MANAGEMENT INFORMATION SYSTEMS

UNIT-1

Section-A

DEFINITION:

Management information system is a system consisting of people, machines, procedures,

databases and data models, as its elements. The system gathers data from the internal and
external sources of an organisation.

MEANING:

Management information system is an acronym of three words, viz., Management,

information, system .in order to fully understand the term MIS, let us try to understand these
three words.

Management:

Management is the art of getting things done through and with the people in formally
organised groups.

Managerial function:

Planning
Organising
Staffing
Directing and
Controlling
Management hierarchy:

strategic
management(top
management)

management
control(middle
management)

operational control(bottom
management)

Information:

Information is data that is processed and is presented in a form which assists decision-
making.it may contain an element of surprise, reduce uncertainty or provoke a manager to
initiate an action.

Data usually take the form of historical records. In contrast to information, raw data
may not be able to surprise us, may not be organised and may not add anything to our
knowledge.

DATA-------→PROCESSING------ →INFORMATION

System:

The term system is the most loosely held term in management literature because of its
use in different contexts. However, a system may be defined as a set of elements which are
joined together to achieve a common objective. The elements are interrelated and
interdependent.

The set of elements for a system may be understood us input, process and output. A
system has one are multiple inputs; these inputs are processed through a transformation
process to convert these input into outputs. The three elements of a system are

INPUT------→PROCESS -------→OUTPUT
 1. Various functions of information systems:-

One of the mostly widely used bases for organising activities in almost every
organisation is the business function. Business activities are grouped around functions
such as production, marketing, finance and personnel etc... Resulting in the respective
department or an area of the business organisation. These departments or functional areas
are commonly known as the functional areas of business.

There is no standard classification of such sub-system in an organisation, but a

typical set of functions in a manufacturing organisation includes:

Production
Marketing
Finance and accounting
Materials and
Personnel systems

Production:

Production planning and control

Engineering standards
Quality control
R & D etc

Marketing:

Sales order
Forecasting
Sales analysis
Billing
Distribution
Stock availability
Sales quota control
Pricing
Product promotion
Finance and accounting:

Financial planning
Budgeting
Cost accounting
Asset accounting
Accounts receivable
Payroll
Accounts payable, etc...

Materials:

Material planning
Bill of material
Cost estimate
Warehousing planning etc...

Personnel:

Employee recruitment
Employee selection
Employee development
Employee transfers
Employee retirements etc...

2. Information system resources.

Information system includes four major resources, hardware, software, people

and data. Let’s briefly discuss some basic concepts and examples of how these resources
contributes to the information processing activities of information system.

Hardware it includes all physical devices

Software-----it includes all set of information processing
instructions.
People -------people are required for the operation of all
information systems. These people resources include specialists
and end users.
 Data-----data is more than the raw material of information
systems. The concepts of data resources have been broadened by
managers and information system professionals.

3. Different types of information.

Information could be classified on the basis of the purpose for which it is

utilised, into three main categories:

 Strategic information ---- it is required by the managers at the strategic level

of management for the formulation of organisational strategies.
 Tactical information -----information in this category is used in short term
planning and is of use at management control level.
 Operational information ----it applies to short periods which may vary from
an hour to a few days.

4. Need for in information system.

Meeting global challenges

Capturing opportunities in marketplace
Supporting corporate strategy
Linking departments whose functions are different
Enhancing worker productivity
Increase in quality of goods and services

Section-B

1. Classification of information system.

The discipline of MIS is in its evolutionary stage. MIS is a concept, which is a

matter of degree rather than an absolute one. The classifications of information system are

Transaction processing system.

Management information system.
Decision support system.
Executive support system.
Office automation system.
Business expert system.
Transaction processing system:

It represents the automation of the fundamental, routine process used to support

business operations. It does not provide any information to the user for his/her decision
making. Previously Transaction processing system was known as MIS. Prior to computers,
data processing was performed manually or with simple machines.

