MANAGEMENT INFORMATION SYSTEM 1.

1 Management,
BACKGROUND ON MIS

Management information systems do not have to be computerized, but with today's large, multinational corporations, computerization is a must for a business to be successful. However, management information systems began with simple manual systems such as customer databases on index cards. As early as 1642, the French mathematician and philosopher Blaise Pascal invented the first mechanical adding machine so that figures could be added to provide information. Almost two hundred years later, Charles Babbage, a professor of mathematics at Cambridge University in England, wanted to make a machine that would compute mathematical tables. He attempted to build a computing machine during the 1880s. He failed because his ideas were beyond his technical capabilities, not because the idea was flawed. Babbage is often called the father of the computer. With the advent of the computer, management information systems became automated. In the late 1890s, because of the efforts of Herman Hollerith, who created a punch-card system to tabulate the data for the 1890 census, it was possible to begin to provide dataprocessing equipment. The punch card developed by Hollerith was later used to form a company to provide data-processing equipment. This company evolved into International Business Machines (IBM). Mainframe computers were used for management information systems from the 1940s, 50s, 60s, and up until the 1970s. In the 1970s, personal computers were first built by hobbyists. Then Apple computer developed one of the first practical personal computers. In the early 1980s, IBM developed its PC, and since then, the personal computer industry has mush roomed. Almost every management information system revolves around some kind of computer hardware and software. Management information systems are be coming more important, and MIS personnel are more visible than in the 1960s and 1970s, when they were hidden away from the rest of the company and performed tasks behind closed doors. So remote were some MIS personnel from the operations of the business that they did not even know what products their companies made. This has changed because the need for an effective management information system is of primary concern to the business organization. Managers use MIS operations for all phases of management, including planning, organizing, directing, and controlling. MANAGEMENT INFORMATION SYSTEM 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 information-oriented more popularly known as management by information . And 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. good decisions can minimize costs and optimize results. Management information system can be helpful to the management in undertaking management decisions smoothly and effectively. Management information system can be analyzed thus: 1. Management: management covers the planning, control, and administration of the operations of a concern. The top management handles planning; the middle management concentrates on controlling; and the lower management is concerned with actual administration. 2. Information: information, in MIS, means the processed data that helps the management in planning, controlling and operations. Data means all the facts arising out of the operations of the concern. Data is processed i.e. recorded, summarized, compared and finally presented to the management in the form of MIS report. 3. System: data is processed into information with the help of a system. a system is made up of inputs, processing, output and feedback or control. Thus MIS means a system for processing data in order to give proper information to the management for performing its functions. 1.2 Information system. 1.3 Role of Management Information System (MIS), MIS CHARACTERISTICS A management information system has the following characteristics. System Approach: The information system follows a System 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. This approach is antipiecemeal in nature. Management Oriented: This is an important characteristic of MIS. For designing of MIS, top-down approach should BE followed. Top-down approach suggests that the system development starts from the determination of management needs and overall business objectives. The MIS development plan should BE derived from the overall business plan. Management oriented characteristic of MIS also implies that the management actively directs the system development efforts. Need Based: MIS design and development should BE as per the information needs of managers at different levels, viz., strategic planning level, management control level and operational control level. In other words, MIS should cater to the specific needs of managers in an organization s hierarchy.

 Exception Based: MIS should BE developed on the exception based reporting principle, which means an abnormal situation, i.e. the maximum, minimum or expected values vary beyond tolerance limits. In such situations, there should BE exception reporting to the decision maker at the required level. Future Oriented: Besides exception based reporting, MIS should also look at the future. In other words MIS should not merely provide past or historical information; rather it should provide information, on the basis of projections based on which actions may BE initiated. Integrated: Integration is a necessary characteristic of a management information system. Integration is significant because of its ability to produce more meaningful information. For example, in order to develop an effective production scheduling system, it is necessary to balance such factors as: 1. Set-up costs, 2. Work force 3. Overtime rates 4. Production capacity 5. Inventory level 6. Capital requirements 7. Customer services Long Term Planning: MIS is developed over relatively long periods. Such system does not develop overnight. A heavy element of planning is involved. The MIS designer must have the future objectives and needs of the company in mind. Sub-System Concept: The process of MIS development is quite complex and one is likely to lose insight frequently. Thus, the system, though viewed as a single entity, must BE broken down into digestible sub-systems which are more meaningful at the planning stage. Central Database: A central database is the mortar that holds the functional systems together. Each 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 Can 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 Can BE accessed by any other sub system.

Applications Of MIS Applications of MIS With computers being as ubiquitous as they are today, there's hardly any large business that does not rely extensively on their IT systems. However, there are several specific fields in which MIS has become invaluable. Strategy Support While computers cannot create business strategies by themselves they can assist management in understanding the effects of their strategies, and help enable effective decision-making. MIS systems can be used to transform data into information useful for decision making. Computers can provide financial statements and performance reports to assist in the planning, monitoring and implementation of strategy. MIS systems provide a valuable function in that they can collate into coherent reports unmanageable volumes of data that would otherwise be broadly useless to decision makers. By studying these reports decision-makers can identify patterns and trends that would have remained unseen if the raw data were consulted manually. MIS systems can also use these raw data to run simulations hypothetical scenarios that answer a range of what if questions regarding alterations in strategy. For instance, MIS systems can provide predictions about the effect on sales that an alteration in price would have on a product. These Decision Support Systems (DSS) enable more informed decision making within an enterprise than would be possible without MIS systems.

