Management Information System

Unit -I

By :- Prof. Gajendra Pawar

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 Management

Information
System
Management Information System
MIS

Management Information System

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Management

The activity of getting things done with the help of people & resources.

Effective utilization of resources to achieve defined objectives with maximum

efficiency.

The process of setting and achieving goals through the execution of basic
management functions: planning, organizing, staffing, directing, coordinating
and controlling; that utilize human, financial, and material resources.

Management means to get the things done in the right way by the right people at
the right time
or in other word
Management is a process where the human beings gather in an environment to
achieve the common goals effectively and efficiently

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Information

Processed data is information

The meaning that a human assigns to data by means of the known

conventions used in their representation

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System

Definition:
A collection of components that work together
to realize some objective forms a system.

A system is an organized, interacting,

interdependent and integrated set of
components.

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Major components in every system
• Input
• Processor
• Output
• Feedback
• Control

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 CONTROL

INPUT PROCESSOR OUTPUT

FEED BACK

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FEEDBACK MECHANISM
Feedback Mechanism: The mechanism, which provides a signal to the
system, about the quality of performance, favourable or adverse.
Positive
Feedback

Positive

Negative

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 FEED BACK MECHANISM
PROCESS OUTPUT
INPUT

SENSOR

CHANNELS OF COMPARISON
CORRECTIVE
UNIT FEEDBACK UNIT

STANDARD
Sensor: the device that measures the output.
Comparison unit: Compares the output with the standard.
If the measured output compares well with the standard, the system provides a feedback to continue the
operation. Otherwise a feedback is provided to the system to stop the operation.
Corrective unit: An in-built mechanism which will decide, based on the feedback to stop, regulate or
continue the system operations. It will act on inputs and processes to bring the system under control.

Control: the process of measuring the output, comparing with the standard,
sending the signal to the corrective unit and the corrective unit acting upon
it. 9
 How Feed back control works?

Input Process Output

Standards COMPARE samples

Leave the
Does not process alone
Confirms to
confirm to standards
standards 10
Model of a Business System

CONTROL
Policies
Plans
Standards

INPUT PROCESSOR OUTPUT

Men Product
Materials Organization Services
Machines Profit/ Loss
Facilities
Information

Feed Back 11
SYSTEM
Definition

 
System is defined as a set of elements arranged
in an orderly manner to accomplish an objective. –
Davis and Olson

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SYSTEM (Example)
Computer System
Elements
Input process & Output process,
OS, Compliers, DBMS, etc.
Common Objective
To process the data and provide information.
Day to day examples of SYSTEM
1. Traffic System
2. Education System
3. Business System etc. 13
System Concept

The features which define and delineate a system

form its boundary.
The system is inside the boundary and the
environment is outside the boundary.

A system is composed of subsystems

The interconnections and interactions between the

subsystems are the interfaces.

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System

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 A System: A Black Box or General View

Environment

. .
. .
. .
Inputs .
System .
Outputs Objectives
. .
. .

Constraints

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 A System and its Subsystems

System Boundary
Environment
System

Interconnection

Inputs Outputs Objectives

Subsystems
(components)

Constraints 17
 Characteristics
1. They have specific objectives
The very existence & everything that the system does
and everything that happens within the system is for
the purpose of fulfilling the objective.
When does a system perform satisfactorily?
If the system achieves its objective it could be said to
be performing satisfactorily.
If not, it is termed a system malfunction.

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 Characteristics (contd.)

2. Systems are composed of elements and these

elements can be systems within themselves
Eg. Transport system:
Subsystems: Road Transport System, Rail Transport System, Air
Transport System, and Water Transport System.
They posses the characteristics of a system

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Characteristics (contd.)
3. Elements can be common to several
systems at the same time
A single element may be a part of several systems at
the same time.
Eg: Human Body
Element –Skin is a part of the body’s defense system; it
is part of the input system.
Business system
Element- Sales is a part of marketing system, also it is a
part of the accounting system.
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 Characteristics (contd.)

