Management Information Systems_ Combined Case Studies.

Management Information System Unit 1
Unit 1 Organisations and Computing
Structure
1.1 Introduction
Objectives
1.2 Case Study
1.3 Modern Organisation
IT-Enabled organisation
Networked organisation
Dispersed organisation
Knowledge organisation
1.4 Information Systems in Organisations
What are information systems?
1.5 Brief History of Computing
ENIAC: Way to commercial computers
Advent of artifi cial intelligence
Advent of personal computing
Free Software Movement
Advent of the Internet
1.6 The Role of the Internet
Internet and Web: They are different
The Internet changes everything!
1.7 Summary
1.8 Glossary
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1.9 Terminal Questions
1.10 Answers
1.1 Introduction
This unit introduces basic concepts of the subject. The organisation is defi
ned as a collection of actors engaged in interactions that serve a common
broader goal. An essential component of the organisation is its information
systems (IS) that bind the organisation internally as well as enables its
interactions with the outside world through the Internet. Information systems
originated with the invention of computers, software, and networks. Various
kinds of specialised computers and software have evolved that help
organisations with different tasks. The advent of the Internet has especially
changed the way organisations operate and how they have to be managed.
1.1.1 Objectives
After studying this unit, you will be able to:
● defi ne modern organisation
● explain information systems in organisations
● outline history of computing and advent of Internet
● distinguish between Internet and Web
1.2 Case Study
Information Systems at Tata Motors
Tata Motors is one of India’s largest automobile manufacturers. They make
a range of automobiles including commercial trucks, passenger cars, utility
vehicles, commercial passenger cars, and defence vehicles. In the fi nancial
year 2008–2009, they had consolidated revenues of Rs 709 billion. The
company manufactures its automobiles in several plants located in Pune
and fi ve other towns in India. It markets its products not only in India and
the Indian subcontinent, but also across the world in Europe, Africa, North
and South America, and East Asia.
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Tata Motors gained worldwide prominence when, in 2009, it launched the
Tata Nano, the lowest cost passenger car in the world. The fi rm had to
face considerable challenges in the launch of the Nano, as there was
political opposition to the physical site they had chosen. There was also a
lot of media attention on the potential success of the car. The Nano was
launched on schedule and in accordance with the planned cost targets.
Tata Motors relies extensively on an infrastructure of advanced
information systems (IS) to run its business. This infrastructure consists
of many computers, a network connecting all the computers, and complex
software that stores and processes data. The IS act as a digital nervous
system that transmits information across the various offi ces and
branches of the fi rm, connecting its suppliers, shop-fl oor workers,
managers, retailers, and customers. It informs the employees about the
activities of the fi rm, keeps track of material used and needed, accounts
for money spent and money received, reports about customer purchases,
and relays data about service needs to various parties.
The IS at Tata Motors enables managers to view their business and
operations in a comprehensive manner and to take decisions accordingly.
This is made possible by specifi c IS capabilities and functions.
Tata Motors has a large network of vendors and suppliers who supply the
components that are used to assemble the automobiles. Typically, the fi rm
has over 2000 vendors at any time. These vendors receiving information
about component needs at the production facility have to be informed of
specifi c deliveries, have to be paid, and have to be informed about parts
delivered, among other things. Vendors too have to inform Tata Motors about
their supply position, their deliveries, payments received, balance due, etc.
An IS at Tata Motors, referred to as the supply chain management system, is
used to both receive and send information to the vendors and keep track of
all these exchanges. This system is quite benefi cial to Tata Motors as it has
increased effi ciencies as compared to the manual method by which the
same tasks were performed earlier. For example, the time required to pay
vendors has reduced from 48 to 24 h with the help of the system. An
example of a typical transaction in the supply chain management system is
outlined below.
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Consider a situation in which Tata Motors has to manufacture about 100
passenger cars of a particular model in a two-week period. For this it has
to obtain a part, say door handles, from a vendor. The steps required to
complete this acquisition consist of several transactions, each of which is
a step in the total assembly process. Broadly, these steps are:
● The company informs its production schedule for the particular
passenger car to the supplier. This will be in the form of a production
plan that states how many parts will be required on any given day in a
two-week period, the inventories that have to be maintained and the
deadlines by which the parts have to be received.
● The supplier will use this information to evaluate their own inventory. If
they already have some parts that they can dispatch, they will inform
Tata Motors accordingly. If they have to manufacture a part, which will
require time, then they may inform the client of their own schedule of
manufacture so that Tata Motors is aware of their schedules. The
details entered by the supplier in the system will automatically be refl
ected in Tata Motors’ internal reports.