Data Processing Not only do MIS systems allow for the collation of vast amounts of business data, but they also provide a valuable time saving benefit to the workforce. Where in the past business information had to be manually processed for filing and analysis it can now be entered quickly and easily onto a computer by a data processor, allowing for faster decision making and quicker reflexes for the enterprise as a whole.

Management by Objectives While MIS systems are extremely useful in generating statistical reports and data analysis they can also be of use as a Management by Objectives (MBO) tool. MBO is a management process by which managers and subordinates agree upon a series of

objectives for the subordinate to attempt to achieve within a set time frame. Objectives are set using the SMART ratio: that is, objectives should be Specific, Measurable, Agreed, Realistic and Time-Specific. The aim of these objectives is to provide a set of key performance indicators by which an enterprise can judge the performance of an employee or project. The success of any MBO objective depends upon the continuous tracking of progress. In tracking this performance it can be extremely useful to make use of an MIS system. Since all SMART objectives are by definition measurable they can be tracked through the generation of management reports to be analyzed by decision-makers. 1.4 1.5 1.6 1.7 1.8 Information as a strategic resource, MIS-support to the management, Organizational structure, MIS-organization, system- types of system,

Types of Management Information Systems Management information systems can be used as a support to managers to provide a competitive advantage. The system must support the goals of the organization. Most organizations are structured along functional lines, and the typical systems are identified as follows: Marketing management information systems: A marketing management information system supports managerial activity in the area of distribution, product development, pricing decisions, promotional effectiveness, and sales forecasting. More than any other functional area, marketing systems rely on external sources of data. Human resources management information systems: Human resources management information systems are concerned with activities related to workers, managers, and other individuals employed by the organization. Because the personnel function relates to all other areas in business, the human resources management information system plays a valuable role in ensuring organizational success. Activities performed by the human resources management information systems include, work-force analysis and planning, hiring, training, and job assignments. Financial management information systems: The financial management information system provides financial information to all financial managers within an organization including the chief financial officer. The chief financial officer analyzes

historical and current financial activity, projects future financial needs, and monitors and controls the use of funds over time using the information developed by the MIS department. Accounting management information systems: All accounting reports are shared by all levels of accounting managers. The above are examples of the major management information systems. There may be other management information systems if the company is identified by different functional areas.

Classification of Management Information Systems There are various types of management information systems. Mason and Swanson (1981) describe four categories of management information systems: 1. Databank Information System-The responsibility of this information system is to observe, classify, and store any item of data which might be potentially useful to the decision maker. 2.Predictive Information System-This system moves beyond pure data collection and the determination of trends over time. Predictive information systems provide for the drawing of inferences and predictions that are relevant to decision making. If data from the above examples were to be used in this way, it is possible to obtain information useful for making predictions or for drawing inferences. 3.Decision-Making Information System-This system goes one step further in the process of decision making and incorporates the value system of the organization or its criteria for choosing among alternatives. An extension organization's values are many and varied. They include concerns for resolving farmer problems, increasing and providing for stability of farmer incomes, and improving the quality of farm life. But they also including and providing for stability of farmer incomes, and improving the quality of farm life. But they also include an intent to provide well for staff members and to aid in the process of bringing about rural economic development. 4.Decision-Taking Information System-This is a decision system in which the information system and the decision maker are one and the same. Management is so confident in the assumptions incorporated in the system that it basically relegates its power to initiate action to the system itself. Airplanes carry automatic pilot systems, which are an example of a decision-taking system. Once activated, the system itself keeps the plane on course and at the proper speed and altitude (according to parameters determined by the pilot). Another example of decision-taking information systems is found in modem factory production. In automobile production, continuous inventories of parts are maintained by computer as cars move down an assembly line. Orders are placed automatically by the computer when additional parts are needed. This is done without the intervention of a manager.

1.9 MIS-as a system

Components of Management Information System A Typical Management Information System is based on four major components: Data Gathering The process of collecting required data from external and internal sources Data Entry The collected data is imputed and stored in the database. Database is the core component used in information processing. Data Transformation The data stored in the database is transformed into useful information through the application of computer programs and judgments made by the technical support staff and the end users. Data Utilization The data that has been transformed into useful information is retrieved as needed by the management of the firm for managing operations and decision making.
Benefits of MIS

Better Planning and Control

MIS is designed and managed in such way that it aggregates information, monitors the company's activities and operations and enhances communication and collaboration among employees. This ensures better planning for all activities and better ways to measure performance, manage resources and facilitate compliance with industry and government regulations. Control helps in forecasting, preparing accurate budgets and providing the tools and vital information to employees, top management and business partners.

