Management Information System

KMBN-208
Unit-1
Avinash Saxena
 Table of content
• Management Information Systems – Need, Purpose and
Objectives
• Contemporary Approaches to MIS
• Information as a strategic resource
• Use of information for competitive advantage
• MIS as an instrument for the organizational change
• Technology – Characteristics and emerging trends
• IT Capabilities and their organizational impact
• IT enabled services
• Transaction Processing System: Characteristics and its
importance
Management Information Systems – Need,
Purpose and Objectives
• Data is crucial for every business. In the internet
era, firms are bombarded with too much data, not
just relevant data.
• Firms collect data in files, documents, cloud
storage, hard copies, and soft copy formats.
• Primarily the MIS stores data in a secure manner.
• For example, a bank maintains records of account
deposits, withdrawals, and customer details.
• A management information system is a
database that facilitates day-to-day business
activities.
• Primarily, information systems increase
efficiency by reducing employee effort.
• An MIS is present in every organization to
collect, record, and track information.
• A management information system (MIS) is used for
processing data.
• In an institution, employees, managers, and staff
access MIS.
• Employees use MIS for day-to-day operations, to print
invoices, bill payments, or performance reviews.
• In addition, they use MIS to compare, analyze, and
store data—a database for information.
• Thus, MIS helps firms in taking decisions rapidly and
accurately.
 Components of MIS
• Data
– Data is crucial for every business. Unfortunately, in
the internet era, firms are bombarded with too
much data, not just relevant data. Firms collect
data in files, documents, cloud storage, hard
copies, and soft copy formats.

– Primarily the MIS stores data in a secure manner.

For example, a bank maintains records of account
deposits, withdrawals, and customer details.
• People
– An MIS is designed to be used by firm employees,
managers, accountants, executives, and staff for
day-to-day operations.

– Ideally, the MIS should be customized based on

the firm needs. The MIS features should suit
common usage.
• Business Processes
– Information systems simplify complex processes—
the centralization of operations achieves this.
• Hardware
– Hardware is an indispensable component of MIS.
Every system runs on a device, but the processing
capabilities vary.
• Software
• MIS software is categorized into two—system
software and application software. The term
system software refers to operating systems
like windows and iOS. Application software is
more specific—banking systems, accounting
applications, payroll applications, etc.
 Use of information for an organization
• Planning −
– At the planning stage, information is the most important
ingredient in decision making. Information at planning stage
includes that of business resources, assets, liabilities, plants
and machineries, properties, suppliers, customers,
competitors, market and market dynamics, fiscal policy
changes of the Government, emerging technologies, etc.
• Recording −
– Business processing these days involves recording
information about each transaction or event. This
information collected, stored and updated regularly at the
operational level.
• Controlling −
– A business need to set up an information filter, so that only filtered
data is presented to the middle and top management. This ensures
efficiency at the operational level and effectiveness at the tactical and
strategic level.
• Measuring −
– A business measures its performance metrics by collecting and
analyzing sales data, cost of manufacturing, and profit earned.
• Decision-making −
– MIS is primarily concerned with managerial decision-making, theory of
organizational behavior, and underlying human behavior in
organizational context. Decision-making information includes the socio-
economic impact of competition, globalization, democratization, and
the effects of all these factors on an organizational structure.
 Objectives of MIS
• Data Storage - it is important to store information or
processed data for future use.
• Data Retrieval - the data should be smoothly retrieved from
storage devices whenever needed by different users.
• Data Propagation - data should be distributed periodically
through the organizational network to its users.
• A system of efficient and effective planning - MIS controls
functions of management to provide quick and timely
information to the management. The process is very
effective to make decisions.
• An MIS's goals is to incorporate the company's organizational
structure and processes in order to better control the enterprise
and maximize the information system's potential for competitive
advantage.
• Graphical reports - give an idea about the performance of
different resources employed in the organization.
• Controlling the organization - MIS helps control the organization
to provide the latest information as well as historical data
whenever required.
• Standard and budgeted performance - Through matching actual
performance with standard and budgeted performance, MIS
brings variances to management attention that can be resolved by
taking remedial action.
 Need and Functions of MIS
• To collect useful data:
– MIS executes the data through computer system
using the sources of an organization. The
organizational data is stores in computer system
or as a paper record by its end users.
• Data Processing:

