Category Archive : Management information systems

Techno-economic analysis

Techno-economic analysis is mainly concerned with the identification of project demand potential and the selection of the optimal technology suitable for achieving the project objectives. This analysis provides necessary information on which the project design can be based. It also indicates whether the economy is in a position to absorb the output of the project.

The size of the project and the technology used depend very much on the demand potential. Technology in a broader sense includes methodology or process. where the technical operations are not included. An optimal size and technology
enable to achieve the economies of scale. The techno-economic analysis makes an analysis of the market and technology.
Therefore an techho-economic feasibility of project has to be conducted before preparing a feasibility report of the project.
(a) Determination of project demand potential: Estimation of demand potential is the starting point of techno-economic analysis. Demand forecasting helps to firm up the qualitative parameters of the project and also provides a basis for selecting the optimal strategy for the project. It involves the determination of market characteristics, quantitative market analysis and appraisal of project demand
potential. The quantitative market analysis is made to estimate the industry demand of goods and service which a project may be expected to produce and to produce necessary information for developing project demand forecasts.

The analysis is taken up in three stages:

(i) Situation analysis
(i) Data collection and Compilation
(ii) Interpretation and Presentation
Then the data is used for projection of future demand.
Technical feasibility is carried out to find out the following information:
(a) Demand forecasting firstly helps to identify the qualitative parameters e.g. whether they are consumer goods or capital goods? What is the market competition?
(b) Market analysis, give the quantitative estimations. It involves the analysis of situation& alternatives; then the data collection & finally the interpretation of facts collected.
(c) Availability of needed materials & supplier; it analysis whether the materials & suppliers are available & where?

  • If delivery is at competitive /reasonable rates?
  • Do we need to import material?
  • What will be the lead time delay time delay? (Required for inventory to be maintained so that to keep production running fill the next delivery comes)- Are there any legal controls? (e.g. fire hazards for crackers, etc.)

(d) Personal required, to know whether skilled or unskilled labor is available at the site itself or we have to import/ hire from outside. The training requirement should also be considered (the cost of training, material wastage in training, etc).
(e) Infrastructure & facilities, like transportation (both for material & labor); storage go downs for inventory; power/fuel/water, sewage or even waste disposal and communication facilities should be adequate enough.
(b) Selection of optimal project strategy: Optimal project strategy refers to that combination of controlled variables which will ensure the achievement of the project objectives with the minimum expenditure of resources. As an infinite number of project strategies is available, selection of optimal strategy may appear to be difficult. This economical or optimal strategy is used to calculate how the minimum resources can be spent so as to achieve the objectives of projects in best ways. The optimal strategy may be selected by comparing the representative strategies and identifying the optimal a representative strategy which meets the project ends in the hand.

Various factors contributing to economic factors for deciding an optimal strategy are as follows:
(i) The market demand,
(i) Costing,
(iii) Raw Materials,
(iv) If the market is stable for,
(v) Capital requirement, to be checked for,
Whether entrepreneur can remain invested for long?

For related topics to mis (management information system click on it)

Evaluation of MIS Management Information Systems

Evaluation of MIS is an integral part of the management control process, in which the organization determines or appraises the quality or worth of their information system. Evaluation of MIS is a process of measuring the performance of organizational information system. The feedback so obtained help in determining the necessary adjustment to be made in their information system.

Evaluation approaches in Evaluation of MIS:

These are different approaches to evaluate MIS in an organization. The MIS evaluation approaches provide the different means to measure a accomplishment of system objectives. The scope of each evaluation is as follows:
(i) Quality assurance review: Quality assurance reviews or technical reviews focus on assessing the information system technical quality e.g., comparison of standards and operations acceptance procedures. The technical evaluation includes variables like data transmission rate, CPU capacity etc.
(ii) Compliance audit: Compliance audit or application control reviews assess the adequency and completeness of control of system inputs, outputs, processing seanity and access. Compliance audit are typically performed by an autonomous internal audit function.

2. Preparation of tender specifications in Evaluation of MIS:

After studying the feasibility and deciding upon the configuration, tender documents are prepared for the benefit of vendors to clarify the details of various specifications as listed below:

(i) Purchase procedure and schedule: it includes:
(a) Date of tender submission
(b) Evaluation criteria
(c) Scope for negotiations, if any and
(d) Expected usage environment and load pattern

(ii) Equipment specification:

Detailed technical specifications of each item required for both mandatory and optional items.

(iii) Quotation format:

(a) Format for stating technical details and quoting prices.
(b) Whether deviations from specifications should be specifically listed.
(c) Prices and levies (duties, taxes etc.) could be quoted as the lump sum or required separately.
(d) Required validity of the quotation.
(e) Earnest money deposit required, if any.

(iv) Proposed terms of the contract:

(a) Expected delivery schedule
(b) Uptime warranties required
(c) Penalty clause, if any
(d) Payment terms (Whether advance payment acceptable)
(e) Arbitrary clauses
(f) Training needs
(g) Post warranty maintenance terms expected

(v) Any additional information required.

