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UBC Theses and Dissertations

Total management information system concept Allsopp, Harold Robert 1969

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TOTAL MANAGEMENT INFORMATION SYSTEM CONCEPT by HAROLD ROBERT ALLSOPP B. COMM., UNIVERSITY OF SASKATCHEWAN, 1962  A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION  i n the F a c u l t y of COMMERCE AND BUSINESS ADMINISTRATION  We a c c e p t t h i s t h e s i s as conforming t o t h e required standard  THE UNIVERSITY OF BRITISH COLUMBIA APRIL, 1969  In presenting t h i s t h e s i s i n p a r t i a l f u l f i l l m e n t of the r e q u i r e m e n t s f o r an advanced degree a t the  University  of B r i t i s h Columbia, I agree t h a t the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and  study.  I further  agree  t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g of t h i s t h e s i s f o r s c h o l a r l y purposes may  be g r a n t e d by the Head of my  or by h i s r e p r e s e n t a t i v e .  Department  I t i s understood t h a t c o p y i n g or  p u b l i c a t i o n of t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l not a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n .  Date  be  ABSTRACT The o b j e c t i v e o f t h i s t h e s i s i s t o d e v e l o p and d e f i n e the concept o f a t o t a l management i n f o r m a t i o n system.  The term  " t o t a l system" has been g r o s s l y m i s r e p r e s e n t e d s i n c e i t s c o i n a g e , however, t h e misuse can be a t t r i b u t e d t o i g n o r a n c e o f i t s f u l l meaning.  The misuse i s a l s o a t t r i b u t e d t o narrow t h i n k i n g on b e h a l f  of t h e u s e r f o r i t s a p p l i c a t i o n has m a i n l y been d i r e c t e d t o a s p e c i f i c circumstance.  The s t u d y d e f i n e s t h e term " t o t a l management i n f o r m a t i o n system" and i t a l s o ' o u t l i n e s t h e a t t r i b u t e s w h i c h make up t h e t o t a l system.  As i n a l l s i t u a t i o n s where an i d e a l i s c r e a t e d ,  there i s r e s i s t e n c e t o r e a c h i n g the i d e a l - these b a r r i e r s a r e enumerated and commented upon. To t e s t t h e v a l i d i t y o f t h e c o n c e p t , i t i s a p p l i e d t o an e x i s t i n g company's i n f o r m a t i o n a l system by t h e methodology systems a n a l y s i s .  of a  C o n c l u s i o n s a r e r e a c h e d on t h e soundness o f t h e  concept and on t h e s t a t u s o f t h e case company toward i t s c l a i m o f holding the t o t a l i t y  status.  P r i m a r y r e s e a r c h was conducted on t h e t h e o r y o f a t o t a l system;  secondary r e s e a r c h was conducted i n t o t h e e x i s t i n g  systems o f t h e case company.  Throughout t h e s t u d y , o b s e r v a t i o n s  were made c o n c e r n i n g t h e problems a s s o c i a t e d w i t h t h e t o p i c and an e v a l u a t i o n i s made on t h e s t a t u s o f t h e e v o l u t i o n o f t h e t o t a l i n f o r m a t i o n system.  ii  TABLE OF CONTENTS  CHAPTER I  II  III  IV  V  VI  PAGE INTRODUCTION Introduction Objective of the Thesis Scope o f t h e T h e s i s Definitions EVOLUTION OF THE TOTAL MANAGEMENT INFORMATION SYSTEM CONCEPT The R o l e o f I n f o r m a t i o n Systems E v o l u t i o n o f Systems I n t e r p r e t a t i o n o f t h e Concept '. T o t a l I n f o r m a t i o n System Concept D e f i n e d . . . . B a r r i e r s w h i c h P r o h i b i t Achievement  2 2 2 4 6 9 9 11 14 20 23  THE SYSTEMS ANALYSIS O b j e c t i v e s o f t h e Systems A n a l y s i s Methodology o f t h e Systems A n a l y s i s Method o f A n a l y s i s t o be Used f o r the Case Study . .  29 29 36  ANALYSIS OF CASE COMPANY G e n e r a l I n f o r m a t i o n on t h e Company and i t s Operations . . I d e n t i f i c a t i o n o f t h e Key V a r i a b l e s D e s c r i p t i o n o f Key O p e r a t i n g Systems C u r r e n t Systems D e s i g n  48  SYSTEMS ANALYSIS FINDINGS I n t e r p r e t a t i o n s o f Case Company's R e p o r t i n g System A p p l i c a t i o n o f T o t a l i t y Concept t o Case Company  82  CONCLUSIONS AND GENERAL OBSERVATIONS D i s c l o s u r e s o f t h e Study C o n c l u s i o n s o f t h e Study O b s e r v a t i o n s o f t h e Study Which Could P r o v i d e Other T o p i c s f o r R e s e a r c h G e n e r a l O b s e r v a t i o n s on C u r r e n t Problems of I n f o r m a t i o n Systems T o t a l Systems - A P r e s e n t E v a l u a t i o n BIBLIOGRAPHY  42  48 50 54 72  82 99 107 107 112 116 118 122 125  iii  LIST OF TABLES TABLE  PAGE  I  Monthly M a r k e t i n g R e p o r t s  l  62  iv  LIST  OF  FIGURES  FIGURE I II III IV V VI  PAGE A n a l y t i c a l Problem S o l v i n g  38  L o g i c a l Systems A n a l y s i s  44  P r o d u c t i o n P l a n n i n g System  65  P r o d u c t i o n S c h e d u l i n g Procedure  67  D i s t r i b u t i o n and M a r k e t i n g Subsystem  75  Cost C o n t r o l and M a n u f a c t u r i n g Subsystem  Information 79  CHAPTER I INTRODUCTION I.  The  INTRODUCTION  phrase " t o t a l management i n f o r m a t i o n system" i s  among t h e most used - and abused - i n b u s i n e s s  today.  I t has been  a p p l i e d t o v i r t u a l l y every k i n d of i n f o r m a t i o n p r o c e s s i n g t h a t a company may p o s s e s s .  system  As a r e s u l t , i t i s f r e q u e n t l y  m i s u n d e r s t o o d and o f t e n u n j u s t l y c r i t i c i z e d by those who have l i t t l e p a t i e n c e i n s e a r c h i n g f o r i t s t r u e meaning.  The terminology  c o n f u s i o n has a r i s e n i n p a r t from d i f f e r e n c e s i n  and i n p a r t from t h e v a r i e t y o f o p i n i o n s on how  management i n f o r m a t i o n systems can o r s h o u l d be a p p l i e d t o management problems.  But t h e main s o u r c e o f c o n t r o v e r s y  l i e s i n t h e l a c k of  consensus on what management i n f o r m a t i o n systems a r e supposed t o be and how they s h o u l d be d e s i g n e d t o meet t h e g r o w i n g needs o f management today.  The movement toward more f u l l y i n t e g r a t e d systems has been underway f o r . s e v e r a l y e a r s and does n o t appear t o be r e t a r d e d by problems i n t e r m i n o l o g y .  T h i s movement i s e v i d e n c e d by t h e  growing number o f m a j o r companies t h a t have i n s t a l l e d c e n t r a l i z e d management i n f o r m a t i o n systems o r a r e p l a n n i n g t o do s o . as management i s s u b j e c t e d  to i n c r e a s i n g pressure  complete and more f u l l y c o o r d i n a t e d reasonable  Moreover,  f o r f a s t e r , more  information, i t i s only  t o assume t h a t t h e t r e n d w i l l  continue.  2  What has begun t o be r e a l i z e d i s t h a t as i n f o r m a t i o n p r o c e s s i n g systems become more complex, a need d e v e l o p s t o have b a s i c terminology  c l e a r l y d e f i n e d and i n a manner w h i c h w i l l be  u n i v e r s a l l y understandable.  The b a s i c c r i t e r i a f o r d i s c u s s i n g  systems o f t h i s type must be known t o a l l p a r t i e s b e f o r e an i n t e l l i g e n t exchange o f o p i n i o n s can be made.  Despite  d i f f e r e n c e s i n n o m e n c l a t u r e , i t may be  e a s i e r t o d e f i n e a t o t a l management i n f o r m a t i o n systems i n terms o f what i t s h o u l d do r a t h e r than i n terms o f what i t i s .  Once t h i s  point i s e s t a b l i s h e d , the r e l a t i o n s h i p of m o d i f i e r s or f a c t o r s e f f e c t i n g attainment  can be i n t r o d u c e d .  I n i t s b r o a d e s t s e n s e , a " t o t a l " system i s one i n w h i c h a l l i n f o r m a t i o n - e x t e r n a l and i n t e r n a l - a f f e c t i n g a company's operations  i s made known t o management.  be used i n t h e d e c i s i o n making p r o c e s s .  The i n f o r m a t i o n can then Using t h i s  generalized  d e f i n i t i o n , i t can be seen t h a t a t o t a l system i s o n l y a concept and must be f u r t h e r d e f i n e d t o f a c i l i t a t e i m p l e m e n t a t i o n i n t o a business  organization.  I t i s t h i s p r o c e s s o f r e f i n i n g t h e broad  d e f i n i t i o n , and i m p l e m e n t a t i o n o f p r i n c i p l e s e x p r e s s e d by t h e d e f i n i t i o n , t h a t w i l l be d i s c u s s e d t h r o u g h t II.  this thesis.  OBJECTIVE OF THE THESIS  Statement o f t h e Problem I t i s t h e purpose o f t h i s t h e s i s t o d e v e l o p a u n i v e r s a l d e f i n i t i o n o f t h e concept "a t o t a l management  information  3  system."  The d e r i v e d d e f i n i t i o n w i l l c o n s t i t u t e a model t o t a l  management i n f o r m a t i o n system w h i c h w i l l then be a p p l i e d a g a i n s t an a c t u a l company as a means o f a s s e s s i n g whether o r n o t t h e e x i s t i n g i n f o r m a t i o n system o f t h e company a t t a i n s t h e s t a t u s o f totality.  The a p p l i c a t i o n t o a case company w i l l a l s o demonstrate  the f e a s i b i l i t y a practical  o f t h e d e f i n i t i o n as b e i n g u n i v e r s a l l y a d a p t a b l e t o  situation.  Importance o f t h e Study "The u l t i m a t e g o a l o f an e f f e c t i v e management i n f o r m a t i o n system i s t o keep management c o m p l e t e l y developments o f t h e b u s i n e s s  i n f o r m e d on a l l  t h a t a f f e c t them".-'- The system w i l l  make i n f o r m a t i o n a v a i l a b l e t o management t o f a c i l i t a t e d e c i s i o n making p r o c e s s .  an e f f i c i e n t  The prime c o n c e r n o f t h e system i s t o  p r o v i d e t i m e l y , r e l e v a n t and a c c u r a t e i n f o r m a t i o n a t minimum c o s t . The b i g g e s t o b s t a c l e t o d e v e l o p i n g such a system i s t o have g e n e r a l agreement on e x a c t l y what t h e t o t a l i t y  concept s h o u l d be.  It will  be t h e o b j e c t of t h i s t h e s i s t o i n v e s t i g a t e c u r r e n t l i t e r a t u r e on the s u b j e c t o f t o t a l i t y  and from t h e s e w r i t i n g s and p e r s o n a l  o b s e r v a t i o n s , t o produce a d e f i n i t i o n o f t h e concept w h i c h c o n t r i b u t e toward u n d e r s t a n d i n g  will  i n f o r m a t i o n systems.  G a l l a g h e r , J.D., Management I n f o r m a t i o n Systems and t h e Computer, New Y o r k , New Y o r k : American Management A s s o c i a t i o n , 1961, p. 17.  4  As a secondary o b j e c t i v e , t h e d e f i n i t i o n o f a t o t a l management i n f o r m a t i o n system w i l l be a p p l i e d t o a case s i t u a t i o n t o t e s t t h e c o n c e p t ' s v a l i d i t y and a company's c l a i m t o achievement of t h e t o t a l i t y s t a t u s .  The method o f a p p l i c a t i o n w i l l be a  b e n e f i c i a l e x e r c i s e f o r anyone i n a systems a n a l y s i s s i t u a t i o n . The  attempt i n t h i s t h e s i s w i l l be t o s e t o u t an o v e r a l l  technique  of a n a l y s e s w h i c h c o u l d be a p p l i e d t o any company i n making a systems a n a l y s i s .  The r e v i e w w i l l a v o i d making d e t a i l e d q u a n t i t a t i v e  v a l u a t i o n s and w i l l n o t be d i r e c t e d s p e c i f i c a l l y t o a computer a p p l i c a t i o n because t h e s e t y p e s o f approaches a r e v e r y much i d e n t i f i e d w i t h an i n d i v i d u a l company s i t u a t i o n .  III.  SCOPE OF THE THESIS  In dealing with the t o p i c of t o t a l  information  systems, t h e scope o f study w i l l be narrowed by l i m i t i n g t h e amount of r e f e r e n c e t o s p e c i f i c i n f o r m a t i o n p r o c e s s i n g equipment.  For  example, i t was n o t f e l t t h a t t h e c o n s i d e r a t i o n o f computers i s an e s s e n t i a l element i n a model i n f o r m a t i o n system, t h e r e f o r e , t h e study w i l l n o t be d i r e c t e d p r i m a r i l y t o a computer a p p l i c a t i o n . I n a r e a s where a computer would f a c i l i t a t e a b e t t e r f l o w than e x p e r i e n c e d and  information  o t h e r w i s e , mention w i l l be made o f i t s use  advantages. The  contents  o f Chapter I I r e p r e s e n t s  which a r e very b a s i c t o a broad understanding  considerations  of the r o l e of  i n f o r m a t i o n systems and i n t r o d u c e s c o n c e p t s w h i c h a r e germane t o  5  the development of the e n t i r e t h e s i s . information  The  concepts of the  system w h i c h are r e v i e w e d i n the c h a p t e r are  i n o r i e n t i n g ones t h i n k i n g r e g a r d i n g  the o b j e c t i v e s o f  total  useful information  systems.  The  purpose of t h i s c h a p t e r i s t o d e v e l o p the  of a model t o t a l i n f o r m a t i o n  concept  system by i n t e g r a t i n g the s i g n i f i c a n t  c o n t r i b u t i o n s of i n d i v i d u a l d e f i n i t i o n s . Construction  of a model i s a common t e c h n i q u e used  t o s t u d y the c h a r a c t e r i s t i c s of systems under v a r y i n g  conditions.  The model i s an a b s t r a c t i o n of the e s s e n t i a l elements t h a t c h a r a c t e r i z e the system or the p r e v i o u s l y u n s t r u c t u r e d w h i c h one w i s h e s t o v i e w as a system.  situation  Once c o n s t r u c t e d ,  a model  s e r v e s as the g u i d e l i n s f o r f u r t h e r a n a l y s i s .  O f t e n companies w i l l p e r f o r m what i s known as systems a n a l y s i s .  However, the purposes and methods of  a n a l y s i s a r e u s u a l l y not f u l l y  understood.  of Chapter I I I t o s e t out the r e c o g n i z e d  a  the  I t w i l l be the purpose  o b j e c t i v e s of a systems  a n a l y s i s i n o r d e r t h a t g u i d e l i n e s can be e s t a b l i s h e d f o r  the  review process followed  Once the  i n the remainder of the t h e s i s .  a n a l y s t becomes a c q u a i n t e d w i t h c o n c r e t e o b j e c t i v e s , he can his  r e v i e w t o s u i t h i s own  design  i n d i v i d u a l needs.  H a v i n g s e t out the o b j e c t i v e s and methodology of a c c e p t a b l e systems a n a l y s i s , the framework w i l l then be drawn up  an  6  for  t h e s p e c i f i c a n a l y s i s t o be used i n r e v i e w i n g t h e case company  (to be known as ABC Company).  Chapters IV and V w i l l i n v o l v e t h e i n v e s t i g a t i o n o f ABC Company i n i t s c u r r e n t o p e r a t i n g form.  The approach w i l l be  to i d e n t i f y t h e key s u c c e s s areas o f company o p e r a t i o n s and t o r e l a t e t h e s e v a r i a b l e s t o t h e common g o a l .  Once t h e key success  areas a r e known, t h e subsystems f o r each of these f u n c t i o n s can be studied.  A n a l y t i c a l p r o c e d u r e s w i l l be used f o r t h e r e v i e w so as  to p r o v i d e a s y s t e m a t i c o u t l i n e o f each subsystem's r e l a t i o n s h i p s . H a v i n g examined t h e subsystems, t h e t o t a l i t y concept w i l l come i n t o f o c u s by v i e w i n g t h e i n t e r a c t i o n s o f these subsystems and how they a r e o r i e n t a t e d toward t h e common g o a l .  Once t h e f i n d i n g s have been p r e s e n t e d , Chapter V w i l l attempt.to  i n t e r p r e t t h e d a t a i n l i g h t o f how each p r o c e d u r e  c o n t r i b u t e s toward t h e t o t a l i n f o r m a t i o n system. IV.  DEFINITIONS  E x p l a n a t i o n s o f t h e key terms used throughout t h e study a r e as f o l l o w s : I n f o r m a t i o n - I t s h o u l d be emphasized t h a t t h e r e i s a d i s t i n c t i o n between t h e terms " d a t a " and " i n f o r m a t i o n " .  Data  a r e s i m p l y u n r e l a t e d and u n i n t e r p r e t e d f a c t s o r s t a t i s t i c s . I n f o r m a t i o n i s knowledge d e r i v e d from t h e c o l l e c t i o n , o r g a n i z a t i o n and a n a l y s i s o f d a t a .  7  Business  i n f o r m a t i o n i s not homogeneous.  Therefore,  varying  k i n d s of i n f o r m a t i o n must be t r e a t e d d i f f e r e n t l y . i t may  Consequently,  be u s e f u l t o d i v i d e i n f o r m a t i o n i n t o i t s s e v e r a l  classifications.  These c l a s s i f i c a t i o n s w i l l be expressed  as  follows: - I n f o r m a t i o n may i n f o r m a t i o n may  r e s u l t i n a c t i o n or non-action;  i . e . the  r e q u i r e the r e c i p i e n t to i n i t i a t e some k i n d  o f a c t i o n or m e r e l y t o be of i n t e r e s t r e q u i r i n g no follow-up.  immediate  F o r purposes of t h i s t h e s i s , i n f o r m a t i o n w i l l  be taken t o mean o n l y w r i t t e n or documented d e t a i l s .  Non-  documentary i n f o r m a t i o n i s i n f o r m a t i o n t h a t i s t r a n s m i t t e d t h r o u g h word of mouth or p e r s o n a l o b s e r v a t i o n s .  T h i s form  i s v e r y d i f f i c u l t t o t r a c e and i d e n t i f y , t h e r e f o r e hard  to  s u b s t a n t i a t e i n cases of argument. - I n f o r m a t i o n may  be g e n e r a t e d i n t e r n a l l y or e x t e r n a l l y i n  r e l a t i o n t o the f i r m . - I n f o r m a t i o n may  a l s o be h i s t o r i c a l or p r o j e c t i v e .  A S y s t e m - A g e n e r a l d e f i n i t i o n would d e s c r i b e a system as s e t 1  of o b j e c t s w i t h a g i v e n s e t ' o f r e l a t i o n s h i p s between o b j e c t s and t h e i r a t t r i b u t e s .  I n a more s p e c i f i c f o r m , the  foregoing  system elements would be d e f i n e d as f o l l o w s : - O b j e c t s a r e the parameters of systems.  The parameters or  c o n s t r a i n t s are i n p u t , process, output,  feedback-control  and a r e s t r i c t i o n .  Optner, S . C , Systems A n a l y s i s f o r B u s i n e s s and I n d u s t r i a l Problem S o l v i n g , Englewood C l i f f s , N.J., P r e n t i c e - H a l l I n c . , 1965, p. 26.  8  - Attributes are the properties of object parameters. Attributes characterize the parameters of systems, making possible the assignment of a value and a dimensional description. - Relationships are the bonds that l i n k objects and attributes i n the system process. a l l system elements;  Relationships are postulated among i.e.  among systems and subsystems  and between two or more subsystems.  9  CHAPTER I I EVOLUTION OF THE TOTAL MANAGEMENT INFORMATION SYSTEM CONCEPT Much has been w r i t t e n i n r e g a r d t o t h e development of improved management i n f o r m a t i o n systems, b u t most a u t h o r s have generally differed  i n d e f i n i n g t h e term " i n f o r m a t i o n systems".  A  b r i e f r e v i e w o f c u r r e n t l i t e r a t u r e on t h e s u b j e c t o f t o t a l i n f o r m a t i o n systems w i l l be g i v e n i n an e f f o r t t o d i s c l o s e t h e r e a s o n s f o r t h e vagueness s u r r o u n d i n g  t h e term.  An attempt w i l l  a l s o be made t o d e r i v e from t h e v a r i o u s v i e w s a g e n e r a l i z e d d e f i n i t i o n of t h e t o t a l i n f o r m a t i o n concept, w h i l e i n l a t e r  chapters  the d e f i n i t i o n w i l l be t e s t e d f o r . i t s v a l i d i t y by a p p l y i n g i t t o an e x i s t i n g company.  I.  THE ROLE OF INFORMATION SYSTEMS  . The o b j e c t i v e o f a l l d e c i s i o n making i n o r g a n i z a t i o n s has one g e n e r a l e f f e c t - t h e p r o m o t i o n o f t h e ends o f p a r t i c i p a n t s to t h e i r satisfaction.-''  The p u r s u i t o f t h i s one g e n e r a l  effect  r e q u i r e s t h a t t h e r e s h a l l be a means o r a p r o c e s s by w h i c h c o o r d i n a t i o n o f the . d e c i s i o n s and a c t s o f t h e employees o f an o r g a n i z a t i o n i s secured. (a)  Coordination entails  a l l employees s h a l l know t h e e f f e c t i v e  that: elements o f t h e  environment o f t h e o r g a n i z a t i o n ; (b)  a l l employees s h a l l know t h e common g o a l o f t h e o r g a n i z a t i o n a t any t i m e ;  Chambers, R . J . , " T h e R o l e o f I n f o r m a t i o n Systems i n D e c i s i o n M a k i n g , Management Technology, Volume 4, Number 1, June, 1964, p. 15.  10  (c)  a l l employees s h a l l r e a c t t o t h e e n v i r o n m e n t a l f a c t s i n s o f a r as t h e f a c t s a f f e c t t h e p u r s u i t o f t h e common g o a l ;  (d)  a l l employees s h a l l have t h e same i n t e r p r e t a t i o n o f f a c t s .  As o r g a n i z a t i o n s i n c r e a s e i n s i z e , each o f t h e s e r e q u i r e m e n t s becomes more d i f f i c u l t  to f u l f i l l .  E v e r y o r g a n i z a t i o n has i t s own t e c h n i c a l v o c a b u l a r y . For d i f f e r e n t a s p e c t s  of i t s operations  i t may use d i f f e r e n t  t e c h n i c a l languages.  Each o f t h o s e languages c o n s i s t s o f a s e t o f  s i g n s and a s e t o f r u l e s by w h i c h they may be formed i n t o o t h e r signs.  I f e f f e c t i v e communication i s t o take p l a c e , t h e language  used must be such t h a t s i g n s employed.evoke i n o t h e r s t h e same r e s p o n s e as i f t h o s e o t h e r s were t o see t h e o b j e c t s i n s t e a d of t h e s i g n s .  represented  The i n f o r m a t i o n system i s d e s i g n e d t o employ  the t e c h n i c a l languages o f e v e n t s and produce a common  The  understanding.  r o l e o f an i n f o r m a t i o n p r o c e s s i n g system w i t h  r e s p e c t t o d e c i s i o n making i s t o produce and s u p p l y  statements  which, i n conjunction with t h e i r i n t e r p r e t a t i o n s , w i l l persons t o make d e c i s i o n s .  evoke  The i n f o r m a t i o n system may n o t , i n  i t s e l f , make t h e d e c i s i o n , b u t w i l l a l e r t t h e d e c i s i o n maker t o environmental f a c t s a l l o w i n g him t o perform the a c t u a l d e c i s i o n process. An i n f o r m a t i o n system i s an a b s t r a c t i n g system; i t s j u s t i f i c a t i o n l i e s i n the reduction of information a v a i l a b l e to the i n f o r m a t i o n t h a t i s r e l e v a n t t o a c t i o n .  But a b s t r a c t i o n may  11  not  be c a r r i e d t o t h e p o i n t where d i f f e r e n c e s i s i g n i f i c a n c e a r e  obscured.  The a b i l i t y t o make i n t e l l i g e n t d e c i s i o n s on vague  i n f o r m a t i o n becomes one o f chance r a t h e r t h a n judgement.  II.  EVOLUTION OF SYSTEMS  The time i s n o t f a r removed from when t o t a l systems, a l t h o u g h n o t r e f e r r e d t o as s u c h , was t h e o p e r a t i n g method o f every b u s i n e s s e n t e r p r i s e .  Each e n t r e p r e n e u r e i t h e r conducted  a l l h i s own a f f a i r s o r i n t i m a t e l y knew each employee.  Each  d e c i s i o n was based upon complete knowledge o f t h e s i t u a t i o n from the  e n v i r o n m e n t , market, economic c o n d i t i o n and s t a t e o f p r o d u c t i o n .  O b v i o u s l y each o f t h e s e c o n d i t i o n s e n t e r e d i n t o e v e r y d e c i s i o n i n v a r y i n g degrees as an a u t o m a t i c r e f l e x o f t h e p r i n c i p a l ' s  thinking.  As b u s i n e s s e n t e r p r i s e s became l a r g e r , t h e y began t o fragment f u n c t i o n a l l y s i m p l y because anyone p o s s e s s i n g t h e g e n e r a l i z e d c a p a b i l i t i e s o f t h e p r i n c i p a l would l i k e l y t o be engaged as an e n t r e p r e n e u r i n h i s own e n t e r p r i s e .  I n o r d e r t o make use o f p e o p l e  who had l i m i t e d a b i l i t y , t h e f u n c t i o n s o f t h e e n t e r p r i s e were fragmented.  As t i m e passed and b u s i n e s s e n t e r p r i s e s became even l a r g e r and more complex, communication l i n e s grew l o n g e r , s l o w e r and more d i f f i c u l t t o m a i n t a i n . the  Those i n t h e s e a t o f d i r e c t i o n o f  e n t e r p r i s e themselves became s p e c i a l i s t s .  W i t h each s p e c i a l t y  developed a p r o v i n c i a l a t t i t u d e and a s p e c i a l i z e d j a r g o n , w h i c h f u r t h e r c o m p l i c a t e d t h e s e m a n t i c s o f communication.  This  finally  12  led  t o t h e r e c o g n i t i o n by many managements t h a t communication  d i r e c t i o n of a l l segments of t h e i r e n t e r p r i s e was the e x i s t i n g t o o l s and  impossible' w i t h  i n t e l l i g e n c e . T h i s r e a l i z a t i o n produced  the development of a scheme of semi-autonomous d i v i s i o n s . p r o c e s s was  and  This  c a l l e d d e c e n t r a l i z a t i o n and r e f l e c t e d r e c o g n i t i o n  a l a c k of the two  of the e s s e n t i a l s t h a t m a i n t a i n a  of  business,  communications and i n t e l l i g e n c e .  W i t h the d e c e n t r a l i z a t i o n p r o c e s s came the r e c o g n i t i o n that the e n t i r e i n f o r m a t i o n  system of a company  j u s t too l a r g e and a l l - e n c o m p a s s i n g t o be a m e a n i n g f u l and classification.  Some began t o t h i n k of systems as b e i n g  of h o r i z o n t a l and v e r t i c a l d i m e n s i o n s . Dearden who  One  was useful  activities  such p e r s o n was  John  s a i d , " h o r i z o n t a l l y , the system's a c t i v i t i e s can  c l a s s i f i e d by the type of work p e r f o r m e d ;  be  v e r t i c a l l y , the system's 2  a c t i v i t i e s can be c l a s s i f i e d by the k i n d of i n f o r m a t i o n  handled".  Others b e l i e v e d the o v e r a l l system t o be made up of v a r i o u s  s u b a c t i v i t i e s w i t h an i n t e g r a t i n g common o b j e c t i v e .  Each s u b a c t i v i t y of the system came t o be r e f e r r e d t o as a subsystem.^  Any  degree of s u b d i v i s i o n c o u l d now  a c t i v i t y c o u l d be f u r t h e r , b r o k e n  be p o s s i b l e as each  out.  Dearden, J . , "How t o O r g a n i z e I n f o r m a t i o n Systems", H a r v a r d B u s i n e s s Review, M a r c h - A p r i l 1965, Volume 43, Number 2, p.  65.  % c G a r r , C.J., "What i s a System", Systems, American Management S o c i e t y , P r o f e s s i o n a l Management B u l l e t i n s , May, 1967, p. 11.  13  T h i s gave t h e r e a l b e g i n n i n g t o t h e s t u d y o f t h e systems as now management c o u l d l o o k a t t h e complete e n t e r p r i s e as fragments r a t h e r t h a n as a whole e n t i t y .  The i n f i n i t e number o f .  events happening e v e r y day c o u l d be a r r a n g e d and s u r v e y e d w i t h o u t the cumbersome dynamics o f a changing e n t e r p r i s e c o n s t a n t l y t a k i n g them o u t o f v i e w .  The n e x t phase i n systems development was t o t a k e the newly i d e n t i f i e d system and subsystems and t h r o u g h i n d i v i d u a l a n a l y s i s c r e a t e new system d e s i g n s , e v a l u a t e e x i s t i n g systems, o r improve t h e i r f u n c t i o n .  There c o u l d be a d e t e r m i n a t i o n o f t h e need,  p r o p r i e t y and e f f e c t i v e n e s s o f t h e e x i s t i n g systems i n terms o f established objectives. I n t h e f u t u r e the phase o f t o t a l systems and i n t e g r a t i o n of subsystems w i l l become i n c r e a s i n g l y h i g h l i g h t e d . The h i g h l e v e l o f i n t e r e s t i n i n f o r m a t i o n systems may be d i r e c t l y r e l a t e d t o a new c o n c e n t r a t i o n on t h e dynamics o f change and advances i n t e c h n o l o g y . As s t a t e d by E. Tomeski: "Top management i s i n t e r e s t e d i n t h o s e s i g n i f i c a n t t o o l s , t e c h n i q u e s and i d e a s t h a t can p r o v i d e c o n t r o l over c o m p l e x i t y and time spans. The d r i v e s o f top management t o seek a s s i s t a n c e from t h e i r m a n a g e r i a l burdens by a d v a n t a g e o u s l y u s i n g t o t a l i n f o r m a t i o n systems a r e n o t based on t h e need t o supplement t h e s h o r t c o m i n g s o f human b e i n g s - b u t because o f t h e i n t e n s e c o m p e t i t i v e economy. The p r e s s u r e s a r e from many s i d e s : f e d e r a l government's a c t i v e r o l e i n c o n s t r a i n i n g b u s i n e s s e s , wages and s a l a r y s p i r a l s and b i d d i n g f o r s c a r c e manpower t a l e n t , i n t e r n a t i o n a l c o m p e t i t i o n , new p r o d u c t s , new market demands."^  Tomeski, E., "Management I n f o r m a t i o n and D e c i s i o n Making Systems", Ideas f o r Management, Systems and P r o c e d u r e s A s s o c i a t i o n , 1963, p. 215.  14  There i s a g r e a t e r awareness o f t h e need f o r constantly updating business.  systems concepts t o meet t h e needs o f  A need has developed f o r f a r more p e n e t r a t i n g and o r d e r l y  studies of the business s p e c i f i c information III. The  i n i t s e n t i r e t y t o d i s c o v e r what a r e t h e  requirements. INTERPRETATION OF THE CONCEPT  f i r s t p r i n c i p l e o f t h e t o t a l i n f o r m a t i o n systems  concept i s t h a t t h e e n t i r e b u s i n e s s of t h e h i g h e s t o r d e r . O b j e c t i v e s a r e pursued.  e n t e r p r i s e i t s e l f i s a system  I t i s a purposeful o r g a n i z a t i o n of resources. C h o i c e s a r e made.  Responsibility for  c h o i c e s i s d i v i d e d among two o r more i n d i v i d u a l s o r groups and t h e choosers a r e aware o f each o t h e r ' s c h o i c e .  One i n d i v i d u a l o r group  has a c o n t r o l f u n c t i o n , comparing outcomes w i t h o b j e c t i v e s and a d j u s t i n g t h e system t o reduce d i f f e r e n c e s .  What i s s i g n i f i c a n t i n any o r g a n i z e d system i s t h e o v e r a l l performance r a t h e r t h a n e f f i c i e n c y o f some i n d i v i d u a l p a r t . F u r t h e r i n f o r m a t i o n systems a r e c h a r a c t e r i z e d by t h e i n t e r d e p e n d e n c e of t h e i r p a r t s .  