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Automated Decision Making - MIS as a Business Driver
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Automated Decision Making - MIS as a Business Driver
Tanmay Roy
General Manager (C&IT)
Bhilai Steel Plant
Automated Decision Making - MIS as a Business Driver
Contents
1. Introduction
2. Organizational Hues
3. Managerial Hues
4. Ownership & Management
4.1 Ownership
4.2 Management
4.3 Supremacy
4.4 People
5. Human Element in Decision Making
5.1 Dilemma
5.2 Boon or bane?
6. Objective Decision Making
7. IT, ERP & Automation
8. Management Information System
9. Automated Decision Making
10. Automated Decision making – Applications
11. Know-how
12. Conclusion
1. Introduction
A new age of reasoning backed up by scientific computing is currently sweeping the decision-making domain of the modern day industries. Rationality, objectivity and optimality are the new corner stones of business decisions. The days when decisions used to be based on emotion-led hunch, cockeyed intuition and rickety information are fast vanishing into the blues.
Information Technology (IT), along with Enterprise Resource Planning (ERP) and Management Information System (MIS), its two illustrious offspring are redefining the ways of conducting businesses and setting new standards for the industries to emulate. The trio has, in fact, done some wonders in areas of Operations Research helping the industries to remove the penumbra of vagueness that often shroud their decision-making processes.
But every thing is not as rosy in the Business & Industry as it is often made out to be. Although the emergence of MIS has broadened the applicability of the decision support software touching almost all aspects of an industry, its penetration level has so far remained erratic, lopsided and far from satisfactory. Plenty of organizations are still managed in traditional ways turning their back to the emerging opportunities.
There are organizations who in spite of their best of intentions continue to languish for want of adequate know how to meet the challenges in the market place. Internal conflict between the ownership and the management, blurred vision and lack of objectivity are also standing in the way of efficient functioning of many a business enterprise.
But one need not be unduly despondent or worried about such developments. Solutions are emerging, and emerging at a rapid pace powered by the advancements in IT driven operational sciences that can swing the fortune of such organizations towards growth and prosperity.
The duet of Information Technology and the Decision-making System is all set to produce a symphony of sublime experience ready to be enjoyed by everybody in any organizational setup. The sooner the industry develops a yen for the same and absorbs the tune in its work culture it is better for all concerned – the IT, industry and all.
The purpose of this paper is to carry out a reality check and make the Business & Industry aware of the emerging scenario in the management of business enterprises following the rapid developments taking place in the post ERP era of an IT driven organization.
2. Organizational Hues
Characteristically organizations have many hues in terms of their states of existence. Some are found to be in a state of ascendancy, while there are others who may be on a choppy or downhill path of decay and possible extinction. This leaves the most populous so called ‘steady’ group, who are chugging along merrily towards their own destinations.
Over its life span the fate of an organization may undergo periodic fluctuations as well. The actual duration of the fluctuating phases varies randomly from one organization to other. The number of factors influencing the fortune of an organization is just too many to comprehend. Some of these factors are internal, while there are a lot more which are external and beyond the reach of the firm’s ability to either control or influence the same.
So going by the adage that what can’t be cured must be endured, the organizations quite often become mute victims of the circumstances beyond their realm. Such firms who allow themselves to be dictated by others without any semblance of a fight rare most likely to degenerate and render themselves sick. But it’s for sure that more the intrinsic strength of an enterprise, greater is its chances to overcome challenges of any sort, either external or internal. Such firms are most likely to survive and prosper in this fiercely competitive world.
Organizations are generally found to be managed and governed in a myriad of ways. As a consequence the quality of the results differs. The researchers have found it to be extremely intriguing how the firms respond and behave in their own characteristically diverse manners under apparently similar conditions of opportunities and threat. While considerable research efforts have been made, volumes have been written and much have been spoken on the elusive recipe of success for a business enterprise, yet the population of firms staring at ominous future seems to be steadily burgeoning with no end in sight.
