SEMCOM

VALLABH VIDYANAGAR

CLASS: TYBCOM/TYBBA (V – SEM)

SUBJECT: MANAGEMENT INFORMATION SYSTEM - UNIT - 2

 Importance of MIS
MIS is a set of procedures that provides essential data and information to the management for making an
informed decision. The Management information system involves Collection of appropriate data,
Processing of such data to extract the relevant and useful information and Delivering this information to
the respective department.

Role of MIS
System ensures that an appropriate data is collected from the various sources, processed, and sent further
to the entire needy destination. MIS helps in Strategic Planning, Management Control, Operational
Control and Transaction Processing. MIS plays the role of information generation, communication,
problem identification and helps in the process of decision making

MIS report of a company is prepared after proper analysis of current data and recent trend prevalent in the
market. The primary purpose of MIS reporting system is to provide critical business information to the
management for complex decision making. Since, it is essential for the administration to have reliable
information related to the current market trend and relevant business data for making a quick and
informed decision. Management information system report plays a crucial role in improving performance,
productivity, and profitability of the organization.

Thus, MIS reporting system serves as a backbone of the company, and it helps the organization to stand
firm against the competitors.

 Advantage s of M IS and Re porting

1. He lps in M anaging Data

MIS helps in maintaining and managing crucial business data for assisting in complex decision-making
by the management. The critical information is stored in an organized manner, and it can be accessed by
the administration quickly whenever required.

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2. Analys e s Tre nds
Management needs to prepare forecasts for strategic planning and determine future goals. Thus, to create
such a strategy, it is essential to have accurate reports on prevailing market trends. MIS uses various
mathematical tools for analysing the current market trend and predicting future trends based on such
information.

3. He lps in Strate gic Planning

MIS reports play a significant role in the strategic planning of the company. It helps in determining the
future needs of the company and assists in formulating goals and strategy based on such information.
Management information system report is also helpful in identifying resources required to meet the
company‟s objective.
4. Goal Se tting
For any organization, setting up a goal is very crucial matter, and it requires lots of research and
development. Since the information provided in MIS reports is based on current data analysis, hence it is
considered suitable and material for determining the goal of an enterprise. Also, MIS reporting includes
the current market trend analysis and prediction of the future trend.

5. Proble ms Ide ntification

MIS report provides information related to every aspect of activities taking place in the company. Hence,
in case any problem arises in front of the management, MIS reports are quite helpful in identifying the
source of the problem.

6. Incre as e s Efficie ncy

The relevant information provided by MIS and reporting is utilized in formulating goals and strategy of
the company. Also, the performance of the business can be assessed with the help of MIS reports.
7. Comparis on of Bus ine s s Pe rformance
The relevant business data and information of the company is stored and maintained in the MIS database.
Since the MIS database can be accessed at any time; hence, the current performance of the firm can be
compared with its previous year‟s achievement to measure the organization‟s growth.

 Computers are making inroads into every activity of human endeavour. For example:

Oil exploration Communication

Space exploration Heavy industry
Weather forecasting Chemicals
Market analysis Small-scale industry
Financial planning Health care
Production planning Tourism
Human Resource Management Hospitality industry
Transportation Education and research

 Thus, a basic knowledge of information systems is almost becoming a generic skill needed by
every professional. To the top management, MIS is a tool to gain insight into the overall health of
the organization itself.
 The recent information revolution has pushed information systems to the Centre stage of modern
management. Getting a competitive advantage, balancing market strengths, increasing market
shares, acquiring more attractive finances, introducing new products and services, reaching out to