According  i s e s s e n t i a l l y an e x t r e m e l y  t o Dr. H.N. Laden, a b u s i n e s s complicated  organization  system o f c o o p e r a t i o n i n  w h i c h e f f e c t i v e n e s s i s dependent l e s s and l e s s on t h e q u a l i t y o f i n d i v i d u a l e f f o r t s and more and more on t h e l o g i c o f t h e t o t a l d e s i g n and upon t h e p r e c i s i o n w i t h w h i c h each i n d i v i d u a l ' s  ^ L e f i v i c h , R.H., The P r i c e System and Resource A l l o c a t i o n , H o l t , R i n e h a r t a n d W i n s t o n 1 9 6 6 , p. 127.  15  c o n t r i b u t i o n i s general to the o v e r a l l plan.  V a r i o u s d e f i n i t i o n s have been o f f e r e d on how a business  o r g a n i z a t i o n can be r e p r e s e n t e d  as a t o t a l system.  However, each o p i n i o n t a k e s a v e r y narrow approach t o t h e s u b j e c t . A v i e w e x p r e s s e d by R.W.  C h r i s t i a n s t a t e s the t o t a l  management i n f o r m a t i o n system concept as an i n t e g r a t e d  corporate  i n t e l l i g e n c e system d e s i g n e d t o p e r m i t management by e x c e p t i o n , based on t i m e l y i n f o r m a t i o n , randomly a v a i l a b l e , and g u i d e d by r i g o r o u s l y d e t e r m i n e d r e l a t i o n s h i p s and d e c i s i o n r u l e s . ^ H i s t o t a l i n f o r m a t i o n systems concept would  provide  a . r e s e r v o i r o f i n f o r m a t i o n a v a i l a b l e t o any manager i n t h e company, any  time i t i s needed.  S i g n i f i c a n t r e l a t i o n s h i p s between  trends  or d a t a , t h e p r o b a b l e impact on t h e e n t i r e company o f contemplated a c t i o n , t h e c o m p a r a t i v e r e t u r n on i n v e s t m e n t o f t o t a l l y u n l i k e p o s s i b i l i t i e s c o u l d be developed on command.  The system would go  beyond g a t h e r i n g and p r o c e s s i n g d a t a t o i n c l u d e , among o t h e r r e c o r d s management and i n f o r m a t i o n  things,  retreival.  Much more p l a n n i n g i n f o r m a t i o n c o u l d be a v a i l a b l e i n f o r m a t i o n that focuses  on t h e f u t u r e and on e x t e r n a l f a c t o r s  such as p o p u l a t i o n , p l a n s and a c t i v i t i e s of c o m p e t i t o r s , new  laws,  ^Laden, H.N., T o t a l Systems Concept, Ideas f o r Management, 1 4 t h I n t e r n a t i o n a l Systems M e e t i n g , Volume 2, 1961, p. 23. C h r i s t i a n , R.W., " T h e T o t a l Systems Concept", Ideas f o r Management, 1 4 t h . I n t e r n a t i o n a l Systems M e e t i n g , Volume 1, 1961, p. 86.  16  import  trends.  The company c o u l d u l t i m a t e l y i s o l a t e and study t h e  c o n t r o l l a b l e , o r a t l e a s t p r e d i c t a b l e f a c t s t h a t a f f e c t i t s growth and p r o s p e r i t y .  There would be f a r more e f f e c t i v e use o f economics,  d e c i s i o n r u l e s , p r o b a b i l i t y theory and s t a t i s t i c a l a n a l y s i s . company c o u l d gather financial  and make p e r s u a s i v e use o f much more non-  information.  C h r i s t i a n , however, d i d not r e c o g n i z e system t o be a s i n g l e a l l p e r v a d i n g needing a c o o r d i n a t e d  system.  these  types  efficiency.  F o r example,  i d e n t i c a l with a c o n t r o l  system nor dependent on i d e n t i c a l i n f o r m a t i o n . something e l s e a g a i n .  the t o t a l  He viewed each company  i n t e r l o c k i n g s e t o f systems.  he viewed a p l a n n i n g system not b e i n g  represent  The  Reporting  systems  The crux o f h i s concept was t h a t  o f i n f o r m a t i o n systems must support  each o t h e r f o r maximum  I t was the concept o f i n t e g r a t i o n o f subsystems r a t h e r  than a t o t a l system.  Another view on the t o t a l i n f o r m a t i o n system i s expressed  by E.R. Dickey who does n o t attempt a c o n c r e t e  definition  of the concept, but g i v e s h i s i n t e r p r e t a t i o n s o f t h e o b j e c t i v e s and scope o f a t o t a l management i n f o r m a t i o n system.  B a s i c o b j e c t i v e s o f an e f f e c t i v e t o t a l system, as i d e n t i f i e d by Dickey,  are to provide  to the r i g h t p e o p l e a t t h e r i g h t  time a t the lowest  information  the r i g h t  information  possible cost.  'Dickey, E.R., " T o t a l Systems", Ideas f o r Management, Systems and Procedures A s s o c i a t i o n , 1962, p. 331.  g  17  Right i n f o r m a t i o n c o n s i s t i n g of three primary  types;  i . e . succinct  a c t i o n i n f o r m a t i o n , h i s t o r i c a l i n f o r m a t i o n and c u r r e n t s t a t u s information.  The r i g h t p e o p l e w i l l i n c l u d e those i n d i v i d u a l s charged  w i t h the r e s p o n s i b i l i t y f o r i n i t i a t i n g a c t i o n , f o r m a i n t a i n i n g conformance t o p o l i c y and o p e r a t i n g p e r s o n n e l .  The  r i g h t time i s  a v a r i a b l e a c c o r d i n g t o s p e c i f i c i n f o r m a t i o n , but w i l l a l s o be  a  time w h i c h p r o v i d e s f o r an e f f e c t i v e i n t e r p r e t a t i o n o f the i n f o r m a t i o n .  The approach and s c o r e of such a t o t a l i n f o r m a t i o n system, as viewed by D i c k e y , d a t a p r o c e s s i n g equipment.  i s mainly The  one o f u t i l i z i n g e l e c t r o n i c  scope would t h e n be d e f i n e d  as:  "The c o l l e c t i o n of a l l c l e r i c a l d a t a a t the p o i n t o f o r i g i n i n machine language, v a l i d a t i o n o f the d a t a , and a s s i m i l a t i o n i n t o a s i n g l e c o r p o r a t e memory; f o r r e t e n t i o n , rearrangement and t i m e l y , c a p s u l i z e d d i s p e r s a l t o u s e r s w i t h a u t h o r i t a t i v e need".9 To be of g e n e r a l v a l u e , t h i s i n t e r p r e t a t i o n need o n l y omit the words, " i n machine language", because these  apply  s p e c i f i c a l l y t o those companies s e r v i c e d by a computer or  other  e l e c t r o n i c d a t a p r o c e s s i n g equipment. I n t h i s d e f i n i t i o n , the c o l l e c t i o n of c l e r i c a l a t the p o i n t o f o r i g i n r e p r e s e n t s a t w o f o l d problem.  First,  data the  data must be c a p t u r e d o n l y once ( a t i t s i n c e p t i o n ) and s h a l l not processed  m a n u a l l y from one a c t i v i t y t o a n o t h e r ,  thus a v o i d i n g  d u p l i c a t i o n o f c l e r i c a l e f f o r t s and p o s s i b i l i t i e s of  9 I b i d . , , p.  339.  be  the  transcription  18  error.  Second, h a v i n g c a p t u r e d  d a t a once, i t s h o u l d be p o s s i b l e  t o make i t a v a i l a b l e f o r r e - u s e as an e c o n o m i c a l b y - p r o d u c t o f t h e i n i t i a l transaction. I t i s the a s s i m i l a t i o n o f a l l c l e r i c a l data i n t o a s i n g l e c o r p o r a t e memory t h a t i s a key element i n t h e scope o f t h e t o t a l i n f o r m a t i o n systems program.  The c o r p o r a t e memory o f any  company can be t a k e n t o mean t h e g r o u p i n g  of a l l the c l e r i c a l  files  and manuals o f p o l i c y o r p r o c e d u r e s needed t o p r o v i d e v a l i d b a s i c data. A more g e n e r a l v i e w o f t h e t o t a l i t y concept i s h e l d by R.W. Graham, J r . , who takes t h e p o s i t i o n o f d e a l i n g w i t h b o t h management and o p e r a t i n g p e r s o n n e l .  He f e e l s t h a t t h e t o t a l  i n f o r m a t i o n system i s a system w i c h p r o v i d e s t h e maximum p e r t i n e n t i n f o r m a t i o n t h a t management o r o p e r a t i o n s r e q u i r e t o e f f e c t i v e l y discharge t h e i r assigned r e s p o n s i b i l i t i e s . - ^  Most d e f i n i t i o n s  look  upon t h e i n f o r m a t i o n system as d e a l i n g o n l y w i t h management o r those i n a p o s i t i o n t o make d e c i s i o n s r a t h e r than o p e r a t i n g  personnel.  Graham c o n t i n u e s h i s o b s e r v a t i o n s by s a y i n g t h a t management has t h r e e main r e s p o n s i b i l i t i e s ; and c o n t r o l .  planning  The s u p e r i o r t o t a l management i n f o r m a t i o n system  s h o u l d a s s i s t i n a l l these  10  operations,  areas.  Graham,;R.W., J r . , " T o t a l Systems Concept", Management:Technology, Volume 4, Number 1, J u n e , 1964, p. 1.  19  Other approaches t o t h e problem of a d e f i n i t i o n use the  method i n c o r p o r a t i n g a u t o m a t i c d a t a p r o c e s s i n g equipment.  i n s t a n c e , Asa T. S p a u l d i n g , J r . , i n an address t o the  For  1964  I n t e r n a t i o n a l Systems M e e t i n g d e f i n e d the t o t a l i n f o r m a t i o n system as an approach t h a t c o n s i d e r s the b u s i n e s s e n t e r p r i s e t o be an e n t i t y composed o f i n t e r d e p e n d e n t systems and subsystems w h i c h , w i t h the use of a u t o m a t i c d a t a p r o c e s s i n g systems, a t t e m p t s t o p r o v i d e t i m e l y and a c c u r a t e i n f o r m a t i o n which w i l l p e r m i t optimum management d e c i s i o n m a k i n g . ^ of  The d e f i n i t i o n i m p l i e s t h e c o m b i n a t i o n  t h r e e components w h i c h i n t h i s c o n t e x t a r e i n h e r e n t t o a t o t a l  system - an a u t o m a t i c d a t a p r o c e s s i n g system, a management i n f o r m a t i o n system and a feedback system.  The i d e a i s t o p r o v i d e  those who have a "need-to-know" w i t h i n f o r m a t i o n w h i c h i s i n a m e a n i n g f u l f o r m , t i m e l y , and t h a t i t be p r o v i d e d a t t h e l o w e s t possible cost. S e v e r a l o t h e r v i e w s on the concept have been e x p r e s s e d , b u t each c o n t i n u e s t o be an i n d i v i d u a l  interpretation.  Among t h e s e i n c l u d e : (a)  "  a t r u l y comprehensive system concept t h a t w i l l  encompass t h e whole range o f an o r g a n i z a t i o n ' s d a t a p r o c e s s i n g r e q u i r e m e n t s , i n b o t h v a r i e t y and  volume.  •'•-''Spaulding, A.T., J r . , " T o t a l Systems f o r the I n s u r a n c e Company", Ideas f o r Management, Systems and P r o c e d u r e s A s s o c i a t i o n , 1964, p. 339. ' • ^ R e f e r e n c e Manual 6, A T o t a l System Study Technique w i t h IBM U n i t Record Equipment, Washington, D.C., I n t e r n a t i o n a l B u s i n e s s Machine C o r p o r a t i o n , 1962, p. 1.  20  (b)  " A l l data processing a p p l i c a t i o n s are f u n c t i o n a l l y  grouped  a c c o r d i n g t o t h e i r i n t e r - r e l a t e d element and p u r p o s e s , thus p e r m i t t i n g development  o f a b r o a d concept o f a  comprehensive system t h a t encompasses a l l d a t a p r o c e s s i n g . T h i s concept i s e x p r e s s e d i n b r o a d b l o c k s o f i n f o r m a t i o n , each an i n t e g r a l p a r t o f what w i l l be t h e t o t a l i n f o r m a t i o n system."-^ (c)  " i.e.  a t o t a l i n f o r m a t i o n system i s made up o f many systems; a c c o u n t i n g system, p r o d u c t i o n c o n t r o l system, i n v e n t o r y  management system, e t c . But t h e d e s i g n o b j e c t i v e i s t o b u i l d toward a system t h a t w i l l f a c i l i t a t e t h e d e c i s i o n making process.  The d e c i s i o n s s h o u l d be aimed toward i m p r o v i n g t h e  company as a whole r a t h e r than t h e o p e r a t i o n o f one p a r t i c u l a r part."  1 4  IV.  TOTAL INFORMATION SYSTEM CONCEPT DEFINED During the review of v a r i o u s i n t e r p r e t a t i o n s of the  t o t a l i n f o r m a t i o n c o n c e p t , c e r t a i n common c h a r a c t e r i s t i c s w h i c h p o i n t towards u n a n i m i t y i n t h e development  of a d e f i n i t i o n .  A b r i e f summarization of these i d e n t i f y i n g c h a r a c t e r i s t i c s (a)  follows:  I n f o r m a t i o n s h o u l d be g e n e r a t e d f o r t h o s e who r e q u i r e i t t o . f u l f i l l t h e i r d e c i s i o n making r o l e .  1 3  appear  Thus, t h e system w i l l  I b i d . , p. 1.  l ^ W e i n t h a l e r , E.L., J r . , " D e v e l o p i n g Advanced B u s i n e s s I n f o r m a t i o n Systems",, Data P r o c e s s i n g f o r Management, Volume 5, O c t o b e r , 1963, p. 10.  21  need t o produce i n t e r n a l as w e l l as e x t e r n a l i n f o r m a t i o n . The k e y , though, i s t o produce i n f o r m a t i o n f o r those who need i t .  The i n f e r e n c e b e i n g t h a t any i n f o r m a t i o n produced  p u r e l y f o r i n t e r e s t i n g r e a d i n g by o t h e r s i s a waste b o t h i n d o l l a r c o s t and t i m e v a l u e . (b)  The t o t a l i n f o r m a t i o n system w i l l have a u n i t y o f purpose which i t w i l l accomplish  i n as s i m p l e , c l e a r and as  u n d e r s t a n d a b l e a manner as p o s s i b l e .  The system must  p r o v i d e i n f o r m a t i o n t h a t i s r e l a t e d t o t h e company's o b j e c t i v e s and i n an u n d e r s t a n d a b l e form. t h i s , t h e r e must be a u n i f o r m  To  accomplish  i n t e r p r e t a t i o n of t h e  o b j e c t i v e s and how t h e o b j e c t i v e s r e l a t e t o i n f o r m a t i o n t h e system p r o v i d e s . (c)  A s u p e r i o r t o t a l i n f o r m a t i o n system must p r o v i d e a r e q u i r e d s e r v i c e a t t h e lowest p o s s i b l e c o s t .  The r u l e b e i n g  that  no f u n c t i o n o r p o r t i o n of a f u n c t i o n be performed when i t does n o t c o n t r i b u t e more than i t s c o s t t o t h e e n t e r p r i s e . ^ (d)  The i n f o r m a t i o n system must be a l l encompassing;  i . e . the  company w i l l be viewed as an i n t e g r a t e d e n t i t y i n i t s information requirements.  The i n f o r m a t i o n g e n e r a t e d f o r  one u s e r can a l s o be made a v a i l a b l e f o r o t h e r u s e r s i f they so d e s i r e .  D u p l i c a t i o n of information production  i s t o be  avoided.  B a r i s h , N.N., Systems A n a l y s i s f o r E f f e c t i v e A d m i n i s t r a t i o n , New Y o r k , Funk & W a g n a l l s Company, 1951, p. 16.  22  (e)  I n t e g r a t e d d a t a p r o c e s s i n g t e c h n i q u e s must be employed i n d e s i g n i n g i n f o r m a t i o n systems.  Data i s t o be c a p t u r e d o r  c r e a t e d i n a u n i f o r m language as near t o t h e s o u r c e of o r i g i n as p o s s i b l e and t o f l o w through t h e system a u t o m a t i c a l l y from t h a t p o i n t on.-*-^ system i s automated  Whether o r n o t t h e  ( i m p l y i n g t h e use o f a computer) i s  a m a t t e r o f i n d i v i d u a l p r e f e r e n c e , depending on r e q u i r e m e n t s i n any g i v e n i n f o r m a t i o n system.  The computer i s  not c o n s i d e r e d n e c e s s a r y i n a t o t a l i n f o r m a t i o n system, but i n some s i t u a t i o n s would be h i g h l y d e s i r a b l e .  H a v i n g r e v i e w e d some o f t h e main c h a r a c t e r i s t i c s o f a t o t a l i n f o r m a t i o n system, an attempt can be made a t combining them i n t o a w o r k a b l e d e f i n i t i o n o f t h e concept - one t h a t w i l l be used throughout t h e remainder o f t h e t h e s i s . A t o t a l management i n f o r m a t i o n system i s d e f i n e d as a system i n v o l v i n g t h e a c q u i s i t i o n , p r o c e s s i n g ,  communication,  s t o r a g e and r e t r e i v a l o f a l l t y p e s o f i n f o r m a t i o n p r o d u c t s and s e r v i c e s r e q u i r e d by e i t h e r u s e r s o r g e n e r a t o r s o f i n f o r m a t i o n u s i n g t h e b e s t c o m b i n a t i o n o f a v a i l a b l e concepts and equipment combined  i n an optimum f a s h i o n w i t h c o n s t r a i n t s t o be f a c t o r s of  c o s t , e f f i c i e n c y and growth.  ^ W e n d l e r , C C . , "An Approach t o D e v e l o p i n g a T o t a l System", f o r Management, C l e v e l a n d , Ohio, Systems and P r o c e d u r e s A s s o c i a t i o n , 1964, p. 205.  Ideas  23  T h i s d e f i n i t i o n d e a l s w i t h t h e complete c y c l e of information.  I t f o l l o w s a " c r a d l e t o g r a v e " path.17  The d e f i n i t i o n  a l s o d e a l s w i t h o n l y t h a t i n f o r m a t i o n which i s r e q u i r e d , whether i t i s r e q u i r e d by t h e o r i g i n a t o r o r o t h e r u s e r s .  I t w i l l be g e n e r a l l y  u n d e r s t o o d t h a t i n f o r m a t i o n w i l l o n l y be d e a l t w i t h a t a m a n a g e r i a l l e v e l o r those i n a p o s i t i o n t o c a r r y out a d e c i s i o n making  process.  The d e f i n i t i o n w i l l f i t e i t h e r a manual o r an automated system, o r any c o m b i n a t i o n o f b o t h .  The o n l y parameters  t o t h e system i s t h a t c o n s i d e r a t i o n be g i v e n t o c o s t , e f f i c i e n c y and growth.  A c a r e f u l eye has t o be k e p t on a l l t h r e e o f t h e s e f a c t o r s  as each one may c a n c e l out any advantage g a i n e d by t h e o t h e r . I t i s b e l i e v e d the d e f i n i t i o n given i s a workable one  f o r any a n a l y s t t o c o n s i d e r  i n h i s l o o k f o r t h e o v e r a l l system.  I t attempts t o p r o j e c t t h r o u g h t h e use o f systems an a p p r e c i a t i o n of t h e i n f o r m a t i o n r e q u i r e m e n t s under t h e t o t a l i t y  : V.  concept.  BARRIERS WHICH PROHIBIT ACHIEVEMENT  The concept o f a t o t a l i n f o r m a t i o n system i s even more d i f f i c u l t t o a t t a i n than i t i s t o d e f i n e .  The r e a l i t y and  p r a c t i c a l i t y o f a p p l y i n g t h e concept t o a g i v e n s i t u a t i o n r i s e t o many problems.  gives  These problems a r e n o t u n i v e r s a l b u t t a k e n  as a f r e q u e n c y d i s t r i b u t i o n w i l l p r o v i d e a b a s i s f o r u n d e r s t a n d i n g o  - ^ T h i s term was used by R.M. S k i n n e r and R . J . Anderson i n d e s c r i b i n g t h e a n a l y t i c a l a u d i t p r o c e d u r e o f t r a c i n g each t y p e o f t r a n s a c t i o n t h r o u g h o u t a system -r from t h e p o i n t o f i n c e p t i o n t o e i t h e r permanent s t o r a g e o r d e s t r u c t i o n . A n a l y t i c a l A u d i t i n g , T o r o n t o , S i r I s a a c P i t m a n (Canada) L t d . , 1966.  24  the l i m i t a t i o n s o f t h e concept i t s e l f .  Some o f t h e problem a r e a s  are d e f i n e d as f o l l o w s : (a)  The main f a c t o r w h i c h i n h i b i t s t h e b u i l d i n g o f a t o t a l i n f o r m a t i o n system i s t h e c o s t .  The p e r s o n n e l  cost, the  equipment c o s t , t h e p h y s i c a l f a c i l i t y c o s t and t h e t i m e v a l u e c o s t a r e a l l c o s t s w h i c h c o n t r i b u t e toward t h e t o t a l barrier.  cost  I n t h e o r y , i f each e n t e r p r i s e c o u l d i n s t a l l a l l  the l a t e s t . e l e c t r o n i c r e p o r t i n g equipment and educate employees t o t h e most advanced i n f o r m a t i o n p r o c e s s e s w i t h no c o n c e r n as t o t h e c o s t , achievement o f a t o t a l system would be made much more s i m p l e . (b)  R e l a t e d t o t h e c o s t element i n t h e i n f o r m a t i o n p r o c e s s i s the problem, of r e p o r t s t r a n g u l a t i o n .  I n the search f o r  b e t t e r r e p o r t i n g , i n f o r m a t i o n i s o f t e n d u p l i c a t e d , made redundant, r o u t i n e , e t c . , w h i c h a l l add up t o a h i g h e r for  cost  the u s e f u l i n f o r m a t i o n which i s e v e n t u a l l y r e c e i v e d .  Closely associated with t h i s c h a r a c t e r i s t i c of excessive r e p o r t s i s t h e d e s i r e f o r p r o t e c t i o n a g a i n s t p o s s i b l e blame s h o u l d some p a r t o f t h e i n f o r m a t i o n system f a i l .  This  takes  the form o f e x t r a c o p i e s , t i m e stamps, i n i t i a l i n g o f memos, v a r i o u s checks and l o g s .  But t h e c o s t o f t h e s e p r o t e c t i v e  measures can f a r exceed t h e . d e l a y s  o r e r r o r s which they  p r o t e c t a g a i n s t , and o f t e n they p r o v i d e l i t t l e o r no h e l p i n determining  the source of such.delays or e r r o r s .  25  (c)  The  problem of c e n t r a l i z a t i o n v e r s u s d e c e n t r a l i z a t i o n f o r  s e r v i c e and concept.  planning  The  necessitated  f u n c t i o n s has  i n h i b i t e d the  totality  t r e n d toward l a r g e r e n t e r p r i s e s has the need f o r d e c e n t r a l i z a t i o n .  often  Reasons of  f l e x i b i l i t y , r e s p o n s i b i l i t y , p r o d u c t s p e c i a l i z a t i o n and c o n t r o l a r e g i v e n f o r t h e s e moves.  However, under a  d e c e n t r a l i z e d o r g a n i z a t i o n t h e r e becomes a d u p l i c a t i o n of f u n c t i o n s r e s u l t i n g i n a . d u p l i c a t i o n of i n f o r m a t i o n (d)  The  generated.  i n f o r m a t i o n system must c o n t a i n a h i g h degree of  flexibility, change and  thus m a i n t a i n i n g  t o adapt i t s e l f  the a b i l i t y  to  withstand  t o the changing demands of  business.  T h i s c o n d i t i o n i s sometimes c a l l e d "management myopia".18  The  modern manager not o n l y cannot a f f o r d to be l o o k i n g backward, he can't even s a f e l y c o n s t r a i n h i s v i s i o n to the He must not be s a d d l e d  present.  e x c l u s i v e l y w i t h the programs d e a l i n g  o n l y w i t h today's p r i o r i t i e s because "today" too soon becomes "yesterday". (e)  R i d g i d i t y i s o f t e n b u i l t i n t o a system by f a i l i n g  to  an adequate p r o c e d u r e f o r changing the system t o meet conditions. times.  The  provide new  A ready awareness i s needed t o keep up w i t h i d e a l i n f o r m a t i o n system w i l l f u n c t i o n  and w i l l b r i n g a t t e n t i o n t o any  the  automatically  s i t u a t i o n which requires  i n v e s t i g a t i o n or c o r r e c t i v e a c t i o n .  'Advances on EDP and I n f o r m a t i o n Systems, American Management A s s o c i a t i o n Report #62, New Y o r k , 1961, p. 15.  26  (f)  The human element has been a s i g n i f i c a n t b a r r i e r t o the a t t a i n m e n t of a t o t a l i n f o r m a t i o n system.  People tend to  c l i n g t o those t h i n g s w h i c h t h e y a r e accustomed  to.  The  i n f o r m a t i o n systems i n many concerns have been e s t a b l i s h e d over l o n g p e r i o d s of t i m e , t a i l o r e d t o the r e q u i r e m e n t s of v a r i o u s s u p e r v i s o r s , . d e p a r t m e n t heads and t o p management. These p e o p l e a r e o f t e n v e r y . s e l f i s h  or s e l f - c e n t r e d i n t h e i r  approach t o the o v e r a l l o b j e c t i v e s of the company. concerned w i t h t h e i r immediate o b j e c t i v e o n l y .  The t o t a l  i n f o r m a t i o n system concept does not c a t e r t o t h e personalities (g)  They a r e  special  and a b i l i t i e s of persons i n the o r g a n i z a t i o n .  The t o t a l i n f o r m a t i o n system program must o b t a i n t h e g e n e r a l a c c e p t a n c e of management.  I t must have t h e i r u n d e r s t a n d i n g .  T h i s p r e r e q u i s i t e has b l o c k e d numerous programs f o r when management does n o t u n d e r s t a n d why  they are doing a procedure,  they t e n d t o a v o i d i t and f o l l o w a n o t h e r p r o c e d u r e w h i c h they do u n d e r s t a n d . (h) T h e  scope of a t o t a l i n f o r m a t i o n system encourages numerous  areas f o r s p e c i a l i z a t i o n . - ^  The tendency i s n o t t o advocate  the o v e r a l l p e r s p e c t i v e , but t o emphasize and p r a c t i c e i n those a r e a s about w h i c h one knows t h e most, e i t h e r t r a i n i n g or experience.  by  As a r e s u l t , s p e c i a l i z a t i o n  creeps  i n and the b r o a d b a l a n c e d v i e w p o i n t f a l l s by t h e w a y s i d e .  T e r r y , G.R., O f f i c e A u t o m a t i o n , Homewood, 111., Dow J o n e s - I r w i n , I n c . , 1966, p. 48.  27  Communication d i f f i c u l t i e s a r i s e among t h e s p e c i a l i s t s .  The  t o t a l i n f o r m a t i o n systems concept i s e v o l v e d on what meanings are (i)  b e l i e v e d t o be as w e l l as what t h e y r e a l l y a r e .  One o f t h e most s e r i o u s b a r r i e r s i s t h e t e m p t a t i o n t o c l i n g to narrow approaches.  The complete and f u l l b e n e f i t of a 20  t o t a l system can never be won by a d h e r i n g t o l i m i t e d a r e a s . T h i s i s a p p a r e n t l y r e l a t e d t o a p e r s i s t i n g tendency t o o r i e n t a t e systems e f f o r t s t o s p e c i f i c problems as t h e y arise. to  O f t e n , systems a r e changed t o b r i n g about a s o l u t i o n  an immediate problem.  The i n i t i a l  t h i n k i n g i s f o c u s e d on  p a t c h i n g up or r e p a i r i n g systems a l r e a d y i n e x i s t e n c e c a l l e d the f i r e f i g h t i n g a p p r o a c h . ^ (j)  The b a r r i e r o f speed i n r e p o r t i n g has and always w i l l be a strong factor.  R e f e r e n c e i s made t o automated systems as  w e l l as t h o s e of humans.  The problem i s t h e t i m e l a g  between t h e o c c u r r e n c e o f an event and t h e r e p o r t i n g o r feedback of t h e d e s i r e d i n f o r m a t i o n . ^  The o b j e c t i v e i s  to  keep t h e l a g a t a minimum, but men and machines have y e t  to  have a . p e r f e c t c o o r d i n a t i o n o f e f f o r t s .  ' I b i d . , p. 49. "A term used t o d e s c r i b e a mthod o f c o r r e c t i n g a problem. I t has a l u r e of b e i n g s e r v i c e - o r i e n t e d , and u s u a l l y amounts t o l i t t l e more t h a n an e x p e d i e n t p a t c h i n g up of weak s p o t s i n t h e r o u t i n e s of b u s i n e s s . "McCarthy, J.T., " D e s i g n i n g an E f f e c t i v e Management R e p o r t i n g System", R e p o r t i n g F i n a n c i a l Data t o Management, AMA Management R e p o r t #83, American Management A s s o c i a t i o n , 1965, p. 22.  28  (k)  As s t a t e d i n t h e b a s i c d e f i n i t i o n o f a t o t a l  information  system, t h e r e must be c l e a r l y s t a t e d o b j e c t i v e s . system w i l l have a u n i t y o f purpose which i t w i l l  The accomplish  i n as s i m p l e , c l e a r and as u n d e r s t a n d a b l e a manner as possible.23  A l l management s h o u l d be made aware o f and be  able to recognize  t h e common g o a l , b u t as o f t e n happens they  , f a i l t o keep i t i n mind a t a l l t i m e s . system w i t h an u n d e f i n e d  A complete  information  s e t o f o b j e c t i v e s i s seldom a t o t a l  system because of t h e tendency t o f o l l o w an i n d i v i d u a l i s t i c s e t o f g o a l s w h i c h o f t e n d i f f e r from o t h e r members o f t h e management team. (1)  F o r e f f e c t i v e r e s u l t s , an i n f o r m a t i o n system must be based on v e r i f i e d f a c t s and n o t on o p i n i o n s , guesses o r f a l s e information.  As o f t e n happens, t h e i n f o r m a l system comes  i n t o p l a y d u r i n g communication r e l a y s w i t h t h e r e s u l t o f accuracy being s a c r i f i e d .  The s c i e n t i f i c method r e q u i r e s  the use o f e s t a b l i s h e d and v e r i f i a b l e f a c t s as t h e b a s i s f o r hypothesis  and d e c i s i o n .  I f t h e s i g n i f i c a n c e of t h e  i n f o r m a t i o n i s l o s t d u r i n g t r a n s l a t i o n , t h e system b r e a k s down and t h e t o t a l i t y n o t i o n i s l o s t .  ' B a r i s h , N.N., Systems A n a l y s i s f o r E f f e c t i v e A d m i n i s t r a t i o n , New Y o r k , Funk & Wagnalls Companyj 1951, p. 29.  29  CHAPTER I I I THE  I.  SYSTEMS ANALYSIS  OBJECTIVES OF THE  SYSTEMS ANALYSIS  T r a d i t i o n a l l y , "systems a n a l y s i s " has s e r v e d  the  needs of the a n a l y s t i n d e a l i n g w i t h the improvement of a s p e c i f i c c l e r i c a l operation.  I t encompassed o n l y such m a t t e r s as  measurement of work f l o w , c o s t s and paperwork volumes. f u n c t i o n i s not adequate f o r the r e q u i r e m e n t s  This  limited  of an o r g a n i z a t i o n i n  terms of a comprehensive t o t a l systems program. the o p e r a t i o n s a n a l y s i s r e q u i r e m e n t s ,  the  Considering only  the systems a n a l y s t i s u s u a l l y  concerned" w i t h t h r e e a s p e c t s o f a n a l y s i s f o r a t o t a l system r e v i e w : (1)  the a n a l y s t i s as concerned w i t h q u a l i t a t i v e a n a l y s i s as he i s  with . quantitative analysis,  (2)  when d e s i g n i n g a company wide  system, the a n a l y s t g i v e s l e s s a t t e n t i o n t o document f l o w w i t h i n a s i n g l e department and more a t t e n t i o n t o i n t e r d e p a r t m e n t a l o r i n t e r f u n c t i o n a l d a t a and i n f o r m a t i o n f l o w ,  (3)  the l i m i t s f o r  d e t a i l e d a n a l y s i s w i l l be determined by the s p e c i f i c needs of the i n f o r m a t i o n p r o c e s s i n g program i t s e l f c h a r t s developed  1  The  f a c t u a l d a t a and  w i l l be d i r e c t l y r e l a t e d t o and i n f l u e n c e d by  d e f i n i t i v e o u t l i n e of the l o g i c o f the new  flow the  system.  -*Galagher, J.D., Management I n f o r m a t i o n Systems and the Computer, AMA R e s e a r c h Study #51, American Management A s s o c i a t i o n I n c . , 1961, p. 128.  30  There are two schools of thought on the basic r o l e of a systems a n a l y s i s .  