Management Information System (B.

Com-III year Semester- VI)

MANAGEMENT INFORMATION SYSTEM

Syllabus

Unit-I: Introduction
Meaning, Evolution of MIS, Manager’s view of Information system, Strategic Planning,
Management control, Operational Control, Using Information Systems for Competitive
Advantage, Value Chain Model, Synergies, Core Competencies and Network based Strategeis,
Information Technology and Business Process Reengineering.
Unit-II: Decision Making and Information Systems
Herbert Simon Model of Decision Making Process, Criteria for Decision Making, Behavioural
Model od Decision Making, Operational Model, Decision Support Systems and Expert
Systems, Relevance of Decision Making Concepts for Information Systems.
Unit-III: Strategic Planning of Information Systems
Techniques of Planning, Applications of Information Systems, Financial Information Systems,
Marketing Information Systems, Production Information Systems, Human Resource
Information Systems.
Unit-IV: Systems Analysis and Design
Development Strategies, Structured Analysis, Prototyping, System Development Life Cycle,
Feasibility, Requirement Analysis, Design of the System Development of Softwatre,
Implementation and Evaluation, System Project Management.
Unit-V: Organisation of Information System
Centralised, Decentralised and Distributed Processing, Role and Responsibilities of Information
Systems Professionals, Security and Ethical Issues in Information Systems, Risks, Controls and
Threats.

SUGGESTED READINGS:
1. Robert Schultheis and Mary Summer, Management Information Systems- The Manager’s
View. Tata Mc Graw Hill, 2008.
2. Kenneth C Laudon and Jane P Laudon, Management Information Systems- Managing the
Digital Firm, Pearson Education, 2009.
3. Murthy.CSV, Management Information Systems- Text & Applications, Himalaya
Publishing House, 2009.
4. Gordon B.Davis, Magrethe H.Olson, Management Information Systems, Conceptual
Foundation Development, Tata Mc Graw Hill, 2008.
5. James A O’Brien and George M.Marakas, Management Information Systems, Tata
McGraw Hills, 2009.

Page 1
 Management Information System (B.Com-III year Semester- VI)

UNIT-1
** MIS Meaning **
Management information system, or MIS, broadly refers to a computer-based system that
provides managers with the tools to organize evaluate and efficiently manage departments
within an organization. In order to provide past, present and prediction information, a
management information system 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.
** Evolution of MIS **
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.
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.
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 to 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.
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.
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 remotely with laptops, tablet pcs,
and smartphones.

Page 2
 Management Information System (B.Com-III year Semester- VI)

Objectives of MIS:
The goals of an MIS are to implement the organizational structure and dynamics of the
enterprise for the purpose of managing the organization in a better way and capturing the
potential of the information system for competitive advantage. Following are the basic
objectives of an MIS.
 Capturing Data − Capturing contextual data, or operational information that will
contribute in decision making from various internal and external sources of organization.
 Processing Data − The captured data is processed into information needed for planning,
organizing, coordinating, directing and controlling functionalities at strategic, tactical and
operational level. Processing data means −
o making calculations with the data o
sorting data
o classifying data and
o summarizing data
 Information Storage − Information or processed data need to be stored for future use.
 Information Retrieval − The system should be able to retrieve this information from the
storage as and when required by various users.
 Information Propagation − Information or the finished product of the MIS should be
circulated to its users periodically using the organizational network.
Characteristics of MIS: Following are the characteristics of an MIS.
 It should be based on a long-term planning.
 It should provide a holistic view of the dynamics and the structure of the organization.
 It should work as a complete and comprehensive system covering all interconnecting sub-
systems within the organization.
 It should be planned in a top-down way, as the decision makers or the management
should actively take part and provide clear direction at the development stage of the MIS.
 It should be based on need of strategic, operational and tactical information of managers
of an organization.
 It should also take care of exceptional situations by reporting such situations.
 It should be able to make forecasts and estimates, and generate advanced information,
thus providing a competitive advantage. Decision makers can take actions on the basis of
such predictions.
 It should create linkage between all sub-systems within the organization, so that the
decision makers can take the right decision based on an integrated view.
 It should allow easy flow of information through various sub-systems, thus avoiding
redundancy and duplicity of data. It should simplify the operations with as much
practicability as possible.
 Although the MIS is an integrated, complete system, it should be made in such a flexible
way that it could be easily split into smaller sub-systems as and when required.
 A central database is the backbone of a well-built MIS.
Characteristics of Computerized MIS: Following are the characteristics of a well-designed
computerized MIS.
 It should be able to process data accurately and with high speed, using various techniques
like operations research, simulation, heuristics, etc.
Page 3
 Management Information System (B.Com-III year Semester- VI)

