Unit 1- MIS (2).pptx
- 1. Unit 1 Evolution of MIS: Concepts; framework for understanding and designing MIS in an organization; MIS and other related disciplines, MIS and Management. Concept of information; definition, features, types, process of generation and communication; quality and value of information; System concept; definition, types and characteristics of system- Input, process- output , control.
- 2. Carl Hayel says “Management Information System is planned and organised approaches to supply executive with intelligence aids that facilitate the managerial process.”
- 4. Evolution of MIS 1. Transaction Processing System: The first business application of computers (in the mid- 1950s) performed repetitive, high-volume, transaction-computing tasks. The computers summarizing and organizing transactions and data in the accounting, finance, and human resources areas. Such systems are generally called transaction processing systems (TPSs). 2. Management Information Systems (MISs): These systems access, organize, summarize and display information for supporting routine decision making in the functional areas. 3. Office Automation Systems(OASs): Such as word processing systems were developed to support office and clerical workers. 4. Decision Support Systems: It was developed to provide computer based support for complex, nonroutine decision. 5. Intelligent Support System (ISSs): Include expert systems which provide the stored knowledge of experts to nonexperts, and a new type of intelligent system with machine- learning capabilities that can learn from historical cases. 6. Knowledge Management Systems: Support the creating, gathering, organizing, integrating and disseminating of organizational knowledge.
- 5. 7. Mobile Computing: Information systems that support employees who are working with customers or business partners outside the physical boundaries of their company; can be done over wire or wireless networks. 8. Business Analytics is the process by which businesses use statistical methods and technologies for analyzing historical data in order to gain new insight and improve strategic decision-making. 9.Business intelligence (BI) combines business analytics, data mining, data visualization, data tools and infrastructure, and best practices to help organizations to make more data-driven decisions 10. Big data is a term that describes the large volume of data – both structured and unstructured – that inundates a business on a day-to-day basis. But it’s not the amount of data that’s important. It’s what organizations do with the data that matters. Big data can be analyzed for insights that lead to better decisions and strategic business moves.
- 6. FRAMEWORK FOR UNDERSTANDING MIS There is too much data and information in an organization. In order to design a MIS successfully, we need a framework to structure the information so that the data and information relevant for decision-making can be separated from rest of the data An organization must respond to market forces, competition, to environmental and technological changes Must do long term planning Different Methodologies for Strategic Planning are available ● Robert Anthony’s framework for Strategic Planning ● Simon’s framework ● Zani’s framework
- 7. According to the model suggested by Robert Anthony Strategic Planning plays an important role in planning and control system 1) Strategic Planning is the process of deciding objectives of the organization, determining the possible shift in objectives, deciding on the resources used to attain their objectives and the policies that govern the acquisition, use and disposition of their resources. 2) Management Control is the process by which managers assure that the resources are obtained and used effectively and efficiently to attain the objectives of the organization. 3) Operational Control is the process of assuming that specific tasks are carried out effectively and efficiently.
- 10. Simon’s framework that has broken down the process of decision making into three stages: 1. Intelligence: This is the stage in which the decision maker recognizes that there is a problem or opportunity that requires him to make a decision. 2. Design: The decision maker determines the alternatives that are available to him to resolve the problem or exploit the opportunity. 3. Choice : In this stage, an alternative generated in stage-2 is singled out to be pursued. The selection process may involve feasibility analysis or cost-benefit analysis.
- 11. With this framework, we can distinguish between three major classes of decisions. a) Programmed Decisions are there in which all stages are handled by following a preset well-defined procedure. The decisions are repetitive and routine which arise often and are capable of being modelled mathematically in their entirety. The classic example would be inventory-ordering decisions. b) Non-programmed decisions are difficult to structure in logical mathematical terms. These decisions cannot be handled in well-defined and pre-specified procedures. These opportunities are not repetitive in nature and they require fresh intelligence, design and choice phases to be executed. An example would be the decision to set up a new factory or launch a new line of product. c) Semi-programmed decisions are those in which at least one and no more than two of the above stages can be handled by well-defined preset procedures. An example where the intelligence phase is well structured would be the diverse kinds of variance analysis. A comparison with a budget or standard is undertaken in a well-defined way to signal the need for a decision. Subsequent stages of design and choice, however, are not handled by a set procedure. Recall that an MIS support problem-specific decision-making. Depending on the framework used by the organization for decision-making and goal set for MIS, the designer should determine the information needs.