2  The proponents of one of these theories  maintain that a detailed analysis i s concerned with v i r t u a l l y every aspect of the project under study and i s necessary as a preliminary to developing  the design s p e c i f i c a t i o n s f o r the  information processing system.  This p o s i t i o n i s defended on the  basis that a complete understanding of the e x i s t i n g system i s required i n order to determine the impact that a change i n the system w i l l have upon certain functions.  The supporters  of the second theory hold that,  except f o r those factors which c l e a r l y have company wide management implications, detailed analysis of the e x i s t i n g system at the operations  l e v e l i s wasteful, unnecessary and w i l l r e s u l t i n a  mass of d e t a i l that can be of only h i s t o r i c a l i n t e r e s t because the system w i l l l i k e l y be substantially changed. the new system w i l l c e r t a i n l y  The design of  not be predicated on the requirements  or r e s t r a i n t s of the old one. . Under this concept, the f o c a l point of concentration i s on the formulation of the new system rather than the point by point improvement of the old, and a l l resources  should  be.diverted to systems design and development. It w i l l be a modification of this second approach that i s more of i n t e r e s t i n dealing with t o t a l information systems  2  T b i d . , p. 127.  31  analysis.  Concern i s not over t h e m i n u t e l y d e t a i l e d  procedural  a s p e c t s of t h e a n a l y s i s , b u t i s d i r e c t e d towards t h e company wide management i m p l i c a t i o n s  i n the system.  The p e r s p e c t i v e i s t h e  t o t a l i t y concept and cannot be c l o u d e d over by l o o k i n g a t e v e r y detailed  operation. W i t h i n t h i s boundary t h e r e can be two  alternatives.  additional  One a l t e r n a t i v e i s where the proposed o r model  i n f o r m a t i o n system i s known t o be the o b j e c t i v e , w i t h a subsequent r e v i e w t o be a r o u t i n e  of examining t h e e x i s t i n g system, a n a l y z i n g  and recommending a l t e r a t i o n s t o f i t t h i s model.  T h i s method  assumes a p r i o r d e t a i l e d knowledge of the systems i n use.  The  second approach i s t o a c q u i r e a w o r k i n g knowledge of o p e r a t i o n s by v e r y b r i e f l y s t u d y i n g the e x i s t i n g p r o c e d u r e s and systems,  examine  f o r i n t e r ^ r e l a t i o n s h i p s and.commonness of e f f o r t s and c l a s s i f y i n t o f u n c t i o n a l groupings.3  The f u n c t i o n a l a r e a s can n o r m a l l y be thought  of as i n d i v i d u a l segments of a t o t a l system;  i . e . subsystems.  E s t a b l i s h i n g f u n c t i o n a l areas permits c l a s s i f y i n g the r e l a t i o n s h i p s between:activities system t o a n o t h e r .  and the n a t u r a l f l o w of i n f o r m a t i o n from one T h i s p l a n would s e r v e i n e s t a b l i s h i n g a  recommended t o t a l i n f o r m a t i o n system.  A g a i n , t h e second approach l e n d s i t s e l f t o g r e a t e r a c c e p t a n c e i n t h a t i t assumes no p r i o r d e t a i l e d knowledge o f t h e ,  -  •  \  .'3This approach was recommended and used by C C . Wandler i n a paper e n t i t l e d "An Approach t o D e v e l o p i n g a T o t a l System", Ideas f o r Management-, C l e v e l a n d , Ohio, Systems and P r o c e d u r e s A s s o c i a t i o n , 1964, p.p. 205-220. s  32  systems and may  a l l o w f o r a more o b j e c t i v e r e v i e w .  o p i n i o n s have been formed.  No  prior  A g e n e r a l i z e d d e f i n i t i o n of a t o t a l  i n f o r m a t i o n system must be h e l d b e f o r e h a n d so as t o f o r m g u i d e l i n e s d u r i n g the r e v i e w .  However, the model w i l l be moulded t o the  p a r t i c u l a r circumstances.  Thus, i n one s i t u a t i o n the system i s  s t r u c t u r e d t o f i t a model or i d e a l , w h i l e i n the o t h e r b o t h the model and the system may  be a l t e r e d t o have c o m p a t i b i l i t y .  I n p r a c t i c e , t h i s second v i e w i s more because the a n a l y s t has o f t e n had e x p e r i e n c e to s i m i l a r systems under o t h e r The  situation  accepted  i n or has been exposed  circumstances.  i n i t i a l s t e p of the a n a l y s i s s h o u l d be  to  examine the e x i s t i n g systems w i t h the o b j e c t i v e of g a i n i n g an u n d e r s t a n d i n g , of the o p e r a t i o n s and to s e a r c h f o r i n f o r m a t i o n t h a t may  be r e q u i r e d i n an o v e r a l l system. . T h i s means a b r i e f r e v i e w  the i n p u t , p r o c e s s i n g and o u t p u t o p e r a t i o n s . i s intended.to.serve  a c e r t a i n purpose.  of  Each p r o c e s s i n g system  These purposes s h o u l d  be  examined t o d e t e r m i n e t h e i r c u r r e n t v a l i d i t y and w o r t h i n terms of c o n t r i b u t i n g t o the o b j e c t i v e s of the o v e r a l l program. e s t a b l i s h e d p r o c e s s i n g g o a l s s h o u l d d i c t a t e the s p e c i f i c o u t p u t r e q u i r e d t o meet t h e s e g o a l s . required?  I n what form?  How  The information  What t y p e s of o u t p u t a r e  frequently?  What s h o u l d they  These q u e s t i o n s s h o u l d a l l be i n c o r p o r a t e d i n the o b j e c t i v e . the i n p u t or raw d a t a w i l l i n t u r n be governed by the o u t p u t requirements.  contain? Often,  33  A n o t h e r o b j e c t i v e w i l l be t o determine i n what o r g a n i z a t i o n a l u n i t s t h e work i s performed. to  The p r o c e d u r e w i l l  be  c l a s s i f y the i n f o r m a t i o n p r o c e s s i n g o p e r a t i o n s by o r g a n i z a t i o n a l  u n i t and by o b j e c t i v e ;  a l s o d e t e r m i n e which i n f o r m a t i o n may  be  b e s t performed, c e n t r a l l y and w h i c h on a d e c e n t r a l i z e d b a s i s and by which u n i t .  The a n a l y s t s h o u l d become f a m i l i a r w i t h company p o l i c i e s , e s p e c i a l l y w i t h t h o s e w h i c h have a d i r e c t b e a r i n g on t h e system.  The p r e s e n t p o l i c i e s c o u l d s e r v e as the g u i d e l i n e s i n any  f u t u r e mouldings of t h e system. the  The system must s e r v e t h e needs of  company, b u t s h a l l n o t go a g a i n s t an e s t a b l i s h e d p o l i c y .  However, as systems may be r e v i s e d , so may  company p o l i c i e s .  If  the  o c c a s i o n a r i s e s where a c h a l l e n g e t o an e x i s t i n g p o l i c y i s made,  the  a n a l y s t s h o u l d be f u l l y  aware o f the i m p l i c a t i o n s so as t o  p r e p a r e h i s defence t o g a i n management a c c e p t a n c e .  . The systems a n a l y s i s s e r v e s t o s t u d y t h e o r i g i n of d a t a and the p r o c e s s i n g s t e p s i n v o l v e d .  4  The purpose i s f o r the  a n a l y s t t o d e t e r m i n e the s o u r c e s o f i n f o r m a t i o n and'to be a b l e t o c a p t u r e t h i s i n p u t d a t a as c l o s e t o the s o u r c e as p o s s i b l e .  The  d a t a would f l o w t h r o u g h t h e system a u t o m a t i c a l l y from t h a t p o i n t on.  The need f o r a c c u r a c y a n d . r e l i a b i l i t y i n d a t a c o l l e c t e d  d i c t a t e s t h e s o u r c e be known and c o n t r o l l e d t o t h e p o i n t of  Wandler, C.C., "An Approach t o D e v e l o p i n g a T o t a l System", Ideas f o r Management, C l e v e l a n d j Ohio, Systems and P r o c e d u r e s A s s o c i a t i o n , 1964, p. 218.  34  producing  s a t i s f a c t o r y input.  The p r o c e s s i n g s t e p s  involved  u s u a l l y f a l l a l o n g t h e l i n e s o f c l e r i c a l r o u t i n e once t h e i n p u t has been c o l l e c t e d , b u t t h e systems a n a l y s t must be p o s i t i v e o f e x a c t l y what p r o c e s s i n g i s done, times t a k e n t o p r o c e s s , used, equipment u s e d , c o s t s , e t c .  personnel  Once t h e s e a r e e s t a b l i s h e d ,  the p o s s i b i l i t y o f i n t e g r a t i o n o f p r o c e s s s t e p s may be s t u d i e d .  A n o t h e r o b j e c t i v e o f t h e systems a n a l y s i s , a l t h o u g h somewhat d e t a i l e d , i s t o assemble forms used i n p r o c e s s i n g and t o evaluate reports prepared.  The a n a l y s t s h o u l d make h i s e v a l u a t i o n  on t h e b a s i s o f f i r s t h a n d o b s e r v a t i o n r a t h e r than a c c e p t a v e r b a l d e s c r i p t i o n t h a t may omit numerous d e t a i l s . c a l l e d , "forms a n a l y s i s and e v a l u a t i o n " .  This process i s often  The purpose o f t h e form  i s r e v i e w e d i n c o n j u n c t i o n w i t h t h e d e t a i l s r e q u i r e d on f o r m , d i s t r i b u t i o n and f i l i n g o f forms.  I t gives a valuable i n s i g h t i n t o  what e x a c t l y i s b e i n g produced by t h e r e c o r d i n g p r o c e s s and where i n f o r m a t i o n i s b e i n g d u p l i c a t e d o r made redundant.  The t r a n s f o r m a t i o n  of i n f o r m a t i o n i n t o r e p o r t form may p o i n t o u t numerous a r e a s where data i s never being used past the i n i t i a l i n f o r m a t i o n i s o f t e n rendered completely eliminated altogether. for  input stage.  This  u s e l e s s and c o u l d be  P o s s i b l y , t h r o u g h t h i s p r o c e d u r e , o t h e r uses  i n f o r m a t i o n may be d i s p l a y e d r e s u l t i n g i n a r e v i s i o n o f r e p o r t  structure. : Volume s t a t i s t i c s f o r forms and r e p o r t s  often  produce some s u r p r i s e s : i n terms o f sheer q u a l i t y and number o f :  35  d u p l i c a t i o n s a c t u a l l y performed.  Volume r e d u c t i o n by way  of  m u l t i p l e uses o f s i n g l e r e p o r t s r a t h e r t h a n m u l t i p l e r e p r o d u c t i o n for  d i f f e r e n t uses may  may  be a  result.  Complete e l i m i n a t i o n of some forms  suggestion.  A r e v i e w of the number of people and c o s t s i n v o l v e d i n s p e c i f i c o p e r a t i o n s may  be one o b j e c t i v e o f a systems a n a l y s i s .  The amount of work i n v o l v e d i n e a c h . t a s k i n terms of man be r o u g h l y c o n v e r t e d  to d o l l a r values.  The  of o b j e c t i v e s o n l y a t a r e a s o n a b l e  A sometimes o v e r l o o k e d  to  to b a s i c procedures;  facilitate  cost.  o b j e c t i v e of the systems  a n a l y s i s i s the d e t e r m i n a t i o n o f the type and f r e q u e n c y exceptions  can  a n a l y s t s h o u l d have  developed an a t t i t u d e t h a t a system i s t o be designed the a t t a i n m e n t  hours  of  i . e . d i v e r s i o n from r o u t i n e .  This  a r e a cannot be s t r e s s e d too l i g h t l y because i t i s the emergency s i t u a t i o n s w h i c h g i v e the r e a l t e s t of the i n f o r m a t i o n system. method t h a t the system w i l l use t o h a n d l e n o n - r o u t i n e i s o f t e n a c r u c i a l f e a t u r e of a dynamic b u s i n e s s .  The  The  information systems  a n a l y s t must have the i m a g i n a t i o n and f o r e s i g h t t o a l l o w f o r the unexpected and t o b u i l d enough f l e x i b i l i t y i n t o the t o t a l system to be a b l e t o cope w i t h these u n u s u a l s i t u a t i o n s .  The t r e n d today  i s t o p l a c e a g r e a t e r emphasis on the "management by  exception"  method as i t i s o f t e n f a r e a s i e r . t o . l o o k a t a few e x c e p t i o n s i t i s t o r e v i e w a complete n o r m a l o p e r a t i o n .  than  36  II.  METHODOLOGY OF THE SYSTEMS ANALYSIS  S u c c e s s f u l a n a l y s i s r e q u i r e s an e v a l u a t i o n o f t h e p r e s e n t b u s i n e s s system as documented i n t h e f a c t f i n d i n g phase o f a survey.  A f t e r an a n a l y s i s i s made, t h e r e i s an a p p l i c a t i o n o f  human i n t e l l e c t t o a s e t o f d a t a .  I t i s , therefore, appropriate  to d i s c u s s the importance of the proper mental a t t i t u d e t o every step of the study.  The most e f f i c i e n t p l a n can be c o m p l e t e l y  negated by u n s a t i s f a c t o r y a t t i t u d e s .  I t i s e s s e n t i a l that the  systems a n a l y s t a d j u s t h i s m e n t a l approach b e f o r e s t a r t i n g  analysis  activities. The p r o p e r a t t i t u d e i s . d e s c r i b e d as b e i n g a n a l y t i c a l i n your thought p r o c e s s e s and b e i n g a b l e t o . d e f i n e t h e l o g i c o f a system.  An o b j e c t i v e v i e w p o i n t must be h e l d .  The maintenance o f  an o b j e c t i v e v i e w p o i n t i s n o t as easy as i t sounds, as soon discovered i n practice.  I t h a s n o t been s t a t e d , and i t i s n o t  i m p l i e d , that m a i n t a i n i n g the proper a t t i t u d e i s easy, b u t simply that i t i s necessary.  A systems s t u d y i s conducted i n a l o g i c a l of a c t i v i t i e s . - *  sequence  The " e n g i n e e r i n g approach" o r " s c i e n t i f i c approach"  a r e terms used t o d e s c r i b e any approach t o a problem t h a t i s thought out and p l a n n e d i n a l o g i c a l  sequence.  B a r r e t t , B.D., "Systems A n a l y s i s " , B u s i n e s s Sytems, C l e v e l a n d , Ohio, Systems and P r o c e d u r e s A s s o c i a t i o n , 1963, Volume 1, p.p. 1 - 5 .  37  To b e g i n w i t h , a t r a d i t i o n a l systems a n a l y s i s i s u s u a l l y conducted t o s o l v e a s p e c i f i c problem.  The sequence o f  a c t i v i t i e s w h i c h w i l l be g i v e n i n t h i s s t u d y w i l l n o t cover a l l situations, followed.  b u t can be used e f f e c t i v e l y as a g u i d e f o r s t e p s t o be I f each s t e p i s f o l l o w e d i m p l i c i t l y , no major r e v i s i o n s  s h o u l d be needed f o r any s p e c i f i c s i t u a t i o n .  These s t e p s a r e  diagrammed as i n F i g u r e I . The problem, i t s e l f , must be r e c o g n i z e d .  The problem  o f t e n goes u n r e c o g n i z e d o r d i s c o u n t e d because t h e scope o f t h e problem i s n o t known. Problem i d e n t i f i c a t i o n o f t e n r e v e a l s t h a t t h e apparent problems a r e o n l y symptoms; difficulty  i s y e t t o be d e t e r m i n e d .  t h e b a s i c cause o f t h e The t r u e problem i s i d e n t i f i e d  by one o r more o f t h e f o l l o w i n g t e c h n i q u e s whose o p e r a t i o n s precede or f o l l o w t h e system i n q u e s t i o n : ^ (a)  Up- and down-stream s t u d i e s - A s t u d y i s made o f t h e system whose o p e r a t i o n s precede o r f o l l o w t h e system i n q u e s t i o n .  (b)  R e s p o n s i b i l i t y a n a l y s i s - A s t u d y i s made o f t h e r e s p o n s i b i l i t i e s of t h e group i n i t i a t i n g ,  p e r f o r m i n g o r r e c e i v i n g an o p e r a t i o n  w i t h i n t h e system. (c)  S u p p o r t i n g o r r e l a t e d o p e r a t i o n s - A s t u d y s h o u l d be made o f any o p e r a t i o n s o r systems s u p p o r t i n g t h e p a r t i c u l a r  system  involved.  ^Systems and P r o c e d u r e s A s s o c i a t i o n , B u s i n e s s Systems, C l e v e l a n d , Ohio, Systems and P r o c e d u r e s A s s o c i a t i o n , 1966, p.p. 3 - 6 .  38  FIGURE I  A N A L Y T I C A L PROBLEM SOLVING  PROBLEM RECOGNITION  PROBLEM IDENTIFICATION  PROBLEM DEFINITION  DETERMINATION  OF  OBJECTIVES  ENVIRONMENT  ATTITUDES  RESOURCES  SYSTEMS PLANNING  SYSTEMS TOOLS  SYSTEMS TECHNIQUES  ANALYSIS  RECOMMENDATIONS  SYSTEMS INFORMATION  3.9  Each problem w i l l v a r y i n the amount of r e q u i r e d i n the s t u d y .  detail  N o r m a l l y , the time spent i n i s o l a t i n g  d e f i n i n g the r e a l problem reduces the l o s t e f f o r t a t o t h e r  and  stages  of the a n a l y s i s .  The mere i d e n t i f i c a t i o n of the problem; segregation  of the b a s i c d i f f i c u l t y i n the system, i s not enough  i n f o r m a t i o n upon w h i c h t o base the s o l u t i o n . defined i n d e t a i l . forms one  The  p r o b l e m must be  " D e f i n i t i o n " , the h a l f w a y p o i n t to s o l u t i o n ,  of the k e y s t o n e s of systems work.^  D e f i n i t i o n allows  the problem t o be b r o k e n down i n t o s m a l l e r segments. for  i . e . the  I t allows  the l o g i c a l g r o u p i n g of o b j e c t i v e s i n t o r e l a t e d f u n c t i o n a l  areas (or o t h e r g r o u p i n g s ) to promote the most e f f i c i e n t use  of  the f a c i l i t i e s a v a i l a b l e .  There i s u s u a l l y a r e c o g n i t i o n of the need f o r s p e c i f i c o b j e c t i v e s d i r e c t e d a t the s o l u t i o n of s p e c i f i c problems. However, every e n t e r p r i s e or f u n c t i o n w i t h i n an e n t e r p r i s e needs a r a t h e r c l e a r statement of i t s immediate o b j e c t i v e t o use as a b a s i s for  a l l i t s planning.  T h i s o b j e c t i v e i n f l u e n c e s the p l a n n i n g  to guide o v e r a l l o p e r a t i o n s .  used  The b a s i c o b j e c t i v e of the a n a l y s i s  i n the s t u d y i s t o a t t a i n the s t a t u s of a t o t a l management information  system.  To.permit a l o g i c a l a n a l y s i s , f a c t s must be i n a manner w h i c h r e l a t e s t o the. o b j e c t i v e of the system.  I b i d . , p.p.  5 -  6.  organized This  kind  40  of an a n a l y s i s o f t e n d i s c l o s e s why t h e e x i s t i n g system i s good o r bad.  The purpose and scope o f t h e study w i l l have an important  b e a r i n g on t h e o r g a n i z a t i o n of f a c t s .  i s t o group t h e f a c t s a c c o r d i n g  The g e n e r a l r u l e  t o t h e e x t e r n a l f a c t o r s t h a t may  a f f e c t t h e achievement o f t h e o b j e c t i v e and t h e major s t e p s i n t h e system.  There a r e a number o f ways i n w h i c h f a c t s can be recorded.  Since the u l t i m a t e g o a l i s not merely to record the f a c t s  but t o a n a l y z e  them, i t i s b e t t e r i f t h e f a c t s a r e r e c o r d e d  manner w h i c h p a r a l l e l s t h e a n a l y t i c a l s t e p s .  in a  For t h i s r e a s o n , i t  i s a d v i s a b l e f o r t h e a n a l y s t t o d e t e r m i n e major a n a l y t i c a l s t e p s o r process p r i o r to the r e c o r d i n g process o r , i f not p r a c t i c a l , t o r e c a t e g o r i z e the f a c t s during the process of analyses. One of t h e most i m p o r t a n t  a s p e c t s of r e c o r d i n g f a c t s  i s t o put them i n a f o r m t h a t w i l l be u n d e r s t o o d by i n d i v i d u a l s who are w o r k i n g w i t h t h e a n a l y s i s .  T h i s means t h a t they s h o u l d be  s i m p l e , c o n c i s e and i n terms u n d e r s t o o d by p e o p l e n o t f a m i l i a r w i t h t e c h n i c a l systems t e r m i n o l o g y . acceptable  techniques  One of t h e most common and most  i s that of charting.  C h a r t s w i t h t h e i r r e p r e s e n t a t i v e symbols can e l i m i n a t e pages of w r i t t e n d e s c r i p t i o n , and t h e r e f o r e become one of t h e most e f f e c t i v e and e f f i c i e n t means o f communication.  Flow c h a r t s show  41  the r e l a t i o n s h i p between components and the l o g i c a l s t r u c t u r e of a c t i v i t i e s , both important  t a s k s i n a c c u r a t e s p e c i f i c a t i o n of  an  e x i s t i n g or proposed system.^  When c h a r t s form the b a s i c t o o l f o r r e c o r d i n g , they s h o u l d meet the c r i t e r i a of s i m p l i c i t y and s i m p l e and levels.  clarity.  cogent enough f o r u t i l i z a t i o n a t a l l o r g a n i z a t i o n a l  S t a n d a r d i z a t i o n of symbols i s the v e h i c l e f o r communication. H a v i n g e s t a b l i s h e d the t o o l s and  techniques  system a n a l y s i s , the r e v i e w i t s e l f may  get underway.  should  areas:^  (a)  They must be  cover the f o l l o w i n g a s p e c t s Personnel  or  and o r g a n i z a t i o n - A l l of the  of  The  approach  qualities,  a t t r i b u t e s and p e c u l i a r i t i e s of the o r g a n i z a t i o n s h o u l d  be  detected. (b)  P r o c e s s i n g c y c l e - The  c h a r t s , as p l o t t e d , s h o u l d  compared w i t h a c t u a l p r o c e s s o p e r a t i o n s of (c)  t o check on  validity  information.  I n t e r - r e l a t i o n s h i p s - No system s t a n d s a l o n e . one may  (d)  be  The  o u t p u t of  form the i n p u t of a n o t h e r .  Work f l o w - As an e s s e n t i a l p a r t of the a n a l y s i s , i t s h o u l d cover the s i z e and peak l o a d c o n d i t i o n s of the work f l o w t h r o u g h a department or  operation.  ^Edge, C.G.j.Roy, L.C., S e n d i f o r d , P . J . , The Impact of Systems and Computers, on Management and the A c c o u n t a n t , S o c i e t y of I n d u s t r i a l and Cost A c c o u n t a n t s , S p e c i a l Study No. 6, 1966, p. 24. ^Systems and P r o c e d u r e s A s s o c i a t i o n , B u s i n e s s bp. c i t . , p.p. 7 - 15 and 7 - 1 7 .  Systems, 1963,  Volume 1,  42  (e)  Procedural structure - The v i t a l question i s whether or not procedures are adequate and are being followed.  (f)  Physical environment - Physical environment may be said to include everything, except the people  (g)  themselves.  Forms and reports - Forms analysis deals with the what, why, how and when of records.  (h)  Management directives - A management d i r e c t i v e i s an a l l i n c l u s i v e term covering written and unwritten p o l i c y , management planning and forecasts, and management preferences and prejudices.  (i)  Goals or objectives - At this point the systems analyst can evaluate the general objective of h i s project. Check l i s t s are a useful tool i n performing an  analysis.  They are not the answer to a complete or perfect review,  but they a s s i s t i n reducing the p o s s i b i l i t y of overlooking some of the more important aspects of the study.  The check l i s t need not  be an endless complex l i s t i n g of every conceivable event that the systems man might encounter.  The prime factors governing a system  should dictate the type of check l i s t needed.  III.  METHOD OF ANALYSIS TO BE USED FOR THE CASE STUDY As can be seen by the previous section, i n the past  the general approach to the conduct of a systems analysis has been directed i n one area - the solution to a s p e c i f i c problem within a system.  The procedural approach to analyzing a t o t a l information  43  system w i l l be somewhat s i m i l a r , b u t w i t h a change i n o b j e c t i v e . The  approach w i l l have t o be a l t e r e d by n o t i n g t h a t a l l i n d i v i d u a l  subsystems a r e t o be looked a t w i t h t h e v i e w of i n t e r - r e l a t i o n s h i p s r a t h e r than s p e c i f i c problem s o l v i n g .  The  diagrammatic p r e s e n t a t i o n o f a n a l y t i c a l problem  s o l v i n g can be a l t e r e d t o r e f l e c t t h e r e q u i r e d approach.  The main  adjustment i s t h e change o f w o r d i n g from "problem" t o "system". I t w i l l n o t be assumed t h a t an i n d i v i d u a l problem e x i s t s w i t h i n a system.  Therefore,  t h e r e v i e w w i l l be focused  on whole subsystems.  See F i g u r e I T .  The b e g i n n i n g  steps w i l l i n v o l v e s t a r t i n g a t the  lowest m a n a g e r i a l l e v e l o f t h e o r g a n i z a t i o n , w o r k i n g up t h r o u g h the o r g a n i z a t i o n , b r i e f l y s t u d y i n g t h e f l o w o f i n f o r m a t i o n i n t h e e x i s t i n g systems.  A review of the inadequacies  of the present  systems and c o n t r o l r e p o r t s w i l l be made a t each l e v e l o f t h e e x i s t i n g management r e p o r t s .  D i s c u s s i o n s on d e t e r m i n i n g t h e  r e q u i r e m e n t s o f a t o t a l i n f o r m a t i o n system w i l l be g i v e n .  The  case company t o be s t u d i e d i s t y p i c a l of t h e  m a j o r i t y o f n a t i o n a l companies today, i n t h a t i t s d e c e n t r a l i z e d n a t u r e r e q u i r e s t h a t a w o r k i n g knowledge of t h e e x i s t i n g be o b t a i n e d  operation  p r i o r t o w o r k i n g w i t h t o p management i n d e f i n i n g  t h e i r i n f o r m a t i o n needs. d i s c u s s e d i n more c o n c r e t e  I n t h i s way, the c u r r e n t systems may be terms and i t w i l l a l l o w f o r a d i s c u s s i o n  w i t h t o p management on a more i n f o r m e d b a s i s .  FIGURE  44  L O G I C A L SYSTEMS ANALYSIS  SYSTEM RECOGNITION  ZJZ SYSTEM IDENTIFICATION  PLANNING SYSTEM DEFINITION  DETERMINATION OF OBJECTIVES  ENVIRONMENT  ATTITUDES  RESOURCES  FACT FINDING  ANALYSIS  SYSTEMS TOOLS  • SYSTEMS TECHNIQUES  INTERPRETATION OF ANALYSIS  ANALYSIS OF LATA SYSTEMS INFORMATION  CONCLUSIONS  45  The s t u d y w i l l be d i v i d e d i n t o f o u r r e v i e w  phases.  The f i r s t phase w i l l e n t a i l t h e i n i t i a l p l a n n i n g of t h e s t u d y . The second phase w i l l i n c l u d e t h e " f a c t f i n d i n g " o f t h e e x i s t i n g i n f o r m a t i o n system w i t h t h e company.  Using the data c o l l e c t e d  about t h e e x i s t i n g system and i t s w o r k i n g s , t h e f u n c t i o n s subsystems can-be viewed as c o l l e c t i v e l y f o r m i n g a t o t a l management i n f o r m a t i o n system be).  ( o r f a i l i n g t o r e a c h t o t a l i t y , as t h e case may  T h i s t h i r d phase comparison  of gathered data to a preconceived  o u t l i n e . o f a t o t a l i n f o r m a t i o n system i s m a i n l y an a n a l y s i s o f t h e f a c t s - no o p i n i o n s on t h e s t a t u s o f t h e system w i l l be formed d u r i n g t h i s phase.  Phase f o u r w i l l a s s e s s whether or n o t t h e t o t a l i t y  s t a t u s f o r t h e system i s a t t a i n e d .  A more d e t a i l e d e x p l a n a t i o n o f  each phase f o l l o w s : (a)  Phase One - P l a n n i n g Thorough p l a n n i n g i s r e q u i r e d b e f o r e b e g i n n i n g t h e  o v e r a l l s t u d y i n o r d e r t o keep t h e d e s i g n a t e d o b j e c t i v e i n view a t a l l times.  The end r e s u l t o f p r e p a r a t o r y p l a n n i n g i s o f t e n a  m i n i m i z a t i o n o f time r e q u i r e d t o c a r r y out a study m a i n l y due t o avoidance o f d e t a i l and f o r e s e e i n g p o t e n t i a l problems.  In this  phase, a l l key v a r i a b l e s 1 0 w i l l be i d e n t i f i e d a l o n g w i t h t h e i r various a c t i v i t i e s .  Advance m a t e r i a l w i l l be p r e p a r e d t o g u i d e t h e  a n a l y s t i n g a t h e r i n g n e c e s s a r y a d d i t i o n a l i n f o r m a t i o n . F o r example,  lORey v a r i a b l e s r e f e r t o those o p e r a t i o n s of a company w h i c h a r e c o n s i d e r e d e s s e n t i a l t o i t s s u c c e s s . F o r example, i n a r e t a i l o r g a n i z a t i o n the s a l e s or marketing f u n c t i o n i s c r i t i c a l , ' t h e r e f o r e w i l l be c o n s i d e r e d a key v a r i a b l e .  46 check l i s t s may be prepared i s known or g a t h e r e d important  t o h e l p ensure t h a t complete i n f o r m a t i o n  f o r a l l areas.  The p l a n n i n g phase a l s o i s  i n p r e p a r i n g s e n i o r management f o r t h e s t u d y , i t s e l f , as  complete a c c e p t a n c e o f t h e study by them i s c r i t i c a l t o i t s s u c c e s s . I t w i l l i n v o l v e i n f o r m i n g a l l members o f t h e o b j e c t i v e s of t h e study and r e q u e s t i n g t h e i r c o o p e r a t i o n so t h a t t h e p r o p e r atmosphere i s created f o r the p r o j e c t . (b)  Phase Two - F a c t F i n d i n g and Systems T h i s phase w i l l be c o n s i d e r e d b a s i c a l l y one of  f a m i l i a r i z a t i o n and f a c t f i n d i n g i n o r d e r t o o b t a i n a g r e a t e r understanding  o f a l l a c t i v i t i e s o f t h e company.  Itwill  involve  i n t e r v i e w i n g p e r s o n n e l r e p r e s e n t i n g a l l l e v e l s of company a c t i v i t i e s w h i c h can be c o n s i d e r e d o f m a n a g e r i a l  significance.  I n a d d i t i o n t o a n a l y z i n g t h e f u n c t i o n s and r e s p o n s i b i l i t i e s o f v a r i o u s members o f t h e company, i t w i l l be necessary  t o o b t a i n an u n d e r s t a n d i n g  o f t h e approaches used i i i a l l  r e g i o n a l o f f i c e s p l u s t h a t of t h e head o f f i c e .  This w i l l r e l a t e t o  such g e n e r a l s u b j e c t s as s a l e s r e p o r t i n g , i n v e n t o r y  control,  production s c h e d u l i n g , c o s t i n g , t r a f f i c , warehousing, e t c .  The  c u r r e n t o r g a n i z a t i o n a l s t r u c t u r e o f a l l s e c t i o n s w i l l be s t u d i e d and a l l management i n f o r m a t i o n r e p o r t s prepared reviewed.  i n t h e company w i l l be  I n f o r m a t i o n c o l l e c t e d d u r i n g t h i s type of a phase s h o u l d  be o r g a n i z e d so as t o make i t a c c e s s i b l e d u r i n g l a t e r phases o f a study.  47  (c)  Phase Three - A n a l y s i s of Data The  and a n a l y z e  o b j e c t i v e of Phase Three would be t o c o n s o l i d a t e  the d a t a c o l l e c t e d i n the p r e v i o u s phase and r e l a t e the  d a t a t o the concept of a model t o t a l management i n f o r m a t i o n system. I n a n a l y z i n g the v a r i o u s subsystems, c o n s i d e r a t i o n w i l l be g i v e n t o the advantages and d i s a d v a n t a g e s of a h i g h e r degree of o r g a n i z a t i o n a l c e n t r a l i z a t i o n t h a n c u r r e n t l y e x i s t s i n the case s t u d y .  Due  to  company h a v i n g n a t i o n a l o p e r a t i o n s , r e g i o n a l d i f f e r e n c e s may t o be m a i n t a i n e d situations.  