What is System in MIS?

Introduction
In the Management Information Systems, the concept of the ‘Systems’ play a very
essential and a defining role and it can be surely referred to as the backbone of the
management Information Systems. The major concept of the systems involves basically
the pattern or a way in which one thinks about managing optimally. In management
Information Systems, it acts as the framework for the visualization and the analysation
of the internal as well as the external environments and the factors affect these
particular environments in a very integrated way or pattern.
The word systems refer to as the arrangement or the way of organizing some specific
things in a particular way. So now a system can be defined as the regularly interacting
interdependent group of the items ultimately leading to the formation of a united whole.
Particularly for the management Information Systems, a system consists of certain
specific set of elements that can be identified as the belonging together because of the
common purpose, goal or the objective.

The features defining the system usually act as its boundaries, so it can be said that the
system is inside the boundary and the environment is outside the boundary.

Each system is further made of the sub systems, which further consist of the other
subsystems and one very important point to be kept in mind here is that all of these
subsystems are defined specifically by its boundaries. Each subsystem itself actually acts
as the system. The Interconnections and the various interactions that generally take
place between the various subsystems are referred to as the interfaces.

These interfaces are generally known to occur at the boundary and usually take the form
of the inputs and the outputs. A system is not at all arranged randomly but is arranged
with the help of certain logic, which are governed by the rules, the regulations, the
principles, the policies etc. Such an arrangement of a system is generally influenced by
the objective which the system always desires to achieve.

In the management Information Systems, the concept of the system is very much
important and one should have an in depth knowledge of it as with the help of this, one
can easily have a look at the individual elements, subsystems in the larger perspective of
the whole system leading to the optimal solutions and the synergy.
DIFFERENT TYPES OF SYSTEM
The word system is derived from the Greek word “system” which means a organized
relationship among the following unit or component. "A system is an orderly grouping of
interdependent components linked together according to a plan to achieve a specific
goal".
The word component may refer to physical parts (engine, wheels of cars), management
steps (planning, organizing, controlling) or a sub subsystem in a multi level structure. It
is to be noted that a system is not a randomly arranged set. It is arranged with some
logic governed by rules, regulation, principles and policies.
In MIS we are usually concerned with man-made system involving input, process and
output, as represented in figure. A system may have multiple inputs and multiple
outputs.
All systems operate in an environment. The environment may influence the system in its
design and performance. When a system is designed to achieve certain objective, it
automatically sets the boundaries for itself. The understanding of boundaries of the
system is essential to bring clarity in explaining the system components and their
arrangement.

A typical system
Characteristics of System :

Following characteristics are present in all systems :

a) Organization
b) Interaction
c) Interdependence
d) Integration
e) Central Objective

Organization : Organization implies structure and order. It is the arrangement of

components that helps to achieve objectives. Hierarchical relationship starting with the
president on top and leading down ward to the blue collar worker represent the
organization structure
Interaction : Interaction refers to the procedure in which each component interact with
other components of the system. In an organization, for example purchasing must
interact with product, advertising with sales and payroll with personnel.
Interdependence : Independence is concerned with how a system is tied together; it is
more than sharing a physical part or location. It means that parts of the system part or
location with in the system, even through each part performance. A unique function
successful integration will typically produce a better request as whole rather than if each
component works independently.
Central Objective : Objective may be real or stated. Objective is determined by higher
management and user must be aware about the central objective well in advance.

There are different types of the system and are generally found to be present in all the
fields of the endeavor. There are systems like the social system, political system,
economic system etc.
All the Systems must possess the following –
1.Goals
2.Components
3.Subsystems
4.Behavior
5.Boundaries
6.Life cycle
What are the Characteristics of the System
A System must be having or possessing the following characteristics –
 1.System receives inputs with the help of the information, energy or the materials.
2.System processes inputs and also produces outputs or the results.
3.System has a particular structure.
4. System is very much interdependent in the nature.
5. System has an objective orientation.

