Unit II

Management Information systems (MIS)

Management Information Systems (MIS) is the study of people, technology,

organizations, and the relationships among them MIS is a people-oriented field
with an emphasis on service through technology.
Businesses use information systems at all levels of operation to collect, process,
and store data. Management aggregates and disseminates this data in the form of
information needed to carry out the daily operations of business. Everyone who
works in business, from someone who pays the bills to the person who makes
employment decisions, uses information systems. For Example
 A car dealership could use a computer database to keep track of which
products sell best.
 A retail store might use a computer-based information system to sell
products over the Internet.
The three components of MIS provide a more complete and focused definition,
where System suggests integration and holistic view, Information stands for
processed data, and Management is the ultimate user, the decision makers.

Management information system can thus be analyzed as follows −

Management
Management covers the planning, control, and administration of the operations
of a concern. The top management handles planning; the middle management
concentrates on controlling; and the lower management is concerned with actual
administration.
Information
Information, in MIS, means the processed data that helps the management in
planning, controlling and operations. Data means all the facts arising out of the
operations of the concern. Data is processed i.e. recorded, summarized, compared
and finally presented to the management in the form of MIS report.
System
Data is processed into information with the help of a system. A system is made
up of inputs, processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information
to the management for performing its functions.
So that Management Information System or 'MIS' is a planned system of
collecting, storing, and disseminating data in the form of information needed to
carry out the functions of management and the purpose of MIS is to extract data
from varied sources and derive insights that drive business growth. 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
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.
Objectives of MIS
The goals of an MIS are to implement the organizational structure and
dynamics of the enterprise for the purpose of managing the organization in a
better way and capturing the potential of the information system for competitive
advantage.
 Following are the basic objectives of an MIS −
 Capturing Data − Capturing contextual data, or operational
information that will contribute in decision making from various
internal and external sources of organization.
 Processing Data − The captured data is processed into information
needed for planning, organizing, coordinating, directing and
controlling functionalities at strategic, tactical and operational level.
Processing data means −
 making calculations with the data
 sorting data
 classifying data and
 summarizing data
 Information Storage − Information or processed data need to be
stored for future use.
 Information Retrieval − The system should be able to retrieve this
information from the storage as and when required by various users.
 Information Propagation − Information or the finished product of the
MIS should be circulated to its users periodically using the
organizational network.
Characteristics of MIS
 t should be based on a long-term planning.
 It should provide a holistic view of the dynamics and the structure of the organization.
 It should work as a complete and comprehensive system covering all interconnecting
sub-systems within the organization.
 It should be planned in a top-down way, as the decision makers or the management
should actively take part and provide clear direction at the development stage of the
MIS.
 It should be based on need of strategic, operational and tactical information of
managers of an organization.
 It should also take care of exceptional situations by reporting such situations.
 It should be able to make forecasts and estimates, and generate advanced information,
thus providing a competitive advantage. Decision makers can take actions on the basis
of such predictions.
  It should create linkage between all sub-systems within the organization, so that the
decision makers can take the right decision based on an integrated view.
 It should allow easy flow of information through various sub-systems, thus avoiding
redundancy and duplicity of data. It should simplify the operations with as much
practicability as possible.
 Although the MIS is an integrated, complete system, it should be made in such a
flexible way that it could be easily split into smaller sub-systems as and when required.
 A central database is the backbone of a well-built MIS.
 It should be able to process data accurately and with high speed, using various
techniques like operations research, simulation, heuristics, etc.
 It should be able to collect, organize, manipulate, and update large amount of raw data
of both related and unrelated nature, coming from various internal and external sources
at different periods of time.
 It should provide real time information on ongoing events without any delay.
 It should support various output formats and follow latest rules and regulations in
practice.
 It should provide organized and relevant information for all levels of management:
strategic, operational, and tactical.
 It should aim at extreme flexibility in data storage and retrieval.

Components of MIS
The major components of a typical MIS long-form (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.
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.

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.

Classification of MIS

Classification as per Information Characteristics

Based on Anthony's brand of Management, information that is used in commerce

trade for decision-making is generally categorized into three types:

 Strategic Information: Strategic information deals with an objective of a

house with long-term policy decisions as well as checks provided these
objectives are met up to their level or not. For example, acquiring the new
 plant, the new product, diversification of chain, etc, comes under strategic
information.
 Tactical Information: Tactical information deals with the information
needed to rule over business resources, like budgeting, bracket control,
improvement level, stock level, productivity level, etc.
 Operational Information: Operational information deals with
plant/business level information as well as is used to handle proper
conduction of specific operational tasks as planned/intended. Various
operators specific, machine-specific as well as shift particular jobs for
quality authority checks come under this category.

