Chapter 6:
Management Information Systems and National Security (55 questions)
Management information systems are valuable to professionals in the fields of security and law
enforcement. Assembling the pieces of crime investigations relies on the ability of MISs to scan
large amounts of information and identify relationships among them, relationships that combine to
create incriminating evidence.
On the federal level the United States National Security Agency (NSA) requires
information about U.S citizens and visitors. Travelers encounter a national security MIS when they
fly. Traveler’s names are entered into a system that checks them against records in two databases of
terrorist suspects: on known as the No-fly list, the other known as the Selectee list. Combined, these
are referred to as the Transportation Security Administration’s (TSA) watch lists. If your name is
found in either list, you might be refused transport or subject to a thorough search. People who are
mistakenly included on the watch lists can request an investigation and clearance, but often are
inconvenienced until the error is corrected.
While the TSA watch lists are designed to strengthen security, the new TSA
Registered Traveler System is designed to offer convenience. This MIS is being piloted in several
high-congestion airports to speed frequent travellers through security gates. Frequent flyers are
invited to provide identifying information so the TSA can conduct a background check and security
assessment to determine eligibility for participation in the program. If approved, the volunteer
becomes a “trusted traveler” and is eligible for an expedited screening process at TSA security
checkpoints. Participants provide both fingerprint and iris biometrics, allowing either biometric to
be used for positive identity verification at the airport.
The NSA made headlines in 2006 with an MIS that collected phone call records of
tens of millions of Americans and analyzed them for ties to terrorist activities. USA Today reported
that the NSA had been building database using records provided by three major phone companies AT&T Inc., Verizon Communications Inc., and BellSouth Corp. – but that the system “does not
involve the NSA listening to or recording conversations.” The MIS evaluates the mountains of
phone call data for associations to the phone numbers of suspected terrorists and provides reports
used in investigations.
Future generations of national MISs might provide an inventory of everyone living in
the United States, including name, birth date, sex, ID number, digital photograph, and address. This
inventory was made nearly inevitable recently when the Real ID Act was signed into law. The law
provides standards and specifications for state driver’s licenses that link the driver data in one large
distributed database. After collecting the data, it can be mined by federal and state government
information systems to reveal useful information. The federally approved ID card will be required
to travel on an airplane, open a bank account, collect Social Security payments, or take advantage of
nearly any government service. The information provided by the system will allow people in the
United States to be monitored to an extent that has never before been possible.
Privacy advocates take issue with allof the MISs mentioned in this sidebar. They
suspect that the MISs allow government to invade our private lives, and are concerned with the
accuracy and security of such systems. They fear that others outside the government might access
the information to build revealing databases that track spending, travel, and other private aspects f
our personal lives.
Discussion Questions:
1. How have management information systems provided safety for U.S. citizens?
2. How have management information systems inconvenienced U.S. citizens?
Critical Thinking Questions
1. How much information about yourself are you comfortable sharing with the government for
a national ID system?
2. Would you be willing to undergo an extensive background check to obtain shorter security
checks at airports? Do you think this is a fair system? Why or why not?
Fully Integrated Decision Support
Decision support tools are increasingly being integrated with management information systems and
day to business activities. Embedded DSSs are popular for helping to speed decision-making
processes. Companies such as Briggs & Stratton, Pharmascience Inc., and Alaska Airlines often use
DSS software tools and utilities to help them make better decisions and get more from their data.
Briggs & Stratton Corporation, based in Wauwatosa, Wisconsin, manufactures lawn
mower and garden tiller engines, and recently began using operational BI systems from SAS. The
new system will provide Briggs & Stratton employees with BI information embedded in
accounting, production and sales processes. “It is such a hot button for us right now”, said Grant
Felsing, decision support manager at Briggs & Stratton. “Show me those things that are within my
area that are not within norms or… are heading for a collision course”.