- 12. According to Zani, the important determinants of MIS design are: 1) Opportunities and risks 2) Company strategy 3) Company structure 4) Management and decision-making process 5) Available technology 6) Available information sources.
- 13. MIS and other related disciplines 1. MIS and Management 2. MIS and mathematics 3. MIS and Computer science 4. MIS and Operational Research 5. MIS and Accounting 6. MIS and Database management 7. MIS and Psychology 8. MIS and communication theory
- 14. ● 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. ● Mathematical models are used to study information systems and to elucidate how they can be applied.
- 15. ● It considers the human mind as a processor of information. While designing the report format and forming communication channels, MIS takes into account the behavior of the manager as an individual and in a group. It gives due regard to the personal factors such as bias, thinking with a fixed frame of reference, risk aversion, strengths and weaknesses. ● In the area of, it uses the accounting principles to ensure that the daccounting applicationata is correct and valid. It uses the accounting methodology for generating a trial balance, balance sheet and other books of accounts. ● The MIS is based on database and uses the database for generating information. The three types of data structures, viz., – Hierarchical, – Network and – Relational database have roots in the mathematics and the set theory. ● The MIS uses the communication theory in a significant manner. The principle of feedback is used while designing analysis and reporting systems. While designing the report format, attention is paid to avoid noise and distortions in the communication process.
- 23. ● Understandable: Since information is lready in a summarized form, it must be understood by the receiver so that he will interpret it correctly. He must be able to decode any abbreviations, shorthand notations or any other acronyms contained in the information. ● Relevant: • Information is good only if it is relevant. This means that it should be pertinent and meaningful to the decision maker and should be in his area of responsibility. ● Complete: It should contain all the facts that are necessary for the decision maker to satisfactorily solve the problem at hand using such information. Nothing important should be left out. Although information cannot always be complete, every reasonable effort should be made to obtain it.
- 24. ● Available: Information may be useless if it is not readily accessible ‘ in the desired form, when it is needed. Advances in technology have made information more accessible today than ever before. ● Reliable: The information should be counted on to be trustworthy. It should be accurate, consistent with facts and verifiable. Inadequate or incorrect information generally leads to decisions of poor quality. For example, sales figures that have not been adjusted for returns and refunds are not reliable. ● Concise: Too much information is a big burden on management and cannot be processed in time and accurately due to “bounded rationality”. Bounded rationality determines the limits of the thinking process which cannot sort out and process large amounts of information. Accordingly, information should be to the point and just enough – no more, no less.
- 25. ● Timely: • Information must be delivered at the right time and the right place to the right person. Premature information can become obsolete or be forgotten by the time it is actually needed. • Similarly, some crucial decisions can be delayed because proper and necessary information is not available in time, resulting in missed opportunities. Accordingly the time gap between collection of data and the presentation of the proper information to the decision maker must be reduced as much as possible. ● Cost-effective: The information is not desirable if the solution is more costly than the problem. The cost of gathering data and processing it into information must be weighed against the benefits derived from using such information. ● Flexibility: The business and economic environment is highly dynamic in nature. Technological changes occur very fast. A rigid control system would not be suitable for a changing environment. These changes highlight the need for flexibility in planning as well as in control.
- 26. Types of Information The information can be classified in multiple ways for a better understanding. As per John Dearden of Harvard University information can be segregated as: - Action vs. No-Action Information: The information which prompts an action is called action information. E.g., “non reconciliation of accounts” reports call for an action to be initiated and thus, called as action information. While the information which communicates only the status is No- Action Information. The monthly statement is an example of no-action information. - Internal and External Information: The information compiled from internal sources of the organization is termed as internal information while the information generated from secondary data sources and government reports, the industry survey etc. are termed as external information. - Recurring vs. Non-Recurring Information: The information compiled at periodical intervals is recurring information. The sales funnel the quarter revenues, profits, stockstatements etc and are recurring information. While, the financial analysis or the report on the market research study are the good examples of non- recurring information.
