Information & Business Economic Analysis

1. Discuss the need for an efficient Management Information System with regard to any
organization. What are the benefits of Southside’s new system?

Introduction

We are living in a time of great change and working in an Information Age. Managers have to assimilate
masses of data, convert that data into information, form conclusions about that information and make
decisions leading to the achievement of business objectives. For an organization, information is as
important resource as money, machinery and manpower. It is essential for the survival of the enterprise.

Before the widespread use of computers, many organizations found difficulties in gathering, storing,
organizing and distributing large amounts of data and information. Developments in computer technology
made possible for managers to select the information they require, in the form best suited for their needs
and in time they want. This information must be current and in many cases is needed by many people at
the same time. So it has to be accurate, concise, timely, complete, well presented and storable. Most firms
nowadays depend on IT.

The term management information system (MIS) made its first appearance in U.S. navy report on the use
of computers to construct a single integrated system to manage all navy resources.

A management information system (MIS) is a subset of the overall internal controls of a business
covering the application of people, documents, technologies, and procedures by management accountants
to solve business problems such as costing a product, service or a business-wide strategy. Management
information systems are distinct from regular information systems in that they are used to analyze other
information systems applied in operational activities in the organization. Academically, the term is
commonly used to refer to the group of information management methods tied to the automation or
support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive
information systems.

MIS combines tech with business to get people the information they need to do their jobs
better/faster/smarter. MIS professionals work as systems analysts, project managers, systems
administrators, etc., communicating directly with staff and management across the organization." “A
system to convert data from internal and external sources into information and communicate that
information in an appropriate form, to managers at all levels in all functions to enable them to make
timely and effective decisions for planning, directing and controlling the activities for which they are
responsible.”(Bee and Bee, 1999)

An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of
information needed to carry out the functions of management. In a way it is a documented report of the
activities those were planned and executed.

According to Philip Kotler "A marketing information system consists of people, equipment, and
procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to
marketing decision makers."

Management information systems are those systems that allow managers to make decisions for the
successful operation of businesses. Management information systems consist of computer resources,
people, and procedures used in the modern business enterprise. MIS also refers to the organization that
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 Information & Business Economic Analysis

develops and maintains most or all of the computer systems in the enterprise so that managers can make
decisions. The goal of the MIS organization is to deliver information systems to the various levels of
corporate managers. MIS professionals create and support the computer system throughout the company.
Trained and educated to work with corporate computer systems, these professionals are responsible in
some way for nearly all of the computers, from the largest mainframe to the desktop and portable PCs.

Its purpose is to help managers to solve structured problems. But it should also fulfill a number of other
purposes:
· It should provide a basis to analyze warning signals that can originate both externally and internally; this
is the main function of data base;
· It should automate routine operations thus avoiding human work in the processing tasks;
· It should assist management in making routine decisions;
· It should provide the information necessary to make non-routine decisions;
· It should serve as a strategic weapon to gain competitive advantages.

Computer-based or manual system transforms data into information useful in the support of decision
making. MIS can be classified as performing three functions:

(1) To generate reports-for example, financial statements, inventory status reports, or performance reports
needed for routine or non-routine purposes.

(2) To answer what-if questions asked by management. For example, questions such as "What would
happen to cash flow if the company changes its credit term for its customers?" can be answered by MIS.
This type of MIS can be called Simulation.

(3) To support decision making. This type of MIS is appropriately called Decision Support System (DSS).
DSS attempts to integrate the decision maker, the data base, and the quantitative models being used.

When information systems are designed to provide information needed for effective decision making by
managers, they are called management information systems. MIS is a formal system for providing
management with accurate and timely information necessary for decision making.

The system provides information on the past, present and project future and on relevant events inside and
outside the organization. It may be defined as a planned and integrated system for gathering relevant data,
converting it in to right information and supplying the same to the concerned executives. The main
purpose of MIS is to provide the right information to the right people at the right time.

A management information system is an integrated man – machine systems that provides information to
support the planning and control function of manager in an organization. For .example, an organization
often processes a lot of data which it is required by law to furnish to various government regulatory
agencies. Such a system, while it may have interfaces with an MIS, would not be a part of it, instances of
such systems is salary disclosures and excise duty statements.

