Module 1

Introduction to MIS- Data Vs. Information- Information Quality-MIS meaning and concept-
Characteristics-Importance and scope-subsystems of MIS- MIS and other academic
disciplines -MIS, Importance and scope of MIS- Structure of MIS (based on management
activity and organisational functions (20 hrs)

INTRODUCTION

A management information system (MIS) provides information that is needed

to manage organizations efficiently and effectively. Management information
systems involve three primary resources: people, technology, and information or
decision making. Management information systems are distinct from other
information systems in that they are used to analyze 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.

DATA
Data is raw facts. Data is like raw material. Data does not interrelate and also it does not help in
decision making. Data is defined as groups of non-random symbols in the form of text, images,
voice representing quantities, action and objects .
Characteristics of Data
 They are facts obtained by reading, observation, counting, measuring and weighing etc. which
are then recorded
 Data are derived from external and internal sources (activities with firm).
 Data may be produced as an automatic by-product of some routine but essential operation
such as the production of an invoice or alternative a special counting or measuring procedure
must be introduced and the result recorded.
 The source of data need be given considerable attention because if the sources of the data
flawed, any resulting information will be worthless.

INFORMATION
 Information is data that is processed and is presented in a form which assists decision-
making.
 Information can be defined as meaningfully interpreted data
It may contain an element of surprise, reduce uncertainty or provoke a manager to initiate an action.
Data usually take the form of historical records. In contrast to information, raw data may not be able
to surprise us, may not be organized and may not add anything to our knowledge. Information can be
recorded as signs, or transmitted as signals. Information is any kind of event that affects the state of a
dynamic system that can interpret the information.

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 DATA PROCESSING INFORMATION

Definition of information
mation by Davis & Olson: ―data that has been processed into a form that is
meaningful to the recipient & is of real or perceived value in current or prospective actions or
decision
 Information is processed data.
Has a form
 Meaningful to the recipient
 Has value
 Preciouss organizational resource like material, money.
 Evolves from data and become knowledge for decision makers.
 For any functions of management to perform, at any level
levelss of management, Information is
required
ed to take different decisions.

 Information is the basis of decision making and in fact the lifeblood of management .

It is a most critical resource of the organization. Managing the information means managing
future. Information is knowledge that one derives from facts placed in the right context with
wi the
purpose of reducing uncertainty.

 Information/Data Collection Techniques

The most popular data collection techniques include:
 Surveys: A questionnaire is prepared to collect the data from the field. Secondary data sources
or archival data: Data is collected through old records, magazines, company website, etc.

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 Objective measures or tests: An experimental test is conducted on the subject and the data is
collected.
 Interviews: Data is collected by the system analyst by following a rigid procedure and
collecting the answers to a set of pre-conceived questions through personal interviews.

 TYPES OF INFORMATION
Information obtained from processing of data is vital for an organisation in terms of long term
and short term planning.
1. Based on the use and purpose of information,
It is broadly categorized into three main categories as follows:
• Strategic information
• Tactical information
• Operational information

Figure 1.2: Various Types of Information

 Strategic Information:
Strategic information is concerned with long term policy decisions that defines the objectives of
a business and checks how well these objectives are met.
ie ,Strategic information is used by higher-level management to devise strategies that need to be
implemented in an organisation.
For example, acquiring a new plant, a new product, diversification of business etc., comes under
strategic information.

 Tactical Information:
Information in this category is used in short term planning and is of use at management
control level.
Tactical information is concerned with the information needed for exercising control over
business resources, like budgeting, quality control, service level, inventory level, productivity
level etc.
Operational Information: Operational information is concerned with plant/business level
information and is used to ensure proper conduction of specific operational tasks as
planned/intended. Various operator specific, machine specific and shift specific jobs for quality
control checks comes under this category.
Used at operational level.

2. Classification by Application

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In terms of applications, information can be categorized as:
 Planning Information: These are the information needed for establishing standard norms and
specifications in an organization. This information is used in strategic, tactical, and operation
planning of any activity. Examples of such information are time standards, design standards.
 Control Information: This information is needed for establishing control over all business
activities through feedback mechanism. When such information reflects a deviation from the
established standards, the system should induce a decision or an action leading to control.
 Knowledge Information: Knowledge is defined as "information about information".
Knowledge information is acquired through experience and learning, and collected from archival
data and research studies.
 Organizational Information: Organizational information deals with an organization's
environment, culture in the light of its objectives This information is used by everybody in the
organization; examples of such information are employee and payroll information.
 Functional/Operational Information: This is operation specific information.
For example, daily schedules in a manufacturing plant that refers to the detailed assignment of
jobs to machines or machines to operators. In a service oriented business, it would be the duty
roster of various personnel. This information is mostly internal to the organization.
 Database Information: Database information construes large quantities of information that
has multiple usage and application. Such information is stored, retrieved and managed to create
databases. For example, material specification or supplier information is stored for multiple
users.