(INPUT) DATA--------→PROCESSING ------- →DATA (OUTPUT)

Management information system:

MIS is an information system which process data and converts it into information.
A MIS uses TPS for its data inputs. The information generated by the information system
may be used for control of operations, strategic and long range planning, short range
planning, management control and other managerial problem solving.

It has some functional business areas. They are

Marketing
Production
Human resources
Finance
Accounting etc...

TPS------→DATA------→INPUT------→PROCESSING-------→OUTPUT-----
---→INFORMATION

Decision support system:

The Decision support system (DSS) is an information system application that assist
decision making. Decision support systems tend to be designed primarily to serve
management control level and strategic planning level managers.

The data in the database typically is a combination of master files (internal

corporate data) and from external sources.
 Database← ------------→model base

↘user interface ↙

User

Executive support system:

Executive support system (ESS) is an extension of the management information

system which is a special kind of DSS. An ESS is specially tailored for the use of chief
executive of an organisation to support his decision making.

An ESS is designed to cater to the information needs of a chief executive keeping

in view not only his requirements but also taking into account his personality and style of
functioning etc.,

Office automation system:

Office automation refers to the application of computer and communication

technology to office functions. Office automation systems are meant to improve the
productivity of managers at various level of management by providing secretarial assistance
and better communication facilities. Office automation systems are the combination of
hardware, software and people in information systems, that process office transactions and
support office activities at all levels of the organisation.

These systems include a wide range of support facilities, which include word
processing, electronic filing, electronic mail, message switching, data storage, data and voice
communication etc...

In the first category, the following is a list of activities.

Typing
Mailing
Scheduling of meetings and conferences
Calendar keeping and
Retrieving documents
 In the secondary category,

Conferencing
Production of information
Controlling performance

Business expert system:

Business expert system (BES) is a knowledge based information system that uses its
knowledge about a specific, complex application area to act as an expert. This system is
one of the knowledge based information system.
Expert system provides decision support to managers in the form of advice from an
expert in a specific problem area. Expert systems find application in diverse areas,
ranging from medical, engineering and business.

Knowledge base← ----------- →inference engine

↘user interface ↙

2. Cost benefit analysis.

Every legitimate solution will have some advantages is benefits and some
disadvantages or costs. These advantages and disadvantages are identified when each
alternative solution is evaluated. This process is typically called cost/benefit analysis.

Examples: ↑ in sales or profits.

↓ in operating costs.
↓ in required investment

Selecting the best solution:

Once all alternative solutions have been evaluated the process of selections the best
solution can begin. Alternative solutions can be compared to each other because they have
been evaluated using the same criteria. It is possible that to decide to select the best solution
to the problem.
Implementing a solution:

Once a solution has been selected it must be implemented. An implementation plan

may be developed. An implementation plan specifies the activities, resources and timing
needed for proper implementation.

Post implementation review:

The final step of the system approach recognized that an implemented solution can
fail to solve the problem for which it was developed. The results of implementing a solution
should be monitored and evaluated. This is called a post implementation review process.

Global business strategies:

MNC is a firm that operates across products, markets, nations and cultures. It consists
of the parent company and a group of subsidiaries. They are geographically disresed and each
one may have its own unique goals, policies and procedures.

Multinational strategies:

It was a type of “hands off” strategy in which the parent allowed the subsidiaries to
develop their own products and practise. The information flows are primarily from the
subsidiaries to the parent in the form of financial reports.

Global strategy and international strategy is also comes under cost/benefit analysis.

3. Components /resources of information system.

An information system depends on the resources of people, hardware, software,

data and networks to perform input, processing, output, storage and control activities that
convert data resources into information.
IS consists of 5 major resources:
People resources:
People are the essential ingredient for the successful operation of all information
systems. This people resource includes:
End users are also called users or clients are people who use an
information system or the information it produces. They can be
customers, salespersons, engineers etc... Most of us are IS end
users.
 IS SPECIALISTS are people who develop and operate
information system. They include system analysis, software
developers, system operators and other managerial, technical and
clerical IS personnel.
Hardware resources:

It includes all physical devices and materials used in information processing.