Generally, MIS deals with information that is systematically and routinely collected in accordance with a
well-defined set of rules. Thus, and MIS is a part of the formal information network in an organization.
Normally, the information provided by an MIS helps the managers to make planning and control
decisions. Now, we will see, what is planning and control. Every organization in order to function must
perform certain operations. For Example, a car manufacturer has to perform certain manufacturing
activities; a wholesaler has to provide water to its area of jurisdiction. All these are operations that need to

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be done. Besides these operations, an organization must make plans for them that it must decide on how
many and what type of cars to make next month or what commissions to offer retailers or what pumping
stations to install in the next five years.

Also an organization must control the operations in the light of the plans and targets developed in the
planning process. The car manufacturer must know if manufacturing operations are in line with the targets
and if not, he must make decisions to correct the deviation or revise his plans. Similarly the wholesaler
will want to know the impacts that his commissions have had on sales and make decisions to correct
adverse trends.

Effective management information systems are needed by all business organization because of the
increased complexity and rate of change of today’s business environment. For Example, Marketing
manager need information about sales performance and trends, financial manger returns, production
managers needs information analyzing resources requirement and worker productivity and personnel
manager require information concerning employee compensation and professional development? Thus,
effective management information systems must be developed to provide modern managers with the
specific marketing, financial, production and personnel information products they required to support
their decision making responsibilities.

An MIS provides the following advantages.

1. It facilitates planning: MIS improves the quality of plants by providing relevant information for sound
decision making. Due to increase in the size and complexity of organizations, managers have lost personal
contact with the scene of operations.

2. In Minimizes information overload: MIS change the larger amount of data in to summarize form and
there by avoids the confusion which may arise when managers are flooded with detailed facts.

3. MIS Encourages Decentralization: Decentralization of authority is possibly when there is a system for
monitoring operations at lower levels. MIS is successfully used for measuring performance and making
necessary change in the organizational plans and procedures.

4. It brings Coordination: MIS facilities integration of specialized activities by keeping each department
aware of the problem and requirements of other departments. It connects all decision centers in the
organization.

5. It makes control easier: MIS serves as a link between managerial planning and control. It improves the
ability of management to evaluate and improve performance. The used computers has increased the data
processing and storage capabilities and reduced the cost.

6. MIS assembles, process, stores, retrieves, evaluates and disseminates the information.

Further information about MIS can be found at the Bentley College Journal of MIS and the US Treasury’s
MIS handbook, and an example of an organizational MIS division can be found at the Department of
Social Services for the state of Connecticut.

To function effectively as an interacting, interrelated, and interdependent feedback tool for management
and staff, MIS must be "useable." The five elements of a useable MIS system are: timeliness, accuracy,
consistency, completeness, and relevance. The usefulness of MIS is hindered whenever one or more of
these elements are compromised.
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• Timeliness
To simplify prompt decision making, an institution's MIS should be capable of providing and
distributing current information to appropriate users. Information systems should be designed to
expedite reporting of information. The system should be able to quickly collect and edit data,
summarize results, and be able to adjust and correct errors promptly.

• Accuracy
A sound system of automated and manual internal controls must exist throughout all information
systems processing activities. Information should receive appropriate editing, balancing, and
internal control checks. A comprehensive internal and external audit program should be employed
to ensure the adequacy of internal controls.

• Consistency
To be reliable, data should be processed and compiled consistently and uniformly. Variations in
how data is collected and reported can distort information and trend analysis. In addition, because
data collection and reporting processes will change over time, management must establish sound
procedures to allow for systems changes. These procedures should be well defined and
documented, clearly communicated to appropriate employees, and should include an effective
monitoring system.

• Completeness
Decision makers need complete and pertinent information in a summarized form. Reports should
be designed to eliminate clutter and voluminous detail, thereby avoiding "information overload."

• Relevance
Information provided to management must be relevant. Information that is inappropriate,
unnecessary, or too detailed for effective decision making has no value. MIS must be appropriate
to support the management level using it. The relevance and level of detail provided through MIS
systems directly correlate to what is needed by the board of directors, executive management,
departmental or area mid-level managers, etc. are in the performance of their jobs.

