Definition of Management Information

System
Management Information System can be defined as a formal method of
collecting timely information in a presentable form. in order to facilitate effective
decision making and implementation, in order to carry out organizational
operations for the purpose of achieving the organizational goal. A management
information system is a system design to provide selected decision orientation
information needed by management plan, control and evaluate the activities of the
corporation. It is designed within the frame work that emphasizes profit, planning,
performance planning and control at all levels. It complements the ultimate
integration of required business information sub system both financial with in the
company.
According to Philip kolter- A marketing information system consist of people,
equipment and procedures together,sort,analyse,evaluate and distribute the needed
timely and accurate information and marketing decision makers.
An information system can be any organized combination of people, hardware,
software, communication network and data resources that collects, transforms and
disseminates information in an organization.

Purpose of Management Information

System
Information processing is a major social activity. A significant part of an
individuals working and personal time is spent in recording, searching for, and
absorbing information, as much as 80% of a typical executives time is spent on
processing and communication information. Their duties involve the production
and use of information outputs documents, reports, analysis, plans, etc.
The system provides information on past, present, and project future and on
relevant events inside and outside the organization in the society. it may be define
as planned and integrated system for gathering relevant data,coverting it in to right
time. The main purpose of management information system is to provide the
right and correct information to the right people at right time.
Another important purpose of management information system is that it is
needed by all business organization because of increased complexity and rate of
change of todays business environment foe example marketing manager needs
information about sales performance and trends financial manager needs
information on returns, production manager needs information analyzing resources

requirement and workers productivity and personnel manager needs information

analyzing resources requirements and workers productivity and personnel manager
needs information concerning employee compensation and professional
development. thus effective managers with the specific
marketing,financial,production and personnel information, and products they
require to support their decision making responsibilities.
Management information system concept is a vital to effective computer use in
business of two or major reason:
1- It serves as a system framework for organizing business computer applications.
business application of computer should be viewed as interrelated and integrated
computer based information system and not as independent data processing job.
2- It emphasized the management orientation of electronics information processing
in business the primary goal of computer based information should be the
processing of data generated by business operations.

Advantages of Management Information

System
1. Management information system helps the managers to make planning and
control decision.
2. Facilitated planning- management information system improves the quality of
by providing relevant information for sound decision making due to increase in
size and complexity of organization.
3. Minimize information overload- management information system changes the
larger amount of data into summarized form and thereby avoids the confusion
which may arise when manager are flooded with detailed facts.
4. Bring coordination-management information system facilities integration of
specialized activities by keeping each department aware of the problem and
requirement of their department. it connect all decision centers in the organization.
5. Make control easier-it serves as a link between managerial planning and control.
It improves the ability of management to evaluate and improve performance. The
use of computers has increased the data processing and storage capability and
reduces the cost.
6. Management information system assembles, processes.stores, retrie, evaluate,

and disseminate the information.

7. It insure that appropriate data is collected from the various sources, processed,
and sent further to all the needy destinations.
8. Management information system helps in strategic planning, management
control, operational control and transaction processing.
9. It helps the clerical personnel in the transaction processing and answer their
queries on the data pertaining to the transaction the status of a particular record and
reference on a variety of documents.

Objectives of Management Information

System
1. Management information system main objective is to attain the transaction
processing of data of an organization effectively. Transaction processing is applied
in conversion and analysis of raw data.
2. Management information system is the management of marketing, fianc,
production, and the personnel becomes better trained which result in his efficiency.
3. Management information system is in making the forecasting and long term
prospective planning more effective.
4. It tries to create a structured database in knowledge base for all the people in the
organization.

Characteristics of Management
Information System
Management information system and top management - management
information system is a comprehensive and coordinated set of information
subsystems which are rationally integrated and which transform data information
in a variety of a ways to enhance productivity in conformity with the managers
style and characteristics on the basis of established quality.
1. Management oriented - the system is designed from top to bottom. This does
not mean that the system will be geared to providing information directly to top
management rather it means that the system development starts from an appraisal
of management needs and overall business objectives it is possible that top
management is the focus of the system such as their needs cornerstone on which