• Processing data includes converting the storage data into the

required information to take beneficial actions. Data
processing includes mathematical and logical operations
like, calculations, sorting, classifying and summarizing the
data. The data processing signifies processing activities as:
– Organize data
– Analysis on data
– Apply statistical, mathematical, operations
– To create predictive modeling
– Research and forecasting
• Information storage and retrieval:
– MIS stores data as an organizational record and
processed for future use. The data organizes as a
fields, records, files and databases for future use.
Information retrieval comprises to access the
stored data as per the requirements of the
management users.
• Disseminating management information:
• Information of finished product is categorizes
and dispersed to the users in an organization
as per the needs.
• This information could be periodic, through
reports or online through computer terminals.
Figure shows various functions performed by
MIS.
 Contemporary Approaches to MIS
• Information systems are sociotechnical systems.
Although they are composed of machines, devices,
and "hard" physical technology, they require
substantial social, organizational, and intellectual
investments to make them work properly.
• Since problems with information systems—and
their solutions—are rarely all technical or
behavioral, a multidisciplinary approach is needed.
• The technical approach emphasizes mathematically
based, normative models to study information
systems, as well as the physical technology and
formal capabilities of these systems.

• The behavioral approach, a growing part of the

information systems field, tends to focus on non-
technical solutions concentrating on changes in
attitudes, management and organizational policy,
and behavior.
• MIS combines the work of computer science,
management science, and operations research with
a practical orientation toward developing system
solutions to real-world problems and managing
information technology resources.

• It is also concerned with behavioral issues

surrounding the development, use, and impact of
information systems, which are typically discussed in
the fields of sociology, economics, and psychology.
Information as a strategic resource
• Business environment is prone to changes and this
factor makes business planning very complex.
• Some factors such as the market forces,
technological changes, complex diversity of business
and competition have a significant impact on any
business prospects.
• MIS is designed to assess and monitor these factors.
The MIS design is supposed to provide some insight
into these factors enabling the management to
evolve some strategy to deal with them.
• The continuous assessment of business
progress in terms of sales, market, quality,
profit and its direction becomes the major role
of MIS. It should further aid the top
management in strategy formulation at each
stage of business.
• Information is strategic resource as it helps in
taking strategic, tactic and operational
decisions. It is important because:
– It helps to understand quality, cost, price,
technology productivity and product.
– It makes business processes smooth and
convenient.
– It helps to maintain business standards like ISO, QS,
Six sigma etc.
– It helps tot be ahead in the competition.
– It helps to make SWOT analysis of the company.
– It helps in maintaining profitability.
– It helps the business to take strategic decisions
like- market development, product development,
market penetration and diversification etc.
– It protects the company from business cycles.
– It provides future directions to the company.
– It provides the competitive edge.
 Use of information for competitive
advantage:
– Manages information to reduce reaction time for
change
– Managing information makes the organization
efficient
– Information management leads to insights into
the business that the competitors cannot have
– Information management is used for predictive
analysis so that the organization is one step ahead
of competition.
• Functional use of information:
– Lower the cost
– Information and information system facilitate
value chain e.g. product delivery, quality
– In increased the speed, accuracy and timeliness of
the organization
– It helps in simplifying the business processes
• Strategic Use:
– New way of doing the work
– New way of dealing in Product differentiation
– It helps in new way of developing strategies, planning, forecasting and
monitoring
– It helps in problem solving and decision making by extensive internal and
external data analysis.
– It improves the ability to perform
– It helps in getting advantages of market situation and keeps ahead in the
competition.
– It helps in eliminating waste, inefficiencies and gaps in the business
operations
– Provides the flexibility and helps manage the uncertainties
– Analysis external information and making use of business
MIS as an instrument for the organizational
change
• MIS can deliver facts, data and trends to
businesses with lightning speed. Having this
information allows companies to react quickly
to market changes, regardless of the type
(positive or negative) of volatility.
• MIS acts’ as an agent or a catalyst to bring
about organizational change that is needed to
cope up with the changing business
environment and the effect of external forces.
• The role of the MIS in an organization can be compared
to the role of heart in the body. The information is the
blood and MIS is the heart. In the body, the heart plays
the role of supplying pure blood to all the elements of
the body including the brain.
• The heart works faster and supplies more blood when
needed. It regulates and controls the incoming impure
blood, processes it and sends it to the destination in
the quantity needed. It fulfills the needs of blood
supply to human body in normal course and also in
crisis.
• The MIS plays exactly the same role in the
organization. The system ensures that an
appropriate data is collected from the various
sources, processed, and sent further to all the
needy destinations.
• The system is expected to fulfill the
information needs of an individual, a group of
individuals, the management functionaries:
the managers and the top management.
• The MIS plays the role of information generation,
communication, problem identification and helps in
the process of decision making. The MIS, therefore,
plays a vital role in the management, administration
and operations of an organization.
• External Change
– MIS has made world smaller
– Worldwide reorganization environment and attempt to
control the calamity.
– Change in the work lifestyle for better result
– Creating Knowledge is an asset
• Internal Change
– MIS will change the Business Process
– MIS will change the old standards and set new standards
– MIS key for Continuous improvement Process
– MIS will reduce the hierarchy and hence less operation cost.
– MIS focus on “Shared information”.
– MIS will accelerate restructure work flow for both line and staff
functions.
– MIS will bring change in Authority and power by merit and not by age
or number of years of experience.
– MIS brings cultural change.
– MIS measures the results and performance.
– MIS brings Continuous addition to Organizational knowledge base.
Information Technology – Characteristics and
emerging trends
• Characteristics