Classification as per Application

 Planned Information: This is the information used in business

organizations maintaining specification norms and specifications.
Everything is mentioned here. This information is used in the strategic,
tactical, and operation planning of any activity. Examples of such
information are time standards, design standards.
 Control Information: This information is termed for specific activities
performed by the system in design to attain their objectives. This
information might cost formal or informal. It is used for controlling
attainment, line, and utilization of important processes in a system. When
this information did make-up any deviation from the defining standards,
the system should be imposing a decision or an action main to authority
the information related to their objectives.
 Knowledge Information: cognition is defined as "information about
information". Knowledge information is acquired through experience and
learning and collected from archival data and research studies.
 Organizational Information: Organizational information deals with an
organization's environment, where organizational objectives are met. Karl
Weick's Organizational Information theory emphasizes that a company
 reduces its uncertainty by collecting, managing, and using this information
carefully. This information is used by everybody in the organization;
examples of such information are employee and payroll information.
 Functional/Operational Information: This is operation-specific
information where the organization assists to perform its functions of day-
day transactions. Mainly preserves technical make-up, For example, daily
schedules in a manufacturing plant that indicated the detailed assignment
of jobs to machines or machines to operators. In a value-oriented business,
it would constitute the duty roster of various personnel. This information
is mostly internal to the organization.
 Database Information: Database information as we know that it is a
collection of related data that is stored, retrieved, and managed to name
databases. It stores large quantities of information that has multiple
ownership and application. For example, the tangible substance that goes
into the makeup of physical thing specification or supplier information is
stored for multiple users. It is a type of software program.

Transaction processing 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.

Types of Transaction Processing Systems

 Batch processing

Batch processing is when clusters of transactions are refined

simultaneously using a computer system.
This method, although designed to be efficient for breaking down bulky
series of programs, has a drawback
as there is a delay in the transaction result.

 Real-time Processing

Real-time processing carries out its transactions exclusively; this method

ensures a swift reply on the condition of the transaction result. It is an ideal
technique for dealing with singular transactions.

Batch vs. Real-Time Processing

 The processing of a group of transactions uniquely differentiates the batch

processing from the real-time processing that only runs exclusive
transactions.
 Batch processing is functional for computing complex data transactions.
This is extremely valuable for reducing costs for large organizations that
 deal with high data traffic. All of this is very different from real-time
processing that is efficient in less complex situations.
 The real-time processing offers timely results on each processed
transaction that makes it more applicable for smaller enterprises, unlike the
batch processing that is time-consuming.
 In batch processing, user interaction is not required as soon as the
transaction begins, however, the real-time processing needs user interface
to process each transaction completely.

Transaction Processing System Features

There are several features involved in a good transaction processing system. A

few of these critical features are described below.

 Performance

The concept behind the use of TPS is to efficiently generate timely results
for transactions. Effectiveness is based on the number of transactions they
can process at a particular time.

 Continuous availability

The transaction processing system should be a very stable and reliable

system that must not crash easily. Disruption of TPS in an organization can
lead to work disturbance and financial loss.

 Data integrity

The TPS must maintain the same method for all transactions processed, the
system must be designed to effectively protect data and overcome any
hardware/ software issues.

 Ease of use
 The TPS should be user-friendly in order to encourage the use and also
decrease errors from inputting data. It should be structured in such a way
that it makes it easy to understand as well as guarding users against making
errors during data-entry.

 Modular growth

The TPS hardware and software components should be able to be upgraded

individually without requiring a complete overhaul.

 Controlled processing

Only authorized personnel, staff members, or employees should be able to

access the system at a time.

How does a Transaction Processing System Work?

 Processing in a batch

Processing batch transactions(1) requires data collection and batch

grouping. Data collected are stored in the form of batches and may be
processed anytime.

 Processing in real-time

Recent technology innovations gave rise to real-time processing(2). RTP

ensures instant data processing with the aim of providing a quick
verification of the transaction. It is highly versatile as it can work
effectively as a multi-user interface and can also be accessed anywhere
there is an online network.
Components of Transaction Processing System

Below are some of the components involved in a TPS:

 Inputs: These are source documents gotten from transactions which serve
as inputs into the computer’s accounting system examples are invoices, and
customer orders.
 Processing: This requires the breaking down of information provided by
the inputs.
 Storage: This is saved information in TPS memory, it may be in the form
of ledgers.
 Output: Any generated record may serve as the output

Examples of Transaction Processing System

 TPS accumulates data about transactions and also initiates processing that
transforms stored data. Examples include order processing, employee
records, and hotel reservation systems.
 Batch transaction process examples include bill generation and check
clearances.
 Examples of real-time transaction processes are the point of sale terminals
(P.O.S) and microfinance loan systems.

