Management Support System
Management Support Systems are the systems used by management to support managerial decision making. MSS are computer-based systems that provide information that is useful for the management. MSS are a collection of all advanced computer technologies for supporting solutions of managerial problems.
Emergence of new technologies and better information distribution has helped in providing more alternatives for management. The scenario of rapidly changing global economies and markets produces greater uncertainty.
Table of Contents
- 1 Management Support System
- 2 Management Information System
- 3 Decision Support System
- 4 Types of Decisions
- 5 Executive Information System
Thus, to be able to maintain a competitive advantage requires a faster response. MSS also enhances the decision-making power of management by checking “what if” scenarios to determine the best use of manpower. Using MSS, one can study worker productivity based on comparisons to a pre-set standard and the average worker. With MSS, one can obtain real-time feedback on our operations to be able to make quick and informed decisions.
There are a large number of systems development methods for MSS, which are:
Let us discuss each of these systems in the following section.
Management Information System
Management Information System (MIS) is a computer-based system that provides information to the management, to help in decision-making and effective business management. MIS is one of the fastest growing concepts in the business environment. It influences decision-making patterns and strategic business planning significantly.
- Increased Complexity of Business
- Increased Competition
- Increased Complexity and Burden on Management
- Information Technology
One of the popular definitions of MIS, given by Schwartz, is:
“MIS is the system of people, equipment, procedures, document and communication that collects, validates, operates on, transforms, stores, retrieves and presents data for use in planning, budgeting, accounting, controlling and other management processes”.
There are two terms in MIS, ‘management’ and ‘information systems’, which should be understood separately. Management is the process of planning, organising, directing, and controlling the resources of an organisation to attain business objectives effectively. Information system refers to a set of interrelated components that collect, store, process, generate and disseminate information for effective business decision making.
MIS collects data from various sources, processes it, and transforms it into meaningful and useful information.
Figure shows the structure of MIS:
The data is collected from various internal and external sources and then processed using technical and analytical measures. This pro cessed data is called information. This information helps in various levels of decision making thereby improving organisational effectiveness.
Figure shows how data flows through the MIS:
MIS plays a significant role in contemporary managerial working, because it serves various needs of managerial functions. It helps to perform complicated managerial functions efficiently. MIS provides support to management functions at all levels of an organisation. It has become a necessity due to the following reasons:
Increased Complexity of Business
With rapid changes in technologies, business environment also underwent a change, which increased the complexity of functions to be performed by every department and overall organisation.
The level of competition increased with the changing business environment. Thus, it is now a challenge to not only be a profitable business but also to remain successful.
Increased Complexity and Burden on Management
The decision-making managerial functions have become more complex and need better analytical approach and expertise.
The emergence of electronic business requires an organisation to be updated with IT revolutions. MIS utilises this technological change for the growth of an organisation, being able to perform with less effort yet derive more efficient information.
MIS serves the information needs of managers to make various management decisions. The various functions of MIS are discussed as follows:
- Collecting Data From Various Sources: It refers to gathering data from various internal as well as external sources. Internal sources are financial reports, sales records, etc.
External sources are suppliers, competitors, customers, newspapers, magazines, and so on. The data is collected on both papers as well as in electronic form.
- Storing Data: It refers to storing and retrieving data as and when required.
- Processing Data: It refers to processing of data i.e, applying various functions, such as calculating, sorting, classifying, analysing, comparing and summarising, the collected data.
- Generating Information: It refers to transforming the collected data into useful and meaningful information after processing. The information generated after processing of data must be well structured and organised.
- Disseminating Information: It refers to segregating the information produced into various departments, depending upon their respective requirements to help them in performing their functions efficiently.
- Storing Information: It refers to saving the generated information back in the database for future reference. The same information can be further processed for generating more results if required.
Some examples of MIS are as follows:
- Sales management systems
- Inventory control systems
- Budgeting systems
- Management Reporting Systems (MRS)
- Personnel (Human Resource Management) systems
Decision Support System
Decision-making plays a significant and vital role in carrying out the activities of an organization successfully. The process of decision-making involves identifying and selecting the best possible alternative from various available options.
It is a problem-solving technique, wherein a viable solution is attained for the prevailing problem. There are certain principles that are taken into consideration by an organization for an effective decision-making process.
These are as follows:
- The people participating in the decision-making process need to understand the purpose of the process.
- All the people involved in the decision-making process need to have a significant interest in the issues being discussed.
- All the people participating in the process should welcome the mutual learning that arises from the process i.e., the process should prove to be educational for the participants.
- The participants involved in the process must not be forced to do so but rather be interested and willing volunteers to be a part of the process.
- All the participants in the process must be presented with an equal opportunity to participate and design the collaborative process. They should be able to access the relevant information with an equal chance and should be provided with an opportunity to participate effectively in the process.
- The process should be designed in such a way that it meets the requirements of the given situation.
- The process should be flexible so that it can accommodate the changing issues, data requirements, political environment, and the constraints such as time and meeting arrangements.
