MIS Management Information System

Unit II

Foundation for Information system for Business

Introduction

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.

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.

CONCEPTS: 

The word 'MIS' comprises of three basic elements such as:

a) Management

b) Information

c) System

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.

Meaning of MIS:

MIS is the use of information technology, people, and business processes to record, store and process data to produce information that decision makers can use to make day to day decisions.

MIS is the acronym for Management Information Systems. In a nutshell, MIS is a collection of systems, hardware, procedures and people that all work together to process, store, and produce information that is useful to the organisation.

Management Information System

Definition:

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.

MIS can be defined in a number of ways:

1. The MIS is defined as a system which provides information support for decision making in the

organisation.

2. MIS is an integrated system of men and machines for providing the information to support the

operations, the management and decision making functions in the organisation.

3. MIS is defined as a system based on the database to the Organisation evolved for the purpose

of providing information to the people in the Organisation.

Objectives of MIS

The goals of an MIS are to implement the organizational structure and dynamics of the enterprise for the purpose of

managing the organization in a better way and capturing the potential of the information system for competitive

advantage.

Following are the basic objectives of an MIS −

• 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.

• 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 should be circulated to

its users periodically using the organizational network.

An information system (IS) is a formal, sociotechnical, organizational system designed to collect, process, store, and

distribute information. In a sociotechnical perspective, information systems are composed by four components: task, people, structure (or roles), and technology. Information systems can be defined as an integration of components for

collection, storage and processing of data of which the data is used to provide information, contribute to knowledge as well as digital products.

Information Systems is an academic study of systems with a specific reference to information and the

complementary networks of hardware and software that people and organizations use to collect, filter, process, create and also distribute data. An emphasis is placed on an information system having a definitive boundary, users, processors, storage, inputs, outputs and the aforementioned communication networks.

Transaction processing system (TPS):

Information systems that process data generated from business transactions are known as transaction processing

systems. In other words, the main job of a transaction processing system is to collect data generated from the

transactions, store it, and, at times, control the decisions that are taken arising out of the transactions. Such transactions can be in the form of purchases, sales, deposits, withdrawals, etc. For instance, booking an airline ticket, withdrawing money from an ATM, depositing cash in the bank, etc are all example of transactions.

Generally, these transactions occur on a day-to-day-basis. A sale or purchase of an item triggers many other

transactions like credit checks, billing, and changes in the inventory. Thus, transactions generate additional data.

Definition: A Transaction Processing System is a set of information which processes the data transaction in database system that monitors transaction programs. The system is useful when something is sold over the internet. It allows for a time delay between when an item is being sold to when it is actually sold. An example is that of a sporting event ticket. While the customer is filling out their information to purchase the seat ticket; the transaction processing system is holding the ticket so that another customer cannot also buy it. It allows for a ticket not to be sold to two different customers.

• An Information system that processes data arising from the occurrence of business transactions. Transaction processing systems (TPS) are aimed at improving the routine business activities on which all organizations depend.

• A transaction is any event or activity that affects the organization which occur as part of doing business, such as sales, purchases, deposit, withdrawals, refunds and payments.

• Transaction processing procedures are often called standard operating procedures.

Example: The routines associated with general banking transactions typify the use of standard operating procedures for the handling of deposits and withdraws, cashing of cheques, and other processes.

Types of TPS:

1. Batch processing: Processes several transactions at the same time, with a time delay.

2. Real-time processing: Deals with one transaction at a time and does not have a time delay.

Following are the objectives of a transaction processing system:

• Carrying out the day-to-day transactions of the organization on a regular basis.

• Collecting, processing, editing, updating, storing the data, and generating the required reports

or documents.

• Supplying the necessary information to the organization, this would enable proper functioning of the business.

• Providing reports and documents which would help in making timely decisions.

• Supplying data to other information systems.

Components of TPS:

• Inputs: Source documents such as Customer orders, invoices, purchase orders, etc. serves a Inputs to the TPS system.

• Processing: Once the inputs are provided, they are further processed to get an output.

• Storage: Ledgers serves as a source of storage.

• Output: Any document generated is termed as output.

These were the fundamentals behind the Transaction Processing System. It is a very helpful, reliable & secured system ofprocessing transactions at an ease.

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.

Programmed and Non-programmed Decisions

There are two types of decisions - programmed and non-programmed decisions.

Programmed decisions are basically automated processes, general routine work, where:

• These decisions have been taken several times.

• These decisions follow some guidelines or rules.

For example, selecting a reorder level for inventories, is a programmed decision.

Non-programmed decisions occur in unusual and non-addressed situations, so:

• It would be a new decision.

• There will not be any rules to follow.

