Unit 1

Management Information
Systems

1-1
Definition – MIS

MIS is the system, which makes

available the right information to the
right person, at the right place, at the
right cost

1-2
Complexities in Modern Era
Modern Era Characterized by:
Globalization & Liberalization
Necessitates:
• ‘Thinking Globally Acting Locally’

Complexities
Business Complexities – Attributed to:
• Technological Revolution ex Hacking
• Research & Development ex Hair Restoration Recipes
• Changes in Product/ Product Life Cycle ex Chinese Mobile Phones
• Explosion of Information ex Newspaper – End of Winter Sale

Management Complexities – Attributed to:

• Management Science Technologies ex Expert Systems
• Decision Making ex Selling Cold-Drink in Rural at what price/ package?
• Onset of Computers ex Not all are used to thus less acceptable
• Information Feedback System ex Vasundhra Losing to Ashok Gehlot
Complexities … contd…
Resolving Complexities
Strategic Planning
Setting of Objectives (parameters)
Devising Operational Plans
Obtaining / Processing/ Storing,
Retrieving and using information for
Decision making
Information
Invaluable Resource to ensure effective and
efficient decision-making thereby ensuring
optimality of results leading to survival and
prosperity of Organization
Resource:
It is scarce ex Shahruk khan visiting home town Delhi
It has a cost ex Upto 70% discount – visit store”
It has alternative uses ex OIL Strike and Dry Pumps
Opportunity Cost – if information is not processed at right
time ex Petrol prices to be cut down from midnight today
Can be used again & again ex Driving a Vehicle as per
Traffic Rules
Not Tangible
Fingale’s Law of Information
“The information we have,
Is not what we want,
The information we want
Is not the information we need,
The information we need,
Is not available”.

Hence, it is said:
“Don’t Give the manager what he said he
wanted But what he meant”
MIS Vs Routine Data Processing
Layer of Difference

MIS has capability to provide analysis,

planning and decision making support

Users have access to decision models

and methods for querying the
database on ad-hoc basis
MIS - Redefined
It is basically an integrated system
which transforms the data (inputs) into
reports (outputs) for facilitating
decision-making through processing
and using various components of
Information System viz. Hardware,
Software, Database, Procedures and
Personnel
MIS – Formal System Characteristics
Uses Computers and Communication
Technology to deal with:

Handling of Voluminous Data

Confirmation of validity of data and transactions
Complex processing of data and multidimensional
analysis
Quick Search & Retrieval
Mass Storage
Communication of the information system to the
user on time
Fulfilling the changing needs of the information
MIS Concept
Data Judgment Skill/ External
/ Intuition Experience Environment
Processing Logic
Data Decision
Computers Intelligence Design Choice
Data
Human Beings
Decision Making
Information
Database
Decision
Implementation

Monitoring/ Feedback Performance

Role of MIS
Is required to enable managers to take
qualitative decisions
Ensure success for Organizations
Enables managers to minimize the element of
surprise
Enables decision-makers to come out with
appropriate response to a business situation
Enables decision-makers to give either a re-
active or proactive response
Can act or function both as an instrument of
defense as well as a weapon for offence, with
strong strategic planning base
IMPACT of MIS
Creates an Information based work culture in an
organization
Creates an impact on organizational functioning,
performance and productivity
Management of marketing, finance, production and
personnel becomes more sufficient
Makes it convenient to understand business better
Enables systemization of business operations for an
effective system design
Improves administration – everybody is required to
follow and use systems and procedures
Characteristics of MIS
Is viewed as Federation of Sub-
systems Marketing

Production

Logistics

Personnel

F& A

IT

R&D
ACTIVITIES

Strategic Planning

Management Control

Operational
Control
Transaction Processing

Data Base Management System

Database
Characteristics of MIS …contd
Functional Sub-systems

Marketing Sales forecasting, sales planning, customer & sales analysis

Manufacturing Production planning and scheduling, cost control analysis
Logistics Planning and control of purchasing, inventories, distributions
Personnel Planning personnel requirements, analyzing performance, salary
administration
Finance & Financial analysis, cost analysis, capital requirements planning,
Accounting income measurement
Information Information system planning, cost-effective analysis
Processing
Top ManagementStrategic planning, resource allocation
Characteristics of MIS …contd
Activities Sub-System

Transaction Processing Processing of orders, shipment and receipts

Operational Control Scheduling of activities and performance reports

Management Control Formulation of budgets and resource allocation

Strategic Planning Formulation of objectives and strategic plans

MIS As seen by User
User Uses
Clerical Personnel Handle transactions, process input data and answer
inquiries

First Level Managers Obtain operations data. Assistance with planning,

scheduling, identify out-of-control situations, and
making decisions

Staff Specialists Information for analysis, Assistance with Analysis,

Planning and reporting

Management Regular reports, Ad hoc retrieval requests, Ad hoc

analyses, Ad hoc reports, Assistance in identifying
problems and opportunities, assistance in decision
making analysis
MIS : A Multi-disciplinary Subject
Management Accounting – Costs etc.
Management Science/ Theory – Decision
Making
Organizational Theory/ Behavior –
Culture, types etc
Operations Research – Mathematical &
Statistical Techniques
Computer Science
MIS : A Multi-disciplinary Subject

