ISSN No :2230-7850

RNI : MAHMUL/2011/38595

Articles Disciplines Covered Review Team Guidelines for reviewers Guidelines to Author FAQ Format of Research Paper Contact Us Vol - I , ISSUE - IV May 2011 : Management

Author : Sadhana Jadhav [ Novel Institute of Management Studies, Chinchwad Pune ]

Article : Management Role Of MIS in Corporate Decision Making

ABSTRACT

The rise and fall of a company or corporation hinges on the real-time decisionmaking ability of top-level and middle-level managers. To make good decisions, managers must have access to the latest and most accurate corporate data. Management information systems are designed to deliver this information to managers in a timely manner.

MIS is considered of recent origin in management but it had always been in existence in past as well. Of course, It was not in a refined form then. Thus, what is new in MIS, is only its computerization which perhaps has become necessary because of environmental pressures on modern business organizations.

MIS is an acronym of three letters i.e.M(Management), I(Informations) and S(system).

Management is to plan , organize, staff , direct and control business resources

to achieve predetermined objectives.

For performing all these functions, a manager has to take an array of decisions. For taking rational decisions, informations is an essential input. Information, which is processed data becomes Information when it is used in decisionmaking and follows certain characteristics, like it is timely, relevant, accurate, current, adequate without superfluous data, clear in form and non repetitive.

System is a set of interrelated elements joined together to achieve a common objective and has input, process, output, feedback and control elements.

It gathers data from the internal and external sources of an organization processes it and supplies Management Information to assist decision-making by managers in an organization.

Keywords :

Raw data

Quality information

Decision making

Intelligence phase

Design phase

Choice phase

Effectiveness

Efficiency

Profitability

Role of MIS in corporate decision making

Introduction:-

The effectiveness of management information systems (MIS) depends upon their impact on the quality of managerial decision making.

A management information system is a system that has important tools to supports, analyze, delivery and adding reliability to any organization. Also this helps to solve business problems. The term MIS is often used to submit to a group of information management methods tied to the support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive information systems.

Decision making is an essence of management. In other words, whatever a manager does, he/she does it through decision making and MIS assists every manager in providing the required information, which is a vital and necessary input in decision making.

Decision making is a process of selecting one optimum alternative from various alternatives.Thus, decision is the end result of the decision making process.

Objectives:

The objectives of MIS in an organization are :

1.Deliver the right information to the right people,at the right time,with the right form.

Ultimately, MIS should improve the workers productivity.

2. To standardize the system of obtaining reports and statistical information from the various hierarchical levels on top, middle as well as lower level people.

3.To record such information on CDs or drives on an organization and send to BODs for budgeting, information storage, analysis and retrieval purposes.

4.To ensure that such information are accurate and timely.

5.To organize information for planning, budgeting and decision making.

6.To help an organizations put in place effective management system and improve utilization of resources.

Overview :

Based on these objectives, It is expected that MIS will assist an organization in decision making on various issues in their operations. To this end, efforts are made by an organization in the areas of the acquisition and use of computers in information processing, computer literacy, establishment of computer services units among others.

MIS and decision making :

Management Information System (MIS ) is basically concerned with the process of collecting, processing, storing and transmitting relevant information to support the management operation in any organization.

Thus , the success of decision making , which is the heart of administration process, is highly dependent partly on available information , and partly on the functions that are the components of the process.

For example : If managerial objectives are absent or unclear, probably due to inadequate information, there is no basis for the search. Without information obtain through a search, there are no alternatives to compare, and without a comparison of alternatives the choice of a particular course of action is unlikely to yield the desired result.

Purpose of the Study:

On the basis of the purpose of the decision making activities, Robert B.Anthony (1965) has differentiated organizational decisions into three categories, namely,

Strategic Planning decisions

Management control decisions

Operational control decisions

Strategic Planning Decisions are those decision in which the decision maker develops objectives and allocates resources to achieve these objectives. Decision in this category are of long time period and usually involve a large investment and effort. Such decisions are taken by strategic planning level (Top level) managers.

Management Control Decisions are taken by management control level (middle level) managers and deal with the use of resources in the organization.

Operational Control Decisions deal with the day- to- day problems that effect the operation of the organization.

The role of an information system in providing information to support decision making in an organization.Simons model of decision making proposes three stages in the decision making process. MIS plays its role in all three stages.

Herbert Simons has suggested three phases of the process of decision making.

They are intelligence, Design and choice phase.

Decision

Intelligence Phase : In this phase, an information system may provide information about internal as well as external environment. Internal information is generated from the functional areas, whereas external information is collected from various sources , such as databases, newspapers, government reports, personal contacts etc. Availability of large amount of information makes it necessary to scan the environment and data sources to get the relevant information . Thus, the decision maker scans the environment and identifies the problem or opportunity. The scanning of environment may be continuous or intermittent.

Intelligence phase of the decision making process involves :

1.Problem searching

2.Problem formulation

Design Phase : In this phase, various alternatives are developed and evaluated. The decision maker identifies alternative courses of action to solve the problem.Developing alternatives is a creative activity which cab be enhanced by various aids such as brain-storming, checklists, analogies etc.

