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MANGEMENT INFORMATION SYSTEM

Note : These notes are just the documented version of slides used in classroom sessions.
Please do not depend on these notes as they just provide with the outline of the course
structure. Major studies should be done using some good books available in your library.

A “System” which facilitates the management by providing timely and

useful information which is used in taking decisions and control
operations at various levels.

MIS: Evolution
Started with industrial revolution
Growth of business and business complexities
Required more governance
Account keeping initially
Major Boost : Globalization in past 30 years
Big corporations and spread of business to globe
Requirement for quick and accurate information
Transformation of industrial economies to service economies
Turbulant environment and shorter product life
Modern multidivision,multilocation and mutiproduct organizations
Growth in computer technology
Incorporation of VLSI
MIS extended to DSS and ESS

Why…”IS”
• Most organizations need information to survive and prosper
• To extend their reach to faraway locations
• Competitive business environment
• To maintain information value chain
• To enhance the management activities like …planning, controlling and decision
making
• For the power growth of supply chain management, enterprise management,
customer management and knowledge management.

Deadly Four (reasons for MIS)

Globalization
Transformation of Industrial economies
Transformation of the Enterprise
Emergence of the Digital Firm

Global Economy
Advanced economies depend on Foreign Trade ( imports and exports )
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Distribution of work to other locations and cost effective areas

Need to be on line 24*7
Need powerful information and communication systems
Need to have analytical power to conduct business globally

What’s Industrial Economy ?

Growth of information and knowledge economies
More white than blue
New product and services
Shorter product life
Turbulent environment
Knowledge : a central strategic asset
Both designing and production depend on knowledge

Transformation of Business Enterprise

Traditional New style
Fixed SOP Decentralized, flattened
Hierarchial, centralized Information systems
Formal plans Informal commitments
Rigid Flexible
Mass production Consumer specific

Emergence of Digital Firm

Digitally enabled relationship with customers, suppliers and employees
Digital management of key corporate assets
Rapid sensing and responding to environmental changes

What is Information System

A set of interrelated components collect, process, store and distribute information
to support decision making and control in the organization.
Helps managers to analyze problems, visualize complex subjects and design
new products
Contains information about significant people, places and things within the
organization or in the environment surrounding it.
Process of Conversion data into useful information for the potential users and the
techniques to deliver it.

Functions of MIS
Input
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Process
Output
Feedback

Input
The capture or collection of raw data from within the organization or from its
external environment for processing in an information system.
Processing
The conversion manipulation and analysis of raw data into a form that is more
meaningful to humans
Output
The distribution of processed information to the people who will use it or to the
activities for which it will be used.
Feedback
Output that is returned to the appropriate members of the organization to help
them evaluate of correct input

Why to study Management and Organization with MIS

Information systems are more than computers.
It requires an understanding of the organization, management and information
technology shaping the systems.
Need to understand major business functions
Its about “ information system literacy “

What is an Organization ?
.
Organization
A stable formal social structure that takes resources from the environment and
process them to produce output
Resources : Capital and Labor
Output : Product and Services
They are formal legal entities with internal rules and procedures
A collection of rights and privileges, obligations and responsibilities that are
delicately balanced over a period of time through conflict and conflict
resolution
People who work in organization develop a customary way of working
They make arrangements with subordinates and superiors about how work is to
be done

Common features of organizations

Max Weber describes :
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Organizations are ‘bureaucracies’ with certain structure.

Common features are:
Clear division of labor
Hierarchy
Explicit rules and procedures
Impartial judgments
Technical qualifications for positions
Maximum organizational efficiency

Few additional features

Standard Operational Procedures ( SOP ) Precise rules, procedures and
practices developed by organizations to cope with virtually all expected
situations
Organizational Culture : The set of fundamental assumptions about what
products the organizations s1hould produce, how and when, and for whom.
Organizational Politics : Different viewpoint of people about how resources
rewards and punishments should be distributed often result in struggle,
competition and conflict

Role of IT in Organizations
Information System department
Chief information officer
Information systems managers
Analysts
Programmers
End users

How Information Systems affect Org.

Transaction Cost Theory
It states that firms grow large because they can conduct marketplace
transactions internally more cheaply than they can with the external firms in
the marketplace.
It can reduce transaction cost therefore reduce in size of Org.
Helps in complex process of outsourcing.
Work can be easily done market and hence we do not need more employees or
bigger setup.