4. Elements in a system are interrelated

Eg: In a business system, marketing, finance, manufacturing etc are
related to each other.
They may work differently from each other and have
different short-term goals, but they eventually have
the same goal, which is to make the business
profitable.

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Characteristics (contd.)

5. Elements in a system are interdependent

They depend on each other for various inputs and are
responsible for directing their output to each other.
6. Systems have a defined structure
The flow of materials, feedback mechanisms etc is possible
because the interactions and interdependency work within
a predefined structure.

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 Characteristics (contd.)
7. Systems react with the environment
Almost all the systems have some form of reaction to the environment in which
they function. This is called as the system behaviour. The behaviour may
be in the inputs the system receives from the environment, the output it
gives to the environment and the measures it takes to protect itself in threat
from the environment.
8. All systems have a life cycle
Life cycle denotes the birth, evolution, decay and death of a system.
9. All systems have boundaries
Boundaries define the limits of the system.
Interface
• The interconnections and interactions between the subsystems are termed
interfaces.

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 TYPES OF SYSTEMS
Classification based on the output and degree of information exchange with
the environment.
Deterministic Vs Probabilistic
– When the inputs, the process and the outputs are known with certainty
the system is called Deterministic system.
– It operates in a predictable manner i.e, you can predict the o/p with
certainty.
– Here, if one has a description of the state of the system at a certain
point plus a description of operation, the next state of the system may
be given exactly, without error.

– When the output can be predicted in probabilistic terms the system is

called a Probabilistic system.
– Its behaviour is not predictable. Here, a certain degree of error is
always attached to the prediction of what the system is doing.

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Open Vs Closed
– If a system has exchange of information, material or energy with the
environment including random and undefined inputs then it is called
Open system.
– Eg: organizational system (marketing, communication, forecasting) and
biological system.
– They tend to have form and structure to allow them to adapt changes in
their environment in such a way as to continue their existence. They have
‘self organizing’ ability i.e. to change their organization in response to
changing conditions.
– Generally, open systems are same as of probabilistic systems as they are
complex in every aspect. Therefore they do considerable amount of
checking and controlling of the system behaviour.
– Eg: pricing system.
– If a system does not have any change with the environment nor is it
influenced by the environmental changes then such a system is called as
Closed system.
– These systems are based on rules and principles. 25
Human–Machine Systems (User-machine
systems)
Information systems are generally human- machine systems
in that both perform some of the activities in the
accomplishment of a goal. The machine elements are
relatively closed and deterministic, whereas the human
elements of the system are open and probabilistic.
Various combinations of human and machine are
possible.  

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Information System
An information system is an arrangement of
components that interact to support the
operations, management and decision
making information needs of an
organization.

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Resources of IS
• Resources of People
• Hardware
• Software
• Data
• Networks

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IS Activities
• Input of data resources
• Processing of data into information
• Output of information product
• Storage of data resources
• Control of system performance
• Information quality

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 Types of Information System
Operation Support Management Support
System System

•Transaction Processing System •MIS

•Process Control System •DSS
•Enterprise Collaboration •ESS/EIS
System

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 Employee
Corporate
Database
Database
of external
of internal
data
data
Corporate
Intranet

ESS
Databases
Business TPS of valid MIS Application
Transactions transactions Databases DSS

ES
Operational Input & error Scheduled
Databases list reports

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MIS (Management Information System)

The system, which makes available

the right information to the right person,
at the right place,
at the right time,
in the right form and
at the right cost.

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 Definitions: MIS
Davis & Olson: MIS is an integrated user-machine
system for providing information to support
operations, management and decision making
functions in an organization. The system utilizes
computer hardware and software, manual
procedures/models for analysis, planning, control and
decision making and a database.

Kelly: A combination of human and computer based

resources which result in collection, storage, retrieval,
communication and use of data for the purpose of
efficient management of operations and for Business
Planning.
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 Definitions (contd.)
According to Henry C. Lucas, “MIS is a set of organized
procedures which when executed provide information
to support decision-making”.

