Introduction To Managemenet Information System: Unit - 4
Introduction To Managemenet Information System: Unit - 4
Introduction To Managemenet Information System: Unit - 4
UNIT 4
INTRODUCTION TO MANAGEMENET
INFORMATION SYSTEM
Learning Objectives
After having read this unit, you will be able to
Structure
4.1.
Introduction
4.2.
MIS: A Definition
4.3.
MIS Characteristics
4.4.
MIS Functions
4.5.
MIS Classifications
4.6.
Summary
4.7.
Review Questions
4.1. Introduction
It goes without saying that all managerial functions are performed through
decision-making; for taking rational decisions, timely and reliable information
is essential and is procured through a logical and well-structured method of
information collecting, processing and disseminating to decision-makers. Such
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a method in the field of management is widely known as Management
Information System (MIS).
In todays world of ever-increasing complexities of business as well as
management, every business organization, in order to survive and grow, must
have a property planned, analysed, designed and maintained MIS so that it
provides timely, reliable and useful information to enable the management
take speedy and rational decisions.
The era of liberalization and globalization, in which the organizations are
required to compete not locally but globally, has further enhanced the
necessity for such a system. Computers and Information Technology (IT) have
added yet another dimension in this direction.
It is because of the above-cited reasons, that MIS, nowadays, is considered to
be of paramount importance, sometimes regarded as the nerve centre of an
organization. Such systems assist decision-makers in organizations by
providing Management Information (MI) at various stages of decision making
and thus greatly help the organizations to achieve their pre-determined goals
and objectives. On the other hand, the MIS which is not adequately planned
for, analysed, designed, implemented or is poorly maintained, may provide
inaccurate, irrelevant or obsolete information, which may prove costly or even
fatal for the organization.
The term MIS is of recent origin. But it does not mean that organizations were
doing without such a system. In fact MIS has been in existence since the
advent of business organizations. Until recently, MIS occupied the status that
oxygen did before Lavoisiers discovery of the gas it was both vital and
unrecognized. However, business as well as management happened to be
simple in yesteryears. Whereas nowadays, both have grown to unprecedented
levels of complexity. Also as has already been mentioned, with the advent of
computers and communication technology, it has now become possible to
transmit large amounts of information across long distances cheaply and
without loss of time. Thus, environmental pressures have necessitated that
information be considered as a fifth important resource along with the
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traditional four resources of money, materials, men and machines. In fact,
some management researchers have gone so far as to define a manager as a
transducer that transfers information to decision. Thus, there is no denying the
fact that MIS, though was very much in use since the start of the first business
organization, it remained manual, very simple and unrecognized, whereas
today, it has got a greatly refined nomenclature, along with a well-designed
computer-based structure, which follows the systems approach. In other
words, todays organizations just cannot survive and grow without property
planned, designed, implemented and maintained MIS. It has been wellunderstood that MIS enables even small organizations to more than offset the
economies of scale enjoyed by their bigger competitors and thus helps in
providing a competitive edge over other organizations.
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Data
Processing Logic
Computers
Intelligence
Design
Choice
Data
Human Beings
Data
Decision Making
Decision
Database
Decision Implementation
MIS
Performance
1. System Approach
The information system follows a systems approach. The systems approach
implies a wholistic approach to the study of system and its performance in the
light of the objective for which it has been constituted. This approach is antipiecemeal in nature. In other words, systems approach, in the sense intended
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here, means taking a comprehensive view or a complete look at the
interlocking sub-systems that operate within an organization.
2. Management Oriented
This is an important characteristic of MIS. For designing of MIS, top-down
approach should be followed. Top-down approach suggests that the system
development starts from the determination of management needs and overall
business objectives. The MIS development plan should be derived from the
overall business plan. Management oriented characteristic of MIS also implies
that the management actively directs the system development efforts. In MIS
development, a manager should spend a good amount of his/her time in
system design. To ensure that the implemented system meets the specifications
of the system, continued review and participation of the manager is necessary.
3. Need Based
MIS design and development should be as per the information needs of
mangers at different levels, viz., strategic planning level, management control
level and operational control level. In other words, MIS should cater to the
specific needs of managers in an organizations hierarchy.
4. Exception Based
MIS should be developed on the exception based reporting principle, which
means an abnormal situation, i.e. the maximum, minimum or expected values
vary beyond tolerance limits. In such situations, there should be exception
reporting to the decision maker at the required level.
5. Future Oriented
Besides exception based reporting, MIS should also look at the future. In other
words 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.
6. Integrated
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Integration is a necessary characteristic of a management information system.
Integration is significant because of its ability to produce more meaningful
information. For example, in order to develop an effective production
scheduling system, it is necessary to balance such factors as
i)
Set-up costs,
ii)
Work force,
iii)
Overtime rates,
iv)
Production capacity,
v)
Inventory level,
vi)
Capital requirements,
vii)
A system that ignores any one of these elements, for example, inventory
levels, is not providing the management with an optimal picture. The cost of
carting excess inventory may more than offset the other benefits of the system.