need  p u r e l y t o be more aware of s p e c i a l g e o g r a p h i c  O r g a n i z a t i o n a l o u t l i n e s would be c o n s i d e r e d  where  n e c e s s a r y as p a r t of the a b i l i t y of the v a r i o u s a c t i v i t i e s of company t o p r o v i d e and (d)  the  the  t o make use of management i n f o r m a t i o n .  Phase Four - I n t e r p r e t a t i o n of  Findings  T h i s phase w i l l i n c o r p o r a t e the r e s u l t s of b o t h Phases Two  and Three and attempt the r e a l assessment of whether or  not the s t a t u s of a t o t a l management i n f o r m a t i o n system was I f t o t a l i t y was be made on how  attained.  not a t t a i n e d , then some comments or o b s e r v a t i o n s  will  the p a r t i c u l a r i n f o r m a t i o n system of the case company  c o u l d be a l t e r e d t o b e t t e r .reach the g o a l of t o t a l i t y .  If  s o p h i s t i c a t i o n of i n f o r m a t i o n p r o c e s s i n g equipment or changes i n b a s i c i n f o r m a t i o n f l o w are r e q u i r e d , these can be b e s t observed commented upon d u r i n g t h i s phase.  and  48  CHAPTER IV ANALYSIS OF CASE COMPANY As i n d i c a t e d i n t h e p r e v i o u s c h a p t e r , t h e systems a n a l y s i s i s p r i m a r i l y an i n f o r m a t i o n o r f a c t f i n d i n g segment o f an o v e r a l l review.  The i d e n t i f i c a t i o n o f o p e r a t i o n s , t h e d e t e r m i n i n g  of systems and t h e r e c o g n i t i o n o f i n t e r - r e l a t i o n s h i p s o f subsystems a l l form p a r t o f t h e t o t a l r e v i e w . at  This chapter w i l l l o o k mainly  t h e case company t h a t was chosen f o r r e v i e w and w i l l i n v o l v e  i d e n t i f y i n g t h e v a r i o u s a s p e c t s o f i t s o p e r a t i o n s w h i c h make i t u n i q u e and w o r t h i n v e s t i g a t i n g .  I.  GENERAL INFORMATION ON THE COMPANY AND ITS OPERATIONS  Due t o t h e n a t u r e o f t h i s i n v e s t i g a t i o n , i t i s t h e w i s h o f t h e company i n v o l v e d t o r e m a i n anonymous.  Most o f t h e  i n f o r m a t i o n c o n c e r n i n g company m a t t e r s has been d i s g u i s e d and w i l l bear no i d e n t i f y i n g marks o f i t s a c t u a l o p e r a t i o n s o r p r o d u c t s . The i n f o r m a t i o n t h a t was g a t h e r e d c o u l d be c o n s i d e r e d v e r y c o n f i d e n t i a l and, f o r t h a t r e a s o n , t h e company w i l l s i m p l y be i d e n t i f i e d as ABC Company.  ABC Company i s a Canadian company w i t h o p e r a t i o n s on a national basis.  I t i s a manufacturing  concern d e a l i n g i n t h e  p r o d u c t i o n and d i s t r i b u t i o n o f sugar and sugar p r o d u c t s .  The  company's p l a n t f a c i l i t i e s a r e s i t u a t e d i n a l l t h e p r i n c i p a l mark e t i n g a r e a s a c r o s s Canada, w i t h t h e head o f f i c e i n Toronto and t h e s a l e s branches i n major Canadian c i t i e s , p l u s some  secondary  49  branches  i n s m a l l e r communities.  The main product w h i c h t h e  company s e l l s i s sugar, w h i c h a c c o u n t s f o r r o u g h l y 90% o f t o t a l sales.  Sugar p r o d u c t s account f o r t h e r e m a i n i n g 10% o f t o t a l  sales.  The company p u r c h a s e s , i n s u b s t a n t i a l l o t amounts, i n p u t s w h i c h i t r e q u i r e s as raw m a t e r i a l s .  Purchasing i s  d e c e n t r a l i z e d f o r l e s s e r i t e m s , b u t c o n t r o l l e d by head o f f i c e f o r major m a t e r i a l s and s u p p l i e s .  The company s e l l s sugar and sugar p r o d u c t s v i a s p e c i a l i z e d salesmen w i t h d i s t r i b u t i o n b e i n g v a r i e d as a r e s u l t of s p e c i a l c i r c u m s t a n c e s . to o t h e r m a n u f a c t u r i n g  F o r example, sugar may be s o l d  directly  concerns, to a wholesale o u t l e t or to  r e t a i l d e a l e r s , depending upon t h e market volume f o r a s p e c i f i c a r e a and t h e t r a n s p o r t a t i o n c o s t s i n v o l v e d .  The company employs over 1,000 p e r s o n s , w i t h t h e m a j o r i t y b e i n g h o u r l y r a t e d employees i n v o l v e d i n t h e p r o d u c t i o n and d i s t r i b u t i o n phases o f i t s o p e r a t i o n s .  These h o u r l y workers  a r e r e p r e s e n t e d by a u n i o n .  The company i s i n v o l v e d i n an i n d u s t r y w h i c h i s u n i v e r s a l i n importance and, as such, has i n t e r n a t i o n a l t i e s i n m a r k e t i n g and p u r c h a s i n g o f raw m a t e r i a l s . W i t h i n t h e i n d u s t r y , t h e company r a n k s h i g h i n terms of q u a l i t y of p r o d u c t , developments i n product r e s e a r c h and m a i n t a i n i n g a share of t h e t o t a l n a t i o n a l market.  50  As p a r t of i t s systems, ABC  Company has a medium  s i z e computer w i t h the c a p a b i l i t y o f p r o v i d i n g l i m i t e d i n the form of " o n - l i n e " communication. i s p a r t of the m a r k e t i n g  This enquiry  information facility  and p r o d u c t i o n i n f o r m a t i o n systems.  I n the f o l l o w i n g p o r t i o n of t h i s c h a p t e r , d e t a i l w i l l be o u t l i n e d f o r the company as a whole. must be g i v e n t o p r o v i d e an u n d e r s t a n d i n g and  their implications.  The  operating detail  of the e x i s t i n g systems  The method used f o r g a t h e r i n g the d e t a i l e d  i n f o r m a t i o n was m a i n l y d i r e c t i n t e r v i e w s w i t h v a r i o u s management people.  An i n f o r m a l check l i s t o f p o s s i b l e q u e s t i o n s to cover  was  used as a g u i d e t o a t t a i n f u l l i n f o r m a t i o n g a t h e r i n g .  II.  IDENTIFICATION OF THE  KEY VARIABLES  As p a r t of the p l a n n i n g phase f o r t h e o v e r a l l the e x a m i n a t i o n over-view.  study,  of a s p e c i f i c company should b e g i n with, a broad  T h i s i s the r o l e of key v a r i a b l e s .  The  i d e n t i f i c a t i o n of key v a r i a b l e s i s s i m p l y a  method f o r b r e a k i n g t h e c o m p l e x i t i e s of a whole e n t e r p r i s e down i n t o something t h a t i s more manageable.  The use of the term  "key  v a r i a b l e s " has been used by many, i n c l u d i n g Robert Anthony, t o d e s c r i b e those o p e r a t i o n s of a company w h i c h a r e c r u c i a l t o i t s success.'''  The  considered  s t r a t e g y of s e t t i n g out t h e  key  Anthony, R.N., Management C o n t r o l Systems: Cases and R e a d i n g s , R i c h a r d D. I r w i n , I n c . , Homewood, I l l i n o i s , 1965, p. 107.  5.1  v a r i a b l e s o f a company, as opposed t o l i s t i n g  t h e more t r a d i t i o n a l  f u n c t i o n a l breakdowns, i s t h a t i t e l i m i n a t e s a p o s s i b l e concent r a t i o n of e f f o r t on a r e a s t h a t may o r may n o t be c r u c i a l t o a company's s u c c e s s .  F o r example, t h e r e i s o f t e n an a c c e n t u a t i o n  put on p e r s o n n e l as b e i n g a c r i t i c a l a r e a i n a company.  However, .  t h i s , i n most companies, would n o t be c o n s i d e r e d a k e y v a r i a b l e . The f e e l i n g  i s t h a t a l t h o u g h p e r s o n n e l ( e x c l u d i n g top l e v e l  management) i s an e s s e n t i a l i t e m i n a company's o p e r a t i o n s , i t i s not o f t e n c r u c i a l to i t s success. i n managerial  The s h i f t o f  e f f o r t s h o u l d t h e n be a b l e t o be d i r e c t e d t o a r e a s  of o p e r a t i o n s o t h e r than p e r s o n n e l , r e s u l t i n g and e f f e c t i v e  importance  i n a more e f f i c i e n t  c h a n n e l l i n g of resources.  The key v a r i a b l e s i n ABC Company w i l l be e x p r e s s e d as p r o d u c t i o n , m a r k e t i n g , d i s t r i b u t i o n and p a c k i n g , and maintenance. The p r o d u c t i o n of sugar and sugar p r o d u c t s i s c o n s i d e r e d t o be c r u c i a l b o t h i n terms of q u a l i t y o f p r o d u c t and i n c o s t s of t h e production. importance market.  The m a r k e t i n g v a r i a b l e can be shown t o be of v i t a l due t o t h e company o p e r a t i n g i n a h i g h l y c o m p e t i t i v e  The d i s t r i b u t i o n , p a c k i n g and maintenance may be c o n -  s i d e r e d somewhat secondary,  but i n r e c e n t y e a r s t h e r i s i n g c o s t s  of a l l t h e s e f u n c t i o n s have brought t o l i g h t t h e need f o r i d e n t i f i c a t i o n and i n s t i t u t i o n of i n t e g r a t e d approaches towards these a c t i v i t i e s .  ABC Company i s m a i n l y c a p i t a l i n t e n s i v e .  There-  f o r e , maintenance c o s t s become a v e r y c r i t i c a l p o r t i o n o f t o t a l operating costs.  The v a r i a b l e s a r e e a s i l y t i e d t o g e t h e r , i n t h a t  i f you have an a t t r a c t i v e p r o d u c t a v a i l a b l e t o a customer when he  52  demands i t and a t a c o m p e t i t i v e p r i c e , he i s j u s t as a p t t o buy your p r o d u c t a s he i s t o buy a c o m p e t i t o r ' s p r o d u c t .  The buyer  i s s a i d t o be i n d i f f e r e n t as t o brand p r e f e r e n c e among l i k e  . .  ,  2  competitive products. W i t h t h e s e v a r i a b l e s i n mind, t h e i n f o r m a t i o n system must be t a i l o r e d t o f i t t h e i n d u s t r y i n w h i c h t h e company o p e r a t e s . A l s o , t h e system  s h o u l d r e c e i v e c a r e f u l and c o n t i n u o u s management  a t t e n t i o n i f t h e company i s t o be s u c c e s s f u l .  To do t h i s , i t  must h i g h l i g h t t h e s e v a r i a b l e s and r e p o r t r e s u l t s t o a l l l e v e l s of management.  The p r o d u c t i o n v a r i a b l e w i l l have r e l a t e d s u b activities.  The f u n c t i o n o f p u r c h a s i n g i s v e r y c r u c i a l t o  p r o d u c t i o n , i n t h a t m a t e r i a l s must be purchased w i t h a v i e w t o m i n i m i z i n g c o s t s , h a n d l i n g t i m e s and q u a n t i t i e s .  The a c t u a l  p r o d u c t i o n s c h e d u l i n g i s an a c t i v i t y t h a t must t r y t o o p t i m i z e the a v a i l a b l e p h y s i c a l f a c i l i t i e s , raw m a t e r i a l and manpower resources.  The d i s t r i b u t i o n v a r i a b l e i s becoming more and more of  a c r i t i c a l function.  separate cost centre.  T h e r e f o r e , i t has been d e s i g n a t e d a C o s t s of d i s t r i b u t i o n c o n t i n u e t o r i s e 3  more r a p i d l y than any o t h e r type o f c o s t i n t h e p r o d u c t i o n phase.  D i s c u s s e d by A.W. S t i e n e r and D.C. Hague as p a r t of a consumer's i n d i f f e r e n c e c u r v e a n a l y s i s among p r o d u c t p u r c h a s i n g c h a r a c t e r i s t i c s ; A Textbook of Economic Theory, Longmans Canada L i m i t e d , Don M i l l s , O n t a r i o , 1964, p.p. 43-76. I n d i c a t e d i n a r e p o r t by J.N. A r b u r y and A s s o c i a t e s , The TimeS e r v i c e Approach t o P h y s i c a l D i s t r i b u t i o n , American Management A s s o c i a t i o n , Management B u l l e t i n #99.  53-  The m a r k e t i n g v a r i a b l e w i l l o b v i o u s l y have r e l a t e d s u b a c t i v i t i e s w h i c h h e l p make i t up.  The s a l e s r e s u l t s form a  complete a c t i v i t y when d e a l i n g w i t h s a l e s by g e o g r a p h i c a r e a , p r o d u c t l i n e s , customer o r s a l e s by day, week, month and y e a r . Salesmen and t h e i r performance a r e a major p a r t o f m a r k e t i n g . A d v e r t i s i n g and p r o m o t i o n form a n o t h e r a c t i v i t y .  Customers,  customer r e l a t i o n s and t h e t o t a l e n v i r o n m e n t a l market a l l have to be viewed as s u b a c t i v i t i e s .  The mere i d e n t i f i c a t i o n o f t h e k e y v a r i a b l e s does not  complete t h e p l a n n i n g phase, but b a s i c a l l y i t g i v e s a p o i n t  w i t h which to begin.  I t must be remembered t h a t t h e o v e r a l l  o b j e c t i v e i n t h i s case s t u d y i s t o d e t e r m i n e whether o r n o t t h e i n f o r m a t i o n system of ABC Company a t t a i n s t h e s t a t u s o f a t o t a l management i n f o r m a t i o n system as d e f i n e d e a r l i e r i n t h e s t u d y . I t must now be a t a s k of b r e a k i n g down each system o f t h e k e y v a r i a b l e s i n t o t h e i r component subsystems.  With smaller  subsystems  d e f i n e d , an a n a l y s i s o f t h e i n t e g r a t i o n and r e l a t i o n s h i p s o f t h e v a r i o u s subsystems c a n be performed.  The subsystems o f each key v a r i a b l e w i l l be i d e n t i f i e d more i n d e t a i l terms r a t h e r t h a n a p o i n t - b y - p o i n t l i s t i n g o f each subsystem.  A b r i e f i d e n t i f i c a t i o n o f each subsystem and i t s  p r o d u c t s i s r e q u i r e d t o b r i n g each s e c t i o n i n t o f o c u s and p r o v i d e more meaning t o t h e r e a d e r .  The d a t a i n d i c a t e d h e r e can be used  l a t e r when d o i n g t h e i n t e r p r e t a t i o n s .  54  III.  DESCRIPTION OF KEY OPERATING SYSTEMS  As noted i n t h e p r e v i o u s c h a p t e r , t h e f i r s t  stage  i n an o v e r a l l management i n f o r m a t i o n system i s t h e development o f plans.  ABC Company has a d e f i n i t e p l a n n i n g a c t i v i t y .  The  p l a n n i n g f u n c t i o n was developed i n c o n j u n c t i o n with, t h e o v e r a l l v i e w o f t h e management i n f o r m a t i o n system.  P r i o r i t y i s given to  s h o r t term p l a n n i n g ; t h e p r e p a r a t i o n o f a comprehensive a n n u a l p l a n each year and t h e use o f t h e p l a n t o c o o r d i n a t e a l l company a c t i v i t i e s through the year.  Annual p l a n n i n g i s c o o r d i n a t e d by t h e f i n a n c e d i v i s i o n w h i c h i s r e s p o n s i b l e f o r t h e f i n a l assembly of p l a n i n f o r m a t i o n i n t o an a n n u a l p l a n form f o r a p p r o v a l by t h e management committee.  Long-range p l a n n i n g i s t h e r e s p o n s i b i l i t y of' t h e  p l a n n i n g department. The  annual p l a n c o n t a i n s a summary p r o f i t p l a n with,  d e t a i l e d supporting schedules, a cash f o r e c a s t , a c a p i t a l f o r e c a s t and a b a l a n c e  The  expenditure  sheet f o r e c a s t .  s t a r t i n g point f o r preparing the annual plan i s  the s e t t i n g o f a n n u a l c o r p o r a t e p r o f i t g o a l s by t h e management committee.  These g o a l s a r e c o n s i s t e n t w i t h t h e l o n g term p o l i c i e s  of t h e company, expressed i n v e s t m e n t and market  i n q u a n t i t a t i v e terms such as r e t u r n on  share.  A c t u a l p r e p a r a t i o n of t h e p l a n i n v o l v e s c o n s i d e r a b l e  55  managerial  and s u p e r v i s o r y t i m e .  D e t a i l e d i n v o l v e m e n t by persons  i n t h e m i d d l e and lower management l e v e l s o f each d i v i s i o n and f u n c t i o n a l a r e a p e r m i t s them an o p p o r t u n i t y t o c o n t r i b u t e d e t a i l e d p l a n s and s c h e d u l e s  f o r t h e i r areas o f r e s p o n s i b i l i t y and t o budget  expenses f o r t h e i r own s e c t i o n s .  T h e i r i n v o l v e m e n t a t an e a r l y  p l a n n i n g s t a g e p e r m i t s b e t t e r f o l l o w - u p p r o c e d u r e s d u r i n g t h e course of r e a l i z i n g t h e p l a n and b e t t e r assessment o f r e s p o n s i b i l i t i e s f o r d e v i a t i o n s from t h e p l a n .  In attempting  to quantify the cost of production,  d i s t r i b u t i o n and a d m i n i s t r a t i o n , t h e management i n f o r m a t i o n system of ABC Company a l l o w s f o r a s y s t e m a t i c a c c u m u l a t i o n historical  d a t a f o r use i n t h e p l a n n i n g In up-dating  reviewed  of a p p r o p r i a t e  activities.  annual p l a n s , sales f o r e c a s t s are  throughout t h e y e a r i n t h e l i g h t o f changing market  conditions.  Because these changes a f f e c t n o t o n l y t h e s a l e s  volume i n d o l l a r s , b u t a l s o p r o d u c t i o n and d i s t r i b u t i o n c o s t s and t o t a l p r o f i t a b i l i t y , the r e v i s e d f o r e c a s t s are incorporated annual plan r e v i s i o n s .  into  Changes i n o t h e r o p e r a t i n g f a c t o r s a l s o  a f f e c t p r o f i t a b i l i t y and t h e y , t o o , a r e b u i l t i n t o r e v i s e d p l a n s d u r i n g t h e course o f t h e y e a r .  I n a c t u a l p r a c t i c e , the updating  i s u s u a l l y c a r r i e d out on a q u a r t e r l y b a s i s .  The management i n f o r m a t i o n system a l s o i n c l u d e s a budgetary c o n t r o l system w i t h r e p o r t i n g designed  a l o n g t h e same  o r g a n i z a t i o n a l l i n e s as f o r t h e p r e p a r a t i o n o f t h e a n n u a l p l a n . The r e p o r t s i n f o r m management o f a c t u a l performance compared t o  56  the p l a n throughout t h e year and t h e e x t e n t t o w h i c h planned a c t i v i t i e s were r e a c h e d . lighted.  D e v i a t i o n s from t h e p l a n a r e a l s o h i g h -  T h i s c o n t r o l r e p o r t i s a k e y management r e p o r t produced  by t h e management i n f o r m a t i o n system.  Of n o t e h e r e i s t h e f a c t t h a t t h e company adopts the t e c h n i q u e  of " r e s p o n s i b i l i t y accounting"  f o r the design of a l l 4  r e p o r t s i n t h e management i n f o r m a t i o n system. presented  Information i s  t o t h e p e r s o n s who c a n d i r e c t l y i n f l u e n c e revenue and  c o s t s and who a r e , t h e r e f o r e , r e s p o n s i b l e f o r o b t a i n i n g  favorable  results. R e p o r t i n g under b u d g e t a r y c o n t r o l has a l l o w a n c e s for a f l e x i b l e report structure.  However, a r e p o r t o f o v e r a l l  r e s u l t s c o n t a i n s a monthly p r o f i t and l o s s statement showing a c t u a l v e r s u s planned s a l e s , v a r i a b l e c o s t s and p r o f i t c o n t r i b u t i o n information.  P e r i o d m a n u f a c t u r i n g c o s t s a r e shown s e p a r a t e l y as  w e l l as s e l l i n g and a d m i n i s t r a t i v e expenses and n e t t r a d i n g p r o f i t . S u b s i d i a r y s c h e d u l e s a r e p r e p a r e d showing t h e major v a r i a n c e s plan with explanations.  from  D i s t r i b u t i o n of r e p o r t s o f company o v e r a l l  t r a d i n g r e s u l t s a r e l i m i t e d t o t h e management committee and t o managers d e s i g n a t e d  by t h e management committee.  Marketing  and  s a l e s management a l s o r e c e i v e r e p o r t s c o v e r i n g p r o d u c t and d i v i s i o n a l  The p r i m a r y o b j e c t i v e o f any r e s p o n s i b i l i t y r e p o r t i n g system i s t o r e l a t e a c t u a l r e s u l t s t o t h e v a r i o u s l e v e l s of management r e s p o n s i b l e f o r p r o d u c i n g such r e s u l t s . See R e s p o n s i b i l i t y R e p o r t i n g , P e a t , Marwick, M i t c h e l l & Co., New York, 1961, p. 23.  57  p r o f i t a b i l i t y w h i c h i n c l u d e s a l e s and v a r i a b l e c o s t f i g u r e s , t o g e t h e r w i t h d i r e c t o r c o n t r o l l a b l e s e l l i n g and a d m i n i s t r a t i v e expenses and details.  M o n t h l y r e p o r t s on e x p e n d i t u r e s t o date f o r c a p i t a l a s s e t  p r o j e c t s a r e b e i n g p r e p a r e d by t h e f i n a n c e d i v i s i o n f o r o p e r a t i n g personnel.  The company a l s o adopts t h e concept of " m a r g i n a l costing"5 which f a c i l i t a t e s the e s t i m a t i n g of manufacturing costs for  any l e v e l of s a l e s by p r o d u c t and f o r s a l e s i n t o t a l by  s e p a r a t i n g v a r i a b l e from f i x e d  (period) costs.  With t h i s  information  management can p r e d i c t t h e e f f e c t o f s a l e s volume i n p r o f i t s , (a)  Marketing ABC Company has m a r k e t i n g r e p o r t s w h i c h a r e p r e p a r e d  b o t h m a n u a l l y and by d a t a p r o c e s s i n g .  The computer system has a  h i g h speed tape s t o r a g e d e v i c e , t h e r e f o r e g i v i n g t h e s a l e s r e p o r t i n g system f l e x i b i l i t y  and speed.  I t a l s o g i v e s i t a complete d a t a base  from w h i c h t o d e v e l o p a wide range o f m a r k e t i n g r e p o r t s .  The  m a r k e t i n g r e p o r t i n g system p l a c e s as much emphasis on r e p o r t i n g and measuring p r o f i t a b i l i t y as i t has h i s t o r i c a l l y on r e p o r t i n g s a l e s volume f i g u r e s .  A fundamental p a r t o f t h e management i n f o r m a t i o n system i s t h e a n n u a l market p l a n .  This plan outlines the objectives  'The " m a r g i n a l " o r " i n c r e m e n t a l " approach s e p a r a t e s a l l c o s t s w h i c h tend t o v a r y d i r e c t l y w i t h o u t p u t ( p r o d u c t i o n o r s a l e s ) from t h o s e w h i c h do n o t . The income s t a t e m e n t . t h e n b u i l d s up t h e n e t income f i g u r e by computing t h e c o n t r i b u t i o n w h i c h t h e volume o f s a l e s makes toward t h e r e c o v e r y o f n o n - v a r i a b l e c o s t s and p r o f i t s . W.C. Haseman, Management Uses of A c c o u n t i n g , A l l a n and Bacon, I n c . , 1963, p. 576.  58  s e t by t h e m a r k e t i n g group f o r t h e upcoming y e a r and t h e s t r a t e g y t o achieve these o b j e c t i v e s . product margins.  I t i n c l u d e s p r o d u c t f o r e c a s t s and  estimated  Where t h e f o r e c a s t p r o d u c t volume assumes a s h i f t  i n e i t h e r p r o d u c t m i x o r customer m i x , p l a n s a r e i n c l u d e d as t o how the changes a r e t o be e f f e c t e d .  The m a r k e t i n g p l a n , f o r purposes of t h e management i n f o r m a t i o n system, has two b a s i c o b j e c t i v e s . volume e s t i m a t e s  F i r s t , i t establishes  on w h i c h t h e p r o d u c t p l a n , o p e r a t i n g  p r o f i t f o r e c a s t s , e t c . , can be p r e p a r e d .  budgets,  Second, i t e s t a b l i s h e s  t a r g e t s on t o t a l market s h a r e , p r o f i t a b i l i t y , p r o d u c t m i x , volume, etc.,  f o r t h e v a r i o u s s e c t i o n s of a m a r k e t i n g department a g a i n s t  w h i c h t h e i n f o r m a t i o n p r o v i d e d by t h e management i n f o r m a t i o n can be compared.  system  The purpose of t h e comparison i s t o h i g h l i g h t where  t h e r e a r e d i v e r s i o n s from t h e p l a n so t h a t c o r r e c t i v e a c t i o n can be t a k e n as soon as p o s s i b l e . The  s a l e s r e p o r t i n g system has f l e x i b i l i t y , i n t h a t  i t had t h e c a p a b i l i t y o f r e t a i n i n g s a l e s s t a t i s t i c s on a customer b a s i s by p r o d u c t i t e m ;  i . e . the lowest l e v e l of d e t a i l .  While  i t i s u n l i k e l y t h a t t h i s amount of d e t a i l would ever be r e q u i r e d on one  report, nevertheless,  complete f l e x i b i l i t y  through t h e r e t e n t i o n o f t h i s  i s achieved f o r the production  detail,  of v i r t u a l l y any  volume d a t a w h i c h t h e m a r k e t i n g department may r e q u i r e .  The-  r e t e n t i o n o f i n f o r m a t i o n on a.customer l e v e l makes i t p o s s i b l e t o e s t a b l i s h e a s i l y t h e demands by g e o g r a p h i c a l i n reviewing  a r e a w h i c h c o u l d be used  p e r i o d i c a l l y t h e a l l o c a t i o n of p r o d u c t i o n  to refineries.  59  There a r e a number of f a c t o r s which m a r k e t i n g can i n f l u e n c e w h i c h , i n t u r n , a f f e c t company p r o f i t a b i l i t y .  It i s ,  t h e r e f o r e , e s s e n t i a l t h a t t h e management i n f o r m a t i o n system can r e p o r t back t o m a r k e t i n g on t h e c u r r e n t s t a t u s of t h e v a r i o u s f a c t o r s .  P r o f i t a b i l i t y i s a f f e c t e d by changes i n p r o d u c t mix and, t h e r e f o r e , t h e c o n s t a n t feedback of a c t u a l p r o d u c t m i x v e r s u s planned p r o d u c t m i x e s t a b l i s h e s where a d i v e r g e n c e i n t o t a l  profit  i s b e i n g caused by a s h i f t i n p r o d u c t mix.  S e c o n d l y , t h e comparison i s a u t o m a t i c a l l y made by the data processing  system o f t h e p l a n n e d and a c t u a l m a r g i n on each  p r o d u c t , r e p o r t i n g t o m a r k e t i n g on a d i v i s i o n a l b a s i s t h e c u m u l a t i v e price  discounts.  . T h i r d l y , a feedback o f f r e i g h t a b s o r p t i o n a l s o i s b u i l t i n t o t h e management i n f o r m a t i o n  system.  F o u r t h l y , budgets a r e e s t a b l i s h e d f o r t h e s a l e s d i v i s i o n and t h e c e n t r a l m a r k e t i n g s t a f f t o r e p o r t on c o s t s under t h e i r c o n t r o l a g a i n s t p l a n n e d s e l l i n g and m a r k e t i n g a d m i n i s t r a t i v e c o s t s . These budgets a r e o r g a n i z e d  a l o n g . r e s p o n s i b i l i t y l i n e s and a r e  c o n s i s t e n t w i t h t h e b u d g e t a r y c o n t r o l system w h i c h i s i n t r o d u c e d a company-wide b a s i s i n c o n j u n c t i o n w i t h t h e management  on  information  system.  . The p r o d u c t c o s t i n f o r m a t i o n p r o v i d e d by t h e management i n f o r m a t i o n system s e g r e g a t e s c o s t s i n t o f i x e d and v a r i a b l e components  60  components so t h a t m a r k e t i n g has added p e r s p e c t i v e on t h e c o n t r i b u t i o n of each p r o d u c t t o f i x e d c o s t s and t o company p r o f i t .  Market s h a r e i s an i m p o r t a n t r e p o r t i n g system.  p a r t of t h e m a r k e t i n g  The management i n f o r m a t i o n system i n d i c a t e s  the market share f o r t h e f i s c a l y e a r t o d a t e , a l s o t h e r o l l i n g t w e l v e month market s h a r e f i g u r e . Market s h a r e i n f o r m a t i o n i s n o t produced by t h e d a t a p r o c e s s i n g system, b u t i s produced on an a n n u a l b a s i s i n t h e form of graphs. As p a r t o f s a l e s coverage i n f o r m a t i o n , a l l s a l e s personnel  a r e r e s p o n s i b l e f o r r e p o r t i n g on t h e d e t a i l s o f customer  calls. I n a d d i t i o n t o s a l e s coverage d a t a , t h e management i n f o r m a t i o n system a l s o c o n t a i n s a s a l e s c o n t r a c t f i l e which i s used t o p r i c e c o n t r a c t o r d e r s and t o r e p o r t t o m a r k e t i n g on t h e c u r r e n t s t a t u s of a l l c o n t r a c t s . The for  use o f m a r g i n a l  c o s t i n g p r o v i d e s added p e r s p e c t i v e  t h e m a r k e t i n g department on p r o d u c t p r o f i t a b i l i t y .  The  i n f o r m a t i o n system i s a l s o d e s i g n e d t o p r o v i d e added p e r s p e c t i v e on customer p r o f i t a b i l i t y . The'use o f t h e computer makes i t a p r a c t i c a l t o r e t a i n s a l e s i n f o r m a t i o n on a.customer l e v e l .  technique  Delivery costs to  61  each customer a r e e s t a b l i s h e d on a b a s i s of s t a n d a r d  delivery rates.  A s a l e s coverage c o s t f o r each customer i s a l s o c a l c u l a t e d on salesmen's c a l l r e p o r t s .  I n c a l c u l a t i n g customer  profitability,  a c t u a l s e l l i n g and d e l i v e r y c o s t s f o r t h e customer would be used. The n a t u r e and d i s t r i b u t i o n of t h e v a r i o u s m a r k e t i n g r e p o r t s p r o v i d e d by t h e management i n f o r m a t i o n system i s shown by Table I .  One of t h e o b j e c t i v e s o f t h e b a s i c management  information  system i s t o p r o v i d e o n l y t h e i n f o r m a t i o n w h i c h i s r e q u i r e d on a regular basis.  I t excludes  i n f o r m a t i o n w h i c h may be r e q u i r e d f o r  s p e c i a l a n a l y s i s from t i m e t o time because o f t h e f l e x i b i l i t y system t o p r o v i d e t h e s p e c i a l r e p o r t s on demand.  of the  W h i l e i t would  appear t h a t t h e r e would be a l a r g e number o f s a l e s r e p o r t s , i n f a c t each one i s q u i t e b r i e f because o f t h e l i m i t e d d e t a i l s on each r e p o r t . None i n c l u d e s produce and s i z e shipments on package p r o d u c t s , f o r example.  However, a g e n e r a l purpose computer program i s m a i n t a i n e d  w h i c h i s a b l e t o develop t h e d e t a i l t o be p r o v i d e d  upon r e q u e s t o f  marketing. The management i n f o r m a t i o n system p r o v i d e s f o r t h e r e p o r t i n g of.customer s e r v i c e i n f o r m a t i o n . i n f o r m a t i o n so t h a t t h e c u s t o m e r . s e r v i c e  T h i s i s a feedback o f  l e v e l can be measured and  the s a f e t y i n v e n t o r y s t o c k s a d j u s t e d t o o b t a i n t h e l e v e l o f customer s e r v i c e d e s i r e d by t h e company.  The company c u r r e n t l y p r o v i d e s  a  h i g h l e v e l o f s e r v i c e t o t h e i r customers and a r e r a r e l y i n a p o s i t i o n where o r d e r s must be d e l a y e d  or s h o r t - s h i p p e d .  