MIS – Subsystems & Types

Prof. Arun Mishra

Assistant Professor
Oriental College of Management
[email protected]
9893686820
Subsystems of an MIS
• Two approaches to define subsystem
▫ Organisational Function Subsystem:
Supports the various functions of an Organisation.
Ex. Marketing, Production, Personnel etc.

▫ Management Activity Subsystem: Supports

the activity for which they are used. Ex.
Transactions, Operations etc.
MIS Subsystems
Organisational Functions

MANAGEMENT
PROCESSING
INFORMATION
MARKETING

PERSONNEL
PRODUCTION

LOGISTICS

FINANCE

TOP
STRATEGIC

ACTIVITIES
PLANNING

MANAGEMENT
CONTROL

OPERATIONAL
CONTROL

TRANSACTION
PROCESSING

MIS Subsystems
 Organisational Function Subsystems
Major Functional Subsystems Some Uses
Marketing Information System Sales forecasting, Sales planning,
Sales analysis
Manufacturing Information Production planning &
System scheduling, cost control analysis
Personnel Information System Salary Admn., Planning HR
requirement, performance
analysis
Accounting Information System Financial Analysis, cost analysis,
Capital planning, etc.
Logistics Information System Planning & control of Purchasing,
inventories, distribution.
Information Processing System Planning of Information System,
cost – effectiveness analysis
Top Management System Strategic Planning, resource
allocation
Activities Subsystems
Activity Subsystems Some Uses
Transaction Processing Processing of orders,
System shipments, & receipts

Operational Control Scheduling of activities and

System performance reports

Management Control Formulation of Budgets &

System resource allocation

Strategic Planning System Formulation of Objectives &

strategic plan
Types of Information Systems
Levels of Management

Upper or Top or
Strategic Management
Strategic

Middle or
Tactical Management Tactical

Lower level Operational

Management
Three levels of management
Levels of Management
Lower or Operational level Management
• They make structured decisions (Operational
decisions).
▫ Structured decision It’s a predictable decision that
can be made following a well defined set of routine
procedures.
• Most decisions at this level require easily defined
information that relates to the current status and
activities within the basic business functions.
• Information is gained from detailed reports which
contain information about routine activities.
• Detailed tasks defined by middle management are
carried out by people at operational level.
Middle or Tactical Management
• Acquire and arrange the resources (Raw Material, People etc.)
to meet the goals of an organization.
• Define the detailed tasks to be carried out at the operational
level.
• Information needed involves review, summarization and
analysis of data to help plan and control operations and
implement policy that has been formulated by upper
management.
• Information is usually given to middle managers as
summarized reports.
• Deals with semi structured decisions. (Tactical decisions)
▫ Semi structured decisions that must be made without a base of
clearly defined informational procedures. In most cases a semi
structured decision is complex, requiring detailed analysis and
extensive computations.
Upper or Top or Strategic Management

• Decides on the broad objectives of an

organization.
• Make unstructured decisions. (Strategic
decision).
▫ Unstructured decisions are the most complex
type of decisions and are rarely based on
predetermined routine procedures. They involve
subjective judgments of the decision maker.
Types of Information Systems
 Operations Support Systems
1. TRANSACTION PROCESSING SYSTEMS
i. Transaction processing systems record and process data
resulting for business transactions.
ii. Typically examples are information systems that process
sales, purchases, and inventory changes.
iii. These can be processed and used by management information
systems, decision support systems, and executive information
systems.

2. PROCESS CONTROL SYSTEMS

i. Operation support systems also make routine decisions that
control operational processes.
ii. Examples are automatic inventory reorder decisions and
production control decisions.
 Operations Support Systems
3. ENTERPRISE COLLABORATION SYSTEMS
i. Enterprise collaboration systems are information
systems that use a variety of information
technologies to help people work together.

ii. Enterprise collaboration systems help us collaborate

to communicate ideas, share resources, and
coordinate our cooperative work efforts as
members of the many formal and informal process
and project teams and other workgroups.
Management Support Systems
1. MANAGEMENT INFORMATION SYSTEMS:
i. Management information systems (MIS) are the most common
form of management support systems.
ii. They provide managerial end users with information that
support much of their day-to-day decision-making needs.
iii. M IS provide a variety of reports and displays to management.

