UNIT -1

Management Information System (MIS)

Definition:

An MIS is a system that provides managers with the necessary information to make decisions about
an organization's operations. The MIS gathers data from various sources and processes it to provide
information tailored to the managers' and their staff's needs.

While businesses use different types of systems, they all share one common goal: to provide
managers with the information to make better decisions. In today's fast-paced business
environment, having access to accurate and timely information is critical for success. MIS allows
managers to track performance indicators, identify trends, and make informed decisions about
where to allocate resources.

Purpose:

The purpose of MIS is to help the organization in the following functional business areas:

 Accounting: In accounting functions, the MIS is used to record business transaction, produce
periodic financial statements and create reports required by users.
 Finance: MIS helps in organizing budgets, manage the flow of cash, analyze investments and
make decisions that could reduce interest payments and increase ventures.
 Marketing: MIS helps to analyze demand for various products in different regions of and
population groups.
 Human Resources: Help with record keeping and employee evaluation.

Objective:

 Data Capturing: Data is collected by MIS from various organizational internal and external
sources. Data might be captured manually or via computer terminals.
 Processing of Data: The recorded data is processed to create the necessary information. Data
processing includes tasks including calculating, sorting, categorizing, and summarizing.
 Storage of Information: The processed or unprocessed data is kept in the MIS for further use.
Any information that is not immediately needed is preserved as a record for the organization to
use later.
 Retrieval of Information: As and when needed, the management information system gets data
from its databases for various users.
 Dissemination of Information: The organization's users receive information, a finished product of
the management information system. It occurs regularly or online via a computer terminal.
Role of MIS in Business Organization

 Decision making -

Management Information System (MIS) plays a significant role in the decision-making process of any
organization. In any organization, a decision is made on the basis of relevant information which can
be retrieved from the MIS.

 Coordination among the department -

Management Information System satisfy multiple need of an organization across the different
functional department.

 Finding out Problems -

As we know that MIS provides relevant information about every aspect of activities. Hence, if any
mistake is made by the management then MIS, information will help in finding out the solution to
that problem.

 Comparison of Business Performance -

MIS store all past data and information in its Database. That why the management information
system is very useful to compare business organization performance.

 Strategies for an Organization -

Today each business is running in a competitive market. An MIS supports the organization to evolve
appropriate strategies for the business to assent in a competitive environment.

Pre-requisites for effective MIS

(i) Qualified System and Management Staff : The prerequisite of an effective MIS is that it should be
managed by qualified officers. These officers should have a mutual understanding about the roles
and responsibilities of each other and be understand clearly the view of their fellow officers. For this,
each organization should have two categories of officers :

(a) System and Computer Experts who in addition to their expertise in their subject area , they
should also be capable of understanding management concepts to facilitate the understanding of
problems asked by concern. They should also be clear about the process of decision making and
information requirements for planning.

(b) Management experts who should also understand quiteclearly the concepts and operations of a
computer. This basic knowledge of computer will be useful will place them in a comfortable position,
while working with systems, technicians in designing or other wise, of the information system.

(ii) Futuristic Perspective : An effective MIS should be capable of meeting the future requirements
of its executives as well. This capability can be achieved by regular monitoring and updating the
MIS.
(iii) Support of Top Management : For a management information system to be effective, it must
receive the full support of top management. The Reasons for this are :
(a) Subordinate managers are usually lethargic about activities which do not receive the support of
their superiors.
(b) The resources involved in computer based information system are larger and are growing larger
and larger in view of importance gained by management information system.
(iv) Common Database : It is an integrated collection of data and information which is utilized by
several information subsystems of an organization. A common database may be defined as a super
file which consolidates and integrates data records formerly stored in a separate data file. Such a
database can be organized as an integrated collection of data records into a single super file or it
can be organized as an integrated collection of several data file.
(v) Control and maintenance of MIS : Control of the MIS means the operation of the system as it
was designed to operate. Some times, users develop their own procedures or short cut methods to
use the system which reduces its effectiveness.

