KCB ID: 4748

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University of Wales
Prifysgol Cymru

MBA
Managing Information Systems
Lecturer: Mr. Cilliers Diedericks
Student ID: 4748
Words : 3295

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“The ultimate goal of any Management Information System (MIS) is

optimization” (Jackson D. Ford 1987).

An integrated MIS should achieve optimization by performing the following

three main functions for the organisation that it is applied into:

1. Provide information across various departments

2. Facilitate decision making at the three tiers of management

3. Serve as efficient means for managing business processes

Organisations can either provide “service” or “manufactured goods” as their

product or more commonly a combination of both.

For this essay you are required to look at the application of integrated MIS in a
“service” based or a “manufacturing” based organisation and critically evaluate
how this has helped them to improve their performance in the context of the
three main functions defined for an integrated MIS above.

Table of Contents
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Introduction……………………………………………………..
……...........................................4

The IT Productivity Paradox……………………………..

……............................................5

Key Systems Applications and their interrelationship……………..

…....................…6

Unified Manageability Architecture – an integrated MIS in

Dell….......………...….7

Dell’s integrated MIS providing information across various

departments while facilitating decision making at the three
tiers of management...........................9

Dell’s integrated MIS serving as an efficient means for

managing business
processes.....................................................................................
…………...………12

Conclusion – Challenges &

Recommendations…………………………………………..….14

Indexes............................................
………………………………………………………..……..16

References...................................................................................
......................18

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Introduction
Organisational decision making has become more complex because of the ever-changing
external environment. Globalisation forces like technology, political & legal, social &
cultural, economical, ecological and many others all seen to be constantly changing while
affecting businesses and changing the way business is done referred to as the Behavioural
Theories. Companies need to develop a sustainable competitive advantage by focusing on a
core capability.

The latest business trend is outsourcing (Doh, 2005; Mol et al, 2005) which can only be
successful if there is a strong relationship management (Tompkins et al., 2006). Managing
relationships within, in between organisations and most importantly across the supply chain
members across different borders can largely be enhanced through the use of IT (Wang et al.,
2006).

Dell has been chosen for this assignment to show how successful the implementation of IT
has been in its worldwide operations, through its exceptional virtual and integrated value
chain consisting of its customers, supplier, distributors, business partners etc. (Figure 1).

Figure 1: A virtually integrated value chain e.g. Dell (Source: Laudon & Laudon, 2006)

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A brief overview on Dell can be seen in Index 1.This assignment sheds some light on how the
application of an integrated MIS in Dell has brought optimization and consequently how it
has helped the company to improve its performance by providing information across various
departments, facilitate decision making at the three tiers of management and how it has
served as an efficient means for managing business processes. An important characteristics of
IS integration is the degree to which organisations can share databases through the
coordination of activities. During that process, different business units will also need access
to the right data about the activities of different departments (Goodhue et al., 1992 cited in
Bhatt, 2000).

A manager can effectively design and manage information systems of a company only by
analysing it closely for example its common and unique features. The structure of Dell for
example, classified as a divisional bureaucracy (ranks 33rd on the Fortune500 2009 list)
would be of great help to a manager in understanding its information systems across and
along that structure. According to Joan, (1998), Dell’s performance in the global IT has
earned the company production efficiencies like flexibility and improved speed.

The IT Productivity Paradox

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With a change of the full implementation of IT in a company, significant changes can be

brought to the products, markets, and society as a whole (Chan, 2000). On the contrary,
according to Carr (2003), IT cannot be used as a differentiating factor to outdo competitors.
He claimed that IT can be purchased in the marketplace, can easily be imitated and is thus
just a mere commodity based on the Internet which most companies can freely get access to.

Dell has defied Chan’s claims by being highly successful through the use of IT as a
differentiator to outperform its rivals. Also many well known studies by leading researchers
have found that IT/IS can bring a significant positive effect to a firm’s productivity
(Brynjolffson and Hitt, 1996; Guimares 1997; Dewan and Kraemer 1998). Based on all these
differed views, Brynjolfsson, (1993) brought forward the “IT productivity paradox” which
reveals the optimistic and pessimistic views of IT as a contribution to business value.