● The supplier dispatches a truck with a portion of the required parts. The
information related to the time of dispatch, the number of parts being sent,
the identity of the truck, and the details of the documents carried by the
truck (such as the shipping invoice) are entered into the system.
● When the truck arrives at the Tata Motors plant, the supplies are
checked and this information is recorded in the system. The supplier is
informed of the receipt of goods.
● The parts are moved to the shop fl oor and checked for quality. Once the
quality check is completed, the parts are stored in the inventory at Tata
Motors and the records are updated to show the new levels. The system
also generates a message for the accounting system to pay the vendor.
● The payment system checks the amount of payment to be made and
informs a local bank to make the payment. This payment is done
automatically and the account of the vendor is credited with the
amount. Manual
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checking is only done if there is a surplus or defi cit with the account of
the vendor and an alteration in the payment account is required.
Figure 1.1 depicts the exchange of information between Tata Motors and
one of its vendors concerning parts supply.
For Tata Motors the IS not only enables the fl ow of information between
the fi rm and its vendors, it also enables all the fi rm’s activities to fl ow
smoothly. Information required for the activities and about the activities is
managed by the IS.
Tata Motors also uses an IS to manage its marketing channel. The fi rm
has an extensive network of over 2000 dealer partners in India and
abroad, and in 2009 had about 30,000 computers connected to their
system. The dealers sell and service Tata Motors automobiles. Dealers
report about orders, sales, payments, deliveries, service requests, and
other data about their business to Tata Motors through the IS. Tata
Motors has to inform dealers about delivery of vehicles, shipping notices,
amounts received, and amounts billed through the system.
Information from the dealers about demand for products helps Tata Motors
plan its production schedule. The information systems give precise
information about what products are demanded, and where and when they
have to be delivered. This information helps the fi rm understand its market
better, plan for advertising and promotion campaigns, and see patterns of
demand over the years. The system also helps the fi rm design its cars as
they are able to learn about customer preferences for features, such as the
seating styles preferred, engine capacities preferred, colours preferred, etc.
Tata Motors can use such information to design its cars according to market
needs and also design its promotion campaigns.

Fig. 1.1: E xchange of information between Tata motors (TM) and its parts
vendor. The diagram only shows information fl ows and not the fl
ows of physical goods
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1.3 Modern Organisation
The world today consists of many organisations that have collections of
people with shared goals. Examples of organisations are private companies
that have a goal of making and selling some product or a department in a
government offi ce that has some specifi c goals to fulfi l. The organisation is
given a name and usually has a physical location by which it is identifi ed. The
most important aspect of the organisation is that it has within its fold
members, that is, people who are engaged in activities that are meant to
serve the organisation’s purpose.
Organisations have many purposes, ranging from making profi ts by
commercial activities to providing information to citizens about their elected
representatives and to enabling millions of commuters use the rail services in
India. Tata Motors of India, for example, is a commercial organisation that
makes cars, trucks, and other automobiles. The company employs 23,000
people in various parts of the world. Although these employees would be
engaged in various activities as part of their work, as a goal they work
towards building and selling automobiles. The Association for Democratic
Reforms, based in New Delhi, is a non-governmental organisation (NGO) that
informs citizens about candidates who are either contesting elections or have
been elected from different constituencies of India. The goal of this small
organisation is to inform citizens about the criminal, fi nancial, and educational
backgrounds of candidates they are about to vote for. Their objective is to
strengthen democracy by informing citizens. The Indian Railways is a
government organisation that manages the massive Indian railway system
consisting of over 9000 trains that ferry 20 million passengers daily. The
passengers may alight at any of 7000 railway stations and may traverse any
distance of over 64,000 km of railway routes. The Indian Railways also ferries
over 2 million tonnes of freight daily. This massive operation is managed by a
number of information systems (IS) that help the Indian Railways achieve its
goals of servicing its commuters and commercial clients.
The following sections discuss some essential features of modern
organisations.
1.3.1 IT-Enabled organisation
The organisations discussed above are modern in the sense that they have built
into their structure the elements of information technology (IT) that enable
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them to function in a manner appropriate to the demands of the environment.
This is a fundamental difference between a modern organisation and its older,
premodern incarnation. Tata Motors, for instance, upon its initiation in 1945
would also have put in place built-in mechanisms to respond to its
environment and to function in a manner appropriate to that time. However,
what distinguishes Tata Motors’ functioning then and now is the difference in
the current use of IT to shape its functioning and responsiveness.
