Management_Information_System_Module_1 (1) (1).pdf

Dr. Bibhuti Bhusan Mishra.
Management Information System

Module - 1
Foundation of Information System in Business and
Competing with IT
Introduction to MIS, System Concepts: Definition of System,
Feedback and Control, Information system (IS) and its role
in Business, Purpose and Components of IS
Types of IS and its Trends, Managerial Challenges of
InformationTechnology
Concept of MIS: Characteristics of MIS, MIS and Other Sub
Systems. Using IT for StrategicAdvantage
Strategic uses of IT, Reengineering Business Process and
QUIZ- 1

Introduction to MIS
System Concepts: Definition of System, Feedback and
Control, Information system (IS) and its role in Business,
Purpose and Components of IS

Introductionto MIS
 Management Information System as defined by Davis & Olson as:
“an integrated user-machine system designed for providing
information to support operational control, management control
and decision making in an organisation”
- provides information support for organisational decision
making process
- based on the database of the organisation evolved for
providing information to the peoples of the organisation
- a computer-based information system
Management
Information
System
Determination of
information needs
Data gathering &
processing
Evaluation,
Indexing,
Abstraction
Dissemination
Storage
Information
use

ManagementInformationSystem
 Management – required to perform
 Determination of organisational objectives & developing plans to
achieve them
 Securing and organising the human & physical resources so that the
objectives could be accomplished
 Exercise adequate controls over the functions
 Monitoring the results to ensure that accomplishments are
proceeding according to plan
 Information – could be defined as set of facts, figures &
symbols processed for the current decision making situation, for
this information is considered as much significant
 System – a set of related components, activities, process &
human beings interacting together, to accomplish some common
objectives
Putting all these three components together, MIS are Set of related
processes, activities individual or entities interacting together to provide
processed data to managers at various levels & functional areas

Characteristicsof an effective MIS
 Management oriented
 Management directed
 Integrated
 Common data flows
 Heavy planning element
 Sub-system concept
 Common database
 Computerised
Top level
Middle level
Low level
EIS
MIS, DSS
TPS
Strategic
Tactical
Operational
Internal
Planning & Control
External
MIS Triangle

Information Systems
• Information System (IS). Collects, processes, stores, analyzes
and disseminates information for a specific purpose.
• Computer-based Information System (CBIS). An information
system that uses computer technology to perform some or all of its
intended tasks.
• Information is a resource which has no value until it is extracted,
processed and utilised. Information technology deals with
information system, data storage, access, retrieval, analysis and
intelligent decision making. Information technology refers to the
creation, gathering, processing, storage, presentation and
dissemination of information and also the processes and devices that
enable all this to be done.
• Information technology is affecting us as individual and as a society.
Information technology stands firmly on Hardware and Software of a
computer and Networking &Tele-communication infrastructure.

InformationSystems:Concepts & Definitions
• Data Item. Elementary description of things, events, activities and
transactions that are recorded, classified and stored but are not
organized to convey any specific meaning.
• Information. Data organised so that they have meaning and value
to the recipient.
• Knowledge. Data and/or information organised and processed to
convey understanding, experience, accumulated learning and
expertise as they apply to a current problem or activity.
• Information Technology Architecture. A high-level map or plan of
the information assets in an organisation, which guides current operations
and is a blueprint for future directions.
• Information Technology Infrastructure. The physical facilities, IT
components, IT services and IT management that support an entire
organization.

BasicComponentsof InformationSystems
• Hardware is a device such as a processor, monitor,
keyboard or printer
• Software is a program or collection of programs that
enable hardware to process data.
• Database is a collection of related files or tables
containing data.
• Network is a connecting system (wire-line or wireless)
that permits different computers to share resources.
• Procedures are the set of instructions about how to
combine the above components in order to process
information and generate the desired output.
• People are those individuals who use the hardware and
software, interface with it, or uses its output.

InformationSystems
• Why Do People Need Information?
• Individuals- Entertainmentand enlightenment
• Businesses - Decision making, problem solving and
control
• Generating Information
• Information In-Context (Relevant, Complete, Accurate,
Current & Economical)

DataInformation and Systems
 Datavs. Information
 Data
 A “given,” or fact; a number, a statement,
ora picture
 Representssomething in the real world
 The raw materials in the production of
information
 Information
 Datathat have meaning within a context
 Datain relationships
 Dataafter manipulation
 DataManipulation
 Example:customer survey
 Reading through data collected from a
customer survey with questions in various
categories would be time-consuming and
notvery helpful.
 When manipulated, the surveys may
provide useful information.
1. Availability
2. Purpose
3. Mode & Format
4. Decay
5. Rate
6. Frequency
7. Completeness
8. Reliability
9. Cost-Benefit Analysis
10. Validity
11. Quality
12. Transparency
13. Value of Information

 WhatIs a System?
 System: A set of components that work together to
achievea common goal
 Subsystem: One part of a system where the products of
more than one system are combined to reach an
ultimate goal
 SuperSystem
 Formal & In-formal Systems
 Closed System: Stand-alone system that has no contact
withothersystems
 OpenSystem: System that interfaceswith other systems
 Manual& Automated System
 Probabilistic& DeterministicSystem
DataInformationand Systems

Informationand Managers
Systems thinking
 Creates a framework for problem solving and decision
making.
 Keeps managers focused on overall goals and
operationsof business.
The Benefits of Human-Computer Synergy
Synergy
 When combined resources produce output that
exceeds the sum of the outputs of the same resources
employedseparately
Allows human thought to be translated into
efficient processing of large amounts of data

