UNIT 1 Management Information System (MIS) in Global Business

Information Systems and business transformation dimensions of information

systems
contemporary approaches to information systems types of business
information systems systems from functional perspective systems from
constituency perspective MIS Concept role of MIS impact of MIS - MIS as a
support to the management - MIS and organization effectiveness MIS as a tool for
management process system concept MIS for a digital firm components of
information system information system resources and activities.
Information Systems and business transformation
Information Technologies have not only increased the efficiency and effectiveness
of business operations and communications, they are also a critical driver of
innovation in generating new business models. Every type of enterprise today
from financial services to manufacturing to retailing to healthcare is being
transformed through the capabilities of information technology. Some of the topics
under this are

Application of information technology to create business value

Data analytics and business intelligence
Cyber security and fraud detection
Healthcare information systems
Ubiquitous and mobile computing
Social media and marketing intelligence
Cloud computing and software-as-a-service

THREE DIMENSIONS OF INFORMATION SYSTEM

An information system represents a combination of management, organization,
and technology element. To fully understand information systems, a manager must
understand the broader organization, management, and information technology
dimensions of systems and their power to provide solutions to challenges and
problems in the business environment. Hence it incorporates an understanding of
the management and organizational dimensions of systems as well as the technical

dimensions of systems as information systems literacy. Information systems

literacy includes a behavioral as well as a technical approach to studying
information systems. Computer literacy, in contrast, focuses primarily on
knowledge of information technology. These dimensions can be explained as
follows

ORGANIZATIONAL DIMENSION
Information systems are part of organizations. Information systems will have the
standard operating procedure and the culture of an organization imbedded within
them. The organization dimension of information systems involves the
organizations hierarchy, functional specialties, business processes, culture, and
political interest groups. In reality today information systems affect a much larger
part of the organization itself, such as organizational products, objectives, and
structure. Powerful computers, software, and networks, including the Internet,
have helped organizations become more flexible, More and more business
activities at all levels involve the use of information systems.
MANAGEMENT DIMENSION OF INFORMATION SYSTEM
Managers perceive business challenges in the environment, they set the
organizational strategy for responding and allocate the human and financial
resources to achieve the strategy and coordinate the work. The management
dimension of information systems involves leadership, strategy, and management
behavior. Information systems supply tools and information needed by managers to
allocate, coordinate and monitor their work, make decisions, create new products,
and services and make long-range strategic decisions. Information system helps to
make teamwork and collaborative work environments Information systems help to
drive both daily operations and managerial strategies. Information systems can
help management to obtain periodic reports, These reports can be obtained from
different systems such as sales./marketing systems, Human resource systems,
accounting systems. The systems assist managers in making decision making such
as by having What-if" questions on decision support systems. Also helps senior
management to tackle and address strategic issues and long-term trends both in the

firm and in the external environment. Their principle concern is matching changes
in the external environment with existing organizational capability
TECHNOLOGY DIMENSION
The technology dimensions consist of computer hardware, software, data
management technology, and networking/telecommunications technology
(including the Internet). Management uses technology (hardware, software,
storage, and telecommunications) to carry out their functions. It is one of the many
tools managers use to cope with change.

Contemporary Approaches to Information Systems

Information systems are sociotechnical systems. Although they are composed of
machines, devices, and "hard" physical technology, they require substantial social,
organizational, and intellectual investments to make them work properly. Since
problems with information systemsand their solutionsare rarely all technical
or
behavioral,
a
multidisciplinary
approach
is
needed.
Figure 1-9

FIGURE 1-9 CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

The study of information systems deals with issues and insights contributed from
technical and behavioral disciplines.

The technical approach emphasizes mathematically based, normative models to

study information systems, as well as the physical technology and formal
capabilities of these systems. The behavioral approach, a growing part of the
information systems field, does not ignore technology, but tends to focus on nontechnical solutions concentrating instead on changes in attitudes, management and
organizational
policy,
and
behavior.
MIS combines the work of computer science, management science, and operations
research with a practical orientation toward developing system solutions to realworld problems and managing information technology resources. It is also
concerned with behavioral issues surrounding the development, use, and impact of
information systems, which are typically discussed in the fields of sociology,
economics,
and
psychology
In the sociotechnical view of systems, optimal organizational performance is
achieved by jointly optimizing both the social and technical systems used in

production. Adopting a sociotechnical systems perspective helps to avoid a purely

technological
approach
to
information
systems.
Technology must be changed and designed, sometimes even "de-optimized," to fit
organizational and individual needs. Organizations and individuals must also be
changed through training, learning, and planned organizational change to allow
technology
to
operate
and
prosper.
Figure 1-10