Examples of hardware in computer based information system are:

Computer system which consists of central processing units

containing microprocessors and a variety of interconnected
peripheral devices. Example: handheld, laptop, midrange computer
systems and large mainframe computer systems.
Computer peripherals which are devices such as a keyboard or
electronic mouse for input of data and commands a video screen or
printer for output of information and magnetic or optical disks for
storage of data resources.

Software resources:

It includes all set of information processing instructions. It includes not

only the set of operating instructions called programs. Examples are

System software such as an operating system program which

controls and supports the operations of computer system.
Application software which are programs that direct processing for
a particular use of computers by end users. Example sales analysis
program, a payroll program and a word processing system.

Data resources:

Data resources of information systems are typically organised, stored and

accessed by a variety of data resources mgt technologies into:

Database that hold processed and organised data.

Knowledge bases the hold knowledge in variety of forms such as facts,
rules, and case.
Network resources:

Telecommunications technologies and networks like the internet, intranets and

extranets. The concept of network resources emphasizes that communications technologies
and networks are a fundamentals resource component of all information systems. Network
resources include:

Communications media is includes twisted pairs wire, coaxial and fiber

optic cables and microwave, cellular and satellite wireless technologies.
Network infrastructure this generic category emphasizes that many
hardware, software and data technologies are needed to support the
operation and use of a communication networks.

4. Fundamentals and dimensions of information system.

It shows the 3 major roles of the business applications of information systems.

Example: consider a retail store as a good example of how these three fundamental roles can
be implemented by a business.

 Support business processes and operations

 Support business decision making
 Support strategies for competitive advantage

Support business processes and operations:

As a consumer you have to deal regularly with the information systems that support
the business processes and operations at the many retail stores where you shop. Example:
most retail stores now use computer based information systems help them record customer
purchase, keep track of inventory, pay employees, buy new merchandise and evaluate sales
trends.

Support business decision making:

IS also help store managers and other business professionals make better decisions
and attempt to gain a competitive advantage.
Support strategies for competitive advantage:

Gaining a strategic advantage over competitors requires innovative use of

information technology.

DIMENSIONS:

The major dimensions of information systems are:

1. Organisation: IS are integral parts of organisations. The key elements of an

organisation are its:
People
Structure
Business processes
Politics
Culture
2. Management: management’s job is to make sense out of many situations faced by
organisations, make decisions and formulated action plans to solve organisational
problems.
3. Technology: information technology is one of many tools managers use to cope with
change in various resources of technology involved in IS are:
Computer hardware
Computer software
Data management technology
Networking and telecommunication technology
 UNIT -2

Section-A

1. Marketing information system (MKIS).

The role of MKIS is to assess the marketing managers information needs then
develop the framework for collecting information and distribute the information
gathered to the end users in time. The marketing information system is generally
carried out marketing need analysis, planning, and implementation and control
functions of marketing managers.
The needed information is developed through internal company records,
marketing intelligence activities, marketing research and marketing decision support
analysis.

Different parts of MKIS:

accounting information system

marketing , sales and customer services
sales force automation
saves company labours hours and telephone expenses
capture customer data
response time to customer inquiries

market research and intelligence information system

customer research
market research
competitor intelligence
Competitor’s products.
“ Operating strengths and weaknesses.
“ Customer service level and customer
policies.
“ New product line.
2. Manufacturing information system.

Manufacturing information system is a complete set of tool for managing the

flow of manufacturing production data throughout the enterprise. This IS was designed to
provide tools for both IT and operations personnel who would deliver services to anyone in
the plant.

Manufacturing consists of many different disciplinary areas including product

engineering, facility design and scheduling, fabrications, and quality control management.
Each of them can be dramatically improved by using information systems.

A manufacturing system takes material, equipment, data management and

information systems technology as the input and uses manufacturing and information
processes to generate better final product as output. The manufacturing designed around the
transaction process of raw materials into usable components or materials. These systems are
value added processes such as materials processing or support systems such as scheduling.

