1

UNIT-1
INTRODUCTION TO MIS
I. DEFINITION:-
Management information system is an information system that is used within the organization to achieve its
desired objectives.MIS collects and processes information and then provides the information to the
management of an organization.
MIS is a well structured method which combines the principles, theories and practices of management and
plays an important role in business organization for planning and decision making process. It provides
managers with different tools to organize, evaluate and run their departments efficiently.
MIS =MANAGEMENT +INFORMATION+SYSTEM

Management: Management is deined as t!e a"t # getting t!ings d#ne t!"#$g! %e#%&e '( di)iding
t!em int# #"gani*ed g"#$%s and designing ea+! g"#$% t# d# a $ni,$e -#'. T!e manage" manages t!e
#"gani*ati#n. T!e .e( a+ti)ities # a manage" a"e:-
/&anning-The process of determining the goals and objectives of a future project in advance. It
includes
i !hat is to be done"
ii !hen should it be done"
iii #ow should it be done"
O"gani*ing-The process of arranging the activities re$uired to meet the objectives derived during the
planning process. It includes%&
i 'ividing the activities as per the planning
ii (llocates the activities to the individual employee
iii )rovide authority to employees
Staing&The process of assigning the right person for the right job.
Di"e+ting&The process of guiding and motivating the people involved in the project by the managers
to achieve the predetermined goals and objectives. It includes&&&
i *nabling communication among employees
ii )roviding motivation to employees
iii Installing leadership $ualities.
C#nt"#&&ing&The process of ensuring that the organizational activities are performed as per planning.
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i Setting standards
ii Measuring the actual performance
iii +omparing final project with the planning ,planned project
iv taking corrective actions.
In#"mati#n: In#"mati#n0 in MIS0 means t!e %"#+essed data t!at !e&%s t!e management in %&anning0
+#nt"#&&ing and #%e"ati#ns. Data means a&& t!e a+ts a"ising #$t # t!e #%e"ati#ns # t!e +#n+e"n. Data is
%"#+essed i.e. "e+#"ded0 s$mma"i*ed0 +#m%a"ed and ina&&( %"esented t# t!e management in t!e #"m #
MIS "e%#"t.
Information is very valuable source that is re$uired by the management of an organization to carry on a
business. It is the processed data that is provided to the decision makers or managers to aid them in their
project. The type of information utilized in the different management levels of an organization depends on the
nature of jobs performed. The various types of information can be as follows%&
-. Structured%& It is well defined and thus its processing is not difficult. *g%monthly production schedule
.. /nstructured&It is not well defined and the processing becomes difficult.eg%&prediction about future of
org.
0. *1ternal%&It is achieved from a source located outside the operations of the organization .*g population
growth in the market in which an organization serves.
2. Internal%&It is by product of various internal operations.*g total purchase conducted by the
organisation in a particular work.
S(stem: Data is %"#+essed int# in#"mati#n 1it! t!e !e&% # a s(stem. A s(stem is made $% # in%$ts0
%"#+essing0 #$t%$t and eed'a+. #" +#nt"#&. A s(stem is a +#&&e+ti#n # )a"i#$s s$'s(stems t!at 1#". t#
a+!ie)e a +#mm#n #'-e+ti)e.
A s(stem ma( 'e # t1# t(%es%&
3pen&(n open system interacts with its environment and e1changes the input and output with the
e1ternal environment. *.g every organization is sensitive to demands and e1pectations of the
customer.
+losed&( closed system neither interact nor e1changes input and output with its environment. e.g a
computer system that takes input and produces output in a defined format.

'efinition of MIS by S+#!(4T5 6MIS is a system of people, e$uipment, procedures, documents

and communication that collects ,validates, operates on transformers ,stores, retrieves and presents
data for use in planning ,budgeting ,accounting, controlling and other processes.
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II. O23ECTI4ES OF MIS
(n information system for a business process provides information to support managerial functions such as
planning, control, organizing, and operating processes. It collects information systematically and routinely in
accordance with the well defined set of rules. The following are the objectives of an effective information
system.
-. To provide the re$uisite information to the decision makers at each level of management to carry out
their functions
.. To help highlight the critical factors for successful functioning of the organization.
0. To support decision making in both structured and unstructured problem environments.
2. To provide a system of people, computers, procedures, interactive $uery facilities documents for
collecting, storing, retrieving and transmitting information to the users.
MIS F$n+ti#ns

MIS is set up by an organization with the prime objective to obtain management information to be used by its
managers in decision making. Thus, MIS must perform the following functions in order to meet its objectives.
Data Ca%t$"ing: MIS captures data from various internal and e1ternal sources of an organization.
'ata capturing may be manual or through computer terminals. *nd users typically, record data about
transactions on some physical medium, such as a paper form, or enter it directly into a computer
system.
