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CONCEPT OF MANAGEMENT INFORMATION SYSTEM

Management Information System (MIS) is an integrated man-

machine system that provides information to support the planning

and control functions of managers in an organization.

It is designed to provide information to various organizational

levels , to assist them in decision-making.

Many firms have customer information system, marketing

information system, accounting information system. These levels

use the information for the purpose of decision-making.

As the business organizations grow in complexity managers

depend more heavily upon various external and internal sources

of information.


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According to Schwartz Management information

system is a system of people, equipment, procedures,

documents, communications that collects, validates,operates, transforms, stores, retrieves and present data

for use in planning , controlling and other managerial

process.

According to G.B. Davis Management Information

System is an integrated man-machine system for proving

information to support the operations, management

analysis, and decision-making functions in an

organization.

Jerome Kanter defined Management information

system as a system that aids management in making ,

carrying out , and controlling decisions.


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Management Information System (MIS) has three

components:

Management

InformationSystem

Management is concerned about the functional aspects of

the management. Managers have to perform important

functions i.e. planning, organizing, directing and controllingfor decision-making.

Information can be defined as the data which is organized

and presented at a time and place so that the decision-maker

take necessary action. Information is the result/product of

processing data.

System is a group of elements/components joined together to

fulfill certain functions. A system is made up of sub-systems,

which directs the organization efforts towards the achievement

of its objectives.


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Thus Management Information system is a set of integrated ,

well knit and scientifically designed system whereby raw data get

converted into decision-based and control oriented information.

Management information system ensures:

Right information at right time to right person and in right

manner.

Regularity in the periodicity of information flow.

Information geared towards aiding managerial decisions for

planning and control.

Screening of all information at the point of transmission to

select the relevant and reject the all the irrelevant details.

A built a system of link-up and follow-up.


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Characteristics Of Management Information System(MIS) :Management information system is an integrated system.

Management information system provides relevant information to

management i.e. objective oriented.

Management information system is flexible system.

Management information system is comprehensive i.e. Transaction

processing system, office information system, forecasting information system,

project information system, decision support system, human resource information

system, marketing information system etc.

Management information system is a feedback system.

Management information system is computerized system.


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Management information system has modules (Sub-system).

Management information system transforms the data into

information.

Management information system uses established quality

criteria.

Management information system enhances productivity.

Management information system comprises common databases.

Management information system is management oriented.

Management information system avoids redundancy in

storage.

Management information system has common data flow.


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Objectives of Management Information System(MIS) :

To provide information for planning , organizing and

controlling.

To store and manage data efficiently from all the functional

areas of the management.

To process the collected data and derive information.

To provide information quickly as and when required.

To reduce the risk and uncertainty in the managerial decision-

making.

To collect and store the data for the purpose of internal

research


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To assist in identifying the managerial problems and their

solutions.

To provide information regarding work force planning.

To provide information regarding financial health of the

organization.

To provide information regarding production and inventory.

To provide information regarding sales and other marketing

aspects i.e .product , price, promotion, physical distribution,payment, collection etc.

To smooth up the flow of data through various levels of the

organization


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Importance of Management Information System

(MIS):

Management information system helps in minimizing risks

in decision-making.

Management information system process data and derive

information out of them.

Management information system provides information

about various aspects of the business.

Management information system helps the executives to

avail the information regarding functional areas of quickly.

Management information system helps in preparing

corporate report.


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Management information system helps the HRD manager

in finding out the requirements of the human resources

planning , recruitment, selection, performance appraisal,transfer ,training & development, promotion, absenteeism

and employees turnover which is useful in drafting sound

HRD policies.

Data regarding production helps the production manager in

deciding out capacity utilization, number of rejection per

batch, frequency of break-down, status of shipment of

processed order etc.

It provides information regarding inventory position and

ensures that the chances of inventory out of stock may be

minimized.

It present information regarding product price, promotion,

demand, sales etc. to marketing manager instantly and

ensures smooth functioning of the department.


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Limitation of Management Information System (MIS) :

Management Information System (MIS) takes the accountmainly quantitative factors, thus it ignores the non-quantitative

factors like morale, attitude of the members of the organization

which have an important bearing on the decision-making of

executives.

Management Information System (MIS) effectiveness decrease

due to the frequent changes in the top management,

organizational structure and operational plan/team.

