FOURTH SEMESTER

MANAGEMENT INFORMATION SYSTEMS

Objective: To offer in depth knowledge on information systems in business and

their management
Unit I Management Information System – Concept, Need, Strategic role –
Evolution of Management Information System – Components of Management
Information System – Information flow

Unit II Data base management systems – Objectives and Components – Database

design – Creation and control – Recent trends in database

Unit III Developing information system – Planning, Designing and redesigning –

Approaches for
system development – System analysis and Design – system Implementation and
Maintenance

Unit IV Transaction processing and Support system – Transaction processing

system – Office
automation systems – Decision support systems – Executive information systems –
Artificial
intelligence and Expert systems

Unit V Functional Information systems – Production, Finance, Human resource

and Marketing –
Managing information resources – Information Security – Control & Audit of
Information Systems

MANAGEMENT INFORMATION SYSTEM

An Information System is a system that gathers data and disseminates

information with the sole purpose of providing information to its users.
The main object of an information system is to provide information to its users.
Information systems vary according to the type of users who use the system.
A Management Information System is an information system that evaluates,
analyzes, and processes an organization's data to produce meaningful and useful
information based on which the management can take right decisions to ensure
future growth of the organization.

Information Vs Data
Data can be described as unprocessed facts and figures. Plain collected data as
raw facts cannot help in decision-making. However, data is the raw material that
is organized, structured, and interpreted to create useful information systems.
Data is defined as 'groups of non-random symbols in the form of text, images,
voice representing quantities, action and objects'.
Information is interpreted data; created from organized, structured, and processed
data in a particular context.

What is MIS?
MIS is the use of information technology, people, and business processes to record,
store and process data to produce information that decision makers can use to make
day to day decisions.
MIS is the acronym for Management Information Systems. In a nutshell, MIS is
a collection of systems, hardware, procedures and people that all work together to
process, store, and produce information that is useful to the organization.

The three components of MIS provide a more complete and focused definition,
where Systemsuggests integration and holistic view, Information stands for
processed data, andManagement is the ultimate user, the decision makers.
Management information system can thus be analyzed as follows −

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.
Thus MIS means a system for processing data in order to give proper information
to the management for performing its functions.

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.

Objectives of MIS

The goals of an MIS are to implement the organizational structure and dynamics
of the enterprise for the purpose of managing the organization in a better way and
capturing the potential of the information system for competitive advantage.
Following are the basic objectives of an MIS −
  Capturing Data − Capturing contextual data, or operational information
that will contribute in decision making from various internal and external
sources of organization.
 Processing Data − The captured data is processed into information needed
for planning, organizing, coordinating, directing and controlling
functionalities at strategic, tactical and operational level. Processing data
means −
o making calculations with the data
o sorting data
o classifying data and
o summarizing data
 Information Storage − Information or processed data need to be stored for
future use.
 Information Retrieval − The system should be able to retrieve this
information from the storage as and when required by various users.
 Information Propagation − Information or the finished product of the MIS
should be circulated to its users periodically using the organizational
network.

Characteristics of MIS

Following are the characteristics of an MIS −

 It should be based on a long-term planning.
 It should provide a holistic view of the dynamics and the structure of the
organization.
 It should work as a complete and comprehensive system covering all
interconnecting sub-systems within the organization.
  It should be planned in a top-down way, as the decision makers or the
management should actively take part and provide clear direction at the
development stage of the MIS.
 It should be based on need of strategic, operational and tactical information
of managers of an organization.
 It should also take care of exceptional situations by reporting such
situations.
 It should be able to make forecasts and estimates, and generate advanced
information, thus providing a competitive advantage. Decision makers can
take actions on the basis of such predictions.
 It should create linkage between all sub-systems within the organization, so
that the decision makers can take the right decision based on an integrated
view.
 It should allow easy flow of information through various sub-systems, thus
avoiding redundancy and duplicity of data. It should simplify the operations
with as much practicability as possible.
 Although the MIS is an integrated, complete system, it should be made in
such a flexible way that it could be easily split into smaller sub-systems as
and when required.
 A central database is the backbone of a well-built MIS.

Characteristics of Computerized MIS

Following are the characteristics of a well-designed computerized MIS −

 It should be able to process data accurately and with high speed, using
various techniques like operations research, simulation, heuristics, etc.
  It should be able to collect, organize, manipulate, and update large amount
of raw data of both related and unrelated nature, coming from various
internal and external sources at different periods of time.
 It should provide real time information on ongoing events without any
delay.
 It should support various output formats and follow latest rules and
regulations in practice.
 It should provide organized and relevant information for all levels of
management: strategic, operational, and tactical.
 It should aim at extreme flexibility in data storage and retrieval.

