MIS AND ITS FUNCTIONS.

Management information system is a system consisting of people, machines, procedures, databases,

and data models, as its elements. The system gathers data from the internal and external sources of an
organization, processes it and supplies Management Information to assist managers in the process of
decision-making.

Structure of MIS is a difficult concept to understand because there is no standard or universally

accepted framework for describing management information system.

MIS structure may be described by following a variety of different approaches as:

i) Physical components,
ii) Information system processing functions,
iii) Decision support,
iv) Levels of management activities, and
v) Organizational functions.

Functions of MIS
MIS is set up by an organization with the prime objective to obtain management information to be used
by its managers in decision-making. Thus, MIS must perform the following functions in order to meet
its objectives.

1) Data Capturing:
MIS captures data from various internal and external sources of an organization. Data
capturing may be manual or through computer terminals. End users, typically record data
about transactions on some physical medium such as paper form or enter it directly into a
computer system.
2) Processing of data:
The captured data is processed to convert it into the required management information.
Processing of data is done by such activities as calculating, comparing, sorting, classifying and
summarizing.
3) Storage of information:
MIS stores processed or unprocessed data for future use. If any information is not immediately
required, it is saved as an organizational record. In this activity, data and information are
retained in an organized manner for later use. Stored data is commonly organized into fields,
records, files and databases.
4) Retrieval of information:
MIS retrieves information from its stores as and when required by various users. As per the
requirements of the management users, the retrieved information is either disseminated as such
or it is processed again to meet the exact demands.
5) Dissemination of MI:
Management information, which is a finished product of MIS, is disseminated to the users in the
organization. It could be periodic, through reports or on-line through computer terminals

Management Information System as a concept.

Management Information System is acronym of three words Management, Information and System. In
order to fully understand the term MIS , let us try to understand these three words.

Management : management is the art of getting things done through and with the people in formally
organized groups. Manager does it by performing different functions in the systematic way. The basic
managerial functions are:
 Managerial functions
• Planning
• Organizing
• Staffing
• Directing
• Controlling

Planning: planning is setting goals and objectives and deciding policies, procedures, rules,
programs, budgets and schedules to achieve the plan.

Organising: It is the process of identifying the entire job, dividing the job into convenient tasks,
allocating sub jobs to person or group of persons so that job is carried out as planned.

Staffing: It is the process of putting the right person at the right job.

Directing: Directing is in order to achieve pre determined goals and objectives, people manning
the organisation have to be guided, motivated nd led by manager.

Controlling: It involves the performance of work by setting performance standards and avoiding
deviations from standards.

INFORMATION
Information, the second component in the term Management Information, system, is considered as
valuable resource required by the management in order to run a business organization. Information is
data that is processed and is presented in a form, which assists decision-makers. It may contain an
element of surprise, reduce uncertainly or provoke a manager to initiate an action. Whereas data (the
singular being datum) is a term used for raw figures, facts, and symbols etc. that are currently not
being used in a decision-making process. Data usually take the form of historical records. In contrast
to information, raw data may not be able to surprise us, may not be organized and may not add
anything to our knowledge.
The relation of data to information is that of raw material to finished product, as depicted in the
following diagram.

Data Processing Information

System
A system may be defined as a set of elements, which are joined together to achieve a common objective.
The elements are inter-related and interdependent. Further, every system is said to be composed of
sub-systems, which in turn are made up of other sub-systems.
The set of elements for a system may be understood as Input, Process and Output. A system has one or
multiple input (s). These input(s) are processed through a transformation process to convert the
input(s) into output(s).

Input Process Output

Different functional information systems

 Functional Information System is based on the various business functions such as Production,
Marketing, Finance and Personnel etc. These departments or functions are known as functional areas
of business. Each functional area requires applications to perform all information processing related
to the function. The popular functional areas of the business organization are:
(i) Financial Information System
(ii) Marketing Information System
(iii) Production/Marketing Information System
(iv) Human Resource Information System
Financial Information System:
Financial information system is a sub-system of organizational management information system. This
sub-system supports the decision-making process of financial functions at the level of an organization.
Marketing Information System:
This sub-system of management information system provides information about various functions of the
marketing system of an organization. Marketing is another functional area of the business
organization, which is engaged in marketing (selling) of its products to its customers.

Important functions of the marketing process include the following.

