MANAGEMENT

INFORMATION SYSTEM

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 Meaning of Information
Systems
• An information system is an organized combination of people,
hardware, software, communications Networks and data resources
that collects, transforms, and disseminates information in an
organization.

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Modern Approaches to Information Systems
Technical approach:
• Emphasizes mathematically based models

• Computer science theories of computation, data storage

• Management science: models of DM and practices

• Operations research: optimizing selected parameters of org.

Behavioral approach

Behavioral issues such strategic business integration,

implementation

• Psychology: how decision makers use formal information

• Economics: how IS change the control and cost structures

• Sociology: how system affect individuals and groups

 Types of Information
systems
Information system types

Operational Business Specialized

Information system Information system Information system

AI
TPS MIS

OLAP
DSS
KIS
EIS/ESS
GIS
MANAGEMENT INFORMATION SYSTEM(MIS)
• The MIS is defined as a system based on the database that is
evolved for the purpose of providing information to the people
in the organization.
• The main objective of MIS is to provide lower and middle
management with printed or electronic reports with inquiry
capabilities so that they can control, organize and plan more
effectively and efficiently.
• Computerized MISs typically extract and summarize data from
TPSs to allow managers to monitor and direct the organization.
• MISs can also provide employees accurate feedback about easily
measured aspects of their work.
• The same data could be summarized in measure of performance,
such as total sales for each type of item, for each salesperson
and for each hour of the day.
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• Management information systems are distinct from regular
information systems in that they are used to analyze other
information systems applied in operational activities in the
organization. MIS involve three primary resources: technology,
information, and people.
• Management information systems are regarded to be a subset of
the overall internal controls procedures in a business, which cover
the application of people, documents, technologies, and
procedures used by management accountants to solve business
problems such as costing a product, service or a business-wide
strategy.
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Characteristics of a MIS
In general MIS perform the following functions.
• Provide reports with fixed and standard formats: For example,
scheduled reports for inventory control may contain the same type
of information placed in the same locations on the reports

• Produce hard-copy and soft-copy reports: Some MIS reports are

printed on paper. Other reports can be soft-copy reports where
typically the output is displayed on a computer screen.

• Use internal data stored in the computer system: These sources

of data can be outputs generated by TPSs or ERP systems. Some
MISs use external sources of data about competitors, the industry,
economy and so on. The Internet is often used as a source for
external data.
• Allow end users to develop their own custom reports: Typically,
analysts and programmers involve in developing and implementing
complex MIS reports.
• Require user requests for reports developed by systems
personnel: As mentioned previously, typically, IS personnel develop
and implement MIS. If any user needs to access these systems, they
typically require to submit a formal request to the IS department.
• Management-oriented: The basic objective of MIS is to provide
information support to the management in the organization for
decision making.
• Management directed: When MIS is management-oriented, it
should be directed by the management because it is the management
who tells their needs and requirements more effectively than anybody
else.
• Integrated: comprehensive or complete view of all the subsystems in
the organization of a company.
• Common data flows: The integration of different subsystems will lead to
a common data flow which will further help in avoiding duplicacy and
redundancy in data collection, storage and processing.
• Heavy planning-element: The preparation of MIS is not a one or two day
exercise. It usually takes 3 to 5 years and sometimes a much longer period.
• Subsystem concept: When a problem is seen in 2 sub parts, then the
better solution to the problem is possible.
• Common database: This is the basic feature of MIS to achieve the
objective of using MIS in business organizations.
• Computerized: MIS can be used without a computer. But the use of
computers increases the effectiveness and the efficiency of the system.
• User friendly/Flexibility: An MIS should be flexible.
• Information as a resource: Information is the major ingredient of any
MIS.

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Features of MIS

• Timeliness
• Accuracy
• Consistency
• Completeness
• Relevance

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MIS in Functional Areas of Business
• Some of the traditional functional areas include
1. Finance
2. Manufacturing
3. Marketing
4. Human resources