Nature and Scope of MIS

The following diagram shows the nature and scope of MIS −

CONCEPT

The scope and purpose of MIS is better understood if each part of them is defined
individually, thus 
1. MANAGEMENT: Management has been define in process or activities that
describe what managers do in the operation for their organization plan,
organize, initiate and control operations. They plan by setting strategies and
goals and selecting the best course of action to achieve the goals. They
organize the necessary tasks for the operational plan, set these tasks up into
homogenous groups and assign authority delegation; they control the
performance standards and avoiding deviation from standard.
The decision-making is a fundamental prerequisite of each of the foregoing
process, the job of MIS is facilitating decisions necessary for planning, organizing
and controlling the work and functions of the business so that specified goals of
business are achieved. 
1. INFORMATION: Data must be distinguished from information and the
distinction is clear and important for present purpose. Data are facts and
figures that are not currently being used in a decision-making process and
usually are taken from the historical records that are recorded and filled
without immediate intent to retrieve for decision-making. 
Information consists of data that have been retrieved, processed or otherwise used
for information or interference purpose, argument or as a basis forecasting or
decision-making regarding any business unit. Information is knowledge that one
derives from facts for effective functioning of systems placed in the right context
with the purpose of reducing uncertainty regarding the alternative courses of action
as they are based on description and measurement of attributes of various entities
associated with the enterprise.
 
1. 3.       SYSTEM: The system can be described as a set of elements joined
together for a common objective. A subsystem is a part of a larger system
with which one is concerned. All systems for our purpose the organization is
the system and the parts (divisions, departments, functions, unit etc) are the
subsystem.
 
The system concept of MIS is, therefore one of optimizing the output of the
organization by connecting the operating subsystems through the medium of
information exchange.
 
NEED
The need for MIS
The following are some of the justifications for having an MIS system
 Decision makers need information to make effective
decisions. Management Information Systems (MIS) make this possible.
 MIS systems facilitate communication within and outside the
organization – employees within the organization are able to easily access
the required information for the day to day operations. Facilitates such as
Short Message Service (SMS) & Email make it possible to communicate
with customers and suppliers from within the MIS system that an
organization is using.
 Record keeping – management information systems record all business
transactions of an organization and provide a reference point for the
transactions.
ROLE OF MANAGEMENT INFORMATION SYSTEM

The role of the 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 heart work faster and supplies more blood when needed. It regulates and
controls the incoming impure blood, processed it and sends it to the destination in
the quantity needed. It fulfills the needs of blood supply to human body in normal
course and also in crisis.
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 send
further to all the needy destinations. The system is expected to fulfill the
information needs of an individual, a group of individuals, the management
functionaries: the managers and top management.
Here are some of the important roles of the MIS:
i. The MIS satisfies the diverse needs through variety of systems such as query
system, analysis system, modeling system and decision support system.
ii. The MIS helps in strategic planning, management control, operational control
and transaction processing. The MIS helps in the clerical personal in the
transaction processing and answers the queries on the data pertaining to the
transaction, the status of a particular record and reference on a variety of
documents.
iii. The MIS helps the junior management personnel by providing the operational
data for planning, scheduling and control , and helps them further in decision-
making at the operation level to correct an out of control situation.
iv. The MIS helps the middle management in short term planning, target setting
and controlling the business functions. It is supported by the use of the
management tools of planning and control.
v. The MIS helps the top level management in goal setting, strategic planning and
evolving the business plans and their implementation.
vi. The MIS plays the role of information generation, communication, problem
identification and helps in the process of decision-making. The MIS, therefore,
plays a vital role in the management, administration and operation of an
organization.

EVOLUTION OF MANAGEMENT INFORMATION SYSTEM

The Five Eras of MIS

In order to make sense of the evolution of management information systems, it's
helpful to break down the history into four or five eras.
First Era (mid-1960s to mid-1970s)
During the first years of computerized MIS, information systems were centralized
and concerned solely with governance and the needs of management. Most
information systems and their reports were under the control of accounting
departments. Technology included third-generation mainframe computers, like
the IBM 360. Languages included Assembler, Fortran, COBO and, Database e.
Ethernet networks were developed during this time.
Second Era (mid-1970s to mid-1980s)
While MIS was still mainly concerned with governance and the needs of
management, more departments were beginning to benefit from the technology.
In many companies, steering committees and user-led initiatives determined the
shape and scope of additional IS projects. Technology included the first personal
computers (PCs), minicomputers and mid-range computers.
Third Era (mid-1980s to late 1990s)
During the third era, centralized information systems began to spread out and
information became decentralized. Each department had its own computer
system. Managing information was often referred to as "herding cats." It was
during this era that a new position emerged in many companies to oversee the
acquisition and management of multiple information systems: the Chief
Information Officer, or CIO. Technology during this era included internetworking
and the beginning of the internet.
Fourth Era (late 1990s to today)
During the current era, information systems are still tightly tied to governance
and management, however the systems are widely distributed, within the reach of
nearly every employee who needs it across multiple platforms. Many information
systems are integrated between different companies, so that a client business can
readily access supplier information and their customers, in turn, can access that
information. Technology now includes social media, search engines and
ubiquitous computing through a variety of platforms including laptops, tablets
and smartphones.
Fifth Era (today forward)
The increase in internet bandwidth over recent years has led to a substantial
reliance on cloud computing. As a result, some maintain that this marks a new era
in worker's ascendancy and that we are now in a fifth era for management
information systems. Today, practically any employee is now in a position to
make informed decisions with tools that are readily available across multiple
platforms. Furthermore, the line between who produces and who consumes MIS
information is increasingly blurred.
Evolution of Management due to Technology
This could mark the end of controlling top-down management styles, which are
being replaced by more autonomy of employees. Management expert Peter
Druker predicted this as an inevitable back in 1954 in his theory on Management
by Objectives. In this paradigm, top-down management can actually harm a
company because, being in the trenches, employees are more and more likely to
understand customer needs better than their supervisors and, being in specialized
fields, may have more understanding of the nuts and bolts behind a business than
those supervisors.
“Knowledge workers have to manage themselves,” Drucker said. “They have to
have autonomy.”