• The marketing identification function
• The purchase motivation function.
• The product adjustment function
• The physical distribution function
• The communication function
• The transaction function
• The post-transaction function

Production /manufacturing Information System

Manufacturing or production information system provides information on production /operation
activities of an organization and thus facilitates the decision-making process of production managers
of an organization. The main decisions to be taken in manufacturing system are:
• Product Design
• Plant Location & Layout
• Production Planning & Control
• Quality Control

Human Resources Information System

This functional information system supports the functions of human resource management of an
organization. The human resource management function, in its narrow sense, it also known as
personnel management .The function involves:
• Manpower planning.
• Staffing
• Training and development
• Performance evaluation, and
• Separation activities

MIS Classification.
The discipline of MIS can be categorized in the following 6 classes:
i) Transaction Processing System (TPS)
ii) Management Information System (MIS)
iii) Decision Support System (DSS)
iv) Executive Support System (ESS)
v) Office Automation Systems (OASs), and
vi) Business Expert Systems (BESs)

TRANSACTION PROCESSING SYSTEM

TPS processes transaction and produces reports. It represents the automation of the fundamental,
routine processing used to support business operations. It does not provide any information to the user
to his/her decision-making. TPS uses data and produces data as shown in the following diagram.

Data Processing Data

Previously, TPS was known as Management Information System. Prior to computers, data processing
was performed manually or with simple machines. The domain of TPS is at the lowest level of the
management hierarchy of an organization.

Management Information System (MIS)

MIS is an information system, which processes data and converts it into information. A management
information system uses TPS for its data inputs. The information generated by the information system
may be used for control of operations, strategic and long-range planning. Short-range planning,
management control, and other managerial problem solving. It encompasses processing in support of a
wide range of organizational functions & management processes. MIS is capable of providing analysis,
planning & decision making support. The functional areas of a business may be marketing, production,
human resource, finance and accounting.

Decision Support System (DSS)

A decision support system (DSS) is an information system application that assists decision-making.
DSS tends to be used in planning, analyzing alternatives, and trial and error search for solution. The
elements of the decision support system include a database, model base & software. The main
application areas of DSS are Production, finance and marketing.

Database Model Base

User Interface

Fig: Elements of DSS

DSS can be differentiated from MIS on the basis of processing the information. MIS processes data to
convert it into information. DSS processes information to support the decision making process of a
manager.

EXECUTIVE SUPPORT SYSTEM (ESS)

Executive Support System (ESS) is an extension of the management information system, which is a
special kind of DSS; An ESS is specially tailored for the use of chief executive of an organization to
support his decision-making. It includes various types of decision-making but it is more specific and
person oriented.
 Office Automation Systems (OAS)
Office automation refers to the application of computes and communication technology to office
functions. Office automation systems are meant to improve the productivity of managers at various
levels of management of providing secretarial assistance and better communication facilities.
Office activities may be grouped under two classes, namely
i) Activities performed by clerical personnel (clerks, secretaries, typist, etc.,) and
ii) Activities performed by the executives (managers, engineers or other professionals like
economist, researches etc.)

In the first category, the following is a list of activities.

a) Typing
b) Mailing
c) Scheduling of meetings and conferences,
d) Calendar keeping, and
e) Retrieving documents
The following is a list of activities in the second category (managerial category)

a) Conferencing.
b) Production of information (messages, memos, reports, etc.) and controlling performance
Business Expert Systems: These systems are one of the main types of knowledge-based information
systems. These systems are based on artificial intelligence, and are advanced information systems. A
business expert system is a knowledge based information system that uses its knowledge about a
specific, complex application area to act as an expert. The main components of an expert system are:
a. Knowledge Base
b. Interface Engine
c. User Interface
Rules,
Logic
facts
Knowledge Base Interface Engine
User Interface

DECISION MAKING

Organizational decisions differ in a number of ways. The following basis are used to classify the
decisions:
PURPOSE OF DECISION-MAKING
On the basis of the purpose of decision-making activities, the organizational decisions are divided into
3 categories:
• Strategic Planning Decisions: Strategic planning decisions are those decisions in which
the decision-maker develops objectives and allocates resources to achieve these
objectives. Such decisions are taken by strategic planning level (top level) managers.
• Management Control Decisions: Management control decisions are taken by
management control level (middle level) managers and deal with the use of resources in
the organization.
• Operational Control Decisions: Operational control decisions deal with the day-to-day
problems that affect the operation of the organization. These decisions are taken by the
managers at operational level (bottom level) of the organization.
 LEVELS OF PROGRAMMABILITY
Simon on the basis of level of the programmability of a decision, proposed two types of decisions:
• Programmed, also known as structured decisions
• Non-programmed, also known as unstructured decisions.
PROGRAMMED/STRUCTURED DECISIONS
Programmed or structured are those decisions, which are well defined and some specified
procedure or some decision rule might be applied to reach a decision. Such decisions are
routine and repetitive and require little time for developing alternatives in the design phase.
Programmed or structured decisions have traditionally been made through habit, by operating
procedures or with other accepted tools.
NON-PROGRAMMED /UNSTRUCTURED DECISION
Decisions, which are not well defined and have not pre-specified procedures decision rule are
known as unstructured or non-programmed decisions.

