UNIT -1

MIS

What is MIS?
MIS Meaning: A management information system is an acronym of three words, viz.,
Management, information, system. In order to fully understand the term MIS, let us try to
understand these three words.

Management: Management is the art of getting things done through and with the people in
formally organised groups.

Information: Information is data that is processed and is presented in a form which assists
decision-making. It may contain an element of surprise, reduce uncertainty or provoke a
manager to initiate an action.

System: A system is an orderly grouping of interdependent components linked together

according to a plan to achieve a specific goal. The term system is the most loosely held term in
management literature because of its use in different contexts.

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. The full form of MIS is Management Information Systems. The purpose of MIS is to
extract data from varied sources and derive insights that leads to business growth.

The need for MIS

Decision makers need information to make effective decisions. Management Information
Systems (MIS) make this possible.

Record keeping- in management information systems record all business transactions of an

organization and provide a reference point for the transactions.

MIS systems facilitate communication within and outside the organization – employees within
the organization are able to easily access the required information for the day to day operations.

Facilitates such as Short Message Service (SMS) & Email- it make possible to communicate
with customers and suppliers from within the MIS system that an organization is using.

Components of MIS
The major components of a typical MIS long-form (Management Information System) are:

People – people who use the information system

Data – the data that the information system records

Business Procedures – procedures put in place on how to record, store and analyze data

Hardware – these include servers, workstations, networking equipment, printers, etc.

Software – these are programs used to handle the data. These include programs such as
spreadsheet programs, database software, etc.

Role of MIS
A management information system (MIS) plays an important role in business organizations.

Decision making
Coordination among the department
Finding out Problems
Comparison of Business Performance
Strategies for an Organization

Decision making
Management Information System (MIS) plays a significant role in the decision-making process
of any organization. In any organization, a decision is made on the basis of relevant information
which can be retrieved from the MIS.

Coordination among the department

Management Information System satisfy multiple need of an organization across the different
functional department.

Finding out Problems

As we know that MIS provides relevant information about every aspect of activities. Hence, if
any mistake is made by the management then MIS, information will help in finding out the
solution to that problem.

Comparison of Business Performance

MIS store all past data and information in its Database. That why the management information
system is very useful to compare business organization performance.

Strategies for an Organization

Today each business is running in a competitive market. An MIS supports the organization to
evolve appropriate strategies for the business to assent in a competitive environment.

Types of Information Systems

The type of information system that a user uses depends on their level in an organization. The
following diagram shows the three major levels of users in an organization and the type of
information system that they use.

Transaction Processing Systems (TPS)

This type of information system is used to record the day to day transactions of a business. An
example of a Transaction Processing System is a Point of Sale (POS) system. A POS system is
used to record the daily sales.

Management Information Systems (MIS)

Management Information Systems abbreviated as MIS, are used to guide tactic managers to
make semi-structured decisions. The output from the transaction processing system is used as
input to the MIS system.

Decision Support Systems (DSS)

Decision support systems are used by top level managers to make semi-structured decisions.
The output from the Management Information System is used as input to the decision support
system.DSS systems also get data input from external sources such as current market forces,
competition, etc.

Manual Information Systems VS Computerized Information Systems (MIS)

Data is the bloodstream of any business entity. Everyone in an organization needs information
to make decisions. An information system is an organized way of recording, storing data, and
retrieving information.

Manual Information System

A manual information system does not use any computerized devices. The recording, storing
and retrieving of data is done manually by the people, who are responsible for the information
system.

The following are the major components of a manual information system

People –people are the recipients of information system

Business Procedures –these are measures put in place that define the rules for processing
data, storing it, analyzing it and producing information

Data –these are the recorded day to day transactions

Filing system – this is an organized way of storing information

Reports –the reports are generated after manually analyzing the data from the filing system and
compiling it.