Krober and Watson has defined MIS as “ an

organized set of processes that provide
information to managers to support the
operation and decision making within an
organization”.

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All these definitions show that MIS is
• A system
• It combines human and computer based resources
• It is meant to provide information to managers
• This information enables managers to make timely and
effective decisions
• For this, it must be properly communicated
In order to fulfill its functions, MIS uses
• Computer hardware and software
• Manual procedures
• Decision models
• Database 35
Need of MIS
• MIS has become necessary due to the increased Business &
Management complexities.
• MIS enables processing of data from the organization and
present it in a form of reports at regular intervals (data
processing)
• MIS is capable of presenting information in a form and format
that it creates an impact on its user, provoking a decision, an
action or an investigation.
• MIS is capable of handling a need based exception reporting.
• MIS is capable of keeping the data all together in such a form
that it can be accessed by anybody and can be processed to suit
his needs (concept of database)
• MIS is capable of decision- making (quantitative &
qualitative ) and helps to minimize risk.
• MIS facilitates pro-active decision making.
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Role of MIS in an Organisation
• Support day-to-day business operations
• Support managerial decision making
• Supports strategic decision making & competitive
advantage
• Optimizing operational cost
• Provide timely & accurate information
• Provide expert advice to the mangers on selected
domains

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Role of MIS in an Organization
• Provides information to all the levels of management
for the following purpose

– Define objectives of the organization

– Formulate strategies & policies to achieve the objectives
– To report organisation’s performance to tax authorities,
share holders, regulatory authorities and other stake holders
such as suppliers & customers etc
– To prepare future plans on short & long term basis
– To exercise day-to-day control on various operations in
different functional areas
– To allow management by exception

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Features of MIS
• Management –Oriented: provides information to all the
management levels.
• Subsystem
• Integration
• Common database
• Information source & reporting format
• More useful for structured decisions
• Provide relevant information
• Computerized
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Limitations of MIS

• It is not a substitution to managerial activities but a tool for

management activities
• It is customized
• Like any other system, the quality of i/p governs the quality of
the o/p.
• It takes into account mainly quantitative factors, non
quantitative factors like morale, attitude of the members of the
organization, which have an important bearing on decision
making process, is conveniently ignored.
• Is less useful for making non programmed decisions
• The effectiveness of MIS will diminish in organization where
information sharing is not adopted as culture.

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MIS : Objectives
• Enhance communication among employees
• Deliver complex material throughout the
organization
• Provide an objective system for recording &
aggregating information
• Reduce expense related to labour-intensive
manual activities
• Support the organization's strategic goals &
direction

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Computer for MIS
• Conceptually MIS can exist with computer,
but it is the power of Computer which
makes MIS feasible.
– Can produce periodic results
– Comparing it with set target
– Required representation of analysis
All done in minimum time with minimum human
involvement.

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Advantages of using computer
• Data access from several (remote) locations
• Data security
• Data confidentiality
• Data storage
• Fast computation
• Integrates working of different Information subsystem
• Better decision making
• User friendly
• More comprehensive information –complete wide ranging
information

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 Environment

Management
Goal Setting

O C C
O
R S D O
P O
G T I R N
L
A A R D T
A
N F E I R
N
I F C N O
N A
S I T L
I T
I N I L
N I
N G N I
G N
G G G N
G

Information Support

MIS 44

MIS Support to Management Process

Impact of MIS
• Management becomes more efficient. Tracking &
monitoring of the functional targets becomes easy
• Better understanding of the business itself.
• Systemisation of business operations.
• MIS goals pull the entire organisation in one
direction towards the corporate goals and
objectives.
• Creates an information-based work culture in the
organisation.