- 27. Further, on basis of application, information can be categorized as: ● - Planning Information: The information that becomes the part or forms the foundation for strategic or operational planning of any activity is termed as the Planning Information e g. specification sheet, product manual, time standards etc. ● - Control Information: Control as a management function means setting standards, measuring the actual performance and taking corrective measures accordingly. Hence, when the status of an activity is reported through a feedback mechanism it is called control information. When such information shows a deviation from the goal or the objective, it will induce a decision or an action leading to control. e.g., security, tracking control systems, severs logs etc. ● - Knowledge Information: A collection of information through the library records and the research studies to build up a knowledge base as information is known as Knowledge Information.
- 28. Organization Information: When the information is for wide circulation and is used by everybody in the organization, it is called Organization Information. Product manuals, notifications, work orders are used by a number of people in an organization. - Functional/ Operational Information: When the information is used by specific business departments is called Functional/Operational Information. E.g., logistics information, delivery schedules. This information is mostly internal to the organization. - Database Information: When the information has multiple use and application, it is called as database information. Such as, address directories, supplier information.
- 29. On basis of management hierarchy, information can be categorized as:- - Supervisory Level – The supervisory level of information relates to operational tasks and is required at each level of the organization. E.g., business correspondence, circulars, reports and spreadsheets. To ensure smooth flow of information from bottom to top level, a clear and easy to use management information system should be provided so as to fulfill operational, business and decision making goals. - Middle Level - Such information sharing occurs within teams, divisions, business units, etc. This information may be critical to the day-to-day activities of the group. E.g., project documentation, business unit specific content, meeting minutes, etc. - Top Level Information - At the top level, corporate information is useful for whole of the organization as it defines the direction of business. This information is generally well addressed by the corporate intranet. Examples of corporate information include policies and procedures, HR information, online forms, phone directory, etc.
- 31. Sources of Management Information
- 41. Good quality information − Quality is a value that would vary according to the users and uses of the information. Most essential characteristic features for information quality Reliability − It should be verifiable and dependable. Timely − It must be current and it must reach the users well in time, so that important decisions can be made in time. Relevant − It should be current and valid information and it should reduce uncertainties. Accurate − It should be free of errors and mistakes, true, and not deceptive. Sufficient − It should be adequate in quantity, so that decisions can be made on its basis Quality And Value Of Information
- 42. Unambiguous − It should be expressed in clear terms. In other words, in should be comprehensive. Complete − It should meet all the needs in the current context. Unbiased − It should be impartial, free from any bias. In other words, it should have integrity. Explicit − It should not need any further explanation. Comparable − It should be of uniform collection, analysis, content, and format. Reproducible − It could be used by documented methods on the same data set to achieve a consistent result.
- 43. Quality And Value Of Information From a managerial context the value of information is judged on the basis of the following parameters: ● Timeliness ● Presentation ● Accuracy ● Context ● Expectation
- 44. Timeliness Information is only valuable to management when it can result in some timely intervention/decision. The time aspect of decision is very vital for any value to be attributed to it in management. Information of an event will only be valuable to managers if they have time to react to it. If the reaction time is not there then the information loses its managerial value. Presentation Managerial information is valuable when presented in a way that facilitates decision- making. Information should not only be given but presented in such a way that the decision-making aspect becomes obvious. Accuracy Any information to management is valueless unless accurate.
- 45. Context Information for management is highly contextual. Information is valuable to a manger only if it has a decision-making connotation to it. For example, for a finance manager any information about the competitor’s product is valueless. Expectation Information is generally more valuable to management when the information breaks an expected view or an expected result or an expected’ reaction. Any information that is unexpected carries a higher value. For example, if a manager has made a marketing strategy expecting his competitor to launch a product A and before the launch he gets information that the product to be launched by his competitor is not product A but product S, then this information has got greater value for him as it is contrary to his expectation.
- 46. System The word System is derived from Greek word Systema, which means an organized relationship between any set of components to achieve some common cause or objective. A system is “an orderly grouping of interdependent components linked together according to a plan to achieve a specific goal.”
- 47. A System is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process.
- 48. System Concepts The concepts of a system are Technology, Application, Development and Management. a. Technology. - Computer networks are systems of information processing components that are a variety of hardware, software and telecommunication technology. b. Application.- That electronic business and commerce application involves interconnected business information system c. Development.- That developing way to use IT in business includes designing the basic component of information system. d. Management. -Managing IT emphasize the quality, strategic business value and security of an organization in information system.
