We live in a world full of systems. There are central heating systems, telephone systems, computer systems, human circulatory system, to name but a few. There are also more complex systems, such as business information systems.
A typical business organisation has systems supporting processes for each of the major business functions-systems for sales and marketing, manufacturing and production, finance and accounting, and human resources.
A typical firm also has different systems supporting the decision-making needs of each of the main management groups: Operational management, middle management, and senior management; each use systems to support the decisions they must make to run the company.
Today’s blog is about IT Support Systems. First of all, it is important to have an idea of what system means. According to Webster’s Dictionary, a system is “a set of facts, principles, rules, etc. classified or arranged in a regular, orderly form so as to show a logical plan linking the various parts.”
Furthermore, systems are important for quality, productivity, customer and employee satisfaction and of course, to generate a profit and maintain a healthy business – just to name a few. However, business owner's need to apply systems to their business that allow different areas of the business to run efficiently (Gerber, 2007). Business consultant Tony Bass agrees.“Today, as competitive as this industry is, you can grow your business and remain profitable if you are efficient. If you are not, your prices will be high, you marketshare low and your prospect for growth limited.” (Amerpohl, 2005). And the application of those systems imply a decision making process.
Decision making involves taking the correct action from a series of choices. Most companies will have differing business rules depending on the nature of the business. DM defines the actions that need to occur in a business when a particular situation arises. i.e. if a customer requests credit and they have a bad credit history or rating then the company may decide to refuse them credit or employ certain rules and conditions upon them. (Management Information Systems notes, pp.4 of 18).
Organisations will typically use a variety of formal systems to consider their options and make business decisions. These decision-making systems will generally receive, and review, a proposal or business plan. Clearly, such proposals should discuss the health, and management, of their underpinning intellectual assets, ideally by presenting a fit-for-purpose intellectual asset plan (Jeremy 2003)
Making a decision is a multi-step process. Simon (1960) described four different stages in decision making: intelligence, design, choice, and implementation.
- Intelligence: consists of discovering, identifying, and understanding the problems occurring in the organisation –why a problem exists, where, and what effects it is having on the firm.
- Design: involves identifying and exploring various solutions to the problem.
- Choice: consists of choosing among solution alternatives.
- Implementation: involves making the chosen alternative work and continuing to monitor how well the solution is working.
Moreover authors have described the levels of managerial decision taking (Curtis & Cobham, 2008). Three levels of managerial activity are important in understanding the way organizations take decisions (Antony, 1965). These are strategic planning, tactical planning and control, and operational planning and control. (Curtis & Cobham, 2008).
1- Strategic Planning: This is carried out by the most senior management and will deal with broad issues concerning an organisation’s development over the long term.
2- Tactical Planning and Control: This activity is normally associated with the middle echelons of management. It may involve the allocation of resources within departmental budget, decisions on medium-term work scheduling and forecasting and planning medium-term cash flows.
3- Operational Planning and Control: Concerned with the decisions made in the normal day-to-day operations within the business.
In order to operate businesses use Intelligence Systems for Decision Support. There are a number of different IT systems that managers are exposed to in a business such as:
· Management Information Systems
· Executive Support Systems
· Expert Systems
· Transaction Processing Systems
· Decision Support Systems
Management Information Systems (MIS)
Any system that provides information for the management activities carried out within an organisation. This information is selected and presented in a form suitable for managerial decision making and for the planning and monitoring of the organisation’s activities.
MIS provide middle managers with reports on the organisation’s current performance. This information is used to monitor and control the business and predict future performance. MIS summarize and report on the company’s basic operations using data supplied by transaction processing systems.
Decision-Support Systems (DSS)
DSS support more non-routine decision making. They focus on problems that are unique and rapidly changing, for which the procedure for arriving at a solution may not be fully predefined and advance. An interesting and powerful DSS is the voyage-estimating system of a subsidiary of a large American metal company that carry bulk cargoes of coal, oil, ores and finished products for its parent company. The system calculates financial and technical voyae details; financial calculations include ship/time costs, port expenses, etc.The next video is about an Hurricane Evacuation Decision Support System presented by Robert Collins (Sr. Planner) and Tim Ledet (Group Manager) showing an example of a DSS.