3. Inviting tenders:

After the preparation of tender specifications, tenders are invited. Invitation of tenders may depend upon the magnitude of purchase (estimate equipment cost). It may be through
(i) Open tender (through newspaper advertisement)
(ii) Limited tender (queries sent to a few selected vendors)
(ii) Propriety purchase (applies mostly to upgrade requirements)
(iv) Direct purchase from market (applies mostly to consumables)

4. Technical scrutiny and short listing:

This step involves the following activities.
(i) All tendered bids are opened on a per-defined date and time.
(ii) Deviations from the specifications, if any, in each bid are noted. (iii) A comparative summary is prepared against the list of tendered technical features. Additional factors to considered are:

(i) Financial health of the vendor (from balance sheets)
(ii) Nature and extent of support (from information provided on number of support staff per installed site an cross-check with selected customers)
(iii) Engineering quality of products (factory inspection of product facilities, QA procedures and R and D)

5. Detailed evaluation of shortlisted vendors:

This step primarily involves getting any finer technical clarifications. Visits to customer sites and factory inspections may be planned. If any specific performance requirement is stipulated, the offered product is to be examined at this stage through suitable benchmark tests. For benchmark tests, standard benchmarks may be used as adequate performance indicators.

6. Negotiation and procurement decision:

Because of the extensive competition, computer system vendors may offer significant concessions. Negotiations are held to maximize these concessions. However, price negotiations are often not permitted by some organizations. When price negotiations are permitted, the committee members should have a good knowledge of the prevailing market prices, current trends, and also the duty/ tax structure.

(i) Computer magazines
(ii) Vendor directories
(iii) Contact with other users
(iv) Past personal experience

7. Delivery and installation:

In this step, the vendor delivers the hardware/software to the buyers organization, where it is matched with the specifications mentioned in the purchase order. If conforms to these specifications, the vendor installs the system in the premises of the organization.

8. Post-installation review:

After the system is installed, a system evaluation is made to determine how closely the new system conforms to the plan. A post installation review, in which system specifications and user requirements are audited, is made. The feedback obtained in this step helps in taking corrective decision.

More related topic on click on it MIS development.

MIS development

Following are the pitfalls of the MIS development:

1. Fundamental weaknesses of MIS development

Following are the fundamental weakness of the MIS development:

(i) No management system to build upon: The MIS must be built on top of a management system that includes the organizational arrangements, the structure and procedures for adequate planning and control, the clear establishment of objectives and all the other manifestations of good organization and management. The lack managerial and operational application is serious because it implies that the process not being performed well, if we can say that the information is the raw material of decision making, and if information is not generated, disseminated and used for management, then no system-manual or computer is going to solve the problem.

(ii) What business are we in ?: Not having the crispy stated mission and purpose for he company is a common weakness. Since, if it is not terrible clear what business we are in, each major challenge the company must face is a completely new challenge and must be analyzed from the ground up. If there was a mission statement. Some of these problem could be dealt with routinely as opposed to their being major crises.

(iii) Company objectives: Written objective are also often missing in the company. A firm without objectives is much like a company without a statement of mission and purpose, it is a ship without rudder. Without the business objectives, the chances of the MIS satisfying management needs are slight.

(iv) Managerial participation: MIS development has been viewed as the responsibility of management. This includes both top-level management and operating line management. The reasonable conclusion that manager must reach is that MIS is too to be left to the computer technician.

(v) Organisation of the MIS functions: Another significant cause of computer failure is the lack of proper organization of the EDP and MIS. The exact location in the organization and the authority granted to the MIS manager is of, course a function of the type business the firm is in and how important the information the resource is to its operation.

(vi) Reliance on consultant of manufacturer: Some computer manufacturer and some consultant will try to sell the system one that is designed and debugged and ready to push the button or turn on the key. Consultant and the manufacturer is concerned more with the machine than with the management solutions. Before buying the a solution from a consultant or manufacturer, be sure that it is the whole solution, that you understand it thoroughly, and that you understand you legal resources when things do not work the way your expected.

(vii) Communication gap: It is unlikely that for the foreseeable future the computer technician will be able to speak the language of management, and managers for the most part are not prepared to speak the language of the computer. The result is a communication gap that sometimes causes a design standoff.

(vii) The people involved: There is no substitute for competence. Good performers of people will worth the price.

2. Soft spots in planning-

MIS respose to the business plans: The purpose of Mis group is to support line management in the company main business. As business plans are made and modified, the corresponding MIS plans must be made and changed. Each MIS plan must be a proper response to a business plan.

(ii) A system view: A master plan: Another cause of computer failure is the lack of a master plan to which hardware development and individual MIS design can be related. The reasons for MIS planning are the same as for planning in general. A system.

(iii) Setting project and system objectives: Setting objectives for projects and systems is not itself a planning activity. However, not meaningful plans can made until these objectives have at least been roughed in. These two activities are co-requisite.

(iv) Facing constraints: Freedom from constraints on financial definition, system performance, system cost, development schedule will leads to enormous MIS problems. It is essential that both managers and technician recognize the reality of those constraints and plan accordingly.

