Chapter 1

Introduction

Before one can explain management information systems, the terms systems, information,
and management must briefly be defined.

A system is a combination or arrangement of parts to form an integrated whole

according to some common principles or rules. A system is a plan or method of
doing something. A system is an assembly of elements arranged in a local order to
achieve certain objectives. The organization is also a system of people where people are
selected on the basis of number, quality and ability and are placed in hierarchical order
plan and execute the business activities to achieve certain goals and objectives.

A system is a scientific method of inquiry, that is, observation, the formulation of an idea,
the testing of that idea, and the application of the results. The scientific method of
problem solving is systems analysis in its broadest sense. Data are facts and figures.
However, data have no value until they are compiled into a system and can provide
information for decision making.

Information is what is used in the act of informing or the state of being informed.
Information includes knowledge acquired by some means. It is processed data which in
turn is collection of raw facts, observations and figures.

Management is usually defined as planning, organizing, directing, staffing and

controlling the business operation. This definition, which evolved from the work of Henri
Fayol in the early 1900s, defines what a manager does, but it is probably more
appropriate to define what management is rather than what management does.
Management is the process of allocating an organization's inputs, including human
and economic resources, by planning, organizing, directing, and controlling for the
purpose of producing goods or services desired by customers so that organizational
objectives are accomplished. If management has knowledge of the planning, organizing,
directing, and controlling of the business, its decisions can be made on the basis of facts,
and decisions are more accurate and timely as a result.

Definition of MIS

Management information systems are those systems that allow managers to make
decisions for the successful operation of businesses. MIS refers broadly to a computer-
based system that provides managers with the tools for organizing, evaluating and
efficiently running their departments. In order to provide past, present and prediction
information, an MIS can include software that helps in decision making, data resources
such as databases, the hardware resources of a system, decision support systems, people
management and project management applications, and any computerized processes that
enable the department to run efficiently.
Within companies and large organizations, the department responsible for computer
systems is sometimes called the MIS department. Other names for MIS include IS
(Information Services) and IT (Information Technology).

'MIS' is a planned system of collecting, processing, storing and disseminating data in the
form of information needed to carry out the functions of management. According to
Phillip Kotler "A marketing information system consists of people, equipments, and
procedures to gather, sort, analyse, evaluate, and distribute needed, timely, and accurate
information to marketing decision makers."

The terms MIS and information system are often confused. Information systems include
systems that are not intended for decision making. MIS is sometimes referred to, in a
restrictive sense, as information technology management. That area of study should not
be confused with computer science. IT service management is a practitioner-focused
discipline. MIS has also some differences with Enterprise Resource Planning (ERP) as
ERP incorporates elements that are not necessarily focused on decision support.

Management information system would mean a set of computer based systems and
procedures implemented to help managers in their crucial job of decision making. The
actual process of MIS will involve the collection, organization, distribution and storage of
organization-wide information for managerial analysis and control. It is better understood
if these components are understood. Management Information Systems (MIS), sometimes
referred to as Information Management and Systems, is the discipline covering the
application of people, technologies, and procedures — collectively called information
systems — to solving business problems. Management Information Systems are distinct
from regular information systems in that they are used to analyze other information
systems applied in 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, Business computers were used for the
practical business of computing the payroll and keeping track of accounts payable and
receivable. As applications were developed that provided managers with information
about sales, inventories, and other data that would help in managing the enterprise, the
term "MIS" arose to describe these kinds of applications. 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, project management, and database
retrieval application.

Management information systems consist of computer resources, people, and

procedures used in the modern business enterprise. The term MIS stands for
management information systems. MIS also refers to the organization that develops and
maintains most or all of the computer systems in the enterprise so that managers can
make decisions. The goal of the MIS organization is to deliver information systems to
the various levels of corporate managers. MIS professionals create and support the
computer system throughout the company. Trained and educated to work with corporate
computer systems, these professionals are responsible in some way for nearly all of the
computers, from the largest mainframe to the desktop and portable PCs.
Components of MIS

The three components of MIS are:

1. Concept of Management
2. Information
3. Information system

A. Concept of Management

Management information Systems (MIS), sometimes referred to as Information

Management and Systems, are the discipline covering the application of people,
technologies, and procedures — collectively called information systems — to solving
business problems. Management Information Systems are distinct from regular
information systems in that they are used to analyze other information systems applied in
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.

MIS - Management information System - a monthly (usually) generated by big

companies to find out where they are standing out in the business. For example each
department viz., Production, Marketing, HR, and Finance etc will report & submit their
reports according the requirement of the management as below Production: No. of Units
reduced, Wastages, Target for the month Vs achieved, Reason & justification of any
downfall, At last backlog & proposed date of shipment. Marketing: No. Orders
procured/executed/lost - Reason viz price high or Discount could not be extended, A
detailed report on pros & cons of marketability. HR: Monthly Manpower turnout with
reasons Finance: Interest recd/paid, Interest Lost due to delayed receipts. Finance charges
incurred and so on

B. Information

It is other way considered as collection of data. In fact the words are different. Data refers
to facts. These facts may be expressed in numerical, text, image or voice. Data usually
take the form of historical records.