Management
Accounting
Computer Science

Management
Science/ Theory

MIS

Operations Research Behavioral

Sciences

Organization Theory
Changing MIS Focus

MIS MIS MIS

Technical Managerial Institutional

Changes Control Core
Activities

Time 1950s 1960s 1970s 1980s 1990s

Evolution of MIS ESS
KS/ES
Knowledge/
AI
Artificial
Expert
DSS Executive Intelligence
System
Support
Decision
System
Support
System

MIS
Management
Information
System

OAS
Office
Automation
System

TPS
Transaction
Processing
System

1950s 21st Century

Changes in MIS
Type of Information Inputs Processing Information Outputs Users
System
ESS/EIS Aggregate data, external, Graphics; Projections; response to Senior Managers
internal Simulations, queries
interactive
DSS Low-volume data; Interactive; Special reports; decision Professionals; Staff
analytical models simulations, analysis; response Managers
analysis to queries

MIS Summary Transaction Routine reports; Summary & exception Middle Managers
data; high volume simple models, reports
data; simple models low level
analysis

KWS Design Specifications; Modeling, Models, Graphics Professionals; Technical

Knowledge base simulations Staff
OAS Documents, Schedules Document Document; Schedules; Clerical workers
management; mails
scheduling;
communication

TPS Transactions; events Sorting; listing; Detailed reports; lists; Operations personnel;
merging; summaries Supervisors
updating
Pre-Requisites of MIS
Should be a unified system
Should support/ facilitate decisions
Should be compatible with the organization’s structure
and culture
Should have user involvement and user-orientation
Should be cost effective/ beneficial
Should use the principle of selectivity and control by
exception
Should be responsive to change around and within the
organization
Should be speedy and accurate
Should provide validated and valid information
Should be “Management” and NOT “MANIPULATED”
Information System
Contemporary Approaches to MIS
The Technical approach
Centered around mathematical and normative models
Relies heavily on the physical technology and formal capabilities of
systems
Contributors: Computer Science, Management Science and OR

The Behavioral Approach

Developer has to consider the behavioral impact/ response of

people in the organization
Carry out Motivational Feasibility
Contributors: Political Science, Psychology, Sociology and
Organizational Behavior

The Socio-Technical Approach

Merges both Technical & Behavioral
Attempt to borrow heavily from both approaches and synthesize so
as to optimize the performance of Information System as a whole
Increasingly accepted and Implemented
Information for Competitive Advantage
Competitive Advantage:
CA could be usually embodied in either a
product or a service that has most added
value to customers and that is unavailable
from competition
Michael Porter & Victor Millar Postulates
IT is affecting competition in 3 ways
• It changes industry structure, and, in so doing,
alters the rule of competitions
• It spawns whole new business, often from within
the company’s existing operations
• It creates competitive advantage by giving
companies new ways to out-perform their rivals
Porter-Millar Postulates….contd
Changes in Industry Structure
Structure of an industry is embodied in Five
competitive forces defining profitability
• Bargaining power of customers
• Bargaining power of suppliers
• Threat of new entrants in firm’s market
• Pressure from substitute products or services
• Positioning of traditional industry competitor/s
Information & IT can alter each of the 5 to
gain competitive advantage
Porter-Millar Postulates….contd
Spawning of New Business
The Information/ IT Revolution makes new
business technologically feasible
Information/ IT also spawn new business by
creating derived demand for new products
Information/ IT help create/ spawn business
within old ones
CA : Firm can offer a bundle of goods/
services
Porter-Millar Postulates….contd
New ways of doing things
Functional Uses
• Reduce costs in Value Chain (system of interdependent activities connected by linkages)
• CA is a function of Cost/ Value Chain
• Helps in:
– Facilitating product delivery
– Adding value to quality
– Improving product quality
• Helps transform physical processing to Automation
• Bestows speed & ability to move quickly into market ensuring First Mover’s Competitive
Advantage (Often enabling competitive premium)
• Helps in enhancing:
– Quality of operations
– Quality of products
– Quality of Services
• Helps in Simplifying
– Products
– Product Processes
– Production Cycle Time
• Information Helps Organization
– Meet benchmarking standards
– Improve customer service
– Improve quality and precision of design and product
Porter-Millar Postulates….contd
Strategic Uses
Give New Ways to out-perform their rivals
Four Basic Competitive Strategies to deal with competitive forces
• Product Differentiation
• Focused Differentiation
• Developing Right Linkages to customers and suppliers
• Becoming a low-cost product
Intensity of information makes it possible for moree precise
development of strategies, planning, forecasting and monitoring
Availability of External/ Internal Data facilitating
• Problem Solving
• Decision Making
Helps Unlock / Unleash Broader Geographical Scope
Enables “Think Globally, Act Locally”
Separate work from Location & Re-Structure work-flows
Help Acquire Strategic Flexibility (Set of capabilities firms use to
respond to various demands & opportunities viz. part of dynamic
and uncertain competitive environment)
Discussion Question(s)
How can IT support an
Organization’s business processes
and decision making and give it a
competitive advantage?