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 more customers and quickly gaining customer preferences, etc. are all made possible in numerous
ways by the introduction of information technology.
 The Airline Reservation system (SABRE) of American Airlines , the OTIS-LINE maintenance
Management System introduced by OTIS elevators], the Railway Reservation system of the
Indian Railways, the Consignment tracking system developed by blue Dart, the Market Map
system introduced by Hindustan Lever, the Voice of Sankara, an innovative marketing of religious
service of the saintly person Kanchi Sankaracharya , are just few examples of information systems
that create new business or change the way of doing business.
 The internet, which is emerging as the largest commercial market in the world, the planned
information Highway, the electronic trading system introduced at the National stock Exchange,
and Video on Demand service being introduced in select counties in the US are some other
examples which are likely to significantly change the lifestyle of humanity at large.
 Obviously, understanding the working and appreciating the impact of information systems or the
contemporary and future business are Obviously, understanding the working and appreciating the
impact of information systems or the contemporary and future business are prerequisites to the
education of today‟s computer science and management student.
 It is important that contemporary managers to be kept abreast of current developments that have
potential impact on future business.
 In short, the study of management information system is extremely vital in today‟s context. This
text aims to fill this gap by a balanced treatment of technical and organizational issues in a jargon-
free, yet non-superficial manner.

 Evolutionof MIS
 Data - as a general concept refers to the fact that some existing information or knowledge is
represented or coded in some form suitable for better usage or processing. Information -
knowledge obtained from investigation, study, or instruction. System- a set of principles or
procedures according to which something is done. Information System- is the information and
communication technology (ICT) that an organization uses. MANAGEMENT INFORMATION
SYSTEM (MIS) -a computerized information-processing system designed to support the activities
of organizational management. MIS (Management Information System)
 Origin of Management Information Systems- industrial exhibition of Paris in 1801. Joseph
Marie Charles Jacquard introduced the world to punch cards. B. The Creation of Punch Card
Systems looms were hand-operated and if you wanted to create a complex pattern in cloth, you
had to know – and remember – the order that different color threads were to be weaved into the
fabric. C. Evolution of Punch Cards - By 1911, IBM emerged, then called the Computing-
Tabulating-Recording Company. By this time, punch cards were used for recording and storing all
sorts of information.

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 The Emergence of MIS in Computers -computers began to emerge in the 1940s and 1950s,
punch cards 1970‟s were replaced by magnetic storage media like tapes and disks. E. MIS
Developing Beyond Accounting- From the 1970s to the early 1990s, as computers became
smaller, faster and more affordable, MIS developed beyond accounting to other business areas,
like inventory systems, sales, marketing, manufacturing processes and engineering.

 First Era (mid-1960s to mid-1970s) during the first years of computerized MIS, information
systems were centralized and concerned solely with governance and the needs of management.
Most information systems and their reports were under the control of accounting departments.
Technology included third- generation mainframe computers, like the IBM 360. Languages
included Assembler, FORTRAN, COBOL and Database e. Ethernet networks were developed
during this time.
 Second Era (mid-1970s to mid- 1980s) while MIS was still mainly concerned with governance
and the needs of management, more departments were beginning to benefit from the technology.
In many companies, steering committees and user-led initiatives determined the shape and scope
of additional IS projects. Technology included the first personal computers (PCs), minicomputers
and mid- range computers.
 Third Era (mid-1980s to late 1990s) during the third era, centralized information systems began
to spread out and information became decentralized. Each department had its own computer
system. Managing information was often referred to as "herding cats." It was during this era that a
new position emerged in many companies to oversee the acquisition and management of multiple
information systems: the Chief Information Officer, or CIO. Technology during this era included
internetworking and the beginning of the internet.
 Fourth Era (late 1990s to today) During the current era, information systems are still tightly tied
to governance and management, however the systems are widely distributed, within the reach of
nearly every employee who needs it across multiple platforms. Many information systems are
integrated between different companies, so that a client business can readily access supplier
information and their customers, in turn, can access that information. Technology now includes
social media, search engines and ubiquitous computing through a variety of platforms including
laptops, tablets and smartphones.
 Fifth Era (today forward) the increase in internet bandwidth over recent years has led to a
substantial reliance on cloud computing. As a result, some maintain that this marks a new era in
worker's ascendancy and that we are now in a fifth era for management information systems.
Today, practically any employee is now in a position to make informed decisions with tools that
are readily available across multiple platforms. Furthermore, the line between who produces and
who consumes MIS information is increasingly blurred.