SYSTEM APPROACH IN MIS

The systems approach is an old concept. The approach stands on the assumption that
breaking down of a complex concept into simple easy to understand units helps in better
understanding of the complexity. Ludwig von Bertalanffy first proposed the systems
approach under the name of 'General System Theory'.
Even though he had orally created the notion of the general systems theory in the 1940's
he formally published it in 1968 (Ludwig von Bertalanffy 1968). He introduced system
as a new scientific philosophy and defined it in a formal manner. He noted that most
systems (biological or physical) of any practical relevance are open as they interact with
the environment. Therefore, to understand the system it has to be differentiated from
the environment, i.e., the boundary of the system has to be clearly defined along with its
interaction with the environment from within this boundary.
The approach concentrates on the holistic entity of the system without neglecting the
components. It attempts to understand the role each component plays in the system
while simultaneously understanding the activity of the whole system. Major concepts of
the systems approach are:
1. Holism: A change in any part/component of a system affects the whole system directly
or indirectly (Boulding 1985, Litterer 1973, von Bertalanffy 1968).
2. Specialization: A whole system can be divided into granular (smaller easy to
understand), components so that the specialized role of each component is appreciated.
3. Non-summational: Every component (subsystem/partial system) is of importance to the
whole. It is therefore essential to understand the actions of each component to get the
holistic perspective (Boulding 1985, Litterer 1973).
4. Grouping: The process of specialization can create its own complexity by proliferating
components with increasing specialization. To avoid this it becomes essential to group
related disciplines or sub-disciplines.
5. Coordination: The grouped components and sub components need coordination.
Without coordination the components will not be able to work in a concerted manner
and will lead to chaos. Coordination and control is a very important concept in the study
of systems as without this we will not be a unified holistic concept.
6. Emergent properties: This is an important concept of systems approach. It means that
the group of interrelated entities (components) has properties as a group that is not
present in any individual component. This is the holistic view of a system. For example,
multicellular organisms exhibit characteristics as a whole which are not present in
individual constituent parts like cells.
What is MIS? Intoduction & Definition

What is MIS?

MIS is the use of information technology, people, and business processes to record,
store and process data to produce information that decision makers can use to make
day to day decisions.

MIS is the acronym for Management Information Systems. In a nutshell, MIS is a

collection of systems, hardware, procedures and people that all work together to
process, store, and produce information that is useful to the organization.

The need for MIS

The following are some of the justifications for having an MIS system

 Decision makers need information to make effective decisions. Management

Information Systems (MIS) make this possible.
 MIS systems facilitate communication within and outside the organization –
employees within the organization are able to easily access the required
information for the day to day operations. Facilitates such as Short Message
Service (SMS) & Email make it possible to communicate with customers and
suppliers from within the MIS system that an organization is using.
 Record keeping – management information systems record all business
transactions of an organization and provide a reference point for the transactions.

Components of MIS

The major components of a typical management information system are;

 People – people who use the information system

 Data – the data that the information system records
 Business Procedures – procedures put in place on how to record, store and
analyze data
 Hardware – these include servers, workstations, networking equipment, printers,
etc.
 Software – these are programs used to handle the data. These include programs
such as spreadsheet programs, database software, etc.

Types of Information Systems

The type of information system that a user uses depends on their level in an
organization. The following diagram shows the three major levels of users in an
organization and the type of information system that they use.
Transaction Processing Systems (TPS)

This type of information system is used to record the day to day transactions of a
business. An example of a Transaction Processing System is a Point of Sale (POS)
system. A POS system is used to record the daily sales.

Management Information Systems (MIS)

Management Information Systems are used to guide tactic managers to make semi-
structured decisions. The output from the transaction processing system is used as
input to the MIS system.

Decision Support Systems (DSS)

Decision support systems are used by top level managers to make semi-structured
decisions. The output from the Management Information System is used as input to the
decision support system.DSS systems also get data input from external sources such
as current market forces, competition, etc.

