CHAPTER 1 MIS Concepts

Information is Critical
The information we have is not what we want, The information we want is not the information we need, The information we need is not available.

Information is a Resource
It is scarce It has a cost It has alternative uses There is an opportunity cost factor involved if one does not process information

Why need Information?

To ensure effective and efficient decision making leading to prosperity of the Organization.

What is MIS (Management Information System)?

The study of information & its impact on the individual, the organization & the society. Also systems that create, process, store & retrieve information. Short for Management Information System MIS refers broadly to a computer-based system that provides managers with the tools for organizing, evaluating and efficiently running their departments.

"Right information to the right person at the right place at the right time in the right form at the right cost"

Management Information System

The three sub-components: - Management, Information and System-- together bring out the focus clearly & effectively. Management focusing on the ultimate use of such information systems for managerial decision making. Information stressing on processed data in the context in which it is used by end users; System emphasizing a fair degree of integration and a holistic view;

The Concept of MIS

MIS's Role
Increased business and management complexities.

Increased Business Complexities _ Technological Revolution _ Research & Development _ Explosion of Information Increased Management Complexities _ Management Science Technologies _ Decision-making _ Onset of Computers Functional Uses of MIS Enhance : _ Quality of our operations _ Quality of our services We achieve : _ Efficiency _ Transparency _ Speedy Decision making 2

Strategic Uses of MIS _ Precise development of strategies, planning, forecasting and monitoring _ Problem solving _ Decision-making _ Separate work from location Historic Development The concept of MIS has changed substantially over the years. In the 50s and 60s, the management saw the potential of computers to process large amounts of data speedily and accurately. The departments that were involved with such activities were known as Electronic Data Processing (EDP) departments. The focus of EDP was Record Keeping e.g. accounting data Payroll data. Historic Development In the 70s, there was a discernible shift from data to information. The focus was not on data but on the analysis of Organization data. There was a shift in the philosophy. Such a concept came to be widely known as Management Information System. right information in right time to right people Historic Development In the 70s the top management relied on the staff of EDP & MIS to supply the necessary information. The 80s saw the Personal Computer (PC) revolution. The Personal Computer & the desk-top metaphor changed the picture completely. The biggest pay-off for such direct use was the what-if analysis capability. This led to the emerge of Decision Support Systems (DSS). Historic Development The information and decision hungry managers of 80s saw a huge potential in the expert systems as a result of spectacular growth in the Artificial Intelligence area. Combined with DSS philosophy the expert systems could supply a superior class of managerial information support, known as Knowledge Based Systems (KBS). Historic Development The EDP targeted the operational level of management. The MIS/DSS/KBS target the middle management. Attempts were made to provide information to top management as well, known as Executive Information System (EIS).

Areas that continue to influence the field of MIS include Computer Science:-Theories and methods of computation, efficient data storage & access and their impact on information. Political Science:-The political impact and uses of information, both within and outside the organization. Psychology:-Cognitive models of human reasoning and behavior as they relate to information. Sociology:- Principals governing society as it relates shaping information policies and principles Linguistics:-Languages and human communications and their influence on the creation and use of information. Operations Research: Scientific models that enhance decision making and make use of information to solve complex problems. Organization Theory & Behavior:- The nature and characteristics of organizations and their effect on the way human beings use information to make decisions.

Organizational Theory Sociology Computer Science Linguistics Political Science Operations Research Psychology

Figure: MIS influenced areas

Data vs Information
Data: - Data are raw facts.The raw material from which information is generated. Data appear in the form of text, numbers, figures, or any combination of these. Information: - Data processed & converted into a form that is useful to the decision maker. Facts, principles, knowledge, experience and intuitions are applied to convert data into information. Data Processing Information

Characteristics of Information
1. Subjectivity:-The value and usefulness of information are highly subjective because information keeps important to one may not be the same case for other. 2. Relevance:-Only relevant information is kept importance i.e, meaningful to the decision maker. 3. Timeliness:-Information must be delivered to right person, in right place & in right time. 4. Accuracy:-Information must be of error free because erroneous information can result in poor decision that results in system failure. 5. Correct information format:- Information must be in the right format such that it helps in decision making. 6. Completeness:- Such a complete information that helps the decision maker to solve the problem satisfactorily at hand using that information. 7. Accessibility:- Information is useless if it is not readily accessible to decision makers, in the desired format, when it is needed. Information must be kept secured as per the importance and must maintain accessibility.

