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MANAGEMENT
INFORMATION SYSTEMS
Chapter I: Introduction
 Data Vs. Information
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Data Information
Representation of facts, concepts, Interpreted/processed data
or instructions
Represented using (A-Z, a-z), digits arranged in meaningful way and
(0-9) or special characters (+, -, /, useful manner, and it is used for
*, <,>, =, etc.). making decisions

have no meaning. E.g.

Can be Numbers, letters, pictures,
line graphs, etc.
Input for the computer
E.g. Abebe, 21, IT, 2.5 etc. Possible Info: Abebe is an IT
student, and has low GPA
Decision :Abebe needs
 Data Processing Cycle
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 Data processing
 is the re-structuring or re-ordering of data by people or
machines to increase their usefulness and add values for
2. Numbers
a particular purpose. compared/sorted/calculated, text
formatted, image/sound edited,
 Data processing cycleetc.…

3. Result displayed and

1. Text, numbers, audio, collected on the monitor,
video, image, symbols speaker, printers, etc. or
4. Data stored for
later use
 What is Information?
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 Information can be defined as meaningfully interpreted data.
 If we give you a number 462250638, it does not make any
sense on its own. It is just a raw data.
 However if we say Tel: +251 462250638, it starts making
sense. It becomes a telephone number.
 If you gather some more data and record it meaningfully like:
 Address: Dean Office, 2nd floor, BSTL, Ethiopia
 Tel: +251 462250638
 Fax: +251 462250640
 It becomes a very useful information - the address of BSTL
college, DEAN Office
 Classification of Information
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 Classification of Information by
Characteristics
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 Based on Anthony's classification of Management, information used in business for
decision-making is generally categorized into three types:
 Strategic Information: it is concerned with long term policy decisions that defines

the objectives of a business and checks how well these objectives are met.
 For example, acquiring a new plant, a new product, diversification of business

etc

 Tactical Information: is concerned with the information needed for exercising

control over business resources, like budgeting, quality control, service level,

inventory level, productivity level etc.

 Operational Information: is concerned with plant/business level information and is

 Classification of information by application
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 In terms of applications, information can be categorized as:
 Planning Information: information needed for establishing standard norms and
specifications in an organization. used in strategic, tactical, and operation
planning of any activity. Examples of such information are time standards, design
standards.
 Knowledge Information: Knowledge is defined as "information about
information". Knowledge information is acquired through experience and learning, and
collected from archival data and research studies.
 Control Information: needed for establishing control over all business activities
through feedback mechanism.
 Organizational Information: Deals with an organization's environment, culture in the
light of its objectives.
 It is used by everybody in the organization; examples of such information are

employee and payroll information.

 Functional/Operational Information: is operation specific information. For example,
daily schedules in a manufacturing plant that refers to the detailed assignment of jobs to
 Quality of Information
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 Information is a vital resource for the success of any

organization.
 Good quality information placed in right context in right
time tells us about opportunities and problems well in
advance.
 Dimensions or elements of Information Quality:
 Intrinsic: Accuracy, Objectivity, Believability,

Reputation.
 Contextual: Relevancy, Value-Added, Timeliness,

Completeness, Amount of information.

 Representational: Interpretability, Format,
 Metrics for assessing the quality of information
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 Reliability - It should be verifiable and dependable.
 Timely - It must be current and reach the users well in time, so that sound

decisions can be made in time.

 Relevant - It should be current and valid information and it should reduce
uncertainties.
 Accurate - It should be free of errors and mistakes, true, and not deceptive.
 Sufficient - It should be adequate in quantity, so that decisions can be made on
its basis.
 Unambiguous - It should be expressed in clear terms. In other words, it should
be comprehensive.
 Complete - It should meet all the needs in the current context.
 Unbiased - It should be impartial, free from any bias and has integrity.
 Explicit - It should not need any further explanation.
 Comparable - It should be of uniform collection, analysis, content, and format.
 Uses of Information by Business
10 Five main uses of information by businesses and other organizations:
 Planning - information is the most important ingredient in decision making.
Information at planning stage includes that of business resources, assets, liabilities,
plants and machineries, properties, suppliers, customers, competitors, market and
market dynamics, fiscal policy changes of the Gov’t, emerging technologies, etc.
 Recording - Business processing these days involves recording information about
each transaction or event. It’s collected, stored, and updated regularly at the
operational level.
 Controlling - A business need to set up an information filter, so that only
filtered data is presented to the middle and top management. This ensures efficiency
at the operational level and effectiveness at the tactical and strategic level.
 Measuring - A business measures its performance metrics by collecting and
analyzing sales data, cost of manufacturing, and profit earned.
 Decision-making - MIS is primarily concerned with managerial decision-
making, theory of organizational behavior, and underlying human behavior
 Definitions of Information systems
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 An Information System is a system that gathers data and
disseminates information with the sole purpose of providing
information to its users.
 Information System(IS) is a set of interrelated elements that:
 Collect(input)

 Manipulate(process)

 Store

 Disseminate (output) data and information

 Provide a corrective reaction (feedback mechanism) to meet an

objective.
 The main object of an information system is to provide information to
its users.
 Information systems vary according to the type of users who use the
Classification of IS based on
Operation
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1. Manual Information system (using pen, paper, etc.)