- 49. Properties of a System A system has the following properties − Organization- Organization implies structure and order. It is the arrangement of components that helps to achieve predetermined objectives. Interaction - It is defined by the manner in which the components operate with each other. For example, in an organization, purchasing department must interact with production department and payroll with personnel department. Interdependence - Interdependence means how the components of a system depend on one another. For proper functioning, the components are coordinated and linked together according to a specified plan. The output of one subsystem is the required by other subsystem as input. Integration- Integration is concerned with how a system components are connected together. It means that the parts of the system work together within the system even if each part performs a unique function. Central Objective - The objective of system must be central. It may be real or stated. It is not uncommon for an organization to state an objective and operate to achieve another.
- 50. Types of Systems The systems can be divided into the following types − Physical or Abstract Systems Physical systems are tangible entities. We can touch and feel them. Physical System may be static or dynamic in nature. For example, desks and chairs are the physical parts of computer center which are static. A programmed computer is a dynamic system in which programs, data, and applications can change according to the user's needs. Abstract systems are non-physical entities or conceptual that may be formulas, representation or model of a real system. Open or Closed Systems An open system must interact with its environment. It receives inputs from and delivers outputs to the outside of the system. For example, an information system which must adapt to the changing environmental conditions. A closed system does not interact with its environment. It is isolated from environmental influences. A completely closed system is rare in reality.
- 52. Adaptive and Non Adaptive System Adaptive System responds to the change in the environment in a way to improve their performance and to survive. For example, human beings, animals. Non Adaptive System is the system which does not respond to the environment. For example, machines. Permanent or Temporary System Permanent System persists for long time. For example, business policies Temporary System is made for specified time and after that they are demolished. For example, A DJ system is set up for a program and it is dissembled after the program. Natural and Manufactured System Natural systems are created by the nature. For example, Solar system, seasonal system. Manufactured System is the man-made system. For example, Rockets, dams, trains.
- 53. Deterministic or Probabilistic System Deterministic system operates in a predictable manner and the interaction between system components is known with certainty. For example, two molecules of hydrogen and one molecule of oxygen makes water. Probabilistic System shows uncertain behavior. The exact output is not known. For example, Weather forecasting, mail delivery. Social, Human-Machine, Machine System Social System is made up of people. For example, social clubs, societies. In Human-Machine System, both human and machines are involved to perform a particular task. For example, Computer programming. Machine System is where human interference is neglected. All the tasks are performed by the machine. For example, an autonomous robot.
- 54. Man–Made Information Systems It is an interconnected set of information resources to manage data for particular organization, under Direct Management Control (DMC). This system includes hardware, software, communication, data, and application for producing information according to the need of an organization. Man-made information systems are divided into three types − Formal Information System − It is based on the flow of information in the form of memos, instructions, etc., from top level to lower levels of management. Informal Information System − This is employee based system which solves the day to day work related problems. Computer Based System − This system is directly dependent on the computer for managing business applications. For example, automatic library system, railway reservation system, banking system, etc.
- 55. Elements of a System The following diagram shows the elements of a system −
- 56. Outputs and Inputs The main aim of a system is to produce an output which is useful for its user. Inputs are the information that enters into the system for processing.Some of the inputs are raw materials, energy, data etc. Output is the outcome of processing.It involves transforming element that has been produced by a transformation process to their ultimate destination. Processor(s) The processor is the element of a system that involves the actual transformation of input into output. It is the operational component of a system. Processors may modify the input either totally or partially, depending on the output specification. As the output specifications change, so does the processing. In some cases, input is also modified to enable the processor for handling the transformation.
- 57. Feedback Feedback provides the control in a dynamic system. Positive feedback is routine in nature that encourages the performance of the system. Negative feedback is informational in nature that provides the controller with information for action. Control The control element guides the system. It is the decision–making subsystem that controls the pattern of activities governing input, processing, and output. The behavior of a computer System is controlled by the Operating System and software. In order to keep system in balance, what and how much input is needed is determined by Output Specifications.
- 58. Environment The environment is the “supersystem” within which an organization operates. It is the source of external elements that strike on the system. It determines how a system must function. For example, vendors and competitors of organization’s environment, may provide constraints that affect the actual performance of the business. Boundaries and Interface A system should be defined by its boundaries. Boundaries are the limits that identify its components, processes, and interrelationship when it interfaces with another system. Each system has boundaries that determine its sphere of influence and control. The knowledge of the boundaries of a given system is crucial in determining the nature of its interface with other systems for successful design.