Management Information System: Information, Information System, Management Information System, Role of MIS, Subsystems of MIS, MIS and Computer, MIS in academics, MIS in Business.

Management Information SystemManagement Information System
MBA/107MBA/107
Lecture - 1

Management Information System
Books for Reference :
1.Management Information System by KenethC.
Laudon & Jane P. Laudon
2.Management Information System by D.P. Goyal
(Unit -I)
 Information, Information System
 Management Information System
 Role of MIS
 Subsystems of MIS
 MIS and Computer
 MIS in Academics
 MIS in Business

DefinitionsDefinitionsData
Raw facts such as an employee’s name and number of
hours worked in a week, inventory part numbers or sales
orders.
Information
A collection of facts organized in such a way that they
have additional value beyond the value of the facts
themselves.
Data
Information
$35,000 12 Units
$12,000 J. Jones
Western Region
$100,000 100 Units
35 Units
Data
Processing
Salesperson: J. Jones
Sales Territory:
Western Region
Current Sales: 147
Units = $147,000

– Example: customer survey
 Reading through data collected from a customer survey with
data in various categories would be time-consuming and not
very helpful.
 When manipulated, the surveys may provide useful
information.
Data ManagementData Management
Month: August September October November
Sales in
Lakhs
1.20 1.40 1.30 1.25

What Is a System?What Is a System?
– System: A set of components that work together to
achieve a common goal
– Subsystem: One part of a system where the products of
more than one system are combined to reach an ultimate
goal
– Closed system: Stand-alone system that has no contact
with other systems
– Open system: System that interfaces with other systems

Definitions:
An information system(IS) is typically considered to be a set of
interrelated elements or components that collect(input),
manipulate(processes), and disseminate (output) data and
information and provide a feedback mechanism to meet an
objective.
Information Systems

An Information System is an organized combination of people,
hardware, software, communication networks and the data resources that
collects, transforms and disseminates information in a organization.
Computer-based Information System

INFORMATION
TECHNOLOGY
Hardware
Software
Databases
Networks
Other related
components
are used to build
INFORMATION
SYSTEMS
Payroll
System
Inventory
System
Marketing
System
Customer
Service
System
IS Vs ITIS Vs IT

Expanding Roles of ISExpanding Roles of IS
1. Data Processing: 1950s-1960s
2. Management Reporting: 1960s-1970s
3. Decision support: 1970s-1980s
4. Strategic and End User Support: 1980s-1990s
5. Global Networking: 1990s-2000s

Classification of ISClassification of IS
Information Systems
Operations
Support System
Management
Support System
Transaction
processing
systems
Process control
systems
Office
automation
systems
Management
information
systems
Decision
support
systems
Executive
information
systems

1. Operations support systems process data generated by business
operations
Major categories are:
i) Transaction processing systems
ii) Process control systems
iii) Office automation systems

1. Operations Support System
i) Transaction processing systems
• Process business exchanges
• Maintain records about the exchanges
• Handle routine, yet critical, tasks
• Perform simple calculations
ii) Process control systems monitor and control industrial
processes.
iii) Office automation systems automate office procedures and
enhance office communications and productivity.

2. Management Support Systems provide information and
support needed for effective decision making by managers
Major categories are
i) Management Information System
ii) Decision Support Systems
iii) Executive Information System

2. Management support systems provide information and support
needed for effective decision making by managers
Major categories are:
i) Management information systems
 Routine information for routine decisions
 Operational efficiency
 Use transaction data as main input
 Databases integrate MIS in different functional areas

ii) Decision Support System
• Interactive support for non-routine decisions or problems
• End-users are more involved in creating a DSS than an MIS
iii) Executive information systems
provide critical information tailored to the information needs of
executives

Other categories
a) Expert systems
b) End user computing systems
c) Business information systems
d) Strategic information systems
a) Expert Systems are knowledge-based systems that provides
expert advice and act as expert consultants to the users
b) End user computing systems support the direct, hands on use
of computers by end users for operational and managerial
applications
c) Business information systems support the operational and
managerial applications of the basic business functions of a firm
d) Strategic information systems provide a firm which strategic
products, services, and capabilities for competitive advantage

Management Information System: Information, Information System, Management Information System, Role of MIS, Subsystems of MIS, MIS and Computer, MIS in academics, MIS in Business.

Lecture – 2
Information Characteristics
How the Information Should be?