The Four Stages of Data Processing
 Input:Datais collected and entered into computer.
 Data processing: Data is manipulated into information
using mathematical,statistical, and other tools.
 Output:Informationis displayed or presented.
 Storage: Data and information are maintained for later
use.
Information Chart

SystemsView
 Frameworkfor seeing Interrelationships
 System: Set of interrelated components working together to
achievecommon purpose
 Information System (IS): Collection of information
technology, procedures, & people that captures, moves,
manages,distributes data & information
GENERAL
STRUCTURE
OF
SYSTEM
SYSTEM
BOUNDARY
COMPONENT 1
Interface
Input 2
Interface
COMPONENT 3
Input 1
STORAGE 1
COMPONENT 2
Interface
Output 1
ENVIRONMENT

SystemBoundary
 DividingLine
 Placed Based on The Purpose: Usually Not A Fixed Line
 Control or Redesign Within The Boundary
 Environment Outside The Boundary
 What Can Be Controlled: External Elements Are Constraints
 What Scope Manageable Within Given Time Period: Complex
Systems Take Longer To Design, Modify
 What Is Impact of Boundary Change: Dynamic Changes
Require Accommodation
ComponentDecomposition
 Break System into Subsystems
 Components of Subsystem May Form More Subsystems
 Often Subsystems are Easier To Understand, Create, Modify

Goals of Hierarchical Decomposition
1. CopeWith Complexity of System
2. Analyse or Change Only Part of System
3. Design,Build Subsystems at Different Times
4. Direct Attention of Target Audience
5. Allow ComponentsTo Operate Independently
Characteristics of a Business System
 All systems work for predetermined objectives & the system is designed
& developed accordingly
 In general a system has a number of interrelated & interdependent
subsystems or components. No subsystem can function in isolation; it
depends on other subsystems for its inputs
 If one subsystem or components of the system fails, in most cases the
whole system does not work. However, it depends on how the
subsystems are interrelated
 The way a subsystem works with another subsystem is called interaction.
The different subsystems interact with each other to achieve the goal of
the system. The goal of individual subsystem is of lower priority than the
goal of the entire system

System
 A system can be described simply as a set of elements joined
together for a common objective.
 A sub-system is a part of a larger system with which we are
concerned.
 All systems are parts of larger systems. For our purposes the
organisation is the system, and the parts (divisions, departments,
functions, units etc.) are the sub-systems.
• Boundaries and Interface: Several systems may share the same
environment. Some of these systems may be connected to one
another by means of a shared boundary or interface. Open
System is a system that interacts with other systems in its
environment.
• Environment: A system exists and functions in an environment
containing other systems. If a system is one of the components
of a larger system, it is a subsystem, and the larger system is it
environment. The organization environment consisting of
vendors, competitors.

Whatis a System?
 The term “system” originates from the Greek term syst¯ema, which
means to “place together.” Multiple business and engineering domains
have definitions of a system.
 Here we defines a system as: An integrated set of interoperable elements, each
with explicitly specified and bounded capabilities, working synergistically to
perform value-added processing to enable a User to satisfy mission-oriented
operational needs in a prescribed operating environment with a specified outcome
and probability of success.
Whata System really is!
A system can be broadly defined as an integrated set of elements that
accomplish a defined objective. People from different engineering
disciplines have different perspectives of what a "system" is. For
example, software engineers often refer to an integrated set of
computer programs as a "system." Electrical engineers might refer to
complex integrated circuits or an integrated set of electrical units as a
"system." As can be seen, "system" depends on one’s perspective, and the
“integrated set of elements that accomplish a defined objective” is an
appropriatedefinition.

Systemis the first step to define the
Computeruse (in applicationprospect)
 A lot of jobs these days involve computers - in particular,
standardPC use.
 The chances are that if your job heavily involves the use of a
computer, you already know what to do. But if like many,
you'renew to computing,thenthis will be useful for you.
A computer is a system, like many others. A system has
3 components:
 Input
 Process
 Output
Input Process Output
Feed-Back
Control

Therefore a Systemcan be defined as:-
 A group of interdependent items that interact regularly to
perform a task.
 Anestablishedor organized procedure; a method.
 A computer system refers to the hardware and software
componentsthatrun a computeror computers.
 Aninformationsystemis a systemthatcollects andstores data.
 On Macintoshes, System is short for System file, an essential
program that runs whenever you start up a Macintosh. The
System provides information to all other applications that run
on a Macintosh. The System and Finder programs together
makeup theMac OS.
 Systemoften simplyrefers to theoperating system.

Ora System can be defined as:-
1. Set of detailed methods,
procedures, and routines
established or formulated to
carry out a specific activity,
perform a duty, or solve a
problem.
2. Organised, purposeful
structure regarded as a 'whole'
consisting of interrelated and
interdependent elements
(components, entities, factors,
members,parts etc.).
Management
Information System
Economic
Resources:
People
Money
Material
Machine
Land
Business
Processes:
Market,
Develop
Product,
Deliver
products,
Services
Goods and
Services:
Products
Services
Payments
Information
Input Processing Output
Control
Feedback

InformationSystemPurposes
Information System is such a type of system, which not only
processes data, but also stores the data as well and provides
necessaryinformationas per the user requirement.
Role of Information System in Management
• Help Managers in effective decision making to achieve the
organisational goal
• From the well designed system, the organisation can gain competitive
advantage
• Helpsto take right decision at right time
• Innovativeideas to solve critical problems
• Gathered knowledge can be stored & utilised in un-usualsituations
• Viewed as a processed approach, can be integrated to formulate a
strategyof action or operation

SystemsDevelopment
 Software that is built correctly can transform as the
organizationand its business processes.
 Software that effectively meets employee needs will help
an organization become more productive and enhance
decision making.
 Software that does not meet employee needs may have a
damaging effect on productivity and can even cause a
business to fail.
• Increase in revenue for the organization.
• Improvement in brand reputation.
• Prevent Liabilities.
• Maximizing productivity.
• Ensuring high quality of output.