ROLE OF INFORMATION IN DECISION MAKING

Information plays a vital role in decision-making. Even to take very simple decisions, we
need information. To understand the role played by information in decision-making, we
 have to understand how decisions are taken. Decision-making is basically a process that
includes the following stages:
Information is thus, very important to take decisions.
Imagine a simple decision like the one a driver (say) makes when he puts on the
brakes to stop a speeding vehicle when he sees a child crossing the road (in middle of
the road). The driver decides on braking based on a lot of information processing that
happens in his brain. At every stage of the decision-making he uses information that he
captures visually. All decisions are like this.
First we get information about a problem, format it into a structure and then factor in
the information about the context in which the problem has occurred. Like in the above
case instead of the child being at the middle of the road and crossing it, the driver would
have seen the child about to cross over with a few steps only he would probably not have
braked to stop but would have slowed down, as he would have calculated that by the
time the vehicle reaches the crossing stage, the child would already have passed. So if
the problem was structured as 'how to not hit the child crossing the road?', and if the
child was at the middle of the road, the driver would have braked but had the child been
at (say) at ninety per cent completion level of crossing the road, the driver would have
only slowed down and not braked to stop. Therefore, we see that the context has a major
role in the decision-making and information is required both about the problem and
about the context in which the problem occurred. The next stage for the decision maker
would be to generate alternatives. In the driver's case such possible alternatives would
be

Stages of Decision- Role of Information

making

Identification and One needs information to identify a problem and put it in a

structuring of structured manner. Without information about a problem
problem/opportunity or opportunity, the decision-making process does not even
start.

Putting the problem/ Without information about the context in which the
problem has occurred, one cannot take any decision on it.
opportunity in
In a way, the .information about the context defines the
context
problem.

Generation of Information is a key ingredient in the generation of

alternatives alternatives for decision-making. One has to have
information about possible solutions to generate
alternatives.

Choice of best Based on the information about the suitability of the

alternative alternatives, a choice is made to select the best alternative.
a. to stop by braking
b. to slow down
c. to take a sharp turn towards left or right to avoid the child
d. press the horn so that the child crosses the road fast
e. To drive the vehicle on to the footpath and out of the road to avoid collision, etc.
So the decision-maker generates these possible solutions to the problem at hand based
on information about such possible solutions. Each of the alternatives represents a
possible solution, which one can generate if one has information about them. In the case
of the driver, obviously, he needs knowledge and information to generate these
alternatives, i.e., to stop by breaking the driver would need to know that braking stops
the vehicle. If he is unaware of this crucial information he would not have been able to
generate this alternative. So information is vital for generation of alternatives. Now for
the choice part also, the decision maker needs to have information about the suitability
of each alternative to decide, which the ‘best’ is. In our example, the driver calculates the
'payoff' for each alternative based on his calculation of the outcome that again is based
on information. He selects the 'best' option that solves the problem. Thus, we can see
that information is the key to the decision making process, without information and the
right kind of information decision-making is not possible. Information plays a crucial
role in every stage of the decision-making process.
Decision-making is the most important task of managers in an organization. Therefore,
to enable managers to take good quality decisions, it is very important to provide them
with the right kind of information. Information management in organizations therefore
assumes a special significance. In most organizations, business or otherwise, a
systematic systems based method is used for information management. Systems based
information management works best under a computerized environment and
such computer based information management system is normally called 'Management
Information Systems (MIS)', which provides the service of information supply to the
managers enabling them to take informed decisions. It may be worthwhile to mention
here that MIS does not necessitates the use of computer based technology, but the use of
computers and information technology makes MIS suitable for business organizations
in a competitive environment as it helps to provide timely and accurate information.
MIS done manually, without the help of computers is neither timely nor accurate.
FRAMEWORK FOR UNDERSTANDING MIS

There is too much data and information in an organization. In order to

design a MIS successfully, we need a framework to structure the information
so that the data and information relevant for decision-making can be
separated from rest of the data. Before we talk about the design of MIS, let
us understand the strategic management of a business. An organization
must respond to market forces, competition, to environment and to
technological changes. The scope of business is wide, touching many fronts.
A business, among other activities, must do a long-term strategic planning.
There are many methodologies for strategic planning. According to model
presented by Robert Anthony, the strategic planning is one of the major
activities in business planning and control. The other two are the
management control and operational control. This framework is illustrated
below:

Figure-II : Framework of Business Planning and Control

1) Strategic Planning is the process of deciding objectives of the

organization, determining the possible shift in objectives, deciding on the
resources used to attain their objectives and the policies that govern the
acquisition, use and disposition of their resources.
2) Management Control is the process by which managers assure that the
resources are obtained and used effectively and efficiently to attain the
objectives of the organization.
3) Operational Control is the process of assuming that specific tasks are
carried out effectively and efficiently.

