CONCEPT OF MANAGEMENT INFORMATION SYSTEM

Management Information System (MIS) is an integrated manmachine system that provides information to support the planning and control functions of managers in an organization. It is designed to provide information to various organizational levels , to assist them in decision-making. Many firms have customer information system, marketing information system, accounting information system. These levels use the information for the purpose of decision-making. As the business organizations grow in complexity managers depend more heavily upon various external and internal sources of information.

According to Schwartz Management information system is a system of people, equipment, procedures, documents, communications that collects, validates, operates, transforms, stores, retrieves and present data for use in planning , controlling and other managerial process.
According to G.B. Davis Management Information System is an integrated man-machine system for proving information to support the operations, management analysis, and decision-making functions in an organization. Jerome Kanter defined Management information system as a system that aids management in making , carrying out , and controlling decisions.

Management Information System (MIS) has three components: Management Information System Management is concerned about the functional aspects of the management. Managers have to perform important functions i.e. planning, organizing, directing and controlling for decision-making. Information can be defined as the data which is organized and presented at a time and place so that the decision-maker take necessary action. Information is the result/product of processing data. System is a group of elements/components joined together to fulfill certain functions. A system is made up of sub-systems, which directs the organization efforts towards the achievement of its objectives.

Thus Management Information system is a set of integrated , well knit and scientifically designed system whereby raw data get converted into decision-based and control oriented information. Management information system ensures: Right information at right time to right person and in right manner.

Regularity in the periodicity of information flow.

Information geared towards aiding managerial decisions for planning and control. Screening of all information at the point of transmission to select the relevant and reject the all the irrelevant details.

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

Characteristics Of Management Information System(MIS) :

Management information system is an integrated system. Management information system provides relevant information to management i.e. objective oriented. Management information system is flexible system. Management information system is comprehensive i.e. Transaction processing system, office information system, forecasting information system, project information system, decision support system, human resource information system, marketing information system etc. Management information system is a feedback system. Management information system is computerized system.

Management information system has modules (Sub-system).

Management information system transforms the data into information. Management information system uses established quality criteria.

Management information system enhances productivity.

Management information system comprises common databases.

Management information system is management oriented.

Management information system avoids redundancy in storage. Management information system has common data flow.

Objectives of Management Information System(MIS) : To provide information for planning , organizing and controlling. To store and manage data efficiently from all the functional areas of the management.
To process the collected data and derive information. To provide information quickly as and when required. To reduce the risk and uncertainty in the managerial decisionmaking. To collect and store the data for the purpose of internal research

To assist in identifying the managerial problems and their solutions.

To provide information regarding work force planning. To provide information regarding financial health of the organization.

To provide information regarding production and inventory.

To provide information regarding sales and other marketing aspects i.e .product , price, promotion, physical distribution, payment, collection etc. To smooth up the flow of data through various levels of the organization

Importance of Management Information System (MIS): Management information system helps in minimizing risks in decision-making.
Management information system process data and derive information out of them.

Management information system provides information about various aspects of the business.
Management information system helps the executives to avail the information regarding functional areas of quickly. Management information system helps in preparing corporate report.

Management information system helps the HRD manager in finding out the requirements of the human resources planning , recruitment, selection, performance appraisal, transfer ,training & development, promotion, absenteeism and employees turnover which is useful in drafting sound HRD policies. Data regarding production helps the production manager in deciding out capacity utilization, number of rejection per batch, frequency of break-down, status of shipment of processed order etc. It provides information regarding inventory position and ensures that the chances of inventory out of stock may be minimized. It present information regarding product price, promotion, demand, sales etc. to marketing manager instantly and ensures smooth functioning of the department.

Limitation of Management Information System (MIS) : Management Information System (MIS) takes the account mainly quantitative factors, thus it ignores the non-quantitative factors like morale, attitude of the members of the organization which have an important bearing on the decision-making of executives. Management Information System (MIS) effectiveness decrease due to the frequent changes in the top management, organizational structure and operational plan/team. The quality of output of MIS are governed by the quality of inputs and processes.