– Diffusion of e-governance on a large scale.

– The development of Information Technology has made education system simpler,
easier, and widespread. Now, people of remote areas can also use technology for
their children’s education and also avail the benefits of adult education.
– Development of remote areas.
– Fast economic development.
– Participation of public in governance and policy making.
– The judiciary and other administrative services can also take the help of technology
to make work easier and faster.
– Technology helps the police in nabbing the criminals.
– Highly beneficial for the common people, as they can access their rights and can
take legal action against the person who violates his/her rights.
– It increases the happiness and prosperity of not only an individual, but rather the
society as a whole.
• Emerging trends
– Analytics
• The field of analytics has grown many folds in recent years. Analytics
is a process which helps in discovering the informational patterns
with data. The field of analytics is a combination of statistics,
computer programming and operations research.
• The field of analytics has shown growth in the field of data analytics,
predictive analytics and social analytics.
• Data analytics is tool used to support decision-making process. It
converts raw data into meaningful information.
• Predictive analytics is tool used to predict future events based on
current and historical information.
• Social media analytics is tool used by companies to understand and
accommodate customer needs.
– Mobile Application
• Another emerging trend within information technology
is mobile applications (software application on Smart
phone, tablet, etc.)
• Mobile application or mobile app has become a success
since its introduction. They are designed to run on
Smartphone, tablets and other mobile devices. They
are available as a download from various mobile
operating systems like Apple, Blackberry, Nokia, etc.
Some of the mobile app are available free where as
some involve download cost. The revenue collected is
shared between app distributor and app developer.
– Cloud Computing
• One of the most talked about concept in information
technology is the cloud computing. Clouding computing is
defined as utilization of computing services, i.e. software as
well as hardware as a service over a network. Typically, this
network is the internet.
• Cloud computing offers 3 types of broad services mainly
Infrastructure as a Service (IaaS), Platform as a Service (PaaS)
and Software as a Service (SaaS).
– Cloud computing reduces IT infrastructure cost of the company.
– Cloud computing promotes the concept of virtualization, which
enables server and storage device to be utilized across organization.
– Cloud computing makes maintenance of software and hardware easier
as installation is not required on each end user’s computer.
– User Interfaces
• User interface has undergone a revolution since
introduction of touch screen. The touch screen capability
has revolutionized way end users interact with
application. Touch screen enables the user to directly
interact with what is displayed and also removes any
intermediate hand-held device like the mouse.
• Touch screen capability is utilized in smart phones, tablet,
information kiosks and other information appliances.
 IT Capabilities and their organizational
impact
• Information technology systems are used by
organizations to perform various tasks.
• Some use IT to provide for the basic
processing of transactions, while others
enable customers, distributors and suppliers
to interact with the organization through
various communication technology systems
such as the internet.
• The term ‘’information technology systems in
an organization ‘’ is composed of
– Flow of Information
– Transaction Processing
– Decision Support
– Workgroup Support
– Executive Support
– Data Management
– Communication
• Flow of Information:
– Information is a key resource for all organizations. What
information describes might be internal, external, objective
or subjective.
• External information describes the environment surrounding the
organization.
• Objective information describes something that is known.
• Subjective information describes something that is currently
unknown.
– With information technology the flow of all these three
types of information is made simple buy use of centralized
data centers where all this data can be retrieved.
• Transaction Processing:
– Information technology simplifies the transaction process
of an organization. A transaction process system (TPS) is a
system that processes transactions that occur within an
organization.
– At the heart of every organization are IT systems whose
main role is to capture transaction information, create new
information based on the transaction information.
• Decision Support:
– A decision support system (DSS) is a highly flexible and
interactive IT system that is designed to support decision
making when the problem is not structured.
– A DSS works together with an artificial intelligence system
to help the worker create information through (OLAP)
online analytical process to facilitate decision making tasks
that require significant effort and analysis.
• Workgroup Support:
– Since information technology facilitates in the creating an
information sharing environment, workers can easily
consult each other across different department without
any interruption.
– They can use emails, text chatting services to inquire some
thing related to a given task at work. With work group
support systems, group decision making becomes easier.
• Executive Support:
– An executive information system (EIS) is an interactive
management information system (MIS) combined with
decision support systems and artificial intelligence for