Advantages of a manual information system

Cost effective – it is cheaper compared to a computerized system because there is no need to

purchase expensive equipment such as servers, workstations, printers, etc.

Flexible –evolving business requirements can easily be implemented into the business
procedures and implemented immediately

Disadvantages:

The following are some of the disadvantages of a manual information system.

Time consuming –all data entries need to be verified before filing, this is a time consuming task
when done by humans. Retrieving data from the filing system also takes a considerable amount
of time

Prone to error – the accuracy of the data when verified and validated by human beings is more
prone to errors compared to verification and validation done by computerized systems.

Lack of security – the security of manual systems is implemented by restricting access to the file
room. Experience shows unauthorized people can easily gain access to the filing room

Duplication of data –most departments in an organization need to have access to the same
data. In a manual system, it is common to duplicate this data to make it easy to accessible to all
authorized users. The challenge comes in when the same data needs to be updated

Data inconsistency – due to the duplication of data, it is very common to update data in one file
and not update the other files. This leads to data inconsistency

Lack of backups – if the file get lost or mishandled, the chances of recovering the data are
almost zero.

Computerized information system

Computerized systems were developed to address the challenges of manual information

systems. The major difference between a manual and computerized information system is a
computerized system uses a combination of software and hardware to record, store, analyze
and retrieve information.

Advantages and Disadvantages of a computerized information system (MIS)

The following are some of the disadvantages of a computerized information system.

Advantages:

The following are the advantages of computerized information systems

Fast data processing and information retrieval – this is one of the biggest advantages of a
computerized information system. It processes data and retrieves information at a faster rate.
This leads to improved client/customer service

Improved data accuracy – easy to implement data validation and verification checks in a
computerized system compared to a manual system.

Improved security – in addition to restricting access to the database server, the computerized
information system can implement other security controls such as user’s authentication,
biometric authentication systems, access rights control, etc.
Reduced data duplication – database systems are designed in such a way that minimized
duplication of data. This means updating data in one department automatically makes it
available to the other departments

Improved backup systems – with modern day technology, backups can be stored in the cloud
which makes it easy to recover the data if something happened to the hardware and software
used to store the data

Easy access to information – most business executives need to travel and still be able to make
a decision based on the information. The web and Mobile technologies make accessing data
from anywhere possible.

Disadvantages:

It is expensive to set up and configure – the organization has to buy hardware and the required
software to run the information system. In addition to that, business procedures will need to be
revised, and the staff will need to be trained on how to use the computerized information
system.

Heavy reliance on technology – if something happens to the hardware or software that makes it
stop functioning, then the information cannot be accessed until the required hardware or
software has been replaced.

Risk of fraud – if proper controls and checks are not in place, an intruder can post unauthorized
transactions such as an invoice for goods that were never delivered, etc.

Managerial use of information system

The purpose of a management information system is to transform comparatively raw data

accessible through using Transaction Processing System into a summarized and aggregated
form for managers, generally in the form of a report. Operational supervisors and middle
management are likely to use the reports.
In MIS, there are various kinds of reports generated. Few reports are a kind of summary report,
ad-hoc reports, exception report, and on-demand report.
Examples of Management Information System are Human resource management system and
Sales management systems.

Sources of the Information

the Information is born from the data i.e. the data acts as the base for the formation of the
Information. Data is the raw material from which the information can be or is obtained. So it can
be said that the Information Is obtained from the data and the data further is obtained from the
various sources, so now it becomes very important to have an in – depth view about these
various sources.
The data can be obtained from the various sources that can be either external or internal in the
nature. When the researcher collects the data for the first time, it is referred to as the Primary
data. But when the data is borrowed by the researcher from the other sources, it is referred to
as the Secondary data.

