UNIT 1

Management Information System (MIS)

What is Management Information System?:
 A management information system (MIS) is an information system used for decision-making,
and for the coordination, control, analysis, and visualization of information in an organization.
 The study of the management information systems involves people, processes and technology in
an organizational context.
 In other words, it serves, as the functions of controlling, planning, decision making in the
management level setting.
 Management Information Systems (MIS) is the study of people, technology, organizations, and
the relationships among them. MIS professionals help firms realize maximum benefit from
investment in personnel, equipment, and business processes.
 A management information system (MIS) is a computer system of hardware and software that acts
as the foundation for an organization's operations. An MIS collects data from various online
systems to support management decision-making, analyses the information, and reports data.
 In an organization, it is utilized for information coordination, control, analysis, and visualization.
People, procedures, and technology are all involved in studying management information systems
in an organizational setting. It provides businesses and organizations with technology that
facilitates communication and information flow, assisting in issue-solving and giving an
organization a competitive edge.

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  The primary function of MIS is to report on business operations to support decision-making and
ensure that the organization is managed more efficiently. This will help the company reach its full
potential and thus gain a competitive advantage.
 The five functions of a management information system are : Strategic planning, resource
organization, staffing, activity direction, and success control are the five fundamental roles of
management.
 A Management Information System (MIS) is an important tool that businesses use to collect,
store, organise and utilise large amounts of data, thereby enabling improved efficiency, accurate
reporting and informed decision-making.
 Data Collection: MIS gathers data from various sources, including internal systems and external
data feeds, to create a comprehensive information database. Data Processing: It processes and
organizes data into meaningful information, such as reports, charts, and graphs, making it easier
for managers to understand.
 The MIS development process typically involves several stages: 1) Planning and analysis to
identify requirements and assess feasibility. 2) Design of the technical architecture, interfaces, and
components. 3) Development through coding, integration, and configuration.
 Five components comprise a management information system: people, business processes, data,
hardware, and software.

How Do You Prepare An MIS Report?

 Define Objectives: Clearly define the objectives of the MIS report. ...
 Data Collection: Gather data from various sources within the organization. ...
 Data Processing: Process the raw data to make it meaningful. ...
 Data Analysis: Analyze the processed data to extract insights and trends.

Role of MIS

 A management information system (MIS) is a computerized financial data database set

up and designed to generate regular reports on operations for all levels of management
within a firm. Additionally, specific reports can typically be easily obtained from the
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 system. The major goal of the MIS is to provide managers with feedback on their
performance so that upper management can keep an eye on the entire business. The
MIS often compares "actual" data to "planned" outcomes and results from the previous
year to gauge progress toward goals.
 Data from corporate departments and functions are sent to the MIS. Some information
is gathered automatically through computer-connected check-out counters, while other
information is manually entered at regular intervals. Other reports are acquired using
built-in query languages, while routine reports are preprogrammed and performed
periodically or on demand. Managers use display functions integrated into the system
to check progress at desk-side PCs connected to the MIS by networks. The
performance of the company's stock is also tracked and shown by several sophisticated
systems.

Evolution of MIS

It's useful to divide the history of management information systems into four or five periods to make
sense of its evolution.

Mid-1960s to mid-1970s:

Information systems were centralized during the early years of computerized MIS and were only focused
on management and governance requirements. Accounting departments were in charge of most
information systems and their reports.

Mid-1970s to mid-1980s:

Even though MIS was still primarily focused on management and oversight, additional departments were
starting to take advantage of the technology. The form and scope of additional Information Systems
steering groups and user-led initiatives often established projects.

Mid-1980s to late 1990s: This period saw the growth of centralized information systems and the
decentralization of information. Every division has its computer network. Information management was
frequently referred to as "herding cats." A new job to handle the acquisition and operation of various
information systems evolved in many businesses during this time.

The late 1990s to today:

Information systems are still closely related to governance and management in the modern period, but
they are extensively dispersed and accessible to almost every employee across several platforms. So that a
client firm can easily access supplier information and their consumers, in turn, may access that
information, many information systems are integrated amongst various companies.

Today forward:

The rapid growth in internet bandwidth has resulted in a significant reliance on cloud computing. Some
claim that this heralds a new era in the rise of the worker and that this is the era of management
information systems. Nowadays, almost any employee can make educated judgments because of the tools
that are easily accessible across several platforms. The distinction between those who create and those
who use MIS information is becoming increasingly hazy.

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Pillars of MIS

Management, Information, and System comprise MIS's three pillars. These are described further below.

1. Management: Art of accomplishing goals via and in collaboration with members of formally
established groups. The following are managerial responsibilities:
o Planning
o Organizing
o Staffing
o Directing
o Controlling
2. Information: Data with a context and a meaning, where data is unprocessed information about an
entity (entity is the object of interest)
3. System: A group of interconnected elements with a distinct boundary cooperating to accomplish a
single objective.

