UNIT1

CONCEPT
The MIS is an idea which is associated with man, machine, marketing and methods for collecting information’s from the
internal and external source and processing this information for the purpose of facilitating the process of decision-
making of the business.

MIS is not new, only the computerization is new , before computers MIS techniques existed to supply managers with the
information that would permit them to plan and control business operations. The computer has added on more
dimensions such as speed, accuracy and increased volume of data that permit the consideration of more alternatives in
decision-making process.

Management information system is an integrated set of component or entities that interact to achieve a particular
function, objective or goal. Therefore it is a computer based system that provides information for decisions making on
planning, organizing and controlling the operation of the sub-system of the firm and provides a synergistic organization
in the process.

The component of an information system includes: a hardware which is used for input/output process and storage of
data, software used to process data and also to instruct the hand-ware component, data bases which is the location in
the system where all the organization data will be automated and procedures which is a set of documents that explain
the structure of that management information system.

There are various driving factors of management information system for example:-
Technological revolutions in all sectors make modern managers to need to have access to large amount of selective
information for the complex tasks and decisions.

The lifespan of most product has continued getting shorter and shorter and therefore the challenge to the manager is to
design product that will take a longer shelf life and in order to do this, the manager must be able to keep abreast of the
factors that influences the organization product and services thus, management information system come in handy in
supporting the process. 

There are huge amount of information available to today’s manager and this had therefore meant that managers are
increasingly relying on management information system to access the exploding information. Management information
services helps manager to access relevant, accurate, up-to-date information which is the more sure way of making
accurate decisions. It also helps in automation and incorporation of research and management science techniques into
the overall management information system for example probability theory. 

The management information services are capable of taking advantage of the computational ability of the company like
processing, storage capacity among others.
Based on this relevancy, management information system should be installed and upgraded in various organizations
since today’s managers need them to access information for managerial decision making and also management
functions. 

The scope and purpose of MIS is better understood if each part of them is defined individually, thus 

1. MANAGEMENT: Management has been define in process or activities that describe what managers do in
the operation for their organization plan, organize, initiate and control operations. They plan by setting
strategies and goals and selecting the best course of action to achieve the goals. They organize the necessary
tasks for the operational plan, set these tasks up into homogenous groups and assign authority delegation; they
control the performance standards and avoiding deviation from standard.

The decision-making is a fundamental prerequisite of each of the foregoing process, the job of MIS is facilitating
decisions necessary for planning, organizing and controlling the work and functions of the business so that specified
goals of business are achieved. 

1. INFORMATION: Data must be distinguished from information and the distinction is clear and important for
present purpose. Data are facts and figures that are not currently being used in a decision-making process and
usually are taken from the historical records that are recorded and filled without immediate intent to retrieve for
decision-making. 

Information consists of data that have been retrieved, processed or otherwise used for information or interference
purpose, argument or as a basis forecasting or decision-making regarding any business unit. Information is knowledge
that one derives from facts for effective functioning of systems placed in the right context with the purpose of reducing
uncertainty regarding the alternative courses of action as they are based on description and measurement of attributes
of various entities associated with the enterprise.

1. 3.SYSTEM: The system can be described as a set of elements joined together for a common objective. A
subsystem is a part of a larger system with which one is concerned. All systems for our purpose the
organization is the system and the parts (divisions, departments, functions, unit etc) are the subsystem.

The system concept of MIS is, therefore one of optimizing the output of the organization by connecting the operating
subsystems through the medium of information exchange.

 The Management information system (MIS) is a concept of the last two decade or two. It has been understood and
described in a number of ways. It is also known as the Information System, the Information and Decision System, the
computer based Decision System.

 Information is the life blood of an organization, particularly in the case of system approach management. The MIS or
Information system can be define as the knowledge communicated by others or obtained from investigation or study. It
is a system providing needed information to each manager at the right time in the right form and relevant one which aids
understanding and stimulates the action.

MIS is an organized method of providing past, present and projection information relating to internal operations and
externals intelligence. It supports the planning, control and operational functions of an organization by furnishing
uniform information in proper time frame to help the process of decision-making.

 Management Information System is generally defined as an integrated user-machine system for providing information
to support operations, management and decision-making functions in an organization. The system utilizes computer
hardware and software, manual procedure, models for analysis. Information is viewed as a resource much like land,
labor and capital. It must be obtained processed, stored, manipulated and analyzed, distributed etc. An organization
with a well-defined information system will generally have a competitive advantage over organization with poor MIS and
no MIS.

 The MIS has more than one definition, some of which are given below:

 
1. The MIS is defined as a system which provides information support for decision-making
in the organization.
 
1. The MIS is defined as 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.
 
 The MIS is defined as a system based on the database of the organization evolved for
the purpose of providing information to the people in the organization.
 

1. The MIS is defined as a computer-based information system.

 

Though there are a number of definitions all of them converge on a single point, i.e. the MIS is a system that support the
decision-making function of the organization. The difference lies in defining the elements of MIS. However, in today’s
world, the MIS is a computerized business processing system generating information for the people in the organization
to meet the information needs for decision-making to achieve the corporate objective of the organization.

 MIS is a computer-based system that provides flexible and speedy access to accurate data. The organizational
information system which in general relates to the planning, operation and control of an enterprise are the most
important among them. MIS refers primarily to such an organizational system which is generally large, sophisticated,
structured and dynamically evolving and of immense commercial values. A large number of programmers and system
analysts are employed by many organizations to build a variety of MIS. Thus, the education of programmers and
system analysts as well as general manager, the subject of MIS, has occupied a key position.
 Thus, MIS is a set of computer-based system and procedures implemented to help managers in their routine job of
decision-making and planning, expansion and development.

 The objective of MIS is to provide information for a decision support process of management. It should help in such a
way that the business goals are achieved in the most efficient manner. Since the decision-making is not restricted to a
particular level, the MIS is expected to support all the levels of the management in conducting the business operations.
Unless the MIS becomes a management aid, it is not useful to the organization.

 Modern management system relies on MIS, the complexity of business management and competitive nature of
business requires handling of business operations with skill and foresight to advert the crisis. The management process
is executed through a variety of decisions taken at each step of planning, organizing, staffing, directing, coordinating
and controlling. If the management is able to spell out the decision required to be taken, then the MIS is designed
suitably.    

The actual MIS process relates to:

1. Collection
2. Organization
3. Distribution
4. Storage of wide information
5. Managerial control and analysis of data
 

Hence MIS focuses on:

1. Organization-wide information
2. Decision-making process
      iii.           Managerial control and analysis

1. Computer-based system

CONCLUSION: Management Information Systems is sets of inter-related procedures

using information system infrastructure in a business enterprise to generate and
disseminate the desired information. Such systems are designed to support decision-
making by the people associated with the enterprise in the process of attainment of its
objectives.
 
The MIS gets data and other resources of IT infrastructure as inputs from the environment and process them to satisfy
the information needs of different entities associated with the business enterprise. There are subsystems of control over
the use of IT resources and feedback system offers useful clues for increasing the benefits of information system to
business. The MIS are subsystem of business system and by themselves serve the function of feedback and control in
business system.

ROLE OF MANAGEMENT INFORMATION SYSTEM

 

The role of the MIS in an organization can be compared to the role of heart in the body. The information is the blood
and MIS is the heart. In the body the heart plays the role of supplying pure blood to all the elements of the body
including the brain. The heart work faster and supplies more blood when needed. It regulates and controls the incoming
impure blood, processed it and sends it to the destination in the quantity needed. It fulfills the needs of blood supply to
human body in normal course and also in crisis.

The MIS plays exactly the same role in the organization. The system ensures that an appropriate data is collected from
the various sources, processed and send further to all the needy destinations. The system is expected to fulfill the
information needs of an individual, a group of individuals, the management functionaries: the managers and top
management.

Here are some of the important roles of the MIS:

1. The MIS satisfies the diverse needs through variety of systems such as query system, analysis system,
modeling system and decision support system.

1. The MIS helps in strategic planning, management control, operational control and transaction processing. The
MIS helps in the clerical personal in the transaction processing and answers the queries on the data pertaining
to the transaction, the status of a particular record and reference on a variety of documents.

 The MIS helps the junior management personnel by providing the operational data for planning, scheduling and
control , and helps them further in decision-making at the operation level to correct an out of control situation.

 
 1. The MIS helps the middle management in short term planning, target setting and controlling the business
functions. It is supported by the use of the management tools of planning and control.

1. The MIS helps the top level management in goal setting, strategic planning and evolving the business plans
and their implementation.

1. The MIS plays the role of information generation, communication, problem identification and helps in the
process of decision-making. The MIS, therefore, plays a vital role in the management, administration and
operation of an organization.

IMPACT OF THE MANAGEMENT INFORMATION SYSTEM

 

MIS plays a very important role in the organization; it creates an impact on the organization’s functions, performance
and productivity.

 The impact of MIS on the functions is in its management with a good MIS supports the management of marketing,
finance, production and personnel becomes more efficient. The tracking and monitoring of the functional targets
becomes easy. The functional managers are informed about the progress, achievements and shortfalls in the activity
and the targets.

 The manager is kept alert by providing certain information indicating and probable trends in the various aspects of
business. This helps in forecasting and long-term perspective planning. The manager’s attention is bought to a situation
which is expected in nature, inducing him to take an action or a decision in the matter.

 Disciplined information reporting system creates structure database and a knowledge base for all the people in the
organization. The information is available in such a form that it can be used straight away by blending and analysis,
saving the manager’s valuable time.

 The MIS creates another impact in the organization which relates to the understanding of the business itself. The MIS
begins with the definition of data, entity and its attributes. It uses a dictionary of data, entity and attributes, respectively,
designed for information generation in the organization. Since all the information systems use the dictionary, there is
common understanding of terms and terminology in the organization bringing clarity in the communication and a similar
understanding of an event in the organization.
 The MIS calls for a systematization of the business operations for an effective system design. This leads to streaming
of the operations which complicates the system design. It improves the administration of the business by bringing a
discipline in its operations as everybody is required to follow and use systems and procedures. This process brings a
high degree of professionalism in the business operations.

The goals and objectives of the MIS are the products of business goals and objectives. It helps indirectly to pull the
entire organization in one direction towards the corporate goals and objectives by providing the relevant information to
the organization.

 A well designed system with a focus on the manager makes an impact on the managerial efficiency. The fund of
information motivates an enlightened manager to use a variety of tools of the management. It helps him to resort to
such exercises as experimentation and modeling.

 The use of computers enables him to use the tools and techniques which are impossible to use manually. The ready-
made packages make this task simple. The impact is on the managerial ability to perform. It improves decision-making
ability considerably high.

 Since, the MIS work on the basic system such as transaction processing and database, the drudgery of the clerical
work is transferred to the computerized system, relieving the human mind for better work. It will be observed that lot of
manpower is engaged in this activity in the organization. Seventy (70) percent of the time is spent in recording,
searching, processing and communicating. This MIS has a direct impact on this overhead. It creates information –based
working culture in the organization.  

IMPORTANCE OF MIS
 

It goes without saying that all managerial functions are performed through decision-making; for taking rational decision,
timely and reliable information is essential and is procured through a logical and well structured method of information
collecting, processing and disseminating to decision makers. Such a method in the field of management is widely
known as MIS.

 In today’s world of ever increasing complexities of business as well as business organization, in order to service and
grow , must have a properly planned, analyzed, designed and maintained MIS so that it provides timely, reliable and
useful information to enable the management to take speedy and rational decisions.

 MIS has assumed all the more important role in today’s environment because a manager has to take decisions under
two main challenges:

 First, because of the liberalization and globalization, in which organizations are required to compete not locally but
globally, a manager has to take quick decisions, otherwise his business will be taken away by his competitors. This has
further enhanced the necessity for such a system.
 

Second, in this information age wherein information is doubling up every two or three years, a manager has to process
a large voluminous data; failing which he may end up taking a strong decision that may prove to be very costly to the
company.

 In such a situation managers must be equipped with some tools or a system, which can assist them in their challenging
role of decision-making. It is because of the above cited reasons, that today MIS is considered to be of permanent
importance, sometimes regarded as the name centre of an organization. Such system assist decision makers in
organizations by providing information at various stages of decision making and thus greatly help the organizations to
achieve their predetermined goals and objectives.

On the other hand, the MIS which is not adequately planned for analyzed, designed, implemented or is poorly
maintained may provide developed inaccurate, irrelevant or obsolete information which may prove fatal for the
organization.

 In other words, organizations today just cannot survive and grow without properly planned, designed, implemented and
maintained MIS. It has been well understood that MIS enables even small organizations to more than offset the
economies of scale enjoyed by their bigger competitors and thus helps in providing a competitive edge over other
organizations.

The following are the most important reasons to have a good management information system:

To control the creation and growth of records

Despite decades of using various non-paper storage media, the amount of paper in our offices continues to escalate.
An effective records information system addresses both creation control (limits the generation of records or copies not
required to operate the business) and records retention (a system for destroying useless records or retiring inactive
records), thus stabilizing the growth of records in all formats.

To reduce operating costs

Recordkeeping requires administrative dollars for filing equipment, space in offices, and staffing to maintain an
organized filing system (or to search for lost records when there is no organized system).

 
It costs considerably less per linear foot of records to store inactive records in a Data Records Center versus in the
office. [Multiply that by 30% to 50% of the records in an office that doesn't have a records management program in
place], and there is an opportunity to effect some cost savings in space and equipment, and an opportunity to utilize
staff more productively - just by implementing a records management program. 

To improve efficiency and productivity

Time spent searching for missing or misfiled record is non-productive. A good records management program (e.g. a
document system) can help any organization upgrade its recordkeeping systems so that information retrieval is
enhanced, with corresponding improvements in office efficiency and productivity. A well designed and operated filing
system with an effective index can facilitate retrieval and deliver information to users as quickly as they need it.

Moreover, a well managed information system acting as a corporate asset enables organizations to objectively evaluate
their use of information and accurately lay out a roadmap for improvements that optimize business returns.

To assimilate new records management technologies

A good records management program provides an organization with the capability to assimilate new technologies and
take advantage of their many benefits. Investments in new computer systems whether this is financial, business or
otherwise, don't solve filing problems unless current manual recordkeeping or bookkeeping systems are analyzed (and
occasionally, overhauled) before automation is applied.

To ensure regulatory compliance

In terms of recordkeeping requirements, China is a heavily regulated country. These laws can create major compliance
problems for businesses and government agencies since they can be difficult to locate, interpret and apply. The only
way an organization can be reasonably sure that it is in full compliance with laws and regulations is by operating a good
management information system which takes responsibility for regulatory compliance, while working closely with the
local authorities. Failure to comply with laws and regulations could result in severe fines, penalties or other legal
consequences.

To minimize litigation risks

Business organizations implement management information systems and programs in order to reduce the risks
associated with litigation and potential penalties. This can be equally true in Government agencies. For example, a
consistently applied records management program can reduce the liabilities associated with document disposal by
providing for their systematic, routine disposal in the normal course of business.

To safeguard vital information

Every organization, public or private, needs a comprehensive program for protecting its vital records and information
from catastrophe or disaster, because every organization is vulnerable to loss. Operated as part of a good management
information system, vital records programs preserve the integrity and confidentiality of the most important records and
safeguard the vital information assets according to a "Plan" to protect the records.  This is especially the case for
financial information whereby ERP (Enterprise Resource Planning) systems are being deployed in large companies.

To support better management decision making

In today's business environment, the manager that has the relevant data first often wins, either by making the decision
ahead of the competition, or by making a better, more informed decision. A good management information system can
help ensure that managers and executives have the information they need when they need it.

By implementing an enterprise-wide file organization, including indexing and retrieval capability, managers can obtain
and assemble pertinent information quickly for current decisions and future business planning purposes.  Likewise,
implementing a good ERP system to take account of all the business’ processes both financial and operational will give
an organization more advantages than one who was operating a manual based system.

To preserve the corporate memory

An organization's files, records and financial data contain its institutional memory, an irreplaceable asset that is often
overlooked. Every business day, you create the records, which could become background data for future management
decisions and planning. 

To foster professionalism in running the business

A business office with files, documents and financial data askew, stacked on top of file cabinets and in boxes
everywhere, creates a poor working environment. The perceptions of customers and the public, and "image" and
"morale" of the staff, though hard to quantify in cost-benefit terms, may be among the best reasons to establish a good
management information system.
What is MIS?
MIS is the use of information technology, people, and business processes to record, store and process data to produce
information that decision makers can use to make day to day decisions.

MIS is the acronym for Management Information Systems. In a nutshell, MIS is a collection of systems, hardware,
procedures and people that all work together to process, store, and produce information that is useful to the
organization.

The need for MIS

The following are some of the justifications for having an MIS system

 Decision makers need information to make effective decisions. Management Information Systems (MIS) make
this possible.
 MIS systems facilitate communication within and outside the organization – employees within the organization
are able to easily access the required information for the day to day operations. Facilitates such as Short
Message Service (SMS) & Email make it possible to communicate with customers and suppliers from within the
MIS system that an organization is using.
 Record keeping – management information systems record all business transactions of an organization and
provide a reference point for the transactions.

Components of MIS

The major components of a typical management information system are;

 People – people who use the information system

 Data – the data that the information system records
 Business Procedures – procedures put in place on how to record, store and analyze data
 Hardware – these include servers, workstations, networking equipment, printers, etc.
 Software – these are programs used to handle the data. These include programs such as spreadsheet
programs, database software, etc.

Types of Information Systems

The type of information system that a user uses depends on their level in an organization. The following diagram shows
the three major levels of users in an organization and the type of information system that they use.
Transaction Processing Systems (TPS)

This type of information system is used to record the day to day transactions of a business. An example of a
Transaction Processing System is a Point of Sale (POS) system. A POS system is used to record the daily sales.

Management Information Systems (MIS)

Management Information Systems are used to guide tactic managers to make semi-structured decisions. The output
from the transaction processing system is used as input to the MIS system.

Decision Support Systems (DSS)

Decision support systems are used by top level managers to make semi-structured decisions. The output from the
Management Information System is used as input to the decision support system.DSS systems also get data input from
external sources such as current market forces, competition, etc.

Manual Information Systems VS Computerized Information

Systems (MIS)
Data is the bloodstream of any business entity. Everyone in an organization needs information to make
decisions. An information system is an organized way of recording, storing data, and retrieving information.
In this section, we will look at manual information systems vs. computerized information systems.

Manual Information System

A manual information system does not use any computerized devices. The recording, storing and retrieving
of data is done manually by the people, who are responsible for the information system.

The following are the major components of a manual information system

 People –people are the recipients of information system

 Business Procedures –these are measures put in place that define the rules for processing data,
storing it, analyzing it and producing information
 Data –these are the recorded day to day transactions
 Filing system – this is an organized way of storing information
 Reports –the reports are generated after manually analyzing the data from the filing system and
compiling it.

The following diagram illustrates how a typical manual information system works

Advantages and Dis-advantages of a manual information system

Advantages:

The following are the advantages of manual information systems

 Cost effective – it is cheaper compared to a computerized system because there is no need to purchase
expensive equipment such as servers, workstations, printers, etc.
 Flexible –evolving business requirements can easily be implemented into the business procedures
and implemented immediately

Disadvantages:

The following are some of the disadvantages of a manual information system.

 Time consuming –all data entries need to be verified before filing, this is a time consuming task
when done by humans. Retrieving data from the filing system also takes a considerable amount of
time
 Prone to error – the accuracy of the data when verified and validated by human beings is more
prone to errors compared to verification and validation done by computerized systems.
 Lack of security – the security of manual systems is implemented by restricting access to the file
room. Experience shows unauthorized people can easily gain access to the filing room
 Duplication of data –most departments in an organization need to have access to the same data. In
a manual system, it is common to duplicate this data to make it easy to accessible to all authorized
users. The challenge comes in when the same data needs to be updated
 Data inconsistency – due to the duplication of data, it is very common to update data in one file and
not update the other files. This leads to data inconsistency
 Lack of backups – if the file get lost or mishandled, the chances of recovering the data are almost
zero.

Computerized information system

Computerized systems were developed to address the challenges of manual information systems. The
major difference between a manual and computerized information system is a computerized system uses a
combination of software and hardware to record, store, analyze and retrieve information.

Advantages and Disadvantages of a computerized information system (MIS)

The following are some of the disadvantages of a computerized information system.

Advantages:

The following are the advantages of computerized information systems

 Fast data processing and information retrieval – this is one of the biggest advantages of a
computerized information system. It processes data and retrieves information at a faster rate. This
leads to improved client/customer service
  Improved data accuracy – easy to implement data validation and verification checks in a
computerized system compared to a manual system.
 Improved security – in addition to restricting access to the database server, the computerized
information system can implement other security controls such as user’s authentication, biometric
authentication systems, access rights control, etc.
 Reduced data duplication – database systems are designed in such a way that minimized
duplication of data. This means updating data in one department automatically makes it available
to the other departments
 Improved backup systems – with modern day technology, backups can be stored in the cloud
which makes it easy to recover the data if something happened to the hardware and software used
to store the data
 Easy access to information – most business executives need to travel and still be able to make a
decision based on the information. The web and Mobile technologies make accessing data from
anywhere possible.

Disadvantages:

 It is expensive to set up and configure – the organization has to buy hardware and the required
software to run the information system. In addition to that, business procedures will need to be
revised, and the staff will need to be trained on how to use the computerized information system.
 Heavy reliance on technology – if something happens to the hardware or software that makes it
stop functioning, then the information cannot be accessed until the required hardware or software
has been replaced.
 Risk of fraud – if proper controls and checks are not in place, an intruder can post unauthorized
transactions such as an invoice for goods that were never delivered, etc.

Summary

 MIS is the acronym for Management Information System. It is a collection of people, procedures,
data, and information technology that aids managers to make informed decisions.
 Computerized information systems are more efficient compared to manual information systems.
Manual information systems are cheaper compared to computerized information systems.
 Transaction processing systems (TPS) are by operational staff to record day to day business
transactions, and they are used to make structured decisions
 Management Information Systems (MIS) are used by middle-level managers to make semi-
structured decisions
 Decision Support Systems are used by top level managers, and they help top level managers to
make unstructured decisions.
 Components of Management Information System (MIS)
MIS is a system that takes data as input, processes it to generate information that can help the
management of an organization in decision-making and strategic planning. Today, most
organizations implement the MIS so as to achieve the organizational goals.

The MIS has various components, which are as follows:

1. Executives:
Executives are the people who utilize MIS. These people are computer professionals who operate
MIS for data processing to achieve organizational goals like planning and decision-making.
2. Hardware:
The hardware components of MIS include various input and output devices that helps in feeding
data as well as displaying the information when required. The input devices include the keyboard,
scanners and mouse. The output devices may be the monitor, printer, network devices, and so on.
3. Software:
Computer programs which are designed to do a specific task for example, MS Office,
Banking Software’s, Railway’s applications etc, different kinds of software available to
process the data/information in an organization such as ERP (enterprise resource planning)
and CRM (customer relationship management).
4. Organizational Procedures:
Procedures are sets of rules or guidelines that an organization establishes for the use of a
computer-based information system. The procedures may vary from one organization to
another. It may also vary from one department to another as per the requirement. For
example, the working of production department is different from the working of sales
department. The production department requires information regarding the raw material or
quantity of goods to be produced. So, the production department sets its procedures in
such a way that the MIS system helps in retrieving the information required by the
department. In the similar way, the sales department requires information regarding the
quantity of goods sold and the other expenses that occurred during the sales of the
product. Therefore, the sales department sets the procedures in such a way that they get
only that information which is required from the MIS.

Functions of MIS
The main goal to set up an MIS in a company is to utilize the information by its managers for
managerial purpose for decision making. MIS performs following functions to achieve
organizational goal:
1. To collect useful data:
MIS executes the data through computer system using the sources of an organization. The
organizational data is stores in computer system or as a paper record by its end users.
2. Data Processing:
Processing data includes converting the storage data into the required information to take
beneficial actions. Data processing includes mathematical and logical operations like, calculations,
sorting, classifying and summarizing the data. The data processing signifies processing activities
as:
o Organize data
o Analysis on data
o Apply statistical, mathematical, operations
o To create predictive modeling
o Research and forecasting
3. Information storage and retrieval:
MIS stores data as an organizational record and processed for future use. The data organizes as a
fields, records, files and databases for future use. Information retrieval comprises to access the
stored data as per the requirements of the management users.

4. Disseminating management information:

information of finished product is categorizes and dispersed to the users in an organization as per
the needs. This information could be periodic, through reports or online through computer
terminals. Figure shows various functions performed by MIS.\
Structure of Management Information System

A management information system (MIS) is an organized combination of people, hardware,

communication networks and data sources that collects, transforms and distributes information in
an organization. An MIS helps decision making by providing timely, relevant and accurate
information to managers. The physical components of an MIS include hardware, software,
database, personnel and procedures.

Hardware
All physical components of a computer system compose the computer hardware. Important components
include the central processing unit, input/output devices, storage units and communication devices.
Communication can be over fiber-optic cables or wireless networks.

Software
Software provides the interface between users and the information system. Software can be divided into
two generic types: system software and applications. The system software comprises of the operating
system, utility programs and special purpose programs. Applications are developed to accomplish a
specific task. For users of MIS it is much more important to understand the software than the hardware.
Software maintenance can take 50 to 70 percent of all personnel activity in the MIS function. When the
organization moves to implement an advanced information system the hardware and software
environment becomes more complex.

Database
A database is a centrally controlled collection of organized data. Central control reduces redundancy and
duplication of data. Data is stored in an organized and structured way to facilitate sharing and improve
availability to those who need it. The database improves efficiency of storage by elimination of redundant
files and improves efficiency of processing by providing all required data in a single file rather than
separate files. This also improves efficiency of information retrieval.

Procedures
Three types of procedures are required for an MIS to operate effectively: user instructions, instructions
for input preparation and operating instructions for MIS personnel who maintain the MIS.

Personnel
The personnel in the MIS function include computer operators, programmers, systems analysts and
managers. Human resource requirements should be assessed by considering both the present system
needs and the future system growth. The quality of MIS personnel is a key factor in its effectiveness. An
MIS manager needs a combination of both managerial and technical skills.

Function 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.

What is MIS, its functions and the main characteristics?

Management Information System (MIS) are computer based information systems consisting of the network of all
communication channels used within an organization.

 Its functionalities include :

 Integrated database of the MIS enables greater flexibility in meeting the information needs of the management.
The MIS integrates the information flow between functional areas.
MIS caters to the information needs of all levels of management .
Management’s information needs are supported on a more timely basis with the MIS.
  The main characteristics of the management information system are :

 MIS is flexible and can be adapted to the changing needs of the organization.
MIS uses an integrated database and supports a variety of functional areas.
MIS supports the data processing functions of transaction handling and record keeping.
MIS provides operational, tactical and strategic levels of the organization with structured information.
It is important to be noted that today’s ERP systems are integrated with functionalities of MIS (Management
Information System) and DSS (Decision Support System). Therefore organizations that implement an ERP
system could get advantage of all these functions.

Role of Management Information System

Management information system (MIS) has become Very Necessary due to Emergence of high complexity
in Business Organization. It is all to know that without information no Organization can take even one step
properly regarding the decision making process. Because it is matter of fact that in an organization decision
plays an essential role for the achievement of its objectives and we know that every decision is based upon
information. If gathered information are irrelevant than decision will also incorrect and Organization may
face big loss & lots of Difficulties in Surviving as well.

 Helps in Decision making: - Management Information System (MIS) plays a significant Role in Decision
making Process of any Organization. Because in Any organization decision is made on the basis of
relevant Information and relevant information can only be Retrieving from the MSI.

 Helps in Coordination among the Department: - Management information System is also help in
establishing a sound Relationship among the every persons of department to department through
proper exchanging of Information’s.

 Helps in Finding out Problems: - As we know that MIS provides relevant information about the every
aspect of activities. Hence, If any mistake is made by the management then Management Information
Systems (MIS) Information helps in Finding out the Solution of that Problem.

 Helps in Comparison of Business Performance: - MIS store all Past Data and information in its
Database. That why management information system is very useful to compare Business organization
Performance. With the help of Management information system (MIS) Organization can analyze his
Performance means whatever they do last year or Previous Years and whatever business performance
in this year and also measures organization Development and Growth.
MIS in organisation
To facilitate the management decision making at all levels of company, the MIS must be integrated. MIS units are
company wide. 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.

Information system and Information technology have become a vital component of any successful business
and are regarded as major functional areas just like any other functional area of a business organization
like marketing, finance, production and HR. Thus it is important to understand the area of information
system just like any other functional area in the business. MIS is important because all businesses have a
need for information about the tasks which are to be performed. Information and technology is used as a
tool for solving problems and providing opportunities for increasing productivity and quality.
Information has always been important but it has never been so available, so current and so overwhelming.
Efforts have been made for collection and retrieval of information, However, challenges still remain in the
selection analysis and interpretation of the information that will further improve decision making and
productivity.

MIS for a Business Organization :  

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 an
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.
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

Level of Management: Types of Information

that are required at Different Levels of
Management
Information, as required at different levels of management can be classified as operational, tactical and strategic.

1. Operational information:
Operational information relates to the day-to-day operations of the organisation and thus, is useful in exercising

control over the operations that are repetitive in nature. Since such activities are controlled at lower levels of

management, operational information is needed by the lower management.

For example, the information regarding the cash position on day-to-day basis is monitored and controlled at the

lower levels of management. Similarly, in marketing function, daily and weekly sales information is used by lower

level manager to monitor the performance of the sales force.

It may be noted that operational information pertains to activities that are easily measurable by specific standards.

The operational information mainly relates to current and historical performance, and is based primarily on internal

sources of data. The predictive element in operational information is quite low and if at all it is there, it has a short

term horizon.

2. Tactical information:

Tactical information helps middle level managers allocating resources and establishing controls to implement the

top level plans of the organisation. For example, information regarding the alternative sources of funds and their

uses in the short run, opportunities for deployment of surplus funds in short- term securities, etc. may be required at

the middle levels of management.

The tactical information is generally predictive, focusing on short-term trends. It may be partly current and partly

historical, and may come from internal as well as external sources.

3. Strategic information:

While the operational information is needed to find out how the given activity can be performed better, strategic

information is needed for making choices among the business options.

The strategic information helps in identifying and evaluating these options so that a manager makes informed

choices which are different from the competitors and the limitations of what the rivals are doing or planning to do.