Information quality/ Quality of Information(CHARACTERISTICS OF

INFORMATION)

Information is a vital resource for the success of any organization. Future of an organization lies
in using and disseminating information wisely. Good quality information placed in right context
in right time tells us about opportunities and problems well in advance .

Right InformationTo the right person At the right placeAt the right timeIn the right formAt
the right cost

Good quality information: Quality is a value that would vary according to the users and uses of
the information.
Quality of information refers to its fitness for use,or its reliability.

i) Timeliness: Timeliness means that information must reach the recipients within the
prescribed timeframes. For effective decision-making, information must reach the
decision-maker at the right time, i.e. recipients must get information when they need
it. Delays destroy the value of information. The characteristic of timeliness, to be
effective, should also include up-to-date, i.e. current information.
ii) Accuracy: Information should be accurate. It means that information should be free
from mistakes, errors &, clear. Accuracy also means that the information is free from
bias. Wrong information given to management would result in wrong decisions. As
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 managers decisions are based on the information supplied in MIS reports, all
managers need accurate information.
iii) Relevance: Information is said to be relevant if it answers especially for the recipient
what, why, where, when, who and why? In other words, the MIS should serve reports
to managers which are useful and the information helps them to make decisions.
Information must be relevant to the problem being considered. Too often reports,
messages, tabulations etc. contain irrelevant parts which most prevent the user of the
information to get the actual meaning of what the sender wants.
iv) Adequacy: Adequacy means information must be sufficient in quantity, i.e. MIS
must provide reports containing information which is required in the deciding
processes of decision-making. The report should not give inadequate or for that
matter, more than adequate information, which may create a difficult situation for the
decision-maker. Whereas inadequacy of information leads to crises, information
overload results in chaos.
v) Completeness: The information which is given to a manager must be complete and
should meet all his needs. Incomplete information may result in wrong decisions and
thus may prove costly to the organization. Ideally, all the information required for a
decision should be available. However, in practice, this is not often obtainable. What
is required is that the information is complete in respect of the key elements of the
problem. This suggests that there should be interaction between information providers
and users to ensure that the key factors are identified
vi) Explicitness: A report is said to be of good quality if it does not require further
analysis by the recipients for decision making.
vii) Impartiality: Impartial information contains no bias and has been collected without
any distorted view of the situation.
viii) Confidence in the source: For information to have value it must be used. For it to be
used managers must have confidence in the source
ix) Communication to the right person: All persons have a defined sphere of activity
and responsibility and should receive information to help them carry out their
designated tasks. In practice this is not always as easy as it sounds. It is quite common
for information to be supplied to the wrong level in the organization. A superior may
not pass it on the person who needs it whilst subordinates may hold onto information
in an attempt to make themselves seem indispensable
x) Exception-based: The most contemporary concept of representing the information is
the one that is based on exception. Exception-based information ensures that only the
information that is required by the management is delivered to the client. Exception-
based information helps the management in saving time, cost and efforts required to
evaluate the information. Whenever an exception-based report is send to the
management, it directly focuses on the target piece of information.

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The quality of information is high, if it creates managerial impact leading to attention, decision
and action. The quality of information can also be measured on the four dimensions, viz.,
1. Utility,
2. Satisfaction,
3. Error
4. Bias

Utility
The utility dimension has four facets- the form, the time, the access and the possession. If the
information is presented in the form the manager requires, then its utility increases. If it is
available when needed, the utility is optimized. If the information is easily and quickly accessible
through the Online Access System, its utility gets an added boost. Lastly, if the information is
possessed by the manager who needs it, then its utility is the highest.
i. Form utility:In order to be of great value, the form of information should closely match
the requirements of the user.
ii. Time Utility:Information,when available when needed ,has a greater value
iii. Place utility: The value of information will be more if it can be accessed or delivered
easily.
iv. Possession utility:The person who had the information influences its value by controlling
its dissemination to others in the organization.