Felsing explained that the new system can alert accountants that correct accounting
procedures are not in place to handle orders as a new engine is set to be shipped. Befre the BI was
embedded in its processes, the company would have to take orders out of the system, reenter the
correct accounting information, and then reenter orders the next day to ensure that the products
would ship correctly.
“Businesses want to get more value out of all of the data, not just the data warehouse.
Many of the real-time decisions that need to be made must be made while the process is happening,
like while the customer is on the phone or when the patient is being treated,” said Keith Gile, an
analyst at Forrester Research Inc.
Montreal-based Pharmascience Inc. is hoping that the new operational BI integration
features will help the pharmaceutical company better manage inventory. Without the embedded BI
system, inventory information can be delayed by as much as a week, explained Jonathan Despres,
manager of information access. The new system with embedded BI will allow inventory
information to be included in product warehouse businesses process. “If (users) get information
delayed by a week, it’s almost impossible to reduce the inventory level,” Despres said.
Alaska Airlines Inc. has recently begun deploying business analytics tools from Siebel
Systems Inc. in its marketing organization. The tools will be integrated with Alaska Air’s customer
management system and will incorporate data from Sabre Holdings Corporation’sSabre reservations
system, according to James Archuleta, director of CRM at the Seattle-based airline. Call center
representatives will have quick access to the best options for customers to assist in travel decisions.
Decision support systems are evolving from stand-alone software tools to utilities embedded within
commonly used information systems. In business and in our personal lives, computers will be
advising us on many types of decisions that we make, big or small. As these systems play a larger
role in our day-to-day lives, the accuracy and intelligence built into embedded decision support
systems becomes increasingly important.
Discussion Questions
1. Why are the decision support systems described in this article considered institutional?
2. How does the information provided by an operational BI system differ from a standard MIS
report?
Critical Thinking Questions
1. How does using operational BI affect the day-to-day lives of business decision makers?
2. How might operational BI concepts be applied to commonly used personal information
management software such as a calendar application? Provide an explanation and example.
CASE STUDIES
Case one
American National Insurance Speeds Information to Customers with MIS and BMP
The goal of an effective management information system (MIS) is to improve a company’s business
processes. A business process is a set of coordinated tasks and activities that people and equipment
perform to accomplish a specific organizational goal. Working to make business processes more
effective and more capable of adapting to an ever-changing environment is commonly referred to as
business process management (BPM). MISs are at the core of BPM. A poorly designed MIS leads
to problems with business processes.
The American National Insurance Company had a problem with its MISs and business
processes in its customer service department. The company uses many legacy management
information systems. When a customer pones the company asking for information regarding a
policy, a customer service representative needs 10 or 11 minutes to find the required information
stored in several system. The rep needs to drill down into one system for part of the answer, log out,
drill down into the next system, and so on until the full answer is assembled. In the mean time, the
rep needs to keep the customer informed during the wait.
American National hired Pegasystems to develop an MIS to link all of its legacy
systems. Pegasystes business process specialists studied the types of queries the customer service
reps made and developed process models that covered the most common customer requests. Then
they designed a properly modelled and easy-to-use system to automate the collection of data fro the
legacy systems.
Today, when American National reps field calls from customers, they enter the
customer ID into the system, select the information requested from menus and wizards provided by
a custom interface, and typically have the desired information within 15 seconds. “Depending on
what the customer asks for, different business rules are enacted that take the customer service rep
down different paths,” says Gary Kirkham, vice president and director of planning and support at
American National.
The new system has satisfied the company’s primary goal: to but the customer service
rep in a position to help the customer as quickly as possible. Now the company is working n its
secondary goal: to optimize and automate business processes. For example, when a customer dies, it
used to require an effort from three American National Insurance employees to handle the
paperwork and business processes to manage the life insurance claim. These processes have been
optimized and automated. “Once Pegasystems knows an insured has expired, it processes
automatically all the things three people used to do,” Kirkham says.
Kirkham stated that the new system has increased sales in its annuity division from
$750million to $2,2 billion two years in a row. He credited the increase to the ability to keep
customer happy and to use the system to identify callers who will produce the most sales and
providing those clients with the priority they deserve.