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MIS as a federation of Sub-systems
Marketing
Logistics Finance & Top Mgmt
Accounting
Information
Production Personnel
Processing

Strategic
planning

Mgmt
Control

Operational
Control
Transaction
Processing

Data Base Management System

Data Base
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Examples: MIS
Production Finance Personnel Marketing

Strategic New plant Alternative Welfare policy Competitor

location financing survey

Tactical Production Variance Performance Advertising

bottleneck analysis appraisal

Operational Daily Payroll Leave records Sales

schedule analysis

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 MIS as a multi – disciplinary subject

Monitoring &controlling
Data storage, processing, organizational performance
manipulation, retrieval etc. & initiating course-actions
whenever/wherever
Mgmt required
Computer
Science Accounting
Explains the
dynamics of
Operations Mgmt
decision making
Use of Research MIS
Science/Theory process
mathematical &
statistical
techniques (for
Organizational Behavioural
Model building, Helps MIS
Theory
creating scenarios, Science professional to
forecasting): helps understand org, their
in decision-making types, cultures &
behaviour.
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MIS described as a pyramid structure

Strategic
planning

Management control

Operational control
Transaction processing

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Role of MIS in different levels
• TP level
– Capturing & processing of data about transactions (data
processing)
• OC level
– Control over day-to-day operations going on.
• MC level
– Control over managerial task
• SP level
– Concentrates on future planning information

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 Objectives of MIS
• To facilitate the decision making process in an organization
(with accurate & timely information)
• To help the management in getting the required information for
controlling the activities of the organization
• To get a process of communication where information is
recorded, stored and retrieved for decision regarding planning
operation and control within an organization.
• To provide a system of people, equipment, procedure,
documents & communication.
• Provide quality information.

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Contemporary Approaches to MIS development
Technical approach
(centered around mathematical & normative models to study
ISs)
The technical approach to the study of Information Systems
emphasises:
– mathematically based models
– physical technology
– formal capabilities
Behavioural approach
(centered around the behavioural aspects of people in the
organizations where ISs implemented ). The behavioral
approach does not ignore technology, but tends to focus on non-
technical solutions concentrating instead on changes in:
• attitudes
• management structure
• organisational policy
• organisational behavior
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Socio–technical approach
(borrow heavily from technical & behavioural
approaches and synthesis so as to optimize the
performance of the IS as a whole)
Though they are composed of machines, devices, and
"hard" physical technology, Information Systems require
substantial social, organisational, and intellectual
investments to make them work properly.
Problems with information systems -- and their solutions
-- are rarely all technical or behavioral

a multidisciplinary approach is needed

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Strategic Use of Information System
• IS can be used to implement strategies
– Example maximize sales & lower cost

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Information as a Strategic Resource
• Information – resource that is scarce, has significant cost and has
alternative uses bestowing competitive edge on the organization which possesses
it.
• Information/Knowledge has become a critical organizational resource
and is accepted as a valuable strategic resource or as an invaluable asset
for competitive advantage.
How organizations can enhance the probability of
achieving strategic competitiveness?
By realizing that its survival, success & prosperity depends on
the ability to capture information, transform it into usable
knowledge and disseminate it rapidly throughout the
organization.
Organization that accept this challenge, shift their focus from
‘OBTAINING’ information to ‘EXPLOITING’ information,
to gain a strategic competitive advantage over competing
firms.
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• To grab & retain the strategic competitive edge, the organization should be able to
raise & answer questions like….
– What business the organization should be in?
– What existing business activities should be spun off?
– What new activities should be undertaken?
– How to protect the organization from business cycles/ business swings?
– What are the competitors doing and can do?
– What drives the competitors, as shown by their future objectives?
– What the competitors believe about themselves and the industry, as shown by the
assumptions?
– What are the competitors capabilities?
These will help an organization prepare an anticipated ‘Response Profile’ of each
competitor covering the following aspects
- What will the competitors do in the future?
- Where does the org hold an advantage with its competitors?
- How will this change the organization’s relationship with its competitors?

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 In short, data/information
for ‘competitor analysis’,
public policies from countries across the world
will enable the recipient
to better understand and better anticipate
competitors objectives,
strategies,
assumptions and capabilities,
and also provide an early warning of threats & opportunities emerging
and analyse how it will affect the achievement of the company’s strategy.