What are the Limitations of Transaction Processing Systems?

 Managing operations with the TPS can be complicated if the company is

not big enough to efficiently use the transaction processing system.
 TPS needs both hardware and software components to efficiently manage
high data volume. This capacity makes TPSs susceptible to software
security breaches in the form of the virus and faulty hardware issues such
as power outage can disrupt the whole system.
  Effective integration of a TPS in a company operation requires skilled
personnel, it also requires a link with associate company branches to
maintain a secure flow of information. This high requirement can create
instability and flux in the company’s daily operations.

Functions of Transaction Processing System

Transaction Processing Systems can execute input, output, storage, and

processing functions.

 Input functions: This includes the securing of data on the source

document, entering of input data in the system and also validate data.
 Output functions: This includes the production of the report of the
transaction via monitor or paper, examples are exception reports, detail
reports, and summary reports.
 Storage functions: This is the process by which data is stored. It entails
the storage of information, accessing, sorting, and updating stored data.
 Processing functions: This entails the transformation of data, it includes
calculation, computation, and apt result.

OFFICE AUTOMATION SYSTEM (OAS)

Office automation is the process of watching data flow around on its own without
any human intervention, inaccuracies, and errors. It is the process of using an
automation tool to create, collect, store, analyze, and share confidential office data
that is required to accomplish basis day-to-day routine tasks and processes
effectively.

Technology has made a serious impact on the daily work of office administration.
Emails have replaced memos, shared drives have done away with filing cabinets,
and biometrics have taken over employee timesheet stamping. Many businesses
think that they have attained office automation nirvana simply by going paperless.
An office automation system is the tool that enables data to move from one system
to another on its own without human intervention and inaccuracies. These tools help
organizations collect, manage, and analyze securely to accomplish everyday tasks
and processes. It optimizes and automates existing business processes and
procedures.
In today’s digital age, office automation systems offer an array of benefits for
organizations of every size. Powerful office automation systems reduce manual
effort and store a large amount of data in little space. They not only streamline day-
to-day tasks but also speed up information retrieval. Additionally, these
tools improve process visibility and help businesses spot bottlenecks easily.
A Microsoft Office suite is an example of office automation. The software saves
time and money by placing all of your documentation and resources in one place.
On a more complex level, you can consider things such as CRM
tools, automated emails, and accountancy software.

Some of the biggest advantages of automating office workflows include:

 Reducing the manual effort to complete mundane tasks

 Cutting down on manual errors
 Shrinking the processing time for items
 Getting insights into process performance metrics
 Gaining greater process visibility and identifying potential bottlenecks
 Making sound business decisions based on data
The five essentialsofoffice automationtools

1. Easy workflow designer

Creating workflows used to be the domain of hard-core system coders. So,
as workflow software evolved, it assumed the people using it would be programmers
as well.
However, a modern office automation system should start with the business user in
mind, not the coder.

When you sit down to trial an office automation tool, start off by making your own
workflows. How easy is it? Can you intuitively create the sequence of tasks needed
to finish a process? If you can’t figure it out within the first five minutes, you need
to move on to the next option.

A piece of software shouldn’t determine how your business should set its operations.
It should instead aid your teams to strengthen the existing processes.

2. Mobile compatibility
Your office is mobile, and all your tools should be too. Whether you have remote
workers or you just want to check in while waiting for a flight, the office automation
tool you choose should work just as smoothly on someone’s phone while on a trip
to China as it does on a PC at the main office.

3. Integration with other software

Office automation software isn’t the only thing you are running. You’ve got your
internal database, a CRM, a marketing automation tool, and your financial software,
and that’s just for starters. When you’re reliant on so many systems, you need a tool
that doesn’t just keep to itself.

4. Reports and analytics

We can’t just evaluate process performance based on how happy your team is. Data
is the ultimate decision-maker, and it’s important for your business to compare a
process’ history, its speed, the outcome quality, etc.

What are the functions of office automation software?

An ideal office automation software:

 Requires less space to store data
 Streamlines data storage and retrieval
 Retrieves information instantly
 Eliminates the need to preserve paperwork
 Removes any chance for data redundancy
 Allows multiple people to access data
 Reduces the possibility of errors

Executive support system (ESS).

An Executive Support System (ESS) is software that allows users to transform

enterprise data into quickly accessible and executive-level reports, such as those
used by billing, accounting and staffing departments. An ESS enhances decision
making for executives. An ESS facilitates access to organized enterprise and
departmental data while providing analysis utilities and performance assessment
predictors. An ESS provides potential outcomes and quick statistical data that are
applied to decision making processes.

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

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