Management Information Systems Dr.

Manju

Chapter 1
Introduction to Management Information System (MIS)
1.1 Concept of MIS
1.2 Evolution and meaning of MIS
1.3 Goals of MIS
1.4 Information and Data
1.5 Classifications of MIS
1.6 Limitations of MIS
1.7 Characteristics of MIS

1.1.CONCEPT OF MIS
As a manager, you’ll need to know how to use information systems strategically and how
systems can help you make better decisions. Information is the basis for every decision taken in
an organization. The efficiency of management depends upon the availability of regular and
relevant information. Thus, it is essential that an effective and efficient reporting system be
developed as part of accounting system. The main object of management information is to obtain
the information required about the operating results of an organization regularly in order to use
them for future planning and control.
The old techniques like intuition, rule of thumb, personal whim and prestige, etc, are now
considered useless in the process of decision taking. Modern management is constantly on
lookout for such quantitative and such information, which can help in analysing the proposed
alternative actions and choosing one as its decision. Thus, modern management functions are
information-oriented more popularly known as “management by information”. And the system
through which information is communicated to the management is known as “management
information system (MIS)”. The management needs full information before taking any decision.
Good decisions can minimize costs and optimize results. Management information system can be
helpful to the management in undertaking management decisions smoothly and effectively.
Information is the basis for every decision taken in an organization. The efficiency of
management depends upon the availability of regular and relevant information. The main object
of management information is to obtain the information required about the operating results of
an organization regularly in order to use them for future planning and control.

The old techniques like intuition, rule of thumb, personal whim and prestige, etc, are now
considered useless in the process of decision taking. Modern management is constantly on look

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out for such quantitative and such information, which can help in analyzing the proposed
alternative actions and choosing one as its decision. Thus, modern management functions are
information-oriented more popularly known as “management by information”. And the system
through which information is communicated to the management is known as “management
information system (MIS)”.
A continuing stream of information technology innovations is transforming the
traditional business world. Examples of transforming technologies include the emergence of
cloud computing, the growth of a mobile digital business platform based on smartphones,
netbook computers, and, not least, the use of social networks by managers to achieve business
objectives. Most of these changes have occurred in the last few years. These innovations enable
entrepreneurs and innovative traditional firms to create new products and services, develop new
business models, and transform the day-to-day conduct of business. In the process, some old
businesses, even entire industries, are being destroyed while new businesses are springing up.
For instance, the emergence of online music stores—driven by millions of consumers who prefer
iPods and MP3 players—has forever changed the older business model of distributing music on
physical devices, such as records and CDs, and then selling them in retail stores.

1.2.EVOLUTION OF MANAGEMENT INFORMATION SYSTEM (MIS) MEANING&

DEFINITON
THE EVOLUTION OF INFORMATION SYSTEMS

Phase 1: Electronic Data Processing Systems (1950-60)

The initial phase that existed from 1950s to 1960s focused on data. Special attention was given
on - Transaction Processing, Record-keeping, and Accounting Applications

Phase 2: Management Information Systems(1960-70)

This phase started immediately after Electronic Data Processing Systems, continued until 1970s.
The emphasis here was on management reports of pre-specified information to support decision
making.
Phase 3: Decision Support Systems (1970s to 1980s)
Interactive support of management decision making process was given priority here. And, this
development in Information System has changed much of the capabilities of business firms.
Phase 4: Strategic and end user support (1980s to 1990s)
The development of following systems were triggered at this phase –

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a. End User Computing Systems: Offered direct computing support for end users and work
group collaboration
b. Office Automation: Includes video conferencing , voice mail, electronic mail, facsimile
transmission, and desktop publishing
c. Executive Information Systems: Provided critical information for top management
d. Expert Systems: Offered knowledge-based expert advice for end users
e. Strategic Information Systems: IS becomes an integral part of business processes for
competitive advantages
Phase 5: Global Internetworking (1990s to2000s)
Internet-worked Information Systems came into existence with the features of:
a. Computing, Communication, Collaboration
b. Inter-organizational computing
c. Global enterprises
CONTEMPORARY APPROACHES TO IS
The study of information systems is a multidisciplinary field. No single theory or
perspective dominates. Figure 1-2 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.

Figure 1-1

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1) 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.
2) 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.
 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 understanding the production of
digital goods, the dynamics of digital markets, and how new information systems change
the control and cost structures within the firm.
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 &
organizational policy.