• These decisions are made based on the available information.

• These decisions are based on the manger's discretion, instinct, perception and judgment. For example, investing in a new technology is a non-programmed decision.

Decision support systems generally involve non-programmed decisions. Therefore, there will be no exact report, content, or format for these systems. Reports are generated on the fly.

Attributes of a DSS

• Adaptability and flexibility

• High level of Interactivity

• Ease of use

• Efficiency and effectiveness

• Complete control by decision-makers

• Ease of development

• Extendibility

• Support for modeling and analysis

• Support for data access

• Standalone, integrated, and Web-based

Characteristics of a DSS

Support for decision-makers in semi-structured and unstructured problems.

• Support for managers at various managerial levels, ranging from top executive to line managers.

• Support for individuals and groups. Less structured problems often requires the involvement of several individuals from different departments and organization level.

Support for interdependent or sequential decisions.

• Support for intelligence, design, choice, and implementation.

• Support for variety of decision processes and styles.

• DSSs are adaptive over time.

Benefits of DSS

• Improves efficiency and speed of decision-making activities.

• Increases the control, competitiveness and capability of futuristic decision-making of the

organization.

• Facilitates interpersonal communication.

• Encourages learning or training.

• Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up new evidences for an unusual decision.

• Helps automate managerial processes.

Components of a DSS

Following are the components of the Decision Support System:

• Database Management System (DBMS): To solve a problem the necessary data may come from internal or external database. In an organization, internal data are generated by a system such as TPS and MIS. External data come from a variety of sources such as newspapers, online data services, databases (financial, marketing, human resources).

• Model Management System: It stores and accesses models that managers use to makedecisions. Such models are used for designing manufacturing facility, analyzing the financial health of an organization, forecasting demand of a product or service, etc.

• Support Tools: Support tools like online help; pulls down menus, user interfaces, graphical analysis, error correction mechanism, facilitates the user interactions with the system.

Classification of DSS

There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows:

• Text Oriented DSS − It contains textually represented information that could have a bearing on decision. It allows documents to be electronically created, revised and viewed as needed.

• Database Oriented DSS − Database plays a major role here; it contains organized and highly structured data.

• Spreadsheet Oriented DSS − It contains information in spread sheets that allows create, view, modify procedural knowledge and also instructs the system to execute self-contained instructions. The most popular tool is Excel and Lotus 1-2-3.

• Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written for performing certain calculations and particular program type.

• Rules Oriented DSS − It follows certain procedures adopted as rules.

• Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the example.

• Compound DSS − It is built by using two or more of the five structures explained above.

Types of DSS:

Following are some typical DSSs:

• Status Inquiry System: It helps in taking operational, management level, or middle level management decisions, for example daily schedules of jobs to machines or machines to operators.

• Data Analysis System: It needs comparative analysis and makes use of formula or an algorithm, for example cash flow analysis, inventory analysis etc.

• Information Analysis System: In this system data is analyzed and the information report is generated. For example, sales analysis, accounts receivable systems, market analysis etc.

• Accounting System: It keeps track of accounting and finance related information, for example,

final account, accounts receivables, accounts payables, etc. that keep track of the major aspects of the business.

• Model Based System: Simulation models or optimization models used for decision-making are used infrequently and creates general guidelines for operation or management.

Executive information system (EIS)

An Executive information system (EIS), also known as an Executive support system (ESS), is a type of management support system that facilitates and supports senior executive information and decision- making needs. It provides easy access to internal and external information relevant to organizational goals. It is commonly considered a specialized form of decision support system (DSS).

EIS emphasizes graphical displays and easy-to-use user interfaces. They offer strong reporting and drill- down

capabilities. In general, EIS are enterprise-wide DSS that help top-level executives analyze, compare, and highlight trends in important variables so that they can monitor performance and identify opportunities and problems. EIS and data warehousing technologies are converging in the marketplace.

Role of Decision Support System in MIS:

Decision support system is a special class of system which facilitate decision making. As in an organization, at each and every point and time, decisions are to be taken irrespective of their nature. Some decisions may be routine and programmed decisions while other may be strategic, and non- programmed decisions. But one thing is certain that decision making is done at all level of management. Decision support system involves the packages which help the managers to take right and timely decisions.

Decision support systems use data from the general management information system and they are used by a manager or a decision maker for decision support. The basic characteristic of the decision support system is that it is based on some tool, technique or model. These systems are used sometimes for testing new alternatives, training and learning. They are also used for sensiting the various parameters of the model.

The MIS designer has to look for all such situations and design the decision support system for integration in the system. The management information system would become more useful if the decision making is made person

independent and executed with well designed decision support system.

