Management

information
system
Notes of: Chetan S. Shirbhate

10/21/2010

Teaching by:
Maumita Roy
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INFORMATION
Need in An Organisation

 Information:

o Difference Between Data & Information

1)Information is useful for decision making but data has

got no value.
2)Information brings clarity and creates an intelligent
human response in the mind.
3)Information is like a finished product whereas data is
like raw material.

 Characteristics of Information:
1)Improves representation of an entity
2)Updates the level of knowledge
3)Reduces Uncertainty
4) Aids in decision making.

Quality depends upon the mix of these characteristics.

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 Importance:

Information has become a valuable resource, just as

much as capital infrastructure and people.
 Name some organisations where the
collection of data is essential for their
continued running?
Information is collected on any amount of different
items and used by managers to make strategic
decisions concerning the organisation.
 Can you think of a situation where
information was not used wisely and an
organisation has suffered the
consequences?
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 Have you or your family been targeted for

particular mail advertisements?
o Consider: making a credit card purchase, a mail
order purchase, a telephone order purchase,
information about you and the product you buy
goes into a database. The information can be used
to target you with advertisements on products that
you are most likely to buy!

 Quality of Information:
Four Dimensions:
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1)Utility
2)Satisfaction
3)Error
4)Bias

 Sales Turnover of Company A for four zones

in the year 2008-09 (Rs. In Cr.)

1st Q tr 2n d Q tr 3rd Q tr 4th Q tr

Ea st 20.4 27.4 90 20.4
W e st 30.6 38.6 34.6 31.6
No rth 45.9 46.9 45 43.9
S o u th 25.3 50 20 58

 Sales Turnover of Company A for four zones

in the year 2008-09 (in Rs. Cr.)
Rs. In crores 100
80
60
40 E ast
W est
20
N orth
0
1st2n d3rd 4th
Q tr Q tr Q tr Q tr
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 Value of Information:
 For decision making under uncertainty, the
decision maker feels secured if additional information
is received.
 The information is called a perfect information, if
it wipes out uncertainty or risk completely.
 The value of additional information making the
existing information perfect (VPI) is:
 VPI = (V2-V1)- (C2-C1)
 Where V is the value of information and C is the
cost of obtaining the information.

 FUNCTIONS OF MANAGEMENT:
a. Management is the process of directing tasks and
organizing resources to achieve organizational goals.
The main functions of management are
i. Planning
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ii. Organizing
iii. Leading
iv. Controlling
Managers are also responsible for adapting to changes
in the external & internal environment.

 MANAGERIAL ROLES:
A. Interpersonal
B. Informational
C. Decisional

 LEVELS OF MANAGEMENT:
1)Top management
a. Senior executives who establish goals
2)Middle management
b. Allocate resources -time, training & budgets - to
achieve the goals of the top management

3)First line management

c. Supervise day-to-day operations and make sure the
performance is suitable
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 Organisation and Information:

 SEQUENCE OF DEVELOPMENT OF M I S:
A. DATA
a. Individual elements of a transaction
B. INFORMATION
b. Is data with meaning
b. INFORMATION SYSTEM
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c. A set of procedures organized to generate information

that enables managers to review operational, tactical
& strategic planning activities
d. MANAGEMENT INFORMATION SYSTEMS
d. Designed to provide information for effective
planning & tactical decision making

 Information Interfaces with External Agencies

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 System is a set of interacting or interdependent

entities, real or abstract, forming an integrated
whole.
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 Data, Information and Systems:

o Subsystem: One part of a system where the
products of more than one system are
combined to reach an ultimate goal
o Closed system: Stand-alone system that has
no contact with other systems
o Open system: System that interfaces with
other system

 SYSTEMS CONCEPTS IN BUSINESS:

1)The systems approach is a way of analyzing business
problems
2)A specific set of interrelated subsystems form a
complete system
3)Each subsystem is a self-contained unit, but is also a
part of the whole system
4) Managers need to understand the goals of the business
and design the functions of the subsystems to achieve
these goals.
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 THE FIRM’S SUBSYSTEMS:

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 INFORMATION SYSTEMS:
 An information system consists of components
that interact to achieve the objectives of the business

 Data, Information and Systems:

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 SUBSYSTEM INTERFACES:
a. Interfaces exist between a subsystem and other
subsystems
b. Outputs of one subsystem become the inputs of
another subsystem
c. If the outputs of one subsystem are incorrect, the next
subsystem will be affected.
 Characteristics of Information System- Achieving
Competitive edge:
1)Management Oriented/Directed
2)Business Driven/Justified
3)Integrated
4)Common Data Flows
5)Heavy Planning Element
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6)Subsystem Concept
7)Flexibility and Ease of Use

• India’s biggest coffee café chain! A whooping 68%

growth rate 900 cafes, 5 lounge cafes, 73 24/7
cafes….
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• India’s biggest coffee café chain! A whooping

68% growth rate 900 cafes, 5 lounge cafes, 73 24/7
cafes….
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Types of Information Systems

 Operational Level Systems

Information Systems that monitor the elementary activities and
transactions of the organization
 Knowledge Level Systems
Information Systems that support knowledge and data workers in an
organisation
 Management Level Systems
Information Systems that support the monitoring, controlling,
decision-making, and administrative activities of middle managers.
 Strategic Level Systems
Information Systems that support the long-range planning activities
of senior management.
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Types of Systems:
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 Transaction Processing Systems(TPS):

Computerized system that performs and records the
daily routine transactions necessary to conduct the
business; these systems serve the operational level of
the organization

• Type: Operational-level
• Inputs: transactions, events
• Process: updating
• Outputs: detailed reports
• Users: operations personnel, supervisors
• Decision Making: highly structured
EXAMPLE: Online Bill Payment
Must pass the ACID test

 Batch versus On-Line Processing:

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 Data Processing Activities Common in Transaction

Processing Systems:
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 A Symbolic Representation for a payroll TPS:

E m p l o y e e d a t a ( v a T r o i o g u e s n d e e r pa al r l et md g e e n r t : s w) a g e s a

M a n a g e m e n t
P a y r o l l S y sR t e e p mo r t s

G o v e r n m e n t d
P a y r o l l
m a s t e r E m p l o y e e c h e c
f i l e O n - l i n e
q u e r i e s

 Systems that Support Order Processing:

Order Processing Purpose

System

Order entry Data for order

Sales configuration Ensure enough

products

Shipment planning Which order from

which location

Shipment execution Right products on time

Inventory control Reflect exact quantity

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Invoicing and billing Generate customer

invoice

Customer management Monitor customer

contact

Routing and scheduling Best way to move

products

 Order Processing Systems:

 Types of TPS System:

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1. Sales/Marketing System
2. Manufacturing/Production System
3. Finance/Accounting System
4. Human Resource System
5. Other Types

 Typical Applications of TPS:

T YP E O F T P S S YS T E M
S a le s / M a n u fa c tu rin g / F in a n c e / H um an O th e r ty p e s
m a rk e tin g p ro d u c tio n a c c o u n tin g re s o u rc e s (e .g ., u n iv e rsity )
s y s te m s s y s te m s s y s te m s s y s te m s

M a jo r fu n c tio nSsa le s m a n a g e m enS cth e d u lin g B u d g e tin g P e rs o n n e l re c o rd

A d m is s io n s
o f s y s te m M a rk e t re s e a rc h P u rc h a s in g G e n e ra l le d g e r B e n e fits G ra d e re c o rd s
P ro m o tio n S h ip p in g /re c e iv in
B gillin g C o m p e n s a tio n C o u rs e re c o rd s
P ric in g E n g in e e rin g C o st a c c o u n tin gL a b o r re la tio n s A lu m n i
O p e ra tio n s T ra in in g

M a jo r S a le s o rd e r M a te ria ls re s o u rcGee n e ra l le d g e r P a y ro ll R e g is tra tio n s y s te m

a p p lic a tio n in fo rm a tio n s ys tepm la n n in g s y s te m s
s y s te m s M a rk e t re s e a rc h P u rc h a s e o rd e r Ac c o u n ts E m p lo y e e re c o rd
S tu
s d e n t tra n s c rip t
s y s te m c o n tro l s y s te m s re c e iv a b le /p a y a b le s y s te m
P ric in g s y s te m E n g in e e rin g B u d g e tin g B e n e fit s ys te m sC u rric u lu m c la s s
s y s te m s c o n tro l s y s tem s

