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RICHARD J. ROLAND, JR.
Associate Professor
Department of Accountancy
University of Illinois at Urbana-Champaign
Tutorial on Management
Information Systems
Introduction
Management information is communication that leads to managerial
action, and managerial action is abetterment achieved through aprocess
of planning and control. Acritical distinction in discussing management
information is the difference between data and information. Data are any
coded messages, considered apart from their use by an individual. Informa-
tion, on the other hand, is the meaning of data to an individual. Informa-
tion, therefore, is derived from data through interpretation and is
ultimately asubjective phenomenon available only to the individual
interpreter.
The first problem in discussing management information is to resolve
the issue of subjectivity so that we might proceed with the question of
system design. The field of management information systems has done this
by treating as information, data that have been selectively assembled and
structured so that we believe they will be useful to their recipient because
we can adequately anticipate the meaning that will be gained.
Thus adiscussion of management information always presupposes a
recipient, acontext and ause. The recipient is an individual manager in an
organizational context who is engaged in decision-making activity. Man-
agement information must always be considered in light of all three of
these aspects:
1.The decision situation includes an analysis of the type of problem being
addressed, the adequacy of evidence required, and the range of norma-
tive and descriptive models available for understanding how the deci-
sion is or should be made.
10
MIS TUTORIAL 11
2. The organizational context includes an analysis of the structure, style,
climate, and power that characterizes the organization as well as aspects
of the larger culture that impact the norms of perception, cognition,
evaluation, and behavior used by its members.
3. The individual manager includes an analysis of the limits of cognitive
ability, the dynamics of group processes, and the cognitive style that
characterizes the way an individual collects and processes data.
Fundamentally, therefore, adiscussion of management information
cannot be value free. If we are to move beyond adiscussion of mere data,
then we must either affirm the status quo or propose achange in the
decision situation, the organizational context or the individual manager.
Either way, we take a normative position with respect to these three aspects
when we make adesign statement about an information system.
An appreciation of the distinction between data and information leads
to asecond problem in discussing management information. Data, as data,
have acost; and data, as information, have avalue. In general, the cost of
data increases as the amount collected increases, but the value of informa-
tion does not. Information has amarginal rate of return which diminishes
as its quantity increases. When we discuss the use of automation to replace
existing manual processes, we can identify reductions in the cost of labor,
space, time, etc. to produce agiven output. Cost and value calculations,
though often imprecise, can be made.
However, when we move beyond using automation to process repeti-
tive transactions at the operational level, and explore the use of automa-
tion to enhance management decision-making, our ability to quantify the
value of an information system becomes very problematic. We shift away
from an assessment of efficiency and quantitative improvements toward an
assessment of effectiveness and qualitative improvements in the function-
ing of the organization.
The two problems of data versus information and cost versus value set
the stage for presenting aframework for analyzing management decision-
making and aprocess for developing information systems to support
decision-making. This paper is in four sections. Section one defines the
organization as asystem and the manager as adecision-maker about that
system. Section two applies the framework to alibrary as asystem. Section
three derives implications for information system design, and section four
explores the process of system development.
ASystems View of Organization
The systems approach is abroad label for the general attempt to
understand organizations by analyzing their relational and dynamic
12 RICHARD J. BOLAND, JR.
aspects. The organization is viewed as a set of relationships between
component parts that stand apart from an environment, receiving inputs
from it and producing outputs that are received by it. Thus the organiza-
tion is an open system that is dependent on input and output relations with
its environment, and organizes its internal components to meet those input
and output demands.
Internally, each component of the organization is understood as the
relationship between its own subunits as it receives input from, and
produces output to other components of the organization or its environ-
ment. Thus, each level of analysis of the system (organization, component,
subunit, etc.) is both awhole with relations between subunits that must
be maintained and apart of alarger whole, with input and output
relations between other parts of that whole.