KNOWLEDGE OF OUTCOMES
Another approach of classifying decisions is the level of knowledge of outcomes. An outcome defines
what will happen, if a decision is made or course of action taken. When there is more than one
alternative, the knowledge of outcome becomes important. On the basis of the level of knowledge of
outcomes, decision-making can be classified into three categories.
• Decision under certainty: Decision-making under certainty takes place when the outcome of
each alternative is fully known. There is only one outcome for each alternative.
• Decision under risk: Decision-making under risk occurs when there is a possibility of multiple
outcomes of each alternative and a probability of occurrence can be attached to each outcome.
• Decision under uncertainty: Decision-making under uncertainty takes place when there are a
number of outcomes for each alternative & the probabilities of their occurrences are not
known.

Decision Support System(DSS):

DSS is an information system application that helps in decision-making. DSS is used in planning and
analyzing alternatives. DSS differs from most traditional information system in that each DSS is
distinct from the other information system and is specifically made for managers. All though it is used
by managers it is part of organization’s MIS. A DSS is prepared for a specific managerial task and
special problem and thus its use is limited to that problem. Decision support systems tend to be
designed to serve management control level and strategic planning level managers. The elements of
DSS include a database, a model base and a software providing interactive dialogue facility for a
manager. The data in the database is a combination of master files, and data from external sources.
The second component of DSS is a library of models to manipulate and analyze the data in the desired
ways. The third component is the user interface through this the user can communicate with the DSS.
The physical interface generally consists of a terminal attach to the mainframe computer either directly
or by telephone. DSS can be differentiated from MIS in terms of its processing capabilities. whereas
MIS process data to convert it into information, DSS processes information

Database Model Base

User Interface
 to support the decision making process of a manager. e.g. a salary information system provides
information to every employee regarding his basic salary, allowances and deductions. However if any
employee wants to make deposits in some schemes for income tax rebates he can make use of DSS. DSS
helps the user to decide in which scheme how much he should invest to get maximum benefits.

Conceptual System Design

In the conceptual design, the feasibility of meeting the management objectives for the MIS is assessed
and a broad picture of the system is analyzed. It involves the following steps:
Define problem:
The first step in conceptual design is to clearly understand and define the problem to be solved.
The information needs of the organization are to be identified and understood in this step,
which can be determined by understanding the mission, objectives and operating plans for the
business.
2) Set system objectives:
System objectives should be stated in quantitative terms. For example, ‘pay salary to 100
percent employees by the last day of the month’.

Identify constraints:
System constraints may be classified into two categories:
a) External constraints
These are external to the organization. For example constraints imposed by the customers,
the government and the suppliers.
b) Internal constraints
These are imposed from within the organization. For example, non-cooperation and lack of
support from top management, resource constraints like manpower, time and money etc.
4) Determine information needs:
For determination of information needs, users should specify:
a) What they want out of an information system and
b) Items of information that are needed to achieve the predetermined
objectives.

5) Determine information sources:

Sources of information may be classified as given below:
a) Internal and external records:
The internal records may be in written form like files, inputs and outputs, correspondence,
reports etc., whereas external records may include trade publications, government
statistics, etc.
b) Managers and operating personnel:
User-managers and operating staff may be an important source. However, gathering data
from the source involves interviewing the managers and operating personnel, which
requires proper planning and skill.
6) Develop various designs:
More than one alternative conceptual designs are to be developed which are compared to select
the optimum one, which:
a) Meets the requirements of the users/organizations and
b) Is cost effective
Various criteria can be adopted as a basis for evaluating the designs such as economic,
performance, operational etc.
7) Documentation of the conceptual design:
 The documentation involves:
a) Overall system flow
b) System inputs
c) System outputs, and
d) Other documentations like activity sheet and system description, etc.
8) Report preparation:
The report prepared should mention the problem, objectives and an overall view of the system.
Justifications for selecting the alternatives and many more.