(v) Plan to sale the MIS: Most system designers admit to the unpleasant reality that the toughest part of the designing and implementation an MIS is gaining acceptance of the user for whom the system is designed. So the system should be designed in the manner that it can easily sale or accepted by the users.

(vi) Detail planning: It is only method that permits one successful MIS project to follow another. All veteran MIS development managers know that and plan in detail for every phase of the project.

3. Design problems-

(i) Consider alternatives designs: This is essential for the manager to require the key designer to lay out the several alternative designs and explain the positive and negative features of each. Then he can select one.

(ii) Beware the user interface: It is a technical problem. The user interface should be according to the user. The user should be comfortable with the design or interface of the system.

(iii) The real world the acid test: Business organizations are not research institutes. The MIS is being implemented to support the firms’ main line of business, not to extend the state of art in MIS design.

(iv) If it moves to automate it: Some things could be automated but not all. Like the designer can easily design the computerized system for the visitor. But people want and expect human interaction to at least immediately available when they enter the lobby of place of business.

(v) The computer obsession: Computer should not be obsession in system. It is a tools and used as a tools only.

(vi) Documentation: Documentation should include: All plans, project and system objective, specifications of functions and performance, user interface specification, user instruction and referen├že manuals and maintenance guideline. These items are necessary to manage and use MIS over time. Not documenting these things in detail is a guarantee of failure in some part of the operation of MIS.

4. Implementation problems-

(i) Test it and test it again: The most common error made with regards to resting is not planning to do enough of it. A good rule of thumb to use in project estimating and planning is 1/3 planning and design, 1/3 implementation, 1/3 testing.
For an MIS project of any reasonable size, this figure for testing is by no means too much. Testing must be done at the fictional level, the component level, and the system level.

(ii) Controlling the MIS project: Although controlling is one of the four basic management functions, it remains one of the preeminent cause of MIS development project failure.

For more details related to business development

Business Planning Process/Preparation of Business Plan

A business plan is a blueprint of step by step process that would be followed to convert the business idea into a successful business venture. The business planning process is explained as below:

Business Planning Process/Preparation of Business Plan:

1. Idea Generation: This is the first step in the business planning process. This step differentiates an entrepreneur from the usual business. An entrepreneur may come up with a new business idea or may bring in value addition to existing products in the market. Sources of the new idea for entrepreneurs are:
(a) Consumers/customers
(b) Existing companies
(c) Distribution channels.
(d) Government
(e) Research and Development

2. Environmental scanning : Once the entrepreneur is through the idea generation stage, next entrepreneur is required to conduct environmental scanning which includes analyzing the internal and external environment that affects business idea.

Internal Environmental Factors: These are also known as controllable factors. These factors provides the basic purpose of an enterprise’s existence and operations. It includes the value system, mission and vision of an organization. The availability of machines, human resources, raw material, etc. are already studied in detail.

External Environmental Factors : These are also known as uncontrollable factors. These are further classified into two segments:

Micro external environmental factors : These includes the following factors which affect on enterprise such as:
(i) Suppliers (ii) Customers (iii) Competitors (v) Employees (vi) Shareholders
(b) Macro external environmental factors: These include the following:
(i) Political environment (ii) Legal environment (iii) Economic Environs
(v) Technological environment (vi) Cultural environment (vii) Ethical environs

3. Feasibility analysis : It refers to conducting detailed analysis in relation to every aspect relevant to business and determining credibility of business. It includes analysis/appraisal of the following:

(a) Market analysis : It is conducted to estimate the demand and market share for proposed product and service in future. Demand and market analysis is based on factors like consumption pattern, availability of substitute goods and services, etc.

(b) Technical and operational analysis : This is to assess operational ability of proposed business enterprise. Technical and operational analysis collects data on following parameters:
(i) Material parameters
(ii) Material requirement planning
(iii) Plant location
(iv) Plant capacity
(v) Machinery and Equipment

(c) Financial analysis : It includes the cost of project and cost of production which includes the recurring and non-recurring expenses.

(d) Economic analysis: It essentially involves the compilation of demands for domestic and export markets, most appropriate installed capacity requirements, etc.

(e) Management analysis: The new entrepreneur manager entering the small scale sector should devote his full attention to the new venture.

4. Selection of idea: The next step is to select an idea on the basis of above study. The following factors should be considered for selecting the suitable. Project to produce certain product or provide any service:
(i) If it is an innovative idea?
(ii) Whether competition in the area is less?

(iii) Whether raw material is easily available?                                                         (iv) Whether infrastructure facilities are available?
(v) Whether Government policy encourages production of the product ?

5. Project report preparation: The entrepreneur has to put his ideas and other information after deciding upon the product and the organization. Project report is a written document that describes step by step strategies involved in starting and running business. The content of project report are discussed in ‘project report preparation ‘chapter’.

6. Evaluation, control and review: As company operates in dynamic environment, company has to monitor and review strategies and policies to stay in line with competition existing in market.

Business Planning Process/Preparation of Business Plan click here