Types of business information systems

Small businesses must be concerned with producing quality goods or services and
also with turning mountains of data into actionable information. To contain costs
and achieve a competitive advantage, many small-business leaders consider
information systems as they formulate corporate, tactical and operational
strategies. To best leverage data as a company asset, the business must adopt an
information strategy, which may require the implementation of a variety of
business information systems that process business transactions and empower
business leaders to make more informed and faster decisions.

Transaction Processing System

A small business processes transactions that result from day-to-day business

operations, such as the creation of paychecks and purchase orders, using a
transaction processing system, or TPS. The TPS, unlike a batch system, requires
that users interact with the system in real time to direct the system to collect, store,
retrieve and modify data. A user enters transaction data by means of a terminal, and
the system immediately stores the data in a database and produces any required
output. For example, a small-business owner may direct a bank system to debit a
savings account for $500 and credit the company's checking account for $500.
Because of constant system updates, a user can access current TPS data, such as an
account balance, at any point.

Management Information System

Small-business managers and owners rely on an industry-specific management
information system, or MIS, to get current and historical operational performance
data, such as sales and inventories data. Periodically, the MIS can create
prescheduled reports, which company management can use in strategic, tactical
and operational planning and operations. For example, an MIS report may be a pie
chart that illustrates product sales volume by territory or a graph that illustrates the
percentage increase or decrease in a product's sales over time. Small-business
managers and owners also rely on the MIS to conduct what-if ad hoc analyses.
For example, a manager might use the system to determine the potential effect on
shipping schedules if monthly sales doubled.

Decision Support System

A decision-support system, or DSS, allows small-business managers and owners to
use predefined or ad hoc reports to support operations planning and problemresolution decisions. With DSS, users find answers to specific questions as a means
to evaluate the possible impact of a decision before it is implemented. The answers
to queries may take the form of a data summary report, such as a product revenue
by quarter sales report. To conduct an analysis, business owners and managers use
an interface -- a dashboard -- to select a particular graphic representation of a key
performance indicator that measures the progress toward meeting a specific goal.

For example, a manufacturing dashboard might display a graphic representing the

number of products manufactured on a particular line.

Executive Support System

The executive support system, or ESS, contains predefined reports that help smallbusiness owners and managers identify long-term trends in support of strategic
planning and nonroutine decision making. System users click on any icon
displayed on the ESS screen and enter report criteria to view individual predefined
reports and graphs, which are based on companywide and functional department
data, such as sales, scheduling and cost accounting. The ESS reports brief the
business manager or owner on an issue, such as market trends and buyer
preferences.The ESS system also offers analysis tools used to predict outcomes,
assess performance and calculate statistics based on existing data.

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Human resource information system

Finance and accounting information system

Manufacturing information system

Sales and marketing information system

SYSTEMS FROM A CONSTITUENCY PERSPECTIVE

Transaction Processing Systems

The operational level of the organization include various units such as order
processing, material movement control, payroll, accounts payable, and employee
record keeping. This level is responsible for daily operations. The information
systems used in this level of the organization are transaction processing systems
(TPS), so called because they record the routine transactions that take place in
everyday operations. TPS combine data in various ways to fulfill the hundreds of
information needs a company requires to be successful. The data are very detailed
at this level. For instance, a TPS will record how many pounds of sugar are used in
making our Cybernuts candy bar. It also records the time it takes from beginning to
end to make the candy bar. And it can record the number of people working on the
assembly line when our candy bar is made and what functions they perform
Management Information Systems and Decision-Support Systems
Those using management information systems (MIS) require information on a
periodic basis instead of on a daily recurring basis like those using a transaction
processing system. Managers also require information on an exception basis. That