Such choices are made by leaders only.

Strategic information is used by managers to define goals and priorities, initiate new programmes and develop

policies for acquisition and use of corporate resources. For example, information regarding the long-term needs of

funds for on-going and future projects of the company may be used by top level managers in taking decision

regarding going public or approaching financial institutions for term loan.

Strategic information is predictive in nature, relies heavily on external sources of data, has a long-term perspective,

and is mostly in summary form. It may sometimes include ‘what if’ scenarios. However, the strategic information is

not only external information.

For long, it was believed that strategic information are basically information regarding the external environment.

However, it is now well recognised that the internal factors are equally responsible for success or failures of

strategies and thus, internal information is also required for strategic decision making.

Figure 1.2 represents the types of information required at different levels of managerial hierarchy.

It may be remembered that each type of information has its role to play in managerial effectiveness. Each type of

information is needed with varying degree by the managers at all levels. Thus, a part of operational information may

be used even by the chief executive officer of a company.

The difference lies in the proportion of each type of information in the total information needs of managers at

different levels of managerial hierarchy.

Transaction processing system
Definition

A Transaction Processing System is a set of information which processes the data transaction in database system that
monitors transaction programs. The system is useful when something is sold over the internet. It allows for a time delay
between when an item is being sold to when it is actually sold. An example is that of a sporting event ticket.

While the customer is filling out their information to purchase the seat ticket; the transaction processing system is
holding the ticket so that another customer cannot also buy it. It allows for a ticket not to be sold to two different
customers.

Types

Batch processing: Processes several transactions at the same time, with a time delay.

Real-time processing: Deals with one transaction at a time and does not have a time delay.

Features

Rapid Response: The response time of a transaction processing system (TPS) is important because a business cannot
afford to have their customers waiting for long periods of time before making a transaction.

Reliability: A good TPS must be very reliable because if it were to break down businesses could lose a huge portion of
revenue because customers would not be able to purchase their products.

Inflexibility: The TPS must work the same way for every transaction as long as the TPS is being used. The formality and
structure should never change.

Controlled processing: The TPS must be able to allow authorized employees to be able to access it at any time.

Storing and Retrieving Data

A TPS must be able to easily be accessed by authorized employees so that information in the TPS can be retrieved.The
information that goes through a TPS must never be deleted so that there will not be any confusion of what orders have
gone through it. It is a good idea to have a back up hard drive so that older information can still be stored, but will not
slow down the server which houses the TPS.

Transaction Process System (TPS)

A transaction process system (TPS) is an information processing system for business transactions involving the collection,
modification and retrieval of all transaction data. Characteristics of a TPS include performance, reliability and consistency.

TPS is also known as transaction processing or real-time processing

A transaction process system and transaction processing are often contrasted with a batch process
system and batch processing, where many requests are all executed at one time. The former requires
the interaction of a user, whereas batch processing does not require user involvement. In batch
processing the results of each transaction are not immediately available. Additionally, there is a delay
while the many requests are being organized, stored and eventually executed. In transaction processing
there is no delay and the results of each transaction are immediately available. During the delay time for
batch processing, errors can occur. Although errors can occur in transaction processing, they are
infrequent and tolerated, but do not warrant shutting down the entire system.

To achieve performance, reliability and consistency, data must be readily accessible in a data warehouse, backup procedures
must be in place and the recovery process must be in place to deal with system failure, human failure, computer viruses, software
applications or natural disasters.

Information system
Information systems (IS) are formal, sociotechnical, organizational systems designed to collect, process, store, and
distribute information.[1] In a sociotechnical perspective, information systems are composed by four components: task,
people, structure (or roles), and technology. [2]
A computer information system is a system composed of people and computers that processes or interprets information. [3][4]
[5][6]
 The term is also sometimes used in more restricted senses to refer to only the software used to run a computerized
database or to refer to only a computer system.
Information Systems is an academic study of systems with a specific reference to information and the complementary
networks of hardware and software that people and organizations use to collect, filter, process, create and also
distribute data. An emphasis is placed on an information system having a definitive boundary, users, processors, storage,
inputs, outputs and the aforementioned communication networks. [7]
Any specific information system aims to support operations, management and decision-making.[8][9] An information system
is the information and communication technology (ICT) that an organization uses, and also the way in which people
interact with this technology in support of business processes. [10]
Some authors make a clear distinction between information systems, computer systems, and business processes.
Information systems typically include an ICT component but are not purely concerned with ICT, focusing instead on the
end use of information technology. Information systems are also different from business processes. Information systems
help to control the performance of business processes. [11]
Alter[12][13] argues for advantages of viewing an information system as a special type of work system. A work system is a
system in which humans or machines perform processes and activities using resources to produce specific products or
services for customers. An information system is a work system whose activities are devoted to capturing, transmitting,
storing, retrieving, manipulating and displaying information. [14]
As such, information systems inter-relate with data systems on the one hand and activity systems on the other. An
information system is a form of communication system in which data represent and are processed as a form of social
memory. An information system can also be considered a semi-formal language which supports human decision making
and action.
Information systems are the primary focus of study for organizational informatics.

Types of information system

The "classic" view of Information systems found in textbooks[19] in the 1980s was a pyramid of systems that reflected the
hierarchy of the organization, usually transaction processing systems at the bottom of the pyramid, followed
by management information systems, decision support systems, and ending with executive information systems at the top.
Although the pyramid model remains useful since it was first formulated, a number of new technologies have been
developed and new categories of information systems have emerged, some of which no longer fit easily into the original
pyramid model.
Some examples of such systems are:

 data warehouses
 enterprise resource planning
 enterprise systems
 expert systems
 search engines
 geographic information system
 global information system
 office automation.
A computer(-based) information system is essentially an IS using computer technology to carry out some or all of its
planned tasks. The basic components of computer-based information systems are:

 Hardware- these are the devices like the monitor, processor, printer and keyboard, all of which work together to
accept, process, show data and information.
 Software- are the programs that allow the hardware to process the data.
 Databases- are the gathering of associated files or tables containing related data.
 Networks- are a connecting system that allows diverse computers to distribute resources.
 Procedures- are the commands for combining the components above to process information and produce the
preferred output.
The first four components (hardware, software, database, and network) make up what is known as the information
technology platform. Information technology workers could then use these components to create information systems that
watch over safety measures, risk and the management of data. These actions are known as information technology
services.[20]
Certain information systems support parts of organizations, others support entire organizations, and still others, support
groups of organizations. Recall that each department or functional area within an organization has its own collection of
application programs or information systems. These functional area information systems (FAIS) are supporting pillars for
more general IS namely, business intelligence systems and dashboards[citation needed]. As the name suggests, each FAIS
support a particular function within the organization, e.g.: accounting IS, finance IS, production-operation management
(POM) IS, marketing IS, and human resources IS. In finance and accounting, managers use IT systems to forecast
revenues and business activity, to determine the best sources and uses of funds, and to perform audits to ensure that the
organization is fundamentally sound and that all financial reports and documents are accurate. Other types of
organizational information systems are FAIS, Transaction processing systems, enterprise resource planning, office
automation system, management information system, decision support system, expert system, executive
dashboard, supply chain management system, and electronic commerce system. Dashboards are a special form of IS that
support all managers of the organization. They provide rapid access to timely information and direct access to structured
information in the form of reports. Expert systems attempt to duplicate the work of human experts by applying reasoning
capabilities, knowledge, and expertise within a specific domain.

Information system development[edit]

Information technology departments in larger organizations tend to strongly influence the development, use, and
application of information technology in the business. A series of methodologies and processes can be used to develop
and use an information system. Many developers use a systems engineering approach such as the system development
life cycle (SDLC), to systematically develop an information system in stages. The stages of the system development
lifecycle are planning, system analysis and requirements, system design, development, integration and testing,
implementation and operations and maintenance. Recent research aims at enabling [21] and measuring[22] the ongoing,
collective development of such systems within an organization by the entirety of human actors themselves. An information
system can be developed in house (within the organization) or outsourced. This can be accomplished by outsourcing
certain components or the entire system.[23] A specific case is the geographical distribution of the development team
(offshoring, global information system).
A computer-based information system, following a definition of Langefors,[24] is a technologically implemented medium for:

 recording, storing, and disseminating linguistic expressions,

 as well as for drawing conclusions from such expressions.
Geographic information systems, land information systems, and disaster information systems are examples of emerging
information systems, but they can be broadly considered as spatial information systems. System development is done in
stages which include:

 Problem recognition and specification

 Information gathering
 Requirements specification for the new system
 System design
 System construction
 System implementation
 Review and maintenance.[25]
ROLE IMPACT AND IMPORTANCE OF MIS
ROLE OF MANAGEMENT INFORMATION SYSTEM

The role of the MIS in an organization can be compared to the role of heart in the body. The information is
the blood and MIS is the heart. In the body the heart plays the role of supplying pure blood to all the
elements of the body including the brain. The heart work faster and supplies more blood when needed. It
regulates and controls the incoming impure blood, processed it and sends it to the destination in the
quantity needed. It fulfills the needs of blood supply to human body in normal course and also in crisis.

The MIS plays exactly the same role in the organization. The system ensures that an appropriate data is
collected from the various sources, processed and send further to all the needy destinations. The system is
expected to fulfill the information needs of an individual, a group of individuals, the management
functionaries: the managers and top management.

Here are some of the important roles of the MIS:

i. The MIS satisfies the diverse needs through variety of systems such as query system, analysis system,
modeling system and decision support system.

ii. The MIS helps in strategic planning, management control, operational control and transaction
processing. The MIS helps in the clerical personal in the transaction processing and answers the queries
on the data pertaining to the transaction, the status of a particular record and reference on a variety of
documents.

iii. The MIS helps the junior management personnel by providing the operational data for planning,
scheduling and control , and helps them further in decision-making at the operation level to correct an out
of control situation.

iv. The MIS helps the middle management in short term planning, target setting and controlling the
business functions. It is supported by the use of the management tools of planning and control.

v. The MIS helps the top level management in goal setting, strategic planning and evolving the business
plans and their implementation.

vi. The MIS plays the role of information generation, communication, problem identification and helps in the
process of decision-making. The MIS, therefore, plays a vital role in the management, administration and
operation of an organization.

IMPACT OF THE MANAGEMENT INFORMATION SYSTEM

MIS plays a very important role in the organization; it creates an impact on the organization’s functions,
performance and productivity.

The impact of MIS on the functions is in its management with a good MIS supports the management of
marketing, finance, production and personnel becomes more efficient. The tracking and monitoring of the
functional targets becomes easy. The functional managers are informed about the progress, achievements
and shortfalls in the activity and the targets. The manager is kept alert by providing certain information
indicating and probable trends in the various aspects of business. This helps in forecasting and long-term
perspective planning. The manager’s attention is bought to a situation which is expected in nature, inducing
him to take an action or a decision in the matter. Disciplined information reporting system creates structure
database and a knowledge base for all the people in the organization. The information is available in such a
form that it can be used straight away by blending and analysis, saving the manager’s valuable time.

The MIS creates another impact in the organization which relates to the understanding of the business
itself. The MIS begins with the definition of data, entity and its attributes. It uses a dictionary of data, entity
and attributes, respectively, designed for information generation in the organization. Since all the
information systems use the dictionary, there is common understanding of terms and terminology in the
organization bringing clarity in the communication and a similar understanding of an event in the
organization.

The MIS calls for a systematization of the business operations for an effective system design. This leads to
streaming of the operations which complicates the system design. It improves the administration of the
business by bringing a discipline in its operations as everybody is required to follow and use systems and
procedures. This process brings a high degree of professionalism in the business operations.
The goals and objectives of the MIS are the products of business goals and objectives. It helps indirectly to
pull the entire organization in one direction towards the corporate goals and objectives by providing the
relevant information to the organization.

A well designed system with a focus on the manager makes an impact on the managerial efficiency. The
fund of information motivates an enlightened manager to use a variety of tools of the management. It helps
him to resort to such exercises as experimentation and modeling. The use of computers enables him to use
the tools and techniques which are impossible to use manually. The ready-made packages make this task
simple. The impact is on the managerial ability to perform. It improves decision-making ability considerably
high.

Since, the MIS work on the basic system such as transaction processing and database, the drudgery of the
clerical work is transferred to the computerized system, relieving the human mind for better work. It will be
observed that lot of manpower is engaged in this activity in the organization. Seventy (70) percent of the
time is spent in recording, searching, processing and communicating. This MIS has a direct impact on this
overhead. It creates information –based working culture in the organization.

IMPORTANCE OF MIS
It goes without saying that all managerial functions are performed through decision-making; for taking
rational decision, timely and reliable information is essential and is procured through a logical and well
structured method of information collecting, processing and disseminating to decision makers. Such a
method in the field of management is widely known as MIS. In today’s world of ever increasing complexities
of business as well as business organization, in order to service and grow , must have a properly planned,
analyzed, designed and maintained MIS so that it provides timely, reliable and useful information to enable
the management to take speedy and rational decisions.

MIS has assumed all the more important role in today’s environment because a manager has to take
decisions under two main challenges:

First, because of the liberalization and globalization, in which organizations are required to compete not
locally but globally, a manager has to take quick decisions, otherwise his business will be taken away by
his competitors. This has further enhanced the necessity for such a system.

Second, in this information age wherein information is doubling up every two or three years, a manager has
to process a large voluminous data; failing which he may end up taking a strong decision that may prove to
be very costly to the company.

In such a situation managers must be equipped with some tools or a system, which can assist them in their
challenging role of decision-making. It is because of the above cited reasons, that today MIS is considered
to be of permanent importance, sometimes regarded as the name centre of an organization. Such system
assist decision makers in organizations by providing information at various stages of decision making and
thus greatly help the organizations to achieve their predetermined goals and objectives. On the other hand,
the MIS which is not adequately planned for analyzed, designed, implemented or is poorly maintained may
provide developed inaccurate, irrelevant or obsolete information which may prove fatal for the organization.
In other words, organizations today just cannot survive and grow without properly planned, designed,
implemented and maintained MIS. It has been well understood that MIS enables even small organizations
to more than offset the economies of scale enjoyed by their bigger competitors and thus helps in providing
a competitive edge over other organizations.

Introduction Role and impact management information systems (MIS)

The society has changed significantly from the barbarian to the agrarian society, from agrarian to the
industrial society and from the industrial society to a society governed by the service sector. This structural
transformation has brought about obvious changes in the way people think. We are all living, not in
industrial society or an agrarian but an Information Society. In fact, we refer to the present times as
Information Era or the IT Age. Underneath this is a tacit recognition of the fact that not since the arrival of
the introduction of the telephone, and the automobile an invention had such wide-spread impact on our
society as the computer, which has ushered in the Information Era.

If individual life has been changed by information, it has profoundly affected business organisations. We
are living in an era characterized by globalization and liberalization. Far- reaching changes across borders
are sweeping nations, and we are all getting engulfed in a boundaryless global village. However, this
emerging scene also requires people to develop the ability of “thinking globally and acting locally” which is
now also being referred to as “globalization.” Business operations have become, and are going to become,
more and more complex and competitive.

The increased complexities can be broadly categorized into business complexities and management
complexities. The increased business complexities could be attributed to:

1. Technological revolution
2. Explosion of information
3. Changes in product/product life cycle
4. Research and development

The increased management complexities could be assigned to:

1. Management science technologies

2. Decision-making
3. The onset of computers
4. Information feedback system

These complexities have in turn necessitated:

1. Strategic planning
2. processing/Obtaining/storing, retrieving and using information for decision-making
3. Devising operational plans
4. The setting of objectives (parameters)

Hence, information is today seen, accepted and recognized as an invaluable source to ensure effective and
efficient decision-making, thereby providing optimality of results leading to survival and prosperity of
business organisations. Information is a resource because It is scarce, It has a cost, and It has alternative
uses.

It must, however, be remembered that unlike other resources, which can be used only once, information
can repeatedly be utilized. It is also not tangible. A decision-maker must keep these aspects in mind. Many
times, we do not have the information we want, and then there is a dilemma. The dilemma is beautifully
expressed in the following words, generally referred to as Finagle’s Law of Information.

One important aspect of the difference between MIS and routine data processing is the capability to provide
decision-making support, planning and analysis. An MIS orientation means users have access to decision
models and methods for querying the database on an ad hoc basis; the database is also an essential part
of conventional transaction processing and reporting. In MIS, information is utilized to improve decision-
making and achieve improved organizational effectiveness.

CONCEPT OF MIS

MIS is the system, which makes available the right information to the right person, at the right place, at the
right time, in the right form and at the right cost. There are, of course, various definitions of MIS. Let us look
at some of them.

MIS is a multicultural user-machine system for providing information to support decision-making operations,
management, and functions in an organization. The system utilizes computer software and hardware,
models for analysis/manual procedures, planning, control and decision-making and database. A
combination of human and computer based resources, which result in collection, storage, retrieval,
communication and use of data for the purpose of efficient management of operations and for business
planning.”

A formal MIS system should be able to take care of the following functions:

•Handling of large data.

• Communication of the information to the user on time.
• Complex processing of data and multidimensional analysis, quick search and retrieval.
• Confirmation of the validity of data and transaction.
• Mass storage.
• Fulfilling the changing needs of information.

The management information system uses computers and communication technology to deal with the
above mentioned functions.

Role of MIS

MIS has become necessary due to increased business and management complexities. These complexities
demand not only quantitative but also qualitative decision-making. All managers, as we know, have to take
decisions under conditions of risk, certainty or uncertainty. A good manager/decision maker is one who
minimizes if not eliminates, the elements of risk and uncertainty in decision-making. MIS is helpful in doing
precisely this. Hence, MIS is required to enable managers to take qualitative decisions and ensure success
for their respective organizations. MIS also enables the managers to minimize the element of surprise.
Again, MIS enables decision-makers to come out with the appropriate response to a business situation.
Thus, MIS enables policy makers to give either a reactive or a proactive response. As the decisions are
also futuristic, MIS facilitates pro-active decision-making it allows the managers/organizations to be ready
for tomorrow. MIS, thereby, can act or function both as an instrument of defense as well as a weapon for
the offense, with strong strategic planning base.

Impact of MIS

MIS creates an information-based work culture in an organization. Since MIS plays a critical role in the
organization, it creates an impact on the organizational functioning, performance, and productivity. MIS
changes the management function of an organization. With a good MIS support, the management of
marketing, finance, production and personnel can become more efficient. The tracking and monitoring of
the functional targets become comfortable. The functional managers are informed about the progress,
achievements, and shortfalls in the activity and targets. The manager can alter certain decisions with the
help of information indicating the probable trends in various aspects of business. This helps in forecasting
and long-term perspective planning. The manager’s attention is brought to a situation, which is exceptional
in nature, inducing him to take action or a decision in the matter. A disciplined information reporting system
creates a structured database and a knowledge base for all the people in the organization. The information
is available in such a form that it can be used straight away or by blending and analysis, saving the
manager’s valuable time.

MIS affects the organization by making it convenient to understand the business better. MIS begins with the
definition of data, entity, and attributes respectively, designed for information generation in the organization.
Since all information systems use the dictionary, understanding terms and terminology becomes easier,
thereby bringing clarity in communication and understanding of an event in the organization. MIS calls for
the systematization of the business operations for an efficient system design. This leads to streamlining of
the operations. It improves the administration of the firm by bringing a discipline in its operations, as
everybody is required to follow and use the systems and the procedure. The process brings a high degree
of professionalism in the business objects. Since the goals and objectives of MIS are the product of
business goals and objectives, it helps indirectly to pull the entire organisation towards the corporate goals
and objectives by providing relevant information to the people of the organisation. A well-designed system
with a focus on the managers makes an impact on managerial efficiency. The use of computers helps
managers to use the tools and techniques, which are impossible to use manually. The ready-made
packages make this task simpler. MIS positively impacts the managerial ability to perform. It also improves
the decision-making ability considerably

MIS - A Support to the Management

 
The management process is executed through a variety of decisions taken at each step of planning, organizing, staffing,
directing coordinating and control. If the management is able to spell out the decisions required to be taken, the MIS can be
designed suitably.  The decisions required to be taken in these steps are tabulated in Table below.
 
Table: Decisions in Management
 
Steps in Management Decision
Planning A selection from various alternatives - strategies, resources, methods, etc.
Organization A selection of a combination out of several combinations of the goals, people,
resources, method and authority.
Staffing Providing a proper manpower complement.
Directing Choosing a method from the various methods of directing the efforts in the
organization.
Coordinating Choice of the tools and the techniques for coordinating the efforts for optimum
results.
Controlling A selection of the exceptional conditions and the decision guidelines
 
The objective of the MIS is to provide information for a decision support in the process of management. It should help in such a
way that the business goals are achieved in the most efficient manner.  Since the decision making is not restricted to a particular
level, the MIS is expected to support all the levels of the management in conducting the business operations.  Unless the MIS
becomes a management aid, it is not useful to the organization.

MIS support Managerial Functions

Managers have always managed information by some method because ‘Information is
Power’. In the past, each operational department namely finance, marketing, production, and
personnel maintained separate information systems to satisfy its particular needs. The problem
was that each system collected, stored, and retrieved some of the same data. The data of each
department were not consistent or compatible with other departments and the systems were costly
and the information was inadequate.

The need for a comprehensive information system became evident. The result was the evolution of
the concept of management information systems (MIS). MIS can be defined generally as an
integrated, structured complex of people, machines, and procedures for supplying relevant data
(information) from both external and internal sources to aid managers for planning, staffing,
communicating, controlling, and decision making. Increasingly, the concept has become dependent
on a computer based network of collecting processing, storing, transmitting, and supplying outputs
to the proper managers at the correct time.

The heart of the integration of information needed in MIS is a data base. A data base is an
organized repository of the organization’s information resources mainly internal and possibly
containing some external data including raw data and procedures. The idea is that the data base
consists of most of the data available in the organization and can be accessed by different
managers for their varied uses. One manager may access the data base for planning, another
manager may need data for controlling, and generally all managers may need to access the data
base for decision making.

The rapid technological developments and the availability of varied computer hardware have been
accompanied by the improved availability of sophisticated software systems. This software has
served as the interface between the complicated computer hardware and the non technical
managers who needs the information contained in the computer. Yet managers still need to be
knowledgeable of the improved potentials of new computer hardware and software, so that they
gain the maximum service from these electronic wizards.

One of the powerful and probably more easily used concepts is that of decision support system
(DSS). Although DSS can be viewed as an application within MIS for supporting decisions, it has
become more powerful and useful to managers because of the following developments:

Interactive computing: a dialogue between the manager and the system through questions and
responses.

User-friendly data base languages and hardware.

Distributed data processing – where at least some portion of the computing function is
decentralized via remote terminals.

The manager’s office of the future has been predicted to be built around executive terminals,
or work-stations. These managerial work stations are multifunction, on-line terminals connected to
a companywide information network.

Designing a management information system:

With the rapid development of computer technology, systems analysts conceptualized ideal and
total information systems. It became clear, however, that information systems are easier to
conceptualize than to implement. Failures developed from purchasing high technology hardware
and attempting to make use of it without preliminary study. Successful MIS is the result of a
deliberate step-by-step process, not sudden leap. We shall outline these design stages and supply
some guidelines for the design of a management information system.

The logical stages for developing an MIS are:

System analysis: Make a preliminary survey and analyze the resent system and its problem. This
first step seeks to orient the system analysts concerning where the organization is relative to
sufficient information before attempting to plan where it will go.

Construct a conceptual design: At this stage, the designer must discover the actual needs of each
manager. It is here that tradeoffs among competing needs and budget resources are measured
and agreed upon. The users and the designer should participate as a group at this point. One
approach is to locate the critical success factors (CSF) or the limited areas for which information is
needed if the organization is to competitively successful. The design should satisfy the routine
information requirements that each worker needs to perform a job

Information System for Business Effectiveness

Introduction
In this digital age with fierce competition, it is essential that managers within organization are completely aware and receptive to
evolving changes. One the quickest evolving change is within information systems. This change in information systems is
contributed to advances in computing and information technology.

Applying a concept that information system is strictly under the purview of IT department can lead to adverse situation for the
company. Therefore, it is essential for organization to recognize information systems contribution in business effectiveness.

Systems and Innovation Opportunities

Development in information systems has brought opportunities but also threats. The onus is on the organization to identify
opportunity and implement it. Organization needs to develop strategies, which can best utilize information systems to increase
overall productivity.

The most common practice with regards to information systems is automation. Though automation is helpful, innovation using
information systems give the organization a competitive edge.

Systems and Customer Delight

Organizations are fully aware that proliferation of information systems has reduced product life cycle, reduced margin and
brought in new products. In such scenario customer satisfaction alone will not suffice, organization needs to strive for customer
delight. Information systems with data warehousing and analytics capability can help organization collect customer feedback and
develop products, which exceed customer expectation. This customer delight will lead to a loyal customer base and brand
ambassador.

Systems and Organizational Productivity

Organizations require different types of information systems to mitigate distinctive process and requirements. Efficient business
transaction systems make organization productive. Business transaction systems ensure that routine process are captured and
acted upon effectively, for example, sales transaction, cash transaction, payroll, etc.

Further, information systems are required for executive decision. Top leadership requires precise internal as well as external
information to devise a strategy for organization. Decision support systems are designed to execute this exact function.

Business transaction systems and executive decision support systems contribute to overall organizational productivity.
System and Workers Productivity
Information systems have facilitated the increase in workers’ productivity. With introduction of email, video conferencing and
shared white board collaboration across organization and departments have increased. This increased collaboration ensures
smooth execution and implementation of various projects across geographies and locations.

Information systems as a Value Add for Organization

Organization use information systems to achieve its various strategy as well as short-term and long-term goals. Development of
information systems was to improve productivity and business effectiveness of organization. Success of information systems is
highly dependent on the prevalent organization structure, management style and overall organization environment.

With correct development, deployment and usage of information systems, organization can achieve lower costs, improved
productivity, growth in top-line as well as the bottom-line and competitive advantage in the market.

The readiness of workers into accepting the information systems is the key in realizing the full potential of them.

Development and deployment of information systems have revolutionized the way business is conducted. It has contributed to business
effectiveness and increased in productivity.

Information Technology and Business

Intelligence
Introduction
After 1990s there was a major transformation in the commercial world. All the organizations across industry sectors have started
using information technologies to maximize their productivity and profitability. Organizations started using technologies like
mainframes, PCs, telecommunications and the internet along with the goods and services which they offered to the consumers.
This process has become the backbone of evolution of information technology. There has been manifold increase in investments
in information technology sector.

A driving force of productivity:

The US economy has seen impressive growth in Gross Domestic Product in the past few years and it is in a state of expansion.
There has been increased demand for labour and low inflation. The lack of increase in price has also flummoxed many
economists. The traditional theories suggest that whenever there is growth in economy and decline in unemployment rate, there
is an increased probability of price pressures.

“Productivity” means the process of utilizing the productive inputs to generate output. If all the input resources like men,
machine/technology and materials are effectively used, then the costs can be better managed and the organizations can offer
goods and services at moderate prices to the end users.

By combining the state-of-art information technology with business strategies, organizations can achieve increased productivity.
Business strategy addresses various like identifying the target markets, consumer preferences and managing the process by
which goods and services are produced/delivered to the end user.

Information technology makes it possible for the business leaders and decision makers to devise various business strategies
based on economic theories. This is done with the flow of information to decision makers and employees throughout an
organization. By implementing effective IT, the following operations can be easily analyzed by the managers. They are:
  Production
 Marketing/advertising
 Customer relationship management
 Distribution
 Finance
 Human Resource
 Telecomm and network processes

Organizations have already started experiencing the enhancement of business efficiency through the use of information
technology. Significant breakthroughs have also happened in information technology like increase in speed and memory of
computers. This in-turn has opened the doors for high-powered, state-of-art software applications. The latest developments in
the telecommunications technology is a value addition to the internet. The combination of all these technology has created a vast
information network and this has become information pulse of an organization.

What is Business Intelligence ?

Business Intelligence (BI) refers to the tools and technique which is used to convert raw data into meaningful and useful
information. Using these techniques, large amount of unstructured data is handled to identify and create new business
opportunities.

The main aim of business intelligence is to make the user easily interpret the data. Based on the insights provided by tools of
business intelligence, organizations gain competitive market advantage and long-term stability.

When these unstructured or raw data is transformed into value-added information, it increases the knowledge of business to
individuals of all categories in an enterprise. These data are used by decision makers to implement various business strategies
based on economic theory. Resources also can be easily managed to cater the needs of the ultimate consumer.

Functions of Business Intelligence

Common functions of BI are:-

1. Reporting
2. Online analytical processing
3. Analytics
4. Data mining
5. Process mining
6. Business performance management
7. Predictive analysis; &
8. Prescriptive analysis

MIS and System Concepts

 
The MIS is an arrangement of data processing and information systems in an orderly manner to support the management in
achieving the business objectives. The MIS boundaries cross the limits of the organization and draw the data from the source
external to the organization.  MIS follows a generalized model of a system as stipulated into the theory and performs on the
principle of feedback and control. It works on the principle of control by exception.
 
MIS is designed to provide the information which is exceptional in nature form the point of view of business. The exceptions
could be abnormal events, surprising developments, shocking news, or something that was not consistent with the
exceptions.  The MIS must catch all such points and reports then to the concerned management. It must, therefore, recognize all
such possible points and provide a measure for comparison with the actual performance. Unless such a feature is included, the
MIS will be supplying merely data and not information.
 
The MIS, initially, concentrates on the quality of in put satisfying the parameters, viz., impartiality, validity, reliability, consistency
and age.  A large amount of system effort is spent in this area to ensure the quality of the input.
 
The MIS provides a system for data processing and data analysis.  It uses a number of applications and business models,
operational research models and applications and business models, operational research models and application packages to
produce the information.  The MIS has a provision to display the information and also print it in a report format.  It also provides a
facility to store the intermediate results, which are used in a number of other systems. The MIS is a combination of the
deterministic and the closed systems, and the probabilistic and the open systems.
 
By nature, the MIS is an open system interfacing continuously with the internal and the external environment and is self
organizing to meet the ever increasing and changing information needs of the organization. 

What is System in MIS?