While there are plenty of success sagas, it is the failure stories that often outnumber the glory of the former and cast a negative impact on the business community at large. The failure stories are as much a subject of intense research as do the success stories. At the end of the day, the researchers come up with some unique reasoning and solutions, and learning points too. Such learning points eventually make their entries in the syllabi of the management institutes. The MBA courses dissect such failure and success stories and come out with daring solutions which the conventional or tradition based mangers find hard to accept, let alone adopt and digest.
In spite of the ongoing efforts, there is as yet no definite or sure-shot remedy for any business firm on how to fight against competition and threat on its road towards progress and prosperity.
3. Managerial Hues
The competence of the managerial team of a firm is a sensitive and key issue. The management has an all-pervasive and pivotal role in the business setup. The people who constitute the managerial team have a highly responsible and challenging role to play. While, in general, higher the qualification and younger the average age of a managerial team, better are its chances to perform than their more aged counterparts. But in practice no such perceptions appear to hold good. There is a fair degree of dichotomy in the way different managerial teams approach to a specific set of problems.
Managers in a business environment can broadly be divided into two clans, namely, seniors and juniors. The senior managers are those, who by virtue of their vast experience are generally tradition bound, more reactive than proactive, and are driven more by compulsion than impulse. They are usually less enthusiastic to new and modern ideas, as they were not exposed to the same during their formative years. They tend to view any innovative approach with a high degree of skepticism and distrust.
The band of junior managers on the other hand shows a natural propensity towards innovation and is more risk embracing as compared to their seniors. They are generally more adventurous in their approach. They usually exhibit greater alertness towards their changing environment. Aided by the power of knowledge, they are more proactive than reactive, and are more prone to mould their future according to their own terms rather than anything else.
However, what is desired for a business firm is a judicious mix of the qualities exhibited by both the types of managers viz. the tradition bound seniors and the innovative youngsters. Given the growing complexities of the business world, it has now been generally acknowledged by all that the tradition bound management techniques of the managers are not enough to effectively cope with the emerging realities. Uncertainty is growing at a rapid pace; so does the number of factors affecting business decisions.
4. Ownership & Management
Ownership
How does one look at, define, evaluate or simply understand a business or industrial enterprise? While some may tend to define the enterprise as a customer driven company, there are others who may view the same as a profit driven one. System driven, knowledge driven, employee driven are some more of ways of viewing an enterprise. Well, the options are many.
The perceptions usually differ from one individual to another. But opinions generally converge on the concept that companies are ultimately owner driven. The rest follow in diminishing order of priorities. The nature of ownership may differ, but there cannot be any doubt that the performance of a company largely depends on the ability and competence of its ownership, except in the case where the ownership being diffused allows the managerial team to take over the leash. The ability of the ownership or the managerial team to lead the company from the front by resolving all outstanding issues with a clear upfront vision for the future is crucial to its success.
Management
The management and the ownership of a company are essentially two sides of the same coin. Both of them have a complementary role set for them. While the Management on one-hand functions within the overall goals set by the owner, the former on the other hand evolves new strategies for the company keeping the later apprised of the same on a regular basis. There is indeed a great degree of co-ordination and involvement that exists 5 of 17
between them. They usually enjoy the mutual respect and trust for each other. Such a harmonic and mutually interdependent relationship of the two primary pillars of an organization generally guarantees its success and prosperity.
Supremacy
There is always an undercurrent of tussle for supremacy between the management and the ownership as to who should have the ultimate say or controlling authority in running a business or industrial enterprise. This issue becomes increasingly complex with the growing dimensions of the organization. In a relatively smaller set-up, say in a proprietary or partnership firm there is hardly any distinction between the groups owning or running it. Usually they represent the same set of people.
But as the organization expands into a full fledged private limited or public company, it starts realizing the necessity to have a separate team of experts comprising of professionals of proven track record to manage its affairs. The ownership that is responsible for providing the capital or equity takes a back seat and relies more and more on the information provided by the managerial team, ostensibly from a well established Management Information System (MIS) of the firm.
