CHAPTER 1

AN OVERVIEW OF MANAGEMENT INFORMATION SYSTEM

DEFINITION OF MIS:
A Management Information System is

An integrated user-machine system

For providing information

To support the operations, management, analysis, and decision-making functions

In an organization

The system utilizes

Computer hardware & software

Manual procedures

Models for analysis, planning, control, and decision making, and

A database
MIS
for
Strategic
and policy
Planning and
Decision making

Management information
for tactical planning
and decision making

Management information for

Operational planning, decision making, and
control
Transaction processing
Inquiry response

Fig: PYRAMID STRUCTURE OF MIS

MIS AND OTHER ACADEMIC DISCIPLINES:

MANAGERIAL ACCOUNTING

OPERATION RESEARCH

MANAGEMENT AND ORGANIZATION THEORY

COMPUTER SCIENCE

SUBSYSTEMS OF AN MIS:
Two approaches of defining the subsystems of an MIS are :

According to the organizational functions which they support

According to managerial activities for which they are used.

ORGANIZATIONAL FUNCTION SUBSYSTEMS:

Major Functional subsystem

Some typical uses

Marketing

Sales forecasting, sales planning,

customer and sales analysis

Manufacturing

Production planning and scheduling,

cost control analysis

Logistics

Planning and control of purchasing,

inventories, distribution

Personnel

Planning personnel requirements,

analyzing performance, salary
administration

Finance and accounting

Financial analysis, cost analysis,

capital requirements planning, income
measurement

Information processing

Information system planning,

cost-effectiveness analysis

Top management

Strategic planning, resource allocation

ACTIVITIES SUBSYSTEMS:
Activity subsystem

Some typical uses

Transaction processing

Processing of orders, shipments, and

receipts

Operational control

Scheduling of activities and performance

reports

Management control

Formulation of budgets and resource

allocation

Strategic planning

Formulation of objectives and strategic

ACTIVITIES
Strategic

Management Control

Operational

M
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Transaction

T
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Database management system

Database

Fig: RELATION OF ACTIVITIES TO FUNCTIONAL SUBSYSTEMS

MIS AS SEEN BY THE USER:
USER

USES

Clerical personnel

Handle transactions, process input data

and answer inquiries

First-level managers

Obtain operations data. Assistance with

planning, scheduling, identifying
out-of-control situations, and making
decisions

Staff specialists

Information for analysis. Assistance with

analysis, planning and reporting

Management

Regular reports.
Adhoc retrieval requests.
Adhoc analyses.
Adhoc reports.
Assistance in identifying problems and
opportunities.
Assistance in decision-making analysis.

CHAPTER 2
STRUCTURE OF A MANAGEMENT INFORMATION SYSTEM
Information system can be classified in terms of the following.
1. Operating elements
2. Decision support
3. Management activity
4. Organizational function
1. OPERATING ELEMENTS OF AN INFORMATION SYSTEM:
A. PHYSICAL COMPONENTS:

Hardware :
Hardware must provide for five major functions:
1. Input or entry
2. Output
3. Secondary storage for data and programs
4. Central processor
5. Communications

Software :
The software can be classified into two major types:
System software & Application software

Database
The database contains all data utilized by application software.

Procedures
Three major types of procedures are required:
1. User instructions
2. Instructions for preparation of input by data preparation personnel
3. Operating instructions for computer operations personnel

Operations personnel
Computer operators, systems analysts, programmers, data preparation personnel,
information systems management, data administration, etc.

B. PROCESSING FUNCTIONS:

1. Process Transactions :

Performance of a
transaction requires
records to

FILES

TRANSACTIO
NS

PROCESS
TRANSACTIO
NS

(1) Direct a transaction

to take place,
(2) Report, confirm, or
explain its performance
Or
(3) Communicate the
transaction to those
needing a record for
background
information
or reference

TRANSACTIO
N
DOCUMENTS

2. Maintain Master Files :

MASTER
FILE

TRANSAC
TION
DATA

UPDATED
MASTER
FILES

UPDATE
MASTER
FILES
MASTER
FILE
CHANGES

Many processing activities

require creation and files
maintenance of master
files, which store relatively
permanent or historical
data about organizational
entities.
When transactions are
processed, master file data
items are updated to reflect
the most current information

3. Produce Reports :
Scheduled reports are
produced on a regular basis.
FILES

PREPARE
REPORT

REPORT

Special reports are also

produced quickly based on
ad hoc (unscheduled)
requests.

4. Process Inquiries :
Other outputs are responses

HANDLE
INQUIRY

INQUIRY

INQUIRY
RESPONSE

to inquiries using database.

Inquiries may be regular
inquiries with a preset format

INQUIRY

INQUIRY
RESPONSE

or ad hoc inquiries.

5. Process Interactive Support Applications :

The information system
contains applications
DECISION
MAKER
OR
ANALYST

MODEL
INPUT
AND

DECISION
MODEL
PROCESSING

designed to support systems

for planning, analysis and
decision making.

C. OUTPUTS FOR USERS :

1. Transaction documents or screens
2. Preplanned reports
3. Preplanned inquiry responses
4. Ad hoc reports and inquiries responses
5. User-machine dialog results
Transactional documents are of the following types :
1. Informational
Reports or confirms that action that will be or has been taken.
2. Action
Requests or instructions for action.
3. Investigational
Reports exceptions, errors, or other conditions that may require investigation. Used for
control and future reference.

Reports, inquiry responses, and dialog results provide four types of information:
1. Monitoring information
Monitoring information provides a basis for problem finding and diagnosis and may lead to
action, but no action is specified by the information itself.
2. Problem finding information
The information is presented in a format that promotes identification of problems.
3. Action information
The information is presented with action specified or implied.
4. Decision support
The report, inquiry, result, or dialog is oriented to performing analysis and
making a decision.
Preplanned reports have a regular content and format and are usually run on a regularly
scheduled basis.
Prepared at a given time, they reflect one of three conditions with respect to the time
period they cover:
1. They describe status or condition at a point in time.
2. They summarize what has occurred during a period such as a week, month, or year.
3. They present results to date and project to the end of the period.
Ad hoc reports and inquiry responses occur at irregular intervals and require data or analysis
whose format has not been preplanned.
Ad hoc request are handled in two ways :
1. The user may be provided with a means (inquiry language) for preparing and processing
the request.
2. An information service may be available to process ad hoc requests.
2. MANAGEMENT INFORMATION SYSTEM SUPPORT FOR DECISION
MAKING
Decisions are of different types with respect to the structure that can be provided for making
them.

Structured, Programmable Decisions

A structured decision can be said to be programmable, in the sense that unambiguous

decision rules can be specified in advance. When a decision can be programmed, an
organization can prepare a decision rule or decision procedure. This can be expressed as a set
of steps to follow, a flowchart, a decision table or formula. Since, structured, programmable
decisions can be pre-specified; many of these decisions can be handle by lower-level
7

personnel with little specialized knowledge. In many cases, it is not possible to define a
decision procedure or decision rule to handle all possible situations.

Unstructured, Nonprogrammable Decisions

An unstructured decision can be said to be nonprogrammable. The unstructured decision has

no pre-established decision procedure, either because is too infrequent to justify the
organizational cost of preparing a decision procedure or because the decision procedure is not
understood well enough or is too changeable to allow a stable pre-established decision
support.
3. MANAGEMENT INFORMATION SYSTEM STRUCTURE BASED ON
MANAGEMENT ACTIVITY
Hierarchy of Management Activity :
The following categories of management planning and control were defined by Anthony.
LEVEL

COMMENTS

Strategic planning

Definition of goals, policies, and general

guidelines charting course for organization.
Determination of organizational objectives.

Management control
and tactical planning

Acquisition of resources.
Acquisition tactics, plant location, new products.
Establishment and monitoring of budgets.

Operational planning
and control

Effective and efficient use of existing facilities

and resources to carry out activities within
budget constraints.