 It should be able to collect, organize, manipulate, and update large amount of raw data of
both related and unrelated nature, coming from various internal and external sources at
different periods of time.
 It should provide real time information on ongoing events without any delay.
 It should support various output formats and follow latest rules and regulations in
practice.
 It should provide organized and relevant information for all levels of management:
strategic, operational, and tactical.
 It should aim at extreme flexibility in data storage and retrieval.
Nature and Scope of MIS: The following diagram shows the nature and scope of MIS.

** Manager’s view of Information System **

The role of the management information system (MIS) manager is to focus on the
organization's information and technology systems. The MIS manager typically analyzes
business problems and then designs and maintains computer applications to solve the
organization's problems.
Managers that perform various functionalities in Information Systems can be categorized
into three teams or groups. They are:
1. System development team
2. Operations group
3. Technical support team.
System development team: This team performs the business system analysis and is responsible
for designing a computer based system that facilitate the users in achieving their objectives.
It can be said that, objectives of any computer based Information system are developed
by a system analyst because, analyst is a person who performs analysis of the business system,
its organization, procedures, work flow, information requirements and problems. He is also
responsible for evaluating alternative design options.
Page 4
 Management Information System (B.Com-III year Semester- VI)

Apart from the system analyst, the system development team also consist of an
application programmer, a maintenance programmer, a documentation specialist, a user training
specialist and a project manager.
Operations group: The employees within this group deals with the day-to-day operations of
the computer system. Scheduling of programs execution is the prime functionality of an
operations manager. The operations manager ensures the timely distribution of output to the end
users. The data entry operator and equipment operators are also supervised by the opearions
manager.
Technical support team: The functions such as system programming, system evaluation, user
services, database administration, design and maintenance of communication system etc.,
comes under the technical support.
The database administrator and the data communications specialist are the two key
players in the technical support team. The databse administrator analyzes the data requirements
of the organization, develops a logical database design for satisfying the application needs and
maintains the organization wide data dictionary. The data communication specialists take the
charge of developing and maintain data communication networks.

** Strategic Planning **
Strategic planning is an organizational management activity that is used to set priorities,
focus energy and resources, strengthen operations, ensure that employees and other
stakeholders are working toward common goals, establish agreement around intended
outcomes/results, and assess and adjust the organization's direction in response to a changing
environment.
It is a disciplined effort that produces fundamental decisions and actions that shape and
guide what an organization is, who it serves, what it does, and why it does it, with a focus on
the future. Effective strategic planning articulates not only where an organization is going and
the actions needed to make progress, but also how it will know if it is successful.
Strategic Plan: A strategic plan is a document used to communicate with the organization the
organizations goals, the actions needed to achieve those goals and all of the other critical
elements developed during the planning exercise.
Strategic Management: Strategic management is the comprehensive collection of ongoing
activities and processes that organizations use to systematically coordinate and align resources
and actions with mission, vision and strategy throughout an organization.
Steps in Strategic Planning & Management:
There are many different frameworks and methodologies for strategic planning and
management. While there are no absolute rules regarding the right framework, most follow a
similar pattern and have common attributes. Many frameworks cycle through some variation on
some very basic phases:
1) Analysis or assessment, where an understanding of the current internal and external
environments is developed.
2) Strategy formulation, where high level strategy is developed and a basic organization
level strategic plan is documented.
3) Strategy execution, where the high level plan is translated into more operational
planning and action items, and
Page 5
 Management Information System (B.Com-III year Semester- VI)

4) Evaluation or sustainment / management phase, where ongoing refinement and

evaluation of performance, culture, communications, data reporting and other strategic
management issues occurs.