Types of Management Information Systems

Companies today usually have several types of information systems useful for
managing different aspects of their business. Most of these work with transaction
processing systems and compile information that can be used to make effective
management decisions.
Transaction Processing System (TPS)
A TPS is usually at the base of any company's integrated information system. It
takes in raw data from sources inside and outside of the company and stores it in
a database. Users are able to query the database for any information they need.
Data can be processed in real-time as it is entered, or by using batch processing,
in which case information is processed at specific times in the day. Sales and
inventory are usually processed in real-time, whereas payroll information, which
isn't as time-sensitive, is often processed in batches, often after hours.
Management Support Systems (MSS)
Once the TPS has gathered and stored needed information, this information can
then be accessed by a management support system to analyze the data,
empowering managers to make informed decisions.
An example of an advanced MSS is a data warehousing system. These systems
extract information from multiple databases throughout the company and store it
in a central database. According to Forrester Research, approximately 60 percent
of companies with revenue of $1 billion or more use data warehouses as a
management tool. Retailers use data warehousing to collect information on
customers to determine their demographics and shopping patterns. Banks use data
warehousing to detect credit card fraud.
Decision Support Systems (DSS)
Decision support systems assist managers in making informed decisions using
interactive computer models that explore real-world processes. The DSS retrieves
specific data from the internal database that pertains to the questions raised by the
user. For example, if a sales manager wanted to figure out which type of new
product would sell the fastest, she could use a DSS to compare sales data and
demographic information about customers to determine what types of products
and what sales points would be most appealing to the largest demographic
groups.
Executive Information Systems (EIS)
An executive information system works much the same way as a DSS, however
the software is customized for specific executives so they can make informed
strategic decisions. As an example, a CEO could use an EIS to compare his
company's financial data to its competitors, with the information presented in
spreadsheets or graphs.
Expert Systems
Expert systems use artificial intelligence to provide managers with advice that is
similar to what a human consultant would offer. The AI can learn to solve
problems using what-if reasoning. Because AI is still relatively new, expert
systems are expensive and take a lot of time to program. However, this is a trend
that is still growing.
Advanced expert systems are used by airlines to determine scheduling of aircraft
and their crews, significantly reducing expenses by eliminating idle time on the
tarmac and half-empty planes going into the air. Expert systems are also useful in
oil exploration, scheduling employee shifts and even diagnosing illnesses.

COMPONENTS OF MANAGEMENT INFORMATION SYSTEM

Components of MIS
The major components of a typical management information system are;
 People – people who use the information system
 Data – the data that the information system records
 Business Procedures – procedures put in place on how to record, store and
analyze data
 Hardware – these include servers, workstations, networking equipment,
printers, etc.
 Software – these are programs used to handle the data. These include
programs such as spreadsheet programs, database software, etc.

Components of MIS and their relationship

A management information system is made up of five major components namely

people, business processes, data, hardware, and software. All of these components
must work together to achieve business objects.
People – these are the users who use the information system to record the day to
day business transactions. The users are usually qualified professionals such as
accountants, human resource managers, etc. The ICT department usually has the
support staff who ensure that the system is running properly.
Business Procedures – these are agreed upon best practices that guide the users
and all other components on how to work efficiently. Business procedures are
developed by the people i.e. users, consultants, etc.
Data – the recorded day to day business transactions. For a bank, data is collected
from activities such as deposits, withdrawals, etc.
Hardware – hardware is made up of the computers, printers, networking devices,
etc. The hardware provides the computing power for processing data. It also
provides networking and printing capabilities. The hardware speeds up the
processing of data into information.
Software – these are programs that run on the hardware. The software is broken
down into two major categories namely system software and applications software.
System software refers to the operating system i.e. Windows, Mac OS, and
Ubuntu, etc. Applications software refers to specialized software for accomplishing
business tasks such as a Payrollprogram, banking system, point of sale system, etc.