Information Requirements by Level of Management Activity

Characteristics
of information

Operational
control

Management
control

Strategic
Planning

Time Horizon

Historical

--------------- 

Future

Currency

Highly current

--------------- 

Quite old

Required
Accuracy

High

--------------- 

Low

Frequency
Of use

Very frequent

--------------- 

Infrequent

Conceptual Structure of MIS:

The conceptual structure of a MIS is defined as a federation of functional

subsystems, each of which is divided into four major information processing

components :

Transaction processing,

Operational control information system support,

Managerial control information system support and

Strategic planning information system support

INFORMATION SUBSYSTEM FOR A FUNCTION

Common to many
applications

Unique to
application

Strategic planning

Model
Base

Management
Control
Operational
Control

Common
Applications
software

Transaction
Processing
Unique subsystem
files

Database Management System

Common Database

CHAPTER 6
THE DECISION-MAKING PROCESS
PHASES IN THE DECISION MAKING PROCESS :
1. SIMONS MODEL
INTELLIGENCE

Searching environment for

Conditions calling for decisions

DESIGN

Inventing,developing and
analyzing possible courses of
Action

CHOICE

Selecting an alternative or
course of action from these
available.

2. RUBENSTEIN AND HABERSTROHS MODEL

1. Recognition of problem or need for decision.
2. Analysis and statement of alternatives.
3. Choice among the alternatives.
4. Communication and implementation of decision.
5. Follow-up and feedback of results of decision.
INTELLIGENCE AND DESIGN PHASES
Important Phases are :
1. Problem Finding :
It is a part of Intelligence phase, and can be defined as finding the difference between some
existing situation and some desired state.
2. Problem Formulation :
Four strategies for formulating a manageable problem.
a. Determining the boundaries
b. Examining changes that may have precipitated the problem.
3. Development of Alternatives :
Generation of alternatives is a creative process which requires adequate knowledge of the
problem area and its boundaries and motivation to solve it by taking aids such as scenarios ,
brainstorming, etc.

10

CONCEPTS OF DECISION MAKING

Four dimensions of decision types are:

Level of knowledge of outcomes

Level of programmability

Criteria for the decision

Level of decision support

Knowledge of outcomes:
Three types:

Certainty : When there is only one outcome for each alternatives

and knowledge of the outcome is complete and accurate.

Risk : Multiple possible outcomes are there for each alternative

with probability attached with each.

Uncertainty : Multiple possible outcomes are there for each

each alternative but no knowledge of the probability attached with
each.
PROGRAMMED VS NON-PROGRAMMED DECISIONS :
1. Non -programmed decisions have

1. Programmed decisions are

no pre -established decision

rules or procedures.

those decisions that can be

pre -specified by a set of rules
or decision procedures.

2. Cannot be delegated.

2. It can be delegated to low - levels

in an organization or automated.
Criteria for decision making:

Normative or Prescriptive :

A model of decision making which tells the decision maker how to

make a class of decisions is normative or prescriptive. It is developed by economists and
management scientists. Eg. Linear programming, Game theory, Capital budgeting, etc.

Descriptive :

A model which describes how decision makers actually make decisions is descriptive. It
attempts to explain the actual behavior and therefore developed by behavioral scientists.

11

BEHAVIORAL MODELS FOR DECISION MAKING

1. Classical decision model of decision maker:
Assumptions :
1. All alternatives and all outcomes are completely known.
2. The decision maker seeks to maximize the profit or utility.
The decision maker is infinitely sensitive to difference in utility among outcomes.
2. Administrative model of decision maker:
It assumes that the decision maker
1. Does not know all alternatives and all outcomes.
2. Makes a limited search to discover a few satisfactory alternatives
3. Makes a decision which satisfies his or her aspiration level.
BEHAVIORAL MODELS OF ORGANIZATIONAL DECISION MAKING
1. Quasi-resolution of conflict:
An organization represents a coalition of members having different goals and unequal power
to influence organizational objectives. There are conflicts among the various goals of
organizational members. Such conflicts are resolved by three methods :
Method of conflict resolution

Explanation

Local rationality

Subunits are allowed to set their own goals

Acceptable level
- decision rules

Within certain limits, units are allowed to

make their own decisions using agreed- upon
decision rules & decision procedures

Sequential attention to goals

The organization responds first to one goal,

than to another, so that each conflicting goal
has a chance to influence organizational
behavior.

Uncertainty avoidance
Organizations live in uncertainty due to behavior of the market, supplier, shareholders and
government.
Legal methods used to reduce or avoid uncertainty are:
Method of avoiding uncertainty

Explanation

Short-run feedback and

reaction cycle

It allows frequent new decisions and thus

reduces the need to be concerned about
future uncertainty

Negotiated environment

The organization seeks to control its

environment by industry-wide conventional
practices, by long-term supply or sales contract,
etc.
12

Problematic search:
The search for solutions is problem-stimulated. The behavioral theory postulates that search
for the solutions is based on simple rules:
1. Search locally either close to the present symptom or close to the present solution.
2. If local search fails, expand the search first to organizationally vulnerable areas before
moving to other areas.
Organizational learning:
Organizations adapt with time. They change their goals and revise their problem search
procedures on the basis of experience. Aspiration levels for goals are assumed to change in
response to the results experienced. In the steady state, aspiration levels are a little above
achievement; when there is increasing achievement, aspiration level will lag behind
achievements. When there is decreasing level of achievement, aspiration levels will decrease
but tend to remain above achievement levels.
Incremental decision:
In Incremental approach, decision making in organizations is confined to small changes from
existing policy and procedures. The emphasis is on correcting or improving existing policies
and actions.
Decision making under psychological stress:
There are many decisions in organizations and in personal life that are charged with emotion
because of strong desires by the decision maker to achieve certain objectives or to avoid
dangers of unpleasant consequences. There are strong opposing tendencies in the individual
with respect to courses of action. The result is decisional conflict, a significant source of
psychological stress. The conflict is heightened if the decision maker becomes aware of the
risk of serious losses from every alternative course of action. Such decisions are still taken
but by using various copying patterns.
Copying patterns:
Conflict theory:
Four questions that determine the copying pattern are :

Are the risks serious in the absence of a change ?

Are the risks serious if change is made ?

Is it realistic to hope for a better solution?

If no better solution is possible than the copying pattern is Defensive Avoidance

If there is no time, the copying pattern is Hyper-vigilance
Is there sufficient time to search and deliberate?

13

Methods for deciding among alternatives:

Optimization Techniques under Certainty

Pay-off Matrices in Statistical Decision Theory

Utility and Indifference Curves

Decision Tree

Ranking Weighting or Elimination by Aspects

Game Theory

Classical Statistical Inference

Decisional Balance Sheet

Documenting and communicating decisions rules:

METHOD
Matrix

COMMENTS
It can be used to present pairs of
of conditions and resulting action.

Decision Table

It document rules that select one or

more actions based on one or more
conditions from a set of possible
conditions.

Flowchart

It has separate path for representing

one decision rule.

Decision tree

This is a flowchart without decision

symbols or processing boxes

Pseudocode

This shows the decision logic in the

IF -THEN format.

14

CHAPTER 7
CONCEPTS OF INFORMATION
DEFINITION OF INFORMATION:
Information is data that has been processed into a form that is meaningful to the recipient and
is of real or perceived value in current or prospective actions or decisions.
MATHEMATICAL DEFINITION OF INFORMATION:
It is the average number of binary digits which must be transmitted to identify a given
message from the set of all possible messages to which it belongs.
INFORMATION PRESENTAION:
Communication of information for human use is affected by methods of transmission and
message handling. These methods can be classified as

Methods that increase the sending and receiving efficiency of a system

Methods to exercise information content of distribution discretion

Methods that increase the sending and receiving efficiency of a system:

Two methods for more efficiently providing information are message summarization and
message routing.
Message summarization is commonly utilized to reduce the amount of data transmission
required without changing the essential meaning of the original message.
Message routing means distributing a particular message to only those individuals or
organizational units which require the information for some action or decision.
Methods to exercise information content of distribution discretion:

Method
Message delay
Message modification or
Filtering
Uncertainty absorption

Presentation bias

Reasons for use

To avoid overload. To distort,
inhibit, or suppress transmission
To modify by summarization
To block certain data by filtering
To reduce data transmission (by
removing recipient from contact
with detail data)
To bias by order and grouping in
data presentation
To bias by selection of limits that
determine whether items are
presented
To bias by selection of graphics layout.