However, the seed of possible source of mutual discontent or conflict between the owner and its protégée - the management - is sown as the organization starts growing warranting a separate group to run its activities. Such organizations where the ownership and the managerial groups function in tandem in a harmonic manner are bound to perform and flourish overcoming all adversities in the long run.
People
Organizations are generally managed either by the owner or by the managerial team or by both together within an agreed framework. People are there at the core of both the groups – the owner and the management. While systems and procedures do exist to help the management to execute their tasks with professional competence, but is the quality of people constituting the who ultimately matter on the performance of the organization that is acceptable to the shareholders of the company – the ultimate owner. The presence of human element is an integral part of any organization and it s expected to remain so in future as well.
The very purpose of an organization is to generate surplus for the stakeholders, much to the satisfaction and delight of the people manning the organization, especially the management and the owner all taken together. No business entity can survive, let alone grow without the basic urge of generating profit or surplus for the organization, the people who are dependent on it and the society at large - the very cause of its existence.
5. Human Element in Decision Making
Dilemma
An organization, a company or for that matter any social entity is an example of a living system as it involves besides the assets like land and buildings, plants and machinery etc. a fair amount of human capital as well. The human resource base is placed at strategic positions to drive, monitor and control its activities. The presence of human element brings in its wake a host of opportunities, albeit with a fair share of problems too. It lends a measure of subjectivity, the extent of which varies across the organizations. The subjectivity while painting a distinct identity and lending a unique character makes the organization vulnerable to personal fancies and whims as well. The subjectivity breeds a number of problems, which on occasions give rise to seemingly ugly situations resulting in loss of revenue, image and goodwill of the enterprise.
Boon or Bane?
The fortune of a business organization is directly intertwined with those of the people serving it. It is both a boon as well as a bane to the organization itself. The organization is the greatest beneficiary when both the ownership as well as the management acts in complete unison for its overall benefits relegating their respective group agendas to the background.
But it’s a serious dilemma in actual practice as the human traits are found to vary widely in real life. The myriad of variations in human character ranges widely from sublimity to grotesque, from finesse to foolishness, from magnanimity to pettiness and so on and so forth. The people who matter in a business set-up tend to exhibit such diverse behavioral characteristics irrespective of their professional qualifications, standings in the organizational hierarchy etc. They are found to pursue their personal agenda with unabashed zeal much to the determent of the overall interest of the organization.
Boon
Bane
Ownership & Management have a mutually harmonic and trustworthy relationship
Ownership & Management at occasional or constant loggerheads
Objectivity and transparency guide all business decisions and dealings
Business decisions and dealings are not necessarily based on the best interest of the company, often remain obscured and less transparent
Professionally competent managers and officials
Incompetent and corrupt management and officials
Goals and objectives are clearly laid out in as much quantitative manner as possible
Goals and objectives are either not clearly spelt out or defined in an ambiguous manner
Systems are well defined at all
Systems and processes drift
stages of Planning, Monitoring & Control
aimlessly much to the detriment of the overall inertest of the company
Decisions are taken in an objective manner keeping the organizational goal in mind
Adhoc and personal ambitions and interests rule supreme
Decisions are based on facts and figures generated by an independent, authentic and reliable Information System (MIS)
Decisions are based often on fudged and cooked-up data in absence of a well defined Information System (MIS) in place
6. Objective Decision Making
A closer look at the above would reveal that objectivity is an important factor that ensures success of a business enterprise.
When subjectivity, in the form of expertise and experience, is in sync with the overall goal of the enterprise, it works wonder and hastens the pace of progress leading to growing prosperity. But subjectivity shrouded in skewed personal egos is a potential threat to a firm’s desire and aspirations to prosper and excel. The presence of such egocentric subjects, which is often out of sync with the overall purpose of an organization, needs to be identified, isolated and shunned at all levels and locations without any compromise. If not nipped in the bud and controlled effectively, unbridled subjectivity or biasness in decision making may spell ultimate disaster for the company at a rate much faster than what could one imagine.