To optimize the returns from IT Investments, it needs to be complemented with social assets
(e.g. internet, IT training, rule & regulations), managerial assets (e.g. flexible management
and knowledge based decision making) and organizational assets (e.g. culture, efficient
business processes). Several studies show that if IT is complemented with the other assets,
superior returns would accumulated and vice versa (Brynjolfsson and Hitt, 2000; Davern and
Kauffman, 2000; Brynjolfsson, 2003; Marchand, 2004). That is where Dell comes in.

Key Systems Applications and their interrelationship

Traditionally IT was mainly characterised by the Office Automation System (OAS) involving
word-processing programs and desktop publishing. It then spread beyond clerical support
with the introduction other IT applications such are the Transactional Processing Systems
(TPS), Decision Support Systems (DSS), Management Information System (MIS) and
Executive Support Systems (ESS). Due to diversification of the information communication
systems (ICS) including videotext, email and some vertical and horizontal integration of
technologies, the primary functions of these systems which were helping and facilitating of
business processes have changed.

These enterprise systems (ES) allowed bypassing of the traditional organisational hierarchy
by allowing interdepartmental linkages and by cutting across the three tiers of management
leading to better integration and achievement of synergy. Intelligence has also been added to
the information systems (e.g. Intelligence Support Systems (ISS), Data Warehousing Systems
(DWS) and Knowledge management system (KMS). The pyramid below (Figure 3) shows
the specific categories of systems serving each organizational level and their value to the
organization. A brief definition of each of these systems is given in Index 2.

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Figure 3: The specific categories of systems serving each organizational level and their value
to the organization (Source: Laudon & Laudon, 2006)

All the key systems above are interrelated to each other while helping to maximise efficiency
and effectiveness of the overall company’s performance (Figure 3).

Figure 3: Interrelationship of systems

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Source: Laudon & Laudon, 2006

Unified Manageability Architecture (UMA) – an integrated MIS in Dell

The roles, efficacy and integration all the key applications shown above are going to be
analysed based on the Dell Company. Named as the Unified Manageability Architecture
(UMA), Dell’s integrated management system has been described as a layered management
model to organize and plan the required aspects to manage products both for in-band and out-
of-band managers as well as for increased public access. It has been designed for increased
manageability and interoperability at a lower cost (Transaction cost theory) and more
efficient decision making at the different levels of the structure. The company’s system
management hierarchy is shown in Figure 3 below.

“Every PC that Dell manufactures is already sold”, (Chen & Popovich, 2003). This statement
holds because the structure of Dell is designed as such that it allows the company to
customize software, hardware, peripherals as well as services which are provided directly to
the customers (Michael S. Dell, 1994). Unlike many companies which have lost track of their
customers, Dell has instead seen customers as a driving force and has therefore established
connections with new and existing customers to increase their long term loyalty by using IT
based customer relationship management (CRM) applications.

Figure 3: Dell’s System Management Hierarchy called the Unified Manageability

Architecture (an integrated MIS)

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Source: www.dell.com

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Dell’s integrated MIS providing information across various departments

while facilitating decision making at the three tiers of management

Dell’s hierarchy is divided into three main layers namely the operational, the tactical and the
strategic level. The operation level of Dell’s system is called the Platform management which
consists of all configurations, monitoring and all diagnostics. That level being highly
dependent on TPS, allows for more accurate and quicker accessibility to information help to
deal with customers queries. Since a bigger emphasis is being laid on the sales and marketing
function, the main TPS application systems for that department are Sales order information
system (Sales Management), Market research (market research), and Pricing system (mainly
for pricing, promotion and new products).

The tactical level of management named the Group management is broken down into scheme
and function. The different functions include provisioning, change management, job
scheduling and event automation. The CRM application links the front office that is sales,
marketing and customer service (operational level of management), to the back office that is
account & finance, operations, transport & logistics and the HR functions (tactical level of
management) with the company’s customer touch points which include the Internet, sales
direct mail, e-mail, telemarketing operations, call centres, advertising.