General System Theory System

A system has inputs, processor, output, feedback & control. The processor adds value to input and convert it into output. The feedback mechanism provides input to the control unit about the performance of the system. If there are any deviations between expected performance and actual performance, the control unit makes modifications to the system. Subsystem is units within a system that shares some or all characteristics of that system. Environment is the world outside the system The system can be viewed as subsystem of an environment. Examples: Environment : - Society System :- Business Organizations Subsystem:- Accounting department

Components of System
Feedback Control

Modifications Input Processor Add value Output

Figure: Systems Components

Types of System
1. Open system: - A system with a feedback mechanism that promotes the free exchange of information between system 7 external entities. e.g. business organization, fan, tube-light etc. 5

2. Closed system: - A system that neither transmits nor receives information to and from outside world. e.g. Secured information system. Or a system that only transmits energy; Pressure Cooker etc. 3. Isolated System: - A system that neither transmits nor receives energy. e.g. Thermos etc.

Characteristics of System
Every system has a purpose. Most systems have five components: input, processes, output, feedback and control. Systems are made up of subsystems, whose goals are referred to as sub-goals. The goals of a system are more important than the sub-goals of its subsystems. Subsystems are guided both by their individual goals and by their relationships with other subsystems within the systems. Subsystems must work together in harmony to achieve system goals.

Information System (IS)

Different types of information systems are required for facilitating organizational decision making. Managers at different levels in an organization make different kinds of decisions (operational, tactical and strategic), that's what different kinds of IS are required.

Types of Information System

1. Personal Information System:- Systems that support the information needs of individuals decision makers for solving structured, semi-structured and unstructured problems. For example:Personal Computer. 2. Workgroup Information System:- A system designed to support group decision making. Such systems promote the free flow of information among group members. For example:- Launching a new product requires team effort and free sharing of information among group members. 3. Organization wide Information System:- Systems that provide overall, comprehensive, longterm information about the entire organization. These systems integrate information from multiple sources to present a complete view of the organization. A good example is: responds to customer queries about product, order status.

Some IS for managerial decision making

Decision Support System (DSS) & Executive Information System (EIS): - Support middle and top managers making semi-structured & unstructured decisionsCH-8 Artificial Intelligence (AI) & Expert System (ES)CH-9: - Helps organizations to capture and retain the knowledge and experience of experts. Office Automation (OA)CH-10 : - Includes various types of systems that facilitate oral and written communication in the workplace.

Why organizations need Information System?

Due to the following reasons: Meeting global challenges. 6

Capturing opportunities in the marketplace. Supporting corporate strategy: - Companies use three strategies to complete successfully in the marketplace by providing goods and services at lower price than competitors. produce highly specialized or unique goods & services. find a market niche and focus on meeting the needs of this special group. Linking departments whose functions are different. Enhancing worker productivity. Increasing the quality of goods and services: - Quality is a leading concern for top and middle managers around world.

Potential Risks of information System

o o o o o o o Deskilling of workers Information overload Employee mistrust Increased competitive pressure Disenchantment with information system Challenges in developing information system Security breaches

Information System vs Information Technology

Information System A system that creates, processes, stores, and retrieves information. Information Technology Tools & techniques that support the design and development of information systems; these include hardware, software, databases, telecommunications and client-servers etc. Information Systems Helps decision makers of various levels Processes, creates & retrieves information Disseminate information Facilitate organizational decision making S.No. Information Technology 1 Helps in design & development of information system 2 Develop an application for achieving a desired goal 3 4 Provides tools & technique It provides the shapes for technical decisions

Computer Literacy vs Information Literacy

Computer Literacy is knowledge of how a computer and its components work. Information Literacy is the ability to use information to one's advantage. 7

