Information System

Information System
An information system (IS) collects, processes, stores, analyzes, and disseminates information for a specific purpose Application.

Hardware Software Data Network Procedures People

3

Hardware
Data

Application
People

Software

Information System Resources

(Management) Information Systems

Different information for different users

KIND OF SYSTEM
STRATEGIC LEVEL

GROUPS SERVED
SENIOR MANAGERS

MANAGEMENT LEVEL

MIDDLE MANAGERS

KNOWLEDGE LEVEL

KNOWLEDGE & DATA WORKERS

OPERATIONAL LEVEL
SALES & MARKETING MANUFACTURING FINANCE ACCOUNTING

OPERATIONAL MANAGERS
HUMAN RESOURCES

Information System - Classification By

Support Function
Senior Mgr
5-year sales trend Profit Planning 5-year budget forecasting Product development Sales Management Inventory Control Annual budget Production Scheduling Cost Analysis Pricing Analysis System support Word Processing Desktop Publishing

Executive Support System Management Information System Decision Support System Intelligent Support Systems Knowledge Management System Office Automation System

Middle Managers

Data Workers

Transaction Processing System

Operational Managers

Order Processing Fulfillment Material Movement A/R, A/P, GL Payroll POS 6

Types of Information Systems

Management Information System (M.I.S.) is basically concerned with processing data into information. Which is then communicated to the various Departments in an organization for appropriate decision-making. Data Information Communication Decisions Data collection involves the use of Information Technology (IT) comprising: computers and telecommunications networks (E-Mail, Voice Mail, Internet, telephone, etc.) Computers are important for more quantitative, than qualitative, data collection, storage and retrieval; Special features are speed and accuracy, and storage of large amount of data.

Management Information Systems (MIS)

Function: Produce reports summarized from transaction data, usually in one functional area. Example: Report on total sales of each customer. Supports: Primarily for middle managers, sometimes for lower level managers as well.

MANAGEMENT LEVEL INPUTS: HIGH VOLUME DATA PROCESSING: SIMPLE MODELS OUTPUTS: SUMMARY REPORTS USERS: MIDDLE MANAGERS

Management Information Systems (MIS)

Features:

STRUCTURED & SEMI-STRUCTURED DECISIONS REPORT CONTROL ORIENTED PAST & PRESENT DATA INTERNAL ORIENTATION LENGTHY DESIGN PROCESS

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

INTERRELATIONSHIPS AMONG SYSTEMS

Finance and accouting

FAS Management information

MIS

HRS

Human Resource

Manufacturing and production

MPS

SMS

Sales and marketing

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

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 Demand reports

Expert systems

Operational databases

Key-indicator reports

Input and error list

Scheduled reports

Schematic of MIS
Marketing management information system Common databases Manufacturing management Information system

Financial management Information system

Order management information system

TPS

Risks Associated With MIS

Risk reflects the potential, the likelihood, or the expectation of events that could adversely affect earnings or capital. Management uses MIS to help in the assessment of risk within an institution. Management decisions based upon ineffective, inaccurate, or incomplete MIS may increase risk in a number of areas such as credit quality, liquidity, market/pricing, interest rate, or foreign currency. A flawed MIS causes operational risks and can adversely affect an organization's monitoring of its fiduciary, consumer, fair lending, Bank Secrecy Act, or other compliance-related activities. Since management requires information to assess and monitor performance at all levels of the organization, MIS risk can extend to all levels of the operations. Additionally, poorly programmed or non-secure systems in which data can be manipulated and/or systems requiring ongoing repairs can easily disrupt routine work flow and can lead to incorrect decisions or impaired planning.

Assessing Vulnerability To MIS Risk

To function effectively as an interacting, interrelated, and interdependent feedback tool for management and staff, MIS must be "useable." The five elements of a useable MIS system are:

Timeliness:
To simplify prompt decision making, an institution's MIS should be capable of providing and distributing current information to appropriate users. Information systems should be designed to expedite reporting of information. The system should be able to quickly collect and edit data, summarize results, and be able to adjust and correct errors promptly.

Relevance:
Information provided to management must be relevant. Information that is inappropriate, unnecessary, or too detailed for effective decision making has no value. MIS must be appropriate to support the management level using it. The relevance and level of detail provided through MIS systems directly correlate to what is needed by the board of directors, executive management, departmental or area mid-level managers, etc. in the performance of their jobs.

Accuracy:
A sound system of automated and manual internal controls must exist throughout all information systems processing activities. Information should receive appropriate editing, balancing, and internal control checks. A comprehensive internal and external audit program should be employed to ensure the adequacy of internal controls.

Consistency
To be reliable, data should be processed and compiled consistently and uniformly. Variations in how data is collected and reported can distort information and trend analysis. In addition, because data collection and reporting processes will change over time, management must establish sound procedures to allow for systems changes. These procedures should be well defined and documented, clearly communicated to appropriate employees, and should include an effective monitoring system.

