CHAPTER 1

INTRODUCTION TO MIS

❖ Characteristics of MIS
❖ Functions of MIS
❖ Role of MIS in Business Organization
❖ Pre-requisites for Effective MIS
❖ Components of MIS
❖ MIS Applications in Business
❖ Advantages of MIS
❖ Challenges while Applying MIS in Business
INTRODUCTION TO MIS

Management is the key for administration of an organization. Information is the key entity that
provides the purpose of managing the organization. It is related to processed data and
knowledge. The computer-based systems with some tools (software) that helps in organize,
evaluate and efficiently manage the resources with in an organization are referred as
Management Information System.

Management Information System (MIS) is an information system which is used within an

organization to obtain its desired objectives. An MIS system includes some software that helps
the management in making decisions related organization resourcing and planning. MIS gathers
and processes information for the management of an organization. It combines the principles,
theories, methods and practices of traditional management. It provides various tools to managers
for organize, evaluate and run their departments efficiently, thus playing an important role in any
organization with regards to planning and decision-making process.

Computer
Business MIS
Science

Fig No. 1 What is MIS

Objectives for MIS

MIS for any business provides information to support managerial functions such as planning,
controll, organize, and operation. It obtains information in a systematic and timely manner using
set of rules which are well defined in nature. Objectives of an effective MIS includes -
• To facilitate the required information to every decision maker present at each level of
management in order to carry out their business functions.
• To provide help in finding the crucial factors responsible for successful functioning of
any organization.
 • To provide help in decision making in both structured and unstructured problem
environments of an organization.
• To promote an organized system of people, computers, procedures, interactive query
facilities documents for collecting, storing, retrieving and transmitting information to the
users.

1.1 Characteristics of MIS

Managemnet
Oriented
Management
Future Oriented
Directed

Exception Based Integrated

MIS
Feedback Characteristics Common Data
Flows

Coordinated Flexibility

Comprehensive Sub System

Fig No. 2 Characteristics of MIS

Characteristics of MIS can be classified in many levels as provided in figure no. 2. It includes –
• Management Oriented: A MIS is designed keeping management in focus at every
aspect. It works form the top to downwards hence it never meant that the system is only
designed to provide information directly to the top management. Every other levels of
management chain are also provided with relevant and focused information.
• Management Directed: Operational reviews are essential part of management processes.
From MIS point of view, it is required that management should continuously make
improvements/reviews. For example, in the marketing information system, the
management has to determine which sales information is necessarily required to improve
its control over marketing operations.

• Integrated: In-order to achieve the objectives of any organization, MIS system should
cover all the functional areas to generate meaningful management information. Coverage
of all such functions can be termed as Integration. MIS consists of various sub-systems
and their objectives, needs, operations and dependencies these sub-systems have amongst
themselves. It becomes important to know about the common areas of information
between these sub-systems which should be processed without repetition and
overlapping. For example, in the development of an effective production scheduling
system, a proper balance amongst the following factors is required:
▪ Initial setup costs
▪ Overtime
▪ Manpower
▪ Production capacity
▪ Stock Level
▪ Required Finances
▪ Customer service

• Common data flows: The integration concept of MIS, common data flow concept avoids
repetition and overlapping in data collection and storage, combining similar functions,
and simplifying operations wherever possible. For example, orders received in any
supply chain in marketing become the basis for billing of goods ordered, setting up of the
accounts receivable, initiating production activities, sales analysis and forecasting etc.

• Flexibility and Ease of use: Ease of use is an essential feature of every MIS system. It
should always be kept in mind while building any such system. All types of possible
means, any needs which may come in future, should be added to make it flexible in
 nature. It should be able to incorporate all such features that make it readily accessible to
wide range of users with easy usability.

• Sub System concept: To solve any problem, best strategy would be to break it in sub
parts. MIS may be viewed as a single entity but for its effective use, it should be broken
down in small parts or subsystems so that details of its sub systems can be enhanced and
focused independently. Priorities setting, and implementation phases becomes easier in
this way. While doing any such activity, easy management of such sub systems should
always be kept in mind.

• Comprehensive: Every MIS should be comprehensive in nature. It includes various

systems like transaction processing systems, information processing systems mainly for
decision making and control at all levels of organization. It also helps other subsystems
of the organization. Examples of such systems are formal and informal subsystems,
manual and computer subsystems, office information systems, decision support systems,
etc.

• Coordinated: Apart from being comprehensive, MIS also act as a coordinated system. It
is centrally coordinated for processing, data gathering, office automation, intelligence and
decision support systems. Every component of MIS is developed and operated in a
planned and coordinated manner. Information is exchanged among these various
subsystems whenever needed in order to make it work efficiently and also cost effective.