Need of Management Information System (MIS) : The need of MIS felt more in its absence than its presence. Very often in an organization some failure symptoms become apparent necessitating the introduction of MIS. Such failure symptoms could be: Organisation being unable to meet its commitments. Increased overtime in respect of clerical and other staff. Huge blockage in executive work-load Delayed decisions, indecisions, and wrong decisions. Non-availability of timely and relevant information. Maintenance of pocket or desk information. Loose control resulting in wastages, losses, and inefficiencies. Duplication of work and disjointed efforts.

Elements / Characteristics Of a Successful and Comprehensive Management Information System(MIS) : Economy Management orientation Flexibility Relevance Reliability Accuracy Simplicity Timeliness Conciseness Database Integrated Computerized Problem-solving

Concept of Data And Information :

Data is the raw material from which useful information is derived. The word data is the plural of Datum. Data is commonly used in both singular and plural forms. It is defined as raw facts or observations, typically about the physically phenomenon or business transactions. Example-A sale of machine tool or automobile would generate a lot of data describing those events. Data are measurements of attributes(characteristics) of entities(such as people, place, things and events). These measurements are usually represented by symbols such as numbers, words, codes, alphabetical, It takes a variety of forms, including numeric data, text, voice and images. Data is the collection of facts, which is unorganized but can be organized into useful information.

Information: The data which has been converted into a useful & meaningful form is called information. Data are raw material resources that are processed into finished information products. Information can be defined as data that has been converted in to a meaningful and useful context for specific end users. Information may include: Its form is aggregated, manipulated and organized. Its content is analyzed and evaluated. It is placed in a proper context for human users.

Data

Information

Data refers to details , facts about any event. Data is generally disorganized and disintegrated in the form. Data is in raw form.

Data cant be understood or made use of by the users. Data does not depend upon the information.

Information refers to only those events which are concerned with entity. Information is properly arranged classified and organized. Information is in finished form. Information is understood and used by the users. Information is based upon and derived from data.

 Data:

50210 Information:

5/02/10 The date of your final exam. Rs.52,010 The average starting salary of an accounting major. 52010 Zip code of state.

Data

Information
SIRIUS SATELLITE RADIO INC.

6.34 6.45 6.39 6.62 6.57 6.64 6.71 6.82 7.12 7.06

$7.20
$7.00 $6.80

Stock Price

$6.60

$6.40
$6.20 $6.00 $5.80

$5.60
1 2 3 4 5 6 7 8 9 10 Last 10 Days

 Information

in Context

Figure 1.2 Characteristics of useful information

Information technology and quality information are not the goals, but merely to support organizations to reach goals of Superior products and services

Greater productivity Eventually success

Control of System Performance

Input of Data Resources

Processing Data

Output of Information Products

Storage of Data Resources

 Classification of Information System: (i) Based on usage of computers: (a)Manual Information system: The being is the earliest and still most prevalent form of data processor. Human being receives input data by seeing or hearing them. These data then stored in the brain, which acts as a control and logic unit. The output obtained from this type of information processing are oral or written reports and a variety of physical actions. The human mind , acting as a control and logic unit , can perform many operations on data such as adding, subtracting, multiplying , dividing, storing results, comparing two items, out putting the results in a pre arranged manner and revising the processing operations as a result of changed instructions. (b)Computer Based Information System : Computer based information system is an information system that uses computer hardware and software to perform its information processing activities. It consists of people , procedures, data, programs, and computers. It process, stores, and retrieve the data.

(ii) Based on number of users :

(a)Personal IS : Here the user is a single person. Individual play three roles: as a user, who uses information produced to perform some business function, as user, operator and as user developer. Personal information system increases the productivity of a single individual. (b)Work Group IS : It includes number of users but number is less than twenty five normally. The user can be classified as users, user operators and professional developers. It can be used in an organization where the users share similar perspectives. The users can be classified as users, use operators and professional developers. (c)Enterprise IS : It can be used in an organization where users have multiple perspectives. The user can be classified as users, professional operators and professional developers.

