Fundamental Concepts of

MIS
• Three words which constitute MIS are
– Management
– Information
– System
 Management
• It is the force that drives the organization.
• The lifeblood of an organization.
• People performing various management roles
in an organization are called managers.
• The most important task that managers
perform is the task of taking decisions.
 Information
• Is the key ingredient for taking decisions.
• Information improves the quality of decision
making. That’s why information is the most
important asset for managers.
• Information is created after processing data,
mostly transaction – level data.
• This transaction – level data has to be captured ,
stored and then processed to create any
meaningful information for managers.
 System
• A system can be defined as a set of interacting
entities having interrelation, interconnections
with each other, forming an integrated whole.
• A system means a process for capturing data ,
storing it and then processing / analyzing it to
provide information.
• A system is a set of elements which are joined
together to achieve a common objective.
• Information systems that help a management
in taking decisions are called management
information systems.
• MIS consists of a set of information systems
working towards the common goal of
achieving greater efficiency in decision-
making at each level of management.
• MIS deals with internally- generated
information.
• The in – house data is processed
(summarized/aggregated) to create reports ,
which helps a management at different levels
in taking decisions.
• E.g. for MIS
– Enterprise Resource Planning System.(ERP)
– Customer Relationship Management System(CRM)
– Supply Chain Management System(SCM)
 Information Technology (IT)
• Technology has always been and will be a
platform for MIS.
• IT refers to the technology that uses computer
software and hardware for the purpose of
processing data and producing useful
information.
• What is Information Technology?
– Any form of technology used by people to handle
information.
• What are Information Systems?
– Integrated components processing, storing and
disseminating information in an organisation.
– Interdisciplinary study of systems that provide
information to users in organisations.
• IT refers to all the components that a system
needs to operate including the following.
– Software
• Operating system s/w, database management s/w, web
browsers etc.
– Hardware
• Servers, computers, I/O devices
– Telecommunication
• Modems, switches, routers etc
• Data
– Data is in raw form.
– meaningless without structure.
– Disorganised and disintegrated in the form.
– Can’t be understood or made use of by the users.
• Information
– Clusters of facts, meaningful and useful to human
beings in processes such as making decisions .
– Properly arranged, classified and organised.
– Information is in finished form.
– It is understood and used by the users.
– It is derived from data.
Input Data Output
DATA processing Information

Feedback

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 Salesman code Zone item Code Sales
SM 001 North P001 475 SM 001 North P001 475
SM 002 East P001 500 SM 002 East P001 500
DATA Processing
Information
 Information System (IS)
• It is concerned with processing the raw facts
into information and transferring this
information to the users.
• Information system can be two types
– Manual IS ( that uses pen, pencil or paper
technology)
– Computer based IS (CBIS) (uses IT to perform its
various tasks.)
 Characteristics of MIS
• Management – oriented
• Management –directed
• Integrated
• Common data flows
• Strategic planning
• Bias towards centralization
• Information and communication technology
enabled
• Management – oriented
– MIS is designed top down.
– The system is designed around the need for
information of the management at different
levels.
• Management –directed
– MIS is ‘for the management’ and initiated ‘by the
management’.
– The system is structured according to the
directions factored in by the management.
• Integrated
– It is integrated with all the operational and
functional activities of the management.
– To provide a complete picture of a scenario,
complete information is needed, which only an
integrated system can provide.

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• Common data flows
– The data being stored into the system, retrieved from
the system , disseminated within the system or
processed by the system can be handled in an
integrated manner.
– The integrated approach towards data management
will result in avoiding duplication of data , data
redundancy and help simplify operations.
– Avoid data redundancy through integrated approach.
• Strategic planning
– A high degree of planning goes into creating an MIS.
– This kind of planning is to ensure that the MIS being
established not only satisfies the information need of
managers currently, but also serves the organization in
the next 5 -10 years with modifications.
• Bias towards centralization
– Centralized data management helps an MIS to
provide an integrated view of data to the
managers.
• Information and communication technology
enabled
– All MIS that run today , run on some ICT platform,
to enable smooth functioning of the system and
ensure timely and accurate results.
 Functions of MIS
• The broad functions of MIS are
• To improve decision-making
• To improve efficiency
• To provide connectivity
• The main functions of MIS are
• Data processing
• Prediction
• Planning
• Control
• Assistance
– To improve decision-making
• The fast and accurate information supplied by the MIS
is used by managers to take quick and better decisions ,
thereby improving the decision making quality and
adding to the value of company.
– To improve efficiency
• MIS helps managers to conduct their tasks with greater
ease and better efficiency. This reflects in better
productivity.
– To provide connectivity
• MIS provides managers with better connectivity with
the rest of the organization.
• The main functions of MIS are
– Data processing
• This comprises collection, transmission , storage and
processing of data to provide an output.
– Prediction
• It carries out analysis on data to predict a future
situation , by applying methods of modern
mathematics, statistics or by way of simulation.
– Planning
• The analysis of data of a regular nature may give
indications on likely future events or situations and this
can be utilized in planning or reviewing the plan already
made earlier.
– Control
• To control day to day activities, monthly activities ,
quarterly or annual activities in a regular manner.
– Assistance
• Providing assistance to the higher management by
analyzing from regular records about various factors
related to the performance of the business operation.
Organizations and Information systems
• From technical viewpoint an organization
– is a formal social structure that takes i/p from its
surrounding environment and transforms these
i/ps to o/ps through production process.
– Here i/p consist of labour and capital provided by
the environment.
– o/ps are products and services.
 organization