• Feedback: Feedback is also integral feature of MIS. It should provide feedback about its
own efficiency and effectiveness. In order to determine these two, aspects which are
taken into account are cost/benefit and supply of relevant and timely information.

• Exception Based: Exceptional scenarios like minimum and maximum ranges should also
be showcased by any MIS. It should be able to generate reports related to any such
scenario to every decision maker at the required level. Exception based reporting includes
 abnormal situations, i.e. the maximum, minimum or expected values vary beyond
tolerance limits.

• Future oriented: MIS should not only provide past or historical information rather it
should also forecast future information based on projections and helps in taking actions
for future decisions.

1.2 Functions of MIS

Whole purpose of using MIS by an organization is to achieve prime objective of obtaining

management information, which will be used by its managers for decision making. In order to do
so, MIS must perform the following functions -

• Data Capturing: Data capturing is among primal function of any MIS. It captures data
from various sources of an organization such as internal and external. It may be manual
or through automated computer terminals. End users data about transactions are typically
recorded on some physical medium, such as a paper form, or enter it directly into a
computer system.

• Data Processing: The captured data is further processed to convert it into the required
management information. Data processing can be done by activities such as calculating,
comparing, sorting, classifying and summarizing. All such activities help in organizing,
analyzing, and manipulating data using various statistical, mathematical, operations
research and other business models.
 Data Capturing

Information
Processing of Data

MIS
Dissemination

Fuctions
Information Retrieval Information Storage

Fig No. 3 Functions of MIS

• Information Storage: Every data whether processed or unprocessed is stored in MIS for
future use. For any information which is not required immediately, is also saved as an
organizational record. All such data and information are retained in an organized manner
for later use. Stored data is commonly organized into fields, records, files and databases.

• Information Retrieval: The stored information is retrieved from the stores when need by
various users in MIS. According to the requirements of management users, the retrieved
information is either served as it is or it is processed again to meet the exact demands.

• Information Dissemination: All such management information, which is resulted as

finished product of MIS, is presented to the users of the organization.

1.3 Role of MIS in Business Organization

MIS adoted in an organization is like the role of heart in the body. Information acts as blood and
MIS acts as the heart in the body. MIS plays very vital role in the management, administration
and operation of the organization. MIS ensures and collects all appropriate data from various
sources, processes it and further sent it wherever and whenever required. In each phase of
management process, management users require information for their activities such as decision
making. It is required to make decision related to number of operations like staff to be employed
by each department, training needs of such employees for their career development plans, budget
estimation, overall future forecasting, surveys and progress reports on every aspect of business
organization. To find out critical information that should be tailored according to the needs of
specific requirements, is also customized in preferred formats. MIS provides any organization
competitive advantages over its rivals. It provides better communication, inter-organizational
computing, and internet-working with in the organization. It supports both business operations
and management of business enterprises. It automates business functions for better use of
available resources. It also increases the ability to make sound, rational and informed decisions
involving complex combinations of factors, and doing so with more confidence and speed. It
improves time utilization by making information available at every time when required. It
improves customer experience by providing customized services and improved personnel
relations within the organization.

MIS for a Business Organization:

• Support the Business Process: MIS gets inputs from a request form and as an output it
provides services to customer. It supports all business operations and use the system to
enhance further way of working.
• Support Operation of a Business Organization: MIS provides support to all operations
of a business organization by providing timely information, maintenance and
enhancement, this providing flexibility in the operation of an organization.
• Support Decision Making: MIS supports the decision making in daily operations of
business. MIS also supports managers in decision making to meet the goals and
objectives of the organization. Different mathematical methods and IT tools helps in
finding problem solving strategies to meet competitive needs.
• Strategies for an Organization: In order to meet competitive needs of the business, MIS
supports the organization to make appropriate strategies for future planning.
1.4 Pre-requisites for Effective MIS

There are some essential pre-requisites for an effective MIS.

• Qualified System and Management Staff: An effective MIS should be managed by

qualified and trained users. These users should have an understanding about the roles and
responsibilities and should be aware of roles and responsibilities of each other. They
should also have clear understanding of fellow user’s viewpoint. Usually each
organization has two categories of MIS users -
▪ System and Computer Experts – These users are the ones who are expertise in
their subject area, they are also capable of understanding management concepts to
get an understanding of problems asked by other users. They are also clear about
the process of decision making and information requirements for planning.
▪ Management Experts – These users are the ones who understand the concepts and
operations of a computer and business. This basic knowledge of computer helps
them while working with systems, technicians in designing of the information
system.
• Futuristic Perspective: As also described earlier a MIS should be effective in meeting
the future requirements of the organizations and its executives as well. This can be
ensured by regular monitoring and updating the MIS regularly.