Integration in the sense intended here, means taking a comprehensive view or
looking at the complete picture of the interlocking sub-systems that operate
within the company. One can start developing an MIS by attacking a specific
sub-system, but unless its place in the total system is realized and property
reflected, serious shortcomings may result. Thus, an integrated system that
blends information from several operational areas is a necessary characteristic
of an MIS.
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flow concept supports several of the basic tenets of system analysis. These
include avoiding duplication, combining similar functions and simplifying
operations wherever possible. The development of common data flow is an
economically sound and logical concept, but it must be viewed in a practical
light.
8. Long-Term Planning
MIS is developed over relatively long periods. Such systems do not develop
overnight. A heavy element of planning is involved. The MIS designer must
have the future objectives and needs of the company in mind. The designer
must avoid the possibility of the system going obsolete before its time.
9. Sub-System Concept
The process of MIS development is quite complex and one is likely to loss
insight frequently. Thus, the system, though viewed as a single entity, must be
broken down into digestible sub-systems which are more meaningful at the
planning stage.
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1. Data Capturing
MIS captures data from various internal and external sources of an
organization. Data capturing may be manual or through computer terminals.
End users typically, record data about transactions on some physical medium,
such as a paper form, or enter it directly into a computer system.
2. Processing of Data
The captured data is processed to convert it into the required management
information. Processing of data is done by such activities as calculating,
comparing, sorting, classifying and summarising. These activities organize and
manipulate data using various statistical, mathematical, operations research
and / or other business models.
Source
Source
User
User
Source
Data
Captur
e
Processin
g
Disseminatio
n
User
Source
Retrieval
Source
Storage of
Data
3. Storage of Information
MIS stores processed or unprocessed data for future use. If any information is
not immediately required, 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.
User
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4. Retrieval of Information
MIS retrieves information from its stores as and when required by various
users. As per the requirements of management users, the retrieved information
is either disseminated as such or it is processed again to meet the exact MI
demands.
5. Dissemination of MI
Management Information, which is a finished product of MIS, is disseminated
to the users in the organization. It could be periodic, through reports or on-line
through computer terminals. Figure 4-2 depicts various functions performed
by MIS
ii)
iii)
iv)
v)
vi)
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his/her decision making. TPS uses data and produces data as shown in the
following diagram. (See Figure 4-3)
Data
Processing
Input
Data
Output
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operations,
strategic
Information
Input
TPS
Processing
Output
Data
hierarchical,
ii)
horizontal, and
iii)
cross-functional.
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In hierarchical integration, operational control level systems feed data to a
higher level system, i.e. to the management control level (middle level) and to
the strategic planning level (top level).
Horizontal integration refers to integration of information systems within a
functional area or a chain of command. For example, a product may pass
through several production processes in a production department. The
information systems of all these sub-systems (production processes) are
integrated in a departmental production information system.
Cross functional information systems, as the name indicates, associate with
different functional areas. For example, a marketing information system may
transmit information regarding loss of sales because of inventory shortage to
the inventory control information system.
Nowadays, with the emergence of Business Process Re-engineering (BPR)
and advancements in network technology, emphasis is being given to business
and their integration. The information systems that focus on the business
processes that a production passes through, integrate all these processes even
in different functional areas and thus make the demarcation lines of functional
areas weak. Such information systems are more popular in larger organizations
having wide geographical coverage and diversified product range because of
the
problems
faced
by
these
organizations
mainly
inter-functional
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needs. ERP systems enable the manager to take an overall view of the business
as a whole instead of having a myopic view of business functions, and thus
offer the benefits of synergy of various functions in achieving the goals and
objectives of the organization. These systems also offer flexibility to business
processes as the process itself, instead of some function in the process, is
automated. All the required changes are implemented quickly with ERP
systems. For example, SAP-R3, an ERP software package provides more than
700 processes that are automated and integrated with each other.
Customer Order
Bill of Material
Sales Analysis
Material
Resource
Planning
Sales Order
Processing
Inventory
System
Work Order
Maintenance
Production
Planning
Shop Floor
Control
Production
Scheduling
Raw Material
Purchase
Quality Control
Accounts
Receivable
Financial
Accounting
Accounts
Payable
Suppliers
Figure 4-5 illustrates a typical ERP system, the sales order processing interacts
with the inventory system, work order maintenance and accounts receivable
sub-systems. In other words, three important functional areas of a business,
namely, marketing, production and finance are integrated. In the system,
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integration of some other activities like production planning, production
scheduling, procurement of raw materials, Material Resource Planning (MRP)
has also been achieved.
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Database
Model Base
User Interface
User
Figure 4-6 Elements of DSS
a1
Information from
MIS
a2
a3
Decision (most
appropriate
alternative)
a4
a5
Alternative Processing
Figure 4-7 Decision Support Systems
DSS can be differentiated from MIS in terms of its processing capabilities.