Core Competencies:

Every market leading enterprise will have at least one core competency – that is, a function they perform
better than their competition. By building an exceptional management information system into the
enterprise it is possible to push out ahead of the competition. MIS systems provide the tools necessary to
gain a better understanding of the market as well as a better understanding of the enterprise itself.

Enhance Supply Chain Management:

Improved reporting of business processes leads inevitably to a more streamlined production process. With
better information on the production process comes the ability to improve the management of the supply
chain, including everything from the sourcing of materials to the manufacturing and distribution of the
finished product.

Quick Reflexes:

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 Information & Business Economic Analysis

As a corollary to improved supply chain management comes an improved ability to react to changes in the
market. Better MIS systems enable an enterprise to react more quickly to their environment, enabling
them to push out ahead of the competition and produce a better service and a larger piece of the pie.

MIS which meets the five elements of use ability is a critical ingredient to an institution's short- and long-
range planning efforts. To achieve sound MIS, the organization's planning process should include
consideration of MIS needs at both the tactical and strategic levels. For example, at a tactical level MIS
systems and report output should support the annual operating plan and budgetary processes. They should
also be used in support of the long term strategic MIS and business planning initiatives. Without the
development of an effective MIS, it is more difficult for management to measure and monitor the success
of new initiatives and the progress of ongoing projects. Two common examples of this would be the
management of mergers and acquisitions or the continuing development and the introduction of new
products and services.

Management needs to ensure that MIS systems are developed according to a sound methodology that
encompasses the following phases:
• Appropriate analysis of system alternatives, approval points as the system is developed or acquired, and
task organization.
• Program development and negotiation of contracts with equipment and software vendors.
• Development of user instructions, training, and testing of the system.
• Installation and maintenance of the system.

Depending on the size and complexity of its MIS system, an institution may need to use different manuals
for different users such as first-level users, unit managers, and programmers.

MIS which meets the five elements of use ability is a critical ingredient to an institution's short- and long-
range planning efforts. To achieve sound MIS, the organization's planning process should include
consideration of MIS needs at both the tactical and strategic levels. For example, at a tactical level MIS
systems and report output should support the annual operating plan and budgetary processes. They should
also be used in support of the long term strategic MIS and business planning initiatives. Without the
development of an effective MIS, it is more difficult for management to measure and monitor the success
of new initiatives and the progress of ongoing projects. Two common examples of this would be the
management of mergers and acquisitions or the continuing development and the introduction of new
products and services.

Management needs to ensure that MIS systems are developed according to a sound methodology that
encompasses the following phases:

• Appropriate analysis of system alternatives, approval points as the system is developed or acquired, and
task organization.

• Program development and negotiation of contracts with equipment and software vendors.

• Development of user instructions, training, and testing of the system.

• Installation and maintenance of the system.

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 Information & Business Economic Analysis

Depending on the size and complexity of its MIS system, an institution may need to use different manuals
for different users such as first-level users, unit managers, and programmers.

Before the real-time integrated system was developed, Southside Electric used six databases to store
information on outages, dispatches, electricity usage, geographic mapping, billing and accounts receivable
—and the databases were not connected to each other.

In 2005, Southside Electric set out to build a real-time integrated system. The goal was to have all
databases appear as if they were one, and to create a system that linked all departments and functions to
provide employees with reliable information. The utility turned to a service-oriented architecture (SOA)
to aggregate and integrate information from the separate databases. The systems integrated include a
customer information system (CIS), geographic information system (GIS), automated meter reading,
financial management, materials management and mobile data.

The benefits of Southside’s new system was that the information gathered from the field was updated
across systems in real time, eliminating the need for manual data transfer processes that used to take a
half-hour to complete. The automated updates also reduced the risk of errors associated with repetitive
manual data entry, so technicians have the most accurate information.

It has been seen that before the new software was deployed, workers would take service order off a printer
and place the order in a supervisor's tray. The supervisor would sort and prioritize orders, and place them
in a serviceman's tray. The serviceman would pick up the service order, and begin the service call. Upon
completion, the serviceman would bring the service order to the office, where a clerk would document
that the work had been completed and so on.

