Lecture Business management information system - Lecture 2: History business management information system

After studying this chapter you will be able to understand: Historical background of information system, information system today, terminology related to MIS and IS, types of information systems, early history of IS with other disciplines.

History Business Management

Information System

Lecture 2

A Little History

n U.S passed from the industrial era to the

information era as early as 1957

¨ The number of U.S employees whose jobs were

primarily to handle information surpassed the number

of industrial workers

n In the late ’50s / ‘60s IT to support “information work” = largely non-existent (except telephone)

¨ Information work = mostly done in general offices

without much support from technology

n People factories?

IBM hosted conference stated that:

“The advances that have taken place in calculating equipment and methods make it possible to determine the relationship between ultimate yields, time of harvest and climatic conditions during the growing season Relationship between the perspective and actual yields and changing prices can be established With such information

at hand the farmer should be in a position to make a decision on his prediction with a high degree of certainty at mid-season regarding his yield and income at harvest time.”

q This statement, made in 1963, reflects the

optimism that prevailed with respect to

information systems Even though there was

much enthusiasm related to these early systems they basically concentrated on accounting

activities and production records.

q Examples include the TelFarm electronic

accounting system at Michigan State University and DHIA for dairy operations.

A Little History cont.

q Accounting activities and production

records has been understood by farm

q Increased enthusiasm for information

systems to enhance management

decision processes

A Little History cont.

n The model base component of the system has decision models that relate to

operational, tactical and strategic

n The user interface, one of the more critical features of the system, is used to assist

the decision maker in making more

efficient and effective use of the system

n The decision maker must have the skills and knowledge on how to correctly use

these systems to address the unique

problem situation at hand

Decision Support System

n The international conference that followed

in France focused on the low adaption rate

of management information systems

n The use of geographic information

systems (GIS) in conjunction with

geographic positioning systems (GPS) to record and display data regarding

cropping operations (e.g., yields obtained) and to control production inputs (e.g.,

fertilizer levels)

n By the mid 1960s it became clear that the accounting systems were fairly effective in supplying descriptive and diagnostic

information but they lacked the capacity to provide predictive and prescriptive

information

n A new approach was needed – a method

of doing forward planning or a

management information system that was more model oriented

n As an example, Kuhlmann, Giessen

University, developed a very robust and comprehensive whole farm simulation model (SIMPLAN) that executed on a

mainframe computer

n the “Top-Farmer Workshops” developed

by Purdue University

n Computer technology continued to advance at a rapid pace, new communication systems were evolving and the application of this technology to agriculture was very encouraging

n Information for the data oriented systems often did not match the data needed for the model oriented systems e.g a cash flow production model

A Little History cont.

A Little History cont.

n 70s = it all ‘started’ with many of the foundations

of IT today invented and costs starting to fall

¨ Typewriters, fax, ‘smaller’ computers

n 1980s = number of US information workers

surpassed the number in all other sectors

(>50%)

A Little History cont.

n Information Technology:

¨ Initially used to perform existing information work

more quickly and efficiently

¨ Then = used to manage work better

¨ Now = well into the 3rd stage of technology

n The Data Processing Industry grew rapidly in the 1960’s, however, the

“quantity” of output, most often, far overshadow the “quality” of output

n The growth of the 1960’s and 1970’s saw

a shift from “computer” orientation, to

“information” orientation

Shift from Data storage to organized information systems

John Diebold (1979) wrote:

n “Information, which in essence is the analysis and

synthesis of data, will unquestionably be one of the most vital corporate resources in the 1980’s It will be

structured into models for planning and decision-making

It will be incorporated into measurements of

performance and profitability It will be integrated into

product design and marketing methods In other words, information will be recognized and treated as an asset.”

n John Theurer Diebold (June 8, 1926 – December 26, 2005)

was an early champion of widespread use of computing

and automated technology

IFIP/BCS (1985)

n An information system is a system which assembles,

stores, processes, and delivers information relevant to

an organization (or to society) in such a way that the information is accessible and useful to those who wish to use it, including managers, staff, clients, and citizens An information system is a human activity (social) system which may or may not involve the use of computer systems.

n International Federation for Information

Processing/British Computing Society 1985 curriculum

for information systems.

International Federation for Information Processing/ British Computer Society: Founded 1957

McNurlin and Sprague (1989 & 1999)

n “ The mission for information systems in organizations is to improve the performance of people in organizations through the use of information technology.”

n The ultimate objective is performance

improvement - a goal based on outcomes and results rather than a “go-through-the-steps process” goal

organizational performance is by the people and groups that comprise the organization.

information technology.

Turban (1990)

n A management information system is a formal,

computer-based (but need not be) system intended to retrieve, extract, and integrate data from various sources

in order to provide timely information necessary for managerial decision-making.

n An MIS is a business information system designed to provide past, present, and future information appropriate for planning, organizing, and controlling the operations of the organization.

Vladimir Zwass (1992)

n A Management Information System is an

organized portfolio of formal systems for obtaining, processing, and delivering

information in support of the business

operations and management of an

organization

Ken Laudon and Jane Laudon

(1995)

n Information system - (definition) Interrelated components that collect, process, store, and disseminate information to support decision-making, control, analysis, and visualization in an organization

Turban, McLean, Wetherbe (1996)

n An information systems is a collection of components that collects, processes, stores, analyzes, and disseminates information for a specific purpose.

n The major components of a computer-based information system (CBIS) can include (1) hardware, (2) software, (3) a database (4) a network (5 )procedures, and (6) people.

