MIS CONCEPTS AND

DEFINITIONS
Information is the basis for every decision taken in an organization. The efficiency of
management depends upon the availability of regular and relevant information. Thus
it is essential that an effective and efficient reporting system be developed as part of
accounting system. The main object of management information is to obtain the
required about the operating results of an organization regularly in order to use them
for future planning and control.
The old techniques like intuition, rule of thumb, personal whim and prestige, etc. are
now considered useless in the process of decision taking. Modern management is
constantly on look out for such quantitative and such information, which can help in
analyzing the proposed alternative actions and choosing one as its decision. Thus,
modern management functions are informationoriented more popularly known
as !management by information". #nd the system through which information is
communicated to the management is known as!management information system
$MIS). The management needs full information before taking any decision. %ood
decisions can minimize costs and optimize results. Management information system
can be helpful to the management in undertaking management decisions smoothly
and effectively.
DEFINITION OF MIS
It is combination of three words i.e. Management, Information and &ystem. To better
understand the concept MI&, we will try to understand these three words.
MANAGEMENT
'arious scholars have described (Management) in various ways, but *oontz)s
definition would be considered+ !Management is the art of getting things done
through and with the efforts of other people."
,owever, a manager gets things done by performing basic managerial functions.
These functions are+
-lanning, .rganizing, &taffing, /irecting and 0ontrolling which can be seen in fayol
definition of management.
It can be observed that ,enry 1ayol defines what a manager does, but it is probably
more appropriate to define what management is in this concept $which is clearly
seen in *oontz)s definition2 rather than what management does.
Management is the process of allocating an organization3s inputs, including human
and economic resources, by planning, organizing, directing, and controlling for the
purpose of producing goods or services desired by customers so that organizational
objectives are accomplished. If management has knowledge of the planning,
organizing, directing, and controlling of the business, its decisions can be made on
the basis of facts, and decisions are more accurate and timely as a result.
BASIC MANAGEMENT PROCESS
4et)s look at what are processes involved in managing a company or business.
There are four generic management processes involved.
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-lanning is the decision of who is going to do what by when, or what is going to be
done when by whom, depending whether the management style is processoriented
or productoriented.
,ence, the first step in a planning process is the definition or a clear understanding
of the functional goals. &ometimes goals are not available6 then, you should
delineate goals from the corporate mission statement or corporate goals and
objectives.
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#fter the objectives or plans have been lineup, managers need to organize their
own and their subordinates) activities to accomplish the objectives of the plan. This
process includes obtaining necessary resources like finance and equipment, and
organizing and scheduling each facet of the plan.