/"#+essing # Data: The captured data is processed to convert it into the re$uired management
information. )rocessing of data is done by activities such as calculating, comparing, sorting,
classifying and summarizing. These activities organize, analyze, and manipulate data using various
statistical, mathematical, operations research and other business models.
St#"age # In#"mati#n: MIS stores processed or unprocessed data for future use. If any information
is not immediately re$uired, it is saved as an organizational record. In this activity, data and
information are retained in an organized manner for later use. Stored data is commonly organized into
fields, records, files and databases.
Ret"ie)a& # In#"mati#n: MIS retrieves information from its stores when re$uired by various users.
(s per the re$uirements of management users, the retrieved information is either disseminated as such
or it is processed again to meet the e1act MI demands.
Disseminati#n5Dist"i'$ti#n # MI: Management Information, which is a finished product of MIS, is
disseminated to the users in the organization
'(
/S*4
S3/4+*
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DATA
CAPTURE
PROCESSING
DISSEMINATION
RETRIEA!
STORAGE O"
DATA
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III. MIS GRO6T7 AND DE4E8O/MENT5E4O8UTION OF MIS
The use of MIS is growing fast. This is because of the role played by the changing concept strategy in the
organization. +hanging concepts refer to change in the re$uirements of users and organization. The
organization are undertaking new systems and modifying the e1isting ones as per the re$uirements of the
users and organization. 7ou need to understand different concepts such as necessity of information and using
information in decision making in order to understand the evolving role of MIS.
19:;<s
8y mid si1ties, organization began recognizing information as an important tool for supporting general
management tasks. The information system of this period was known as MIS.MIS processes the data and
converts it into the re$uired information.
19=;<s
8y early eighties information was regarded as the special purpose tool that provides project controls to the
management of an organization .The top level management started using MIS in decision making process to
take intelligent decisions regarding the activities of the business that can be utilized in favor of the
organization.
199;<s
In early ninety9s, information was regarded as the strategic resource that was capable of providing competitive
advantage. The concept of strategic systems was supported by the latest MIS. Information obtained from MIS
is now used by organizations to define an optimum strategy for future, so that ma1imum benefits can be
obtained from investments to get ahead of others in the market.
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I4. R#&e # MIS :-
-. MIS plays very vital role in the management, administration and operation of the organization.
.. The system ensures that an appropriate data is collected from various sources, processed and sent
further wherever and whenever re$uired.
0. :ulfill the information needs of an individual and top management
2. (t every phase of the management process, managers constantly need information in order to make
effective decisions and this information is provided by MIS.
;. <MIS is re$uired by managers as they make their decisions, such as number of staff re$uired to be
employed by each department, their training re$uirements, career development plans, budgets, overall
forecasts, surveys, and progress reports on socio economic conditions.
=. Timely and (ccurate Transaction )rocessing.
>. Streamlining (ccounting and 4ecords Management.
?. )roviding Managers with ad hoc and interactive support in decision&making.
@. )rovision of an easy and systematic way in digging out critical information tailored according
to specific re$uirements, and customized in preferred formats.
-A. *nables an organization to gain competitive advantage over others
--. 8etter communication, inter&organizational computing, and internet&working. Supports business
operations and successful management of business enterprises.
-.. <8etter use of e1ecutive resources by automating routine functions.
-0. Increased ability to make sound, rational and informed decisions involving comple1 combinations of
factors, and doing so with more confidence and speed.
-2. <8etter use of time by making facilities available every time they are re$uired.
-;. <Improved customer services and improved personnel relations within the organization
4. Im%a+t # MIS
Since the MIS plays a very important role in the organization, it creates an impact on the organizations
functions, performance and productivity. The impact of MIS on the functions is in its management. !ith a
good support, the management of marketing, finance, production and personnel become more efficient. The
tracking and monitoring of the functional targets becomes easy. The functional, managers are informed about
the progress, achievements and shortfalls in the probable trends in the various aspects of business. This helps
in forecasting and long& term perspective planning. The managerBs attention is brought to a situation which is
e1ceptional in nature, inducing him to take an action or a decision in the matter. ( disciplined information
reporting system creates a structured data and a knowledge base for all the people in the organization. The
information is available in such a form that it can be used straight away or by blending analysis, saving the
managerBs valuable time.
The MIS calls for a systematization of the business operation for an effective system design. ( well designed
system with a focus on the manger makes an impact on the managerial efficiency. It helps him to resort to
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such e1ercises as e1perimentation and modeling. The use of computers enables him to use the tools C
techni$ues which are impossible to use manually. The ready&made packages make this task simpler. The
impact is on the managerial ability to perform. It improves the decision making ability considerably. Since the
MIS works on the basic systems such as transaction processing and databases, the drudgery of the clerical
work is transferred to the computerized system, relieving the human mind for better work.
