14 MIS Support for Decision Making

Dr. Ashish Saihjpal

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1. Learning Outcome:

 

After completing this module the students will be able to:

  • Comprehend the meaning of decision making.
  • List the various steps in the decision making process.
  • List the type of decisions at the organizational level.
  • Understand the role of MIS in decision making.
  • Understand various applications of MIS that support decisions in organizations.
  • Get an overview from industry vide examples about the impact of MIS implementations on organizational decisions.

 

2.  Introduction

 

Concept of Decision Making

 

A decision refers to a choice out of several alternatives made by the decision maker to achieve some objectives. Business decisions are those which are made in the process of conducting business to fulfill its objectives in a given environment. Decision making is the focal point for any managerial activity such asplanning, organizing, staffing, directing, controlling and communicating. Once a decision is taken it promises commitment of resources, money, materials and machinery.

Decision making is not an independent or discrete activity. It is involved in day to day functions. In the context of business organizations, the capability of information systems can be rendered to assist decision making. However, it is important to note that the system does not take decisions but facilitates decision making. The process of decision making utilizes many tools, techniques and perceptions.

 

The decision making process requires creativity, imagination and a deep understanding of human behavior. It is imperative to predict and be aware of the implications of the decisions undertaken. This process requires viewing the problem from different angles and list possible approaches to the resolution. Then one possible alternative is narrowed down and appropriate tools and techniques are utilized to approach the problem.

 

Information systems are necessary to support the decision making process. The managers must be aware of what sort of problems shall arise before decision can be made. A problem exists when the real situation is different than the expected one. It is important to note, that critical decisions can be realized when the right resources are assigned the right tasks. This resource allocation is possible when the functional heads are well acquainted with the capability of the manpower. In the context of enterprises, certain decision, once taken, cannot be reversed as business stakes and investments are high. Hence, the support of decision making tools is utilized to study the problem from different viewpoints.

 

Management information system enables business process to be time saving and hassle free as the cumbersome process of maintaining records, data processing and analysis done manually are discarded. This is replaced with an automated system which is capable of doing all the former jobs as well as processing requests and handling business queries. Thus, it speeds up the business processes.

 

3.  The Decision Making Process

 

The decision making process is a seven step process represented in figure 1 which can be studied as below.

  1. Problem definition: The problem has to be viewed from various dimensions to provide a clear understanding of what is to be studied. A problem can be explained as the clear difference from the present state to the expected one. It also has to consider all constraints that are prevalent during the course of study.

 

2.  Problem analysis: This process requires a scrutiny of the collected data. Data collection needs to be backed by corresponding facts and statistics.The basis of data collection, analysis and categorization is based on the following:

 

The scope of the decision or the time frame of its applicability. The effect of the decision on other functional areas.Essential constraints and considerations to be kept in mind.

 

3. Developing alternative solutions – The target here lies to narrow down to the best and most viable alternative from the various options available. The careful and detailed analysis of the researcher is of paramount importance here.

 

4. Selecting an alternative – Before making the decision to select the best alternative, key points are to be kept in mind. It is essential to estimate the risk element involved in various ways to approaching the problem keeping in mind all constraints or limited resources at the disposal. The aim is to ensure the right resources are assigned the right task within the right time frame to achieve desired outcome.

 

5. Implementation of the decision – Any decision can be implemented in the correct manner if it is communicated well to various stakeholders. Adaptability to the new decision is equally important. The correct time of implementation should be decided so that migration to the proposed change does not lead to complexities.

 

6. Follow up – Merely introducing a change in a certain process is insufficient. It is essential to ensure the change is well mitigated and implemented. Hence, follow up is necessary.

 

7.Monitoring and feedback – Feedback enables to evaluate the effectiveness of a change that has been incorporated. It allows us to make corrective actions, if needed, well in time so that any shortcomings in the process can be rectified and do not keep continuing.

  1. Types of Decision in an Organization

 

Business managers have to take a variety of decisions. Some are routine and some are long term implementation decisions. Exhibit 2 outlines the hierarchical level of decision making in any organization. It also exemplifies the kind of decisions taken at each level of the organization structure.

 

  • Strategic decisions – These are long term decisions taken by the upper management of the firm. They shape the business of the firm and involve a high degree of risk and uncertainty. These decisions are taken keeping in mind the corporate goals which are in-line with the mission and vision of the firm.
  • Tactical decisions – These decisions are taken in accordance to the strategic decisions. These have a relatively mid-term focus. Decision making at this level is undertaken at the mid management level who supervise the operational activities of their subordinates. These managers are answerable and report to strategic level executives.
  • Operational decision – Such decisions are undertaken for completion of tasks that have a short-term or immediate focus. Such decisions deal with day to day activities and are structured in nature. They tend to be repetitive and involve lesser risk. Post completion the status is verified by the middle level managers.
  1. Case Study: How MIS supported Decision Making at the Enterprise Level

 

5.1  The Hospital Management System at Wipro

 

The Hospital Information System is an implementation which works like an information repository with all necessary information regarding the working of the hospital (Exhibit 3). Ranging from necessary details of the doctors with their schedules, complete medical history and profile for each patient.