2. DECISION SUPPORT SYSTEMS:

i. A natural progression from information reporting systems and
transaction processing systems.
ii. Decision support systems are interactive, computer-based
information systems that use decision models and specialized
database to assist the decision making process of managerial
end users.
 Management Support Systems

3. EXECUTIVE INFORMATION SYSTEMS:

i. EIS are management information systems tailored
to the strategic information needs of top
management.
ii. Top executives get the information they need from
many sources, including letters, memos, periodicals,
and reports produced manually as well as by
computer systems.
Systems Concepts
• A definition of a system: A physical system is
a set of components (subsystems or
elementary parts) that operate together to
achieve a common objective (or multiple
objective).
 20

Systems Concepts
• General Model of a System: Input,
process and output.
▫ The features which define and delineate a
system form its boundary. The system is
inside the boundary and the environment is
outside the boundary.
▫ a system is composed of subsystems
▫ Examples: stereo system. PC, automobile.
 21

Systems Concepts
• The interconnections and interactions
between the subsystems are the
INTERFACES.
• Example of a system: An information system:
• subsystems: PC Monitor, PC software, PC
hard disk, User.
• What is the boundary between the software
and the User?
 22

System
 23

A
ASystem:
System: A
ABlack
Black Box
Box or
or General
GeneralView
View

Environment

. .
. .
. .
Inputs System Outputs Objectives
. .
. .
. .

Constraints
 24
A
ASystem
System and
and its
its Subsystems
Subsystems

System Boundary
Environment
System

Interconnection

Inputs Outputs Objectives

Subsystems
(components)

Constraints
 SYSTEM ENTROPY
How systems are build from
subsystems?
System Entropy
• ENTROPY is the term used for disorder or chaos
in the system.
• Entropy can be countered by bringing in the
information and other stimuli from the
environment.
• The process of maintaining a system is the
process of decreasing entropy.
Limitations of System
• Obsolete
• Rigidity
• Repetitions
• Less Success
Methods of Building System from
Sub-systems
• Decomposition
• Simplification
▫ Clusters
▫ Decoupling
Decomposition
• A complex system is very difficult to understand
as a whole.
• Therefore, it is decomposed or divided into
subsystems. The sum of subsystems constitutes
the entire system.
• The process of decomposition is continued to with
subsystems divided into smaller subsystems until
the smallest subsystem are of manageable
size.
• These subsystems generally form hierarchical
structure.
Hierarchical relations of subsystems

System

Subsystem Subsystem Subsystem

A B C

A1 A2 B1 B2 C1 C2

A2(1) A2(2) C1(1) C1(2)

An example of Decomposition
1. Information system divided into subsystem such as:
a. Sales & Order entry
b. Inventory
c. Production
d. Personnel & Payroll
e. Purchasing
f. Accounting & Control
g. Planning
2. Each subsystem is further divided into subsystems. Ex. Personnel &
Payroll:
a. Personnel Reports
b. Payroll data entry & validation
c. Hourly Payroll processing
d. Salaried payroll processing
e. Payroll Report for management
f. Payroll report for Government
3. The subsystems defined in (2) might be further subdivided into smaller
subsystems or modules. For Example, the hourly payroll processing might
be divided into modules for calculation of deductions & net pay, payroll
register & audit controls preparations, register & controls outputs.
 Simplification
• The process of decomposition could lead to a large
number of subsystem interfaces to define.
• Each interconnection is a potential interface for
communication among subsystems.
• Simplification is the process of organizing
subsystems so as to reduce the number of
interconnections.
• Methods of simplification are:
▫ Clusters
▫ Decoupling
 All systems interconnected

A1 A2 B1 B2

A3 A4 B3 B4
Cluster Method
• Clusters of subsystems are established which
interact with each other, then a single
interface path is defined from the cluster to
other subsystems or clusters of subsystems.