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Introduction
In the Management Information Systems, the concept of the ‘Systems’ play a very essential and a defining
role and it can be surely referred to as the backbone of the management Information Systems. The major
concept of the systems involves basically the pattern or a way in which one thinks about managing
optimally. In management Information Systems, it acts as the framework for the visualization and the
analysation of the internal as well as the external environments and the factors affect these particular
environments in a very integrated way or pattern.
The word systems refer to as the arrangement or the way of organizing some specific things in a particular
way. So now a system can be defined as the regularly interacting interdependent group of the items
ultimately leading to the formation of a united whole. Particularly for the management Information Systems,
a system consists of certain specific set of elements that can be identified as the belonging together
because of the common purpose, goal or the objective.

The features defining the system usually act as its boundaries, so it can be said that the system is inside
the boundary and the environment is outside the boundary.

Each system is further made of the sub systems, which further consist of the other subsystems and one
very important point to be kept in mind here is that all of these subsystems are defined specifically by its
boundaries. Each subsystem itself actually acts as the system. The Interconnections and the various
interactions that generally take place between the various subsystems are referred to as the interfaces.

These interfaces are generally known to occur at the boundary and usually take the form of the inputs and
the outputs. A system is not at all arranged randomly but is arranged with the help of certain logic, which
are governed by the rules, the regulations, the principles, the policies etc. Such an arrangement of a
system is generally influenced by the objective which the system always desires to achieve.

In the management Information Systems, the concept of the system is very much important and one should
have an in depth knowledge of it as with the help of this, one can easily have a look at the individual
elements, subsystems in the larger perspective of the whole system leading to the optimal solutions and
the synergy.

There are different types of the system and are generally found to be present in all the fields of the
endeavor. There are systems like the social system, political system, economic system etc.
All the Systems must possess the following –
1. Goals
2. Components
3. Subsystems
4. Behavior
5. Boundaries
6. Life cycle
What are the Characteristics of the System

A System must be having or possessing the following characteristics –

1. System receives inputs with the help of the information, energy or the materials.
2. System processes inputs and also produces outputs or the results.
3. System has a particular structure.
4. System is very much interdependent in the nature.
5. System has an objective orientation.

Explain various types of Systems in MIS?

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Types of the System in the Management Information Systems

1. Conceptual Systems
a. Are theoretical and explanatory in the nature.
b. Provide the much needed clarification.
c. Provide theoretical framework for which there may or may not be any real life counterpart.
d. E.g. of such systems can be philosophy, theology etc.

2. Empirical Systems
a. Are very practical, specific and also very operational in the nature.
b. Can be based on the conceptual system.
c. Examination system, surgery act as very good examples of the empirical systems.

3. Open Systems
a. Involve continuous interaction with the environment.
b. So exchanges the information, material, energy with the environment.
c. Is open and also self organizing in the nature.
d. Is also adoptive or adaptive to the changing environment as it is flexible.

4. Closed Systems
a. Shuns any kind of the exchange with the environment.
b. Is rigid in nature.
c. Is not at all amenable to the change.
d. Is also self contained.
e. Is somewhat isolated in the nature.
f. Is having a well defined boundary.
g. Is not at all adaptive in the nature.

5. Natural Systems
a. Such Systems exist and also abound in the nature.
b. Are also not at all the results of the human endeavors.
c. Rivers, mountains, minerals etc. are the major examples of the natural Systems.

6. Artificial Systems
a. Are manufactured (man made).
b. Examples of such Systems are dams, canals, roads, machines, factories etc.

7. Probabilistic Systems
a. Based on the predictability of the behavior or the outcome.
8. Deterministic Systems
a. In such Systems, the interaction of the elements is known.
b. As the behavior of the elements is pre determined, it becomes possible to work upon the reaction well in
the advance.

Digital firm
The Digital Firm is an organization that has enabled core business relationships through digital networks. These digital networks are
supported by enterprise class technology platforms that have been leveraged within an organization to support critical business functions
and services. Some examples of these technology platforms are Customer Relationship Management (CRM), Supply Chain
Management (SCM), Enterprise Resource Planning (ERP), Knowledge Management System (KMS), Enterprise Content
Management (ECM), and Warehouse Management System (WMS) among others. The purpose of these technology platforms is to
digitally enable seamless integration and information exchange within the organization to employees and outside the organization to
customers, suppliers, and other business partners

The term "Digital Firm" originated, as a concept in a series of Management Information Systems (MIS) books authored
by Kenneth C. Laudon [1] and it provides a new way to describe organizations that operate differently than the
traditional brick and mortar business as a result of broad sweeping changes in technology and global markets. Digital firms
place an emphasis on the digitization of business processes and services through sophisticated technology and
information systems. These information systems create opportunities for digital firms to decentralize operations, accelerate
market readiness and responsiveness, enhance customer interactions, as well as increase efficiencies across a variety of
business functions.

Acceleration of technology adoption[edit]

Technology adoption has been increasing as digital firms continually look to achieve greater levels cost savings,
competitive advantage, and operational performance optimization. As organizations adopt technology, the internal appetite
for additional technologies increases and in some cases accelerates. [2] This acceleration of technology adoption by digital
firms creates a "digital divide"[2] as emerging technology is absorbed at varying rates across organizations. This technology
divergence can affect competitive dynamics in the market place between firms that achieve operational benefits from the
technology and firms which have yet to adapt.
While the growth of new technology consumption is not uniform across organizations, the trend for business-driven
investment in technology across all markets has and continues to increase. During the span of 1990 to 2006, the gross
U.S. domestic investment in information and communications technology, as measured by the U.S. Census Bureau,
increased by 170%.[3]
The market for Enterprise Resource Planning (ERP) systems and other packaged applications started to grow
substantially during the 90's to the point that the ERP market alone accounts for approximately $25 billion. [4] According to
surveys conducted in 2002, nearly "75% of global Fortune 1000 firms had implemented SAP’s ERP suite". [4]

Advantages[edit]
Through digital networks and information systems, the digital firm is able to operate core business services and functions
continuously and more efficiently. This digital enablement of business processes creates highly dynamic information
systems allowing for more efficient and productive management of an organization.
Additionally, digital enablement of core business functions and services provides an organization with opportunities to:

 Operate business continuously ("Time Shifting") [1]

 Operate business in a global workplace ("Space Shifting") [1]
 Adapt business strategies to meet market demands [5]
 Create business value from technology investments [6]
 Drive efficiency improvements in inventory and supply chain [5]
 Enhance the management of customer relationships [7]
 Improve organizational productivity [4]

Effects on organizational performance[edit]

Technology and information systems serve many critical roles in a digital firm by providing technology-driven capabilities
that increase operational performance. For example, digital networks and information systems allow organizations to
connect and integrate supply chains in ways that are real-time, uninterrupted and highly responsive to market conditions.
Another example of an information system that can increase an organization's performance awareness and management
capabilities is a Real-Time Business Intelligence (RTBI) system. A RTBI system can provide a highly responsive and
strategic decision support platform for an organization to analyze operational events as they occur. RTBI systems often
work closely with Organizational Risk Management (ORM) systems in this capacity to increase capabilities around
monitoring operational performance and assessing operational risks. These types of information systems can increase an
organization's capabilities to effectively manage performance and productivity.
The three main enterprise information systems that can positively affect an organization's performance and productivity
are:

Enterprise Resource Planning (ERP)[edit]

ERP deployments can be complex and require a significant shift in business operations for an organization but the benefits
can be substantial.
After implementation of an ERP system within an organization there are measurable performance and productivity gains
that can be directly correlated to the ERP system go-live event. [4] This study conducted a detailed analysis of the ERP data
produced and found that there was a direct causal relationship between ERP systems and performance gains in an
organization.[4]
Organizations that deploy ERP systems typically, based on performance and productivity gains, also implement both of the
following enterprise platforms as well.[4]

Customer Relationship Management (CRM)[edit]

Organizations leverage CRM systems to improve the overall management of their relationships with customers. CRM
systems operate as enterprise platforms that provide digital firms with opportunities to closely manage all aspects of
interactions with customers through customer-oriented business processes. [7]
Organizations which implement CRM systems may encounter some lag time until the CRM productivity affects are fully
realized in the firm based on studies.[7] However, the lag effects are difficult to measure and based in part on the
organization's ability to leverage the new CRM system and adapt to the changes in business operations as a result. [7]

Supply Chain Management (SCM)[edit]

Studies of organizations that implemented SCM systems to improve supply chain management capabilities found that
those systems had a significant impact on productivity and performance within the organization. [4] Additionally, the
implementation of SCM and CRM systems differed from an ERP implementation in that organizational performance could
be directly correlated "with both the initial purchase and go-live event". [4]
SCM and CRM systems are often viewed as "extended enterprise systems" due to the way that they integrate with ERP
systems and the benefits that they bring to organizations. [4]
UNIT 2

Planning in 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.
Strategy for Plan Achievement : The designer has to take a number of strategic decisions for the
achievement of MIS goals and objectives. They are
d) Development Strategy : Ex. an online, batch , a real time.
e) System Development Strategy : Designer selects an approach to system development like operational
verses functional, accounting verses analysis.
f) Resources for the Development : Designer has to select resources. Resources can be in-house verses
external, customized or use of package.
g) 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 modeling 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.
 

The Role of Management Information Systems in Decision-Making

Management information systems can help you make valid decisions by providing accurate and up-to-date information and performing
analytic functions. You have to make sure the management information system you choose can work with the information formats
available in your company and has the features you need. Suitable management information systems can structure the basic data
available from your company operations and records into reports to present you with guidance for your decisions.

Information from Company Operations

When you base your decisions on data available from management information systems, they reflect information that

comes from the operations of your company. Management information systems take data generated by the working level

and organize it into useful formats. Management information systems typically contain sales figures, expenses,

investments and workforce data. If you need to know how much profit your company has made each year for the past five

years to make a decision, management information systems can provide accurate reports giving you that information.

Capability to Run Scenarios

The capability to run scenarios is a key decision-making tool. Some management information systems have this feature

built in, while others can provide the information required for running scenarios on other applications, such as

spreadsheets. Your decision is influenced by what happens if you decide a certain way. What-if scenarios show you how

different variables change when you make a decision.

You can enter reduced staff levels or increased promotion budgets and see what happens to revenue, expenses and profit

for different levels of cuts or increases. Management information systems systems play a critical role in making realistic

scenarios possible.

Projections to Assist in Decision Making

Any decisions you make result in changes in the projected company results and may require modifications to your

business strategy and overall goals. Management information systems either have trend analysis built in or can provide

information that lets you carry out such an analysis. Typical business strategies include projections for all fundamental

operating results.

A trend analysis allows you to show what these results would be in the current situation and how they will change once you

have implemented the decisions you have taken. The new values form the basis of your strategic approach going forward.
Implementation and Evaluation

While you make your decisions with specific goals in mind and have the documentation from management information

systems and trend analysis to support your expectations, you have to track company results to make sure they develop as

planned. Management information systems give you the data you need to determine whether your decisions have had the

desired effect, or whether you have to take corrective action to reach your goals. If specific results are not on track, you

can use management information systems to evaluate the situation and decide to take additional measures if necessary.

4 Main Stages of Traditional MIS Planning (With Diagram)

The stages are: 1. Strategic Planning 2. Organisational Information Requirement

Analysis (OIRA) 3. Resource Allocation 4. Project Planning.
Traditional MIS Planning Stage # 1. Strategic Planning:
In the beginning, it is difficult to align MIS strategic planning with overall organizational
planning.

To accomplish this, the organization must assess organizational objectives, strategies

sets MIS mission and the organizational environment sets MIS policies, objectives
and strategies.

Traditional MIS Planning Stage # 2. Organisational Information Requirement Analysis

(OIRA):
The first phase of OIRA consists of assessing current and projected information
needs to support decision making and operations of the organization. The second
phase of OIRA consists of assembling a master development plan.

Traditional MIS Planning Stage # 3. Resource Allocation:

Resource allocation consists of developing hardware, software, data communications,
facilities, personnel and financial plans needed to execute the master development
plan defined in the OIRA stage.

Traditional MIS Planning Stage # 4. Project Planning:

Project planning consists of evaluating the project in terms of requirements and difficulty. Time,
cost and completion estimates must be developed and checkpoints to be used for evaluating
project progress must be defined.

PLANNING, DESIGNING AND IMPLEMENTATION OF MIS

Planning of Information Systems

a) Development of Long Range Plans of the MIS

Many organizations have purchased computers for data processing and for meeting the statutory requirements of filing the
returns and reports to the Government. Computers are used mainly for computing and accounting business transactions and
have not been considered as a tool for information processing. The organizations have invested in computers and expanded its
use by adding more or bigger computers to take care of the numerous transactions in the business. In this approach, the
information processing function of the computers in the organization never got its due regard as an important asset to the
organization. In fact, this function is misinterpreted as data processing for expeditious generation of reports and returns, and not
as information processing for management actions and decisions. However, the scene has been changing since the late eighties
when the computers became more versatile, in the function of Storage, Communications, Intelligence, and Language. The
computer technology is so advanced that the barriers of storage, distance understanding of language and speed are broken.
The computers have become user-friendly. They can communicate to any distance and hare data, information and physical
resources of other computers. Computers can now be used as a tool for information processing and communication. It can be
used for storing a large database or knowledgebase. It can be used for knowing the current status of any aspect of the business
due to its online real time processing capability. With the advancement of computer technology more popularly known as
information technology, it is now possible to recognize information as a valuable resource like money and capacity. It is
necessary to link its acquisition, storage, use, and disposal as per the business needs for meeting the business objectives. Such
a broad-based activity can be executed only when it is conceived as a system. This system should deal with management
information and not with data processing alone. It should provide support for management planning, decision making, and action.
It should support the needs of the lower management as well as that of the top management. It should satisfy the needs of
different people in the organization at different levels having varying managerial capabilities. It should provide support to the
changing needs of business management. In short, we need a Management Information System flexible enough to deal with the
changing information needs of the organization. It should be conceived as an open system continuously interacting with the
business environment with a built-in mechanism to provide the desired information as per the new requirements of the
management. The designing of such an open system is a complex task. It can be achieved only if the MIS is planned, keeping in
view, the plan of the business management of the organization. The plan of MIS is consistent with the business plan of the
organization. The information needs for the implementation of the business plan should find a place in the MIS. To ensure such
an alignment possibility, it is necessary that the business plan – strategic or otherwise, states the information needs. The
information needs are then traced to the source data and the systems in the organization which generate such data. The plan of
development of the MIS is linked with the steps of the implementation in a business development plan. The system of information
generation is so planned that strategic information is provided for the strategic planning, control information is provided for a
short term planning and execution. The details of information are provided to the operations management to assess the status of
an activity and to find ways to make up, if necessary. Once the management needs are translated into information needs, it is left
to the designer to evolve a plan of MIS development and implementation.

 b) Contents of the MIS Plan

A long-range MIS plan provides direction for the development of the systems and provides a basis for achieving the specific
targets or tasks against a time frame. The plan would have contents which will be dealt with by the designer under support from
the top management.

C) MIS Goals and Objectives

It is necessary to develop the goals and objectives for the MIS which will support the business goals. The MIS goals and
objectives will consider management philosophy, policy constraints, business risks, internal and external environment of the
organization and the business. The goals and the objectives of the MIS would be so stated that they can be measured. The
typical statements of the goals are as under:
 It should provide online information on the stock, markets and the accounts balances.
o The query processing should not exceed more than three seconds.
o The focus of the system will be on the end user computing and access facilities.
Such statements of the goals and objectives enable the designer to set the direction and design
implementation strategies for the MIS Plan.

Strategy for the Plan Achievement

The designer has to take a number of strategic decisions for the achievement of the MIS goals and
objectives. They are:
a) Development strategy: An online, a batch, a real-time technology platform.
b) System development strategy: Any approach to the system development – Operational vs.
Functional; Accounting vs. Analysis; Database vs. Conventional approach; Distributed vs.
Decentralized processing; One Database vs. multiple databases SSAD vs. OOT
c) Resources for system development: In house vs. external, customized development vs. the use
of packages.
d) Manpower composition: Analyst, programmer skills and know-how.
The Architecture of the MIS
The architecture of the MIS plan provides a system structure and its input, output, and linkages. It
also provides a way to handle the systems or subsystems by way of simplification, coupling, and
decoupling of subsystems. It spells out in detail the subsystems from the data entry to processing,
analysis to modeling, and storage to printing.
The System Development Schedule
A schedule is made for the development of the system. While preparing the schedule due
consideration is given to the importance of the system in the overall information requirement. Due
regard is also given to logical system development. For example, it is necessary to develop the
accounting system first and then the analysis. Further, unless the systems are fully developed their
integration is not possible. This development schedule is to be weighed against the time scale for
achieving certain information requirement linked to a business plan. If these are not fully met, it is
necessary to revise the time schedule and also the development schedule, whenever necessary.
Hardware and Software Plan
Giving due regard 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 investment starting from the lower configuration of hardware
going over to higher as development takes place. The process is to match the technical decisions
with financial decisions. The system development schedule is linked with the information
requirements which in turn, are linked with the goals and objectives of the business. The selection
of the architecture, the approach to the information system development and the choice of
hardware and software are the strategic decisions in the design and development of the MIS in the
organization. The organizations which do not care to take proper decisions in these areas suffer
from overinvestment, underutilization and are not able to meet the critical information requirements.
It is important to note the following points:
1. The organization’s strategic plan should be the basis for the MIS strategic plan.
2. The information system development schedule should match with the implementation
schedule of the business plan.
3. The choice of information technology is a strategic business decision and not a financial
decision.

Development of Information Systems

a) Development and Implementation of the MIS

Once the plan of MIS is made, the development of the MIS calls for determining the strategy of
development is discussed earlier, the plan consists of various systems and subsystems. The
development strategy determines where to begin and in what sequence the development can take
place with the sole objective of assuring the information support. The choice of the system or the
subsystem depends on its position in the total MIS plan, the size of the system, the user's
understanding of the systems and the complexity and its interface with other systems. The
designer first develops systems independently and starts integrating them with other systems,
enlarging the system scope and meeting the varying information needs. Determining the position of
the system in the MIS is easy. The real problem is the degree of structure and formalization in the
system and procedures which determine the timing and duration of development of the system.
Higher the degree of structured and formalization, greater is the stabilization of the rules, the
procedures, decision-making and the understanding of the overall business activity. Here, it is
observed that the user's and the designer's interaction is smooth, and their needs are clearly
understood and respected mutually. The development becomes a method of approach with
certainty in the input process and outputs.
b) Prototype Approach
When the system is complex, the development strategy is Prototyping of the System. Prototyping is
a process of progressively ascertaining the information needs, developing a methodology, trying it
out on a smaller scale with respect to the data and the complexity, ensuring that it satisfies the
needs of the users, and assess the problems of development and implementation.
This process, therefore, identifies the problem areas, inadequacies in the prototype visa is the
fulfillment of the information needs. The designer then takes steps to remove the inadequacies.
This may call upon changing the prototype of the system, questioning the information needs,
streamlining the operational systems and procedures and move user interaction.
In the prototyping approach, the designer's task becomes difficult, when there are multiple users of
the same system and the inputs they use are used by some other users as well. For example, a lot
of input data comes from the purchasing department, which is used in accounts and inventory
management.
The attitudes of various users and their role as the originators of the data need to be developed
with a high degree of positivism. It requires, of all personnel, to appreciate that the information is a
corporate resource, and all have to contribute as per the designated role by the designer to fulfill
the corporate information needs. When it comes to information the functional, the departmental, the
personal boundaries do not exist. This call upon each individual to comply with the design needs
and provide without fail the necessary data inputs whenever required as per the specification
discussed and finalized by the designer.
Bringing the multiple users on the same platform and changing their attitudes toward information,
as a corporate resource, is the managerial task of the system designer. The qualification,
experience, knowledge, of the state of art, and an understanding of the corporate business, helps
considerably, in overcoming the problem of changing the attitudes of the multiple users and the
originators of the data.
c) Life Cycle Approach
There are many systems or subsystems in the MIS which have a life cycle, that is, they have birth
and death. Their emergence may be sudden or may be a part of the business need, and they are
very much structured and rule-based. They have 100% clarity of inputs and their sources, a definite
set of outputs in terms of the contents and formats. These details more or less remain static from
the day the system emerges and remains in that static mode for a long time. Minor modifications or
changes do occur but they are not significant in terms of handling either by the designer or the user
of the system. Such systems, therefore, have a life and they can be developed in a systematic
manner and can be reviewed after a year or two, for significant modification, if any.

Examples of such systems are payroll, share accounting, basic financial accounting, finished
goods accounting and dispatching, order processing, and so on. These systems have a fairly long
duration of survival and they contribute in a big way as sources of data to the Corporate MIS.
Therefore, their role is important and needs to be designed from the viewpoint as an interface to
the Corporate MIS.

d) Implementation of the Management Information System

The implementation of the system is a management process. It brings about organizational
change; It affects people and changes their work style. The process evokes a behavior response
which could be either favorable or unfavorable depending upon the strategy of system
implementation.
In the process of implementation, the system designer acts as a change agent or a catalyst. For a
successful implementation, he has to handle the human factors carefully. The user of the system
has a certain fear complex when a certain cultural work change is occurring. The first and the
foremost fear are about the security to the person if the changeover from the old to new is not a
smooth one. Care has to be taken to assure the user that such fears are baseless and the
responsibility, therefore, rests with the designer. The second fear is about the role played by the
person in the organization and how the change affects him. On many occasions, the new role may
reduce his importance in the organization, the work design may make the new job impersonal, and
a fear complex may get reinforced that the career prospects may be affected. There are certain
guidelines for the systems designer for the successful implementation of the system. The system
designer should not question beyond a limit the information need of the user.
1. Not to forget that his role is to offer a service and not to demand terms.
2. Remember that the system design is for the use of the user and it is not the designer's
prerogative to dictate the design features. In short, the designer should respect the demands of the
user.
3. Not to mix up technical needs with the information needs. He should try to develop a suitable
design with appropriate technology to meet the information needs. The designer should not
recommend modifications of the needs, unless technically infeasible.

4. Impress upon the user the global nature of the system design which is required to meet the
current and prospective information need.
5. Not to challenge the application of the information in decision-making. It is the sole right of the
user to use the information the way he thinks proper.
6. Impress upon the user that the quality of information depends on the quality of input.
7. Impress upon the user that you are one of the users in the organization and that the information
is a corporate resource and he is expected to contribute to the development of the MIS.
8. Ensure that the user makes a commitment to all the requirements of the system design
specifications. Ensure that he appreciates that his commitments contribute largely to the quality of
the information and successful implementation of the system.
9. Ensure that the overall system effort has the management's acceptance.
10. Enlist the user's participation from time to time, so that he is emotionally involved in the process
of development.
11. Realize that through serving the user, he is his best guide on the complex path of development.
12. Not to expect perfect understanding and knowledge from the user as he may be the user of a
non-computerized system. Hence, the designer should be prepared to change the system
specifications or even the design during the course of development.
13. Impress upon the user that the change, which is easily possible in a manual system, is not as
easy in the computer system as it calls for changes in the programs at cost.
14. Impress upon the user that perfect information is nonexistent; His role therefore still has an
importance in the organization.
15. Ensure that the other organization problems are resolved first before the MIS is taken for
development.
16. Conduct periodical user meetings on systems where you get the opportunity to know the
ongoing difficulties of the users.
17. Train the user in computer appreciation and systems analysis as his perception of the
computerized information system will fall short of the designer's expectation. Implementation of the
MIS in an organization is a process where organizational transformation takes place. This change
can occur in a number of ways. Lewin's model suggests three steps in this process. The first step
is unfreezing the organization to make the people more receptive and interested in the change.
The second step is choosing a course of action where the process begins and reaches the desired
level of stability, and the third step is Refreezing, where the change is consolidated and equilibrium
is reinforced. Many times, this process is implemented through an external change agent, such as
a consultant playing the role of a catalyst.
The significant problem in this task is the resistance to change. The resistance can occur due to
three reasons, viz., the factors internal to the users of information, the factors inherent in the design
of the system and the factors arising out of the interaction between the system and its users. The
problem of resistance can be handled through education, persuasion, and participation. This can
be achieved by improving the human actors, and providing incentives to the users, and eliminating
the organizational problems before implementing the system.

Decision in MIS

every decision-making process produces a final choice that may or may not prompt action. Decisions vary
depending on the structure, which provided for making those decisions. Modern information technologies
offer new solutions for businesses, companies or other scientific institutions, which create new work
surroundings which is based on computer communication between people. This differs express
surroundings working people, so that enables greater flexibility, easier solutions to business problems,
greater creativity, better interpersonal cooperation etc. Well presented solutions that have an impact on
people's destiny, not only in performing physical but also intellectual works. Doya, Kenji; Michael N Shadlen
(2012) says Most decisions are followed by some form of cost-benefit analysis, people try to maximize
benefits while minimizing costs by Schacter, Gilbert, Wegner (2011). According to Mustafa Muhamet (1995)
management information system provides a support for making decisions based on methods and systematic
analysis. Relying on this are created with the software who tested alternatives preparatory stage of the
decision making process. These systems are known as decision support systems (DSS). A decision support
system (DSS) is a computer program application that analyzes business data and presents it so that users
can make business decisions more easily. It is an "informational application" (to distinguish it from an
"operational application" that collects the data in the course of normal business operation).
By Searchcio (http://searchcio.techtarget.com/definition/decision-support-system) typical information that a
decision support application might gather and present would be:

• Comparative sales figures between one week and the next

• Projected revenue figures based on new product sales assumptions
• The consequences of different decision alternatives, given past experience in a context that is described
Decision support systems (DSS) on the other hand, are characterized by flexible implementation in the
database in a variety of output formats and flexible collection of deployment models.
From such components required more support manager in the decision making process, rather than trying
to find solutions and take decisions instead of users. These systems have been shown to eliminate the
shortcomings of management information system and enterprise duly held on as they have gained
experience with system management information. The term placements mostly means the process of
selecting one of two or more alternative stock in any given situation which will be undertaken in order to
achieve any goal in any near future or distant. Decision support systems are presented in the 70's, as
generators of new computing solutions for management support. Starting points of decision support systems
are:
• Computer support given to the case of decision making when dealing with structural problems;
• Connect the data models and decisions, efficient computing elections;
• To provide computer support manager.

Following are the important steps of the decision making process according to Each step may be supported
by different tools and techniques
Fig. 2. Steps of decision making process.

Research phase of the decision-making process includes activities identifying problems associated with
reviewing the circumstances of the conditions for making decisions. Analysis and placement cannot be
identified until the problem is formulated and therefore not research phase consists of search and research
environment for internal and external circumstances which lead to the identification of an opportunity or a
problem. Following the research phase, which results in the recognition of the problem or opportunity, the
design phase, involves inventing, developing and analyzing possible directions stock. Support for the design
phase should provide iterative procedure when reviewing alternatives. Decision support system is an
information system based on the computer that regulates manipulates and demonstrates the necessary
 information to make decisions. The role of the computer here is not to replace but to assist the recipient in
the decision making process decisions. These systems represent the latest technology and more complex,
which enables managers to ask questions and get answers to questions posed and enters the database
related to their needs for information and are therefore particularly useful to solve recurring problems.

Management as a control system

 
Planning, organizing, staffing, coordinating, directing and controlling are the various steps in a management process.  All the
steps prior to a control are necessary but are not necessarily self-assuring the results unless it is followed by strong control
mechanism. The management experts have viewed these steps as `Management Control System'. They postulate the
hypothesis that unless a control is exercised on the process, the goals will not be achieved. They advocate a system of effective
control to ensure the achievement of the business objectives.
 
Definition
 
A definition of control is the process through which managers assure that actual activities conform to the planned activities,
leading to the achievement of the stated common goals.  The control process measures a progress towards those goals, and
enables the manager to detect the deviations from the original plan in time to take corrective actions before it is too late. Rober J
Mockler defines and points out the essential elements of the control process.
 
The management is a systematic effort to set the performance standards in line with the performance objectives, to design the
information feedback systems, to compare the actual performance with these predetermined standards, to identify the deviations
from the standards, to measure its significance and to take corrective actions in case of significant deviations. This systematic
effort is undertaken through the management control system.
 
The control system is essential to meet the environmental changes discussed earlier, to meet the complexity of today's business,
to correct this mistakes made by the people, and to effectively monitor the delegation process. A reliable and effective control
system has the following features.
 
Early Warning Mechanism
 
This is a mechanism of predicting the possibility of achieving the goals and the standards before it is too late and allowing the
manager to take corrective actions.
 
Performance Standard
 
The performance standard must be measurable and acceptable to all the organization. The system should have meaningful
standards relating to the work areas, responsibility, and managerial functions and so on.  For example, the top management
would have standards relating to the business performance, such as production, sales, inventory, quality, etc. The operational
management would have standard relating to the shift production, rejection, down time, utilization of resources, and sale in
typical market segment and so on.  The chain of standards, when achieved, will ensure an achievement of the goals of the
organization.
 
Strategic Controls
 
In every business there are strategic areas of control known as the critical success factors. The system should recognize them
and have controls instituted on them.
 
Feedback
 
The control system would be effective, if it continuously monitors the performance and send the information to the control centre
for action. It should not only highlight the progress but also the deviations.
 
Accurate and Timely
 
The feedback should be accurate in terms of results and should be communicated on time for corrective action.
 
Realistic
 
The system should be realistic so that the cost of control is far less than the benefits.  The standards are realistic and are
believed as achievable.  Sufficient incentive and rewards are to be provided to motivate the people.
 
The Information Flow
 
The system should have the information flow aligned with the organization structure and the decision makers should ensure that
the right people get the right information for action and decision making.
 
Exception Principle
 
The system should selectively approve some significant deviations form the performance standards on the principle of
management by exception.
 
A standard is meaningful when it is achievable and provides a challenge to the achiever. A management control system has a
set of objectives, standards to measure, a feedback mechanism and an action centre as elements of the system. They need to
be properly evolved and instituted in the organization with due recognition to the internal and the external environment. The
system as a whole should be flexible to be changed with ease so that the impact of changed environments is handled effectively.

The Role of Management Information Systems in Decision Making

The role of management information systems (MIS) in decision making is to generate data that is useful
to management as they consider strategy, staffing, teams, marketing and more. Choosing what data MIS
tracks as well as how management uses this data in decision making can make or break the direction of
a company in the competitive marketplace.