Satisfaction
The degree of satisfaction would determine the quality of the information. If the organization has
a high degree of satisfaction, then one can be safe in saying that information systems are
designed properly to meet the information needs of the managers at all the levels.
Error
An erroneous information is a serious problem because the decision maker cannot make the
adjustments as he is not aware of it in terms of the location and quantum of error. To control
errors, it is necessary to follow the methods of systems analysis and design. The approach should
be that the error should be prevented, failing that they should be detected, and if not, they should
be controlled.
Bias
If the information is processed out of a biased data it will have a bias. The
procedure of communicating the information should be such that the system is able to
detect the degree and the nature of the bias and correct the information accordingly.

 Functions of Information
a) Reduction of Uncertainty: Uncertainty exist where there is less than perfect knowledge.
Rarely, if ever is there perfect knowledge but relevant information help to reduce the unknown.

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b) An aid to monitoring and control: By providing information about performance and the
extent of deviations from planned level of performance, management is better able to control
operation.
c) As a means of communication: Managers need to know about developments, plans,
forecasts, and impending changes and so on.
d) As a memory supplement: By having historical information about performance, transactions,
results of past actions and decisions available for reference, personal memories are
supplemented.
e) As aid to simplification: By reducing uncertainty and enhancing understanding, problems and
situations are simplified and become more manageable.

DIMENSIONS OF INFORMATION/VALUE OF
INFORMATION
Information presented to the management is estimated to have its dimension in terms of cost,
business and technical issues involved. Various dimensions of information systems are.
• Economic
• Business
• Technical
o Economic Dimension
Economic dimension of information determines the cost involved in obtaining the information
and the benefits that are derived from the information. Based on the cost and benefits analysis
and economic dimensions are evaluated as.
 Cost of information
Cost of information determines the cost involved in obtaining the information, which includes.
• Cost of acquiring the data
• Cost of maintaining the data
• Cost of generating the information
• Cost of communicating the information
The cost is estimated from the point the information is generated to the point the information is
retrieved by MIS. The cost of obtaining the accurate and complete information is more as
compared to the cost generally retrieved from the system.

 Value of information
Value of information is determined on the basis of benefits that are derived from the
information. Consider an example where two products A and B are developed. The benefits
derived from product A evaluates to 20 and the benefits derived from product B evaluates to 30.
The difference between the benefits of the two products is 10 units.
If you add some information, the benefits derived from product A increases by 20 points from 20
to 40. The actual value of information needs to be calculated from simple mathematics. The cost
of information increases by 20 units. You need to subtract the cost involved in obtaining the
information to determine the actual value of the information.

The value of information is the value of the change in decision behavior because
of the information. The change in the behavior due to new information is measured to determine

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the benefit from its use. To arrive at the value of information, the cost incurred to get this
information is deducted from the benefit.
Value of information = Cost to get information – benefit

o Business Dimension/Management Dimension

The business dimension of the information is used to determine the relevance of information at
various levels of management. The business dimension of information at top-level management
is totally different from the business dimension of information at lower level management. The
difference in business dimension arises from the difference in the level and nature of work
performed at various levels of management.
o Technical Dimension
The technical dimension of information covers the technical aspects of information such as the
volume of information to be stored in the database. It also undertakes the type of database that is
used to store information in the database. The technical dimension covers the capacity of the
database and the time required to retrieve information from the database.

MIS MEANING AND CONCEPT

CONCEPT
Management Information Systems (MIS), 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.
“'MIS' is a planned system of collecting, storing and disseminating data in the form of
information needed to carry out the functions of management.”

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 is a means for connecting the managed operating systems by exchange of
information. An MIS is more than a set of ideas or concepts. It is an operational system performing a
variety of functions to produce outputs which are useful to the operating personnel and management
of an organization. Managers have always had sources of information; the MIS provides a system of
information. MIS is an organized method of providing past, present and projected information
relating to internal operations of an organization and external intelligence by good environmental
scanning techniques.

Management : Management is art of getting things done through and with the people in formally
organized groups. The basic functions performed by a manager in an organization are: Planning,
controlling, staffing, organizing, and directing.

Information : Information is considered as valuable component of an organization. Information is

data that is processed and is presented in a form which assists decision maker.