Discussion Questions
1. How were poorly designed management information systems responsible for problems in
American National Insurance Company’s customer service business process?
2. How did American National Insurance Company use an MIS to turn a bad situation into an
advantage?
Critical Thinking Questions
1. How do you think American National found itself with information systems that were so
difficult to navigate?
2. Based on what you have learned throughout this book, what would you suggest as an
alternative but much more costly solution to American National’s dilemma (rather than the
one provided by Pegasystems)?
Case two
Transit New Zealand Reroutes Information to Avoid Traffic Jams
New Zealand’s state highway network takes drivers through 11,000 kilometres of some of the most
beautiful scenery in the world. Transit New Zealand´(TNZ) manages those highways, which carry
half the country’s traffic, to make sure that drivers have smooth and efficient routes to their
destinations. Unfortunately, until recently, the flow of information within TNZ was anything but
smooth and efficient. TNZ was in dire need of an upgrade to its management information systems.
The public face of TNZ provides drivers with information about the condition and
safety of its roads. Its main mission, however, is to work with external contractors and government
bodies that decide on highway building and maintenance projects. TNZ needed to freely exchange
information with all these constituencies but lacked the integrated information systems to do so.
“Our content was stored in several siloed systems,” says Geoff Yeats, TNZ’s chief
information officer. “This made it difficult for our employees to find the information they needed to
do their jobs. For example, to initiate a road repair project using the same contractor that had
worked on the road previously, we had to consult a number of disparate systems to find contractor
information, spec sheets for the old job and the new repairs, and the government road construction
standards that were current at the time. It took a lot of time.”
A siloed system is one that stands alone, disconnected from surrounding systems.
Such systems typically stand in the way of establishing on true integrated enterprise information
system. TNZ realized that what they needed was an enterprise-wide information management
solution so they could centrally manage information from all departments and save it economically
fro easy and timely retrieval. Because the information would be viewed by different groups f users
for different purposes, the system would need to present information in multiple ways.
If TNZ accessed organization-wide data from one central interface, the walls dividing
its siloed systems would have to come down. TNZ worked with an information system provided to
develop a document, records, and content management system within one repository. The new
system provided a consistent and customizable framework that let user access information through
scheduled, demand, and drill-down reports. The new MIS could also provide an interface to the
corporate applications and services that TNZ developed over time as needed.
The firs phase of the system provides access to documents of all types as well as
contact data form its customer relationship management and information held in its Road Asset
Maintenance Management database. This database is on of TNZ’s largest repositories of
information, containing millions of items of data relating to everything from the technical condition
of various stretches of road and maintenance records to details on traffic lights and signage. “You
can go into this database and find out what sort of gravel has been used to build a road and even
what the road surface characteristics are like,” says Yeats.
The new system also provides many other benefits. TNZ is better able to control costs
and manage the growth of its information while ensuring the currency and accuracy of that
information. Searches made across multiple systems are completed with subsecond response times.
Because the new system uses commonly recognized standards, TNZ road information can be
published through third parties simply by giving the vendor access to the information system.
The new system provides solid business value by integrating, analyzing, and
optimizing heterogeneous types and sources of information throughout its life cycle to mange risk
and creates new business insights. It is designed to get the right information to the right people or
process at the right time to take advantage of opportunities. “By responding to opportunities and
threats with information on demand, we can lower our costs, optimize our infrastructure, gain
control of our master data and m0anage information complexity,” says Yeats.
Future initiatives include electronic collaboration, browser-based content creation, and
a link with TNZ’s geographical information system. Because the system is designed to comply with
Java Specification Request (JSR) 170, an emerging standard for accessing content repositories, it
will be easy for TNZ to continue to realize benefits from the system.
Discussion Questions
1. How were siloed systems affecting the flow of information throughout TNZ?
2. What business value does the new system provide for TNZ?
Critical Thinking Questions
1. Provide two reasons that TNZ wanted to use commonly recognized standards such as JSP
170 in the design of its new system.