• Support of Top Management: To make an effective MIS system, it must have the full
support of the top management of the organization. The main reasons of obtaining this
are –

(a) Subordinate management users are usually reluctant and lethargic about activities
which do not receive the support of their superiors.
(b) As the resources required in any computer-based information system are growing
larger and larger in view of importance gained by any MIS.

• Common Database: A common source of information for entire MIS including its
subsystems is always required. It acts as an integrated collection of data and information.
 A common database can be looked as a super file which combines and integrates data
records previously stored in separate data files. Such a database can be organized as an
integrated collection of data records into a single super file or it can be organized as an
integrated collection of several data file.

• Control and Maintenance of MIS: A controlled MIS is the one which works as it was
designed to operate. Most of the times, users develop their own procedures or short cut
methods to use the system which results in reduction its effectiveness.

1.5 Components of MIS

Management Information MIS

Fig No. 4 MIS Components

Management is defined as the art of getting things done through people by dividing them into
organized groups and designing each group to do a unique job. The manager manages the
organization. The key activities of a manager are:-
• Planning: It is known as the process of determining the goals and objectives of any
future project in advance. It includes -
▪ What is to be done?
▪ When should it be done?
▪ How should it be done?
• Organizing: It is known as the process of arranging the activities which are required to
meet the objectives derived during the planning process. It includes -
▪ Division of the activities as per the planning.
▪ Allocation of the activities of the individual employee.
▪ Provide authority to take decision by management users.
• Staffing: It is known as the process of assigning the right person for the right job.
 • Directing: It is known as the process of guiding and motivating the people involved in
the project by the managers to achieve the predetermined goals and objectives. It includes
▪ Enabling communication among employees.
▪ Providing motivation to employees.
▪ Installing leadership qualities.
• Controlling: It is known as the process of ensuring that the organizational activities are
performed as per planning.
▪ Setting standards.
▪ Measuring the actual performance.
▪ Comparing final project with the planning or planned project.
▪ Taking corrective actions.
In MIS information can be seen as the processed data that helps the management in planning,
controlling and operations of any organization. Data comprises of all the facts that comes out of
the operations of the concerned management users. Data processing is done by recording,
summarizing, comparing and finally presenting MIS report to the management.
One of the very valuable resource that is required by the management of an organization to carry
on a business is Information. It is the processed data that provides aid in their corresponding
project to the decision makers or managers. The type of information utilized in the different
management levels of an organization depends on the nature of functions performed. The various
types of information can be as follows:-
• Structured: It is the information that is well defined in nature and thus its processing is
easy e.g. monthly production schedule.
• Unstructured: It is the information that is not well defined and thus its processing is not
easy e.g. prediction about future of organization.
• External: It is the information that is achieved from a source which is located outside the
operations of the organization e.g. population growth in the market in which an
organization serves.
• Internal: It is the byproduct information of various internal operations of an organization
e.g. total purchase conducted by the organization in a particular work.
System: A system helps in processing data into information. A system comprises of inputs,
processing, output and feedback or control. A system is a collection of various subsystems whose
purpose is to achieve a common objective.

Input Process Output

Fig No. 4 System Components

A system can be classified in to two types -

• Open: An open system is the one which interacts with its environment and exchanges the
input and output with the corresponding external environment. E.g. each organization is
protective towards its demands and expectations of the customer.
• Closed: A closed system is the one which neither interacts nor exchanges input and
output with its environment. e.g. a computer system that takes input and produces output
in a well-defined format.

1.6 MIS Applications in Business

A lot of applications are introduced in the organization when properly developed MIS is used.
Examples of such application may be -

• Increase Productivity: Time, Errors and Cost associated while processing information is
reduced by using MIS. To increase productivity of the organization MIS follows Online
Transaction Processing (OLTP).

• Enhance Quality of Decision Making: To do a business in a better way, the top

management gets help by MIS. It finds solutions to problems or help in decision making
by providing the relevant information.

• Develop Team Work: MIS manages information and facilitates communication between
different team and improves the team work.

• Facilitates Organization Transformation: MIS helps organizations to remain

competitive or enter new markets and transforms the way business is done.
Financial MIS
Finance information which is required by the financial managers to make daily decisions on
operations within the organization is provided by a financial MIS. Most financial MIS provide
these functions:
▪ Integration of financial information from different sources.
▪ Easy accessibility to financial information in brief.
▪ Financial analysis enablement using easy-to-use tools.
▪ Provides comparison of historic and current financial activities.
A financial MIS usually consists of several subsystems which are dependent on the type of
organization. These subsystems may include revenue analysis, cost estimation, profit forecasting,
auditing features for both internal and external purposes and fund management. A financial MIS
also includes features such as to generate reports for internal stakeholders and third parties such
as external auditors or shareholders.

