LECTURE 1

MANAGEMENT INFORMATION SYSTEM

OVERVIEW
Early business computers were used for simple operations such as tracking inventory, billing, sales, or payroll data, with little detail or structure. Over time, these computer applications became more complex, hardware storage capacities grew, and technologies improved for connecting previously isolated applications. As more and more data was stored and linked, managers sought greater detail as well as greater abstraction with the aim of creating entire management reports from the raw, stored data. The term "MIS" arose to describe such applications providing managers with information about sales, inventories, and other data that would help in managing the enterprise. A successful MIS supports a business' long range plans, providing reports based upon performance analysis in areas critical to those plans, with feedback loops that allow for titivation of every aspect of the enterprise, including recruitment and training regimens. MIS not only indicates how things are going, but also why and where performance is failing to meet the plan. These reports include near-real-time performance of cost centres and projects with detail sufficient for individual accountability.

MANAGEMENT INFORMATION SYSTEM (MIS)

A system which provides information support for decision making in the organization. An integrated system of man and machine for providing the information to support the operations, the management and the decision making function in the organization. A system based on the database of the organization evolved for the purpose of providing information to the people in the organization. Planned system of collecting, storing and disseminating data in the form of information needed to carry out the functions of management. are designed to be used to analyze and facilitate strategic and operational activities in the organization
LECTURE 1: Management Information System 1

refer to the study of how individuals, design, implement, manage, and utilize improve efficiency and effectiveness of termed decision support systems, expert systems.

groups, and organizations evaluate, systems to generate information to decision making, including systems systems, and executive information

OBJECTIVES OF MIS

Source

User

Data Capture

Processing

Dissemination

Retrieval

Storage of Data

Data Capturing MIS capture data from various internal and external sources of organization. Data capturing may be manual or through computer terminals. Processing of Data The captured data is processed to convert into required information. Processing of data is done by such activities as calculating, sorting, classifying, and summarizing.
LECTURE 1: Management Information System 2

Storage of Information MIS stores the processed or unprocessed data for future use. If any information is not immediately required, it is saved as an organization record, for later use. Retrieval of Information MIS retrieves information from its stores as and when required by various users. Dissemination of Information Information, which is a finished product of MIS, is disseminated to the users in the organization. It is periodic or online through computer terminal.

TYPES
Management information systems (MIS) Produce fixed, regularly scheduled reports based on data extracted and summarized from the firms underlying transaction processing systems[4] to middle and operational level managers to identify and inform structured and semi-structured decision problems. Decision support systems (DSS) Computer program applications used by middle management to compile information from a wide range of sources to support problem solving and decision making. Executive information systems (EIS) Reporting tool that provides quick access to summarized reports coming from all company levels and departments such as accounting, human resources and operations. Marketing information systems Designed specifically for managing the marketing aspects of the business. Office automation systems (OAS) Support communication and productivity in the enterprise by automating work flow and eliminating bottlenecks. OAS may be implemented at any and all levels of management. School management information systems Cover school administration, and often including teaching and learning materials.

LECTURE 1: Management Information System

ADVANTAGES
Companies are able to highlight their strengths and weaknesses due to the presence of revenue reports, employees' performance record etc. The identification of these aspects can help the company improve their business processes and operations. Giving an overall picture of the company and acting as a communication and planning tool. The availability of the customer data and feedback can help the company to align their business processes according to the needs of the customers. The effective management of customer data can help the company to perform direct marketing and promotion activities. Information is considered to be an important asset for any company in the modern competitive world. The consumer buying trends and behaviours can be predicted by the analysis of sales and revenue reports from each operating region of the company.

CHARACTERISTICS
Systems Approach The information system follows a systems approach. Systems approach means taking a comprehensive view or a complete look at the interlocking sub-systems that operate within an organization. Management Oriented Management oriented characteristic of MIS implies that the management actively directs the system development efforts. For planning of MIS, top-down approach should be followed. Top down approach suggests that the system development starts from the determination of managements needs and overall business objective. To ensure that the implementation of systems police meet the specification of the system, continued review and participation of the manager is necessary. Need Based MIS design should be as per the information needs of managers at different levels.