Management Information Systems

Management information systems are computer-based databases comprised of information regarding

company operations. Management and top executives can use MIS to track management performance
as well as to run reports about things like productivity, efficiency, revenue, product performance, team
sales and more. Many MIS systems show current performance contrasted with projected performance so
that managers can tell whether they are falling behind, meeting goals or exceeding them.
 The importance of MIS in decision making lies in its ability to change the direction of management teams
and entire organizations. For instance, if the MIS reports show that all but one management team is
exceeding the quarterly performance projections, extra help can be brought in to help the struggling
team, or executives might choose to terminate and then replace the poorly performing team.

Other Types of Information Systems

Management information systems are used by management for decision making but should not be
confused with other information systems used by a variety of employees. Some other information
systems include the following:

 Decision-Support Systems: Decision-support systems (DSS) are used by management to make

organizational decisions versus the management decisions for which MIS is used. For instance, while
MIS could be used to make decisions about assisting a poorly performing employee, DSS could be used
by executives to create an overall shift in direction based on company and market trends.
 Knowledge-Worker Systems: Knowledge-worker systems (KWS) are used by employees who rely on
knowledge for performing their basic job tasks, like company engineers, finance experts and human
resources personnel. KWS systems include things like computer-animated drawing systems, human
resources systems, financial workstations and virtual reality systems.
 Office-Automation Systems: Office-automation systems help facilitate the daily operations of an office
setting and include things like the voicemail system, word processing programs and email. These are
basic systems that are used by most employees at every level of an organization.
 Executive-Support Systems: Executive-support systems merge together MIS and DSS in order to provide
top executives with the data they need to make vital decisions about the direction of the company as well
as employee performance strategies.
 Transactional-Processing Systems: Transactional-processing systems (TPS) are used by companies to
fulfill purchases, place orders, bill clients, track received orders and more. When a TPS works well, and
people use it as intended, it provides accurate information on inventory, sales rates, cost for materials,
order fulfillment and many other details of daily operations. This information is useful to everyone, from a
sales employee to middle management and top executives. 

What MIS Tracks

Management information systems generate reports about all kinds of data that are useful to management
in decision making. This includes reports on things like employee performance, employee efficiency, the
effectiveness of training, completed work and work that still needs to be completed. MIS can compare
employee performance, rank employee performance and compare performance to projections and
expectations.

For instance, an engineering department at a major telecommunications company could have a MIS that
tracks each employee's workload, jobs, job due dates and accuracy percentages. When a manager runs
the MIS report for the week, month or quarter, the report will highlight late jobs, employees performing
below company standards and employees with an overburdened workload. This report is then discussed
at management and team meetings in order to address issues before they become crises.
 Objectives of MIS
While the objective of a transactional-processing system is to provide accurate transaction data, and the
objective of office-automation systems is to increase office communication, management information
systems have specific objectives too. While they vary from company to company based on the data
tracked, the following are common objectives:

 Compare actual performance to expected performance.

 Facilitate efficient and timely managerial planning.
Reduce costs by highlighting time waste in the organization.
 Provide data about the performance of employees, management, products, services, money, materials
and equipment.
 Highlight organizational strengths and weaknesses.
 Illuminate product- or material-quality problems in order to reduce material waste.

The role of management information systems in an organization is to provide the most accurate data
possible so that management can make wise and timely decisions in order to increase the bottom line.

Application of MIS
The application of MIS in an organization requires involvement of many key team players, including
systems analysts, information technology specialists, computer programmers, management, executives,
quality-control personnel, help-desk specialists, information security and more. Proper application of MIS
should result in the following advantages:

 Increased Profits: MIS application can result in new product development, changed marketing, changed
packaging, improved customer service, a growing product line, better communication with different levels
of customers, competitive pricing and higher customer retention rates.
 Increased Quality: MIS application contributes to increased quality through reducing waste, helping in the
selection of quality materials and implementing warranties/guarantees that match material quality.
 Decreased Costs: MIS application helps management become more strategic about material sourcing,
staffing, scheduling, increasing efficiency, improving processes, managing inventory appropriately and
manufacturing goods at the right time. 

Role of Management Information Systems in Organizations

The role of management information systems in organization decision-making processes is key to
helping businesses reduce waste and increase profits. MIS reports can be used by individual managers
and groups of managers and can be shown to employees to highlight where they are performing well and
where they need to grow.

When management has an accurate report, they do not have to guess about who is doing well or what
needs to be improved or wonder where their blind spots are. The data help them see a clearer, less-
biased picture than they could come up with on their own.
 Implementing Management Information Systems
Once management information systems are in place, implementing them into management workflow is
vital to their effectiveness. Management needs to be aware of how to access the data, run regular
reports and find help when they need it. Visual presentations and opportunities for hands-on exploration
of the systems help managers to get used to accessing data before they need to.

Help-desk personnel could choose to host a class or webinar that walks management through every step
needed to navigate through your company's MIS. Due to the importance of MIS data in decision making,
it is imperative that management has a thorough understanding of how and when to best use the system.

Importance of Decision Making

Managers regularly make decisions that impact the daily lives of their employees, so having accurate
data is important. Changes introduced by management have the power to alter someone's life by:

 Increasing or decreasing stress levels.

 Increasing or decreasing workload.
 Increasing or decreasing ease of job performance.
 Increasing or decreasing job task understanding.
 Giving or taking away livelihood.

The large impact of managerial decisions on the everyday lives of people as well as on the company's
bottom line means that decisions cannot be made lightly or without adequate information.

Decision-Making Processes
Many companies train their managers to make decisions using a structured decision-making process.
While these processes vary slightly from organization to organization, a basic seven-step process is
common:

1. Identify the problem.

2. Gather data related to the problem.
3. Identify possible solutions to the problem.
4. Consider pros and cons of each solution. 
5. Choose the solution that minimizes risks while increasing benefits.
6. Execute your plan, adjusting as needed. 
7. Review the effectiveness of your plan to help inform future decisions.

Importance of MIS in Decision Making

The importance of MIS in decision making can be seen throughout the typical corporate decision-making
process. MIS reports typically alert management about problems by highlighting poor performance, lower
than expected sales, problems in efficiency and so forth.
These same reports allow managers to gather data related to the problem by looking at trends over a
certain period of time and seeing where improvements can be made. This information empowers
managers to brainstorm a wide variety of possible solutions to the given problem so that they can
consider the pros and cons of each one. This makes it possible for management to choose and execute
a plan to solve the problem.

Future MIS reports should show improvement in the problem areas so that managers can accurately
evaluate the success of their given plan and make adjustments going forward.

Proactive Versus Reactive Decision Making

The importance of MIS in decision making lies in its ability to help managers become proactive versus
reactive decision makers. Without proper data, crises can build in the background and then explode,
causing managers to go into survival mode and make reactive decisions that Band-Aid the problem
rather than prevent it in the first place.

The role of management information systems in organization leadership is to give a heads up about
growth areas before major crises emerge so that they can make proactive decisions. This results in crisis
prevention so that the company can focus on growth.

Goal Setting and MIS

Because MIS provides a plethora of information that helps with proactive decision making, it is also
helpful for goal setting and review. When your management team sets goals for the week, month, quarter
or year, those can be programmed into your management information system. Then, it is easy to track
actual performance against your goals and then either increase or decrease your goals in the future to
make them more probable and make profit margins more accurate.

For instance, if your sales team sets a goal to do $25,000 in sales this month but is only able to come up
with $15,000 in sales when working efficiently, you can try setting a different goal next month. Maybe you
set a goal for $20,000 and then run a customer special to make that more achievable and find that your
team does $19,000.

You know that the following month is busy for sales, and so that month your team does $21,000 in sales
and can be reasonably certain that $20,000 is a pretty accurate prediction of team sales going forward.
The information used to set these numbers and adjust them all comes from your MIS report showing total
sales and employee-performance trends.

Limitations of MIS in Decision Making

While the role of MIS in decision making is vital to the health of most businesses, it's not without
limitations. Management information systems measure data but cannot always accurately collect
information on things like team morale, job satisfaction and other abstract dynamics at play in the
workplace. Human resources specialists, corporate psychologists and good old-fashioned relationship
building can help make up for the blind spots of MIS.
MIS - Decision Support System
Decision support systems (DSS) are interactive software-based systems intended to help managers in
decision-making by accessing large volumes of information generated from various related information
systems involved in organizational business processes, such as office automation system, transaction
processing system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the analytical models. A
decision support system helps in decision-making but does not necessarily give a decision itself. The
decision makers compile useful information from raw data, documents, personal knowledge, and/or
business models to identify and solve problems and make decisions.

Programmed and Non-programmed Decisions

There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work, where −
 These decisions have been taken several times.
 These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations, so −
 It would be a new decision.
 There will not be any rules to follow.
 These decisions are made based on the available information.
 These decisions are based on the manger's discretion, instinct, perception and judgment.
For example, investing in a new technology is a non-programmed decision.
Decision support systems generally involve non-programmed decisions. Therefore, there will be no exact
report, content, or format for these systems. Reports are generated on the fly.

Attributes of a DSS
 Adaptability and flexibility
 High level of Interactivity
 Ease of use
 Efficiency and effectiveness
 Complete control by decision-makers
 Ease of development
 Extendibility
 Support for modeling and analysis
  Support for data access
 Standalone, integrated, and Web-based

Characteristics of a DSS
 Support for decision-makers in semi-structured and unstructured problems.
 Support for managers at various managerial levels, ranging from top executive to line managers.
 Support for individuals and groups. Less structured problems often requires the involvement of several
individuals from different departments and organization level.
 Support for interdependent or sequential decisions.
 Support for intelligence, design, choice, and implementation.
 Support for variety of decision processes and styles.
 DSSs are adaptive over time.

Benefits of DSS
 Improves efficiency and speed of decision-making activities.
 Increases the control, competitiveness and capability of futuristic decision-making of the organization.
 Facilitates interpersonal communication.
 Encourages learning or training.
 Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up new evidences for
an unusual decision.
 Helps automate managerial processes.

Components of a DSS
Following are the components of the Decision Support System −
 Database Management System (DBMS) − To solve a problem the necessary data may come from internal or
external database. In an organization, internal data are generated by a system such as TPS and MIS. External
data come from a variety of sources such as newspapers, online data services, databases (financial, marketing,
human resources).
 Model Management System − It stores and accesses models that managers use to make decisions. Such
models are used for designing manufacturing facility, analyzing the financial health of an organization,
forecasting demand of a product or service, etc.
Support Tools − Support tools like online help; pulls down menus, user interfaces, graphical analysis, error
correction mechanism, facilitates the user interactions with the system.

Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows −
  Text Oriented DSS − It contains textually represented information that could have a bearing on decision. It
allows documents to be electronically created, revised and viewed as needed.
 Database Oriented DSS − Database plays a major role here; it contains organized and highly structured data.
 Spreadsheet Oriented DSS − It contains information in spread sheets that allows create, view, modify procedural
knowledge and also instructs the system to execute self-contained instructions. The most popular tool is Excel
and Lotus 1-2-3.
 Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written for performing certain
calculations and particular program type.
 Rules Oriented DSS − It follows certain procedures adopted as rules.
 Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the example.
 Compound DSS − It is built by using two or more of the five structures explained above.

Types of DSS
Following are some typical DSSs −
 Status Inquiry System − It helps in taking operational, management level, or middle level management
decisions, for example daily schedules of jobs to machines or machines to operators.
 Data Analysis System − It needs comparative analysis and makes use of formula or an algorithm, for example
cash flow analysis, inventory analysis etc.
 Information Analysis System − In this system data is analyzed and the information report is generated. For
example, sales analysis, accounts receivable systems, market analysis etc.
 Accounting System − It keeps track of accounting and finance related information, for example, final account,
accounts receivables, accounts payables, etc. that keep track of the major aspects of the business.
 Model Based System − Simulation models or optimization models used for decision-making are used
infrequently and creates general guidelines for operation or management.
Why are there different types of Information System?
In the early days of computing, each time an information system was needed it was 'tailor
made' - built as a one-off solution for a particular problem. However, it soon became apparent
that many of the problems information systems set out to solve shared certain characteristics.
Consequently, people attempted to try to build a single system that would solve a whole range
of similar problems. However, they soon realized that in order to do this, it was first necessary
to be able to define how and where the information system would be used and why it was
needed. It was then that the search for a way to classify information systems accurately began.

How do you identify the different types of information system in an

organization?
The different types of information system that can be found are identified through a process of
classification. Classification is simply a method by which things can be categorized or classified
together so that they can be treated as if they were a single unit. There is a long history of
classification of things in the natural world such as plants or animals, however, Information
systems are not part of the 'natural' world; they are created and acquired by man to deal with
particular tasks and problems. The classification of information systems into different types is a
useful technique for designing systems and discussing their application; it not however a fixed
definition governed by some natural law. A 'type' or category of information system is simply a
concept, an abstraction, which has been created as a way to simplify a complex problem
through identifying areas of commonality between different things. One of the oldest and most
widely used systems for classifying information systems is known as the pyramid model; this is
described in more detail below.

How many different kinds of Information System are there?

As can be seen above, there is not a simple answer to this. Depending on how you create your
classification, you can find almost any number of different types of information system.
However, it is important to remember that different kinds of systems found in organizations
exist to deal with the particular problems and tasks that are found in organizations.
Consequently, most attempts to classify Information systems into different types rely on the
way in which task and responsibilities are divided within an organization. As most organizations
are hierarchical, the way in which the different classes of information systems are categorized
tends to follow the hierarchy. This is often described as "the pyramid model" because the way
in which the systems are arranged mirrors the nature of the tasks found at various different
levels in the organization.

For example, this is a three level pyramid model based on the type of decisions taken at
different levels in the organization.
 Three level pyramid model based on the type of decisions taken at different levels in the
organization

Similarly, by changing our criteria to the differnt types of date / information / knowledge that are
processed at different levels in the organization, we can create a five level model.
 Five level pyramid model based on the processing requirement of different levels in the
organization

What are the most common types of information system in an

organization?
While there are several different versions of the pyramid model, the most common is probably a
four level model based on the people who use the systems. Basing the classification on the
people who use the information system means that many of the other characteristics such as
the nature of the task and informational requirements, are taken into account more or less
automatically.
 Four level pyramid model based on the different levels of hierarchy in the organization

A comparison of different kinds of Information Systems

Using the four level pyramid model above, we can now compare how the information systems
in our model differ from each other.

1. Transaction Processing Systems

What is a Transaction Processing System?

Transaction Processing System are operational-level systems at the bottom of the

pyramid. They are usually operated directly by shop floor workers or front line staff,
which provide the key data required to support the management of operations. This
data is usually obtained through the automated or semi-automated tracking of low-level
activities and basic transactions.
 Functions of a TPS

TPS are ultimately little more than simple data processing systems.

Functions of a TPS in terms of data processing requirements

Inputs Processing Outputs

Validation
Sorting Lists
Transactions Listing Detail reports
Events Merging Action reports
Updating Summary reports?
Calculation

Some examples of TPS

o Payroll systems
o Order processing systems
o Reservation systems
o Stock control systems
o Systems for payments and funds transfers

The role of TPS

o Produce information for other systems

o Cross boundaries (internal and external)
o Used by operational personnel + supervisory levels
o Efficiency oriented

2. Management Information Systems

What is a Management Information System?

For historical reasons, many of the different types of Information Systems found in
commercial organizations are referred to as "Management Information Systems".
However, within our pyramid model, Management Information Systems are
management-level systems that are used by middle managers to help ensure the
smooth running of the organization in the short to medium term. The highly structured
information provided by these systems allows managers to evaluate an organization's
performance by comparing current with previous outputs.
 Functions of a MIS

MIS are built on the data provided by the TPS

Functions of a MIS in terms of data processing requirements

Inputs Processing Outputs

Internal Transactions Sorting Summary reports

Internal Files Merging Action reports
Structured data Summarizing Detailed reports

Some examples of MIS

o Sales management systems

o Inventory control systems
o Budgeting systems
o Management Reporting Systems (MRS)
o Personnel (HRM) systems

The role of MIS

o Based on internal information flows

o Support relatively structured decisions
o Inflexible and have little analytical capacity
o Used by lower and middle managerial levels
o Deals with the past and present rather than the future
o Efficiency oriented?

3. Decision Support Systems

What is a Decision Support System?

A Decision Support System can be seen as a knowledge based system, used by senior
managers, which facilitates the creation of knowledge and allow its integration into the
organization. These systems are often used to analyze existing structured information
and allow managers to project the potential effects of their decisions into the future.
Such systems are usually interactive and are used to solve ill structured problems. They
offer access to databases, analytical tools, allow "what if" simulations, and may support
the exchange of information within the organization.
 Functions of a DSS

DSS manipulate and build upon the information from a MIS and/or TPS to generate
insights and new information.

Functions of a DSS in terms of data processing requirements

Inputs Processing Outputs

Modelling
Internal Transactions Summary reports
Simulation
Internal Files Forecasts
Analysis
External Information? Graphs / Plots
Summarizing

Some examples of DSS

o Group Decision Support Systems (GDSS)

o Computer Supported Co-operative work (CSCW)
o Logistics systems
o Financial Planning systems
o Spreadsheet Models?

The role of DSS

o Support ill- structured or semi-structured decisions

o Have analytical and/or modelling capacity
o Used by more senior managerial levels
o Are concerned with predicting the future
o Are effectiveness oriented?

4. Executive Information Systems

What is an EIS?

Executive Information Systems are strategic-level information systems that are found at
the top of the Pyramid. They help executives and senior managers analyze the
environment in which the organization operates, to identify long-term trends, and to plan
appropriate courses of action. The information in such systems is often weakly
structured and comes from both internal and external sources. Executive Information
 System are designed to be operated directly by executives without the need for
intermediaries and easily tailored to the preferences of the individual using them.

Functions of an EIS

EIS organizes and presents data and information from both external data sources and
internal MIS or TPS in order to support and extend the inherent capabilities of senior
executives.

Functions of a EIS in terms of data processing requirements

Inputs Processing Outputs

External Data Summarizing Summary reports

Internal Files Simulation Forecasts
Pre-defined models "Drilling Down" Graphs / Plots

Some examples of EIS

Executive Information Systems tend to be highly individualized and are often custom
made for a particular client group; however, a number of off-the-shelf EIS packages do
exist and many enterprise level systems offer a customizable EIS module.

The role of EIS

o Are concerned with ease of use

o Are concerned with predicting the future
o Are effectiveness oriented
o Are highly flexible
o Support unstructured decisions
o Use internal and external data sources
o Used only at the most senior management levels

Decision Support System (DSS): Meaning,

Features and Users
A decision support system is that system which helps the management in taking the
business decisions.
It is a system which allow human-machine interface whereby, the decision-maker
possess control throughout the decision making process.

It has one primary objective that is to provide the managers with the necessary
information for making intelligent decisions. This approach not only helps in bringing
decision-making information directly to the executives, but also goes one step further
than typical management information systems by allowing decision-maker to interact
with the computer.

In this way, the computer is simply a tool, which helps the executives in evaluation of
the alternatives so that they may reach on an effective decision. The ability of an
individual to retail control over the decision making process is not only useful to solve
well structured problems but also helps in solving semi structured and unstructured
problems.

Thus, Decision Support System (DSS) is a specialized MIS designed to support an

executives’ skills at all stages of decision making i.e. problem identification, selecting
relevant data, picking the approach to be used in decision making and evaluating the
alternative courses of action.

A decision support system must generate information in such a form that executives
may understand and at a time when such an information is needed and place the
information under the direct control of the executives. Thus, the DSS enables the
business executives to take the efficient, effective and economic decisions.

Features/Characteristics of Decision Support System:

Features & characteristics of decision support system are:
(a) It is a way to organize information intended for use in decision-making. It envelope
the use of a database for a specific decision making process. A decision support
system does not automate transformation performed on data nor simply provide
output in the form of report rather it supports the decision makers problem solving
approach.

(b) A DSS allow the decision-maker to interact in a natural manner due to the careful
design of the user interface.

(c) Decision support systems are designed to help support decisions that are
formulated as semi structured, complex problem. These problems remain resistant to
complete computerization

(d) A DSS may be constructed to support one-time decision, those that are infrequent;
however, the type of problem or opportunity best addressed through use of a DSS is
one that requires human judgment.

(e) A decision support system is typically designed for either a particular decision-
maker or a group of decision-makers. This allows the system designer to customize
important system features to adapt to the type of representations.

(f) Rather than building a specific DSS from scratch, a system analyst can use a
package of interrelated hardware and software called a DSS generator.

(g) A decision support system is best conceptualized as a process instead of a

product.

Elements of Decision Support System:

Decision support systems were initially designed as data base management systems
combined with mathematical modeling systems to provide powerful, flexible tools for
quantitative analysis of management decisions. 2. Decision rules
3. Mathematical models

4. Managerial knowledge

5. Human judgement.

Decisions based on set of decision rules by a data base system, since the rules
depend on a data item in a data base : net profit Note, however, that it is up to the
manager to decide which rules applies, since a conventional data base system does
not know whether net profit is normal, above normal, or below normal.

Selection of the appropriate decision rule depends on the manager’s judgement on

whether last year’s net profit was normal or not (of course, precise rules could be
established for determining this as well).

The set of decision rules is considerably different because it requires a forecast of net
profit for the next year. The kinds of data base systems contain historical and current
data, not forecasts. Of course, forecasts are often based on mathematical or
statistical models that require historical Data.

Thus, a data base system can provide the Data on which to base such forecasts. The
modeling component of the DSS provides the forecasting model.

Mathematically based forecasts are not without error, however, and they may not take
all relevant factors into account. Thus, human judgement must be used to interpret
and adjust the forecast. Managerial judgements such as these are based on
knowledge of the organisation and its environment. This knowledge is not included in
data base systems and is seldom found in computer systems at all.
Experts systems try to capture expert knowledge of the problem domain, or specific
problem area, and use that knowledge to make decisions. Knowledge is stored as a
separate entity called a knowledge base, which is analogous to the Data base in a
data base system. In a data base system, the data base management system is a
complex program that manipulates the Data base.

In an expert system, the interference engine is a complex program that manipulates

the knowledge base (which is sometimes called a data base in the expert system
literature). Data in data base tends to be numeric, with some character data.

Information in knowledge bases is more qualitative or textual in nature, and

interference engines may use qualitative reasoning rather than quantitative models to
reach decisions.

There is already a clearly observable trend toward the development of decision

support systems that integrate data bases, knowledge bases, mathematical models,
and expert system inference engines into integrated systems for management
decision making. The potential impact of these decision-support systems is
tremendous.

Users of Decision Support System:

The ultimate user of a decision support system is the decision maker; however, he
may not actually run the system. Based on his research on 56 Decision Support
Systems, Alter identified following four distinct usage patterns.

1. Terminal mode

2. Clerk mode

3. Subscription mode
4. Intermediary mode.

1. Terminal mode:

The decision maker is the direct user of the system through on line access.

2. Clerk mode:
The decision maker uses the system directly but offline, preparing input on a coding
form. The primary difference between this mode and the terminal mode is in the
technology employed (batch versus online).

3. Subscription mode:
The decision maker receives reports that are generated automatically on a regular
basis. This is the typical mode of usage for management reporting systems. Although
some data analysis systems or accounting models might be used in this way, it is not
typical for decision support systems.

4. Intermediary mode:
The decision maker uses the system through intermediaries, who perform the
analysis and interpret and report the results. The decision maker does not need to
know the intermediary used the system to arrive at the requested information.

The role of an intermediary is common in the use of decision support systems and
merits separate attention. It has typically been argued that decision support systems
will be resisted because managers will refuse to use terminals. The job of chief
executives is highly fragmented with frequent interruptions.
Such a pattern of activity is a major constraint on the use of a system requiring
concentration over a period of time. The use of an intermediary allows the manager to
benefit from the decision support system without actually having to execute it.

There are two types of intermediaries that reflect different types of support for the
manager.

(a) Expert tool user

(b) Staff assistant or staff analyst.

(a) Expert tool user:

This person is skilled in the application of one or more types of specialised problem
solving tools. The expert tool user performs tasks which the problem solver does not
have the skills or training to perform.

(b) Staff assistant or staff analyst:

This person has specialized knowledge about problems and some experience with
the decision support technology. The staff assistant essentially extends the
manager’s capabilities by taking over many of the tasks of problem solving such as
setting up the problem, obtaining data and building the initial model.

The manager can concentrate on the more unstructured portions of the problem
solving task. The staff assistant performs work the manager could do if time were
available.

Although more intermediaries are staff assistants, there is also frequent need for the
expert tool user. The use of intermediaries permits the systems to be more
sophisticated and powerful. On line, interactive systems are still desirable with
intermediaries because they allow them to work more quickly and efficiently.

Role of Decision Support System in MIS:

Decision support system is a special class of system which facilitate decision making.
As in an organisation, at each and every point and time, decisions are to be taken
irrespective of their nature. Some decisions may be routine and programmed
decisions while other may be strategic, and non-programmed decisions.

But one thing is certain that decision making is done at all level of management.
Decision support system involves the packages which help the managers to take right
and timely decisions.

Decision support systems use data from the general management information system
and they are used by a manager or a decision maker for decision support. The basic
characteristic of the decision support system is that it is based on some tool,
technique or model. These systems are used sometimes for testing new alternatives,
training and learning. They are also used for sensiting the various parameters of the
model.

The MIS designer has to look for all such situations and design the decision support
system for integration in the system. The management information system would
become more useful if the decision making is made person independent and
executed with well designed decision support system.

All such embedded systems cover the normal variety of decision situations. If
anything outside the considered variety crops up, decision support system will bring to
the notice of the decision makers that action is called for in the situation.
The decision support system plays a dominant role in the management information
system as a support to decision making.

MIS - Executive Support System

Executive support systems are intended to be used by the senior managers directly to provide support to
non-programmed decisions in strategic management.
These information are often external, unstructured and even uncertain. Exact scope and context of such
information is often not known beforehand.
This information is intelligence based −

 Market intelligence
 Investment intelligence
 Technology intelligence

Examples of Intelligent Information

Following are some examples of intelligent information, which is often the source of an ESS −

 External databases
 Technology reports like patent records etc.
 Technical reports from consultants
 Market reports
 Confidential information about competitors
 Speculative information like market conditions
 Government policies
 Financial reports and information

Features of Executive Information System

Advantages of ESS
 Easy for upper level executive to use
 Ability to analyze trends
 Augmentation of managers' leadership capabilities
 Enhance personal thinking and decision-making
 Contribution to strategic control flexibility
 Enhance organizational competitiveness in the market place
 Instruments of change
 Increased executive time horizons.
 Better reporting system
 Improved mental model of business executive
 Help improve consensus building and communication
 Improve office automation
 Reduce time for finding information
 Early identification of company performance
 Detail examination of critical success factor
  Better understanding
 Time management
 Increased communication capacity and quality

Disadvantage of ESS
 Functions are limited
 Hard to quantify benefits
 Executive may encounter information overload
 System may become slow
 Difficult to keep current data
 May lead to less reliable and insecure data
 Excessive cost for small company

Executive Support System (ESS) is a software used by companies which has information related to business,
which enables the top management to take better decisions in favor of the company. ESS mainly deals with
data related to key departments like billing, accounting, scheduling, staffing etc. In addition to providing
quick access to the data, ESS helps to analyze the data systematically and helps the companies to even
forecast and prepare for the future.

ESS thus saves valuable time of the executives in digging the huge pile of information to identify the critical
data and helps them spend more time on brainstorming and decision making by providing only the required
data. ESS can be used to view and analyze both the present data and predicted future data.

Depending on the utility, the software can be adjusted according to parameters to deliver the best results.

Some of the advantages of ESS are:

1. Improved personal efficiency

2. Increased organizational control
3. Competitive advantage over competitors
4. Automation of the managerial processes.

Executive Support System (ESS) is a reporting tool (software) that allows you to turn your organization's data into useful summarized
reports. These reports are generally used by executive level managers for quick access to reports coming from all company levels and

departments such as billing, cost accounting , staffing, scheduling, and more.

In addition to providing quick access to organized data from departments, some Executive Support System tools also provide analysis tools

that predicts a series of performance outcomes over time using the input data. This type of ESS is useful to executives as it provides possible

outcomes and quick reference to statistics and numbers needed for decision-making.

The exact reporting tools and outcome of an Executive Support System completely depends on the ESS developer and it's intended industry

use. For example, Cambridge Systematics has ESS to support the investment planning process for the Ministry of Transportation. The features

and functions of this Executive Support System are entirely different from the Executive Support System developed by Meditech, which is

useful to health care organizations.

Several companies offer pre-designed Executive Support System packages (usually suited to one particular industry), while others offer

packages which can be customized your your organization's needs.

Group Decision Support System (GDSS)

A group decision support system (GDSS) is an interactive computer based system that facilitates a number
of decision-makers (working together in a group) in finding solutions to problems that are unstructured in
nature. They are designed in such a way that they take input from multiple users interacting simultaneously
with the systems to arrive at a decision as a group.

The tools and techniques provided by group decision support system improve the quality and effectiveness
of the group meetings. Groupware and web-based tools for electronic meetings and videoconferencing 
also support some of the group decision making process, but their main function is to make communication
possible between the decision makers.

In a group decision support system (GDSS) electronic meeting, each participant is provided with a
computer. The computers are connected to each other, to the facilitator’s computer and to the file server. A
projection screen is available at the front of the room. The facilitator and the participants can both project
digital text and images onto this screen.
A group decision support system (GDSS) meeting comprises different phases, such as idea generation,
discussion, voting, vote counting and so on. The facilitator manages and controls the execution of these
phases. The use of various software tools  in the meeting is also controlled by the facilitator.

Components of Group Decision Support System (GDSS)

A Group decision support system (GDSS) is composed of 3 main components, namely

 hardware,
 software tools,
 people.

