Unit I

INTRODUCTION TO MANAGEMENT INFORMATION SYSTEMS Management Information Systems - Concept

The concept of the MIS has evolved over a period of time comprising many different facets of the organizational functions. MIS is necessity of all the organizations. The initial concept of MIS was to process data from the organization and present it in the form of reports as regular intervals. The system was largely capable of handling the data from collection to processing. It was more impersonal, requiring each individual to pick and choose the processed data and use it for his requirements. This concept was further modified when a distinction was made between data and information. The information is a product of an analysis of data. This concept is similar to a raw material and the finished product. What is needed is information and not a mass of data. However, the data can be analyzed in a number of ways, producing different shades and specifications of the information as a product. It was, therefore, demanded that the system concept should be an individual oriented, as each individual may have a different orientation towards the information. This concept was further modified, that the system should present information in such a form and format that it creates an impact on its user, provoking a decision, an action or an investigation. It was later realized that even though such an impact was a welcome modification, some sort of selective approach was necessary in the analysis and reporting. Hence, the concept of exception reporting was imbibed in MIS. The concept remained valid till and to the extent that the norm for an exception remained true and effective. Since the environment turns competitive and is ever changing, fixation of the norm for an exception becomes a futile exercise at least for the people in the higher echelons of the organization. The concept was then evolved that the system should be capable of handling a need based exception reporting. This need may be either of an individual or a group of people. This called for keeping all data

together in such a form that it can be accessed by anybody and can be processed to suit his needs. The concept is that the data is one but it can be viewed by different individuals in different ways. This gave rise to the concept of Database, and the MIS based on the database proved much more effective. The concept of MIS gives high regard to the individual and his ability to use the information. An MIS gives information through data analysis. While analyzing the data, it relies on many academic disciplines. These include the theories, principles and concepts from the Management Science, Management Accounting, Operations Research, Organization Behavior, Engineering, Computer Science, Psychology and Human Behavior, making the MIS more effective and useful. These academic disciplines are used in designing the MIS, evolving the decision support tools for modeling and decision-making. MIS uses the concept of management control in its design and relies heavily on the fact that the decision maker or the manager is a human being and is a human processor of information. A management Information System can be evolved for a specific objective if it is evolved after systematic planning and design. It calls for an analysis of a business, management views and policies, organization culture and the management style. The information should be generated in this setting and must be useful in managing the business. This is possible only when it is conceptualized as a system with an appropriate design. The MIS, therefore, relies heavily on the systems theory. The systems theory offers solution to handle the complex situations of the input and output flows. It uses theories of communication which helps to evolve a system design capable of handling data inputs, process, and outputs with the least possible noise or distortion in transmitting the information from a source to a destination. It uses the principles of System Design, viz., an open system or a closed system. An open system of the MIS offers an ability of continuous adjustment or correction in the system in line with the environmental changes in which the MIS operates. Such a design helps to keep the MIS tuned with the business management needs of the organization.

 The concept, therefore, is a blend of principles, theories and practices of the Management, Information and System giving rise to single product known as Management Information System (MIS). The MIS is a product of a multi-disciplinary approach to the business management. It is a product which needs to be kept under a constant review and modification to meet the corporate needs of the information. The MIS model of organization changes over a time, as the business passes through several phases of developmental growth cycle. It supports the management of business in each phase by giving the information which is crucial in that phase. Every business has critical success factors in each phase of growth cycle and the MIS model gives more information on the critical success factors for decision making.

MIS, or management information systems, are used to manage the data created within the structure of a particular business. These systems store the data and allow the business to manipulate, analyze and compile the data through the use of software applications. Reports and analysis pulled from an information system can assist in the directing, planning and decision making needs of managers. Terminology The terms MIS, information system, ERP and, information technology management are often confused. Information systems and MIS are broader categories that include ERP. Information technology management concerns the operation and organization of information technology resources independent of their purpose. Types Most management information systems specialize in particular commercial and industrial sectors, aspects of the enterprise, or management substructure.

Management information systems (MIS), per se, produce fixed, regularly scheduled reports based on data extracted and summarized from the firms underlying transaction processing systems[4] to middle and operational level

managers to identify and inform structured and semi-structured decision problems. Decision support systems (DSS) are computer program applications used by middle management to compile information from a wide range of sources to support problem solving and decision making. Executive information systems (EIS) is a reporting tool that provides quick access to summarized reports coming from all company levels and departments such as accounting, human resources and operations. Marketing information systems are MIS designed specifically for managing the marketing aspects of the business. Office automation systems (OAS) support communication and productivity in the enterprise by automating work flow and eliminating bottlenecks. OAS may be implemented at any and all levels of management. School management information systems (MIS) cover school administration, often including teaching and learning materials.