Systems are seen as the nested, hierarchical organization of relatively
self-contained sets of relationships between internal components, interact-
ing by input/output processes with alarger environment. This view is
important because it emphasizes that any "problem" with the organiza-
tion must be understood in terms of its internal and external relations. It
cannot be understood in isolation or out of context. Also, since organiza-
tions produce myriad outputs and are constituted by avery large number of
relationships, the role of managers as active determinants of the problems
they face (by defining inputs, outputs and relations of interest to them) is
made apparent.
The basic building block of the system approach is the notion of
input, process and output (see figure 1).
Environment
Input
Process Output
Fig. 1. Basic Input-Process-Output Model
The process can be left as an unexplained "black box," or can be
expanded to include any level of detail of boxes within boxes. Avery crude
application to alibrary would be as indicated in figure 2.
As afirst elaboration of this crude image, we will add the concept of
levels of decision-making. The decision-maker can be viewed as making
strategic, managerial or operational level decisions. At astrategic level, the
MIS TUTORIAL 13
Funds
Personnel
Clients
Publications
Other Resources
Access and
-^\ use of
holdings
Fig. 2. Application of the Input-Process-Output Model
decision-maker is concerned with defining and prioritizing goals and
objectives, and with securing the resources to achieve them. Here the
manager questions and refines the basic mission of the organization
what client's are emphasized, what type and scope of services are provided,
what will the character of the holdings be, what will the criteria for success
and performance evaluation be?
At the managerial level, the decision-maker takes as given the resour-
ces available, the statement of mission and priorities, and the standard of
performance evaluation. The problem is to arrange the operations, sched-
ule activities, and allocate resources for the purpose of effectively achieving
the strategic goals. The key idea here is effectiveness in the way the
organization is configured, and the way resources are allocated.
At the operational level, the decision-maker is concerned with the
details of procedures for carrying out organizational functions defined at
the managerial level. Here the emphasis is on efficiency in performance, on
reducing bottlenecks in flows through the system, and on removing unnec-
essary redundancy.
These three levels of decision-making are added to the basic input-
process-output model in figure 3. Each level of decision can be further
characterized by three stages of the decision-making process: intelligence,
design and choice.
Intelligence. This is the initial stageof adecision process in which the
manager is concerned with understanding the situation as abasis for
defining the need for action or identifying the need for decision-making.
The emphasis is on defining problems, threats, opportunities, and con-
straints that require action.
Design. At this stage, the decision-maker has identified adecision
problem, and is inventing alternative courses of action and developing
ideas for dealing with the problem. The recent emphasis on creativity in
14 RICHARD J. BOLAND, JR.
Strategic Relations with Environment
Managerial
Effectiveness
Operational
Efficiency
Input
Library System:
Component
Procedures
Communications
Flows
Output
Fig. 3. Diagram of Decision-making Levels Applied to the
Basic Input-Process-Output Model
management training attests to the need for more attention to this stage of
the decision process.
Choice. This stage is frequently discussed as if it comprised the whole
of management decision-making. Here, acourse of action is selected from
the set of alternatives that have been identified for meeting the needs of the
problem, as it has been defined. We can treat this process as one of pure
rational choice of the best alternative, or as asatisfying choice of one that is
"good enough."
These stages of decision-making are not atidy, linear sequence of
steps, but are an iterative, cyclical process in which our understanding of
the situation, the alternatives we are considering, and our evaluation of
those alternatives interact with each other over time. The cyclic, iterative
nature of decision-making is depicted in figure 4.
MIS TUTORIAL 75
Fig. 4. Diagram of the Cycles in the Decision-making Process
Decision-making at each stage and level discussed earlier can be
further characterized by the degree of "structure" they display. Structure
refers to the relative ease with which we understand and accomplish the
decision-making phases, and ranges from very well-structured decisions to
very ill-structured ones. Well-structured decisions are those that can be
fully specified such that a procedure can be designed to automate the
decision-making process. Ill-structured decisions are those that remain
incompletely specified and are ultimately dependent on human judgment'.
The basis for making those judgments rest on tacit understandings that are
never fully explicated.
Recently there has been increased attention on the development of
decision support systems. These systems use database, graphics, telecom-
munications, and simulation models to help managers make semistruc-
tured decisions where neither pure procedure, nor pure judgment prevail.
