Chapter Three

Management Information
System

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 Outline
 Management Information System
 Trends in Information System
 The Role of e-Business in Business
 MIS and Information requirements of decision makers
 Barriers to good decision making
 Types of Management Information System

 Transaction Processing Systems

 Decision Support Systems

 Executive information

 Expert Systems

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 Management Information System
 Management Information System is about creating, capturing,
storing, and disseminating data in the form of information
needed to carry out the functions of management.
 Creating Information:
 Generate new information
 Devise solutions to existing problems
 Identify new explanations for events
 Capturing and Storing information
 Enables the organization to:
» Codify new knowledge
» Maintain an organizational memory
 Disseminating Information
 Information can be formatted and easily accessible.

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 Trends in Information System

1960’s
 Electronic Data Processing (EDP)
 Management Information Systems (MIS)
1970’s
 Decision Support Systems (DSS)
1980’s
 End User Computing
 Executive Information Systems (EIS)
 Enterprise Resource Planning (ERP)
1990’s
 The Internet
 Intranets and extranets
 Global networks
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 Cont.

2000’s
 Business Intelligence (BI) – all applications and
technologies focused on gathering and analyzing
data/information for strategic business decisions

 Internet-based/Web-enabled enterprises – dramatically

changed the capabilities of IS in business

 Global e-business and e-commerce – now common place

 IS is now solidly rooted as a strategic resource in the
modern organization
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Cont.

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 The Role of e-Business in Business

E-Business:
 Use of Internet technologies to empower business
processes, e-commerce, and enterprise collaboration
within a firm and its customers, suppliers, and stakeholders
Enterprise Collaboration Systems:
 Support communication, coordination, and collaboration
among networked teams/workgroups.
E-Commerce:
 Buying, selling, marketing and servicing products, services,
and information over computer networks.

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Cont.

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 MIS and Information requirements of decision
makers
 Business decisions are increasingly difficult to make
 Dramatic increase in the internal business data
available to managers
 Managers must keep current on vast amounts of
data resources on the Internet
 Globalization
 The speed of commerce
 The increased number of business choices available
 Group decision making
 Teams may include members from many companies
 Members may have different backgrounds and opinions
 Difficult to reach consensus

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 Barriers to Good Decision Making

 Human cognition
 Our mental ability to comprehend and understand
something
 Human perception
 Difficulty isolating problems
 Tend to think of only narrow range of possible solution
 Human bias
 Tendency to shape responses based on stereotypes,
memory, and current position

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 How to Overcome the barriers

 Decision support systems (DSS) are one tool

 A computer-based system that supports and improves
human decision making
 Helps analyze complex problems
 Process vast amounts of analytical data
 Group decision support systems (GDSS)
 Tool for supporting team decision making( e.g.
Brainstorming tools, Commenter tools, Categorizing tools,
Idea-ranking tools, Electronic-voting tools, Group
facilitator)
 Executive information system (EIS)
 Computer-based system that supports the decision-making
processes of senior managers

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 Types of Management Information System

Four basic types of Management Information System

1. Transaction Processing Systems

2. Decision Support Systems

3. Executive information

4. Expert Systems

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 Transaction Processing System (TPS)

 Their objective is to process transactions in order to

update records and generate reports.
 Example

 Payroll system

 Bank transaction system

 Are designed to process day to day and routine

transactions efficiently and accurately.

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 Cont.

 A business will have several TPS; for example:

 Billing systems to send invoices to customers

 Systems to calculate the weekly and monthly payroll and

tax payments
 Production and purchasing systems to calculate raw

material requirements
 Stock control systems to process all movements into,
within and out of the business

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 Cont.
 Transaction processing systems are faster and more accurate
than the manual system.
 Deals with well-structured processes including record keeping
applications.
 The form and format of the data input and the information
output of the systems are highly structured.
 TPS processing transaction into two ways:
 Batch Processing:-Data is accumulated over a period time and
processed periodically. Ex. payroll system
 Real Time Processing: Data is immediately processed after a
transaction occurs.
 Ex1: Sales and Inventory Processing ,
 Ex2 transfers funds from a customer’s bank account to a retail
outlet’s account after scanning a customer’s debit card.

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 Cont.
 Transaction processing system output may take the form of
transaction documents or database queries.
A. Transaction documents
 Many transaction processing systems produce transaction documents, such
as purchase orders or payroll lists.
 These documents may be classified as
 Action documents
 Action documents imply that some kind of action is taken.
 For example, an airline ticket guarantees that a seat on an
airplane is reserved, or a bank has to pay out money when a
cheque is presented.
 Information documents
 Information documents confirm that a transaction has taken
place or informs about one or various transactions.
 For example, a bank transfer slip with details of the transfer.

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 Cont.

B. Database queries
 A wide variety of information can be extracted from a database
using a database management system.
 These queries can provide lists of all transactions processed during
a specific time period.
 ex1. dashboard information from many tables

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 Management Information System(MIS)
 MIS is generally defined as an integrated user-machine system
for providing information to support operations, management
and decision-making functions in an organization.
 Information is viewed as a resource much like land, labor and
capital.
 It must be obtained, processed, stored, manipulated and
analyzed, distributed in and out the organization.
 An organization with a well-defined information system will
generally have a competitive advantage over organization with
poor MIS and no MIS.

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 Decision Support System(DSS)
 A system used to support problem-specific decision making
 Decision support systems provide interactive information
support to managers and business professionals during the
decision making process.
 It provides managerial end user with information in an
interactive manner i.e., analytical modeling, data retrieval
information presentation capability.
 End-users are more involved in creating a DSS than an MIS

 Ex: Product pricing, Risk Analysis

 DSS systems are specifically designed to help management

make decisions in situations where there is uncertainty about
the possible outcomes of those decisions.
 e.g. Simulations and emulator analysis tools, modeling

tools, sales region analysis by spreadsheet

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 Executive Information System (EIS)
 An Information System that provides Strategic information
tailored to the needs of executives and other decision makers
(top management).
 It gathers, analyses and summarizes the key internal and
external information used in the business.
 It provides top management with immediate and easy access
to select information about key factors that are critical to
organizational strategic objectives.
 Ex: The top level executives may use the touch screen to

instantly view text and graphics that display the key areas
of the organization.

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 Expert System
 Expert Systems are knowledge-based systems that provides
expert advice and act as expert consultants to the users
 A system that gives a computer the ability to make

suggestions and act like an expert in a particular field.

 Knowledge Base system: The collection of data, rules,

procedures, and relationships that must be followed to

achieve value or the proper outcome/goal.
 End user computing systems support the direct, hands on use
of computers by end users for operational and managerial
applications.
 Expert advice for operational decisions

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Thank you !!!!

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