System : A system is defined as a set of elements which are joined together to achieve a common
objective. The elements are interrelated and interdependent. Thus every system is said to be
composed of subsystems. A system has one or multiple inputs, these inputs are processed through a
transformation process to convert these input( s) to output.
FIG: concept of MIS

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 o Meaning of MIS:
MIS is the use of information technology, people, and business processes to record, store and
process data to produce information that decision makers can use to make day to day decisions.
MIS is the acronym for Management Information Systems. In a nutshell, MIS is a
collection of systems, hardware, procedures and people that all work together to process, store,
and produce information that is useful to the organization.
DEFINITION
G.B. Davis defined a Management Information System (MIS) is ―an integrated
man/machine system for providing information to hold up the operations, management and
decision making functions in an organization.‖ Here the system utilizes hardware and software,
manual procedures, management decision model and data base.
An MIS need not be wholly computer based; it is however inevitable that the information
deriving from the high volume of data in basic operational processes is computerized; what is
still not so certain is whether the once off ―high level information also needed in an MIS, is best
obtained using a computer.
A management information system aims at meeting the information needs of managers,
predominantly with regard to the current and past operations of the enterprise.

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 Management information system is a system which provides precise, timely and meaningful
data for management planning, analysis and control to optimize the growth of the organization.
The MIS is a system which provides information support for decision making in the
organization.

 Functions/Objectives of MIS :
Data Capturing : MIS capture data from various internal and external sources of organization.
Data capturing may be manual or through computer terminals.
Processing of Data : The captured data is processed to convert into required information.
Processing of data is done by such activities as calculating, sorting, classifying, and
summarizing.
Storage of Information : MIS stores the processed or unprocessed data for future use. If any
information is not immediately required, it is saved as an organization record, for later use.
Retrieval of Information : MIS retrieves information from its stores as and when required by
various users.
Dissemination of Information : Information, which is a finished product of MIS, is
disseminated to the users in the organization. It is periodic or online through computer terminal.

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 Characteristics of MIS :

1. Systems Approach : The information system follows a systems approach. Systems approach
means taking a comprehensive view or a complete look at the interlocking sub-systems that
operate within an organization.
2. Management Oriented : Management oriented characteristic of MIS implies that the
management actively directs the system development efforts. For planning of MIS, top-down
approach should be followed. Top down approach suggests that the system development starts
from the determination of management’s needs and overall business objective. To ensure that the
implementation of system’s polices meet the specification of the system, continued review and
participation of the manager is necessary.
3. Need Based : MIS design should be as per the information needs of managers at different
levels.
4. Exception Based : MIS should be developed on the exception based also, which means that in
an abnormal situation, there should be immediate reporting about the exceptional situation to the
decision –makers at the required level.

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5. Future Oriented : MIS should not merely provide past of historical information; rather it
should provide information, on the basis of future projections on the actions to be initiated.
6. Integrated : Integration is significant because of its ability to produce more meaningful
information. Integration means taking a comprehensive view or looking at the complete picture
of the interlocking subsystems that operate within the company.
7. Common Data Flow : Common data flow includes avoiding duplication, combining similar
functions and simplifying operations wherever possible. The development of common data flow
is an economically sound and logical concept, but it must be viewed from a practical angle.
8. Long Term Planning : MIS is developed over relatively long periods. A heavy element of
planning should be involved.
9. Sub System Concept : The MIS should be viewed as a single entity, but it must be broken
down into digestible sub-systems which are more meaningful.
10. Central database : In the MIS there should be common data base for whole system
11. Strategic planning
MIS cannot be designed overnight. It requires very high degree of planning which goes into
creating an effective organization. The reason for this kind of planning is to ensure that the MIS
being built not only satisfies the information need of the managers today but can also serve the
organization for the next five to ten years with modifications. Sometimes when the planning part
is done away with, systems tend to perform well in the present, but they tend to become obsolete
with time. Planning helps to avoid this problem.

