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ISDP2: Management information system – UNIT 1 THEORY OF MANAGEMENT

The system designs created by system analysts must operate within the confines of management structures. It is therefore vital for system analysts to have a grasp of the theory of management before conducting analysis and design. In any event, they will be dealing with managers a lot, so, understanding the mechanism of the management process makes it easier to anticipate the needs of managers in system designs.2.0 OBJECTIVESBy the end of this unit, you should be able to:• Explain the divisional structure of organizational management • Explain the functional approach to management• Describe the structure of the Strategic Information Center • Explain the various design alternatives in an Information Support System setting
  • Overview

It is useful to systems analysts to understand the management process. To accomplish this, we will develop a theory of management that has been tested and validated in a number of case studies. This theory is helpful in designing and implementing management information and decision support systems.

  • Management of Organizations

To begin with, the management of an organization is normally divided into three levels. These levels are strategic, tactical, and operational. The strategic level of management consists of top-level managers, such as the president and vice presidents. The tactical level consists of middle-level managers and decision makers and the operational level consists of lower-level managers and decision makers. The source of data and information, the presentation of information, and the use of information vary from one level to the next.

Strategic or top-level managers should have primarily external sources of data; the information should be summarized, and the use of the information is primarily external. On the other hand, operational or low-level managers should have primarily internal sources of data, the presentation should be detailed, and the use of the information is normally internal. Tactical or middle managers are somewhat between the strategic and operational managers, concerning the source, presentation, and use of information.

Since a management information or decision support system helps managers perform various managerial functions, it is important to understand how the levels of management perform these functions; In general, managers are responsible for planning, organizing, staffing, directing, and controlling. How managers and decision makers perform these functions depends on the managerial level (strategic, tactical, and operational).

The three managerial levels have slightly different orientations for the five managerial functions. Strategic managers are involved with long-range planning, high-level organizing, high-level staffing, overall directing, and overall control. Operational managers perform short-range planning, low-level organizing, low-level staffing, detailed directing, and detailed controlling. As before, tactical managers fall between strategic and operational managers.

The decision-making process also varies depending upon the level (strategic, tactical, or operational) of the particular manager. For strategic managers, the degree of problem structure is low, the time horizon is long, the amount of judgment is high, and each problem is usually unique. For operational managers, the degree of problem structure is high, the time horizon is short, the amount of judgment is low, and the decisions are usually routine. Tactical managers fall between these ranges in the decision-making process.

The Functional Approach to Management

During the initial development of MIS (Management Information System) and DSS (Decision Support System) concepts (see unit for further explanation of these concepts), the goal was to develop an integrated system. This system, theoretically, would be used by all managers and decision makers in the organization. Unfortunately, these systems were just too large and complex. As a result, many of the initial efforts ended in failure. This disappointing start prompted data processing personnel to seek better ways of developing these systems. Although there is no one best way, many organizations adopted the functional approach.

Most organizations are organized along functional lines or areas. This is usually apparent from the organization chart, which shows functional vice presidents under the president. Some of the traditional functional areas are:

(1) accounting, (2) finance, (3) marketing, (4) personnel, (5) research and development, (6) legal services, (7) operations/ production management, and (8) information services. Furthermore, each of these areas require different information and support for decision making. In addition, each of these functional areas within the organization contains the various levels of management described previously in this unit. Thus, in addition to horizontally slicing management into three levels (strategic, tactical, and operational), there is also a need to vertically slice management into the various functional areas.

Using a functional approach, a different information or decision support system is developed for the various functional areas and the different levels of management within each functional area, Thus, there would be a system for top-level managers in accounting, middle-level managers in accounting, lower-level managers in accounting, top-level managers in finance, middle-level managers in finance, lower-level managers in finance, and so on. Each system is designed to meet the particular needs of each group of managers.

When a functional approach is taken, it is necessary to try to relate or tie together the various management information and decision support systems. Otherwise, the organization might end up with a collection of disjointed and ineffective systems, With the increased use of data bases and data base management systems (DBMS), one way to unify and integrate the various systems is through a common data base. Data bases and data base management systems are discussed in the next supplement. Working with a common data base and a DBMS, it is possible to develop separate data bases and application programs for each functional managerial level.