Application of System in Business
 Handling huge volume of data that is not
manageable by human efforts
 Storing enormous volume of data for indefinite
period without any decay
 Quick and accurate processing of data to match
the competitive environment
 Quick retrieval of information on query
 Quick and efficient transportation of data/
information to distant places almost at no cost
 Availability of software tools for quick decision
making in a complex situation

Types of IS and its Trends, Managerial
Challenges of Information Technology

Types of Systems
 Natural System
 Man-made System
 Automated System
 Manual System
 Computer based System (CBIS)
 Finance & Accounting
 Marketing & Sales
 Production / Manufacturing
 Inventory / Stores
 Human Resources
 Open System
 Close System
 Deterministic and Probabilistic System

Importance of Information Systems for Business
 Business is evolving all the time. No business stays the same
because there is always a new innovation to develop it. Similarly,
for the business strategy, no company is recommended to apply the
same one for marketing their products. It is caused by the interest
and consumer demand for a product that is always changing.
Business has the dynamic characteristics. For that, the company
should be aware of any change in society. People‟s lifestyle is also a
consideration in business, as well as the use of technology. By
combining the various elements in the business, it will always be
ready to face any changes that could affect the business.
 Talking about information systems, the company must accustom
itself to use it for its benefit. Because business is always changing,
the information has a crucial role to be the basis for company in
making policy. The main information system is more than the flow
of goods because it is very complex. Although a company is very
powerful in its monopoly on the product on the market, but if it
does not have good information systems, the product distribution
will be less accurate. It will make efforts become ineffective. The
system of information is very important for controlling over the
goods distribution system.

 In addition, the information system can also increase the productivity of a
company. More effective coordination can be done based on the company‟s
information systems. The services to consumers are also more increased
compared to using a system of doing business without accurate information.
Therefore, all companies should begin to strengthen their information systems in
order to develop the business to be more prospective. The system will definitely
make goods distribution; company management and the service to consumer
become more effectively done. This can also be meaning as cost saving because all
things are done accurately.
 Six reasons why information systems are so important for
business today include:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
Importance of Information Systems for Business

Role of INFORMATION SYSTEMS in Business
Why are information systems so important in business today?
 Information systems are the foundation for conducting business
today. In many industries, survival and even existence without
extensive use of IT is inconceivable, and IT plays a critical role in
increasing productivity. Although information technology has
become more of a commodity, when coupled with complementary
changes in organization and management, it can provide the
foundation for new products, services, and ways of conducting
business that provide firms with a strategic advantage.
 The emergence of a global economy, transformation of industrial
economies, transformation of the business enterprise, and the
emergence of digital firm make information systems essential in
business today. Information system is a foundation for conducting
business today. In many businesses, survival and the ability to
achieve strategic business goals is difficult without extensive use of
information technology. There are six reasons or objectives why
businesses use information system.

Role of System in Management
 It will help managers in effective decision
making
 Well organised storage & retrieval provide
competitive advantage
 Right decision at right time
 Facilitates innovation
 Knowledge system guides in un-usual situations
 Process level view for strategy/ implementation
/ operation

The Three Fundamental Roles of
Information Systems in Business
1. Information Storage and Analysis
2. Assist With Making Decisions
3. Assist With Business Processes
 Organizations strive to be market leaders in their given
industry. In climates where factors such as recession,
inflationary pressures and increased competition can
hinder the achievement of this goal, companies look for
strategies that lead to competitive advantages. One such
strategy is the adoption of information systems within the
company. Information systems help a company make
adequate use of its data, reduce workload and assist with
compliance with various mandatory regulations.

1. Information Storage and Analysis
 At the date of publication, many companies no longer
manage their data and information manually with registers
and hard-copy formats. Through the adoption of
information systems, companies can make use of
sophisticated and comprehensive databases that can
contain all imaginable pieces of data about the company.
Information systems store, update and even analyze the
information, which the company can then use to pinpoint
solutions to current or future problems. Furthermore,
these systems can integrate data from various sources,
inside and outside the company, keeping the company up
to date with internal performance and external
opportunities and threats.

2. Assist With Making Decisions
 The long-term success of a company depends upon the
adequacy of its strategic plans. An organization‟s
management team uses information systems to
formulate strategic plans and make decisions for the
organization's longevity and prosperity. The business
uses information systems to evaluate information from
all sources, including information from external
references such as Reuters or Bloomberg, which
provide information on the general economy. This
analysis of and comparison to market trends helps
organizations analyze the adequacy and quality of their
strategic decisions.