Characteristics of usefulCharacteristics of useful
informationinformation

Characteristics of useful informationCharacteristics of useful information
1. Relevant: Information that is fit for purpose.
For example if you were opening a business in Amravati then
it would be advisable to look at the population within a certain
area beside where you wanted to open the business. Looking at
information about the population of Buldhana would not really
be fit for purpose in this instance.
If a bakery was looking at the price of metal then this would
not really be relevant information to their business. Relevant
information for a bakery would be looking at the price of
ingredients to use in their products.

2. Complete: Having the right level of
detail:
For example, if a manager wants a summary of the
sales figures for the last 6 months, then the
information that has the right level of detail might
show the overall sales figures for each month
and the grand total added together.
Giving the manager a complete list of all sales for
every product would not really required or the
missing information of one or two months will
also not work.

3. Accurate: Accurate information helps
businesses make the correct decisions.
 If a sales department sent inaccurate sales figures
to the finance department this might result in
incorrect tax calculations for the company that
would put them in danger.

4. Current or Timely:
Timely information is information that is
from the correct time period.
If a company wants to analyze current profit and
loss then they will need to access current sales
figures and not the sales figures from 2 years ago.
Timely information is information that is
available as and when needed.

5. Economical or Cost Effective:
Cost effective information is information
that is worth investing the time and money
to get to help make business decisions.
For example, if you paid a company to do a survey
for you and it cost Rs.10,000 and you were then
able to use the information supplied to increase
your profits by Rs.12,000 in the next month then
this could be seen as cost effective information.

Computer System Vs Managers
– Systems thinking
Creates a framework for problem solving and
decision making.
Keeps managers focused on overall goals and
operations of business.

Qualities of humans and computers that contribute to synergy

 The Benefits of Human-Computer Synergy
– Synergy
 When combined resources produce output that exceeds the
sum of the outputs of the same resources employed separately
– Allows human thought to be translated into efficient
processing of large amounts of data

The Role of MISThe Role of MIS
Three fundamental roles:
Support business processes and operations
Support decision making of employees and
managers
Support strategies for competitive advantage

Example:Example:
 In a hotel for instance, customer check-ins and check-outs are done by
computers and software which makes work easy unlike the traditional
method of using note books and paper to record such information.
 Customers can now even make their own bookings through the hotels website
instead of visiting the hotel in person to do so, which may lead to pressure on
front office staff.
 Systems have now been developed to gather customer information easily and
quickly. Now, because of information systems, the various departments of an
organization work together with ease. The housekeeping department of a
hotel can now inform the front office about which rooms are ready for use and
which are not, without personal interactions of staff as a result collect into
knowledge so that they can provide services and products that are
ahead of their competitors.
 Strategic information systems can help provide hospitality operations with
the innovative mediums they need to provide products and services that will
give them comparative advantage over their competitors.

Advantages:Advantages:
Organizations’ overall performance
Making important and competitive decisions
at the strategic level of the organization
Advantages to their users which range from
simple transaction processing at the
operational level to difficult tasks

Role of MIS Manager:Role of MIS Manager:
Executives Role in MIS :
Systems Planning
Data Center Management & Operations
Management of Remote Equipment
Identification of Opportunities for New Systems
Systems Analysis, Design, and Construction of
New Systems
Distributed Systems: The migration of
equipment to user areas and control (selection,
purchase, and ownership). Standards sometimes
set by IS department.

 Knowledge Users :
Users take on increased responsibility. Identify
applications, and conduct systems analysis and design.
 Applications :
More specific, user friendly, functional, lower price,
readily available, and self training. Results: less need for
programmers, IS head count and budget decrease as a
result.
 Outsourcing :
Other, external organizations taking over the management
and control of the data centers. Results: cost reductions,
head count reductions and budget reductions.

Lecture - 3Lecture - 3
Sub-systems of MIS

1. Subsystems of MIS – Function based1. Subsystems of MIS – Function based
Functional Information System is based on the
various business functions such as Production,
Marketing, Finance and Personnel etc.
The popular functional areas of the business
organization are:
(i) Financial Information System
(ii) Marketing Information System
(iii) Production/Manufacturing Information System
(iv) Human Resource Information System

1. Financial Information System:1. Financial Information System:
Financial information system is a sub-system
of organizational management information
system. This sub-system supports the
decision-making process of financial
functions at the level of an organization.
Input Information Output Information

2. Marketing Information System2. Marketing Information System
This sub-system of management information system
provides information about various functions of
the marketing system of an organization.
Marketing is another functional area of the business
organization, which is engaged in marketing
(selling) of its products to its customers.
Input Information Output Information