Components of MIS

Five components comprise a management information system: people, business processes, data,
hardware, and software. To accomplish corporate goals, each of these components must cooperate.

1. People: These are the system users who utilize it to keep track of daily business transactions. The
users have typically educated professionals, such as human resource managers and accountants.
2. Business procedures: These are generally accepted best practices that instruct users and every
other component on how to operate effectively. Users, consultants, and other people create
business procedures.
3. Data: The daily business transactions that were documented. Data is gathered for banks via
transactions like deposits and withdrawals.
4. Hardware: Computers, printers, networking equipment, and other items make up hardware. The
hardware provides the ability to process data. Additionally, networking and printing capabilities
are provided.
5. Software: These are applications that use hardware to function. System software and applications
software are the two main divisions of the software. The operating system is referred to as system
software. Applications software describes specialized software used to carry out business
operations.

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Objective of MIS

The major objectives of an MIS are to assist executives in decisions that further the business's strategy
and to implement the organizational structure and dynamics of the firm to manage the organization more
effectively and gain a competitive advantage.

Some MIS objectives are as follows:

 Data Capturing: Data is collected by MIS from various organizational internal and external
sources. Data might be captured manually or via computer terminals.
 Processing of Data: The recorded data is processed to create the necessary information. Data
processing includes tasks including calculating, sorting, categorizing, and summarizing.
 Storage of Information: The processed or unprocessed data is kept in the MIS for further use.
Any information that is not immediately needed is preserved as a record for the organization to
use later.
 Retrieval of Information: As and when needed, the management information system gets
data from its databases for various users.
 Dissemination of Information: The organization's users receive information, a finished
product of the management information system. It occurs regularly or online via a computer
terminal.

Characteristics of MIS

o System approach: MIS adheres to the system approach, which denotes a step-by-step procedure
for examining a system's operation in the context of the goal for which it was created. It entails
having a comprehensive perspective on how organizational subsystems function.
o Management-oriented: The management-oriented nature of MIS suggests that a top-down MIS
design methodology must be used. According to a top-down approach, management needs and
business objectives are decided upon at the start of system development. MIS suggests
management that works dynamically with system development to reach management decision
completeness.
o According to requirements: The MIS should be designed and developed based on the data that
managers need. Strategic planning, management control, and operational control are three separate
levels at which the necessary design and development information is found. Accordingly, MIS
should address the unique requirements of managers at various levels of an organization's
hierarchy.
o Future-focused: MIS should be designed and developed with the future in mind so that it is not
limited to providing only historical data.
o Integrated: A full MIS combines all its sub-components to deliver the pertinent data to make a
wise decision. An essential element of MIS is an integrated system that combines data from
several operating domains.
o Common data flows: This idea underpins several fundamental perspectives on system analysis,
including reducing duplication, merging related tasks, and streamlining processes. The increase of
common data flow is a sensible and cost-effective idea.

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 o Long-term planning: Since MIS entails logical planning for an organization's success, it should
always be developed as a long-term plan. The analyst should consider the demands of the business
and future-focused analyses when creating MIS.
o Relevant relationship between subsystem planning: The development of the MIS should be
broken down into its associated subsystems. These supporting systems must be useful with careful
planning.
o Central database: Data are presented in tabular form in the central database. This database
contains data related to inventories, employees, clients, and other sources of information. The
database is responsible for record insertion, deletion, and updating processes.

Types of management information system (MIS):

Information systems come in various forms to gather data, provide reports, and aid operational and
middle-level managers in making decisions. Depending on the situation, several management
information systems are used. Thus, choosing the appropriate MIS type is crucial. Here are some of
the often-used MIS kinds explained:

1. Management Reporting System

It is a database that tracks all the finances and business activities at various management levels. Middle-
level managers typically utilize a management reporting system to produce frequent reports by comparing
past and present financial performance to assess financial growth. The intermediate-level managers can
also use it to analyze their performance. The senior-level managers compare the company's present
financial situation and operational effectiveness against the company's established goals using data
supplied by the reporting system.

2. Process Control Systems

This system focuses on physical or industrial business activities, such as car assembly, oil refining, or
metal manufacturing. The process control system continuously collects data and produces a report on the
system's performance. The report helps the management assess how well the process is working and
provides information on when a specific event occurred. Additionally, it reveals how frequently the
production system deviates from a cyclical production process. This kind of data is useful for assessing
the production system's effectiveness and maintaining control over worker and equipment safety.

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3. Sales and marketing system

Managers can monitor a company's sales and advertising effectiveness through sales and marketing
systems. Through client reviews and comments, marketing systems can generate reports that assist
managers in raising the caliber of their products. Marketing managers that utilize sales systems can use
reports to learn more about expected sales and assess how they compare to present earnings. They can use
this to recognize patterns and develop solutions for future development. These systems can keep track of
price discrepancies between products and the current promotions and advertising campaigns that specific
retailers use. Managers may use this information to track a product's sales and target additional
promotions or discounts.