The quality of output of MIS are governed by the quality of

inputs and processes.


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Need of Management Information System (MIS) :

The need of MIS felt more in its absence than its

presence. Very often in an organization some failure

symptoms become apparent necessitating the introduction

of MIS. Such failure symptoms could be:

Organisation being unable to meet its commitments.Increased overtime in respect of clerical and other staff.

Huge blockage in executive work-load

Delayed decisions, indecisions, and wrong decisions.

Non-availability of timely and relevant information.

Maintenance of pocket or desk information.

Loose control resulting in wastages, losses, and

inefficiencies.

Duplication of work and disjointed efforts.


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Elements / Characteristics Of a Successful and

Comprehensive Management Information System(MIS)

:

Economy

Management orientation

Flexibility

Relevance

ReliabilityAccuracy

Simplicity

Timeliness

ConcisenessDatabase

Integrated

Computerized

Problem-solving


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Concept of Data And Information :

Data is the raw material from which useful information is

derived.The word data is the plural ofDatum. Data is commonly

used in both singular and plural forms.

It is defined as raw facts or observations, typically about

the physically phenomenon or business transactions.

Example-A sale of machine tool or automobile would

generate a lot of data describing those events.

Data are measurements of attributes(characteristics) of

entities(such as people, place, things and events).

These measurements are usually represented by symbolssuch as numbers, words, codes, alphabetical, It takes a

variety of forms, including numeric data, text, voice and

images.

Data is the collection of facts, which is unorganized but

can be organized into useful information.


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Information:

The data which has been converted into a useful &

meaningful form is called information.

Data are raw material resources that are processed into

finished information products.

Information can be defined as data that has been converted into a meaningful and useful context for specific end users.

Information may include:

Its form is aggregated, manipulated and organized.

Its content is analyzed and evaluated.

It is placed in a proper context for human users.


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Data Information

Data refers to details , facts

about any event.

Data is generally disorganized

and disintegrated in the form.

Data is in raw form.

Data cant be understood or

made use of by the users.

Data does not depend upon the

information.

Information refers to only

those events which are

concerned with entity.

Information is properly

arranged classified andorganized.

Information is in finished

form.

Information is understood and

used by the users.

Information is based upon

and derived from data.


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Data: 50210

Information:

5/02/10 The date of your final exam.

Rs.52,010 The average starting salary of anaccounting major.

52010 Zip code of state.


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Data 6.34

6.45

6.39 6.62

6.57

6.64

6.71

6.82

7.12

7.06$5.60

$5.80

$6.00

$6.20

$6.40

$6.60

$6.80

$7.00

$7.20

1 2 3 4 5 6 7 8 9 10

Sto

ckPrice

Last 10 Days

SIRIUS SATELLITE RADIO INC.

Information


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Figure 1.2 Characteristics of useful information

Information in Context


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Information technology and quality information arenot the goals, but merely to support organizations

to reach goals of

Superior products and services

Greater productivity

Eventually success


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Input ofDataResources

ProcessingData

Output ofInformationProducts

Control of System Performance

Storage of Data Resources


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Classification of Information System:(i) Based on usage of computers:

(a)Manual Information system:

The being is the earliest and still most prevalent form of dataprocessor.

Human being receives input data by seeing or hearing them. These

data then stored in the brain, which acts as a control and logic unit.

The output obtained from this type of information processing are oral

or written reports and a variety of physical actions.

The human mind , acting as a control and logic unit , can perform manyoperations on data such as adding, subtracting, multiplying , dividing,

storing results, comparing two items, out putting the results in a pre

arranged manner and revising the processing operations as a result of

changed instructions.

(b)Computer Based Information System : Computer based information system is an information system that uses

computer hardware and software to perform its information processing

activities.

It consists of people , procedures, data, programs, and computers. It

process, stores, and retrieve the data.


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(ii) Based on number of users :

(a)Personal IS :

Here the user is a single person. Individual play three roles: as a user, who uses information produced to

perform some business function, as user, operator and as user developer.

Personal information system increases the productivity of a single

individual.

(b)Work Group IS : It includes number of users but number is less than twenty five normally.

The user can be classified as users, user operators and professional

developers. It can be used in an organization where the users share similar

perspectives. The users can be classified as users, use operators and

professional developers.