Issue
The fundamental issue therefore is to protect the organization’s interest from the vagaries of egocentric whims and fancies of errant and irresponsible individuals, especially who are at the helm of affaires bestowed with the responsibility of steer it clear of any troubled path. Under unavoidable circumstances, their possible ill effects on the organization can be minimized or contained by providing them with improved, authentic and objective information. This would force them to rethink and come out with much better quality decisions than what they could possibly imagine.
Reasons
The dilemma as described above is a common phenomenon for many a business enterprise. Many of who are blissfully unaware of the presence of such a potentially debilitating situation in their own organizational setup. On being pointed out, they usually take an aggressive stand of either denying or choosing to wish away the likely ill effects of the same.
The organizations, which are struggling to perform, are often found to be afflicted with this kind of maladies. But the irony is that these organizations fail to appreciate the real reasons of their under performance. The reasons are not external to the enterprise they are trying ‘so hard’ to improve upon. In most of the cases, internal maladjustments and malfunctioning of the constituent systems and subsystems reign supreme and stand in the way of improving the overall performance.
The underlying reason is once again the poor quality of decisions arising out of wrong and incorrect data and information, which could have otherwise been avoided with an objective information system in place. This would have helped the decision makers to overcome their own shortcomings and put the organization’s interest to the fore.
Solution
The solution to this rather intriguing situation where the management of a business empire functions quite oblivion of the danger and consequences of their own decisions can be largely resolved, or at least lessened with an independent and objective Information System in place that is capable of providing authentic and accurate information in order to
• reduce the risk and uncertainty often associated with the business decisions making processes and
• decision making based on the sound principle of economic efficiency.
The above implies that there are decision models available, which can deliver the most optimum results in situations of risk and uncertainty. Models also exist in conditions of certainty as well like allocation and deployment of scarce resources etc. in the most equitable manner based on the principle of optimization.
This in effect leads the organization towards what can euphemistically termed as ‘Business Decision Automation’ or Automation of Decision Making System’ or simply ‘Decision Automation or Auto-decision’
7. IT, ERP & Automation
Information Technology
The improvements in the quality of information, especially the integrated and concerted nature of functioning, opened up possibilities of mind-boggling dimensions. The role of data and information in the decision making is getting altered at a rapid pace. Shrugging off the ignominy of being ‘outdated’, ‘incorrect’, ‘lacking details’ etc. the information base of a company is assuming a more proactive and dynamic role. Resurrecting from the ashes like the proverbial ‘phoenix’ Information Technology (IT) is giving a new shape to the decision philosophy to those progressive business or industrial enterprise that are willing to adapt themselves to the changing environment.
Presently, two distinct trends are clearly visible in the way the power of IT is being leveraged by the business communities at large. The first approach exemplifies the reengineering of the existing commercial applications from manual to computerized environment and making them network or web enabled, wherever feasible, for greater access and utility across time and space. The other approach is more radical in nature, which includes exploring innovative solutions to complex business issues that are beyond the realm of human intuition.
True the former trend has considerable room for human ingenuity and innovation too, but the same is more directed towards the aspect of conversion of the routine applications like purchases, selling, accounting etc. Such applications do not demand any complex algorithm involving higher level statistical or mathematical treatments.
Although such applications have a much wider scope in terms of numbers and scale of operations than those coming under the other trend, it is the later trend which is going have a more enduring, far reaching and significant impact of an industry’s bottom line than the former.
Today the might of Information Technology characterized by its immense computing power coupled with its analytical ability is generating solutions to business problems involving higher mathematical and statistical techniques. Examples of such problems are decision making under risk and uncertainty, optimization involving linear and non-linear stochastic variables etc. Till the other day only a handful of business organizations having mainframe computer systems were privileged to enjoy such luxuries.