is, they need to know if production is higher or lower than the targeted rate or if
they are over or under their budgets. They also need to know about trends instead
of straight numbers. The questions they may ask of the system would be: How far
behind in production are we for this quarter? or How many more workers would
we need if we increased production by 10,000 candy bars per quarter? or If we
do adopt the new Cybernuts recipe, what positions are open for the 25 excess
workers and what skills do they possess that the company can use elsewhere?
Decision-support systems (DSS)
DSS also serve the management level of an organization, but in a somewhat
different way from an MIS. An MIS uses internal data to supply useful
information. A DSS uses internal data but also combines it with external data to
help analyze various decisions management must make. Analyzing complex,
interactive decisions is the primary reason for a company to use a DSS.
The sales and marketing management of WorldWide Candy would use a DSS to
answer a semistructured question such as: What price should we charge for the
Cybernuts candy bar so that we can maximize our profits, minimize our costs, and
still remain competitive? Using a DSS, the manager in charge of the
manufacturing division could determine the best answer to this semistructured
question: How does the change in the size and packaging of the Cybernuts candy
bar affect the other products we produce, not just in shipping, but also on the
display shelf at the convenience store?

Executive Support Systems

Executive support systems (ESS) are used at the very upper echelons of
management. At the strategic level, the typical decision is very unstructured. Often
there is no specific question, but rather a series of undefined situations executives
may face. There are no easy, definable answers. These executives require
summarized, historical information gleaned from all other levels of the

organization, coupled with large amounts of external data gathered from many
sources.
CONCEPT, ROLE AND IMPORTANCE OF MIS

CONCEPT
The MIS is an idea which is associated with man, machine, marketing and methods
for collecting informations from the internal and external source and processing
this information for the purpose of facilitating the process of decision-making of
the business.
MIS is not new, only the computerization is new , before computers MIS
techniques existed to supply managers with the information that would permit
them to plan and control business operations. The computer has added on more
dimensions such as speed, accuracy and increased volume of data that permit the
consideration of more alternatives in decision-making process.
The scope and purpose of MIS is better understood if each part of them is defined
individually, thus
1.

MANAGEMENT:

Management has been define in process or activities that describe what managers
do in the operation for their organization plan, organize, initiate and control
operations. They plan by setting strategies and goals and selecting the best course
of action to achieve the goals. They organize the necessary tasks for the operational
plan, set these tasks up into homogenous groups and assign authority delegation;
they control the performance standards and avoiding deviation from standard.

The decision-making is a fundamental prerequisite of each of the foregoing

process, the job of MIS is facilitating decisions necessary for planning, organizing
and controlling the work and functions of the business so that specified goals of
business are achieved.

2.

INFORMATION:

Data must be distinguished from information and the distinction is clear and
important for present purpose. Data are facts and figures that are not currently
being used in a decision-making process and usually are taken from the historical
records that are recorded and filled without immediate intent to retrieve for
decision-making.

Information consists of data that have been retrieved, processed or otherwise used
for information or interference purpose, argument or as a basis forecasting or
decision-making regarding any business unit. Information is knowledge that one
derives from facts for effective functioning of systems placed in the right context
with the purpose of reducing uncertainty regarding the alternative courses of action
as they are based on description and measurement of attributes of various entities
associated with the enterprise.

3.

SYSTEM:

The system can be described as a set of elements joined together for a common
objective. A subsystem is a part of a larger system with which one is concerned. All
systems for our purpose the organization is the system and the parts (divisions,
departments, functions, unit etc) are the subsystem.

The system concept of MIS is, therefore one of optimizing the output of the
organization by connecting the operating subsystems through the medium of
information exchange.

The Management information system (MIS) is a concept of the last two decade or
two. It has been understood and described in a number of ways. It is also known as
the Information System, the Information and Decision System, the computer based
Decision System.

Information is the life blood of an organization, particularly in the case of system

approach management. The MIS or Information system can be define as the
knowledge communicated by others or obtained from investigation or study. It is a
system providing needed information to each manager at the right time in the right
form and relevant one which aids understanding and stimulates the action. MIS is
an organized method of providing past, present and projection information relating
to internal operations and externals intelligence. It supports the planning, control
and operational functions of an organization by furnishing uniform information in
proper time frame to help the process of decision-making.
Management Information System is generally defined as an integrated usermachine system for providing information to support operations, management and
decision-making functions in an organization. The system utilizes computer
hardware and software, manual procedure, models for analysis. Information is
viewed as a resource much like land, labor and capital. It must be obtained
processed, stored, manipulated and analyzed, distributed etc. An organization with
a well-defined information system will generally have a competitive advantage
over organization with poor MIS and no MIS.
The MIS has more than one definition, some of which are given below:
I.
The MIS is defined as a system which provides information support
for decision-making in the organization.

