Management Information System

Unit 1

Unit 1

Understanding MIS

Structure: 1.1 Introduction Objectives 1.2 Basics of MIS History of MIS Impact of MIS 1.3 Role and Importance MIS characteristics Functions of MIS Disadvantages of MIS Role of IS in business Importance of MIS in business 1.4 MIS Categories Classification Relationships 1.5 Managers and Activities in IS View of structure of MIS 1.6 Types of Computers Used by Organisation in Setting up MIS Desktop personal computer Notebook computers Personal Digital Assistant (PDA) 1.7 Hardware Support for MIS Advantages of a personal computer Classification of computers 1.8 Summary 1.9 Glossary 1.10 Terminal Questions 1.11 Answers 1.12 Case let

1.1 Introduction
Information is a vital resource for any organisation. It has to be available at the right time and in right form to support the management in decisionmaking. Within organisations, the information is generated and disseminated using Management Information Systems.
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Management Information System (MIS) is an integrated system, which provides information support for decision making in the organisation. There may be various definitions of MIS, but you can see all of them defining MIS as a means of transforming data into information for managerial decisionmaking. To appreciate this unit you must have knowledge about the different functional areas of the organisation. In addition, you must be familiar with using a computer, basic computer software suite like MS- Office or i-Work or OpenOffice.Org and internet. In this unit, you will study about the role of MIS, its significance in the organisation, the classification of MIS on any business and the structure of MIS. Finally, you will learn about the various computers used in setting up of MIS. Objectives: After going through this unit, you should be able to explain the basics of MIS describe the role and importance of MIS in business list the types of MIS and its classification analyse the concepts of MIS in various businesses elaborate the phases of development in MIS explain the managers view of the information system describe the computers used in setting up of MIS

1.2 Basics of MIS

The industrial revolution has replaced manual labour with machines, thus paving way for the use of computers for data processing. 1.2.1 History of MIS Between 1936 and 1940, computers were used to handle scientific calculations. From 1940 to 1960, computers were largely used to process large amount of census and payroll data. In the 1960s and the 1970s computers could generate information in the form of reports like daily sales reports, weekly production and accounts payable/receivable reports. These reports assisted the management to take
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decisions on number of units to produce, how to improve operations and potential problems in payment of money by customers. For the organizations managers these reports were a tactical resource. That is the information described in the reports was essential to ensure the effective operation of the organization. The term Management Information Systems (MIS) came into existence during this period. Later, in 1980s information was viewed as a strategic resource i.e. information generated in form of reports was utilized to create unique value and differentiate the organisation from its competition. MIS is a critical organizational resource, in this age of internet, user-friendly devices and applications and declining computing costs. It provides accurate trends and analysis, enables quick response to customers, supports the integration of organizational functions and provides solutions to business problems. Thus, MIS enables organizations to prosper and survive Today we define MIS an organized combination of people, databases, hardware, and software and communication networks to store and transform data into information to expedite decision-making, control activities and operations. 1.2.2 Impact of MIS MIS plays a vital role in the organization and has an impact on the following: Functional areas of the organization: MIS provides structured information to track and monitor organizational functions like marketing, finance, production and HR. It indicates trends in each function which can be used for forecasting and long term planning. Further exception reports generated by MIS aid in taking corrective action. Understanding of business: To generate information MIS makes use of a dictionary of entities, attributes and data. This leads to the usage of standard terminology and processes within the organization. It results in MIS bringing in clarity to communication and events that happen within an organization. Organisation goals and objectives: The business goals and objectives are embedded within the MIS that the organisation implements. Hence, the information generated aids people within the organisation to
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streamline operations and procedures to realize the goals and objectives. Managerial efficiency: MIS supports analysis, simulation and modeling of business situations to improve managerial decision-making capacity. The manager can make use of the information made available by MIS or he/she can further blend or analyse it for the required purpose.