Choice Phase : At this stage, one of the alternatives developed in design phase is selected and is called a decision. For selecting an alternative, a detailed analysis of each and every alternative is made. Information system can provide summarized and organized information to the decision makers at this stage. Several models may be used to select the most appropriate alternative and this help decision makers select the best course of action.

Techniques used in Decision Making :

Simulation : In this approach , a mathematical model of the situation is created. Main decision variable are defined and the model is operated under different assumptions or with different starting conditions to help explore alternative paths for the real situation.

Optimizations: In this technique, a mathematical model of the situation is developed. The model is designed so that optimizations techniques can be used to search for optimal values of decision variables.

OLAP and Data mining : It uses statistical technique to analyse business results and find hidden relationships.

Expert system : Here an experts view of an area of knowledge in terms of facts and rules are summarized and then the facts and rules to a particular situation are applied to help someone else decide what to do.

Case based reasoning: This approach creates a database of examples that may help in making decision.

Use of decision support system :

The need for computerized decision support system become necessary for todays manager because of following reasons:

Fast computation: A decision maker can perform a large number of computations very quickly and that too at a low cost with the help of computer

support system.Todays, in majority of the decisions, time is the essence.

Enhanced productivity : Support systems can enhance the productivity of support staff and also enable the group members to discuss the problem among themselves at a distance.

Data transmission : Sometimes the data, which may be stored at different locations, may be required to be transmitted quickly from the distance locations. Computer support system can search, store, and transmit the required data quickly and economically.

Better Decisions : Computer support systems can help a decision makers in arriving at a better decision

Competitive edge : Dicision support systems enable the users to get a competitive edge over their competitors as these systems enable organizations to change their operations frequently, re-engineer processes and structures, empower employees and innovate.Decision support technologies can create unseful empowerment by allowing people to make good decisions, even if they lack some knowledge.

Impact of decision making in MIS :

The Management Information System ensures that an appropriate data is collected from the various sources, processed, and sent further to all the needy destinations. The system is expected to fulfill the information needs of an individual, a group of individuals, the management functionaries: the managers and the top management.

The MIS satisfies the diverse needs through a variety of systems such as Query Systems, Analysis Systems, Modeling Systems and Decision Support Systems the MIS helps in Strategic Planning, Management Control, Operational Control and Transaction Processing.

The MIS helps the clerical personnel in the transaction processing and answers their queries on the data pertaining to the transaction, the status of a particular record and references on a variety of documents.

The MIS helps the junior management personnel by providing the operational data for planning, scheduling and control, and helps them further in decision making at the operations level to correct an out of control situation.

The MIS helps the middle management in short them planning,target setting and controlling the business functions. It is supported

by the use of the management tools of planning and control.

The MIS helps the top management in goal setting, strategic planning and evolving the business plans and their implementation.

The MIS plays the role of information generation, communication, problem identification and helps in the process of decision making. The MIS, therefore, plays a vita role in the management, administration and operations of an organization.

Conclusion and Recommendations :-

Despite the positives associated with the role of MIS in decision making process, there are a few challenges that are believed to limit the efficacy of MIS.

They include :

1.The dynamic nature of MIS makes it difficult for some organizations to keep up with the principles, strategies, propositions or even ideas.

2. Different situations call for different decisions to be made. This poses challenges to MIS theorists since some MIS tend to not be adaptable.

3. The programming, monitoring and evaluating MIS requires a lot of expertise something which numerous organizations lack.

4. The running of MIS programs tends to be relatively costly for some organization especially small ones who are not well-endowed financially.

5. MIS is more of a science oriented field which business is art oriented. Consequently, finding a middle ground where the two can be linked is quite challenging to some people.

6. Most organizations do not a well-defined decision making system. So even with the right MIS tools, very little can be achieved in terms of improving decision making.

Based on these limitations plus other underlying issues that arises from the main discussion, the following recommendations are suggested :

1. There should be an increased monitoring of MIS so as to avoid falling victims of unobserved MIS which has dire ramification. 2. Managers and business owners should find a way of tailoring information in a way that it fits various decision making processes in variant businesses. 3. The management should encourage the effectuation of a mutually interdependent and balanced MIS where workers and automated systems are handled with due respect. 4. Business entities should find a way in calculating teachings about new MIS in order to reduce the trend of businesses being left behind on new inceptions. 5. A well - defined decision making system should be fledged in businesses so as to provide a viable working environment for MIS.A place to start here would be in inception of a centralized place where all decisions in businesses are channeled though 6. Business managers must ensure that they employ ( or alternatively outsource) professional personnel who are able to ardently run both MIS and

the decision making process.

References:

Jawdekar Waman, Management Information Systems Text and cases, Third edition, Tata McGraw- hill Publishing company Limited, New Delhi

Goyal D.P., 2006,Management information Systems, Managerial perspectives, Second edition, Macmillan India Limited.

C.S.V.Murthy, Management Infoirmation System Text and Applications, Third Edition, Himalay Publishing House Pvt.Ltd, Mumbai.

Muneesh Kumar, Business Information System,Vikas Publishers Distributors, Pvt.Ltd.

Mahadeo Jaiswal, Monika Mital, Management Information Systems, Oxford University Press.

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