The report was intended to comprehend the theoretical and speculative aspects about the management information system, and its practical applications as well. The next thing to be done is providing recommendations to Amazon.com for a profitable information system to coordinate the operations and workforce activities, and incorporating novel processes while expanding business in the times of economic crisis.
Management Information System
Information system is comprised of integrated components used to gather, store, analyze and transfer the information. The technology used to manage and coordinate the information in a way that it can be retrieved when required is known as information technology. (Clarke, 2007)
The information system is the one which collects the data both internally and externally, process it into information, pass this information to people working at varied levels of organizations, assist them in decision making in a timely and effective manner (Lucey, 2004).
The management information system is the system which gives needed timely information to management for decision making, planning, and controlling of business operations effectively and efficiently. In this highly competitive world of technology, the management information systems are combination of man and hardware, which aids and provide support to the management to perform business operation with excellence. It is the man and computer based technology which collects the raw form of data, converts it into useful information, store it, and retrieve it when needed. This information is conducive for all managerial levels or hierarchies. The well built and structured information system is helpful to both business and its employees in acquiring their objectives and formulates decision making process easier at all organizational levels. (Laudon, 2006)
Decision Focus of MIS
Figure1 (Sourced: Lucey,7th Edi)
Roles of MIS
The organizations of the modern world have comprehended it well that information systems are essential for the growth of their businesses. They play a critical role in managing operations; perform routine tasks and future decision making. As a result, organizations will enhance their processes, improves customer service, and earn more market share and profits eventually. Thus it will be appropriate to say that a well structured and utilized management information system can act as a source of giving competitive advantage to organization, which is demand of the corporate sector globally (Clarke, 2007).
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Some critical roles played by the management information system are discussed here: Firstly, it supports business processes; the best illustration is inventory tracking or management, order delivery management, supply chain management. These systems are helpful in performing daily routine tasks or business operations in a more efficient manner, thus empowering employees to perform well and satisfy their customers (Luftman and Kempaiah, 2008).
The next is that it supports in making decisions for normal day to day operations. This is the most important role played by the system helping employees at various levels in organization. The middle level used this information for making decisions regarding the service and product, while senior management used this information to make strategic decisions for future of business. Thus, it is the well structured and well designed management information system that assists in decision making at every management level because they are providing appropriate information to the management. (McAfee and Brynjolfsson, 2008).
Another important role played by the information system is giving a competitive advantage. In industry settings, it acts as source of competitive edge in two ways. One way is to record and then present the information of customers, their behaviours, preferences, demographic influences and also in enhancing product quality, exposing the right product to right customers, and focussing on customer relationships. In another way, management can utilize this information to make changes and take decisions regarding businesses and product development to gain competitive edge (McAfee and Brynjolfsson, 2008).
Types of Management Information system
There exist four major types of the management information system. The Executive Support System resides at the top level management. It has a role in providing the corporate strategic information to senior management. Then is the Decision Support System, which serves to the middle management by providing information they require and helps them in decision making. Another system on same level is Management Information System, which provides internal and external information of customers and employees to the management. The most basic is the Transaction Support System, which provides information about daily business operations and helps employees to provide enhance services to their customers. These Transaction Support Systems are used to track inventory, record daily sales etc (Luftman and Kempaiah, 2008).
Figure 2 (Sourced: Laudon &Laudon 9th Edi)
In past, the presence of management information system was not as vital as it is today, because it was employed for the purpose of assistance in transactions and daily operations only. But recently, these systems have gained importance due to the new picture of corporate landscape and culture. Now the time factor is present, the right information must be delivered in time to its respondents to take decisions on this basis. To take strategic decisions, it is essential to have accurate and timely information with the management. That is why the graph of importance of MIS is rapidly increasing. This makes it clear that information systems if implemented correctly and used efficiently can act as a strategic weapon of the company (Clarke, 2007).
These information systems can be utilized in multiple ways. From the customersââ‚¬â„¢ perspective, these systems facilitate their interaction with the company, motivating them to do further transactions, and it can be used effectively on B2B business model. With the implementation of intelligent business information system, company can get the feedback from customers, perform analysis on it and use this for improvements in business operations and procedures. Thus it helps in building a strong business relationship with customers, and consequently organization can achieve competitive advantage (Preston and Karahanna, 2009).
Some other advantage which organization can get from this MIS are enhanced efficiency of organization, improved inventories, just in time delivery of raw material and learning process from the data collected by this information system. This helps in increasing the business processes of the company and reduces cost of processes. This is how information systems can strategically used as business weapon (Preston and Karahanna, 2009).
Information System Technology:
Information communication system technologies are involved in almost every aspect of life. The whole process of acquiring, processing, storing and distributing verbal, theoretical and numerical information via computation is collectively known as Information communication technologies .(Lucey,2004).