1.3.2 Networked organisation
Modern organisations function in a world of digital networks in addition to the
physical world that was the same for the old organisations. The organisations
are linked as nodes on the network where they receive and transmit
information. Remaining on the network requires sensing and responding to
this fl ow of information. The digital network consists of the Internet and
telecommunication networks that rely on digits (ones and zeros) to carry
information across large distances. Sensing the world means frequent
monitoring of the news and information that becomes available. This
information is in the form of text, audio, or video. Organisations such as Tata
Motors have to constantly monitor their digital environment to learn about the
markets, their competition, their partners, and the business they operate in.
Responding to the digital information available to organisations is also a
modern challenge. Information is widely available instantly and in multiple
forms. Responding means taking those actions that will move the organisation
towards its goals. The response could be in the form of further transfer of
information on the digital networks, say, by issuing messages or by taking
action in the physical world. Responses are shaped by the context of the
situation that the organisation operates in and by the nature of the sensed
information. For example, when Tata Motors launched its widely popular Nano
car, it anticipated a huge demand for information from its website by
prospective customers. Therefore, it designed the site in such a manner that it
could handle the rush adequately.
1.3.3 Dispersed organisation
Another key aspect of many large modern organisations is that they are highly
dispersed. Tata Motors, for instance, has operations in many cities in India and in
other parts of the world. The companies disperse their operations to best meet
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customer needs or to locate functions where the resources such as skilled
labour or raw materials are available.
Multinational organisations are well known to seek out new destinations for their
operations and also new markets. They are able to do this owing to laws and
facilities that are created by host nations, as it benefi ts their economy. The
challenge for multinational organisations is to fully use the opportunities thus
created and manage work and organisational issues in a new environment.
1.3.4 Knowledge organisation
Modern organisations rely on knowledge workers to a much larger extent than
older organisations. These workers differ from blue-collar workers as their
work responsibilities involve accessing and dealing with knowledge about the
work and the environment, as opposed to repetitive manual labour related to
production. Knowledge workers enjoy greater autonomy in their work and the
variety of work they have to perform. Consequently, they are better educated
and more informed about the business they are working in.
A major function of modern organisations is to process information. They
create information about goods and services, accumulate it within the
organisation and use it to achieve their goals. Information is like a glue that
binds the organisation and its functions together. For commercial
organisations, it is a key component for competing in the market. Information
is stored, processed and converted into forms that make it an integral part of
an organisation. This is referred to as the organisation’s knowledge base.
Knowledge stored and accessed in this manner enables the organisation to
drive action and shape its own understanding of the world.
Self Assessment Questions:
1. Organisations are collections of ________ with shared ________.
2. Modern organisations have elements of ________ built into their
structure, functioning in a world of ________ networks. They are highly
________ and rely on ________ workers largely.
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3. A major task of modern organisations is to process information. (True/
False)
4.
Modern organisations use a matrix structure where strict hierarchies are
present. (True/False)
5.
Companies disperse their operations only to locate functions where
resources such as skilled labour or raw material are available. (True/
False)
6.
An essential component of a modern-day organisation is an
information system
(a) which binds the organisation
(b) which enables its interactions with the world through the Internet
(c) both (a) and (b)
(d) only (b)
7.
Remaining on the network, requires the organisation to
(a) sense the fl ow of information on the network
(b) respond to the fl ow of information on the network
(c) both sense and respond to the fl ow of information on the network
(d) do nothing more, once added on to the network
8. Knowledge workers differ from blue-collar workers
(a) i n that their responsibilities involve accessing and dealing with
knowledge
(b) i n that their responsibilities involve repetitive labour related to
production
(c) i n that their responsibilities involve decisions regarding the
generation of revenues for the organisation
(d) only marginally, as the two terms are often used interchangeably
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1.4 Information Systems in Organisations
1.4.1 What are information systems?
Information systems are collections of computers, networks, software, and
people who create, store, modify, and distribute data and information in any
organisation. Computers and information technology (IT) are key ingredients
of modern information systems (IS). Information technology includes
computing devices such as personal computers, notebook computers,
personal digital assistants, mobile phones, and various types of networks that
allow the computing devices to connect and to communicate.
Let us distinguish between information technology (IT) and information
systems (IS). IT is understood as the artefacts such as computing devices,
software and network devices that constitute the material aspects of IS.
However, information systems are constituted by the artefacts of technology
as well as the people and organisations that use them.