Whereas MIS processes data to convert it into information; DSS processes
information to support the decision making process of a manger. For example,
a salary information system provides information to every employee regarding
his basic salary, allowances and deductions, if any, etc. However, if an
employee wants to make deposits in some schemes for availing income tax
rebates, he can make use of DSS. Decision Support system helps the user
decide in which scheme and how much he should invest in order to get
maximum benefits. Secondly DSS provides an interactive dialogue
environment, through which the user can interact with the system to add/alter
the data as per his requirements. The main application areas of DSS are
production, finance and marketing. For example, DSS supports decision
making in procurement analysis, production planning and scheduling,
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inventory planning and control, financial planning and analysis, marketing
mix decisions, etc. DSS can, nowadays, be developed with the help of special
purpose computer packages. These language packages usually include several
pre-written analysis routines such as interest calculation formulae, discounted
cash flow calculation routines, internal rates of return, and time-series analysis
routines. These routines can be easily integrated into a decision support system
requiring that particular calculating function. Interactive Financial Planning
Systems (IFPSs) and Simplan are two well-known decision support system
software packages in use. Visicalc, Supercalc, Context MBA, Lotus 1-2-3,
Symphony and DSS-F provide similar but less extensive assistance in
developing support systems.
4.5.4. 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 organization to support his
decision-making. Thus, ESS is a comprehensive information system which
includes various types of decision-support systems, but it is more specific and
person-oriented. 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.
4.5.5. Office Automation Systems (OASs)
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 levels 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 organization. These systems include a wide range
of support facilities, which include word processing, electronic filing,
electronic
mail,
message
communications, etc.
switching,
data
storage,
data
and
voice
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Office activities may be grouped under two classes, namely
1. activities performed by clerical personnel (clerks, secretaries, typists,
etc.), and
2. activities performed by the executives (managers, engineers or other
professionals like economists, researchers, etc.).
In the first category, the following is a list of activities.
a) Typing,
b) Mailing,
c) Scheduling of meetings and conferences,
d) Calendar keeping, and
e) Retrieving documents.
The following is a list of activities in the second category (managerial
category).
a) Conferencing,
b) Production of information (messages, memos, reports, etc.), and
c) Controlling performance.
As already discussed, information technology facilitates both types of
activities. A wide variety of office automation devices like fax machines,
copiers, phones, etc., are used in offices. However, nowadays, computer-based
office automation systems are gaining popularity among managers and office
staff, because such systems offer integrated solutions that can be shared
automatically. Computer-based office automation systems not only cater to the
communication needs of the office managers within the organization but also
help to communicate with external entities such as vendors, investors,
customers, etc. Some of the applications of office automation systems are
discussed, in brief.
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Word Processing
This refers to the computer-assisted preparation of documents (like letters,
reports, memos, etc.) from textual data. Text is entered via a keyboard which is
displayed on the screen of a visual display unit. Data once entered can be
manipulated in various ways. It can be edited, stored on magnetic media and
reproduced through simple commands which eliminate the need for redrafting
the entire document. Spellings can be checked automatically and pre-defined
letters can be generated, addressed to many persons by merging the letter and
address through a mail-merge program. Nowadays, these systems can even be
trained to understand the dictation of the manager and to convert it to text on
the word processor.
Electronic Filing
This facilitates the filing of incoming and outgoing mail/documents on a
magnetic media. Information is captured from the documents and is stored for
future reference. Computer-based filing systems have the advantage of space
saving and permitting easily modifiable cross-reference indexes. These
indexes contain pointers to the location of the document itself.
Electronic Mail
It
involves
the
transfer
of
letters
and
other
documents
through
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ii)
iii)
Knowledge base
ii)
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iii)
User interface.
Logic
Rules, Facts
Knowledge Base
Interface Engine
User Interface
ESS
B
E
S
&
O
A
S
DSS
MIS
TPS
Figure 4-9 Hierarchy of Information Systems
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From the above discussion, it emanates that the concept of MIS continues to
evolve. It is related to, but not equivalent to TPS and other information
systems-related concepts. Two more such concepts that are considered
extensions of the MIS concept are Information Resource Management (IRM)
and End-User Computing. The hierarchy of information system is shown in
Figure 4-9 which depicts the overlapping nature of the various classes of
information systems.
4.6. Summary
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 organization; processes it and
supplies Management Information to assist managers in the process of
decision making.
MIS must perform the following functions in order to meet its objectives. MIS
captures data from various internal and external sources of an organization.
Data capturing may be manual or through computer terminals. The captured
data is processed to convert it into the required management information. MIS
stores processed or unprocessed data for future use. MIS retrieves information
from its stores as and when required by various users. Management
Information, which is a finished product of MIS, is disseminated to the users
in the organization.
MIS can be categorized in the following six classes.
vii)
viii)
ix)
x)
xi)
xii)
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2)
3)
4)
5)
6)
7)
8)
Briefly discuss Business Expert Systems. How are they different from
Decision Support Systems? Give business applications of expert
systems.