All such embedded systems cover the normal variety of decision situations. If anything outside the considered variety crops up, decision support system will bring to the notice of the decision makers that action is called for in the situation.

The decision support system plays a dominant role in the management information system as a support to decision making.

Challenges in the development of MIS:

If all the existing barriers are divided into humanistic, organizational and environmental factors, the major drawbacks and the reasons of failure and using MIS in public organizations are as following:

Humanistic factors

• The lack of information of the managers and users as they don’t know exactly what they want and

what their information needs are.

• The lack of understanding of the needs of the users by designers (the lack of correct definition of the needs and their analysis)

• The lack of information of the managers and users about the collaboration method with the

designer team.

• The lack of participation of the managers and users in system design.

• The lack of understanding of the managers of software and information systems.

• The lack of information of most of the analysts and programmers (designers) with new system work environment.

• The lack of acceptance of the system executers and resistance against the change.

• The lack of accuracy in the data collected Organizational factors.

• The lack of good conditions for participation and collaboration of the managers, users and system

directors

• The lack of consistency and complexity of the existing manualsystems.

• The lack of existing systems and methods analysis before the system design

• The lack of evaluation of the existing power

Environmental factors

• The lack of suitable consultants for designing the system and software

• The lack of procedures and methodology and stages of creating the system

• The lack of evaluation of environmental aspects in management information systems

• The lack of suitable use of mass media to develop the culture of using computer and information systems.

• The lack of holding suitable MA training courses in the universities and the lack of suitable education of human resources in this regard.

• The lack of ratification of the suitable rules in Islamic council parliament and government board and the considerable problem in this regard.

• The lack of serious consideration and adequate investment in this regard.

THE COMPONENTS OF INFORMATION SYSTEMS:

DATA: 

• Data is raw facts or Observation about physical phenomena or Business Transaction.
• Data is also objective measurement of the attributes (characteristics) of entities such as People, place, things & events.
• Data is Raw, un- summarized, unanalyzed facts.
• Data is used in the form of raw material & must be subjected to data manipulation or processing to produce useful information.

INFORMATION: 

Information is data placed in a meaningful & useful context for end users. The conversion of process of data/action is shown in the following.

Data

Process

Information

Decision

Action

Defining Information Systems

• “Information systems (IS) is the study of complementary networks of hardware and software that people and organizations use to collect, filter, process, create, and distribute data.”

• “Information systems are combinations of hardware, software, and telecommunications networks that people build and use to collect, create, and distribute useful data, typically in organizational settings.”

• “Information systems are interrelated components working together to collect, process, store,

and disseminate information to support decision making, coordination, control, analysis, and

viualization in an organization.”

As you can see, these definitions focus on two different ways of describing information systems: the components that make up an information system and the role that those components play in an organization.

THE COMPONENTS OF INFORMATION SYSTEMS:

A system is a set of components (subsystems) that operate together to achieve certain objectives. The objectives of a system are realized in its outputs. An information system is a system that accepts data resources as input and processes them into information products as output.

An information system depends on the resources of

✓ people (end users and IS specialists),

✓ hardware (machines and media),

✓ software (programs and procedures),

✓ data (data and knowledge basis),

✓ and networks (communications media and network support)

to perform input, processing, output, storage, and control activities that convert data resources into information products.

THE COMPONENTS OF INFORMATION SYSTEMS

This information system model highlights the relationships among the components and activities of information systems.

It provides a framework that emphasizes four major concepts that can be applied to all types of information systems:

• People, hardware, software, data, and networks are the five basic resources of information systems.

• People resources include end users and IS specialists, hardware resources consist of machines and media, software resources include both programs and procedures, data resources can include data and knowledge bases, and network resources include communications media and networks.

• Data resources are transformed by information processing activities into a variety of information products for end users.

• Information processing consists of input, processing, output, storage, and control activities.

Information System Resources

1. People Resources: 

People are required for the operation of all information systems. These people resources include end users and are specialists.

• End users (also called users or clients) are people who use an information system or the

information it produces. They can be accountants, salespersons, engineers, clerks, customers, or managers. Most of us are information system end users.

• Is Specialists are people who develop and operate information systems. They include systems analysts, programmers, computer operators, and other managerial technical, and clerical is personnel. Briefly, systems analysts design information systems based on the information requirements of end uses, programmers prepare computer programs based on the specifications

of systems analysts, and computer operators operate large computer systems.

2. Hardware Resources: The concept of Hardware resources includes all physical devices and materials used in information processing. Specially, it includes not only machines, such as

computers and other equipment, but also all data media, that is, all tangible objects on which data is recorded, from sheets of paper to magnetic disks. Example of hardware in computer-based information systems are:

• Computer systems, which consist of central processing units containing microprocessors, and variety of interconnected peripheral devices. Examples are microcomputer systems, midrange computer systems, and large mainframe computer systems.