3. Assist With Business Processes
 Information systems aid businesses in developing a larger
number of value added-systems in the company. For example,
a company can integrate information systems with the
manufacturing cycle to ensure that the output it produces
complies with the requirements of the various quality
management standards. Adoption of information systems
simplifies business processes and removes unnecessary
activities. Information systems add controls to employee
processes, ensuring that only users with the applicable rights
can perform certain tasks. Further, information systems
eliminate repetitive tasks and increase accuracy, allowing
employees to concentrate on more high-level functions.
Information systems can also lead to better project planning
and implementation through effective monitoring and
comparison against established criteria.

Different kinds of Systems
 Operational-level systems
 Knowledge-level systems
 Management-level systems
 Strategic-level systems

Different Kinds of Systems
 Operational-level Systems
 Information systems that monitor the elementary
activities and transactions of the organization.
 Knowledge-level Systems
 Information systems that support knowledge and
data workers in an organization.
 Management-level Systems
 Information systems that support the monitoring,
controlling, decision making, and administrative
activities of middle managers.
 Strategic-level Systems
 Information systems that support the long-range
planning activities of senior management.

Major Types of Systems
• Transaction Processing Systems (TPS)
• OfficeAutomation Systems (OAS)
• KnowledgeWork Systems (KWS)
• Management Information Systems (MIS)
• Decision Support Systems (DSS)
• Executive Support Systems (ESS)
Six
Major
Types
of
Information
Systems

Types and Trends in INFORMATION
SYSTEMS
Support of
Business
Operations
Support of
Management
Decision
Making
Information Systems
Operations Support
System
Management
Support System
Transaction
Processing
Systems
Process
Control
Systems
Office
Automation
Systems
Management
Information
Systems
Decision
Support
Systems
Executive
Information
Systems
Strategic
Information
Systems
Cross
Functional
Systems
Knowledge
Management
Systems
E-
Business
Systems

1. Operations support systems process data generated by business operations
Major categories are:
i. Transaction processing systems
ii. Process control systems
iii. Office automation systems
Management Information Systems
 Routine information for routine decisions
 Operational efficiency
 Use transaction data as main input
 Databases integrate MIS in different functional areas
2. Management Support Systems provide information and
support needed for effective decision making by managers
Major categories are
i) Management Information System
ii) Decision Support Systems
iii) Executive Information System

Central Computer
Sales Reports
POS
Cash
Registers
Customers
EDI
Supplier
Bank
Additional
Stores Strategy
Tactics
Operations
Warehouse
Inventory
Management
CEO Information
Process Control
Different Categories of Systems
1. Operational - level systems:
Support operational managers keep track of the elementary activities
and transactions.
2. Management-level systems:
Serve the monitoring, controlling, decision-making, and administrative
activities
3. Strategic-level systems:
Help senior management tackle and address strategic issues.
Three main categories of information systems function at
different organizational levels:

Managerial Challenges of
Information Technology
 The role of information systems in the
organization is shifting to support business
processes rather than individual functions. The
focus is outwards to customers, rather than inwards
to procedures. Services are as important as
products. Businesses are changing more and more
rapidly.
 This poses a challenge to existing information
systems, which are often inappropriately structured
to meet these needs. It also poses a challenge to the
people who design, work with, and use these
systems, since they may hold outdated assumptions.

What is the Real Business Challenge?
 Coping with change
 The pressures for change
 Political, economic, social, and technological...
 Globalization
 Rapid organizational change
 Increased customer expectations
 Inexpensive computing and telecommunications
 Information usage
 Operational support
 for business processes
 Decision support
 for business analysis

Information Systems Hierarchy
 Information exchange within the Enterprise
 Departments have their own information systems
 selected to match their specific activities
 Departments may be geographically spread
 ...there is greater benefit if information in the
systems is integrated

Information exchange between Enterprises
 Information is exchanged with
 Partners
 Suppliers
 Customers
 Information exchange between enterprises is not purely an
information systems issue
Information exchange with Customers
 Product and service availability
 Product and service status
 Timely and reliable delivery
 ... supporting a relationship as preferred supplier

 Information exchange for decision support
 Long-term storage for trend analysis
 Inward flow to decision makers
 Outward flow to decision executors
 Imperatives for information systems
 Put information in the hands of those who need it
 Provide information, not just data
 Maintain the quality of information
 Remove duplication of effort, & activities that do not add value
 Assuring the quality of information
 The right information,
 in the right place,
 at the right time,
 in the right form

The right information
 Consistent
 with other information in
the system
 Coherent
 accurately representing
external facts
 Concise
 no extraneous information
In the right place
 Remote access to information
 Distribution of information
 Environment where
information is delivered
At the right time
 Response time
 how long from request to
response?
 Delay
 how up-to-date?
In the right form
 In the form required by the
business process
 In an agreed format
 Intended for further
processing, if required
 by people
 by other computer systems

Information systems assuring
information quality
 Overcoming distance
 - through transmission
 Overcoming time
 - through storage
 Overcoming complexity
 - through processing and
presentation
Distributed processing
 Transmission can be distributed
 - if appropriate
 Storage can be distributed
 - if appropriate
 Processing and presentation can
be distributed
 - by exploiting client/server
technology
Distributed processing in
information systems
 Keep the data and processing
together
 Decentralize the processing of
information
 Allow flexible presentation of
information
 ... client/server technology is a
key enabler of distributed
processing
Client/server in outline
 ‟Client‟ machines presenting
information to end-users
 „Server‟ machines storing and
maintaining data
 Information processing is
distributed between client and
server via networks

