CH-1

An Overview of Management
Information System
Definition & Meaning Management Informatıon System
(MIS)
Definition
“'MIS' is a planned system of collecting, storing and
disseminating data in the form of information needed
to carry out the functions of management.”
• Management information system is a system consisting of
people, machines, procedures, & databases as its
elements.
• The system gathers data from the internal and external
sources of an organization.
• MIS is defined as an integrated system of man and
machine for providing the information to support the
operations, the management and the decision making
function in the organization.

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 MIS Cont…
• Management information systems are distinct from
regular information systems in that they are used to
analyze other information systems applied in
operational activities in the organization.
• MIS involve three primary resources: technology,
information, and people.
• Management information systems are regarded to be
a subset of the overall internal controls procedures in
a business, which cover the application of people,
documents, technologies, and procedures used by
management to solve business problems.

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Meaning:
• Management information system is an
acronym of three words, viz., Management,
information & system. In order to fully
understand the term MIS, let us try to
understand these three words.
Management:
• Management is the art of getting things
done through and with the people in
formally organized groups.

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Information:
• Information is data that is processed and is
presented in a form which assists decision-
making.
• It may contain an element of surprise, reduce
uncertainty or provoke a manager to initiate
an action.
• Data usually take the form of historical
records. In contrast to information, raw data
may not be able to surprise us, may not be
organized and may not add anything to our
knowledge.
DATA-------→PROCESSING-------→INFORMATION

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 Basic Concepts
• Data vs. Information
– Data
• Raw facts
• Distinct pieces of information, usually formatted in a
special way
– Information
• A collection of facts organized in such a way that they
have additional value beyond the value of the facts
themselves
– Database
• Collection of data in a structured, secured and efficient
form so that it can be stored and retrieved easily

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 Types of Data
Data Represented by
Numeric data Numbers with their natural
order and weight (integer,
double, float etc…)
Text (string) data Streams of alphanumeric
without formal order or
numerical values
Image data Graphic images or pictures
Audio data Sound, noise, tones
Video data Moving images or pictures
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System:
• The term system is the most loosely held term in
management literature because of its use in
different contexts.
• However, a system may be defined as a set of
elements which are joined together to achieve
a common objective.
• The elements are interrelated and
interdependent.
• The set of elements for a system may be
understood us input, process and output.

INPUT------→PROCESS--------→OUTPUT

Management Information System 8

 System Example
Elements
System Processing Goal
Inputs Outputs
elements
Actors, Filming, editing, Finished Entertaining
director, special effects, film movie, film
Movie staff, sets, distribution delivered awards, profits
equipment to movie
studio
Data Application SW, Informatio Data processing,
Operating n transforming,
Computer system, storing,
hardware system communicating
and retrieving
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 System Components and Concepts

• System boundary
– Defines the system and distinguishes it from
everything else
• System types
– Simple vs. complex
– Open vs. closed
– Stable vs. dynamic
– Adaptive vs. non-adaptive
– Permanent vs. temporary

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 System Performance and Standards

• Efficiency
• A measure of what is produced divided by
what is consumed
• Effectiveness
• A measure of the extent to which a system
achieves its goals
• System performance standard
– A specific objective of the system

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 Modeling a System
• Model
–An abstraction or an approximation
that is used to represent reality
• Types of models
–Narrative (descriptive)
–Physical
–Schematic
–Mathematical
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Management Information System -13-
 Information System (IS)
• Definition
– A set of interrelated elements or components
(procedures, materials, manpower etc.) that collect
(input), manipulate (process), and disseminate
(output) data and information and provide a feedback
mechanism to meet an objective
– (IS) Pronounced as separate letters, and short for
Information Systems or Information Services. For
many companies, IS is the name of the department
responsible for computers, networking and data
management. Other companies refer to the
department as IT (Information Technology) and MIS
(Management Information Services).