MEANING AND DEFINITION

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A Management Information System (MIS) provides information that is needed to manage

organizations efficiently and effectively. Management information systems are not only
computer systems - these systems encompass three primary components: technology, people
(individuals, groups, or organizations), and data/information for decision making. However, we
can say that, Management Information System is a sub-system of organization that gives the
people in-charge of organization by providing right information that they need to take decisions
at right time.
Sekhar in 2007 defined management information system as "a system that collects and
processes data (information) and provides it to managers at all levels, who use it for decision
making, planning, program implementation and control." Thus MIS means a system for
processing data in order to give proper information to the management for performing its
functions. The Management Information System (MIS) is a concept of the last decade or two. It
has been understood and described in a number ways. It is also known as the Information
System, the Information and Decision System, the Computer- based information System.

In other words, MIS can be defined as 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 can be analyzed thus:
1. Management: Management is art of getting things done through and with the people in
formally organized groups. The basic functions performed by a manager in an organization
are: Planning, staffing, organizing, directing and controlling,
2. Information: Information is considered as valuable component of an organization.
Information is data that is processed and is presented in a form which assists decision maker.
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.
3. System: A system is defined as a set of elements which are joined to achieve a common
objective. Data is processed into information with the help of a system. A system is made up
of inputs, processing, output and feedback or control. A system has one or multiple inputs,
these inputs are processed through a transformation process to convert these input to output.
Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.
Definition of Management Information System
The Management Information System (MIS) is a concept of the last decade or two. It has
been understood and described in a number ways. It is also known as the Information System,
the Information and Decision System, the Computer- based information System.

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The MIS has more than one definition, some of which are give below.
1) The MIS is defined as a system which provides information support for decision making
in the organization.
2) The 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.
3) The MIS is defined as a system based on the database of the organization evolved for the
purpose of providing information to the people in the organization.
4) The MIS is defined as a Computer-based Information System.
Thought there are a number of definitions, all of them converge on one single point, i.e.,
the MIS is a system to support the decision making function in the organization.
“Management Information System can be defined as an organized combination of resources and
activities that collect, process, store and disseminate information”, Mark Mullen.
“'MIS' is a planned system of collecting, storing and disseminating data in the form of
information needed to carry out the functions of management.”

1.3. OBJECTIVE /GOAL OF INFORMATION SYSTEMS

 Data Capturing: MIS capture data from various internal and external sources of
organization. Data capturing may be manual or through computer terminals.
 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.
 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.
 Retrieval of Information: MIS retrieves information from its stores as and when required by
various users.
 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.

1.4 INFORMATION AND DATA

SYSTEM CONCEPTS OF MIS
What Is a System?
A system is defined as a set of interrelated components, with a clearly defined boundary,
working together to achieve a common set of objectives by accepting inputs and producing

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outputs in an organized transformation process. Many examples of systems can be found in the
physical and biological sciences, in modern technology, and in human society.

Data, Information and Information Systems

So how can we distinguish between data and information? The distinction can easily be grasped
from the following figure.
PROCESSING
Data Information
Processing

Data:
Data are only raw facts, the material for obtaining information. Information systems use data
stored in computer databases to provide needed information. A database is an organized
collection if inter related data reflecting a major aspect of a firm’s activities.

Information
Information is an increment in knowledge. It contributes to the general framework of concepts
and facts that we know. Information relies on the context (your question) and the recipient’s
general knowledge for its significance.
Example: If I suddenly throw the word “five” into our discourse at this point, it obviously means
nothing to you. It is a data item, but it becomes meaningful information only if it is placed within
a context familiar to you. Now, if you had just asked me, “what were the sales of the packaged
goods division last month?” then I have provided you with information rather than data. I
provided information, that is, if you already know that the sales are measured in millions of
dollars.

WHAT IS AN INFORMATION SYSTEM

An information system is an organized set of components for collecting, transmitting,
sorting, and processing data in order to deliver information for action. In business firms and
other organizations, this information is necessary for both operations and management. Most
technologies these days are built around the information technologies of computers and
telecommunications- they are computer-based information systems.

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Three activities in an information system produce the information that organizations need
to make decisions, control operations, analyze problems, and create new products or services.
These activities are input, processing, and output (see Figure 1-1). Input captures or collects raw
data from within the organization or from its external environment. Processing converts this raw
input into a meaningful form. Output transfers the processed information to the people who will
use it or to the activities for which it will be used. Information systems also require feedback,
which is output that is returned to appropriate members of the organization to help them evaluate
or correct the input stage.

Figure 2-1
An information system contains information about an organization and its surrounding
environment. Three basic activities—input, processing, and output—produce the information
organizations need. Feedback is output returned to appropriate people or activities in the
organization to evaluate and refine the input. Environmental actors, such as customers, suppliers,
competitors, stockholders, and regulatory agencies, interact with the organization and its
information systems.