It is useful to classify the above definitions with some examples. The table
below gives instances of planning and control activities in different functional
areas.

Table-1: Planning and Control Activities in Different Functional Area

Anthony’s framework enables us to understand the characteristics of
information needed to support the three types of planning and control
process. The Table-2 below depicts these characteristics and highlights the
substantial differences in information required for strategic planning,
management control, and operational control.

Table-2: Differences in Information required for three types of Planning and

Control Processes
Let us now look at Simon’s framework that has broken down the process of
decision making into three stages:

1. Intelligence: This is the stage in which the decision maker recognizes that
there is a problem or opportunity that requires him to make a decision.
2. Design: The decision maker determines the alternatives that are available
to him to resolve the problem or exploit the opportunity.
3. Choice : In this stage, an alternative generated in stage-2 is singled out
to be pursued. The selection process may involve feasibility analysis or cost-
benefit analysis.

With this framework, we can distinguish between three major classes of

decisions.

a) Programmed Decisions are there in which all stages are handled by

following a preset well-defined procedure. The decisions are repetitive and
routine which arise often and are capable of being modelled mathematically
in their entirety. The classic example would be inventory-ordering decisions.

b) Non-programmed decisions are difficult to structure in logical

mathematical terms. These decisions cannot be handled in well-defined and
pre-specified procedures. These opportunities are not repetitive in nature
and they require fresh intelligence, design and choice phases to be executed.
An example would be the decision to set up a new factory or launch a new
line of product.

c) Semi-programmed decisions are those in which at least one and no more

than two of the above stages can be handled by well-defined preset
procedures. An example where the intelligence phase is well structured
would be the diverse kinds of variance analysis. A comparison with a budget
or standard is undertaken in a well-defined way to signal the need for a
decision. Subsequent stages of design and choice, however, are not handled
by a set procedure. Recall that an MIS support problem-specific decision-
making. Depending on the framework used by the organization for decision-
making and goal set for MIS, the designer should determine the information
needs.

An MIS should not automate the existing procedures. MIS should act as a
catalyst of change in the processes of an organization. For instance, a
private bank sanctions loans by using a sequential process. An applicant
applies for a loan, the details provided by him are verified, and his
application details are entered into the bank application format along with
his credit limit. The computer application is then passed on to the loan
sanctioning authority. The process takes two weeks time even though the
staff spends about thirty minutes on the application. A workflow
system should not automate the existing process. It should aim to reduce
the application processing time to less than a week. The present workflow
systems let everyone look at the application simultaneously and each
concerned person adds his feedback. The sequential process has been
changed to a parallel process. The total time has come down to less than a
week.

SIMON’S MODEL OF DECISION MAKING

Herbert Simon made key contributions to enhance our understanding of the decision-
making process. In fact, he pioneered the field of decision support systems. According
to (Simon 1960) and his later work with (Newell 1972), decision-making is a process
with distinct stages. He suggested for the first time the decision-making model of human
beings. His model of decision-making has three stages:
• Intelligence which deals with the problem identification and the data collection on the
problem.
• Design which deals with the generation of alternative solutions to the problem at hand.
• Choice which is selecting the 'best' solution from amongst the alternative solutions
using some criterion.
The figure given below depicts Simon's decision-making model clearly.