 Integration of a Firm’s TPSs:

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 Office Automation Systems (OAS) :

Computer system, such as word processing, electronic mail system, and
scheduling system, that is designed to increase the productivity of data
workers in the office.
• Type: Knowledge-level
• Inputs: documents, schedules
• Processing: document management, scheduling, communication
• Outputs: documents; schedules
• Users: clerical workers
EXAMPLE: document imaging system

 Knowledge Work Systems (KWS):

Information system that aids knowledge workers in the creation and
integration of new knowledge in the organization.
• Type: Knowledge-level
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• Inputs: design specifications

• Processing: modelling
• Outputs: designs, graphics
• Users: technical staff; professionals
EXAMPLE: Engineering workstations

 Management Information Systems (MIS):

Information system at the management level of an organization that
serves the functions of planning, controlling, and decision making by
providing routine summary and exception reports.
• Type: Management-level
• Inputs: high volume data
• Processing: simple models
• Outputs: summary reports
• Users: middle managers
• Decision Making: structured to semi-structured
EXAMPLE: annual budgeting

 Characteristics of Management information

Systems:
1. MIS support structured decisions at the operational and
management control levels. However, they are also useful for
planning purposes of senior management staff.
2. MIS are generally reporting and control oriented. They are designed
to report on existing operations and therefore to help provide day-
to-day control of operations.
3. MIS rely an existing corporate data-and data flows.
4. MIS have little analytical capability.
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5. MIS generally aid in decision making using past and present data.
6. MIS are relatively inflexible.
7. MIS have an internal rather than an external orientation.

Transaction Processing System Management Information

System

 Sample Report Produced by MIS:

Product Product
Code Description Sales Region Actual Sales Planned Actual VS.Planned
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4469 Carpet Cleaner

4066 4800000 0.08

NorthEast 700 3778112 3750000 1.06
South Midwest 4867001 4600000
West 4003440 4400000 0.91

Total
16715253 17550000 0.95

5674 Room Freshner 0.94

3676
1.19
700 3900000
Northeast 5608112 4700000 1.12
South Midwest 4711001 4200000
West 4563440 4900000 0.93

Total
18559253 17700000 1.05

 Decision Support Systems (DSS):

Information system at the management level of an organization that
combines data and sophisticated analytical models or data analysis tools
to support semi-structured and unstructured decision making.
• Type: Management-level
• Inputs: low volume data
• Process: simulations, analysis
• Outputs: decision analysis
• Users: professionals, staff managers
• Decision Making: semi-structured
EXAMPLE: sales region analysis

 The DSS Focuses on Semistructured Problems:

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Structured Semistructured Unstructured

DEGREE OF PROBLEM STRUCTURE

 DSS Categories;
1. Support-based categories (Alter 1980)
a. Data-based DSS
b. Model-based DSS
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2. Nature of the decision situation (Donovan & Madnick 1977)

a. Institutional
b. Ad hoc
3. User-based categories (Keen 1980)
a. Individual
b. Multi-individual
c. Group

 Types of DSS:
 Model-Driven DSS
Primarily stand-alone system that uses some type of model to perform
“what-if” and other kinds of analyses.

 Data-Driven DSS
A system that supports decision making by allowing users to extract
and analyze useful information that was previously buried in large
databases.
DSS Classification Type of Operation Examples

Data oriented systems. E.g., account balance, stock position

File Drawer Systems Access of data items queries.

Adhoc analysis of data Data oriented systems. E.g., analysing files for overdue
Data Analysis Systems files account, bad payers.
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Adhoc analysis using Data oriented systems. E.g., a marketing support DSS could
Analytical Information databases and small include internal sales data, customer data and market
System models research data.

Estimating future
results using Model oriented systems. E.g., cash and expenditure
Accounting Models accounting rules budgeting, balance sheet projections

Estimating results,
Representational consequences where Model oriented systems. E.g., risk analysis for new project,
Models risk exists traffic simulation with variable flows.

Calculating optimal
results where Model oriented systems. E.g., machine loading, material
Optimisation Models constraints exists usage, production planning.

Producing suggested
results where decision Model oriented systems. E.g., credit authorizations,
Suggestion Models rules are known insurance rate calculations.

