MANAGEMENT INFORMATION SYSTEM

UNIT 1 NOTES

Management Information System ((MIS): Concept & Definition

MIS is popularly known as the Management Information System. MIS is considered as one such method
of generating
erating information which is used by management of organization for decision Making, control of
activities, operations etc. During the period 1940 to 1960 computers were commercially used for census
and payroll work. This involved large amount of data and its processing. Since then the commercial
application exceeded the scientific applications for which the computer were mainly intended for. MIS is
an information System which helps in providing the management of an organization with information
which is useded by management for decision making
making.

Management Information Systems (MIS), referred to as Information Management and Systems, is the
discipline covering the application of people, technologies, and procedures collectively called information
systems, to solving
ing business problems.

“'MIS' is a planned system of collecting, storing and disseminating data in the form of information needed
to carry out the functions of management.”

Management: Management is art of getting things done through and with the people in formally
organized
ed groups. The basic functions performed by a manager in an organization are: Planning,
controlling, staffing, organizing, and directing.

Information: Information is considered as valuable component of an organization. Information is data

that is processedd and is presented in a form which assists decision maker.

System: A system is defined as a set of elements which are joined together to achieve a common
objective. The elements are interrelated and interdependent. Thus every system is said to be composed
compose of
subsystems. A system has one or multiple inputs, these inputs are processed through a transformation
process to convert these input(s)
s) to output.

Management Information System or 'MIS' is a planned system of collecting, storing, and

disseminating data in the form of information needed to carry out the functions of management. An MIS
gathers data from multiple online systems, analyzes the information, and reports data to aid in
management decision-making.

MIS is a formal method of collecting timely information in a presentable form in order to facilitate
effective decision making.

Thee MIS has more than one definition, some of which are given below:
  The MIS is defined as a system which provides information support for decision making in the
organization.
 The MIS is defined as an integrated system of man and machine for providing the information to
support the operations, the management and the decision making function in the organization.
 The MIS is defined as a system based on the database of the organization evolved for the purpose
of providing information to the people in the organization.
 The MIS is defined as a Computer based Information System.

Objectives of MIS: Following are the basic objectives of an MIS –

 Capturing data: MIS capture data from various internal and external sources of the organization.
Data capturing may be manual or through computer terminals.
 Processing data: The captured data is processed to convert into the required information.
Processing of data is done by such activities as calculating, sorting, classifying, and summarizing.
 Information storage: MIS stores the processed or unprocessed data for future use. If any
information is not immediately required, it is saved as an organization record, for later use.
 Information retrieval: MIS retrieves information from its stores as and when required by
various users.
 Information propagation: Information, which is a finished product of MIS, is disseminated to
the users in the organization. It is periodic or online through a computer terminal.

Characteristics of MIS:
 Systems Approach: The information system follows a systems approach. Systems approach
means taking a comprehensive view or a complete look at the interlocking sub-systems that
operate within an organization.
 Management Oriented: Management oriented characteristic of MIS implies that the
management actively directs the system development efforts. For planning of MIS, top-down
approach should be followed. Top down approach suggests that the system development starts
from the determination of management‘s needs and overall business objective. To ensure that the
implementation of system‘s polices meet the specification of the system, continued review and
participation of the manager is necessary.
 Need Based: MIS design should be as per the information needs of managers at different levels.
Exception Based: MIS should be developed on the exception based also, which means that in an
abnormal situation, there should be immediate reporting about the exceptional situation to the
decision –makers at the required level.
 Future Oriented: MIS should not merely provide past of historical information; rather it should
provide information, on the basis of future projections on the actions to be initiated.
 Integrated: Integration is significant because of its ability to produce more meaningful
information. Integration means taking a comprehensive view or looking at the complete picture of
the interlocking subsystems that operate within the company.
 Common Data Flow: Common data flow includes 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 from a practical angle.
  Long Term Planning: MIS is developed over relatively long periods. A heavy element of
planning should be involved.
 Sub System Concept: The MIS should be viewed as a single entity, but it must be broken down
into digestible sub-systems which are more meaningful.
 Central database: In the MIS there should be common data base for whole system

Managerial Levels:

 Senior managers: long-range strategic decisions about products and services

 Middle managers: Carry out the programs and plans of senior management
 Operational managers: monitor the firm’s daily activities
 A typical organization is divided into operational, middle, and upper level. The information
requirements for users at each level differ.
 There are number of information systems that support each level in an organization

Strategic Management Level:

 This is the most senior level in an organization. The users at this level make unstructured
decisions.
 Senior level managers are concerned with the long-term planning of the organization. They use
information from tactical managers and external data to guide them when making unstructured
decisions.
Tactical Management Level:

 This organization level is dominated by middle-level managers, heads of departments,

supervisors, etc.
 The users at this level usually oversee the activities of the users at the operational management
level.
 Tactical users make semi-structured decisions. The decisions are partly based on set guidelines
and judgmental calls.
Operational management level:
  The operational level is concerned with performing day to day business transactions of the
organization.
 Users at this level use make structured decisions. This means that they have defined rules that
guide them while making decisions.

Data versus Information:

 To make good decisions, accurate data can be transformed into information.

 Information Processing Cycle
Input Process Output Storage

(Data) (Information)

Characteristics of Good Information

 Subjective Value
 Relevant
 Timely
 Accurate
 Meaningful Format
 Complete
 Accessible

Process of MIS:

 The process of MIS starts by knowing MIS objectives. The objectives of MIS should be
compatible with the company’s objectives.

