Lecturer Notes of Management Information System Department of BCA

Unit:2

MANAGEMENT INFORMATION SYSTEM

2.1Definitions:
• 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.
• The concept may include systems termed transaction processing system, decision
support systems, expert systems, and executive information systems.
• The term MIS is often used in the business schools.
• Some of MIS contents are overlapping with other areas such as information system,
information technology, informatics, computer science e-commerce.

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.

2.2Historical Development of MIS:

According to development in technology there are five eras of Management Information System
evolution corresponding to the five phases in the development of computing technology:
• 1) mainframe and minicomputer computing, 2) personal computers, 3) client/server
networks, 4) enterprise computing, 5) cloud computing.

• The first era (mainframe and minicomputer):

✓ This era was ruled by IBM and their mainframe computers; these computers
would often take up whole rooms and require teams to run them IBM supplied
the hardware and the software.

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Lecturer Notes of Management Information System Department of BCA
✓ As technology advanced, these computers were able to handle greater
capacities and therefore reduce their cost.
✓ Smaller, more affordable minicomputers allowed larger businesses to run their
own computing centers in-house.

• The second era (personal computer):

✓ This era began in 1965 as microprocessors started to compete with mainframes
and minicomputers and accelerated the process of decentralizing computing
power from large data centers to smaller offices.
✓ In the late 1970s minicomputer technology gave way to personal computers and
relatively low-cost computers were becoming mass market commodities, allowing
businesses to provide their employees access to computing power that ten years
before would have cost tens of thousands of dollars.
✓ This proliferation of computers created a ready market for interconnecting
networks and the popularization of the Internet.

• The Third Era (Client/Server):

✓ As technological complexity increased and costs decreased, the need to share
information within an enterprise also grew—giving rise to the third
era (client/server), in which computers on a common network access shared
information on a server.
✓ This lets thousands and even millions of people access data simultaneously.

• The fourth era(enterprise):

✓ This era is enabled by high speed networks, tied all aspects of the business
enterprise together offering rich information access encompassing the complete
management structure.
✓ Every computer is utilized.
• The fifth era (cloud computing):
✓ This era is latest and employs networking technology to deliver applications as
well as data storage independent of the configuration, location or nature of the
hardware.
✓ This, along with high speed cellphone and wifi networks, has led to new levels of
mobility in which managers may access the MIS remotely with laptop, tablet
computers and smartphones.

2.3 Characteristics of MIS:

• The most important characteristics of MIS are described below:

1. Usefulness:
✓ The information, a manager receives from MIS may be relevant and accurate, but
it is only useful if it helps him with the particular decisions he has to make.

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Lecturer Notes of Management Information System Department of BCA
2. Timeliness:
✓ MIS output must be current.
✓ Management has to make decisions about the future of the organization based on
data from the present, even when evaluating trends.

3. Completeness:
✓ An effective MIS presents all the most relevant and useful information for a
particular decision.
✓ If some information is not available due to missing data, it highlights the gaps and
either displays possible scenarios or presents possible consequences resulting from
the missing data.

4. Accuracy:
✓ Management information systems are accurate and provide up-to-date and correct
information based on factual data.
✓ All processed information derived from an accurate and correct management
information system is typically free of flaws, consistent and complete.

5. Integrated:
✓ Organizations are involved in various functions and sub-functions, such as
manufacturing, finance, human resources, marketing and other specialized areas.
✓ A management information system is an integrated collection of information
systems, each designed to support a unique functional area.

6. Available:
✓ Information may be useless if it is not readily accessible ‘in the desired form, when it
is needed.
✓ Advances in technology have made information more accessible today than ever
before.

7. Reliable:
✓ The information should be counted on to be trustworthy.
✓ It should be accurate, consistent with facts and verifiable.
✓ Inadequate or incorrect information generally leads to decisions of poor quality.
✓ For example, sales figures that have not been adjusted for returns and refunds are not
reliable.

8. Cost-effective:
✓ The information is not desirable if the solution is more costly than the problem.
✓ The cost of gathering data and processing it into information must be weighed
against the benefits derived from using such information.

9. Control database:
✓ Another important characteristic of MIS is that it always based on centralized data
and information. MIS is to supply data and information in such a way so that the
management can take its important decision

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Lecturer Notes of Management Information System Department of BCA

2.4 Components of MIS:

• 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.