1.Operations Support System(OSS): Information systems need to process data generated by and used in business operations is called operation support system(OSS). Operation support system(OSS) collects, processes and stores data generated by the operations systems of an organization and produces data and information for input into a management information system or for the control of an operations system. It may be noted that operation system is a basic subsystem of the business firm that constitutes its input, processing and output components. It is also called physical system. it produces a variety of information products for external and internal use. However , they do not emphasize producing the specific information products that can be best used by the managers. Further processing by management information systems is usually required. The role of a business firms operations support systems is to efficiently process business transactions, control industrial processes, support office communications and productivity, and update corporate databases.

(a)Transaction processing System(TPS): This is one of the earliest type of information system. It produces a variety of information like customer statements, employee pay cheque, sales receipts, purchase orders, dividend cheque, tax forms, financial statements etc. transactions can be internal or external. When ABC company places an order to suppliers/vendors internal transaction occurs. When a customer places an order for a product, external transaction occurs. Further , when a company orders raw materials from the supplier, a transaction occurs then transaction system records relevant information such as: Name of supplier Address Credit rating and past experience Kind of item ordered Quality ordered Quantity to be ordered Amount to be paid

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Types of TPS Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Payroll TPS

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Overview of Inventory Systems

Figure 2-10

 Transaction processing system contains the following steps: Data Entry: The transaction data is entered into the system using various input devices. Data validation : data validation ensures the accuracy and reliability of data by comparing actual data with pre-determined standards or known results. ExPlacing quotation. Data Processing and Revalidation : There are two ways to do process transactions as under: Online Transaction Processing(OLTP):It means instantaneous processing of data and the data input device is directly linked to the TPS and therefore the data are processed as soon as it is entered into the system. Ex-Flight reservation. Batch Processing : Under this system, transactions are accumulated over time and processed periodically. Hence processing of data take place weekly/fortnight/monthly. Validation is done before and after data is processed. Data storage : It could be stored on CD, memory of computer , hard disk or any other suitable device meant for such purpose. Output Generation : Output can be communicated to decision makers. Query Support: The last step in processing a transaction is query(asking questions of) system. Query facilities allow users to access data and information that may otherwise not be readily Available. e.g.-sales manager may query the system for the number of damaged items in a given lot.

(b)Process Control System : Process control system makes routine decisions that control operational process. For example-Automatic inventory reorder limit and production control decision, which are used in assembly line decisions. Computer automatically makes process control system decisions, adjusting a physical production process. Process control system helps to monitor a physical operation ,capture and process data selected by sensors and makes real time adjustments to the process. Example: in a petroleum refinery use sensors to monitor chemical processes. (c) Enterprise Collaboration Systems: Enterprise Collaboration Systems are system whose primary goal is to facilitate communications. Enterprise Collaboration Systems are computer based information systems that collects, process, store and transmit electronic messages, documents, and other forms of communications among individuals, work groups and organizations. Enterprise Collaboration system uses mechanical, electrical and electronic devices to enhance communication in the work place and increase the efficiency and productivity of knowledge workers and clerical workers.

Enterprise Collaboration System includes: Word Processing :.letters, memos, reports

Electronic mail (e-mail)

Voice mail Electronic Calendaring: store and retrieves appointment calendars of managers. Audio Conferencing Video Conferencing

Teleconferencing :Audio, video, and computer

2.Management Support System :

Providing information and support for effective decision making by all types of managers and business professionals is a difficult task and applications when it is focused on the above are called Management Support System. Management Support System is an information system that provides information to support managerial decision-making by all the levels of management. Conceptually, several major types of information systems support a variety of decision-making responsibilities. (a)Management Information System : Management Information System are the most common form of management support system. They provide managerial end users with information products that support much of their day to day decision-making needs. Management information system provides variety of reports and displays to management. Management Information Systems retrieve information about internal operations from database that have been updated by transaction processing systems. They also obtain data about business environment from external sources.