** Management Control & Operational Control **

Management control describes the means by which the actions of individuals or groups
within an organization are constrained to perform certain actions while avoiding other actions in
an effort to achieve organizational goals.
Operational control or task control is the process of assuring that specific tasks are carried
out effectively and efficiently. The focus of operational control is on individual tasks or
operations. For instance, it is concerned with scheduling and controlling individual jobs through
a shop rather than with measuring the performance of the shop as a whole. It involves control
over individual items for inventory rather than the management of inventor as a whole.
Differences between Management Control and Operational Control: The following points
of distinction between management control and operational control can be identified:
1. Focus: Management control concerns the whole of an organization or division. Its focus is
on all the operations of an organization or unit. On the other hand, the focus of operational
control is limited to a single task or operation.
2. Nature: An operational control system is a rational system because the action to be taken is
decided by a set of logical rules. Rules govern the control system and judgment is involved
in exceptional cases. On the contrary, in management control psychological considerations
are dominant. There are very little rules and a high degree of judgment or subjective decision
making are involved.
3. Time Horizon: Management control involves weekly, monthly or yearly time frames-
whereas the time horizon of operational control tends to be day-to-day.
4. Degree of Difficulty: Control is more difficult in management control than in operational
control due to the lack of a scientific standard with which actual performance can be
compared. A good operational control system can provide a much higher degree of
assurance that actions arc proceeding as desired than can a management control system.
5. Type of Data Used: A management control system is usually built around financial data
whereas operational control dam are open non monetary, e.g., man-hours, number of items,
etc. Data in an operational control system are often in real time, i.e., they are, reported as the
event is occurring, and relate to all individual events. One the contrary, data in a
management control system is often retrospective and summarizes many separate events.
Similarly, operational control uses exact data whereas management control needs only
approximations.
6. Analogies: In operational control systems, analogies within technical, electrical and
hydraulic systems are reasonable and useful. Therefore, terms like feedback, network
balancing, optimization, etc., are relevant. For example, an operational control system can
be considered as analogous to a thermostat, which turns the refrigerator and on according to
its perception of changes in temperature.
These analogies do not work well with management control system because the success
of a management, control system is highly dependent on its impact on people who are not
like thermostats.
Page 6
 Management Information System (B.Com-III year Semester- VI)

7. Techniques: Operations Research (OR) techniques are widely applied in operational control
because the activities are programmable. But management control system depends on
management information system (MIS) and decision support system (DSS) as its activities
are not programmable.
8. Role of System: In management control, the system is a relatively insignificant part of the
control process. The success or failure of the management control process depends on the
judgment, knowledge and other personal characteristics of the manager. In operational
control, on the other hand, the system itself is relatively more important because the degree
of involvement of the managers small.
9. Guide: The designer of an operational control system can draw on knowledge from
mathematical and physical sciences to arrive at models and decision rules. On the other
hand, the, designer of a management control system has no comparable body of knowledge
to guide him.

** Using Information Systems to Achieve Competitive Advantage **

Firms with a competitive advantage over others typically have access to special resources
that others do not or are able to use resources more efficiently, resulting in higher revenue
growth, profitability, or productivity growth (efficiency), all of which ultimately in the long run
translate into higher stock market valuations than their competitors.
I) Michael Porter's competitive forces model: It describes five competitive forces that shape
the fate of the firm.
1. Traditional competitors: Existing firms that share a firm's market space
2. New market entrants: New companies have certain advantages, such as not being
locked into old equipment and high motivation, as well as disadvantages, such as less
expertise and little brand recognition. Some industries have lower barriers to entry, ie:
cost less for a new company to enter the field.
3. Substitute products and services: These are substitutes that your customers might use if
your prices become too high. For example, Internet telephone service can substitute for
traditional telephone service. The more substitute products and services in your industry,
the less you can control pricing and raise your profit margins.
4. Customers: The power of customers grows if they can easily switch to a competitor's
products and services, or if they can force a business and its competitors to compete on
price alone in a transparent marketplace where there is little product differentiation and
all prices are known instantly (such as on the Internet).
5. Suppliers: The more different suppliers a firm has, the greater control it can exercise
over suppliers in terms of price, quality, and delivery schedules.