Challenges of IS: Key Management Issues
 The Strategic Business Challenge: Realising the Digital Firm: How
can Business use IT
 The Globalisation Challenge: How can firms understand the
Business & System Requirement of a global Economic
Environment
 The Information Architecture & Infrastructure Challenge: How can
Organisations develop an Information Architecture & IT
Infrastructure that can support their goals when Business conditions
and Technologies are changing so Rapidly
 The Information Systems Investment Challenge: How can
Organisations determine the business values of Information
Systems
 The Responsibility & Control Challenge: How can organisations
ensure that their Information Systems are used in an Ethically and
Socially responsible Manager

Concept of MIS: Characteristicsof MIS, MIS and Other
Sub Systems. Using IT for Strategic Advantage

Concept of MIS
• MIS is a concept continues to evolve. Two concepts
extension to it are DSS & IRM. Another trend is „ End User
Computing‟ facilitating convenient user interactions.
• MIS being used for Organisational Growth with the
advent of Computer.
• It supports the Management at various Levels & serves as a
means of communication where data are collected,
processed, stored and retrieved latter for making Decisions
regarding Planning, Operation & Control of an
organisation
• The three levels of organisation hierarchies are –
Operational control, Management control & Strategic
planning.
• The Functions of MIS are – Collection of Data, Storing &
Processing of Data, Presenting Potential information to
Managers.
• MIS Objectives are Derived from the Organisation‟s
Objectives

Definition
 "An integrated user-machine system for providing information to
support operations, management and decision making functions in
an organization. The system utilizes computerized and manual
procedures; models for analysis, planning, control and decision
making; and a database."
 Based on: Davis, G.B. 1985. MIS: Conceptual Foundations. Structure
and Development. 2nd ed. New York, NY: McGraw-Hill.
MIS principal concerns
 Facilitate decision making by supplying the information
needed in an up-to-date and accurate form
 to the people who need it
 on time
 in a usable form

Characteristics of MIS
 According to Jerome Kanter the Characteristics of MIS
are follows –
1. Management Oriented
2. Management Directed
3. Integrated System
4. Avoid Redundancy in Data Storage
5. Common Data Flow
6. Heavy Planning Element
7. Subsystem Concept
8. Common Database
9. Flexibility and Ease of Use
10.Computerisation

Characteristics
of
MIS  Management Oriented: The system is designed form the top to
work downwards. It does not mean that the system is designed
to provide information directly to the top management. Other
levels of management are also provided with relevant
information.
 Management Directed: Management orientation of MIS, it is
necessary that management should continuously make reviews.
 Integrated System: 5M – Man, Money, Materials, Machines &
Methods. The word 'integration' means that system has to cover
of all the functional areas of an organization so as to produce
more meaningful management information, with a view to
achieving the objectives of the organization. It has to consider
various sub-Systems, their objectives, information needs, and
recognize the independence, that these sub-systems have
amongst themselves, so that common areas of information are
identified and processed without repetition and overlapping. For
example, in the development of an effective production scheduling system,
a proper balance amongst the following factors is desired:
i. Set up costs ii. Overtime iii. Manpower iv. Production capacity
v. Inventory level vi. Money available vii. Customer service.

Avoid Redundancy in Data Storage: As MIS is an Integrated System, no un-
necessary Duplication is there for Data Gathering or Storage.
Common Data Flows: The integration concept of MIS, common data flow
concept avoids repetition and overlapping in data collection and storage,
combining similar functions, and simplifying operations wherever possible.
Heavy Planning Element: A management information system cannot be
established overnight. It takes almost 2 to 4 years to establish it successfully
in an organization. Hence, long-term planning is required for MIS
development in order to fulfill the future needs and objectives of the
organization.
Sub-System Concept: MIS Provisions for breaking into various Sub-Systems,
based on activity as well as functions.
Common Database: It acts as a Master that holds the functional Sub-
Systems Together.
Flexibility and ease of use: While building an MIS system all types of
possible means, which may occur in future, are added to make it flexible. A
feature that often goes with flexibility is the ease of use.
Computerisation: MIS can be computerised because of its nature as a
comprehensive System for Optimisation, Speed, Accuracy, Diligence, and
Consistency in Data Processing.
Characteristics
of
MIS

MIS and Other Sub Systems
Subsystems of an MIS
 Two approaches to define subsystem
– Organisational Function Subsystem: Supports the various
functions of an Organisation. Ex. Marketing, Production,
Personnel etc.
– Activity Subsystem: Supports the activity for which they are
used. Ex. Transactions, Operations etc.
Production Marketing Logistics Personnel Finance Information
Processing
Top Management
Strategic
Planning
Management
Control
Operational
Control
Transaction
Processing

Organisational Function Subsystems
Major Functional Some Uses
Marketing Information System Sales Forecasting, Sales Planning, Sales Analysis
Manufacturing Information System Production Planning & Scheduling, Cost Control Analysis
Personnel Information System Salary Admn., Planning HR Requirement, Performance Analysis
Accounting Information System Financial Analysis, Cost Analysis, Capital Planning etc.
Logistics Information System Planning & Control of Purchasing, Inventories, Distribution
Information Processing System Planning of Information System, Cost-Effectiveness Analysis
Top Management System Strategic Planning, Resource Allocation
Activities Subsystems
Activity Subsystems Some uses
Transaction Processing System Processing of Orders, Shipments & Receipts
Operational Control System Scheduling ofActivities and Performance Reports
Management Control system Formulation of Budgets and Resource Allocation
Strategic Planning System Formulation of Objectives and Strategic Plan