II.
The MIS is defined as an integrated system of man and machine for
providing the information to support the operations, the management and the
decision-making function in the organization.

III.
The MIS is defined as a system based on the database of the
organization evolved for the purpose of providing information to the people in the
organization.

IV.

The MIS is defined as a computer-based information system.

Though there are a number of definitions all of them converge on a single point,
i.e. the MIS is a system that support the decision-making function of the
organization. The difference lies in defining the elements of MIS. However, in
todays world, the MIS is a computerized business processing system generating
information for the people in the organization to meet the information needs for
decision-making to achieve the corporate objective of the organization.
MIS is a computer-based system that provides flexible and speedy access to
accurate data. The organizational information system which in general relates to
the planning, operation and control of an enterprise are the most important among
them. MIS refers primarily to such an organizational system which is generally
large, sophisticated, structured and dynamically evolving and of immense
commercial values. A large number of programmers and system analysts are
employed by many organizations to build a variety of MIS. Thus, the education of
programmers and system analysts as well as general manager, the subject of MIS,
has occupied a key position.
Thus, MIS is a set of computer-based system and procedures implemented to help
managers in their routine job of decision-making and planning, expansion and
development.
The objective of MIS is to provide information for a decision support process of
management. It should help in such a way that the business goals are achieved in
the most efficient manner. Since the decision-making is not restricted to a
particular level, the MIS is expected to support all the levels of the management in
conducting the business operations. Unless the MIS becomes a management aid, it
is not useful to the organization.
Modern management system relies on MIS, the complexity of business
management and competitive nature of business requires handling of business
operations with skill and foresight to advert the crisis. The management process is
executed through a variety of decisions taken at each step of planning, organizing,
staffing, directing, coordinating and controlling. If the management is able to spell
out the decision required to be taken, then the MIS is designed suitably.
The actual MIS process relates to:
A.

Collection

B.

Organization

C.

Distribution

D.

Storage of wide information

E.

Managerial control and analysis of data

Hence MIS focuses on:

i.

Organization-wide information

ii.

Decision-making process

iii.

Managerial control and analysis

iv.

Computer-based system

CONCLUSION: Management Information Systems is sets of inter-related

procedures using information system infrastructure in a business enterprise to
generate and disseminate the desired information. Such systems are designed to
support decision-making by the people associated with the enterprise in the process
of attainment of its objectives. The MIS gets data and other resources of IT
infrastructure as inputs from the environment and process them to satisfy the
information needs of different entities associated with the business enterprise.
There are subsystems of control over the use of IT resources and feedback system
offers useful clues for increasing the benefits of information system to business.
The MIS are subsystem of business system and by themselves serve the function of
feedback and control in business system.

ROLE OF MANAGEMENT INFORMATION SYSTEM

The role of the MIS in an organization can be compared to the role of heart in the
body. The information is the blood and MIS is the heart. In the body the heart plays
the role of supplying pure blood to all the elements of the body including the brain.
The heart work faster and supplies more blood when needed. It regulates and
controls the incoming impure blood, processed it and sends it to the destination in

the quantity needed. It fulfills the needs of blood supply to human body in normal
course and also in crisis.
The MIS plays exactly the same role in the organization. The system ensures that
an appropriate data is collected from the various sources, processed and send
further to all the needy destinations. The system is expected to fulfill the
information needs of an individual, a group of individuals, the management
functionaries: the managers and top management.
Here are some of the important roles of the MIS:
i.
The MIS satisfies the diverse needs through variety of systems
such as query system, analysis system, modeling system and decision support
system.

ii.
The MIS helps in strategic planning, management control,
operational control and transaction processing. The MIS helps in the clerical
personal in the transaction processing and answers the queries on the data
pertaining to the transaction, the status of a particular record and reference on a
variety of documents.

iii.
The MIS helps the junior management personnel by providing
the operational data for planning, scheduling and control , and helps them further
in decision-making at the operation level to correct an out of control situation.

iv.
The MIS helps the middle management in short term planning,
target setting and controlling the business functions. It is supported by the use of
the management tools of planning and control.

v. The MIS helps the top level management in goal setting, strategic
planning and evolving the business plans and their implementation.

vi. The MIS plays the role of information generation, communication,

problem identification and helps in the process of decision-making. The MIS,
therefore, plays a vital role in the management, administration and operation of an
organization.