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 When computers began to emerge in the 1940‟s and 1950‟s, punch cards were still a big part of
information systems. They continued to play a role until the 1970‟s when they were replaced by
magnetic storage media like tapes and disks. These storage devices greatly increased the speed of
calculating data consequently; MIS began to develop for accounting. Calculating data and
compiling it into reports could now be done in a fraction of the time it would have taken before.
Centralized Data Processing was characterized by batch processing- that is transactions were
stored and process all at one time, this limited any MIS usage. CENTRALIZED DATA
PROCESSING

 Logical foundations of MIS

MIS as a discipline has no basic theory of its own. The data processing applications were predicted to
have a simple goal of efficient, accurate and fast processing of data.

A variety of simple control mechanisms, including double of even multiple entry with machine-based
comparisons to improve accuracy, control totals as an alternative to avoid any pattern of error,
measurement schemes like despairs per hour, records of transactions per hour, etc. were therefore
developed. With the increasing sophistication in computational devices with built-in parity error
checking, checksums and Cyclic Redundancy Check (CRC).

Performance measures like speed of on-line Transaction Processing (OLPT) represent some level of
formalization in this area. The well-known bench marking are: TPC (Transaction Processing Council)-
TPC-A, TPC-B, and (TPC-C. these bench marks measure the execution of speed at which large scale vital
transactions like updating of multiple data tables update operations. With the refinement of data
processing into MIS and later DSS, there was increasing demand for “what if” capability. Such a demand
necessitated the extensive use of mathematical and statistical techniques in the form of optimization and
simulation models. These models were collectively known as the models of operations research and
management science. While the models were powerful, they could not be applied to real-world problems
due to the non-availability of data. With streamlined data available to the decision maker through MIS
systems the power of statistical and operations research models could be very well exploited.
The classic example in this direction was the “Frequent Flyer” option introduced by the Airline industry
and “Planned Overbooking” that increased the seat utilization considerably with practically no additional
investment in seat capacity.

A new generation of spread sheet software with solver, back solver and optimization capabilities reinforce
this trend. Thus, the quantitative tools of operations research and management science from one of the
logical foundations of MIS. Since MIS is primarily concerned with decision making in a managerial
context, the theory of organizations and organizational behaviour forms another logical foundation for

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 MIS area. The socio-economic impact of competition, globalization, and democratization on
organizational structure must be well understood, before one can design a successful MIS system today.
Computing science would form another logical foundation for the MIS field. Since every major MIS
system developed today is built on some computational device-PC, the mini or the mainframe or
supercomputer with or without an underlying computer network-a clear understanding of the various
facets of computing becomes a major advantage to the success of MIS professional today. While all areas
of computing science are of significance to MIS.

Today, the following areas of computing science contribute significantly to the MIS discipline:
 Data and file structures

 Database management

 Systems design and analysis

 Computer networking

 Expert systems

Information theory would form yet another logical foundation of MIS today, even though it is not well
appreciated by many MIS professionals.

Information theory developed independently an ability to analytically quantify the information content of
a massage, which in the MIS context is data. This area also developed related issues like noise reduction,
error detection and control, signal processing image processing image compression image enhancement,
etc. that have significant relationships in MIS.

In short, it provides insight into the fundamental aspects of information processing at an abstract level.
Information by MIS systems with the emergence of MIS system which are rich in information content,
like multi-media, automatic recognition of characters and speech, the information theory is likely to play
a major role in the designing of next generation MIS systems. The related area of systems engineering
that focuses on interbrain is another logical foundation of MIS.

 Typical MIS

 The typical management information systems that will be in the operation in any organization can be
classified in many ways. One classification is based on the functional disciplines of management like
marketing, finance, etc. it is possible to discuss at length a number of management information systems
that can be built to assist each of the functional areas of management.
 Today, a number of systems are already in place, and many users already have a taste of one or many of
the systems in various functional management areas.

