Basic MIS

What is an Information System (IS)?

• An Information System is a set of interrelated components that collect, analyze
and disseminate data and information to support decision making coordination,
and control to an organization.
• Information systems contain information about significant people, places, and
things within the organization or in the environment surrounding it. Data is
streams of raw facts representing events occurring in organization or the physical
environment before they have been organized and arranged into a form that
people can understand and use.
• Three major activities in an information system are input, processing, and output.
• Input is the capture or collection of raw data from within the organization or from
its external environment for processing in an information system.
• Processing is the conversion, manipulation, and analysis of raw input into a form
that is more meaningful to humans.
• Output is the distribution of processed information to the people who will use it
or to the activities for which it will be used.
• Information systems also require feedback, which is output that is returned to the
appropriate members of the organization to help them evaluate or correct input.
Components of an Information Systems
Hardware, computer equipment used for
→ input
→ processing
→ outputs
Software, computer programs that run on hardware:
→ systems software
→ applications software
Databases: specialized applications software designed to organize data and
information on an organization’s operations
Infrastructure: equipment designed to link hardware across space:
→ telecommunications
→ networks
→ Internet
People: IS personnel and users .
Procedures: rules for developing and using the IS
• Formal IS can be either computer-based or manual systems use paper-and pencil
technology. Computer-based systems, in contrast, relay on computer hardware
and software technology to process and disseminate information.
• Although computer-based information systems use computer technology to
process raw data into meaningful information, there is a sharp distinction
between a computer and a computer program on one hand, and an information
system on the other.
• Electronic computers and related software programs are the technical
foundation, the tools and materials, of modern information systems. Computers
provide the equipment for storing and processing information. Computer
programs are sets of operating instructions that direct and control computer
processing. Computers are only part of an information system.
Information Technology vs. Information System
Information system
• A system that creates, processes, stores, and retrieves information.
• The input to such a system is data: processed data becomes information.
Information technologies
• Tools and techniques that support the design and development of information
systems: these include hardware, software, database, telecommunications, and
client servers.
Information systems use Information Technology as tools for the storing and rapid
processing of information leading to analysis, decision-making and better
coordination and control. Hence information technology forms the basis of any
modern information systems.
General Classification of Information Systems
Several categories of information systems can support either operations or
management applications. For example, expert systems can provide expert advice
for operational chores like equipment diagnostics or managerial-based information
systems that support the creation, organization, and dissemination of business
knowledge to employees and managers throughout a company.
Transaction Processing Systems (TPS)
• Transaction processing is a style of computing that divides work into indivisible
operations, called transactions. Transaction Processing Systems (TPS) are the
basic business systems that serve the operational level of the organization. A
transaction processing system is a computerized system that performs and
records the daily routine transactions necessary to conduct the business.
• A transaction processing system is an information system that records company
transactions (a transaction is defined as an exchange between two or more
business entities). A transaction processing system meets the needs of
operational managers; the output of the TPS becomes the input to an MIS.
Characteristics of Transactions Processing Systems
– A TPS records internal and external transactions for a company. It is
repository of data that is frequently accessed by other systems.
– A TPS performs routine, repetitive tasks. It is mostly used by lower-level
managers to make operational decisions.
– Transactions can be recorded in batch mode or online. In batch mode, the
files are updated periodically; in online mode, each transaction is recorded
as it occurs.
• There are six steps in processing a transaction. They are data entry, data
validation, data processing, and revalidation, storage, output generation, and
query support.
Steps in Processing a Transaction
There are six steps in processing a transaction are:
– Data entry: To be processed, transaction data must first be entered into the
system. There are a number of input devices for entering data, including the
keyboard and the mouse. For example, when a customer returns an item at
a store, the sales receipt becomes the source document for the transaction
“return item for refund”. An ATM receipt for a bank transaction becomes the
source document for balancing a checkbook.
• Source document: The documents that is generated at the source where
the transaction occurs. A sales receipt is an example of a source
document.
– Data validation: Data validation is an essential step in transaction
processing. It ensures the accuracy and reliability of data by comparing
actual data with predetermined standards or known results. There are two
steps in validation;
• Error detection: Error detection is performed by one set of control
mechanisms.
Processing and revalidation: Once the accuracy and reliability of the data are
validated, the data are ready for processing. There are two ways to process
transactions;
• Online transaction processing (OLTP): Online transaction processing is the almost
instantaneous processing of data. The term online means that the data input
device is directly linked to the TPS and therefore the data are processed as soon as
it is entered into the system. The input device may be at a remote location and be
linked to the system by networks or by telecommunications systems. So data are
processed as they are created; since there is no time lag between data creation
and data processing, the information in an online system is always current.