• For Example: A database assessed by many

programs, but the interconnection is through a
database management interface.
 Systems connected within cluster & clusters
interconnected with single interface

A1 A2 B1 B2

A3 A4 B3 B4
Decoupling Method
• If two different subsystems are connected very tightly,
very close coordination & timing between them
is required.
• Because, they are somewhat independent, it is difficult
to make them operate completely in synchronized
fashion.
• The solution is to decouple or loosen the
connection so that the two systems can operate in the
short run with some measures of independence.
• Some means of decoupling are:
▫ Inventories, buffer or waiting line
▫ Slack & flexible resources
▫ Standards
Means of Decoupling
• The raw material inventory
Inventories allows raw material subsystem
or Buffer & production subsystem to
operate somewhat independently.

• When the output of one system is the

Slack & input of another, the existence of slack
resources allows subsystems to be
Flexible somewhat independent & yet allows each
Resources to respond
subsystems.
to demand of other

• Standard specifications, standard

costs, and other standards allow a
Standards subsystem to plan & organize with
reduces need to communicate with
other subsystems.
 Value of
Information
What is Information?
• Information is data that has been
processed into a form that is meaningful to
the recipient & is of real or perceived
value in current or prospective action or
decision.
• Its form is aggregated, manipulated & organised.
• Information reduces uncertainty.
• Information tells something the receiver did
not know or could not predict.
Data Vs. Information
Data Information
• Data are Raw facts • Information is data that
in isolation. has been manipulated to
be useful to someone.
• Convey meaning but • Information must have
generally are not value, or it is still data.
useful by • Information tells people
themselves. something they don’t
already know or confirms
something that is suspect.
Characteristics of Information
• Timeliness • Appropriateness
• Accuracy • Conciseness
• Frequency • Understandability
• Relevant • Complete
• Current • Economical
Value of Information
• The value of Information is described most
meaningfully in the context of a decision.
• The definition discussed earlier recognizes
both;
▫ the value of information in a specific
decision and,
▫ the value of information in motivation, model
building, & background building affecting
the future decisions & actions.
Value of Information in Decision Making
• Decision theory provides approaches for
making decisions under certainty, risk, &
uncertainty.
▫ Decision making under certainty assumes
perfect information as to outcomes;
▫ Risk assumes information as to the
probability of each outcome; and
▫ Uncertainty assumes a knowledge of
possible outcomes but no information as to
probability.
Value of Information in Decision
Making
• In decision theory the value of information is
the value of change in decision behaviour
caused by the information less the cost of
obtaining the information.

• If the new information does not cause

different decision then value of information
is Zero.
Value of Information in Decision Making
• Value of Perfect Information: is computed as
the difference between the optimal policy without
perfect information & the optimal policy with
perfect information.
• Almost no decisions are made with perfect
information because:
▫ The needed information is unavailable.
▫ The effort to acquire the information is too costly.
▫ There is no knowledge of the availability of the
information.
▫ The information is not available in the form needed.
Value of Information other than in a Decision
• Motivation: Some information is motivational, it
provides the information with a report on how well
they are doing. This feedback information may
motivate decisions.
• Model Building: The management & operation
of a enterprise function with models of the
enterprise. Information that is received be these
managers may result in change or reinforcement of
their models.
 Value of information other than
in a Decision
• Background Building: In decision theory
the value of information is the value of change
in decision behaviour, but the information has
value only to those who have the background
knowledge to use it in a decision. The most
qualified person generally uses information
most effectively but may need less information
since experience has already reduced
uncertainty.
 Types of Value of Information
• Normative Value: obtained by theoretical
procedures of decision-making and assumes that it
will be an optimal decision. Ex. A manager estimates
the cost of production & margins based on information
about bulk order in future.
• Realistic Value: The value obtained after taking
the behavioural aspects into consideration is
known as realistic value of information.
• Subjective Value: The value obtained by using
the intuitive guess is known as subjective value of
information. Mostly used in real life.
ANY QUESTIONS?

Unit – I is Completed