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 Operational Decisions

Production Finance Personnel Marketing

Strategic New plant location Alternative financing Welfare policy Competitor survey
Tactical Production bottleneck Variance analysis Performance appraisal Advertising
operational Daily scheduling Payroll Leave records Sales analysis

 Daily schedules refer to the detailed assignment of jobs to machines or machines to operations in a
production environment. In a service organization like a hospital, the schedule may be a duty roaster for
nurses, doctors or other paramedical staff. Such schedules must be detailed, unambiguous reports
produced in large numbers at relatively low cost. Most of the information contained in such reports is
internal to the individual organization.
 The payroll represents a typical operational system for the financial management. Since such systems
must execute accurately, data pertaining to a large number of staff in a timely manner, month after month,
cost based efficiency and speed would be major considerations in the design of such system.
 Leave records constitute a major statutory record that must be maintained for every employee,
throughout the many years the employee serves the organization. The MIS built for such an application
has the primary aim of minimizing the chore involved in such large-scale mundane record keeping. Once
again, speed and accuracy are the major performance measures of such systems.
 Detailed sales analysis is a must for any sales and marketing function. It might involve a very detailed
data collection and processing pertaining to every salesman, every product over a long time span- an
entire year or a quarter- with details of the region, market segment, etc. it is therefore a complex data
collection and processing function. Accuracy and timeliness of this effort would decide the quantity of
tactical and strategic decisions that may be based on summary information generated from this data.
Accuracy and disaggregation would be the watchwords for such detailed data collection effectively.

 Tactical Decisions
 At the tactical level one could visualize a production bottleneck analysis in a manufacturing
environment. Such analysis would call for senior management involvement, by people with years of
experience. Results arising from such analysis are likely to have medium range impact. Obviously,
information systems to provide such information must have summary information, with provision for
detailed information when called for. Comparative analysis- shift wise, plant wise, machine wise,
operator wise, etc. may be necessary. The watchwords would be insight and analysis and not simple
reporting of data.
 Variance analysis for the finance function calls for systems that point put deficiencies, cost overruns,
budget excesses, etc., by carefully matching goal or target information, with summary information
generated by operational data. Once again, accuracy is important, but what is more import is the clear

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 recognition and highlighting of patterns that can help the decision maker to initiate action and bring
systems under control. Timeliness is a must as the systems must be reset before it is too late.
 A tactical system under the personnel function is the performance appraisal which would take into
account, among others, the individual employee‟s leave records. The details may not be that important but
the patterns are, whenever they are clearly visible. Certain policy confirmation may also be checked
through such analysis. Since decisions based on such systems are likely to have medium to long-term
impact, accuracy should not be underestimated, while keeping the priority of analysis.
 Advertising information system is another example of tactical information system for the marketing
function of management. Needless to say, planning for advertisement would use much of the information
generated by detailed sales analysis (an operational MIS system). But to be able to decide on the levels of
advertisement, mix of advertisement, budget for advertisement, etc. calls for certain policy parameters as
well as environment (outside organization) information. This point must be clearly kept in mind in
designing MIS for tactical decision situations.

 Strategic Decisions
 A strategic decision by the production function of the management is, for example, decision about the
location of a new plant. Such a decision requires much of the internal information generated by the
tactical system designed to analyse the production bottleneck which is internal to the organization. But a
long-term decision like location of a new plant is likely to be influenced far more by environmental
information such as changing market, changing technology, changing fiscal and governmental policy,
e.g., deregulation and tax incentive for backward area. Obviously, strategic information systems should
have a mechanism for scanning and assimilating environmental information which are likely to influence
strategic decisions in a systematic way.
 For the finance discipline, alternate financing is a strategic decision. It uses a summary status
information about the internal finances of the company, including payroll, budget, overruns, and variance,
but will be primarily governed by long-term policy, business environment etc. which are strategically
important to the survival and growth of the organization. Information support for such strategic decision
would call for substantial external information supplemented with internal financial health indicators.
 Decision concerning the welfare policy of an organization is a strategic decision that must be made by
personnel management. The decision will be influenced by internal information about the size and
quantity of staff, the compensation package, etc., but the strategic decision will be governed by the vision
for the future of organization as seen by the top management as well as the labour market conditions of
the environment. Being a long-term decision, with a major impact on the corporate health of the
organization, this strategic decision must be supported by a balanced blend of external and internal
information.
 A strategic decision for the marketing function is a survey of competition and the resulting strategy of
gaining a major market share. While a detailed analysis of in-company sales and advertising is a