IMPACT OF THE MANAGEMENT INFORMATION SYSTEM

MIS plays a very important role in the organization; it creates an impact on the
organizations functions, performance and productivity.
The impact of MIS on the functions is in its management with a good MIS
supports the management of marketing, finance, production and personnel
becomes more efficient. The tracking and monitoring of the functional targets
becomes easy. The functional managers are informed about the progress,
achievements and shortfalls in the activity and the targets. The manager is kept
alert by providing certain information indicating and probable trends in the various
aspects of business. This helps in forecasting and long-term perspective planning.
The managers attention is bought to a situation which is expected in nature,
inducing him to take an action or a decision in the matter. Disciplined information
reporting system creates structure database and a knowledge base for all the people
in the organization. The information is available in such a form that it can be used
straight away by blending and analysis, saving the managers valuable time.
The MIS creates another impact in the organization which relates to the
understanding of the business itself. The MIS begins with the definition of data,
entity and its attributes. It uses a dictionary of data, entity and attributes,
respectively, designed for information generation in the organization. Since all the
information systems use the dictionary, there is common understanding of terms
and terminology in the organization bringing clarity in the communication and a
similar understanding of an event in the organization.
The MIS calls for a systematization of the business operations for an effective
system design. This leads to streaming of the operations which complicates the
system design. It improves the administration of the business by bringing a
discipline in its operations as everybody is required to follow and use systems and

procedures. This process brings a high degree of professionalism in the business

operations.
The goals and objectives of the MIS are the products of business goals and
objectives. It helps indirectly to pull the entire organization in one direction
towards the corporate goals and objectives by providing the relevant information to
the organization.
A well designed system with a focus on the manager makes an impact on the
managerial efficiency. The fund of information motivates an enlightened manager
to use a variety of tools of the management. It helps him to resort to such exercises
as experimentation and modeling. The use of computers enables him to use the
tools and techniques which are impossible to use manually. The ready-made
packages make this task simple. The impact is on the managerial ability to
perform. It improves decision-making ability considerably high.
Since, the MIS work on the basic system such as transaction processing and
database, the drudgery of the clerical work is transferred to the computerized
system, relieving the human mind for better work. It will be observed that lot of
manpower is engaged in this activity in the organization. Seventy (70) percent of
the time is spent in recording, searching, processing and communicating. This MIS
has a direct impact on this overhead. It creates information based working culture
in the organization.

MIS - A Support to the Management

The management process is executed through a variety of decisions taken at each
step of planning, organizing, staffing, directing coordinating and control. If the
management is able to spell out the decisions required to be taken, the MIS can be
designed suitably. The decisions required to be taken in these steps are tabulated in
Table below.

Steps in Management

Decision

Planning

A selection from various alternatives strategies, resources, methods, etc.

Staffing

Providing
a
complement.

Directing

Choosing a method from the various

methods of directing the efforts in the
organization.

Coordinating

Choice of the tools and the techniques

for coordinating the efforts for optimum
results.

Controlling

A selection of the exceptional conditions

and the decision guidelines

proper

manpower

The objective of the MIS is to provide information for a decision support in the
process of management. It should help in such a way that the business goals are
achieved in the most efficient manner. Since the decision making is not restricted
to a particular level, the MIS is expected to support all the levels of the
management in conducting the business operations. Unless the MIS becomes a
management aid, it is not useful to the organization.
MIS and organization effectiveness
It goes without saying that all managerial functions are performed through
decision-making; for taking rational decision, timely and reliable information is
essential and is procured through a logical and well structured method of
information collecting, processing and disseminating to decision makers. Such a