 Need of MIS
MIS helps the management at various levels and it is mean of communication where data are collected,
processed, stored and retrieved for making decisions regarding planning, operation and control of an
organization.
 Nature and Scope of MIS
The following diagram shows the nature and scope of MIS:

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 Computer science is related with instituting speculations of computability, methods of computation, and
techniques of efficient data storage and access.
Management science highlights the expansion of models for decision-making and management practices.
Operations research concentrates on mathematical techniques for optimizing chosen parameters of
organizations like transportation, inventory control, and transaction costs.
An important part of the information systems field is concerned with behavioral issues that arise in the
development and long-term maintenance of information systems. Issues such as strategic business integration,
design, implementation, utilization, and management cannot be explored usually with the model used in the
technical approach.

o COMPONENTS OF MIS
Management information system refers to the data, hardware and the computer programs that
are used to develop information for managerial use.
People – it is the only living component of MIS which operates, controls the other components
of MIS.
Procedure – procedure explain people how to operate the computer hardware.
Data – Data provide interface between the user and computer.
Hardware – It is the machine part of the system which executes the instruction in programs.
Programs – The program is the set of instruction written in logical order for performing specific
task related to information production.

o Importance/role of MIS
 Helps in Decision making: - Management Information System (MIS) plays a significant Role
in Decision making Process of any Organization. Because in Any organization decision is made
on the basis of relevant Information and relevant information can only be Retrieving from the
MIS.

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  Helps in Coordination among the Department: - Management information System is also
help in establishing a sound Relationship among the every persons of department to department
through proper exchanging of Information‘s.

 Helps in Finding out Problems: - As we know that MIS provides relevant information about
the every aspect of activities. Hence, if any mistake is made by the management then
Management Information Systems (MIS) Information helps in Finding out the Solution of that
Problem.

 Helps in Comparison of Business Performance: - MIS store all Past Data and information
in its Database. That why management information system is very useful to compare Business
organization Performance. With the help of Management information system (MIS)
Organization can analyze his Performance means whatever they do last year or Previous Years
and whatever business performance in this year and also measures organization Development
and Growth.

 Provides timely, useful and reliable information that helps in the progress and growth of the
business and management infrastructure in a situation of increased business complexities. This
information can significantly help the management in taking quick, rational and speedy
decisions.
 Supports the business processes and operations of the organization that help in globalization
and liberalization of the organizations and enables the organization to compete both locally and
globally.
 Provides Management Information (MI) at various stages of decision-making in an
organization that helps assist the decision makers to take decision in an organization.

ALSO

1 MIS ensure that appropriate and relevant data is collected from various sources, processed
and is sent further to the needy destination.
2 It fulfills the need of individual, workgroup and management.
MIS satisfies the diverse need of various systems like query, Analysis, Modeling, DSS.
4 MIS helps in strategic planning, management control, operational control and transaction
processing level.
5 MIS play important role in information generation, communication, problem identification
and decision making administration.
6 With good MIS support marketing, finance, production, and personal functions increases
efficiently.
7 MIS helps in streamlining of the operations.
8 MIS creates structured database and therefore saves the time.
9 MIS bring clarity in communication and understanding this help in bringing high degree of
professionalism.

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10 MIS helps in systemization of business operation through tools and techniques of the
computer, which makes task simpler, accurate and faster.

o Goals of MIS
MIS is the most common type of management support systems. Various goals of MIS in an
organization are as follows:
 To provide information to managerial end-users to support their day-to-day decision-making
needs
 To produce reports for specific time periods designed for managers responsible for specific
functions in an organization. For example, departmental expense reports and performance reports
 To provide correct information to the concerned manager at the right time
 To help in carrying out regular and routine operations
 To control, organize and plan better business operations

o Limitations of MIS
There are fundamental weaknesses in an organization, such as improper management and
unclear organizational functions. When the organization decides to implement an
MIS, the following problems directly affect and limit an MIS:
 Organizational framework: Some managers think that they can solve a company’s
shortcomings using MIS. MIS does not help to achieve this goal without a good planning and
control within the framework of an organizational structure. MIS must be built on top of a
management system that includes the organizational arrangements, structure and procedures for
adequate planning and control.
 Generation of information: The lack of managerial and operational applications to the MIS
makes a great impact because it implies that the process of management is not being performed
well to generate the information. The information is the raw material of decision-making for MIS
and if information is not being generated, disseminated and used for management, then no
system manual or computer is going to solve the organizational problems.
 Managerial participation: The most striking characteristic of the successful company is that
the development of MIS has been viewed as a responsibility of the management. Their success is
attributed directly to the fact that managers are required to become involved in the design of their
own systems. This includes both top management and operating line management. Moreover, the
president of the organization needs to take a personal interest and participate directly in defining
what work the computer should do for the company.
 MIS is heavily technology driven and therefore lacks a human element. The information
represented by the MIS is often rich in nature. The expertise of humans is needed to analyze the
information presented and to make decisions accordingly.

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