Management Information System (UNIT-1)

Management Information System (MIS):

Management Information System is a computer based information system which is basically

concerned with processing data into information which is then communicated to the various
departments in an organization to support the operations, the management and the decision
making function in the organization.

“A formal method of collecting timely information in a presentable form in order to facilitate

effective decision making and implementation, in order to carryout organizational operations
for the purpose of achieving the organizational goals”. —Walter I. Kennevan

“An MIS is a system designed to provide selected decision oriented information needed by
management to plan, control and evaluate the activities of the corporation. It is designed
within a framework that emphasizes profit planning, performance planning and control at all
levels.

It contemplates the ultimate integration of required business information, sub systems both
financial and non-financial within the company”.

Need for MIS:

• Business Driven: The purpose of MIS the organization and its stakeholders
• Management Oriented/Directed: MIS is designed to meet the information needs of the
management at all levels so that the organizational objectives are achieved
• Flexibility and Ease to Use: The MIS is designed flexible enough to accommodate new
requirements. System is easy to operate so that not much computer skills are required
on the part of the user to access databases.
• Common Databases: MIS stores transaction data for present and future uses.
Applications access this database for relevant data to process transaction or to generate
information. The system maintains general databases so that any functional subsystem
can access database

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• Integrated System: MIS views organization information needs from a systems point of
view. It blends together database of all subsystems of the business system and through
information interchange integrates the organization
• Avoids redundancies in Data Storage: MIS is an integrated system. It avoids
unnecessary duplication and redundancy in data gathering and change
• Distributed System: Most organization have their offices sales outlets.
• Heavy planning: Design and implementation of MIS require detailed and meticulous
planning of such activities as acquisition and deployment of hardware and software

Purpose of MIS:

With the coming of the computer age, management information system [i.e. MIS) is becoming
popular in the corporate circle for giving quick information to the management. The purpose of
MIS is reporting and is to provide the necessary information to the managers and supervisors at
various levels to help them to discharge their functions of organizing, planning, control and
decision making.

MIS is a scientific way of collecting; processing, storing and communicating information relating
to the various activities of an organization to the various levels of management so that
management may be facilitated in discharging its functions efficiently and run the organization
in an efficient manner for the betterment of all.

MIS enhances the quality of management and growth of the organization by providing timely,
accurate and meaningful information for planning, organization and control, No management
can ever succeed without continuous appraisal of its performance and MIS by providing timely
and meaningful information can be helpful in this regard. MIS should be developed keeping in
mind the information needs of all managers and it should be based on cost- benefit analysis. It
should be designed in such a way that it covers all aspects of the organization and it should be
flexible to meet changing management needs and changing inputs.

Management information system is a system designed in an organization to provide right

information at the right time to facilitate managerial decision making. The need for

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management information system has arisen because managerial decision making has become
very complicated due to fast changing economic, political, social, and technological changes.

The old techniques of decision making such as intuition, rule of thumb etc. are no more
relevant and useful in the process of decision making. Modern managements assemble both
quantitative as well qualitative information which can be used for analyzing the pros and cons
of various alternative courses of actions and thereby facilitating the best course of action.

Objectives of Management Information System:

1. MIS is very useful for efficient and effective planning and control functions of the
management. Management is the art of getting things done through others. MIS will be
instrumental in getting the things done by providing quick and timely information to the
management.
2. Reports give an idea about the performance of men, materials, machinery, money and
management. Reports throw light on the utilization of resources employed in the
organization.

3. MIS is helpful in controlling costs by giving information about idle time, labor turnover,
wastages and losses and surplus capacity.

4. By making comparison of actual performance with the standard and budgeted

performance, variances are brought to the notice of the management by MIS which can
be corrected by taking remedial steps.

5. MIS brings to the notice of the management strength (i.e., strong points) of the
organization, to take advantage of the opportunities available.

6. MIS reports on production statistics regarding rejection, defective and spoilage and their
effect on costs and quality of the products.

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Contemporary Approaches to MIS:

Multiple perspectives on information systems show that the study of information systems is a
multidisciplinary field. The major disciplines that contribute problems, issues, and solutions in
the study of information systems. It can be divided in to two:

1) Technical approach

2) Behavioral approach

3) Socio Technical Approach

1) Technical Approach:

The Technical approach to information systems emphasizes mathematically based models to

study information systems, as well as the physical technology & formal capabilities of these
systems. The disciplines that contribute to the three technical approaches
1. Computer science 2. Management science 3. Operations science

2) Behavioral Approach:

Behavioral Approach is an important part of the information systems field is concerned with
behavioral issues that arise in the development and long team maintenance of information
systems. Issues such as strategic business integration, design, implementation, utilization, and
management cannot be explored usefully the models used in the technical approach. 2)
Behavioral approach

The disciplines that contribute to the three in behavioral approach: 1) Sociology 2) Psychology
3) Economics

3) Socio Technical Approach:

It includes both technical as well as behavioral approaches.