- The values, ideas, and interests of the participants who are knowledgeable about the problem should be respected in the collaborative process.
- The participants who initiated the process should be accountable for the process.
- There are deadlines that need to be respected throughout the process.
- There has to be a commitment by all the participants to reach an effective decision through the process, which has to be monitored regularly
The figure shows decision processing system:
The figure is an example of a shipment organization that is using a decision support system.
Types of Decisions
A decision is defined as a judgment, conclusion, or resolution reached by selecting the best alternative among two or more options for some specific action or purpose. Decisions can be of various types depending upon the field where they are being applied.
- Unstructured Decision/Strategic Level Decision
- Semi-structured/Managerial Decision
- Structured/Operational Decision
They can be categorized under various heads. In any organization, the management is divided into different levels like strategic level, managerial level, and operational level. These levels define the decisions taken in the organization.
The accuracy and quality of information also differ as per the level of decision-making. Therefore, managers should have a proper understanding of all the levels of decisions.
Thus, decisions can be categorized as follows:
Unstructured Decision/Strategic Level Decision
This refers to the decisions taken at the top-management level. These decisions define the broad objectives and strategic planning of an organization for profit-making. These decisions are called unstructured decisions because they are not well defined, and there is ample scope for various sub-decisions based on these decisions.
Such decisions are taken to have a long-term approach from a business perspective and are taken at the executive level of the organization, where managers focus on the strategic issues faced by the organization in the long term.
There is no specific set of rules and procedures followed in these decisions. Instead, the focus is on solving the problems, which are complex, non-routine, and long-term requirements of the organization.
The decision-makers at this level include the President, the Chief Executive Officer (CEO), and the Board of Directors. For example, the decision to entering into a new market segment within a diversification strategy.
This refers to the decisions taken by managers at the control level of business. The decisions at this level are neither structured nor unstructured because these can be pre-specified to the extent their nature allows. Decision-making at this level is said to be semi-structured, because problems and solutions are clear, and expertise is also required in taking semi-structured decisions.
Managers at this level focus on monitoring and controlling activities at the operational level and providing information to the business-level management. For example, the introduction of a new feature in an existing product.
This refers to decisions that are usually taken at the operational level, where the routine day-to-day business process occurs. The decisions taken at this level are based on certain rules and predefined procedures, which are specified in advance before taking the decisions.
Thus, decisions taken at this level are not only highly structured but also repetitive and are related to day-to-day activities. To meet the requirements of decision-makers at this level, information systems are designed to improve the efficiency of business processes. For example, the determination of the quantity of raw material.
Executive Information System
An Executive Information System (EIS) is a type of MIS that facilitates and supports information and decision-making needs at the senior executive level. EIS provides easy access to internal and external information relevant to organizational goals.
It is commonly considered a specialized form of DSS. The emphasis of EIS is on graphical displays and easy-to-use user interfaces. It offers strong reporting and drill-down capabilities. In general, EIS is an enterprise-wide DSS that helps top-level executives analyze, compare, and highlight trends in important variables so that they can monitor performance and identify opportunities and problems.
EIS is not a piece of hardware or software. It is basically an infrastructure from where operational data and up-to-the-minute details are supplied to a firm’s executives. The operational data is first gathered and sifted from various databases and then transferred to an executive level.
The information mix presented to executives typically includes financial information, work in process, inventory figures, sales figures, market trends, industry statistics, and the market price of the firm’s shares. This information may even include suggestions related to what needs to be done. EIS differs from a DSS in that it is targeted at executives and not managers.
Previously, EIS was developed as computer-based program on mainframe computers to provide a company’s description, sales performance, and/or market research data for senior executives. However, earlier, senior executives were not computer literate and were not skilled in handling computer-based information. Moreover, EIS data earlier supported only executive-level decisions and not necessarily the entire company or enterprise.
Current EIS data is available taking into consideration the entire organization. Further, it is facilitated by personal computers and workstations on LANs. Executives and employees are now more computer literate and have been trained since to handle such kind of information.
Thus, employees can access company data to help decision-making in their individual workplaces, departments, divisions, etc. This allows employees to provide their inputs and ideas both above and below their company level.
EIS has a few advantages and disadvantages, which are discussed as follows:
Advantages of EIS:
- It is easy for upper-level executives to use; no extensive computer experience is required in operations.
- It provides timely delivery of company summary information, so that management can make decisions promptly.
- The information that is provided is better understood.
- It improves tracking information.
- It Offers efficiency to decision-makers.
Disadvantages of EIS:
- It is system dependent.
- It has limited functionality, by design.
- It causes information overload for some managers.
- Its benefits are hard to quantify.
- It involves high implementation costs.
- It may become slow, large, and hard to manage.
- It needs good internal processes for data management.
- It may lead to less reliable and less secure data.
Example of EIS:
EISs tend to be highly individualized. They are usually custom-made for a particular client group keeping in mind their specific requirements. However, a number of off-the-shelf EIS packages also exist, and many enterprise-level systems offer a customizable EIS module.