Unit 1st

Introduction to Management Information System

Management Information System is an implementation of the organizational systems and
procedures. To a programmer it is nothing but files 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: 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.

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.

The MIS has been understood and described in a number of ways. It is also referred to as:

a) Information system
b) Information and decision system
c) Computer based information
 1. The MIS is defined as a system which provides information support for decision
making inthe organization.
2. MIS is an integrated system of men and machines for providing the information to
supportthe operations, the management and decision making functions in the
organization.
3. MIS is defined as a system based on the database to the Organization evolved
for thepurpose of providing information to the people in the Organization.

Objectives of MIS
MIS has five major objectives which include:

1. Data Capturing
2. Processing of Data
3. Storage
4. Retrieval
5. Dissemination

1) Data Capturing
MIS capture data from various internal and external sources of the organization. Data
capturing may be manual or through computer terminals.

2) Processing of Data
The captured data is processed to convert into the required information. Processing of
data is done by such activities as calculating, sorting, classifying, and summarizing.
3) Storage of Information
MIS stores the processed or unprocessed data for future use. If any information is not
immediately required, it is saved as an organization record, for later use.

4) Retrieval of Information
MIS retrieves information from its stores as and when required by various users.

5) Dissemination of Information
Information, which is a finished product of MIS, is disseminated to the users in the
organization. It is periodic or online through a computer terminal.

Characteristics of MIS
MIS plays a very important role in every aspect of an organization. These characteristics are
generic in nature.

1. System Approach 6. Integrated

2. Management Oriented 7. Long Term Planning
3. Need-Based 8. Sub-System Concept
4. Exception Based 9. Central Database
5. Future Oriented

1) System Approach
The information system follows a System’s approach. The system’s approach implies a
holistic approach to the study of system and its performance in the light for the objective
for which it has been constituted.
2) Management Oriented
The top-down approach must be followed while designing the MIS. The top-down
approach suggests that the system development starts from the determination of
management needs and overall business objectives.

The MIS development plan should be derived from the overall business plan.
Management oriented characteristic of MIS also implies that the management actively
directs the system development efforts.

3) Need-Based
MIS design and development should be as per the information needs of managers at
different levels, strategic planning level, management control level and operational
control level. In other words, MIS should cater to the specific needs of managers in an
organization’s hierarchy.

4) Exception Based
MIS should be developed on the exception-based reporting principle, which means an
abnormal situation, i.e. the maximum; minimum or expected values vary beyond
tolerance limits. In such situations, there should BE exception reporting to the decision-
maker at the required level.

5) Future Oriented
Besides exception-based reporting, MIS should also look at the future. In other words,
MIS should not merely provide past or historical information; rather it should provide
information, on the basis of projections based on which actions may be initiated.

6) Integrated
Integration is a necessary characteristic of a management information system. Integration
is significant because of its ability to produce more meaningful information.

For example, in order to develop an effective production scheduling system, it is

necessary to balance such factors as setup costs, Workforce, Overtime rates, Production
capacity, Inventory level, Capital requirements and Customer services.

7) Long Term Planning

MIS is developed over relatively long periods. Such a system does not develop overnight.
A heavy element of planning is involved. The MIS designer must have the future
objectives and needs of the company in mind.
8) Sub-System Concept
The process of MIS development is quite complex and one is likely to lose insight
frequently. Thus, the system, though viewed as a single entity, must be broken down into
digestible sub-systems which are more meaningful at the planning stage.

9) Central Database
A central database is a mortar that holds the functional systems together. Each system
requires access to the master file of data covering inventory, personnel, vendors,
customers, etc. It seems logical to gather data once, validate it properly and place it on a
central storage medium, which can be accessed by any other subsystem.

Advantage of MIS
 Generate Competitive Advantages
 Implementation of Management by Objectives Techniques
 Fast Reaction to Market Changes
 MIS as Strategic Resource
 Change in Industry Structure
 Functional Use
 External and Internal Change
 Availability of Customer Data

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. Figure 1-10 illustrates the
major disciplines that contribute problems, issues, and solutions in the study of information
systems. In general, the field can be divided into technical and behavioral approaches.

Information systems are socio-technical 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.
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.
 MIS as an Instrument for the Organizational Change
Management Information Systems (MIS) can play a critical role in facilitating organizational
change by providing timely and accurate information that supports decision-making and enables
organizational agility.
Here are some ways in which MIS can serve as an instrument for organizational change:

Facilitating Collaboration and Communication:

MIS can help facilitate collaboration and communication within an organization by providing a
centralized platform for employees to share information and work together on projects. This can
improve team collaboration, knowledge sharing, and innovation.

Enabling Data-Driven Decision Making:

MIS can provide real-time information about business operations, enabling decision-makers to
make informed decisions based on data rather than intuition or guesswork. This can help
organizations to identify and respond quickly to changes in the business environment.

Supporting Process Optimization:

MIS can help organizations optimize business processes by identifying bottlenecks and
inefficiencies, tracking performance metrics, and providing insights into process improvements.
This can enable organizations to streamline their operations, reduce costs, and improve overall
efficiency.
Managing Change Processes:

MIS can be used to manage change processes within an organization by tracking progress,
monitoring risks and issues, and providing a platform for communication and collaboration. This
can help to ensure that change initiatives are implemented effectively and with minimal
disruption to business operations.

ITES
“Information Technology Enabled Services”

ITES refers to any service that is delivered with the help of information
technology. ITES services are tasks that a company hires another company to do,
and they use technology to do it.