the system is built for example- a marketing information system basic sales order
processing the shipment of goods to the customers and the billing of the goods are
fundamental operation control activities. however if the system is designed
properly this transaction information can be traced by salesman, sales territory, size
of order, geography and product line furthermore if designed with strategic
management needs in mind external competition market and economic data can be
created to give a picture of how well the companys product are faring in their
marketing environment and to serve as a basic of new product or marketplace
introduction the initial application can be geared to the operational and
management control areas but in such a way as not preclude its integration into a
strategic planning subsystem for upper management.
2. Management directed - because of the management information system it is
imperative that management actively directs the system development efforts to
determine what information is necessary to improve its control of operation it is
rare to find an management information system where the manager himself or a
high level representative of his department is not spending a good deal of time in
system design it it not a non time involvement for continued review and
participation are necessary to ensure that the implemented system meets the
specification of the system that designed therefore management is responsible for
setting system specification and it must play a major role in subsequent trade off
decision that inevitably occur in system development. An important element of
effective system planning is the process for determining the priority of application
development. Management must control this process if a management
information system is the objectives. A company without a formal application
approval cycle and a management steering to determine priorities will never
develop anmanagement information system.
3. Integrated - integration is significant because of the ability to produce more
meaningful management information for example in order to develop an effective
production scheduling system we must balance such factors as:
A. Set up cost.
B. Work force.
C. Overtime rates.
D. Production capacity.
E. Capital requirement
D. Customer service.
4. Common data flows - Because of the integration concept of management
information system there is an opportunity to avoid duplication and redundancy in
data gathering storage and dissemination for example customer orders are the basic
for billing the customer for goods ordered setting up the accounts receivable
initiating production activity sales analysis sales forecasting and so on it is prudent
to capture this data closest to the source where the event occur and use it

throughout the functional area it is also prudent to capture it once and thus avoid
the duplicate entry of sources data into several system.
5. Heavy planning elements - Management information system do not occur
overnight they take from three to five years and longer to get established firmly
within a company a heavy planning element must be present in management
information system development the management information system designer
must have the future objectives and needs of the company firmly in mind. the
designer must avoid the possibility of system obsolescence before the system
planning is an essential ingredient to successful management information
system the management information systemprovides meaningful direction
towards which one strives.
6. Sub-system concept - In tackling a project as broad and complex in scope as
a management information system, one just avoid losing sight both the forest and
the trees. Even though the system is viewed as a single entity, it must be broken
down into digestible sub-system that can be implemented one at a time. The
breakdown of management information system into meaningful subsystems set
the stage for prioritized implementation. The subsystem analysis is essential for
applying boundaries to the problem, thus enabling the designer to focus on
manageable entities that can be assigned and computerized by selected system and
programming team.
7. Flexibility and ease of use - Despite a careful analysis of the future
management information needs it is impossible to predict what is desire their to
five year hence. This is true in most industries and especially in industries with
rapid change patterns, it is nave to think that if anyone possesses the omniscience
to predict the future with this aa a premise, the next best thing an management
information system developer can do is to built in the flexibility to incorporate as
many manufacture nuances as possible.
8. Data base - The data is the mortar that holds the functional system together each
system requires access to a master file or data covering inventory, personnel,
vendors, customers, general ledger, work in progress and so on. If the data is stored
efficiently and with common usages in mind one master file can provide the data
needed by any of the functional system. It seems logical to gather data once,
properly validate it and place it on a central storage medium that can be accessed
by any system. However it is not unusual to find a company with multiple data
files, one serving one functional system and another serving another system.
9. Distributed data processing - The majority of the companies
implementing management information system have a geographic network of
sale office, distribution channel, manufacturing plants,divison,subdivision and so
on some of these entities are operated in a completely independent fashion and
therefore may not be part of the integrated management information

system more often than not, the remote site to have the connection with each other
and with a host of operation in order to create a effective management
information system with geographical boundaries some from of distributed data
processing is necessary. Distributed data processing can be thought of as the
delivery system, placing information in the hands of those who need it when they
need it.
10. Information as a resource - Providing the entire organization must be a
concept that information is a valuable resource particularly in the management
control and strategic planning areas must be properly managed. This is a subtle but
important change in thinking. It was a common in the past to view the data
processing.

Models/ Types of Management Information

Systems
1. Accounting management information systems - All levels of accounting
managers share all accounting reports. 2.Financial management information
systems - It provide financial information to all financial managers within an
organization include the chief financial officer. The chief financial officer. The
chief financial officer analyzes historical and current financial activity.
3. Manufacturing management information systems - More than any functional
area great advance in technology have impacted operations, as a result
manufacturing operations have changed. For instance, inventories are provided just
in time so that great amounts of money are not spent for warehousing huge
inventories in some instance raw material are even proceeds on rail load cars
waiting to be sent directly to the factory thus there is no need for warehousing.
4. Marketing management information system - A marketing management
information system support managerial activity in the area of product
development, distribution, pricing decision, promotional effectiveness and sales
forecasting more than any other functional area.
5. Human resource management information system - It concern with activity
related workers, managers and other individual employed by an organization
because the personnel function relates to all other areas in business the human
resourcemanagement information system playa a valuable role in ensuring
organization system include work-force analysis and planning, hiring, training, and
job assignment.
6. Structure of management information system - The management
information system has been described in terms of support for decision making
management activity and organization functions.