Page 7
 Management Information System (B.Com-III year Semester- VI)

II) In Porter’s competitive forces model: It is the strategic position of the firm and its
strategies are determined not only by competition with its traditional direct competitors but also
by four forces in the industry’s environment: new market entrants, substitute products,
customers, and suppliers.
There are four generic strategies used to manage competitive forces, each of which often
is enabled by using information technology and systems:
1. Low-cost leadership: Use information systems to achieve the lowest operational costs
and the lowest prices.
2. Product differentiation: Use information systems to enable new products and services,
or greatly change the customer convenience in using your existing products and services.
3. Focus on market niche: Use information systems to enable a specific market focus and
serve this narrow target market better than competitors. Information systems support this
strategy by producing and analyzing data for finely tuned sales and marketing techniques.
4. Strengthen customer and supplier intimacy: Use information systems to tighten
linkages with suppliers and develop intimacy with customers. This allows suppliers more
lead time in producing goods. Strong linkages to customers and suppliers increase
switching costs (the cost of switching from one product to a competing product) and
loyalty to your firm.

III) The value chain model: It highlights specific activities in the business where competitive
strategies can best be applied and where information systems are most likely to have a strategic
impact. The value chain model views the firm as a series or chain of basic activities that add a
margin of value to a firm's products or services. These activities can be categorized as either
primary activities or support activities.
 Primary activities are most directly related to the production and distribution of the firm's
products and services, which create value for the customer. Primary activities include
inbound logistics, operations, outbound logistics, sales and marketing, and service.

 Support activities make the delivery of the primary activities possible and consist of
organization infrastructure (administration and management), human resources
(employee recruiting, hiring, and training), technology (improving products and the
production process), and procurement (purchasing input).

You can use the business value chain model to identify areas where information systems will
improve business processes. You can also benchmark your business processes against your
competitors or others in related industries, and identify and implement industry best practices.
 Benchmarking involves comparing the efficiency and effectiveness of your business
processes against strict standards and then measuring performance against those
standards.
 Industry best practices are usually identified by consulting companies, research
organizations, government agencies, and industry associations as the most successful
solutions or problem-solving methods for consistently and effectively achieving a
business objective.

Page 8
 Management Information System (B.Com-III year Semester- VI)

This figure provides examples of systems for both primary and support activities of a
firm and of its value partners that can add a margin of value to a firm’s products or services.
A firm's value chain is linked to the value chains of its suppliers, distributors, and
customers.
Information systems can be used to achieve strategic advantage at the industry level by
working with other firms to develop industry-wide standards for exchanging information or
business transactions electronically, which force all market participants to subscribe to similar
standards. Such efforts increase efficiency, making product substitution less likely and perhaps
raising entry costs.

** Synergies- Core competencies and Network based strategies **

Synergy, also known as synergism, refers to the combined effects produced by two or
more parts, elements, or individuals. Simply stated, synergy results when the whole is greater
than the sum of the parts.
For example, two people can move a heavy load more easily than the two working
individually can each move their half of the load. Synergy can be a positive or negative
outcome of combined efforts.