Levels of Management
• Expanding Roles of IS
1. Data Processing: 1950s-1960s
2. Management Reporting: 1960s-1970s
3. Decision support: 1970s-1980s
4. Strategic and End User Support: 1980s-1990s
5. Global Internetworking: 1990s-2000s

Information & the MIS concept
 Information is a set of classified and interpreted data used in decision making.
It has also been defined as 'some tangible or intangible entity which serves to
reduce uncertainty about future state or events' (Lucas, 1978). A management
information system (MIS) is 'an integrated user-machine system for providing
information to support operations, management and decision making functions
in an organization. The system utilizes computers, manual procedures, models
for analysis, planning, control and decision making, and a database' (Davis and
Olson, 1984). MIS facilitates managerial functioning. Management information
is an important input at every level in the organization for decision making,
planning, organizing, implementing, and monitoring and controlling. MIS is
valuable because of its content, form and timing of presentation. In the context
of different levels of decision making, information can be described as:
1. Source
2. Data
3. Inferences and Predictions drawn from data
4. Value and Choices (evaluation of inferences with regard
to the objectives & then choosing a course of action) &
5. Action which involves course of action.
 The MIS concept comprises three interrelated and interdependent key elements:
management, system and information (Murdick and Ross, 1975).

Information Requirements for MIS
Assessing information needs
 The first step in designing and developing an MIS is to assess the
information needs for decision making of management at
different hierarchical levels, so that the requisite information can
be made available in both timely and usable form to the people
who need it. Such assessment of information needs is usually
based on personality, positions, levels and functions of
management. These determine the various levels of information
requirements.
MIS Elements
Management functions
Planning
Controlling
Decision Making
Information system
Management information

Levels of Information Requirements
 There are three levels of information requirements for
designing an MIS (Davis and Olson 1984). They are:
 At the organizational level, information requirements define an
overall structure for the information system and specific
applications and database.
 Application level requirements include social or behavioural -
covering work organization objectives, individual roles and
responsibility assumptions, and organizational policies - and
technical, which are based on the information needed for the
job to be performed. A significant part of the technical
requirement is related to outputs, inputs, stored data, structure
and format of data and information processes.
 At the user level, database requirements can be classified as
perceived by the user or as required for physical design of the
database.

MIS as A Pyramidal Structure
Conceptual Basis of MIS
1. Concepts of organization
2. Organizational theories, principles, structure, behaviour and
processes such as communication, power and decision
making
3. Motivation and leadership behaviour

Implications of The Organizational
Structure For MIS
Concepts:
 Hierarchy of authority
 Specialization
 Formalization
 Centralization
 Modification of the basic model
 Information model of organization
 Organizational culture
 Organizational power
 Organizational growth cycle
 Goal displacement
 Organizational learning
 Project model of organizational change
 Case for stable system
 Systems that promote organizational change
 Organizations as socio-technical systems

Information Requirements For MIS
1. Assessing information requirements
2. Levels of information requirements
 Organizational level
 Application level
 Technical
 Database
Strategies For Determining Information Requirements
1. Asking
2. Deriving from an existing information system
3. Synthesizing from characteristics of the utilizing system
4. Discovering from experimentation with an involving
information system

Types of MIS
MIS can be categorized (Mason, 1981) as follows:
 Databank information systems refer to creation of a database by
classifying and storing data which might be potentially useful to the
decision-maker. The information provided by the databank is merely
suggestive. The decision-maker has to determine contextually the cause
and effect relationships. MIS designs based on the databank
information system are better suited for unstructured decisions.
 Predictive information systems provide source and data along with
predictions and inferences. The decision-maker can also enquire as to
'what if a certain action is taken?' and whether the underlying
assumptions are true. This type of MIS is useful for semi-structured
decisions.
 Decision-making information systems provide expert advice to the
decision-maker either in the form of a single recommended course of
action or as criteria for choice, given the value system prevailing in the
organization. The decision-maker has just to approve, disapprove or
modify the recommendation. Decision-making information systems
are suitable for structured decisions. Operations research and cost-
effectiveness studies are examples of decision-making information
systems.
 Decision-taking information systems integrate predictive information
and decision-making systems.

• The diagram illustrates one way
to depict the kinds of systems
found in an organisation.
• In this illustration the
organisation is divided into
– a) Strategic
– b) Management
– c) Operational
• This is further divided into
functional areas as indicated in
the figure hence this show that
systems are built to serve
different organisational
interests.
Because there are different interest, specialties and levels in an
organisation, there are different kinds of systems. No single system
can provide all the information an organisation needs.

The Impact of IT on organisations
• Information technology (IT) is dramatically changing the business
landscape. Although organisation cultures and business strategies
shape the use of IT in organisations, more often the influence is
stronger the other way round. IT significantly affects strategic
options and creates opportunities and issues that managers need to
address in many aspects of their business. This slide outlines some
of the key impacts of technology and the implications for
management on:
– Business strategy - collapsing time and distance, enabling
electronic commerce
– Organisation Culture - encouraging the free flow of information
– Organisation Structures - making networking and virtual
corporations a reality
– Management Processes - providing support for complex decision
making processes
– Work - dramatically changing the nature of professional, and
now managerial work
– The workplace - allowing work from home and on the move, as
in tele-work

the difference between MIS and IRM
• The difference between the management information and
information management.
• The main difference is that in information system we only just
collect the information but in information management system we
have decide to which type of information is more relevant to an
organisation.
• Knowledge management is the ability a person has to use
information or data efficiently and honestly.
• Information system management is the capacity of a computer to
connect a network of computers through a local or metropolitan
area network or through the world wide web.
• One of the dilemmas facing today's manager is that on the one
hand they seem to be suffering from information overload, yet on
other hand, they often they complain about shortage of
information needed to make vital decisions.
• the crucial problem of exploiting an organisation's proprietary
information as a strategic asset.
• these problems is that of having "the right information, in the right
place, in the right format, at the right time".