 Example: developing patterns and trends on graph

paper for stock analysis

2. Computer-based Information System (uses
electronic devices).
 It uses technological Infrastructure as a single set.

 It includes hardware, software, databases,

telecommunications, people, and procedures

 They are configured to collect, manipulate, store, and

process data into information.

 Hardware: Computer equipment used to perform
 Classification of IS based on Operation..
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 Software: Computer programs that govern the operation of the computer.
 System software controls basic computer operations
 Application software allows you to accomplish specific tasks.
 Database: Organized collection of facts and information, typically
consisting of two or more related data files.
 Telecommunications: The electronic transmission of signals for
communications
 Networks: Connect computers and equipment to enable electronic
Communication
 Internet: World’s largest computer network, consisting of thousands of
interconnected networks, all freely exchanging information.
 People: The most important element in most computer-based information
systems.
 Business Information Systems
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 Most common types of information systems:
 Those designed for electronic and mobile commerce, transaction processing,
management information, and decision support.
 BIS are systems built to collect, process and present data in an easily
digestable way, so that managers can make better, more informed business
decisions.
 So, BIS collects raw data and gives is meaning, transforming it into relevant,
usable information.
 This collected information supports forecasting, planning, co-ordination, and
decision making inside companies.
 Some organizations employ:
 Special-purpose systems, such as virtual reality, that not every organization uses.
 Types of Information System (DSS,
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MIS, ES TPS)
 Transactional Processing System(TPS)
Knowled  used to record day to day business transactions
ge Work
Manage
System
ment
 aperational-level systems at the bottom of the
Expert pyramid
Informati
System
on
system
 Management Information System (MIS)
Information  provides the information necessary to manage
System
organization's current performance status by
Executiv
e Decision comparing current with previous outputs.
Informati Support  TPS output is input for MIS
on System
System Transacti  Decision Support System (DSS)
onal
Processin
 assist in management decision-making.
g System  Executive Support Systems(ESS)
 strategic-level information systems
 helps to senior management to decide business
4 Level: based on the people who use the systems strategic plan and to make decision based on
 Definition of MIS

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 To the managers, MIS is an implementation of the organizational
systems and procedures.
 The three components of MIS provide a more complete and
focused definition, where:
 System is an organized collection of parts (or subsystems)
that are highly integrated to accomplish an overall goal.
 Information stands for processed data, and
 Management: Management defined as all the activities and
tasks undertaken for archiving goals by continuous activities
like; planning, organizing, leading and controlling.
 Managers are the ultimate users of MIS, and are the
decision makers.
 Meaning of MIS .. 1
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 What is a System? (in the context of MIS)
• An inputs – processing - output and feedback matrix.
• Supports the processing of data into information.
 what is MIS?
• A management information system (MIS) is a computer system
consisting of hardware and software that serves as the backbone of
an organization’s operations.
• An MIS gathers data from multiple online systems, analyzes the
information, and reports data to aid in management decision-
making.
• MIS is the system providing management with timely & accurate
information necessary to make decision
 What is MIS?
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 MIS supports Management with information

for:
 Operations –
 Administration –
 Decision making –
 The foundation of MIS is databases.
 Today’s MIS is a computerized processing

system.
 MIS differ from other ISs because:
 1.2. Objectives of MIS
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 The purpose of an MIS is improved decision-making, by
providing up-to-date, accurate data on a variety of
organizational assets, including: Financials, Inventory,
Personnel, Project timelines, Manufacturing, Real estate,
Marketing, Raw materials, R&D
 The MIS collects the data, stores it, and makes it accessible to
managers who want to analyze the data by running reports.
 MIS processes data to support the management functions.
 MIS manages information system (IS) productively:
 1.2. Objectives of MIS ….
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 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
 1.2. Objectives of MIS ….
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1. Facilitate: The decision making process by furnishing