This distinction between IT and IS is important and has to be emphasised. IT
is what people buy and confi gure and use, whereas IS is the manner in which
we understand, conceptually, the use of IT in organisations and by people.
Here is an example to understand the difference. Any organisation may buy IT
components such as printers that are provided to offi ces for their printing
needs. The printer itself is an artefact of IT, which is a tangible object or a tool.
Its function is well defi ned and limited: it has to print text or images on paper
in a manner defi ned by the user of the printer.
In this example, printer is part of the IS of the organisation and plays a role in
preparing reports and memos. It becomes relevant and useful for the
organisation when it prints properly and in the manner required by the users
(and becomes a problem when it cannot print due to some malfunction). In
other words, the role and relevance of the printer are determined by the needs
of the organisation, the people who are using the IS and the purpose for which
they are using it. In this larger context, the printer is a component of the IS of
the organisation and helps to serve its goals.
Self Assessment Questions:
9. IT is understood as artefacts while Information Systems (IS) is
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(a) the collection of all IT artefacts in the entire organisation
(b) t he manner in which IT artefacts in an organisation are used by
its people
(c) t he collection of all IT artefacts used by various functions in an
organisation, within the organisation
(d) t he collection of all IT artefacts used by various functions in an
organisation, to respond to information on its network
10. ________ and ________ are the key ingredients of modern IS.
1.5 Brief History of Computing
Computers or general purpose computing devices were invented in the middle
of the 20th century, but the ideas they are based on evolved a century earlier.
Charles Babbage, a renowned British mathematician, fi rst conceived the idea
of a computing device in the 1820s when he was confronted with the problem
of errors creeping into navigation charts at the time of their writing. In those
days this work was done by clerks who used manual methods of pencils,
rough paper and slide rules to make navigation charts used by sailors. These
charts required extensive numerical computations. Each chart had to be
created individually and owing to the tedious nature of the work was prone to
errors. The clerks who performed the calculations were known as ‘computers’.
Babbage designed a mechanical device that could be moved by pulleys and
gears and could be used to make computations. This device was known as
the Difference Engine. He tried to construct the Difference Engine but never
succeeded in doing so. He also designed an advanced version of this engine,
which he called the Analytical Engine, in which instructions could be given by
punched cards. Ada Lovelace, who was a colleague of Babbage and also a
mathematician, conceived of a method of writing a series of punched cards for
the Analytical Engine that could perform complex calculations. Babbage is
thus credited with inventing the idea of a computing device and Lovelace with
inventing the idea of programming.
1.5.1 ENIAC: Way to commercial computers
The fi rst versions of modern-day computers were built in the 1940s, almost a
hundred years after Babbage’s fi rst designs. One of the earliest computers was
built by Konrad Zuse, an engineer working in Germany during World War II and
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was based on electrical relay switches. Owing to the war this invention could
not be publicised to the world. Another computer was developed by the UK
under the guidance of mathematician Alan Turing, also during the war. This
computer consisted of both electrical and mechanical parts and was used to
compute numbers quickly, mainly to break secret codes used by rival military
operations.
World War II was also the period in which two other, independent efforts to
build computers were attempted in the USA. The fi rst was by some
independent researchers at the Iowa State University who created the fi rst
electronic and digital computer called the Atanasoff-Berry computer. This
project did not receive much attention at that time. In contrast, a computer
called Electronic Numerical Integrator and Computer (ENIAC), built by John
Mauchly and Presper Eckert in the University of Pennsylvania also during
World War II received much more attention and media coverage. This
computer consisted entirely of electronic components and differed from the
earlier efforts because it was ‘general purpose’ in nature. The term general
purpose means that the instructions required to run the computer were neither
specifi ed in advance nor built into the computer, but, could be specifi ed later,
so different sets of instructions could be given. This property of the ENIAC
made it different from the computers built earlier.
The success of the ENIAC and the lessons learned from it led to the commercial
development of computers in the USA. In the 1950s companies such as
Honeywell and IBM produced the fi rst commercial computers that they sold to a
number of government departments and businesses. These computers were
physically large and were maintained in separate rooms of offi ces. They required
specially trained engineers and operators who could program them and also help
manage the large amounts of data that was being created and stored. In Europe
too, and particularly in the UK, commercial computers were manufactured and
sold to governments and businesses.