Hence we can say that the major Information Systems activities are:
a. Input (recording & editing),
b. Process (Calculating, Comparing, Sorting, Classifying, Analyzing, and Summarizing),
c. Output (producing appropriate information),
d. Storage(retaining of data and information for future), and

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e. Control (producing and acting on feedback, operating within the boundary and between
the boundaries)

1.5. COMPONENTS OF INFORMATION SYSTEMS

We have noted that an information system is a system that accepts data resources as input
and processes them into information products as output. How does an information system
accomplish this task? What system components and activities are involved? Figure 3.1 illustrates
an information system model that expresses a fundamental conceptual framework for the major
components and activities of information systems. 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 bases), and networks (communications
media and network support) to perform input, processing, output, storage, and control activities
that transform data resources into information products.

1) Hardware: Computing, Storing and communicating

Hardware equals the collection of physical elements that comprise a computer system. Computer
hardware refers to the physical parts or components of a computer such as monitor, keyboard,
hard drive disk, mouse, printers, graphic cards, sound cards, memory, motherboard and chips, etc

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all of which are physical objects that you can actually touch. In contrast, software is untouchable.
Software exists as ideas, application, concepts, and symbols, but it has no substance. A
combination of hardware and software forms a usable computing system.
The computer hardware includes every physical component attached to a computer system. The
major hardware components of a computer are explained as below:
A. Case (CPU)
A computer case (also known as a computer chassis, cabinet, box, tower, enclosure, housing,
system unit or simply case) is the enclosure that contains most of the components of a
computer (usually excluding the display, keyboard and mouse). A computer case is
sometimes incorrectly referred to as a CPU referring to a component housed within the case.
CPU was a common term in the earlier days of home computers, when peripherals other than
the motherboard were usually housed in their own separate cases.
B. Power Supply
A power supply unit (PSU) converts alternating current (AC) electric power to low-voltage
DC power for the internal components of the computer. Some power supplies have a switch
to change between 230 V and 115 V. Power supply units used in computers are nearly
always switch mode power supplies (SMPS). The SMPS provides regulated direct current
power at the several voltages required by the motherboard and accessories such as disk
drives and cooling fans.
C. Motherboard
The motherboard is the main component inside the case. It is a large rectangular board with
integrated circuitry that connects the other parts of the computer including the CPU, the
RAM, the disk drives (CD, DVD, hard disk, or any others) as well as any peripherals
connected via the ports or the expansion slots.
The major components directly attached to the motherboard include:
a. The CPU (Central Processing Unit) performs most of the calculations which enable a
computer to function, and is sometimes referred to as the "brain" of the computer.
b. The Chipset, which includes the north bridge, mediates communication between the CPU
and the other components of the system, including main memory.
c. The Random-Access Memory (RAM) stores the code and data that are being actively
accessed by the CPU.
d. The Read-Only Memory (ROM) stores the BIOS that runs when the computer is powered
on or otherwise begins execution, a process known as Bootstrapping, or "booting" or
"booting up".
D. Secondary Storage Devices

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Computer data storage, often called storage or memory, refers to computer components and
recording media that retain digital data. Data storage is a core function and fundamental
component of computers. Some of the major secondary storage devices are:
a. Hard disk drives: a hard disk drive (HDD; also hard drive, hard disk, or disk drive) is a
device for storing and retrieving digital information, primarily computer data. It consists
of one or more rigid (hence "hard") rapidly rotating discs (often referred to as platters),
coated with magnetic material and with magnetic heads arranged to write data to the
surfaces and read it from them.
b. Optical Disc Drives for reading from and writing to various kinds of optical media,
including Compact Discs such as CD-ROMs, DVDs, DVD-RAMs and Blu-ray Discs.
Optical discs are the most common way of transferring digital video, and are popular for
data storage as well.
c. Floppy disk drives for reading and writing to floppy disks, an outdated storage media
consisting of a thin disk of a flexible magnetic storage medium. These were once
standard on most computers but are no longer in common use
d. USB flash drive plug into a USB port and do not require a separate drive. USB flash
drive is a typically small, lightweight, removable, and rewritable flash memory data
storage device integrated with a USB interface.
E. Input Devices
Input devices allow the user to enter information into the system, or control its operation.
Very early computer systems had literal toggle switches that could be tested by running
programs as a simple form of user input; modern personal computers have alphanumeric
keyboards and pointing devices to allow the user to interact with running software. Some of
the most common input devices are:
a. Keyboard - a device to input text and characters by depressing buttons
b. Mouse - a pointing device that detects two dimensional motion relative to its supporting
surface.
c. Touchscreen - senses the user pressing directly on the monitor.
d. Joystick - a hand-operated pivoted stick whose position is transmitted to the computer.
e. Game pad - a hand held game controller that relies on the digits (especially thumbs) to
provide input.
f. Game controller - a specific type of controller specialized for certain gaming purposes.
g. Image scanner - a device that provides input by analyzing images, printed text, handwriting, or
an object.