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Model of an Information System?
• Schematic model of an information system

Input Processing Output

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 Input, Processing, Output,
• Input
– The activity of gathering, capturing and converting
(digitizing) data
– Whatever goes into the computer
• Processing
– Converting or transforming data into useful outputs
• Output
– Useful information, usually in the form of
documents and/or reports
– Anything that comes out of a computer (mostly
human readable)
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 Feedback
• Feedback
–Output that is used to make changes to
input or processing activities
• Forecasting
–A proactive approach to feedback
–Use for estimating future sales or
inventory needs

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 Manual vs. Computerized Systems
• Manual systems still widely used
– Eg., some investment analysts manual draw charts
and trend lines to assist them in making investment
decisions
• Computerized systems
– Eg., the above trends lines can be drawn by
computer
• Evolution
– Many computerized system began as manual
systems

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 Characteristics of MIS
• Management-oriented: The basic objective of MIS is to
provide information support to the management in the
organization for decision making.
• Management directed: When MIS is management-oriented, it
should be directed by the management because it is the
management who tells their needs and requirements more
effectively than anybody else.
• Integrated: It means a comprehensive or complete view of all
the subsystems in the organization.
• Common data flows: The integration of different subsystems
will lead to a common data flow which will further help in
avoiding duplicacy and redundancy in data collection, storage
and processing.
• Heavy planning-element: The preparation of MIS is not a one
or two day exercise. It usually takes 3 to 5 years and
sometimes a much longer period.
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 Char. Con…

• Common database: This is the basic feature of MIS to achieve

the objective of using MIS in business organizations.
• Computerized: MIS can be used without a computer. But the
use of computers increases the effectiveness and the efficiency
of the system.
• Information as a resource: Information is the major ingredient
of any MIS.

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 Features of MIS
• Timeliness
• Accuracy
• Consistency
• Completeness
• Reliable
Economical, flexible, simple, verifiable, accessible & secure

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 Objectives of MIS :
1. Data Capturing : MIS capture data from various internal
and external sources of organization. Data capturing may be
manual or through computer terminals.
2. Processing of Data : The captured data is processed to
convert into 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 computer terminal.
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WhyBusiness NeedInformation Technology?
• Information Technology is reshaping the basics
of business, customer service, operations,
product and market strategies, and
distribution are heavily, or sometimes even
entirely, dependent on IT.
• The fundamental reasons for the use of
information technology in business are:
1. Support of business operations
2. Support of managerial decision making
3. Support of strategic competitive advantage.

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 Benefits of MIS

• It improves personal efficiency.

• It expedites problem solving(speed up
the progress of problems solving in an
organization).
• It facilitates interpersonal
communication
• It promotes learning or training.
• It increases organizational control.

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 Benefits of MIS Cont..
• It generates new evidence in support
of a decision.
• It creates a competitive advantage
over competition.
• It encourages exploration and
discovery on the part of the decision
maker.
• It reveals new approaches to
thinking about the problem.
• It helps automate the Managerial
processes.

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 Role Of MIS
• The role of MIS in an organization can be
compared to the role of heart in the body.
• The information is the blood and MIS is the
heart. In the body the heart plays the role of
supplying pure blood to all the elements of the
body including the brain.
• The MIS plays exactly the same role in the
organization.
• The system ensures that an appropriate data is
collected from the various sources, processed,
and sent further to all they need destinations.
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 MIS satisfies the diverse needs through a variety of
systems
• MIS helps the clerical personnel in the
transaction processing and answers their queries
on the data pertaining to the transaction, the
status of a particular record and references on a
variety of documents.
• MIS helps the junior management personnel by
providing the operational data for planning,
scheduling and control.
• MIS helps the middle management in short them
planning, target setting and controlling the
business functions.
Management Information System 27
 Cont…
• MIS helps the top management in goal
setting, strategic planning and evolving the
business plans and their implementation.
• MIS plays the role of information generation,
communication, problem identification and
helps in the process of decision making.
• MIS, therefore, plays a vital role in the
management, administration and operations
of an organization.

