MANAGEMENT INFORMATION SYSTEMS

Dominic K. Louis

Introduction: Management Information Systems

Information Systems Fundamentals

An Information System is a set of (primarily) electronic components that collect, analyze and disseminate data and information to meet an objective. Data: raw facts, e.g. text, image, audio, video. By itself, data cannot help us make decisions Information: aggregation, analysis and selection of data that enables organizations to meet objectives. Some characteristics of information: accurate reliable relevant verifiable valuable

Information Systems Components

Inputs: raw data May be physical, electronic or conceptual May use a manual or automated process Processing: conversion of inputs to outputs May be comprised of computations, data storage, choosing alternatives May be a manual or automated process Outputs: information used to make decisions May be delivered in paper form or electronically Outputs of one system may be inputs to another system Feedback/assessment: outputs used to improve system performance Can flag for incorrect processing Cue for managerial interventions Supply estimates of future input values (forecasting)

 Hardware, computer equipment used for input processing outputs Software, computer programs that run on hardware: systems software applications software Databases: specialized applications software designed to organize data and information on an organizations operations Infrastructure: equipment designed to link hardware across space: telecommunications networks Internet People: IS personnel and users Procedures: rules for developing and using the IS

Computer-Based IS Components

Why Information Systems Matter

Capital Management: I.T is largest component of capital investment for
most firms and double as a percentage of total business investment since 1980

Why Information Systems Matter

Foundation of Doing Business: Managers and employees rely on information
systems every day to conduct business

All of e-commerce would be impossible without

substantial IT investment, and firms like Google, eBay , etc. would not exist

Why Information Systems Matter

Productivity: Investment in I.T plays a critical role in increasing
the productivity of firms

I.T Tools along with innovations in management has

enabled firms to gain substantial productivity

For example: Economists at the US Federal Reserve

Bank estimates that I.T contributed to the lowering of inflation by 0.5 to 1 percentage point in the years from 1995 to 2000 (A. Greenspan, 2000)

Why Information Systems Matter

Strategic Opportunity and Advantage: Using investment in I.T to develop new products and
create new services

Using I.T as a tool to achieve strategic advantage:

Innovate Differentiate Promote growth Alliance Reduce cost, etc.

Strategy / M. Porter
Threat of New Entrants

Bargaining Power of Suppliers

Rivalry Among Existing Competitors

Bargaining Power of Buyers

Threat of Substitute Products or Services

What is MIS?
As an academic discipline, MIS is:
an organized approach to the study of the information needs of an organizations management at every level in making operational, tactical and strategic decisions.

MIS aims to:

design and implement procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent and timely manner.

What is MIS? Management Information System A combination of computers and people that is used to provide information to aid in making decisions and managing a firm.

Management Information Systems (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

Why is MIS Important?

MIS affects all areas of business Manufacturing Accounting & Finance Human resources Marketing Top management
Performance evaluationsexpectations

Sources of Management Information

Schematic

Employees Corporate databases of internal data

Databases of external data

Corporate intranet Decision support systems

Executive support systems

Business transactions

Transaction processing systems

Databases of valid transactions

Management information systems

Application databases

Drill-down reports Exception reports

Expert systems

Operational databases

Demand reports Key-indicator reports

Input and error list

Scheduled reports

Outputs of a Management Information System

Scheduled reports
Produced periodically, or on a schedule (daily, weekly,
monthly)

Key-indicator report
Summarizes the previous days critical activities Typically available at the beginning of each day

Demand report
Gives certain information at a managers request

Exception report
Automatically produced when a situation is unusual or
requires management action

Scheduled Report Example

Daily Sales Detail Report
Prepared: 08/10/xx Order # P12453 P12453 P12453 P12455 P12456 Customer ID C89321 C89321 C03214 C52313 C34123 Sales Rep ID CAR CAR GWA SAK JMW Ship Date 08/12/96 08/12/96 08/13/96 08/12/96 08J/13/96 Quantity 144 288 12 24 144 Item # P1234 P3214 P4902 P4012 P3214 Amount $3,214 $5,660 $1,224 $2,448 $720

Key Indicator Report Example

Daily Sales Key Indicator Report This Month Total Orders Month to Date $1,808 Last Month $1,694 Last Year $1,014

Forecasted Sales for the Month

$2,406

$2,224

$2,608

Demand Report Example

Daily Sales by Sales Rep Summary Report Prepared: 08/10/xx Sales Rep ID CAR Amount $42,345

GWA
SAK JWN

$38,950
$22,100 $12,350

Exception Report Example

Daily Sales Exception Report ORDERS OVER $10,000 Prepared: 08/10/xx
Order # P12453 P12453 P12453 Customer ID C89321 C89321 C03214 Sales Rep ID CAR CAR GWA Ship Date 08/12/96 08/12/96 08/13/96 Quantity 144 288 12 Item # P1234 P3214 P4902 Amount $13,214 $15,660 $11,224

Outputs of a Management Information System

Earnings by Quarter (Millions) Actual Forecast $11.8 $10.7 $14.5 $13.3 Variance 6.8% 0.9% -1.4% -3.0%

Drill Down Reports Provide detailed data about a situation.