LECTURE 1: Management Information System

Exception Based MIS should be developed on the exception based also, which means that in an abnormal situation, there should be immediate reporting about the exceptional situation to the decision makers at the required level. Future Oriented MIS should not merely provide past of historical information; rather it should provide information, on the basis of future projections on the actions to be initiated. Integrated Integration is significant because of its ability to produce more meaningful information. Integration means taking a comprehensive view or looking at the complete picture of the interlocking subsystems that operate within the company. Common Data Flow Common data flow includes avoiding duplication, combining similar functions and simplifying operations wherever possible. The development of common data flow is an economically sound and logical concept, but it must be viewed from a practical angle. Long Term Planning MIS is developed over relatively long periods. A heavy element of planning should be involved. Sub System Concept The MIS should be viewed as a single entity, but it must be broken down into digestible sub-systems which are more meaningful. Central database In the MIS there should be common data base for whole system

CHARACTERISTICS OF COMPUTERIZED MIS

Ability to process data into information with accuracy and high speed. It involves complex computation, analysis, comparisons and summarization. Organizing and updating of huge amount of raw data of related and unrelated nature, derived from internal and external sources at different periods of time.
LECTURE 1: Management Information System 5

The information processing and computer technology have been so advanced that managers are able to obtain real time information about on-going activities and events without any waiting period. The input data in computer can be converted into different output formats for a variety of purpose. The system is so organized that managers at different levels and in different activity units are in a position to obtain information in whatever form they want, provided that relevant programmes or instructions have been designed for the purpose. Super-human memory, tremendous volume of data and information and the set of instructions can be stored in the computer and can be retrieved as and when needed. Management can get bit of stored information from the computer in seconds.

ORGANIZATIONAL NEED FOR MIS IN A COMPANY

To facilitate the management decision making at all levels of company, the MIS must be integrated. MIS units are companywide. MIS is available for the Top management. The top management of company should play an active role in designing, modifying and maintenance of the total organization wide management information system. Support the Business Process Treats inputs as a request from the customer and outputs as services to customer. Supports current operations and use the system to influence further way of working. Support Operation of a Business Organization MIS supports operations of a business organization by giving timely information, maintenance and enhancement which provides flexibility in the operation of organizations. To Support Decision Making MIS supports the decision making by employee in their daily operations. MIS also supports managers in decision making to meet the goals and objectives of the organization. Different mathematical models and IT tools are used for the purpose evolving strategies to meet competitive needs.

LECTURE 1: Management Information System

Strategies for an Organization Today each business is running in a competitive market. MIS supports the organization to evolve appropriate strategies for the business to assented in a competitive environment

ESSENTIAL REQUIREMENT OF AN EFFECTIVE MIS

Qualified System and Management Staff The prerequisite of an effective MIS is that it should be managed by qualified officers. These officers should have a mutual understanding about the roles and responsibilities of each other. be understand clearly the view of their fellow officers. For this, each organization should have two categories of officers: o System and Computer Experts who in addition to their expertise in their subject area, they should also be capable of understanding management concepts to facilitate the understanding of problems asked by concern. They should also be clear about the process of decision making and information requirements for planning. o Management experts who should also understand quite-clearly the concepts and operations of a computer. This basic knowledge of computer will be useful will place them in a comfortable position, while working with systems, technicians in designing or otherwise, of the information system.

Futuristic Perspective An effective MIS should be capable of meeting the future requirements of its executives as well. This capability can be achieved by regular monitoring and updating the MIS. Support of Top Management For a management information system to be effective, it must receive the full support of top management. The Reasons for this are: o Subordinate managers are usually lethargic about activities which do not receive the support of their superiors. o The resources involved in computer based information system are larger and are growing larger and larger in view of importance gained by management information system.
LECTURE 1: Management Information System 7

Common Database It is an integrated collection of data and information which is utilized by several information subsystems of an organization. A common database may be defined as a super file which consolidates and integrates data records formerly stored in a separate data file. Such a database can be organized as an integrated collection of data records into a single super file or it can be organized as an integrated collection of several data file. Control and maintenance of MIS Control of the MIS means the operation of the system as it was designed to operate. Sometimes, users develop their own procedures or short cut methods to use the system which reduces its effectiveness.

DEVELOPMENT OF MIS
The plan for development and its implementation is a basic necessity for MIS. In MIS the information is recognized as major resource like capital and time. If this resource has to be managed well, it calls upon the management to plan for it and control it, so that the information becomes a vital resource for the system. The management information system needs good planning. This system should deal with the management information not with data processing alone. It should provide support for the management planning, decision making and action. It should provide support to the changing needs of business management. A long range MIS plan provides direction for the development of the system and provides a basis for achieving the specific targets or tasks against time frame. Following are the contents of MIS planning: MIS Goals and Objectives It is necessary to develop the goal and objectives for the MIS which will support the business goals. The MIS goals and objectives will consider management philosophy, policy constraints, Business risk, internal and external environment of the organization and business. The goals and objectives of the MIS would be so stated that they can be measured. The typical statements of the goals can be providing online information on the stock and market; the query processing should not exceed more than three seconds and the like.