 Hardware: It includes electronic hardware like computer, equipment used for

networking, electronic display boards and audio visual equipment. It also includes the
conference facility, including the physical setup – the room, the tables and the chairs –
laid out in such a  manner that they can support group discussion and teamwork.
 Software Tools: It includes various tools and techniques, such as electronic
questionnaires, electronic brainstorming tools, idea organizers, tools for setting priority,
policy formation tool, etc. The use of these software tools in a group meeting helps the
group decision makers to plan, organize ideas, gather information, establish priorities,
take decisions and to document the meeting proceedings. As a result, meetings become
more productive.
 People: It compromises the members participating in the meeting, a trained facilitator
who helps with the proceedings of the meeting, and an expert staff to support the
hardware and software. The GDSS components together provide a favorable
environment for carrying out group meetings

Features of Group Decision Support System

(GDSS)
  Ease of Use: It consists of an interactive interface that makes working with GDSS
simple and easy.
 Better Decision Making: It provides the conference room setting and various software
tools that facilitate users at different locations to make decisions as a group resulting in
better decisions.
 Emphasis on Semi-structured and Unstructured Decisions: It provides important
information that assists middle and higher level management in making semi-structured
and unstructured decisions.
 Specific and General Support: The facilitator controls the different phases of the group
decision support system meeting (idea generation, discussion, voting and vote counting
etc.) what is displayed on the central screen and the type of ranking and voting that
takes place, etc. In addition, the facilitator also provides general support to the group
and helps them to use the system.
 Supports all Phases of the Decision Making: It can support all the four phases of
decision making, viz intelligence, design, choice and implementation.
 Supports Positive Group Behavior: In a group meeting, as participants can share their
ideas more openly without the fear of being criticized, they display more positive group
behavior towards the subject matter of the meeting.

Group Decision Support System (GDSS) Software

Tools
Group decision support system software tools helps the decision makers in organizing their ideas,
gathering required information and setting and ranking priorities. Some of these tools are as
follows:

 Electronic Questionnaire: The information generated using the questionnaires helps the

organizers of the meeting to identify the issues that need immediate attention, thereby
enabling the organizers to create a meeting plan in advance.
  Electronic Brainstorming Tools: It allows the participants to simultaneously contribute
their ideas on the subject matter of the meeting. As identity of each participant remains
secret, individuals participate in the meeting without the fear of criticism.
 Idea Organizer: It helps in bringing together, evaluating and categorizing  the ideas that
are produced during the brainstorming activity.
 Tools for Setting Priority: It includes a collection of techniques, such as simple voting,
ranking in order and some weighted techniques that are used for voting and setting
priorities in a group meeting.
 Policy Formation Tool: It provides necessary support for converting the wordings of
policy statements into an agreement.

What are Group Decision Support Systems? What are its Components
and Features?
The Decision Support System has been designed in such a way that it can be used conveniently by the
individual decision maker but the decision makers need to work in groups. So this Decision Support System
does not suit such a process which has given way for the development of the group Decision Support
System, which provides with the following advantages over the Decision Support System

1. Better comprehensive consideration of the problems and the various relating issues.
2. Better group understanding of the problem.
3. Less likelihood of quibbling with the help of the 20/20 hindsight.
4. Better group commitment to the decision.
5. Better communication to/with the implementers.
Group Decision Support System according to De Sanctis and Gallupe is “an interactive computer based
system, which helps in solving the various un-structured problems with the help of the decision makers
working in the groups.

Basic components of the Group Decision Support System

1. Hardware
i. Input / output devices.
ii. Audio visual instruments.
iii. Electronic display board/ screens.
iv. Computer equipments.
v. Conferencing infrastructure.
vi. Network systems.
2. Software
i. Database and database management system.
ii. Modeling capabilities.
iii. Dialogue management with multiple user access.
iv. Specialized application programmes to facilitate the group access.
3. People and the procedure
i. Trained facilitators.
ii. Decision making participants.
iii. Support staff.
iv. Laid down procedure.
v. Modus operandi.
Features of the Group Decision Support System
1. Very much similar to the Decision Support System.
2. Is a group decision facilitator.
3. Extension or expansion of the Decision Support System.
4. Helps in concentrating on the merits of the input without considering about the fact that who gave it.
5. Enables every group member to address the issues.
6. Automated record keeping plays a critical support for the future review and the analysis.
Group Decision Support System success depends on the following factors
1. Improved pre planning.
2. Increased participation.
3. Open, collaborative meeting atmosphere.
4. Criticism free idea generation.
5. Idea organization and then evaluation.
6. Setting priorities.
7. Making decisions depending on the priorities.
8. Documentation.
9. Record keeping of the meetings.
10. Access to the external information.
11. Preservation of the ‘organization memory’.

Developing DSS
 The researchers agree that this type of systems cannot be developed using a traditional system development
approach. The way of designing DSS is different from that of a transactional processing system. The purpose of this
article is to analyze the most suitable methodologies for DSS development. We will use in our research the analytical
descriptive method based on a reach specialty bibliography, the content analysis method and the observation
method. Modern DSS provide managers with a wide range of capabilities: quick access to crucial information, reduce
the necessary time for decision making, join various sources of information, provide intelligent access to relevant
knowledge and provide strategic and competitive advantages. DSS must be part of any managerial activity because
they improve the effectiveness of decision-making process.
Development methodologies
DSS development methodologies are different in paradigm, models and objectives. A paradigm describes a specific
way of thinking about the problems, while a model represents a subjective way of representing the reality.

There are many types of DSS development methodologies:

1. Decision driven methodologies: focus on the comprehensive analysis of decision-making process and on
supporting and improving this process using decision support systems.
2. Process driven methodologies: the central component of DSS development is the representation of the system
capacities using processes.
3. Data driven methodologies: focus on the DSS database definition, design, construct and management.
4. System driven methodologies: the analysis of the internal component of DSS is made based on the system
theory.
Almost all methodologies, except system-driven, specify the sequence of phases that must be followed in order to
develop DSS.
The main phases of decision support system development process are
: − requirements definition;
− analysis;
− design;
− prototype design and test;
− implementation;
− maintenance and evolution.

Designing and Developing Decision Support

Systems
The business intelligence tools or decision support systems aid decision making in an organization. An effective DSS provides
you with unbiased data analysis, real time monitoring and rich reporting, supporting you make an informed decision in the least
possible time span. A meticulously designed DSS makes use of analytical models, various statistical and econometric tools and
of course, human intelligence and insights to support decision making.

This proves the importance of technology, methodology and approach behind designing and development of a decision support
system. As a decision maker, you need to be extremely careful in selecting the DSS technology and developmental
methodology. You need to get the basics right, in order to get a reliable tool to support diverse information and decision-making
needs.

 designing and development of a decision support system is a complex process, you may face a number of issues, such as:

1. Mismatch between the perspectives of the programmer and decision maker

 Decision makers, on one hand, have very little knowledge about what it takes to design and develop a decision support
system. On the other hand, a programmer or developer may not have a fair idea of how complex business decision
making has become in today’s highly turbulent times. Technology selection may seem puzzling and ambiguous to
decision maker while the preferences, needs and expectations of a decision maker may not fit the process of system
design and development. This mismatch between perspectives leads to complexities. But at the same time, this
increases the likelihood of creation of an effective and apt DSS.

2. Identification of specific requirements

Most of the times, even decision makers have no clue about what to expect from a decision support system. This is
especially the case when managers need a tool to aid in resolving ill-structured or unstructured problems. It is easy to
decide what functionality a DSS must possess when problems are routine and structured. Managers can seek help
from their team members and conduct brainstorming sessions, in order to chart out the functions and benefits of a
decision support system.

1. Technology selection

In today’s highly competitive business environment, you need an interactive and responsive decision support system
that maximizes your performance. In such a scenario, the selection of technology plays a crucial role. However, it’s not
always necessary to use the latest version of a particular platform. It completely depends on the objectives you wish to
achieve. However, a DSS development company may push you for the latest technology, which will certainly add to
your expenses. The rule of thumb is to ask for price quotes from different companies.

2. Approach to software design and development

As said earlier, there is no standard approach or methodology to design the best decision support system. There are
three main approaches to system design and development: 1) the traditional system development life cycle (SDLC)
approach; 2) rapid prototyping and 3) end-user approach. You may want to choose a methodology that ensures that
the final product accomplishes your objectives. But each approach has its pros and cons, making it difficult to choose
the best one.

Most of these issues can be resolved by:

 Identifying clear agendas

 Brainstorming with team members
 Communicating the expectations clearly to the programmers
 Educating yourself about various technologies used in DSS development

 Trying to reach at a common platform with the developers

Pre-Design Diagnosis and Feasibility Study

How to secure the right DSS developmental methodology? Well, a pre-design diagnosis of a decision making process and
feasibility study of a DSS concept can help you gain clarity. Diagnosis and feasibility testing are two different processes but are
intertwined. Depending upon how decisions are made in an organization, a programmer carries out the feasibility testing of the
idea on which a DSS is to be developed.

Diagnosis of a Decision Making Process

A diagnostic study of decision making process in an organization helps gain clarity on:

 Problem identification process

 Data collection techniques
 How decisions are made
 Who all are involved in decision making
 Norms pertaining to decision making in an organization

The study involves:

 Defining the types of decisions

 Charting out the formal decision making process basis observation
 Identifying the primary role of decision maker
 Interviewing decision makers
 Assessing the effectiveness of data collection techniques
 Evaluating the performance of decision making process
 Need for computerized aid to support these decisions
 Identifying what needs to be improved
 Determining what will remain unchanged

A diagnostic study of decision making proves to be very useful to assess the overall process. It helps in redesigning the decision
making process and charting out the objectives, functionality and expectations from a decision support system.

Feasibility Study
Testing the decisional, economical and technological feasibility of a proposed decision support system succeeds the diagnostic
study of a decision making process. The feasibility study aims to:

 Uncover viability or achievability of a proposed DSS

 Discover the target users of a proposed decision support system software
 Identify opportunities and threats to a proposed DSS
 Determine if a proposed DSS with desired features falls within the budget of the organization
 Determine the technologies that can possible be used to develop a DSS
 Measure how well a proposed DSS will be able to solve problems
 Identify time available to build the system
 Uncover the amount of resources required to build the system
 Identify the limitations and risks associated with the proposed system

Both decision maker and programmer attain clarity on whether to go ahead with the system development or not, once these
factors are assessed.

. Here are three approaches to system development that you may want to learn about:

1. SDLC - System Development Life Cycle Approach

The formal SDLC is a sequential process which begins with identifying the system objectives (needs of end users) and
goes through various stages, including

 System analysis (technical components required)

 System design (architecture)
 Coding (programming)
 Testing (errors and bug fixing)
  Implementation (execution in the organization)
 Use (end users employing DSS)
 Evaluation (verification of functions and capabilities)
 Modification (adjustments required)

It’s the most commonly used and most rigid system development approach. In complex situations, it becomes difficult
to use this approach, as the requirements of users are constantly changing. It doesn’t promote recurring development
and testing.

2. Rapid Prototyping Approach

As the name suggests, rapid prototyping is a method that promotes faster system development. Moreover, it’s
combined effort of decision maker and analyst. A DSS analyst works closely with a decision maker, to chart out
specific requirements. Though a decision maker uses general terms, the analyst uses DMS (database management
system) to support rapid development of the application.

Rapid prototyping goes through:

 Identifying objectives/ user requirements

 Developing the first model
 Evaluating the first model, identifying adjustments required and modification
 Testing the developed DSS. Go back to evaluation and modification, if needed
 Implementing

As the communication lines are always open, evaluation and modification happen at a rapid pace. This is why it’s
considered a better approach than SDLC in complex situations.

3. End-User DSS Development Approach

End-user DSS development approach promotes the designing and development of a software system depending upon
the specific or individual needs of a decision maker. It’s like customizing your laptop. As managers make extensive use
of various applications, they may want a system that integrates all the functions that they need.

The plus side of this approach is that a decision maker makes his DSS on his own. The negative side is that he or she
may end up choosing the inappropriate software. Moreover, they may make mistakes unknowingly when developing a
decision support system because of the lack of technical expertise. This approach is very rarely used.

DSS Project Management

Project management is an additional overhead. It’s a common belief. No one understands the importance of project management
until they get punched in their face. The entire process, beginning from DSS conceptualization, development and implementation
needs to be closely overseen, in order to:

 Reduce chaos
 Manage risk
 Supervise project development
 Administer quality
 Manage smooth integration of newly developed DSS with business processes
 Identify training requirements of staff
 Manage change
Projects are chaotic in nature. And when technology is involved, chaos quadruples. The process becomes further complex when
‘change’ is included. Generally, employees resist change. They fear technology. As a business, you must hire a DSS project
manager, in order to carry out the whole process as smoothly and hassle-free as possible.

DSS Project Participation

A decision support system development is a comprehensive project that requires diverse skills and capabilities. Therefore, it’s
essential to bring together the right talent from the fields of technology, management, finance, project management, analytics
and potential users and ensure active participation of team members.

Remember you can’t ride on the expertise of programmers alone. It’s a combined effort and requires active participation of
everyone involved in project development. The team typically includes sponsor, financial executives, DSS analyst, programmer,
technical support professional and decision-maker/end-user.

Define the steps in constructing the DSS and explain the role in business. Ans. Steps in
constructing a DSS: -

There are following steps which are constructing the DSS.

1. Identification of the problem: - In this stage the developer and the knowledge
engineer interact to identify the problems. The following points are discussed:-
a) The scope and extent are analyzed.
b) The return of investment analysis is done.
c) The amount of resources needed is identified.
d) Areas in the problems that can give much trouble are identified and a conceptual
solution of that problem is found.
e) Over all specification is made.
ii) Decision about mode of development: -Once the problem is identified, the immediate
step would be to decide about the vehicle for development. He can develop shell for development by any
programming language. In this stage various shells and tools are identified and analyzed for their suitability.
These tools whose features fit the characteristics of the problems are analyzed in details.
iii) Development of a prototype: -Before the development of a prototype we decide the
knowledge level to solve the particular problem. For this we adopted some methods in
sequence. After this the taste of knowledge begins the knowledge of Engineer and
developer which interact frequently and domain specific knowledge is entranced.
When knowledge representation scheme and knowledge is available a prototype is
constructed.
iv) Prototype validation: - The prototype under goes the process of testing for various
problems and revision of the prototype takes place. It is very important step the DSS.
v) Planning for full scale system: - In prototype construction, the area in the problem
that can be implemented with relative case is first choice extensive planning is done.
Each subsystem development is assigned a group leader and schedules are drawn.
vi) Final implementation, maintenance and evaluation: -This is the final stage of DSS
Life Cycle. The full scale system developed is implemented at the basic resources
requirements are fulfilled and parallel conversion.
 Information and the MIS concept

Information is a set of classified and interpreted data used in decision making. It has also been
defined as 'some tangible or intangible entity which serves to reduce uncertainty about future state
or events' (Lucas, 1978). A management information system (MIS) is 'an integrated user-machine
systemfor providing information to support operations, management and decision making functions
in an organization.

The system utilizes computers, manual procedures, models for analysis, planning, control and
decision making, and a database' (Davis and Olson, 1984). MIS facilitates managerial functioning.
Management information is an important input at every level in the organization for decision
making, planning, organizing, implementing, an monitoring and controlling. MIS is valuable
because of its content, form and timing of presentation. In the context of different levels of decision
making, information can be described as:

· source,
· data,
· inferences and predictions drawn from data,
· value and choices (evaluation of inferences with regard to the objectives and then choosing a
course of action), and
· action which involves course of action.

The MIS concept comprises three interrelated and interdependent key elements: management,
system and information (Murdick and Ross, 1975).

Management and the MIS process

An MIS is directed towards the managerial functions of planning, controlling and monitoring, and decision
making.

Planning

Planning consists of five sequential and interactive steps (Kumar, 1989). These are:

· selecting objectives;
· identification of the activities which are required to achieve the stipulated objectives;

· detailing the resources - including the various skills - required to undertake the activities;

· determining the duration of each activity to be performed; and

· defining the sequence of the activities.

The basic requirements during the planning process of most importance in designing and
implementing an MIS for an organization are (Kumar, 1989):

· providing the information required by the planner at each step of planning;

· establishing procedures for obtaining the information;

· arranging for storage of the approved plans, as these will provide the information requisite to
monitoring and controlling; and

· evolving methods for communicating the plans to employees in the organization.

Monitoring and controlling

Controlling 'compels events to conform to plans' (Murdick and Ross, 1975). It involves:

· establishing standards of performance in order to reach the objective;

· measuring actual performance against the set standards; and

· keeping actions on course by correcting deviations as they appear (mid-course corrections).

The requirements for successful development of a control system are:

· defining expectations in terms of information attributes; and

· developing the logic for reporting deviations to all levels of management prior to the actual
occurrence of the deviation.
Decision making

Decision making is the process of selecting the most desirable or optimum alternative to solve a
problem or achieve an objective. The quality and soundness of managerial decisions is largely
contingent upon the information available to the decision-maker. Gorry and Scott Morton (1971)
classified decision making on three levels of a continuum:

· Strategic decisions are future-oriented because of uncertainty. They are part of the planning
activity.

· Tactical decision making combines planning activities with controlling. It is for short-term activities
and associated allocation of resources to them to achieve the objectives.

· Technical decision making is a process of ensuring efficient and effective implementation of

specific tasks.

Elements of decision making

The four components of the decision making process are (Burch and Strater, 1974):

· Model A model is an abstract description of the decision problem. The model may be quantitative
or qualitative.

· Criteria The criteria must state how goals or objectives of the decision problem can be achieved.
When there is a conflict between different criteria, a choice has to be made through compromise.

· Constraints. Constraints are limiting factors which define outer limits and have to be respected
while making a decision. For example, limited availability of funds is a constraint with which most
decision makers have to live.

· Optimization Once the decision problem is fully described in a model, criteria for decision making
stipulated and constraints identified, the decision-maker can select the best possible solution.
Systems approach

Modern management is based upon a systems approach to the organization. The systems
approach views an organization as a set of interrelated sub-systems in which variables are
mutually dependent. A system can be perceived as having:

· some components, functions and the processes performed by these various components;

· relationships among the components that uniquely bind them together into a conceptual assembly
which is called a system; and

· an organizing principle that gives it a purpose (Albrecht, 1983).

The organizing system has five basic parts, which are interdependent (Murdick and Ross, 1975).
They are:

· the individual;

· the formal and informal organization;

· patterns of behaviour arising out of role demands of the organization;

· the role perception of the individuals; and

· the physical environment in which individuals work.

The interrelationship of the sub-systems within an organization is fundamental to the systems

approach. The different components of the organization have to operate in a coordinated manner
to attain common organizational goals. This results in synergic effects. The term synergy means
that when different sub-systems work together they tend to be more efficient than if they work in
isolation (Murdick and Ross, 1975). Thus, the output of a system with well integrated sub-systems
would be much more than the sum of the outputs of the independent sub-systems working in
isolation.

The systems approach provides a total view of the organization. It enables analysis of an
organization in a scientific manner, so that operating management systems can be developed and
an appropriate MIS designed (Murdick and Ross, 1975).
By providing the required information, an MIS can help interrelate, coordinate and integrate
different sub-systems within an organization, thus facilitating and increasing coordinated working of
the sub-systems, with consequent synergism. The interaction between different components of the
organization depends upon integration, communication and decision making. Together they create
a linking process in the organization.Integration ensures that different sub-systems work towards
the common goal. Coordination and integration are useful controlling mechanisms which ensure
smooth functioning in the organization, particularly as organizations become large and increasingly
complex. As organizations face environmental complexity, diversity and change, they need more
and more internal differentiation, and specialization becomes complex and diverse. The need for
integration also increases as structural dimensions increase.

Communication integrates different sub-systems (specialized units) at different levels in an

organization. It is thus a basic element of the organizational structure necessary for achieving the
organization's goals.

Organizational structure and MIS

MIS has been described as a pyramidal structure, with four levels of information resources. The
levels of information would depend upon the organizational structure. The top level supports
strategic planning and policy making at the highest level of management. The second level of
information resources aid tactical planning and decision making for management control. The third
level supports day-to-day operations and control. The bottom level consists of information for
transaction processing. It then follows that since decision making is specific to hierarchical levels in
an organization, the information requirements at each level vary accordingly.

Thus, MIS as a support system draws upon:

· concepts of organization;

· organizational theories, principles, structure, behaviour and processes such as communication,

power and decision making; and

· motivation and leadership behaviour.

Davis and Olson (1984) analysed the implications of different characteristics of the organizational
structure on the design of information systems (Table 1).
Group decision support system
Group Decision Support Systems
Group D Group decision system, is a computerized based system that helps managers and employees to
take better enhancing faster decisions, and also its main purpose to solve problems and help decision –
making process.

Group decision supported system, is like a DSS but here we do it in group, we can say it is an electronic
meeting for colleagues to discuss and take important decisions in business, and the result will be better
than if one person took the decision and it will faster for sure.

Group Decision Support Systems (GDSS)were referred to as a Group Support System (GSS) or
anelectronic meeting systemsince they shared similar foundations. However today’s GDSS is characterised
by being adapted for a group of people who collaborate to support integratedsystems thinkingfor complex
decision making. Participants use a common computer or network to enable collaboration.

Computer software and hardware used to support group functions and processes.

Why is GDSS better to OTIS company…

• High level managers can spend 80% of their time making decisions in groups. Applied correctly, GDSS
can reduce this time, arriving at a better decision faster.

• GDSS provides the hardware, software, databases and procedures for effective decision making.

Characteristics of GDSS …

• Special Design

• Ease of use

• Specific and general support

• Suppressing negative group behavior

• Supporting positive group behavior

• Organizational commitment/support

• Trained facilitators or may be user driven

• User training
• Anonymity

• Appropriate tasks

Dedicated decision rooms

Advantages of GDSS:

• Anonymity – drive out fear leading to better decisions from a diverse hierarchy of decision makers

• Parallel Communication – eliminate monopolizing providing increased participation, better decisions

• Automated record keeping – no need to take notes, they’re automatically recorded

• Ability for virtual meetings – only need hardware, software and people connected

• Portability – Can be set up to be portable… laptop

• Global Potential – People can be connected across the world

No need for a computer guru – although some basic experience is a must

Disadvantages of GDSS:

• Cost -infrastructure costs to provide the hardware and software/room/network connectivity can be very
expensive

• Security – especially true when companies rent the facilities for GDSS; also, the facilitator may be a
lower-level employee who may leak information to peers

• Technical Failure – power loss, loss of connectivity, relies heavily on bandwidth and LAN/WAN
infrastructure – properly setup system should minimize this risk

• Keyboarding Skills – reduced participation may result due to frustration

• Training – learning curve is present for users, varies by situation

• Perception of messages – lack of verbal communication could lead to misinterpretation

• Examples of GDSS :

• 1) “One example of implementation of GDSS is at IBM. They, as well as many other corporations, initiated
GDSS to improve group meetings. A specific case involved a plant manager not being able to identify the
cause of problems with shop floor control. After having a meeting for two hours with plant personnel all that
resulted were arguments and bad feelings.
• So after meeting with the company’s GDSS facilitator, the manager decided to have ten plant employees,
himself, and two junior analysts participate in a GDSS program. They would use electronic brainstorming
and voting to resolve the shop floor control problem.

• The manager and the facilitator decided the topic would be “What are the key issues in improving shop
floor control?”

• After brainstorming for 35 minutes and compiling 645 lines of suggestions, ideas and comments on how to
improve shop floor control, the manager found that he had gotten useful information about the issue for the
first time.

• A list was compiled of the comments and then the members of the group ranked them in order of
importance. The results were displayed and a discussion occurred for ten minutes. The manager thanked
the participants and was given a printout of all the discussion and results of the group vote (Aiken 3).”

• 2) “Another example is Hewlett-Packard. Their human-factors engineers work at locations all over the
world. And they meet in person only once a year. The rest of the time, they have frequent, ongoing
meetings to discuss professional and company issues. But they have these discussions through an
electronic conference and final decision making is done with the aid of GDSS (Sproull 121).”

Best Uses Of GDSS:

• Complex decision making

• For Large Groups – a meeting of 2 or 3 people does not justify GDSS investment

Future Implications of GDSS:

• Integrating into existing corporate framework

– GDSS brings changes which must be managed

• GDSS will incorporate Artificial Intelligence and Expert Systems – the software will “learn” and help the
users make better decisions

• Decreasing cost will allow more organizations to use GDSS

• Increasing implementation of GDSS with the customer

– Customer voice their needs in non-threatening environment

• GDSS may play a large role in the future of the virtual companies

• GDSS can help the virtual companies do business in the global business environment

• GDSS can help promote a culturally diverse work environment

• Tele work seems to make a lot of sense using GDSS

Choosing The Right GDSS:

• Consider the following;

– Decision Task Type

– Group Size

– Location of members of the group

EDSS
EDSS are equipped with user-friendly interface, interactive computer hardware/software, heuristic
models, and factual database from the existing databases. They derive the power from the inference
engine. knowledge acquisition mechanism. and knowledge from the KB of the ES. The integration creates
a synergistic effect which is higher than that of the two applied individually. It is a unified system, not just a
hotchpotch. The user-friendliness is deeply embedded in the system. They may be incorporated with
natural language processors in the near future. It will enable end users to directly communicate with the
system. The EDSS generates alternatives and evaluates them. then prompt the users the options from
which they can select for decision making. The system can function either as a consultant or advisor to deal
with uncertain, incomplete, fuzzy, or qualitative problems.

A PROPOSED STRUcruRE OF AN EDSS

As indicated earlier, there are many ways in structuring the integrated system. Many different
models and structures have been proposed. Here is a simple architecture of EDSS as shown in fig. 3. (Ma
and Lee, 1989) An EDSS consists of five components, three of them are very different from those in
traditional DSS or "pure" ES. The natural language interface functions as the language subsystem in DSS
and the user interface in ES. This intelligent interface signiJ'icantly improves the interaction between users
and computers and is more natural and more friendly for end users than the traditional DSS or ES. The
users of the system need not learn or remember all commands to communica~e with computers. nor do
they have to select different options through different levels of menus which are sometimes very
cumbersome. Users just pose queries and problems by using plain English or other natural languages. The
knowledge bank is an integration of the knowledge subsystem in DSS and the knowledge base in ES. It
contains not only a great deal of numerical information which is essential to business, but also symbolic
information which are vital for the construction and operation of analytical and judgmental of functions. This
integrated knowledge system consists of rules, procedures, databases, models, text, and concepts.

The knowledge acqUlSltlOn subsystem is designed mainly to make the system more flexible and
more adaptable, especially during the operation of the system. The environment will constantly change,
and new technology and information will be available all time. Therefore, the system must be kept changing
and updated accordingly. The main goal of the knowledge acqUisition subsystem is to receive these
changes and raw materials entered by developers or users through the natural language interface, to
transform them into rules, procedures, models and frames and then to send them to the knowledge bank,
problem-solving subsystem, inference engine respectively. The EDSS can function like a DSS .• In this
case, the components of DSS consists of a natural language interface, a problem processing subsystem,
and a knowledge bank. The EDSS can also be viewed as an ES. The components of ES are composed of
a natural language interface, an inference engine, and a knowledge bank. Unlike a traditional DSS, it has a
reasoning and explanation capability, strong qualitative, fuzzy and symbolic manipulation capabilities. It
provides alternatives or solutions to certain problems and offers advice and explanations as well. Unlike a
"pure" ES, it can deal with concrete or abstract problems which are often faced by a manager in his/her
daily routines. It can also easily be tailored to individual userstyles.

MIS - Knowledge Management System

All the systems we are discussing here come under knowledge management category. A knowledge
management system is not radically different from all these information systems, but it just extends the
already existing systems by assimilating more information.
As we have seen, data is raw facts, information is processed and/or interpreted data, and knowledge is
personalized information.

What is Knowledge?
 Personalized information
 State of knowing and understanding
 An object to be stored and manipulated
 A process of applying expertise
 A condition of access to information
 Potential to influence action

Sources of Knowledge of an Organization

  Intranet
 Data warehouses and knowledge repositories
 Decision support tools
 Groupware for supporting collaboration
 Networks of knowledge workers
 Internal expertise

Definition of KMS
A knowledge management system comprises a range of practices used in an organization to identify, create, represent,
distribute, and enable adoption to insight and experience. Such insights and experience comprise knowledge, either
embodied in individual or embedded in organizational processes and practices.

Purpose of KMS
 Improved performance
 Competitive advantage
 Innovation
 Sharing of knowledge
 Integration
 Continuous improvement by −
o Driving strategy
o Starting new lines of business
o Solving problems faster
o Developing professional skills
o Recruit and retain talent

Activities in Knowledge Management

 Start with the business problem and the business value to be delivered first.
 Identify what kind of strategy to pursue to deliver this value and address the KM problem.
 Think about the system required from a people and process point of view.
 Finally, think about what kind of technical infrastructure are required to support the people and processes.
 Implement system and processes with appropriate change management and iterative staged release.

Level of Knowledge Management

What are Knowledge Management Systems?
Knowledge management systems refer to any kind of IT system that stores and retrieves knowledge,
improves collaboration, locates knowledge sources, mines repositories for hidden knowledge, captures and
uses knowledge, or in some other way enhances the KM process.
If my explanation above makes the definition of these systems seem vague, that is because there is no
consensus as to what constitutes a knowledge management system, much like there is no consensus
regarding KM. Furthermore, since KM is involved in all areas of the firm, drawing a line is very difficult.
James Robertson (2007) goes as far as to argue that organizations should not even think in terms of
knowledge management systems. He argues that KM, though enhanced by technology, is not a technology
discipline, and thinking in terms of knowledge management systems leads to expectations of "silver bullet"
solutions. Instead, the focus should be determining the functionality of the IT systems that are required for
the specific activities and initiatives within the firm. However, with proper implementation, IT systems have
become a critical component of KM today.
For the purpose of this site (intended to be useful for those people that do search for terms like knowledge
management systems), I will break these down into the following general categories (adapted from the
work of Gupta and Sharma 2005, in Bali et al 2009):
 Groupware systems & KM 2.0
 The intranet and extranet
 Data warehousing, data mining, & OLAP
 Decision Support Systems
 Content management systems
 Document management systems
 Artificial intelligence tools
 Simulation tools
 Semantic networks
These categories will cover the vast majority of the systems that people would normally associate with a
KM system.