Executive Support Systems (ESS)
ESS helps senior management make these decisions. They address non-routine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution. ESS are designed to incorporate data about external events, such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS.
For example, the CEO of Leiner Health Products, one of the largest manufacturers of private-label vitamins and supplements in the United States, has an ESS that provides on his desktop a minute-to minute view of the firm’s financial performance as measured by working capital, accounts receivable, accounts payable, cash flow, and inventory. The information is presented in the form of a digital dashboard, which displays on a single screen graphs and charts of key performance indicators for managing a company.
Transaction Processing Systems (TPS)
Operations managers need systems that keep track of the elementary activities and transactions of the organisation, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow of material in a factory. TPS provides this kind of information. For example a TPS can supply employee payments history data for insurance, pension, and other benefits calculations to a firm’s human resource function and employee payment data to government agencies such as the U.S. Internal Revenue Service and Social Security Administration.
Expert Systems
Management Information, decision support, and executive support systems help managers make decisions by providing and analyzing information. They do not, however, advise the decision maker on what to do. An expert system (ES), on the other hand, is a type of information system that gives expert advice to the decision maker. An expert system mimics the way a human expert would analyze a situation and then recommends a course of action. The accomplishes this task by incorporating human expert knowledge and by using this knowledge to analyze specific problems.
An early example of an expert system is Mycin, which was developed at Stanford University in the 1970s. it was used by doctors to help diagnose certain diseases and to recommend treatment. a more recent example is an expert system developed by American Express to decide whether to issue a credit card to a customer. ( Nickerson 2001).
Example:
In Africa, the Ghanaian village of Bonsaaso, Community health workers (CHWs) with basic training, a skilled midwife, an ambulance driver and a receiving hospital use mobile phones to coordinate as a team. Ever more deliveries now take place in the clinic rather than at home; in the event of complications, the mother is whisked to a receiving hospital about 10 miles away. Mobile phone connectivity among community, clinic, ambulance and hospital makes possible a once unthinkable degree of coordination.
In the Kenyan village of Sauri, also part of the Millennium Village Project, CHWs are pioneering the application of expert systems for malaria control. In the past, suspected malaria patients had to walk or be carried to a clinic, often miles away, have a blood smear read under a microscope by a trained technician and, if positive, receive a prescription. With clinics few and far between and with trained technicians and microscopes even scarcer, untreated, lethal malaria ran rampant.
In the new approach, CHWs visit households on the lookout for fevers that may signify malaria. They carry rapid diagnostic tests that examine a drop of blood for the presence of the malaria pathogen. Then they send an SMS (short service message) text with the patient’s ID and the test results. Seconds later an automated text response informs the health worker of the proper course of treatment, if any. The system can also send reminders about any follow-up treatments or scheduled clinic visits for the patient. The new system of malaria control includes insecticide-treated bed nets made to last for five years and a new generation of combination drugs based on a traditional Chinese herbal treatment, artemisinin.
This full set of tools constitutes a remarkably effective malaria-control system. Already a partial deployment of the system is reducing the malaria burden dramatically in several parts of Africa. Modest international financial support could greatly accelerate the deployment of the full system, and if it were scaled up throughout Africa, hundreds of thousands of lives could be saved annually at around $7 per person a year in the malaria-transmission zones.
India is similarly scaling up rural public health by deploying advanced information technologies, CHWs and improved management systems. In the past, public health data became available only after rounds of surveys three years apart, and those results were used mainly for research purposes. Now key data will increasingly be available after only hours or days and will be used for real-time health system management.
Checklists, teamwork and telecommunications-based expert systems can revolutionize rural farm yields, disease control, business networks, rural finance, education systems, and much more. Soon farmers will be able to enter local data for advice on specific soil needs, timing on the planting season, drought and rainfall forecasts, market prices and logistics. Mobile-phone-based banking and payments services will penetrate even the most remote regions. With development aid directed toward these new systems, the world’s capacity to reduce poverty, hunger and illness—and the violence that accompanies them—will become more powerful and effective than ever
References:
Curtis, G and Cobham, D (2008) Business Information Systems: Analysis, Design and Practice. Graham . 6th Edition. Prentice Hall. England).
Nickerson, R. (2001) Business and Information Systems. Second Edition.Prentice Hall:New Jersey.
Sachs, J. Expert Systems Fight Poverty.
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