INFORMATION FLOW
An Information System is a system that gathers data and disseminates
information with
the sole purpose of providing information to its users.
The main object of an information system is to provide information to its users.
Information
systems vary according to the type of users who use the system.
A Management Information System is an information system that evaluates,
analyzes,
and processes an organization's data to produce meaningful and useful information
based on
which the management can take right decisions to ensure future growth of the
organization.
Information is interpreted data; created from organized, structured, and processed
data in a particular context.

Information can be classified in a number of ways

Classifiication by Characteristic

Based on Anthony's classification of Management, information used in business

for decisionmaking is generally categorized into three types:
 Strategic Information: Strategic information is concerned with long term
policy
decisions that defines the objectives of a business and checks how well these
objectives are met. For example, acquiring a new plant, a new product,
diversification
of business etc., comes under strategic information.
 Tactical Information: Tactical information is concerned with the information
needed
for exercising control over business resources, like budgeting, quality control,
service
level, inventory level, productivity level etc.

Operational Information: Operational information is concerned with

plant/business
level information and is used to ensure proper conduction of specific operational
tasks
as planned/intended. Various operator specific, machine specific and shift specific
jobs
for quality control checks comes under this category.
Classification by Application
In terms of applications, information can be categorized as:
 Planning Information: These are the information needed for establishing
standard
norms and specifications in an organization. This information is used in strategic,
tactical, and operation planning of any activity. Examples of such information are
time
standards, design standards.
 Control Information: This information is needed for establishing control over
all
business activities through feedback mechanism. This information is used for
controlling attainment, nature and utilization of important processes in a system.
When
such information reflects a deviation from the established standards, the system
should induce a decision or an action leading to control.
 Knowledge Information: Knowledge is defined as "information about
information".
Knowledge information is acquired through experience and learning, and collected
from archival data and research studies.
 Organizational Information: Organizational information deals with an
organization's environment, culture in the light of its objectives. Karl Weick's
Organizational Information Theory emphasizes that an organization reduces its
equivocality or uncertainty by collecting, managing and using these information
prudently. This information is used by everybody in the organization; examples of
such
information are employee and payroll information.
 Functional/Operational Information: This is operation specific information.
For
example, daily schedules in a manufacturing plant that refers to the detailed
assignment of jobs to machines or machines to operators. In a service oriented
business, it would be the duty roster of various personnel. This information is
mostly
internal to the organization.
 Database Information: Database information construes large quantities of
information that has multiple usage and application. Such information is stored,
retrieved and managed to create databases. For example, material specification or
supplier information is stored for multiple users.

Information is a vital resource for the success of any organization. Future of an