Agency Cost Theory

It views the firm as the nexus of contracts among self-interested individuals who
must be supervised or managed
A principal employee agents to perform work on his behalf.
Agents need constant supervision and management to avoid development of
personal interest.
IT helps to manage and control agents
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Behavioral Theory
IT could change the hierarchy of decision making in Org. by lowering the cost of
information acquisition and broadening the distribution of information.
Virtual organizations : work is noi longer tied to geographical location. It uses
networks to link people, places and ideas. They can ally with suppliers and
customers tp develop new product and services.

Negative effects of IS
May lead to mass resistance.
It affects who does what to whom, when where and why in the Org.
Might increase the information given to middle managers empowering them to
take important decisions.
It makes people self managed with lesser hierarchy but what makes sure they do
not head in wrong direction.

Management
It’s a job to make sense out of the many situations faced by organiations, make
decisions, and formulate action plans to solve organizational problems
Roles and Decisions vary at various level of management.

Management
Senior management
Middle management
Operational management

Information Concepts : Information System

Data vs. Information
Data
Raw facts
Distinct pieces of information, usually formatted in a special way
Information
A collection of facts organized in such a way that they have additional
value beyond the value of the facts themselves

Data ‘Discussion’ (1)

(1) Distinct pieces of information, usually formatted in a special
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way. All software is divided into two general categories: data and
programs. Programs are collections of instructions for manipulating
data.

Data can exist in a variety of forms -- as numbers or text on pieces

of paper, as bits and bytes stored in electronic memory, or as facts
stored in a person's mind.

Strictly speaking, data is the plural of datum, a single piece of information. In

practice, however, people use data as both the
singular and plural form of the word.

Terminology
Process
A set of logically related tasks performed to achieve a defined outcome
Process
(n) An executing program. The term is used loosely as a synonym of task.
(v) To perform some useful operations on data.
Knowledge
An awareness and understanding of a set of information and how that
information can be made useful to support a specific task
Knowledge base
The collection of data, rules, procedures, and relationships that must be
followed to achieve value or the proper outcome

Characteristics of Valuable Information

Characteristics
Accurate
complete
economics
flexible
reliable
relevant
simple
timely
verifiable
accessible
secure

What is System
System
A set of elements or components that interact to accomplish goals
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A combination of components working together

Refers to a combination of components working together. For
example, a computer system includes both hardware and software.
A Windows system is a personal computer running the Windows
operating system. A desktop publishing system is a computer
running desktop publishing software.
(2) Short for computer system.
(3) Short for operating system.
(4) An organization or methodology. The binary numbering system,
for instance, is a way to count using only two digits.

So what’s Information System (IS)

Definition
A set of interrelated elements or components that collect (input), manipulate
(process), and disseminate (output) data and information and provide a
feedback mechanism to meet an objective
(IS) Pronounced as separate letters, and short for Information Systems or
Information Services. For many companies, IS is the name of the
department responsible for computers, networking and data management.
Other companies refer to the department as IT (Information Technology)
and MIS (Management Information Services).

Use of Information systems in Business Functions

.
Sales and marketing
Systems that helps the firm identify customers for the firms products and services
Develop products or services to meet customers needs
Promote them
Sell them
Provide customer care
E.g. Order processing, market analysis, sales trends and pricing analysis

Manufacturing and production services

System that deals with the planning development and production of products and
services and with controlling the flow of production
E.g. machine control
CAD
Production planning
Facilities locations

Finance and Accounting

Systems that keep track of the firm’s financial assets and fund flow
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Managing the capitalization of the firm

E.g. budgeting
Profit planning
Accounts receivable

Human resource systems

Systems that maintain employee records
Track employee skills
Job performance and training
Planning for employee compensation
E.g. compensation analysis
HR planning
Training and development

Manual vs. Computerized Systems

Manual systems still widely used
E.g., some investment analysts manual draw charts and trend lines to assist them in
making investment decisions
Computerized systems
E.g., the above trends lines can be drawn by computer
Evolution
Many computerized system began as manual systems
E.g., directory assistance (“411”)

Computer-based Information Systems

A CBIS is composed of…
Hardware
Software
Databases
Telecommunications
People
Procedures
Together they are…
Configured to collect, manipulate, store, and process data into information
Parts of a CBIS
Five parts
Hardware
Software
Database
Telecommunications
Networks

Hardware
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Hardware
Computer equipment used to perform input, processing, and output activities
The objects that you can actually touch, like disks, disk drives, display
screens, keyboards, printers, boards, and chips.

Hardware refers to objects that you can actually touch, like disks, disk drives,
display screens, keyboards, printers, boards, and chips. In contrast, software is
untouchable. Software exists as ideas, concepts, and symbols, but it has no
substance.
Books provide a useful analogy. The pages and the ink are the hardware,
while the words, sentences, paragraphs, and the overall meaning are the
software. A computer without software is like a book full of blank pages -- you
need software to make the computer useful just as you need words to make a
book meaningful.