Important functions of the marketingImportant functions of the marketing
process include the following:process include the following:
 The marketing identification function
 The purchase motivation function.
 The product adjustment function
 The physical distribution function
 The communication function
 The transaction function
 The post-transaction function

3. Production /manufacturing3. Production /manufacturing
Information SystemInformation System
Manufacturing or production information system
provides information on production /operation
activities of an organization and thus facilitates the
decision-making process of production managers of
an organization. The main decisions to be taken in
manufacturing system are:
Process Design
Product Design
Input Information Output Information

4. Human Resources Information System4. Human Resources Information System
This functional information system supports the
functions of human resource management of
an organization.
The function involves:
 Manpower planning.
 Staffing
 Training and development and
 Performance evaluation.

Sub-systems of MISSub-systems of MIS
 All the above subsystems work in concert to make a
functional information system.
MIS
Financial
Information
System
Human Resource
Information
System
Production /
Manufacturing
Information
System
Marketing
Information
System

2. MIS subsystems - Logical2. MIS subsystems - Logical
(Components of MIS)
Information system is a special type of
system that allows storage, retrieval
and processing of data in a secure
environment. Logically the major sub
systems of information systems are:

1. Data Repository
This is a subsystem which is at the core of
any information system. Mostly this is a
relational database management system that
has pre-formatted and structured tables
for storage of data.
These structures are arranged in a way that
helps in faster storage and retrieval of such
data with adequate security.

2. User Interface
This subsystem handles the interaction of
the system with the user (human) and hence
it has to take care of issues related to the
display of data on an output medium.
This can be either graphical or character-
based depending on the level of ease
offered to the user.

3. Network
This subsystem ensures communication
between the different entities of an
information system. It is crucial for
functioning of an information system.

4. Computer Hardware
One needs IT infrastructure to use
information systems in an effective manner.
Almost all the components of an
information system are housed in some kind
of computer hardware enabling it to
perform the tasks better.
Discussion on Subsystems continued …
Lecture - 4

5. System Software
Some basic software is required just like
computer hardware for efficient functioning
of information systems. The system
software does not directly aid in the
functionality of information systems but
work as enablers.
Examples: Operating Systems.

6. Input / Output
Sometimes this is clubbed with the user
interface.
However, in some systems I/O may be user
independent.
Ex: When an alert is activated, the input
for the alert comes from some other
system input rather than a user.

7. Business Rule (Process)
This is a set of rules that governs how a
system should function to copy the real
business process.

8. Algorithm /Program/ Application Software
The logic (business rule), is defined in the
program (embedded in it) which enables
the functioning of the information system
for some specific purpose.

Sub-systems of MISSub-systems of MIS
 All the above components work in concert to make a
logical information system.
MISBusiness
Rules
Algorithm /
Program /
Application
s/w
User
Interface
Network
Input /
Output System
Software
Computer
Hardware
Data
Repository

MIS and Academics
The MIS draw a lot of support from other
academic disciplines too. The foundation of
MIS is the management theory.

1. Principles and practices of management &1. Principles and practices of management &
Organizational behavior.Organizational behavior.
It uses the principles and practices of
management while designing the system,
and gives due regard to the theory of
organizational behavior.

2. Human mind (Psychology)2. Human mind (Psychology)
It considers the human mind as a
processor of information. While designing
the report format and forming
communication channels, MIS takes into
account the behavior of the manager as
an individual and in a group. It gives due
regard to the personal factors such as bias,
thinking with a fixed frame of reference,
risk aversion, strengths and weaknesses.

3. Operational Research.3. Operational Research.
The operational research is used for developing
the models of management problem and they
are then incorporated in MIS as decision
support systems.
The inventory control, queuing theory, and
resource programming are used in the MIS as
decision support systems.
The network theory is used for planning and
controlling large projects.

4. Accounting4. Accounting
In the area of accounting application, it uses
the accounting principles to ensure that the
data is correct and valid. It uses the
accounting methodology for generating a
trial balance, balance sheet and other books
of accounts.

5. Communication theory5. Communication theory
The MIS uses the communication theory in a
significant manner. The principle of feedback
is used while designing analysis and
reporting systems.
While designing the report format, attention
is paid to avoid noise and distortions in the
communication process.

6. Databases6. Databases
The MIS is based on database and uses the
database for generating information. The
three types of data structures, viz.,
– Hierarchical,
– Network and
– Relational database
have roots in the mathematics and the set
theory.