Advantages The following are some of the benefits that can be attained for different types of management information systems.[5]

Companies are able to highlight their strengths and weaknesses due to the presence of revenue reports, employees' performance record etc. The identification of these aspects can help the company improve their business processes and operations. Giving an overall picture of the company and acting as a communication and planning tool. The availability of the customer data and feedback can help the company to align their business processes according to the needs of the customers. The fective management of customer data can help the company to perform direct marketing and promotion activities. Information is considered to be an important asset for any company in the modern competitive world. The consumer buying trends and behaviours can be predicted by the analysis of sales and revenue reports from each operating region of the company.

Types of information systemwritten by Chris Gountanis An information system is a collection of hardware, software, data, people and procedures that are designed to generate information that supports the day-to-day, short-range, and long-range activities of users in an organization. Information systems generally are classified into five categories: office information systems, transaction processing systems, management information systems, decision support systems, and expert systems. The following sections present each of these information systems. 1. Office Information Systems An office information system, or OIS (pronounced oh-eye-ess), is an information system that uses hardware, software and networks to enhance work flow and facilitate communications among employees. Win an office information system, also described as office automation; employees perform tasks electronically using computers and other electronic devices, instead of manually. With an office information system, for example, a registration department might post the class schedule on the Internet and e-mail students when the schedule is updated. In a manual system, the registration department would photocopy the schedule and mail it to each students house.An office information system supports a range of business office activities such as creating and distributing graphics and/or documents, sending messages, scheduling, and accounting. All levels of users from executive management to non management employees utilize and benefit from the features of an OIS. The software an office information system uses to support these activities include word processing, spreadsheets, databases, presentation graphics, e-mail, Web browsers, Web page authoring, personal information management, and groupware. Office information systems use communications technology such as voice mail, facsimile (fax), videoconferencing, and electronic data interchange (EDI) for the electronic exchange of text, graphics, audio, and video. An office information system also uses a variety of hardware, including computers equipped with modems, video cameras, speakers, and microphones; scanners; and fax machines. 2. Transaction Processing Systems A transaction processing system (TPS) is an information system that captures and processes data generated during an organizations day-to-day transactions. A

transaction is a business activity such as a deposit, payment, order or reservation. Clerical staff typically perform the activities associated with transaction processing, which include the following: 1. Recording a business activity such as a students registration, a customers order, an employees timecard or a clients payment. 2. Confirming an action or triggering a response, such as printing a students schedule, sending a thank-you note to a customer, generating an employees paycheck or issuing a receipt to a client. 3. Maintaining data, which involves adding new data, changing existing data, or removing unwanted data. Transaction processing systems were among the first computerized systems developed to process business data a function originally called data processing. Usually, the TPS computerized an existing manual system to allow for faster processing, reduced clerical costs and improved customer service. The first transaction processing systems usually used batch processing. With batch processing, transaction data is collected over a period of time and all transactions are processed later, as a group. As computers became more powerful, system developers built online transaction processing systems. With online transaction processing (OLTP) the computer processes transactions as they are entered. When you register for classes, your school probably uses OLTP. The registration administrative assistant enters your desired schedule and the computer immediately prints your statement of classes. The invoices, however, often are printed using batch processing, meaning all student invoices are printed and mailed at a later date. Today, most transaction processing systems use online transaction processing. Some routine processing tasks such as calculating paychecks or printing invoices, however, are performed more effectively on a batch basis. For these activities, many organizations still use batch processing techniques. 3. Management Information Systems While computers were ideal for routine transaction processing, managers soon realized that the computers capability of performing rapid calculations and data