Detailed System Design

Conceptual design in itself is not the end of the design process, rather it servers as a basis for the
detailed MIS design. The performance requirements specified by the conceptual design become inputs
to the detailed design phase, in which these are further refined, detailed and finalized to be called the
system specifications. Thus, the main objective of the detailed system design is to prepare a blue print
of a system that meets the goals of the conceptual system design requirements. Detailed system design
involves the following phases.
• Project planning and control.
• Involve the user
• Define the detailed sub-system.
• Input/Output design.
• Feedback form the user
• Database design.
• Procedure design.
• Design Documentation

1) Project planning and control

In order to ensure an effective and efficient design of an MIS, it is very important that a detailed design
process should in itself be considered a complete project. Therefore, the first step in the detailed design
is planning and controlling, so that standards may be established and a proper follow-up is made.
Some of the main points, which are important in planning and control of a detailed design, are given
below.

Project planning
1. Formulate the project objectives.
2. Define the project tasks.
3. Prepare a network diagram of all events and activities so as to specify sequential and
parallel events.
4. Schedule the work as per the requirements of the user.
5. Prepare a budget for the project.

Project control
• Get a feedback of the actual performance of the project with respect to time, cost and
work of the project and compare it with schedules, budgets and technical plans.
• Take corrective action where required so as to maintain control.

2) Involve the user

System designers must inform the user regarding the new information system being developed and gain
their support and acceptance. In this phase, users are assured that changes will benefit them or that
they will not be at disadvantage because of the new system.
 3) Detailed sub system definition
In detailed system design, every system needs to be broken down to ascertain all activities required and
their respective inputs and outputs. In some of the cases, sub systems are broadly defined in the
conceptual design phase, but at this stage they are specifically defined to work out every detail
concerning the sub-system. Decomposition of the system to operational activities in general is carried
out as follows. System
Sub System
. Functional component
Task
Sub Task
Operation element

4) Output/Input Design
Having defined the subsystem well, by way of flow diagrams and a through discussion with the users of
MIS, the system designers now define the specifications of outputs and inputs for each sub-system, in
more detail. These specifications will later be used by programmers to develop programs to actually
produce the output/input.

5) Feedback from the user

Having specifically defined sub-system, output and inputs, the designers once again involve the user to
get feedback. This step will increase the acceptance of the MIS being designed. The system analyst
should demonstrate the proposed MIS to the users of the system/sub-system. This step will also
reassure the top management of the user organization that the detailed design project is processing as
per plans.

1) Database design
A database is an orderly arrangement of all the records related to each other. It servers as a data
resource for the MIS of an organization. To have optimum performance, storage and fast retrieval of
data, database design is an important phase in the detailed design of a system. For designing a
database, the designer should keep the following points in mind.
• Identify all data tables and record types.
• Identify fields for each table, the key fields for each table and relations between various tables.
• Determine the data type and width for each field of the tables.
• Normalize the data tables.
• Properly document data dictionary.
7) Procedure design
Procedures are the rules, standards or methods designed to increase the effectiveness of the
information system. The procedures detail about the tasks to be performed in using the system. They
serve as the ready recovers for the designers as well as for the users. Sometimes they perform the task
of a supervisor over operators. There are a wide variety of procedures, which include:
• Data entry procedures.
• Run time procedures.
• Error handling procedures.
• Security and back up procedures.
• Software documenting procedures.
In designing procedures, designers should:
• Understand the purpose and quality standards of each procedures
• Develop a step-by-step direction for each procedure, and
• Document all the procedures.
8) Design Documentation
 Detailed design starts with the performance specifications given by the conceptual design and ends
with a set of design specifications for the construction of MIS. The outputs from the detailed design, i.e.
design specifications, are handed over to the programmers for writing codes to translate system
specifications into a physical MIS. Therefore, the system analyst should very carefully document the
detailed design. In fact, design documents should consist of comprehensive details of all the design
phases. Design documentation of detailed design report, generally, consists of
• System objectives,
• Design constraints,
• Inputs/outputs,
• Data files,
• Procedures (manuals)
• Proposed system (a summery and detailed flow charts),
• Input/Output specifications,
• Program specifications,
• Database specifications,
• Cost of installation and implementation, and
• System test conditions.

System Maintenance
The results obtained from the evaluation process help the organization to determine whether its
information systems are effective and efficient or otherwise. The process of monitoring, evaluating, and
modifying of existing information systems to make required or desirable improvements may be termed
as System Maintenance.
System maintenance is an ongoing activity, which covers a wide variety of activities, including
removing program and design errors, updating documentation and test data and updating user
support. For the purpose of convenience, maintenance may be categorized into three classes, namely:
i) Corrective,
ii) Adaptive, and
iii) Perfective.