1. 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.

2. 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.
3. Data:
✓ The recorded day to day business transactions is data.
✓ For a bank, data is collected from activities such as deposits, withdrawals, etc.

4. 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.

5. 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 Payroll program, banking system, point of sale system, etc.

2.5Advantages and Disadvantages of MIS:

Advantages of MIS
The following are some of the benefits that can be attained using MIS:
i) Helps in formulation of planning
ii) Provides coordination
iii) Systematic decentralization
iv) Help in control system
v) Increase Speed in Operation
vi) Reduce duplication of efforts

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Lecturer Notes of Management Information System Department of BCA
Disadvantages:
a) Expensive
b) Maintenance
c) Ineffective
d) Unemployment
e) Privacy
f) Lack of job security
g) Dominant culture

2.6 Role of MIS:

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.

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.

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.

2.7 Importance of MIS for Managers:

• Management Information Systems is sets of inter-related procedures using information
system infrastructure in a business enterprise to generate and disseminate the desired
information.
• The MIS are subsystem of business system and by themselves serve the function of
feedback and control in business system.
The actual MIS process relates to:
1. Collection
2. Organization
3. Distribution
4. Storage of wide information
Managerial control and analysis of data Hence MIS focuses on:
a) Organization-wide information
b) Decision-making process
c) Managerial control and analysis
d) Computer-based system

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Lecturer Notes of Management Information System Department of BCA
MIS has assumed all the more important role in today’s environment because a manager
has to take decisions under two main challenges:

1. Because of the liberalization and globalization, in which organizations are required to

compete not locally but globally, a manager has to take quick decisions, otherwise his
business will be taken away by his competitors. This has further enhanced the necessity
for such a system.

2. In this information age wherein, information is doubling up every two or three years, a
manager has to process a large voluminous data; failing which he may end up taking a
strong decision that may prove to be very costly to the company.

In such a situation manager must be equipped with some tools or a system, which can assist them
in their challenging role of decision-making.
• It is because of the above reasons, that MIS is considered to be of permanent importance,
sometimes regarded as the name center of an organization.
• Such system assists decision makers in organizations by providing information at various
stages of decision making and thus greatly help the organizations to achieve their
predetermined goals and objectives.
• On the other hand, the MIS which is not adequately planned for analyzed, designed,
implemented or is poorly maintained may provide developed inaccurate, irrelevant or
obsolete information which may prove fatal for the organization.
• In other words, organizations today just cannot survive and grow without properly
planned, designed, implemented and maintained MIS.
• It has been well understood that MIS enables even small organizations to more than
offset the economies of scale enjoyed by their bigger competitors and thus helps in
providing a competitive edge over other organizations.

2.8 Simple Case Study:

Considers what businesses believe are their information management challenges; acts as an
introduction to business information systems course.

Learning objectives:
Explain why Information Systems are essential to business.
Identify major information management challenges perceived by contemporary organizations.

Case problem:
In business, computer‐based Information Systems store data and generate most of the
information we use. Such systems are essential to business operations where they can make the
organization more efficient (reducing costs), productive and more effective. Such systems also
benefit tactical and strategic management, providing useful insights to enable planning,
decision‐making, coordination and control.

1. The purpose of IS
List the main uses of business Information Systems.

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Lecturer Notes of Management Information System Department of BCA
2. Data and Information
The words data and information were used frequently in the film clip. Define and distinguish the
two concepts and explain what constitutes a database.

3. What is System?
The terms Information Systems and business information system were used throughout the
video; discuss the meaning of these terms and concepts and list as many examples of such
systems as you can.

4. The importance and benefits of information system and information management

organization
Drawing upon the comments made in the film clip, discuss why organizations need Information
Systems and better information management. How important are they and what benefits does the
organization gain from them?

5. Challenges
What were the big issues (three most problematic issues) referred to in the film clip and what are
organizations doing to address them. You should comment on how companies are addressing
their information management issues and the barriers preventing some companies from action.

Question 1: What type of challenges will be managed by the using of MIS?

Question 2: Why MIS is used for the good management as well as full fills the target?
Question 3: How MIS can make the good decision making to achieve the goal of firm?

2.9 Nature and Scope of MIS:

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