A record  62  TABLE I  MONTHLY MARKETING  VALUE - &  Management Committee  Vice-President Sales  Division Managers  X  X X  X  P r o f i t C o n t r i b u t i o n - Company - Division - Territory - Company - Division - Territory  X X  Company Division Territory  X X  By Brand  Company Division Territory  X X  By D i v i s i o n  A l l Divisions Individual Divisions  X  Marketing Expense  REPORTS  Territorial Managers  Salesmen  X X  VOLUME POUNDS Market Share  X  (By industry (class  X X  By T e r r i t o r y By Industry  Company Division Territory  Bulk, L i q u i d and Granulated  Company Division Territory  By C e n t r a l Purchasing Groups  X  (Major accounts ^ (shown  X X  ( A l l company ^ (accounts shown  Division  Major Accounts  - Company - Division  By Dealer  - Division  Sales t o Other Divisions By Salesmen by Customer  X  X  63  i s m a i n t a i n e d m a n u a l l y on the number of items and pounds shortss h i p p e d per month, the number of o r d e r s and pounds not shipped  on  t i m e , o r d e r s c a n c e l l e d because of i n a b i l i t y t o s h i p on t i m e , a r e c o r d of customer c o m p l a i n t s , e t c . , so as t o p r o v i d e a sound b a s i s ort w h i c h t o r e v i e w p e r i o d i c a l l y the l e v e l o f s e r v i c e p r o v i d e d to customers b y . t h e company, (b)  Production The system f o r t h e key v a r i a b l e , " p r o d u c t i o n " , i s  somewhat l e s s d e t a i l e d , b u t , n e v e r t h e l e s s , c o m p l i c a t e d .  In specifying  the management i n f o r m a t i o n system on p r o d u c t i o n , two n a t u r a l headings occur - sugar p l a n t p r o d u c t i o n c o n t r o l and p r o d u c t i o n c o n t r o l of sugar b l e n d s .  I n the sugar p l a n t p r o d u c t i o n c o n t r o l a r e a , the main  subsystems a r e a n n u a l p l a n n i n g of p r o d u c t i o n , weekly m o n i t o r i n g of f o r e c a s t s and the method of o r d e r i n g b y . r e g i o n a l warehouse.  I n the  p r o d u c t i o n c o n t r o l o f sugar b l e n d s , the p r i n c i p a l subsystems a r e o p t i m a l raw sugar d i s t r i b u t i o n , c o n t r o l of p l a n t performance and s e l e c t i o n of o p t i m a l sugar b l e n d s . The p r o d u c t i o n i n f o r m a t i o n system has  recognized  the need not o n l y f o r o p e r a t i n g c o n t r o l over p r o d u c t i o n , but a l s o the p r o v i s i o n of adequate p l a n n i n g t o o l s and i n f o r m a t i o n f o r the production a c t i v i t i e s .  These they have a c h i e v e d through  of a v a r i e t y of computer and m a t h e m a t i c a l  the  use  techniques which provide  management w i t h b e t t e r and complete i n f o r m a t i o n f o r p r o d u c t i o n p l a n n i n g and  control.  64 The m a t h e m a t i c a l l i n e a r programming models.  techniques  c o n s i s t p r i n c i p a l l y of  A package program f o r s o l v i n g l i n e a r  programming problems, c a l l e d LP-MOSS, i s used on the company's computer.  Another t e c h n i q u e used i s r e g r e s s i o n a n a l y s i s , f o r w h i c h  a packaged computer program i s a l s o b e i n g  utilized.  W i t h i n the sugar p l a n t , p r o d u c t i o n c o n t r o l subsystems e x i s t w h i c h a l l o w f o r an i d e n t i f i c a t i o n of the t o t a l picture.  production  These subsystems w i l l be d e s c r i b e d o n l y i n those  details  relevant to a general d e s c r i p t i o n : (i)  A n n u a l p l a n n i n g subsystem The major f e a t u r e of the demand f a c e d by the sugar p l a n t i s i t s seasonality.  The method used f o r d e t e r m i n i n g  p r o d u c t i o n p l a n f o r any y e a r i s t o d e r i v e a  the.best  mathematical  model o f p r o d u c t i o n . l e v e l s . . T h i s model may  i n c l u d e such items as t o t a l expected  costs,  maximum number of p r o d u c t i o n days a v a i l a b l e , minimum number o f p r o d u c t i o n days t h a t may  be used, maximum number of days  t h a t any work crew t a k e n from another p r o d u c t i o n w i l l be a v a i l a b l e .  location  The p l a n n i n g program then e s t a b l i s h e s  the o p t i m a l p r o d u c t i o n p l a n f o r the t w e l v e months w h i c h meets a l l the expected  demands each month and obeys the  v a r i o u s c a p a c i t y c o n s t r a i n t s . See F i g u r e I I I . (ii)  M o n t h l y s c h e d u l i n g subsystem The  p r o d u c t i o n p l a n n i n g phase i n d i c a t e s f o r any  given  month the:number of p r o d u c t i o n hours a l l o c a t e d and how  they  PRODUCTION P L A N N I N G  Planning Data  FIGURE III  ;  65  SYSTEM  Machine Group Characteristics  EDIT PROGRAM  Restriction Cards  Revision OarJ-  Cost Cards Prod. Rate Cards  LP-MOSS Control Cards  LP-MCWD 3olu t i o n ; Repo rt Format  LP-KCBS Llo'lut.ion; Card Output  PRODUCTION PLAN iffiPORT  OUTPUT PROGRAM  66  are  arranged i n t o s h i f t s .  s c h e d u l i n g subsystem  The purposes of t h e monthly  i s then t o determine t h e b e s t way t o  d i s t r i b u t e t h e a v a i l a b l e p l a n t c a p a c i t y among t h e v a r i o u s grades and types o f sugar p r o d u c t s . stages:  I t does so i n two  f i r s t , t h e s c h e d u l i n g program c a l c u l a t e s t h e  minimum q u a n t i t y r e q u i r e d f o r each p r o d u c t i n t h e n e x t month i n o r d e r t o meet t h e e x p e c t e d demands w i t h a p r e d e t e r m i n e d p r o b a b i l i t y o f s u c c e s s , example, a t a 9 5 % c o n f i d e n c e l e v e l ; second, t h e system m a n u a l l y c o n v e r t s t h e minimum r e q u i r e m e n t s into production quantities.  I f the p l a n t c a p a c i t y allows  no b u i l d - a h e a d , then t h e p r o d u c t i o n q u a n t i t i e s would  remain  the same as t h e minimum r e q u i r e m e n t s . Thus, a t t h e end o f t h e phase, a p r o d u c t i o n s c h e d u l e f o r the month i n q u e s t i o n i s produced  i n which t h e b a s i c  s t r u c t u r e of t h e s c h e d u l e i s s p e c i f i e d and t h e e x a c t p r o d u c t i o n q u a n t i t y f o r each sugar p r o d u c t i s s p e c i f i e d , i n d i c a t i n g what p a r t o f t h a t q u a n t i t y r e p r e s e n t s w o r k i n g s t o c k , b u i l d - a h e a d s t o c k and s a f e t y s t o c k .  The aggregate  s a f e t y s t o c k f o r a l l sugar p r o d u c t s i s a v a i l a b l e  monthly  and can be used i n t h e a n n u a l p l a n n i n g phase where t h e o v e r a l l i n v e n t o r y needs a r e b e i n g e v a l u a t e d . (iii)  Weekly s e q u e n c i n g  See F i g u r e IV.  subsystem  The purpose o f t h e weekly sequencing i s t o respond t o those d e v i a t i o n s o f a c t u a l demands from f o r e c a s t t h a t a r e l i k e l y to r e s u l t i n an o u t - o f - s t o c k s i t u a t i o n .  T h i s i s done by  67  PRODUCTION SCHEDULING PROCEDURE  1)  Current Month Number  2)  Production In Hand or on Order f o r each product this month  3)  Sales Dept. Forecast of Shipments for each product next month  FIGURE IV  68  c a l c u l a t i n g an i n d e x , c a l l e d t h e c r i t i c a l r a t i o , f o r each product.  T h i s i n d e x i n d i c a t e s t o p r o d u c t i o n management  whether t h e p r o d u c t has t o be made e a r l i e r than  scheduled  because o f a low f o r e c a s t , o r whether i t can be d e l a y e d w i t h o u t r i s k because o f a h i g h f o r e c a s t . The weekly s c h e d u l i n g program produces a c r i t i c a l  ratio  r e p o r t w h i c h l i s t s each grade o f sugar i n a s c e n d i n g of t h e i r r e l e v a n t c r i t i c a l r a t i o . for  order  This report i s the b a s i s  d e c i d i n g on a p p r o p r i a t e a c t i o n i n response t o s h o r t  term d i f f e r e n c e s between f o r e c a s t e d and a c t u a l demand.  The  t h r e e subsystems o f p r o d u c t i o n c o n t r o l d e s c r i b e d  so f a r - a n n u a l p l a n n i n g , monthly s c h e d u l i n g , weekly sequencing a r e a l l aimed a t c e n t r a l i z i n g c o n t r o l over sugar p r o d u c t i o n .  -  They  do n o t d i s t i n g u i s h between o r d e r s on home o f f i c e and those from r e g i o n a l warehouses. be met.  T h i s makes no d i f f e r e n c e when a l l o r d e r s can  However, when s h o r t a g e s a r i s e as a r e s u l t o f o r d e r s from  r e g i o n a l warehouses, t h e management i n f o r m a t i o n system has a p r o v i s i o n t o i n d i c a t e t o head o f f i c e t h e d i s p o s i t i o n o f f i e l d  stocks  so t h a t a r a t i o n a l c h o i c e can be made between s h o r t - s h i p p i n g (which i s a p o s s i b i l i t y i f t h e i t e m was o r d e r e d m a i n l y t o o b t a i n a c a r l o a d o r d e r ) and changing t h e p r o d u c t i o n s c h e d u l e t o produce t h e o u t - o f s t o c k Item.. T h i s d e c i s i o n i s made w i t h r e f e r e n c e t o a n a t i o n a l i n v e n t o r y s t a t u s r e p o r t and i s n e g o t i a t e d between t h e r e g i o n a l s a l e s , department and t h e p r o d u c t i o n  scheduler.  69  The management i n f o r m a t i o n system has been extended t o g e n e r a t e recommended o r d e r s f o r a l l grades o f sugar f o r each region.  This i n v o l v e s maintaining accurate inventory records  centrally  and opposes a f i x e d p a t t e r n o f o r d e r i n g on r e g i o n a l warehouses, (c)  D i s t r i b u t i o n and p a c k i n g The management i n f o r m a t i o n system i s d e s i g n e d t o  p r o v i d e c o n t r o l r e p o r t s on d e l i v e r y and f r e i g h t c o s t s . s t o r a g e c o s t s a r e i n c l u d e d i n d e l i v e r y charges.  Variable  I t i s considered  i m p o r t a n t n o t o n l y t o know when d e l i v e r y c o s t s a r e o t h e r  than  e s t i m a t e d , b u t t o know t h e b a s i c r e a s o n f o r any d i s c r e p a n c y .  As a  r e s u l t , t h e amount o f f r e i g h t b i l l e d t o the customer i s compared and accumulated a g a i n s t t h e f r e i g h t and d e l i v e r y c o s t s from t h e normal point of d e l i v e r y .  A f u r t h e r c o n t r o l report i s provided which  measures the d i f f e r e n c e between t h e f r e i g h t from t h e normal s u p p l y p o i n t t o t h e customer, and t h e f r e i g h t from t h e a c t u a l s u p p l y  point  t o t h e cus tomer. E l e c t r o n i c d a t a p r o c e s s i n g mechanizes t h e f i n i s h e d goods i n v e n t o r y r e c o r d s .  A n a t u r a l b y - p r o d u c t o f t h i s system and  i t s management i n f o r m a t i o n system i s t h e d a i l y e x c e p t i o n r e p o r t o f items o u t s i d e t h e minimum and maximum i n v e n t o r y l e v e l s , and a p e r i o d i c r e v i e w and r e c a l c u l a t i o n o f minimum and maximum l e v e l s .  The management i n f o r m a t i o n system does n o t a c t u a l l y c o n t r o l t h e t o t a l f i n i s h e d goods i n v e n t o r y o r t h e s p l i t between packed and unpacked f i n i s h e d goods i n v e n t o r y , b u t m e r e l y  records  70  the changes i n l e v e l s .  The i n f o r m a t i o n system does, however, r e p o r t  on t h e mix o f t h e packed f i n i s h e d goods i n v e n t o r y .  Target i n v e n t o r y  l e v e l s f o r t h e v a r i o u s i n d i v i d u a l packaged p r o d u c t s  a r e developed on  an i n f o r m a l b a s i s by m a r k e t i n g  and d i s t r i b u t i o n .  While i n the  c o n t e x t o f t h i s system t h e product mix o f t h e packed i n v e n t o r y i s not c r i t i c a l , p r o v i s i o n i s made i n t h e management i n f o r m a t i o n system f o r a more s o p h i s t i c a t e d method o f e s t a b l i s h i n g t a r g e t i n v e n t o r y levels.  T h i s i s b e f o r e t h e method of s c h e d u l i n g the p a c k a g i n g  o p e r a t i o n c a n be changed, thereby i n c r e a s i n g the e f f i c i e n c y o f p e r s o n n e l and equipment u t i l i z a t i o n w i t h i n the p a c k i n g  operation.  The management i n f o r m a t i o n system d e v e l o p s t h e necessary  d a t a t o e s t a b l i s h t a r g e t i n v e n t o r y l e v e l s f o r each  packaged p r o d u c t .  U s i n g i n v e n t o r y movement f i g u r e s from t h e  management i n f o r m a t i o n system, s a f e t y s t o c k i s t h e c a l c u l a t e d f o r each p r o d u c t based on t h e v a r i a b i l i t y p a c k i n g department l e a d - t i m e .  o f demand over t h e d e s i r e d  With t h i s technique  f o r s e t t i n g the  t a r g e t i n v e n t o r i e s , t h e o v e r a l l packed i n v e n t o r i e s a r e b e t t e r balanced  and e f f i c i e n c i e s a r e o b t a i n e d  i n personnel  utilization  w i t h i n t h e e x i s t i n g o v e r a l l company f i n i s h e d goods i n v e n t o r y system.  I n t h e p a c k i n g department, system j o b c a r d s a r e prepared  f o r a l l packing labour i n d i c a t i n g the various cost centres,  c o s t s t a t i o n s and elements w h i c h a r e t o be charged.  Data p r o c e s s i n g  produces a weekly t a b u l a t i o n o f the p a c k i n g l a b o u r by c o s t c e n t r e , based on t h e j o b c a r d s .  There i s n o t always a d i r e c t r e l a t i o n s h i p  71  between l a b o u r r e q u i r e m e n t s and t o t a l tonnage o u t p u t .  T h i s problem  i s n o r m a l l y s o l v e d through the s c h e d u l i n g of p r o d u c t i o n over a p e r i o d of two or t h r e e weeks d u r i n g w h i c h l a b o u r r e q u i r e m e n t s a r e l e v e l l e d . T h i s t e c h n i q u e e l i m i n a t e s the n e c e s s i t y t o have excess s t a f f t o cope w i t h the peaks w h i c h o c c u r from time t o time under a d a i l y s c h e d u l i n g operation.  The l e n g t h e n i n g o f the p r o d u c t i o n s c h e d u l e i n p a c k i n g has t h e added advantage of d e c r e a s i n g the e f f e c t w h i c h  distribution  can have on the p a c k a g i n g o p e r a t i o n , and t h e r e f o r e i n c r e a s e s the a b i l i t y t o i s o l a t e the performance of the p a c k i n g a c t i v i t y . The p a c k a g i n g s e c t i o n of the management i n f o r m a t i o n system produces a weekly performance r e p o r t w h i c h compares a c t u a l p r o d u c t i o n t o a t t a i n a b l e s t a n d a r d s f o r b o t h machine c o n t r o l l e d o p e r a t i o n s and m a n u a l l y c o n t r o l l e d o p e r a t i o n s . Machine  utilization  r e c o r d s a r e kept and a c o d i n g system i s e s t a b l i s h e d so t h a t the r e a s o n f o r down t i m e can be i n d i c a t e d i n the r e p o r t i n g system.  All  machines have r e c o r d e r s t o a c c u r a t e l y measure machine u t i l i z a t i o n .  A d a i l y a n a l y s i s o f p a c k i n g performance i s done by the computer system, h i g h l i g h t i n g on an e x c e p t i o n b a s i s t o p a c k a g i n g management t h o s e i t e m s which d i d n o t f a l l w i t h i n an a c c e p t a b l e performance (d)  range,  Maintenance Job c a r d s a r e p r e p a r e d f o r a l l maintenance p e r s o n n e l  i n d i c a t i n g f o r each r e p a i r assignment the c o s t c e n t r e , s t a t i o n and  72  element code, t h e r e g u l a r , overtime  or d o u b l e - t i m e h o u r s , the  employee number and the machine number.  R e q u i s i t i o n cards a r e  r e q u i r e d f o r a l l maintenance m a t e r i a l and i n c l u d e the c o s t code and d o l l a r amount of t h e m a t e r i a l w h i c h has been p r i c e d by p u r c h a s i n g . As a b y - p r o d u c t o f the c o s t i n g system, r e p o r t s a r e p r o v i d e d t o maintenance management each p e r i o d c o v e r i n g t h e maintenance, l a b o u r and m a t e r i a l by c o s t c e n t r e .  ABC Company has an on-going p r e v e n t a t i v e maintenance system i n w h i c h a h i s t o r y i s r e t a i n e d f o r each machine on a Kardex f i l e of a l l maintenance work done.  As maintenance r e p r e s e n t s a  s i g n i f i c a n t percentage of t o t a l v a r i a b l e production c o s t s , the management i n f o r m a t i o n system p l a y s an i m p o r t a n t a l l maintenance c o s t s .  part i n reporting  Maintenance i n f o r m a t i o n i s m a i n t a i n e d  by  d a t a p r o c e s s i n g , t h e r e f o r e an u p - t o - t h e - m i n u t e r e p o r t on maintenance cost i s r e a d i l y a v a i l a b l e . V a r i o u s maintenance r e p o r t s a r e a v a i l a b l e . d e t a i l i s provided  Cost  t o v a r i o u s o p e r a t i n g departments showing n o t  o n l y t o t a l maintenance, b u t a l s o a breakdown i n t o the v a r i o u s of maintenance.  Information  and c a n be p r o v i d e d  types  i s a l s o a v a i l a b l e by machine number  t o maintenance management. IV.  CURRENT SYSTEMS DESIGN  I n ABC Company t h e r e a r e two b a s i c concepts r e l a t i n g t o systems d e s i g n .  The f i r s t concept i s t h e emphasis on t h e d e s i g n  73  for  i n p u t and p r o p e r s t o r a g e o f d a t a i n order t o form a comprehensive  d a t a base.  I t i s t h i s d a t a base which p r o v i d e s u n l i m i t e d  flexibility  as t o t h e format o f the v a r i o u s o u t p u t r e p o r t s , t h e f r e q u e n c y w i t h which the i n f o r m a t i o n i s provided and  ( i . e . instantaneously  t h e b a s i s on which t h e i n f o r m a t i o n i s p r o v i d e d  or p e r i o d i c a l l y )  ( i . e . exception  or complete r e p o r t i n g ) . I t i s f e l t t h a t t h e p r o c e s s i n g of i n p u t and t h e c o n s t r u c t i o n o f t h e d a t a base w i l l have l a s t i n g v a l u e as t h e company i n c r e a s e s i t s degree o f s o p h i s t i c a t i o n o f the management i n f o r m a t i o n system over f u t u r e y e a r s .  I t w i l l r e m a i n r e l a t i v e l y unchanged u n t i l  the need a r i s e s i n t h e f u t u r e f o r a change i n computer equipment t o p r o v i d e f a s t e r response t o the systems. The  o t h e r b a s i c p r i n c i p a l used i n t h e d e s i g n o f t h e  management i n f o r m a t i o n system i s t h a t o f i n t e g r a t i o n . t h a t t h e i n p u t d a t a i s used f o r m u l t i p l e purposes. j o b cards p r e p a r e d by t h e p a c k i n g for  cost accounting  T h i s means  F o r example,  department a r e o n l y t o be used  purposes, but are a l s o stored i n a packing  data  f i l e t o p r o v i d e management r e p o r t s on t h e performance of p a c k i n g activities.  S i m i l a r l y , t h e d a t a needed t o p r e p a r e an i n v o i c e i s  a l s o used t o up-date t h e m a r k e t i n g d a t a f i l e and t h e f i n i s h e d goods inventory  file. As s t a t e d p r e v i o u s l y , t h e o v e r a l l management  i n f o r m a t i o n system i s made up of a number of o p e r a t i n g systems ( e . g .  74  b i l l i n g s , p a y r o l l , e t c . ) , and a number o f i n f o r m a t i o n r e p o r t i n g systems (e.g. m a r k e t i n g  i n f o r m a t i o n systems, maintenance i n f o r m a t i o n  systems, e t c . ) . For purposes o f documentation, t h e d e s i g n o f t h e o v e r a l l management systems can be combined i n t o two major subsystems w h i c h a r e r e l a t i v e l y independent o f one another. The  f i r s t combines t h e order p r o c e s s i n g ,  a c c o u n t s r e c e i v a b l e , c r e d i t and f i n i s h e d goods i n v e n t o r y systems w i t h t h e m a r k e t i n g The  billing, operating  and d i s t r i b u t i o n i n f o r m a t i o n systems.  second system combines t h e o p e r a t i o n a l f u n c t i o n s o f m a i n t a i n i n g  l a b o u r , p a y r o l l , m a t e r i a l and o t h e r c o s t r e c o r d s w i t h t h e budgetary c o n t r o l , product  p r o f i t a b i l i t y , p a c k i n g and maintenance management  r e p o r t i n g systems.  W i t h i n each o f t h e subsystems t h e r e i s a h i g h  degree o f i n t e g r a t i o n ; i . e . a m u l t i p l e use o f common i n p u t d a t a and a common use o f t h e b a s i c f i l e s o f t h e system.  Both subsystems  p r o v i d e d a t a f o r t h e company's f i n a n c i a l r e p o r t s , (a)  D i s t r i b u t i o n and M a r k e t i n g  Subsystems  Figure V i n d i c a t e s the general o u t l i n e of a d i s t r i b u t i o n and m a r k e t i n g  subsystem.  I t i d e n t i f i e s t h e k e y types  of i n p u t d a t a , f i l e s and output documents and r e p o r t s . A sales contract f i l e i s maintained  and i s up-dated  d a i l y w i t h new c o n t r a c t s , a l t e r e d c o n t r a c t s and c a n c e l l e d c o n t r a c t s . The  f i l e s e r v e s two b a s i c p u r p o s e s :  > DISTRIBUTION  oc  O  INPUT  / SALES  /  ^  COVCRASf DATA  CHANA ES TO PRODUCT OATA  CHAMOIS  C U S T O M en  DATA  CUSTOMER OROER8  AOVICI  or  SHIPMENT  INTER PL ART • MARE HOUSE SHIPMENTS  DAILY PRODUCTION OATA  CUSTOMER PAYMENT!  FILES  & MARKETING  SUB-SYSTEM  76  (i) (ii)  t o r e p o r t p e r i o d i c a l l y on t h e s t a t u s o f t h e c o n t r a c t , t o a l l o w o r d e r s w h i c h i n d i c a t e a c o n t r a c t number t o be a u t o m a t i c a l l y p r i c e d by t h e system.  A s a l e s coverage and s t a t i s t i c s f i l e i s m a i n t a i n e d to r e t a i n d a t a on each customer p e r t a i n i n g t o s a l e s coverage. I t i n c l u d e s t h e number o f c a l l s d u r i n g t h e p e r i o d , t h e number o f o r d e r s , the  time spent i n c o v e r i n g t h e a c c o u n t s , t h e e s t i m a t e d t o t a l purchase  for  the year, e t c .  T h i s f i l e i s up-dated on t h e b a s i s o f t h e  salesmen's c a l l r e p o r t s .  The b a s i c purpose o f t h i s f i l e i s t o  p r o v i d e s t a t i s t i c a l i n f o r m a t i o n on.customers  ( o t h e r t h a n shipment  data) and t o p r o v i d e d a t a used i n t h e p e r i o d i c a l a n a l y s i s o f customer p r o f i t a b i l i t y .  .  A p r o d u c t master f i l e i s m a i n t a i n e d w h i c h i n c l u d e s the  c o s t o f i n f o r m a t i o n on p r o d u c t s , such as p r o d u c t d e s c r i p t i o n ,  packed p r i c e d i f f e r e n t i a l s ,  etc.  T h i s f i l e i s m a i n t a i n e d o n l y when  new p r o d u c t s a r e added o r changes a r e made t o t h e e x i s t i n g p r o d u c t prices, etc.  S i m i l a r l y , a customer master f i l e i s m a i n t a i n e d  c o n t a i n i n g a l l c o n s t a n t customer i n f o r m a t i o n , such as name and a d d r e s s , f r e i g h t a r e a , s a l e s m a n ' s - t e r r i t o r i e s , c h a i n s t o r e codes, etc.  I t improves n o t o n l y a c c o u n t s w h i c h a r e t o be b i l l e d j b u t  also "ship t o " accounts. are  I t i s o n l y up-dated where new customers  added o r i n f o r m a t i o n on e x i s t i n g customers i s t o be changed.  By f a r the l a r g e s t volume o f i n p u t d a t a i s t h e d a i l y customer's o r d e r .  I t i s d e s i r a b l e t o g e t t h e o r d e r s i n t o t h e system  77  b e f o r e shipment by p l a c i n g them on an open o r d e r f i l e .  In processing  customer o r d e r s , t h e p r o d u c t and customer f i l e a r e checked t o ensure the v a l i d i t y o f the c o d i n g on the o r d e r .  The advantage o f  m a i n t a i n i n g an open o r d e r f i l e i s t o produce, a t t h e e a r l i e s t p o s s i b l e t i m e , a d a i l y o r d e r r e p o r t and t o reduce t h e amount of keypunching w h i c h must be done a f t e r shipment so t h a t the f i n i s h e d goods i n v e n t o r y f i l e s a r e more q u i c k l y up-dated.  On r e c e i p t o f a d v i c e o f shipment of a p a r t i c u l a r o r d e r , t h e a d v i c e i s t a k e n o f f t h e open o r d e r f i l e , p r i c e d and extended and p l a c e d i n the m a r k e t i n g  d a t a f i l e s i m u l t a n e o u s l y up-  d a t i n g t h e f i n i s h e d goods i n v e n t o r y f i l e f o r t h a t p a r t i c u l a r p l a n t or warehouse l o c a t i o n , t h e accounts volume and revenue f i l e .  r e c e i v a b l e f i l e and t h e s a l e s  A t the same t i m e , a customer i n v o i c e ,  an account r e c e i v a b l e c a r d and an i n v o i c e r e g i s t e r a r e produced.  In  o r d e r t h a t the f i n i s h e d goods i n v e n t o r y f i l e i s  c o m p l e t e l y up-dated, d a i l y p r o d u c t i o n i s a l s o p r o c e s s e d the f i l e as w e l l as i n t e r - p l a n t or warehouse shipments. customer payments a r e p r o c e s s e d  a g a i n s t t h e accounts  against Similarly,  receivable f i l e .  D a i l y i n v e n t o r y e x c e p t i o n r e p o r t s a r e produced a f t e r the f i n i s h e d goods i n v e n t o r y f i l e i s up-dated and c r e d i t e x c e p t i o n r e p o r t s r e p o r t s a f t e r t h e accounts dated.  r e c e i v a b l e f i l e i s up-  A t t h e end o f the p e r i o d ( o r as o f t e n as r e q u i r e d ) , customer  statements  can be produced f r o m t h e accounts  r e c e i v a b l e f i l e as  w e l l as t h e a g e i n g a n a l y s i s of o u t s t a n d i n g a c c o u n t s .  The f i n i s h e d  78  goods i n v e n t o r y f i l e p r o v i d e s t h e n e c e s s a r y  information to p e r i o d i c a l l y  a n a l y z e warehouse movements f o r t h e d i v i s i o n a l manager and t o r e a s s e s s target inventory  levels.  The m a r k e t i n g reports.  data f i l e produces a wide v a r i e t y of  These i n c l u d e t h e v a r i o u s r e p o r t s by salesmen, t e r r i t o r y ,  d i v i s i o n , n a t i o n a l , brand and i n d u s t r y , as w e l l as s a l e s i n f o r m a t i o n on key a c c o u n t s and t h e summary of p r i c e d i s c o u n t s and f r e i g h t absorption during the period.  Since the marketing  data f i l e i s  r e t a i n e d on a customer d e t a i l b a s i s , i t has complete f l e x i b i l i t y i n p r o v i d i n g v i r t u a l l y any c o m b i n a t i o n  o f d a t a w h i c h i s r e q u i r e d and  forms t h e b a s i s f o r a p e r i o d i c a n a l y s i s o f customer p r o f i t a b i l i t y .  The m a r k e t i n g  i n f o r m a t i o n f i l e c o n t a i n s a l l budgets  and s a l e s o b j e c t i v e s so t h a t c o m p a r a t i v e m a r k e t i n g  r e p o r t s can be  produced. (b)  Cost C o n t r o l and M a n u f a c t u r i n g  I n f o r m a t i o n Subsystems  F i g u r e V I i n d i c a t e s t h e g e n e r a l o u t l i n e of t h e c o s t c o n t r o l and m a n u f a c t u r i n g  subsystems.  The key f i l e of t h i s system  would be t h e c o s t f i l e by c o s t c e n t r e , s t a t i o n and element.  Cost  c e n t r e s and s t a t i o n s a r e e s t a b l i s h e d f o r head o f f i c e a d m i n i s t r a t i v e and m a r k e t i n g  departments as w e l l as f o r m a n u f a c t u r i n g  Job cards from a l l h o u r l y p e r s o n n e l  a r e processed  departments.  d a i l y and a t t h e  end of t h e week matched a g a i n s t c l o c k c a r d s , c o s t e d and t h e c o s t c e n t r e s t a t i o n master f i l e up-dated. cards a r e p r o c e s s e d  Similarly, salary payroll  and a l l o c a t e d a p p r o p r i a t e l y by c o s t c e n t r e and  80  station.  S a l a r i e s and h o u r l y employee master f i l e s i n c l u d e the  necessary  i n f o r m a t i o n t o produce p a y r o l l cheques, r e g i s t e r s and  supplementary p a y r o l l r e p o r t s .  Job c a r d s f o r maintenance p e r s o n n e l would i n c l u d e the a d d i t i o n a l i n f o r m a t i o n w h i c h was  o u t l i n e d p r e v i o u s l y and go  not  o n l y i n t o a c o s t c e n t r e f i l e , but a l s o i n t o a s p e c i a l maintenance data f i l e .  S i m i l a r l y , j o b cards on p a c k i n g l a b o u r go i n t o a c o s t  c e n t r e s t a t i o n f i l e as w e l l as i n t o a s p e c i a l p a c k i n g d a t a This f i l e  file.  i s a l s o up-dated d a i l y w i t h f i n i s h e d goods p r o d u c t i o n .  Such d a t a i s one of the examples of i n p u t t h a t i s common t o b o t h the major subsystems.  The p r o d u c t i o n d a t a i s a l s o used i n the  o r d e r subsystem t o up-date f i n i s h e d goods i n v e n t o r y .  Maintenance s t o r e s r e q u i s i t i o n s a r e p r i c e d by purchasing  and processed  d a i l y , up-dating  the c o s t c e n t r e master  file. Maintenance l a b o u r , d i r e c t l a b o u r , s t o r e d m a t e r i a l , etc.,  i s chargeable  t o f a c t o r y a u t h o r i z a t i o n s or e n g i n e e r i n g work  o r d e r s and charged d i r e c t l y i n t o a s p e c i a l work order  file.  Maintenance l a b o u r on f a c t o r y a u t h o r i z a t i o n s and e n g i n e e r i n g work o r d e r s a r e a l s o added t o the maintenance d a t a f i l e  so t h a t a  complete d i s t r i b u t i o n of maintenance l a b o u r i s a v a i l a b l e .  A f i x e d asset f i l e  i s maintained  end c a l c u l a t i o n of d e p r e c i a t i o n and the a p p r o p r i a t e c o s t c e n t r e .  b o t h t o do the  year-  to d i s t r i b u t e d e p r e c i a t i o n to  81  At  t h e month end, a number o f r e t r o a c t i v e e n t r i e s  are.keypunched t o complete t h e c o s t r e c o r d s .  This includes  o p e r a t i n g s u p p l i e s , p a c k i n g m a t e r i a l usage, a c c o u n t s p a y a b l e d i s t r i b u t i o n and m i s c e l l a n e o u s j o u r n a l e n t r i e s .  A budget f i l e i s m a i n t a i n e d c o n t a i n i n g t h e budget for  a l l c o s t c e n t r e s and s t a t i o n s as w e l l as t h e f i s c a l y e a r - t o - d a t e  figures.  U s i n g t h e c o s t c e n t r e master f i l e and t h e budget  budget r e p o r t s a r e produced a t the end o f each p e r i o d .  