4I. MIS +"eates an im%a+t #n t!e #"gani*ati#n>s $n+ti#n0 %e"#"man+e and
%"#d$+ti)it(.
<!ith MIS support management of all departments of an organization can become more effective
Targets tracking and monitoring becomes easy. Top level managers can be informed accordingly.
)robable trends in various aspects of business can be traced. This helps in long&term planning and forecasting.
*1ception conditions can be brought to the notice, so that manages can take decision in that matter.
<Information reporting system helps entire organization.
MIS brings clarity in the communication, due to common understanding of terms and terminology.
8rings high degree of professionalism in the business operations.
4II. MIS 6IT7 RES/ECT TO MANAGEMENT 8E4E8S
The structure can be described by using the levels of various management activities performing within the
organization. *ach level of the management needs information system. The specific need vary from level to
level. (n organization has 0 levels.
layer 0
layer .
layer -
8E4E8 1?O/ERATIONA8 CONTRO8 8E4E8@:
This level specifies short term plans and decisions for the current operations in the organization.'etermining
the production levels and defining the inventory levels of some of the operational control level activities.
8E4E8 A?Management C#nt"#& 8e)e&@:
This level specifies the internal activities performed by one or more managers. These activities include
ac$uisition and organization of resources , structuring organizational works, recruiting and training personal
etc.
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8E4E8 B?st"ategi+ /&anning &e)e&s@:
This level specifies the long term plans based on the business objectives of the organization.The various
activities included in the strategic planning levels are deciding the product mi1,planning marketing strategy
,identifying the environmental factors for the plans etc.
4III. NATURE C SCO/E OF ORGANIDATION?MIS NEIT7ER SCIENCE NOR ART@
T!e +#n+e%t # MIS is inte"-dis+i%&ina"( in nat$"e i.e. it has borrowed its concept from Management
(ccounting, Management ScienceDTheory, 3rganizational behavior, 3perations 4esearch, +omputer Science
etc. as illustrated in the figure.

Management A++#$nting
(ccounting is broadly classified into two parts%
a Financial accounting% :inancial accounting is concerned with measurement of income for specific periods
of time and reporting of financial positions at the end of the period. Its reports are more oriented towards
investors. (s a result, it has limited usefulness for managerial decision making.
b Management accounting% Management accounting includes the methods and concepts necessary for
effective planning, choosing among alternative business actions and control through evaluation and
interpretation of performances. Thus, management accounting provides inputs for decision making in the
areas of planning and control.
The MIS concept includes much of management accountingE however, the support systems which provide
users with access to data and models are beyond the scope of traditional management accounting.
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+ontemporary organizational practices are to retain the cost and budget analysis within the management
accounting function and to have the MIS function provides data and model support.
Management and O"ganisati#n T!e#"(
Management S+ien+e Te+!ni,$es and /"in+i%&es are inseparable part of decision&making. They e1plain the
dynamics of decision&making process, specify management functions at various levels, and thereby facilitate
development of MIS. MIS has to be developed and implemented in an organizational conte1t. O"ganisati#na&
T!e#"(5 2e!a)i#$" enables MIS professional to understand organizations, their types, cultures and behavior.
These are valuable inputs as the success of MIS would depend on how it adoptsDadapts to the specific
organizational re$uirements.
8ecause of its inte"dis+i%&ina"( nat$"e, MIS is neither termed as a pure science nor an artE rather it is
considered as a combination of both.
MIS is a support system for effective organisational functioning. Therefore, it draws heavily from
management and organisation theory. The fields of management and organisation theory provide several
concepts which are key to understanding the function of MIS in an orgainsation. Some of the major concepts
are behavioural theory of organisational and individual decision making, group processes and group decision
making, individual motivation and leadership processes, organisational change process and organisation
structure design. The knowledge of these concepts helps the designer of MIS to ascertain the types of
decisions made at different levels of an organisation and to align the MIS to provide relevant information for
making these decisions.
O%e"ati#ns Resea"+!
3perations research is applied decision theory where the managers seek rationality while dealing with
problems through the use of scientific, logical or mathematical means. In operation research, various elements
of a problem on which decision is to be made are e1pressed in numerical forms, the relationship among these
elements are established and the decision is made on the basis of analysis of these relationships. 3peration
research is $uite relevant to MIS because it has developed procedures for the analysis and computer based
solutions of many types of decision problems. The systematic approach to problem solving, use of models,
and computer based solutions are generally incorporated in the decision support system concept of MIS.
C#m%$te" S+ien+e
+omputer science deals with hardware and software of computer systems. The knowledge of computer
science has enabled speedy information storage, processing and retrieval. +omputer science is important for
MIS because it covers topics such as algorithms, computation, software and data structures. #owever, modern
MIS is not merely an e1tension of computer science but the emphasis in MIS is on the applications of the
technical capabilities that computer science has made available.
