The Basic characteristics of an effective Management Information System are as follows:

I. Management-oriented: The basic objective of MIS is to provide information support to

the management in the organization for decision making. So an effective MIS should start
its journey from appraisal of management needs, mission and goal of the business
organization. It may be individual or collective goals of an organization. The MIS is such
that it serves all the levels of management in an organization i.e. top, middle and lower
level.

II. Management directed: When MIS is management-oriented, it should be directed by the

management because it is the management who tells their needs and requirements more
effectively than anybody else.

Manager should guide the MIS professionals not only at the stage of planning but also on
development, review and implementation stages so that effective system should be the
end product of the whole exercise in making an effective MIS.

III. Integrated: It means a comprehensive or complete view of all the sub systems in the
organization of a company. Development of information must be integrated so that all the
operational and functional information sub systems should be worked together as a single
entity. This integration is necessary because it leads to retrieval of more meaningful and
useful information.

IV. Common data flows: The integration of different sub systems will lead to a common
data flow which will further help in avoiding duplicacy and redundancy in data
collection, storage and processing. For example, the customer orders are the basis for
many activities in an organization viz. billing, sales for cashing, etc. Data is collected by
a system analyst from its original source only one time. Then he utilizes the data with
minimum number of processing procedures and uses the information for production
output documents and reports in small numbers and eliminates the undesirable data. This
will lead to elimination of duplication that simplify the operations and produce an
efficient information system.

V. Heavy planning-element: The preparation of MIS is not a one or two day exercise. It
usually takes 3 to 5 years and sometimes a much longer period. So the system expert has
to keep 2 things in mind – one is that he has to keep future objectives as well as the firm’s
information well in advance and also he has to keep in mind that his MIS will not be
obsolete before it gets into action.

VI. Sub System concept: When a problem is seen in 2 sub parts, then the better solution to
the problem is possible. Although 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. Priorities will be set and phase of implementation will
 be made easy. While making or breaking down the whole MIS into subsystems, it should
be kept in mind that the subsystems should be easily manageable.

VII. Common database: This is the basic feature of MIS to achieve the objective of using
MIS in business organizations. It avoids duplication of files and storage which leads to
reduction in costs. Common database means a “Super file or Master file” which
consolidates and integrates data records formerly stored in many separate data files. The
organization of the database allows it to be accessed by each subsystem and thus,
eliminates the necessity of duplication in data storage, updating, deletion and protection.

VIII. Computerized: MIS can be used without a computer. But the use of computers
increases the effectiveness and the efficiency of the system. The queries can be handled
more quickly and efficiently with the computerized MIS. The other benefits are accuracy,
storage capacity and timely information.

IX. User friendly/Flexibility: An MIS should be flexible i.e. there should be room for
further modification because the MIS takes much time in preparation and our
environment is dynamic in nature.MIS should be such that it should be used
independently by the end user so that they do not depend on the experts.

X. Information as a resource: Information is the major ingredient of any MIS. So, an MIS
should be treated as a resource and managed properly
 Structure of MIS
MIS for decision making:
Decision making can be classified into two types:

1. Structured, programmable decisions

When a decision can be programmed, an organization can prepare a decision rule or a decision
procedure. This can be expressed as a set of steps to follow, a flowchart, a decision table, or a
formula. The decision procedure will also specify the information to be acquired before the
decision rules are applied. Since structured programmable decisions can be pre specified, many
of these decisions can be handled by lower level personal with little specialized knowledge. This
procedure can also be completely automated although human review may be required. The
process of structured decision making includes entering the required input data, validation
procedure to check the input, processing of the input using decision logic and output of the
programmed decision in a form that is useful for action.

2. Unstructured, non programmable decisions

The unstructured decision has no pre-established decision procedure either because the decision
is too in frequent to justify the cost involves in preparing the decision procedure, or because the
decision process in not understood well enough, or is too changeable to establish a decision
procedure. The support requirements for an unstructured decision making include access to data
and a variety of analysis & decision procedures. The data requirements are not completely know
in advance hence data retrieval must allow ad hoc retrieval requests.

MIS Structure based on Management activity:

MIS supports management activities. This means that the structure of an information system can
be classified in terms of hierarchy of management planning and control activities.