MIS finds application in the following areas. When you go to any vendor and ask for catalogues of the product, the smart catalogues and databases help you in buying the right product. The smart catalogue enables the marketing team to update information without changing the design of catalogue. The information to be updated such as price, offer description and product features is stored in a text file, a database or a XML (Extensible Mark-up Language) file. This arrangement allows managers to speed up the broadcast of latest information to the customer. When you are travelling or driving, the transponder-equipped vehicle or Global Positioning System (GPS) can guide you in real time to reach your destination faster. For a logistics manager it helps in finding the shortest distribution routes and track consignments. Voice-recognition systems can bring about easy warehouse inventory control. The system directs the human operator in the warehouse through commands. The operator responds verbally instead of typing or scanning. This reduces errors when picking quantities of products and sorting them according to customer orders. When you use your credit cards or ATM cards or smart cards, you generate transactional data. This data is stored and later analysed by managers to find usage patterns to drive revenues. A computerised MIS in a hospital or a doctors clinic enables listing and retrieval of information on all registered patients, number of counselling sessions conducted, treatment and medicines administered and all visits of the patients. An educational MIS system allows the management to manage day-today operations such as admissions, staff recruitment, timetable and payroll. It also allows the management to find trends in demand for
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various courses, analyse student results, prepare budgets for the academic year and track actual expenditures In the traffic control system, an Intelligent Transportation System (ITS) disseminates real-time traffic information to traffic Inspectors. It assists traffic police officers to decide routes for commuters based on the traffic congestion information and reduce travel time. In the field of travel and tourism, customers use an electronic reservation system to book tickets, hotel rooms and plan the itinerary by considering the different modes of transportation. Here MIS aids the managers in manpower planning, analysing arrival and departure data to predict occupancy rates, visiting frequency and tourist spending patterns. Office automation systems enable managers to send and receive emails to or from subordinates. When employees are in different geographic locations videoconferencing helps the manager to conduct team meetings.

Fig. 1.1: Application of MIS in Different Areas Sikkim Manipal University Page No. 5

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Figure 1.1 depicts the application of MIS in different areas. MIS has become so important that you cannot view MIS in isolation or any function of management without MIS. Self Assessment Questions 1. In the 1960s and the 1970s computers could generate information in the form of ___________________ . 2. __________________ provides structured information to track and monitor organizational functions like marketing, finance, productions and HR. 3. _________ systems enable managers to send and receive emails to or from subordinates.

1.3 Role and Importance

In the previous section, we discussed the basics of MIS. Let us now learn the role and importance of MIS. You will find a host of factors contributing to the role of MIS. You need to study about the characteristics, functions, and disadvantages of MIS to know the role of MIS in a business. 1.3.1 MIS characteristics The characteristics of MIS are: Transaction handling and record keeping. Major functional areas are taken care of by IDMS (Integrated Database Management System). It supports decision making an important role of MIS. A greater access is provided by MIS to the operational, tactical and strategic level managers. Adaptability to distinct organisational needs. For example MIS can be used to integrate supply chain, production, and marketing to deliver goods and services to customers Only authorised and authenticated users are allowed to access MIS as it generates vital business information. MIS can be used as a MBO (Management by Objectives) tool to measure the performance level of people and projects. Since MIS integrates information across functions, during the crisis it is possible for managers to take necessary corrective action.
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MIS data is stored in a centralised or distributed database and made available to all functions. This type of storage reduces data duplication and redundancy (unnecessary duplication of data). MIS is divided in subsystems. Each sub system is easier to handle in comparison to the entire system. The subsystems provide easy access to data, ensures accuracy and better information processing and generation. MIS assembles, processes, stores, retrieves, evaluates, and disseminates information.

1.3.2 Functions of MIS Figure 1.2 depicts the main functions of MIS and they are explained as follows: Data Capturing Data capturing is process of gathering data from various sources like. o Customer touch points (interaction point between the customer and companies products/services through e-commerce, store visits, mobile shopping, self check out etc), o Output of one system. For example closed orders of sales department billed by finance, o From third party such as social media and o Data from stakeholders such as suppliers or vendors Data Storage Data Storage is the process of storing the gathered data in a database or data file. Further, it is stored on various storage media (hardware devices) such as hard disks, magnetic tape and magnetic disks. Data Processing Data Processing is task of gathering, storing, transmitting and processing data into meaningful information. This is this most important function of MIS. Intelligent processing of data into information allows a business to achieve competitive advantage. Data and information Distribution Data and information distribution is the process of delivering timely data and information to the right person within the organisation. The information may be in the form of a report, image, message, file, form, video or audio. To facilitate comparison information is represented in the
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form of charts or tables. Increases and decreases such as units sold are represented as percentages Prediction With the help of modern arithmetic, statistics or simulation, MIS can predict business trends using historical data as a base. Planning Reports are generated based on the enterprises need for planning to enable each functional department to work efficiently. Control MIS helps in monitoring and tracking operations against organisational plans. The deviation between operation and plan, in terms of the data pertaining to different functional departments, is analysed for exercising control.