(n information system is a logical system, which is considered as a combination of both. It is a logical
system, which is concerned with FhowB something is being accomplished and thus may be differentiated from
physical system, which is the process itself and is concerned with the content or FwhatB is going on.
MIS is considered as more of management subject after enormous debate because of the simple logic that
computers are just a tool in the hands of the managers. +omputers are used for their characteristics like
accuracy, speed and capacity to handle large amount of data. Thus, computers find application in MIS and
because of this, MIS may be termed as +omputer 8ased MISG+8MIS.
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Information systems may be manual or computer based. Manual, where people use tools such as pencils,
paper or even some machines such as typewriter or calculators to concert raw data into information.
+omputer applications have increased the scope of MIS to a great e1tent. MIS finds application in all
functional areas of every type of business organisations at all levels.
MIS caters to information needs of managers in an organization, thus its scope lies in structured as well as
unstructured type of information which could be gathered from internal as well as e1ternal sources of
information. Therefore, MIS represents a confluence of different areas of knowledge.
IE. Mis+#n+e%ti#ns ?M(t!s@ a'#$t MIS
The concept of management information systems is not clearly understood by many developers Gviz.
programmers and systems analysts as well as end users, namely, managers, of these very systems. There are
many misconceptions about a management information system. These are the following%
< (ny computer&based information system is an MIS.
< (ny repository system is an MIS.
< MIS is a philosophy and not any specific entity.
< MIS is a management techni$ue
< MIS is a bunch of technologies.
< MIS is an implementation of organizational systems and procedures. MIS is a course on file structures.
E. FACTORS CONTRI2UTING TO SUCCESS OF MIS
If MIS is to be a success, then it should have all the features listed below %
-. MIS is integrated into the management function. It sets clear objectives to ensure that MIS focuses on the
major issues of the business. (lso ade$uate development resources are provided and human C organizational
barriers to progress are removed.
.. (n appropriate information processing technology re$uired to meet the data processing and analysis needs
of the users of MIS is selected.
0. MIS is oriented, defined and designed in terms of the users re$uirements and its operational viability is
ensured.
2. MIS is kept under continuous surveillance, so that its open system is modified according to the changing
information needs.
;. MIS focuses on results and goals, and highlights the factors and reasons for no achievements.
=. MIS is not allowed to end up into an information generation mill avoiding the noise in the information and
the communication system.
>. MIS recognizes that a manager is a human being and therefore, the systems must consider all the human
behavioral aspects in the process of management.
EI. FACTORS CONTRI2UTING TO FAI8URES
Many times, MIS is a failure. The common factors which are responsible for this are as follows%
-. MIS is conceived as a data processing and not as an information system.
.. MIS does not provide that information which is needed by managers but it tends to provide the information
generally the function calls for. MIS then becomes an impersonal function.
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0. /nderestimating the comple1ity in the business systems and not recognizing it in the MIS design leads to
problems in the successful implementation.
2. (de$uate attention is not given to the $uality control aspects of the inputs, the process and the outputs
leading to insufficient checks and controls in MIS.
;. MIS is developed without streamlining the transaction processing systems in the organizations.
=. Hack of training and appreciation that the users of the information and the generators of the data are
different, and they have to play an important role in the MIS.
EII. C!a"a+te"isti+ # MIS
-. Management #"iented% The system is designed form the top to work downwards. It does not mean that the
system is designed to provide information directly to the top management. 3ther levels of management are
also provided with relevant information.
.. Management di"e+ted% :or management orientation of MIS, it is necessary that management should
continuously make reviews. :or e1ample, in the marketing information system, the management must
determine what sales information is necessary to improve its control over marketing operations.
0. Integ"ated% The word IintegrationI means that system has to cover all the functional areas of an
organization so as to produce more meaningful management information, with a view to achieve the
objectives of the organization. It has to consider various sub&Systems, their objectives, information needs, and
recognize the independence, that these sub&systems have amongst themselves, so that common areas of
information are identified and processed without repetition and overlapping. :or e1ample, in the development
of an effective production scheduling system, a proper balance amongst the following factors is desired%
i Set up costs
ii 3vertime
iii Manpower
iv )roduction capacity
v Inventory level
vi Money available
vii +ustomer service
2. C#mm#n data &#1s% The integration concept of MIS, common data flow concept avoids repetition and
overlapping in data collection and storage, combining similar functions, and simplifying operations wherever
possible. :or e1ample, in the marketing operations, orders received for goods become the basis for billing of
goods ordered, setting up of the accounts receivable, initiating production activity, sales analysis and
forecasting etc.
;. F&eFi'i&it( and ease # $se% !hile building an MIS system all types of possible means, which may occur in
future, are added to make it fle1ible. ( feature that often goes with fle1ibility is
the ease of use. The MIS should be able to incorporate all those features that make it readily accessible to
wide range of users with easy usability.