It is usually required to break tasks into smaller units $the subtasks2 and allocate
subtasks to capable individuals with definite completion dates. The managers of
each unit must develop an action plan which can help to coordinates and
orchestrates the entire project on paper to allow the task to be completed on time.
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1ollowing the organizing stage, the activities of the plan are carried out in the
directing stage. The managers implement or e:ecute the plan as it was organized,
and resources and personnel are deployed according to the predetermined time
sequence. The process leader $who may not be the functional manager2 leads,
motivates, delegates and coordinates in order to complete the process.
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#s soon as managers have implemented a plan, they need to know the e:tent to
which they have accomplished their missions. In other words, they need to find out
what the gap is and then take action to bridge or close the gap.
In controlling any task or duty, if a variance is beyond the predefined tolerance level,
some adjustments or remedial actions must be arranged. The standard could be a
capital budget, sales volume or defect level. The variance is a measure of how the
actual performance deviates from the standard, or the budgeted amount. Managers
can then investigate the causes of the deviation, and determine any corrective
action. The proposed actions act as feedback information that may revise the
standard or budgeted amount. ,ence, controlling is often an iterative process.
INFORMATION
It is the second component of (MI&). Information is a data which is processed and
presented to decision makers and helps them in making decisions.
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Information can be said to have a number of different characteristics that can be
used to describe its quality. The differences between (good) and (bad) information can
be identified by considering whether or not it has some or all of theattributes of
information ua!it".
#ccording to .)7rien $=>>?2 information quality can be described as being divided
into three basic categories+ time, content and form.
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The time #imension describes the time period that the information deals with and
the frequency at which the information is received.
Time!iness. The information should be available when needed. If information is
provided too early, it may no longer be current when used. If the information is
supplied too late, it will be of no use.
Curren$". The information should reflect current circumstances when provided.
.ne can go further and suggest that as well as being uptodate the information
should also indicate those areas or circumstances liable to change by the time the
information is used.
Freuen$". In addition to being available when needed, information should also be
available as often as needed. This normally means that information should be
supplied at regular intervals, for e:ample some organizations may require weekly
sales reports whilst others need only monthly reports.
Time %erio#. The information should cover the correct time period. # sales forecast,
for e:ample, might include information concerning past performance, current
performance and predicted performance so that the recipient has a view of past,
present and future circumstances.
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The $ontent #imension describes the scope and contents of the information.
A$$ura$". Information that contains errors has only limited value to an organization.
Re!e&an$e. The information supplied should be relevant to a particular situation and
should meet the information needs of the recipient. 9:traneous detail can
compromise other attributes of information quality, such as conciseness.
Com%!eteness. #ll of the information required to meet the information needs of the
recipient should be provided. Incomplete information can compromise other
attributes of information quality, such as scope and accuracy.
Con$iseness. .nly information relevant to the information needs of the recipient
should be supplied. In addition, the information should be provided in the most
compact form possible. #s an e:ample, sales figures are normally provided in the
form of a graph or table @ it would be unusual for them to be supplied as a
descriptive passage of te:t.
S$o%e. The scope of the information supplied should be appropriate to the
information needs of the recipient. The recipient)s information needs will determine
whether the information should concern organizational or e:ternal situations and
whether it should focus on a specific area or provide a more general overview
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The form #imension describes how the information is presented to the recipient.
C!arit". The information should be presented in a form that is appropriate to the
intended recipient. The recipient should be able to locate specific items quickly and
should be able to understand the information easily.
Detai!. The information should contain the correct level of detail in order to meet the
recipient)s information needs. 1or e:ample, in some cases highly detailed
information will be required whilst in others only a summary will be necessary.
Or#er. Information should be provided in the correct order. #s an e:ample,
management reports normally contain a brief summary at the beginning. This allows
a manager to locate and understand the most important aspects of the report before
e:amining it at a higher level of detail.
Presentation. The information should be presented in a form that is appropriate to
the intended recipient. /ifferent methods can be used to make information clearer
and more accessible to the recipient, for e:ample it is common to present numerical
information in the form of a graph or table.
Me#ia. Information should be presented using the correct medium. 1ormal
information, for e:ample, is often presented in the form of a printed report, whereas a
presentation might make use of a slide projector.
S'STEM
The word (&ystem) is a set of elements that are interrelated and interdependent to
achieve a common goal.
DEFINITION
MANAGEMENT INFORMATION S'STEM (MIS)
#fter discussing the three components of MI&, now we shall try to understand its
definition. Ahile discussing the components+ Management, Information and &ystem, it
has been cleared that decision making is an important part of managerial functions. 1or
taking adequate decisions, Management Information $MI2 is necessary as it works as a
vital input.
# system which consists of people, machines, procedures, databases and data models
as its components is known as Management Information &ystem. This system collects
data from e:ternal and internal sources of an organization, analyse it and supplies
management information to managers and helps them in making decisions.
#ccording to %.7. /avis, !MI& is a man or machine that provide information to support
management in decision making process
IT AND MIS )IS
Information Technology $IT2 is sometimes called as a technological side of an
information systemBMI&, which includes hardware, software, networks and other
devices. In other words, IT is a subsystem of an information systemBMI&.
NAT*RE AND SCOPE OF MIS
MI& is neither a pure science nor an art6 it is recognized as a combination of both. It has
been much analyzed on the issue whether MI& is managementoriented or computer
oriented. #pplications in MI& are found in computers and because of this MI& may be
described as 0omputer7ased MI& $07MI&2.
F*NCTIONS OF MIS
#ccording to Mi!in# Gan#+i MI& is set up by an organization with the prime
objective to obtain management information to be used by its managers in decision
making. Thus, MI& must perform the following functions in order to meet its
objectives.
Data Ca%turin,- MI& captures data from various internal and e:ternal sources of an
organization. /ata capturing may be manual or through computer terminals. 9nd
users typically, record data about transactions on some physical medium, such as a
paper form, or enter it directly into a computer system.
Pro$essin, of Data- The captured data is processed to convert it into the required
management information. -rocessing of data is done by such activities as
calculating, comparing, sorting, classifying and summarizing. These activities
organize, analyze, and manipulate data using various statistical, mathematical,
operations research and other business models.
Stora,e of Information- MI& 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. &tored data is commonly organized into fields, records, files and databases.
Retrie&a! of Information- MI& retrieves information fro its stores as and when
required by various users. #s per the requirements of management users, the
retrieved information is either disseminated as such or it is processed again to meet
the e:act MI demands.
Dissemination of MI- Management Information, which is a finished product of MI&,
is disseminated to the users in the organization.
C.ARACTERISTICS OF MIS
S"stem A%%roa$+- The information system follows a &ystem)s approach.
The system)s approach implies a holistic approach to the study of system
and its performance in the light for the objective for which it has been
constituted.
Mana,ement Oriente#- This is an important characteristic of MI&. 1or designing of
MI&, topdown approach should be followed. Topdown approach suggests that the
system development starts from the determination of management needs and overall
business objectives. The MI& development plan should be derived from the overall
business plan. Management oriented characteristic of MI& also implies that the
management actively directs the system development efforts.
Nee# Base#- MI& design and development should be as per the information needs
of managers at different levels, strategic planning level, management control level
and operational control level. In other words, MI& should cater to the specific needs
of managers in an organization)s hierarchy.
E/$e%tion Base#- MI& should be developed on the e:ception based reporting
principle, which means an abnormal situation, i.e. the ma:imum6 minimum or
e:pected values vary beyond tolerance limits. In such situations, there should 79
e:ception reporting to the decision maker at the required level.
Future Oriente#- 7esides e:ception based reporting, MI& should also look at the
future. In other words MI& should not merely provide past or historical information6
rather it should provide information, on the basis of projections based on which
actions may 79 initiated.
Inte,rate#- Integration is a necessary characteristic of a management information
system. Integration is significant because of its ability to produce more meaningful
information. 1or e:ample, in order to develop an effective production scheduling
system, it is necessary to balance such factors as+
&etup costs,
Aork force
.vertime rates
-roduction capacity
Inventory level
0apital requirements
0ustomer services
0on, Term P!annin,- MI& is developed over relatively long periods. &uch system does
not develop overnight. # heavy element of planning is involved. The MI& designer must
have the future objectives and needs of the company in mind.
Sub1S"stem Con$e%t- The process of MI& development is quite comple: and one is
likely to lose insight frequently. Thus, the system, though viewed as a single entity, must
be broken down into digestible subsystems which are more meaningful at the planning
stage.

Centra! Database- # central database is the mortar that holds the functional systems
together. 9ach system requires access to the master file of data covering inventory,
personnel, vendors, customers, etc. If the data is stored efficiently and common usage in
mind, one master file 0an provide the data needed by any of the functional systems. It
seems logical to gather data once, to properly validate it and to place it on a central
storage medium, that 0an 79 accessed by any other sub system.