Management Information System

Introduction:
Purpose of information system:

In business, however people and organization seek and

use information specifically to make sound decision and to solve problems – two
closely related practices that form the foundation of every company.
Data Vs Information:

The word dta is derived from the latin word datum,

literally a given or fact, which might take the form of a number, statement or
picture. Data is the raw material in the production of information.

Information: data that has been shaped into a form which is meaningful and useful.
To become information data is manipulated through tabulation, addition, division
or any operation that lead to great understanding of a situation.

Data: it’s a stream of raw facts representing events occurring in an organization.

What is an IS?

A set of interrelated components that collect, process,

store and disseminate information to support decision making and control in an
organization.
It also help managers and workers analyse problems,
visualize complex subjects and creates new products.

Why IS matters?

1. Capital mgt
2. Foundation of doing business
3. Productivity
4. Strategic opportunity & advantage.

What is a system?
 An array of components that work together to achieve a
common goal by accepting input, processing it, and producing output in an
organized manner.

Activities of IS:

1. Input
2. Process
3. Output.

Input: captures or collects raw data from within the organization or from its
external environment.
Processing: converts this raw input into a more meaningful form
Output: transfers the processed information to the people or activities where it will
be used.
Feedback: output that is returned to the appropriate members of the organization
to help them evaluate or correct the input.

Components:

Data: Input that the system takes to produce information.

Hardware: A computer and its peripheral equipment- input,
output and storage devices, hardware also includes data communication
equipment.
Software: Sets of instructions that tell the computer how to
take data in, how to store data and information.
Telecommunication: Hardware and software that facilitates
fast transmission and reception of text, pictures, sounds and animation in
the form of electronic data.
People: IS professionals and users who analyze organizational
information needs, design and construct IS, write programs, operate the
hardware and maintain software.\
Procedures: Rules for achieving optimal and secure
operations in data processing: procedures include priorities in dispensing
software applications and security measures.

Framework:
 Strategic level senior mgrs (EIS)

Management level Middle mgrs (DSS)

(MIS)

Operational level Operational mgrs

(TPS)

Operational management:

 Supports operational managers by keeping track of the

elementary activities and transactions of the organization such
as sales, receipts, cash deposits, payroll, credit decisions and the
flow of materials.
 To answer routine questions and to track the flow of
transactions through the organizations.
Management level:

It serves the monitoring, controlling, decision making and

administrative activities of middle managers. Management level system typically
provides periodic reports rather than instant information on operation.

Strategic level:
 It helps the senior management to tackle and address
strategic issues and long- term trends both in the firm and in the external environment.
Principal concern is making changes in the external environment with existing
organizational capabilities.

Transaction processing System:

It supports the processing of an organization’s transactions

which are routine business events and affect the financial health of an organization.
All TPS perform 3 rudimentary functions.

1. Book keeping
2. Issuance
3. Control reporting
Book keeping – Keeping accurate record of company’s financial transactions.

Issuance – the generation of business documents such as invoices, vouchers and

payables

Control reporting – reports on transactions for control of accounts purpose

Ex. Payroll, inventory systems, accounts payable, ledger etc.

Decision support system:

It is an organized collection of people, procedures,

software, database and devices used to support problem- specific decision making.
DSS helps a manager “do the right thing “DSS goes beyond a traditional management
information system. It can provide immediate assistance in solving complex problems
that were not supported by a traditional MIS

Management information system:

Used to provide routine information to managers and

decision makers. The focus of a MIS is primarily on operational efficiency. It used to
provide reports. 3 types of reports.

1. Scheduled reports – produced periodically ( daily,

weekly, monthly or yearly
2. Demand reports – developed to give decision makers
certain information on request.
 3. Exception reports – describe unusual or critical
situations like low inventory etc.
Produced only if a certain condition exists.

Executive information system:

To help them make decisions. ESS serves the strategic

level of the organization. They address non-routine decisions requiring judgment,
evaluation and insight because there is no agreed-on procedure for achieving solution.
To incorporate data about external events, but they
also draw summarized information from internal MIS & DSS. They filter, compress
and track critical data, displaying the data of greatest importance to senior managers.