Fig. 1.2: MIS Function

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1.3.3 Disadvantages of MIS MIS does also have some disadvantages, which are discussed below: MIS provides information only to managerial level for decision making and not to all employees. MIS implementation requires commitment from top management. MIS does not solve all management problems. MIS cannot update itself for the changes unless the current inputs are fed in time to analyse a subject. 1.3.4 Roles of IS in Business Figure 1.3 is a graphical representation to show the history of roles of IS.
2000 and beyond

ERP and BI

Enterprise wide applications, data mining, CRM& SCM.

Adapted from: O'Brien J. A., Marakas, G. M., & Behl, R. (2010), Management Information Systems, New Delhi: Tata McGraw Hill.

Fig. 1.3: History of Roles of IS

From the figure 1.3, you will observe that the business applications of information systems have expanded significantly over the years. Also, you will notice that information systems have transformed from simple data processing systems to ERP (Enterprise Resource Planning) and BI (Business Intelligence) systems.

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Data processing: 1950s-1960s In this age, the role of IS was to process data electronically for record keeping, transaction processing and accounting. Management reporting: 1960s-1970s During this decade the role of IS was to prepare pre-specified reports by processing necessary data. The reports aided in managerial decisionmaking. The notion of Management Information System(MIS) came into existence in this decade. Decision support: 1970s-1980s The role of IS in this decade was to provide managers with interactive and adhoc support to the decision making process. This meant that managers could get customised reports for solving specific business related problems. In this decade, the term Decision Support Systems (DSS) was commonly used to represent these IS. Strategic and end user support: 1980s-1990s In this decade, end user (person who utilises the IS) computing systems gave direct computing support to end user productivity and work group collaboration. These included: Executive Information Systems (EIS): EIS helped in providing top management with critical information at the right time in the right format. Expert systems: Gave expert advice to the users by asking a series of questions and then searching for answers in its knowledge base. Strategic information systems: Provided support to the organisation in shaping its competitive strategy. Electronic business and commerce: 1990s - 2000s The role of IS was to support the organisations objectives on the internet through e-business and e-commerce systems. The capability of the IS dramatically changed due to the rapid growth of internet, extranet (network that allows controlled access from outside) and intranet (network used within the organisation). In addition, customers could access the IS of the organisation without having to interact with the organisations employees.

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For example, Web 2.0 technology an advanced internet technology encompasses applications like Blogs: A blog (short form of Weblog) is an online journal that a person stores, posts and publishes on the internet. To set up your own blog you can use web publishing tools such as blogger, blogspot and word press. Wikis: Wiki is a website that enables online collaboration for adding editing and deleting content within it. Ward Cunningham developed this technology in the year 1994. A very good example of a wiki is Wikipedia. RSS (Real Simple Syndication): RSS is used by organisations to distribute web content through feeds to subscribed users with a link to the full content as soon as it is published. Enterprise resource planning and business Intelligence: 2000 and beyond The role of IS now is to integrate the functional areas of the organisation. Enterprise resource planning (ERP) system serves this purpose and presents a common interface to computerised functional areas of the organisation. It has one logical database at its core and enables the firm to extend IS capabilities. In addition, organisations want to increase the understanding of their business. Business Intelligence (BI) enables managers to gain this insight. BI is a set of applications that have the ability to gather, manage, and analyse large amount of data in order to mine them for relationships. The components of BI are data warehouse, data mining, online analytical processing, querying, and reporting tools. 1.3.5 Importance of MIS in business The importance of MIS in business is due to the following reasons: Globalisation of businesses: Today most organisations compete globally with other firms in the industry. The management operating such businesses need to get a snap shot of the business in real time to take timely decisions that increases their competitiveness. MIS provides this support to businesses. For example, McDonalds earns more than 40% of its revenue from overseas operations. In order to sustain its revenue the top management at McDonalds will have the task of finding the drivers of customer demand. In India McDonalds has found a new
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source of revenue in senior citizens and has come up with a new menu satisfy this segment. Humongous amount of data processing: Currently organisations generate huge of amount of data, which will be added year on year to the historical data. It is a superhuman task to find patterns and relationships in this data manually while market is still providing the stimulus for demand. MIS can cater to this need; provide the necessary associations, trends, and forecast of demand.