file,  The  p a c k i n g d a t a f i l e i s used t o produce weekly p a c k i n g performance r e p o r t s and t h e maintenance d a t a f i l e i s used t o produce a number of  maintenance r e p o r t s by c o s t s t a t i o n s , type of maintenance,  machine number and r a t i o of d i r e c t l a b o u r and r a t i o o f o v e r - t i m e a g a i n s t t h e t o t a l maintenance. The s a l a r y employee p a y r o l l master f i l e and t h e h o u r l y employee master p a y r o l l f i l e a r e used t o m a i n t a i n s t a t i s t i c s on employees w h i c h p e r s o n n e l r e q u i r e s f o r a n a l y t i c a l purposes. In ABC Company's management i n f o r m a t i o n system, one of the  t h e prime c o n s i d e r a t i o n s i s t h e degree o f response r e q u i r e d from systems;  i . e . speed o f a c c e s s t o t h e I n f o r m a t i o n .  Compared t o  some companies, v e r y l i t t l e d a t a i s p r i n t e d out i n t h e form of r o u t i n e r e p o r t s , b u t r a t h e r d a t a i s r e q u e s t e d of t h e system when needed and i t i s p r o v i d e d i n s t a n t l y on t h e b a s i s of a s p e c i f i c inquiry.  82  CHAPTER V SYSTEMS ANALYSIS FINDINGS  A f t e r a l l p e r t i n e n t f a c t s have been g a t h e r e d c o n c e r n i n g an i n f o r m a t i o n system, the r e a l purpose of the systems a n a l y s i s can be u n d e r t a k e n ;  i . e . the i n t e r p r e t a t i o n of the f a c t s i n t o m e a n i n g f u l  information.  I n a n a l y z i n g the f a c t s g a t h e r e d i n the p r e v i o u s c h a p t e r , the i n t e r p r e t a t i o n s w i l l r e l a t e t o the s t a t e d o b j e c t i v e of d e t e r m i n i n g the t o t a l i t y , s t a t u s of ABC Company's i n f o r m a t i o n system.  In areas  where t h e . r e p o r t i n g system s i g n i f i c a n t l y c o n t r i b u t e s towards a t o t a l i n f o r m a t i o n system, e l a b o r a t i o n of the elements of the system w i l l outlined.  be  I n a r e a s where p a r t i c u l a r p a r t s o f the r e p o r t i n g system  p r o h i b i t or h i n d e r the achievement of t o t a l i t y , mention w i l l a l s o be made of t h i s f a c t and p o s s i b l e s o l u t i o n s toward c o r r e c t i o n of t h e system's d e f i c i e n c y w i l l be  I.  given.  INTERPRETATIONS OF CASE COMPANY'S REPORTING SYSTEMS I n a n a l y z i n g the f a c t s g a t h e r e d p e r t a i n i n g t o ABC  Company's management i n f o r m a t i o n system, s e v e r a l i t e m s were mentioned w h i c h h e l p make the system somewhat u n i q u e . The f i r s t i t e m of n o t e i s t h a t t h e : r e p o r t i n g  system  has as i t s n u c l e u s a computer w i t h l i m i t e d " o n - l i n e " c a p a b i l i t i e s . The a d d i t i o n , o f the computer made i t p o s s i b l e t o s t o r e and m a n i p u l a t e l a r g e volumes of d a t a and t o p r o v i d e i n f o r m a t i o n on a c u r r e n t  basis  83  i n a manageable form. various  I t also provided  i n f o r m a t i o n a l and  f o r the i n t e g r a t i o n of  r e p o r t i n g systems of the company.  the The  computing c a p a b i l i t y of the computer, a l o n g w i t h t h i s a b i l i t y  to  h a n d l e l a r g e volumes of d a t a , has made i t p o s s i b l e t o use a number of m a t h e m a t i c a l t e c h n i q u e s t o a s s i s t i n the d e c i s i o n making f u n c t i o n . I t a l s o p o s s e s s e d the c a p a b i l i t y of p r o v i d i n g , w i t h i n the computer systems, a feedback of i n f o r m a t i o n w i t h w h i c h t o measure and a c t u a l performance a g a i n s t p r e d e t e r m i n e d s t a n d a r d s and  A second i t e m of n o t e was a v e r y heavy emphasis on the p l a n n i n g  t h a t ABC  function.  control  plans.  Company was T h i s was  placing  evidenced  by the development of a d e t a i l e d m a r k e t i n g p l a n , a budgetary c o n t r o l system and plans.  the l a r g e amount of work spent on c r e a t i n g the  The  t o t a l planning  production  program appears t o have the f o l l o w i n g  main•features: (a)  The  p r o b a b l e e f f e c t on net p r o f i t of f o l l o w i n g each of  several a l t e r n a t i v e marketing plans i s studied p r i o r t o the b e g i n n i n g of the f i s c a l y e a r .  A p l a n t i s then  s e l e c t e d w h i c h would produce the b e s t r e s u l t s i n l i n e w i t h company g o a l s . (b)  As p a r t of the p l a n n i n g have the o p p o r t u n i t y  p r o c e s s , a l l managers appear t o  of making an o b j e c t i v e a p p r a i s a l of  the a c t i v i t i e s under h i s s u p e r v i s i o n .  The manager  can  then r e q u e s t the system t o r e v i e w any p r o p o s a l s he  may  make.  84  (c)  P r o p e r l y p r e p a r e d p l a n s a r e coupled w i t h w e l l d e s i g n e d management r e p o r t s which compare a c t u a l r e s u l t s t o those p l a n n e d on a " r e s p o n s i b i l i t y a c c o u n t i n g "  basis.  P l a n n i n g and improved i n f o r m a t i o n a l r e p o r t i n g i s p o s s i b l e t h r o u g h t h e use of good p l a n development, t o g e t h e r w i t h t h e use o f m a r g i n a l  c o s t i n f o r m a t i o n from major components of ABC  Company's management i n f o r m a t i o n system.  A t h i r d o v e r a l l f e a t u r e of ABC Company's i n f o r m a t i o n system was t h e f l o w o f i n f o r m a t i o n t o t h e i n d i v i d u a l members o f management.  I t f o l l o w e d t h e company's o r g a n i z a t i o n a l s t r u c t u r e  wherever p o s s i b l e .  T h i s was a r e s u l t o f t h e f a c t t h a t t h e o r g a n i z a t i o n  s t r u c t u r e of t h e company was c l e a r l y e s t a b l i s h e d and t h e r e s p o n s i b i l i t i e s clearly  defined.  A f o u r t h component o f t h e management i n f o r m a t i o n system was t h e use of " m a r g i n a l  costing".!  This technique  had s e v e r a l  advantages t o management i n p l a n n i n g and c o n t r o l a c t i v i t i e s , among which i n c l u d e : . (a)  t h e p l a n n i n g o f p r o d u c t mix f o r s a l e s and p r o d u c t i o n i s speeded up and made more a c c u r a t e ;  (b)  t h e r e i s more a c c u r a t e a c c o u n t i n g  f o r contribution to  p r o f i t s by p r o d u c t groups, s a l e s d i v i s i o n s and r e g i o n s ; (c)  b e t t e r information i s a v a i l a b l e f o r the s e t t i n g of s e l l i n g prices;  ^ M a r g i n a l c o s t i n g f a c i l i t a t e s t h e e s t i m a t i n g of m a n u f a c t u r i n g c o s t s f o r any l e v e l o f s a l e s by p r o d u c t and f o r s a l e s i n t o t a l , by s e p a r a t i n g v a r i a b l e from f i x e d ( p e r i o d ) c o s t s .  85  (d)  u n i t v a r i a b l e p r o d u c t i o n c o s t s a r e a v a i l a b l e by c o s t stations;  (e)  a comparison of a c t u a l w i t h p l a n f o r a l l a c t i v i t i e s of the o r g a n i z a t i o n becomes more  meaningful.  A l o n g w i t h the m o r e . g e n e r a l i n t e r p r e t a t i o n s o f t h e f a c t s connected w i t h ABC Company's management i n f o r m a t i o n system, t h e r e a r e s e v e r a l f e a t u r e s of t h e subsystems, t h e m s e l v e s , w h i c h s h o u l d be n o t e d . By i n t e r p r e t i n g t h e f a c t s , r e l a t i o n s h i p s can be drawn between how each a t t r i b u t e o f t h e system c o n t r i b u t e s o r d e t e r s from a t o t a l management i n f o r m a t i o n system, (a)  Marketing Within the marketing  subsystem t h e r e i s a s i t u a t i o n  whereby t h e r e p o r t i n g system p l a c e s as much emphasis on r e p o r t i n g and measuring p r o f i t a b i l i t y as i t has h i s t o r i c a l l y volume s t a t i s t i c s .  on r e p o r t i n g s a l e s  T h i s i s due t o t h e company's a t t e m p t s t o maximize  p r o f i t a b i l i t y w i t h i n t h e g i v e n market s h a r e , r e s u l t i n g i n a need f o r more complete p r o d u c t of t h i s  p r o f i t a b i l i t y information.  The r a p i d feedback  type of i n f o r m a t i o n g r e a t l y i n c r e a s e s t h e accumulated  total  of knowledge on a p a r t i c u l a r p r o d u c t ' s m a r k e t a b i l i t y . A l s o , t h e d e s i g n of t h e m a r k e t i n g  s e c t i o n of the  management i n f o r m a t i o n system assumes t h e a v a i l a b i l i t y s t o r a g e i n i t s computer c o n f i g u r a t i o n .  of l a r g e  The system i s t h e n a b l e t o  r e t a i n s a l e s s t a t i s t i c s on a computer b a s i s and b y - p r o d u c t i t e m ; i.e.  the lowest l e v e l of d e t a i l .  T h i s a l l o w s f o r complete  flexibility  86  on r e p o r t p r e p a r a t i o n of v i r t u a l l y any volume d a t a which t h e m a r k e t i n g department may r e q u i r e .  F u r t h e r , t h e r e t e n t i o n of i n f o r m a t i o n on a  customer l e v e l makes i t p o s s i b l e t o e s t a b l i s h e a s i l y t h e demand by geographical  a r e a w h i c h c o u l d be used i n r e v i e w i n g p e r i o d i c a l l y t h e  a l l o c a t i o n of production t o r e f i n e r i e s .  I t i s also possible to  d e v e l o p new r e p o r t s w h i c h may be needed i n t h e f u t u r e because of s h i f t s i n emphasis i n m a r k e t i n g a c t i v i t y .  The f a c i l i t y e x i s t s t o  p r e p a r e r e p o r t s on a r e g u l a r o r p e r i o d i c b a s i s o r c o m p l e t e l y  on an  exception basis. As a b y - p r o d u c t o f o r d e r p r o c e s s i n g , a d a i l y summary of o r d e r s  i s p r e p a r e d by d i v i s i o n , i n a d d i t i o n t o t h e r e g u l a r s a l e s  volumes produced a t t h e end o f each p e r i o d .  Production  o f t e n make use of t h i s i n f o r m a t i o n i n t h e i r p r o d u c t i o n  personnel scheduling  techniques.  Sales personnel  s t a t e d e t a i l s of t h e i r s sales c a l l s  w h i c h , i n t u r n , a r e i n j e c t e d i n t o t h e company's s a l e s r e p o r t i n g system.  T h i s c o n t r i b u t e s t o t h e t o t a l management i n f o r m a t i o n system  i n t h r e e ways: (i)  t h e i n c l u s i o n o f coverage i n f o r m a t i o n p e r m i t s a p e r i o d i c a u t o m a t i c a n a l y s i s o f s a l e s coverage.  I n order f o r i t  t o be complete, i n f o r m a t i o n o r i n a c t i v e customers, as w e l l as customers who a r e r e g u l a r l y p l a c i n g o r d e r s , is  included;  87  (ii)  the c e n t r a l c o l l e c t i o n of.customer coverage a l l o w s f o r h i g h speed p r o c e s s i n g  of numerous  information records  m a i n t a i n e d by the v a r i o u s l e v e l s of s a l e s management; (iii)  the i n c l u s i o n of s a l e s coverage i n f o r m a t i o n  facilitates  the p e r i o d i c c a l c u l a t i o n of customer p r o f i t a b i l i t y , s i n c e i t i s p o s s i b l e t o e s t a b l i s h a b a s i s on which t o a l l o c a t e s a l e s coverage c o s t s t o p a r t i c u l a r customers.  The  a c t of f o r e c a s t i n g i n v o l v e s making p r o j e c t i o n s  on a f i v e y e a r and a one y e a r volume b a s i s .  T h i s i s e a s i l y performed  by u s i n g a m a t h e m a t i c a l approach i n v o l v i n g e x p o n e n t i a l l y w e i g h t e d moving averages a d j u s t e d  f o r seasonal  and  trend e f f e c t s .  By  u s i n g the computer, t r e n d s and moving averages a r e e a s i l y c a l c u l a t e d , i n c r e a s i n g the u s e f u l n e s s which to estimate d a t a i s one  the f u t u r e .  A g a i n , t h i s m u l t i p l e usage of  f a c e t of t o t a l i n f o r m a t i o n One  ABC  of t h i s i n f o r m a t i o n as background d a t a on original  systems.  f u r t h e r advantage of the f l e x i b i l i t y b u i l t i n t o  Company's m a r k e t i n g system i s t h a t i t does not r e l y on o n l y  method of r e p o r t i n g .  one  For i n s t a n c e , i t can v e r y q u i c k l y g e n e r a t e  " e x c e p t i o n a l " s a l e s r e s u l t s t o the m a r k e t i n g manager.  I f t h i s were  the o n l y c a p a b i l i t i e s of the system, the manager would v e r y  likely  be f a c e d w i t h more problems t h a n e v e r b e f o r e because i t would be difficult  (and d a n g e r o u s ) , however, f o r the manager t o a c t on  information alone.  this  B e f o r e he can take i n t e l l i g e n t a c t i o n , he must  a l s o know whether the d e v i a t i o n s from p l a n a r e the r e s u l t of  88  d e v i a t i o n s i n s a l e s e f f o r t s of u n u s u a l c o m p e t i t i v e a c t i v i t i e s or of other f a c t o r s .  To be a t o t a l i n f o r m a n t , t h e r e f o r e , the system must  also include a diagnostic procedure.  2  T h i s ABC  Company's system can  do because o f i t s h i g h d a t a s t o r a g e powers - the format of the r e p o r t i s s i m p l y a l t e r e d t o i n f o r m on the v a r i a n c e s w i t h i n s p e c i f i c a r e a s .  There i s one drawback i n the a r e a of  product  p r o f i t a b i l i t y , however, and i t i n v o l v e s t h e l i m i t e d amount of s t a t i s t i c s t h a t a r e a v a i l a b l e on u n i t p r o d u c t c o s t s and mix.  product  I f e f f o r t s a r e t o be made t o i n c r e a s e p r o f i t a b i l i t y , much  more must be known about p r o d u c t c o s t s , p r o d u c t mix and profitability.  T h i s may  customer  not be c o n s i d e r e d a systems f a u l t , but  i t i s a l i m i t a t i o n towards a c h i e v i n g t h e t o t a l i t y concept marketing area.  I f management i s t o be v e r s e d i n how  i n the  to u t i l i z e  the d a t a t h a t i s g i v e n t o them, then f u l l i n f o r m a t i o n s h o u l d be put i n t o the system and not p a r t i a l d e t a i l s .  C o r r e c t i o n of t h i s  f a u l t would i n c l u d e the reassessment of the c o s t i n g system, r e c o g n i z i n g not o n l y the need t o develop a c c u r a t e : c o s t d a t a , b u t a l s o t h e requirement i n a meaningful  t o p r e s e n t the c o s t i n f o r m a t i o n t o management  way. The a n n u a l market p l a n developed by ABC  f u n d a m e n t a l l y good and appears t o meet i t s o b j e c t i v e s .  Company i s Production  i s a b l e t o key i t s p l a n s t o e s t i m a t e d s a l e s volumes and the t a r g e t s  2  C o x , D.F., Good, R.E., "how t o B u i l d a M a r k e t i n g I n f o r m a t i o n System", H a r v a r d B u s i n e s s Review, H a r v a r d U n i v e r s i t y P r e s s , May-June, 1967, Volume 45, No. 3, p. 152.  89  for market share, p r o f i t a b i l i t y , volumes, etc., are c l e a r l y defined. The objectives are said to be i d e a l .  One problem e x i s t s , however,  and that i s what to do when there are diversions from the plan. Management has expressed the.feeling that they are not being made aware of deviations from the plan soon enough. not able to take corrective action fast enough.  They f e e l they are Therefore, they are  unable to take f u l l advantage of corrective measures.  The system  i s not t o t a l , i n that i t does not allow for information when i t i s r e a l l y required the most.  Most sales reporting systems deal mainly with the preparation of periodic s a l e s . s t a t i s t i c s , usually on a volume basis only.  The system at ABC Company, however, allows the marketing  department to not only influence volume, but to effect p r o f i t a b i l i t y . This contributes toward the t o t a l i t y concept because i t deals with sales performance on a volume basis, plus s e l l i n g and administrative expenses incurred by the marketing department, plus product contribution to p r o f i t s , plus market share, plus customer p r o f i t a b i l i t y . The design of the marketing subsystem i s such that i t i s possible to r e t a i n sales s t a t i s t i c s on the lowest l e v e l of d e t a i l by customer and by product item.  This allows f o r the f l e x i b i l i t y i n  report preparation which i s required i n a t o t a l system.  One l i m i t a t i o n  to this system i s the fact that some information must be summarized, therefore losing i t s o r i g i n a l i t y .  A certain amount of summarization  i s necessary to make i t p r a c t i c a l to store the information within the  90  core c a p a c i t y r e s t r a i n t s of the computer c o n f i g u r a t i o n . i n f o r m a t i o n on an i n d i v i d u a l product  If specific  item i s r e q u i r e d , i t may not be  p o s s i b l e , through the system, t o o b t a i n the d e s i r e d i n f o r m a t i o n due to the summarization p r o c e s s .  The t o t a l i t y of the system has not  been m a i n t a i n e d .  The m a r k e t i n g subsystem p r o v i d e s on the company's market s h a r e .  only l i m i t e d  information  T h i s i s m a i n l y an e n v i r o n m e n t a l f e a t u r e ,  but a t o t a l management i n f o r m a t i o n system would be a b l e t o produce.such i n f o r m a t i o n and on an immediate b a s i s . i n h i s t o r i c a l estimates share  To date, ABC Company d e a l s  o f i t s . market share  a t the end o f each month.  only  s t a t e d i n terms of market  To be a t o t a l system, i t would have  to.be " o n - l i n e " t o the v a r i o u s e n v i r o n m e n t a l f a c t o r s and be. a b l e t o r e p o r t immediately anytime management q u e r i e d . t h e  company's p o s i t i o n  i n the market p l a c e .  A s i g n i f i c a n t f e a t u r e toward a t o t a l system i s t h e company's p r a c t i c e whereby a l l s a l e s p e r s o n n e l  are responsible f o r  r e p o r t i n g on the d e t a i l s o f t h e i r customer c a l l s . t h i s type system.  In.other  companies  of i n f o r m a t i o n i s r a r e l y i n c l u d e d i n i t s s a l e s r e p o r t i n g T h i s type o f r e p o r t i n g s h o u l d b e l o n g  i n f o r m a t i o n f o r .three reasons.  First,  i n a management  the i n c l u s i o n of coverage  i n f o r m a t i o n i n the management i n f o r m a t i o n system w i l l permit p e r i o d i c automatic a n a l y s i s of s a l e s coverage.  I n order  a  t h a t the  a n a l y s i s be complete, i n f o r m a t i o n on i n a c t i v e customers as w e l l as customers who a r e r e g u l a r l y p l a c i n g o r d e r s would be I n c l u d e d .  Second,  91.  the c e n t r a l c o l l e c t i o n o f customer coverage i n f o r m a t i o n , i n c l u d i n g estimates  o f t h e i r a n n u a l usage, e t c . , would e l i m i n a t e t h e n e c e s s i t y  f o r manual r e c o r d s  t o be m a i n t a i n e d c o v e r i n g t h i s d a t a by v a r i o u s  l e v e l s o f s a l e s management.  T h i r d , t h e i n c l u s i o n o f s a l e s coverage  i n f o r m a t i o n i n t h e management i n f o r m a t i o n system c o u l d  facilitate  the p e r i o d i c c a l c u l a t i o n o f customer p r o f i t a b i l i t y s i n c e i t would be p o s s i b l e t o e s t i m a t e a b a s i s t o a l l o c a t e s a l e s coverage c o s t s t o p a r t i c u l a r customers.  One o f t h e o b j e c t i v e s o f a t o t a l management i n f o r m a t i o n system i s t o p r o v i d e o n l y t h a t i n f o r m a t i o n w h i c h i s r e q u i r e d .  This  i n c l u d e s i n f o r m a t i o n which may be r e q u i r e d f o r s p e c i a l a n a l y s i s from t i m e t o time.  As i n d i c a t e d i n t h e Summary o f Market R e p o r t s , o n l y  c e r t a i n l e v e l s . of management r e c e i v e c e r t a i n r e p o r t s .  F o r example,  the management committee would r e c e i v e o n l y p r o f i t c o n t r i b u t i o n , market s h a r e and t o t a l brand i n f o r m a t i o n on a company b a s i s .  Therefore,  the o b j e c t i v e o f p r o v i d i n g i n f o r m a t i o n t o o n l y t h o s e who need i t i s b e i n g met.  Most management i n f o r m a t i o n systems p r o v i d e f o r t h e r e p o r t i n g o f customer s e r v i c e i n f o r m a t i o n .  ABC Company, however,  has an e x c e p t i o n a l system f o r r e p o r t i n g customer s e r v i c e and appears t o be t o t a l l y aware o f t h e i r s e r v i c e l e v e l s , (b)  Production The p r o d u c t i o n subsystem o f ABC Company i s r e l a t i v e l y  s o p h i s t i c a t e d i n i t s approach t o i n f o r m a t i o n p r o c e s s i n g and h a n d l i n g .  92  I t r e l i e s v e r y h e a v i l y on p l a n n i n g and f o r e c a s t i n g . on the use of m a t h e m a t i c a l  models f o r d e t e r m i n i n g  o p e r a t i n g c o n t r o l over p r o d u c t i o n . information producing techniques  I t also r e l i e s  the o p t i m a l  The use of p l a n n i n g t o o l s and  c o n t r i b u t e s i g n i f i c a n t l y to  management's t o t a l awareness of the o v e r a l l p r o d u c t i o n phase. The m a t h e m a t i c a l  t e c h n i q u e s have been used v e r y  e f f e c t i v e l y over a r e a s o n a b l e p e r i o d of time.  T h e r e f o r e , i t may  assumed t h a t the management has g a i n e d b e t t e r i n f o r m a t i o n on  be  their  p r o d u c t i o n a c t i v i t i e s compared t o p r e v i o u s r e p o r t i n g methods. P l a n n i n g i s emphasized v e r y h e a v i l y f o r the v a r i o u s p r o d u c t i o n demands. environmental  For example, i n a n n u a l p r o d u c t i o n p l a n n i n g ,  f a c t o r s a f f e c t i n g a changing market s i t u a t i o n  brought i n t o c a l c u l a t i o n s .  I n a t o t a l system, complete knowledge  must be c o o r d i n a t e d between the subsystems of m a r k e t i n g  and  t o g i v e o n l y one r i g h t d e c i s i o n on t h e . l e v e l of p r o d u c t i o n t o be o p t i m a l .  ABC  are  production expected  Company's system determines from v a r i o u s p l a n  l e v e l s of o p e r a t i o n the p r o d u c t i o n c a p a c i t y a l l o c a t e d t o groups i n . s u c h a way  as t o meet expected  demands a t the  product lowest  production, plus holding cost. One  shortcoming  of the company's p r o d u c t i o n p l a n n i n g  program i s the method of d e t e r m i n i n g the v a r i o u s c a p a c i t y c o n s t r a i n t s . The c o n s t r a i n t s a r e too r i g i d and narrow, not a l l o w i n g f o r t o t a l information.  For example, t h e r e i s no a l l o w a n c e  or r e c o g n i t i o n g i v e n  t o h i r i n g and f i r i n g c o s t s a s s o c i a t e d w i t h changing from s i n g l e t o  93  double s h i f t operations or vice versa.  The model should be  designed  so that the t o t a l cost of a p a r t i c u l a r plan can be established.  The production planning does have a f a i r degree of f l e x i b i l i t y and can be re-run as often as the information system dictates i n the l i g h t of changing circumstances.  I t does not re-run  automatically, however, but must be reintroduced upon inspection and made to include the revised data.  Once the annual production plan i s established, a monthly scheduling system i s used to determine the best way  to  d i s t r i b u t e the a v a i l a b l e capacity among the various products.  Once  the d i s t r i b u t i o n has been established, i t i s r e l a t i v e l y stable unless target" requirements are changed.  To change the plan, the whole  planning system has to become operative again for each plan i s set to an optimal s o l u t i o n and i f any constraints are altered, the end solution i s a l t e r e d . anything.but  For .this reason, management tends to ignore  a major change because the nuisance and time value of  a production plan a l t e r a t i o n i s p r o h i b i t i v e . . The t o t a l i t y concept would allow for any a l t e r a t i o n s to be made automatically because the system would be programmed to interpret plan changes. ABC  Company attempts to lessen the effects of  fluctuating demands by creating over-production ahead stocks.  i n the form of b u i l d  The system attempts to project what products to over-  produce by forecasting what i s l i k e l y to result i n an out-of-stock situation.  This i s done by c a l c u l a t i n g an index, c a l l e d the c r i t i c a l  94  r a t i o , f o r each p r o d u c t .  The  l o g i c behind  the c r i t i c a l r a t i o  i n d i c a t e s what p r o d u c t i o n can be d e l a y e d w i t h o u t from y o u r customers due  r i s k of r e p r i s a l  t o an o u t - o f - s t o c k s i t u a t i o n .  The  principle  i s v e r y sound and h e l p s c o n t r i b u t e g r e a t l y toward a . t o t a l l y management.  I t f o r c e s them to a p p r a i s e t h e i r p r o d u c t i o n  each week, thus k e e p i n g  them f u l l y  simply  aware of the t o t a l  informed  situation  production  environment.  The management i n f o r m a t i o n system i s , i n t h e o r y , used to g e n e r a t e recommended p r o d u c t i o n f o r a l l p r o d u c t s  f o r each r e g i o n .  I f t h i s were happening i n p r a c t i c e , i t would be a l a r g e s t e p to h a v i n g a t o t a l i n f o r m a t i o n system.  Practical considerations,  however, d i c t a t e t h i s p r o c e d u r e t o be l i m i t e d . p u t t i n g c e n t r a l i z e d systems of o r d e r i n g and are  forward  The  cost involved i n  inventory  record-keeping  prohibitive.  (c)  D i s t r i b u t i o n and  Packing  The management i n f o r m a t i o n system f o r t h i s s e c t i o n i s designed  t o p r o v i d e c o n t r o l r e p o r t s on d e l i v e r y and f r e i g h t c o s t s ,  f i n i s h e d goods i n v e n t o r y l e v e l s and p a c k a g i n g i n f o r m a t i o n . D e l i v e r y and f r e i g h t c o s t s a r e c o n t r o l l e d a d e q u a t e l y for  the p r e s e n t purposes of ABC  not have the f l e x i b i l i t y shipment;  Company.  However, the system does  t o c o n t r o l the c o s t s i n v o l v e d i n an abnormal  i . e . a shipment o r i g i n a t i n g from a p l a n t or warehouse  o t h e r than the n e a r e s t one  t o the customer.  I t i s the  incremental  c o s t i n c u r r e d t o s u p p l y goods from some o t h e r s u p p l y p o i n t t h a t would  95  be m e a n i n g f u l t o management. had  I t would i n d i c a t e t h e added c o s t s t h a t  t o be i n c u r r e d because o f an o u t - o f - s t o c k s i t u a t i o n .  I f these  s t o c k s h o r t a g e s were c a u s i n g e x c e s s i v e d i s t r i b u t i o n c o s t s , a t o t a l l y i n f o r m e d management would be a b l e t o take c o r r e c t i v e . a c t i o n .  A l s o , t h e system uses s t a n d a r d  f r e i g h t costs i n  c a l c u l a t i n g t h e n o r m a l d e l i v e r y expenses t o a customer. r a t e i s b u i l t up from h i s t o r i c a l s h i p p i n g i n f o r m a t i o n . h i s t o r i c a l standard  The s t a n d a r d The use o f an  imposes r i g i d i t y i n t o t h e c o s t i n g , f o r i t does  not a l l o w f o r r a p i d l y changing c o s t s o f d e l i v e r y r a t e s .  The r e v i e w s  made o f t h e s t a n d a r d r a t e a r e n o t f r e q u e n t enough t o keep c u r r e n t on distribution costs.  The f i n i s h e d goods i n v e n t o r y i s m e c h a n i c a l l y c o n t r o l l e d f o r a l l r e f i n e r i e s and warehouses.  T h i s i n f o r m a t i o n system p r o v i d e s  an e x c e l l e n t check on d a i l y f i n i s h e d goods i n v e n t o r y l e v e l s .  I t also  g i v e s a d a i l y e x c e p t i o n r e p o r t t o management o f items o u t s i d e t h e minimum and maximum i n v e n t o r y l e v e l s and a p e r i o d i c r e v i e w and w e i g h t c a l c u l a t i o n o f minimum and maximum i n v e n t o r y l e v e l s .  The  complex c o n t r o l s i n t h i s a r e a o f f i n i s h e d goods i n v e n t o r y appears t o be a w a s t e , however, b e c a u s e , under c u r r e n t p r o d u c t i o n  facilities  and p l a n n i n g , t h e r e i s v e r y l i t t l e o p p o r t u n i t y t o change t h e t o t a l f i n i s h e d goods i n v e n t o r y a t any p o i n t i n t i m e .  T o t a l f i n i s h e d goods  inventory i s . c u r r e n t l y a f u n c t i o n of the t o t a l f o r e c a s t of s a l e s f o r the y e a r .  96  W h i l e t h e r e i s l i m i t e d o p p o r t u n i t y f o r a management i n f o r m a t i o n system t o improve t h e c o n t r o l of t h e t o t a l f i n i s h e d p r o d u c t s i n v e n t o r y , a d d i t i o n a l management i n f o r m a t i o n i s r e q u i r e d on the m i x o f t h e packed f i n i s h e d goods i n v e n t o r y .  Under t h e p r e s e n t  system, t h e p r o d u c t m i x of t h e packed i n v e n t o r y i s n o t c r i t i c a l . However, p r o v i s i o n s h o u l d be made f o r a more s o p h i s t i c a t e d method of e s t a b l i s h i n g packed t a r g e t i n v e n t o r y i n o r d e r t h a t t h e method of s c h e d u l i n g t h e packed o p e r a t i o n can be changed, thus i n c r e a s i n g t h e e f f i c i e n c y o f p e r s o n n e l and equipment operation.  u t i l i z e d w i t h i n the packaging  I t i s t h i s p r o v i s i o n o r a b i l i t y t o change w h i c h makes t h e  system a t o t a l i n f o r m a t i o n system. W i t h i n t h e p a c k i n g department, i t s e l f , t h e i n f o r m a t i o n p r o v i d e d management i s adequate t o c o n t r o l b o t h l a b o u r and machine efficiency.  R e p o r t s a r e produced d a i l y f o r a l l c o n t r o l l a b l e o p e r a t i o n s .  There a r e some i n c o n s i s t e n c i e s , however, and t h e s e a r e m a i n l y r e p o r t i n g p r a c t i c e s among t h e v a r i o u s b r a n c h e s .  F o r i n s t a n c e , one b r a n c h does  not p r e p a r e an equipment performance r e p o r t , w h i l e a second branch does not r e p o r t on p a c k i n g o p e r a t i o n s w h i c h a r e m a n u a l l y c o n t r o l l e d .  Another  p r a c t i c e w h i c h tends t o d e t r a c t from t h e t o t a l i t y concept i s t h e f a c t t h a t p r o d u c t i o n r a t e s a g a i n s t w h i c h day-to-day p r o d u c t i o n i s compared tends t o be h i s t o r i c a l p r o d u c t i o n averages r a t h e r than an a t t a i n a b l e standard r a t e of production.  