7. Pure Science and7. Pure Science and
Application ScienceApplication Science
The MIS becomes rich in content and more
useful when it becomes more and more a
decision-making or decision support
system. This is possible when it builds
decision making systems in MIS which in
turn is possible if it draws tools,
techniques, methods, rules and principles
from pure science and application science,
and uses them as an integral part of the
system.

The MIS uses knowledge from
management, business management,
mathematics, accounting, psychology,
communication theory, operations research
and probability theory for building
processes, methods, and decision-support
systems in designing business applications.

Lecture – 5Lecture – 5
MIS as a tool in businessMIS as a tool in business
MIS, refers to a computer-based system that
provides managers with the tools to
organize, evaluate and efficiently manage
departments within an organization.

.. Information systems in BusinessInformation systems in Business

MIS is a discipline and a profession that
brings information and communication
technologies to businesses and society. By
applying information and communications
technologies and systems, MIS solves real
business problems and gives competitive
advantage to firms.

Function of MIS in businessFunction of MIS in business
Data Capturing:
MIS captures data from various internal and
external sources of an organization
Processing of data:
The captured data is processed to convert it
into the required management information.
Storage of information:
MIS stores processed or unprocessed data
for future use.

Retrieval of information:
MIS retrieves information from its stores as
and when required by various users..
Dissemination of Information:
Management information, which is a
finished product of MIS, is disseminated to
the users in the organization..

Need of MIS in organizationNeed of MIS in organization
Support the Business Process :
Treats inputs as a request from the customer and
outputs as services to customer.
Support Operation of a Business Organization:
Gives timely information, maintenance and
enhancement of business operations.
To Support Decision Making :
MIS also supports managers in decision making to
meet the goals and objectives of the organization.

Strategies for an Organization :
MIS supports the organization to evolve
appropriate strategies for the business to
stay in a competitive environment

MIS and the UserMIS and the User
Every person in the organization is a user of the
MIS. The people in the organization operate at
all levels in the hierarchy.
The following are the list of MIS users in any
organization.
– Clerk
– Assistant
– Officer
– Executive or a Managers.

MIS as a Tool for ManagementMIS as a Tool for Management
Data and Information
Feedback
Budgeting and reporting
Business information

MIS Professionals in businessMIS Professionals in business
Analyze, design, implement and
administer Information Technology (IT) Deliver IT
to businesses
Apply IT to business goals
Understand IT capabilities to provide value-
added business solutions
Communicate with customers and managers to
understand their IT needs
Over 90% of MIS professionals work outside of IT
Industries

A Case Study for MIS:A Case Study for MIS:
Information System in Restaurant:
A waiter takes an order at a table, and then enters it
online via one of the six terminals located in the
restaurant dining room. The order is routed to a
printer in the appropriate preparation area: the cold
item printer if it is a salad, the hot-item printer if it is
a hot sandwich or the bar printer if it is a drink. A
customer’s meal check-listing (bill) the items
ordered and the respective prices are automatically
generated.

This ordering system eliminates the old three-carbon-
copy guest check system as well as any problems
caused by a waiter’s handwriting. When the kitchen
runs out of a food item, the cooks send out an ‘out of
stock’ message, which will be displayed on the dining
room terminals when waiters try to order that item. This
gives the waiters faster feedback, enabling them to give
better service to the customers. Other system features
aid management in the planning and control of their
restaurant business. The system provides up-to-the-
minute information on the food items ordered and
breaks out percentages showing sales of each item
versus total sales. This helps management plan menus
according to customers’ tastes.

The system also compares the weekly sales totals
versus food costs, allowing planning for tighter cost
controls. In addition, whenever an order is voided,
the reasons for the void are keyed in. This may help
later in management decisions, especially if the
voids consistently related to food or service.
Acceptance of the system by the users is
exceptionally high since the waiters and waitresses
were involved in the selection and design process.
All potential users were asked to give their
impressions and ideas about the various systems
available before one was chosen.

Questions:Questions:
1. In the light of the system, describe the decisions to
be made in the area of strategic planning,
managerial control and operational control? What
information would you require to make such
decisions?
2. What would make the system a more complete
MIS rather than just doing transaction processing?
3. Explain the probable effects that making the
system more formal would have on the customers
and the management.

Management Information System: Information, Information System, Management Information System, Role of MIS, Subsystems of MIS, MIS and Computer, MIS in academics, MIS in Business.

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