Software
Software
Computer programs that govern/determine/control the operation of the
computer
Computer instructions or data

Software is computer instructions or data. Anything that can be stored

electronically is software. The storage devices and display devices are hardware.
The terms software and hardware are used as both nouns and adjectives. For
example, you can say: "The problem lies in the software," meaning that there is a
problem with the program or data, not with the computer itself. You can also say:
"It's a software problem.“

The distinction between software and hardware is sometimes confusing

because they are so integrally linked. Clearly, when you purchase a program,
you are buying software. But to buy the software, you need to buy the disk
(hardware) on which the software is recorded.
Software is often divided into two categories. Systems software includes the
operating system and all the utilities that enable the computer to function.
Applications software includes programs that do real work for users. For
example, word processors, spreadsheets, and database management systems
fall under the category of applications software.

Database
Database
An organized collection of facts and information
A collection of information organized in such a way that a computer program
can quickly select desired pieces of data

Database ‘Discussion’ (1)

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A database is a collection of information organized in such a way that a

computer program can quickly select desired pieces of data.
You can think of a database as an electronic filing system. Traditional
databases are organized by fields, records, and files. A field is a single piece of
information; a record is one complete set of fields; and a file is a collection of
records. For example, a telephone book is analogous to a file. It contains a list of
records, each of which consists of three fields: name, address, and telephone
number.
An alternative concept in database design is known as Hypertext. In a
Hypertext database, any object, whether it be a piece of text, a picture, or a film,
can be linked to any other object. Hypertext databases are particularly useful for
organizing large amounts of disparate information, but they are not designed for
numerical analysis.
To access information from a database, you need a database management
system (DBMS). This is a collection of programs that enables you to enter,
organize, and select data in a database.

Telecommunications
The electronic transmission of signals for communications; enables
organizations to link computer systems into effective networks
Refers to all types of data transmission, from voice to video

Networks
Used to connect computers and computer equipment in a building,
around the country, across the world, to enable electronic
communications
A group of two or more computer systems linked together
There are many types of computer networks, including:
local-area networks (LANs) : The computers are
geographically close together (that is, in the same building).
wide-area networks (WANs) : The computers are farther apart and are
connected by telephone lines or radio waves.
In addition to these types, the following characteristics are also used to
categorize different types of networks:
topology : The geometric arrangement of a computer system. Common
topologies include a bus, star, and ring.
protocol : The protocol defines a common set of rules and signals that
computers on the network use to communicate. One of the most popular
protocols for LANs is called Ethernet. Another popular LAN protocol for PCs is
the IBM token-ring network .
architecture : Networks can be broadly classified as using either a peer-to-peer
or client/server architecture. Computers on a network are sometimes called
nodes.
Computers and devices that allocate resources for a network are called servers
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Management and Decision Making

How decision making is affected by IS ?
Role of managers in organization
Classical : Traditional description of management that focused on its formal
function of planning, organizing, coordinating, deciding and controlling.
Behavioral : Based on the observation that what mangers do in their jobs

Golden Five : what mangers do ?

> 600 different activities each day
Most activities last less than 9 minutes
Prefer information even if it is gossip
Prefer oral communication as it is faster and flexible.
Maintain a diverse and complex web of contacts.

Roles of Managers
Interpersonal roles
Figurehead
Leader
Liaison
Informational roles
Nerve Center
Disseminator
Spokesperson
Decisional Roles
Entrepreneur
Disturbance Handler
Resource Allocation
Negotiator

Managers and Decision Making

Stages of Decision Making
Intelligence : individuals collect information to identify problems occurring in the
organization.
Design : individuals conceive the possible alternative solutions to the
problem.
Choice : when the individual selects from the various possible solution
alternatives.
Implementation : when the individual puts the decision into effect and reports
on the progress of the solution.
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Different groups of management and

Information Systems for them

Groups of Management
Operational managers ( First Line managers, Lower level mangers)
Knowledge and data workers
Middle managers
Senior managers

Operational level systems

Information systems that monitor the elementary activities and transactions of the
organizations.
Principal function is to answer the basic questions like “how many parts in
inventory?” “what about the client’s payments?” etc..
Activities like sales, receipts, cash deposits etc.