Business model:

The approach to information system is to first develop a

business model comprised of the business processes or activities that are the essence
of the business. This is not the mathematical model, but the portrayal of a business as
a one large system showing the inter connections and the sequence of the business
subsystem or processes that comprise it. The planning is accomplished from the top
down while the implementation is from the bottom up.
Based on business strategy and objectives, a business model
comprised of business processes are managed and controlled by various organization.
The information system is developed to provide the required information to the
organization to manage the processes that are part of the business model. The database
is the source of information and drive the IS.

Business processes:
Supportive: Mainstream Administrative

Marketing Sales order processing Financial

Sales analysis Customer billing A\c rec
Sales forecasting Order filling A\c payable
Advertising Transportation General ledger
Sales admin Inv reporting Cost a\cing
& Control
Strategic planning Stk status reporting F.A\cing
Economic models Statistical replenishmt Budgeting
 Market models Requirement generation Financial model
Simulation Gross R.G Keyrated analy
Decision theory Net R.G P&L stat
Inventory analysis Prdn sch Personnel
Facilities planning Prdn control Payroll
Eng & Research Purchasing Payroll receipt
Design automation Receiving Wages &
Compn
analysis
Project control Quality control Performance

Appraisal
Numerical control Maintenance

Examples for business model:

1. B2B
2. B2C
3. C2C

Information System Architecture:

An analysis of business processes & models has formed

information system architecture. There are other factors to consider in building the
architecture.
Increasingly, members of senior management are beginning to
worry about their company’s IS resource ability and to respond to a combination of
increasing technological options and changing business conditions brought about by
globalization, deregulation , acquisitions and mergers, increases competition and
changing economic, political and social conditions. Both IS people & users\mgrs are
beginning to realize they need IS that are flexible & adaptable to these massive
changes. A flexible IS architecture can provide a foundation for the required IS
adaptability.
Cornelius H. Sullivan, Jr. defined architecture as “an effort to
achieve fit or harmony between form & context.”
The architect designs a street, a building, a city (the form) that
meets the requirements of the people (the context).
 The context includes the financial resources, building and health
codes and environmental constraints. The success of the architecture is measures by
the fit of form and context.
For the information system architect the form differs as does the
context, but the objective remains the same – to find a meaningful fit between the two.
Pressures of time and cost favored alternatives, add-ons, extensions, patches and the
like. The conflict arises when the context becomes so demanding and volatile that the
form finally does not possess the flexibility to respond to all.
Developing an information system architecture that matches form
and context is becoming top priority for IS executive and is gaining the attention of
senior management as well. An architecture that can handle the complexities of
today’s business yet provide the built in flexibility and expandability to incorporate
tomorrow’s growth and new requirements is necessary; its development is no mean
task.

Rules to consider:

1. Focus on a future vision

2. Consider architecture as the top priority job
3. Maintain a high degree of flexibility
4. Don’t introduce constraints prematurely.

Evolution:

1950 - 1960 – Electronic data processing system

Transaction processing, record- keeping and traditional

accounting applications.

1960 – 1970 – Management reporting

MIS: Management reports of prespecified information to

support decision making.

1970 – 1980 – Decision support system.

Interactive ad hoc support of the managerial decision

making process.
1980 – 1990 – End user computing system

Direct computing support for end user productivity and user

productivity and work group collaboration

EIS – Critical information for top management

ES – Knowledge – based expert activities for end user

SIS – Strategic products and competitive advantage

1990 – 2000 – E. business and E. commerce.

System Development Life Cycle

The System Development Life Cycle is the process of developing

information systems through investigation, analysis, design,
implementation, and maintenance. The System Development Life
Cycle (SDLC) is also known as Information Systems Development or
Application Development.