Management Information System (MIS)

Figure 2-5

MIS
Creates reports managers can use to make routine business decisions
Scheduled

reports Key-indicator reports Exception reports Ad hoc (demand) reports Drill-down reports

(b)Decision Support System : Decision Support System is a set of well-integrated, user friendly, computer based tools combine data with various decision-making models(both quantitative and qualitative) to solve semi-structured and unstructured problems. Decision support System allows the decision-makers to retrieve data and test alternative solutions during the process of problem solving. Decision support system is invariable an outcome of management information system, providing support for operational control, management control and strategic planning. Decision Support system contains following characteristics: DSS integrates data with decision-making models. DSS solves semi-structured and unstructured problems DSS supports a wide variety of decision-making processes and styles. DSS facilitates decision making under dynamic conditions.

Decision Support System (DSS)

Figure 2-7

Decision Support System (DSS)

Figure 2-6

 Classification of DSS: Decision Support System contains

following types: File Drawer System: Access of data items Ex-data oriented system Data Analysis System : analysis of data files. Analysis information System: Using databases and other models.

Accounting models: Estimating future results using accounting rules.

Representational Models : Estimating results, consequences where risk exists. Optimization Models : Calculating optimal results where constraints exist. Suggestion Models : producing suggested results where decision rules are known.

Components of Decision Support System :

Hardware Resources: Executive workstations are connected with computer telecommunication channels. Software Resources : Decision support system software packages are called system generators. They contain modules for Database which helps in DBMS Model i.e. Mathematical models for solving complex problems and dialogue management meant for managerial interface. Data Resources: It includes summarized data and information that are indispensable for the managers for taking specific type of decisions. Model Resources: Model base includes a library of mathematical models and analytical technique stored in a variety of program modules and files. People Resources :It includes managers and their staff specialists explore decision alternative.

(c)Executive Information system:

Executive Information system is a set of computer based tools with features such as colour, graphics, touch screens, voice-activated commands. It helps managers to quickly retrieve, analyze, navigate, summarize and disseminate large volumes of data. Executive Information System is normally connected with online information services, so that top managers could access data wherever they require for the same. Executive Information System delivers and displays information rather than analysis or diagnoses of information like decision support system. Executive Information System are management information systems tailored to the strategic information needs of top management. Top executives get information through: Letters Memos Periodicals Reports Meetings Telephone calls Social activities

 Many of the information come through non-computer sources.

The goal of executive information system is to provide top management with immediate and easy access to selective information about key factors that critical to accomplish a firms strategic objectives.

Expert System:
Expert System is an computer based information system in which knowledge is represented in data, In which the processing of the knowledge is directed primarily by computer programs. This system has the greatest degree of computer control. Expert system could be classified either operation information system or management information system. Although Expert systems are versatile, it can not be used everywhere. The development of systems that process the knowledge of a true human expert has proven to be difficult and expensive. It is aimed at replicating abilities of true human experts.

Components of Expert system:

It contains following

components: Knowledge acquisition: This program is used by an individual who has expertise in the problem to create, add or change the knowledge base. Potential sources of knowledge include human experts, text books, data bases, special research reports and users own experiences. The Knowledge base : knowledge base is a depository of knowledge that human expert might apply to solve problem in a subject are like medicine, engineering, finance etc. the information in the knowledge base is incorporated into a computer program by a process called knowledge representation. Inference Engine : It is a section of software that determines what knowledge to apply, when and how apply it.it applies rules and other forms of knowledge in an attempt to make sequence of logical conclusions that will solve users problem. User interface : expert system contains a language professor for friendly problem oriented communications between the manager-user and the computer . This communication is best carried out in a natural language, and in some cases, it is supplemented by graphics.