LECTURE 1: Management Information System

Strategy for Plan Achievement The designer has to take a number of strategic decisions for the achievement of MIS goals and objectives. They are: o Development Strategy: Ex. an online, batch, a real time. o System Development Strategy: Designer selects an approach to system development like operational verses functional, accounting verses analysis. o Resources for the Development: Designer has to select resources. Resources can be in-house verses external, customized or use of package. o Manpower Composition: The staff should have the staffs of an analyst, and programmer.

The Architecture of MIS The architecture of the MIS plan provides a system and subsystem structure and their input, output and linkage. It spells out in details the subsystem from the data entry to processing, analysis to modelling and storage to printing. The System Development Schedule A schedule is made for development of the system. While preparing a schedule due consideration is given to importance of the system in the overall information requirements. This development schedule is to be weighed against the time scale for achieving certain information requirements. Hardware and Software Plan Giving due regards to the technical and operational feasibility, the economics of investment is worked out. Then the plan of procurement is made after selecting the hardware and software. One can take the phased approach of investing starting from the lower configuration of hardware going to the higher as development take place. The process needs matching the technical decisions with the financial decisions.

STAGES OF DEVELOPMENT
In order to develop a system successfully, it is managed by breaking the total development process into smaller basic activities or phases. Any system development process, in general, is understood to have the following phases: Systems Planning Systems Analysis Systems Design
LECTURE 1: Management Information System 9

Systems Implementation Systems Operation and Support

APPROACHES TO DEVELOPMENT OF MIS

There are two basic approaches for development of MIS: System development life cycle. The system development life cycle have following steps of development: o o o o o Systems Planning Systems Analysis Systems Design Systems Implementation Systems Operation and Support (System Maintenance)

Prototyping. Prototyping is the process of creating an incomplete model of the future full-featured system, which can be used to let the users have a first idea of the completed program or allow the clients to evaluate the program. Advantages: The designer and implementer can obtain feedback from the users early in the project development. The client and the contractor can compare that the developing system matches with the system specification, according to which the system is built. It also gives the engineer some idea about the accuracy of initial project estimates and whether the deadlines can be successfully met. The process of prototyping involves the following steps: Identify basic requirements. Develop initial prototype. Review.The customers, including end-users, examine the prototype and provide feedback for additions or changes. Revise and Enhance the Prototype.Using the feedback both the specifications and the prototype can be improved. If changes are introduced then a repetition of steps 3 and 4 may be needed. Types of prototyping

LECTURE 1: Management Information System

10

System prototyping are of various kinds. However, all the methods are in some way based on two major types of prototyping: Throwaway Prototyping. Throwaway or Rapid Prototyping refers to the creation of a model that will eventually be discarded rather than becoming part of the finally delivered system. After preliminary requirements gathering is accomplished, a simple working model of the system is constructed to visually show the users what their requirements may look like when they are implemented into a finished system. The most obvious reason for using Throwaway Prototyping is that it can be done quickly. Evolutionary Prototyping.Evolutionary Prototyping (also known as Breadboard Prototyping) is quite different from Throwaway Prototyping. The main goal when using Evolutionary Prototyping is to build a very good prototype in a structured manner so that we can refine it or make further changes to it. The reason for this is that the Evolutionary prototype, when built, forms the heart of the new system, and the improvements and further requirements will be built on to it. It is not discarded or removed like the Throwaway Prototype. When developing a system using Evolutionary Prototyping, the system is continually refined and rebuilt. Incremental Prototyping. The final product is built as separate prototypes. At the end the separate prototypes are merged in an overall design.