Marketing MIS
A marketing MIS provides throughout support to multiple activities of various marketing
departments. A marketing MIS consists of subsystems such as marketing research, product
development and delivery, promotion and advertising, product pricing and sales analysis.
Production of sales report is one of the most common uses of a marketing MIS. These reports are
typically generated on a regular basis and can be categorized into weekly reports, monthly
reports and quarterly reports. Organization of such reports can be done sales representative,
product, customer or geographic area. These reports help management in deciding different sales
aspects and identify the better and worst productive departments.

Manufacturing MIS
A typical manufacturing MIS mainly focuses on serving the needs of different functional levels
such as personnel, finance, production, materials, marketing and corporate business
management. Such Manufacturing MIS provides data and information which helps in -
▪ Business planning at middle level management.
▪ Strategic planning at top level management.
Human Resource MIS
In today's business organizations human resourcing is considered as one of the key areas of
management. Attendance recording, and Payroll processing are routine activities provided by
transaction processing layer of MIS in human resourcing functions. Maintaining the employee
records is one of the activities that is done at the operational level which is used as a basis for
strategic layers. As size of organization is growing in nature and with growing importance of
human resource management, maintenance of employee related data and generating appropriate
reports has become a crucial aspect for any organization.

1.7 Advantages of MIS

Management Information Systems provides many benefits to the organizations employing them.
Some of these benefits makes work management ease for management users while the others
help the whole organization.
• Organization stakeholders have access to single database which records the day to day
information which is further needed to process daily operations of business.
• Due to better availability of information, all employees working in the organization can
contribute more for the completion of productive tasks.
• By proving the processed data, MIS improves decision making power of the organization.
• With the availability of digital information across various platforms such as desktop,
terminals, tablets, smartphones and web cloud, employees can easily have interaction
about the progress of any process occurring in the organization.
• Any changes in these systems such as inputs or modifications are logged in a concise
manner.
• Management Information Systems help in reducing the paperwork.
• Due to availability of various reports, it becomes easy for organizations to easily identify
their strengths and weaknesses in carrying out various functions.
• From top mangement perspective, these systems provide overall financial impression of
organization.
• Customer understanding and engagement is a feature that is provided by most MIS. They
collect and store important data and feedback from customers.
• MIS provides competitive advantage to any organization.
 • MIS helps in elimination of redundant processes and roles in an organization.

1.8 Challenges While Applying MIS in Business

Apart from having a huge number of benefits, there are a number of challenges that
organizations face in adoption and implementation of suitable Management Information Systems
in their businesses.
• MIS cost is biggest challenge for its adoption. These systems are expensive in nature.
• Due to different needs by different stakeholders, providing suitable training program to
all stakeholders is also difficult.
• Many companies don’t find out which MIS suits their needs and finally they end up
purchasing systems that lack the features they needed the most.
• Apart from purchasing MIS, a trained staff is also needed for its maintenance who always
tries to keep the system in good working order.
• Management Information Systems may not meet the needs of an organization, when it
undergoes heavy changes.
• Management Information Systems may result in the loss of human capacity in case of bad
financial phases in a small organization.
SUMMARY

• MIS refers to a computer based system that helps the managers with the tools to organize,
evaluate and efficiently manage the resources available in an organization.
• MIS is a well structured method which combines the principles, theories and practices of
management and plays an important role in business organization for planning and
decision making process.
• MIS is set up by an organization with the prime objective to obtain management
information to be used by its managers in decision making.
• MIS plays very vital role in the management, administration and operation of the
organization.
• MIS enables an organization to gain competitive advantage over others. Better
communication, inter-organizational computing, and internet-working.
• A financial MIS provides financial information for managers to make daily decisions on
operations within the organization.
• A marketing MIS supports activities throughout the many activities of marketing
departments.
• A typical information system primarily serves the needs of functional levels such as
personnel, finance, production, materials, marketing and corporate business management.
• The transaction processing layer of MIS in human resource function deals with routine
activities like attendance recording and payroll calculations.
REVIEW QUESTIONS

Q1 Define MIS. What are its objectives?

Q2 Explain in detail the characteristics of MIS.
Q3 What are the various functions of MIS.
Q4 Explain the role of MIS in business organization.
Q5 Discuss in detail the components of MIS.
Q6 What are the pre-requisites needed for an effective MIS?
Q7 Discuss the MIS applications in various businesses.
Q8 What are the advantages and disadvantages while applying MIS in business.