But now, when the service order comes in, it is displayed on the mobile system in a service technician's
vehicle where the serviceman does the work, completes the service order electronically in the vehicle and
posts the data immediately on all databases.

2. What are the steps involved in designing a Management Information System? Do you think
Southside’s new system will enable it to formulate more effective strategies? Discuss.

STEPS IN DEVELOPING MIS

After facilitating an understanding of basic concepts and elements of MIS, the following are the steps
involved in creating a MIS.

Preliminary Investigation

In this phase, the agency needs to critically assess its current system in order to justify the cost and time
involved before deciding on having a new MIS. The facilitator needs to clarify the MIS need not always
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involve computers. However, if there are computers the work gets accelerated. In preliminary
investigation, the following things are taken into consideration.

· The problem

· Magnitude and scope

· Alternatives

· Viability and cost effectiveness

Requirements Analysis

The methods and means of ascertaining the information needs to be addressed by MIS. Further, the
mechanisms for gathering information from primary and secondary sources are to be determined by
agencies. A critical factor is ascertaining MIS needs of primary and secondary users.

· Knowing the primary and secondary users

· Ascertaining user needs

· Primary and secondary sources of information

· Design, development and implementation needs

System Design

The facilitator explains basics of a MIS system elucidating the inputs, the processing and the outputs.
While inputs include information provided by front-line workers, the outputs could be various types of
reports, including those sent periodically to funders. The procedures define how and in what format the
information will be inputted and by whom and at what intervals. The storage could be manual or
electronic or both. Design specifies the operational parameters at a drawing board stage. One of the inputs
for MIS could be information from a client database.

Other stages

The facilitator systematically discusses the different steps in MIS development in a universalized
perspective. In other words, it needs to be specified that these steps need to be tailored to one’s own
situation. In the acquisition stage, hardware is procured after appraisals and cost analysis. Draw attention
to the need to ensure compatibility between what is being acquired and what is already available within
the agency. The implementation step is a crucial one consuming considerable amount of time in MIS
development. Here the application development is done customized to the agency’s needs. The procedure
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 Information & Business Economic Analysis

and user manuals are developed and personnel are oriented in using MIS. The software is installed once it
is tested and debugged.

Acquisition/procurement

· Compatibility

· Cost effectiveness

· Performance standards

· After sales service

· Configuration

· Portability

Implementation/installation

· Application development

· Testing

· Debugging – logical and syntactical

· Procedure and user manual preparation

· Orientation and training

Maintenance and up gradation

WHAT COULD BE THE ROLE OF MIS COORDINATOR IN DEVELOPING A

· Interact with user groups

· Identify the needs of users of MIS

· Designing of reporting formats

· Identify systems of information flow

· Ensure smooth flow of information within and outside the organization

· Time management – tracking inputs/reports

· Act as interface among sections and management tiers

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 Information & Business Economic Analysis

· Identify training needs of staff in MIS jointly with application developer.

· Organize monthly/periodic meetings to assess performance, maintain minutes and follow-up on the
decisions.

· Interface with the various divisions/units in the organization for information sharing.

Southside’s new system will enable to formulate more effective strategies:

 It’s seen that before the new software was deployed, a worker would take a service order off a
printer and place the order in a supervisor's tray. The supervisor would sort and prioritize orders,
and place them in a serviceman's tray. The serviceman would then pick up the service order, and
begin the service call. Upon completion, the serviceman would bring the service order to the
office, where a clerk would document that the work had been completed and so on.

But now, when a service order comes in, it is displayed on the mobile system in a service
technician's vehicle and then the serviceman does the work, completes the service order
electronically in the vehicle and posts the data immediately on all databases.

Here it’s been seen that coordinating all activities in the supply chain brings proper control over
the functioning of the organization. Southside should minimize costs, inventory, and cycle time
and should maximize profits. The use of internet and software solutions will help the organization
to keep a track of whatever happens in the organization.

 Southside should coordinate all the processes that involve customers. They should maximize the
value of the firm to all customers and value of the customer to the firm.