Hierarchy of Management activities –

1. Strategic Planning – Definition of goals, policies, objectives and general guidelines for an
organization.

2. Management control and tactical planning – Acquisition of resources, tactics, plant

location, new products. Establishment and monitoring of budgets.
 3. Operational planning and control – Effective and efficient use of existing facilities and
resources to carry out activities within budget constraints.

The following 3 sections summarize the characteristics of information system support for the 3
levels of hierarchy of Management planning and control.

1. Operational Control – This is a process of ensuring that the operational activities are
carried out effectively and efficiently. A large % of decisions are programmable and the
procedure used is quite stable. It makes use of pre-established procedures and decision
rules. Individual transactions are often important; hence the system must be able to
respond to both individual transactions and summaries of transactions. The data required
for this process is generally current and the sequence of processing is often significant.

Processing support for operational control consists of

- Transaction processing – Inventory withdrawal transaction can examine balance on

hand, calculate order quantity, produce action document.

- Enquiry processing – An enquiry for personal files describing the requirement for a
position.

- Report processing – A report showing orders still outstanding after 30 days.

2. Management Control – This system is required by managers of departments, profit

centers to measure performance, decision on control actions, formulate new decision
rules and allocate resources. Summary information is needed and it must be processed so
that trends may be observed, reasons for performance variations and solutions may be
suggested.

The control process requires the following types of information:

- Planned performance – To assist managers in finding problems and reviewing plans

and budgets. It projects the effect of current action.

- Variance from planned performance – This report shows performance and variations
from planned performance.

- Problem analysis models to analyze data to provide input for decision making.

- Decision models to analyze a problem situation and provide possible solutions.

- Inquiry model to provide assistance to enquiries.

3. Strategic Planning – The purpose of strategic planning is to develop strategies by which

an organization will be able to achieve its objectives. These activities do not occur on a
periodic basis. Data required for strategic planning are generally for processed
 summarized data from a variety of sources. Information system support can provide
substantial aid to the process of strategic planning.

- Evaluation of current capabilities based on internal data.

- Internal projection of future capabilities by analyzing past data.

- Fundamental market data on the industry and the competitors.

- Databanks of public information regarding industry and competitors.

MIS structure based on Organizational functions:

The structure of information system can also be described in terms of organizational functions
which use information. There are no standard classifications of functions but a typical set of
functions in an organization includes Production, Sales & Marketing, Finance & Accounting,
Logistics and Personal information system. Top management can also be considered as a
separate function. Each of these functions has unique information needs and each requires
information system support designed for it.

1. Sales & Marketing – The transactions involved in this subsystem are Sales order,
promotion order, etc. Operational activities include hiring and training of sales force, day
to day scheduling of sales and promotion effort, periodic analysis of sales volume by
region, product, customer, etc. Managerial control concerns comparison of overall
performance against planned. Strategic planning involves new markets and marketing
strategies.

2. Production – It includes planning, scheduling and operation of production facility,

employment and training of production personnel, quality control and inspection.
Transactions include production order, assembly order, finished parts tickets, scrap
tickets. Operational control requires reports comparing actual performance to the
production schedule. Management control requires summary report comparing oval
planned performance to standard performance. Strategic planning includes alternative
manufacturing approach and approach to automation.

3. Logistics – Transaction process includes purchase, manufacturing and receiving report.

Tickets for inventory, shipping and orders. Operational control includes past-due
purchases, shipment, out of stock items. Strategic planning involves analysis of new
distribution strategy, policies, etc.

4. Finance & Accounting – Transaction involves credit applications, sales, payment

vouchers, checks, ledgers, stock transfer, etc. Operations include exception reports,
records of processing delays and reports of unprocessed transactions. Managerial control
utilizes information on budget vs. actual costs of financial resources and processing
 accounting data. Strategic planning includes accounting policies for minimizing tax
impact, long run strategies to ensure adequate financing.

Conceptual Structure
The conceptual structure of an information system consists of a group of information subsystems
for different functions. Each subsystem provides support for transaction processing, operational
control, management control and strategic planning. The conceptual structure includes some
unique files for each subsystem plus a common database. There is unique software for each
subsystem and there is common software used by all subsystems, i.e. a data management system,
some software routines, planning & decision models.

Physical Structure
The actual organizational information system will defer from the above model because certain
elements are not cost justified. The physical structure of an information system is affected by the
use of common modules for many processing operations. It is designed as an informational
system with a number of small sets of processing instructions called modules. These modules can
be written and tested separately allowing more efficient maintenance by identification of the
boundaries of the module being changed.