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Information as a Strategic Resource:

Information helps in taking Strategic, Tactical and operational Decisions. It is one of critical and
importance resource.

1. It helps us understand Cost, Quality, price, technology, productivity and product.

2. It helps to smooth following of business process and there by smooth managing of business
operation.

3. It helps to maintain the business standards like ISO (International Organization for
Standardization), QS [Quantum satis (abbreviation q.s. or Q.S.) is a Latin term meaning the
amount which is enough], CMMI (Capability Maturity Model Integration (CMMI) is a process
level improvement training and appraisal program), Six Sigma (Six Sigma is a quality-control
methodology developed in 1986 by Motorola, Inc. The method uses a data-driven review to
limit mistakes or defects in a corporate or business process.) etc.

4. It helps to be ahead in the competition

5. It helps company in analyzing their own SWOT

6. It helps in maintaining its own profitability.

7. It will help in taking new business decisions like new plant, new product, new business line
etc.

8. It protects company from business cycles.

9. It provides future direction to the organization.

10. It provides the competitive edge.

USE OF INFORMATION FOR COMPETITIVE ADVANTAGES

A. According Porter Miller: Information helps in following:

i) Change in industry structure: this includes Five Forces:

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1. Customers’ bargaining power

2. Suppliers’ bargaining power

3. Threats of new entrant in market

4. Pressure from substitute products and services and

5. Existing Industry competitors

ii) Birth of new business/new business initiatives

iii) New ways of doing business

B. Functional Use:

1. Lower the cost

2. Information and information system facilitate value chain e.g. product delivery, quality

3. In increased the speed, accuracy and timeliness of the organization

4. It helps in simplifying the business processes

5. It helps organization in meeting the standards and benchmarks

C. Strategic Use

1. New way of doing the work

2. New way of dealing in Product differentiation

3. It helps in new way of developing strategies, planning, forecasting and monitoring

4. It helps in problem solving and decision making by extensive internal and external data
analysis.

5. It improves the ability to perform

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6. It helps in getting advantages of market situation and keeps ahead in the competition.
7. It helps in eliminating waste, inefficiencies and gaps in the business operations

8. Provides the flexibility and helps manage the uncertainties

9. Analysis external information and making use of business

MIS as an Instrument for the Organizational Change:

Internal Change:

1. MIS will change the Business Process

2. MIS will change the old standards and set new standards

3. MIS key for Continuous improvement Process

4. MIS will reduce the hierarchy and hence less operation cost

5. MIS focus on “Shared information”

6. MIS will accelerate restructure work flow for both line and staff functions.

7. MIS will bring change in Authority and power by merit and not by age or number of years of
experience.

8. MIS brings cultural change.

9. MIS measures the results and performance.

10. MIS brings continuous addition to organizational knowledge base.

External Change

1. MIS has made world smaller

2. Worldwide reorganization environment and attempt to control the calamity.

3. Health conscious among the group, leading less suffering

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4. Change in the work lifestyle for better result

5. Creating Knowledge as an asset

Information Technology:

Information technology (IT) is the use of computers to store, retrieve, transmit, and manipulate
data or information.

Characteristics of Information Technology:

• The development of Information Technology has made education system simpler,

easier, and widespread. Now, people of remote areas can also use technology for their
children’s education and also avail the benefits of adult education.
• Diffusion of e-governance on a large scale.
• Participation of public in governance and policy making.
• Fast economic development.
• Development of remote areas.
• Technology helps the police in nabbing the criminals.
• The judiciary and other administrative services can also take the help of technology to
make work easier and faster.
• Highly beneficial for the common people, as they can access their rights and can take
legal action against the person who violates his/her rights.
• It increases the happiness and prosperity of not only an individual, but rather the society
as a whole.

Emerging Trends in Information Technology:

21st century has been defined by application of and advancement in information technology.
Information technology has become an integral part of our daily life. According to Information
Technology Association of America, information technology is defined as “the study, design,

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development, application, implementation, support or management of computer-based

information systems.”

Information technology has served as a big change agent in different aspect of business and
society. It has proven game changer in resolving economic and social issues.

Advancement and application of information technology are ever changing. Some of the trends
in the information technology are as follows:

1. Cloud Computing

One of the most talked about concept in information technology is the cloud computing.
Clouding computing is defined as utilization of computing services, i.e. software as well
as hardware as a service over a network. Typically, this network is the internet.

Cloud computing offers 3 types of broad services mainly Infrastructure as a Service

(IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS).

Some of the benefit of cloud computing is as follows:

▪ Cloud computing reduces IT infrastructure cost of the company.

▪ Cloud computing promotes the concept of virtualization, which enables server
and storage device to be utilized across organization.
▪ Cloud computing makes maintenance of software and hardware easier as
installation is not required on each end user’s computer.

Some issues concerning cloud computing are privacy, compliance, security, legal, abuse,
IT governance, etc.

2. Mobile Application

Another emerging trend within information technology is mobile applications (software

application on Smart phone, tablet, etc.)