2. Why does TNZ find it beneficial to allow third parties to publish information stored in its
systems?
Questions for Web case
See the Web site for this book to read the Whitmann Price Consulting case for this chapter.
Following are questions concerning this Web case.
Whitmann Price Consulting: MIS and DSS Considerations
Discussion Questions
1. What different types of needs can MISs and DSSs fulfil in Whitmann Price’s new system?
2. Why did Whitmann Price decide to desing its own Calendar and Contacts MIS rather than
using standard BlackBerry software?
Critical Thinking Questions
1. How does the source of input differ between the MISs being designed for all consulting
areas and the DSSs uniquely designed for each consulting area?
2. How might a GSS be useful for consultants at Whitmann Price?
Summary
Principle
Good decision-making and problem-solving skills are the key to developing effective
information and decision support systems.
Every organization needs effective decision making and problem solving to reach its objectives and
goals. Problem solving begins with decision making. A well-known model develobed by Herbert
Simon divides the decision-making phase of the problem-solving process into three stages:
intelligence, design, and choice. During the intelligence stage, potential problems or opportunities
are identified and defined. Information is gathered that relates to the cause and scope of the
problem. Constraints on the possible solution and the problem environment are investigated. In the
design stage, alternative solutions to the problem are developed and explored. In addition, the
feasibility and implications of these alternatives are evaluated. Finally, the choice stage, the
decision makers evaluate the implementation of the solution to determine whether the anticipated
results were achieved and to modify the process in light of new information learned during the
implementation stage.
Decision making is a component of problem solving. In addition to the intelligence,
design, and choice steps of decision making, problem solving also includes implementation and
monitoring. Implementation places the solution into effect. After a decision has been implemented,
it is monitored and modified if needed.
Decisions can be programmed or nonprogrammed. Programmed decisions are made
using a rule, procedure, or quantitative method. Ordering more inventory when the level drops to
100 units of fewer is an example of programmed decision. A nonprogrammed decision deals with
unusual or exceptional situations. Determining the best training program for a new employee is an
example of a nonprogrammed decision.
Decisions can use optimization, satisficing, or heuristic approaches. Optimization
problems often have an objective such as maximizing profits given production and material
constraints. When a problem is too complex for optimization, satisficing is often used. Satisficing
finds a good, but not necessarily the best decision. Finally a heuristic is a “rule of thumb” or
commonly used guideline or procedure used to find a good decision.
Principle
The management information system (MIS) must provide the right information to the right
person in the right format at the right time.
A management information system is an integrated collection of people, procedures, databases, and
devices that provides managers and decision makers with information to help achieve
organizational goals. AN MIS can help an organization achieve its goals by providing managers
with insight into the regular operations of the organization so that they can control, organize, and
plan more effectively and efficiently. The primary difference between the reports generated by the
TPS and those generated by the MIS is that MIS reports support managerial decision making at the
higher levels of management.
Data that enters the MIS originates from both internal and eternal sources. The most
significant internal sources of data for the MIS are the organisation’s various TPSs and ERP
systems. Data warehouses and data marts also provide important input data fort MIS. External
sources of data for the MIS include extranets, customers, suppliers, competitors, and stockholders.
The output of most MISs is a collection of reports that are distributed to managers.
These reports include scheduled reports, key indicator reports, demand reports, exception reports
and drill-down reports. Scheduled reports are produced periodically, or on a schedule, such as daily,
weekly, or monthly. A Key-indicator report is a special type of scheduled report. Demand reports
are developed to provide certain information at a manager’s request. Exception reports are
automatically produced when a situation is unusual or requires management action. Drill-down
reports provide increasingly detailed data about situations.
Management information systems have a number of common characteristics,
including producing scheduled, demand, exception, and drill-down reports; producing reports with
fixed and standard formats; producing hard-copy and soft-copy reports; using internal data stored in
organizational computerized databases; and having reports developed and implemented by IS
personnel or end users.