information in the proper time frame.
2. Provide: It requisite information at each level of
management to carry out their functions.
3. Help: In highlighting the critical factors to the closely
monitored for success
4. Support: Support decision making in both structured and
unstructured problem environments.
5. Provide: Provide a system of people, computers, and
procedures, interactive query facilities documents for
collecting, storing, retrieving and transmitting information
Components of MIS
 made up of five major components, All of these components must work together to achieve
business objects.
 People –
 users who use the IS to record the day to day business transactions
 professionals such as accountants, human resource managers, etc.
 The ICT department usually has the support staff who ensure that the system is running properly.
 Business Procedures –
 guide the users and all other components on how to work efficiently.
 Business procedures are developed by the people i.e. users, consultants, etc.
 Data –
 the recorded day to day business transactions.
 For a bank, data is collected from activities such as deposits, withdrawals, etc.
 Hardware –
 hardware is made up of the computers, printers, networking devices, etc.
 The hardware provides the computing power for processing data.
 It also provides networking and printing capabilities. The hardware speeds up the processing of data into information.
 Software –
 these are programs that run on the hardware.
 The software is broken down into two major categories namely system software and applications software.
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 System software refers to the operating system i.e. Windows, Mac OS, and Ubuntu, etc.
Subsystems of MIS
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1. Transaction Processing System (TPS),

• which processes the day today transactions associated with a business.
• Example transactions include payroll processing, order processing, such as for an e-commerce
business, and invoicing.
2. Management Support Systems (MSS),
• which store and organize data, enabling end users to generate reports and analyze data to
address business needs and inform planning.
• A data warehouse is an example of a Management Support System.
3. Decision Support Systems (DSS),
• which analyze business data to assist managers with decision making.
• For example, a DSS could project revenue figures based on new product sales assumptions.
4. Expert Systems,
• which provide managers with insights and advice, using artificial intelligence (AI) to simulate the
expert knowledge of a human in a particular field.
 Contemporary Approaches To MIS
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 The two contemporary approaches to management are

 study of information systems is a multidisciplinary field
1. Technical Approach
 emphasizes mathematically based models to study information systems
 as well as the physical technology and formal capabilities of these systems
 The disciplines that contribute to the technical approach are computer science,
management science, and operations research.
2. Behavioral Approach
 concerned with behavioral issues that arise in the development and long-term
maintenance of information systems.
 Issues such as strategic business integration, design, implementation, utilization, and
management
 Implementation of MIS
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 The implementation plan involves the following steps:

1. Preparing organizational plans.
2. Planning of work flow.
3. Training of personnel.
4. Development of software.
5. Acquiring computer hardware.
6. Designing the format for data collection.
7. Construction of data files.
8. Operation of old and new systems in parallel.
9. Phasing out the old and inducting the new system.
10. Evaluation, maintenance and control of the new system.
 Disadvantages of Information
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System
 Following disadvantages are likely to be there from information systems:
1. ‘Deskilling’ of workers:-Introduction of new technologies, especially for automation,
sometimes render obsolete the existing skill of some workers. Therefore, while
computerization can increase operational efficiency and improve profits, sometimes it is also
the root cause of workforce reduction.
2. Information overload: Generation of excessive amounts of information can overwhelm
managers who must digit it and used it to make decisions.
3. Employee mistrust: Employees sometimes fear that computers eventually replace
them. They may view information system with skepticism; unless they are assured that their
jobs are not in danger.
4. Increased competitive pressure: There is increased pressure on small and medium-
scale industries, failing which they are steadily being pushed out of the marketplace by
larger companies.
5. Disenchantment with IS: Many organizations are unable to value the information systems
and technologies to their organizations vis-à-vis the return on investment. In coming years,
the MIS will experience close scrutiny of its abilities to the delivery on its promises.
6. Security breaches: when organization introduce new and sophisticated technologies,
they most also find new ways to protected these assets from theft, pilferage, and security
breaches.
 Constraints in developing an MIS
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Following are the constraints in developing an effective

MIS:
1. No management system to build upon.
2. No clear definition of mission and purpose.
3. No objectives for the company.
4. Miss-organization.
5. Communication gap.
6. Lack of management participation.
 MIS and use of Computer
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 The main advantages of using computer technology in

MIS:
 Expanding scope for using system
 Enhancing speed of processing and retrieval of data
 Widening the scope of analysis.
 Increasing complexity of system design and operation.
 Integrating different information sub systems.
 Increasing the effectiveness of information system.
 Extending more comprehensive information to business

managers.
 Limitations of MIS
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 MIS cannot replace managerial judgment in decision making. It is merely

effective tool for the managers in decision making problem solving.
 The quality of output of MIS is directly proportional to the quality of input and
processes.
 MIS cannot provide tailor made information packages. It is required to analyze
the available information before decision making.
 In a fast changing and complex environments, MIS may not have enough
flexibility to update itself quickly.
 MIS takes only quantitative factors into account.
 MIS is less useful for making non programmed decisions.
 MIS is less effective in organizations where information is not being shared with
others.
 MIS is less effective due to frequent changes in top management,
organizational structure and operational staff.