Research and development of computers and IT was widespread and rapid at
this stage. University departments, commercial research departments, and
government laboratories were created in many countries around the world
with massive funding for development of computing technology. Computing
hardware was separated from the instructions that were required to run it and
a separate stream of research in software evolved. Software was further
specialised into systems software and application software. The systems
software mainly ran the hardware and its different components and the
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application software was used for organisational purposes. Software was also
created in computer languages, a restricted set of words, which could be
translated into a code that the hardware could understand. These computer
languages evolved from low-level to high-level languages capable of many
and diverse functions.
In the 1960s there evolved a set of technologies that could allow computers to
connect to each other. These technologies were a set of hardware and software
devices that could allow data interchange between computers. A set of standards
were developed to enable sharing of data and messages between computers
thus facilitating the formation of computer networks. The fi rst of these was the
ALOHA network set up in the University of Hawaii in 1970.
Computers and computing technology began to spread around the world. These
were fi rst adopted by wealthy, industrialised nations but others followed soon.
Military agencies and government departments were some of the fi rst to buy and
adopt these technologies for their own use. In India, the fi rst computer was
obtained by the Indian Statistical Institute in Kolkata in 1956 (the computer was
obtained from the Union of Soviet Socialist Republics). This computer was used
for research in computing as well as for solving computing problems for the
Atomic Energy Commission and the National Sample Survey of India.
1.5.2 Advent of artifi cial intelligence
Research in the fi eld of artifi cial intelligence began in 1956 in the USA. This fi eld
dealt with building computers and writing software that could emulate human
capabilities in problem solving. The fi eld gained popularity and attracted a large
number of researchers. It also initiated a sister fi eld of Robotics, whose main goal
was to build human or animal-like devices called robots that could move about
independently. The researchers in these disciplines examined the prospects of
keeping information about the world within computer memory that could then be
used to generate useful conclusions.
1.5.3 Advent of personal computing
Over several decades the size of the computing hardware decreased signifi
cantly, and by the 1980s personal computers were available for individuals to
purchase. These were not only small that they could be kept on a desk, but were
also cheap enough to buy. The technology to make these computers was
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standardised and distributed, giving rise to an entire industry around the world
that manufactured these personal computers.
The software used on personal computers also became a product that could
be made and sold for commercial gain and soon became an industry. Several
fi rms provided system and application software for personal computers that
were now widely used by both individuals and businesses. Software was no
more automatically bundled with the hardware as used to be the case before.
1.5.4 Free Software Movement
The 1980s also saw the emergence of the Free Software Movement that
insisted that software should be available to all who wanted it and could use it
on their personal computers. This movement was initiated by Richard
Stallman, a researcher in the USA. The free software movement was opposed
to the idea of locking software in licences that prevented its widespread usage
by everyone and keeping secret the source of the software by the companies
selling it. The movement advocated free sharing, usage and modifi cation of
software. The movement enthusiasts created a large amount of software that
they made publicly available to all who were interested.
1.5.5 Advent of the Internet
The proliferation of personal computers in organisations also created the need
for networks and these too grew in scale and sophistication. Data networks
were increasingly becoming popular. Many universities, government’s defence
departments, and commercial organisations were linked by data networks
based on a standard known as the Internet Protocol (IP). In France, the
Minitel network was quite popular in the 1980s, which provided text on prices,
ticket purchases and news. By the late 1980s, local area networks in
organisations were widely used and were found to be so useful that an entire
new industry emerged with companies going into the production of computer
networking equipment.
In 1990, Tim Berners-Lee, a British scientist, designed and implemented the
Hypertext Transfer Protocol (HTTP), which was to become the basis for what
is now called the World Wide Web. This protocol allowed individuals to easily
access data on computers in any part of the world just with the address of the
page that contained the required information. After the original protocol was
invented, there was rapid improvement and the Web came up with many
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services, such as transfer of images and video. The Internet was opened for
commercial access in 1993 and the Web began to grow tremendously.
Individuals and organisations from around the world began to create data for
the Web and create a unique identity for themselves. The 2000 saw the
growth of social networking sites on the Web, such as Orkut and Facebook,
that enabled millions of users to link to their friends and family through the
Web. The Web presented a new and almost ubiquitous interface for people
and organisations to interact. This had profound implications for businesses,
governments, and other organisations. Figure 1.2 shows the evolution of
computing over the decades.

Fig. 1.2: The evolution of computing over the decades
Self Assessment Questions:
11. Before the advent of personal computers, the software used was
automatically bundled with the hardware purchased. (True/False)
12. Hypertext Transfer Protocol allowed individuals to easily access data
on computers in any part of the world with just the address of the page
that contained the required information. (True/False)
13. In the 1980s, the Free Software Movement emerged, which advocated
(a) free usage and sharing of software only