 

It organizes all prescriptions, diagnosis and appointments in a streamlined manner. Information regarding collaborations, accounts and records is maintained and update. Reports and data analysis can be fetched on need basis.

 

 

 

This provides an integrated one stop solution for necessary information on a regular basis. This platform not only reduces the time required in record keeping, it further improves efficiency. The solution by Wipro has found installations in over 200 hospitals and nearly 1000 clinics across multiple countries in South East Asia, Middle East and the Indian Sub-continent.

 

It has to its credits the largest online e-governance health program which is connecting 50 million lives across India. The robust system is highly interoperable with various medical technology platforms. It can interface with mobility solutions like biometric and Radio Frequency Identification (RFID) handled devices and picture archiving communication systems. It connects to third party apps as well as lab equipment for networked connectivity and information sharing.

 

The success story of Wockhardt Hospitals who implemented the hospital information resource planning system at its Nagpur and Mumbai sites is worth a mention. The deployment improved operational efficiency substantially by networking various other hospitals as well as internal systems at Wockhardt on a common platform. The system offers long term scalability and application interface. Minimizing chances of manual error that could occur the system offers a very reliable, competent and sustainable platform.

 

5.2  Centre for Railway Information System

 

 

The Centre for Railway Information System (CRIS) was setup with the initiative to automate the processes for Indian Railways. CRIS brings together information technology experts, consultants and intellectuals from the Indian Railways under the same umbrella.

 

CRIS is assigned with the task of building, developing, maintaining and operating the information technology infrastructure for Indian railways. From freight operations to passenger ticketing, CRIS integrates automated networks into a national grid.

 

Another aspect comprises the rail budget compilation system. This system is designed to receive inputs from different zones of the railway network as well as production houses. The system is responsible for assessing the demand and maintaining the database for further analysis.

 

The Workshop Information System (WISE) integrates about fourteen workshops across India. This coordinates with the enterprise resource planning system and provides timely reports and updates from each of the locations.

 

The electronic procurement system enables e-tendering in a fair and transparent form. This not only enables the vendors to submit bids online but also check for updates on procurement. In addition to this a transaction gateway is integrated to enable online payments during the tendering process.

Computerization of the unreserved ticketing system as shown in exhibit 6, using multiple access points such as counters, vending machines, handheld terminals has been implemented by CRIS. In addition to this the train tracking system as well as the status update is a service rendered by CRIS.

 

5.3 MIS implementation at a Restaurant

 

An information system deployment at a restaurant can greatly improve the operational efficiency and communication. Interestingly, the system can understand customer requests and process the orders accordingly. In a networked scenario of a restaurant, different terminals are allocated the task to receive order requests and then, these are routed to the designated computers in a systematic manner.

 

It could be a hot chocolate fudge request sent to a wireless dessert printer to a grilled sandwich request being sent to a hot snack printer. The printer highlights the order in the concerned preparation area.

 

This makes order processing swift and less time consuming. Errors in taking orders or those being moved to wrong tables during rush hour can be greatly minimized. Any item being out of stock gets reflected and information is sent for its replenishment. This helps move logistics well and ensures faster service to the customers. Exhibit 7 showcases the easy way to understand user interface of a restaurant management software named Crunch time.

 

Billing, itself is an automated process and compilation of the same gets easy. Feedback from customers can be keyed in and processed to view customer preferences and trends. This makes decision making easy for the management and they can list out what areas to focus on for future improvements.

 

Exhibit 8 highlights the functional departments that the Crunch Time software is integrated with. It shows the details that are imported to the information system and that can be fetched or exported from the system for business use. To make decisions at the management level, many types of reports can be fetched out. Sales analysis reports as well as diagrammatic representation of the costs verses sales for any required time period can be obtained. Also, the mid level managers and restaurant manager can make decisions pertaining to the feedback for restaurant staff obtained after servicing customers. They can fill voids, if any, and make changes in accordance to customer delight.

 

  1. Role of MIS in Decision Making

 

At the outset, it is essential to state, that decision making is an integral part of any business. This is because majority of operations revolve around decisions made by the management and other key stake holders. These decisions rely on information and hence, the timely availability of adequate information in very important.

 

Information systems facilitate day to day business operations, support decision making at mid management level and assist in providing competitive tools for business analysis.

 

Management information systems are a platform for the software to integrate with hardware to produce functionality for day to day business requirements of the modern day managers. The processing of data into useful information and analysis helps in shaping business decisions.

 

The hierarchy of decision making with respect to management information systems is represented in figure 2.

 

 

Information Systems have numerous applications across industries and in various functional units.