A l s o , t h e feedback of i n f o r m a t i o n t o one  b r a n c h i s i n t h e form o f t h e monthly budget w h i c h covers f a r t o o l o n g a p e r i o d i n o r d e r f o r t h e r e c i p i e n t t o p r o p e r l y r e l a t e t h e cause and e f f e c t o f a p a r t i c u l a r problem i n t h e p a c k i n g o p e r a t i n g d u r i n g t h a t  97  period.  Because p a c k i n g must r e a c t q u i c k l y t o t h e c u r r e n t o r d e r and  i n v e n t o r y p o s i t i o n , t h e r e i s l i t t l e advantage t o p r e p a r i n g a l o n g term p a c k i n g s c h e d u l e w h i c h would r e q u i r e more i n f o r m a t i o n on a c t u a l h i s t o r i c a l packing r a t e s .  I t i s also recognized  that the packing schedule  a f f e c t e d by t h e p r o d u c t i o n o f c e r t a i n b u l k p r o d u c t s of s t o r a g e b i n s .  can be  and t h e c a p a c i t y  While i t i s u n l i k e l y t h a t a packing schedule  can be  e s t a b l i s h e d f o r two weeks and n o t r e q u i r e amendment a t a l l d u r i n g t h a t period, nevertheless, i t i s believed that s i g n i f i c a n t opportunity f o r improvement e x i s t s i n t h e p a c k i n g s c h e d u l i n g o p e r a t i o n .  I f production  l e v e l s a r e t o be smoothed, much more i n f o r m a t i o n would be r e q u i r e d on t h e l a b o u r c o n t e n t o f packed p r o d u c t s  so t h a t t h e s e f a c t o r s c o u l d  be used t o e s t a b l i s h t h e t o t a l l a b o u r r e q u i r e m e n t s f o r t h e p r o d u c t i o n schedule. schedules  These c o u l d then be used t o e s t a b l i s h t h e i n d i v i d u a l d a i l y based on l e v e l l a b o u r r e q u i r e m e n t s ,  o p e r a t i n g speeds of t h e equipment. s h o u l d be d e s i g n e d  recognizing the various  The management i n f o r m a t i o n system  t o produce t h i s h i s t o r i c a l d a t a .  A f u r t h e r degree  of s o p h i s t i c a t i o n w h i c h c o u l d be i n t r o d u c e d would be a d a i l y a n a l y s i s of p a c k i n g performance by t h e computer system and h i g h l i g h t i n g on an e x c e p t i o n b a s i s t o p a c k i n g management those items w h i c h do n o t f a l l w i t h i n an a c c e p t a b l e performance range, (d)  Maintenance ABC Company has a p r e v e n t a t i v e maintenance system i n  operation.  However, t h e system does n o t appear t o c o n t r i b u t e t o a  t o t a l i n f o r m a t i o n system concept.  There a r e a number of p r a c t i c e s o f  98  the system w h i c h do n o t keep management f u l l y i n f o r m e d of maintenance operations.  F i r s t , maintenance r e p o r t s p r o v i d e d  a r e produced on a  p e r i o d b a s i s and tend t o be r e c e i v e d i n the second or t h i r d week a f t e r the end o f a p e r i o d .  Second, i f t h e r e i s a l a r g e v a r i a n c e  on  the budget r e p o r t , i t i s d i f f i c u l t t o e s t a b l i s h the r e a s o n f o r the variance  s i n c e maintenance t i m e i s not s e g r e g a t e d i n t o v a r i o u s  categories;  i . e . r e g u l a r p r e v e n t a t i v e maintenance, emergency r e p a i r ,  plan r e p a i r , etc.  T h i r d , the information provided  t o maintenance  tends t o be a b y - p r o d u c t of the c o s t i n g system r a t h e r than a s p e c i a l purpose maintenance r e p o r t w h i c h r e f l e c t s the c o n s o l i d a t i o n of maintenance work done throughout the r e f i n e r y .  F o u r t h , the f a c t o r y  a u t h o r i z a t i o n j o b r e p o r t which r e f l e c t s a c t u a l e x p e n d i t u r e s t o d a t e a g a i n s t the v a r i o u s p r o j e c t s i s a l s o produced two t o t h r e e weeks a f t e r the end of the p e r i o d and does not i n c l u d e an e s t i m a t e  of the  p e r c e n t a g e of the p r o j e c t completed, and, t h e r e f o r e , i t i s d i f f i c u l t t o e s t a b l i s h whether the work i n any p a r t i c u l a r p r o j e c t i s on t a r g e t until  the work i s completed.  F i n a l l y , t h e r e i s no s p e c i f i c  on f a c t o r y a u t h o r i z a t i o n and e n g i n e e r i n g whether the s a v i n g s  work o r d e r s  on w h i c h t h e c o s t was j u s t i f i e d  Maintenance c o s t s r e p r e s e n t of t o t a l v a r i a b l e p r o d u c t i o n  follow-up  to e s t a b l i s h has been  achieved.  a s i g n i f i c a n t percentage  c o s t s ( e x c l u d i n g raw m a t e r i a l s ) .  A l t h o u g h i t tends t o be one of the most d i f f i c u l t a r e a s i n w h i c h t o measure performance, n e v e r t h e l e s s , maintenance r e p o r t i n g s h o u l d be an i m p o r t a n t p a r t of the o v e r a l l management i n f o r m a t i o n  system.  99  A number o f c o n s o l i d a t e d r e p o r t s s h o u l d be p r e p a r e d each p e r i o d f o r maintenance management, so t h a t they c a n see t h e t o t a l d i s t r i b u t i o n o f maintenance t i m e i n t o t h e v a r i o u s  categories  of p l a n p r e v e n t a t i v e maintenance, emergency r e p a i r , c a p i t a l p r o j e c t s , etc.  T h i s r e p o r t would be i n a d d i t i o n t o t h e normal r e p o r t o f l a b o u r  by c o s t c e n t r e .  The r e p o r t s s h o u l d be p r e p a r e d i m m e d i a t e l y a f t e r t h e  end o f a p e r i o d so t h a t c o r r e c t i v e a c t i o n can be t a k e n by management if  required.  The p r a c t i c e o f p r e v e n t a t i v e maintenance i s based upon an assumption t h a t minor r e p a i r s performed on a c o n t i n u i n g b a s i s  will  a v o i d major breakdowns and c o n t r i b u t e toward l o n g e r machine l i f e . Under a t o t a l system, i n f o r m a t i o n would be made a v a i l a b l e t o management on e x a c t l y how e f f e c t i v e t h e p r e v e n t a t i v e maintenance p r o c e d u r e s a r e . There s h o u l d be a measure o f how c a p i t a l i n v e s t m e n t i s b e i n g due  deferred  t o l o n g e r machine l i f e o r how t h e f r e q u e n c y o f machine breakdowns  i s decreasing,  thus l o w e r i n g t h e l e v e l o f " c o s t s " a s s o c i a t e d w i t h  machine downtime.  ABC Company h a s . n e i t h e r  of these e f f e c t i v e n e s s  reports.  II.  APPLICATION OF TOTALITY CONCEPT TO CASE COMPANY The  T o t a l Information  System Concept d e f i n e d  p r e v i o u s l y s e t s out t h e i d e a l , t h e model, or t h e p e r f e c t system f o r management use i n t h e . d e c i s i o n making p r o c e s s . system s t a t u s i s c o n s i d e r e d  To a t t a i n such a  a r e a l feat of managerial designing.  To say t h e i n f o r m a t i o n system o f ABC Company was a t o t a l system  100  would be a g r o s s e x a g g e r a t i o n .  I t i s a v e r y a c c e p t a b l e system,  however, b u t i t i s f a r from a t t a i n i n g t h e s t a t u s of t o t a l i t y . I t i s a system w i t h w h i c h ABC  Company i s v e r y p l e a s e d w i t h because  i t i s a system w h i c h i s d e s i g n e d t o s e r v e t h e i r immediate needs and i n f o r m a t i o n a l r e q u i r e m e n t s .  The b i g g e s t b a r r i e r t h a t ABC  Company f a c e s i n  a t t a i n i n g the t o t a l system i s the time element. to  The time i t takes  r e p o r t the o c c u r r e n c e of an event can t a k e up t o two o r t h r e e  weeks from t h e date i t happened. minutes.  Some o t h e r responses o n l y t a k e  However, the t i m e l a g t h a t o c c u r s i s o f t e n e x c e s s i v e ,  r e s u l t i n g i n an i n e f f e c t i v e d e c i s i o n making p r o c e s s .  I f the  management d e c i s i o n c o u l d have been made i m m e d i a t e l y a f t e r an event o c c u r r e d , the  c o r r e c t i v e a c t i o n would be c o n s i d e r a b l y more e f f e c t i v e .  F o r example, the m a j o r i t y of the m a r k e t i n g r e p o r t s a r e p r e p a r e d o n l y monthly 8th  and a r e a v a i l a b l e f o r management use anywhere from the  t o the 15th w o r k i n g day of the f o l l o w i n g month.  does n o t keep management t o t a l l y i n f o r m e d .  T h i s time l a g  I n the a r e a of customer  p r o f i t a b i l i t y , ' the company c o u l d have made a l a r g e s a l e t o an u n p r o f i t a b l e customer d u r i n g the f i r s t p a r t o f the month b e f o r e r e c e i v i n g a r e p o r t t h a t t h e customer has proven t o be u n p r o f i t a b l e and no f u r t h e r s a l e s t o him s h o u l d be contemplated. was  I f management  t o t a l l y i n f o r m e d o f t h i s c o n d i t i o n , t h e n the u n p r o f i t a b l e s a l e  would.never have been made. In most c a s e s , the time l a g o f r e p o r t i n g i s d i r e c t l y r e l a t e d t o the a c c e s s i b i l i t y of the i n f o r m a t i o n i t s e l f .  I f the  101  s o u r c e of i n f o r m a t i o n i s e n v i r o n m e n t a l , the system has  the  task  of t r y i n g t o m o n i t o r something t h a t i s beyond the c o n t r o l of company.  the  T h i s o f t e n a c c o u n t s f o r some of the time l a g as the  t o p r o c u r e d a t a i s a major i n i t i a l q u e s t i o n .  right  I f the t o t a l system  i s a c t i v e , e n v i r o n m e n t a l i n f o r m a t i o n would be g a t h e r e d from a l l s o u r c e s as q u i c k l y as p o s s i b l e , but w i t h i n the bound of good business e t h i c s .  The  concept i s t o get as much r e l e v a n t  as i s p o s s i b l e w i t h i n as s h o r t a time as p o s s i b l e t o be  The  c o s t f a c t o r has  a l s o h e l d ABC  b e i n g a b l e to a c h i e v e a t o t a l system.  information effective.  Company back from  Each time a segment of  the  system needs t o be improved upon, the c o s t of such a change must be c o n s i d e r e d  - the c o s t of the p h y s i c a l equipment and  the personne c o s t i n v o l v e d i n the change and spent on p l a n n i n g evaluated,  a change.  facilities,  the m a n a g e r i a l time  When the t o t a l c o s t i n v o l v e d i s  the p r o j e c t i s o f t e n not f e a s i b l e .  For i n s t a n c e ,  ABC  Company wanted t o a c q u i r e " o n - l i n e " , " r e a l - t i m e " computer equipment for  use a t the v a r i o u s p l a n t b r a n c h o f f i c e s .  increased.their.information handling  I t would have g r e a t l y  c a p a b i l i t i e s , but  the c o s t of  i n s t i t u t i n g such a system d i d not exceed m a r g i n a l b e n e f i t s t h a t would b e . f o r t h c o m i n g . s i g n i f i c a n t i n recent ABC  The  c o s t f a c t o r has become i n c r e a s i n g l y  years.  Company i s h a v i n g problems w i t h r e p o r t s t r a n g u l a t i o n ,  e s p e c i a l l y a t the l e v e l of d i v i s i o n managers.  The  d i v i s i o n manager  i s burdened down w i t h an extreme amount of r e p o r t s - many of w h i c h  102  he i s not r e a l l y concerned w i t h .  I t has developed t o the s t a t e  whereby the d i v i s i o n manager a l m o s t a u t o m a t i c a l l y r e c e i v e s a copy of e v e r y r e p o r t produced by h i s d i v i s i o n o r produced by head w i t h some a p p l i c a t i o n t o a p a r t i c u l a r d i v i s i o n . now  office  The d i v i s i o n manager  tends t o d i s r e g a r d most of the i n f o r m a t i o n f o r he doesn't have  the t i m e t o . r e a d and absorb each r e p o r t coming t o him.  What i s  r e a l l y r e q u i r e d i s a f u r t h e r d e l e g a t i o n of a u t h o r i t y , r e c h a n n e l l i n g of r e p o r t s t o o t h e r persons r e s p o n s i b l e , or g r e a t e r use of r e p o r t i n g by  exception.  Another b a r r i e r t o the t o t a l i t y concept f o r ABC Company i s the s p r e a d of f u n c t i o n a l r e s p o n s i b i l i t i e s between the head o f f i c e and b r a n c h e s .  Some f u n c t i o n s a r e h a n d l e d c e n t r a l l y ,  others are d e c e n t r a l i z e d .  The reasons f o r h a v i n g some s e r v i c e s  d e c e n t r a l i z e d a r e many.  However, the main c r i t e r i a i s t h a t  s p e c i f i c branches have s p e c i f i c demands imposed upon them by environmental f a c t o r s . marketing.  T h i s i s e s p e c i a l l y t r u e i n the a r e a of  By c r e a t i n g the s i t u a t i o n of d e c e n t r a l i z a t i o n ,  d u p l i c a t i o n of e f f o r t and systems p r o c e d u r e s imposes an added c o s t a g a i n s t t h e . o v e r a l l company p r o f i t a b i l i t y .  The t o t a l system  does not a s c r i b e t o d u p l i c a t i o n e f f o r t f o r i t tends t o be a waste of p e r s o n n e l and tends t o " t i e up" the system w h i c h c o u l d be used f o r . o t h e r more p r o d u c t i v e  functions.  One a r e a of the i n f o r m a t i o n system t h a t has been very d i f f i c u l t to.assess system i t s e l f .  i s the human element connected w i t h t h e  The i n f o r m a t i o n o f ABC  Company i s new and i t was  103  developed w i t h t h e f u l l c o o p e r a t i o n o f a l l p e r s o n n e l i n v o l v e d . T h e r e f o r e , t h e r e i s s t i l l a h i g h amount o f human e n t h u s i a s m t o make t h e system work.  I f , i n f u t u r e , t h i s enthusiasm begins t o  w a i n , t h e system w i l l l i k e l y b e g i n t o show s i g n s o f breakdown.  To  d a t e , however, t h i s appears n o t t o have happened and p e r s o n a l i t i e s are  p l a y i n g a very l i t t l e r o l e i n the information flow. Some s p e c i a l i z a t i o n has c r e p t i n t o t h e system w h i c h  tends t o d e t r a c t from t h e t o t a l i t y c o n c e p t .  An a i r o f mystery  surrounds t h e f u n c t i o n o f t h e computer i n the system and management tends t o l e t those p e r s o n a l i t i e s d i r e c t l y i n v o l v e d w i t h t h e computer  t a k e t h e i r own c o u r s e s o f a c t i o n .  computer  s p e c i a l i s t has tended t o p u t up a communications  between management and t h e s p e c i a l i s t . of  This c r e a t i o n of a barrier  I t i s n o t known how much  an a f f e c t t h i s b a r r i e r has on t h e f l o w o f i n f o r m a t i o n , b u t i t  i s known t h a t t h e r e i s a h e s i t a n c y f o r management t o a n a l y z e t h e e f f e c t i v e n e s s o f a computer, m a i n l y because management does n o t understand f u l l y i t s i m p l i c a t i o n s .  Another approach t a k e n by ABC Company w h i c h does n o t a l l o w i t t o q u a l i f y f o r a t o t a l management i n f o r m a t i o n system i s the  p r a c t i c e o f d e a l i n g w i t h segments o f t h e system i n s t e a d o f t h e  system as a whole.  Management tends t o c o r r e c t o r b u i l d each  subsystem a t one time r a t h e r t h a n t a k i n g t h e f u l l v i e w o f t h e impact t h a t a change o f one system has on a l l o t h e r systems. reasons f o r t h i s a r e m a i n l y t h e c o s t and t i m e f a c t o r s .  The  ABC Company,  as w e l l as o t h e r companies, i s governed by budget and o t h e r c o s t  104  limitations.  T h e r e f o r e , the amount of spending done i s l i m i t e d  and t h e l i m i t i s o f t e n f o r one s p e c i f i c p r o j e c t or system.  The  time t a k e n t o b u i l d up a system i s u s u a l l y l i m i t e d as w e l l , hence the segment i s o f t e n l o o k e d a t a l o n e .  I n most c a s e s , t h e r e a r e  o n l y a few p e r s o n n e l a s s i g n e d t o . r e v i e w a system, and t o have an e f f e c t i v e r e v i e w you need a l l management p e r s o n n e l f o r i t w i l l t a k e everyone  t o g i v e t h e i r i m p r e s s i o n s of how  the system  will  a f f e c t the whole company r a t h e r t h a n have a few persons g i v e t h e i r views.  To put everyone on t h e i r r e v i e w committee i s o b v i o u s l y  i m p r a c t i c a b l e as t h e r e a r e o t h e r m a n a g e r i a l d u t i e s t o be  performed  as w e l l .  One major element t h a t ABC  Company does not have  f u l l i n f o r m a t i o n on i s the e n v i r o n m e n t a l f a c t o r s a f f e c t i n g the company.. The exposure t o the environment  i s s t i l l by way  m a n a g e r i a l c o n t a c t s , news media and governmental system was for  edicts.  of I f the  t o be a t o t a l system, t h e r e s h o u l d be some p r o v i s i o n s  the m o n i t o r i n g of a l l e n v i r o n m e n t a l f a c t o r s , i n c l u d i n g  p o p u l a t i o n t r e n d s , c o m p e t i t i o n , new  p r o d u c t developments,  laws,  i m p o r t and e x p o r t t r e n d s , raw m a t e r i a l p r i c i n g f l u c t u a t i o n s , e t c . To do t h i s , the system would almost have t o be on an  "on-line,  r e a l - t i m e " b a s i s w h i c h would g i v e the immediate i n t e r a c t i o n i n f o r m a t i o n feedback r e q u i r e d .  and  Of c o u r s e , t h i s type of i n f o r m a t i o n  i s the most d i f f i c u l t t o m o n i t o r , b u t i t i s an i n c r e a s i n g l y i m p o r t a n t one, i n v i e w o f r a p i d l y changing e n v i r o n m e n t a l c o n d i t i o n s . F o r example, ABC  Company w i l l need t o b e g i n t o develop systems t o  105.  a c c e p t i n p u t t o improve market f o r e c a s t i n g and a c h i e v e f a s t e r response t o a changing market environment.  Information t o t a l system.  r e t r i e v a l i s an i m p o r t a n t  aspect of a  ABC Company has i n f o r m a t i o n r e t r i e v a l f a c i l i t i e s ,  but they a r e on a l i m i t e d b a s i s .  I n some i n s t a n c e s ,  information  can o n l y be r e t r i e v e d from t h e system by c a l l i n g f o r a s p e c i a l study o r r e p o r t .  This request  f o r i n f o r m a t i o n i n d i c a t e s somewhat  of a l i m i t a t i o n i n t h e system because those who r e q u i r e t h e i n f o r m a t i o n must f i r s t a s k someone e l s e who has a c c e s s t o t h i s type of i n f o r m a t i o n . for  Time i s wasted as w e l l as the i n c r e a s e d p r o b a b i l i t y . ,  a "communication l o s s " as a r e s u l t o f i n f o r m a t i o n  transmitted several  The  being  times.  i n f o r m a t i o n system o f ABC Company a l s o f a i l s t o  be a t o t a l system due t o i t s l a c k o f f u l l y u t i l i z i n g t h e c a p a b i l i t i e s o f t h e system.  F o r example, ABC Company does n o t use  the system t o m a i n t a i n d e t a i l e d i n f o r m a t i o n on i t s p e r s o n n e l .  It  does n o t r e c o r d d e t a i l s o f i t s e x t e n s i v e r e s e a r c h and development program.  I t i s n o t f u l l y used t o c o n t r o l p r o d u c t i o n , n o r i s i t  used t o f e e d b a c k i n f o r m a t i o n o f r e t u r n on v a r i o u s  investments.  A l l these d u t i e s a r e performed by manual, a r c h a i c and r a t h e r c o s t l y methods.  As o f y e t , however, management has n o t f u l l y  integrated  them i n t o t h e o v e r a l l system so they cannot be c l a s s e d as p a r t o f a t o t a l system.  I n summary, t h e i n f o r m a t i o n system o f ABC Company i s  106  a d e f i n i t e attempt at reaching a t o t a l system, but i t s t i l l lacks some of the c h a r a c t e r i s t i c s which make up the t o t a l i t y concept. It lacks c a p a b i l i t i e s of f u l l y acquiring, processing, communicating, storing and r e t r i e v i n g a l l types of information products.  107  CHAPTER V I CONCLUSIONS AND GENERAL OBSERVATIONS  Throughout t h e s t u d y , t h e emphasis has been on one g o a l - t o t a l management i n f o r m a t i o n system c o n c e p t .  To i l l u s t r a t e  t h i s o b j e c t i v e , an i n f o r m a t i o n system from an e x i s t i n g company was analyzed. reached.  S e v e r a l o b s e r v a t i o n s have been made and c o n c l u s i o n s An i m p r e s s i o n o f the p r e s e n t s t a t u s of t o t a l systems may  a l s o s e r v e t o i n d i c a t e how f a r i n d u s t r y has advanced towards t h e t o t a l i t y concept.  T.  DISCLOSURES OF THE STUDY  I n a l l t y p e s o f a n a l y s i s t h e r e e x i s t s an u l t i m a t e objective.  Throughout  t h i s s t u d y , the o b j e c t i v e has been t o  develop a concept w h i c h b e s t d e s c r i b e s t h e term " t o t a l management i n f o r m a t i o n system". A w o r k a b l e d e f i n i t i o n has been proposed i n a manner w h i c h i s g e n e r a l enough t o be a p p l i c a b l e t o a l l r e a s o n a b l e situations.  To demonstrate how t h e developed d e f i n i t i o n can be  a p p l i e d t o any s i t u a t i o n , i t was put i n t o a p r a c t i c a l framework  -  i t was used as t h e main c r i t e r i a i n d e t e r m i n i n g whether o r n o t an e x i s t i n g company had a t o t a l management i n f o r m a t i o n system. The company had e x p r e s s e d t h e f e e l i n g t h a t a v e r y e x t e n s i v e and comprehensive  i n f o r m a t i o n system e x i s t e d w i t h i n t h e i r o p e r a t i o n s  and management was c l a i m i n g t h e s t a t u s o f a t o t a l system.  By  a p p l y i n g t h e proposed d e f i n i t i o n o f a t o t a l i n f o r m a t i o n system, i t  108  was found t h a t t h e case company d i d n o t measure up t o t h e t o t a l i t y s t a t u s even though i t d i d c o n t a i n some o f t h e a t t r i b u t e s common t o a t o t a l system.  The approach t a k e n t o r e a c h t h i s c o n c l u s i o n was  to s y s t e m a t i c a l l y a n a l y z e each f a c e t o f t h e company's  information  complex and t o a s s e s s t h e i n t e r - r e l a t i o n s h i p s between each component of t h e o v e r a l l system.  I t was e a r l i e r a s s e s s e d t h a t t h e i n f o r m a t i o n of ABC Company was n o t a t o t a l system.  system  However, a b r i e f r e v i e w of  the key subsystems o f t h e company w i l l d i s c l o s e some of t h e u n d e r l y i n g causes and e f f e c t s .  I n ABC Company,  t was d i s c l o s e d  t h a t w i t h i n t h e subsystem of m a r k e t i n g , s e v e r a l o p e r a t i o n s l e a d i n g r o l e i n the flow of i n f o r m a t i o n .  took a  I t was a f l e x i b l e system  d e s i g n e d t o emphasize p l a n n i n g and p r o f i t a b i l i t y .  Planning  i n the  sense t h a t t a r g e t s a r e b e i n g s e t f o r a l l l e v e l s of managem „t and t^e d e v i a t i o n s a r e a u t o m a t i c a l l y known v i a v a r i o u s c o n t r o l f e a t u r e s . Planning  i s a l s o c a r r i e d out i n terms o f f o r e c a s t i n g o f immediate  demands and t r e n d s  i n demands.  P r o f i t a b i l i t y a n a l y s i s forms a v e r y i n t e g r a l p a r t of ABC Company's management i n f o r m a t i o n p r o c e s s ,  i n that success  of t h e m a r k e t i n g f u n c t i o n was o f t e n measured by v a r i o u s y a r d s t i c k s of p r o f i t c o n t r i b u t i o n s .  The p r o f i t a b i l i t y s t a n d a r d  was n o t e d  from.the l o w e s t base l e v e l o f i n d i v i d u a l customers up through t o t o t a l company p r o f i t s .  109  L i m i t a t i o n s , i n the a r e a . o f m a r k e t i n g , towards  the  t o t a l i t y concept i n c l u d e d the l i m i t e d d a t a base and t h e i n a b i l i t y of  the system t o m o n i t o r the environment  f a c t o r s governing t h a t  company's c o m p e t i t i v e p o s i t i o n i n a t o t a l market p l a c e . to  Relating  the d a t a base, i t has been shown t h a t a t the h e a r t of every  s u c c e s s f u l i n f o r m a t i o n system i s a d i s a g g r e v a t e d d a t a f i l e . . .  the  d i s a g g r e v a t e d d a t a f i l e p r o v i d e s the f l e x i b i l i t y w h i c h i s a p r e r e q u i s i t e of an i n t e l l i g e n t system e v o l u t i o n . 1  In designing  the d a t a bank, i t i s i m p o r t a n t t o p r o v i d e f o r common  denominators  i n d i f f e r e n t s e t s of d a t a so t h a t c o r r e l a t i o n and a n a l y s i s p o t e n t i a l of  t h e management i n f o r m a t i o n system can be r e a l i z e d .  T h i s means  t h a t such elements as geography, time and r e s p o n s i b i l i t y b o u n d a r i e s of  d i f f e r e n t t y p e s o f d a t a must be c o m p a t i b l e t o p e r m i t m e a n i n g f u l  comparisons.2  ABC Company d o e s - n o t J i a v e . , t h i s v e r y e x t e n s i v e d a t a  bank.  The f a i l u r e t o .develop the use of e x t e r n a l o r e n v i r o n m e n t a l i n f o r m a t i o n i s m a i n l y due t o the problems i n v o l v e d i n m o n i t o r i n g such i n f o r m a t i o n . Data i s o f t e n not i n a r e a d i l y u s e a b l e form and must f i r s t be d i g e s t e d t o s c a n f o r r e l e v a n t d e t a i l s . I t i s s u r p r i s i n g t h a t more f i r m s have n o t a l l o w e d f o r t h i s f u n c t i o n for  1  such e n v i r o n m e n t a l d a t a i s b e i n g r e c o g n i z e d a t a r a p i d r a t e as  The M a r k e t i n g E x e c u t i v e and Management I n f o r m a t i o n Systems, S c i e n c e , . T e c h n o l o g y and M a r k e t i n g , 1966 F a l l Conference P r o c e e d i n g s of the American M a r k e t i n g A s s o c i a t i o n , p. 76.  ^Cox, D.F., Good, R.E., "How t o B u i l d a M a r k e t i n g I n f o r m a t i o n System", H a r v a r d Review, May-June, 1967, p. 153.  110  a key management t o o l .  A l l t h a t i s needed i s f o r f i r m s t o develop  systems w h i c h w i l l a c c e p t such i n p u t . 3  I n t e r a c t i n g w i t h marketing,  t h e subsystem o r  p r o d u c t i o n i s b u i l t h e a v i l y around p l a n n i n g .  The success o f a  b u s i n e s s o f t e n depends i n a l a r g e p a r t on i t s a b i l i t y t o c o n t r o l b o t h i t s c u r r e n t o p e r a t i o n s and r e j u v e n a t e i t s e l f ABC Company has developed  through  innovation.^  t h i s type o f p h i l o s o p h y , and m a i n l y  through t h e enthusiasm a n d . i t s s u c c e s s f u l use o f v a r i o u s o p e r a t i o n s r e s e a r c h t e c h n i q u e s has kept i t s o b j e c t i v e s up-dated t o meet f u t u r e demands.  T h i s same a t t i t u d e o f c o n s t a n t l y u p - d a t i n g p l a n n i n g i s  h e l p e d by proponents o f p a r t i c i p a t i v e g o a l s e t t i n g . 5  i f the  p r o d u c t i v e p l a n n i n g . a t m o s p h e r e o f ABC Company can m a i n t a i n i t s p r o g r e s s i v e n e s s , t h e c a p a b i l i t i e s o f management w i l l have t o be regarded  as b e i n g a h i g h l y informed  group w i t h i n t h e o v e r a l l  company system. The main l i m i t a t i o n t o t h e p r o d u c t i o n subsystem o f ABC Company i s t h a t i t l a c k s f l e x i b i l i t y b o t h i n day-to-day o p e r a t i n g c o n t r o l and f o r f u t u r e growth.  The f l e x i b i l i t y  of the  system i s l i m i t e d i n t h a t i t cannot be a l t e r e d f r e q u e n t l y as day-  ^Couger, J.D., "Seven I n h i b i t o r s t o a S u c c e s s f u l Management I n f o r m a t i o n System", Systems and Procedures J o u r n a l , J a n u a r y - F e b r u a r y , 1969, p. 18. ^Zannetos, Z.S., Poensgn, O.H., I n n o v a t i o n , O p e r a t i o n a l C o n t r o l and the Management I n f o r m a t i o n System, The B u s i n e s s Q u a r t e r l y , W i n t e r , 1966, Volume 31, No. 4, p. 38. 5Anthony, R.N., P l a n n i n g and C o n t r o l Systems - A frame Work f o r A n a l y s i s , D i v i s i o n of R e s e a r c h , Graduate S c h o o l o f B u s i n e s s , H a r v a r d U n i v e r s i t y , B o s t o n , Mass., 1965.  Ill  to-day s i t u a t i o n s o f t e n demand w i t h o u t c o n s i d e r a b l e c o s t s i n v o l v e d in rescheduling.  The  l i m i t e d f l e x i b i l i t y a l s o a p p l i e s t o the  v a r i o u s c o n s t r a i n t s needed i n d e v e l o p i n g for  production  the m a t h e m a t i c a l model  scheduling.  The p r o d u c t i o n system a l s o f a i l s t o a l l o w s i g n i f i c a n t room f o r e x p a n s i o n of t o t a l p h y s i c a l f a c i l i t i e s .  I t does not  assume t h a t any of the r e f i n e r i e s c o u l d have major changes i n e f f i c i e n c y , c a p a c i t y or even the a b i l i t y t o c l o s e down.  For  p r a c t i c a l reasons,  production  i t has assumed o n l y l i m i t e d ranges of  capabilities. I n the a r e a o f d i s t r i b u t i o n and p a c k i n g , an  important  i  d i s c l o s u r e has been made w i t h r e g a r d t o f i n i s h e d goods i n v e n t o r y and d i s t r i b u t i o n methods.  I n c o n t e x t , the f i n i s h e d goods i n v e n t o r y  i s c u r r e n t l y a f u n c t i o n o f the t o t a l f o r e c a s t of s a l e s f o r the year.  D i s t r i b u t i o n b a s i c a l l y f o l l o w s the premise t h a t the goods  w i l l be shipped Use  from the warehouse w h i c h i s c l o s e s t t o the customer.  i s not b e i n g made,of numerous management s c i e n c e  techniques  w h i c h can e a s i l y and w i t h v e r y l i t t l e c o s t be i n c o r p o r a t e d t o . p r o v i d e t i g h t e r c o n t r o l over t h i s e n t i r e subsystem.  I t i s estimated  .that by not c o n t r o l l i n g t h i s a r e a , s i g n i f i c a n t e x t r a " d o l l a r " c o s t s are being i n c u r r e d .  I t i s suspected  t h a t as c o m p e t i t i o n becomes  more i n t e n s e , companies o f t h i s s o r t w i l l be p l a c i n g g r e a t e r emphasis on customer s e r v i c e ;  i . e . s a t i s f y the customer a t a l l c o s t s .  'A New Approach t o P h y s i c a l D i s t r i b u t i o n , American Management A s s o c i a t i o n , I n c . , P u r c h a s i n g D i v i s i o n , New Y o r k , June, 1967.  