4. Inventory control system

It keeps track of every inventory-related event, such as theft, spoilage, and inventory on hand, enabling
management to see which products are selling out more quickly and require restocking, either in specific
retail locations or the business warehouse. The movement of inventory into the warehouse, from the
warehouse to the stores, sales, and returns are all tracked by the inventory control system.

5. Accounting and Finance systems

It keeps track of an organization's assets and investments. It compiles all the information relevant to the
financial reports required by law for federal, state, and local taxes, payroll, and pension funds. If the
institution publishes yearly reports, the accounting and finance system delivers the reports required for
such audits. It also makes it easier to post daily transactions, such as sales revenue, returns, and bank
deposits. This method is the foundation for monthly statements like the profit and loss and balance sheets.
In addition, these statements assist managers in comparing the company's current financial success to its
historical results and setting targets for future expansion.

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6. Human resources

With the use of this information management system, management may regulate how information is
distributed throughout the company. The office automation information system includes electronic tools
that managers use to communicate with other departmental managers, their staff, or even with other
employees. Payroll, benefits, and retirement are all financial components of the accounting and financial
systems that are tracked by this system. The human resource system also tracks numerous more things.
Providing notices of statutory compliance required training sessions, and HR regulations facilitates
communication between staff members, HR, and management.

7. Decision support system

Decision support systems collect information from both internal and external sources to assist managers
in making business choices. Data from other departments, such as financial data, inventory data, or
current sales margins for a quarter, are examples of data from internal sources. External data sources
include industry developments, interest rates, and costs with rival businesses or suppliers. When making
judgments on building growth, annual work quotas, or new policy creation, a manager may employ a
decision support system.

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8. Executive information system

The executive information system is made to help executive management oversee executives. By
providing information in tables and charts, this system makes it simple for managers to analyze data and
make informed judgments.

9. Marketing information systems

The Marketing Information System refers to the systematic gathering, analysis, interpretation, storage,
and presentation of market information to marketers regularly and continuously from internal and external
sources. It gives marketers important details to decide how best to carry out marketing operations, such as
pricing, packaging, new product development, distribution, media, and promotion.

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10. Transaction system

Transaction process systems capture data during an organization's daily transactional activity. They can
also keep an eye on other regular operations like queues of goods or reservations for various
commodities. Payroll and other corporate operations involving deposits can be automated with transaction
systems.

11. School Information management system

A school information system (SIMS) enables a school to operate efficiently. Many schools are utilizing
this technology to handle all of the behind-the-scenes operations of a school as well as mold the brains of
young people. The school information system has decreased the workload of maintaining and managing
student attendance records.

12. Enterprise resource planning

A firm uses software or system to plan and manage daily activities like supply chain, manufacturing,
services, financials, and other processes. Accounting and procurement, project management, customer
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relationship management, risk management, compliance, and supply chain operations are just a few tasks
that enterprise resource planning software may perform to automate and streamline a company or
organization.

Advantages of MIS:

o Facilitates planning: With the size and complexity of organizations growing, managers now
work remotely rather than from the place of operations, thanks to the useful information that MIS
gives for effective decision-making.
o Minimizes Information Overload: MIS aid in segmenting data into more manageable, pertinent
components for decision-making. As a result, enormous amounts of organized data are less
confusing.
o MIS Encourages Decentralization: Decentralization of power is made possible via MIS. This
aids in updating organizational policies and practices. As there are minority systems at lower
levels of performance measurement, this is plausible.
o Brings Coordination: All organizational decision-making nodes are connected through MIS.
This guarantees an organization's efficient operation. It helps with the absorption of specialized
activity so that each area can understand the needs and difficulties of others.
o Makes Control Easier: MIS is a crucial instrument connecting managerial planning and control.
MIS uses computers to expand data processing and storage capacity while decreasing costs. It
improves management's capacity to assess and raise performance.

Disadvantages of MIS:

o Quite expensive to set up and configure: The main drawback of MIS is that it is extremely
expensive to deploy for a business. Numerous hardware and software components are needed for
this information system to function.
o Lack of Flexibility to Update Itself: MIS can't automatically update itself like many other
applications. The system must be manually updated by collecting raw data and putting it into it for
processing and updating previously stored data.

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 o Risk of fraud: At every transaction stage, appropriate controls and checks must be made. Any
breach could lead to potentially dangerous situations, such as an intruder posting unlawful
transactions.
o Takes into Account only Qualitative Factors: MIS ignores non-qualitative aspects, including
employee morale, attitude, and motivation, in favor of just considering qualitative factors.
o Heavy reliance on technology: In computerized information systems, technology is heavily
reliant. Information cannot be accessible during any device or software failure until the necessary
software or hardware has been replaced.