Advantages of Prototyping Reduced Time and Costs Improved and Increased User Involvement Disadvantages of Prototyping Insufficient Analysis User Confusion for Prototype and Finished System Excessive Development Time of the Prototype Expense of Implementing Prototyping

LECTURE 1: Management Information System

11

FACTORS RESPONSIBLE FOR DEVELOPMENT OF MIS

Factors Responsible for the development of MIS are numerous and have been a prime concern for many Researchers and Practitioners. Both Inter and external factors must be taken into account when trying to understand and organizations criteria for deciding about technology. The following are the factors which are responsible for development of MIS: External Factors External Factors are conditions that exist in organizations external environment. The factors can be found at the industry level or in national policies. o Industry level. At the industry level, we are looking at characteristics as degree of diffusion of certain technologies, the availability of external know-how, for example, technology suppliers, the degree of innovativeness of the industry, the requirements imposed by major customers and external markets and overall levels of competition and technology sophistication in the industry. o National Policies For the external factors the national policies also affect the organization that indirectly affects the subsystems of the organization. Internal Factors Internal factors internal of the firm that may affect the development of MIS can be grouped into three categories: o Past Experience with Technology. The organizations past experience about the technology in terms of exposure and organizational learning ultimately affects its future in developing technology. o Organizational Characteristics. An organizations characteristic like size, influence the adoption of MIS application in organization. The adoption of certain technologies may appear more appropriate for the larger firms because of the large capital investments and the skilled human resources involve in the implementation and operation of such technologies. Smaller firms are less affected by organizational inertia and they show a greater degree of involvement of organizational members especially top management during implementation. Ready to use software and less expensive equipment of MIS application are more attractive to smaller firms.

LECTURE 1: Management Information System

12

o Organizational Pursued strategy. Internal factors deal with the organizations pursued strategy on both orientation and technology policy. An organizations strategy reflects its action with market and technology, which ultimately modify its experience and consequently its overall characteristics and capabilities. The need for a strong technology has been advocated by a number of authors and investments in MIS should therefore be closely aligned with overall corporate strategy. Other Factors o Customer Satisfaction. Development of MIS is affected by customer satisfaction. Customer of the services should be satisfied by the presented system. o Effective. Development should be effective in terms of organizational benefit & user satisfaction. o Efficient. Development should use all the resources, organization values efficiently.

BUSINESS PLAN VS. MIS PLAN

Business plan
Business goals and objectives.

MIS plan
Management information system, objectives, consistent to the business goals and objectives. Information strategy for the business plan implementation playing a supportive role Architecture of the Management Information System to support decisions. and System development schedule, matching the plan execution. Hardware and software plan for the procurement and the implementation.

Business plan and strategy Strategy planning and decisions. Management plan for execution control. Operation plan for the execution.

LECTURE 1: Management Information System

13

A MODEL OF THE MIS PLAN

Contents
Corporate information Corporate philosophy Corporate mission/goals/objectives Business risk and rewards

Particulars
Business environment and current operation. Policy, guidelines, culture. Current and new mission/goals/objectives. Clear quantitative statements on these factors showing a trade-off between the risk and rewards. Details of the strategic and policy decisions affecting the business. Strategic/planning, operational. Information Technology details. Details of the systems and subsystems and their linkages charted against the time scales. Manpower and delegation details. Internal and external resources. Details on the investment schedule and benefits.

Focus
Where are we? What is the foundation of business? Where do we want to reach? What is the risk? Is it worth the risk?

Business policy and strategy Information needs Architecture of the plan Schedule of development

How do we achieve the goals and objectives? What is the key in formation? What are the tools for achievement? When and how will it be achieved?

Organisation of the plan

Who will achieve it?

Budget

How much will it cost?

RELATIONSHIP OF OTHER SYSTEM TO OTHER

TPS are typically a major source of data for other systems, whereas ESS is primarily a recipient of data from lower-level systems. The other types of systems may exchange data with each other as well. Data may also be exchanged among systems serving different functional areas. For example, an order captured by a sales system may be
LECTURE 1: Management Information System

14

transmitted to a manufacturing system as a transaction for producing or delivering the product specified in the order or to a MIS for financial reporting. The various types of systems in the organization have interdependencies. TPS are major producers of information that is required by the other systems, which, in turn, produce information for other systems. These different types of systems have been loosely coupled in most organizations. It is definitely advantageous to integrate these systems so that information can flow easily between different parts of the organization and provide management with an enterprise-wide view of how the organization is performing as a whole. But integration costs money, and integrating many different systems is extremely time consuming and complex. This is a major challenge for large organizations, which are typically saddled with hundreds, even thousands of different applications serving different levels and business functions. Each organization must weigh its needs for integrating systems against the difficulties of mounting a large-scale systems integration effort.

LECTURE 1: Management Information System

15