112  The subsystem o f maintenance employs a b a s i c c o n c e p t ; i . e . p r e v e n t a t i v e maintenance, b u t i t does n o t employ i t t o a t o t a l systems advantage. the work " s y s t e m a t i c " . ^  The key t o p r e v e n t a t i v e maintenance i s E f f e c t i v e p r e v e n t a t i v e maintenance f o r a  t o t a l system must p r o v i d e s y s t e m a t i c i n s p e c t i o n s , s y s t e m a t i c r e p a i r procedures,  s y s t e m a t i c s e r v i c i n g p r o c e d u r e s and s y s t e m a t i c  S y s t e m a t i c means " a c c o r d i n g t o a s t a n d a r d " .  Therefore,  follow-up.  t h e system  must be a b l e t o c o r r e c t a d e v i a t i o n a u t o m a t i c a l l y , n o t two o r t h r e e weeks l a t e r when t h e f i n a n c i a l r e p o r t s a r e p r e p a r e d .  These have been t h e major d i s c l o s u r e s o f t h e i n f o r m a t i o n system o f ABC Company and they a r e m a i n l y d i s c l o s u r e s w h i c h tend t o d e t r a c t from h a v i n g a t o t a l system.' II.  CONCLUSIONS OF THE STUDY  S e v e r a l c o n c l u s i o n s o f t h e s t u d y can be made, b u t the c o n c l u s i o n s reached c a n , i n r e t r o s p e c t , be a p p l i c a b l e t o numerous companies who u s u a l l y have a s i m i l a r b a s i c o r g a n i z a t i o n a l structure'. (a)  These c o n c l u s i o n s a r e as f o l l o w s :  ABC Company does n o t have a t o t a l management i n f o r m a t i o n system. The  However, i t does n o t r e a l l y need a t o t a l system.  concept o f t o t a l i t y i s t h e i d e a l and t h e ABC Company  philosophy this ideal.  or g o a l i s n o t s p e c i f i c a l l y s t a t e d as o b t a i n i n g They o n l y want t o work towards i t , n o t a t t a i n  ^Maynard, H.B., I n d u s t r i a l E n g i n e e r i n g Handbook, M c G r a w - H i l l Book Company, I n c . , Second E d i t i o n , 1963, p.p. 4-56.  113  it.  The company i s not i n t h a t c r i t i c a l a  competitive  p o s i t i o n t h a t i t must have a t o t a l system t o s u r v i v e .  The  t o t a l system concept i s a m o t i v a t i o n t h a t e x i s t s o n l y i n the minds of the c o r p o r a t e management - i t i s a d r i v e t h a t i s f e l t p e r s o n a l l y by each manager, but i t i s a d r i v e t h a t represents  a c h a l l e n g e r a t h e r than the m a t t e r o f s u r v i v a l .  The t o t a l i n f o r m a t i o n system concept covers  so v a s t a  spectrum of c o n d i t i o n s t h a t i t i s d o u b t f u l t h a t a company would r e c o g n i z e achievement even i f t o t a l i t y had been attained.  What would management measure i t a g a i n s t ? • How  c o u l d i t be demonstrated t o show achievement?  By  simply  s a y i n g t h a t the system appears t o q u a l i f y f o r a l l c r i t e r i a mentioned i n the d e f i n i t i o n does not n e c e s s a r i l y say t h a t a l l the a t t r i b u t e s a r e r e l a t e d i n an optimum f a s h i o n . t o t a l system i s n o t t o be measured - i t i s too A t o t a l system, i t s e l f , studied.  Therefore,  A  encompassing.  i s t o o l a r g e t o be e n v i s i o n e d or  i t i s b r o k e n i n t o subsystems.  As  management t h i n k s i n terms o f subsystems, i t tends t o b u i l d up i n d i v i d u a l subsystems and never seems t o r e a l l y grasp the concept of one system a g a i n . e f f o r t s w i l l be c h a n n e l l e d  Even t h e m a n a g e r i a l  a t f i r s t t o one subsystem, t h e n  a n o t h e r , t r y i n g t o p e r f e c t each i n d i v i d u a l segment. t o t a l system i s never r e a l l y reached by t h i s  The  process.  T r a d i t i o n a l l y , the i n f o r m a t i o n t h a t has bound t h e v a r i o u s subsystems t o g e t h e r has been f i n a n c i a l . to r e g a r d the a c c o u n t i n g  Management has come  i n f o r m a t i o n as " t h e " i n f o r m a t i o n  114  system of the b u s i n e s s  and  the o t h e r i n f o r m a t i o n systems t o  be m e r e l y t o o l s of the department i n v o l v e d . ^  The  i n f o r m a t i o n s t r i c t l y i n the form of numbers has I n f o r m a t i o n modes and  technology  days of past.  have advanced t o the s t a g e  where numbers tend t o be m e a n i n g l e s s i n a l o t of s i t u a t i o n s . More use must be. made of o t h e r forms of communication.  (e)  The  system must be  The  concept of a t o t a l system i m p l i e s a c e n t r a l c o n t r o l of  the systems e f f o r t .  imaginative.  C e n t r a l i z a t i o n of c o n t r o l means t h a t  most p l a n n i n g , o p e r a t i n g d e c i s i o n s and e x e c u t i v e d i r e c t i v e s a r e made b y . t o p management and  t h a t the d u t i e s of the lower  l e v e l s of management a r e p r i m a r i l y " a c t s of d o i n g " of " a c t s of p l a n n i n g or d e c i d i n g " . 9 what the t o t a l system was  instead  This i s c l e a r l y  meant t o be as i t was  not  t o be  an  i n f o r m a t i o n producer and d i s t r i b u t o r f o r a l l l e v e l s of management.  However, w i t h t h e economics g a i n e d by  c e n t r a l i z a t i o n of c o n t r o l , a t r e n d may  develop  having  and  d e c e n t r a l i z e d management become l e s s common. (f)  The most d i f f i c u l t b a r r i e r t o a t o t a l system i s the i n v o l v e d f o r i n s t i t u t i n g such a system.  cost  Companies j u s t  cannot a f f o r d a l l the r e q u i r e d t o o l s , p e r s o n n e l t h a t must go i n t o making up a t o t a l system.  and  knowledge  In recent  years,  ^ H e i n , Dr. L.W., "The Management A c c o u n t a n t and the I n t e g r a t e d I n f o r m a t i o n System", Management A c c o u n t i n g , N a t i o n a l A s s o c i a t i o n of A c c o u n t a n t s , J u n e , 1968. 9Haseman, W.C., Management Uses of A c c o u n t i n g , B o s t o n , 1963, p. 760.  A l l a n and Bacon, I n c . ,  115  i n f o r m a t i o n i s b e i n g produced i n such q u a n t i t i e s t h a t the !  p h y s i c a l t a s k of s o r t i n g through g r e a t amounts of d a t a t o f i n d m e a n i n g f u l i n f o r m a t i o n i s enormous. ^ 1  f i g u r e i s attached  If a dollar  t o the s e a r c h f o r i n f o r m a t i o n , the  c o s t would be a s t r o n o m i c a l .  H a l f the c o s t of r u n n i n g  economy i s the c o s t of i n f o r m a t i o n . H  total our  For i n d i v i d u a l f i r m s ,  the same p r i n c i p l e a p p l i e s , i n t h a t a b e n e f i t - c o s t a n a l y s i s performed f o r i n f o r m a t i o n g a t h e r i n g makes most i d e a s of innovations p r o h i b i t i v e .  The h i g h p r i c e t a g of i n f o r m a t i o n  p r o c e s s i n g equipment a l s o p l a c e s a c o s t b a r r i e r t o the purchasing (g)  The  of improved i n f o r m a t i o n h a n d l i n g  techniques.  dynamic s o c i e t y w i t h i n w h i c h a t o t a l i n f o r m a t i o n system  must work a l m o s t d e s t r o y s the t o t a l i t y n o t i o n as q u i c k l y as i t can be s a i d t o be a t t a i n e d .  By the time the system has  been i n s t i t u t e d t o the degree n e c e s s a r y  for totality, a  changed environment r e q u i r e s a changed system.  I t i s doubtful  t h a t a t o t a l i n f o r m a t i o n system c o u l d ever be designed t a k e account of a c u r r e n t (h)  to  situation.  The use of e l e c t r o n i c d a t a p r o c e s s i n g equipment i s almost e s s e n t i a l f o r a company t o b u i l d a t o t a l management i n f o r m a t i o n system.  T h i s a p p l i e s t o medium and l a r g e s i z e companies  s p e c i f i c a l l y and  t o some s m a l l companies which a r e h e a v i l y  l O B e y e r , R., "A P o s i t i v e Look a t Management I n f o r m a t i o n F i n a n c i a l E x e c u t i v e , June, 1968.  System",  U N e u s c h e l , R.F., Management by System, 2nd E d i t i o n , M c G r a w - H i l l Book Co., I n c . , New Y o r k , New Y o r k , 1960.  116  dependent on e n v i r o n m e n t a l  conditions.  The manual p r o c e s s i n g  of i n f o r m a t i o n i s j u s t t o o s l o w t o be o f r e a l v a l u e .  On-  l i n e c a p a b i l i t i e s from management t o t h e system a r e r e q u i r e d f o r q u i c k and easy a c c e s s .  Computers a l s o a l l o w f o r g r e a t e r  c a p a b i l i t i e s such as t h e use o f management s c i e n c e  techniques  i n i n f o r m a t i o n g a t h e r i n g and h a n d l i n g , (i)  W i t h t h e i n c r e a s e d emphasis on more i n f o r m a t i o n , t h e c o n t r o l s i n s t i t u t e d t o ensure a c c u r a t e i n f o r m a t i o n have been reduced somewhat.  The c o s t o f d e t a i l e d c o n t r o l s  have now r i s e n t o l e v e l s w h i c h exceed any amounts o f l o s s e s t h a t c o u l d be e x p e c t e d i f no c o n t r o l s e x i s t e d .  III.  OBSERVATIONS OF THE STUDY WHICH COULD PROVIDE OTHER TOPICS FOR RESEARCH  S e v e r a l o b s e r v a t i o n s made throughout t h e study p o i n t e d toward a new t r e n d i n management p o l i c y and i n f o r m a t i o n procedures.  These i n t e r e s t i n g f e a t u r e s would r e q u i r e g r e a t e r i h -  depth r e v i e w b e f o r e commenting on and, as s u c h , c o u l d be t o p i c s for further research.  One o b s e r v a t i o n was t h a t major r e v i s i o n s i n o r g a n i z a t i o n a l s t r u c t u r e appear t o r e s u l t from t h e development o f a t o t a l i n f o r m a t i o n system.  O r g a n i z a t i o n a l changes caused by t h e  i n f o r m a t i o n systems r e v i s i o n can be c l a s s i f i e d i n t o t h r e e forms: (1)  general organization r e v i s i o n s ,  and  (3) use o f c o n t r o l s .  (2) r e a l i g n m e n t  of f u n c t i o n s ,  The f i r s t c e n t r e s on t r e n d s toward  b r o a d e n i n g t h e scope of a manager's a u t h o r i t y and i n c r e a s i n g -  117  centralized control.  The second d e a l s w i t h changes i n f u n c t i o n a l  arrangements of d u t i e s , u s u a l l y made p o s s i b l e or n e c e s s i t a t e d by developments  i n d a t a systems.  The t h i r d emphasizes changes i n  s p e c i f i c departments i n w h i c h needed m o d i f i c a t i o n s i n the assignment of r e s p o n s i b i l i t i e s  a r e now p o s s i b l e due t o improved  information  services.  Another o b s e r v a t i o n i s t h a t the d e s i g n of a t o t a l i n f o r m a t i o n system i m p l i e s g r e a t e r m a n a g e r i a l a c c e s s i b i l i t y t o s u p p o r t i n g d e t a i l , w h i c h o b v i o u s l y i n c r e a s e s the problems of security for c o n f i d e n t i a l information.  A l l management c l e a r l y  cannot have a c c e s s t o a l l i n f o r m a t i o n , but y e t management must have a freedom t o t a p the system f o r t h e i r i n d i v i d u a l requirements.  information  I f the system i s made e x t r e m e l y easy t o o b t a i n  i n f o r m a t i o n from, c o m p e t i t o r s  or even t h i r d p a r t i e s c o u l d i n q u i r e -  the problem i s how t o c r e a t e the s e c u r i t y  necessary.  A t h i r d o b s e r v a t i o n i s t h a t the c o s t of h a n d l i n g u n i t . o f i n f o r m a t i o n has been reduced.  However, t o t a l c o s t s g e n e r a l l y  cannot be r e d u c e d s i g n i f i c a n t l y i n a t o t a l system. .  a  An i n t e r e s t i n g  r e s e a r c h study would be t o i n v e s t i g a t e ways t o reduce t h i s  total  c o s t , e s p e c i a l l y i n v i e w of the f a c t t h a t o r i g i n a l d a t a i s b e i n g used t o i n i t i a t e i n f o r m a t i o n i n s e v e r a l subsystems w i t h i n t h e t o t a l system. These a r e o n l y some of the t o p i c s i n t r o d u c e d , b u t they c o u l d p r o v i d e f o r f u r t h e r r e s e a r c h i n the t o t a l systems  area.  information  118  IV.  GENERAL OBSERVATIONS ON CURRENT PROBLEMS OF INFORMATION SYSTEMS The  term " t o t a l management i n f o r m a t i o n system" i s a  r e l a t i v e l y new concept. during recent years.  However, much has been t r i e d and a c h i e v e d  S e v e r a l problems have been a p p e a r i n g  w h i c h i n f l u e n c e t h e d r i v e toward t h e t o t a l i t y c o n c e p t .  recently  Some o f  these a r e b r i e f l y o u t l i n e d as f o l l o w s : (a)  I n d u s t r y appears t o be p r e o c c u p i e d w i t h d e v e l o p i n g and i n s t a l l i n g new e l e c t r o n i c d a t a p r o c e s s i n g equipment.  It  has become an o b s e s s i o n w i t h some companies t o always have the most modern equipment a v a i l a b l e .  Large amounts o f time  and money a r e spent on t h i s d e s i r e , whereas t h e r e a l r e s o u r c e s h o u l d be e f f e c t i v e u t i l i z a t i o n o f t h e equipment a l r e a d y owned. (b)  Few f i r m s have the r e s o u r c e s , e i t h e r f i n a n c i a l o r p e r s o n n e l , to a f f o r d t o implement a l l modules o f t h e management i n f o r m a t i o n system s i m u l t a n e o u s l y . 1 2 the most o f t e n used.  A phasing  Unfortunately, p r i o r i t y  approach i s designations  among systems a r e o f t e n i n c o n s i s t e n t w i t h t h e c r i t i c a l i t y of t h e system t o t h e f i r m ' s o p e r a t i o n s . accounting  systems a r e , o f t e n g i v e n h i g h e r p r i o r i t y  systems w h i c h p r o v i d e a h i g h e r . r e t u r n on (c)  F o r example,  investment.  I n many companies, u n s o p h i s t i c a t e d t e c h n i q u e s s o p h i s t i c a t e d equipment.13  l ^ C o u g e r , o p . c i t . , p. 18. 1 3 l b i d . , P. 18.  than  a r e used w i t h  The equipment and t h e m a n a g e r i a l  119  t a l e n t a r e j u s t not b e i n g f u l l y e f f e c t j b e i n g wasted. them.  The  utilized.  I f the r e s o u r c e s  They a r e , i n  are a v a i l a b l e -  use  l o n g r u n b e n e f i t s w i l l u s u a l l y f a r outweigh the  costs involved. (d)  Company power p o l i t i c s has proven t o be a p o t e n t i a l d i s r u p t i v e f a c t o r f o r a management i n f o r m a t i o n system p r o j e c t .  1 4  I n s t i t u t i n g a t o t a l management i n f o r m a t i o n system f r e q u e n t l y r e s u l t s i n the r e a l i g n m e n t authority lines.  of the company's t r a d i t i o n a l  Whenever a u t h o r i t y i s q u e s t i o n e d  or changed,  the company p o l i t i c i a n s become a c t i v e , o f t e n damaging chance f o r (e)  The  any  success.  t o t a l i n f o r m a t i o n system concept i s p a r t i a l l y i n t e r p r e t e d  to mean p r o v i d i n g the r i g h t i n f o r m a t i o n a t the r i g h t time t h i s i s o f t e n m i s t a k e n f o r p r o v i d i n g any  i n f o r m a t i o n on  an  immediate b a s i s . . I n r e a l i t y , management does not need " a l l " i n f o r m a t i o n on an immediate b a s i s . F o r c o s t s w i l l not change minute by m i n u t e . systems t e c h n i q u e s  Using s o p h i s t i c a t e d  t o p r o v i d e t h i s i n f o r m a t i o n on a r e a l -  time b a s i s i s a waste of time and money. designers (f)  In  today a r e s t i l l t r y i n g t o do  However, systems  this.  the r a p i d advance toward a t t a i n i n g a t o t a l system, a l l  companies f i n d they have o m i t t e d  1 4  example, f i x e d  a c r i t i c a l procedure which  G a l e , J.R., "Why Management I n f o r m a t i o n ' E x e c u t i v e , A u g u s t , 1968, p. 47.  l ^ B y e r , R.,  bp.  c i t . , p.  52.  Systems F a i l " , F i n a n c i a l  120  c o u l d have s i g n i f i c a n t c o s t i m p l i c a t i o n s i n the f u t u r e . They a l l admit t o h a v i n g poor documentation.  Management  knows i t must have documentation on what a c t u a l l y has been done - the remainder i s assumed t o n o t have been done.16 Some companies have been.set back as much as s i x months i n t h e i r systems r e v i e w s j u s t by not h a v i n g p r o p e r documentation. The d u p l i c a t i o n of e f f o r t t h a t r e s u l t s by n o t k e e p i n g p r o p e r records i s r e a l l y inexcuseable. (g)  Management i n v o l v e m e n t i n d e v e l o p i n g a t o t a l system has been generally very l i m i t e d . becoming  Management has a tendency t o a v o i d  i n v o l v e d i n the d e s i g n of a t o t a l system.17  They  f e e l t h e y a r e not c a p a b l e of u n d e r s t a n d i n g the t e c h n i c a l i t i e s , the j a r g o n , e t c . , t h a t n a t u r a l l y accompanies a t o t a l system development.  T h i s has proven t o be a major b a r r i e r i n t h e  . e v e n t u a l s u c c e s s of a . t o t a l system.. The concept has t o have m a n a g e r i a l a c c e p t a n c e and m a n a g e r i a l p a r t i c i p a t i o n b e f o r e , i t w i l l succeed. .(h)  Perhaps one of the most e s s e n t i a l elements i n c r e a t i n g a t o t a l system i s a bank or f i l e based on d i s a g g r e g a t e d o r " m i c r o " data.18  There a r e l i m i t s t o the s i z e of the d a t a  bank from w h i c h the manager s h o u l d be a b l e t o draw.  W ' E l w e l l , H.H., J r . , "Data and I n f o r m a t i o n Management Management S e r v i c e s , November-December, 1967.  In  Systems",  l M a r t i n o , Dr. R.L., "Management I n f o r m a t i o n Systems", Data P r o c e s s i n g : P e r s p e c t i v e s f o r Management, American Data P r o c e s s i n g , I n c . , F e b r u a r y , 1965. 7  18cox, D.F.,  Good, R.E.,  op. c i t . , p.  152.  121.  any  f i r m , i t i s n o t now p o s s i b l e , n o r w i l l i t l i k e l y ever  be p o s s i b l e f o r t h e manager t o be a b l e t o g e t a l l t h e i n f o r m a t i o n he f e e l s he wants.  As a r e s u l t , t h e manager  w i l l . c h o o s e t o i g n o r e t h e system and c o n t i n u e d e c i s i o n s by h i s own i n t u i t i o n . have t o be reached as  A p r a c t i c a l balance w i l l  t o the amount o f i n f o r m a t i o n t o s t o r e  as opposed t o t h e amount a v a i l a b l e . be s h o r t of complete (i)  t o make  However, i t w i l l  always,  information.19  Management, i n g e n e r a l , has n o t a c q u i r e d t h e l e v e l o f s o p h i s t i c a t e d knowledge n e c e s s a r y t o s t e p i n t o a t o t a l management i n f o r m a t i o n system.  O f t e n , they have n o t  mastered t h e b a s i c concepts on i n f o r m a t i o n p r o c e s s e s  before  they want t o i n c o r p o r a t e h i g h l e v e l systems.20(j)  F o r companies t h a t use e l e c t r o n i c d a t a p r o c e s s i n g  equipment  i n . t h e i r systems, t h e d a t a p r o c e s s i n g manager i s o f t e n t h e i n d i v i d u a l h e l d r e s p o n s i b l e f o r d e c i d i n g what k i n d of i n f o r m a t i o n s h o u l d be g e n e r a t e d by t h e system.  This i s a  wrong a t t i t u d e t h a t t h e p e r s o n r e s p o n s i b l e f o r d a t a p r o c e s s i n g s h o u l d r e s t r i c t t h e systems r e q u i r e m e n t s o n l y as a r e s u l t of t h e d a t a p r o c e s s i n g c a p a b i l i t i e s - i t s h o u l d be an o v e r a l l management r e s p o n s i b i l i t y f o r i n f o r m a t i o n  output.^  ^ G r i n d s a y , P b r t i s , Luba, "Management I n f o r m a t i o n Systems: How t o Get One", The B u s i n e s s Q u a r t e r l y , U n i v e r s i t y of Western O n t a r i o , Autumn, 1967, Volume 32, Number 3. ^ C a r l s o n , A.E., " B u d g e t i n g v s . T o t a l Systems Concept", The A c c o u n t a n t s D i g e s t , March, 1967, Volume I I , Number 3. 21-Drearden, J . , "How t o O r g a n i z e I n f o r m a t i o n Review, M a r c h - A p r i l , 1965.  Systems", Harvard  Business  122  There a r e o b v i o u s l y o t h e r problems b e i n g e x p e r i e n c e d i n t h e development  o f t o t a l systems, b u t t h e y a r e more a p t t o be a  s p e c i f i c problem r e l a t e d t o a s p e c i f i c company s i t u a t i o n . attempt i n t h i s s t u d y i s to r e l a t e t h e b a s i c u n d e r l y i n g  The  problems  s u r r o u n d i n g a t o t a l management i n f o r m a t i o n system. V.  TOTAL SYSTEMS - A PRESENT EVALUATION  A s h o r t t i m e ago, t h e term " t o t a l systems", meaning t o t a l l y i n t e g r a t e d systems, was t h e r a g e . information handling. been d i s p e l l e d .  T h i s was t h e Utopia f o r  Today, much o f t h e i n i t i a l e n t h u s i a s m has  However, t h i s does n o t mean t h a t t h e t o t a l  concept i s . n o t v a l i d .  systems  I t would seem.to suggest t h a t t h e work  i n v o l v e d i n d e v e l o p i n g t o t a l systems f o r a commercial e n t e r p r i s e poses g r e a t e r h u r d l e s and i s f a r more d i f f i c u l t and e l u s i v e than f i r s t suspected.  A l s o , the complexity of the e n t e r p r i s e ' s o p e r a t i o n s ,  the c o m p e t i t i v e environment under w h i c h i t o p e r a t e s , t h e urgency f o r a t o t a l system, t h e c a l i b r e o f systems made a v a i l a b l e , t h e a t t i t u d e o f t o p managers and a h o s t . o f a d d i t i o n a l f a c t o r s a r e contributory.  I n t h e case ;of s e v e r a l l a r g e c o r p o r a t i o n s m a n u f a c t u r i n g  i n d i f f e r e n t l o c a t i o n s and d i s t r i b u t i n g n a t i o n a l l y and i n t e r n a t i o n a l l y encompassing r e l a t i o n s h i p s w i t h t h e m u l t i t u d e of v e n d o r s , customers, employees, communities, s h a r e h o l d e r s and governments, t h e thought has been advanced t h a t t h e t o t a l systems concept i s t o o broad and too l a r g e t o use e f f e c t i v e l y .  I t i s planned t h a t s a t i s f a c t o r y  r e s u l t s , a t l e a s t f o r t h e p r e s e n t , a r e p o s s i b l e w i t h something l e s s than t o t a l systems.  123  The most p r a c t i c a l s o l u t i o n t o some o f t h e major problems i s t o base p h i l o s o p h i e s on grounds o f r e a s o n a b l e n e s s . P r e s e n t management t h i n k i n g has been t r e n d i n g towards t h i s  policy.  That i s , i f a t o t a l system cannot be a c h i e v e d because o f c o n s t r a i n t s , such as c o s t , then we s h o u l d attempt based on r e a s o n a b l e n e s s  of cost.  c o m b i n a t i o n o f computerized  t o b u i l d an e f f i c i e n t  system  I f t h e system r e q u i r e s a  and non-computerized, methods, i t may be  more e f f i c i e n t t h a n o l d e r methods and come c l o s e r t o t h e t o t a l i t y concept.  The c o s t s w i l l be w i t h i n the g u i d e l i n e s o f b e i n g  reasonable  r a t h e r than b e i n g w h o l l y dependent on an e x p e n s i v e system as t h e o n l y means o f a t o t a l  system.  The p r e s e n t s t a t u s i s one o f degree more than o f kind.  I f t o t a l systems cannot be used, some degree o f i t c a n .  There i s u n a n i m i t y o f o p i n i o n t h a t w i t h i n an e n t e r p r i s e , a p a r t i a l t o t a l system i s s u p e r i o r t o s e v e r a l l a r g e b u t u n c o o r d i n a t e d systems.  I t i s wise t o s p e c i f y the extensiveness of the c o o r d i n a t i o n  by t h e statement  o f the o b j e c t i v e s .  L i t e r a l l y , we s a y t h a t t o  a c c o m p l i s h t h e s e o b j e c t i v e s we w i l l use i n t e g r a t e d systems.  Hence,  what i s a p a r t i a l t o t a l system may p r o v i d e t h e needed r e s u l t s .  Our  problem may r e s o l v e i n t o t h a t o f d e t e r m i n i n g p r e c i s e l y and c o m p l e t e l y the t o t a l o b j e c t i v e s o f t h e e n t e r p r i s e . t o t a l systems  This sets the stage f o r the  concept.  The day o f t o t a l systems may not have a r r i v e d as y e t , b u t i t i s s u r e l y on i t s way. and b e t t e r t e c h n i q u e s a r e developed  As e x p e r i e n c e , g r e a t e r f o r systems a l o n g w i t h  skill continued  124 progress i n processing equipment, the present hurdles to the far reaching and i n c l u s i v e t o t a l management information systems w i l l be surmounted.  125 BIBLIOGRAPHY American Management A s s o c i a t i o n , Advances on E.D.P. and I n f o r m a t i o n Systems, Report #62, New York, 1961. , A New Approach t o P h y s i c a l D i s t r i b u t i o n , P u r c h a s i n g D i v i s i o n , Management B u l l e t i n #89, New York, J a n u a r y , 1967. American M a r k e t i n g A s s o c i a t i o n , The M a r k e t i n g E x e c u t i v e and Management I n f o r m a t i o n Systems, S c i e n c e , Technology and M a r k e t i n g , 1966 F a l l Conference P r o c e e d i n g s of t h e American M a r k e t i n g A s s o c i a t i o n . A n t h o n y , R.M., Management C o n t r o l Systems; Cases and R e a d i n g s , R i c h a r d D. I r w i n , I n c . , Homewood, I l l i n o i s , 1965. , P l a n n i n g and C o n t r o l Systems - A Framework f o r A n a l y s i s , D i v i s i o n of R e s e a r c h , Graduate S c h o o l o f B u s i n e s s , Harvard U n i v e r s i t y , B o s t o n , M a s s a c h u s e t t s , 1965. A r b u r y , J.N., and A s s o c i a t e s , The T i m e - S e r v i c e Approach t o P h y s i c a l D i s t r i b u t i o n , American Management A s s o c i a t i o n , Management B u l l e t i n #99, New York June, 1967. B a r r e t t , B.D., Systems A n a l y s i s , B u s i n e s s Systems, Systems and P r o c e d u r e s A s s o c i a t i o n , C l e v e l a n d , Ohio, Volume I , 1963. B a r i s h , N.N., Systems A n a l y s i s F o r E f f e c t i v e A d m i n i s t r a t i o n , Wagnalls Company, New Y o r k , 1951. Beyer, R., A P o s i t i v e Look a t Management I n f o r m a t i o n Systems, E x e c u t i v e , June, 1968.  Funk &  Financial  C a r l s o n , A.E., B u d g e t i n g v s . T o t a l Systems Concept, The A c c o u n t a n t s D i g e s t , Volume I I , Number 3, March, 1967. Chambers, R . J . , The R o l e of I n f o r m a t i o n Systems i n D e c i s i o n Making, Management T e c h n o l o g y , Volume 4, Number 1, June, 1964. C h r i s t i a n , R.W., The T o t a l Systems Concept, Ideas f o r Management, Papers s u b m i t t e d a t 14th I n t e r n a t i o n a l Systems M e e t i n g , Systems and P r o c e d u r e s A s s o c i a t i o n , Volume I , 1961. Couger, J.D., Seven I n h i b i t o r s t o a S u c c e s s f u l Management I n f o r m a t i o n System, Systems and P r o c e d u r e s J o u r n a l , J a n u a r y - F e b r u a r y , 1968. Cox, D.F., Good, R.E., How t o B u i l d a M a r k e t i n g I n f o r m a t i o n System, Harvard B u s i n e s s Review, H a r v a r d U n i v e r s i t y P r e s s , B o s t o n , M a s s a c h u s e t t s , Volume 45, Number 3, May-June, 1967. D i c k e y , E.R., T o t a l Systems, Ideas f o r Management, Papers s u b m i t t e d a t 1 5 t h I n t e r n a t i o n a l Systems M e e t i n g , Systems and P r o c e d u r e s A s s o c i a t i o n , Volume I , 1962.  126 Dreaden, J . , How t o O r g a n i z e I n f o r m a t i o n Systems, H a r v a r d B u s i n e s s Review, H a r v a r d U n i v e r s i t y P r e s s , B o s t o n , M a s s a c h u s e t t s , Volume 43, Number 2, M a r c h - A p r i l , 1965. Edge, C.G., Roy, L.C., S a n d i f o r d , P . J . , The Impact o f Systems and Computers on Management and t h e A c c o u n t a n t , S o c i e t y o f I n d u s t r i a l , and C o s t A c c o u n t a n t s , S p e c i a l Study Number 6, 1966. E l w e l l , H.H., J r . , Data and I n f o r m a t i o n Management Systems, Management S e r v i c e s , November-December, 1967. G a l e , J.R., Why Management I n f o r m a t i o n Systems F a i l , E x e c u t i v e , A u g u s t , 1968.  Financial  G a l l a g h e r , J.D., Management I n f o r m a t i o n Systems and t h e Computer, American Management A s s o c i a t i o n , R e p o r t Number 5 1 , New Y o r k , 1961. Graham, R.W., J r . , T o t a l Systems Concept, Management Technology, Volume 4, Number 1, J u n e , 1964. G r i n d a y , P o r t i s , Luba, Management I n f o r m a t i o n Systems: How t o Get One, The B u s i n e s s Q u a r t e r l y , U n i v e r s i t y of Western O n t a r i o , Volume 32, Number 3, Autumn, 1967. 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J . , 1965. P e a t , Marwick, M i t c h e l l & Co.,  R e s p o n s i b i l i t y R e p o r t i n g , New Y o r k , 1961.  S k i n n e r , R.M., Anderson, R.J.,. A n a l y t i c a l A u d i t i n g , S i r I s a a c Pitman. (Canada) L t d . , T o r o n t o , 1966. S p a u l d i n g , A.R., J r . , T o t a l Systems f o r t h e Insurance Company, Ideas f o r Management, Systems and Procedures A s s o c i a t i o n , 1964. Systems and P r o c e d u r e s Volume I , 1966. ,  A s s o c i a t i o n , B u s i n e s s Systems, C l e v e l a n d , Ohio  B u s i n e s s Systems, C l e v e l a n d , Ohio, Volume I , 1966.  S t e i n e r , A.W., Hague, D.C.,. A Textbook o f Economic Theory, Longmans Canada L i m i t e d , Don M i l l s , 1964. T e r r y , G.R., O f f i c e A u t o m a t i o n , Dow J o n e s - I r w i n , I n c . , Homewood, I l l i n o i s , 1966. Tomeski, E., Management I n f o r m a t i o n and D e c i s i o n Making Systems, Ideas f o r Management, Systems and Procedures A s s o c i a t i o n , 1963. Wandler, C.C., An Approach t o D e v e l o p i n g a T o t a l System, Ideas f o r Management, Systems and Procedures A s s o c i a t i o n , 1964. W e i n t h a l e r , E.L., J r . , D e v e l o p i n g Advanced B u s i n e s s I n f o r m a t i o n Systems, Data P o r c e s s i n g f o r Management, Volume 5, O c t o b e r , 1963. Z a n n e t o s , Z.S., Poensgn, O.H., I n n o v a t i o n , O p e r a t i o n a l C o n t r o l and the Management I n f o r m a t i o n System, The B u s i n e s s Q u a r t e r l y , Volume 3 1 , Number 4, W i n t e r , 1966.  

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