Self Assessment Questions 4. _________________________ gives direct computing support for end user productivity and work group collaboration. 5. ____________ gives advice to the end users based on the knowledge. 6. _______ technology is an advanced internet technology encompassing applications like blogs, wikis and RSS.

1.4 MIS Categories

In the previous section, we discussed the role and importance of MIS. Let us now learn the different categories of MIS. 1.4.1 Classification The classification of MIS, is based on following aspects: Functionality Utility Area of application Processing type Frequency of usage The activities of management in the areas of planning, scheduling, allocating resources, processing and bringing competitive strategies will come under functional classification of MIS MIS, based on its utility value can be classified as (a) artificial intelligence, (b) generating management related information, (c) providing aid in decision-making, (d) giving necessary supports and (e) executive information system.

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MIS is also classified according to the areas where it functions such as Banking Information Systems, Insurance Information Systems, Production Information Systems, Data Warehouse Information Systems, and Public Information Systems. According to the type data processing MIS is classified as Online Transaction processing system (transactions are processed as they occur), Batch Processing system(transactions are gathered and stored and executed together e.g. payroll), distributed processing system(transactions are processed using more than one processor). An MIS system needs a constant review of its working. To achieve this, a mechanism is built into the system. The outcome of its performance is assessed accordingly. This is periodically done at fixed intervals. This MIS category is classified under frequency of usage. 1.4.2 Relationships Using MIS, it is possible to relate the data input with each related department directly or indirectly through a different types of information systems that exist within an organisation. This creates an integrated system IS. Self Assessment Questions 7. In MIS, there is no constant need for review of the system. (True/False) 8. The information generated in one department cannot be used by another department to create further information that can be used by other departments. (True/False)

1.5 Managers and Activities in IS

In the previous section, we discussed the different categories of MIS. Let us now learn about managers and their activities in IS. To manage IS activities in your organization as a manager you need to know how IT works in general. Most importantly, you should be able to identify how MIS provides opportunities for new ways of doing business. Finally, you should be able to understand how MIS can enhance productivity levels of the organization.

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1.5.1 View of structure of MIS Management information systems are used at various levels in an organisation. Operational-level systems These MIS systems keep a track on the daily regular business transactions of the organisation. For example, recording daily sales and placing orders. Management-level systems These MIS systems aid in administrative activities and in decisionmaking. For example, gathering monthly sales figures and its related information. Strategic-level systems This helps the senior executives in your organisation to address issues like planning and decision-making. For example, predicting the profit trend for the next 5 years.

Self Assessment Questions 9. To keep a track on the daily regular activities _________________ systems will help. 10. __________________ systems help the senior executives in your organisation to address issues like planning and decision making. 11. _________ systems aid in administrative activities and in decisionmaking.

1.6 Types of Computers Used by Organisations in Setting up MIS

In the previous section, we discussed managers and their activities in IS. Let us now learn about types of computers used by organisations in setting up MIS. Computers are electronic devices used for processing data. They help ingenerating the desired information based on certain input data. The output in the form of information is used for making various decisions. An organisation uses various types of computers such as desktop computer, notebook computer and PDA to implement MIS.