 

Information access – Business decisions are dependent on numerous internal and external environmental factors that affect a firm. Hence, decision making needs to be accurate yet quick to implement so that a competitive edge can be maintained. This is possible with the assistance of Information Systems that make availability and accessibility of information as per business needs.

 

Data collection – MIS pools in data, both, from inside and outside the organization. By setting up a network that links a central data base to retail outlets, distributors and members of a supply chain, companies can collect sales and production data daily or more frequently and make decisions on latest information.

 

Exhibit 9 shows the interactions between different entities that form part of management information systems.

  • Collaboration – The integration among functional departments and information sharing makes it easier to be well connected and make decisions collectively. This can be made possible even if the functional units are dispersed across different geographical regions.
  • interpretation – The robust reporting engine tool enables to fetch reports and analyze data with respect to the changing business requirements. This helps in trend analysis and forecasting.
  • Presentation – Reporting tools enable decision makers to customize reports as per business needs. If a decision may require an approval by senior authorities, the manager can create a brief summary which can be reviewed. This reduces the time and involvement of seniors in going through each segment of the report intricately. Managers can draft status reports, full reports and supplementary data to support decisions.
  • Multitasking – A good MIS can perform multiple tasks at the same time. Not only does this increase the efficiency in a company but several business operations can be conducted simultaneously. Hence, an information system is robust and can handle large volume of data for analysis.
  • Maintenance – Information Systems can process tasks as per the time scheduled while programming them. While certain tasks are routine, some others may be periodic in nature or others may be scheduled as per need basis. An efficient IS can be maintained if it is debugged for any errors on the programming front. System maintenance, when conducted in a regular manner keeps the platform running efficiently and error free.
  • Updates – Up gradation and updating activities need to be carried on a real time basis since an information system is carrying some activity or the other. A time lag needs to be avoided.

 

6.1  The Applications of Information Systems

 

Let us try to understand the various application areas of management information systems. The different types of operational and executive level information systems are discussed below:

 

 

Operations support systems – These operations support system helps to coordinate and support various operational level or routine activities of an organization. These include, transaction processing, database management, system update and maintenance is few among them. These processes are carried on a real time basis and the system is not put on a halt as it can substantially affect business.

 

Management information systems – These provide information in the form of reports, charts and pictorial diagrams to managers and business professionals supporting day to day business needs. Pre-processing of information is required at this level to support decision making. Decision are more structured in nature and the constrains are clearly defined.

 

Decision Support Systems – These systems support decision making and planning activities at the middle and strategic levels of management. Decisions at this level are risk oriented, long term and highly unstructured in nature. The knowledge bound systems can handle data analytics, modeling techniques and facilitate understanding of raw data that may otherwise be cumbersome and voluminous to manage. Exhibit 13 highlights the inputs and corresponding output from a decision support system catering to environmental analysis.

 Executive Information Systems – This system is designed to cater to the senior level of the organization. The systems are designed in such a way so as to facilitate strategic decision making. The senior executives of the organizations cannot idle time in operational and administrative activities. They require systems with graphic user interface to work on reports and analyze trends. These systems are designed to handle report generation, business performance indicators, forecasting with exception handling and analysis up to the minutest details.

 

  • Specialized Processing Systems – These systems are characterized as functional business systems, strategic information systems, knowledge management systems and expert systems.

 

It is of paramount importance to understand that the business applications of information systems in the real world are typically integrated combinations of all these types of information systems. Practically, all the different types and roles of information systems are combined into a consolidated platform for record keeping and transactions.

  1. Summary

 

Effective decision making demands accurate, timely and relevant information. Management information systems (MIS) make it possible for organizations to get the right information to the right people at the right time by enhancing the interaction between the organization’s people, the data collected in its various IT systems, and the procedures it uses. MIS plays a crucial role of providing a wide range of streamlined options from which decision makers are able to make their preferred choices. As organizations grow, MIS allows information to move between functional areas and departments instantly, reducing the need for face-to-face communications among employees, thus increasing the responsiveness of the organization. Well-constructed and well-organized MIS can provide management with the knowledge it needs to reduce operating costs and increase profits. Hence, it is the competent information systems that enable the decision makers to use real-time data from the marketplace.

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Learn More:-

  • Reddy G.Satyanarayana, Srinivasu Rallabandi, Rikkula Srikanth Reddy, “Management Information Systems to help Managers for providing decision making in an Organization,”International Journal for reviews in Computing, ISSN 2076 – 3328.
  • Laudon Kenneth C, Laudon Jane P, Management Information Systems, Managing the Digital Firm, Pearson Education South Asia, 2013.
  • O’Brien A James, Marakas M George, Behl Ramesh, “Management Information Systems.” 9th Edition, Tata Mc Graw Hill Education Pvt Ltd.
  • Linton Ian, “The Role of MIS in Decision Making”, 2016, The McKinsey Quarterly.