 Management comprises process or activities they are as follows:-

1. Recognition of a problem and an opportunity

2. Define problem or opportunity
3. Develop alternative course of action
4. Decision
5. Implementation of plan
6. Control performance against plan

MIS - A Tool for Management Process

 The process of management requires a lot of data and information for execution of the plan.
 This requirement arises on account of the fact in each step of management, a variety of
decisions are taken to correct the course of development.
 The decisions or actions are prompted due to the feedback given by the control system
incorporated in the management system.
  The control of overall performance is made possible by way of Budget Summarizes and
reports. The summary showing sales, costs, profit and return on investment throws light on
the direction the organization is moving to.
 The exception reports identify the weaknesses in the system of management.
 If effective management system is to be assured, it has to rest on business information.
 The management performance improves if the business risk and uncertainties are handled
effectively. If the information provided is adequate, one can deal with these factors squarely.
 The information support improves the lack of knowledge, enriches experience and improves
analytical abilities leading to better business judgment.
 So, if efficient information support is to be provided, it calls for a system with the goals of
generating management information.
 A good MIS must furnish information to the managers to expand their knowledge base. He
must know the adverse trends in business, the shortfalls and failures in the management
process.

MIS and computers (Computerized MIS):

(i) Ability to process data into information with accuracy and high speed. It involves complex
computation, analysis, comparisons and summarization.
(ii) Organizing and updating of huge amount of raw data of related and unrelated nature, derived
from internal and external sources at different periods of time.
(iii) The information processing and computer technology have been so advanced that managers are
able to obtain real time information about ongoing activities and events without any waiting
period.
(iv) The input data in computer can be converted into different output formats for a variety of
purpose.

(v) Super-human memory, tremendous volume of data and information and the set of instructions can
be stored in the computer and can be retrieved as and when needed.

Advantages of Computer: The usage of computer gives following advantages in comparison to manual
MIS:
a) Speed: The speed of carrying out the given instructions logically and numerically is incomparable
between computers and human beings. A computer can perform and give instructions in less than a
millionth of second
b) Accuracy: Computer can calculate very accurately without any errors.
c) Reliability: The information stored in the computer is in digital format. The information can be stored
for a long time and have long life. A user may feel comfortable and be rely on, while using information
stored in computer.
d) Storage: Computer can store huge data for a long time in comparison to human brain.
e) Automaticity: Computers perform automatically in user friendly and menu driven program.
f) Repetitiveness: Computer can be used repetitively to process information without any mental fatigue as
in case of human brain.
g) Diligence: A computer is an electronic device. It does not suffer from the human traits of lack of
concentration.
 h) No Feeling: Computers are devoid of any emotions. They have no feelings and no instincts because
they are machines.
Limitations of Computer:
a) Lack of Common Sense: Computer is only an electronic device. It cannot think. If we provide an
incorrect data, it does not have a commonsense to question the correctness of the data.
b) Memory without Brain: Computer can store data in its memory; however, if a wrong instruction is
given to computer it does not have a brain to correct the wrong instruction.

IMS- a support to the management -

 An Integrated Management System (IMS) integrates all of an organization’s systems and
processes into one complete framework, enabling an organization to work as a single unit with
unified objectives.
 An Integrated Management System (or “IMS”) can benefit your organization through increased
efficiency and effectiveness, and cost reductions while minimizing the disruption caused by
several external audits. It also shows your commitment to increased performance, employee and
customer satisfaction, and continuous improvement.
 With an integrated management system, your management systems work together, with each
function aligned behind a single goal: improving the performance of the entire organization.
 An integrated system provides a clear, uniform image of your entire organization, how they
impact each other, and the associated risks. Efficiency is gained from less duplication, and it
becomes easier to adopt new systems in the future.

MIS: Business Planning:

 In MIS the information is recognized as major resource like capital and time.
 This resource has to be managed well so that it becomes vital resource for the system.
 The management information system needs good planning.
 It should provide support for the management planning, decision making and action.
 MIS plan provides direction for the development of the system.
 It also provides a basis for achieving the specific targets or tasks against time frame.

Contents of MIS planning:

 MIS Goals and Objectives: It is necessary to develop the goal and objectives for the MIS which
will support the business goals. The MIS goals and objectives will consider management
philosophy, policy constraints, Business risk, internal and external environment of the
organization and business. The goals and objectives of the MIS would be so stated that they can
be measured.
 Strategy for Plan Achievement: The designer has to take a number of strategic decisions for the
achievement of MIS goals and objectives. They are-
a) Development Strategy - Eg. An online batch or a real time.
b) System Development Strategy- Designer selects an approach to system development like
operational verses functional, accounting verses analysis.
c) Resources for the Development – Designer has to select resources. Resources can be in-house
verses external, customized or use of package.
d) Manpower Composition- They should have the staffs of an analyst, and programmer.
 The Architecture of MIS: The architecture of the MIS plan provides a system and subsystem
structure and their input, output and linkage. It spells out in details the subsystem from the data
entry to processing, analysis to modeling and storage to printing.
 The System Development Schedule: A schedule is made for development of the system. While
preparing a schedule due consideration is given to importance of the system in the overall
information requirements. This development schedule is to be weighed against the time scale for
achieving certain information requirements.
 Hardware and Software Plan: Giving due regards to the technical and operational feasibility,
the economics of investment is worked out. Then the plan of procurement is made after selecting
the hardware and software. One can take the phased approach of investing starting from the lower
configuration of hardware going to the higher as development take place. The process needs
matching the technical decisions with the financial decisions.