• Computer peripherals, which are devices such as a keyboard or electronic mouse for input of data and commands, a video screen or printer for output of information, and magnetic or optical disks for storage of data resources.

3. Software Resources: The concept of Software Resources includes all sets of information processing instructions. This generic concept of software includes not only the sets of operating

instructions called programs, which direct and control computer hardware, but also the sets of information processing instructions needed by people, called procedures.

It is important to understand that even information systems that don’t use computers have a software resource

component. This is true even for the information systems of ancient times, or the manual and machinesupported information systems still used in the world today. They all require software resources in the form of information processing instructions and procedures in order to properly capture, process, and disseminate

information to their users.

The following are the examples of software resources:

• System Software, such as an operating system program, which con controls and supports the operations of a computer system.

• Application Software, which are programs that direct processing for a particular use of computers by end users. Examples are a sales analysis program, a payroll program, and a work processing program.

• Procedures, which are operating instructions for the people who will use an information system. Examples are instructions for filling out a paper form or using a software package.

4. Data Resources: Data is more than the raw material of information systems. The concept of data resources

has been broadened by managers and information systems professionals. They realize that data constitutes a

valuable organization resource. Thus, you should view data as data resources that must be managed effectively

to benefit all end users in an organization.

Data can take many forms, including traditional alphanumeric data, composed of numbers and alphabetical and other characters that describe business transactions and other events and entities. Text data, consisting of sentences and paragraphs used in written communications; image data, such as graphic shapes and figures; and audio data, the human voice and other sounds, are also important forms of data.

The data resources of information systems are typically organized into:

• Database that hold processed and organized data

• Knowledge bases that hold knowledge in variety of forms such as facts, rules, and case examples about successful business practices.

For example, data about sales transactions may be accumulated and stored in a sales database for subsequent processing that yields daily, weekly, and monthly sales analysis reports for management. Knowledge bases are used by knowledge management systems and expert systems to share knowledge and give expert advice

on specific subjects.

5. Network Resources: Telecommunications networks like the Internet, intranets, and extranets have

become essential to the successful operations of all types of organizations and their computer-based

information systems.

Telecommunications networks consist of computers, communications

processors, and other devices interconnected by communications media and controlled by communications software. The concept of Network resources emphasizes that communications networks are a fundamental resource component of all information systems. Network resources include:

• Communication media, Examples include twisted pair wire, coaxial cable, fiber-optic cable, microwave systems, and communication satellite systems.

• Network Support, This generic category includes all of the people, hardware, software, and data resources that directly support the operation and use of communications network.

Examples include communications control software such as network operating systems and Internet packages.

In summary, these five components together make up the five component framework, which are the five

fundamental components of an information system. First you will need the hardware in order to start off

your system. Then you must use the software in order to run you hardware. After you have set up your

hardware and loaded up the software to run it, you will need data to input into your hardware. Once you have

your data ready you will need procedures set in play to properly store your data within the system, and last you will need people in order to put in the data and keep the system up and running properly at all times. As

you can see, you will need every component in order to ensure that you have a functional running

information system.

CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

Multiple perspectives on information systems show that the study of information systems is a multidisciplinary field. No single theory or perspective dominates. In general, the field can be divided into technical and behavioral approaches.

Information systems are sociotechnical systems. Though they are composed of machines, devices, and “hard” physical technology, they require substantial social, organizational, and intellectual investments to make them work properly.

Technical Approach

The technical approach to information systems 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.

• Computer science is concerned with establishing theories of computability, methods of computation, and methods of efficient data storage and access.

• Management science emphasizes the development of models for decision-making and management practices.

• Operations research focuses on mathematical techniques for optimizing selected parameters of

organizations, such as transportation, inventory control, and transaction costs.

Behavioral Approach

An important part of the information systems field is 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 cannot be explored usefully with the models used in the technical approach. Other

behavioral disciplines contribute important concepts and methods.

• For instance, sociologists study information systems with an eye toward how groups and organizations

shape the development of systems and also how systems affect individuals, groups, and organizations.

• Psychologists study information systems with an interest in how human decision makers perceive and

use formal information.

• Economists study information systems with an interest in what impact systems have on control and cost structures within the firm and within markets.

The behavioral approach does not ignore technology. Indeed, information systems technology is often the stimulus for a behavioral problem or issue. But the focus of this approach is generally not on technical solutions. Instead, it concentrates on changes in attitudes, management and organizational policy, and behavior.