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1.6.1 Desktop personal computer These are systems, kept on desks in various offices, residences, classrooms, departmental stores, showrooms, etc. A person sitting in front of the desktop computer operates it. 1.6.2 Notebook computers These are small when compared to desktop computers. The screen size is approximately 11x8. It is possible for a person to carry it in a bag. Since it is similar to the size of a notebook, it is called as a notebook computer. It is also called as a laptop as you operate it by placing it on your lap. It is very convenient to use for day-to-day applications especially when you are on the move. 1.6.3 Personal Digital Assistant (PDA) This is a small hand held device. It has simple applications like notes, phone, calendar, camera etc. You can even access the Internet from a PDA, thus bringing the entire World Wide Web on your fingertips. Self Assessment Questions 12. PDAs are systems which are kept on desks in various offices, residences, class rooms, departmental stores, showrooms, etc. (True/False) 13. It is possible to carry a notebook computer in pockets and hence, it is very convenient to use. (True/False)

1.7 Hardware Support for MIS

In the previous section, we discussed about types of computers used by organisations in setting up MIS. Let us now learn about the hardware support for MIS. Generally, hardware in the form of personal computers and peripherals like printers, fax machines, copier, and scanners are used in organisations to support various MIS activities.

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1.7.1 Advantages of personal computers A personal computer offers the following advantage Speed A Personal computer (PC) is capable of processing data at a very high speed. It can also process millions of instructions within fraction of a second. Storage A PC can store huge quantity of data in its hard disk. It gets rid of the conventional office flat files and box files by storing information digitally. This information can be transferred from one place to another place in electronic form via the internet, pen drive and CD. Communication A PC on the network can offer great support in communicating information in the form of text and images. Today a PC with Internet connectivity is a powerful support tool for communicating every business activity. Accuracy A PC is highly reliable and is used to compute data continuously with more accuracy than humans. Conferencing A PC with Internet access offers worldwide video conferencing opportunity. Thus, it saves traveling across the globe for business people to meet their business partners, colleagues, and customers. Through video conferencing, cost and time can be saved. A block diagram of a computer is depicted in figure 1.4.

Input Unit

Processor

Output Unit

Fig. 1.4: Block Diagram of a Computer

The processor gets inputs from the input unit such as keyboard, scanner, mouse or bar code reader. The processor refers to the unit which processes the input received as per the instructions given. In a computer, the processor is the CPU (Central Processing Unit). It takes care of all arithmetic calculations, logical tasks and storage of details in the memory. The output unit displays the output from the computer. Monitor, printer, speakers etc. are output units.
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1.7.2 Classification of computers Computers are classified as follows 1. 2. Depending upon the processor used e.g., Pentium Dual Core, Intel PI, PII, PIII, PIV, AMD, Celerons, etc. Depending upon the purpose for which it is used A computer may be a general purpose computer or a specific purpose computer. General purpose computers are the ones used for general tasks such as business analysis, typing letter, generating reports for management decisions, scheduling activities, preparing balance sheets and invoices. Specific purpose computers are custom-built for specific tasks like space research, weather forecasting, satellite sensing. Specific purpose computers are designed to perform tasks for which they are intended for. For example, the systems used in pathology labs. Depending upon the size: A computer may be classified based upon its size and speed of computing as microcomputers, mini computers, mainframes, and supercomputers. Super computer is the largest in size and the fastest in computing speed.

3.

Self Assessment Questions 14. Personal computers can________ data at a very high speed. 15. A PC with ______ offers facility of video conferencing worldwide. 16. A processor refers to a unit which processes the ______ received in the way it has been instructed.

1.8 Summary
Let us recapitulate the important concepts discussed in this unit. The industrial revolution has replaced manual labour with the use of machines, thus paving way for use of computer for data processing. The term Management Information Systems (MIS) came into existence during the 1960s- 1970s. MIS has an impact on the functional areas of the organisation, and on the organisation goals and objectives. Some of the characteristics of MIS are transaction handling, record keeping, supporting decision making and disseminating information.
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The main functions of MIS are data capturing, data storage, data processing, prediction and planning. Information systems have transformed from simple data processing systems to ERP (Enterprise Resource Planning) and BI (Business Intelligence) systems. MIS are classified based on functionality, utility, area of application, processing type and frequency of usage. Different types of IS exist in an organisation and these may be related to each other directly or indirectly. Computers are electronic devices used for processing data. It helps in generating the desired information output based on certain input data. Computers are classified depending upon the processor used and the purpose for which it is used. Activity 1: Visit the site: http://eng.hi138.com/? i91761 and find out how MIS helps in systematic material procurement.