3. Business information system.

Business information system in marketing, manufacturing, and human resources

with a special emphasis on computer integrated manufacturing. It describes the most widely
used types of accounting information systems as well as information needed for the effective
financial management of a firm.

Functional Business information systems:

Marketing
Production/operations
Accounting
Finance
Human resource management

4. Accounting information system.

Accounting information system is the part of organisations information system.

The information system processes a mixture of quantitative and qualitative data but the
accounting information system focuses almost entirely on processing quantitative data. The
accounting system and information system must work together in an effective and efficient
way.

Accounting information system provide efficient delivery of information needed

to perform necessary accounting work and to assist in delivery of accurate and informative
data to users especially those who are not familiar with the accounting and financial reporting
areas itself. A high value of data processing characterizes these applications. Data processing
consists of 4 major tasks- data gathering, data manipulation, data storage, and document
preparation.

Section-B

1. Transaction processing system.

Transaction processing system:

Transaction processing systems are information system that process data resulting
from the occurrence of business transactions. Transactions are events that occur as part of
doing business such as sales, purchase, deposits, withdrawals, refunds and payments.

For example:

The data generated whenever the business sells something to a customer on credit.

Data about the customer, product, salesperson, and store and so on must be captured and
processed. This in turn causes additional transactions such as credit checks, customer billing,
inventory changes, and increases in accounts receivable balances, which generate even more
data. Thus, transaction processing activities are needed to capture and process such data, or
the operations of a business world grind to a halt. Therefore, transaction processing systems
play a vital role in supporting the operations of an organisation.

The Transaction processing cycle:

Transaction processing systems capture and process data describing business

transactions. Transaction processing system has five stages of cycle. They are

Data entry activities

Transaction processing activities
File and database processing
 Document and report generation
Inquiry processing activities

The data entry process:

The input activity in transaction processing systems involves a data

process. In this process data is captured or collected by recording,
coding and editing activities.
Data may be converted to a form that can be entered into a computer
system.
It has always been a problem getting data into computers accurately and
quickly enough to match their awesome processing speeds.
These methods are more efficient and reliable and are known as source
data automation.

Traditional data entry:

Traditional methods of data entry typically rely on the end users of an

information system to capture data on source document such as
purchase order, payroll time sheets and sales order forms. The source
documents are subjected to one of the following additional data entry
activities.
The data is converted into a machine – readable medium, such as
magnetic tape or magnetic disks. Typically this means using such
devices as key to tape machine and key to disk system.
The data from source documents could alternatively be directly entered
into a computer system using a direct input device without the use of
machine readable media.

Source of data automation:

 The use of automated methods of data entry is known as source data

automation several methods have been developed to accomplish this
automation though very few completely automate the data entry
process.
 They are all based on trying to reduce or eliminate many of the activities,
people and data media required by traditional data entry methods.

Batch processing:

Transaction processing system process data two basic ways:

Batch processing where transaction data is accumulated over a period

of time and processed periodically.
Real time processing where data is processed immediately after a
transaction occurs.

Transactions processing systems still make heavy use to batch processing.

Batch processing activities:

In a batch processing system transaction data is accumulated over a period of time and
processed periodically. Batch processing usually involves.

Gathering source documents originated by business transactions such a sales orders

and invoices into groups called batches.
Recording transactions data on an input medium such as magnetic disk or magnetic
tape.
Sorting the transactions in a transaction file in the same sequence as the records in a
sequential master file.
Processing transaction data and creating an updated master file and a variety of
documents and reports.

Real time processing:

It processes transaction data immediately after they are generated

and can provide immediate output to end users.
Data is fed directly into the computer system from online terminals
without being stores and it is always stored online in direct access
files.
Files and database are always upto date since they are updated
whenever date is originated regardless of its frequency.
 Real time processing depends as telecommunications networks of
online terminals and computers.

Conclusion:

Transaction processing systems are operations information systems that process

data resulting from business transactions. They involve the basic activities of data entry,
transaction processing, file and database etc.