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 necessary prerequisite, much will depend on the present and future strategies of the competitors who are
external to the organization. Once again, this brings to the focus the importance of external information
for strategic decision.
 While the detailed description of this example will convince the reader of the usefulness of MIS in the
organizational context, it still does not provide a clear perspective about the overall impact of MIS in an
organization. A typical young executive entering an organization is bewildered by a plethora of terms
describing various computer-based systems such as payroll, inventory, market information, HRD system,
bulletin board, corporate communication, Desk top Publishing (DTP), DBMS, and electronic mail. Where
and how these systems fit into the organization is not at all clear to the young entrant to the organization.
It takes years of understanding of the organization, reading the manuals pertaining to the various systems
in place and working experience in the actual design of one or more systems before a clear picture
emerges. The remaining modules of the text, particularly those of systems analysis and design and
database management have to be studied thoroughly along with the detailed module on organizational
systems to get a better appreciation of organization wise manageme nt information systems

 Information and Managerial Effectiveness

It is well accepted and recognized fact that a manager ought to ensure effectiveness and efficiency in
performance. Thus a manger automatically assumes this generic responsibility in respect of the functions
assigned to him in a business enterprise.
A manager can operate effectively if he/she:

 Is clear about the targets

 Understands clearly his/her role in the unit
 Identifies opportunities and anticipates the problems that may create hurdles in his/her working
 Committed to achieve the objectives
 Plans for periodic feedback on his/her progress towards the achievement of objectives
 Is held responsible for his/her actions

This would require him to understand internal and external environment that influence the outcome of
his/her actions, transform the environment by bringing about changes in the controllable factors in the
environment and develop strong relationships with the people who are associated with the achievement of
the organizational goals.
Tools of Information Technology can help a manager keeping him aware of the environment.
As intense competition and pressure on pricing are becoming standard elements of an operating
environment, perfect information regarding the market and role of various forces that influence the
market are becoming critical for survival of a business enterprise.
Knowledge being the source of differentiation, information can help product differentiation and
development of role markets.

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 Business Information System
 The business information system gets data and other resources of IT infrastructure as input from
the environment and process them to satisfy the information needs of different entities associated
with the business enterprise.
 There are systems of control over the use of IT resources and the feedback system offers useful
clues for increasing the benefits of information systems to business. The business information
systems are sub-systems of business system and by themselves serve the function of feedback and
control in business system.

Business system

Input
Process Output
IT Resources Processing Information

Feedback and Control

Business Environment

 Business information systems are sets of interrelated procedures during IT infrastructures in a

business enterprise to generate and disseminate desired information.
 Such systems are designed to support decision making by the people associated with the enterprise
in the process of achievement of its objectives.
 The business information systems get 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 systems of control over the use of IT resources and the feedback system offers useful
clues for increasing the benefits of information systems to business.
 The business information systems are sub-systems of business system and by themselves serve the
function of feedback and control in business system.
 The business information systems id represented in the Figure. The environment in the figure
includes the internal and external environment of the business.
 The business information systems are to be integrated with other business systems to make it
meaningful in the context of achievement of the goals of a business enterprise.

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 Features of Business Information System
- The dynamics of business environment is flexible enough to absorb the inevitable changes.
- Business information systems need to be proactive.
- To cater to the information needs for decision making in business.
- Designed keeping in view the availability of financial and human resources to the business.
- The cost effectiveness.

o Introduction and Types of BIS

1. Shared Business Information Systems
This includes information systems that are large, more complex and expensive. A
detailed planning process must precede the building up of infrastructure for shared
information systems. The advantage of developing and using these BISs lies in the
sharing of information in these systems. A shared information system should permit
sharing of expensive laser printers, scanners, E-mail and Internet connection as well as
information stored in various texts and spread sheet files. Shared systems improve
inter personal communication and promote seamless flow of information across
various functions and levels of managerial hierarchy. The shared business information
systems also ensure standardization in information and reduce redundancy in
information and other resources. These systems can provide expert advice from
technical experts in the information systems. Due to sharing, they are more exposed to
security and privacy risks. Therefore, procedures are very important elements of such
shared information systems.