Intelligence Phase
This is the first step towards the decision-making process. In this step the decision-
maker identifies/detects the problem or opportunity. A problem in the managerial
context is detecting anything that is not according to the plan, rule or standard. An
example of problem is the detection of sudden very high attrition for the present month
by a HR manager among workers. Opportunity seeking on the other hand is the
identification of a promising circumstance that might lead to better results. An example
of identification of opportunity is-a marketing manager gets to know that two of his
competitors will shut down operations (demand being constant) for some reason in the
next three months, this means that he will be able to sell more in the market.
Thus, we see that either in the case of a problem or for the purpose of opportunity
seeking the decision-making process is initiated and the first stage is the clear
understanding of the stimulus that triggers this process. So if a problem/opportunity
triggers this process then the first stage deals with the complete understanding of the
 problem/opportunity. Intelligence phase of decision-making process involves:
Problem Searching: For searching the problem, the reality or actual is compared to
some standards. Differences are measured & the differences are evaluated to
determine whether there is any problem or not.
Problem Formulation: When the problem is identified, there is always a risk of solving
the wrong problem. In problem formulation, establishing relations with some problem
solved earlier or an analogy proves quite useful.

Design Phase
Design is the process of designing solution outlines for the problem. Alternative
solutions are designed to solve the same problem. Each alternative solution is
evaluated after gathering data about the solution. The evaluation is done on the basic of
criteria to identify the positive and negative aspects of each solution. Quantitative tools
and models are used to arrive at these solutions. At this stage the solutions are only
outlines of actual solutions and are meant for analysis of their suitability alone. A lot of
creativity and innovation is required to design solutions.

Choice Phase
It is the stage in which the possible solutions are compared against one another to find
out the most suitable solution. The 'best' solution may be identified using quantitative
tools like decision tree analysis or qualitative tools like the six thinking hats technique,
force field analysis, etc.
This is not as easy as it sounds because each solution presents a scenario and the
problem itself may have multiple objectives making the choice process a very difficult
one. Also uncertainty about the outcomes and scenarios make the choice of a single
solution difficult.
structured and unstructured decisions
STRUCTURED DECISION -

 These decisions are these that can be programmed and well defined.
 They are essentially repetitive, routine and involve a defined.
 They are essentially repetitive, routine and involve a definite procedure for handling
them so that they do not have to be treated each as if they were new.
 Structured decisions are also called programmable decisions involve situations
where the procedures decisions involve situations where the procedures to follow when
a decisions are structured or programmed by the decisions procedures or decision rules
developed for them.
 A structured decision could possibly involve what is known as a deterministic
decision or an algorithmic decision. Exp. Decision making of students results.
decision about the payroll systems etc

CHARACTERISTICS :-
 Structured decisions can be delegated.
 The cost of taking such decisions is not as high as that of unstructured ones.
 These decisions can be made with the help of computer systems.

UNSTRUCTURED DECISION -

 These types of decisions are occasional and unique in nature.

 There are no predefined procedures available to solve these problems and a new
analysis is required for each occurrence.
 In top level managers are usually faced with more such unstructured decision
making situations.
 They the strategic decision are non-repetitive vital and important and aim of
determining or changing the ends or means of the enterprise.
 Unstructured decisions are not simple.
 They are usually quite complex in nature. So, there is no tried and true method of
handling them.

 Unstructured decisions are those in which the decision makes must provide
judgment evaluation and insight into the problem definition.

 The risk involved in taking decisions to solve the problems in this is usually high.
Exp. Produce scheduling, capital budgeting.

Features of unstructured decision:-

 These decisions can not be delegated.
The cost of taking such decisions is quite high. Compared to structured decisions.

FORMAL VS INFORMAL SYSTEMS

Formal information system is composed of:

 information resources (archives, databases),

 information users (internal or external to the organization),
 information needs of users (employees or managers),
 communication subsystem (technology).
It is characterized by the following features:

 performs the functions of identification, diagnostics, and problem solving,

 resources and information needs of users are thematically related to various
fields of management (for example: finance, human resources, production),
 it is located in the organizational structure of the company as a IT division or
IT department, but it can also function in a distributed system.
Formal information system is used primarily for analysis, preparation and transfer of
information. One of many tasks of managers is development of various types of
presentation of the facts of any field of activity, reports, analyses, draft decisions. More
on this topic: Management information system or Structure of strategic information
system.