• Batch processing: In batch processing, transactions are accumulated over time
and processed periodically. Batch processing may be done on a daily, weekly, or
monthly basis, or any other time period appropriate to the given application. For
example, a company may process the travel expenses of its employees on a
monthly basis, whereas sales may be processed at the end of each day.
Storage: Processed data must be carefully and properly stored for future use. Data
storage is a critical consideration for many organizations because the value and
usefulness of data diminish if data are not properly stored. The kind of processing and
the type of storage medium are, to some extent, related issues. For example,
magnetic tape is often used to store data that is batch-processed. However, online
transaction processing cannot be done on magnetic tape; it relies on other types of
storages media, such as magnetic disks.
Output generation: Once data has been input, validated, processed, revalidated,
and stored, the output can be communicated to decision makers in two ways;
• Documents and reports: Documents are a popular output method. They can be
processed further, either to generate additional information or to present the
same information in a different format. Some examples of documents are
invoices, paychecks, purchase invoices, sales receipts, and job orders. A report,
on the other hand, may summarize all the invoices from a given supplier.
(Nevertheless, these terms are often used interchangeably.)
• Forms; screens or panels: Computer output need not always be presented in
hard-copy form (such as reports, documents, and printouts), but can also appear
on computer screens and panels. Such soft-copy presentations are known as
forms.
Query support: The last step in processing a transaction is querying (asking question
of) the system. Query facilities allow users to access data and information that may
otherwise not be readily available. For example, a sales manager may query the
system for the number of damaged items in a given store.
Advantages of the transaction processing system
• The TPS keeps a stable database and reduces risk of loss of user information in
the occurrence of terminal or network failure.
• The TPS is able to effectively recover from operating system failure and also
handle system failures depending on what stage the transaction was in when
the system failure occurred.
• The TPS can process large amount of data in real time or batches.
• The use of TPS in organizations is a key feature in improving customer service
and satisfaction.
• A TPS allows for the user/customer to have a level of reliability and confidence
during transactions.
MIS( Management Information System )
• To the managers, Management Information System is an implementation of the
organizational systems and procedures. To a programmer it is nothing but file
structures and file processing. However, it involves much more complexity.
• Management Information System or 'MIS' is a planned system of collecting,
storing, and disseminating data in the form of information needed to carry out
the functions of management.
How a MIS works
• In addition to serving as a department within a company, MIS refers to
computer software that is used to store, organize and analyze information.
• Management information systems are used to track sales, inventory, equipment
and related business information. In the past, management information systems
ran on mainframe computers.
• As computing systems evolved, MIS moved to run on client/server systems.
Strategic of information system
• Strategic Information Systems are computer systems that are used at every level
of the organization that change operational objectives, service products and
environmental relationships to help organizations gain competitive advantage.
Importance of Strategic information system
Strategic information system provides a connection between demands of
organization and latest information technology. This tactic helps an organization to
get hold of the market by utilizing Information tech to meet its challenging
requirements to the continuous variation in the corporate environment.
Decision Support System
Decision support systems (DSS) are interactive software-based systems intended to
help managers in decision-making by accessing large volumes of information
generated from various related information systems involved in organizational
business processes, such as office automation system, transaction processing
system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the
analytical models. A decision support system helps in decision-making but does not
necessarily give a decision itself. The decision makers compile useful information
from raw data, documents, personal knowledge, and/or business models to identify
and solve problems and make decisions.
Executive Support System
Executive support systems are intended to be used by the senior managers directly
to provide support to non-programmed decisions in strategic management.
These information are often external, unstructured and even uncertain. Exact scope
and context of such information is often not known beforehand
Following are some examples of intelligent information, which is often the source of
an ESS −
• External databases
• Technology reports like patent records etc.
• Technical reports from consultants
• Market reports
• Confidential information about competitors
• Speculative information like market conditions
• Government policies
• Financial reports and information
Artificial Intelligence
• Artificial Intelligence is composed of two words Artificial and Intelligence,
where Artificial defines "man-made," and intelligence defines "thinking power",
hence AI means "a man-made thinking power.“
• So, we can define AI as:
• "It is a branch of computer science by which we can create intelligent machines
which can behave like a human, think like humans, and able to make decisions."
Expert System
An expert system is a computer program that is designed to solve complex
problems and to provide decision-making ability like a human expert. It performs
this by extracting knowledge from its knowledge base using the reasoning and
inference rules according to the user queries.
Management Information System
Management Information System is an implementation of the organizational
systems and procedures. To a programmer it is nothing but file structures and file
processing. However, it involves much more complexity.