1.9 Glossary
Automated: Controlled through computers Catalogues: Products for sale arranged according to categories with price details, product features, and specifications. Redundancy: Inconsistency in same data stored in different locations. E.g. phone numbers of the customer in the customer table of database is not updated when it is inserted in the orders table. Transponder: An electrical device designed to receive a specific signal and automatically transmit a specific reply.

1.10 Terminal Questions

1. 2. 3. 4. Write a note on the origin and impact of MIS? What are the characteristics of MIS? Explain the functions of MIS. Explain how MIS could be classified.
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5. 6. 7.

Explain the managers activity in IS. What are the various types of input and output devices used in MIS? Explain the advantages of using a personal computer in business.

1.11 Answers
Self Assessment Questions 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Reports MIS Office automation systems End user computing systems Expert systems Web 2.0 False False Operational-level Strategic-level Management- level False False Process Internet Input

Terminal Questions 1. The industrial revolution has replaced manual labour with the use of machines, thus paving way for use of computer for data processing For more details refer 1.2. 2. Some of the characteristics of MIS are transaction handling, record keeping, supporting decision making and disseminating information For more details refer 1.3.1. 3. The main functions of MIS are data capturing, data storage, data processing, prediction and planning For more details refer 1.3.2. 4. MIS can be classified based on functionality, utility, area of application, processing type and frequency of usage For more details refer 1.4.1.

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5. To manage IS activities in your organization as a manager you need to know how IT works in general For more details refer 1.5. 6. Computers are electronic devices used for processing data. It helps in generating the desired information output based on certain input data For more details refer 1.6. 7. A personal computer offers the advantages of speed, accuracy and conferencing For more details refer 1.7.1.

1.12 Case let

Select and Carry Sales Issues A department store Select and Carry with several outlets in Bangalore is trying to increase its sales. The top management thinks that the answers lie in the historical data of sales (last 24 months), current (transactional) data, promotion expenses and response and the feedback from the customers. The problem for the management is how do we use this data to increase sales? To understand this they call you, the IS manager. You propose that to find the answer to the question the data has to be organised more meaningfully in various forms like equations, percentages, charts, figures and tables. This kind of representation will allow the managers to find the relationships among the data points. Further, proper models can be prepared using statistics or simulation or mathematics to analyse customer buying patterns, seasonality of certain products and customer loyalty to the store. You also recommend that the management procure an information system like a BI system or an expert system to automate the process of analysis and find alternative ways to increase sales. Such a system enables the users to query the system to get responses on the current trends in sales, and forecast of demand. Further it highlights the potential problems in selling products, strategy to overcome the problems, models for the strategy and the way to implement the models by the use of appropriate technology. Once the analysis is done the management can use the information to direct outlet managers on various promotional activities, loyalty programs and reorganising the layout (shelves) of the store to improve sales.
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Discussion Questions: 1. What are the basic concepts of information management that you got from this case let. Hint: How to organise the data... 2. In what way does the IS facilitate solving the managements problem? Hint: Depicting current trends in sales, forecast of demand 3. How will the management use the information for increasing sales? Hint: Promotional activities, loyalty programs References: Sadagopan S. Management Information Systems, Prentice Hall. Robert S. and Mary, S. Management Information Systems The Managers View, Tata McGraw Hill. Jwadekar. Management Information Systems: Texts and Cases. Tata McGraw Hill. Josheph, S. J., & Mohapatra. Management Information System in Knowledge Economy. Prentice Hall. Laudon, K., Laudon, J., & D, Rajanish. Management Information System. Managing the Digital Firm. New Delhi: Pearson Education. O'Brien, J. A. Management Information System. New Delhi: Galkotia Publications. O'Brien J. A., Marakas, G. M., & Behl, R. (2010), Management Information Systems, New Delhi: Tata McGraw Hill.

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