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Mobile application or mobile app has become a success since its introduction. They are
designed to run on Smartphone, tablets and other mobile devices. They are available as
a download from various mobile operating systems like Apple, Blackberry, Nokia, etc.
Some of the mobile app are available free where as some involve download cost. The
revenue collected is shared between app distributor and app developer.

3. User Interfaces

User interface has undergone a revolution since introduction of touch screen. The touch
screen capability has revolutionized way end users interact with application. Touch
screen enables the user to directly interact with what is displayed and also removes any
intermediate hand-held device like the mouse.

Touch screen capability is utilized in smart phones, tablet, information kiosks and other
information appliances.

4. Analytics

The field of analytics has grown many folds in recent years. Analytics is a process which
helps in discovering the informational patterns with data. The field of analytics is a
combination of statistics, computer programming and operations research.

The field of analytics has shown growth in the field of data analytics, predictive analytics
and social analytics.

Data analytics is tool used to support decision-making process. It converts raw data into
meaningful information.

Predictive analytics is tool used to predict future events based on current and historical
information.

Social media analytics is tool used by companies to understand and accommodate

customer needs.

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The every changing field of information technology has seen great advancement and changes in
the last decade. And from the emerging trend, it can be concluded that its influence on
business is ever growing, and it will help companies to serve customers better.

IT capabilities and their organizational impact:

Capabilities of Information Technology:

The organizational information technology has impacts on many aspects of business, in recent
times, technology has become an ever increasing existence in the workplace and it is one of the
hot topics among the business world. More and more businesses, large and small, are trying to
incorporate the latest technology into their operations.

Multiple levels in IT based Capabilities:

There have been many typologies for IT based capabilities which are varied in terms of degree
of aggregation. It based capabilities can be categories into three groups in terms of their
aggregation level of IT resources
Top level: It described IT based capabilities according to their strategic values. The main
purpose of this level of analysis is “Demonstrate” IT resources. Hence we called this level IT
strategic level.
Middle level: This level is technology functionality level and IT strategic level is IT system level.
Lower level: Lower level define IT, based capabilities according to their functional ability of
specific technology, Components or application feature and this level is called, Technology
functionality area.
IT organizational Impact:
IT plays an important role in this generation. Traditional offices were designed for people and
paper. More recent offices were built for information systems, computer rooms, cabling etc.
Impact of the IT in different sector in organization:
Marketing: Product data form production, Research and development
Sales and Distribution: sales, packing, distribution sections.
Advertising: promotion of product

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Human resources management: Human resources budget & Expenditure, Competitors, Turn
over
Financial management: Owner, Manager, Shareholders

IT Enabled Services:
• Information Technology that helps in improving the quality of service to the users is
called IT Enabled Services [ITES].
• IT Enabled Services are human intensive services that are delivered over
telecommunication networks or the Internet to a range of business segments.
• • ITES greatly increases the employment opportunities.
IT Enabled Services:
• E-Governance
• Call Centers
• Data Management
• Medical (Telemedicine & Transcription)
• Data Digitization
• Website Services

Transaction Processing System:

A Transaction Processing System (TPS) is a type of information system that collects, stores,
modifies and retrieves the data transactions of an enterprise.
Characteristics of TPS:
• Rapid Response: fast performance with rapid results.
• Reliability: well designed backup and recovery with a low failure rate.
• Inflexibility: treat every transaction equally.
• Controlled processing: maintain specific requirement for the roles and responsibilities
of different employees.
Acid test
• In order to qualify as a TPS , transactions made by the system must pass the ACID test.
• ATOMICITY; A transaction’s change to the state are atomic, either all happen or none
happen. These changes include database changes , message, and action on transactions.

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• CONSISTENCY;TPS systems exist within a set of rules .

• ISOLATION; treats each transaction separately and keeps data from each transaction
separate.
• DURABILITY; the data should continue to exist.
Types of TPS
There are two types of TPS, Batch processing and Real time processing
Batch Processing system
• Batch processing is where the information is collected as a batch and then processed
later on.
• Eg ; paying by Cheque
Advantages
1. control over time of processing
2. Standardization
3. Reduced setup and processing costs
Disadvantages
1. time delay in gathering data , storing and bulk processing
2. Operation cost may increase
3. Only identical data is processed in one batch
4. Errors are corrected after the processing of data
Real Time Processing
• Real time processing is where all details of the transaction are recorded and changed at
the time as it occurs
• Eg;ATM’s
Advantages
1. Error correction can be immediate
2. Data is processed as demand
3. No time delay
Disadvantages
1. Standardization may not exist or may be more difficult

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2. Processing needs make control difficult

3. System hardware and software is expensive
4. Security is critical
Transaction Processing Cycle: Transaction processing system , capture and process data
describing business transactions, update organizational databases , and produce a variety of
information products. It should understand this as a transaction processing cycle of several
basic activities.

Purpose of TPS:
• To keep records about the state of the organization.
• To process transaction that affects the record.
• To produce outputs that reports on transactions that have occurred.

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