Enterprise Resource Planning (ERP)
IT has emerged as a new ‘avatar’ in the shape of ERP promising and indeed performing the kind of ‘magic’ the industry has never witnessed before. Within the ERP umbrella, the metal industry is currently busy trying its utmost to transform itself into a modern entity. Fierce competition in the market place is forcing the industries to innovative in order to keep pace with the emerging challenges where customer is the ‘king’.
.
The essence of Enterprise Resource Planning or ERP is the centralization of the functions of a company having multiple divisions and/or locations by way of sharing a common and unified database for the company as a whole.
Such a unified approach banishes forever the nagging issues like the delayed and, quite often, non-availability of right information at right point of time and inconsistency in information produced by a multitude of agencies working with distributed databases in a disjointed manner.
The ERP also enables an organization to make it more process focused, re-engineer its processes by adopting the ‘best practices’ of the industry and thus raise its standard at par with that of the world.
This unified approach of ERP also leads to a substantial increase in the accuracy and reliability of data with a consequent improvement in the overall quality of information. Thus the centralized approach ensures the attainment of the dream of ‘on-line’ Management Information System (MIS) in an integrated and comprehensive manner backed-up by enterprise computing of many a business enterprise a reality.
Automation
The word automation conjures up a specter of technological syndrome usually prevalent in a manufacturing environment where gadgets and instruments of various sorts monitor predefined operational parameters of critical processes and trigger appropriate actions as per the logic already programmed therein so as to ensure efficient functioning of the system as a whole.
The concept of industrial automation has already taken a big stride forward and is presently considered as an integral and compulsory adjunct to any technological process especially in a production or manufacturing environment. Advancements in electronic and instrumentation sciences have taken automation to newer heights. As a consequence the application of automation has become technologically easier and commercially profitable.
Thus Automation in the manufacturing setup of an industrial enterprise has made a permanent impact. It has added values to the industries’ ongoing search for raising productivity and efficiency to new levels.
Automation in Industry
Industrial automation is the use of control systems such as computers to control industrial machinery and processes, replacing human operators. It is a step beyond mechanization. Whereas mechanization provided human operators with machinery to assist them with the physical requirements of work, automation greatly reduces the need for human intervention
Initially, the focus on using automation was to increase productivity and reduce costs Currently, for manufacturing companies, the purpose of automation has shifted from increasing productivity and reducing costs, to broader issues, such as increasing quality and flexibility in the manufacturing processes.
Industrial automation has brought unprecedented levels of improvements and innovations in the technology space.
Information Automation
Like the industrial automation, the Business & Industry too is in the midst of a major information automation revolution across the globe. The development in the Information Technology sector has made it happen across the organizations in an unprecedented scale.
Information technology coupled with the improvements in networking and data transmissions has broken the barriers of ‘Time & Space” in enabling the organizations in acquiring, interpreting and acting upon information.
IT has transformed into reality the ultimate dream of any organization of having an ‘on-line’ MIS backed up by enterprise-wide computing a reality. The advent of Enterprise Resource Planning or ERP while adding muscle to IT per se has brought about the much needed unification and integration of databases in a global scale.
8. Management Information System (MIS)
It has also been observed that the success of many a business enterprises depend largely on the quality of the decisions the organizations take, which in turn depends on the reliability and accuracy of data leading to such decisions. This implies that information has a central role to play in the decision making apparatus of any organization. The organizations, which have proper Management Information Systems (MIS) in place, are technically better equipped to take more improved and enlightened decisions than those who fail to acknowledge the importance of the MIS in their own setups.
The launching of ERP has also added muscle to the MIS of a business enterprise. A proper MIS or the Management Information System, which is a major derivative of an ERP or integrated IT operating environment, is in a position to provide the kind of information generally required by the Decision Making Systems of a business enterprise.
But mere generation of information is not enough. It must be put to productive use. It must result in a qualitative improvement of the business decisions.