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=. S$' S(stem +#n+e%t: !hen a problem is seen in sub parts, then the better solution to the problem is
possible. (lthough MIS is viewed as a single entity but for its effective use, it should be broken down in small
parts or subsystems so that more attention and insight is paid to each sub system. )riorities will be set and
phase of implementation will be made easy. !hile making or breaking down the whole MIS into subsystems,
it should be kept in mind that the subsystems should be easily manageable.
>. C#m%"e!ensi)e: MIS is comprehensive in nature. It includes transaction processing systems as well as
information processing systems decisioned primarily for decision making and control at all levels of
organization. It also embraces other subsystems of the organization such as formal and informal subsystems,
manual and computer subsystems, office information systems, decision support systems, etc.
?. C##"dinated: It is a coordinated system. It is centrally coordinated to ensure that data gathering,
processing, office automation, intelligence and decision support systems and other components of MIS are
developed and operated in a planned and coordinated wayE information is passed back and forth among
various subsystems as needed and the whole IS operates efficiently so that the system becomes cost effective.
@. Feed'a+.: MIS should provide feedback about its own efficiency and effectiveness. In determining MIS
efficiency and effectiveness, two aspects are taken into account , costDbenefit and supply of relevant and
timely information.
-A. EF+e%ti#n 2ased: There should be e1ception reporting to decision maker at the re$uired level i.e.
e1ception based reporting in abnormal situation, i.e. the ma1imum, minimum or e1pected values vary beyond
tolerance limits.
--. F$t$"e #"iented: MIS should not merely provide past or historical information rather it should provide
information on the basis of projections based on which actions may be initiated.
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Die"en+e 'et1een MIS C C#m%$te" s(stem
EIII. 8#+ati#n # MIS in an #"gani*ati#n?8e)e&s # Management@-+#n+e%t5design
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Most organizations have three management levels% low&level, middle&level, and top&level managers. These
managers are classified in a hierarchy of authority, and perform different tasks. In many organizations, the
number of managers in every level resembles a pyramid. *ach level is e1plained below in specifications of
their different responsibilities and likely job titles.

T#%-&e)e& manage"s
+onsists of board of directors, president, vice&president, +*3s, etc. They are responsible for controlling and
overseeing the entire organization. They develop goals, strategic plans, company policies, and make decisions
on the direction of the business. In addition, top&level managers play a significant role in the mobilization of
outside resources and are accountable to the shareholders and general public.
The role of the top management can be summarized as follows &
a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
c. It prepares strategic plans C policies for the enterprise.
d. It appoints the e1ecutive for middle level i.e. departmental managers.
e. It controls C coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
Midd&e-&e)e& manage"s
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+onsist of general managers, branch managers and department managers. They are accountable to the top
management for their departmentIs function. They devote more time to organizational and directional
functions. Their roles can be emphasized as e1ecuting organizational plans in conformance with the
companyIs policies and the objectives of the top management, they define and discuss information and
policies from top management to lower management, and most importantly they inspire and provide guidance
to lower level managers towards better performance. Some of their functions are as follows%
Their role can be emphasized as &
a. They e1ecute the plans of the organization in accordance with the policies and directives of the top
management.
b. They make plans for the sub&units of the organization.
c. They participate in employment C training of lower level management.
d. They interpret and e1plain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performance.
i. 'esigning and implementing effective group and intergroup work and information systems.
j. 'efining and monitoring group&level performance indicators.
k. 'iagnosing and resolving problems within and among work groups.
8#1-&e)e& manage"s
+onsist of supervisors, section leads, foremen, etc. They focus on controlling and directing. They usually have
the responsibility of assigning employees tasks, guiding and supervising employees on day&to&day activities,
ensuring $uality and $uantity production, making recommendations, suggestions, and upchanneling employee
problems, etc. :irst&level managers are role models for employees that provide%
8asic supervision.
Motivation.
+areer planning.
)erformance feedback.
T(%es # in#"mati#n s(stem
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O%e"ati#n s$%%#"t s(stems
T"ansa+ti#n /"#+essing S(stem?T/S@
Transaction processing systems were among the earliest computerized systems. Their primary purpose is to
record, process, validate, and store transactions that take place in the various functional areasDof a business for
future retrieval and use.
-. ( transaction processing system GT)S is an information system that records company transactionsGa
transaction is defined as an e1change between two or more business entities.
.. Transaction processing systems GT)S are cross&functional information systems that process data
resulting from the occurrence of business transactions.
0. Transactions are events that occur as part of doing business, such as sales, purchases,deposits,
withdrawals, refunds, and payments. Transaction processing activities are needed to capture and
process data, or the operations of a business would grind to a halt.