The emphasis is on supporting judgment by supplementing the managers
decision process with computer power in away that is understandable and
controllable by them.
So far we have introduced the notion of asystem with its nested set of
input, process and output relations, and we have surveyed the process of
management decision-making. Now, we add the perspective of the organi-
zation as asystem. For this we use the systems approach of C. West
Churchman. 1We understand organizations with asystems approach when
16 RICHARD J. BOLAND, JR.
we think of the organization with five basic considerations. They are:
(1) the resources of the system; (2) the environment of the system; (3) the
components of the systems; (4) the objective of the system; and (5) the man-
agement of the system.
Resources are everything the system can draw you in carrying out its
activities. This includes everything from cash and fixed assets to depend-
able procedures, to employee morale and client goodwill. Managers often
overlook potential resources and fail to take full advantage of their
possibilities.
The environment includes everything that is outside the system and
thereby outside of its control that impacts the performance of the system.
For the systems approach, defining the environment correctly and adapt-
ing to it successfully is the critical managerial function.
The components of the organization are its missions and functional
programs; that which its procedures accomplish. These production pro-
cesses of the organization may coincide with adepartmental structure, but
usually they will cross departmental lines, and are best conceived of as
organization-wide programs rather than activities of isolated subunits.
The objectives of the organization are the goals it tends to achieve.
These goals are contained in the recognized measures of accomplishment,
the criteria used for performance evaluation, and the organization's defini-
tion of purpose. One must be careful to distinguish the "real" from the
merely espoused objectives, and to observe how the organization actually
performs when characterizing its operating objectives.
The management of the organization is the responsible action taken
by its decision-makers. Here we emphasize the manager's involvement in
planning and control decisions. Planning decisions set standards, goals
and criteria over afuture time horizon, and control is aprocess of compar-
ing actual achievements with planned outcomes and taking corrective
action as needed. This is acybernetic feedback control process in which a
standard of performance is established, and results are compared to the
standard, prompting amanagerical response when necessary.
Application of the Systems View to Libraries
This section presents some images of the way the systems approach
can be used to observe and understand the purposeful activity of organiza-
tions. The nested cyclic, input/output transformations that characterize
the systems approach, as well as the cybernetic control process, lend
themselves well to the use of visual imagery.
The intent is that these visual images be used by the manager or
systems analyst as abasis for exploring the set of relationships that consti-
tutes the system, as well as abasis for generating other images and empha-
MIS TUTORIAL 17
sizing other relationships. In any event, the images are convenient ways of
organizing the systems concepts identified above, and applying them to a
library setting.
Figure 5presents avisual depiction of Churchman's systems approach.
It emphasizes the organization's relationship with critical factors in the
environment and the demand those relationships put on the system. As
elements are changed, the relationships that are emphasized are changed.
Also, any feature of the diagram (resources, access, acquisitions) can be
further elaborated for detailed exploration. For instance, the management
planning and control process can be expanded as indicated in figure 6.
1
1
Environment
1
1
18 RICHARD ]. BOLAND, JR.
Management Planning and Control
Strategies
Tactics
Operations
Intelligence Design Choice
Budgets, Standards,
Feedback, Rewards
Evaluation
Fig. 6. Management Planning and Control Process
At any level of detail that we wish to expand the diagram, we should
not only be concerned with identifying the missing details, but with
assessing the overall balance of the system, and using that assessment as a
basis for setting priorities. Focusing on one environmental relation while
ignoring others, or emphasizing one aspect of the decision-making process
over others is usually self-defeating.
The systems view also emphasizes the cyclic character of organiza-
tional processes. Figure 7is adepiction of the library as atwo-cycle system
of serving clients and building acollection interacting with an environ-
ment of knowledge creation and of publications. This basic model can also
be expanded, as in figure 8, to reveal subsystems in each cycle and their
interrelations. The process of expansion and exploration can continue as
each subsystem itself is depicted as acycle of interrelated activities. Once
again, the benefit of this type of analysis is to assist in identifying critical
activities and their interrelationships, unnecessary redundancy, weakness,
or overemphasis. In short, it helps to explore the question of balance
among the many competing demands placed on the organization.