There are significant developments in the areas of economics, management science, operations research, information technology and above all in applied mathematics. All these developments have converged on the formation of a bouquet of business models, perfectly capable of removing the burden of decision making from the shoulders of the decision makers, viz. the business managers.
The problem associated with the decisions involving risk and uncertainty has adequately been taken care of by the advancement in applied statistics, especially in the areas of simulation techniques.
Today, the MIS or Management Information System as an entity is standing at the threshold of a promising era. The concept of automation, as it is applied in process control systems in plants and machinery, can easily be extended in automating the process of business decisions making in commercial environment as well. Such a possibility is impregnated with immense possibilities.
A comparative analysis of the similarities and dissimilarities in the philosophy of automation as it is applied in process control and decision making realms are furnished below.
Automation
Auto-Decision Application
Process control – usually in manufacturing environment
Decision making in business environment
Input
Physical parameters – all meter-able and measurable in physical units
Non-Physical symbolic variables not meter-able but can be calculated in terms of data and information
Process
Simple logic circuits – all programmable
Advanced level mathematical models – solvable through advanced level programming
Output
Physical parameters in the form of digital displays and printouts
Numerical outputs – decision variables with numerical or logical values
Scale
Small – limited to specific tasks and applications but proliferate with the magnitude and scale of operations involved
Large, often spans the entire business space. Does not vary with the magnitude or scale of operations involved
Dimension
Generally unidirectional and one-dimensional
Generally multidirectional and multidimensional
Variability
Generally deterministic
Deterministic as well as stochastic
Results
Fast, accurate but limited
Less fast but more wide ranging with high degree of reliability
Current Status
Advanced and Well established
Maturing & Expanding
Most importantly MIS is poised to transform the process of business decisions from subjectivity to objectivity - the ultimate goal of any business enterprise. A comparative analysis of the emerging MIS driven objective decision-making approach vis-à-vis the conventional trend is presented below.
Conventional Approach
MIS Driven (informed) Approach
Input
Inadequate information often estimated – likely to be unrealistic and risky
Processed information – reliable, accurate and dependable - less risky
Process
Primarily based on intuition and hunch, occasionally backed up by experience and gut feeling. Generally devoid of any scientific basis
Invariably based on sound economic principles and econometric methods. Crosschecked with experience and knowledge whenever required
Result
Often aggregated and restricted with little details. Usually devoid of alternative options
Always available with required degree of details with plenty of alternative options
Overall
Subjective and prone to risk and failure
Objective with a high probability of success
9. Automated Decision Making
Developments in IT, especially in ERP and MIS have catapulted the organizations to a new threshold level impregnated with exciting opportunities. One of the most important challenging opportunity is to automate its own its decision making process.
Every organization has some form of decision-making system in place, though the degree of its coverage and implementation differs widely from one organization to another. Placing the system on a firm objective footing is expected to usher in lot of benefits in the long run.
A little effort in this direction is destined to transform the face of an industry beyond recognition. Automated decision-making is expected to catapult the organization in an orbit of rapid growth, improved bottom line and enable it to stay ahead of its competitors.
10. Automated Decision Making - Applications
The application canvas of MIS or information driven object oriented decision-making domain is very wide indeed. In fact, it is too wide to be fully accommodated in this paper with limited objective. Hence, the discussion is restricted to some of the major applications of automated decision making processes only. Some of these are discussed below.
• Production & Dispatch Planning
• Inventory & Materials Management
• Market Planning & Demand Forecasting
• Logistics & Transportation
• Investment & Capacity Planning etc.
How the information plays a dominant role in framing the models in the above areas is briefly described below.
Production & Dispatch Planning
Production plans based on the principle of either revenue maximization or cost minimization may be drawn up for any planning period ranging from annual to monthly to daily or for that matter any time period as per convenience of the production planner. The information required for solving this kind of decision model are-
• Demand with revenue potential/cost of production.
• Capacities of plants and equipments
• Technological coefficient like
• Raw material usage
• Material yield
• Availability of plants and equipments etc.