The Primary data can be collected from the following sources –

1. Directly from the respondent.
2. Various techniques like the observations, questionnaires, interviews etc.

The Secondary data can be collected from the following sources –

1. Newspapers
2. Magazines
3. Trade journals
4. Government Publications
5. Government Policy Documents
6. Research Reports
7. Websites

Information Systems Users – Types of Users

Besides the people who work to create, administer, and manage information systems, there is
one more extremely important group of people, namely, the users of information systems. This
group represents a very large percentage of an organization's employees. If the user is not able
to successfully learn and use an information system, the system is doomed to failure.

Technology adoption user types

One tool that can be used to understand how users will adopt a new technology comes from a
1962 study by Everett Rogers. In his book, Diffusion of Innovation, Rogers studied how farmers
adopted new technologies and noticed that the adoption rate started slowly and then
dramatically increased once adoption hit a certain point. He identified five specific types of
technology adopters:

Innovators. Innovators are the first individuals to adopt a new technology. Innovators are willing
to take risks, are the youngest in age, have the highest social class, have great financial
liquidity, are very social, and have the closest contact with scientific sources and interaction with
other innovators. Risk tolerance is high so there is a willingness to adopt technologies that may
ultimately fail. Financial resources help absorb these failures.

Early adopters. The early adopters are those who adopt innovation soon after a technology has
been introduced and proven. These individuals have the highest degree of opinion leadership
among the other adopter categories, which means that these adopters can influence the
opinions of the largest majority. Characteristics include being younger in age, having a higher
social status, possessing more financial liquidity, having advanced education, and being more
socially aware than later adopters. These adopters are more discrete in adoption choices than
innovators, and realize judicious choice of adoption will help them maintain a central
communication position.

Early majority. Individuals in this category adopt an innovation after a varying degree of time.
This time of adoption is significantly longer than the innovators and early adopters. This group
tends to be slower in the adoption process, has above average social status, has contact with
early adopters, and seldom holds positions of opinion leadership in a system.

Late majority. The late majority will adopt an innovation after the average member of the society.
These individuals approach an innovation with a high degree of skepticism, have below average
social status, very little financial liquidity, are in contact with others in the late majority and the
early majority, and show very little opinion leadership.

Laggards. Individuals in this category are the last to adopt an innovation. Unlike those in the
previous categories, individuals in this category show no opinion leadership. These individuals
typically have an aversion to change agents and tend to be advanced in age. Laggards typically
tend to be focused on "traditions", are likely to have the lowest social status and the lowest
financial liquidity, be oldest of all other adopters, and be in contact with only family and close
friends.

Framework of MIS
An organization may be conceived in a lot of ways. One can visualize an organization as a
balance sheet or a function of financial statements, i.e., as a financial entity or as an
organization chart delineating the decision-making hierarchy levels and formal communication
channels. While both views are correct, the latter view is more appropriate for understanding an
organization’s MIS.

Strategic Planning
Managerial Control
Operational Control

Strategic Planning
This requires focusing on the objectives and goals of the organization, on changes in the
objectives, on the resource requirements to fulfill the objectives and on the guiding principles
and policies that will govern the acquisition, use and disposal of resources to attain the
objectives. In short, this role is the most important role in the management hierarchy and the
decisions taken by managers in this role have a far-reaching impact on the organization.
Managers in this role set the direction in which the organization will travel. In terms of hierarchy,
this lies at the top.

Managerial Control
This requires that resources are acquired and used effectively and efficiently to attain the
objectives of the organization. This is a middle management role. Managers in this role take
guidance from the strategic planning hierarchy and control the activities of the organization such
that the goals set by the higher level are attained in an efficient and effective manner. The
impact of the decisions of the managers in this role is medium term and degree.

Operational Control
This requires that directives as set by the immediate higher hierarchy is followed and that
specific task/s are carried out effectively and efficiently. The decisions at this level have very
little impact on the organization. The organization behaves in a routine nature where the
parameters of the decision-making process are well laid and certain.

What is Information Systems Development?