2. Transaction processing system keeps an organization running smoothly by automating the processing
of the large amount of paper work that must be handled daily. These systems include the accurate
recording of transactions as well as the control procedures used in issuing such documents as pay
checks, invoices, customer statements, etc. :or e1ample, the transaction processing system of a
departmental store can record customer purchases, prepare billing and booking of order from suppliers
and inter&relate these tasks into an overall accounting system. The transaction processing system of a
college helps performing such tasks as enrolling students in courses, billing students for tuition, and
issuing pay check.
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;. The main purpose of this system is to allow the businesses that are using it to be able to keep track of
all of the business transactions that they have made in a manner that is both reliable and effective,
despite whether their business is online or offline. Typical e1amples of such systems would be (irline
4eservation Systems, 8anking Systems, or the (ccounting System of almost any large company
T(%es # T"ansa+ti#ns :-
!hen a department orders office supplies from the purchasing department, an internal transaction occurs,
when a customer places an order for a product, an e1ternal transaction occurs.
Inte"na& T"ansa+ti#ns: Those transactions, which are internal to the company and are related with the
internal working of any organization. :or e1ample 4ecruitment )olicy, )romotion )olicy, )roduction
policy etc
EFte"na& T"ansa+ti#ns: Those transactions, which are e1ternal to the organization and are related
with the e1ternal sources, are regarded as *1ternal Transaction. :or e1ample sales, purchase etc.
C!a"a+te"isti+s # T"ansa+ti#n /"#+essing S(stems
-. ( T)S records internal and e1ternal transactions for a company. It is a repository of data that is fre$uently
accessed by other systems
.. ( T)S performs routine, repetitive tasks. It is mostly used by lower&level managers to make operational
decisions
0. Transactions can be recorded in batch mode or online. In batch mode, the files are updated periodicallyE in
online mode, each transaction is recorded as it occurs.
2. There are si1 steps in processing a transaction. They are data entry, data validation, data processing and
revalidation, storage, &output generation, and $uery support.
Feat$"es # T/S
-. ( T)S supports different tasks by imposing a set of rules and guidelines that specify how to record, process,
and store a given transaction. There are many uses of transaction processing systems in our everyday lives,
such as when we make a purchase at retail store, deposit or withdraw money at a bank, or register for classes
at a university. (lmost all organizations, regardless of the industry in which they operate, have a manual or
automated T)S
.. ( T)S is the data life&line for a company because it is the source of data for other information systems,
such as MIS and 'SS G'ecision Support Systems. #ence, if the T)S shuts down, the conse$uences can be
serious for the organization
0. ( T)S is also the main link between the organization and e1ternal entities, such as customers suppliers,
distributors, and regulatory agencies
2. T)S e1ist for the various functional areas in an organization, such as finance, accounting, manufacturing,
production, human resources, marketing $uality control, engineering, and research and development. /ntil a
few years ago, many companies viewed the T)S for each business function as separate entity with little or no
connection to other systems in the company. Today, however, many companies are trying to build cross&
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functional T)S to promote the free e1change of information among different business units. This is a desirable
goal, but is still very difficult to achieve
T(%es # T/S:-There are two types of T)S
3nline systemsDonline transaction processing ,It involves a direct connection between the operator
and T)S program. They provide immediate results. They are used to process a single transaction at a
time.
8atch )rocessing&It involves grouping the transactions together and processing them as a unit.*g bank
che$ues processing.
Management s$%%#"t s(stems
EFe+$ti)e S$%%#"t S(stem
-. (n e1ecutive information system G*IS is a type of management information system intended to
facilitate and support the information and decision&making needs of senior e1ecutives by providing
easy access to both internal and e1ternal information relevant to meeting the strategic goals of the
organization.
.. It is commonly considered as a specialized form of decision support system G'SS. (n EFe+$ti)e
S$%%#"t S(stem ?GESSG@ is designed to help senior management to make strategic decisions.
0. It gathers, analyses and summarizes the key internal and e1ternal information used in the business.
2. *1ecutive Support System G*SS is a reporting tool Gsoftware that allows you to turn your
organizationIs data into useful summarized reports. These reports are generally used by e1ecutive level
managers for $uick access to reports coming from all company levels and departments such as billing,
cost accounting , staffing, scheduling, and more
;. In addition to providing $uick access to organized data from departments, some *1ecutive Support
System tools also provides analysis tools that predicts a series of performance outcomes over time
using the input data. This type of *SS is useful to e1ecutives as it provides possible outcomes and
$uick reference to statistics and numbers needed for decision&making.
=. ( good way to think about an *SS is to imagine the senior management team in an aircraft cockpit &
with the instrument panel showing them the status of all the key business activities. *SS typically
involves lots of data analysis and modeling tools such as Jwhat&ifJ analysis to help strategic decision&
making.