organization
lies in using and disseminating information wisely. Good qality information placed
in right
context in right time tells us about opportunities and problems well in advance.
Good quality information: Quality is a value that would vary according to the users
and uses
of the information.
According to Wang and Strong, following are the dimensions or elements of
Information
Quality:
 Intrinsic: Accuracy, Objectivity, Believability, Reputation
 Contextual: Relevancy, Value-Added, Timeliness, Completeness, Amount of
information
 Representational: Interpretability, Format, Coherence, Compatibility
 Accessibility: Accessibility, Access security
Various authors propose various lists of metrics for assessing the quality of
information. Let
us generate a list of the most essential characteristic features for information
quality:
 Reliability - It should be verifiable and dependable.
 Timely - It must be current and it must reach the users well in time, so that
important
decisions can be made in time.
 Relevant - It should be current and valid information and it should reduce
uncertainties.
 Accurate - It should be free of errors and mistakes, true, and not deceptive.
 Sufficient - It should be adequate in quantity, so that decisions can be made on
its
basis.
 Unambiguous - It should be expressed in clear terms. In other words, in should
be
comprehensive.
 Complete - It should meet all the needs in the current context.
 Unbiased - It should be impartial, free from any bias. In other words, it should
have
integrity.
 Explicit - It should not need any further explanation.
 Comparable - It should be of uniform collection, analysis, content, and format.
 Reproducible - It could be used by documented methods on the same data set
to
achieve a consistent result.
3. MIS ─ Quality of Information
Information processing beyond doubt is the dominant industry of the present
century.
Following factors states few common factors that reflect on the needs and
objectives of the
information processing:
 Increasing impact of information processing for organizational decision
making.
 Dependency of services sector including banking, financial organization, health
care,
entertainment, tourism and travel, education and numerous others on information.
 Changing employment scene world over, shifting base from manual agricultural
to
machine-based manufacturing and other industry related jobs.
 Information revolution and the overall development scenario.
 Growth of IT industry and its strategic importance.
 Strong growth of information services fuelled by increasing competition and
reduced
product life cycle.
 Need for sustainable development and quality life.
 Improvement in communication and transportation brought in by use of
information
processing.
 Use of information processing in reduction of energy consumption, reduction in
pollution and a better ecological balance in future.
 Use of information processing in land record managements, legal delivery
system,
educational institutions, natural resource planning, customer relation management
and so on.
 Information is needed to survive in the modern competitive world.
 Information is needed to create strong information systems and keep these
systems
up to date.
Implications of Information in Business
Information processing has transformed our society in numerous ways. From a
business
perspective, there has been a huge shift towards increasingly automated business
processes
and communication. Access to information and capability of information
processing has helped
in achieving greater efficiency in accounting and other business processes.
A complete business information system accomplishes the following
functionalities:
4. Collection and storage of data.
 Transform these data into business information useful for decision making.
 Provide controls to safeguard data.
 Automate and streamline reporting.
The following list summarizes the five main uses of information by businesses and
other
organizations:
 Planning - At the planning stage, information is the most important ingredient
in
decision making. Information at planning stage includes that of business resources,
assets, liabilities, plants and machineries, properties, suppliers, customers,
competitors, market and market dynamics, fiscal policy changes of the
Government,
emerging technologies, etc.
 Recording - Business processing these days involves recording information
about
each transaction or event. This information is collected, stored, and updated
regularly
at the operational level.
 Controlling - A business need to set up an information filter, so that only
filtered data
is presented to the middle and top management. This ensures efficiency at the
operational level and effectiveness at the tactical and strategic level.
 Measuring - A business measures its performance metrics by collecting and
analyzing
sales data, cost of manufacturing, and profit earned.
 Decision-making - MIS is primarily concerned with managerial decision-
making,
theory of organizational behavior, and underlying human behavior in
organizational
context. Decision-making information includes the socio-economic impact of
competition, globalization, democratization, and the effects of all these factors on
an
organizational structure.
In short, this multi-dimensional information evolves from the following logical
foundations:
 Operations research and management science
 Theory of organizational behavior
 Computer science:
o Data and file structure
o Data theory design and implementation
o Computer networking
o Expert systems and artificial intelligence
 Information theory
Following factors arising as an outcome of information processing help speed up
of business
events and achieve greater efficiency:
 Directly and immediate linkage to the system
 Faster communication of an order
 Electronic transfer of funds for faster payment
 Electronically solicited pricing (helps in determining the best price)
MIS Need for Information Systems
Managers make decisions. Decision-making generally takes a four-fold path:
 Understanding the need for decision or the opportunity,
 Preparing alternative course of actions,
 Evaluating all alternative course of actions,
 Deciding the right path for implementation.
MIS is an information system that provides information in the form of
standardized reports
and displays for the managers. MIS is a broad class of information systems
designed to
provide information needed for effective decision making.
Data and information created from an accounting information system and the
reports
generated thereon are used to provide accurate, timely and relevant information
needed for
effective decision making by managers.
Management information systems provide information to support management
decision
making, with the following goals:
 Pre-specified and preplanned reporting to managers.
 Interactive and ad-hoc support for decision making.
 Critical information for top management.
MIS is of vital importance to any organization, because:
 It emphasizes on the management decision making, not only processing of data
generated by business operations.
 It emphasizes on the systems framework that should be used for organizing
information systems applications.

ADVANTAGES OF MIS
MIS ─ In

 Provide relevant information for facilitating planning and timely control

 Data is available in summarized form which minimize information loading
 Ease in measuring performance helps in encouraging decentralization in an
organization
 Improve coordination as all departments are aware of course of action or any
change in plan
 Enhance quick, cheap and efficient communication
 Bring down linguistic, geographical and cultural boundaries. 
 Automation helps in saving time and papers24*7 availability of
information  
 Creation of new type of jobs like computer programmer, system analyzer,
software and hardware developer etc
 DISADVANTAGES OF MIS
 Require constant monitoring of sensitive data
 Security issues like hacking always prevail 
 Quality of output depends on quality of input
 Implementation of MIS is costly as requires hardware, software and training
of human resources
 Lack of flexibility to upgrade software
 Increase unemploymentTakes only quantitative data
 Effectiveness decreases due to frequent change in top management and their
policies

BENEFITS

MIS when properly developed and used in an organization brings in a lot of

benefits for the organization. A list of the benefits of MIS for a organization are:

MIS increases productivity

1. MIS reduces time, errors and costs associated with processing information.
2. To increase productivity, MIS follows Online Transaction Processing (OL
TP). OLTP is the gathering of data as input, processing that input data and
updating the data to create valuable information from this processed data.
3. Another area in which modern MIS improves productivity is by allowing
customers to process their own transactions through the use of a Customer-
Integrated System (CIS).
MIS enhances the quality of decision-making
1. MIS helps top management to do business in a better way, find solutions to
problems/opportunities, or help them in decision-making by providing the relevant
information.
2. MIS support for decision-making falls in two categories:
a.
a. When MIS helps you analyze a situation by providing all the
relevant information about the situation and then expecting you to make the
decision.
b. When MIS actually makes some sort of recommendation or
giving some insight into what decision to take.
MIS improves communication and helps develop team work
a. MIS helps to manage information and facilitates communication between
diverse teams.
b. A collaborative management information system is a specific system to
improve team work.
c. One aspect of EDI is Electronic Funds Transfer (EFT) which allows for
payment without physically sending money.
MIS can facilitate organizational transformation
1. MIS helps organizations to remain competitive or enter new markets and
transform the way business is done.