At that level, the lives of middle managers are made easier as the Customer Relationship
Management (CRM) system interacts with KMS, MIS and DSS to extract, manipulate and
retrieve data quickly for various analyses such as profitability, customer profiling and
customer retention modelling which then lead to efficient and effective decision making in
Dell. Dell has successfully been able to use its KMS where people exchange and share
personal or public or organisational knowledge for further research (E.g. Idea Storm
(customers interaction) and Employee Storm (staff interaction) in Dell).

This unique core competence through the production of competitive knowledge in turn helps
the DSS in bringing new products and services to life. The DSS does not involve any
professional programming but does supports decision making by gathering data through user
controls inputs and outputs and through the use of sophisticated modelling tools. The MIS
application helps with structured and semi-structured decisions as it uses high volume past
and present data, process them using simple models and the output are normally in the forms
of summary reports like the Annual Reports of a company.

The strategic level referred to as the Enterprise systems management is divided into longer
term planning which includes resource management and business management for strategic
level managers. For the strategic level of management, the CRM system helps with data
analysis tools and advanced data consolidation in the form of summarised or more detailed
report while interacting with the ESS. At that level, CRM application also works together
with other applications such as DWS and Enterprise Resource Planning (ERP) systems.

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DWS collects “islands of customer data” in Dell by combining all databases and all operation
based systems such as HR, Sales & Marketing and TPS, financials data, inventory,
purchasing systems to allow Dell’s strategic decision makers to have instant access to
information transformed by Expert Systems (ES) allowing ‘what if’ questions to be asked to
be able to forecast and plan well ahead of time.

Below is an example of what happens when a customer puts in an order at the initial stage of
the operational level and how data is then passed on to various departments while at the same
time facilitating decision making at the three tiers of management.

A customer initiates the sales process from keyboard-to-server (other ways include face-to-
face, ear-to-ear sales). Through the internet Dell’s customers can choose the configuration of
their own system from a combination of thousand of hardwares and softwares accompanied
by a user friendly system which gives out progress updates and delivery dates (Chen &
Popovich, 2003). At the tactical level, the accounts department receives the data from the
TPS at the operational level, verifies the financial credit charge instantly and send the
information back to the TPS to confirm the order with the customer to be delivered in five
working days.

Data collected from the TPS is also passed on to the manufacturing department/ business unit
in the form of a print out of the order and manufacturing begins within hours. Once checked
and inspected, the computer is boxed in the packaging department who then send it off to the
distribution and logistics department/centres. From there, the computer is shipped to an agile
supplier who matches up with the computer with the correct monitor by data received from
the TPS through the purchase order and sent to the customer through a next day delivery.

At the strategic level, data and information is gathered from all the different departments and
from all the different system at those levels to help, support, forecast and plan (e.g. through
sales trends) the future for the overall company or even industry. This overall system of Dell
is a work of art based on three guiding principles which is the key to success:

• Standards Based – Non-proprietary and openly available

• Scalable and Flexible

• Industry Adoptable – consistent with other complementary standards

In present day through its IS, Dell has created its customised ‘leagile’ (lean-agile hybrid
created by Naylor et al. 1999) supply chain while benefiting from the four key business
metrics of the Mason-Jones et al. (2000) model namely quality, lead-time, cost and
availability, Christopher and Towill, (2000). Dell needs to remember that the importance of
these key metrics changes with time especially if new market winners emerge. Dell also
satisfies Johansson et al. (1993) equation shown below which is expressed in terms of value
delivery in a business:

Total value = Quality * Service level

Costs * Lead-time

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Christopher and Towill, (2000), also mentioned two decoupling points behind the success of
a leagile supply chain which is material and information. According to these authors,
information should lie as far as possible upstream in the supply chain and that is the furthest
point where the real actual demand penetrates (TPS). This theory shows the importance of IS
which allows the right data and information to become accessible in the correct format to the
right department as well as right level of management and how the overall performance of a
company can be improved.

Several companies tried to copy Dell’s integrated system approach. Compaq has tried to
change from indirect to direct distribution channels but without any luck. The main reason
behind this is Dell’s capital asset (integrated information system) which includes a set of
systems that support and serve the custom configuration process and the agile ability to
respond to its customers in a timely manner and which cannot be easily imitated (Chou et al,
2004).