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 ImpactofMISonanOrganization
• Since the MIS plays a very important role in
the organization, it creates an impact on the
organization’s functions, performance and
productivity.
• With good support, the management of
marketing, finance, production and personnel
become more efficient.
• The tracking and monitoring of the functional
targets becomes easy.

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 Factors contributing to the success of
MIS
• MIS must be integrated into the managerial
functions.
• An appropriate information processing
technology must be selected.
• MIS is oriented, defined and designed in terms of
the user’s requirements and its operational
viability is ensured.
• MIS is kept under continuous supervision, so that
its open system design is modified according to
the changing information needs.

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 Success factors Cont…
• MIS must recognizes that a manager is a
human being and therefore, the systems must
consider all the human behavioral factors in
the process of the management.
• MIS must recognize different information
needs for different objectives
• MIS must be easy to operate and, therefore,
the design of the MIS has such features which
make up a user-friendly design.

Management Information System 31

 Factors contribution to MIS failure
• MIS is conceived as a data processing tool and
not as an information processing tool and MIS
does not provide that information which is
needed by the managers.
• Underestimating the complexity in the
business systems and not recognizing it in the
MIS design.
• Adequate attention is not given to the quality
control aspects of the inputs, the process and
the outputs.
Management Information System 32
 Factors for failure Cont…
• A belief that the computerized MIS can solve
all the management problems of planning and
control of the business and lack of
administrative discipline in following the
standardized systems and procedures
• Lack of training on MIS to stakeholders.

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The End
Management Information System -34-
 CHAPTER TWO
FOUNDATIONAL CONCEPTS IN MIS
Objectives of the chapter
After completing this chapter, students will be
able to:
Define the concept of data, information, knowledge
and wisdom.
Describe the information need and sources of
manpower
Understand framework for information systems
Explain the business system
 2.1. Business and Management Functions
2.1.1. Business functions
 Facilities and Security
 Finance
 Human Resources
 IT
 Legal/Compliance
 Manufacturing (Assembly)
 Marketing and Sales
 Operations
 Research and Development
 Warehouse (Inventory, Order Fulfilment, Shipping,
Receiving)
 Management Functions

• The functions of management can be grouped into

five areas: planning; decision making;
organization and co-coordinating; leadership and
motivation and control. Obviously, the emphasis
given to each area varies from manager to
manager and is especially dependent on the level
of the manager in the organization.
 Data, Information, Knowledge and Wisdom
• Data has commonly been seen as simple facts that can be
structured to become information. Information, in turn,
becomes knowledge when it is interpreted, put into
context, or when meaning is added to it.

• There are several variations of this widely adopted theme.

The common idea is that data is something less than
information, and information is less than knowledge.