Completeness
Decision makers need complete and pertinent information in a summarized form. Reports should be designed to eliminate clutter and voluminous detail, thereby avoiding "information overload."

An Overview of Management Information Systems: Management Information Systems in Perspective

A management information system (MIS) provides managers with information that supports effective decision making and provides feedback on daily operations The use of MISs spans all levels of management

Fundamentals of Information Systems, Third Edition

23

Inputs to a Management Information System

Internal data sources
TPSs and ERP systems and related databases; data warehouses and data marts; specific functional areas throughout the firm

External data sources

Customers, suppliers, competitors, and stockholders, whose data is not already captured by the TPS; the Internet; extranets

Fundamentals of Information Systems, Third Edition

24

Outputs of a Management Information System

Scheduled report: produced periodically, or on a schedule Key-indicator report: summary of the previous days critical activities Demand report: developed to give certain information at someones request Exception report: automatically produced when a situation is unusual or requires management action Drill-down report: provides increasingly detailed data about a situation
Fundamentals of Information Systems, Third Edition 25

Functional Aspects of the MIS

Most organizations are structured along functional lines or areas The MIS can be divided along functional lines to produce reports tailored to individual functions

Fundamentals of Information Systems, Third Edition

26

Functional Aspects of the MIS (continued)

27

Financial Management Information Systems

Financial MIS: provides financial information to all financial managers within an organization Profit/loss and cost systems Auditing Uses and management of funds

Fundamentals of Information Systems, Third Edition

28

29

Manufacturing Management Information Systems

The manufacturing MIS subsystems and outputs monitor and control the flow of materials, products, and services through the organization Design and engineering Production scheduling Inventory control

Fundamentals of Information Systems, Third Edition

30

31

Marketing Management Information Systems

Marketing MIS: supports managerial activities in product development, distribution, pricing decisions, promotional effectiveness, and sales forecasting Marketing research Product development Promotion and advertising Product pricing
Fundamentals of Information Systems, Third Edition 32

Human Resource Management Information Systems

Human resource MIS: concerned with activities related to employees and potential employees of an organization Needs and planning assessments Recruiting Training and skills development Scheduling and assignment Employee benefits Outplacement
Fundamentals of Information Systems, Third Edition 34

Order Management Information System

This software facilitates the entering of an order, whether via a web-site shopping cart or a data entry system (for orders received via phone and mail). It typically captures customer proprietary information and account level information. Credit verification or payment processing is done to check for validity and/or availability of funds. Once entered, valid orders are processed for warehouse fulfillment, such picking/packing/shipping. Orders can be received from businesses, consumers, or a mix of both, depending on the products. Offers and pricing may be done via catalogs or web sites or broadcast network advertisements.

An integrated order management system may encompass these modules:

Product Information (descriptions, attributes, locations, quantities) Inventory Availability (ATP) and Sourcing Vendors, Purchasing, and Receiving Marketing (Catalogs, promotions, pricing) Customers and Prospects Order Entry and Customer Service (including Returns and Refunds) Financial Processing (credit cards, billing, payment on account) Order Processing (selection, printing, picking, packing, shipping) Data Analysis and Reporting Financials (Accounts Payable, Accounts Receivable, General Ledger) Order Management requires multiple steps in a sequential process like Capture, Validation, Fraud Check, Payment Authorization, Sourcing, Backorder management, Pick, pack, ship and associated customer communications; it is common therefore for an order management system to have workflow capabilities as well.

Other Management Information Systems

Accounting MIS: provides aggregate information on accounts payable, accounts receivable, payroll, and many other applications Geographic information system (GIS): capable of assembling, storing, manipulating, and displaying geographic information

Fundamentals of Information Systems, Third Edition

38

A Comparison of DSS and MIS

39

Managing Information Systems

Information Systems (IS) have enormous strategic value so when they are not working even for a short time, an organization cannot function. Furthermore, the Life Cycle Costs (acquisition, operation, security, and maintenance) of these systems is considerable. Therefore, it is essential to manage them properly. The planning, organizing, implementing, operating, and controlling of the infrastructures and the organizations portfolio of applications must be done with great skill. The responsibility for the management of information resources is divided between two organizational entities:
The information systems department (ISD), which is a corporate entity

the end users, who are scattered throughout the organization.

41

CLASSIFICATION OF MIS REPORTS

MIS reports can be classified into two types: 1) CONTENT 2) TIME

CONTENT
COMPREHENSIVE

REPORTS

listing each sales transaction over a specified period in a given sales region

CONTENT
SUMMARY
showing the total sales of each item sold in a given region

REPORTS

CONTENT
EXCEPTION REPORTS listing items that have shown a drop in sales by over 20% in a given region since the last period.

TIME
HISTORICAL

REPORTS

comparing past sales information with the present

TIME
STATUS REPORTS
Only shows the current sales

TIME
forecasts of PREDICTIVE next months REPORTS sales.