The Early History of IS with other disciplines

Information systems have been used with variety

of different subject areas, including

¨ IS and Managerial Accounting

¨ IS and Operations Research

¨ IS and Management and Organization Theory

¨ IS and Computer Science

¨ IS and Cognitive Psychology

n A management information system (MIS)

is a system or process that provides the information necessary to manage an

n The importance of maintaining a

consistent approach to the development, use, and review of MIS systems within the institution must be an ongoing concern of both bank management and OCC

examiners

n MIS should have a clearly defined

framework of guidelines, policies or

practices, standards, and procedures for the organization

n MIS is viewed and used at many levels by management.

n It should be supportive of the institution's longer term strategic goals and objectives

n Financial accounting systems and

subsystems are just one type of

institutional MIS

Ø Reduce expenses related to

labor-intensive manual activities

Ø Support the organization's strategic goals and direction

n It should always be sufficient to meet an institution's unique business goals and objectives

n MIS is a critical component of the

institution's overall risk management

strategy

n MIS should be used to recognize, monitor, measure, limit, and manage risks.

n Risk management involves four main

n The MIS represents the electronic

automation of several different kinds of

counting, tallying, record-keeping, and

accounting techniques of which the by far oldest, of course, was the ledger on which the business owner kept track of his or her business

Computing-Tabulating-Recording Company

n Automation emerged in the 1880s in the

form of tabulating cards which could be

sorted and counted

n These were the punch-cards still

remembered by many: they captured

elements of information keyed in on

punch-card machines; the cards were then processed by other machines some of

which could print out results of tallies

n Each card was the equivalent of what

today would be called a database record, with different areas on the card treated as fields

n World-famous IBM had its start in 1911; it was then called Computing-Tabulating-

Recording Company

C-T-R Punch cards

n C-T-R Punch cards were used to keep time records and to record weights at

scales

n The U.S Census used such cards to

record and to manipulate its data as well

World War II punch-card systems

n When the first computers emerged after World War II punch-card systems were

used both as their front end (feeding them data and programs) and as their output

(computers cut cards and other machines printed from these)

In 1970s, 80s, and 90s

n Waves of innovation spread the

fundamental virtues of coherent

information systems across all corporate functions and to all sizes of businesses in the 1970s, 80s, and 90s

Major functional areas developed

n Often these were not yet connected:

engineering, manufacturing, and inventory systems developed side by side

sometimes running on specialized

hardware

n Personal computers ("micros," PCs)

appeared in the 70s and spread widely in the 80s

21st century

n The first decade of the 21st century the narrowly conceived idea of the MIS has become somewhat fuzzy

n Systems are available for computer

assisted design and manufacturing CAM); computers supervise industrial

(CAD-processes in power, chemicals,

petrochemicals, pipelines, transport

systems, etc

n Systems manage and transfer money

worldwide and communicate worldwide

n Virtually all major administrative functions are supported by automated system

n Many people now file their taxes over the Internet and have their refunds credited (or money owning deducted) from bank accounts automatically

n MIS was thus the first major system of the

Information Age At present the initials IT are coming into universal use

n "Information Technology" is now the

category to designate any and all

software-hardware-communications

structures that today work like a virtual

nervous system of society at all levels

n The mid-sixties IS was already forging its way into business mainstream.

n Computers remained out of reach for most businesses, telecommunications made its mark with the TELEX machine

n This step gave businesses the ability to

communicate within its own organization anywhere in the world at any time and

effectively pass instructions and

information

n The use of computer in business and industry usually started off in the

accounting departments

n a number of business school began developing Management Information System (MIS) programs to meet the growing need of IS managers

n During the seventies more upper

management recognized the importance

of IS and the flexibility it was bring to

business

n The TELEX became the standard of

information transfer and the mainframe computer became the standard for

database creation

n IS begins to receive its own autonomy and large budgets in corporations, many

technical savvy managers of these new

departments begin spending huge amount

of money on systems and software at their own discretion and many time out spend all other departments without any returns

to the business

n These were troubling and risky times for CEO's deciding to direct the business into

IS based systems

n The systems and software were complex, continually changing, and the people that knew the systems tended have their own agendas

Mainframes Vs PCs

n This new rush in what is now referred to

as e-mail, was brought about by the

invention of the mini and micro computer, which could put and entire system on an executives desk for a very low price

compared to mainframes and the ability to have an autonomous system with out pay huge amounts of money to process

information

n Once again turmoil enters the

relationships of IS and businesses, where software and hardware vendors begin

making demands on businesses to switch there style of business to fit the computer systems

n There was little standardization of software and hardware with many start up

companies that went under there after

leaving business with out any technical or system support, resulting in spending

above budgets to install entirely new

systems

n The desire to support different

departments of a corporation with IS and the new affordability of hardware and

software each department began to put IS programs together independently of MIS department

Quality Initiatives in IS

Development

n The mid-eighties were the time most

manufacturing companies began to shift to

IS to forecast sales, take orders, and

manage distribution of products

n Time Berners-Lee developed the World

Wide Web in 1989

n This protocol HTML used over the existing Internets that had been constructed

opened up a new era of EDI the world had never seen

n The mid-1990's it became apparent that

there is no way for a corporation to

efficiently do business without a solid

functioning IS setup inside its own walls as well as connected with its supply-chain

vendors and distributors

n EDI once known as Electronic Data

Processing (EDP) have now brought profit margins so low that any business that

does not prepare itself will be out of

business in the next five years

¨ Historical background of information system

¨ Information system today.

¨ Terminology related to MIS and IS

¨ Types of Information Systems

Early history of IS with other disciplines