It will be the survival of the fittest.

• Thus, information is the real enabler as a strategic resource

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Use of Information for Competitive Advantage
What is competitive advantage?
Is about changing the balance of power
between a firm and its competitors in the
industry, in the firm’s favour.
An integral system that delivers benefits to
a firm, not enjoyed by its competitor.

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Why Firms Seek Competitive Advantage
(Porter’s Five-Force Model):

• Rivalry among existing competitors

• Threat of new entrants
• Threat of substitute product and services
• Bargaining power of buyers
• Bargaining power of suppliers

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Information Systems for Competitive
Advantage
• Businesses continually seek to establish
competitive advantage in the marketplace.
• There are eight principles:
– The first three principles concern products.
– The second three principles concern the
creation of barriers.
– The last two principles concern establishing
alliances and reducing costs.

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 Use of Information for Competitive Advantage
(contd.)
What is the role of Information in Competitive
Environment?
• Porter-Millar Postulates
– IT is affecting competition in three vital ways.
• It changes industry structure, and, in doing so, alters the rule of
competition.
• It spawns whole new business, often from within the company’s
existing operations.
• It creates competitive advantage by giving companies new ways
to out –perform their rivals

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Changes in industry structure
Structure of an industry is embodied in five
competitive forces that collectively determine the
industry profitability
The bargaining power of the customers
The bargaining power of the suppliers
Threat of the new entrants in the firm’s market
Pressure from substitute products or services
Positioning of traditional industry competitor(s)

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Spawning of New Business
Information, IT and the resultant Information Revolution are
giving birth to competitively new industries in three
distinct ways
Info Rev makes new business technologically feasible
Info/IT spawn new business by creating derived demand for
new products
Info & IT help create business within old ones.

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New ways of doing things
Info & IT facilitate development of new ways of doing old
things.

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Uses of Information in Competitive Advantage
• Functional uses
– Info helps lower cost in any/all parts of ‘Value chain’
– Info & IS help in
• Facilitating product delivery
• Adding value to quality
• Improving product quality
– Info helps transforming the physical processing component of activities
into information component leading to value addition
– Helps org to enhance
• Quality of their operation
• Quality of their products
• Quality of their services
– Can help simplify
• Products
• Product process
• Production cycle time
– Information help organization
• Meet benchmarking standards
• Improve customer service 65
• Improve quality & precision of design & product.
• Strategic uses
– New ways to out perform their rivals
– A firm can use four basic competitive strategies to deal
with competitive forces
• Product differentiation
• Focused differentiation
• Developing right linkages to customers & suppliers
• Becoming a low cost product.

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How info helps in gaining a competitive
advantage?
• The new intensity of information makes it possible for more precise
development of strategies, planning, forecasting & monitoring
• Facilitates availability of extensive data, both internal & external,
thereby facilitating a more comprehensive analysis and adding value
to
• Help in increase organization's abilities
– To coordinate its activities regionally, nationally,& globally.
• Enables organizations to ‘think globally, act locally’
• Yield strategic opportunities & enables changes in rules of the
competition.
• Helps org become more flexible & responsive
• Helps acquire Strategic flexibility

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MIS as an Instrument for the Organizational
Change
• What is change?
• The process by which future INVADES our
present and our lives.

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 Organizational Change
• Organizational change deals with how organizations plan for, implement and
handle change. Overcoming resistance to change can be the hardest part of
bringing information systems into a business. Too many computer systems
and new technologies have failed because managers and employees were not
prepared for change.
• A change model identifies the phases of change and the best way to
implement it:
– Unfreezing is the process of removing old habits and creating a climate
receptive to change
– Moving is the process of learning new work methods, behaviors and
systems
– Refreezing involves reinforcing changes to make the new process second
nature, accepted and part of the job

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MIS and Organizational Change

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Change Model
TASK

PEOPLE TECHNOLOGY

STRUCTURE

Leavitt Model
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Questions
• Define System. Discuss any three System characteristics. Explain why
’Feedback’ and ‘Control’ are considered the ‘Key system concepts’?
• Discuss various types of systems
• Explain Feedback mechanism with an example.