 The Strategic Information Center

In order to help managers get the information they need when they need it, the overall concept of a strategic information center has been developed. A strategic information center has the overall purpose of providing managers with the information needed to make effective decisions. The strategic information center can be located within or outside the data processing department. The sole function of the center members is to be resource personnel for top-level managers and decision makers.

Most strategic information centers seek information for managers that is both internal and external to the computer system. When data is stored on the computer, members of the strategic information center develop programs and commands that obtain the information that managers want. In some cases, the desired information is not contained in computer files. Then, center members seek other sources of information, such as annual reports, trade journals, legal documents, newspapers and magazines, and advice from experts and consultants.

  • Design and Implementation Considerations

In the above sections, we have emphasized that different functional areas and different managerial levels require different management information and decision support systems. The differences discussed in the above sections should be taken into account in designing and implementing a management information system or a decision support system.


There are many design alternatives that can be used in an information and decision support system. The system can be centralized, decentralized, or distributed. A hybrid approach, where various components of the system can be either centralized, decentralized, or distributed is also possible. These components include hardware, software, personnel, data base, and control. For example, hardware and software can be decentralized, while personnel, data bases, and overall control are centralized. Another option would be to have the hardware and personnel decentralized while everything else is centralized. In other words, it is possible to centralize, decentralize, or distribute the hardware, software, data processing personnel, data bases employed, and overall control of the entire system.


The overall approach in designing and implementing an MIS or a DSS is the same for systems analysis and design. For a complete description of design and implementation procedures, refer to the unit on systems analysis and design. There are, however, problems and circumstances particularly important in the design and implementation of an MIS or a DSS.


  • Problems of Management and Information Systems


To begin with, there are a number of problems that have blocked the success of an MIS or a DSS. Some of these problems are:


  1. Lack of goals and objectives for the MIS or DSS.


  1. Lack of involvement of managers at all levels within the organization.


  1. Too much emphasis placed on technical aspects of the system,


  1. Not enough emphasis placed on human factors.


  1. Over reliance on data processing personnel.


  1. Lack of flexibility in the MIS or DSS.


  1. False assumptions made by data processing professionals in developing the DSS or MIS.


  1. Inability of data processing personnel to understand the needs of management during the design stage.


  1. An inadequate or misdirected implementation of the MIS or DSS.


  1. Inadequate control and ineffective evaluation and maintenance of the MIS or DSS after it has been installed.

One of the major problems in designing and implementing an MIS or a DSS has been due to human factors. Normally, there has been a resistance to these new systems and to change in general. Some managers have perceived these new systems as a threat to power, a threat to status and position, and a threat to financial and job security. Managers have also perceived these new systems as creating job and role uncertainties and ambiguities; changing the relationships between top- middle and lower-level managers, increasing job pressures, and increasing job complexity.


A successfully designed and implemented MIS or DSS overcomes the above problems or solves them before they become a serious threat. One solution suggested by many people is to get the managers involved in the new system. But involvement by itself is not enough. The involvement should directly tie them to the success of the system. One of the best approaches is to have the manager or user actually conceives or develops the solution. Managers should also be involved in evaluating the alternatives, selecting the best alternative, designing the new system, and implementing the new system. The overall objective is to make the new system the manager’s system.


During implementation, the new system should be marketed and sold to managers like a new product is marketed and sold to consumers. Some companies have used brochures, posters, and informal seminars with great success to advertise, promote, and personally sell the new system to managers. The actual implementation of the new system should be slow, smooth, and no threatening. The people in charge of the implementation are change agents. They need to have both good interpersonal and organizational development skills and good technical skills, The implementation process requires three phases: (1) unfreezing, (2) moving, and (3) refreezing. Unfreezing is the process of removing or eliminating the old procedures and systems; moving is the phase of having managers get used to the new system; and refreezing is the process of establishing new habits and behaviors concerning the use of the new system.




We have seen therefore how management information or decision support system helps managers perform various managerial functions. It is important for systems analysts and designers to understand how the levels of management perform these functions so that a more effective system of management of information can be designed for their organizations. In general, managers are responsible for planning, organizing, staffing, directing, and controlling. They can only do this efficiently if an effective interface is created for them.