comparisons could produce meaningful information for management. Management information systems thus evolved out of transaction processing systems. A management information system, or MIS (pronounced em-eye-ess), is an information system that generates accurate, timely and organized information so managers and other users can make decisions, solve problems, supervise activities, and track progress. Because it generates reports on a regular basis, a management information system sometimes is called a management reporting system (MRS). Management information systems often are integrated with transaction processing systems. To process a sales order, for example, the transaction processing system records the sale, updates the customers account balance, and makes a deduction from inventory. Using this information, the related management information system can produce reports that recap daily sales activities; list customers with past due account balances; graph slow or fast selling products; and highlight inventory items that need reordering. A management information system focuses on generating information that management and other users need to perform their jobs. An MIS generates three basic types of information: detailed, summary and exception. Detailed information typically confirms transaction processing activities. A Detailed Order Report is an example of a detail report. Summary information consolidates data into a format that an individual can review quickly and easily. To help synopsize information, a summary report typically contains totals, tables, or graphs. An Inventory Summary Report is an example of a summary report. Exception information filters data to report information that is outside of a normal condition. These conditions, called the exception criteria, define the range of what is considered normal activity or status. An example of an exception report is an Inventory Exception Report is an Inventory Exception Report that notifies the purchasing department of items it needs to reorder. Exception reports help managers save time because they do not have to search through a detailed report for exceptions. Instead, an exception report brings exceptions to the managers attention in an easily identifiable form. Exception reports thus help them focus on situations that require immediate decisions or actions. 4. Decision Support Systems Transaction processing and management information systems provide information

on a regular basis. Frequently, however, users need information not provided in these reports to help them make decisions. A sales manager, for example, might need to determine how high to set yearly sales quotas based on increased sales and lowered product costs. Decision support systems help provide information to support such decisions. A decision support system (DSS) is an information system designed to help users reach a decision when a decision-making situation arises. A variety of DSSs exist to help with a range of decisions. A decision support system uses data from internal and/or external sources. Internal sources of data might include sales, manufacturing, inventory, or financial data from an organizations database. Data from external sources could include interest rates, population trends, and costs of new housing construction or raw material pricing. Users of a DSS, often managers, can manipulate the data used in the DSS to help with decisions. Some decision support systems include query language, statistical analysis capabilities, spreadsheets, and graphics that help you extract data and evaluate the results. Some decision support systems also include capabilities that allow you to create a model of the factors affecting a decision. A simple model for determining the best product price, for example, would include factors for the expected sales volume at each price level. With the model, you can ask what-if questions by changing one or more of the factors and viewing the projected results. Many people use application software packages to perform DSS functions. Using spreadsheet software, for example, you can complete simple modeling tasks or what-if scenarios. A special type of DSS, called an executive information system (EIS), is designed to support the information needs of executive management. Information in an EIS is presented in charts and tables that show trends, ratios, and other managerial statistics. Because executives usually focus on strategic issues, EISs rely on external data sources such as the Dow Jones News/Retrieval service or the Internet. These external data sources can provide current information on interest rates, commodity prices, and other leading economic indicators. To store all the necessary decision-making data, DSSs or EISs often use extremely large databases, called data warehouses. A data warehouse stores and manages the data required to analyze historical and current business circumstances. 5. Expert Systems

An expert system is an information system that captures and stores the knowledge of human experts and then imitates human reasoning and decision-making processes for those who have less expertise. Expert systems are composed of two main components: a knowledge base and inference rules. A knowledge base is the combined subject knowledge and experiences of the human experts. The inference rules are a set of logical judgments applied to the knowledge base each time a user describes a situation to the expert system. Although expert systems can help decision-making at any level in an organization, nonmanagement employees are the primary users who utilize them to help with job-related decisions. Expert systems also successfully have resolved such diverse problems as diagnosing illnesses, searching for oil and making soup. Expert systems are one part of an exciting branch of computer science called artificial intelligence. Artificial intelligence (AI) is the application of human intelligence to computers. AI technology can sense your actions and, based on logical assumptions and prior experience, will take the appropriate action to complete the task. AI has a variety of capabilities, including speech recognition, logical reasoning, and creative responses. Experts predict that AI eventually will be incorporated into most computer systems and many individual software applications. Many word processing programs already include speech recognition. Integrated Information Systems With todays sophisticated hardware, software and communications technologies, it often is difficult to classify a system as belonging uniquely to one of the five information system types discussed. Much of todays application software supports transaction processing and generates management information. Other applications provide transaction processing, management information, and decision support. Although expert systems still operate primarily as separate systems, organizations increasingly are consolidating their information needs into a single, integrated information system. INFORMATION CONCEPTS Information Concepts

The word `information' is used commonly in our day to day working. In MIS, information has a precise meaning and it is different from data. The information has a value in decision making while data does not have. Information brings clarity and creates an intelligent human response in the mind. In MIS a clear distinction is made between data and information. Data is like raw materials while the information is equivalent to the finished goods produced after processing the raw material. Information has certain characteristics. These are:

Information Improves representation of an entity Updates the level of knowledge Has a surprise value Reduces uncertainty Aids in decision making