Ad)antages # EIS
-. *asy for upper&level e1ecutives to use, e1tensive computer e1perience is not re$uired in operations
.. )rovides timely delivery of company summary information
0. Information that is provided is better understood
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2. :ilters data for management
;. Improves tracking information
=. 3ffers efficiency to decision makers
Disad)antages # EIS
-. System dependent
.. Himited functionality, by design
0. Information overload for some managers
2. 8enefits hard to $uantify
;. #igh implementation costs
=. System may become slow, large, and hard to manage
>. Keed good internal processes for data management
?. May lead to less reliable and less secure data
Management In#"mati#n S(stems
( management information system GJMISJ is mainly concerned with e1ternal sources of information. MIS
usually take data from the transaction processing systems and e1ternal sources and summarise it into a series
of management reports. MIS reports tend to be used by Top level, middle management and sometimes,
operational supervisors.
MIS F$n+ti#ns :-
MIS is set up by an organization with the prime objective to obtain management information to be used by its
managers in decision making. Thus, MIS must perform the following functions in order to meet its objectives.
Data Ca%t$"ing: MIS captures data from various internal and e1ternal sources of an organization. 'ata
capturing may be manual or through computer terminals. *nd users typically, record data about transactions
on some physical medium, such as a paper form, or enter it directly into a computer system.
/"#+essing # Data: The captured data is processed to convert it into the re$uired management information.
)rocessing of data is done by activities such as calculating, comparing, sorting, classifying and summarizing.
These activities organize, analyze, and manipulate data using various statistical, mathematical, operations
research and other business models.
St#"age # In#"mati#n: MIS stores processed or unprocessed data for future use. If any information is not
immediately re$uired, it is saved as an organizational record. In this activity, data and information are retained
in an organized manner for later use. Stored data is commonly organized into fields, records, files and
databases.
Ret"ie)a& # In#"mati#n: MIS retrieves information from its stores when re$uired by various users. (s per
the re$uirements of management users, the retrieved information is either disseminated as such or it is
processed again to meet the e1act MI demands.
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Disseminati#n # MI: Management Information, which is a finished product of MIS, is disseminated to the
users in the organization
De+isi#n-S$%%#"t S(stems
'ecision Support Systems G'SS are a specific class of computerized information system that supports
business and organizational decision making activities. ( properly designed 'SS is an interactive software
based system intended to help decision makers compile useful information from raw data, documents,
personal knowledge, andDor business models to identify and solve problems and make decisions.
'SS is an application of #ebert Simon model. The model has three phases :
i Intelligence ii 'esign iii +hoice
ii The 'SS basically helps in the information system in the intelligence phase where the objective is to
identify the problem and then go to the design phase for solution. The choice of selection criteria
varies from problem to problem.
iii It is therefore, re$uired to go through these phases again and again till satisfactory solution is found.
In the following three phase cycle, you may use in$uiry, analysis, and models and accounting system
to come to rational solution.
iv These systems are helpful where the decision maker calls for comple1 manipulation of data and use
of several methods to reach an acceptable solution using different analysis approach. The decision
support system helps in making a decision and also in performance analysis. 'SS can be built around
the rule in case of programmable decision situation. The rules are not fi1ed or predetermined and
re$uires every time the user to go through the decision making cycle as indicated in #erbert Simon
model.
Att"i'$tes5Feat$"es # DSS:
i 'SS should be adaptable and fle1ible.
ii 'SS should be interactive and provide ease of use.
iii *ffectiveness balanced with efficiency Gbenefit must e1ceed cost.
iv +omplete control by decision&makers.
v *ase of development by Gmodification to suit needs and changing environment end users.
vi Support modeling and analysis.
vii 'ata access.
DSS C!a"a+te"isti+s :
i Support for decision makers in semi structured and unstructured problems.
ii Support managers at all levels.
iii Support individuals and groups.
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iv Support for interdependent or se$uential decisions.
v Support intelligence, design, choice, and implementation.
vi Support variety of decision processes and styles
2eneits # DSS
-. Improves personal efficiency
.. Speed up the process of decision making
0. Increases organizational control
2. *ncourages e1ploration and discovery on the part of the decision maker
;. Speeds up problem solving in an organization
=. :acilitates interpersonal communication
>. )romotes learning or training
?. Lenerates new evidence in support of a decision
@. +reates a competitive advantage over competition
-A. 4eveals new approaches to thinking about the problem space
--. #elps automate managerial processes
T(%es # de+isi#n s$%%#"t s(stem:-
-. Status In$uiry systems&The number of decisions in operational management and some middle
management are such that they are based on few aspects of a decision making situation. Ko elaborate
calculations are made. If the status is known, the decision is automatic.
.. 'ata (nalysis Systems&These decision systems are based on use of formula or an algorithm. These
use simple data processing tools and business rules.
0. Information analysis Systems& 'ecision are taken after data is analyzed and information reports are
generated. The reports might be having e1ceptions. as a feature. These reports are used for analysis.
These systems have market research analysis, M4) of a system etc.