Problems and Failure Factors

Too often, the effects of technology on the organization are not given enough thought prior to the
introduction of a new system. There are two sets of knowledge necessary for the design and
implementation of a knowledge management system (Newell et al., 2000):
 The technical programming and design know-how
 Organizational know-how based on the understanding of knowledge flows
The problem is that rarely are both these sets of knowledge known by a single person. Moreover,
technology is rarely designed by the people who use it. Therefore, firms are faced with the issue of fit
between IT systems and organizational practices, as well as with acceptance within organizational
culture (Gamble & Blackwell 2001).
Botha et al (2008) stress the importance of understanding what knowledge management systems cannot
do. They point to the fact that introducing knowledge sharing technologies does not mean that experts will
share knowledge - other initiatives have to be in place.
Akhavan et al (2005) identify several additional failure factors including: lack of top management support,
organizational culture, lack of a separate budget, and resistance to change.
Building upon all this, and incorporating previously discussed elements, failure factors of knowledge
management systems are as follows:
 Inadequate support: managerial and technical, during both implementation and use.
 Expecting that the technology is a KM solution in itself.
 Failure to understand exactly what the firm needs (whether technologically or otherwise).
 Not understanding the specific function and limitation of each individual system.
 Lack of organizational acceptance, and assuming that if you build it, they will come – lack of appropriate
organizational culture.
 Inadequate quality measures (e.g. lack of content management).
 Lack of organizational/departmental/etc fit - does it make working in the organization. easier? Is a system
appropriate in one area of the firm but not another? Does it actually disrupt existing processes?
 Lack of understanding of knowledge dynamics and the inherent difficulty in transferring tacit knowledge with
IT based systems (see segment on tacit knowledge under knowledge sharing).
 Lack of a separate budget.

Promoting Acceptance and Assimilation

According to Hecht et al. (2011) the process of successful implementation has three stages: adoption,
acceptance, and assimilation. Based on recognized models and theories, the authors identified three
comprehensive sets of factors affecting these three elements. The resulting model organized the KMS
implementation factors into the following categories:
 Adoption:
 Influenced by design: Innovation characteristics, fit, expected results, communication characteristics.
 Not influenced by design: Environment, technological infrastructure, resources, organizational characteristics.
 Acceptance
 Influenced by design: Effort expectancy, performance expectancy.
 Not influenced by design: Social influences, attitude towards technology use.
 Assimilation:
 Influenced by design: social system characteristics, process characteristics.
 Not influenced by design: Management characteristics, institutional characteristics.
Step 1: KMS Adoption
Some of the key factors identified by Hecht et al (2011) are: characteristics, commercial advantage, cultural
values, information quality, organizational viability, and system quality. To promote KMS adoption:
 Start with an internal analysis of the firm.
 Evaluate information/knowledge needs & flows, lines of communication, communities of practice, etc. These
findings should form the basis of determining the systems needed to complement them.
 Make a thorough cost-benefit analysis, considering factors like size of firm, number of users, complexity of the
system structure, frequency of use, upkeep & updating costs, security issues, training costs (including
ensuring acceptance) etc. vs improvements in performance, lower response time, lower costs (relative to the
previous systems) etc.
 Evaluate existing work practices and determine how the systems will improve - and not hinder - the status
quo.
 One very interesting rule of thumb presented by Botha et al (2008), is that "the more tacit the knowledge, the
less high-tech the required solution". For example, expert knowledge is often best supported by multimedia
communication technology and by expert finders. Beyond that, it is about human interaction and
collaboration.
Step 2: KMS acceptance
Some of the factors outlined by Hecht et al. (2011) include: anxiety, ease of use, intrinsic motivation, job-fit,
results demonstrability, and social factors. Promoting acceptance can be improved by:
 Involve the users in the design and implementation process when possible (Liebowitz 1999).
 Involve the user in the evaluation of the system when applicable (Liebowitz 1999).
 Make it as user friendly and as intuitive as possible (Frank 2002).
 Support multiple perspectives of the stored knowledge (Frank 2002).
 Provide adequate technical and managerial support.
 Use product champions to promote the new systems throughout the organization.
Step 3: KMS Assimilation
Some of the factors identified by Hecht et al. (2011) include: knowledge barrier, management
championship, process cost, process quality, and promotion of collaboration. Assimilation can be improved
by:
 Content management (Gamble & Blackwell, 2001): In order for the system to remain useful, its content must
be kept relevant through updating, revising, filtering, organization, etc.
 Perceived attractiveness factors (Gamble & Blackwell, 2001): This includes not only the advantages of using
the KMS, but also of management's ability to convince users of these advantages.
 Proper budgeting: i.e. planning expenses and implementing a KMS that is cost efficient.
 Focus on collaboration. In particular, consider the adoption of enterprise 2.0 / KM 2.0 systems, which by
design promote collaboration while generally being inexpensive and often quite popular.
 Management involvement: The system must be championed by management at all levels.
Naturally, these factors do not apply to all systems. Some are fairly straightforward and accepted in today's
society (e.g. email). However, the strategic implications of implementing knowledge management systems
that significantly aim to change the way things are done in the organization requires proper consideration
and careful planning. Moreover, with the evolution of systems to better support different facets of KM, they
should be regarded as a critical component in the implementation of the discipline.
Enterprise-Wide Knowledge Management Systems

Enterprise-wide knowledge management systems are firmwide efforts to collect, store, distribute, and apply digital content and
knowledge. They use an array of technologies for storing structured and unstructured content, locating employee expertise,
searching for information, disseminating knowledge, and using data from key corporate systems.
Figure 11-4

FIGURE 11-4 ENTERPRISE-WIDE KNOWLEDGE MANAGEMENT SYSTEMS

Enterprise-wide knowledge management systems use an array of technologies for storing structured and unstructured documents, locating employee
expertise, searching for information, disseminating knowledge, and using data from enterprise applications and other key corporate systems.

There are three major categories of enterprise-wide KMS:

1. Structured knowledge systems

2. Semistructured knowledge systems

3. Knowledge networks

Structured knowledge systems provide databases and tools for organizing and storing structured knowledge that exists in formal documents.
KPMG International's KWorld is an example. It provides online access to presentations, white papers, best practice guidelines, methodologies,
human resources information, professional resumes, research reports, and external news sources. It also features a tool that permits
collaboration among team members and clients in a secure Web environment.

Figure 11-5
FIGURE 11-5 KWORLD’S KNOWLEDGE DOMAINS
KPMG’s KWorld is organized into nine levels of content that are further classified by product, market segment, and geographic area.

Semistructured knowledge systems provide databases and tools for organizing and storing semi structured knowledge, such as
e-mail, brochures, or rich media, that is not in a formal document or report. Such systems provide a database and technical
infrastructure that tracks, stores, and organizes semistructured content.

Figure 11-6
FIGURE 11-6 HUMMINGBIRD’S INTEGRATED KNOWLEDGE MANAGEMENT SYSTEM
Hummingbird’s enterprise solution combines document management, knowledge management, business intelligence, and portal technologies and can
be used for managing semistructured as well as structured knowledge.

Structured and semistructured knowledge systems provide knowledge repositories. Taxonomies (schemes for classifying

information) and tagging are used to classify repository content so that it is easier to access.

Knowledge network systems try to turn tacit, unstructured knowledge into explicit knowledge that can be shared in a database.
To disseminate tacit knowledge, knowledge network systems may provide directories and tools for locating firm employees with
special expertise, or provide solutions to commonly found problems in a central knowledge database or FAQ repository.

Figure 11-7
FIGURE 11-7 ASKME ENTERPRISE KNOWLEDGE NETWORK SYSTEM
A knowledge network maintains a database of firm experts, as well as accepted solutions to known problems. The system facilitates the communication
between employees looking for knowledge and internal solution providers, either through the Web-based system, standard e-mail such as Outlook, and
instant messaging solutions or handheld devices. Solutions created in this communication are then added to a database of solutions in the form of
frequently asked questions (FAQs), best practices, or other documents.

Technologies used for supporting knowledge management systems include:

 Enterprise knowledge portals to external information and internal resources

 Collaboration technologies, including e-mail, chat, discussion groups, conferencing

 Consumer Web technologies, such as blogs, wikis, and social bookmarking

 Learning management systems (LMS): LMS provide tools for managing, delivering, tracking, and assessing various
types of employee learning and training.
Knowledge Work Systems
Knowledge workers perform three key roles that are critical to the organization and to the managers who work
within the organization:

 Keeping the organization current in knowledge

 Serving as internal consultants regarding the areas of their knowledge

 Acting as change agents

Knowledge workers rely on traditional office systems but often require highly specialized knowledge work systems
with powerful graphics, analytical tools, and communications and document management capabilities. These
systems require great computing power, access to external databases, easy-to-use interfaces, and optimization for
the specific tasks to be performed.

FIGURE 11-8 REQUIREMENTS OF KNOWLEDGE WORK SYSTEMS

Knowledge work systems require strong links to external knowledge bases in addition to specialized hardware and software.
Examples of knowledge work systems include:

 CAD/CAM systems: Computer-aided design (CAD) and Computer-aided manufacturing (CAM) systems

automate the creation and revision of designs, using computers and sophisticated graphics software.
They provide engineers, designers, and factory managers with precise manufacturing control over
industrial design and manufacturing

 Virtual reality systems: These use interactive graphics software to aid drug designers, architects,
 engineers, and medical workers by presenting precise, three-dimensional simulations of objects.

 Investment workstations: These are high-end PCs used in the financial sector to analyze trading situations
instantaneously and facilitate portfolio management

Intelligent Techniques

Intelligence techniques may be used for:

 Capturing individual and collective knowledge and extending a knowledge base, using artificial intelligence and
database technologies

 Capturing tacit knowledge, using expert systems, case-based reasoning, and fuzzy logic

 Knowledge discovery, or discovering underlying, hidden patterns in data sets, using neural networks and data mining

 Generating solutions to highly complex problems, using genetic algorithms

 Automating routine tasks, using intelligent agents

Artificial intelligence (AI) is the effort to develop computer-based systems (both hardware and software) that behave as humans,
with the ability to learn languages, accomplish physical tasks, use a perceptual apparatus, and emulate human expertise and
decision making.

Expert systems:

 Capture tacit knowledge in a very specific, limited domain of human expertise

 Support highly structured decision making

 Model human knowledge as a set of rules called the knowledge base

 Work by applying a set of IF-THEN-ELSE rules extracted from human experts

 Use an inference engine to search through the knowledge base. In forward chaining, the inference engine begins with
information entered by the user to search the knowledge base for a conclusion. In backward chaining, the system
begins with a hypothesis and asks the user questions to confirm or disprove the hypothesis.
  Require input from both human experts for defining the knowledge base and knowledge engineers, who translate the
knowledge into a set of rules

Figure 11-9, Figure 11-10

FIGURE 11-9 RULES IN AN EXPERT SYSTEM

An expert system contains a number of rules to be followed. The rules are interconnected; the number of outcomes is known in advance and is limited;
there are multiple paths to the same outcome; and the system can consider multiple rules at a single time. The rules illustrated are for simple credit-
granting expert systems.
FIGURE 11-10 INFERENCE ENGINES IN EXPERT SYSTEMS
An inference engine works by searching through the rules and “firing” those rules that are triggered by facts gathered and entered by the user.
Basically, a collection of rules is similar to a series of nested IF statements in a traditional software program; however, the magnitude of the statements
and degree of nesting are much greater in an expert system.

Case-based reasoning (CBR):

 Stores cases (descriptions of past experiences) in a database for later retrieval

 Searches the database for cases with similar characteristics to a new case to find and apply appropriate solutions

 Rely on continuous expansion and refinement by users

Figure 11-11
FIGURE 11-11 HOW CASE-BASED REASONING WORKS
Case-based reasoning represents knowledge as a database of past cases and their solutions. The system uses a six-step process to generate
solutions to new problems encountered by the user.

Fuzzy logic systems:

 Use rule-based logic to represent imprecise or ambiguous values used in human or linguistic categorization, such as
defining and comparing terms such as "hot, warm, cool, cold" for use in a temperature control system.

 Provide solutions to problems requiring expertise that is difficult to represent in the form of crisp IF-THEN rules

Figure 11-12
FIGURE 11-12 IMPLEMENTING FUZZY LOGIC RULES IN HARDWARE
The membership functions for the input called temperature are in the logic of the thermostat to control the room temperature. Membership functions
help translate linguistic expressions such as warm into numbers that the computer can manipulate.
Source: James M. Sibigtroth, “Implementing Fuzzy Expert Rules in Hardware,” AI Expert, April 1992. © 1992 Miller Freeman, Inc. Reprinted with
permission.

Neural networks:

 Find patterns and relationships in massive amounts of data that would be too complicated and difficult for a human
being to analyze.

 "Learn" patterns by sifting through data, searching for relationships, building models, and correcting over and over
again the model's own mistakes.

 Use a large number of sensing and processing nodes that continuously interact with each other

 May be sensitive and not perform well with too little or too much data

 Are used in science, medicine, and business primarily to discriminate patterns in massive amounts of data.

Figure 11-13
FIGURE 11-13 HOW A NEURAL NETWORK WORKS
A neural network uses rules it “learns” from patterns in data to construct a hidden layer of logic. The hidden layer then processes inputs, classifying
them based on the experience of the model. In this example, the neural network has been trained to distinguish between valid and fraudulent credit
card purchases.

Genetic algorithms:

 Find optimal solutions to a problem by examining a very large number of possible solutions for that problem.

 Use adaptive, evolutionary conceptual models to change and reorganize components of possible solutions to create
viable solutions, test their fitness, and discard unlikely solutions

 Use processes such as fitness, crossover, and mutation are to "breed" solutions.

 Are useful for dynamic and complex business problems involving hundreds or thousands of variables, such as
problems involving engineering design optimization, product design, and monitoring industrial systems.

Figure 11-14
FIGURE 11-14 THE COMPONENTS OF A GENETIC ALGORITHM
This example illustrates an initial population of “chromosomes,” each representing a different solution. The genetic algorithm uses an iterative process
to refine the initial solutions so that the better ones, those with the higher fitness, are more likely to emerge as the best solution.
Source: Vasant Dhar and Roger Stein, Seven Methods for Transforming Corporate Data into Business Intelligence, p. 65, © 1997. Reprinted by
permission of Prentice Hall, Upper Saddle River, New Jersey.

Hybrid AI systems:

 Integrate genetic algorithms, fuzzy logic, neural networks, and expert systems are being developed to take advantage
of the best features of each technology.

Intelligent agents:

 Are software programs that work in the background without direct human intervention

 Carry out specific, repetitive, and predictable tasks

 Use a limited built-in or learned knowledge base to accomplish tasks or make decisions on the user's behalf

 Are used in agent-based modeling applications used to model or simulate the behavior of consumers, stock markets,
and supply chains and to predict the spread of epidemics

Figure 11-15
FIGURE 11-15 INTELLIGENT AGENTS IN P&G’S SUPPLY CHAIN NETWORK
Intelligent agents are helping Procter & Gamble shorten the replenishment cycles for products such as a box of Tide.

knowledge-based systems (KBS)

A knowledge-based system (KBS) is a form of artificial intelligence (AI) that aims to capture the
knowledge of human experts to support decision-making. Examples of knowledge-based systems
include expert systems, which are so called because of their reliance on human expertise.

The typical architecture of a knowledge-based system, which informs its problem-solving

method, includes a knowledge base and an inference engine. The knowledge base contains a
collection of information in a given field -- medical diagnosis, for example. The inference engine
deduces insights from the information housed in the knowledge base. Knowledge-based
systems also include an interface through which users query the system and interact with it.
A knowledge-based system may vary with respect to its problem-solving method or approach.
Some systems encode expert knowledge as rules and are therefore referred to as rule-based
systems. Another approach, case-based reasoning, substitutes cases for rules. Cases are
essentially solutions to existing problems that a case-based system will attempt to apply to a
new problem.

Knowledge-based
systems represent a rules-based or case-based approach to AI

Where knowledge-based systems are used

Over the years, knowledge-based systems have been developed for a number of applications.
MYCIN, for example, was an early knowledge-based system created to help doctors diagnose
diseases. Healthcare has remained an important market for knowledge-based systems, which
are now referred to as clinical decision-support systems in the health sciences context.

Knowledge-based systems have also been employed in applications as diverse as avalanche

path analysis, industrial equipment fault diagnosis and cash management.

Knowledge-based systems and artificial intelligence

While a subset of artificial intelligence, classical knowledge-based systems differ in approach to

some of the newer developments in AI.
Daniel Dennett, a philosopher and cognitive scientist, in his 2017 book, From Bacteria to Bach
and Back, cited a strategy shift from early AI, characterized by "top-down-organized,
bureaucratically efficient know-it-all" systems to systems that harness Big Data and "statistical
pattern-finding techniques" such as data-mining and deep learning in a more bottom-up
approach.

Examples of AI following the latter approach include neural network systems, a type of deep-

learning technology that concentrates on signal processing and pattern recognition problems
such as facial recognition.

Enterprise Resource Planning (ERP)

What Is Enterprise Resource Planning (ERP)?
Enterprise resource planning (ERP) is a process used by companies to manage and integrate the important
parts of their businesses. Many ERP software applications are important to companies because they help
them implement resource planning by integrating all of the processes needed to run their companies with a
single system. An ERP software system can also integrate planning, purchasing inventory, sales,
marketing, finance, human resources, and more.

Understanding Enterprise Resource Planning

You can think of an enterprise resource planning system as the glue that binds together the different
computer systems for a large organization. Without an ERP application, each department would have its
system optimized for its specific tasks. With ERP software, each department still has its system, but all of
the systems can be accessed through one application with one interface.

ERP applications also allow the different departments to communicate and share information more easily
with the rest of the company. It collects information about the activity and state of different divisions, making
this information available to other parts, where it can be used productively.

ERP applications can help a corporation become more self-aware by linking information about the
production, finance, distribution, and human resources together. Because it connects different technologies
used by each part of a business, an ERP application can eliminate costly duplicate and incompatible
technology. The process often integrates accounts payable, stock control systems, order-monitoring
systems, and customer databases into one system.

ERP offerings have evolved over the years from traditional software models that make use of physical
client servers to cloud-based software that offers remote, web-based access.
 ERP, or enterprise resource planning, is a modular software system designed to
integrate the main functional areas of an organization's business processes into a unified
system.

An ERP system includes core software components, often called modules, that focus on essential business
areas, such as finance and accounting, HR, production and materials management, customer relationship
management (CRM) and supply chain management. Organizations choose which core modules to use
based on which are most important to their particular business.

What primarily distinguishes ERP software from stand-alone targeted software -- which many vendors and
industry analysts refer to as best-of-breed solutions -- is a common central database from which the various
ERP software modules access information, some of which is shared with the other modules involved in a
given business process. This means that companies using ERP are largely saved from having to make
double entries to update information because the system shares the data, in turn enabling greater accuracy
and collaboration between the organization's departments.

ERP implementation options include on premises, cloud and a mix of the two, called hybrid, such as with
platform as a service (PaaS) and infrastructure as a service (IaaS). Although ERP has historically been
associated with expensive, monolithic, end-to-end implementations, cloud versions now enable easier
deployments, which SMBs are taking advantage of in greater numbers.

Some ERP systems also offer next-generation capabilities, such as AI, IoT and advanced analytics, to
foster digital transformation. Businesses typically turn to an ERP system when they outgrow spreadsheets
and disparate, often siloed software systems and need the unifying capabilities of an ERP system to enable
growth. As with many technology products, the specific definition of what constitutes ERP can vary widely
from vendor to vendor.

How ERP works

ERP systems rely on a centralized relational database, which collects business information and stores
them in tables. Having the data stored centrally allows end users, such as from finance, sales and other
departments, to quickly access the desired information for analysis.

Instead of employees in different departments managing their own spreadsheets and reports, ERP systems
allow for reporting to be generated from a single, centralized system. Information updated in one ERP
module, such as CRM, HR and finance, is sent to a central, shared database. The appropriate information
in the central database is then shared with the other modules.

Importance of ERP

Experts list four important business benefits of ERP:

 IT cost savings

 Business process efficiency

 A business process platform for process standardization

 A catalyst for business innovation

While businesses often focus on the first two areas because they’re easy to quantify, the latter two areas
can create greater impact for businesses.

ERP makes real-time business data available throughout the organization, which enables businesses to
adapt quickly and respond to changes. The business data available in ERP systems provides for more
informed decision making within an enterprise. ERP systems can also share data with third party partners
and vendors to improve efficiencies in the supply chain.

Benefits of ERP systems

ERP offers a plethora of benefits, most of which come from information sharing and standardization.
Because ERP components can share data more easily than disparate systems, they can make cross-
departmental business processes easier to manage on a daily basis. They can also enable better insights
from data, especially with the newer technologies that many ERP systems are including, such as powerful
analytics, machine learning and industrial IoT capabilities.

In addition, ERP software:

 boosts efficiencies by automating data collection;

 enables business growth by managing increasingly complex business processes;

 helps lower risk by enabling better compliance;

 fosters collaboration using data sharing and integrated information;

 provides better business intelligence and customer service capabilities; and

 improves supply chain management.

Advantages and disadvantages

Many consider ERP software to be a requirement for enterprises -- especially for core business functions
such as finance -- and the same is arguably true for growing SMBs. The sheer volume of data that
companies generate, along with the complexity of the global business landscape and modern consumer
demands, has made streamlining business processes and managing and optimizing data increasingly
critical. An ERP software system is typically at the core of such capabilities.

That said, there are advantages and disadvantages to implementing ERP.

Advantages:

 Can save money over the long run by streamlining processes.

 Provides a unified system that can lower IT-related expenses and end-user training costs.

 Enables greater visibility into myriad areas of the business, such as inventory, that are critical for
meeting customer needs.

 Enables better reporting and planning due to better data.

 Offers better compliance and data security, along with improved data, backup and the ability to control
user rights.

Disadvantages:

 Can have a high upfront cost.

 Can be difficult to implement.

 Requires change management during and after implementation.

 Basic, core ERP modules may be less sophisticated compared to targeted, stand-alone software.
Companies may require additional modules for more control and better management of specific areas,
such as the supply chain or customer relationship capabilities.

UNIT 3

The Role of Database Management System in Information Systems

An organized collection of data, databases need to be managed accordingly. A database management system (DBMS)
can help do that. So, what is a DBMS and what is its role in information systems? Let’s find out.

Typically organized to represent relevant aspects of reality, data stored in a database supports processes requiring this
information. However, this will happen only if there is a database management system in place. An information system is
nothing more than an organized collection of data if a DBMS is not organizing, controlling and classifying the data stored
there. The ultimate objective of a DBMS is to ensure the data integrity by implementing controls and providing
maintenance to data files.

The Importance of a Database Management System

The use of a computer database is typically involved in efficient data management. A shared, integrated computer
structure, a database stores the following:

 End-user data i.e. raw data relevant to the end user

 Metadata—the data about data, through which end-user data is integrated and managed
In case you weren’t aware, metadata describes the characteristics of the data and the set of relationships linking the data
present within the database. So, what is the role of a DBMS in all this? We discuss that next.

The Role of DBMS in Information Systems

A DBMS plays a crucial role in both the creation and management of data. Without a database management system,
running and managing data effectively is not possible. Serving as the intermediary between the user and the database, a
DBMS provides users access to files stored in a database. It provides the end user with a single, integrated view of the
data, and translates all applications it receives into complex operations that fulfil those requests. However, much of the
internal complexity of the database is hidden from the users and application programs.

From enabling the sharing of data in the database among multiple applications or users to providing users with a single all-
encompassing data repository, DBMS plays an important role in information systems. Following are some of the things a
DBMS enables in information systems:

Better Data Access Within the Company

With a DBMS, users within a company can access, update and delete data in a database or information system. This
information is easily available to users when the company’s information systems are integrated with the relational DBMS.

Stronger Relationships Between Data

A key function of database management systems is allowing different data sets to relate to one another. This makes a
DBMS ideal for managing relationships between data sets in a systematic and simple way. This, in turn, allows managers
to understand key statistics related to business operations and sales.

Improved Data Security

The more people access the data, the greater the risk of data security breaches. Generally, companies invest considerable
time, effort and money to ensure proper use of their data. But, this does not always produce the desired outcomes. With a
DBMS, organizations can ensure better enforcement of data privacy and security policies, which allows them to improve
overall data security.

database (DB)

A database is a collection of information that is organized so that it can be easily accessed, managed

and updated. Computer databases typically contain aggregations of data records or files, containing
information about sales transactions or interactions with specific customers.
In a relational database, digital information about a specific customer is organized into rows,
columns and tables which are indexed to make it easier to find relevant information
through SQL or NoSQL queries. In contrast, a graph database uses nodes and edges to define
relationships between data entries and queries require a special semantic search syntax.  As of
this writing, SPARQL is the only semantic query language that is approved by the World Wide
Web Consortium (W3C). 

Typically, the database manager provides users with the ability to control read/write access,
specify report generation and analyze usage. Some databases offer ACID (atomicity,
consistency, isolation and durability) compliance to guarantee that data is consistent and that
transactions are complete.

Types of databases

Databases have evolved since their inception in the 1960s, beginning with hierarchical and
network databases, through the 1980s with object-oriented databases, and today with SQL and
NoSQL databases and cloud databases.

In one view, databases can be classified according to content type: bibliographic, full text,
numeric and images. In computing, databases are sometimes classified according to their
organizational approach. There are many different kinds of databases, ranging from the most
prevalent approach, the relational database, to a distributed database, cloud database, graph
database or NoSQL database.

Relational database

A relational database, invented by E.F. Codd at IBM in 1970, is a tabular database in which
data is defined so that it can be reorganized and accessed in a number of different ways.

Relational databases are made up of a set of tables with data that fits into a predefined
category. Each table has at least one data category in a column, and each row has a certain
data instance for the categories which are defined in the columns.
The Structured Query Language (SQL) is the standard user and application program interface
for a relational database. Relational databases are easy to extend, and a new data category
can be added after the original database creation without requiring that you modify all the
existing applications.

Distributed database

A distributed database is a database in which portions of the database are stored in multiple
physical locations, and in which processing is dispersed or replicated among different points in
a network.

Distributed databases can be homogeneous or heterogeneous. All the physical locations in a

homogeneous distributed database system have the same underlying hardware and run the same
operating systems and database applications. The hardware, operating systems or database
applications in a heterogeneous distributed database may be different at each of the locations.

Cloud database

A cloud database is a database that has been optimized or built for a virtualized environment, either in
a hybrid cloud, public cloud or private cloud. Cloud databases provide benefits such as the ability to
pay for storage capacity and bandwidth on a per-use basis, and they provide scalability on demand,
along with high availability.

A cloud database also gives enterprises the opportunity to support business applications in a software-
as-a-service deployment.

NoSQL database

NoSQL databases are useful for large sets of distributed data.

NoSQL databases are effective for big data performance issues that relational databases aren't built to
solve. They are most effective when an organization must analyze large chunks of unstructured data or
data that's stored across multiple virtual servers in the cloud.
Object-oriented database

Items created using object-oriented programming languages are often stored in relational databases,

but object-oriented databases are well-suited for those items.

An object-oriented database is organized around objects rather than actions, and data rather than
logic. For example, a multimedia record in a relational database can be a definable data object, as
opposed to an alphanumeric value.

Graph database

A graph-oriented database, or graph database, is a type of NoSQL database that uses graph theory to
store, map and query relationships. Graph databases are basically collections of nodes and edges,
where each node represents an entity, and each edge represents a connection between nodes.

database
A database is an organized collection of data, generally stored and accessed electronically from a computer system.
Where databases are more complex they are often developed using formal design and modeling techniques.
The database management system (DBMS) is the software that interacts with end users, applications, and the database
itself to capture and analyze the data. The DBMS software additionally encompasses the core facilities provided to
administer the database. The sum total of the database, the DBMS and the associated applications can be referred to as a
"database system". Often the term "database" is also used to loosely refer to any of the DBMS, the database system or an
application associated with the database.

Classification
One way to classify databases involves the type of their contents, for example: bibliographic, document-text, statistical, or
multimedia objects. Another way is by their application area, for example: accounting, music compositions, movies, banking,
manufacturing, or insurance. A third way is by some technical aspect, such as the database structure or interface type. This
section lists a few of the adjectives used to characterize different kinds of databases.

 An in-memory database is a database that primarily resides in main memory, but is typically backed-up by non-volatile
computer data storage. Main memory databases are faster than disk databases, and so are often used where response
time is critical, such as in telecommunications network equipment.
 An active database includes an event-driven architecture which can respond to conditions both inside and outside the
database. Possible uses include security monitoring, alerting, statistics gathering and authorization. Many databases
provide active database features in the form of database triggers.
 A cloud database relies on cloud technology. Both the database and most of its DBMS reside remotely, "in the cloud", while
its applications are both developed by programmers and later maintained and used by end-users through a web
browser and Open APIs.
 Data warehouses archive data from operational databases and often from external sources such as market research firms.
The warehouse becomes the central source of data for use by managers and other end-users who may not have access to
operational data. For example, sales data might be aggregated to weekly totals and converted from internal product codes
to use UPCs so that they can be compared with ACNielsen data. Some basic and essential components of data
warehousing include extracting, analyzing, and mining data, transforming, loading, and managing data so as to make them
available for further use.
 A deductive database combines logic programming with a relational database.
 A distributed database is one in which both the data and the DBMS span multiple computers.
 A document-oriented database is designed for storing, retrieving, and managing document-oriented, or semi structured,
information. Document-oriented databases are one of the main categories of NoSQL databases.
 An embedded database system is a DBMS which is tightly integrated with an application software that requires access to
stored data in such a way that the DBMS is hidden from the application's end-users and requires little or no ongoing
maintenance.[21]
 End-user databases consist of data developed by individual end-users. Examples of these are collections of documents,
spreadsheets, presentations, multimedia, and other files. Several products exist to support such databases. Some of them
are much simpler than full-fledged DBMSs, with more elementary DBMS functionality.
 A federated database system comprises several distinct databases, each with its own DBMS. It is handled as a single
database by a federated database management system (FDBMS), which transparently integrates multiple autonomous
DBMSs, possibly of different types (in which case it would also be a heterogeneous database system), and provides them
with an integrated conceptual view.
 Sometimes the term multi-database is used as a synonym to federated database, though it may refer to a less integrated
(e.g., without an FDBMS and a managed integrated schema) group of databases that cooperate in a single application. In
this case, typically middleware is used for distribution, which typically includes an atomic commit protocol (ACP), e.g.,
the two-phase commit protocol, to allow distributed (global) transactions across the participating databases.
 A graph database is a kind of NoSQL database that uses graph structures with nodes, edges, and properties to represent
and store information. General graph databases that can store any graph are distinct from specialized graph databases
such as triplestores and network databases.
 An array DBMS is a kind of NoSQL DBMS that allows modeling, storage, and retrieval of (usually large) multi-
dimensional arrays such as satellite images and climate simulation output.
 In a hypertext or hypermedia database, any word or a piece of text representing an object, e.g., another piece of text, an
article, a picture, or a film, can be hyperlinked to that object. Hypertext databases are particularly useful for organizing large
amounts of disparate information. For example, they are useful for organizing online encyclopedias, where users can
conveniently jump around the text. The World Wide Web is thus a large distributed hypertext database.
 A knowledge base (abbreviated KB, kb or Δ[22][23]) is a special kind of database for knowledge management, providing the
means for the computerized collection, organization, and retrieval of knowledge. Also a collection of data representing
problems with their solutions and related experiences.