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h. Web cam - a video camera used to provide visual input that can be easily transferred over the
internet.
i. Microphone - an acoustic sensor that provides input by converting sound into electrical
signals.
F. Output Devices
Output devices display information in a human readable form. A program-controlled pilot lamp
would be a very simple example of an output device. Modern personal computers have full-
screen point-addressable graphic displays and often a printing device to produce paper copies of
documents and images.

2) Software (Programs)
Computer software, or just software, is a collection of computer programs and related data that
provides the instructions for telling a computer what to do and how to do it. Software is a set of
programs, procedures, algorithms and its documentation concerned with the operation of a data
processing system. Program software performs the function of the program it implements, either
by directly providing instructions to the digital electronics or by serving as input to another piece
of software. The term was coined to contrast to the old term hardware (meaning physical
devices) and software "cannot be touched".
Types of Software
Software includes all the various forms and roles that digitally stored data may have and play in
a computer (or similar system), regardless of whether the data is used as code for a CPU, or other
interpreter, or whether it represents other kinds of information. Software thus encompasses a
wide array of products that may be developed using different techniques such as ordinary
programming languages, scripting languages, microcode, or an FPGA configuration. However,
the basic types of software are as explained below:
A. System Software: System software is computer software designed to operate the
computer hardware, to provide basic functionality, and to provide a platform for running
application software. System software includes device drivers, operating systems,
servers, utilities, and window systems. System software is responsible for managing a
variety of independent hardware components, so that they can work together
harmoniously. Its purpose is to unburden the application software programmer from the
often complex details of the particular computer being used, including such accessories
as communications devices, printers, device readers, displays and keyboards, and also to
partition the computer's resources such as memory and processor time in a safe and stable
manner.

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B. Application Software: Application software is developed to perform in any task that

benefits from computation. It is a set of programs that allows the computer to perform a
specific data processing job for the user. It is a broad category, and encompasses software
of many kinds, including the internet browser being used to display this page.
C. Programming Software: Programming software include tools in the form of programs or
applications that software developers use to create, debug, maintain, or otherwise support
other programs and applications. The term usually refers to relatively simple programs
such as compilers, debuggers, interpreters, linkers, and text editors, that can be combined
together to accomplish a task, much as one might use multiple hand tools to fix a physical
object. Programming tools are intended to assist a programmer in writing computer
programs, and they may be combined in an integrated development environment (IDE) to
more easily manage all of these functions.

3) People and procedures

The single most important resource in an organization is not technology, but it is people.
Technology is a tool that can help an organization produce and manage information more
efficiently. In the end, the most important thing to an organization is what its people decide to
do with the information. Therefore, it is important that you become a technology-literate
knowledge worker. A technology-literate knowledge worker is a person who knows how and
when to apply technology. You cannot apply technology to any given process and expect that
process instantly efficient and effective.
There is a need of people resources to operate and organize all Management Information system.
These people resources have to categories:
a. End User: End user is the client of a Management information system. The People
who use an information system or produced information. In this category we include
all kind of a worker or employee of an organization or library users as an end users.
b. Information system specialists: It is second category of people resource. Specialists
are those people who developed and operate a system; we can include systems
analysts, system operators and software developers in this category.
Where there is importance for people as resources, there is also importance for procedures to
practice technology in the right manner to score right solutions. If people act as the proprietors of
MIS, procedures are the bounding norms of an MIS.