The final image presented in this section is that of acybernetic control
process. For each activity in the system-in-environment diagram or in the
system-cycles diagrams, acontrol process is implied. The basic elements of
that control process are shown in figure 9. The model starts with the
familiar input-process-output diagram. Added to it is amonitor that
measures system outputs. The outputs are then compared to astandard,
goal or norm. Here the standard is shown as the prediction from amodel of
desired system functioning. If the comparison reveals adifference, an error
message is received by the manager, who activates achange in the system,
the inputs or the standard.
MIS TUTORIAL 19
Knowledge
Creation
Publications/
Distribution
Fig. 7. Representation of the Library as a Two-cycle System
Search
Strategy
Holding
Evaluation
Inquiry Acquisitions
Fig. 8. The Subsystem within the Basic Two-cycle System
The word cybernetic literally means "steersman" and refers to the fact
that communication processes set in motion by the output of an activity
stimulate corrective responses that tend to bring the outputs back in con-
trol. Thus, the system is brought into control by the act of going out of
control, and is an error-driven control process.
The cybernetic control model helps us explore the existence or ade-
quacy of the measures of system output, the feedback communication
channels, the model of desired system functioning, and the ability of a
decision-maker to take corrective action in atime frame that allows the
system to remain stable. If the response is too fast or too slow, the system
will display oscillations around the standard, but will not converge on it.
We generally recognize three orders of cybernetic feedback control.
First order feedback returns system outputs to an acceptable range, given a
standard goal. Second order feedback modifies the goal itself to maintain
20 RICHARD J. BOLAND, JR.
Model Prediction
Decision
Maker
Comparison
son
~~
Organizational
Resources
and Components
Monitor
Fig. 9. Diagram of the Basic Elements in the Control Process
an overall strategy in achanging environment, and third order feedback
modifies the strategy and purpose of a system based on alearning process
that questions the nature of the systems relation with its environment.
Implications for Deriving Management Information from Automation
We now add to the discussion above some further considerations in
designing management information systems.
The organization itself the way it is structured with routine proce-
dures and reporting relations is asource of management information.
These in-place procedures not only provide the positive or negative feed-
back that enables cybernetic control, they also define the organization's
ability to sense changes in the environment, react to disturbances, handle
exceptions, implement plans, achieve consensus, and revise plans. The
structure and process of the organization thus deserves as much attention
as the data processing support available to aparticular manager.
Another consideration is that the data system must fit the organiza-
tion. The style, climate and power that characterizes the management of an
organization is critical to effective information system design. Is the struc-
ture based on type of client served, library function, geographic location,
or amatrix combination? Is the structure centralized or decentralized,
formal or informal? Is there agreement on goals? How are unit heads held
accountable? What kinds of reward and status systems are in place? How
MIS TUTORIAL 21
freely does formal and informal communication occur? What style of
leadership does the organization display rational persuasion, inspira-
tion or empathy? How are these tied to the methods of motivating
employees? What degree of formality, concern for the privileges of office,
responsibility for worker security, and participation in decision-making
characterize the organization? Where does power rest in the organization?
How is it displayed and used? All these considerations are important
because they contribute to the crucial difference between data and informa-
tion. The data from an automated system will only be informative in an
organizational context. To realize its potential value, data must lead to
understanding and effective action, both of which are constrained by the
organization structure.
We observe that most organizations have alimited number of critical
factors that spell the difference between success and mere survival for an
organization. This limited number of critical factors follows from the
organization's strategic relations with its environment. Key decisions
related to these critical factors is where the effort of management informa-
tion support should be directed. There is practically no limit to the number
of decisions and management activities that could be identified and sup-
ported with automation. Most of them are not worth the effort. The value
of system development is maximized when those key decisions that affect
the critical success factors receive the focus of attention and effort.
