a small enterprise. Given the limited resources available for its use in investing in an effective management information system, it is important to consider the IS competencies available to the company. It can readily be seen that out of the six critical macro-competencies, Helectron has advantage in five out of six of them given their expertise in this field (except supply). To put it clearly, the following competencies are within the expertise of the Helectron staff: technology innovation, information governance, prioritization, IS strategy alignment, business performance improvement, systems and process innovation, infrastructure development, technology analysis, sourcing strategies, benefits planning, benefits delivery, managing changes, applications development, service management, information asset management, implementation management, apply technology, IS/IT staff development and technology standards.
Much like that of the MIS systems for educational institutions, it is important to specify the requirements for Helectron. Given their goal to improve their global standing, it is important the system has access to the internet and other networks within the region. It is also important that information from field projects easily and readily flow to the main database and are analyzed ready for the decision making procedures of the senior management at the main offices. It is important the security of the files is not compromised because a project-based system of clients is susceptible to industrial espionage and even sabotage. To protect the interests of the company, sufficient fire walls and other security mechanisms must be set in place to ensure only appropriate users can access the appropriate files at the appropriate levels. Given the size of the company, costs for operations of the system must be kept at a minimum. There must be open and rapid file transfer capabilities to allow for real-time monitoring of events across all project sites. The system must be capable of accommodating multiple users at a time to make sure all information is received even if projects are implemented at the same time. The long history of the company indicates the need for huge storage space. The nature of the client base requires for accessible and easy-to-use user interface. The nature of the projects indicates the need for high processing power for operations in relation to the projects. An effective financial monitoring system must also be put in place. Finally, the emphasis of the company on its staff necessitates an extensive human resource management record compilation and storage.
As seen in the case of SSE, hardware and software components make all the difference in the success of the management information system. It is important that the latest in hardware (servers, telephones, computers, internet connections) and software (operating systems, document processing, virus detection, file integrity protection) must be employed to make sure Helectron’s management information system is reliable and competent to meet the needs of the company.
Once a prototype of the system is in place, it is important that it is run through feasibility studies and other indicators of the effectiveness and efficiency of the system. If it does not pass the tests, more improvement and development must be made on the system for the benefit of Helectron.
Helectron would benefit greatly from an effective and efficient management information system. Its client base will surely grow exponentially with an effective customer service wing. The project productivity will be increased if more projects can be performed at the same time and coordinated by the management information system. Senior managers can make well-informed decisions at unprecedented times. An effective management information system would be Helectron’s ticket to global competitiveness and competency.
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