 A mobile database can be carried on or synchronized from a mobile computing device.

 Operational databases store detailed data about the operations of an organization. They typically process relatively high
volumes of updates using transactions. Examples include customer databases that record contact, credit, and demographic
information about a business's customers, personnel databases that hold information such as salary, benefits, skills data
about employees, enterprise resource planning systems that record details about product components, parts inventory, and
financial databases that keep track of the organization's money, accounting and financial dealings.
 A parallel database seeks to improve performance through parallelization for tasks such as loading data, building indexes
and evaluating queries.
The major parallel DBMS architectures which are induced by the underlying hardware architecture are:

 Shared memory architecture, where multiple processors share the main memory space, as well as other data
storage.
  Shared disk architecture, where each processing unit (typically consisting of multiple processors) has its own
main memory, but all units share the other storage.
 Shared nothing architecture, where each processing unit has its own main memory and other storage.

 Probabilistic databases employ fuzzy logic to draw inferences from imprecise data.

 Real-time databases process transactions fast enough for the result to come back and be acted on right away.
 A spatial database can store the data with multidimensional features. The queries on such data include location-based
queries, like "Where is the closest hotel in my area?".
 A temporal database has built-in time aspects, for example a temporal data model and a temporal version of SQL.
More specifically the temporal aspects usually include valid-time and transaction-time.
 A terminology-oriented database builds upon an object-oriented database, often customized for a specific field.
 An unstructured data database is intended to store in a manageable and protected way diverse objects that do not fit
naturally and conveniently in common databases. It may include email messages, documents, journals, multimedia
objects, etc. The name may be misleading since some objects can be highly structured. However, the entire possible
object collection does not fit into a predefined structured framework. Most established DBMSs now support
unstructured data in various ways, and new dedicated DBMSs are emerging.

INFORMATION MANAGEMENT
Information Management Definition
Information management (IM) is the process by which relevant information is provided to decision-makers in a timely manner
(Davis, 1997). Information management has largely been defined from an information systems perspective and equated with the
management of information technology. IM is a generic term that encompasses all the systems and processes within
organisations for the creation and use of corporate information. IM aims to get the right information to the right person at the right
place and at the right time (Robertson, 2005).
Information management (IM) concerns a cycle of organizational activity: the acquisition of information from
one or more sources, the custodianship and the distribution of that information to those who need it, and its
ultimate disposition through archiving or deletion.
This cycle of organisational involvement with information involves a variety of stakeholders, including those
who are responsible for assuring the quality, accessibility and utility of acquired information; those who are
responsible for its safe storage and disposal; and those who need it for decision making. Stakeholders
might have rights to originate, change, distribute or delete information according to organisational
information management policies.
Information management embraces all the generic concepts of management, including
the planning, organizing, structuring, processing, controlling, evaluation and reporting of information
activities, all of which is needed in order to meet the needs of those with organisational roles or functions
that depend on information. These generic concepts allow the information to be presented to the audience
or the correct group of people. After individuals are able to put that information to use, it then gains more
value.
Information management is closely related to, and overlaps with, the management
of data, systems, technology, processes and – where the availability of information is critical to
organisational success – strategy. This broad view of the realm of information management contrasts with
the earlier, more traditional view, that the life cycle of managing information is an operational matter that
requires specific procedures, organisational capabilities and standards that deal with information as
a product or a service.
Information management (IM) is the process of collecting, storing, managing and maintaining information in
all its forms. Information management is a broad term that incorporates policies and procedures for
centrally managing and sharing information among different individuals, organizations and/or information
systems throughout the information life cycle.
Information management may also be called information asset management.
Information management is generally an enterprise information system concept, where an
organization produces, owns and manages a suite of information. The information can be in the form of
physical data (such as papers, documents and books), or digital data assets. Information management
deals with the level and control of an organization's governance over its information assets. Information
management is typically achieved through purpose-built information management systems and by
supporting business processes and guidelines. Moreover, IM also focuses on how that information is
shared and delivered to various recipients, including individuals and different computing devices such as an
organization’s website, computers, servers, applications and/or mobile devices

Database management system

Connolly and Begg define Database Management System (DBMS) as a "software system that enables
users to define, create, maintain and control access to the database". [24]
The DBMS acronym is sometime extended to indicated the underlying database model, with RDBMS
for relational, OODBMS or ORDBMS for the object (orientated) model and ORDBMS for Object-Relational.
Other extensions can indicate some other characteristic, such as DDBMS for a distributed database
management systems.
The functionality provided by a DBMS can vary enormously. The core functionality is the storage, retrieval
and update of data. Codd proposed the following functions and services a fully-fledged general purpose
DBMS should provide:[25]

 Data storage, retrieval and update

 User accessible catalog or data dictionary describing the metadata
 Support for transactions and concurrency
 Facilities for recovering the database should it become damaged
 Support for authorization of access and update of data
 Access support from remote locations
 Enforcing constraints to ensure data in the database abides by certain rules
It is also generally to be expected the DBMS will provide a set of utilities for such purposes as may be
necessary to administer the database effectively, including import, export, monitoring, defragmentation and
analysis utilities.[26] The core part of the DBMS interacting between the database and the application
interface sometimes referred to as the database engine.
Often DBMSs will have configuration parameters that can be statically and dynamically tuned, for example
the maximum amount of main memory on a server the database can use. The trend is to minimise the
amount of manual configuration, and for cases such as embedded databases the need to target zero-
administration is paramount.
The large major enterprise DBMSs have tended to increase in size and functionality and can have involved
thousands of human years of development effort through their lifetime. [a]
Early multi-user DBMS typically only allowed for the application to reside on the same computer with
access via terminals or terminal emulation software. The client–server architecture was a development
where the application resided on a client desktop and the database on a server allowing the processing to
be distributed. This evolved into a multitier architecture incorporating application servers and web
servers with the end user interface via a web browser with the database only directly connected to the
adjacent tier.[27]
A general-purpose DBMS will provide public application programming interfaces (API) and optionally a
processor for database languages such as SQL to allow applications to be written to interact with the
database. A special purpose DBMS may use a private API and be specifically customised and linked to a
single application. For example, an email system performing many of the functions of a general-purpose
DBMS such as message insertion, message deletion, attachment handling, blocklist lookup, associating
messages an email address and so forth however these functions are limited to what is required to handle
email.
Application
External interaction with the database will be via an application program that interfaces with the DBMS.
[28]
 This can range from a database tool that allows users to execute SQL queries textually or graphically, to
a web site that happens to use a database to store and search information.
Application Program Interface
A programmer will code interactions to the database (sometimes referred to as a datasource) via
an application program interface (API) or via a database language. The particular API or language chosen
will need to be supported by DBMS, possible indirectly via a pre-processor or a bridging API. Some API's
aim to be database independent, ODBC being a commonly known example. Other common API's
include JDBC and ADO.NET.
Database languages
Database languages are special-purpose languages, which allow one or more of the following tasks,
sometimes distinguished as sublanguages:

 Data control language (DCL) – controls access to data;

 Data definition language (DDL) – defines data types such as creating, altering, or dropping tables and
the relationships among them;
 Data manipulation language (DML) – performs tasks such as inserting, updating, or deleting data
occurrences;
 Data query language (DQL) – allows searching for information and computing derived information.
Database languages are specific to a particular data model. Notable examples include:

 SQL combines the roles of data definition, data manipulation, and query in a single language. It was
one of the first commercial languages for the relational model, although it departs in some respects
from the relational model as described by Codd (for example, the rows and columns of a table can be
ordered). SQL became a standard of the American National Standards Institute (ANSI) in 1986, and of
the International Organization for Standardization (ISO) in 1987. The standards have been regularly
enhanced since and is supported (with varying degrees of conformance) by all mainstream commercial
relational DBMSs.[29][30]
 OQL is an object model language standard (from the Object Data Management Group). It has
influenced the design of some of the newer query languages like JDOQL and EJB QL.
 XQuery is a standard XML query language implemented by XML database systems such
as MarkLogic and eXist, by relational databases with XML capability such as Oracle and DB2, and also
by in-memory XML processors such as Saxon.
 SQL/XML combines XQuery with SQL.[31]
A database language may also incorporate features like:

 DBMS-specific configuration and storage engine management

 Computations to modify query results, like counting, summing, averaging, sorting, grouping, and cross-
referencing
 Constraint enforcement (e.g. in an automotive database, only allowing one engine type per car)
 Application programming interface version of the query language, for programmer convenience

Storage
Main articles: Computer data storage and Database engine

Database storage is the container of the physical materialization of a database. It comprises

the internal (physical) level in the database architecture. It also contains all the information needed
(e.g., metadata, "data about the data", and internal data structures) to reconstruct the conceptual
level and external level from the internal level when needed. Putting data into permanent storage is
generally the responsibility of the database engine a.k.a. "storage engine". Though typically accessed by a
DBMS through the underlying operating system (and often using the operating systems' file systems as
intermediates for storage layout), storage properties and configuration setting are extremely important for
the efficient operation of the DBMS, and thus are closely maintained by database administrators. A DBMS,
while in operation, always has its database residing in several types of storage (e.g., memory and external
storage). The database data and the additional needed information, possibly in very large amounts, are
coded into bits. Data typically reside in the storage in structures that look completely different from the way
the data look in the conceptual and external levels, but in ways that attempt to optimize (the best possible)
these levels' reconstruction when needed by users and programs, as well as for computing additional types
of needed information from the data (e.g., when querying the database).
Some DBMSs support specifying which character encoding was used to store data, so multiple encodings
can be used in the same database.
Various low-level database storage structures are used by the storage engine to serialize the data model
so it can be written to the medium of choice. Techniques such as indexing may be used to improve
performance. Conventional storage is row-oriented, but there are also column-oriented and correlation
databases.
Existing DBMSs provide various functions that allow management of a database and its data which can be
classified into four main functional groups:

 Data definition – Creation, modification and removal of definitions that define the organization of the
data.
 Update – Insertion, modification, and deletion of the actual data. [2]
 Retrieval – Providing information in a form directly usable or for further processing by other
applications. The retrieved data may be made available in a form basically the same as it is stored in
the database or in a new form obtained by altering or combining existing data from the database. [3]
 Administration – Registering and monitoring users, enforcing data security, monitoring performance,
maintaining data integrity, dealing with concurrency control, and recovering information that has been
corrupted by some event such as an unexpected system failure. [4]
Both a database and its DBMS conform to the principles of a particular database model.[5] "Database
system" refers collectively to the database model, database management system, and database. [6]
Physically, database servers are dedicated computers that hold the actual databases and run only the
DBMS and related software. Database servers are usually multiprocessor computers, with generous
memory and RAID disk arrays used for stable storage. RAID is used for recovery of data if any of the disks
fail. Hardware database accelerators, connected to one or more servers via a high-speed channel, are also
used in large volume transaction processing environments. DBMSs are found at the heart of most database
applications. DBMSs may be built around a custom multitasking kernel with built-in networking support, but
modern DBMSs typically rely on a standard operating system to provide these functions.
Since DBMSs comprise a significant market, computer and storage vendors often take into account DBMS
requirements in their own development plans. [7]
Databases and DBMSs can be categorized according to the database model(s) that they support (such as
relational or XML), the type(s) of computer they run on (from a server cluster to a mobile phone), the query
language(s) used to access the database (such as SQL or XQuery), and their internal engineering, which
affects performance, scalability, resilience, and security.

database management system (DBMS)

A database management system (DBMS) is system software for creating and
managing databases. A DBMS makes it possible for end users to create, read, update and
delete data in a database. The DBMS essentially serves as an interface between the database
and end users or application programs, ensuring that data is consistently organized and
remains easily accessible

Functions

The DBMS manages three important things: the data, the database engine that allows data
to be accessed, locked and modified, and the database schema, which defines the
database's logical structure. These three foundational elements help provide concurrency,
security, data integrity and uniform data administration procedures. Typical database
administration tasks supported by the DBMS include change management, performance
monitoring/tuning and backup and recovery. Many database management systems are also
responsible for automated rollbacks, restarts and recovery as well as the logging and
auditing of activity in databases.
The DBMS is perhaps most useful for providing a centralized view of data that can be
accessed by multiple users, from multiple locations, in a controlled manner. A DBMS can
limit what data the end user sees, as well as how that end user can view the data, providing
many views of a single database schema. End users and software programs are free from
having to understand where the data is physically located or on what type of storage media
it resides because the DBMS handles all requests.

The DBMS can offer both logical and physical data independence.This means it can protect
users and applications from needing to know where data is stored or having to be
concerned about changes to the physical structure of data. As long as programs use the
application programming interface (API) for the database that is provided by the DBMS,
developers won't have to modify programs just because changes have been made to the
database.

In a relational database management system (RDBMS), the most widely used type of
DBMS, this API is SQL, a standard programming language for defining, protecting and
accessing data in an RDBMS.

Popular types 

Popular database models and their management systems include:

 Relational database management system (RDBMS) -- adaptable to most use cases, but
RDBMS Tier-1 products can be quite expensive.
 NoSQL DBMS -- well-suited for loosely defined data structures that may evolve over
time.
 In-memory database management system (IMDBMS) -- provides faster response times
and better performance.
 Columnar database management system (CDBMS) -- well-suited for data
warehouses that have a large number of similar data items.
 Cloud-based database management system -- the cloud service provider is responsible
for providing and maintaining the DBMS.
Advantages of a DBMS

Using a DBMS to store and manage data comes with advantages, but also overhead. One
of the biggest advantages of using a DBMS is that it lets end users and application
programmers access and use the same data while managing data integrity. Data is better
protected and maintained when it can be shared using a DBMS instead of creating new
iterations of the same data stored in new files for every new application. The DBMS
provides a central store of data that can be accessed by multiple users in a controlled
manner.

Central storage and management of data within the DBMS provides:

 Data abstraction and independence.

 Data security.
 A locking mechanism for concurrent access.
 An efficient handler to balance the needs of multiple applications using the same data.
 The ability to swiftly recover from crashes and errors, including restartability and
recoverability.
 Robust data integrity capabilities.
 Logging and auditing of activity.
 Simple access using a standard API.
 Uniform administration procedures for data.

Another advantage of a DBMS is that it can be used to impose a logical, structured

organization on the data. A DBMS delivers economy of scale for processing large amounts
of data because it is optimized for such operations.

A DBMS can also provide many views of a single database schema. A view defines what
data the user sees and how that user sees the data. The DBMS provides a level of
abstraction between the conceptual schema that defines the logical structure of the
database and the physical schema that describes the files, indexes and other physical
mechanisms used by the database. When a DBMS is used, systems can be modified much
more easily when business requirements change. New categories of data can be added to
the database without disrupting the existing system and applications can be insulated from
how data is structured and stored.

Of course, a DBMS must perform additional work to provide these advantages, thereby
bringing with it the overhead. A DBMS will use more memory and CPU than a simple file
storage system, and different types of DBMSes will require different types and levels of
system resources.

Changes in how DBMSes are built, sold and serviced

By 2019, the most significant trends in the DBMS sector were how databases were constructed and how
they were used. Open source DBMS technologies were rapidly gaining traction. In fact, Gartner projected
that open source databases would account for 10% of total spending on database software by 2019 due to
increased enterprise adoption. Most mainstream IT organizations use open source software in some of
their mission-critical operations.
A database management system (DBMS) is a software package designed to define, manipulate, retrieve
and manage data in a database. A DBMS generally manipulates the data itself, the data format, field
names, record structure and file structure. It also defines rules to validate and manipulate this data.
A DBMS relieves users of framing programs for data maintenance. Fourth-generation query languages,
such as SQL, are used along with the DBMS package to interact with a database.
Some other DBMS examples include:

 MySQL
 SQL Server
 Oracle
 dBASE
 FoxPro

A database management system receives instruction from a database administrator (DBA) and
accordingly instructs the system to make the necessary changes. These commands can be to load,
retrieve or modify existing data from the system.
A DBMS always provides data independence. Any change in storage mechanism and formats are
performed without modifying the entire application. There are four main types of database organization:

 Relational Database: Data is organized as logically independent tables. Relationships among

tables are shown through shared data. The data in one table may reference similar data in
other tables, which maintains the integrity of the links among them. This feature is referred to
as referential integrity – an important concept in a relational database system. Operations such
as "select" and "join" can be performed on these tables. This is the most widely used system of
database organization.

 Flat Database: Data is organized in a single kind of record with a fixed number of fields. This
database type encounters more errors due to the repetitive nature of data.
 Object-Oriented Database: Data is organized with similarity to object-oriented programming
concepts. An object consists of data and methods, while classes group objects having similar
data and methods.
 Hierarchical Database: Data is organized with hierarchical relationships. It becomes a complex
network if the one-to-many relationship is violated.
 Database Concepts and Standards

These articles provide a basic background on concepts and standards for database management systems
(DBMS). Many of these concepts apply to all forms of database management systems: relational (RDBMS),
object (ODBMS), XML (XDBMS), and others as well as object-relational mapping and XML-mapping
products. 

Basic Concepts for Using a DBMS

ACID Properties
Atomicity
Consistency
Isolation
Durability

Concurrency Control and Locking

Page Locking
Cluster Locking
Class or Table Locking
Object or Instance Locking
Database Model Concepts
Object Model Concepts
Data Abstraction
Encapsulation
Inheritance
Relational Model Concepts
Comparing Object and Relational Models
Comparison of Object and Relational Terminology
Comparison of Object and Relational Concepts

DBMS Standards
 SQL-92
 JDBC
 SQLJ
 SQLJ Execution Environment
 Mapping SQL and Java Data Types
 SQL:1999
  ADO.NET
 Java Data Objects (JDO)
 JDO PersistenceManager
 JDO Identity Models
 JDO Query Language (JDOQL)
 ODMG 3.0

DBMS Database Models

A Database model defines the logical design and structure of a database and defines how data will be
stored, accessed and updated in a database management system. While the Relational Model is the most
widely used database model, there are other models too:

 Hierarchical Model

 Network Model

 Entity-relationship Model

 Relational Model

Hierarchical Model
This database model organises data into a tree-like-structure, with a single root, to which all the other data
is linked. The heirarchy starts from the Root data, and expands like a tree, adding child nodes to the parent
nodes.
In this model, a child node will only have a single parent node.
This model efficiently describes many real-world relationships like index of a book, recipes etc.
In hierarchical model, data is organised into tree-like structure with one one-to-many relationship between
two different types of data, for example, one department can have many courses, many professors and of-
course many students.
Network Model
This is an extension of the Hierarchical model. In this model data is organised more like a graph, and are
allowed to have more than one parent node.
In this database model data is more related as more relationships are established in this database model.
Also, as the data is more related, hence accessing the data is also easier and fast. This database model
was used to map many-to-many data relationships.
This was the most widely used database model, before Relational Model was introduced.

Entity-relationship Model
In this database model, relationships are created by dividing object of interest into entity and its
characteristics into attributes.
Different entities are related using relationships.
E-R Models are defined to represent the relationships into pictorial form to make it easier for different
stakeholders to understand.
This model is good to design a database, which can then be turned into tables in relational model(explained
below).
Let's take an example, If we have to design a School Database, then Student will be
an entity with attributes name, age, address etc. As Address is generally complex, it can be
another entity with attributes street name, pincode, city etc, and there will be a relationship between them.
Relationships can also be of different types. To learn about E-R Diagrams in details, click on the link.

Relational Model
In this model, data is organised in two-dimensional tables and the relationship is maintained by storing a
common field.
This model was introduced by E.F Codd in 1970, and since then it has been the most widely used database
model, infact, we can say the only database model used around the world.
The basic structure of data in the relational model is tables. All the information related to a particular type is
stored in rows of that table.
Hence, tables are also known as relations in relational model.
In the coming tutorials we will learn how to design tables, normalize them to reduce data redundancy and
how to use Structured Query language to access data from tables.
Data models in DBMS

Data models are used to show how the data is connected and stored inside a system. Data models mainly represent the

relationship between the data. The model is basically the high-level view between the attributes and entities. The three

main data models in a database management system are relational, network and hierarchical. But nowadays there are lots

of data models that are used in different implementations. here we will discuss the different types of Data Models in DBMS.

Different types of Data Models in DBMS

The different types of data models in DBMS that are used are as given below:
  Flat Data Model

 Entity-Relationship Model

 Relation Model

 Record base Model

 Network Model

 Hierarchical Model

 Object-oriented Data Model

 Object Relation Model

 Semi-structured Model

 Associative Model

 Context Data Model

Below are the detailed description of the above database models

 Flat Data Model:

Flat data model is the first introduced traditional data model where data is kept in the same plane. This is a very old model

which is not much scientific.

 Entity Relationship Data Model:

The Entity relationship data model structure based on the impression of the real world entities and the existing relationship

between them. In the process of designing the real world scenario into the database model the Entity sets are created in

the beginning and then the model is dependent on the two below vital things which are entities consisting of the attributes

and the relationship that exists among the entities. An entity contains a real-world property called attribute. Attributes are

defined by a set of values known as domains. For example, in an office the employee is an entity, the office is the

database, employee ID, name are the attributes. The logical association between the different entities are known as the

relationship among them.

  Relational Data Model:
The most popular and extensively used data model is the relational data model. The data model allows the data to be

stored in tables called relation. The relations are normalized and the normalized relation values are known as atomic

values. Each of the rows in a relation is called tuples which contains the unique value. The attributes are the values in each

of the columns which are of the same domain.

 Network Data Model:

In the network data model, all the entities are organized in graphical representations. There may be several parts in the

graph in which the entities can be accessed.

 Hierarchical Data Model:

The hierarchical model is based on the parent-child hierarchical relationship. In this model, there is one parent entity with

several children entity. At the top, there should be only one entity which is called root. For example, an organization is the

parent entity called root and it has several children entities like clerk, officer and many more.

 Object-oriented Data Model:

An object-oriented data model is one of the most developed data models which contains video, graphical files, and audio.

This consists of the data piece and the methods in the form of database management system instructions.

 Record base Data Model:

The record-based data model is used to determine the overall design of the database. This data model contains different

kinds of record types. Each of the record types has a fixed length and a fixed number of fields.

 Object-relational Data Model:

The object-relational data model is a powerful data model but for the design of the object-relational data, the model is very

complex. This model gives efficient results and widespread with huge application thus some part of the complexity problem

can be ignored because of this. It also offers features like working with other data models. Using the object-relational data

model we can work with the relational model also.

  Semi-structured Data Model:
The semi-structured data model is a self-describing data model. The data stored in this model is generally associated with

a scheme which is contained within the data property known as self-describing property.

 Associative Data Model:

Associative data model follows the principle of division which data in two ways between entities and association. Hence,

the model is dividing the data for all the real world scenarios into entities and associations.

 Context Data Model:

Context data models are very flexible as it contains a collection of several data models. It is a collection of data models like

the relational model, network model, semi-structured model, object-oriented model. Thus, because of the versatile design

of this database model different types of tasks can be accomplished. As a result, support for different types of users is

added which may differ by the interaction of the users in the database. The context data model brought a revolutionary

change in the industries by properly handling relevant data. The main function of the data models in a database

management system is helping the users to use and create databases. There are several types of data models depending

on the kind of structure the users need and based on that we can select the data models in the database management

system.

Conclusion – Data Models in DBMS

Data modeling is the method of developing the data model for the data to be stored in the database. This ensures

consistent naming convention and different other security features to maintain the quality of the data. Because of data

modeling, proper structure is defined for tables and different primary and foreign keys as well as stored procedures in the

database. There are three main models of data modelling like conceptual, logical, and physical. A conceptual model is

used to establish the entities, attributes, and relationships. A logical data model is to define the structure of the data
elements and set the relationship between them. Finally, the physical model is used to specify the database-centric

implementation of the model. The main motive of designing the data model is to ensure that the objects given by the

functional team are represented properly and accurately. The main disadvantage of database modeling is that a minimum

modification in the structure may result in the change in the entire application.

DBMS features and capabilities and DBMS building blocks

DBMS building blocks

A DBMS includes four main parts: modeling language, data structure, database query language, and
transaction mechanisms:

1)Modeling language

A data modeling language to define the schema of each database hosted in the DBMS, according to the
DBMS database model. The four most common types of models are the:

* hierarchical model,
* network model,
* relational model, and
* object model.
2)Data structure

Data structures (fields, records, files and objects) optimized to deal with very large amounts of data stored
on a permanent data storage device (which implies relatively slow access compared to volatile main
memory)

3) Database query language

A database query language and report writer allows users to interactively interrogate the database, analyze
its data and update it according to the users privileges on data. It also controls the security of the database.
Data security prevents unauthorized users from viewing or updating the database. Using passwords, users
are allowed access to the entire database or subsets of it called subschemas. For example, an employee
database can contain all the data about an individual employee, but one group of users may be authorized
to view only payroll data, while others are allowed access to only work history and medical data.

If the DBMS provides a way to interactively enter and update the database, as well as interrogate it, this
capability allows for managing personal databases. However, it may not leave an audit trail of actions or
provide the kinds of controls necessary in a multi-user organization. These controls are only available when
a set of application programs are customized for each data entry and updating function

4) Transaction mechanism
A database transaction mechanism ideally guarantees ACID properties in order to ensure data integrity
despite concurrent user accesses (concurrency control), and faults (fault tolerance). It also maintains the
integrity of the data in the database. The DBMS can maintain the integrity of the database by not allowing
more than one user to update the same record at the same time. The DBMS can help prevent duplicate
records via unique index constraints; for example, no two customers with the same customer numbers (key
fields) can be entered into the database. See ACID properties for more information (Redundancy
avoidance).

DBMS features and capabilities

 Query ability
 Backup and replication
 Rule enforcement
 security
 Computation
 Change and access logging
 Automated optimization
 Meta-data repository
 Relational DBMS

Query ability
Querying is the process of requesting attribute information from various perspectives and combinations of
factors. Example: "How many 2-door cars in Texas are green?" A database query language and report
writer allow users to interactively interrogate the database, analyze its data and update it according to the
users privileges on data.

Backup and replication

Copies of attributes need to be made regularly in case primary disks or other equipment fails. A periodic
copy of attributes may also be created for a distant organization that cannot readily access the original.
DBMS usually provide utilities to facilitate the process of extracting and disseminating attribute sets. When
data is replicated between database servers, so that the information remains consistent throughout the
database system and users cannot tell or even know which server in the DBMS they are using, the system
is said to exhibit replication transparency.

Rule enforcement
Often one wants to apply rules to attributes so that the attributes are clean and reliable. For example, we
may have a rule that says each car can have only one engine associated with it (identified by Engine
Number). If somebody tries to associate a second engine with a given car, we want the DBMS to deny such
a request and display an error message. However, with changes in the model specification such as, in this
example, hybrid gas-electric cars, rules may need to change. Ideally such rules should be able to be added
and removed as needed without significant data layout redesign.

Security
Often it is desirable to limit who can see or change which attributes or groups of attributes. This may be
managed directly by individual, or by the assignment of individuals and privileges to groups, or (in the most
elaborate models) through the assignment of individuals and groups to roles which are then granted
entitlements.

Computation
There are common computations requested on attributes such as counting, summing, averaging, sorting,
grouping, cross-referencing, etc. Rather than have each computer application implement these from
scratch, they can rely on the DBMS to supply such calculations.

Change and access logging

Often one wants to know who accessed what attributes, what was changed, and when it was changed.
Logging services allow this by keeping a record of access occurrences and changes.

Automated optimization
If there are frequently occurring usage patterns or requests, some DBMS can adjust themselves to improve
the speed of those interactions. In some cases the DBMS will merely provide tools to monitor performance,
allowing a human expert to make the necessary adjustments after reviewing the statistics collected.

Meta-data repository

Metadata is data describing data. For example, a listing that describes what attributes are allowed to be in
data sets is called "meta-information". The meta-data is also known as data about data.

Relational DBMS

Edgar Codd worked at IBM in San Jose, California, in one of their offshoot offices that was primarily
involved in the development of hard disk systems. He was unhappy with the navigational model of the
Codasyl approach, notably the lack of a "search" facility which was becoming increasingly useful. In 1970,
he wrote a number of papers that outlined a new approach to database construction that eventually
culminated in the groundbreaking A Relational Model of Data for Large Shared Data Banks.[1]

In this paper, he described a new system for storing and working with large databases. Instead of records
being stored in some sort of linked list of free-form records as in Codasyl, Codd's idea was to use a "table"
of fixed-length records. A linked-list system would be very inefficient when storing "sparse" databases
where some of the data for any one record could be left empty. The relational model solved this by splitting
the data into a series of normalized tables, with optional elements being moved out of the main table to
where they would take up room only if needed.

Database design 

Database design is the organization of data according to a database model. The designer determines what data must be stored
and how the data elements interrelate. With this information, they can begin to fit the data to the database model.[1]
Database design involves classifying data and identifying interrelationships. This theoretical representation of the data is called
an ontology. The ontology is the theory behind the database's design.

Determining data to be stored[edit]

In a majority of cases, a person who is doing the design of a database is a person with expertise in the area of database design,
rather than expertise in the domain from which the data to be stored is drawn e.g. financial information, biological information etc.
Therefore, the data to be stored in the database must be determined in cooperation with a person who does have expertise in that
domain, and who is aware of what data must be stored within the system.
This process is one which is generally considered part of requirements analysis, and requires skill on the part of the database
designer to elicit the needed information from those with the domain knowledge. This is because those with the necessary domain
knowledge frequently cannot express clearly what their system requirements for the database are as they are unaccustomed to
thinking in terms of the discrete data elements which must be stored. Data to be stored can be determined by Requirement
Specification.[2]

Determining data relationships[edit]

Once a database designer is aware of the data which is to be stored within the database, they must then determine where
dependency is within the data. Sometimes when data is changed you can be changing other data that is not visible. For example,
in a list of names and addresses, assuming a situation where multiple people can have the same address, but one person cannot
have more than one address, the address is dependent upon the name. When provided a name and the list the address can be
uniquely determined; however, the inverse does not hold - when given an address and the list, a name cannot be uniquely
determined because multiple people can reside at an address. Because an address is determined by a name, an address is
considered dependent on a name.
(NOTE: A common misconception is that the relational model is so called because of the stating of relationships between data
elements therein. This is not true. The relational model is so named because it is based upon the mathematical structures known
as relations.)