2. Financial information system.

Financial information system is a sub system of organisational management

information system. This sub system supports the decision making process of financial
functions at the level of an organisation.

A brief description of each of the financial decisions that a financial manager has
to take is given below.

Capital budgeting decision----in this decision funds are allocated to long term asset
which would yield benefits in the future. Example: funds allocated for land, building,
machinery, etc...
Financial decision----the financial manager has to decide about the proportion of
equity and debt capital.
Dividend decision this decision relates to the dividend policy of the organisation.
A decision whether the organisation should distribute all profits or retain them or
distribute a portion and retain the balance has to be taken by the financial managers.
Current asset management-----in order to safeguard the org against liquidity or
insolvency current assets of the organisation are also required to be efficiently
managed.

3. Human resources information system.

This functional information system supports the functions of human resource

management of an organisation. The function involves:

Manpower planning:

It is about deciding the present and future needs of manpower in the

organisation.
Staffing:
This function includes recruitment, selection and placement of employees.
Recruitment refers to attracting qualified and competent people for different jobs.
Training and development:
The need to train and develop the employees is felt due to
A gap between the job requirements and competence of the employee.
The need to develop lower level managers to assume higher level
responsibility when required.
Performance evaluation:
This task is concerned with evaluating employee performance at work in terms
of pre determined standards and norms. Evaluation or performance appraisal
includes the formulation of performance appraisal plans, development of appraisal
techniques and programmes etc...
Separation activities:
The employee employer relations may come to an end due to the resignation
of an employee, layoff, death or retirement. HRM besides the above mentioned
functions is also responsible for the wages and salary administration, sustaining and
maintaining the work force in the organisation and maintaining of healthy and
peaceful labour management relations. It contains 3 function flow of human resource
information system.
Transaction data-----is a basis for various types of output
information or analysis. The data includes employee number, name,
qualification, experience, joining data etc... Categories and grades of
posting and daily performance etc...
Environmental data----includes data about the availability of
personnel, trends in the labour force, competition, market offering to the
employees, government and labour laws etc...
Organisational plans------also provide an important input in
human resource information system, on the basis of which future planning
for recruitment, job assignment, etc...
 4. Accounting information system.

Accounting information system is the part of organisations information system.

The information system processes a mixture of quantitative and qualitative data but the
accounting information system focuses almost entirely on processing quantitative data. The
accounting system and information system must work together in an effective and efficient
way.

Accounting information system provide efficient delivery of information needed

to perform necessary accounting work and to assist in delivery of accurate and informative
data to users especially those who are not familiar with the accounting and financial reporting
areas itself. A high value of data processing characterizes these applications. Data processing
consists of 4 major tasks- data gathering, data manipulation, data storage, and document
preparation.

Characteristics of accounting information system:

Performs necessary task

Adheres to relatively standardized procedures
Handles detailed data
Has a primarily historical focus
Provides minimal problem solving information

Sources of accounting information system:

Procedures manual
Management accounts / balance sheets
Financial data
Accounting policies
Tax details
Working capital
Types of accounting information system:

 General ledger system: this module helps organisations leverage the GL

processing speeds available streamline accounting processes and reduce the
period end close cycle.
 Asset management: this module help streamline tracking, depreciation and
maintenance scheduling of asset improve productivity with easier access to
critical information derive maximum tax benefits and minimize risk of loss or
damage to capital assets. It maintains an inventory of the company’s long
term assets.
 Order entry system: it captures and manages different kinds of data relating
to a transaction such as number of units sold customer billing.
 Account receivable and payable system: this module helps organisations
bill customers automatically from any sales channel, streamline accounts
receivables processing and automate the invoicing process.
 Inventory control system: it captures processes and manages all issues
related to the company’s inventory such as items in inventory, inventory cost,
lost items and damages items.
 Payroll system: it captures and processes data related to salaries including
taxes, other deductions, benefits, overtime and other related data.
 Cash management: this module helps organisations forecast cash flows in
any currency and in multiple time periods, streamline the reconciliation
process, monitor exceptions and fraud and manage the cash cycle efficiently
with control.