Computer Literacy S.No. Information Literacy Working knowledge of computers, their 1 Ability to create and use of information systems to components and their functions. achieve competitive advantages. Faster way of performing the desired 2 Find solutions to business problem. tasks Characteristics of Information Literacy 1. 2. 3. 4. Business acumen Understanding the organizational mission Knowledge of information technology and Problem solving skills

The Process of Converting Data into Information

Collection Classification Sorting, adding, merging and so on Summarizing Storing Retrieval Dissemination Depending upon the nature of tasks, some or all the above steps may be required to convert data into information
Supplier s Business Units Functional Department s Competitor s Other s

Customers

Data Collection

Classify Sort Process

Store Retrieve Duplicate Disseminate (To distribute information in right format to right people, right place and in right time)

Decision Maker1

Decision Maker2

Decision Maker N

Action

Goals & Mission Step1: To collect data through surveys, interviews, newspapers, sensors, documents or any other appropriate means. Step2: Collected data is then classified and sorted to arrange it in a meaningful form. Step3: The process may include other than sorting such as adding values, merging files and so on. Step4: Once the data is processed it becomes the information which then can be summarized to make it more useful to the decision makers. Step5: The information is then stored carefully for future use. Step6: Information can then be retrieved as and when required by decision makers. Step7: Finally the information must be disseminated or distributed in the right format.

Information Systems & Organizational Structures

Organizational Structure It identifies the level of responsibility, authority, management and scope of control of employees in the organizations. There are two types of organizational structures: 1. Pyramid structure: - This structure based upon the organizational hierarchy with CEO as top level management through middle level management & lower level management. This structure considers the different types of tasks such as;

a) Structured Task: - This task is performed by low level management. for example; calculating the simple interest on a loan, payroll, inventory control, account management etc are structured tasks which are routine based and do not require judgments. b) Semi-structured task: - It includes assessing the impact of different marketing strategies on product sales, determining the impact of an increasing in operational costs on company profits appraising the impact of a new tax law on return on investments and so on. This type of task is generally handled by middle level management. c) Unstructured task: - It includes assessing the way competitors may react to a new marketing strategies, prediction the impact of changes in the global economy, developing global competitive strategies, and so on. This type of task is handled by top level management and middle level management. The decisions generally rely on intuition, judgment & experience. Unstructured decision making by top level management. The three factors -- sources of information, degree of judgment and time span of information influence the way managers in hierarchical organization use information. 2. Task-based structure: - A structure in which a group of people required to accomplish a given task are brought together based on their skills rather than on their places in the organizational hierarchy. For example; a surgical task is accomplished by the group of employees where top level, middle level and may be low level employees may be involved in a hospital. A group of medical specialists and physicians come together to accomplish the task regardless of their levels within the structure of the hospital.

Ethics and Information systems

Ethics is the study of right or wrong behavior as it applies to oneself, to others, and to organizations that are implicitly or explicitly engaged in decision making. Organizations must provide employees with clear guidelines for conduct and encourage them to uphold high ethical standards in their everyday business practices. Note that ethical dilemmas are not about legal issues but about moral issues distinguishing right from wrong. There are three sources that can be used to assess ethical behavior. The rules and regulations that specify codes of conduct The explicit guidelines established by an organization The ethical and moral code of conduct of an individual Ten Commandments of computer ethics 1. Thou shalt not use a computer to harm other people. 2. Thou shalt not interfere with other people's computer work. 3. Thou shalt not snoop around in other people's computer fies. 4. Thou shalt not use a computer to steal. 5. Thou shalt not use a computer to bear false witness. 6. Thou shalt not copy or use proprietary software for which thou hasn't paid. 7. Thou shalt not use other people's computer resources without authorization or proper compensation. 8. Thou shalt not use other people's intellectual output. 9. Thou shalt think about the social consequences of the program thou art writing or the system thou art designing. 10. Thou shalt always use a computer in ways that demonstrate consideration and respect for thy fellow humans. 10