 Cargo Revenue Optimisation:

Examples of Situations in which DSSs may be used
• Help medical personnel in a hospital setting to consider various
diagnoses and treatment plans
• Help engineers to analyze, develop and compare solution options
• Help military planners to generate alternative plans of military
maneuvers
• Help search and rescue workers to prioritize which of many critical
activities to attend next.

 Executive Support Systems (ESS) :

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Information system at the strategic level of an organization that

address non routine decision making through advanced graphics
and communications.
• Type: Strategic level
• Inputs: aggregate data; internal and external
• Processing: interactive
• Outputs: projections
• Users: senior managers
• Decision Making: highly unstructured
EXAMPLE: 5 year operating plan

 Model of a Typical Executive Support System:

E S S
w o r k s t a t i o n

M e n u s
G r a p h i c s
C o m m u n i c a t i o n s
L o c a l p r o c e s s i n g

E S S I n t e r n a l D Ea t x a t e r n a l
a t a D
E S S
w o r k
s t a t i o n
T P S / M I S D D a ot aw J o n e ws o r k s t a t i o n
F i n a n c i a l DG a a t l a l u p P o l l
O f f i c e S y s t S e t m a ns d a r d &
M o d e l i n g / P o o r ' s
M e n u s a n a l y s i s M e n u s
G r a p h i c s G r a p h i c s
C o m m u n i c a t i o n s C o m m u n i c a t i o n s
L o c a l p r o c e s s i n g L o c a l p r o c e s s i n g
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 Relationship between different IS:

 TPS is a major producer of information for other systems

 Manufacturing Information System:

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 Quality Control Information System:

Information Security

 Information Security:
 Meaning- Protecting information and information systems
from
unauthorised access, use, disclosure, disruption, modification,
or destruction

 It is more of a business related issue than a technology issue.

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 Security should protect assets and at the same time, not hinder
business.
 Think like an attacker when planning an information security
strategy.

 Hacker Motivations:
i. Monetary Gains
ii. Competitive Advantage
iii. Display of dominance
iv. Revenge
v. Misdirected creativity
vi. Greed

 Networked Systems VS Secured Systems:

Some platforms are more secure than others

NETWORKS SECURITY

Open Communication Closed Communication

Full Access Full Lockdown

Managers must strike a balance

 Confidentiality- Property of preventing disclosure of
information to
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unauthorised individuals or systems.

 Integrity – data integrity is the assurance that data is
consistent
and correct. Means the data cannot be modified without
authorization.
 Availability – To serve its purpose, the information
must be available when it is needed.

 CIA Triad – Core Principles of Information

Security:

 Threat – Anything that has the potential to cause

harm.
 Vulnerability – Weakness that could be used to
endanger or cause harm to an informational asset.
 Risk – likelihood that a threat will use a vulnerability
to cause harm to an information asset.

 Risk Management:
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o Risk management is the process of identifying vulnerabilities and

threats to the information resources used by an organization in
achieving business objectives, and deciding what countermeasures,
if any, to take in reducing risk to an acceptable level, based on the
value of the information resource to the organization."

In broad terms the risk management

process consists of:
1. Identification of assets and estimating their value. Include: people,
buildings, hardware, software, data (electronic, print, other),
supplies.
2. Conduct a threat assessment. Include: Acts of nature, acts of war,
accidents, malicious acts originating from inside or outside the
organization.
3. Conduct a vulnerability assessment, and for each vulnerability,
calculate the probability that it will be exploited.
4. Evaluate policies, procedures, standards, training, physical security,
quality control, technical security.
5. Calculate the impact that each threat would have on each asset. Use
qualitative analysis or quantitative analysis.
6. Identify, select and implement appropriate controls. Provide a
proportional response. Consider productivity, cost effectiveness,
and value of the asset.
7. Evaluate the effectiveness of the control measures. Ensure the
controls provide the required cost effective protection without
discernible loss of productivity.

 Current Countermeasures:
Access Controls:
a. Identification- Assertion of who someone is or what
something is.
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b. Authentication-Act of verifying a claim of identity.

c. Authorisation- Official permission or approval for accessing
information
Cryptography

 Secured Website-Yes Bank:

A Phishing e-mail
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