• The three components of MIS provide a more complete and focused definition,
where System suggests integration and holistic view, Information stands for
processed data, and Management is the ultimate user, the decision makers.
Management information system can thus be analyzed as follows −
Management
• Management covers the planning, control, and administration of the operations
of a concern. The top management handles planning; the middle management
concentrates on controlling; and the lower management is concerned with
actual administration.
Information
• Information, in MIS, means the processed data that helps the management in
planning, controlling and operations. Data means all the facts arising out of the
operations of the concern. Data is processed i.e. recorded, summarized,
compared and finally presented to the management in the form of MIS report.
System
• Data is processed into information with the help of a system. A system is made up
of inputs, processing, output and feedback or control.
• Thus MIS means a system for processing data in order to give proper information
to the management for performing its functions.
Characteristics of Computerized MIS
Following are the characteristics of a well-designed computerized MIS −
• It should be able to process data accurately and with high speed, using various
techniques like operations research, simulation, heuristics, etc.
• It should be able to collect, organize, manipulate, and update large amount of raw
data of both related and unrelated nature, coming from various internal and
external sources at different periods of time.
• It should provide real time information on ongoing events without any delay.
• It should support various output formats and follow latest rules and regulations in
practice.
• It should provide organized and relevant information for all levels of
management: strategic, operational, and tactical.
• It should aim at extreme flexibility in data storage and retrieval.
Resources of Management Information System
Hardware:
The system components which can physically touch – the system unit (tower,
desktop, laptop), internal devices and peripheral devices (keyboards and monitors)
– are called hardware and it is important to remember that basic definition:
• The hardware are the parts of the computer that are tangible and can be
touched . Peripheral devices are provided in many other ways, but think of them
as hardware that surrounds the system unit.
• These peripherals devices may be connected by wired or wireless technology to
the system unit. Generally peripherals devices communicate with the interior
components of the system unit via installed software. The software itself is
intangible and can’t be touched physically.
Software:
We know that, the hardware needs to know what to do, and that is the role of
software. The software may be divided into two types: first system software and
second application software. Primary piece of system software is the operating
system, such as Windows or iOS, which manages the hardware’s operation.
Application software is perform for specific tasks, such as handling a spreadsheet,
creating a document, or designing a Web page.
People:
The human element is the most important component of information system and
the people that are needed to run the system and the procedures they follow so
that the knowledge in the huge databases and data warehouses can be turned into
learning that can interpret what has happened in the past and guide future action.
Data:
Data is one of the most important component which is generally store in form of
information in a database system and a database is a place where data is collected
and from which it can be retrieved by querying it using one or more specific
criteria . All types of data store in warehouse without knowing whatever form that
an organization needs. The databases and data warehouses have assumed even
greater importance in information systems with the emergence of “big data, ” a
term for the truly massive amounts of data that can be collected and analyzed.
Network:
The network is defined as a system in which more than the system is connected
through a transmission media. It provides an interface to receive a piece of
information or send an information. It is also one of the best resources in the
information system.
Advantages of Management Information System
1)Facilitates planning :
• Management Information System provides relevant information for efficient
decision making for stop with the increasing size and complexity of organisation,
managers now work remotely rather than from the operations location. MIS
proves to be a big help in such scenarios.
2) Minimises Information Overload :
• MIS help in compartmentalizing data into smaller relevant parts of decision-
making. This reduces the confusion of large can organised data.
3) MIS Encourages Decentralization :
• MIS enables decentralization of authority. This is possible as there and minority
system at lower levels of measuring performance. This helps in making changes
in organisational plans and procedures.
4) Brings Co-ordination :
• MIS connect all decision making nodes in an organisation . it assist in
assimilation of specialized activities whereby each department becomes aware
of the problems and requirement of other departments . this ensures smooth
functioning of an organisation.
5) Makes Control Easier :
• MIS at as an important tool to relate managerial planning and control. MIS
increases the data processing and storage capacity as well as reduces the cost
with the help of computer. It enhance the managements capability to evaluate
and improve performance.
Disadvantage of Management Information System
1)Highly sensitive, requires constant monitoring:
• MIS content highly sensitive information about an organisation which can be
used for fraudulent activities. Constant monitoring and filtering is required to
avoid manipulation of data by fraudster causing harm to business.
2) Budgeting of MIS is Extremely Difficult :
• MIS cannot be budgeted like activities of all other department. Hence, its
expense is unpredictable. Even though it forms a very sensitive and important
function of organisation but it is not possible to predict its expense.
3) Quality of Outputs Governed by Quality of Input :
• The quality of the information generated through MIS is dependent on the
quality of raw data used for processing.