The quality of information could be called good or bad depending on the mix of these characteristics. Information Presentation Presentation of the information is an art. The data may be collected in the best possible manner and processed analytically, bringing lot of value in the information; however, if it not presented properly, it may fail to communicate anything of value to the receiver. The degree of communication is affected by the methods of transmission, the manner of information handling and the limitation and constraints of a receiver as the information user. The methods used for improving communication are summarization and message routing. The concept of summarization is user to provide information which is needed in the form and content. The information can be summarized in a number of ways as shown in Table below. The principle behind summarization is that too much information causes noises and distortions, i.e., confusion, misunderstanding and missing and purpose. The summarization suppresses the noise and the distortions.

Table: Information Summarization Key for summarization Management position Focus of information Responsibility Example General Manager, Divisional Head Marketing, Materials Production Top, Middle Operations Only those products, where sale is below the budget

Management functions Levels in the organization Selective on condition

Performance, Goals, Targets Relevance to the level Exceptions

Another method of improving the degree of communication is through message routing. The principle here is to distribute information to all those who are accountable for the subsequent actions or decisions in any manner. That is if the information is generate with a certain purpose for a primary user, the information may have secondary purposes to some other users in the organization. This is achieved by sending the copies of the reports or documents to all the concerned people or users. The principle of the message routing achieves the spread of information to the appropriate quarters. Knowledge is a power and an intelligent person in the organization can misuse this power to achieve personal goals undermining the functional and organizational goals. This tendency should be curbed. Further, the decision maker may call for the information on the grounds that, just in case required, he should readily have it. Apart from the misuse of information, it has an impact on the cost of information processing.

System Concepts Fundamental Information System Concepts That Computer networks are systems of information processing components.

That Business uses of Computer networks are really interconnected business information systems. That developing ways to use computer networks in business includes designing the basic components of information systems. That managing information technology emphasizes the quality, business value, and security of an organizations information systems. Definition of system: System is a group of interrelated components working together toward a common goal by accepting input and producing outputs in an organized transformation process. System has three basic interacting components or Functions: 1. Input Involves capturing and assembling elements that enter the system to be processed. For ex. Raw materials, energy, data, and human effort must be secured and organized for processing. 2. Processing involves transformation processes that convert into output. Ex: manufacturing process, the human breathing process or mathematical calculations. 3. Output involves transferring elements that have been produced by a transformation process to their ultimate destination. E.g. finished products ,human services, and management information must be transmitted to their human users. The system concept becomes even more useful by including two addition components: feedback and control .A system with feedback and control components is sometimes called a Cybernetic system that is self monitoring and self regulating system. Feedback: is data about the performance of a system. Ex. Data about sales performance is feedback to a sales manager. Control: involves monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal. The control function then makes necessary adjustments to a systems input and processing components to ensure that it produces proper output. A business is an organizational system where economic resources of (input) are transformed by various organization processes (processing) into goods and services(output).Information Systems provide information(feedback)on the operations of the system to management for the direction and maintenance of the system(control),as it exchanges inputs and outputs with its environment. Components of Information System

Information system Model that expresses a fundamental conceptual framework for major components and activities of information systems. Information System depends on the resources of 1.People (End user and IS specialists) 2.Hardware (Machine and Media) 3.Software (Program and procedures) 4.Data (Data and knowledge base) 5.Network (communication media and Network support)to perform input, processing, output, storage and control activities that convert data resources into information products. Information system model highlights the relationships among the components and activities of information systems .It provides a framework that emphasizes four major concepts that can applied to all types of information systems. There are the five basic resources of information system. People resources include end users and are specialists Specialist: -System analysis, programmer, computer operators. End user: -any one else who uses information system. hardware resources consist of machine and media, Machines: Computers, Video monitors, magnetic disk drive, printers, output scanners .Media: Floppy disk, magnetic tape, optical disks, paper forms, plastic card. Software resources include both programs and procedures, Programs: operating system, spreadsheet programs, word processing programs, payroll program. Procedures: data entry procedures, error correction procedures, paycheck distribution procedures. Data resources can include data and knowledge base, Data resources are transformed by information processing activities into a variety of information products for end users. Procedure descriptions, customer records, employee files, inventory database. Network resources include communications media and networks. Information processing consists of input, processing, output, storage, and control activities. Communications media, communications processors, network access and control software. Information Products:Management reports, and Business documents using text and graphics displays, Audio responses and paper forms.