method in the field of management is widely known as MIS. In todays world of

ever increasing complexities of business as well as business organization, in order
to service and grow , must have a properly planned, analyzed, designed and
maintained MIS so that it provides timely, reliable and useful information to enable
the management to take speedy and rational decisions.
MIS has assumed all the more important role in todays environment because a
manager has to take decisions under two main challenges:
First, because of the liberalization and globalization, in which organizations are
required to compete not locally but globally, a manager has to take quick decisions,
otherwise his business will be taken away by his competitors. This has further
enhanced the necessity for such a system.
Second, in this information age wherein information is doubling up every two or
three years, a manager has to process a large voluminous data; failing which he
may end up taking a strong decision that may prove to be very costly to the
company.
In such a situation managers must be equipped with some tools or a system, which
can assist them in their challenging role of decision-making. It is because of the
above cited reasons, that today MIS is considered to be of permanent importance,
sometimes regarded as the name centre of an organization. Such system assist
decision makers in organizations by providing information at various stages of
decision making and thus greatly help the organizations to achieve their
predetermined goals and objectives. On the other hand, the MIS which is not
adequately planned for analyzed, designed, implemented or is poorly maintained
may provide developed inaccurate, irrelevant or obsolete information which may
prove fatal for the organization. In other words, organizations today just cannot
survive and grow without properly planned, designed, implemented and
maintained MIS. It has been well understood that MIS enables even small
organizations to more than offset the economies of scale enjoyed by their bigger
competitors and thus helps in providing a competitive edge over other
organizations.
MIS - A Tool for Management Process

The process of management requires a lot of data and information for execution of
the plan. This requirement arises on account of the fact in each step of
management, a variety of decisions are taken to correct the course of development.
The decisions or actions are prompted due to the feedback given by the control
system incorporated in the management system. The control of overall
performance is made possible by way of Budget Summarizes and reports. The
summary showing sales, costs, profit and return on investment throws light on the
direction the organization is moving to. The exception reports identify the
weaknesses tin the system of management.
If effective management system is to be assured, it has to rest on business
information. The management performance improves if the business risk and
uncertainties are handled effectively. If the information provided is adequate, one
can deal with these factors squarely. The information support improves the lack of
knowledge, enriches experience and improves analytical abilities leading to better
business judgment. So, if efficient information support is to be provided, it calls
for a system with the goals of generating management information. A good MIS
must furnish information to the managers to expand their knowledge base. He
must know the adverse trends in business, the shortfalls and failures in the
management process.

System concept
System
A system is an orderly grouping of interdependent components linked together
according to a plan to achieve a specific objective.
Basic Implications
A System must be designed to achieve a predetermined objective.
Interrelationships & Interdependence must exist among the components. The
objectives of the organization as a whole have a higher priority than the objectives
of its subsystems.

Examples of Systems
Transportation System
Telephone System
Accounting System
Production System
Computer System
Business System etc.
Elements/Components Of System
Inputs
Processor (s)
Outputs
Control
Feedback
Environment

Characteristics Of System
Organization
Interaction
Interdependence
Integration
Central Objective
Types Of Systems
Conceptual & Empirical
Natural & Manufactured
Social, People-Machine & Machine

 Closed & Open

Adaptive & Non-Adaptive
Deterministic & Probabilistic
Permanent & Temporary
Stationary & Non-Stationary
Subsystems & Supersystem

System Approach
Its the approach of building information systems.
The Increased Complexity of Business
The Technological Revolution
Research and Development
Product Changes
Information Explosion
The Increased Complexity of Management
Information Feedback Systems
Decision Making
Management Science
The Electronic Computer
MIS for a digital firm
Rapid advances in Information Systems and Technologies (IS/IT) are touching our
intimate spheres; revolutionizing the way in which we live our lives and the way in
which businesses are conducted. In todays business environment, information
systems have become one of the key success drivers for any digital firm. By the aid
of IS/IT, business managers are in better positions for achieving operational
excellence, innovating and developing novel products and services, making more

effective decisions, and for achieving competitive advantages. But to be able to do

so, nowadays business managers are urged to comprehend how best to utilize IS/IT
so as to solve business problems and subsequently achieve business objectives
more efficiently and effectively.
Components of information system
The six components that must come together in order to produce an information
system are:
1. Hardware: The term hardware refers to machinery. This category includes

the computer itself, which is often referred to as the central processing unit
(CPU), and all of its support equipments. Among the support equipments
are input and output devices, storage devices and communications devices.
2. Software: The term software refers to computer programs and the manuals