i) Corrective Maintenance: - This type of maintenance implies removing errors in a program, which
might have crept in the system due to faulty design or wrong assumptions. Thus, in corrective
maintenance, processing or performance failures are repaired.
ii) Adaptive Maintenance: - In adaptive maintenance, program functions are changed to enable the
information system to satisfy the information needs of the user. This type of maintenance may
become necessary because of organizational changes which may include:
a) Change in the organizational procedures,
b) Change in organizational objectives, goals, policies, etc.
c) Change in forms,
d) Change in information needs of managers.
e) Change in system controls and security needs, etc.
iii) Perfective Maintenance: - Perfective maintenance means adding new programs or modifying the
existing programs to enhance the performance of the information system. This type of maintenance
undertaken to respond to user’s additional needs which may be due to the changes within or
outside of the organization. Outside changes are primarily environmental changes, which may in
the absence of system maintenance, render the information system ineffective and inefficient. These
environmental changes include:
a) Changes in governmental policies, laws, etc.,
b) Economic and competitive conditions, and
c) New technology.
Evaluation of the MIS
Evaluation of MIS is an integral part of the management control process, in which the organizations
determine or appraise the quality or worth of their information system. In other words, evaluation of
MIS is a process of measuring performance of organizational information systems.

Evaluation approach
There are different approaches to evaluate MIS in an organization. The MIS evaluation approaches
provide different means to measure accomplishments of system objectives. Hamilton’s survey (1980)
indicates that the following approaches on MIS evaluation are frequently employed in organizations.
i) Quality Assurance Review: - Quality assurance reviews or technical reviews focus on assessing
the Information system’s technical quality, e.g. comparison to standards and operations acceptance
procedures.
ii) Compliance Audits: - Compliance audits or application control reviews assess the adequacy and
completeness of controls for system inputs, outputs, processing, security and access. Compliance
audits are typically performed by an autonomous internal audit function.
iii) Budget performance review: - Evaluation of MIS budget performance concentrates on compliance
with a predetermined budget expenditure level for the MIS development or operations process.
Evolution of user budget performance has its focus on MIS resource consumption by the user. Both
may be supported by a chargeback mechanism.
iv) MIS personnel productivity measurement: - The capability of MIS personnel is typically
determined in terms of productivity. Examples of productivity measures include; lines of code per
unit time for the programming (development) personnel and keystrokes per unit time for the data
entry (operations) personnel.
v) Computer performance evaluation: - The production capability of the computer hardware is
typically evaluated in terms of performance efficiencies and bottlenecks that limit production. For
example, computer performance evaluation measurements are made on percent uptime, actual
throughput, and I/O channel utilization.
vi) Service level monitoring: - Service level monitoring focuses on assessing the information and
support provided to the user, based on the terms established between the MIS and the user
personnel. Assessment of the information provided includes turnaround time, response time and
error rates. Assessment of the support provided includes the time required to respond to the user’s
problems and requests for changes.
vii) User attitude survey: - User attitude survey method is used in operational evaluation. Operational
considerations refer to whether input data is adequately provided and the output is usable. These
types of attitude surveys are conducted through questionnaires and/or interviews to appraise the
user’s perceptions of the information and support given by the MIS function.
viii) Post installation review: - The focus of a post installation review (PIR) is often on estimating
whether the system meets the requirement definition, i.e. ‘Does the system do what it is designed to
do?’
ix) Cost/Benefit analysis: - Cost/Benefit analysis is also known as economic evaluation. The analysis
quantifies the system’s effect on organizational performance in terms off Dollars, e.g. direct cost
savings or tangible financial benefits. Cost/benefit analysis is often used in capital budgeting to
gauge the return on investment.

Evaluation classes
Evaluation of performance measurement consists of two major classes as given below.
Effectiveness This refers to the quality of the outputs from the system. Effectiveness means doing
the ‘right’ thing in the right manner so that desired results may be achieved. Information system is
said to be effective if its product (i.e. Output) is of quality, and the process of producing output is
right (effective).
Efficiency It is a measure of the amount of resources required to achieve the output, i.e. the use of
system resources to get results. Being efficient implies the system is operating the ‘right’ way.
 The relationship between effectiveness and efficiency is that effectiveness is a measure of
’goodness’ of output, while efficiency is a measure of the resources required to achieve the output.

Product based MIS Evaluation: - Since the focus of the product-based evaluation is on the product
(information support) or the output from the system, the evaluation may be termed as effectiveness
evaluation.

Cost/Benefit-based evaluation: - In cost/benefit based evaluation, a through study of various expected

costs, the benefits to be expected from the system and expected savings, if any, is done. It is economic
evaluation of the system, in which costs to be incurred for developing, implementing and operating a
system are to be justified against the expected benefits from the system. In other words, cost/benefit
analysis determines the cost-effectiveness of the system.