(c)Enterprise IS : It can be used in an organization where users have multiple perspectives.

The user can be classified as users, professional operators and

professional developers.


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1.Operations Support System(OSS): Information systems need to process data generated by and used in

business operations is called operation support system(OSS).

Operation support system(OSS) collects, processes and stores datagenerated by the operations systems of an organization and produces

data and information for input into a management information system

or for the control of an operations system.

It may be noted that operation system is a basic subsystem of the

business firm that constitutes its input, processing and output

components. It is also called physical system. it produces a variety of information

products for external and internal use.

However , they do not emphasize producing the specific information

products that can be best used by the managers.

Further processing by management information systems is usually

required. The role of a business firms operations support systems is to

efficiently process business transactions, control industrial processes,

support office communications and productivity, and update corporate

databases.


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(a)Transaction processing System(TPS): This is one of the earliest type of information system.

It produces a variety of information like customer statements,

employee pay cheque, sales receipts, purchase orders, dividendcheque, tax forms, financial statements etc. transactions can be

internal or external.

When ABC company places an order to suppliers/vendors internal

transaction occurs.

When a customer places an order for a product, external transaction

occurs. Further , when a company orders raw materials from the supplier, a

transaction occurs then transaction system records relevant

information such as:

Name of supplier

Address

Credit rating and past experience Kind of item ordered

Quality ordered

Quantity to be ordered

Amount to be paid


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Types of TPS Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION


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Payroll TPS

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION


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Overview of Inventory Systems

Figure 2-10

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE


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Transaction processing system contains the following steps:

Data Entry: The transaction data is entered into the system using various inputdevices.

Data validation : data validation ensures the accuracy and reliability of databy comparing actual data with pre-determined standards or known results. Ex-

Placing quotation. Data Processing and Revalidation : There are two ways to do process

transactions as under:

Online Transaction Processing(OLTP):It means instantaneous processing ofdata and the data input device is directly linked to the TPS and therefore the

data are processed as soon as it is entered into the system. Ex-Flight

reservation.

Batch Processing : Under this system, transactions are accumulated overtime and processed periodically. Hence processing of data take place

weekly/fortnight/monthly. Validation is done before and after data is processed.

Data storage : It could be stored on CD, memory of computer , hard disk or anyother suitable device meant for such purpose.

Output Generation : Output can be communicated to decision makers.

Query Support: The last step in processing a transaction is query(askingquestions of) system. Query facilities allow users to access data and

information that may otherwise not be readily Available. e.g.-sales manager

may query the system for the number of damaged items in a given lot.


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(b)Process Control System : Process control system makes routine decisions that control operational

process. For example-Automatic inventory reorder limit and production control

decision, which are used in assembly line decisions.

Computer automatically makes process control system decisions, adjusting a

physical production process.

Process control system helps to monitor a physical operation ,capture and

process data selected by sensors and makes real time adjustments to theprocess. Example: in a petroleum refinery use sensors to monitor chemical

processes.

(c) Enterprise Collaboration Systems: Enterprise Collaboration Systems are system whose primary goal is to

facilitate communications.

Enterprise Collaboration Systems are computer based information systemsthat collects, process, store and transmit electronic messages, documents,

and other forms of communications among individuals, work groups and

organizations.

Enterprise Collaboration system uses mechanical, electrical and electronic

devices to enhance communication in the work place and increase the

efficiency and productivity of knowledge workers and clerical workers.


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Enterprise Collaboration System includes:

Word Processing :.letters, memos, reports

Electronic mail (e-mail)

Voice mail

Electronic Calendaring: store and retrieves appointment calendars ofmanagers.

Audio Conferencing

Video Conferencing

Teleconferencing :Audio, video, and computer


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2.Management Support System :

Providing information and support for effective decision making by all typesof managers and business professionals is a difficult task and applications

when it is focused on the above are called Management Support System.

Management Support System is an information system that provides

information to support managerial decision-making by all the levels of

management.

Conceptually, several major types of information systems support a varietyof decision-making responsibilities.

(a)Management Information System : Management Information System are the most common form of

management support system.

They provide managerial end users with information products that support

much of their day to day decision-making needs.

Management information system provides variety of reports and displays to

management.