Most MISs are organized along the functional lines of an organization. Typical
functional management information system includes financial, manufacturing, marketing, human
resources, and other specialized systems. Each system is composed of inputs, processing
subsystems, and outputs. The primary sources of input to functional MISs include the corporate
strategic plan, data from the ERP system and TPS, information from supply chain and business
transactions, and external sources including the Internet and extranets. The primary output of these
functional MISs are summary reports that assist in managerial decision making.
A financial management information system provides financial information to all
financial managers within an organization, including the chief financial officer (CFO). Subsystems
are profit/loss and cost systems, auditing, and use and management of funds.
A manufacturing MIS accepts inputs from the strategic plan the ERP system and TPS,
and external sources, such as supply chain and business transactions. The systems involved support
the business processes associated with the receiving and inspecting of raw material and supplies;
inventory tracking of raw materials, work in process, and finished goods; labor and personnel
management; management of assembly lines, equipment, and machinery; inspection and
maintenance; and order processing. The subsystems involved are design and engineering, master
production scheduling and inventory control, process control, and quality control and testing.
A marketing MIS supports managerial activities in the areas of product development,
distribution, pricing decisions, promotional effectiveness, and sales forecasting. Subsystems include
marketing research, product development, promotion and advertising, and product pricing.
A human resource MIS is concerned with activities related to employees of the
organization. Subsystems include human resource planning, personnel selection and recruiting,
training and skills inventories, scheduling and job placement, age and salary administration, and
outplacement.
An accounting MIS performs a number of important activities, providing aggregate
information on accounts payable, accounts receivable, payroll, and many other applications. The
organization’s ERP system or TPS captures accounting data, which is also used by most other
functional information systems. Geographic information systems provide regional data in graphical
form.
Principle
Decision support systems (DSSs) are used when the problems are unstructured.
A decision support system (DSS) is an organized collection of people, procedures, software,
databases, and devices working to support managerial decision making. DSS characteristics include
the ability to handle large amounts of data; obtain and process data from different sources; provide
report and presentation flexibility; support drill-down analysis, perform complex statistical analysis;
offer textual and graphical orientations; support optimization, satisficing, and heuristic approaches.
DSSs provide support assistance through all phases of the problem-solving process.
Different decision frequencies also require DSS support. An ad hoc DSS addresses unique,
infrequent decision situations; an institutional DSS handles routine decisions. Highly structured
problems, semistructured problems, and unstructured problems can be supported by a DSS. A DSS
can also support different managerial levels, including strategic, tactical, and operational managers.
A common database is often the link that ties together a company’s TPS, MIS, and DSS.
The components of a DSS are the database, model base, user interface or dialogue
manager, and a link to external databases, the Internet, the corporate intranet, extranets, networks,
and other systems. The databasecan use data warehouses and data marts. A data-driven DSS
primarily performs qualitative analysis based on the company’s databases. Data-driven DSSs tap
into vast stores of information contained in the corporate database, retrieving information on
inventory, sales, personnel, production, finance, accounting, and other areas. Data mining is often
used in a data-driven DSS. The model base contains the models used by the decision maker, such as
financial statistical, graphical, and project-management models. A model driven DSS primarily
performs mathematical or quantitative analysis. Model management software (MMS) is often used
to coordinate the use of models in a DSS. The dialogue manager provides a dialogue management
facility to assist in communications between the system and the user. Access to other computerbased systems permits the DSS to tie into other powerful systems, including the TPS or functionspecific subsystems.
Principle
Specialized support systems, such as group support systems (GSSs) and executive support
systems (ESSs), use the overall approach of a DSS in situations such as goup and executive
decision making.
A group support system (GSS), also called a computerized collaborative work system, consists of
most of the elements in a DSS, plus software to provide effective support in group decision-making
settings. GSSs are typically easy to learn and use and can offer specific or general decision-making
support. GSS software, also called groupware, is specially designed to help generate lists f decision
alternatives and perform data analysis. These packages let people work on joint documents and files
over a network.