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 2. Personal Business Information Systems

They are used by managers to improve their productivity at work. They help managers
perform their jobs more efficiently. The personal information systems involve the use
of microcomputers along with software‟s for word processing, electronic spread
sheets, personal data base mgt. systems, graphics and business presentation and
desktop organizing.

The personal information systems are expensive to install and simple to use as
compared to shared business information systems. They are more flexible and
protected because they are single-hand handled systems.

The key feature of personal information system is the fact that a single person takes up
the responsibility of defining requirements, designing the framework of the system and
using it.

o Difference between Shared and Personal Information System

There are qualitative differences between shared business information systems and personal
information systems. This kind of differences relate to degree of flexibility, control,
environment, emphasis, user acceptance and value addition.
Degree of Flexibility: The shared systems are large and complex information systems having
many applications and a large no. of users competing for priorities. As a result, the shared
information systems take time to adapt to the changes in the needs of users. Thus, the degree
of flexibility of shared information systems is lower than that of personal information
systems.
Control: The operations in shared information systems are generally handled by a group of
professionals for all the users belong to a variety of interest groups. As a result,
comprehensive control systems are developed to avoid any abuse of the IT infrastructure.
Personal Information systems, on the other hand, are used and controlled by the concerned

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user and the control systems are almost absent, except for the backup and data recovery
procedures.
Environment: The shared information systems involve huge investment in IT and influence
the activities of almost everyone in the organization. The efficient use of IT resources is
critical in the success of such information systems. Therefore, each element of these systems
is better planned, managed and maintained in a predetermined and centrally controlled
structure. The personal information systems, on the other hand, operate better in unstructured
or at the most semi-structured environment. They work only as and when the user‟s need
arises and work the way the user desires. Thus, the personal information systems may
sometimes be used even for relatively inefficient uses. The problem of use of microcomputers
for inefficient uses is as old as microcomputers. The new passion for some of the users is to
surfing on the WWW for reasons other than business, during their free time. They also
sometimes indulge in the Internet Relay Chat (IRC) on the topics that are of no relevance to
their job profile.
Emphasis: The main emphasis of shared information systems is on generation of information
for the business enterprise as a whole, developing new applications and maintaining existing
applications. As a result, changes in hardware, software and communication links are routine
activities in such information systems. The activities are mainly technical in nature and the
emphasis is on attaining efficiency in operation and better service. In the case of personal
information systems, the emphasis is more on problems than on facilities and infrastructure.
The personal information systems are considered to be support systems-they are more like
problem driven systems than the service driven systems.
User Acceptance: The shared business information systems are designed and offered to users
keeping in view the efficiency and cost effectiveness of the information system as a whole.
There is possibility of an information system not satisfying all the expectations. So compare
to personal information systems, shared information systems have high acceptance.
Value addition: Shared information systems reduce the cost in terms of reduction in
manpower, quicker response from the central control setup, efficiency in operations, etc.
However, the personal information systems focus on the local problems and their solution.

o Business Functions and Information Needs Of Business

 Business enterprises develop and use business information systems to satisfy their
information needs. The information needs of a business enterprise are determined primarily
by the nature of business functions or activities, and The process of managerial
decision making followed by the business managers.
 It is thus imperative to understand the information needs of business with regard to various
business functions or activities and the process of managerial decision making in
imprecise, in a given enterprise.

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 The business functions or activities and managerial decision making process vary from one
enterprise to another, so would the information need.
 The functions of a typical business enterprise can be broadly classified into the following
categories:
 Marketing function
 Finance function
 Production function
 Human Resources management function
 Information function
 Information needs of a business enterprise, thus, be identified under these broad functional
areas.
 However, at the very outset it is essential to print out the present market realities suggest
that the focus of all business functions should be the customer.
 Each of the functions of business should, therefore, aim at goals such as reducing costs,
streamlining processes, maintaining good relations with customers, reducing cycle times,
maintaining high degree of quality control, customizing products and services, catering to
place markets, etc.
 For attaining these goals a manager needs information, services and networks that would
enable him to focus on customers.