Knowledge level systems

Information systems that support knowledge and data workers in the
organizations
Helps to integrate new knowledge into the sytems
Fastest growing applications today

Management level systems

Information systems that support the monitoring, controlling, decision-making and
administrative activities of middle managers
Typically provide period reports rather than instant information on operations
These systems often answer what-if questions
Support non-routine decision making

Strategic level systems

Information systems that support the long-range planning activities of senior
management
Focus is on matching changes in the external environment with existing
organizational activities

Six major types of Information Systems

Executive support systems ( ESS ) & Expert Sysems
Decision support systems ( DSS )
Management information systems ( MIS )
Knowledge work systems ( KWS )
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Office systems
Transactions process systems ( TPS )

Transaction processing system

Computerized systems that perform and record the daily routine transactions
necessary to conduct the business
Serve at operational level
Tasks and operations are pre defined
Major producers of information
E.g sales order entry, hotel reservation ,payroll, employee record keeping
Transactions…
Basic business operations such as customer orders, purchase orders, receipts,
time cards, invoices, and payroll checks in an organization
Transaction processing systems (TPS)
Perform routine operations and serve as a foundation for other systems

Two types of TPS:

Batch processing
A system whereby business transactions are accumulated over a period of time
and prepared for processing as a single unit or batch
On-line transaction processing (OLTP)
A system whereby each transaction is processed immediately, without the delay
of accumulating transactions into a batch

Objectives of TPS
 Process data generated by and about transactions
 Maintain a high degree of accuracy
 Ensure data and information integrity and accuracy
 Produce timely documents and reports
 Increase labour efficiency
 Help provide increased and enhanced service
 Help build and maintain customer loyalty
 Achieve competitive advantage

Data Processing Activities Common to TPSs

• Data collection
• Data editing
• Data correction
• Data manipulation
• Data storage
• Document production
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Knowledge work and Office Systems

KWS Aids knowledge workers in the creation and integration of new knowledge.
Office systems e.g. Word processor, e-mail etc are designed to increase the
productivity of data workers in office
They manage and handle documents through Desktop Publishing and image
scanners

Management Information System

 An MIS is…
 An organized collection of people, procedures, software, databases, and
devices used to provide routine information to managers and decision
makers

Information system at the management level of the organization that serve the
function of planning, controlling and decision making by providing routine
summary and exception reports.
They are oriented almost exclusively to internal or external events
Summarizes the reports on the company’s basic operations

 Management information system (MIS)

• An MIS provides managers with information and support for
effective decision making, and provides feedback on daily
operations
• Output, or reports, are usually generated through accumulation of
transaction processing data
• Each MIS is an integrated collection of subsystems, which are
typically organized along functional lines within an organization

Outputs of MIS
 Scheduled reports
• Produced periodically, or on a schedule (daily, weekly, monthly)
 Key-indicator report
• Summarizes the previous day’s critical activities
• Typically available at the beginning of each day
 Demand report
• Gives certain information at a manager’s request
 Exception report
• Automatically produced when a situation is unusual or requires
management action
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Characteristics of MIS
Provides reports with fixed and standard formats
Hard-copy and soft-copy reports
Uses internal data stored in the computer system
End users can develop custom reports
Requires formal requests from users

Executive support system

Works at strategic level
Designed to address unstructured decision making through advanced graphics
and communications
Designed to incorporate data about external events like tax policies
ESS are not designed to solve specific problems

Characteristics
A specialized DSS that includes all the hardware, software, data, procedures,
and people used to assist senior-level executives within the organization
Tailored to individual executives
Easy to use
Drill down capabilities
Support the need for external data
Help with situations with high degree of uncertainty
Futures orientation (predictions, forecasting)
Linked with value-added business processes

Capabilities of an ESS
Support for
defining overall vision
strategic planning
strategic organizing and staffing
strategic control
crisis management

Expert Systems
An expert system is…
A computer application that performs a task that would otherwise be
performed by a human expert
gives the computer the ability to make suggestions and to act like an expert
in a particular field
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Examples: diagnose human illnesses, make financial forecasts, schedule

routes for delivery vehicles
Expert systems typically include “artificial intelligence”

Artificial Intelligence
The branch of computer science concerned with making computers
behave like humans. The term was coined in 1956 by John McCarthy
at the Massachusetts Institute of Technology. Artificial intelligence
includes
games playing: programming computers to play games such as
chess and checkers
expert systems : programming computers to make decisions in real-life
situations (for example, some expert systems help doctors diagnose
diseases based on symptoms)
natural language : programming computers to understand natural
human languages
neural networks : Systems that simulate intelligence by attempting
to reproduce the types of physical connections that occur in animal
brains
robotics : programming computers to see and hear and react to
other sensory stimuli

Currently, no computers exhibit full artificial intelligence (that is, are

able to simulate human behavior). The greatest advances have
occurred in the field of games playing. The best computer chess
programs are now capable of beating humans. In May, 1997, an IBM
super-computer called Deep Blue defeated world chess champion Gary
Kasparov in a chess match.
In the area of robotics, computers are now widely used in assembly
plants, but they are capable only of very limited tasks. Robots have
great difficulty identifying objects based on appearance or feel, and
they still move and handle objects clumsily.