Benefits of Expert System :

Cost reduction Increased output Improved quality Reduced down time Capturing scarce expertise Equipment operation Reliability Response time Enhancing problems solving Solving complex problems in narrow domain Working with incomplete and uncertain information Use of less expensive equipment Operations in hazardous environments

Limitation of Expert System :

Solving specific types of problems in a limited domain of knowledge Perform well with specific types of operational and analytical tasks Comparatively costly

Scheduled Reports

Produced periodically, or on a schedule (daily, weekly, monthly).

59

Key-Indicator Report

Summarizes the previous days critical activities and typically available at the beginning of each day.

Demand Report

Gives certain information at a managers request.

Exception Report
Automatically produced when a situation is unusual or requires management action.
61

Drill Down Reports

Provide detailed data about a situation.

62

Management Information Systems

Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

EXECUTIVE SUPPORT SYSTEMS (ESS):

Inputs: Aggregate data
Processing: Interactive Outputs: Projections Users: Senior managers Example: 5 year operating plan

Management Information Systems

Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)

Top Level Management Designed to the individual senior manager

Ties CEO to all levels

Very expensive to keep up Extensive support staff

Management Information Systems

Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Model of a Typical Executive Support System

Figure 2-8

Management Information Systems

Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

Enterprise Systems
Enterprise systems, also known as enterprise resource planning (ERP) systems, provide a single information system for organization-wide coordination and integration of key business processes. Information that was previously fragmented in different systems can seamlessly flow throughout the firm so that it can be shared by business processes in manufacturing, accounting, human resources, and other areas.

Management Information Systems

Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

Enterprise Application Architecture

Figure 2-13

Management Information Systems

Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

Traditional View of Systems

Figure 2-14

Management Information Systems

Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

Enterprise Systems

Figure 2-15

Management Information Systems

Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

Benefits of Enterprise Systems

Help to unify the firms structure and organization: One organization
Management: Firm wide knowledge-based management processes Technology: Unified platform Business: More efficient operations & customer-driven business processes

Management Information Systems

Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

Challenges of Enterprise Systems

Difficult to build: Require fundamental changes in the way the business operates
Technology: Require complex pieces of software and large investments of time, money, and expertise Centralized organizational coordination and decision making: Not the best way for the firms to operate

System Transaction processing system (TPS) Management information system (MIS) Office automation system (OAS) Word processing system CAD/CAM Communication and collaboration systems (e.g., e-mail, voice mail, call centres, others) Desktop publishing System Document management system (DMS) Decision support system (DSS) Executive support system (ESS) Group support system (GSS) Expert system (ES) Knowledge work system (KWS) Neural networks, casebased reasoning Data warehouse

Employees Supported All employees

All employees Office workers Office workers Engineers, draftspeople

All employees

Description Processes an organizations basic business transactions (e.g., purchasing, billing, payroll). Provides routine information for planning, organizing, and controlling operations in functional areas. Increases productivity of office workers; includes word processing. Helps create, edit, format, distribute, and print documents. Allows engineers to design and test prototypes; transfers specifications to manufacturing facilities. Enable employees and customers to interact and work together more efficiently. Combines text, photos, graphics to produce professional-quality documents. Automates flow of electronic documents. Combines models and data to solve semi-structured problems with extensive user involvement. Supports decisions of top managers. Supports working processes of groups of people (including those in different locations). Provides stored knowledge of experts to nonexperts and decision recommendations based on built-in expertise. Supports the gathering, organizing, and use of an organizations knowledge. Learn from historical cases, even with vague or incomplete information. Stores huge amounts of data that can be easily accessed and manipulated for decision support. Gathers and uses large amounts of data for analysis by DSS, ESS and intelligent systems. Support employees who work with customers or business partners outside the physical boundaries of the organization.

Office workers Office workers Decision makers, Managers Executives, senior Managers People working in Groups Knowledge workers, nonexperts Managers, knowledge Workers Knowledge workers, Professionals Managers, knowledge workers Decision makers, managers Mobile employees

Business intelligence Mobile computing systems