Benefits of an MIS

Not having an effective, functional MIS leaves managers guessing in the dark.
Employees are busy going through their workdays without direction or purpose.
A management information system provides the data to identify non-performing
areas and leads to the following benefits:

Helps to achieve a higher level of efficiency: Managers have the information

needed to identify a company's strengths and weaknesses.

Improves the quality of decisions: Better availability of information reduces

uncertainty and lets managers make more rational decisions based on reliable
data.
Promotes better communications between departments in a
workplace: When managers, department heads and employees are sharing the
same information, there is better communication between them to identify
problem areas and find mutually agreeable solutions.

Provides a platform to explore different scenarios for various alternatives

and economic environments: Management is able to explore various
alternatives to see the possible results before making decisions and commitments.

Improves employee productivity: Employees are more productive because they

don't have to spend time gathering the data that management wants. A well-
designed MIS will gather all the data without any more input from employees.

Strengthens a company's competitive advantage: Running a more efficient

business by reducing and eliminating weaknesses and non-performing areas
increases a company's competitive advantage over its rivals.

Reveals more data about customers: With more data about the needs of
customers, management is better able to improve customer service and design
more effective marketing and promotional campaigns.

Differentiate between Management Information System and the Decision

Support System

S.NO. MIS DSS

1. The main focus is on the Focus is mainly on the semi /

structured tasks and the routine un-structured tasks, which
decisions. demand the managerial
judgment.
2. Identifies the information Develops certain tools for using
requirement. in the decision process.
3. Data storage is of great The main emphasis is on the
importance data – manipulation.

4. Delivers system depending on Current data can be used in the

the frozen requirements. Decision Support System.
5. Only the in – direct access to Managers enjoy direct access to
the data by the managers is the data.
provided.

6. Very much dependent on the Depends on the managerial

computer expert. judgment.

7. Access to the data possibly Waiting is not at all required.

requiring a ‘wait’ for the
manager’s turn.

8. MIS manager may not Manager possesses the

completely understand the knowledge about the nature of
nature of the decision. the decision and the decision
making environment.

9. Main stress is on the efficiency. Main emphasis is laid on the

effectiveness.

BASIC DIFFERENCES BETWEEN  DECISION SUPPORT SYSTEM,

MANAGEMENT INFORMATION SYSTEMS AND  EXECUTIVE
INFORMATION SYSTEM.

With the exposure to all the above information systems, let us find out the
differences between DSS and MIS. Table-1 enlists some basic differences
between Decision Support System,Management Information
Systems and Executive Information System. As the name implies, the later two
are the systems that provide information that may or may not be used for making a
decision whereas the support information provided for deciding on the policy,
planning or implementation is the basic component of DSS.
 Let us find out the characteristics of the three systems :
DSS (DECISION SUPPORT SYSTEM) :

- DSS generally provide support for unstructured, or semi-structured decisions

(decisions that cannot be described in detail).
- DSS problems are often characterized by incomplete or uncertain knowledge, or
the use of qualitative data.
- DSS will often include modelling tools in them, where various alternative
scenarios can be modeled and compared.
- Investment decisions are an examples of those that might be supported by DSS
MIS (MANAGEMENT INFORMATION SYSTEMS) :

-    MIS is generally more sophisticated reporting systems built on existing transaction

processing systems
-    Often used to support structured decision making (decisions that can be described
in detail before the decision is made)
-    Typically will also support tactical level management, but sometimes are used at
other levels
-   Examples of structured decisions supported by MIS might include deciding on
stock levels or the pricing of products.
EIS (EXECUTIVE INFORMATION SYSTEM) :

-      EIS support a range of decision making, but more often than not, this tends to be
unstructured
-     EIS support the executive level of management, often used to formulate high level
strategic decisions impacting on the direction of the organization
-     These systems will usually have the ability to extract summary data from internal
systems, along with external data that provides intelligence on the environment of
the organization
-   Generally these systems work by providing a user friendly interface into other
systems, both internal and external to the organization