ITES is a subset of the broader category of Business Process Outsourcing (BPO).

Here we provide some examples of ITES that is call center services, data entry,
management services, software development and maintenance, tech support, and
back-office operations such as accounting, and human resources.

 KPO (Knowledge Process Outsourcing)

 BPO (Business Process Outsourcing)
 LPO (Legal Process Outsourcing)
 GPO (Game Process Outsourcing)
 Call Centers
 Operations at Back Office
 Logistics Management.
Features of ITES
 Data security: ITES providers place a high focus on data security and employ
stringent security protocols to guarantee that customer information is
protected. Sensitive data is safeguarded against unauthorized access and use
because confidentiality is taken very seriously.

 Customizable: The providers of ITES services offer specialized solutions that

can be modified to meet the particular needs of each organization, and these
services are highly scalable. Through the outsourcing of non-essential tasks to
ITES providers while concentrating on their core competencies, businesses
can streamline their operations and boost productivity.
 Flexibility: Everybody’s individual demands can be met thanks to the
adaptable ITES service. Businesses can specify the services they need and
have them customized to meet their unique requirements in order to receive
the precise help they require.

 Cost-effective: One of the primary benefits of ITES is that it is a cost-

effective solution for businesses. By outsourcing their processes to ITES
providers, companies can save money on labor costs, infrastructure, and
technology investments.

 Technology-driven: ITES is a technology-driven industry that uses the latest

software tools and technologies to provide services to clients.

 Continuous improvement: The ITES industry is constantly evolving, with

new technologies and tools emerging all the time. ITES providers invest in
ongoing training and development for their employees to ensure they stay up-
to-date with the latest trends and technologies.

 Improved customer experience: ITES providers are trained to provide

excellent customer service, helping businesses to improve the customer
experience and build customer loyalty.

 Flexibility: ITES services are flexible and can be customized to meet the
unique needs of each client.

Why is information technology required in business and various fields

all over the globe?
1. Healthcare
2. Education
3. Communications
4. Employment
5. Security
6. Governance
15 characteristics of IT digital maturity

IT needs to move up its maturity from functioning to firm to delight, running full
speed with less friction. Here is a set of characteristics of IT digital maturity.

1. Operational excellence

IT is the lubricant to a well-designed business system; IT has to provide stability and operational
excellence to “keep the business lights on.” IT needs to take the wise steps in doing consolidation,
modernization, automation, integration and optimization for improving its overall digital maturity.
IT management should be in the continuous tuning mode to streamline processes and tighten
coordination and collaboration with the business partners.

2. Digital proficiency

The business goals of IT are about leveraging information and technology to lower costs, improve
operations and increase revenue. An IT organization with digital proficiency can devote more
attention to what organizations really care about – leveraging information for gaining business
insight and putting technology to business advantage. Businesses will be more successful when they
realize that one of their greatest strengths will be their multifaceted digital proficiency to scale up
and shift from “doing digital” to “being digital.”

3. Innovativeness

To move up digital maturity, businesses are looking for IT to add new innovative methods for
management of complexity, improving quality and driving digital transformation. The available
digital technologies just make innovation easier to do now than in the past – less costly and more
easily accessible. Innovation can be categorized as breakthrough innovation (push something to the
new level), sustainable innovation (better version of products or services), efficiency innovation
(process improvement), or “soft innovations” (communication or culture innovation).

4. Simplexity

People are complex, business is complex and the world is complex. Complexity is one of the
emerging digital characteristics in the digital era. Imagine the complexity that comes in due to these
characteristics such as less structure, more rules and regulations, diversity, volatility, ambiguity,
unpredictability, lack of linearity and increased flux, etc.

5. Customer-centricity

The biggest challenge to business success is IT and the biggest challenge of IT is

about understanding the business and customers’ expectations. Digital is the age of
people-centricity. IT should shift its focus from inside-out operation driven to
outside-in customer-centric for improving its digital maturity. Technology is being
leveraged every day to enhance customer experiences with or without the use cases
from an IT department.

6. Adaptability

Adaptability is the ability of people or systems adapting themselves smoothly and

acting fast to changed circumstances. Digital means fast-paced changes,
continuous disruptions, overwhelming information and shortened knowledge life
cycle. How successfully the individual or the organization can handle such a digital
new normal depends on how fast and capable they can adapt to changes and
overcome upcoming challenges.

Transaction Processing System

Transaction Processing System Transaction processing systems were among the earliest
computerized systems. Their primary purpose is to record, process, validate, and store
transactions that take place in the various functional areas/of a business for future retrieval and
use.

A Transaction Processing System (TPS) is an information system that records company

transactions (a transaction is defined as an exchange between two or more business entities).
Transaction Processing Systems (TPS) are cross-functional information systems that process data
resulting from the occurrence of business transactions.
Types of Transactions
There are mainly two types of transaction and these are:

1. External transaction
2. Internal transaction

Internal Transactions: Those transactions, which are internal to the company and are related
with the internal working of any organization.

External Transactions: Those transactions, which are external to the organization and are
related with the external sources, are regarded as External Transaction. For example sales,
purchase, etc.

Characteristics of Transaction Processing Systems

Various characteristics of TPS are:

1. A TPS performs routine, repetitive tasks. It is mostly used by lower-level

managers to make operational decisions.
2. A TPS records internal and external transactions for a company. It is a
repository of data that is frequently accessed by other systems.
3. 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.
4. There are six steps in processing a transaction. They are data entry, data
validation, data processing and revalidation, storage, output generation, and
query support.

THE END