Management Information Systems retrieve information about internal

operations from database that have been updated by transaction processing

systems. They also obtain data about business environment from external

sources.


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Figure 2-5

Management Information System (MIS)


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Scheduled reportsKey-indicator reports

Exception reports

Ad hoc (demand) reportsDrill-down reports

Creates reports managers can useto make routine business decisions

MIS


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(b)Decision Support System : Decision Support System is a set of well-integrated, user

friendly, computer based tools combine data with various

decision-making models(both quantitative and qualitative)to solve semi-structured and unstructured problems.

Decision support System allows the decision-makers to

retrieve data and test alternative solutions during the

process of problem solving.

Decision support system is invariable an outcome ofmanagement information system, providing support for

operational control, management control and strategic

planning.

Decision Support system contains following

characteristics: DSS integrates data with decision-making models.

DSS solves semi-structured and unstructured problems

DSS supports a wide variety of decision-making processes

and styles.

DSS facilitates decision making under dynamic conditions.


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Figure 2-7

Decision Support System (DSS)


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Figure 2-6

Decision Support System (DSS)


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Classification of DSS: Decision Support System containsfollowing types:

File Drawer System: Access of data items Ex-data oriented system

Data Analysis System : analysis of data files.

Analysis information System: Using databases and other models.

Accounting models: Estimating future results using accountingrules.

Representational Models : Estimating results, consequences where

risk exists.

Optimization Models : Calculating optimal results whereconstraints exist.

Suggestion Models : producing suggested results where decisionrules are known.


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Components of Decision Support System : Hardware Resources: Executive workstations are connected with

computer telecommunication channels. Software Resources : Decision support system software packages

are called system generators. They contain modules for Database

which helps in DBMS Model i.e. Mathematical models for solving

complex problems and dialogue management meant for

managerial interface. Data Resources: It includes summarized data and information

that are indispensable for the managers for taking specific type

of decisions.

Model Resources: Model base includes a library of mathematicalmodels and analytical technique stored in a variety of program

modules and files.

People Resources :It includes managers and their staff specialistsexplore decision alternative.


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(c)Executive Information system: Executive Information system is a set of computer based tools with

features such as colour, graphics, touch screens, voice-activated

commands. It helps managers to quickly retrieve, analyze, navigate, summarize and

disseminate large volumes of data.

Executive Information System is normally connected with online

information services, so that top managers could access data wherever

they require for the same.

Executive Information System delivers and displays information rather

than analysis or diagnoses of information like decision support system.

Executive Information System are management information systems

tailored to the strategic information needs of top management.

Top executives get information through:

Letters

Memos

Periodicals

Reports

Meetings

Telephone calls

Social activities


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Many of the information come through non-computer sources.

The goal of executive information system is to provide top

management with immediate and easy access to selective

information about key factors that critical to accomplish afirms strategic objectives.

Expert System: Expert System is an computer based information system in

which knowledge is represented in data,

In which the processing of the knowledge is directed primarilyby computer programs.

This system has the greatest degree of computer control.

Expert system could be classified either operation information

system or management information system.

Although Expert systems are versatile, it can not be usedeverywhere.

The development of systems that process the knowledge of a

true human expert has proven to be difficult and expensive.

It is aimed at replicating abilities of true human experts.


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Components of Expert system:It contains followingcomponents:

Knowledge acquisition: This program is used by an individual who hasexpertise in the problem to create, add or change the knowledge base.

Potential sources of knowledge include human experts, text books, data

bases, special research reports and users own experiences.

The Knowledge base : knowledge base is a depository of knowledgethat human expert might apply to solve problem in a subject are like

medicine, engineering, finance etc. the information in the knowledgebase is incorporated into a computer program by a process called

knowledge representation.

Inference Engine : It is a section of software that determines whatknowledge to apply, when and how apply it.it applies rules and other

forms of knowledge in an attempt to make sequence of logicalconclusions that will solve users problem.

User interface : expert system contains a language professor for friendlyproblem oriented communications between the manager-user and the

computer . This communication is best carried out in a natural language,

and in some cases, it is supplemented by graphics.