7. Conceptual structure - The conceptual structure of a management

information system is defined as a federation of functional subsystem each of
which is divided into four major information processing components transaction
processing, operational control information system support, managerial control
information system, managerial control information system and strategic planning
information system which has some unique data files which are used by only that
sub system.
8. Physical structure - The physical structure of an management information
system would be identical to the conceptual structure of all applications consisting
of completely separate programs used by only one function but this is frequently
not the case substantial information can be achieved from
1 - Integrated processing
2 - Use of common modules
Integrated processing is achieved by designing several related applications as a
single system in order to simplify the interconnection and reduce the duplication of
input. A good example is an order entry system. The recording of an order initiates
a sequence of processing. Each step using new data but also most of the data from
prior processing. In other words, an integrated order entry system crosses
functional boundaries.

Management Information System Planning,

Controlling and Limitations
Planning - The top level management is mainly concerned with strategic planning
for example the strategic planning activities of top management involve future
interaction between the organization and its external environment.
Computational support for planning:
1. An analysis of historical data to obtain relationship useful for projection.
2. Various projection and forecasting techniques to estimate future value.
4. Computations internal to the plan and computation required for outputs.
5. Output of the results in a meaningful planning format.
Historical data analysis techniques
Historical data analyzed to discover pattern or relation that will be useful in
projecting the future value of significance variables. Even when the quantitative

relations are not sufficiently stable to use in forecasting data analysis is useful for
input into the judgmental forecast.
Historical extrapolation techniques
Historical data describes the past planning that involve the future estimating is
generally based on analysis of past history combined with various technique to
generate data for planning purposes.
Financial planning computation
Models that involve financial plan need to provide for various computation and
analyses commonly required for measuring or evaluating profitability example are
depreciation computation rate of return analysis and break even analysis.
Depreciation is a significant computation in most financial planning it affect profit
computation because it is an expense and it effect cash flow because of its impact
on taxes. There are several methods for computing deprecation all of which should
be available to the planner. These methods are straight line double declining
balance sum of the year digits and production or use basis.
Controlling - At the middle level management, information is management
control. Middle level managers such as departmental heads are concerned with the
current and future performance of their units. Therefore they need aggregate
information on the sales, profit etc.of their units such information is available from
both within the organization as well as outside the organization, for example,
financial data for budgets and ratio analysis are available from the companys
records. However market data can be collected through special surveys and reports
from outside the organization. Top level managers also require management
control information. But these information must be more detailed narrower in
scope and more accurate than information required for strategic planning. It should
also generate at more frequent because the time horizon of decision is shorter.
At the supervisory level of management operational control is exercised production
scheduling, cost and credit control, etc. are examples of operational control.
Therefore a detailed report on a daily and weekly basis is required, inventory
report, operating cost, production rate, etc are examples of such information. Such
information available from with in the organization.
The control feedback loop is basic to system design. The computer can improve the
control process in several ways:
1. The standard can be complex. Computational simplifications are not necessary.
2. The computation of deviation and identification of cause can be more
sophisticated.
3. Reporting with computers can use irregular time interval which is very difficult

with manual processing and can be done more frequently.

Limitation
1. Aggression - The people may hit back at the system and may even sabotage it
by using equipment incorrectly by putting incomplete information into the system
or buy actual destruction of hardware or software.
2. Projection - It is a psychological mechanism of blaming difficulties on someone
or something else. When employees blame the management information
system for problems caused by human error or other factors unrelated to the
system, projection is taking place.
3. Avoidance - It occurs when individuals defend themselves by withdrawing from
or avoiding a frustrating situation. Managers may avoid the system by ignoring its
output, in favour of their own information sources.
Management Information System Planning - Management information
system general business planning initiates from the following concepts :
1. Mission of the corporate.
2. Objectives and goals for the corporate in all key performance areas. These are in
line with the mission of the corporate.
3. Strategic planning for general approach on how to achieve long term objectives.
4. Operational planning for specific guideline on how to transverse short term
milestones