Page 9
 Management Information System (B.Com-III year Semester- VI)

According to the American Heritage Dictionary, the term "synergy" is derived from the
Greek word “sunergos”, meaning "working together." Positive synergy is sometimes called the
2 + 2 = 5 effect. Operating independently, each subsystem can produce two units of output.
However, by combining their efforts and working together effectively, the two subsystems can
produce five units of output.
Negative synergy can be called the 2 + 2 = 3 effect. Again, individuals operating alone
can each produce two units of output. However, with negative synergy, the combination of their
efforts results in less output than what they would have achieved if they had each worked alone.
Negative synergy can result from inefficient committees, business units that lack strategic fit,
and from other poorly functioning joint efforts.
The idea of synergies is that when the output of some units can be used as inputs to other
units, or two organizations pool markets and expertise, these relationships lower costs and
generate profits.
Core Competencies:
A core competency is an activity for which a firm is a world-class leader. Core
competencies may involve being the world’s best miniature parts designer, the best package
delivery service, or the best thin-film manufacturer. In general, a core competency relies on
knowledge that is gained over many years of practical field experience with a technology. This
practical knowledge is typically supplemented with a long-term research effort and committed
employees.
Any information system that encourages the sharing of knowledge across business units
enhances competency. Such systems might encourage or enhance existing competencies and
help employees become aware of new external knowledge; such systems might also help a
business leverage existing competencies to related markets.

Network-based strategies: The availability of Internet and networking technology has inspired
strategies that take advantage of firms’ abilities to create networks or network with each other.
Network-based strategies include the use of network economics, a virtual company model, and
business ecosystems.
Network economics -Model of strategic systems at the industry based on the concept of a
network where adding another participant entails zero marginal costs but can create much larger
marginal gains.
Virtual company-uses networks to link people, assets, and ideas, enabling it to ally with other
companies to create and distribute products and services without being limited by traditional
organizational boundaries or physical locations.
Business ecosystems- loosely coupled but interdependent networks of suppliers, distributors,
outsourcing firms, transportation service firms, and technology manufacturers.

** Information Technology and Business Process Reengineering **

A business process is an activity or collection of activities, which has an effect on the
customer directly or indirectly. Every organization has many processes built in their systems.
Manufacturing, order processing, invoice generation, bill payment and customer service are
some of the business processes of current day organizations. These processes can be
reengineered.
Page 10
 Management Information System (B.Com-III year Semester- VI)

Hammer, M. and Stanton, S.A. defined reengineering as follows in their book

TheReengineering Revolution (1995).
“The fundamental rethinking and radical redesign of business processes to bring about
dramatic improvements in performance.”
According to this definition, we can expect the dramatic improvements as a result of our
reengineering process in the business. Also the definition talks about the radical redesign of the
existing business processes in the organization. There are many steps involved in business
process reengineering effort. Those steps are given in the following figure.

Figure 1 explains the steps involved in business process reengineering. For Business
Process Reengineering, one should identify the processes in the organization to be reengineered.
The outcomes expected from business process reengineering can be increase in profits,
reduction in costs, improvement in quality, service or increment in turn around time, etc. There
should be reengineering team assigned for this business process reengineering assignment
purposes. Definitely there should be commitment from the top management such as CEO and
COO for this business process reengineering purpose.
Reengineering efforts are to be supported by the senior management in the organization.
The process owner and reengineering team work on reengineering of each identified processes
of the organization. During this reengineering time, the top management should be committed
to the BPR efforts in the organization.
The role Information technology in BPR:
All the electronic means through which communication can be done can be included
broadly in this term. From a small digital watch on hand to the huge satellite in the skies are the
examples of the information technology. In business environment IT has played an important
role for making things efficient and effective like office automation, networking LAN WAN
etc, Multimedia communication, computer added software for designing and modeling etc. the
basic advantages of using information technology in Business process reengineering are:
Page 11
 Management Information System (B.Com-III year Semester- VI)

 To decrease cost
To achieve accuracy in the process
Coordination at real time
Integration of team work
Effective and Efficient system
To make the system user friendly
Business process Reengineering needs some tools to take place these tools are called
enablers , as it is the processes of having something new at work, it may be about that how to do
the work or how to acquire the work, whatever the main concern of BPR, Information
Technology is the main enabler.
IT has an important role in the reengineering to be set in , many studies have proved it
that IT is the Basic capacitor to change in the process or redesigning of the system

Page 12