ICT is not only comprised of the hardware and software, but also structure of network and communication, structure of data and information with its access to different levels, user friendly, and also deals in operations and organizational strategies. To make long story short, these information communication systems are socio-technical as they integrates information, equipment, organization and people altogether .(Lucey,2004)
Some main uses of information communication technologies are discussed in the figure below.
Figure 3( Sourced Lucey, 7th Edi)
It has been found that, information communication technologies (ICT) are not essential in every management information system, yet it is noted that if these ICTs are deployed in MIS then they can provide support to multiple managerial posts in organization. The figure below depicts the likelihood of applying this application at various levels in organization.
Computer Application Feasible Area
Figure 4(Sourced Lucey, 7th Edi)
The information communication technologies can be deployed in organizational settings for varied reasons, some of which are:
Corporate Data Information
Electronic Data Interchange
World Wide Web
Hardware and Software Management
The information systems are complex systems, created from multiple components. These include people, resources, software, hardware, data and networks, each one having its own importance and management style. Some considerations need to be taken for managing any information system in organizations (Clarke, 2007).
While talking about the hardware portion, it has to be kept in mind that hardware component of information system must be designed and created by forecasting the future requirements of the information. Same is done in case of software parts, yet in this case mostly current needs of the company are considered, which is problematic when business expands and information requirements are changed.
Similar types of regulations are applicable on data and network of the information system. In case of the networks, future needs are kept in mind while designing and creating networks, while in data case, the needs of all management levels are considered before making data management system as every tier has its own particular specific need that is to be satisfied. This is why it is required to develop a highly flexible data management system in order to cater all types of information related needs (Luftman and Kempaiah, 2008).
Example of MIS
Here is a case study of management information system of Amazon.com is a US-based electronic commerce company. Amazon is one of the largest online business retailers in the United States with its Headquarter in Seattle, Washington. The case discussed below is a an example of using a profitable MIS setup in an organization, which helps in sustaining the business (Web1,2010)
Management Information System at Amazon.com
Users at Amazon
The people using MIS at Amazon.com includes sales staff, collection team, marketing personnel, accountants, finance officers, inventories and procuring managers and teams. The usage rights varied from person to person in an organization on the basis of difference in designations they have. The ones who are executives and leaders of the team possess rights regarding business processes, managers are entitled to right for checking the information collectively and individually. This right is also given to the senior executives and head of departments, who can view all information, and get reports in different formats to check the performance of individual employee and whole organization as well. This is how the management of Amazon measures the performance of its employees (Web1, 2010)
The hardware components that are deployed in management information systems of Amazon are:
Inbox Intel Core2Due Processing Systems
The software components incorporated in the MIS of the Amazon.com are of various kinds. one the kind is which are used as machine running software these include Microsoft Windows & Office, Antivirus system and other are application that are designed for needs of different departments depending upon the nature of business they are handling. These applications include Tracer system, Econnect system, CRM system, Infinity Analysis portal and Octopus.
One primary kind is used for running machines and known as system software such as Microsoft Windows & Office, Antivirus, other software applications designed to cater the needs of the different departments which is dependent on the type of business they are dealing in. Some examples of these applications include:
Infinity Analysis portal
Sales Order Processing System
Networks for Remote Locations
Amazon.com acquires it network system and utilizes LAN (use Local Area Network), WAN (Wide Area Network), and VPN (Virtual Private Network), to perform operations in remote areas without presence in the office.
Example of WAN
Figure 6(Source Web2)
The data component of Amazonââ‚¬â„¢s MIS is comprised of the database management system, which gathers, stores, analyze, and retrieves data through servers and software applications.
Here, we have to provide some major recommendations to the Amazon who is expanding their business and focus is on optimizing the performance of their workforce by managing and controlling them. As we know Amazon is a US based organization who is intended to expand its business in South Asian region of the World such as Pakistan and India. That is why we have to recommend main points about the management information system for Amazon which will help it strategically. Some main aspects of MIS regarding management strategy and decision making are as under.
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Strategic Management through MIS
In most cases, strategy making is not a well organized and structured process, and the role of new management information system is limited in information processing. Though MIS is required to collect information according to the environment and perform scanning and processing methods to identify the possible threats and opportunities. Some main characteristics of the strategic information utilized in decision making are as under:
Outside Information: It is known that internal information is required continuously for business, yet a real fact is that organizations are working in any environment and not alone, so in this case they need extensive outside information for making decisions on strategic issues. This information can be the performance report of competitor in a market, financial patterns, technological advancements, political situations, market scenarios and trends etc.
Long term Concerns: The strategic plans are made for the medium and long terms. That is why strategic information systems must be designed to cater the information like trends, forecasts, appraisals, previous performance records.
Quality and Quantity: The element of the quality and quantity is required in the information gathered for the information system. The qualitative information is needed to formulate strategic plans and take decisions. The quantitative information is needed for daily operations like sales.