o Information Management as Business Function

 Information technology is now being viewed as a separate business function. It is
concerned with planning, development and maintenance of IT infrastructure for catering to
the information needs of a variety of its users in and outside the enterprise.
 The information technology manager has the responsibility to ensure that the needed
information is developed and made available for use in the decision making process in all
the business functions.
 More specifically, he performs the following activities:
1) Identify information needs of the organization
2) Information technology tracking
3) Planning for IT infrastructure
4) Procurement of suitable IT resources
5) Ensuring proper utilization and security of IT infrastructure.
 The IT manager should keep in mind the following characteristics of the IT environment:
1) Information is an intangible resource and specific to the need of specific enterprises
only. As there are hardly any opportunities for leading this resource or selling it off to
others for payment, the cost on the generation of information is a sunk cost. Only its
utilization can add value to the information resource.

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 2) The information and its technology are subject to high rate of obsolescence.
3) Information needs keep changing fast and quicker solutions are quite rewarding.
4) Information is for users and its generation is not an end in itself.
 Information technology function is evolving and the past experiences are not adequate to
serve as guide for future action. Learning by experimentation is, thus, quite natural in this
function.
o Integration Of Business Functions:
 Mere establishment of IT infrastructure is no answer to the problems of a business
manager. There is a need to use IT infrastructure for developing a culture that promotes
more transparency and sharing of information.
 IT infrastructure must help integrating the business functions to bring about „oneness‟ in
the organization activities. Each activity needs to be directed towards achievement of the
common objectives laid down for the organization as a whole.
 The information systems, thus, are becoming more and more multifunctional and the
organizational boundaries of various business functions are rightly being transgressed. IT
infrastructure can play a vital role in reducing cycle time, focusing on customers and
ensuring seamless flow of information across various business functions, thereby, improve
efficiency and effectiveness of business performance.
 Reducing cycle time: IT can reduce time involved in production cycle, inventory turnover
cycle, revenue cycle, etc. this can be achieved by integrating the processing and
streamlining of the operations.
 Customer focus: By establishing a regular and continuous flow of communication with
customer, IT infrastructure can help in focusing on customer needs and enable all functions
to adapt quickly to the changing customer preference. Customer service, customization of
products, realignment of production facilities in view of customer needs are some of the
areas where IT shall offer tangible and quick results.
 Seamless (continuous) flow of information across functions: IT infrastructure needs to
be developed in such a way that all the functions of business. A level playing field for all
managers in so far as access to information is concerned is an important step towards
enabling the manager to take overall view of the organization as a whole instead of taking
a biased view of business functions. The Enterprise resource Planning (ERP) systems aim
at achieving such an integration of business functions and offer the benefits of synergy of
various functions in achievement of goals of the organization.
 The information needs of different business functions differ both in terms of nature and
contents. These needs are to be met taking into account the fact that these functions are
transforming themselves in the light of changing business scenario. There is a need to

UNIT – 2 – MANAGEMENT INFORMATION SYSTEM Page 15

 integrate the information needs of different business functions into a well-knit web of
information that is rich in content and focuses on customer.
 The attempts to implement integrated business information systems, popularly known as
Enterprise Resource Planning systems are steps in the right direction. It may be noted that
the most frequent and important user of business information systems is the business
manager.
The figure shows how various business functions integrate themselves to focus on customers.

Customer
Service

Orger Market
Execution Management

Financial Product
Management
CUSTOMER Devt.

Infromation Procurement
Technology Management
Human
Resource
Management

 Pitfalls in MIS System

 Earlier MIS lacked the facilities of exception reports, key indicator reports and on-call reports.
 Another common weakness of MIS has been the non-availability of decision oriented reports. For
example, a manager would need a report that offers complete information regarding the cost
structures for a pricing decision and not just estimate of variable and fixed costs. Because of the
predefined periodicity of MIS reports, it is possible that information reaches the manager quite late
and sometimes too late.
 Though, MIS reports serve the purpose of keeping the manager aware of happenings in the
enterprise, they are not tuned for analysis of the situation in terms of identifying reasons for
undesired situation in terms of identifying reasons for undesired situations or working out and
evaluating alternative courses of action.

 Another, common complaint of managers is that MIS are generally, quite slow in responding to the
dynamics of the market situation and thus help more in doing post-mortem than warning .

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