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Dell’s integrated MIS serving as an efficient means for managing business

processes
The rest of this assignment is based on how an integrated MIS has served as an efficient
means for managing business processes and improves performance. Enterprise wise Business
Processes does not finish within an organisation’s four walls (for e.g. departments/ functions)
but also integrate its customers, best-of-breed vendors/partners like Dell, suppliers leading to
extensive operational efficiencies and also profitability (McNurlin, 2001 cited by Davenport
et al, 2004). Other authors emphasised on the linkages of companies into industry-wide
system. Champy, (2002) talked about a bigger emphasis in today’s world which is inter-
organisational business processes.

The process-oriented approach argues that “IT improves business performance through
enhanced specific business processes, capabilities or structures”, Jean et al, (2008). Through
the application of the Resource Based View Theory (RBV) in IT business value, it has been
found that IT on its own cannot be linked directly to improved business performance (Pavlow
and Sawy, (2006). It can only be the case if IT interacts or enhances with higher order
business processes and capabilities of an organisation (Jean et al, 2008). Such business
processes can be for example supply chain relationships (Subramani, 2004).

According to Lindgren and Bandhold (2003), value chain is a way of describing the internal
and external activities and processes of a company and analysing them in terms of the
company’s strengths and weaknesses. Dell has successfully created a robust business model
by analysing and choosing exactly the right value chain processes that it would like. By
supplying directly to its customers, Dell has merged the notion of supplier and customer
relationship management (Margretta, J. 2002). This has without any doubt allowed Dell to
compete better than its competitors through vital customer information and at the same time it
has successfully been able to avoid high holding inventory costs as well as high obsolescence
costs due to the rapid change of technology through this Just-in-time approach (Walters and
Rainbird, 2007).

Process management and innovation allows “virtuality to become reality” (Walters and
Rainbird, 2007). “According to Dell, for example, virtualisation has enabled them to boost
processor utilisation rates beyond 20%, resulting in the decommissioning of around 8,000
servers and the shutting down of two data centres in 2009, saving $38m on annual IT training
costs” (Key Note, 2010).

By collaborating with different complementary business partners (Agency Theory) using

value chain, Dell has been able to create and maximise value delivered to customers and
create a competitive advantage. Through this cooperation with its myriad of suppliers, Dell
has been able to benefit a lot. It has been able “to leverage suppliers’ tangible and intangible
assets together with the ability to reduce the company’s operating cycle, cash cycle and
transaction cost (Transaction cost theory) which has created huge competitive advantage for
the company”, Walters and Rainbird, 2007). A robust and efficient Information
communications technology between Dell and its partners is of vital importance to success

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achieved. Such a model has nurtured innovations which were mainly associated with the
integration of KMS, SCM and CRM.

Many authors have agreed with the benefits which can be reaped when teaming up with
competitors like inter-partner learning (Dussage et al, 1999), greater force and power to forge
into new markets while pooling resources together (Johnsen and Johnsen, 1999). But on the
other side there is always the threat of trust and fear of over-sharing crucial corporate
information and knowledge which might threaten the market position of one company if used
by competitors (Bernal et al, 2002). Such relationships are normally bonded by networks
sharing but sometimes those complex interdependencies of networks (for e.g. industry hubs)
cannot be controlled or coordinated but can only be managed (Ford et al, 1998).

“Only high-tech companies that align their business models with the hypercompetitive future
(one in which horizontal, not vertical, business models offer strategic advantage) will
succeed. Those that don’t will falter”, (Kapur et al, 2003). That is one of the reasons why just
like IBM, Dell Computer has successfully been able to hold steady or declined slightly
compared to other companies which plummeted down by forty percent or more during the
mid-2000 when the economy was stumbling. At the same time, Dell believes “more in a
vertically connected enterprise than a vertically integrated enterprise” (Michael S. Dell,
1994).