Informal Processes: Formal procedures are important in strategic planning, but it is the fact that informal procedures to analyse the information is highly effective way. Studies indicate that an extra formal system in strategic levels makes the organization less adaptive and responding.
Boundary less: The information at lower management level is boundary less in the organizations, but it has been noted that it is limited to a specific action. In case of strategic information, it should be broad and not restricted by any boundaries.
Multi-Proportion Management: While building strategy or taking decisions, management must consider all the solutions to issue and look problem with all aspects. For instance, taking decision on one issue, management has to consider all factors such as financial, customers, marketing.
Environmental Influences on Scanning
The primary difference between, management information system made for strategic level and other MISs is that in case of strategic MIS, impact of environment is considered. In creating strategies or making decisions, it is essential to comprehend the involvement of environment and forecast potential changes that will occur in future, and also predict the future trends and influence factors of business. This whole process of collecting information whether formal or informal is known as scanning. The four main types of scanning includes:
Undirected scanning: The scanning in which the information is searched out by the manager generally and not for any specific purpose.
Conditioned scanning: In this type managerââ‚¬â„¢s influence is involved. The influence come through any previous event or experience, and several portions of information are collected by it, instead of exploring specifically for the problem.
Informal Directed Scanning: Here the information is searched particularly for any purpose or topic but in an informal or non structured format, rather manager following a formal setup.
Formal Scanning: In this type, the information is collected for the specific purpose through formal and structured process
Enterprise wide information systems
An appropriate ERP system is recommended to the Amazon.com for optimizing its business. The advancements in networking and information technology have enabled the usage of shared data bases or ware houses by many information systems. This is done to provide support to the business operations and processes, linking them together to form enterprise wide information systems.
One known or famous example of enterprise wide information system is Enterprise Resource Planning system. The retailers of known ERP systems include SAP, Baan, Oracle, and People-soft. The main task of ERP system is that it performs the integration, warehousing, application, and creates user friendly interfaces of the data and facilitate with data analyzing tools. It is a collection of multiple software modules which helps in bringing major business processes together. Each module performs its own task in analyzing the data. Some main modules of ERP system are:
Bill of materials
Sales and Marketing
Human resource Management
Role of ICT Applications in Managing Remote Workforce
Trying to manage the operations and performance of its workforce in remote locations, (ICT) information communication technologies are used at all management levels so that information can be accessible whenever required, which enables the multinationals (MNCs) to operate globally even in remote areas. Thus, a well coordinated and designed MIS is vital for the business success and sustainability in this world of competition.
Some examples of ICT applications which can be utilized for a useful management information system are discussed here.
In order to carry out the information processing tasks in the company, technology of automating the offices is employed and in fashion these days. With help of such technologies, it is easier for the information to travel among different departments. For instance writing a memo, or report and email it to all departments. Office automation involves collection of software such as MS Office, Accounting software, Adobe etc.
E commerce is a specifically electronic or digital process, which includes activities both internally and externally businesses by information communication technology network such as internet, intranet and extranet. The whole business activities including sale, purchasing of services and goods, funds transfer all done electronically. E commerce involves e-marketing, B2B, B2C, C2B and etc.
Another novel concept of this age is m-business, which has been evolved from the e-business. WAP (wireless application protocol) has made it possible to get connected on mobile phones. Some other latest applications includes tele- business, video conferencing, enabling the managers to connect with their team or subordinates from anywhere in the world.
Location of Database
It has been discussed in the case that major database of Amazon.com is located at its headquarters in Seattle, but with expansion of its business in South Asian countries and rest world, there might be some hurdles in having single database for all.
The effect of having database in the headquarters is that, the operational efficiency in remote areas will decrease, due to failure of application to respond. Secondly, the holiday and time zone format in USA is different from that of country in South Asia. And this will be problematic for the staff of the remote operational area to handle queries when database employees will on leave. So having a single database is not recommended when Amazon is expanding business.
In order to get in time support of operations, it is preferred to have a database in operational area. Same is required in the case of application development and support system. As these two tools are designed in the head office and used there, so the operations will be delayed because of this. This will results decline in the customer satisfaction and commitment. To cope up with such problems, databases and corresponding applications should be designed and developed in the operational country.
Security of MIS
It is highly important to consider the security of the information system. While dealing with ICT system which is networked via internet and intranet, its security be designed. The security procedures must ensure that only authorised people have access to the strategic information. The secrecy of the MIS should be on the top priority as this will make the business successful and if mishandled then cause losses.
The author has done the detailed study of the theoretical concepts of management information system in this assignment. Additionally, the sources of information, its storage, and processing are also discussed in the assignment. The importance of MIS in strategic decision making is the key issue discussed here, and keeping in view this, suggestions are provided by author for Amazon.com to expand its business with appropriate MIS to improve its effectiveness of business.
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