An effective MIS with or without any branded ERP is capable of generating the above information with considerable degree of accuracy and reliability. The system can generate the desired results with necessary details based on sound economic principle as well.
Materials & Inventory Management
The most common problem is to determine the ‘Economic Order Quantity’ under various operating conditions ranging from certainty to uncertainty based on the principle of minimization of overall cost of inventory management.
The kind of information required is -
• Demand or consumption rate with associated probabilities
• Availability and supply rate with associated probabilities
• Ordering and carrying cost of inventory etc.
These models can be integrated with the production and other models in the areas of marketing and logistics as well.
Another variant of the inventory management related issue is the determination of the optimum time of disposal of inventories especially the idle inventories in a volatile market.
The kind of information required is -
• Market demand trend
• Market realization Price
• Carrying cost of inventory.
Logistics & Transportation
The business decisions under logistics cover Transportation & Distribution, Warehousing etc.
Transportation & Distribution -
The most widely used model is the determination of the optimum distribution and haulage plan of either the raw materials or the finished products or both for a business firm based on the principle of minimization of cost of transportation and haulage. The kind of information required is:
Location wise demand of finished products in the market with their associated transportation and distribution costs.
Availability of raw materials from different sources with associated haulage costs.
Availability of finished products from different sources.
Warehousing -
The choice of the ideal or optimum location and capacity planning of a warehouse is the decision model most widely used across the industries. The kind of data required is –
• Location or market specific demand to be served by the new warehouse.
• Transportation and distribution costs of inbound and outbound haulage of materials.
• Operating costs of ware house management.
Market Planning & Demand Forecasting
Market planning based on the principle of maximizing revenue is a business model extensively used industry wide. The optimum marketing plan based on the principle of revenue maximization can be drawn up for any planning period either monthly, daily, etc. The kind of information required is as under.
• Demand with revenue potential for each location
• Availability of material for the planning period
• Transportation and distribution costs for each location (optional)
Investment & Capacity Planning
Decisions on planning for new capacities either by making fresh investments or by acquisition or merger are very common phenomena. Such decisions can be conventionally programmed in the form of optimization modeling based on the principle of profit or revenue maximization.
Traditionally such models can be developed to incorporate more than one objective like increasing market share, maximizing turnover, rate of return on investment, etc. in addition to profit which is normally the sole determinant of any investment related problems.
Simulation technique is gainfully applied to take care of uncertainties associated with stochastic variables which are required to be predicted in order to ascertain the project viabilities.
11. Know-how
Today with the onward march of IT, MIS and Operations Research (OR), there are decision models which can be tailor-made to suit the requirements of specific industries. 16 of 17
The task of generating industry specific models can be handled either by in-house effort or can be outsourced to competent professionals. In any case, the industry concerned is likely to reap rich dividends by making increasing use of such decision models, the results of which have become extremely useful in making substantial improvements in the quality of information thrown up by the present-day information systems, namely, the MIS.
12. Conclusion
Information or MIS does not usurp or supplant the management. In other words, business decisions have evolved to help management to base their decisions on more rational footings.
The management or the owner retains the final authority by either accepting the recommendations or rejecting them. However, with decisions emanating from enlightened and quality information driven systems, the task of choosing the right decisions has become all the more easier. It has become more transparent and objective.
As a consequence, the interest of the industry is preserved and protected from the vagaries of the ego centric managers groping in the penumbra of vagueness created by their own vanity for the perfectly illuminated and enlightened information.
Here, the MIS is not a foe but a friend, philosopher and a true guide to the management or the owner of the business firm.
Although a number of successful industries have realized the potential benefits of automating their decision making or the decision support systems, there are a large number of industries who are yet to appreciate the same. The fate of such industries hangs in the balance. The sooner they switch over and embrace the modern techniques of MIS or information driven decision making it is better for their future.
The author is General Manager (C&IT), Bhilai Steel Plant, SAI. He is accessible at
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