i/Ps from the

environment
o/ps to the environment

Production process

Technical view of organization

 How information systems affect
organizations
• Economic Impact
– Both the cost of information and capital are
affected by the change in IT.
– With the decrease in cost of IT, the dependence of
many firms on IT has increased.
• Organizational and behavioral impact.
1)Information system flattens organizations.
– According to traditional organizational hierarchy of
management, various levels of management managed
the lower level staff.
– The use of IS has increased the efficiency by flattening
the hierarchies.
– IT applications provide the lower level employees with
the information they require and they are empowered
to make decisions without supervision.
A traditional organizational hierarchy of management
A flattened organizational hierarchy
 2)Virtual organizations are easy
• Virtual organizations connect people , assets and
ideas with the help of networks.
• They can support customers , suppliers and even
competitors in creating and distributing new
products and services without any limitation of
physical locations.
• In virtual organization whose members are
geographically apart , while appearing to others
to be a single , unified organization with a real
physical location.
• Reasons for using virtual organizations are
– To increase flexibility
• The organization can hire best workers regardless of where
they live.
– Globalization
• Greater level of collaboration , cooperation and efficiency is
achieved.
– Changes in employee values and attitude towards
work.
• Employees can balance professional as well as personal life,
family requirements and personal fulfillment.
– Cost reduction
• The cost of physical assets used to support work
environments, cost of infrastructure or the cost involved in
maintaining the offices at several physical locations is
reduced.
 The internet and organizations
• The internet has made phenomenal changes
in the working of organizations.
• It provides precise, timely and accurate
information and also helps in effective
decision making.
 Managers and decision making
• Decision making is the core managerial
function.
• Decision making is the process of choosing the
best alternative from among various
alternatives.
• It involves all the activities of coordinating ,
information processing, problem solving and
evaluating before finally making a decision.
 Decision making process
• According to Herbert A. Simon, a decision
making process can be described in four
different stages. They are
– Intelligence
– Design
– Choice
– implementation
 Intelligence

• This stage includes finding , analysing and

understanding the problem , the nature of the
problem , the reason for its occurrence and its
effects on the organization.
• In this stage , information system provides
detailed information in the form of routine
reports ,interpreted transaction data and
exception reports that help in identifying the
problem.
 Design

• This stage includes finding the possible

solutions for the problem.
• The decision support systems (DSS) proves to
be of great help as it provides the user with
logical tools for modeling data there by
enabling users to find possible solutions for
the problem.
 Choice
• This stage includes choosing the optimal
solution among the alternatives.
• The group decision support system(GDSS)
provides an electronic environment to
conduct group discussions among all
managers , who discuss the various
alternatives and select the suitable solution
for the problem.
 Implementation

• This stage includes putting the solution to

work and monitoring the working of the
solution.
• It also includes analysing the chosen solution
and finding whether the applied solution is
the optimal solution by comparing it with
other possible solutions.
 Intelligence
(Problem identifications.
What is the problem?)

Design
(Solution Identification
What are the potential
solutions?)

Choice
(Selecting solutions
Which is the best solution?)

Implementation
(testing solution
Is the solution working? Is
there any other better
solution?)

Stages in decision -making

 Types of decisions
• According to Simon , on the basis of
programmability decisions are classified into
two types.
– Programmed decisions
– Non – programmed decisions
• According to G. A. Gorry and M.S. Scott
Morton , programmed and non-programmed
decisions are referred as
– structured and
– unstructured decisions.
 Structured Decisions
• These decisions are well defined, certain and need little
effort from decision makers.
• These decisions need to be made at a small interval of
time.
• They can be easily made using some definite
procedure, thus operational level managers are
permitted to take such decisions.
• Inventory reorder decisions, routine credit decisions etc
are structured decisions.
 Unstructured decisions
• They are not well defined and no certain rules
are specified to take such decisions.
• This kind of decisions are taken by the
strategic(higher) level managers of the
organization.
• Introduction of a new product , deciding long
term corporate goals, planning for R & D etc
are unstructured decisions.
 Semi - structured decisions
• Decisions have elements of both the
structured and unstructured decisions.
• i.e. there are some well-defined or certain
rules for some part of the problem and rest
needs to be solved using judgment or
intuition.
• Generally middle level managers handle semi-
structured decisions.
• Developing a marketing plan , designing a new
corporate website etc are semi-structured
decisions.