Strategic uses of IT, Reengineering
Business Process and Quiz- 1

Strategic use of IT
 Many “best practices” evolved over the years, with
respect to strategic use of IT
 Each required right resources and skills
 Intranets and Web portals are ways to bring cohesion
within “flatter” organizations
 Customer-centric business strategy leads to use of IT
across organizational boundaries (supply chain)
 As IT continues to evolve, so does its strategic uses
Strategic Information System
• Information Systems are Strategic to the extent that they are used to
support or enable different elements of an organisations' business strategy
• The information revolution is affecting competition in the following three
vital ways
• CompetitiveAdvantage - New ways to Outperform Rivals
• Structural Change - Customers, Suppliers, New Entrants,
Substitutes & Competitors
• New Businesses - IT Enabled Services (ITES)

History of Strategic Uses of IT
 Mid 1980s: End-user computing
 Working inward (adoption of PCs and software)
 Late 1980s: Transactional efficiency
 Working outward (gain competitive advantage)
 Merrill Lynch‟s CMA system, which combined stock account with savings and
checking accounts
 1990s: Re-engineering
 Working inward (BPR)
 Mid to late 1990s: Internet
 Integration of Internet into e-business models
 Dotcom downward spiral began in 1999
 E-business skepticism
 Early 2000s: Back to business basics
 Leverage traditional operations by using Internet
to work more closely with others (working across)
 2005 onwards:
 Working inwards, outwards and across to achieve competitive advantage
 2008: Putting IT in the forefront of business strategy

How to Manage Information as a
Strategic Asset
1. Understand the role of Information
2. Assign Responsibility for Leading your IRM Initiative
3. Develop Clear Policies on Information Resources
4. Conduct an Information Audit (Knowledge Inventory)
5. Link to Management Processes
6. Systematic scanning
7. Mix hard/soft, internal/external
8. Optimize your information purchases
9. Introduce mining and refining processes
10.DevelopAppropriateTechnological Systems
11.Exploit technology convergence
12.Encourage a Sharing Culture

Building Strategic Advantage Through IT
 Unlike what some commentators have said, information
technology is not a commodity; nor is it an afterthought. IT
is a strategic asset,when implemented and used appropriately.
IT enables an organization and its people to be reliable,
unified, agile, and responsive. This white paper describes for
CIOs, CFOs, and other senior officials how IT can provide a
return on knowledge that leads to a competitive edge.
“Information technology becomes a
strategic asset when it makes the entire
business adaptive and ready for change.”

Strategic Advantage Through IT
 Information technology becomes a strategic asset when it makes
the entire business adaptive and ready for change.
 The economics of the Knowledge Age have not caught up with
innovation.
 How an organization defines value is a key component of how it
realizes value. For IT that means aligning investments with strategy.
 Flexible IT adapts to change without requiring constant changes to
the deep rules and schemas that reflect current realities.
 Project managers need to distinguish between false metrics and real
business metrics.
 The ideal IT model pushes out most capabilities to business users
by giving them easy ways to customize their information
environment and modify processes as their needs and roles evolve.
 Today, every worker needs a flexible, powerful, and connected
information work platform and the skills to use it in a variety of
contexts and business scenarios.

Strategic Advantage Through IT
 Infrastructure matters because it supports the delivery of value.
 What makes IT matter is often as much about how the business
speaks of technology internally as it is what technology does for the
business.
 If the business wants to innovate on multiple levels, it must
carefully listen to what IT has to offer.
 Organizations can get more from their IT investment by adopting a
layered approach, where each new development effort extends the
underlying platform of capabilities.
 When IT systems need professional development services or
support, customers need to know where to turn.
 From applications to infrastructure, you must understand the value
of data and tie it to the IT investment.
 IT departments that want their value recognized need to monitor
the project‟s return on investment.

Eight Ways To Achieve More Strategic IT
1. Connect information to the business functions it
supports
2. Understand the business and speak the language of
business
3. Build business expertise
4. Tie the IT investment to competitive differentiation
5. Create a dialogue with business
6. Capture value
7. Create a learning environment
8. Think about the business implications of systems

The Strategic Use of IT
Business Process
Reengineering
Reengineering is the
fundamental rethinking and
radical redesign of business
processes to achieve dramatic
improvements in critical,
contemporary measures of
performance, such as cost,
quality, service and speed.
(Hammer & Champy, 1993)

Reengineering Business Process
Business Process Reengineering
 Business process re-engineering is a Business Management
Strategy, originally pioneered in the early 1990s, focusing on the
analysis and design of workflows and business processes within
an organization.
 BPR aimed to help organizations fundamentally rethink how
they do their work in order to dramatically improve customer
service, cut operational costs, and become world-class
competitors.
 BPR seeks to help companies radically restructure their
organizations by focusing on the ground-up design of their
business processes.
 According to Davenport (1990) a business process is a set of
logically related tasks performed to achieve a defined business outcome.
Re-engineering emphasized a holistic focus on business objectives and
how processes related to them, encouraging full-scale recreation of
processes rather than iterative optimization of sub-processes.