The frequency of GSS use and the location of the decision akers will influence the
GSS alternative chosen. The decision room alternative supports users in a single location who meet
infrequently. Local area networks can be used when group members are located in the same
geographic area and users meet regularly. Teleconferencing is used when decision frequency is low
and the location of group members is distant. A wide area network is used when the decision
frequency is high and the location of group members is distant.
Executive support systems (ESSs) are specialized decision support systems designed
to meet the needs of senior management. They serve to indicate issues of importance to the
organization, indicate new directions the company might take, and help executives monitor
company’s progress. ESSs are typically easy to use offer a wide range of computer resources, and
handle a variety f internal and external data. In addition, the ESS performs sophisticated data
analysis, offers a high degree of specialization, and provides flexibility and comprehensive
communications abilities. An ESS also supports individual decision-making styles. Some of the
major decision-making areas that can be supported through an ESS are providing an overall vision,
strategic planning and organizing, strategic control, and crisis management.
Review questions
1. What is a satisficing model? Describe a situation when it should be used.
2. What is the difference between intelligence and design in decision making?
3. What is the difference between a programmed decision and a nonprogrammed decision?
Give several examples of each…
4. What are the basic kinds of reports produced y an MIS?
5. What guidelines should be followed in developing reports for management information
systems?
6. What are the functions performed by a financial MIS?
7. Describe the functions of a marketing MIS.
8. What is a human resource MIS? What are its outputs?
9. List and describe some other types of MISs.
10. What are the stages of problem solving?
11. What is the difference between decision making and problem solving?
12. What is a geographic information system?
13. Describe the difference between a structured and an unstructured problem and give an
example of each.
14. Define decision support. What are its characteristics?
15. Describe the difference between a data-driven and a modeldriven DSS.
16. What are the components of a decision supports system?
17. State the objective of a group support system (GSS) and identify three characteristics that
distinguish it from a DSS.
18. Identify three group decision making approaches often supported by a GSS.
19. What is an executive support system? Identify three fundamental uses for such a system.
Discussion questions
1. Select on an important problem you had to solve during the last two years. Describe how
you used the decision-making and problem-solving steps discussed in this chapter too solve
the problem.
2. Describe how an MIS can be used at your school or university.
3. How can management information systems be used to support the objectives of the business
organization?
4. Describe a financial MIS for a Fortune 1000 manufacturer of food products. What are the
primary inputs and outputs? What are the subsystems?
5. How can a strong financial MIS provide strategic benefits to a firm?
6. Why is auditing so important in a financial MIS? Give an example of an audit that failed to
disclose the true nature of the financial position of a firm. What was the result?
7. Describe two industries where a marketing MIS is critical to sales and success.
8. You have been hired to develop a management information system and a decision support
system for a manufacturing company. Describe what information you would include in
printed reports and what information you would provide using a screen-based decision
support system.
9. Pick a company and research its human resource management information system. Describe
how its system works. What improvements could be made to its human resource MIS?
10. You have been hired to develop a DSS for a car company such as Ford or GM. Describe
how you would use both data-driven and model-driven DSSs.
11. Imagine that you are the CFO for a service organization. You are concerned with the
integrity of the firm’s financial data. What steps might you take to ascertain the extent of
problems?
12. What functions do decision support systems support in business organizations? How does a
DSS differ from a TPS and an MIS?
13. How is decision making in a group environment different from individual decision making,
and why are information systems that assist in the group environment different? What are
the advantages and disadvantages of making decision as a group?
14. You have been hired to develop group support software. Describe the features you would
include in your new GSS software.
15. The use of ESSs should not be limited to the executives of the company. Do you agree or
disagree? Why?
16. Imagine that you are the vice president of manufacturing for a Fortune 1000 manufacturing
company. Describe the features and capabilities of your ideal ESS.