As the name suggests, information system development or commonly known as SLC (Systems
Life Cycle) or SLDC (Software Development Life Cycle) is a process of making and changing
the system and the model and methodology used. In other words, an SDLC is the preparation of
a new system to replace the old system, both in whole and only partially.

Development of information systems is generally done because of problems that cannot be

accommodated by the old system. For example, the hospital where you work make an overhaul
SIMRS (Sistem Informasi Manajemen Rumah Sakit/Hospital Management Information System)
because of applications that previously could not do bridging with BPJS. Considering the fact
that the government has required it, then inevitably the hospital must adjust the SIMRS it
already has.

As for carrying out an information system development, the related team will consist of several
personnel, namely the project coordinator, system analyst and design, network designer,
programmer, technician (hardware), administrator, software tester, graphic designer, and
documentary.

Information System Development Stages

An information system development consists of six important stages, it is system survey, needs
analysis, design, implementation, testing, change and maintenance.

1) System Survey
The SLDC phase also consists of three main points: system identification, selection, and system
planning.
1) System Identification

This process is to identify the problems facing the company and the system it has. The team will
look for any opportunities that can be done to overcome this.

2) Selection

The selection phase will apply evaluation points to the development project to ensure the
solutions are created in accordance with the company’s expected targets.

3) System Planning

This step is the step of developing a formal plan to start working on and implementing the
information system development concept that has been chosen.

2) Needs Analysis
System requirements analysis is a technique for solving problems by decomposing the
components of the system. The aim is none other than to find out more about how each
component works and the interaction between one component with other components.

Some aspects that need to be targeted in the needs analysis in the development of information
systems include business users, job analysis, business processes, agreed rules, problems and
solutions, business tools, and business plans.

3) Design
The design or design of system development is intended to provide a complete blueprint as a
guideline for the IT team (especially programmers) in making applications. Thus the IT team no
longer makes decisions or works in a sporadic way.

4) Implementation
The stage of developing this information system is to work on a previously designed
development.

5) Testing
A system needs to be tested to ensure that the development carried out is appropriate or not
with the expected results. Tests that are applied are various, such as performance, input
efficiency, syntax (program logic), output, and so on.

This information system development stage requires preparation of various supporting aspects.
In addition to applications, hardware readiness and several other related facilities also need to
be prepared. As for implementation, several activities carried out include data migration
(conversion), training for users, and trials.

6) Change and Maintenance

This step covers the whole process in order to ensure the continuity, smoothness and
improvement of the system. In addition to monitoring the system at a certain time, maintenance
also includes activities to anticipate minor bugs (bugs), system improvements, and anticipation
of some risks from factors outside the system.

Thus information about the development of information systems or SLDC. May be useful!

Level of Management: Types of Information that are required at Different Levels of

Management
:

Information, as required at different levels of manage­ment can be classified as operational,

tactical and strategic.

1. Operational information:
Operational information relates to the day-to-day operations of the organisation and thus, is
useful in ex­ercising control over the operations that are repetitive in nature. Since such activities
are controlled at lower levels of management, operational information is needed by the lower
management.

For example, the information regarding the cash position on day-to-day basis is monitored and
controlled at the lower levels of manage­ment. Similarly, in marketing function, daily and weekly
sales in­formation is used by lower level manager to monitor the perform­ance of the sales force.

It may be noted that operational informa­tion pertains to activities that are easily measurable by
specific standards. The operational information mainly relates to current and historical
performance, and is based primarily on internal sources of data. The predictive element in
operational information is quite low and if at all it is there, it has a short term horizon.

2. Tactical information:
Tactical information helps middle level man­agers allocating resources and establishing controls
to implement the top level plans of the organisation. For example, information regarding the
alternative sources of funds and their uses in the short run, opportunities for deployment of
surplus funds in short- term securities, etc. may be required at the middle levels of
man­agement.

The tactical information is generally predictive, focusing on short-term trends. It may be partly
current and partly histori­cal, and may come from internal as well as external sources.