15

QUALITY OF INFORMATION:
Some aspects of information quality in terms of the perceptions of the decision maker are
1. Utility of information
Andrus identifies four information utilities

Form Utility: As the form of information more closely matches the requirements of the
decision maker, its value increases

Time Utility: Information has greater value to decision maker if it is available when
needed.

Place Utility (physical accessibility): Information has greater value if it can be accessed
or delivered easily.

Possession Utility (organization location): The possessor of information strongly affects

its value by controlling its dissemination by others.

2. Information Satisfaction
It is the degree to which the decision maker is satisfied with the output of the
formal information system.
3. Errors and Bias
Bias is caused by the ability of individuals to exercise discretion in information
presentation.
Errors are more serious problem and may be a result of:

Incorrect data measurement and collection methods

Failure to follow correct processing procedures

Loss or non-processing of data

Wrong recording or correcting of data

Incorrect history (master) file (or use of wrong history file)

Mistakes in processing procedure

Deliberate falsification

AGE OF INFORMATION:
1. Condition data which pertains to a point in time.
2. Operating data which reflects changes over a period of time.

16

CHAPTER 8
HUMANS AS INFORMATION PROCESSORS
The Newell-Simon Model:
Allen Newell and Herbert A. Simon proposed a model of human problem solving which
makes use of the analogy between computer processing and human information processing.
The Human Information Processing System:

The human information processing system consists of a processor, sensory input, motor
output and three different memories: long term memory (LTM), short-term memory (STM),
and external memory (EM). The system operates in serial fashion rather than in parallel.
Tentative limits of Human Information Processing:

The Newell-Simon model suggests that there are limitations on the ability of human as
information processors.

One set of limits concerns the processing of data and is directly related to short-term
memory.

Another set of limits is the ability of humans to detect differences.

Humans are also limited in their ability to generate, integrate and interpret
probabilistic data.

Concepts of Human Cognition and Learning:

Cognition Theory:

Cognition refers to the activities by which an individual resolves differences between an

internalized view of the environment and what is actually perceived in that same
environment.
Cognition Style:

Two individuals rarely follow the same decision-making process, even if they make the same
choice. One aspect of individual decision-making style that has received much research
attention is cognitive style. This refers to the process through which individuals organize and
change information during the decision-making process.
Learning Theory:

Information and information systems can aid individual learning. The learning process has
four important elements: drive, cue, response and reinforcement. The drive to learn in an
infant is primarily associated with physiological processes: in an adult, the drive to learn
beyond innate curiosity is acquired. Cues are stimuli that guide and determine responses.
Reinforcement consists of the reward or punishment or praise that follows a response. The
reinforcement causes responses to be learned.
17

IMPLICATIONS FOR INFORMATION SYSTEM DESIGN:

Some of the limits on human as information processor should be directly addressed in system
design. Examples are:
Concept

Implications for information system design

Filtering

Information systems should be designed to

filter irrelevant data and to provide increased
filtering for stress decisions. Systems should
attempt to override undesirable frame-of
reference filters by reinforced display of
relevant data.

Newell-Simon Model

Information systems should assist in defining

problem space and in the search process for a
solution. The information format should attempt
to expand the limits of bounded rationality.
Systems should utilize the user memory that is
suited to the task.

Magical number 72

Codes for human use should not exceed five to

seven symbols or be divided into segments of
five or less. Systems should not have humans
do significant unaided processing. Graphics
may be used to present chunks of data in
efficient way.

Just noticeable

Systems should highlight significant differences

Differences

rather than assuming humans will notice them.

Human as intuitive

The information system should provide statistical

Statisticians

analysis of data. Decision algorithms should

provide a consistency check of various
information sources. Data generation procedures
should be designed to assist in eliminating bias
such as recency of events.

Concreteness

The information needed should be presented in

the form needed. No added processing should be
required.

18

Concept

Implications for information system design

Anchoring and
Adjustment

Information and decision systems should be

designed to assist in selecting a suitable anchor
point and for prompting adequate adjustment
from it.

Cognitive style

Systems should allow selection of alternative for

order of processing and forms of information
presentation in order to accommodate different
styles.

Learning theory

System interface should be comprehensible to the

novice user as well as efficient for the skilled user
and should facilitate a normal progression of
learning.

Feedback

Systems should provide feedback to indicate that

data has been received, processing is taking place etc.

Value of unused data

Explains some of pressure for data with no apparent

utility. Suggests storage and retrieval strategies and
terminal access to increase availability without
individual storage.

Information overload

Input should be kept below the overload point.

System use should not involve managing or
processing amounts of data beyond overload.

Individual differences

Those which are critical to system use should be

identified and explicitly accommodated, whenever
possible through a flexible interface.

Nonverbal input

System design and training in use should consider

The effect of absence of nonverbal clues in
electronic communication.

Processing time

Managers need short bursts of information

processing to support their mode of operation.

Amount of
Information
Compression

Information systems should present summarized

data in a decision-impelling format, but the system
should also allow browsing through the raw data.

19

CHAPTER 9
SYSTEM CONCEPTS
System:
Systems can be abstract or physical. An abstract system is an orderly arrangement of
interdependent ideas or constructs. A physical system is a set of elements which operate
together to accomplish an objective.
Types of Systems:
1. Deterministic and Probabilistic systems:
A deterministic system operates in a predictable manner. The interaction among the parts is
known with certainty.
The probabilistic system can be described in terms of probable behavior, but a certain
degree of error is always attached to the predication of what the system will do.
2. Closed and Open systems:
A closed system is defined as a system which is self-contained.
Open systems exchange information, material, or energy with the environment including
random and undefined inputs.
3. Artificial systems:
They are systems that are created rather than occurring in nature.
4. Human-Machine systems:
Information systems are generally human-machine systems (or user-machine systems) in that
both perform some of the activities in the accomplishment of a goal. The machine elements
(computer hardware and software) are relatively closed and deterministic, whereas the human
elements of the system are open and probabilistic.
Principles of Systems:
1. Decomposition:
It is the process by which complex systems are decomposed or factored into subsystems. The
boundaries and interfaces are defined, so that the sum of subsystems constitutes the entire
system.
2. Simplification:
It is the process of organizing subsystems so as to reduce the number of interconnections.
3. Decoupling:
If two different subsystems are connected very tightly, than such tight coupling places a
heavy co-ordination and time requirement on the two systems. The solution is to decouple
or loosen the connection so that the two systems can operate in the short run with some
measure of independence. Some means of decoupling are:
Inventories, buffer, or waiting lines
Slack and flexible resources
Standards

20

Chapter 14
Developing a Long-Range Information System Plan
Content of the information system master plan:
The master plan has two components

a long-range plan form three to five years (or longer) and

a short-range plan for one year

It contains four major sections:

1.

Information system goals, objectives and architecture

2.

Inventory of current capabilities

3.

Forecast of developments affecting the plan

4. The specific plan

Information system goals, objectives and architecture:
This section of the plan might contain the descriptions of the following:
a.

Organizational goals, objectives and strategies

b.

External environment

c.

Internal organizational constraints such as management philosophy

d.

Assumptions about the business risks and potential consequences

e.

Overall goals, objectives, and strategy for information system

f.