Another consideration is that acybernetic control image emphasizes
the importance of standards of evaluation and models of system perfor-
mance. Unless there are standards to which actual outcomes are compared,
there can be no stimulus for corrective action. Unless there is at least an
implicit model of how the organization should be functioning and how
decisions should be made, there is no basis for learning. The definition of
standards for evaluation and the identification of the decision models
managers do or should use is perhaps the most significant outcome of
developing amanagement information system.
Data to provide management information may be generated from:
1. Reports from operations and transaction-based systems. The reports
can be regularly scheduled, ad hoc, or exception based, with content tied
to the level and type of decision being supported.
2. Access to database systems, both internal and external, that allow in-
quiry and special reports.
3. Modeling facilities that allow simulations, statistical analyses and
forecasts.
In addition to database access and statistical and graphic analysis, manage-
ment terminals can also offer time management, project management,
message management, and teleconferencing services.
22 RICHARD J. BOLAND, JR.
The types of decision support models that can be developed include:
1. probabilistic decision models, where the alternatives and payoffs identi-
fied by the decision-maker are combined with their expectations of the
occurrence of future events;
2. deterministic simulations showing how aclosed-system set of relation-
ships behave over time. Cash flow and budget projections are classic
examples of these simulations, and are the basis of financial planning
and control;
3. forecasting models where historical experience of demand, usage, etc. is
extrapolated to generate data for capacity planning and other purposes;
and
4. optimizing models, such as linear programming, where aset of con-
straints are taken into account in maximizing an objective function.
Perhaps the most common type of managerial support, however, is
provided by aset of search, sort and statistical programs tied to alarge file
representing aportfolio of objects for which the manager has responsibil-
ity. For instance, we have recently been involved in developing an acquisi-
tion support system for amedia center. It consists of afile of potential
acquisitions along with aboolean search procedure, sort and statistical
procedures, and areport generator. In the development of the system, there
were many critical technical issues that needed careful attention and
which, in some instances, constrained the design. Yet, the most crucial
issues in design centered on how the system was going to change the
location of decision-making on acquisitions, with some people losing
power and others gaining it.
Although the software of this system is powerful and flexible, its
effectiveness will depend on the quality with which managers rank target
areas and rate potential acquisitions. This kind of formal quantification is
anew behavior that must be learned. Finally, the boolean search proce-
dures are only as good as the questions the decision-makers will ask. The
system only presents apotential, and the manager alone has the possibility
to realize it which leads to the final implication.
The major reason for the failure of management support systems are
organizational not technical or economic. To be asuccess, the system
must be implemented and used. This is aquestion of organizational
acceptance and individual learning on the part of managers. There is no
clear recipe for implementation success, but some prominent features of
systems that succeed are:
1. that there is astrong felt need on the part of managers to develop the
system;
2. that top administration personnel supports and fosters the effort;
MIS TUTORIAL 23
3. that all affected parties are actively, meaningfully involved in the devel-
opment; and
4. the system is congruent with the climate, style and power of the organi-
zation.
The System Development Process
This section gives abrief overview of an ideal system development
process. The design, installation and evaluation of management support
systems is atightly woven cycle that displays an evolutionary, adaptive
learning capacity. It is an iterative, recursive process that is easily separated
into neat stages only in papers such as this. Figure 10 depicts the system
development process as beginning with asystem plan. My intention is to
highlight the need to identify the critical decisions needing support based
on the organization's strategic relations with its environment. The issues
of efficiency versus effectiveness discussed in section one must be resolved
in the planning process with atime-phased identification of priorities.
The plan should chart the organization's forward movement by maintain-
ing abalance among its key functions, and its level of managerial and
technical sophistication.
System
Planning
Review and
Evaluation ^Feasibility
Study
User
Experience
Operation and
Maintenance
Analysis and
Design
Fig. 10. Diagram of the System Development Process
24 RICHARD J. BOLAND, JR.
The planning process, combined with the experience of user groups,
creates afelt need for change and system development. It is this felt need for
change which should drive system design. The feasibility study is an
opportunity to assess the quality of this need and to test the economic,
technical and operational validity of the proposed development. It is
important here to focus on the decisions that will be supported, their
significance and the impact the system will have on them. This requires
that the study team understand the decision process in question, and that
they do not merely assume that automation will enhance it.