(if any) that support them. Computer programs are machine-readable

instructions that direct the circuitry within the hardware parts of the system
to function in ways that produce useful information from data. Programs are
generally stored on some input / output medium, often a disk or tape.
3. Data: Data are facts that are used by programs to produce useful

information. Like programs, data are generally stored in machine-readable

form on disk or tape until the computer needs them.
4. Procedures: Procedures are the policies that govern the operation of a

computer system. "Procedures are to people what software is to hardware"

is a common analogy that is used to illustrate the role of procedures in a
system.
5. People: Every system needs people if it is to be useful. Often the most over-

looked element of the system are the people, probably the component that
most influence the success or failure of information systems. This includes
"not only the users, but those who operate and service the computers, those
who maintain the data, and those who support the network of computers."
<Kroenke, D. M. (2015). MIS Essentials. Pearson Education>

6. Feedback: it is another component of the IS, that defines that an IS may be

provided with a feedback (Although this component isn't necessary to

function).
Data is the bridge between hardware and people. This means that the data we
collect is only data, until we involve people. At that point, data is now information.
Information system resources and activities
The major activities of an information system are;
1. Input of Data Resource
Data about business transactions and other events must be captured and prepared
for processing by the input activity. Input typically takes the form of data entry
activities such as recording and editing. End uses typically record data about
transactions on some type of physical medium such as paper form, or enter it
directly into a computer system. This usually includes a variety of editing activities
to ensure that they have recorded data correctly. Once entered, data may be
transferred onto a machine-readable medium such as a magnetic disk until needed
for processing.

For example, data about sales transactions can be recorded on source documents
such as paper sales order forms. (A source document is the original formal record
of a transaction). Alternately, salespersons can capture sales data using computer
keyboards or optical scanning devices; they are visually prompted to enter data
correctly by video displays. This provides them with a more convenient and
efficient user interface, that is, methods of end user input and output with a
computer system. Methods such as optical scanning and displays of menus,
prompts, and fill-in-the-blanks formats make it easier for end users to enter data
correctly into an information system.

2. Processing of Data into Information

Data is typically subjected to processing activities such as calculating, comparing,

sorting, classifying, and summarizing. These activities organize, analyze and
manipulate data, thus converting them into information for end users. The quality
of any data stored in an information system must also be maintained by a continual
process of correcting and updating activities.

For example, data received about a purchase can be (1) added to a running total of
sales results, (2) compared to a standard to determine eligibility for a sales
discount, (3) sorted in numerical order based on product identification numbers, (4)
classified into product categories (such as food and nonfood items), (5)
summarized to provide a sales manager with information about various product
categories, and finally, (6) used to update sales records.

3. Output of Information Products

Information in various forms is transmitted to end-users and made available to
them in the output activity. The goal of information systems is the production of
appropriate information products for end users. Common information products
messages, reports, forms, and graphic images, which may be provided by video
displays, audio responses, paper products, and multimedia. For example, a sales
manager may view a video display to check on the performance of a salesperson,
accept a computer-produced voice message by telephone, and receive a printout of
monthly sales results.

4. Storage of Data Resource

Storage is a basic system component of information systems. Storage is the
information system activity in which data and information are retained in an
organized manner for later use. For example, just as written text material is
organized into words, sentences, paragraphs, and documents, stored data is
commonly organized into fields, records, files, and database. This facilitates its
later use in processing or its retrieval as output when needed by users of a system.

5. Control of System Performance

An important information system activity is the control of its performance. An
information system should produce feedback about its input, processing, output,
and the system is meeting established performance standards. Then appropriate
system activities must be adjusted so that proper information products are
produced for end users.

For example, a manager may discover that subtotals of sales amounts in a sales
report do not add up to total sales. This might mean that data entry or processing
procedures need to be corrected. Then changes would have to be made to ensure
that all sales transactions would be properly captured and processed by a sales
information system.
INFORMATION SYSTEM RESOURCES

(i) PEOPLE RESOURCES

People are required for the operation of all information systems. These people
resources include end users and IS specialists.

End users (also called users or clients) are people who use an information system
or the information it produces. They can be accountants, salespersons, engineers,
clerks, customers, or managers. Most of us are information system end users.