Architecture of the information system.

Current Capabilities:
It includes such items as the following:
1.

Inventory of :
a. Hardware
b. Generalized Software
c.

Application systems

d. Personnel
2.

Analysis of :
a.

Expense

b. Hardware utilization
c.

Software utilization

d. Personnel utilization
3.

Status of projects in process

4. Assessment of strengths and weaknesses

21

Forecast of Developments Affecting the Plan:

Planning is affected by current and anticipated technology. The impact of such developments
as PCs, LAN, DBMS and Office automation should be reflected in the long-range plan.
Software availability should also be forecast and the impact on future systems anticipated.
Methodology changes may also be forecast. Environmental developments such as
government regulations, tax laws, and competitor actions can also be included insofar as they
affect information systems.
The Specific Plan:
The Specific Plan is prepared for the next year. The plan should include:
1.

Hardware acquisition schedule

2.

Purchased software schedule :

3.

System software

Applications software

Application development schedule

4. Software maintenance and conversion schedule

5.

Personnel resources required and schedule of hiring and training

6. Financial resources required by object of expenditure (hardware, software, personnel,

etc.) and by purpose (operations, maintenance, new development, etc.).
Stages of Information System Growth:
Four stage Nolans model:
Stage of growth

Description

Initiation

Early use of computers by small number of users to meet

basic organizational needs.

Expansion (or contagion)

Experimentation with and adoption of computers by many

users. Proliferation of applications. Crisis due to rise in
costs.

Formalization (or control)

Organizational controls established to contain growth in

use and apply cost-effectiveness criteria. Centralization.
Controls often prevent attainment of potential benefits.

Maturity (or integration)

Integration of applications. Controls adjusted. Planning

well established. Alignment of information system to
organization.

22

Six stage Nolans model:

Stage

Levels of control or slack

Initiation

Low control. Some slack. Little or no information system

planning.
Contagion

Greater slack in order to encourage use. Lack of planning.

Costs
rise and costs from lack of integration become visible.
Control

High levels of controls. Information system planning is given

increased emphasis.

Integration

Emphasis on integration. More emphasis on user control or

information system costs. Use of databases.

Data administration

Focus of data administration. Some slack to encourage

development of systems which contribute to strategic
advantage of the organization.

Maturity

Application portfolio is complete and matches the

organizational objectives.

Assumptions of Nolans Model about the growth dynamics of movement through the
stages:
1. Organizational learning permits movement through stages.
2. Stages cannot be skipped because experience is necessary before the organization is ready
for the next stage.
3. Although there is certain natural growth processes involved, the four growth processes
can be planned, coordinated and managed to move through the stages effectively and
efficiently.
The Three - Stage Model of the Planning Process:

Generic
Activity

Strategic
Planning

Alternate
Methodologies

Strategy set
transformation
Strategic grid
Strategic fit
Derivation from
organizational
plan

Organizational
Information
Requirements
Analysis

Business
systems
Planning (BSP)
Critical success
Factors (CSF)
Ends/means
Analysis (E/M)
23

Resource
Allocation

Comparative cost/benefits
Return on investment
(ROI)
Zero-based budgeting
Portfolio approach
Chargeout
Steering committee
ranking

Strategic Planning Stage:

The objective of this stage is to create objectives, goals, and strategies that align with (are
derived from) the organizations objectives, goals and strategies. Four techniques useful in
this strategic alignment are:
Derivation of Information System Strategy from Organizational Plan
If the organization has a plan that reflects organization goals, objectives, and strategies,
information system goals, objectives, and strategy can be derived from it. Each objective,
goal, and strategy in the plan is analyzed for required information system support. These can
then be organized into information system goals, objectives, and strategies.
The McFarlan McKenney Strategic Grid
The grid defines four types of information system planning situations depending on the
strategic impact of the existing information systems applications portfolio and the strategic
impact of the portfolio of applications planned for development. The cells define the position
of the information systems activity relative to the organization.
Strategic: Information system activities are critical to the current competitive strategy and to
future strategic directions of the enterprise. Information systems applications are part of new
strategic directions.
Factory: Information system applications are vital to the successful functioning of welldefined, well-accepted activities. However, information systems are not part of future
strategic directions.
Support : Information system applications are useful in supporting the activities of the
organization. Information systems are not part of future strategic directions.
Turnaround: This is a transition state from support to strategic. The organization has had
support-type applications but is now planning for applications vital to strategic success of the

Strategic impact of existing

Operating Applications

organization.

Strategic impact of planned

application development portfolio
Low
Low

High

Low
Support

High
Turnaround

Strategic

Factory
Strategic Fit withHigh
Organizational Culture

24

Fig : The Strategic Grid

Goals, objectives, and strategies for information systems should fit with the culture in order
to avoid high resistance and high risk of failure. Clues of culture can be obtained from the
following sources:

Stories

Meetings

Top management behavior

Physical layout

Ritual

Documents

Strategic Set Transformation

Strategy set transformation is used to produce goals and strategy for the information system
by the following steps:
1.

Explain the organizations strategy set

a.

Outline the organizations claimant structure. The client, claimant, or

stakeholders in the organization are identified. Examples are owners,
customers, suppliers, and employees.

b. Identify goals for the claimants.

c. Identify organizational goals and strategies for each claimant group.
2. Validate the organizational goals and strategies by asking management to critique the
statements. The organizational objectives, strategies, and strategic organizational
attributes form the organizational strategy set.
3. Transform the organizational strategy set into the information system strategy set.
a. Identify one or more information system objectives for each organizational
strategy and for each relevant organizational objective and attribute.
b. Identify information system constraints from organization strategy set and from
information system objectives.
c. Identify information system design strategies based on organizational
attributes, information system objectives and information system constraints.
Analysis of Organizational Information Requirements:
Wetherbe and Davis described a method of obtaining organizational
information requirements. This method consists of the following steps:
1.

Define underlying organizational subsystems

2.

Develop manager by subsystem matrix

3.

Define and evaluate information requirements for organizational subsystems.

25

Resource Allocation:
Information system resources are limited, and not all projects can be done at once. Each
project should be analyzed in terms of four factors.
1. The expected cost of savings or profit improvement resulting from the project.
2. Cost savings or increased profit which cannot easily be quantified.
3. Institutional factors such as the need to have the development proceed in an orderly
fashion or the need to have the entire organization involved in a new information
system.
4. System management factors.
Using the four factors as input, a number of methods have been proposed for allocating scare
development resources with different underlying criteria for decision making. The methods
may be used single or in combination.
Method

Underlying Criteria

Comparative cost or benefit

Economic rationality

Portfolio approach

Project risk and extent to which project fits information

system stage or strategic direction

Chargeout

Value to user (local rationality)

Steering committee ranking

Organizational power, politics, and coalitions

26

Chapter 15
Strategies for the Determination of Information Requirements
Difficulties to obtain a set of information requirements:
1. The constraints on humans as information processors and problem solvers.
2

The variety and complexity of information requirements.

The complex patterns of interaction among users and analysts in defining

requirements.

Unwillingness of some users to provide requirements (for political or behavioral

reasons)
The Three Levels of Information requirements:
There are three levels at which information requirements need to be established in order to
design and implement computer-based information systems:
1. The organizational information requirements to define an overall information system
structure and to specify a portfolio of applications and databases.
2. The requirements for each database defined by data models and other specifications.
3. The detailed information requirements for an application
Strategies for determining information requirements:
1. Asking
2. Deriving from an existing information system
3. Synthesizing from characteristics of the utilizing system
4. Discovering from experimentation with an evolving information system
1. Asking
Asking method

Description

Conditions suggestion use

Closed questions

Each question has a

When a factual responses

defined set of possible

are known or respondent may

answers from which

not be able to recall all

the respondent selects.

possibilities. Analyst must

know all possible
responses

Open questions

No answers provided.