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4) Data & Information Resources

A popular approach for describing information systems is that proposed by Harsh and
colleagues. They define information as one of four types and all these types are important
component of a management information system. Furthermore, the various types build upon and
interact with each other.
a. A common starting level is Descriptive information. This type of information portrays
the “what is” condition of a business, and it describes the state of the business at a
specified point in time. Descriptive information is very important to the business
manager, because without it, many problems would not be identified. Descriptive
information includes a variety of types of information including financial results,
production records, test results, product marketing, and maintenance records.
b. The second type of information is diagnostic information, This information portrays this
“what is wrong” condition, where “what is wrong” is measured as the disparity between
“what is” and “what ought to be.” This assessment of how things are versus how they
should be (a fact-value conflict) is probably our most common management problem.
Diagnostic information has two major uses. It can first be used to define problems that
develop in the business. Are production levels too low? Is the rate earned on investment
too low? These types of question cannot be answered with descriptive information alone
(such as with financial and production records). A manager may often be well supplied
with facts about his business, yet be unable to recognize this type of problem. The
manager must provide norms or standards which, when compared with the facts for a
particular business, will reveal an area of concern. Once a problem has been identified, a
manager may choose an appropriate course of action for dealing with the problem
(including doing nothing).
c. As description is concerned with “what is” and diagnostics with “what is wrong,”
prediction is concerned with “what if...?” Predictive information is generated from an
analysis of possible future events and is exceedingly valuable with “desirable” outcomes.
With predictive information, one either defines problems or avoids problems in advance.
Prediction also assists in analysis. Predictive information is needed by managers to
reduce the risk and uncertainty concerning technology, prices, climate, institutions, and
human relationships affecting the business. Such information is vital in formulating
production plans and examining related financial impacts.
d. The choice is conditionally right, depending upon a farm manager’s knowledge,
assumptions, and conditions he wishes to impose on the decision. Prescriptive
information is directed toward answering the “what should be done” question. Provision

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of this information requires the utilization of the predictive information. Predictive

information by itself is not adequate for decision making. An evaluation of the predicted
outcomes together with the goals and values of the manger provides that basis for making
a decision. For example, suppose that a manager is considering a new changing
marketing alternative. The new alternative being considered has higher “predicted”
returns but also has higher risks and requires more management monitoring. The decision
as to whether to change plans depends upon the managers evaluation of the worth of
additional income versus the commitment of additional time and higher risk. Thus, the
goals and values of a farm manager will ultimately enter into any decision.

5) Network & Communication Technologies

Telecommunications technologies and networks like the Internet, intranets, and extranets
are essential to the successful e-business and e-commerce 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 technologies and networks are fundamental resource
components of all information systems.
Communications technology or information and communication technology (ICT), is
often used as an extended synonym for information technology (IT), but is a more specific term
that stresses the role of unified communications and the integration of telecommunications
(telephone lines and wireless signals), computers as well as necessary enterprise software,
middleware, storage, and audio-visual systems, which enable users to access, store, transmit, and
manipulate information. The term ICT is now also used to refer to the convergence of audio-
visual and telephone networks with computer networks through a single cabling or link system.

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Network can be defined as the collection of computer and communications devices which are
well organized and interconnected to share data, information, and other resources.

Limitations of Computer:
a) Lack of Common Sense: Computer is only an electronic device. It can not think. If we
provide an incorrect data, it does not have a common sense to question the correctness of the
data.
b) Memory Without Brain : Computer can store data in its memory; however, if a wrong
instruction is given to computer it does not have a brain to correct the wrong instruction

1.7.CHARACTERISTICS OF MIS :
2. Systems Approach: The information system follows a systems approach. Systems
approach means taking a comprehensive view or a complete look at the interlocking sub-
systems that operate within an organization.
3. Management Oriented: Management oriented characteristic of MIS implies that the
management actively directs the system development efforts. For planning of MIS, top-
down approach should be followed. Top down approach suggests that the system
development starts from the determination of management’s needs and overall business
objective. To ensure that the implementation of system’s polices meet the specification of
the system, continued review and participation of the manager is necessary.
4. Need Based: MIS design should be as per the information needs of managers at different
levels.
5. Exception Based: MIS should be developed on the exception based also, which means
that in an abnormal situation, there should be immediate reporting about the exceptional
situation to the decision –makers at the required level.
6. Future Oriented: MIS should not merely provide past of historical information; rather it
should provide information, based on future projections on the actions to be initiated.
7. Integrated: Integration is significant because of its ability to produce more meaningful
information. Integration means taking a comprehensive view or looking at the complete
picture of the interlocking subsystems that operate within the company.
8. Common Data Flow: Common data flow includes avoiding duplication, combining
similar functions and simplifying operations wherever possible. The development of
common data flow is an economically sound and logical concept, but it must be viewed
from a practical angle.

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9. Long Term Planning: MIS is developed over relatively long periods. A heavy element
of planning should be involved.
10. Sub System Concept: The MIS should be viewed as a single entity, but it must be
broken down into digestible sub-systems which are more meaningful.
11. Central database: In the MIS there should be common data base for whole system

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