3. Strategic information:
While the operational information is needed to find out how the given activity can be performed
better, strategic information is needed for making choices among the busi­ness options.
The strategic information helps in identifying and evaluating these options so that a manager
makes informed choices which are different from the competitors and the limita­tions of what the
rivals are doing or planning to do. Such choices are made by leaders only.

Strategic information is used by man­agers to define goals and priorities, initiate new
programmes and develop policies for acquisition and use of corporate resources. For example,
information regarding the long-term needs of funds for on-going and future projects of the
company may be used by top level managers in taking decision regarding going public or
approaching financial institutions for term loan.

Strategic infor­mation is predictive in nature, relies heavily on external sources of data, has a
long-term perspective, and is mostly in summary form. It may sometimes include ‘what if’
scenarios. However, the strategic information is not only external information.

For long, it was believed that strategic information are basically information regarding the
external environment. However, it is now well rec­ognised that the internal factors are equally
responsible for suc­cess or failures of strategies and thus, internal information is also required for
strategic decision making.

MIS - The factors of Success and Failure

Many organizations use MIS successfully, others do not. Though the hardware and the software
is the latest and has appropriate technology, its use is more for the collection and storage of
data and its elementary processing. There are some factors which make the MIS a success and
some others, which make it a failure. These factors can be summarized as follows:

Factors Contributing to Success

If a MIS is to be success then it should have all the features listed as follows:

§ The MIS is integrated into the managerial functions. It sets clear objectives to ensure that
the MIS focuses on the major issues of the business.

§ An appropriate information processing technology required to meet the data processing

and analysis needs of the users of the MIS is selected.
§ The MIS is oriented, defined and designed in terms of the user's requirements and its
operational viability is ensured.

§ The MIS is kept under continuous surveillance, so that its open system design is
modified according to the changing information needs.

§ MIS focuses on the results and goals, and highlights the factors and reasons for non
achievement.

§ MIS is not allowed to end up into an information generation mill avoiding the noise in the
information and the communication system.

§ The MIS recognizes that a manager is a human being and therefore, the systems must
consider all the human behavioral factors in the process of the management.

§ The MIS recognizes that the different information needs for different objectives must be
met with. The globalization of information in isolation from the different objectives leads to too
much information and information and its non-use.

§ The MIS is easy to operate and, therefore, the design of the MIS has such features which
make up a user-friendly design.

§ MIS recognizes that the information needs become obsolete and new needs emerge.
The MIS design, therefore, has a basic potential capability to quickly meet new needs of
information.
§ The MIS concentrates on developing the information support to manager critical success
factors. It concentrates on the mission critical applications serving the needs of the top
management.

Factors Contributing to Failures

Many a times MIS is a failures. The common factors which are responsible for this are listed as
follows:

§ The MIS is conceived as a data processing and not as an information processing system.

§ The MIS does not provide that information which is needed by the managers but it tends
to provide the information generally the function calls for. The MIS then becomes an impersonal
system.

§ Underestimating the complexity in the business systems and not recognizing it in the MIS
design leads to problems in the successful implementation.

§ Adequate attention is not given to the quality control aspects of the inputs, the process
and the outputs leading to insufficient checks and controls in the MIS.

§ The MIS is developed without streamlining the transaction processing systems in the
organization.

§ Lack of training and appreciation that the users of the information and the generators of
the data are different, and they have to play an important responsible role in the MIS.
§ The MIS does not meet certain critical and key factors of its users such as a response to
the query on the database, an inability to get the processing done in a particular manner, lack of
user-friendly system and the dependence on the system personnel.

§ A belief that the computerized MIS can solve all the management problems of planning
and control of the business.

§ Lack of administrative discipline in following the standardized systems and procedures,

wrong coding and deviating from the system specifications result in incomplete and incorrect
information.

§ The MIS does not give perfect information to all the users in the organization.