As businesses have evolved, the need for both fast access to quality intelligence and
independence at the business unit level have made it imperative and challenging to
manage information assets more effectively, efficiently and wisely. Developing and
implementing a complete strategy for how information about suppliers, customers,
competitors and global markets is obtained, validated, stored, managed, accessed,
analyzed and distributed is now central to organizational survival and profitability.

To make the most of opportunities, organizations must maximize the business value of
information and leverage investments made in all data management technologies. The
rewards will go beyond survival to quickness, compliance, innovation, and in the end,
competitive advantage.

The following are the several common ideas of information system in MIS

a. It is the processed date b. It has an element of surprise value c. It has a value in

decision making process.

C. Information System:

The next component of MIS is information system which is most loosely used in
management literature. The information system is a system of group of interrelated
components working together towards a common goal by accepting inputs and producing
outputs in an organized transformation process. In this system there are three basic
components or functions are involved. i.e., Input, Processing and Output.

Input: It involves capturing and assembling elements that enter the system to be
processed. In general what ever the date after collection to enter into the computing
system for further processing is called input. For example. Raw Material, energy, data
and human efforts must be secured and organized for further processing.

Processing: After successful of input and involves transformation processes that convert
into output. Example: Manufacturing process, human breathing process and mathematical
calculations etc.,

Output: After successful of the processing and it involves transferring elements that have
been produced by transformation process to their ultimate destination. Example: Finished
products, human services and management information.

Role of MIS

A management information system is a system that has important tools to support,

analyze, deliver and add reliability to any organization. It ensures that appropriate data is
collected from various sources, processed and sent to needy destinations. Also this helps
to solve businesses 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.

MIS stands for management information system. MIS is a mainframe or minicomputer-

based system that provides predefined periodic reports on an organization's performance
in formats tailored to the informational needs of different management levels: strategic,
tactical, and operational.

At its basic level, MIS monitors day-to-day activities and distributes information on those
activities to middle management to support and enhance tactical decision-making. For
example, MIS not only gives middle managers the information they need to make
informed decisions on how to best organize resources to achieve their division's goals,
but also reports on whether those goals are being met.

At the most senior levels of management, MIS provides the information necessary to
make informed strategic decisions. Upper management uses MIS output to evaluate
performance, manage resources, comply with regulatory requirements, and manage risk
— including assessing the effectiveness of existing risk management controls.

Impact of MIS

MIS provides several advantages to the organization:

• Ability to link and enable employees: Electronic communication increases the

overall amount of communication within a firm. The most important aspect is that
people from the various units of a corporation can interact with each other and
thus horizontal communication is promoted. All the obvious advantages of
quicker information availability is the outcome of this function of IT but it must
also be remembered that too much electronic communication leads to increased
alienation of employees due to increased impersonality.
• Increases boundary spanning: An individual can access any information in any
part of the organization with the aid of the appropriate technology. This eliminates
the need for the repetition of information and thus promotes non-redundancy. If
information provided is adequate, one can deal with factors like business risk and
uncertainties effectively.
• Ability to store and retrieve information at any instance: means that the
organization does not have to rely solely on the fallibility of human error, which is
subject to error and erosion. Information can be stored, retrieved and
communicated far more easily and effectively. The information support improves
the lack of knowledge, enriches experience and improves analytical ability
leading to better business judgment. It helps managers to act decisively.
• Helps in forecasting and long term planning: A disciplined IS creates a
structured database and knowledge base for all people in the organization. The
information available in such a form that it can be used either straight away or
using blending and analysis thereby saving manager’s valuable time.

Disadvantage of MIS:

• However, IT can often lead to information overload, meaning that managers have
to sift through an insurmountable amount of stored data and thus hindering timely
decision-making. This problem is not as serious as first thought, though.
Information overload is not an IT problem but more of a documentation problem.
Furthermore, management tends to adapt to IT problems once it gets used to the
idea of the new technologies. Inaccurate reporting can lead to flawed decision-
making and planning. MIS typically extracts data from many different financial
and transaction systems running on various computer platforms, which can often
 lead to inaccurate and inconsistent reports unless appropriate control procedures
are in place. Even if the information is accurate, the predefined reports generated
by MIS may not always anticipate the information needs of individual managers
at all times; or the correct information is not available when needed, or is simply
hard to access. Because of these deficiencies in MIS, managers are increasingly
turning to interactive decision support systems to obtain the information they need
for planning and control.