DIMENSION DSS MIS EIS

Focus Analysis, decision Information Status Access
Support processing
Typical Users Analysts, Middle, lower Senior Executives
professions, levels, sometime Expediency
Served
senior executives
managers (via
intermediaries)
Impetus Effectiveness Efficiency
Application Diversified Areas Production control, Environmental
where Managerial sales forecasts, scanning,
Decisions are made financial analysis, performance

human resource evaluation,

management identifying
problems and

opportunities
Database(s) Special Corporate Special
Decision Supports semi- Direct or indirect Indirect support,
Support structured and support, mainly mainly high level
and
Capabilities unstructured structured routine
decision making; problems, using unstructured
mainly ad-hoc, but standard operations, decisions and
sometimes policies
research and other
repetitive decisions models
Type of Information to Scheduled and News items,
support demand reports; external
Information
structured flow, information on
specific situations
exception reporting
customers,
mainly internal
competitors and the
operations
environment
Principal Use Planning, Control Tracking and
Organizing, staffing control
and control
Adaptability to Permits individual Usually none, Tailored to the
judgment, what-if standardized decision making
Individual User
capabilities, some style

choice of dialogue of each individual

style executive, offers

several options of
outputs
Graphics Integrated part of Desirable A must
many DSS
User A must where no Desirable A must
Friendliness
intermediaries are
used
Treatment of Information Information is Filters and
provided by the provided to a compresses the
Information
EIS/or MIS is used diversified group of information, tracks
as an input users who then critical data and
manipulate it or
to the DSS information
summarize

it as needed
Supporting Can be programmed Inflexibility of Instant access to the
Detailed into DSS reports, cannot get supporting

Information the supporting details of any

details quickly summary
Model Base The Core of the Standard Models Can be added,
DSS are available but usually not
 are not managed included or

limited in nature
Construction By users, either By vendors or IS By Vendors or IS
alone or with specialists Specialists
specialists from IS
or IC departments
Hardware Mainframes, micros Mainframes, Distributed system
or Micros or

distributed distributed
Nature of Large computational Application Interactive, easy to
oriented, access multiple
Computing capabilities,
databases, on-line
modelling performance
Packages access,
reports,
languages and sophisticated
simulation, strong reporting DBMS capabilities
capabilities,
applications and and complex
standard statistical,
DSS linkages
financial,
generators accounting and
management
science models

  

Types of Information Systems

The type of information system that a user uses depends on their level in an
organization. The following diagram shows the three major levels of users in an
organization and the type of information system that they use.

Transaction Processing Systems (TPS)

This type of information system is used to record the day to day transactions of a
business. An example of a Transaction Processing System is a Point of Sale (POS)
system. A POS system is used to record the daily sales.
Management Information Systems (MIS)
Management Information Systems are used to guide tactic managers to make semi-
structured decisions. The output from the transaction processing system is used as
input to the MIS system.
Decision Support Systems (DSS)
Decision support systems are used by top level managers to make semi-structured
decisions. The output from the Management Information System is used as input to
the decision support system.DSS systems also get data input from external sources
such as current market forces, competition, etc.
Manual Information Systems VS Computerized Information Systems (MIS)
Data is the bloodstream of any business entity. Everyone in an organization needs
information to make decisions. An information system is an organized way of
recording, storing data, and retrieving information.
In this section, we will look at manual information systems vs. computerized
information systems.
Manual Information System
A manual information system does not use any computerized devices. The
recording, storing and retrieving of data is done manually by the people, who are
responsible for the information system.
The following are the major components of a manual information system
 People –people are the recipients of information system
 Business Procedures –these are measures put in place that define the rules
for processing data, storing it, analyzing it and producing information
 Data –these are the recorded day to day transactions
 Filing system – this is an organized way of storing information
 Reports –the reports are generated after manually analyzing the data from
the filing system and compiling it.

The following diagram illustrates how a typical manual information system works
Advantages and Dis-advantages of a manual information system
Advantages:
The following are the advantages of manual information systems
 Cost effective – it is cheaper compared to a computerized system because
there is no need to purchase expensive equipment such as servers,
workstations, printers, etc.
 Flexible –evolving business requirements can easily be implemented into
the business procedures and implemented immediately
Disadvantages:
The following are some of the disadvantages of a manual information system.
 Time consuming –all data entries need to be verified before filing, this is a
time consuming task when done by humans. Retrieving data from the filing
system also takes a considerable amount of time
  Prone to error – the accuracy of the data when verified and validated by
human beings is more prone to errors compared to verification and
validation done by computerized systems.
 Lack of security – the security of manual systems is implemented by
restricting access to the file room. Experience shows unauthorized people
can easily gain access to the filing room
 Duplication of data –most departments in an organization need to have
access to the same data. In a manual system, it is common to duplicate this
data to make it easy to accessible to all authorized users. The challenge
comes in when the same data needs to be updated
 Data inconsistency – due to the duplication of data, it is very common to
update data in one file and not update the other files. This leads to data
inconsistency
 Lack of backups – if the file get lost or mishandled, the chances of
recovering the data are almost zero.

Computerized information system

Computerized systems were developed to address the challenges of manual
information systems. The major difference between a manual and computerized
information system is a computerized system uses a combination of software and
hardware to record, store, analyze and retrieve information.