When feelings or opinions are

Respondent is allowed

important or when respondent

to formulate response.

has knowledge and ability to

formulate responses.

27

Asking method

Description

Conditions suggestion use

Brainstorming

Group method for drawing

Used to extend boundaries of

out a wide variety of

problem spaces of participants

suggestions by open flow

and draw out nonconventional

ideas

solutions

Guided

Participants are asked to

Used to guide brainstorming to

Brainstorming

define ideal solutions and

ideal solutions. Useful where

then select the best

participants have system

feasible ideal solution

knowledge, but may be locked

into an anchoring and
adjustment behavior

Group consensus

The participants are asked

Used to arrive at best

for their estimates or

judgmental estimate of

expectations regarding

variables that are difficult or

significant variables.

impossible to estimate
quantitatively

Deriving from an Existing Information System:

1. Existing system that will be replaced by the new system
2. Existing system in another similar organization
3. Proprietary system or package
4. Descriptions in textbooks, handbooks, industry studies, etc.
Synthesizing from characteristics of the utilizing system:
1. Normative analysis:

Normative analysis methods are based on the fundamental

similarity of classes of object systems. For example, all billing applications perform a set
of basic functions that can be prescribed in advance. These fundamental characteristics
are the basis for a prescribed in advance. These fundamental characteristics are the basis
for a prescribed or normative set of requirements. Analysis then concentrates on tailoring
the normative requirements to meet nonstandard needs of a specific organization or
application.
2. Strategy set transformation: It is a methodology primarily for describing organization
level information requirements from the objectives of the organization.

28

3. Critical factor analysis: In this approach, information requirements are derived from the
critical factors for operating and managing an enterprise. There is therefore a two step
process of drawing out the critical factors and then deriving information requirements. An
example of this approach is the Critical Success Factors (CSF) method. The analyst asks
users to define the factors that are critical to success in performing their functions or
making decisions. Information requirements can then be derived.
4. Process analysis: The idea underlying this approach is that business processes (groups of
decisions and activities required to manage the resources of the organization) are the basis for
information system support. Processes remain relatively constant over time, and the
requirements derived from the process will reflect the non-transient needs of the organization.
An example of a process-based methodology is Business System Planning (BSP).
5. Ends-means analysis: It is a technique for determining requirements based on theory. The
technique can be used to determine information requirements at the organizational,
departmental, or individual manager level. The technique separates the definition of ends or
output (goods, services, and information) generated by an organizational process from the
means (inputs and processes) used to accomplish them. The ends or output from one process
is the input to some other process.
6. Decision analysis: This method for information requirements determination is performed
by the following steps:
1. Identify and prescribe the decision
2. Define the decision algorithm or decision process
3. Define information needed for the decision process.
This method is very useful in clarifying information requirements with users in cases where
the decision process is fairly well defined.
7. Socio-technical analysis: This approach consists of two parts: Social analysis and
technical analysis. The social analysis determines system requirements relative to the social,
human interaction system of the organization. These requirements include system design
features and implementation procedures. The social analysis is performed by studying
patterns of social interaction and group behavior in the current system. Technical analysis is
an analysis of variance and control loops that require information.
Requirements for socio-technical design are usually obtained from participative methods and
are oriented to application level analysis. It is especially appropriate for applications that
involve many users, particularly secondary users where the application will significantly
change the work environment, social interaction or job design.
29

8. Input-process-output analysis: It is a system approach. A system is defined in terms of

input, outputs and information processes for receiving inputs and producing outputs. The
approach starts in a top-down fashion on an object system. Subsystems of the object system
are analyzed to subdivide them into smaller subsystems, etc. until information processing
activities are defined as separate activities within a subsystem. The advantage of analysis
based on inputs, process and outputs of systems is that it is systematic and comprehensive.
Steps in selecting a strategy and methods for determining information requirements:
1. Identify those characteristics of the four elements in the development process that affect
uncertainty in the determination of information requirements:

Utilizing system

Information system or application

Users

Analysts

2. Evaluate the effect of the characteristics of the four elements in the development process
on three process uncertainties :

Existence and availability of a set of usable requirements

Ability of users to specify requirements

Ability of analysts to draw out and evaluate requirements.

3. Evaluate the combined effect of the process uncertainties on overall requirements

uncertainty.
4. Select a primary strategy for requirements determination based on the overall
requirements uncertainty.
Uncertainty

Strategy

Low

Asking
Deriving from an existing system
Synthesis from characteristics of utilizing system

High

Discovering from experimentation

5. Select one or more methods from the set of methods to implement the primary strategy.

30

Chapter 16
Database Requirements
Database
A database is a collection of logically related data. By data we mean know facts that can be
recorded and that have implicit meaning.
Database Management System (DBMS)
A DBMS is a collection of programs that enable users to create and maintain a database. It is
general purpose software that facilitates the process of defining, constructing and
manipulating database for various applications.
Objectives of Database and DBMS
Database Objective

Description

Availability

Data should be available for use by applications (both

current and future) and by queries.

Shareability

Data items prepared by one application are available to

all applications or queries. No data items are owned
by an application.

Evolvability

The database can evolve as application usage and query

needs evolve.

Data Independence

The users of the database establish their view of the data

and its structure without regard to the actual physical
storage of the data.

Data Integrity

The database establishes a uniform high level of

accuracy and consistency. Validation rules are applied
by the DBMS

Phases of Database Design

Phase

Description

Requirements determination

Determination of the data requirements (views) of

individual users and applications.

Conceptual (logical) design

Integration of the individual user and application views

into an overall conceptual view that resolves view
conflicts.

Physical design

Translating the conceptual design into physical storage

structure.

31

Chapter 17
User Interface Requirements
Classification of Users:
 Developers versus Non-developers
Developers are those who develop information processing applications and tools for use by
other workers. They are professional system analysts who must deal with large, complex
systems.
Non-developers (end users) are workers who input, manipulate, or retrieve information using
the application and tools
 Novice versus Experts
A novice is one who is unfamiliar with both the systems specific syntax and semantic
knowledge. They should be able to get explanations or assistance through the system.
An expert is one who has internalized the systems syntactic structure or has considerable
semantic knowledge. They should be permitted rapid interaction and not be held up by
explanations or details that are only required by the novice.
 Occasional versus Frequent Users
Frequent users are experts particularly in syntactic knowledge than an occasional user.
Occasional user needs training in basic system commands & functions whereas frequent users
can learn unnatural commands.
 Primary versus Secondary Users
Primary user is one who benefits from the systems output whereas a secondary user is
responsible input into the system and sometimes for output but does not use the output
directly in his or her job.
Consideration in Design of a User Interface:
Screen Design
A good screen design is clear, uncluttered, and free of irrelevant information. Two useful
guidelines for deciding what information should be put on a single screen are the following.
1. Provide only information that is essential to make a decision or perform an action
2. Provide all data related to one task on a single screen.
The following are some guidelines for placement based on information processing limitations
plus culture-based habits of processing.
 Place items together that logically belong together.
 Place items in customary processing order.

32

 Position of most important items (preferably) at left side and arrange in importance
from top to bottom.
 Leave sufficient space so that items do not get confused.
 Position items across close enough that the eye does not change rows in moving
across. Use guide strips of lines, dots or dashes if necessary.
Feedback and Assistance:
Two types of feedback should be part of a user dialog.
1. The system should acknowledge every user request in some way.
2. Additional assistance (such as system status) should be available upon request.
3. Help
Help:
Type of Help

Description

Command Assistance

Provides an explanation of how to formulate a specific

command.

General Help

Provides a list of commands. When a user identifies the

command needed, a command assistance HELP may be used.

Prompting

When an error is detected, some systems will attempt to prompt

the user with information to make a correct entry.

Online tutor

A new user (or an infrequent user) may not know to perform

basic operations, so general help and command help are
insufficient. The online tutor help provides a lesson on how to
use the system.