Process of management

Management in all business and human organization activity is simply the act of getting
people together to accomplish desired goals and objectives. Management comprises
planning, organizing, staffing, leading or directing, and controlling an organization (a
group of one or more people or entities) or effort for the purpose of accomplishing a goal.
Re-sourcing encompasses the deployment and manipulation of human resources,
financial resources, technological resources, and natural resources.

Management can also refer to the person or people who perform the act(s) of
management.

The various decisions in management are:

Steps in Management Decision

Planning A selection from various alternatives-
strategies, resources and methods etc.
Organizing A selection of combination out of various
combinations of the goals, resources,
method and authority.
Staffing Providing proper man power complement.
Directing Choosing a method of directing the efforts
in the organization for the accomplishment
of the goals
Coordinating and controlling Coordinating the efforts for optimum
results and selection of exceptional
conditions and decision guidelines.

Organization structure

Every organization is composed of certain parts. These parts then have their various
functions and are interdependent on each other for a smooth functioning of the
organization. An organization’s structure is a framework that allots a particular
space for a particular department or an individual and shows its relationship to the
other. An organizational structure is a mostly hierarchical concept of subordination of
entities that collaborate and contribute to serve one common aim.
An organization’s structure may be of many types, the most common of these being:
• The hierarchical organizational structure
• The flat organizational structure.

A horizontal organizational structure is what we call the traditional structure or

at times, the bureaucratic structure where there are one or more levels between the
most junior and the senior most employees. This helps in proper distribution of
work but can be harmful in terms of efficiency and decision making.

A flat organization is much more relaxed and so-called modern in approach

where everyone directly reports to a single boss. This could provide greater speed
in the decision making process but then the boss ends up taking care of a lot of
things thus making delegation difficult.

Organizations are a variant of clustered entities. The structure of an organization is

usually set up in many styles, dependent on their objectives and ambience. The structure
of an organization will determine the modes in which it shall operate and will perform.

The various elements of organization as per H.J. Lewitt are:

1. People
2. Task
3. Technology
4. Structure
5. Culture

An effective organizational structure shall facilitate working relationships between

various entities in the organization and may improve the working efficiency within the
organizational units. Organization shall retain a set order and control to enable
monitoring the processes. Organization shall support command for coping with a mix of
orders and a change of conditions while performing work. Organization shall allow for
application of individual skills to enable high flexibility and apply creativity. When a
business expands, the chain of command will lengthen and the spans of control will
widen. When an organization comes to age, the flexibility will decrease and the creativity
will fatigue. Therefore organizational structures shall be altered from time to time to
enable recovery. If such alteration is prevented internally, the final escape is to turn down
the organization to prepare for a re-launch in an entirely new set up. It should be an open
system capable of adjusting itself to the changing environment.

Organizational behavior

Organizational behavior can be termed as the behavior of persons in an

organization. It is an important aspect to understand others behavior in an organization.
The understanding of other behavior helps in influencing them. Human behavior is
directed by external and internal forces. The appropriate analysis of these forces proves
useful in understanding the behavior of other persons in the organization. The
understanding of behavior has proved useful for the managers. It helps them in directing
human energy in accomplishing the set goals of the organization. The concept and study
of organizational behavior delivers guidelines for influencing the behavior of persons in
the organization. According to Keith Davis, it is an academic discipline that is concerned
with understanding and relating human behavior in an organizational behavior. It focuses
on the complex human factor in the organizations. It is done through identifying the
causes and effects of the observed particular behavior. According to Joe Kelly,
Organizational behavior can be explained as the systematic study of the nature of the
organizations. It thoroughly focuses on factors such as the origination of organization, its
growth and development and organization effect on its members and other relative
organizations.

The study of OB has proved beneficial in many ways. The benefits of studying OB are as
follows:

1. OB is a systematic study of the actions and attitudes that people exhibit within the
organization. It also helps any individual to understand his behavior.

2. OB has proved instrumental for managers in getting their work done effectively.

3. OB lays emphasis on the interaction and relations between organization and individual
behavior. It works as a positive attempt in fulfilling psychological agreement between
organization and the individuals.

4. OB delivers job satisfaction to employees and helps in developing work-related

behavior in the organization.

5. OB helps in building motivating climate in the organization.

6. OB helps in building cordial industrial relations.

7. OB smoothes the progress of marketing by providing deeper insight of consumer

behavior and motivating and managing field employees.

8. OB helps in predicting behavior and its application in meaningful way delivers

effectiveness in the organization.

9. OB implies effective management of human resources.

10. OB helps in improving functional behavior within the organization. It helps in

attaining higher productivity, effectiveness, efficiency, organizational citizenship. It
works effectively in reducing dysfunctional behavior at work place like absenteeism,
employee turnover, dissatisfaction, tardiness etc.