• Moreover, it is assumed that we first need to have data

before information can be created, and only when we have
information, knowledge can emerge.
 Data
• factual information (as measurements or statistics)
• information output by a sensing device or organ
• It is raw.
Information
 is data that is organized and meaningful.
 The collected facts and data about a particular subject
(1): knowledge obtained from investigation, study, or
instruction
(2): intelligence, news
(3): facts, data.
 Knowledge
The range of one's information.
• General awareness or possession of information, facts,
ideas, truths, or principles
• All the information, facts, truths, and principles learned
throughout time
• Familiarity or understanding gained through experience or
study
Wisdom
• accumulated philosophic or scientific learning:
Knowledge.
• Wise attitude or course of action.
• 1) the quality of being wise.
• 2) the body of knowledge and experience that develops
 Decision Making as a Component of Problem Solving
The problem-solving model comprises five stages:
• Intelligence stage: A problem or opportunity is identified
and information gathered to refine the scope, resources,
and constraints.
• Design stage: Possible solutions are developed and the
feasibility of each evaluated.
• Choice stage: The most appropriate solution is selected.
The decision is made.
• Implementation stage: The problem is not solved until the
selected solution has been implemented.
• Monitoring stage: In this final stage, the decision makers
assess how well the solution fits
• the problem and what modifications may be necessary to
improve it.
 Levels of Decision Making
Operational decisions: Lower-level managers
oversee the day-to-day operations, making routine
operational decisions.
Tactical decisions: Middle-level managers,
concerned with meeting short-term objectives, make
tactical decisions.
Strategic decisions: Top-level managers or
executives are particularly concerned with strategic
decisions.
Information Systems Framework
 Information Systems Framework
Foundation concepts:
Development processes:
Information Technology:
Business Applications:
Management challenges:
 Business Systems
• A business firm is an open, adaptive
organizational system operating in a business
environment.
A business consists of the following interrelated
system components:
• Input: Economic resources such as people,
money, material, machines, land, facilities,
energy, and information are acquired by a
business from its environment and used in its
system activities.
• Processing: Organizational Processes such as
marketing, manufacturing, and finance transform
input into output.
• Output: goods and services, payments to employees
and suppliers, dividends, taxes, and information are
all outputs produced by a business and exchanged
with or transferred to its environment.
• Feedback: A primary role of information systems is
serving as the feedback component of an
organizational system. They provide information to
management concerning the performance of the
organization.
• Control: management is the control component of an
organizational system.
 The Fundamental Roles of IS in Business
• They are found in the three vital roles that
information systems can perform for a business
enterprise:
Support of business processes and operations.
Support of decision making by employees and
managers.
Support of strategies for competitive advantage.
 Business has three dimensions of a meaning
• Business commerce is the process that people
produce, exchange and trade goods and
services.
• Business as an occupation is the acquired set
of specialized skills and abilities that allows
people to create valuable goods and services.
• Business as an organization is the system of
task and authority relationship that
coordinates and controls the interactions
between people so that they work toward a
common goal.
 E-business
• Electronic business (e-business): All electronically
mediated information exchanges, both within an
organization and with external stakeholders
supporting the range of business processes.
The Role of e-Business in Business: The Internet and related
technologies and applications have changed the ways
businesses operate and people work, as well as how
information systems support business processes, decision
making, and competitive advantage.
e-business as the use of Internet technologies to
work and empower business processes, e-
commerce, and enterprise collaboration within a
company and with its customers, suppliers, and
other business stakeholders.
In essence, e-business can be more generally
considered an online exchange of value. Any online
exchange of information, money, resources,
services, or any combination under the e-business
umbrella.
These companies rely on e-business applications
to

Reengineer internal business processes,

Implement e-commerce systems with their
customers and suppliers, and
Promote enterprise collaboration among
business teams and workgroups.
 Enterprise resource planning
applications (ERP) software:
ERP is the technological backbone of e-business,
an enterprise wide transaction framework with
links into sales order processing, inventory
management and control, production
and distribution planning, and finance.
Enterprise resource planning is a cross-functional
enterprise system driven by an integrated suite of
software modules that supports the basic internal
business processes of a company.
• ERP systems track business resources (such as cash,
raw materials, and production capacity), and the
status of commitments made by the business (such as
customer orders,

• purchase orders, and employee payroll), no matter

which department (manufacturing, purchasing, sales,
accounting, and so on) has entered the data into the
system.

• ERP software suites typically consist of integrated

modules of manufacturing, distribution, sales,
accounting, and human resource applications.
Examples of manufacturing processes
 The major application components of
enterprise resource planning.
Example modules:

• –Sales & Distribution (SD)

• –Financials (FI)

• –Controlling (CO)

• –Materials Management (MM)

• –Project System (PS)

–Time Sheet (CATS)

–Payroll

–Human Resources (HR)

–Asset Accounting (AA).

The main Roles of IS in Business includes;
Support of business processes and operations,
Support of decision making by employees and
managers and Support of strategies for
competitive advantage.
• The major Benefits of ERP includes;
Quality and efficiency
Decreased costs
Decision support