2ND Qtr 1999 1st Qtr 1999 4th Qtr 1998 3rd Qtr 1998

$12.6 $10.8 $14.3 $12.8

Characteristics of a Management Information System

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

Management Information Systems for Competitive Advantage

Provides support to managers as they work to achieve corporate goals
Enables managers to compare results to established company goals and identify problem areas and opportunities for improvement

MIS and Web Technology

Data may be made available from management information systems on a companys intranet
Employees can use browsers and their PC to gain access to the data

Functional Aspects
MIS is an integrated collection of functional information systems, each supporting particular functional areas.

Schematic

Internet

An Organizations MIS
Financial MIS

Business transactions

Transaction processing systems

Databases of valid transactions

Accounting MIS

Drill down reports Exception reports Demand reports

Marketing MIS

Key-indicator reports
Scheduled reports

Business transactions

Databases of external data

Human Resources MIS Etc.

Etc.

Extranet

Financial MIS
Provides financial information to all financial managers within an organization.

Schematic

Databases of internal data

Databases of external data

Financial DSS

Business transactions Transaction processing systems

Databases of valid transactions for each TPS

Financial MIS

Financial applications databases

Business transactions Operational databases

Financial statements Uses and management of funds Financial statistics for control

Financial ES

Internet or Extranet

Business transactions

Customers, Suppliers

Inputs to the Financial Information System

Strategic plan or corporate policies Contains major financial objectives and often projects
financial needs.

Transaction processing system (TPS) Important financial information collected from almost
every TPS - payroll, inventory control, order processing, accounts payable, accounts receivable, general ledger. External sources Annual reports and financial statements of competitors and general news items.

Financial MIS Subsystems and Outputs

Financial subsystems Profit/loss and cost systems Auditing Internal auditing External auditing Uses and management of funds

Manufacturing MIS

Schematic

Databases of internal data

Databases of external data

Manufacturing DSS

Business transactions Transaction processing systems

Databases of valid transactions for each TPS

Manufacturing MIS

Manufacturing applications databases

Business transactions Operational databases

Quality control reports Process control reports

Internet or Extranet

JIT reports MRP reports Production schedule CAD output

Manufacturing ES

Business transactions

Customers, Suppliers

Inputs to the Manufacturing MIS

Strategic plan or corporate policies. The TPS: Order processing Inventory data Receiving and inspecting data Personnel data Production process External sources

Manufacturing MIS Subsystems and Outputs

Design and engineering Master production scheduling Inventory control Manufacturing resource planning Just-in-time inventory and manufacturing Process control Computer-integrated manufacturing (CIM) Quality control and testing

Marketing MIS
Supports managerial activities in product development, distribution, pricing decisions, and promotional effectiveness

Schematic

Databases of internal data

Databases of external data

Manufacturing DSS

Business transactions

Transaction processing systems

Databases of valid transactions for each TPS

Marketing MIS

Marketing applications databases

Sales by customer Sales by salesperson

Operational databases

Sales by product

Manufacturing ES

Pricing report
Total service calls Customer satisfaction

Inputs to Marketing MIS

Strategic plan and corporate policies The TPS External sources: The competition The market

Marketing MIS Subsystems and Outputs

Marketing research Product development Promotion and advertising Product pricing

Human Resource MIS

Concerned with all of the activities related to employees and potential employees of the organization

Databases of internal data

Databases of external data

Manufacturing DSS

Business transactions

Transaction processing systems

Databases of valid transactions for each TPS

Human Resource MIS

Human resource applications databases

Benefit reports Salary surveys

Operational databases

Scheduling reports Training test scores Job applicant profiles Needs and planning reports

Manufacturing ES

Inputs to the Human Resource MIS

Strategic plan or corporate policies The TPS: Payroll data Order processing data Personnel data External sources

Human Resource MIS Subsystems and Outputs

Human resource planning Personnel selection and recruiting Training and skills inventory Scheduling and job placement Wage and salary administration

Other MISs
Accounting MISs Provides aggregated information on accounts
payable, accounts receivable, payroll, and other applications.

Geographic information systems (GISs) Enables managers to pair pre-drawn maps or

map outlines with tabular data to describe aspects of a particular geographic region.