Online Documentation

The manual is online in addition to or instead of a document

manual. The online documentation serves much the same
purpose as a command help, but may be in more depth.

Error Control:
A well-designed user interface should have four distinct dimensions of error control.
1. Error prevention: As much as possible, the system should provide specific instructions
(eg. prompts, help facilities) so that the user knows exactly what to do and avoid
making errors.
2. Error detection: When an error is made, the system should it clearly and explicitly.
However, polite error messages are favoured. Notification, that an error has been
detected should occur immediately. The user should be able to easily identify the
error. Finally, no error should cause the system to terminate abnormally.
33

3. Error correction: Correction should be straight forward and should require re-keying
only the portion of the data in error.
4. Error recovery: An important feature of a well-designed system is the ability to
undo something which has been done.
Response Time:
Response time in an interactive system is that time that elapses between the user keying in a
command and the system beginning to display a response. Some useful guidelines for best
response time are the following.
1. Frequent, simple commands should take less than a second.
2. For a given command type, response time should be as consistent as possible, even if
it takes slightly longer time.
3. Short response times to relatively complex requests may actually increase error rates.
4. If a response will take a long time (say > 10 secs) a message should be issued within 1
or 2 seconds to give the user feedback.
Workstation Design:
Considerations in a visual display terminal are the following:
1. The screen should usually be fixed at an angle of 10 to 15 degrees from the vertical,
away from the user. Preferably, the tilt should be adjustable, horizontally as well as
vertically.
2. Characters should not flicker or move on the screen.
3. Glare and reflections on the display surface should be minimized.
4. Resolution must provide a sharp image.
5. Character-to-background brightness contrast should be greater than 50 percent.
Preferably, the brightness should be adjustable. Screens may offer alternatives of dark
on light or light on dark.
The ergonomic considerations for physical design of the keyboard are the following:
1. Key force: A range of 15 to 125 grams pressure.
2. Key spacing: 18 to 20 millimeters between keys
3. Key displacement and activation: The results in the feel of a key when it is pressed.
Suggested displacement is 3 to 5 millimeters, with a key activation point requiring an
increasing force until contact is made at 65 to 75 percent of downward travel, then a
decrease in force so that the point of contact can be felt.
4. Key shape: Concave shape, with a matte finish to prevent reflection.
5. Keyboard slope: 10 to 15 degrees, preferably adjustable.
34

Interactive User Dialog:

The dialog between user and machine can follow many different structures. They are:
1. Command Language: The most common method of user interface dialog is the
command language. Most basic computer operating systems utilize a command
language to access other applications and perform basic system functions.
A command language generally has a prespecified format for each command. A
command to perform an operation is followed by one or more arguments that specify
the details for it.
Two methods are commonly used:
1. Keyword: The user specifies keywords for the arguments.
2. Position: The meaning of the arguments is determined by their position.
2. Menus: With the menu format, the user is shown a list of options, usually numbered
and is expected to choose the appropriate option by positioning a cursor or by keying
the associated number. A series of menus allow the user to step through a series of
hierarchical levels of increasing specificity.
The advantage of a well-designed menu is that it provides a familiar format and a
clear set of choices which are well understood by the user.
3. Icons, Graphs and Color: Graphical symbols commonly called icons may be used in
system dialog instead of menus or command language. The user moves the cursor to
the icon representing the desired function and presses a key to select that icon; either
the function is executed or a new set of icons is displayed.
4. Forms: In a forms-based interface design, the user fills in the blanks on a screen.
This type of interface dialog is appropriate for data entry transactions.
5. Natural Language: The development of natural language interfaces is generally
considered part of the domain of artificial intelligence. The goal is for a novice user to
communicate with computer through a natural language such as English.

35

Chapter 18
Developing and Implementing Applications
Prototyping Approach to Application System Development
The strategy of experimental assurance in development of information system applications
which is achieved by an evolutionary design method is called prototyping. Prototyping is
used when requirements are difficult to specify in advance or when requirements may change
significantly during development. The prototyping methodology is based on the simple
proposition that people can express what they like or do not like about an existing application
system more easily than they can express what they think they would like in an imagined,
future system.

STEP 1

Identify the basic information requirements

Basic needs
Scope of the application
Estimated Costs

STEP 2

Develop the initial

prototype

Initial
prototype

Use the prototype

system and refine
requirements

STEP 3

YES

Is the
user/ designer
satisfied ?

Operational
prototype

NO
Working
prototype

Use prototype
as specification
for application
development

Use prototype
As application
STEP 4

Figure: Application system

prototype development model

Revise and
Enhance prototype

36

Enhanced
working
prototype

Advantages:

Ability to try out ideas without incurring large costs.

Lower overall development costs when requirements change frequently.

The ability to get a functioning system into the hands of the user quickly.

Effective division of labor between the user professional and the MIS professional.

Reduced application development time to achieve a functioning system.

Effective utilization of scarce (human) resources.

Disadvantages:

The management of the development process is difficult because of frequent changes.

There may be a tendency to accept a prototype as the final product when it should
only be the basis for a fully-specified design.
DEFINITION STAGE
Proposal definition

Information Requirement analysis

Conceptual Design
DEVELOPMENT STAGE
Physical system design
Physical database design
Program development
Procedure development
INSTALLATION AND OPERATION
Conversion
Operation and Maintenance
Post audit

37

CANCELLATION POSSIBLE AT ANY STAGE

Feasibility assessment

Figure: The application

system development
life cycle

Life Cycle Approach to Application System Development:

Stages in Life Cycle

Phases in Life Cycle

Comments

Proposal Definition

Preparation of request for a

proposed application.

Feasibility assessment

Evaluation of feasibility and costbenefit of proposed application

Definition

Information requirements

Determination of information
needed for analysis

Conceptual design

User-oriented design of
application

Physical system design

Detailed design of flows and

processes in application
processing system and
preparation of program
specification.

Physical Database design

Design of internal schema for

data in database or design of files

Development

Program Development

Coding and testing of computer

programs

Procedure Development

Design

of

procedures

and

preparation of user instructions

Conversion

Final system test and conversion

Operation and

Day-to-day operation,

Maintenance

modification,

Installation and
Operation

and maintenance
Post Audit

Evaluation of development
process, application system, and
results of use

38

Chapter 19
Quality Assurance and Evaluation
Definition of Quality:
Quality is defined as excellence or fitness. An application has quality relative to its primary
and secondary users, operation personnel, control personnel, maintenance personnel, and so
forth.
Quality Characteristics:
Information System

Implementation of Quality concepts

Quality Characteristics
Complete data

All data items are captured and stored for use. Data items
are properly identified with time periods.

Accurate data

The correct data values are recorded.

Precise data

Measurement of variables meets user needs for precision.

Understandable output

The output of the system is understandable to the users.

Timely output

The output of the application is available in time for actions

and decisions.

Relevant output

The outputs are relevant to the actions and decisions to be

taken.

Meaningful output

The format, labeling, data provided, and context in which

data is presented makes the output meaningful for actions and
decision making.

User friendly operation

The system provides user interfaces that are understandable

and designed to conform to human capabilities.

Error resistant operations

Suitable error prevention and detection procedures are in

place. There are procedures for reporting and correcting
errors. Various audit procedures are applied.

Authorized use

Only authorized personnel have access to facilities,

application, and data.

Protected system and

The system and its operation are protected from various

Operations

environmental and operational risks. There are provisions

for recovery in the event of failure or destruction of part or
all of the system.

39

Top Management Information System Control and Quality Assurance Duties:

Establish domain of responsibility and authority of information systems function

Select information system executive

Approve the information system charter, the information system long-range plan,
and the yearly budget

Approve major hardware and software systems

Approve major applications

Review results against plan and evaluate information system performance

Review and approve information system procedures for quality assurance and
control.