• The MIS can be divided along those functional lines, in order to

produce reports tailored to individual functions.
1. Financial MIS
The following figure describes a basic financial MIS. The
typical inputs to a MIS include internal TPS databases,
additional corporate databases of internal data and
external data.
1. Profit/Loss and Cost systems
2. Auditing (Internal External)
3. Funds Usage and Management
2. Marketing MIS
A marketing MIS supports managerial
activities
related to product development, distribution,
pricing decisions, promotions, and sales
forecasting.
1.Market research
2.Product development
3.Promotion and advertising
4.Product pricing
3. Human Resource MIS
The personnel function relates to all other functional areas
in the business, the human resource MIS plays a
valuable role in ensuring organizational success.
1. Human resource planning
2. Personnel selection and Recruiting
3. Training and skills inventory
4. Scheduling and job placement
5. Wage and salary administration (medical
payments, saving plans, retirement accounts)
6. Outplacement (job counselling and training, job
and executive search, retirement and financial
planning)
4.Manufacturing MIS
Manufacturing has been improved by advances in
technology. With emphasis on greater quality and
productivity, having an efficient and effective
manufacturing process is becoming critical to the
success of manufacturing organizations
1. Design and engineering
2. Master production schedule and inventory
control
3. Process control
4. Quality control and testing
5. Other Management Information Systems
In addition to finance, manufacturing, marketing and human
resource MIS some companies have other functional MIS.
Accounting MIS
An information system provides aggregate information on
accounts payable, accounts receivable, payroll and many other
applications.

Geographical Information Systems

A computer system is capable of assembling, storing,
manipulating and displaying geographically referenced
information, that is data identified according to its location.
Role of MIS
• The role of MIS in an organization can be compared to the role of
heart in the body. The information is the blood and MIS is the heart.
In the body the heart plays the role of supplying pure blood to all the
elements of the body including the brain.
• The system ensures that an appropriate data is collected from the
various sources, processed, and sent 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 the top management.
• The MIS satisfies the diverse needs through a variety of systems
such as Query Systems, Analysis Systems, Modeling Systems and
Decision Support Systems.
• The MIS helps in Strategic Planning, Management Control,
Operational Control and Transaction Processing.
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Components of MIS
1) Marketing Research System (MRS)
Marketing research can be seen as the systematic and objective
search for and analysis of data and information relevant to the
identification and solution of any problem in the field of marketing.

2) Marketing Intelligence System (MIS)

The process of acquiring and analyzing information in order to
understand the market (both existing and potential customers); to
determine the current and future needs and preferences, attitudes and
behavior of the market; and to assess changes in the business
environment that may affect the size and nature of the market in the
future.

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3) Internal Record System (IRS)
Marketing managers rely on internal reports on orders, sales,
prices, costs, inventory levels, receivables, payables, and so on. By
analyzing this information, they can spot important opportunities
and problems.

4) Decision Support System(DSS)

A decision support system (DSS) is a computer-based information
system that supports business or organizational decision-making
activities. DSSs serve the management, operations, and planning
levels of an organization and help to make decisions, which may
be rapidly changing and not easily specified in advance.

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Benefits of MIS
• It improves personal efficiency.
• It expedites problem solving(speed up the progress of problems
solving in an organization).
• It facilitates interpersonal communication
• It promotes learning or training.
• It increases organizational control.
• It generates new evidence in support of a decision.
• It creates a competitive advantage over competition.
• It encourages exploration and discovery on the part of the decision
maker.
• It reveals new approaches to thinking about the problem space.
• It helps automate the Managerial processes.

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Outputs of MIS / Types of
Report
• Scheduled reports which are produced periodically, or on a
Schedule (daily, weekly, monthly).
• Key-indicator report which summarizes the previous day’s critical
activities and also it is typically available at the beginning of each
day.
• Demand report which gives certain information at a manager’s
request.
• Exception report which is automatically produced when a situation
is unusual or requires management action.

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• Sales report: provided a complete sales analysis of different
products sold in different geographical areas
• Budget:  income and expenditure budget, production budgets,
cash budgets etc.
• Production report: production targets achieved by the
production department and also highlight variation between
budgeted production and actual achievements
• Cash flow statement: cash inflows and cash outflow during
the period of operations
• Funds flow statement: points out various sources of funds as
well as their application areas during any period
• Budgeted and actual profit report: points out clearly the
figures of budgeted and actual profit of the concern during a
specified period
• Machine utilization report: clearly gives the details of
machine hours utilized for different jobs and the duration for
which machine remained idle 24
• Report on financial statements: Income statement and
balance sheet are important sources of giving financial
information not only to shareholders but also to the
government and other concerned parties.
• Report on ideal time: states clearly the time actually spent by
the worker on different jobs and the time for which he was
sitting idle due to either want of material, electricity or any
other resource
• Abnormal losses report: reflects any increase in product cost
arising due to abnormal situations in the areas of material,
labor and ideal facilities.
• Cost reports: production cost report, departmental cost
report etc.
• Orders in hand report: states in qualitative terms the orders
received by the concern in respect of each of its products along
with the ratio of orders in hand to production capacity.
• Other reports: daily production statement, daily statement of
raw material used – stock statement etc 25
 TPS
(TRANSACTION PROCESSING
SYSTEM)
• Transaction Processing Systems (TPS) are cross functional
systems that process data resulting from the daily routine
transactions necessary for business functions.
• Transactions are events that occur as part of doing
business, such as sales, purchases, deposits, payments etc.
• Automated TPSs consist of all the components of a
computer based information system (CBIS), including
databases, telecommunications, people, procedures,
software and hardware devices used to process
transactions.
• TPSs are considered as operational level systems as they
keep track of the elementary activities and transactions of
the organization.
• These systems are used mainly by operational level
employees of an organization.
• Input to a TPS: Basic business transactions such as
customer orders, purchase orders, receipts and invoices
are inputs to a TPS.