Advantages and Disadvantages of a computerized information system (MIS)

The following are some of the disadvantages of a computerized information

system.
Advantages:
The following are the advantages of computerized information systems
  Fast data processing and information retrieval – this is one of the biggest
advantages of a computerized information system. It processes data and
retrieves information at a faster rate. This leads to improved client/customer
service
 Improved data accuracy – easy to implement data validation and
verification checks in a computerized system compared to a manual system.
 Improved security – in addition to restricting access to the database server,
the computerized information system can implement other security controls
such as user’s authentication, biometric authentication systems, access rights
control, etc.
 Reduced data duplication – database systems are designed in such a way
that minimized duplication of data. This means updating data in one
department automatically makes it available to the other departments
 Improved backup systems – with modern day technology, backups can be
stored in the cloud which makes it easy to recover the data if something
happened to the hardware and software used to store the data
 Easy access to information – most business executives need to travel and
still be able to make a decision based on the information. The web
and Mobile technologies make accessing data from anywhere possible.

Disadvantages:

 It is expensive to set up and configure – the organization has to buy

hardware and the required software to run the information system. In
addition to that, business procedures will need to be revised, and the staff
will need to be trained on how to use the computerized information system.
  Heavy reliance on technology – if something happens to the hardware or
software that makes it stop functioning, then the information cannot be
accessed until the required hardware or software has been replaced.
 Risk of fraud – if proper controls and checks are not in place, an intruder
can post unauthorized transactions such as an invoice for goods that were
never delivered, etc.

Summary

 MIS is the acronym for Management Information System. It is a collection

of people, procedures, data, and information technology that aids managers
to make informed decisions.
 Computerized information systems are more efficient compared to manual
information systems. Manual information systems are cheaper compared to
computerized information systems.
 Transaction processing systems (TPS) are by operational staff to record day
to day business transactions, and they are used to make structured decisions
 Management Information Systems (MIS) are used by middle-level managers
to make semi-structured decisions
 Decision Support Systems are used by top level managers, and they help top
level managers to make unstructured decisions.
Definition of data and information and characteristics of good information
Data refers to raw basic facts i.e. price of a product, the number of products
purchased, etc. that haven't yet been processed.
For example, a price of $6 and a quantity of 10 do not convey any meaning to a
customer at a point of sale till. Information should be processed data that conveys
meaning to the recipient.
For example, multiplying $6 by 10 gives us $60, which is the total bill that the
customer should pay.
Good information should be timely and available when it is needed.
The following are the characteristics of good information.
 Accurate – information must be free from errors and mistakes. This is
achieved by following strict set standards for processing data into
information. For example, adding $6 + 10 would give us inaccurate
information. Accurate information for our example is multiplying $6 by 10.
 Complete – all the information needed to make a good decision must be
available. Nothing should be missing. If TAX is an application to the
computation of the total amount that the customer should pay then, it should
be included as well. Leaving it out can mislead the customer to think they
should pay $60 only when in actual fact, they must pay tax as well.
 Cost Effective – the cost of obtaining information must not exceed the
benefit of the information in monetary terms.
 User-focused – the information must be presented in such a way that it
should address the information requirements of the target user. For example,
operational managers required very detailed information, and this should be
considered when presenting information to operational managers. The same
information would not be appropriate for senior managers because they
would have to process it again. To them, it would be data and not
information.
 Relevant – the information must be relevant to the recipient. The
information must be directly related to the problem that the intended
recipient is facing. If the ICT department wants to buy a new server,
 information that talks about a 35% discount on laptops would not be relevant
in such a scenario.
 Authoritative – the information must come from a reliable source. Let's say
you have a bank account and you would like to transfer money to another
bank account that uses a different currency from yours. Using the exchange
rate from a bureau de change would not be considered authoritative
compared to getting the exchange rate directly from your bank.
 Timely – information should be available when it is needed. Let's say your
company wants to merge with another company. Information that evaluates
the other company that you want to merge with must be provided before the
merger, and you must have sufficient time to verify the information.
Competitive advantage of information and MIS
Competitive advantage is a position that makes a business more profitable than its
competitors. For example, producing products at a lower cost than your
competitors makes you more profitable.
Information systems have the capacity to help an organization into such a position.
They do so in the following ways
Operational excellence – operational excellence seeks to improve the operations
of the business. Let's take an example of a retail store. A retail store can use
information systems to automatically place an order with a supplier once the
inventory level reaches the re-order limit. This ensures that the retail store never
runs out of inventory and customers can always count on it to find what they need.
New business models, products, and services – let's continue with the example of
a retail store. The retail store can develop a web based order system or smartphone
application that clients can use to buy items from the comfort of their homes or
wherever they are. The order system can be linked to a delivery business and have
support for online payments. This is a new business model compared to customers
walking in to make purchases vs doing it from web based or smartphone apps.
Improved supplier and customer relations – historical data is used to understand
the needs of the customers and suppliers. This data is then used to create services
and products that address the needs. This leads to long-term relationships with
customers and business which puts an organization in a more profitable position.
Improved decision making – information is critical when making decisions.
Information systems if designed and operated efficiently, output information that
has all the characteristic of good information described in the above section. This
enables an organization to make decisions that will profit the organizations.