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• Definition: Management Information
Systems (MIS) is the term given to the
discipline focused on the integration of
computer systems with the aims and
objectives on an organisation.

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• The development and management of
information technology tools assists
executives and the general workforce in
performing any tasks related to the processing
of information. MIS and business systems are
especially useful in the collation of business
data and the production of reports to be used
as tools for decision making.

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• Applications of MIS
• With computers being as ubiquitous as they are
today, there's hardly any large business that does
not rely extensively on their IT systems.

However, there are several specific fields in

which MIS has become invaluable.

*
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• Strategy Support

While computers cannot create business strategies by themselves they can assist management in
understanding the effects of their strategies, and help enable effective decision-making.

MIS systems can be used to transform data into information useful for decision making. Computers
can provide financial statements and performance reports to assist in the planning, monitoring and
implementation of strategy.

MIS systems provide a valuable function in that they can collate into coherent reports unmanageable
volumes of data that would otherwise be broadly useless to decision makers. By studying these
reports decision-makers can identify patterns and trends that would have remained unseen if the raw
data were consulted manually.

MIS systems can also use these raw data to run simulations – hypothetical scenarios that answer a
range of ‘what if’ questions regarding alterations in strategy. For instance, MIS systems can provide
predictions about the effect on sales that an alteration in price would have on a product. These
Decision Support Systems (DSS) enable more informed decision making within an enterprise than
would be possible without MIS systems.

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* Data Processing
Not only do MIS systems allow for the collation of
vast amounts of business data, but they also provide
a valuable time saving benefit to the workforce.
Where in the past business information had to be
manually processed for filing and analysis it can now
be entered quickly and easily onto a computer by a
data processor, allowing for faster decision making
and quicker reflexes for the enterprise as a whole.

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• Management by Objectives

While MIS systems are extremely useful in generating statistical reports and data analysis they can also be of use as a Management by Objectives (MBO) tool.

MBO is a management process by which managers and subordinates agree upon a series of objectives for the subordinate to attempt to achieve within a set time frame. Objectives are set using the SMART
ratio: that is, objectives should be Specific, Measurable, Agreed, Realistic and Time-Specific.

The aim of these objectives is to provide a set of key performance indicators by which an enterprise can judge the performance of an employee or project. The success of any MBO objective depends upon the
continuous tracking of progress.

In tracking this performance it can be extremely useful to make use of an MIS system. Since all SMART objectives are by definition measurable they can be tracked through the generation of management
reports to be analysed by decision-makers.

Benefits of MIS

The field of MIS can deliver a great many benefits to enterprises in every industry. Expert organisations such as the Institute of MIS along with peer reviewed journals such as MIS Quarterly continue to find
and report new ways to use MIS to achieve business objectives.

Core Competencies

Every market leading enterprise will have at least one core competency – that is, a function they perform better than their competition. By building an exceptional management information system into the
enterprise it is possible to push out ahead of the competition. MIS systems provide the tools necessary to gain a better understanding of the market as well as a better understanding of the enterprise itself.

Enhance Supply Chain Management

Improved reporting of business processes leads inevitably to a more streamlined production process. With better information on the production process comes the ability to improve the management of the
supply chain, including everything from the sourcing of materials to the manufacturing and distribution of the finished product.

Quick Reflexes

As a corollary to improved supply chain management comes an improved ability to react to changes in the market. Better MIS systems enable an enterprise to react more quickly to their environment,
enabling them to push out ahead of the competition and produce a better service and a larger piece of the pie.

Further information about MIS can be found at the Bentley College Journal of MIS and the US Treasury’s MIS handbook, and an example of an organisational MIS division can be found at the Department
of Social Services for the state of Connecticut.

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