Components of MIS

1. People: These are the system users who utilize it to keep track of daily business transactions.
The users have typically educated professionals, such as human resource managers and
accountants.
2. Business procedures: These are generally accepted best practices that instruct users and every
other component on how to operate effectively. Users, consultants, and other people create
business procedures.
3. Data: The daily business transactions that were documented. Data is gathered for banks via
transactions like deposits and withdrawals.
4. Hardware: Computers, printers, networking equipment, and other items make up hardware.
The hardware provides the ability to process data. Additionally, networking and printing
capabilities are provided.
5. Software: These are applications that use hardware to function. System software and
applications software are the two main divisions of the software. The operating system is
referred to as system software. Applications software describes specialized software used to
carry out business operations.
MIS Applications in Business

 Business Intelligence System: In BI, all levels of management and executives can print data and
graphs showing information or trends relating to growth, costs, strategic control, efficiency, risk
and performance.
 Executive Information System: An EI system provides the same information as a BI system, but
with greater attention to detail and more confidential information, designed to help top-level
executives make choices that impact the entire organization.
 Marketing Information System: MI systems provide data about past marketing campaigns so
that marketing executives can determine what works, what does not work and what they need
to change in order to achieve the desired results.
 Transaction Processing System: TPS handles sales transactions and makes it possible for
customers to sort search results by size, color or price. This system can also track trends related
to sales and search results.
 Customer Relationship Management System: Keeping up with customers is key to overall
success, and CRMS helps companies know when and how to follow up with customers in order
to encourage an ongoing sales relationship with them.

Information in Decision Making

Meaning:
Information is processed, organised and structured data. It provides context for data and enables
decision making. For example, a single customer’s sale at a restaurant is data – this becomes
information when the business is able to identify the most popular or least popular dish.

Importance:

Information plays a crucial role in the decision-making process. It serves as the foundation for
informed decisions. Also, it helps individuals and organizations make choices that are based on
accurate and relevant data.

Sources and Types of Information

Sources of the Information:

The data can be obtained from the various sources that can be either external or internal in the
nature.

When the data has been generated by the researcher himself/herself, surveys, interviews,
experiments, specially designed for understanding and solving the research problem at hand, it is
referred to as the Primary data. But when the data that is collected by someone other than the
primary user, it is referred to as the Secondary data.

The Primary data can be collected from the following sources –

 Directly from the respondent.

 Various techniques like the observations, questionnaires, interviews etc.
The Secondary data can be collected from the following sources –

 Newspapers
 Magazines
 Trade journals
 Government Publications
 Government Policy Documents
 Research Reports
 Websites

Types of Information:

1. Action Information - Induces the action.

2. Non Action Information - Communicates only about the status of a situation.
3. Recurring Information - Such Information is generated at the regular Information.
4. Non Recurring Information - Non repetitive in the nature.
5. Internal Information - Generated through the internal sources of the organization.
6. External Information - Generated through the external sources.

Information requirement in management

The Information acts as a very critical tool in making the strategies for an organization by the
management of that organization.

Information is almost everything for the planning that is to be done for the smooth functioning of
the organization.

The requirement of the Information can be defined as the statement of the Information that is very
detailed in the nature and is usually about the Information needs that a new system has to fulfill.

In the Information requirement, it is very important to identify who needs which information and
also when, where, when and how it is required.

With the conduction of the analysis of the Information requirement, one comes to know about the
objectives of the system and after this the detailed description of the functions that the new system
is expected to perform can be developed.

Relevance of Information in Decision Making

The following are some of the key ways in which information contributes to decision making:

1. Problem Solving: Information helps identify problems and allows decision makers to evaluate
alternative solutions and choose the best course of action.
2. Evidence-based Decision Making: Information provides the evidence needed to make decisions
that are based on data and facts, rather than opinions or assumptions.
3. Risk Assessment: Information helps decision makers assess risks and make decisions that
minimize potential harm and maximize benefits.
4. Forecasting: Information helps decision makers anticipate future events and trends, allowing
them to make plans and prepare for potential challenges and opportunities.
5. Improved Accuracy: Information helps decision makers make more accurate decisions by
providing them with a complete and accurate picture of a situation.