Difference between MIS and DPS

1. Management Information System (MIS) :
MIS is an application of computer related technology to programs. It provides managers with
information and support for effective decision-making and provides the feedback on daily operations.
The outputs or reports are usually generated through accumulation of transaction processing data.
It ensures that appropriate data is collected from the valid sources, processed and passed to needy
destinations. It satisfies the needs through query systems, analysis systems, modelling systems.

The main characteristics of MIS are :

 It supports data processing functions.

 It uses an integrated database and supports a variety of functional areas.
 It provides operational, tactical and strategic levels of organization.
 It is flexible
 It can adapt to the changing needs of the organization which is a big advantage of MIS.
For Example: Human resource management systems, sales and marketing systems etc.
2. Data Processing System (DPS) :
DPS is the manipulation of data by computers. It represents the automation of routines processing to
support operations. Basically, it converts raw data into readable format which can be easily utilized by
the people in the organization.
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The data processing functions are data collection, manipulation, storage as used to report and analyze
business activities. It is oriented primarily to processing transaction data for day-to-day transactions.
There are six stages of data processing:
 Data Collection
 Data Preparation
 Data Input
 Processing
 Data Output
 Data Storage

For Example : Typing sales numbers into an inventory control software program.

Difference between MIS and DPS :

MIS DPS

It uses an integrated database. It does not use integrated databases.

It provides greater flexibility to the

It provides no such flexibility.
management.

It integrates the information flow between

It tends to support a single functional area.
functional areas.

It focus on information needs of all level of

It focuses on departmental level support.
management.

Output is in the form of graph. Output is in the form of the table.

The model is simple. Sometimes, the model becomes complex.

It focuses on converting data to another form

Focuses on operational functionality.
or language.

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Difference between Management Information System (MIS) and Decision Support
System (DSS):
Decision Support System (DSS) is an interactive, flexible computer based information system or sub-
system intended to help decision makers use communication technologies, data, documents to identify
and solve problems, complete decision process tasks and make decision. Management Information
System (MIS) consists of following three pillars: Management, Information, and System. These are
explained as following below.
1. Management: art of getting things done through and with the people of in formally organized
groups.
2. Information: data that have a meaning with a context, where data is raw facts about an entity (entity
is the object of interest).
3. System: set of inter-related components with a clearly defined boundary working together to achieve
a common goal.
Management Information System (MIS) is a computer based system that makes information
available to users with similar needs. Difference between Management Information System (MIS)
and Decision Support System (DSS):
MIS(MANAGEMENT DSS(DECISION SUPPORT
PARAMETER INFORMATION SYSTEM) SYSTEM)

Develop certain tools for using

1. Main task Identifies information requirement.
decision process.

2. Main stress Main stress is on efficiency. Main stress is on effectiveness.

3. Type of database
Uses corporate database. Uses special database.
used

Main emphasis is on data

4. Data related task Data storage is of great importance
manipulation

dependent on management
5. Dependency on Very much dependent on computer
judgement.

6. Access to data Indirect access of data by provided Management enjoys direct access

Principal use is planning, staffing,

7. Principal use Principal use is control
decision making.

8. Created/developed Constructed by vendors or information Created by users alone or with

by specialists specialists.

Middle level, lower level, sometimes

9. Types of users Analysts, professionals, managers.
senior executive

Focuses on decision support,

10. Main focus Focuses on information processing.
analysis.

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Information Resources Management (IRM)
Definition: Information Resource Management (IRM) is a technique of managing information as a
shared organizational resource.

Information Resources Classes

There are three (3) classes of information resources:

1. Business Resources: Enterprises, Business Functions, Positions (Jobs), Human/Machine

Resources, Skills, Business Objectives, Projects, and Information Requirements.
2. System Resources: Systems, Sub-Systems (business processes), Administrative Procedures
(manual procedures and office automation-related), Computer Procedures, Programs, Operational
Steps, Modules, and Subroutines.
3. Data Resources: Data Elements, Storage Records, Files (computer and manual), Views, Objects,
Inputs, Outputs, Panels, Maps, Call Parameters, and Data Bases.
Benefits of Information Resources Management (IRM)

One of the important benefits of IRM is the cataloging and cross-referencing information resources is a
model of the enterprise, including how it is organized and how it operates. Other benefits include:

 All information resources are controllable, permitting the ability to design integrated systems and
perform an “impact analysis” of a proposed resource change.
 The simplified search of information resources for reuse. The redundancy of resource definition is
eliminated.
 Complete and current documentation of all information resources, in an organized and meaningful
way.
 Communications within the organization are improved since developers and users would use
standard and common definitions for information resources, all of which would be in standard
business terminology.

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