The proposal should be assessed in terms of its fit with the style,
climate and power of the organization and with the openness of the parties
involved to accept achange. This requires that there be adissatisfaction
with the existing state of affairs and awillingness to experiment and learn
new behaviors as agroup, as well as at an individual level.
Analysis and design requires active involvement and support between
the manager and the system analyst or technical experts. The best form of
this involvement combines asharing of design responsibility with asense
of mutual understanding, in which each participant respects and attempts
to understand the perspective and concerns of the other. This type of
involvement requires asignificant time commitment by managers, and if
they are not prepared to give it, perhaps the felt need is not as great as was at
first thought.
The analysis and design stage can follow atop-down or abottom-up
progression. Top-down entails movement from goals and objectives to a
logical system that meets their requirements, while bottom-up entails
starting with existing procedures and processes and designing an
improved system. Usually both used in conjunction with each other will
prove most effective. This is because the decision process is not just a
rational process of selecting best courses of action.
As mentioned above, the procedures, programs, offices, and routines
are an important, organizationally-embedded source of decision-making
and action. In fact, Iwould argue that most organizational decisions are
determined by the interaction of routine organizational procedures. The
decision process is also a political, disjointed one in which coalitions form
and dissolve as threats and opportunities change. Any analysis that
emphasizes the purely rational at the expense of appreciating the proce-
dural and political is risking implementation failure.
An evaluation of the design should be performed before programming
and testing. The risk of implementation failure should be reassessed, as
well as the value of the system to the intended decisions. Designs have away
of being modified over time and this provides atest that the expected
impact on crucial decisions has not been lost.
MIS TUTORIAL 25
Installation, operation and maintenance are beyond the scope of this
paper, except to say that structured approaches to design and program-
ming seem to produce systems with fewer errors and less delays. Also,
systems designed with structured techniques appear to require less effort
for maintenance and modification. Because of the significant percentage of
effort consumed by routine maintenance, this can have amajor impact on
the resources available for the development of new and improved systems.
Review and evaluation of systems after implementation is one step in
the development process that is frequently ignored. Yet the periodic review
of existing systems is necessary to weed out those that are no longer cost
effective. Industrial firms that have started determined efforts at postimple-
mentation reviews find many systems that are overly-sophisticated. These
firms are freeing up computer resources by shifting these applications
away from online and toward batch processing.
Perhaps most importantly, an effort at postimplementation review
focuses management attention on the all important questions of assessing
the efficiency and effectiveness of their organization. It requires defining
desirable outcomes that can serve as a basis for measuring the quantity and
quality of their output. Ultimately, this assessment of the efficiency and
effectiveness of outputs, and the identification of decisions critical to their
improvement is the driving force behind the entire system development
process.
Conclusion
This paper has briefly covered agreat deal of ground in surveying a
major part of the management information system area. While it could not
cover each area in the depth it deserves, the hope is to provide aframework
for management information support within which the other, more
detailed papers can find acommon ground.
REFERENCE
1. Churchman. C. West. The Systems Approach, 2d ed. New York: Basic Books, 1979.
ADDITIONAL REFERENCES
Emery, James C. Organizational Planning and Control Systems. New York: Macmillan, 1969.
Keen, Peter CW., and Scott Morton, Michael S. Decision Support Systems. Reading:
Addison-Wesley, 1978.
26 RICHARD J. BOLAND, JR.
Schoderbek, Charles G. Management Systems: Conceptual Conserations, 2d ed. Dallas,
Tex.: Business Publications, 1980.
Simon, Herbert A. The New Science of Management Decision, rev. ed. Englewood Cliffs,
N.J.: Prentice-Hall, 1977.
Tricker, Robert I., and Boland, R.J. Management Information and Control Systems, 2d ed.
London: Wiley, Chichesler, 1982.