Aid Decision Making

MIS can generate synthesized and processed information from computerized/automated and certain manual systems. Information distribution to all levels of corporate managers, professionals and key executives becomes quite seamless with streamlined MIS. Managers are able to make quick, timely and informed decisions. Top management and board members can take strategic decisions, plan future growth and business expansion activities based on the data and information generated by MIS.

Core Competencies
MIS systems provide the tools necessary to gain a better understanding of the market as well as a better understanding of the enterprise itself. Every market leading enterprise will have at least one core competency that is,

a function they perform better than their competition. By building an exceptional management information system into the enterprise it is possible to push out ahead of the competition.

Enhance Supply Chain Management

Improved reporting of business processes leads inevitably to a more streamlined production process. With better information on the production process comes the ability to improve the management of the supply chain, including everything from the sourcing of materials to the manufacturing and distribution of the finished product.

Quick Reflexes
As a corollary to improved supply chain management comes an improved ability to react to changes in the market. Better MIS systems enable an enterprise to react more quickly to their environment, enabling them to push out ahead of the competition and produce a better service and a larger piece of the pie.

A management information system (MIS) provides information which is needed to manage organizations efficiently and effectively. Management information systems involve three primary resources: people, technology, and information. Management information systems are distinct from other information systems in that they are used to analyze operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. decision support systems, expert systems, and executive information systems. Overview Initially in businesses and other organizations, internal reporting was produced manually and only periodically, as a by-product of the accounting system and with some additional statistic(s), and gave limited and delayed information on management performance. Data was organized manually according to the requirements and necessity of the organization. As computational technology developed, information began to be distinguished from data and systems were developed to produce and organize abstractions, summaries, relationships and generalizations based on the datas. Early business computers were used for simple operations such as tracking sales or payroll data, with little detail or structure. Over time, these computer applications became more complex, hardware storage capacities grew, and technologies improved for connecting previously isolated applications. As more and more data was stored and linked, managers sought greater detail as well as greater abstraction with the aim of creating entire management reports from the raw, stored data. The term "MIS" arose to describe such applications providing managers with information about sales, inventories, and other data that would help in managing the enterprise. Today, the term is used broadly in a number of

contexts and includes (but is not limited to): decision support systems, resource and people management applications, enterprise resource planning (ERP), enterprise performance management (EPM), supply chain management (SCM), customer relationship management (CRM), project management and database retrieval applications. The successful MIS supports a business's long range plans, providing reports based upon performance analysis in areas critical to those plans, with feedback loops that allow for titivation of every aspect of the enterprise, including recruitment and training regimens. MIS not only indicate how things are going, but why and where performance is failing to meet the plan. These reports include near-real-time performance of cost centers and projects with detail sufficient for individual accountability. Kenneth and Jane Laudon identify five eras of MIS evolution corresponding to five phases in the development of computing technology: 1) mainframe and minicomputer computing, 2) personal computers, 3) client/server networks, 4) enterprise computing, and 5) cloud computing. y The first (mainframe and minicomputer) era was ruled by IBM and their mainframe computers, these computers would often take up whole rooms and require teams to run them, IBM supplied the hardware and the software. As technology advanced these computers were able to handle greater capacities and therefore reduce their cost. Smaller, more affordable minicomputers allowed larger businesses to run their own computing centers in-house. y The second (personal computer) era began in 1965 as microprocessors started to compete with mainframes and minicomputers and accelerated the process of decentralizing computing power from large data centers to smaller offices. In the late 1970s minicomputer technology gave way to personal computers and relatively low cost computers were becoming mass market commodities, allowing businesses to provide their employees access to computing power that ten years before would have cost tens of thousands of dollars. This proliferation of computers created a ready market for interconnecting networks and the popularization of the Internet. As the complexity of the technology increased and the costs decreased, the need to share information within an enterprise also grew, giving rise toy the third (client/server) era in which computers on a common network were able to access shared information on a server. This allowed for large amounts of data to be accessed by thousands and even millions of people simultaneously. y The fourth (enterprise) era enabled by high speed networks, tied all aspects of the business enterprise together offering rich information access encompassing the complete management structure. y The fifth and latest (cloud computing) era of information systems employs networking technology to deliver applications as well as data storage independent of the configuration, location or nature of the hardware. This, along with high speed cellphone and wifi networks, led to new levels of mobility in which managers access the MIS from most anywhere with laptops, tablet pcs, and smartphones.

Types Most management information systems specialize in particular commercial and industrial sectors, aspects of the enterprise, or management substructure. y Management information systems (MIS), per se, produce fixed, regularly scheduled reports based on data extracted and summarized from the firm s underlying transaction processing systems to middle and operational level managers to identify and inform structured and semi-structured decision problems. y 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. y 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. y Marketing information systems are MIS designed specifically for managing the marketing aspects of the business. y 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. Advantages The following are some of the benefits that can be attained for different types of management information systems. y 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. y Giving an overall picture of the company and acting as a communication and planning tool. y 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 effective management of customer data can help the company to perform direct marketing and promotion activities. y 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.