2. (ccounting systems&These systems are not necessarily for decision making but they are desirable to
keep track of major aspects of the business or a function. These systems account items such as cash,
inventory.
'SS generally take less time and money to develop than MIS. They are interactive in the sense that the user
interacts with the data directly, and are useful for solving semi&structured problems.
The generic 'SS has 0 components GHaudon C Haudon, -@@?%
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The database of a 'SS is a collection of information often taken from the firm9s own internal
transaction systems.
The model base consists of the analytical tools used by the system. )erhaps this is the most critical
difference between MIS and 'SS.
The easy to use software system & MIS generally have very simple analytical tools , averages,
summations, deviation from plan, and the like. 'SS however, have very sophisticated analytical and
modelling tools, such as built&in spreadsheets, statistical analysis, and simulation
GDSS?G"#$% De+isi#n s$%%#"t S(stem@
'SS so far is used for a manager who is sole decision maker. #owever many decision making situations call
for involvement of a number of persons,each contributing towards the decision process.IT supports such
decision making where there is a group participartion. Such decision support system is called L'SS.L'SS
has also the same component as in 'SS like database,models,'SS toolsand something more which group
needs to work together.
Feat$"es # GDSS:-
-. L'SS process is transparent
.. In L'SS, group members interact, debate, communicate and conclude using different tools and
techni$ues.
0. This process may not happen in real time in continuous manner.
2. Lroup members are drawn for different fields having specific knowledge and application skills.
A+ti)ities +#mm#n in GDSS:-
-. Sending the receiving information in all forms,types across the network.
.. 'isplay of notes, graphic, drawings, pictures
0. Sharing ideas, choices and indicating preferences
2. )articipating in decision making process with inputs,help etc.
Die"en+e 'et1een GDSS and DSS
L'SS is a computer based information system that
focuses on the group
'SS focuses on an individual for instance, the
manager or the supervisor
L'SS has a networking technology that is best suited
for group discussions or communication.
'SS on the other hand, have technologies that are
focused for a single user
L'SS maintenance involves a better system
reliability and incomprehensible multi&user access
'SS because system failures in L'SS will involve a
lot of individual.
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Hn#1&edge Management S(stems
Hn#1&edge Management S(stems GJMMSJ e1ist to help businesses, create and share information. These are
typically used in a business where employees create new knowledge and e1pertise & which can then be shared
by other people in the organisation to create further commercial opportunities. Lood e1amples include firms
of lawyers, accountants and management consultants. MMS are built around systems which allow efficient
categorization and distribution of knowledge. :or e1ample, the knowledge itself might be contained in word
processing documents, spreadsheets, )ower)oint presentations, internet pages or whatever. To share the
knowledge, a MMS would use group collaboration systems such as an intranet.
EE/ERT SYSTEM
(n e1pert system is a computer based information system in which knowledge is represented in data in which
the processing of the knowledge is directed primarily by computer program.
The term e1pert system was aimed initially at replicating the abilities of true human e1perts.
These systems capture the knowledge of skilled employees in the form of a set of rules in a software system
that can be used by others in the organization. In other words it employs human knowledge captured in
computer to solve problem that ordinarily re$uire human e1pertise. These can be used by non e1pert to
improve their problem solving abilities.*S becomes a knowledgeable assistant to human e1perts. They can be
used to propagate search knowledge resources for improved consistent results.
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-. Mnowledge base%&contains facts and rules for some specialized knowledge domain.
.. Inference *ngine%&accepts user input and $ueries and response to $uestions through input&output
interface and uses this dynamic information together with the static knowledge stored in the
knowledge base.
0. *1planation Module provides the user with the e1planation of reasoning process. If the user does not
agree with the reasoning steps they may be changed using editor.
Ad)antages:
*S provides cost reduction as human e1pertise is costly.
It enhances output as can work faster than human .
It improves $uality by providing consistent advice and reducing operational hazards .
It can work with incomplete and uncertain information to solve comple1 problems in narrow domain .
Disad)antages:-
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*1pertise is hard to e1tract from humans.
The approach of each e1pert to situational assessment may be different yet correct.
The costDtime of development may be a prohibitive factor.
ES in '$siness
*S and techni$ues can be built into a decision support system in order to improve the $uality of the
decision making process.
(n e1pert system can build a knowledge base to help the decision maker understand problems and
alternatives.
Today *S are used widely in many areas.Managers in sales,finance and manufacturing are now using
e1pert systems as e1pert consultants to help them make decision about how to allocate resources ,how
to control cost and how to develop more accurate production plans
(n e1pert system for personal financial planning named planpower is currently available.uisng
information about its client objectives ,ta1es ,prior inverstment insurance coverage and real estate
holding ,planpower develops financial plans for its clients.
Re&ati#ns!i% 'et1een T/S0MIS0DSS0ES
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