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Conclusion – Challenges and Recommendations

Most of the challenges of the Enterprise System can be deduced from the key factors driving
realization of ES values (Davenport et al, 2004) pictured below in figure 2. The ES allows
management to have an enterprise-wide view of how a company is performing on the overall.
The unfortunate side of it is requires massive amount of time to be spent, huge amount of
investment and high upfront costs and it comes with the daunting difficulties faced in the
extensive implementation. Even after implementation, problems crop up when it comes to
integrate, optimize and informate.

Figure 4: Key factors driving the realizing of ES values (Source: Davenport et al, 2004)

The major sufferers are the bigger companies which need to integrate hundreds and
sometimes even thousands of different systems applications serving different levels of the
management tiers and the various business units/functions involved. What companies need to
do before engaging in such massive integration is weighing their needs of integration against
the large-scale difficulties which are going to accumulate. Is it really worth it?

Though integration brings money savings, quicker communications and improved decision
making, integration is much more complex as it is an ongoing process which can take years
to be completely automated (Bernal et al, 2002). To surmount this problem, recommendation
s include the implementation of centralised shared services while some companies have gone
beyond that by sharing hardware, softwares or core business processes with other firms
(Bernal et al, 2002). Another approach Hagel, (2002) is the employment of Enterprise
Application Integration (EAI) web services or tools to make applications compatible to each
other. If not, then organisations need to collaborate and agree on key information and
business processes which is often a painful process.

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Customisation of ES can bring optimization through more efficient alignment between

required processes and systems . To achieve it, companies need to make sure that non-IT
employees and managers are properly educated about the implications of the new system on
the processes and allow them to get use to the system. ((Bernal et al, 2002)). Just like
managers have to live with the system before optimization occurs, the same applies to the
process of informate which is an evolutionary process where managers and professionals
must learn how to sift out good business information from a massive amount of transactional
data and how to make the most efficient use of those data or information.

Organisations seeking to deal with that kind of problem should implement new ES functions
such as performance measurement applications for e.g. a balanced scorecard application to
track performance while handling information requests quicker and to generate new insights
into operations through the analysis of management information. Data warehouses, portals
and adhoc reporting functionality for employees are also useful and allow the company to
come up with improved quality data.

Dell has been able to realize and accelerate value from its ES as that company has invested
the time and resources needed to get a critical mass of implementation and capitalize on
better integration, seamless flows of data and information between departments, business
units and geographies. Also unlike many firms trying to play safe by adopting a bifocal
approach on short term and long term benefits, Dell has instead wisely prioritized its benefits
and consequently created corresponding action plans to achieve them. Its integrated MIS has
successfully achieved its ultimate goal of optimization (Jackson D. Ford, 1987).

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Indexes
Index 1: Dell Corporation Ltd

The UK computer hardware market is dominated by the major international producers, HP,
Dell, IBM, Canon, Sun Microsystems and others. Dell Corporation Ltd is part of the US giant
Dell Inc and markets and distributes computer hardware products in the UK. It holds the
second position behind HP (23%) with a market share of 21 %. Dell as a global computer
hardware supplier and peripheral specialists focuses almost entirely on computer
hardware/peripheral production and sales across many end-user sectors. Dell Inc develops
and manufactures servers, networking systems, storage products, workstations and other
peripherals along with computer software and services.

Customers are diverse, from householders and students to large conglomerates and
government departments. Dell is a leading provider to small- and medium-sized businesses
internationally. The company sells its products and services to customers through sales
representatives, telephone-based sales, retailers and directly online, as well as through various
indirect sales channels. Dell products are sold through 40,000 commercial sales partners and
in 30,000 consumer retailers globally.

During its fiscal Year (FY) 2009, it accumulated revenue of $61.1bn and employed 78,900
employees. During 2008-2009, Dell reduced its global workforce by 9,000 people to cut costs
following a drop in demand in 2009 with the largest decline in business markets. Most of the
employees are mainly involved in sales, marketing and distribution because everything else is
outsourced from low-cost usually Asia-based manufacturing countries. Assembly operations
for Europe are based in the Republic of Ireland, where Dell is the country's largest exporter
and second-largest company overall.