IS Specialists are people who develop and operate information systems. They
include systems analysts, programmers, computer operators, and other managerial
technical, and clerical IS personnel. Briefly, systems analysts design information
systems based on the information requirements of end uses, programmers prepare
computer programs based on the specifications of systems analysts, and computer
operators operate large computer systems.

(ii) HARDWARE RESOURCES

The concept of Hardware resources includes all physical devices and materials
used in information processing. Specially, it includes not only machines, such as
computers and other equipment, but also all data media, that is, all tangible objects
on which data is recorded, from sheets of paper to magnetic disks. Example of
hardware in computer-based information systems are:

Computer systems, which consist of central processing units containing

microprocessors, and variety of interconnected peripheral devices. Examples are
microcomputer systems, midrange computer systems, and large mainframe
computer systems.

Computer peripherals, which are devices such as a keyboard or electronic mouse

for input of data and commands, a video screen or printer for output of
information, and magnetic or optical disks for storage of data resources.

(iii) SOFTWARE RESOURCES

The concept of Software Resources includes all sets of information processing

instructions. This generic concept of software includes not only the sets of
operating instructions called programs, which direct and control computer
hardware, but also the sets of information processing instructions needed by
people, called procedures.

It is important to understand that even information systems that dont use

computers have a software resource component. This is true even for the

information systems of ancient times, or the manual and machine-supported

information systems still used in the world today. They all require software
resources in the form of information processing instructions and procedures in
order to properly capture, process, and disseminate information to their users.

The following are the examples of software resources:

System Software, such as an operating system program, which con controls and
supports the operations of a computer system.
Application Software, which are programs that direct processing for a particular
use of computers by end users. Examples are a sales analysis program, a payroll
program, and a work processing program.

Procedures, which are operating instructions for the people who will use an
information system. Examples are instructions for filling out a paper form or using
a software package.

(iv) DATA RESOURCES

Data is more than the raw material of information systems. The concept of data
resources has been broadened by managers and information systems professionals.
They realize that data constitutes a valuable organization resource. Thus, you
should view data as data resources that must be managed effectively to benefit all
end users in an organization.
Data can take many forms, including traditional alphanumeric data, composed of
numbers and alphabetical and other characters that describe business transactions
and other events and entities. Text data, consisting of sentences and paragraphs
used in written communications; image data, such as graphic shapes and figures;
and audio data, the human voice and other sounds, are also important forms of
data.
The data resources of information systems are typically organized into:

 Database that hold processed and organized data.

Knowledge bases that hold knowledge in variety of forms such as facts, rules, and
case examples about successful business practices.
For example, data about sales transactions may be accumulated and stored in a
sales database for subsequent processing that yields daily, weekly, and monthly
sales analysis reports for management. Knowledge bases are used by knowledge
management systems and expert systems to share knowledge and give expert
advice on specific subjects.

DATA VERSUS INFORMATION

The word data is the plural of datum, though data commonly represents both
singular and plural forms. Data are raw facts or observations, typically about
physical phenomena or business transactions. For example, a spacecraft launch or
the sale of an automobile would generate a lot of data describing those events.
More specifically, data are objective measurements of the attributes (the
characteristics) of entities (such as people, places, things, and events).

Example
A spacecraft launch generates vast amounts of data. Electronic transmissions of
data (telemetry) form thousands of sensors are converted to numeric and text data
by computers. Voice and image data are also captured through video and radio
monitoring of the launch by mission controllers. Of course, buying a car or an
airline ticket also produces a lot of data. Just think of the hundreds of facts needed
to describe the characteristics of the car you want and its financing, or the details
for even the simplest airline reservation.
Peoples often use the terms data and information interchangeably. However, it is
better to view data as raw material resources that are processed into finished
information products. Then we can define information as data that have been
converted into a meaningful and useful context for specific end users. Thus, data
are usually subjected to a value-added process (we call data processing or

information processing) where (1) its form is aggregated, manipulated, and

organized; (2) its content is analyzed and view information as processed data
placed in a context for human user. So you should view information as processed
data placed in a context that gives it value for specific end users.
Example
Names, quantities, and dollar amounts recorded on sales forms represent data about
sales transactions. However, a sales manager may not regard these as information.
Only after such facts are properly organized and manipulated can meaningful sales
information be furnished, specifying, for example, the amount of sales by product
type, sales territory, or sales persons.