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Benefits of Expert System : Cost reduction

Increased output

Improved quality Reduced down time

Capturing scarce expertise

Equipment operation

Reliability

Response time

Enhancing problems solving

Solving complex problems in narrow domain

Working with incomplete and uncertain information

Use of less expensive equipment

Operations in hazardous environments

Limitation of Expert System : Solving specific types of problems in a limited domain of

knowledge

Perform well with specific types of operational and analytical

tasks

Comparatively costly


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Scheduled Reports

Produced

periodically, oron a schedule

(daily, weekly,

monthly).


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Key-Indicator Report

Summarizes the previous days critical activities

and typically available at the beginning of each

day.


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Demand Report

Gives certain

information at amanagers

request.

Exception

ReportAutomatically

produced when asituation is unusual

or requires

management action.


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Drill Down Reports

Provide detailed

data about asituation.

Management Information Systems


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Chapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

EXECUTIVE SUPPORT SYSTEMS (ESS):

Inputs: Aggregate data

Processing: Interactive

Outputs: Projections

Users: Senior managers

Example: 5 year operating plan

Management Information Systems


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EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)

Top Level Management

Designed to the individual senior manager

Ties CEO to all levels

Very expensive to keep up

Extensive support staff

Management Information Systemsh h


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Model of a Typical Executive Support System

Figure 2-8

Management Information SystemsCh 2 I f i S i h E i


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Enterprise Systems

Enterprise systems, also known as enterprise resource planning(ERP) systems, provide a single information system fororganization-wide coordination and integration of key business

processes.

Information that was previously fragmented in different systemscan seamlessly flow throughout the firm so that it can be shared bybusiness processes in manufacturing, accounting, humanresources, and other areas.

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:Introduction to Enterprise Applications

Management Information SystemsCh t 2 I f ti S t i th E t i


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Enterprise Application Architecture

Figure 2-13




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Traditional View of Systems

Figure 2-14




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Enterprise Systems

Figure 2-15


Management Information SystemsChapter 2 Information S stems in the Enterprise


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Benefits of Enterprise Systems

Help to unify the firms structure and organization: Oneorganization

Management: Firm wide knowledge-based management processes

Technology: Unified platform

Business: More efficient operations & customer-driven business

processes


Management Information SystemsChapter 2 Information Systems in the Enterprise


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Challenges of Enterprise Systems

Difficult to build: Require fundamental changes in the way thebusiness operates

Technology: Require complex pieces of software and largeinvestments of time, money, and expertise

Centralized organizational coordination and decision making: Notthe best way for the firms to operate


System Employees Supported Description

Transaction processing

system (TPS)All employees

Processes an organizations basic businesstransactions (e.g., purchasing, billing,


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system (TPS)payroll).

Management

information system

(MIS)

All employees

Provides routine information for

planning, organizing, and controlling

operations in functional areas.

Office automation

system (OAS)Office workers

Increases productivity of office workers;

includes word processing.

Word processing system Office workersHelps create, edit, format, distribute, and

print documents.

CAD/CAM Engineers, draftspeopleAllows engineers to design and testprototypes; transfers specifications to

manufacturing facilities.

Communication and

collaboration systems

(e.g., e-mail, voice mail,

call centres, others)

All employees

Enable employees and customers to

interact and work together more

efficiently.

Desktop publishing

SystemOffice workers

Combines text, photos, graphics to produce

professional-quality documents.

Document management

system (DMS)Office workers

Automates flow of electronic documents.

Decision support system(DSS)

Decision makers,Managers

Combines models and data to solvesemi-structured problems with extensive

user involvement.

Executive support

system (ESS)

Executives, senior

Managers

Supports decisions of top managers.

Group support system

(GSS)

People working in

Groups

Supports working processes of groups of

people (including those in different

locations).

Expert system (ES)Knowledge workers,

nonexperts

Provides stored knowledge of experts to

nonexperts and decision recommendations

based on built-in expertise.

Knowledge work system

(KWS)

Managers, knowledge

Workers

Supports the gathering, organizing, and use

of an organizations knowledge.

Neural networks, case-

based reasoning

Knowledge workers,

Professionals

Learn from historical cases, even with

vague or incomplete information.

Data warehouseManagers, knowledge

workers

Stores huge amounts of data that can be

easily accessed and manipulated for

decision support.

Business intelligenceDecision makers,

managers

Gathers and uses large amounts of data for

analysis by DSS, ESS and intelligent

systems.

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