• Processing: In order to produce the required output

processing is carried out on input data. The processing
activities include data collection, data editing, data
correction, data manipulation and data storage and
document production.

• Output of a TPS: Updated records after the last

transaction.

• Users: Operational personnel; supervisors

Types of TPS Functional
Area
Transaction Processing
Cycle
 TPS Application
TPS support the order processing, purchasing and accounting
business processes. Although each organization may have
unique business processes, only a generalized view is
presented.
Order Processing System
Purchasing transaction process system
Accounting processing
system
 DSS
(DECISION SUPPORT SYSTEMS)

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• Decision support systems (DSS) helps in making decision and
also in its performance evaluation.

• These systems can be used to sense the decision by performing

sensitivity analysis on various parameters of the problem.

• Decision support system can be defined as

– Computer based systems
– That help decision makers
– Through direct interaction
– With data and analysis models
Characteristic and Components of DSS

• DSS focus on decision processes rather than transactions

processing. DSS aim at top managers and executive decision
maker.
• DSS can be easily designed, it is simple in structure, and can be
quickly implementation and altered.
• Inputs: databases optimized for statistical analysis
• Processing: Interactive, Simulations and statistical analysis
• Outputs: Responses to queries; statistical test results.
• Users: Professionals, staff
DSS Components
• Main components of a DSS include a database and a model
base.
• In addition a typical DSS contains a dialogue manager, which
allows decision makers to easily access and manipulate the
DSS and to use common business terms and phrases.
• Apart from the dialogue manager additional components
include access to the internet, networks and other computer-
based systems.
The database
•The database management system allows managers and decision
makers to perform qualitative analysis on the company’s vast
stores of data in databases, data warehouses, and data marts.

•Data-driven DSSs tap into vast stores of information contained

in the corporate database, retrieving information on inventory,
sales, personnel, production, finance, accounting and other areas.

•A database management system can also be connected to

external databases to give managers and decision makers even
more information and decision support. External databases can
include the Internet, libraries, government databases, and more.
The Model base

•The model base allows managers and decision makers to perform

quantitative analysis on both internal and external data.
•It is a software component that consists of models used in
computational and analytical routines that mathematically express
relationships among variables.
The dialogue manager

•The dialogue manger allows users to interact with the DSS to

obtain information. It assists with all aspects of communications
between the user and the hardware and software that constitute the
DSS
 EIS
(EXECUTIVE INFORMATION
SYSTEMS)

ESS
(EXECUTIVE SUPPORT SYSTEMS)

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• EIS developed focusing on meeting the strategic information
needs of top management, now it is widely used by persons at
middle levels in the organizational structure.

• EISs serve to indicate issues of importance to the organization,

indicate new directions the company may take, and help
executives monitor the company’s progress.

• Some of the major decision making that can be supported through

an EIS are, ability to provide an overall vision, strategic planning
and organizing, strategic control and crisis management.
 Characteristics of ESS
• Tailored to individual executives: An ESS is an interactive
hands-on too, that allows an executive to focus, filter and
organize data and information.

• Easy to use: An ESS must be easy to learn and use, not very
complex, in order to save the time of top-level executives.

• Have drill-down abilities: An ESS allows executives to drill

down into the company to determine how certain data was
produced. Drilling down allows an executive to get more
detailed information if needed.
• Support the need for external data: Information from
competitors, the federal government, trade associations and
journals and consultants are required to make effective top
level decisions.

• Help with uncertain situations: Handling these unknown

situations using modelling and other ESS procedures help top-
level managers to measure the amount of risk in a decision.

• Have a future orientation: Meaning those decisions will have

a broad impact for years or decades.

• Linked with value-added business processes: ESSs are

linked with executive decision making about value added
business processes.
Types of systems at the four
levels