4) Lack of Flexibility to Update Itself :
• MIS Cannot update itself automatically like many other application. Updating
has to be done manually by obtaining raw data and feeding it into the system for
processing and updating pre existing data.
5) Effectiveness Decrease Due to Frequent Changes in Top Management :
• Frequent changes in middle or top management levels reduces the effectiveness
of information produced through MIS, as requirements of reports are the result
of input provided by the top management level . Change in management result
in chair changed information requirement because new team of management
will require information on their own format.
6) Takes into Account only Qualitative Factors :
• MIS takes into consideration only qualitative factors, ignoring the non qualitative
factors such as morale, attitude, and motivation of workers. is the biggest
limitation of MIS.
Impact of MIS
• The MIS creates another impact in the organization which relates to the
understanding of the business itself.
• The MIS begins with the definition of data, entity and its attributes. It uses a
dictionary of data, entity and attributes, respectively, designed for information
generation in the organization. Since all the information systems use the
dictionary, there is common understanding of terms and terminology in the
organization bringing clarity in the communication and a similar understanding
of an event in the organization.
• The MIS calls for a systematization of the business operations for an effective
system design. This leads to streaming of the operations which complicates the
system design. It improves the administration of the business by bringing a
discipline in its operations as everybody is require to follow and use systems
and procedures. This process brings a high degree of professionalism in the
business operations.
Role of MIS in Business Organisation
• The role of the MIS in an organization can be compare to the role of heart in the
body. The information is the blood and MIS is the heart. In the body the heart
plays the role of supplying pure blood to all the elements of the body including
the brain. The heart work faster and supplies more blood when needed. It
regulates and controls the incoming impure blood, processed it and sends it to
the destination in the quantity needed. It fulfils the needs of blood supply to
human body in normal course and also in crisis.
• The MIS plays exactly the same role in the organization. The system ensures that
an appropriate data is collecte from the various sources, processed and send
further to all the needy destinations. The system is expecte to fulfil the
information needs of an individual, a group of individuals, the management
functionaries: the managers and top management.
How MIS helps in Business Organisation
• The MIS satisfies the diverse needs through variety of systems such as query
system, analysis system, modelling system and decision support system.
• The MIS helps in strategic planning, management control, operational control
and transaction processing. The MIS helps in the clerical personal in the
transaction processing and answers the queries on the data pertaining to the
transaction, the status of a particular record and reference on a variety of
documents.
• The MIS Executive helps the junior management personnel by providing the
operational data for planning, scheduling and control, and helps them further in
decision-making at the operation level to correct an out-of-control situation.
• The MIS helps the middle management in short term planning, target setting
and controlling the business functions. It is supporte by the use of the
management tools of planning and control.
• The MIS helps the top-level management in goal setting, strategic planning and
evolving the business plans and their implementation.
• The MIS plays the role of information generation, communication, problem
identification and helps in the process of decision-making. The MIS, therefore,
plays a vital role in the management, administration and operation of an
organization.
Types of MIS Reports
• There are different types of MIS reports in every company. These reports range
from company to company. Management Information system reports process
data in its raw form. This raw data is generated by the people, business
processes, and transactions that are collided to create understandable data
points.
• Different types of MIS reports aggregate different data points and present them
in a format that provides clear insights and conclusions. The various
departments in an organization present MIS reports which outline their
department’s specific functions. There can be different types of MIS reports
based on which data is being analyzed and what it is being used for. We’ve tried
to summarize the most common types of MIS reports which you will find in an
organization.
1. The Summary Reports
• Summary reports are a type of MIS reports used to visualize aggregate data and
provide a summary. This summary could be of different business units, different
products, different customer demographics among other things. The report is
presented in a format that can be understood by the company’s management.
• For example, an inventory summary, which summarizes the cost of stocking
inventory and their purchase value. A sales summary report summarizes the
sales revenue, the geographical distribution of sales, and details of products
sold.
2. The Exception Reports
• An exception report is a type of MIS reports that is an aggregate report of
exceptions, which are abnormal or unusual circumstances within a company. The
exceptions report will collect instances of all such conditions within different
departments in your company, and present them to the management in a
uniform format. Exceptions reports are useful for catching problems early, and
solving them before they cause a major disruption.
• For example, an inventory that is seriously understocked, which has to be refilled
on an urgent basis; or a product which is underperforming and needs to be
scrapped.
3. On-Demand Reports
• The on-demand report is a type of MIS reports that are produced on specific
demands from your company’s management team. There is no fixed criteria or
format that must be included in an on-demand report. This type of MIS report
includes the requirements of a company and the prevailing circumstances will
dictate the contents of an on-demand report.