Current and Future Developments

Throughout 2008/2009, Dell has been developing its capabilities in existing product lines and
acquiring new technologies, particularly in servers, storage, services and software. They are
developing more into enterprise computing including data centres; secure, energy-efficient
virtualized servers; high-performance, standards-based storage solutions optimized for
virtualization; new managed and Internet-based cloud services; and infrastructures for other
cloud providers.

In October 2009, Dell launched the new Inspiron 11z, which is the thinnest and lightest
Inspiron Dell offers. It falls between a netbook and laptop in offering both portability and
strong functionality. The new laptop is based on the Intel's ultra low voltage chips. In
September 2009, Dell announced that it has agreed to buy Perot Systems, an IT services
company, for $3.9bn. The acquisition is part of Dell's strategy to expand beyond PCs and into
services. Perot Systems specializes in services for infrastructure, business processes,
technology, applications and consulting.

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Index 2 : A brief and explanation of each of the six key systems applications of a business.

As a manager, it is very important to know exactly how information systems can help an organisation.
He/ She needs to understand which types of information systems are available to a company and what
they can do.

The six major types of Information Systems are:

• Executive Support System (EES)

• Decision Support System (DSS)
• Management Information System (MIS)
• Knowledge Management System (KMS)
• Office Automation System (OAS)
• Transaction Processing System (TPS)

ESS

“Executive information systems (EIS) are user-friendly computerized systems designed specifically to
provide selected and summarized information from diverse sources in a form that permits access,
analysis and presentation to assist top level management”, (Collier & Dixon, 1994).

DSS

“DSS help managers make decisions that are unique, rapidly changing, and not easily specified in
advance. They address problems where the procedure for arriving at a solution may not be fully
predefined in advance thus having more analytical power than any other systems”, (Laudon &
Laudon, 2006).

MIS

A commonly cited definition is provided by Davis and Olsen (1985), who describe an MIS as “an
integrated, user machine system for providing information to support operations, management, and
decision making functions in an organisation”, (Davenport et al, 2004).

KMS

Knowledge management systems collect all relevant knowledge and experience in the firm and make
it available wherever and whenever it is needed to support business processes and management
decisions. They also link the firm to external sources of knowledge, (Laudon & Laudon, 2006).

OAS

“Office information systems (OIS) are concerned not only with the administrative process of the
company (document processing, electronic mail and executive support systems – electronic diaries,
directories, memorandum files, etc.), but also with access to wider information sources” (Collier &
Dixon, 1994).

TPS

“A transaction processing system is a computerized system that performs and records the daily routine
transactions necessary to conduct business. Examples are sales order entry, hotel reservation systems,
payroll, employee record keeping, and shipping”, (Laudon & Laudon, 2006).

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Mason-Jones, R, Naylor, J.B, Towill, D.R (2000); "Engineering the leagile supply chain",
International Journal of Agile Management Systems
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No.January.

Michael S. Dell (1994); “Making the Right Choices for the New Customer”, Managing
Service Quality, Vol 4, Issue 2, pp 22 – 25

Mohsen Attaran, (2003); “Information technology and business-process redesign”, Business

Process Management Journal, Vol 9, Issue 4, pp 440-458

Mol et al (2005); "Antecedents and performance consequences of international outsourcing",

International Business Review, Vol. 14 No.5, pp.599-617

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Naylor et al, (1997); "Leagility: interfacing the lean and agile manufacturing paradigm in the
total supply chain", International Journal of Production Economics, Vol. 62 pp.107-18.

Pavlou et al, (2006); "From it leveraging competence to competitive advantage in turbulent

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Srinivas Talluri (2000); “An IT/IS acquisition and justification model for supply-chain
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Books:

Laudon & Laudon, (2006) Management Information Systems: Managing the Digital Firm, 9th
edition, Prentice Hall, Azimuth Interactive Inc.

Websites:

www.dell.co.uk
www.dell.com
www.marketingweek.co.uk
http:content.dell.com/us/en/corp/d/press-releases/2010-02-16-dell-ms-integration-tools.aspx
http;//money.cnn.com/magazines/fortune/fortune500/2009/full_list

Other:

Key Note, Computer Hardware 2010

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