Information System Management Control and Quality Assurance Duties:

Establish and supervise quality assurance procedures for application developed inhouse or obtained as packages

Establish and supervise various information system control functions

Establish and monitor procedures to measure and report evidence of quality errors,
downtime, reruns, application repair maintenance, etc

Information System Control and Quality Assurance Duties:

1. Librarian: This function maintains custody of programs, files, and documentation.
These resources are issued based on an authorized schedule of use or special
authorization. The custodial activities include record keeping.
2. Processing control: This includes logging in and checking input, checking progress
of jobs, reconciling control information for applications, checking

output and

distributing it to authorized recipients, maintaining error logs, and following up on

error correction.
3. Access control: This function is responsible for control of physical access to the
installation and control of access through terminals. Duties include follow

up

on

violations of system access rules.

4. Database administrator: This includes control over access to and use of the database,
enforcement of data integrity rules, and establishment and enforcement of standards.
5. Backup and recovery: This function is responsible for preparing backup copies of
programs, files and databases, etc.
6. Application development quality assurance: This function includes review of controls
planned for an application and review of adequacy of testing during development.

40

Quality Assurance in Application Development:

The development life cycle is design to support quality assurance in terms of developing a
system that meets requirements. Some quality assurance processes are:

Information requirements determination processes to ensure complete and correct

requirements

Sign-offs at each phase of development to assure review and agreement on the system
to that point.

Program development procedures for quality control. These include structured design,
structured programming, independent review of program logic and program testing

Conventional installation testing

Post audit evaluation

41

MINICASES
1. AMERICAN EXPRESS WITHDRAWS $1 BILLION IDS OFFER
The following excerpts are from a news article in the Minneapolis Star and Tribune, August 17, 1983,
p. 58.
American Express Co. called off its acquisition of Investors Diversified Services, Inc. (IDS), Tuesday,
saying that $1 billion was too high a price." (IDS have investment funds such as mutual funds and
money market funds. It would therefore allow American Express to expand its range of services to
customers.)
Although American Express officials would not comment further, several observers said that
problems discovered at IDS probably lay behind the decision [The] article [in the Wall Street
Journal] said that American Express feared that IDS's data-processing system was inadequate to
handle the new products planned for the IDS sales staff. American Express officials also were
concerned about the 30 percent annual turnover among sales personnel . Walter Scott, IDS
president, responded that IDS data-processing was quite competent and has absorbed at least one new
product a month for two years. (Note: The acquisition was completed after a revised offer.)
Questions
a. Why should American Express be so concerned about the capabilities of IDS's data processing?
b. What competitive advantages to a financial services company may be provided by an information
system?
2. THE COMPUTER IN THE RESTAURANT
The installation of a minicomputer-based information system has enabled Dailey's Restaurant in
Atlanta to streamline their operations arid promote tighter internal controls over their business.
A waiter takes an order at a table, and then enters it online via one of the six terminals located in the
restaurant dining room. The order is routed to a printer in the appropriate preparation area: the colditem printer if it is a salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink.
A customer's meal check listing the items ordered and the respective prices is automatically generated.
This ordering system eliminates the old three-carbon-copy guest check system as well as any
problems caused by a waiter's handwriting. When the kitchen runs out of a food item, the cooks send
an "out of stock" message, which will be displayed on the dining room terminals when waiters try to
order that item. This gives the waiters faster feedback, enabling them to give better service to the
customers.
Other system features aid management in the planning and control of their restaurant business. The
system provides up-to-the-minute information' on the food items ordered and breaks out percentages
showing sales of each item versus total sales. This helps management plan menus according to
customers' tastes. The system also compares the weekly sales totals versus food costs, allowing
planning for tighter cost controls. In addition, whenever an order is voided, the reason for the void is

42

keyed in. This may help later in management decisions, especially if the voids are consistently related
to food or service.
Acceptance of the system by the users is exceptionally high since the waiters and waitresses were
involved in the selection and design process. All potential users were asked to give their impressions
and ideas about the various systems available before one was chosen.
Based on Ann Dukes, "Side Order of (Computer) Chips Speeds Meals," MIS Week, June 17, 1981, p.
14.
Questions
a. In managing the business of a restaurant, what are some decisions that must be made in the areas of:
-strategic planning
-managerial control
-operational control
b. What information would you require from this system in order to aid in making such decisions?
(In other words, what would make this system a more complete management information system
rather than just doing transaction processing?)
c. Compared to this system, most restaurant information systems are relatively informal. Explain the
probable effects that making the system more formal would have on:
- customers
- waiters
- management
3. THE ROBOT SUICIDE
Isaac Asimov's science fiction mystery The Naked Sun (Fawcett, New York, 1957) takes place on a
planet served by robots. In order to protect the humans on the planet, the robots are programmed with
the Laws of Robotics. The first two laws are:
1. A robot may not injure a human being or, through inaction, allow a human being to come to
harm.
2. A robot must obey the orders given it by a human being except where such orders conflict
with the first law.
In one episode, a robot serves a glass of water to a man. The man is poisoned. The robot short circuits
because it brought harm to the man, although it did not know the water was poisoned. '
Questions
a. Using this illustration, describe the problem(s) of programmed decision making.
b. Why wasn't the robot programmed to recognize that giving a normally non injurious substance or
object to a human that turns out to do injury does not violate the first law (or does it)?
c. What would be the implications of a decision rule that required human decisions when no other
decision rule applied?
4. SOLAR ENERGY DECISION

43

The leasing of solar energy equipment for industrial use is a potential alternative to federally
subsidized programs for encouraging use of solar technology. The factors encouraging the leasing of
solar equipment include rising fuel costs, decreasing cost of solar technology, and the Business
Energy Property Tax Credit. The latter measure, passed by Congress in 1980, added an incentive
credit of 15 percent for energy savings on top of the already existing 10 percent business investment
tax credit.
Planned Energy International (PEl) is perhaps the first company to have formalized a lease for solar
equipment. According to PEl's president, Billie Jolson, the company leased 52 solar panels to a
California laundromat. She estimated the savings to the business would be $165,000 over the sevenyear lease, including $720 in the first year.
Under a typical arrangement, PEl conducts extensive energy audits of the potential client company
and estimates the potential savings on utility bills each year under a lease agreement. Once the lease is
signed, PEl assumes all responsibility for purchasing, delivering, installing, and maintaining the solar
equipment.
"Solar Energy: Leasing Cuts High Cost of Providing 'Harness' for the Sun," Christian Science
Monitor, July 20, 1981.
Questions
a. What appears to be the goal of each organization in relation to solar energy? (Hint: Examples are
maximizing, minimizing regret, satisfying, avoiding uncertainty, and resolving conflict.)
b. What are the information requirements for each goal?
c. Which decision model fits each organization?
5. EXCELLENCE IN MANAGEMENT
Recently, the management consulting firm of McKinsey and Company conducted an in- depth study
of 37 firms considered to be examples of well-managed companies. The study revealed eight
attributes that the firms had in common. The most significant attributes were concentration on one key
business value, simple form and lean staff, a bias toward action and emphasis on doing what they
know best.
Some of the companies used modem management tools such as decision support systems and strategic
planning. Rather than a perfect overall plan, they preferred controlled experirnents. The general
attitude was "get some data; do it; adjust it.'
Both new ideas and problems were handled quickly. Ideas were implemented quickly on a small
scale, with the results leading to rapid expansion or to the idea being discarded. Problems were put
into the hands of a task force or a person with temporary but extraordinary power. Action, not reports,
were expected. A later follow-up would evaluate the action taken; rewards or criticism would then
result. Most problem handlers preferred to find solutions expeditiously and return to their interrupted
work. .'
"Putting Excellence into Management," Business Week, July 21, 1980, p. 196,

44

Questions
a. What form of decision making is illustrated in these "well-run" companies?' '
b. What are the decision attributes?
c. What information is of greatest interest to who are assigned problems?
6. DECIDING WHERE TO SEND CHECKS
One way a bank can improve its performance is to speed up collection of out -of-town checks. When a
bank accepts an out-of-town check, it must clear the check by sending it to the bank on which it was
drawn. There are several ways this can be done, each having a cost and a time. In increasing order of
cost, typical options are:

Clear through the Federal Reserve System

Send the check to a private clearing bank which transports the check

Use direct courier service

The time each option takes will depend on the time of day and day of week. The decision must be
made for each check.
The Maryland National Bank, averaging over 500,000 transit checks per day, developed an integer
linear program for decision making as to the clearing option. The bank has saved over $100,000 per
year using the linear program analysis.
Robert E. Markland and Robert M. Nauss, 'Improving Transit Check Clearing Operations at Maryland
National Bank," Interfaces, 13:1, February 1983, pp. 1-9.
Questions
a. How does this application fit into the categories of decision making?
b. What kind of decision rules might be prepared if the criterion were satisfying?