helping managers identify and address problems and
opportunities.
– An EIS allows managers to view information from different
angles. Yet it also provides managers with the flexibility to
easily create more views to better understand the problem
or opportunity at hand.
• Data Management:
– With the help of database software, an organization stores
all its relevant data on a database. This infrastructure can
be designed when it is internal or external.
– An internal centralized system can only be accessed with in
the organization while an external centralized system
allows data to be accessed out side the organization using a
remote (IP) internet protocol Address or a domain name.
– In this case, employees or managers can use a company
website to access relevant company data by use of
passwords. This data is not exposed to the public and
search engines.
• Communication:
– Information technology accounts in the development
of communication technology. Services like electronic
mail make communication within and outside the
organization easy and first.
– Now days email communication is a default
communication technology used by every organization.
– Communication is a great tool in business develops, with
advanced communication tools, employees and managers
can easily make beneficial decisions in the organization.
 IT enabled services
• Machine Learning and A.I:
– It has been quite some time since artificial intelligence is making
headlines owing to an excess of applications which could be
derived from it. The technology could be enabled to allow
computers to read, see, listen and even respond to human
queries. However, recent times have made A.I. be quite a
buzzword. A.I. is powered by the technologies of machine
learning.
– Machine learning is essentially an ability of a computer to learn
with or without human interference. This is done by analyzing
data and tracking repeating patterns. Machine learning is
changing the way companies perform and interact with their
customers as well meet their needs easily.
• Blockchain:
– In the simplest of terms, a blockchain refers to an append-only transaction
ledger. This ledger can be used to write new forms of information but the
previously written information cannot be edited, adjusted or changed. This
is made possible with cryptography to link the newly added block.
– Bitcoin was created by a group of people. Since then, it has become
something much bigger. Previously, it had been used only in the field of
generating digital currency or crypto currency. However, the technology
could be used in various other areas. There are numerous reasons for
Blockchain’s popularity, such as:
• Immutability
• Being consensus-driven
• Decentralization
• Highly secure owing to cryptography implementation
• Can be publicized promptly
• Cognitive Technology:
– Cognitive technology lies in the same basket as machine learning and
deep learning. However, it is powered by a much larger concept.
Cognitive technology is powered by NLP or Natural Language
Processing and speech recognition. This is a form of technology
which mimics the functions of the human brain on numerous levels
which include data processing, data mining, pattern recognition etc.
– The technology could be made even more mainstream in the years
upcoming via implementing it in the fields of automation,
information technology etc. The various mainstream uses of
cognitive technology are:
• Application in the supercomputers
• Uses in the business sector
• In media streaming services to generate user recommendations.
• Humanized Big Data:
– Big data is essentially a technology which collects and analyzes
data created from a plethora of sources which include the IoT,
advanced machines constantly sending and receiving data, alerts,
maintenance etc. Collecting and analyzing, which is the greatest
strength of Big Data, also forms to be its greatest weakness. It is
difficult to derive concrete action guidelines or actionable
meaning from a large heap of data.
– This is what led towards humanized big data. Humanizing big
data refers to collecting or accumulating data in a manner in
which non-data scientists too can infer clear answers from. They
can then use this data to make their daily decisions. However,
humanizing big data isn’t something which can be automated.
 Transaction Processing System:
Characteristics and its importance
• Transaction Processing System is a type of information
processing system, software and hardware combination,
which supports Transaction processing.
• Transaction processing is a type of computer processing in
which each individual indivisible task, called a transaction, is
worked upon and executed as and when it comes.
• The response to requests is immediate. In contrast to this is
batch processing in which a batch of requests are stored and
then executed all at once.
• A transaction Processing System is also used to collect, store,
retrieve and modify transactions executed by an organization.
• In transaction processing, user or customer
interaction is required, unlike batch processing. It
allows only certain predefined, typically short
duration, tasks and transactions to be performed by
the user and provides a predictable request
execution time, which is pre- programmed. This gives
it the following characteristics:
– Predictability
– Reliability
– Consistency
• Transaction processing systems are helpful in
three areas:
– System runtime functions: An execution
environment with high response time, reliability of
execution and security of data
– System administration functions: Administrative
support required for managing transactions
– Application development functions: Customization
support to design and manage the user interface.
• Example: ATM (Automatic Teller Machine)