 Business process re-engineering is also known as business process
redesign, business transformation, or business process change
management.
 Reengineering guidance and relationship of Mission and Work
Processes to InformationTechnology.
 Business Process Reengineering (BPR) is the practice of
rethinking and redesigning the way work is done to better support an
organization's mission and reduce costs.
 Reengineering starts with a high-level assessment of the organization's
mission,strategic goals,and customer needs.
 Business process re-engineering (BPR) began as a private sector
technique to help organizations fundamentally rethink how they do
their work in order to dramatically improve customer service,
cut operational costs, and become world-class competitors.
A key stimulus for re-engineering has been the continuing
development and deployment of sophisticated information systems and
networks. Leading organizations are becoming bolder in using this
technology to support innovative business processes, rather than
refining current ways of doing work.

 In 1990, Michael Hammer, a former professor of computer science at the
Massachusetts Institute of Technology (MIT), published the article
"Reengineering Work: Don't Automate, Obliterate" in the Harvard Business
Review, in which he claimed that the major challenge for managers is to
obliterate forms of work that do not add value, rather than using technology
for automating it. This statement implicitly accused managers of having focused on
the wrong issues, namely that technology in general, and more specifically
information technology, has been used primarily for automating existing processes
rather than using it as an enabler for making non-value adding work obsolete.
 Hammer's claim was simple: Most of the work being done does not add any value
for customers, and this work should be removed, not accelerated through
automation. Instead, companies should reconsider their inability to satisfy customer
needs, and their insufficient cost structure. Even well established management
thinkers, such as Peter Drucker and Tom Peters, were accepting and
advocating BPR as a new tool for (re-)achieving success in a dynamic world. During
the following years, a fast growing number of publications, books as well as journal
articles, were dedicated to BPR, and many consulting firms embarked on this trend
and developed BPR methods. However, the critics were fast to claim that BPR was a
way to dehumanize the work place, increase managerial control, and to justify
downsizing, i.e. major reductions of the work force, and a rebirth of
Taylorism under a different label.

 Information technology (IT) has historically played an important role in
the reengineering concept. It is considered by some as a major enabler for
new forms of working and collaborating within an organization and across
organizational borders.
 BPR literature identified several so called Disruptive Technologies
that were supposed to challenge traditional wisdom about how work
should be performed.
 Shared databases, making information available at many places
 Expert systems, allowing generalists to perform specialist tasks
 Telecommunication networks, allowing organizations to be
centralized and decentralized at the same time
 Decision-support tools, allowing decision-making to be a part of
everybody's job
 Wireless data communication and portable computers, allowing
field personnel to work office independent
 Interactive videodisk, to get in immediate contact with potential
buyers

Case – 1 Ten Guidelines for Strategic MIS Planning
 Mr. X is a consultant on MIS planning, provided ten guidelines to help MIS
executives who are on the threshold of experimenting with strategic MIS planning:
1. Make provisions in the systems plan for taking small steps rapidly. “Don‟t have a
plan with goals extending so far into the future that there is no way of tracking it.”
2. Develop alternative plans when significant contradictory trends are discerned in
business objectives or technology.
3. Interface the systems plan with the corporate plan, modifying both
appropriately.
4. Document the systems plan in a format intelligible to top management and
arrange for personal presentation.
5. Establish a formal mechanism for review and reiteration of the systems plan.
6. Develop a system for tabulating and forecasting utilization of installed data
processing (DP) equipment.
7. Fix the organizational responsibility for systems planning.
8. Rotate the assignment of technical personnel to the planning staff in order to
avoid an “ivory tower aura.”
9. Budget for research and development.
10. Set up a comparative systems intelligence activity.
Questions:
a.What can be the drawback of having a formal system as mentioned in point 5?
b.Can transparency make organizational responsibility more effective?
Case Analysis

MIS Case
Reducing Operational Costs Through Outsourcing
Complex Insurance Service Operations.
Financial Processing
Background
A US based title insurance provider which offers the
most reliable and comprehensive title insurance
services in the residential and commercial industry.
The service provider is one of the biggest firms in its
domain along the East Coast. Due to the high
competitiveness in the market and the reducing profits
the firm wanted to reduce its operational costs and
wanted to have greater revenue growth in order to
strengthen its competitive position in the marketplace.
The company considered outsourcing mortgage
servicing operations to India as part of its strategy to
achieve its objective and chose to partner with MIS
Solutions implementation of this project..

MIS Case
MIS's Solution
MIS went thru the entire process involved in servicing a
loan. MIS used its expertise, prepared a detailed process
maps and then managed the program for transitioning the
effort to India. This included pure data entry work as well
the more complicated verification of the legal documents
and making suitable judgment calls.
MIS performed this task on the uninsured products of the
firm and due to the effectiveness and the delivery.
MIS recommended the client to move the processing of
other products also to MIS after a detailed assessment of
the effectiveness and efficiency due to outsourcing. MIS
adopted a structured transition methodology, which
included thorough planning, program management and
training.

MIS Case
The move helped the client to save an additional 40% in
production costs and an improvement in service levels to a
great extent.
Key Benefits
100% increase in productivity, with the doubling
of transactions handled per day.
Eased the top processing executives to look into
other operations which were more onsite
oriented.
Improvement in turnaround time as MIS's
offshore centers operated 24 hours.
Improved quality..
Successful execution of outsourced process has lead to client
ramp-up of over 300% since the beginning of the outsourcing
relationship.

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