7. NEED TO KNOW AND AVAILABLE INFORMATION

Employee preferences regarding the sources of information they use in their work are quite different
from the sources they usually depend on outside of work. That was the conclusion of the International
Association of Business Communicators after they surveyed work communication in 40 companies.
Ninety percent of those surveyed preferred to get news from their immediate supervisors. The next
most favored sources were small group meetings, the top executive, and handbooks - in that order.
Fifty-five percent get their information from supervisors. The next most available source, however,
was the least favored of all 15 surveyed in the study: the grapevine. The employee handbook and the
bulletin board ranked third and fourth as the most available sources.
The survey also asked what it was the employees wished to know. The three subjects which ranked
highest were the organization's future plans, personnel policies, and productivity improvement
information - in that order.

45

Source: A joint survey by the International Association of Business Communicators, San Francisco,
CA, and Towers, Perrin, Forster, & Crosby, Inc., New York, 1980.
Questions
a. Mintzberg's study shows that executives prefer an oral means of communication. How does that
compare with this study of workers?
b. What do their choices indicate about their locus of control?
c. Identify the frame of reference and the filters that appear to be operating in these workers.
d. How is their problem space probably defined?
8. DAYDREAMS IN MANHATAN
A penny for your thoughts" was the inducement some psychology graduate students gave pedestrians
on Fifth Avenue when they wanted to study what passersby had on their minds.
Two tables were set up on a fine Friday lunch hour to sample people's thoughts at Fifth Avenue near
57th Street and at 14th Street. The results showed that the two environments produced quite different
thoughts. At fashionable Fifth Avenue, the most common thoughts were about the environment, the
misfortune of having to return to work, and members of the opposite sex - in that order. In the open
market area of 14th Street, the most common thoughts were of money and shopping. Those were
followed in frequency by thoughts of the future and thoughts about a particular member of the
opposite sex. In addition, men were more likely to be thinking about themselves while women were
more likely to be thinking about another person.
"Daydreams in Manhattan," Psychology Today, August 1981.
Questions
a. How do you feel about this story as a source of information? Would you be likely to base a business
decision on it?
b. If you did decide that it might be a useful study, what additional information would you want to
have about the study?
c. What do your answers say about your limitations as an intuitive statistician?
9. A SYSTEM LOG-IN
Consider the following interaction with a commonly used operating system. The user made the
connection through telephone lines. On the screen appeared:
TERMINAL =
The user typed in the name of the terminal on which he was working, and the system responded:
?
The user began again from the point of dialing in. This time when he received the message
TERMINAL =
he skipped it by hitting the carriage return. Then the system responded with:
@
He tried typing a few things but only received the response

46

?
Finally he gave up.
Question
Without being concerned about what the user is trying to accomplish, describe what is wrong with the
user interface and make suggestions for improving it.
10. AN ENGINEER'S VIEW OF A USER INTERFACE
"I remember the first time I used the computer. Our data processing department gave me an account
number. Two days later, a terminal was moved into my office and half of my desk disappeared. To
help me get acquainted with my new assistant, I was handed something called a user's manual. It was
two inches thick, filled with pages of diagrams, boxes, examples. It had long black lines in the lefthand margin. I tried to read it that afternoon, but got bogged down after the first two pages.
"The next day, manual in hand, I started to explore the system. After I turned the terminal, the
following message appeared:
VERSION 3.3 3/10/81
ENTER LOGON/PASSWORD:
A "LOGON"? What was that? No one had ever mentioned a LOGON. I could not even find it in the
unbridged dictionary. After spending 15 minutes searching through the manual, I realized a LOGON
was my account number. Why couldn't the data processing department and the computer agree on
what they call an account number? Why don't they say what they mean?
As I began to type, everything seemed to be going fine, until I pressed the" /" key; then the computer
stopped printing. I hit the return key, but nothing happened. The computer simply told me
ACCESS DENIED
"I attempted to revive the computer a few times with no success. When I called the woman from the
computer center, I was told that the computer would not print my password, but it read it anyway.
How could the computer read something if it was not printed? The answer: the printing is not
important; it's the pressing of the keys that sends information to the machine. In fact, the computer
looks at each key as it is pressed. Suddenly, I knew why the computer did not print my password.
When I pressed the key marked" /", the computer turned off the printing for the rest of the line. From
then on, I avoided using that key; I wanted to know what I typed.
"A few minutes after I typed the next line I was treated to the following information:
**** THE SYSTEM WILL BE DOWN FOR PM FROM
1000 TO 1130.
**** USER SHOULD REFER TO LIB.$SYS.NEW.PROC
FOR UPDATED PROCEDURES.
**** THERE HAVE BEEN REPORTS ABOUT
PROBLEMS WITH XLIBSTA. IF YOU HAVE
EXPERIENCED ANY PROBLEMS CONTACT BOB

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AT EXTENSION 8425.
**** DUE TO THE HEAVY LOAD ON THE SYSTEM,
GAMES WILL NOT BE ALLOWED FROM 10:00 TO 17:30.
At least I understood the last part of the message; where were the games?
"During the next two week I worked on a number of different jobs, each requiring different program.
Each program looked different; each worked differently; one could communicate with another. What
bothered me most was that I had to think in different terms for each program. Not only were the same
items called by different names in different programs, but operations I could do on the same item in
one program were impossible in another As an engineer I had learned well-defined methods for
designing cars. Why couldn't computer people do the same thing?"
Michael L. Schneider and john C. Thomas, "The Humanization of Computer Interfaces,
Communications of the ACM, April 1983, p. 253.
Question
Apply the principles learned in this chapter to justify the engineer's complaints.
11. THE TEMPORARY PROTOTYI:'E THAT BECAME PERMANENT
The company embraced the idea of prototyping as a method of developing applications, but
management wanted to use the prototypes only to identify requirements; working systems were then
to be developed with proper controls and with consideration to efficiency. This followed the concept
of heuristic development. (See T. Berrisford and James C. Wetherbe, "Heuristic Development: A
Redesign of Systems Design," MIS Quarterly, 3:1, March 1979, pp. 11-19.)
The policy didnt , workout for many applications. The users didn't want to proceed with a project to
move from the prototype to a regular working version.
Question
Why didnt users follow the heuristic development policy? What are the costs and benefits of full
development and the users' alternative of using only the prototype?
12. THE MICROCOMPUTER DECISION
The Dean of the School of Management was upset. He was just about to make a decision to purchase
microcomputers for the faculty and staff of the School. A vendor and model number had been
selected. Then a new product announcement was made for a better, faster, cheaper computer. He had
seen similar announcements every few months. How was he to make a decision on equipment when
the "leading edge" where he wanted to be was a moving target?
Questions
a. Explain how this decision can be made within the context of an information system plan.
b. The replacement period for the microcomputers was never specified. If the plan calls for a three
year life before replacement, aid the Dean by explaining the dynamics of product announcement,
availability of initial software, availability of significant amounts of software, and hardware
obsolescence.

48