Natural-language processing offers the greatest potential rewards

because it would allow people to interact with computers without
needing any specialized knowledge. You could simply walk up to a

computer and talk to it. Unfortunately, programming computers to

understand natural languages has proved to be more difficult than
originally thought. Some rudimentary translation systems that
translate from one human language to another are in existence, but
they are not nearly as good as human translators. There are also
voice recognition systems that can convert spoken sounds into
written words, but they do not understand what they are writing;
they simply take dictation. Even these systems are quite limited --
you must speak slowly and distinctly.
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In the early 1980s, expert systems were believed to represent the

future of artificial intelligence and of computers in general. To date,
however, they have not lived up to expectations. Many expert
systems help human experts in such fields as medicine and
engineering, but they are very expensive to produce and are helpful
only in special situations.

.
Today, the hottest area of artificial intelligence is neural networks,
which are proving successful in a number of disciplines such as voice
recognition and natural-language processing
There are several programming languages that are known as AI
languages because they are used almost exclusively for AI
applications. The two most common are LISP and Prolog.

Decision Support System ( DSS )

It assists management decision making by combining data, sophisticated

analytical models and tools, and user friendly software into single powerful
system that can support semi-structured or un-structured decision making
It combines data and analytical sophisticated models or data analysis tools to
support semi-structured and unstructured decision making.
Although it uses TPS and MIS for internal information, they often use external
sources for data
Have more analytical power than others
Highly user interactive

Characteristics of a DSS
Handles large amounts of data from different sources
Provides report and presentation flexibility
Offers both textual and graphical orientation
Supports drill down analysis
Performs complex, sophisticated analysis and comparisons using advanced
software packages
Supports optimization, satisfying, and heuristic approaches

Characteristics of a DSS (2)

Performs different types of analyses
“What-if” analysis
Makes hypothetical changes to problem and observes impact on the
results
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Simulation
Duplicates features of a real system
Goal-seeking analysis
Determines problem data required for a given result

Emphasizes change, flexibility and rapid response.

MIS and DSS

MIS primarily provide information on the firm’s performance to help managers in
monitoring and controlling the business.
Typically produce fixed, regular scheduled reports based on data provided by
TPS
DSS provide new set of capabilities for non routine decisions and user control.
Emphasizes change, flexibility and rapid response.

Types of DSS
Model Driven : Primarily stand - alone systems that uses some type of model to
perform what-if and other kind of analysis.
Data Driven : It supports decision making by allowing users to extract and
analyze the useful information that was previously buried in large data bases.
They can extract information like Association, sequences, Classifications and
Clustering.

Components of DSS
DSS Database : A collection of current or historical data from a number of
applications or groups. Can be small PC database or a massive Data
Warehouse.
DSS Software System : collection of software tools that are used for data
analysis such as OLAP tools, data mining tools or a collection of mathematical
or analytical model.

Capabilities of a DSS
Supports
Problem solving phases
Different decision frequencies
.Highly structured problems
Straightforward problems, requiring known facts and relationships.
Semi-structured or unstructured problems
Complex problems wherein relationships among data are not always clear,
the data may be in a variety of formats, and are often difficult to manipulate
or obtain
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Group Decision Support System (GDSS)

GDSS
DSS focus primarily on individual decision making.
GDSS is an interactive computer based system to facilitate the solution of un-
structured problems by a set of decision-makers working together as a group.
Provide tools and technology exclusively geared to group decision making and
were developed in response to a growing concern over the quality and
effectiveness of meetings
Components of GDSS
Hardware
Software Tools
People

Characteristics of a GDSS
Special design
Ease of use
Flexibility
Decision-making support
Delphi approach (decision makers are geographically dispersed)
Brainstorming
Group consensus
Nominal group technique
Anonymous input
Reduction of negative group behaviour
Parallel communication
Automated record keeping
Cost, control, complexity factors

Components of a GDSS and GDSS Software

Database
Model base
Dialogue manager
Communication capability
Special software (also called GroupWare)
E.g., Lotus Notes
people located around the world work on the same project, documents, and
files, efficiently and at the same time