• For example, a sales manager may want to know the peak sales season for a
particular product in a particular location. This will help the manager to decide
whether other similar products may succeed in the same market.
4. Scheduled Reports
Scheduled reports also called periodic reports are those that are issued periodically .
i. e hourly , daily , weekly , monthly quaterly or annually. Examples of such report
are production report and monthly performance report . These types of reports can
be either planning or control purposes.
MIS : A tool For management Process
The process of management requires a lot of data and information for execution of
the plan. This requirement arises on account of the fact in each step of
management, a variety of decisions are taken to correct the course of development.
The decisions or actions are prompted due to the feedback given by the control
system incorporated in the management system. The control of overall performance
is made possible by way of Budget Summarizes and reports. The summary showing
sales, costs, profit and return on investment throws light on the direction the
organization is moving to. The exception reports identify the weaknesses tin the
system of management.
• If effective management system is to be assured, it has to rest on business
information. The management performance improves if the business risk and
uncertainties are handled effectively. If the information provided is adequate,
one can deal with these factors squarely. The information support improves the
lack of knowledge, enriches experience and improves analytical abilities leading
to better business judgment. So, if efficient information support is to be
provided, it calls for a system with the goals of generating management
information. A good MIS must furnish information to the managers to expand
their knowledge base. He must know the adverse trends in business, the
shortfalls and failures in the management process.
The following are some of the justifications for having an MIS system
Decision makers need information to make effective decisions: Management
Information Systems (MIS) make this possible.
MIS systems facilitate communication within and outside the
organization: employees within the organization are able to easily access the
required information for the day to day operations. Facilitates such as Short
Message Service (SMS) & Email make it possible to communicate with customers
and suppliers from within the MIS system that an organization is using.
• Record keeping: management information systems record all business
transactions of an organization and provide a reference point for the transactions.
MIS - The factors of Success and Failure
• Many organizations use MIS successfully, others do not. Though the hardware and
the software is the latest and has appropriate technology, its use is more for the
collection and storage of data and its elementary processing. There are some
factors which make the MIS a success and some others, which make it a failure.
These factors can be summarized as follows:
Factors Contributing to Success
If a MIS is to be success then it should have all the features listed as follows:
• The MIS is integrated into the managerial functions. It sets clear objectives to
ensure that the MIS focuses on the major issues of the business.
• An appropriate information processing technology required to meet the data
processing and analysis needs of the users of the MIS is selected.
• The MIS is oriented, defined and designed in terms of the user's requirements
and its operational viability is ensured.
• The MIS is kept under continuous surveillance, so that its open system design is
modified according to the changing information needs.
• MIS focuses on the results and goals, and highlights the factors and reasons for
non achievement.
• MIS is not allowed to end up into an information generation mill avoiding the
noise in the information and the communication system.
• The MIS recognizes that a manager is a human being and therefore, the systems
must consider all the human behavioral factors in the process of the
management.
• The MIS recognizes that the different information needs for different objectives
must be met with. The globalization of information in isolation from the
different objectives leads to too much information and information and its non-
use.
• The MIS is easy to operate and, therefore, the design of the MIS has such
features which make up a user-friendly design.
• MIS recognizes that the information needs become obsolete and new needs
emerge. The MIS design, therefore, has a basic potential capability to quickly
meet new needs of information.
• The MIS concentrates on developing the information support to manager critical
success factors. It concentrates on the mission critical applications serving the
needs of the top management.
Factors Contributing to Failures
• Many a times MIS is a failures. The common factors which are responsible for this
are listed as follows:
• The MIS is conceived as a data processing and not as an information processing
system.
• The MIS does not provide that information which is needed by the managers but
it tends to provide the information generally the function calls for. The MIS then
becomes an impersonal system.
• Underestimating the complexity in the business systems and not recognizing it in
the MIS design leads to problems in the successful implementation.
• Adequate attention is not given to the quality control aspects of the inputs, the
process and the outputs leading to insufficient checks and controls in the MIS.
• The MIS is developed without streamlining the transaction processing systems in
the organization.
• Lack of training and appreciation that the users of the information and the
generators of the data are different, and they have to play an important
responsible role in the MIS.
• The MIS does not meet certain critical and key factors of its users such as a
response to the query on the database, an inability to get the processing done in a
particular manner, lack of user-friendly system and the dependence on the system
personnel.
• A belief that the computerized MIS can solve all the management problems of
planning and control of the business.
• Lack of administrative discipline in following the standardized systems and
procedures, wrong coding and deviating from the system specifications result in
incomplete and incorrect information.
• The MIS does not give perfect information to all the users in the organization.