Informal information system covers all areas of the organization that is not described by
the formal organizational structure (organizational chart, procedures, work
descriptions, organizational documentation). Any contact between employees,
customers or suppliers which are not described in operational procedures enforced in
the organization is a manifestation of the informal information system.

Examples of such informal communication may be:

 casual conversation,
 rumours about employees, customers, competitors,
 exchange of news on topics unrelated to work,
 messages in social media and blogs,
 conversation over coffee or lunch, etc.
Both formal and informal information system coexist in the organization and are
essential to its smooth functioning.

Pitfalls in MIS Development

Following are the pitfalls of the MIS development :

(A) Fundamental Weaknesses : Following are the fundamental weaknesses of the
MIS development :
(a) 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.
(b) What business are we in? : Not having the crispy stated mission and
purpose for the 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.
(c) 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.

An effective MIS requires continuous, consistent, long-range planning

with involvement and commitment from the management as an institutionalized
planning process involving everybody concerned. There is a need for an information
steering committee and it may take more than one iteration to establish the process
firmly. It has to undergo an application development cycle consisting of analysis,
synthesis and implementation phases. Systems feasibility (consisting of technical,
economic and operational feasibility) is a most important starting point of MIS
development. In other words, the development process should take into account the
rationale, definition and characteristics, economics, design, specification;
schedule, implementation plan, implementation status and review. Some of the usual
pitfalls and problems in developing and running effective Information System are
mentioned below along with -some ways of increasing effectiveness:
1. Emphasis on Clerical System: Just taking over an existing clerical system and
modifying it without upgrading or changing it does not help. The clerical system
has to be upgraded to a management system. On the other hand, computers
have been put to work on those things that are best understood and easily
structured and which require little management involvement.
2. Communication gap between Computer Technologist and Manager/ User:
Ensuring maximum cooperation and coordination between computer personnel
and managers is necessary. A greater degree of interaction and involvement
between the systems function and themanagement function is required.
3. Lack of a Master Plan: A systematic long range plan/planned approach
is necessary for establishing an effective Management Information
System. Increased focus on the area of problems definition is required in the
systems analysis. The dramatic changes in business strategy together with
changes in the top management personnel and organisation structure call for a
through plan.
4. Subordination of MIS Function to EDP Accounting System:
Management Information System's function should be made an independent
function so that it reports directly to top management.
5. Lack of Managerial Participation: This involvement and support of
top management as well as participation of all managers in the design of
their own management information system are necessary. If top
management tends to depend upon its informally designed private information
systems, development of structured, formalised and a public management
information systems becomes difficult. Many top managers wrongly feel that
good strategic decisions are made more by intuition than by a quantitative
analysis of the available data.
6. Overlooking Human Acceptance: Users of Management Information System
should be involved right at the early stages of design. Their cooperation by
demonstrating how Management Information System will positively affect their
job is a must.
7. Lack of Resources and Trained Personnel: Lack of trained
personnel consisting of system analysts, system designers, programmers and
chief information officers who are business trained and/or have a basic
business prospective is a handicap.
8. Voluminous and Unstructured Nature of Data: Sometimes the volume of data
itself can be a hurdle unless careful sifting is done. On the other hand, it may
also be difficult to locate and retrieve relevant data.Often, the data required by
 top management is unstructured, non- programmed, future oriented. inexact and
external and hence difficult to capture.
9. Limited Use of Management Science and or Techniques: Some of the ways of
increasing the effective of Management Information System include motivating
managers to participate and get involved in Management Information System,
establishing consistent performance and work criteria for Management
Information System, maintaining simplicity and ease of use, training systems
analysts and careful consideration of basic computer feasibility criteria like
volume and repetitive nature of transactions, degree of mathematical processing,
quick turnaround time, accuracy and validity of data, common source documents
and well understood processing logic.
10. Enormous Time, Effort and Resources Required: MIS budget includes data
processing costs, hardware costs, personnel costs, supplies, services, etc.