Logically structuring data[edit]

Main article: Logical schema

Once the relationships and dependencies amongst the various pieces of information have been determined, it is possible to
arrange the data into a logical structure which can then be mapped into the storage objects supported by the database
management system. In the case of relational databases the storage objects are tables which store data in rows and columns. In
an Object database the storage objects correspond directly to the objects used by the Object-oriented programming
language used to write the applications that will manage and access the data. The relationships may be defined as attributes of the
object classes involved or as methods that operate on the object classes.
The way this mapping is generally performed is such that each set of related data which depends upon a single object, whether
real or abstract, is placed in a table. Relationships between these dependent objects is then stored as links between the various
objects.
Each table may represent an implementation of either a logical object or a relationship joining one or more instances of one or
more logical objects. Relationships between tables may then be stored as links connecting child tables with parents. Since
complex logical relationships are themselves tables they will probably have links to more than one parent.

ER diagram (entity-relationship model)[edit]

A sample Entity-relationship diagram

Database designs also include ER (entity-relationship model) diagrams. An ER diagram is a diagram that helps to design
databases in an efficient way.
Attributes in ER diagrams are usually modeled as an oval with the name of the attribute, linked to the entity or relationship that
contains the attribute.

A design process suggestion for Microsoft Access[3][edit]

1. Determine the purpose of the database - This helps prepare for the remaining steps.
2. Find and organize the information required - Gather all of the types of information to record in the database, such as
product name and order number.
3. Divide the information into tables - Divide information items into major entities or subjects, such as Products or Orders.
Each subject then becomes a table.
4. Turn information items into columns - Decide what information needs to be stored in each table. Each item becomes a
field, and is displayed as a column in the table. For example, an Employees table might include fields such as Last Name
and Hire Date.
5. Specify primary keys - Choose each table's primary key. The primary key is a column, or a set of columns, that is used to
uniquely identify each row. An example might be Product ID or Order ID.
6. Set up the table relationships - Look at each table and decide how the data in one table is related to the data in other
tables. Add fields to tables or create new tables to clarify the relationships, as necessary.
7. Refine the design - Analyze the design for errors. Create tables and add a few records of sample data. Check if results
come from the tables as expected. Make adjustments to the design, as needed.
8. Apply the normalization rules - Apply the data normalization rules to see if tables are structured correctly. Make
adjustments to the tables, as needed.

Normalization[edit]
Main article: Database normalization
In the field of relational database design, normalization is a systematic way of ensuring that a database structure is suitable for
general-purpose querying and free of certain undesirable characteristics—insertion, update, and deletion anomalies that could lead
to loss of data integrity.
A standard piece of database design guidance is that the designer should create a fully normalized design;
selective denormalization can subsequently be performed, but only for performance reasons. The trade-off is storage space vs
performance. The more normalized the design is, the less data redundancy there is (and therefore, it takes up less space to store),
however, common data retrieval patterns may now need complex joins, merges, and sorts to occur - which takes up more data
read, and compute cycles. Some modeling disciplines, such as the dimensional modeling approach to data warehouse design,
explicitly recommend non-normalized designs, i.e. designs that in large part do not adhere to 3NF. Normalization consists of
normal forms that are 1NF,2NF,3NF,BOYCE-CODD NF (3.5NF),4NF and 5NF
Document databases take a different approach. A document that is stored in such a database, typically would contain more than
one normalized data unit and often the relationships between the units as well. If all the data units and the relationships in question
are often retrieved together, then this approach optimizes the number of retrieves. It also simplifies how data gets replicated,
because now there is a clearly identifiable unit of data whose consistency is self-contained. Another consideration is that reading
and writing a single document in such databases will require a single transaction - which can be an important consideration in
a Microservices architecture. In such situations, often, portions of the document are retrieved from other services via an API and
stored locally for efficiency reasons. If the data units were to be split out across the services, then a read (or write) to support a
service consumer might require more than one service calls, and this could result in management of multiple transactions, which
may not be preferred.

Physical design
Main article: Physical schema

The physical design of the database specifies the physical configuration of the database on the storage media. This
includes detailed specification of data elements, data types, indexing options and other parameters residing in the
DBMS data dictionary. It is the detailed design of a system that includes modules & the database's hardware &
software specifications of the system. Some aspects that are addressed at the physical layer:

 Security - end-user, as well as administrative security.

 Replication - what pieces of data get copied over into another database, and how often. Are there multiple-
masters, or a single one?
 High-availability - whether the configuration is active-passive, or active-active, the topology, coordination
scheme, reliability targets, etc all have to be defined.
 Partitioning - if the database is distributed, then for a single entity, how is the data distributed amongst all the
partitions of the database, and how is partition failure taken into account.
 Backup and restore schemes.
At the application level, other aspects of the physical design can include the need to define stored procedures, or
materialized query views, OLAP cubes, etc.

What is Database Design?

Database Design is a collection of processes that facilitate the designing,
development, implementation and maintenance of enterprise data management
systems
It helps produce  database systems

1. That meet the requirements of the users

2. Have high performance.

The main objectives of database designing are to produce logical and physical designs
models of the proposed database system.

 The logical model concentrates on the data requirements and the data to be stored
independent of physical considerations. It does not concern itself with how the data will be
stored or where it will be stored physically.

 The physical data design model involves translating the logical design of the database onto
physical media using hardware resources and software systems such as database
management systems (DBMS).

Why Database Design is Important ?

Database designing is crucial to high performance database system.

  Apart from improving the performance, properly designed database are easy to maintain, improve data
consistency and are cost effective in terms of disk storage space.

Note , the genius of a database is in its design . Data operations using SQL is relatively simple

Database development life cycle

 

The database development life cycle has a number of stages that are followed when developing database
systems.

The steps in the development life cycle do not necessary have to be followed religiously in a sequential
manner.

On small database systems, the database system development life cycle is usually very simple and does
not involve a lot of steps.

In order to fully appreciate the above diagram, let's look at the individual components listed in each step.

Requirements analysis

 Planning - This stages concerns with planning of entire Database Development Life Cycle  It  takes
into consideration the Information Systems strategy of the organization.
 System definition - This stage defines the scope and boundaries of the proposed database system.

Database designing

 Logical model - This stage is concerned with developing a database model based on requirements.
The entire design is on paper without any physical implementations or specific DBMS
considerations.
 Physical model - This stage implements the logical model of the database taking into account the
DBMS and physical implementation factors.

Implementation

 Data conversion and loading - this stage is concerned with importing and converting data from the
old system into the new database.
 Testing - this stage is concerned with the identification of errors  in the newly implemented
system .It checks the database against requirement specifications.

Two Types of Database Techniques

1.     Normalization
2.     ER Modeling

What is good database design?

 Certain principles guide the database design process. The first principle is that duplicate information (also
called redundant data) is bad, because it wastes space and increases the likelihood of errors and
inconsistencies. The second principle is that the correctness and completeness of information is important.
If your database contains incorrect information, any reports that pull information from the database will also
contain incorrect information. As a result, any decisions you make that are based on those reports will then
be misinformed.

The design process

The design process consists of the following steps:

 Determine the purpose of your database    

This helps prepare you for the remaining steps.

 Find and organize the information required     

Gather all of the types of information you might want to record in the database, such as product name and
order number.

 Divide the information into tables    

Divide your information items into major entities or subjects, such as Products or Orders. Each subject then
becomes a table.

 Turn information items into columns    

Decide what information you want to store in each table. Each item becomes a field, and is displayed as a
column in the table. For example, an Employees table might include fields such as Last Name and Hire
Date.

 Specify primary keys    

Choose each table’s primary key. The primary key is a column that is used to uniquely identify each row.
An example might be Product ID or Order ID.

 Set up the table relationships    

Look at each table and decide how the data in one table is related to the data in other tables. Add fields to
tables or create new tables to clarify the relationships, as necessary.
 Refine your design    

Analyze your design for errors. Create the tables and add a few records of sample data. See if you can get
the results you want from your tables. Make adjustments to the design, as needed.

 Apply the normalization rules    

Apply the data normalization rules to see if your tables are structured correctly. Make adjustments to the
tables, as needed.

Applying the normalization rules

You can apply the data normalization rules (sometimes just called normalization rules) as the next step in
your design. You use these rules to see if your tables are structured correctly. The process of applying the
rules to your database design is called normalizing the database, or just normalization.

Normalization is most useful after you have represented all of the information items and have arrived at a
preliminary design. The idea is to help you ensure that you have divided your information items into the
appropriate tables. What normalization cannot do is ensure that you have all the correct data items to begin
with.

You apply the rules in succession, at each step ensuring that your design arrives at one of what is known
as the "normal forms." Five normal forms are widely accepted — the first normal form through the fifth
normal form. This article expands on the first three, because they are all that is required for the majority of
database designs.

First normal form

First normal form states that at every row and column intersection in the table there, exists a single value,
and never a list of values. For example, you cannot have a field named Price in which you place more than
one Price. If you think of each intersection of rows and columns as a cell, each cell can hold only one value.

Second normal form

Second normal form requires that each non-key column be fully dependent on the entire primary key, not
on just part of the key. This rule applies when you have a primary key that consists of more than one
column. For example, suppose you have a table containing the following columns, where Order ID and
Product ID form the primary key:

 Order ID (primary key)

 Product ID (primary key)
 Product Name
 This design violates second normal form, because Product Name is dependent on Product ID, but not on
Order ID, so it is not dependent on the entire primary key. You must remove Product Name from the table.
It belongs in a different table (Products).

Third normal form

Third normal form requires that not only every non-key column be dependent on the entire primary key, but
that non-key columns be independent of each other.

Another way of saying this is that each non-key column must be dependent on the primary key and nothing
but the primary key. For example, suppose you have a table containing the following columns:

 ProductID (primary key)

 Name
 SRP
 Discount

Assume that Discount depends on the suggested retail price (SRP). This table violates third normal form
because a non-key column, Discount, depends on another non-key column, SRP. Column independence
means that you should be able to change any non-key column without affecting any other column. If you
change a value in the SRP field, the Discount would change accordingly, thus violating that rule. In this
case Discount should be moved to another table that is keyed on SRP.

A good database design is, therefore, one that:

 Divides your information into subject-based tables to reduce redundant data.

 Provides Access with the information it requires to join the information in the tables together as needed.
 Helps support and ensure the accuracy and integrity of your information.
 Accommodates your data processing and reporting needs.

Relational Database Management System(RDBMS)

Stands for "Relational Database Management System." An RDBMS is a DBMS designed specifically
for relational databases. Therefore, RDBMS are a subset of DBMS.
A relational database refers to a database that stores data in a structured format, using rows and columns.
This makes it easy to locate and access specific values within the database. It is "relational" because the
values within each table are related to each other. Tables may also be related to other tables. The
relational structure makes it possible to run queries across multiple tables at once.
While a relational database describes the type of database an RDMBS manages, the RDBMS refers to the
database program itself. It is the software that executes queries on the data, including adding, updating,
and searching for values. An RDBMS may also provide a visual representation of the data. For example, it
may display data in a tables like a spreadsheet, allowing you to view and even edit individual values in the
table. Some RDMBS programs allow you to create forms that can streamline entering, editing, and deleting
data.
Most well known DBMS applications fall into the RDBMS category. Examples include Oracle Database,
MySQL, Microsoft SQL Server, and IBM DB2. Some of these programs support non-relational databases,
but they are primarily used for relational database management.
Examples of non-relational databases include Apache HBase, IBM Domino, and Oracle NoSQL Database.
These type of databases are managed by other DMBS programs that support NoSQL, which do not fall into
the RDBMS category.

What is RDBMS?
RDBMS stands for Relational Database Management System. RDBMS is the basis for SQL, and for all
modern database systems like MS SQL Server, IBM DB2, Oracle, MySQL, and Microsoft Access.
A Relational database management system (RDBMS) is a database management system (DBMS) that is
based on the relational model as introduced by E. F. Codd.

What is a table?
The data in an RDBMS is stored in database objects which are called as  tables. This table is basically a
collection of related data entries and it consists of numerous columns and rows.
Remember, a table is the most common and simplest form of data storage in a relational database. The
following program is an example of a CUSTOMERS table −
+----+----------+-----+-----------+----------+
| ID | NAME | AGE | ADDRESS | SALARY |
+----+----------+-----+-----------+----------+
| 1 | Ramesh | 32 | Ahmedabad | 2000.00 |
| 2 | Khilan | 25 | Delhi | 1500.00 |
| 3 | kaushik | 23 | Kota | 2000.00 |
| 4 | Chaitali | 25 | Mumbai | 6500.00 |
| 5 | Hardik | 27 | Bhopal | 8500.00 |
| 6 | Komal | 22 | MP | 4500.00 |
| 7 | Muffy | 24 | Indore | 10000.00 |
+----+----------+-----+-----------+----------+

What is a field?
Every table is broken up into smaller entities called fields. The fields in the CUSTOMERS table consist of
ID, NAME, AGE, ADDRESS and SALARY.
A field is a column in a table that is designed to maintain specific information about every record in the
table.

What is a Record or a Row?

A record is also called as a row of data is each individual entry that exists in a table. For example, there
are 7 records in the above CUSTOMERS table. Following is a single row of data or record in the
CUSTOMERS table −
+----+----------+-----+-----------+----------+
| 1 | Ramesh | 32 | Ahmedabad | 2000.00 |
+----+----------+-----+-----------+----------+
A record is a horizontal entity in a table.

What is a column?
A column is a vertical entity in a table that contains all information associated with a specific field in a
table.
For example, a column in the CUSTOMERS table is ADDRESS, which represents location description and
would be as shown below −
+-----------+
| ADDRESS |
+-----------+
| Ahmedabad |
| Delhi |
| Kota |
| Mumbai |
| Bhopal |
| MP |
| Indore |
+----+------+

What is a NULL value?

A NULL value in a table is a value in a field that appears to be blank, which means a field with a NULL
value is a field with no value.
It is very important to understand that a NULL value is different than a zero value or a field that contains
spaces. A field with a NULL value is the one that has been left blank during a record creation.

SQL Constraints
Constraints are the rules enforced on data columns on a table. These are used to limit the type of data
that can go into a table. This ensures the accuracy and reliability of the data in the database.
Constraints can either be column level or table level. Column level constraints are applied only to one
column whereas, table level constraints are applied to the entire table.
Following are some of the most commonly used constraints available in SQL −
 NOT NULL Constraint − Ensures that a column cannot have a NULL value.
 DEFAULT Constraint − Provides a default value for a column when none is specified.
 UNIQUE Constraint − Ensures that all the values in a column are different.
 PRIMARY Key − Uniquely identifies each row/record in a database table.
 FOREIGN Key − Uniquely identifies a row/record in any another database table.
 CHECK Constraint − The CHECK constraint ensures that all values in a column satisfy certain conditions.
 INDEX − Used to create and retrieve data from the database very quickly.

Data Integrity
The following categories of data integrity exist with each RDBMS −
 Entity Integrity − There are no duplicate rows in a table.
 Domain Integrity − Enforces valid entries for a given column by restricting the type, the format, or the range of
values.
 Referential integrity − Rows cannot be deleted, which are used by other records.
 User-Defined Integrity − Enforces some specific business rules that do not fall into entity, domain or referential
integrity.

Database Normalization
Database normalization is the process of efficiently organizing data in a database. There are two reasons
of this normalization process −
 Eliminating redundant data, for example, storing the same data in more than one table.
 Ensuring data dependencies make sense.
Both these reasons are worthy goals as they reduce the amount of space a database consumes and
ensures that data is logically stored. Normalization consists of a series of guidelines that help guide you in
creating a good database structure.
Normalization guidelines are divided into normal forms; think of a form as the format or the way a
database structure is laid out. The aim of normal forms is to organize the database structure, so that it
complies with the rules of first normal form, then second normal form and finally the third normal form.
It is your choice to take it further and go to the fourth normal form, fifth normal form and so on, but in
general, the third normal form is more than enough.

 First Normal Form (1NF)

 Second Normal Form (2NF)
 Third Normal Form (3NF)
First normal form
The First normal form (1NF) sets basic rules for an organized database −
 Define the data items required, because they become the columns in a table.
 Place the related data items in a table.
 Ensure that there are no repeating groups of data.
 Ensure that there is a primary key.

First Rule of 1NF

You must define the data items. This means looking at the data to be stored, organizing the data into
columns, defining what type of data each column contains and then finally putting the related columns into
their own table.
For example, you put all the columns relating to locations of meetings in the Location table, those relating
to members in the MemberDetails table and so on.

Second Rule of 1NF

The next step is ensuring that there are no repeating groups of data. Consider we have the following table
−
CREATE TABLE CUSTOMERS(
ID INT NOT NULL,
NAME VARCHAR (20) NOT NULL,
AGE INT NOT NULL,
ADDRESS CHAR (25),
ORDERS VARCHAR(155)
);
So, if we populate this table for a single customer having multiple orders, then it would be something as
shown below −

ID NAME AGE ADDRESS ORDERS

100 Sachin 36 Lower West Side Cannon XL-200

100 Sachin 36 Lower West Side Battery XL-200

100 Sachin 36 Lower West Side Tripod Large

But as per the 1NF, we need to ensure that there are no repeating groups of data. So, let us break the
above table into two parts and then join them using a key as shown in the following program −
CUSTOMERS table −
CREATE TABLE CUSTOMERS(
ID INT NOT NULL,
NAME VARCHAR (20) NOT NULL,
AGE INT NOT NULL,
ADDRESS CHAR (25),
PRIMARY KEY (ID)
);
This table would have the following record −

ID NAME AGE ADDRESS

100 Sachin 36 Lower West Side

ORDERS table −
CREATE TABLE ORDERS(
ID INT NOT NULL,
CUSTOMER_ID INT NOT NULL,
ORDERS VARCHAR(155),
PRIMARY KEY (ID)
);
This table would have the following records −

ID CUSTOMER_ID ORDERS

10 100 Cannon XL-200

11 100 Battery XL-200

12 100 Tripod Large

Third Rule of 1NF
The final rule of the first normal form, create a primary key for each table which we have already created.
Second Normal
The Second Normal Form states that it should meet all the rules for 1NF and there must be no partial
dependences of any of the columns on the primary key −
Consider a customer-order relation and you want to store customer ID, customer name, order ID and
order detail and the date of purchase −
CREATE TABLE CUSTOMERS(
CUST_ID INT NOT NULL,
CUST_NAME VARCHAR (20) NOT NULL,
ORDER_ID INT NOT NULL,
ORDER_DETAIL VARCHAR (20) NOT NULL,
SALE_DATE DATETIME,
PRIMARY KEY (CUST_ID, ORDER_ID)
);
This table is in the first normal form; in that it obeys all the rules of the first normal form. In this table, the
primary key consists of the CUST_ID and the ORDER_ID. Combined, they are unique assuming the same
customer would hardly order the same thing.
However, the table is not in the second normal form because there are partial dependencies of primary
keys and columns. CUST_NAME is dependent on CUST_ID and there's no real link between a customer's
name and what he purchased. The order detail and purchase date are also dependent on the ORDER_ID,
but they are not dependent on the CUST_ID, because there is no link between a CUST_ID and an
ORDER_DETAIL or their SALE_DATE.
To make this table comply with the second normal form, you need to separate the columns into three
tables.
First, create a table to store the customer details as shown in the code block below −
CREATE TABLE CUSTOMERS(
CUST_ID INT NOT NULL,
CUST_NAME VARCHAR (20) NOT NULL,
PRIMARY KEY (CUST_ID)
);
The next step is to create a table to store the details of each order −
CREATE TABLE ORDERS(
ORDER_ID INT NOT NULL,
ORDER_DETAIL VARCHAR (20) NOT NULL,
PRIMARY KEY (ORDER_ID)
);
Finally, create a third table storing just the CUST_ID and the ORDER_ID to keep a track of all the orders
for a customer −
CREATE TABLE CUSTMERORDERS(
CUST_ID INT NOT NULL,
ORDER_ID INT NOT NULL,
SALE_DATE DATETIME,
PRIMARY KEY (CUST_ID, ORDER_ID)
);

Third normal
A table is in a third normal form when the following conditions are met −

 It is in second normal form.

 All nonprimary fields are dependent on the primary key.
The dependency of these non-primary fields is between the data. For example, in the following table – the
street name, city and the state are unbreakably bound to their zip code.
CREATE TABLE CUSTOMERS(
CUST_ID INT NOT NULL,
CUST_NAME VARCHAR (20) NOT NULL,
DOB DATE,
STREET VARCHAR(200),
CITY VARCHAR(100),
STATE VARCHAR(100),
ZIP VARCHAR(12),
EMAIL_ID VARCHAR(256),
PRIMARY KEY (CUST_ID)
);
The dependency between the zip code and the address is called as a transitive dependency. To comply
with the third normal form, all you need to do is to move the Street, City and the State fields into their own
table, which you can call as the Zip Code table. −
CREATE TABLE ADDRESS(
ZIP VARCHAR(12),
STREET VARCHAR(200),
CITY VARCHAR(100),
STATE VARCHAR(100),
PRIMARY KEY (ZIP)
);
The next step is to alter the CUSTOMERS table as shown below −
CREATE TABLE CUSTOMERS(
 CUST_ID INT NOT NULL,
CUST_NAME VARCHAR (20) NOT NULL,
DOB DATE,
ZIP VARCHAR(12),
EMAIL_ID VARCHAR(256),
PRIMARY KEY (CUST_ID)
);
The advantages of removing transitive dependencies are mainly two-fold. First, the amount of data
duplication is reduced and therefore your database becomes smaller.
The second advantage is data integrity. When duplicated data changes, there is a big risk of updating only
some of the data, especially if it is spread out in many different places in the database.
For example, if the address and the zip code data were stored in three or four different tables, then any
changes in the zip codes would need to ripple out to every record in those three or four tables.

Using Databases to Improve Business Performance and Decision-Making

Businesses use their databases to:

 Keep track of basic transactions

 Provide information that will help the company run the business more efficiently

 Help managers and employees make better decisions

In a large company, special capabilities and tools are required for analyzing vast quantities of data and for
accessing data from multiple systems, such as:

 Data warehouse: a database that stores current and historical data from core operational
transactional systems for use in management analysis, but this data cannot be altered.

 Data mart: A subset of a data warehouse in which a summarized or highly focused portion of the
organization's data is placed in a separate database for a specific population of users.

 Business intelligence (BI) tools: Data analysis tools used for consolidating, analyzing, and
accessing vast stores of data to help in decision making, such as software for database query and
reporting, tools for multidimensional data analysis (online analytical processing), and data mining.

Figure 6-13, Figure 6-14

FIGURE 6-13 COMPONENTS OF A DATA WAREHOUSE
The data warehouse extracts current and historical data from multiple operational systems inside the
organization. These data are combined with data from external sources and reorganized into a central
database designed for management reporting and analysis. The information directory provides users with
information about the data available in the warehouse.

FIGURE 6-14 BUSINESS INTELLIGENCE

A series of analytical tools works with data stored in databases to find patterns and insights for helping
managers and employees make better decisions to improve organizational performance.
Online Analytical Processing (OLAP) supports multidimensional data analysis, enabling users to view the
same data in different ways using multiple dimensions, for example: How many dishwashers were sold in
the East in June.

Figure 6-15

FIGURE 6-15 MULTIDIMENSIONAL DATA MODEL

The view that is showing is product versus region. If you rotate the cube 90 degrees, the face that will show
is product versus actual and projected sales. If you rotate the cube 90 degrees again, you will see region
versus actual and projected sales. Other views are possible.
Data mining finds hidden patterns and relationships and infers rules from these to predict future behavior.
The types of information obtainable from data mining include

 Associations
 Sequences
 Classifications
 Clustering
 Forecasting

Predictive analysis uses data mining techniques, historical data, and assumptions about future conditions
to predict outcomes of events, such as the probability a customer will respond to an offer or purchase a
specific product.

Databases can be linked to the Web by using middleware software products, allowing users or clients to
access corporate data through a Web browser interface. Such software might consist of an application
server, a custom software program, or CGI (common gateway interface) scripts. In a client/server
environment, the DBMS might reside on a special dedicated computer called a database server. Web
interfaces are easy to use and require few or no changes to the internal database.

Figure 6-16
FIGURE 6-16 LINKING INTERNAL DATABASES TO THE WEB
Users access an organization’s internal database through the Web using their desktop PCs and Web
browser software.

Client/Server Architecture

Client/server architecture is a computing model in which the server hosts, delivers and manages most of the
resources and services to be consumed by the client. This type of architecture has one or more client computers
connected to a central server over a network or internet connection. This system shares computing resources.
Client/server architecture is also known as a networking computing model or client/server network because all the
requests and services are delivered over a network.

Client/Server Architecture
Client/server architecture is a producer/consumer computing architecture where the server acts as the producer and
the client as a consumer. The server houses and provides high-end, computing-intensive services to the client on
demand. These services can include application access, storage, file sharing, printer access and/or direct access to
the server’s raw computing power.
Client/server architecture works when the client computer sends a resource or process request to the server over the
network connection, which is then processed and delivered to the client. A server computer can manage several
clients simultaneously, whereas one client can be connected to several servers at a time, each providing a different
set of services. In its simplest form, the internet is also based on client/server architecture where web servers serve
many simultaneous users with website data

The Internet has brought revolutionary change in the world of technologies, bringing the
entire globe interconnected. But it follows some specific architecture and structure for
communication. The popular is the client-server architecture which is a computing model,
where the server hosts, distributes and controls the majority of the resources as well as
services to be used by the client. Such structural designs are made up of one or more client
systems connected to central or main servers through a network, which we usually know as
an Internet connection. All such systems associated with it share computing resources.

The client-server architecture is also termed as a network-computing structure because

every request and their associated services are distributed over a network. So now the
question is how the thing works? In the client-server architecture, when the client computer
sends a request for data to the server through the internet, the server accepts the
requested, process it and deliver the data packets requested back to the client. One special
feature is that the server computer has the potential to manage numerous clients at the
same time. Also, a single client can connect to numerous servers at a single timestamp,
where each server provides a different set of services to that specific client.

Let us take a scenario where we require today's weather data for our city. There will be
someone, i.e., the server in which periodic updates regarding the weather will be updated
and stored. Before the existence of computers, people get such news through the daily
newspaper or may listen to the radio broadcasting weather news. In the modern world with
 computers and servers, there are two participants — first, the users, who scrounge for the
weather report and the second is the weather info up-loaders (in the server) who provide the
weather-related information. So these two participants are termed individually.

 First of all, consumers who type specific URLs for weather reports and consume particular
information. They are also called customers.
 Second, there are providers, who upload their data on their system/server to provide
information through the Internet. They are also called servers.
So, the clients and servers are two different computers in different parts of the world that are
connected through the Internet. However, it is not compulsory to have the client, and the
server resides miles apart, rather it could remain within the same building as well.

So, now we as a user can type that specific URL (let suppose any weather-forecasting site)
and surf for the weather report. But some additional factors come into action with such
online data gathering technologies. Your newspaper or radio uses your local language to
give you the weather report and other information. But, for the client-server architecture on
the web, specific factors need to be considered:

 A specific set of languages along with a communication standard, exclusively a protocol

for the interaction of two systems. The most popular are the HTTP and HTTPS (Hyper
Text Transfer Protocol Secure).
 Mechanism and protocol for requesting the required aspects from the server. That could
be in any structure of formatted data. Mainly implemented and popular formats are done in
XML and JSON.
 Next, the server responds by sending a reply in a structure of formatted data, (usually
XML or JSON)

Client-server architecture, architecture of a computer network in which many clients (remote

processors) request and receive service from a centralized server (host computer). Client
computers provide an interface to allow a computer user to request services of the server and
to display the results the server returns. Servers wait for requests to arrive from clients and
then respond to them. Ideally, a server provides a standardized transparent interface to clients
so that clients need not be aware of the specifics of the system (i.e.,
the hardware and software) that is providing the service. Clients are often situated
at workstations or on personal computers, while servers are located elsewhere on the network,
usually on more powerful machines. This computing model is especially effective when clients
and the server each have distinct tasks that they routinely perform. In hospital data processing,
for example, a client computer can be running an application program for entering patient
information while the server computer is running another program that manages
the database in which the information is permanently stored. Many clients can access the
server’s information simultaneously, and, at the same time, a client computer can perform other
tasks, such as sending e-mail. Because both client and server computers are considered
intelligent devices, the client-server model is completely different from the old “mainframe”
model, in which a centralized mainframe computer performed all the tasks for its associated
“dumb” terminals.

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DBMS Architecture
o The DBMS design depends upon its architecture. The basic client/server architecture is used to deal with a large
number of PCs, web servers, database servers and other components that are connected with networks.
o The client/server architecture consists of many PCs and a workstation which are connected via the network.
o DBMS architecture depends upon how users are connected to the database to get their request done.

Types of DBMS Architecture

 Database architecture can be seen as a single tier or multi-tier. But logically, database architecture is of two types like: 2-tier
architecture and 3-tier architecture.

1-Tier Architecture
o In this architecture, the database is directly available to the user. It means the user can directly sit on the DBMS
and uses it.
o Any changes done here will directly be done on the database itself. It doesn't provide a handy tool for end users.

o The 1-Tier architecture is used for development of the local application, where programmers can
directly communicate with the database for the quick response.

2-Tier Architecture
o The 2-Tier architecture is same as basic client-server. In the two-tier architecture, applications on the
client end can directly communicate with the database at the server side. For this interaction, API's
like: ODBC, JDBC are used.
o The user interfaces and application programs are run on the client-side.
 o The server side is responsible to provide the functionalities like: query processing and transaction
management.
o To communicate with the DBMS, client-side application establishes a connection with the server side.

Fig: 2-tier Architecture

3-Tier Architecture
o The 3-Tier architecture contains another layer between the client and server. In this architecture, client
can't directly communicate with the server.
o The application on the client-end interacts with an application server which further communicates with
the database system.
o End user has no idea about the existence of the database beyond the application server. The database
also has no idea about any other user beyond the application.
o The 3-Tier architecture is used in case of large web application.
Fig: 3-tier Architecture