Below are the steps involved in the System Development Life Cycle.
Each phase within the overall cycle may be made up of several steps.
 The first step is to identify a need for the new system.
This will include determining whether a business
problem or opportunity exists, conducting a feasibility
study to determine if the proposed solution is cost
effective, and developing a project plan.

Software This process may involve end users who come up

Concept with an idea for improving their work or may only
involve IS people. Ideally, the process occurs in
tandem with a review of the organization's strategic
plan to ensure that IT is being used to help the
organization achieve its strategic objectives.
Management may need to approve concept ideas
before any money is budgeted for its development.

Requirements analysis is the process of analyzing the

information needs of the end users, the organizational
environment, and any system presently being used,
developing the functional requirements of a system
that can meet the needs of the users. Also, the
requirements should be recorded in a document,
email, user interface storyboard, executable
Requirements prototype, or some other form. The requirements
Analysis documentation should be referred to throughout the
rest of the system development process to ensure the
developing project aligns with user needs and
requirements.

IS professionals must involve end users in this

process to ensure that the new system will function
adequately and meets their needs and expectations.

After the requirements have been determined, the

necessary specifications for the hardware, software,
people, and data resources, and the information
products that will satisfy the functional requirements
Architectural of the proposed system can be determined. The
Other points to consider
The system development life cycle
does not change if the decision is
made to purchase an off-the-shelf
program rather than develop a home
grown system. The coding and
debugging process is replaced with a
process used to evaluate the potential
Buy vs. purchased products, and to actually
Develop purchase the software.

Coding and debugging may be

required for the interfaces that link the
purchased software to existing
systems that must communicate with
the new system.

The planning stages, requirements

analysis and architectural design, are
the most important stages. Good
planning will help reduce errors and
reduce the chance for missing or
Importance extending production schedules. An
of planning undetected design error will take 10
times longer to fix during the
debugging stage than had it been
detected and corrected during the
planning stage.

Moving It is possible to go back to previous

back steps as subsequent analysis
warrants. Typically, the life cycle has
a spiral shape rather than a linear one,
with repeated steps back to prior
activities as requirements are refined
and new information is gathered.
 A business case and a project plan are
Business created during the concept stage, and
Case & then continually updated throughout
Project the life cycle as users and developers
Plan gain a clearer idea of the scope of the
project.

Functional Areas of Information systems:

 Functional
Business
system

Accounting
Manufacturing 1. Order Finance
Human processing
1.Manufacturing 1.Cash mgt
Marketing Resource 2.Inventory
resource 2.Credit mgt
1 .Interactive 1. Compensation control
planning 3. Inventory
mktng analysis 3. A\c’s
2.Manufacturing mgt
2 .CRM 2. Employee Receivable
execution 4. Capital
3 .Salesforce skills inventory 4. A\c’s payable
system budgeting
automation 3. Personnel 5.Payroll
3.Process 5. Financial
forcasting 6. Genaral
control forecasting
ledger

Marketing Information System:

The business function of marketing is concerned with the planning,

promotion and sale of existing products in existing markets and the
development of new products and new markets to better serve present &
potential customers. Marketing programs a vital function in the operation of
a business enterprise. Business firms have increasingly turned to the
information technology to help them perform vital marketing functions in
the face of rapid changes.

Marketing information systems provide information

technologies that support major components of the marketing functions. Ex:
Internet/ Intranet websites and services make an interactive marketing. Sales
force automation systems use mobile computing and internet technology to
automate many information processing activities.

Interactive marketing:

The term interactive marketing is coined to describe a

customer focused marketing process that is based on using the internet, intranet
and extranets to establish a two – way transaction between business and its
customers.
The goal of interactive marketing is to enable a company to
profitably use those networks to attract and keep customers who will become
partners with the business in creating, purchasing & improving products &
services.

In interactive marketing, customers are not just passive

participants who receive media advertising prior to purchase, but are actively
engaged in a network – enabled proactive & interactive process. Interactive
marketing encourages customers to become involved in product development,
delivery & service issues. This enabled by various internet technology including
chat & discussion groups, web forms & questionnaires & E – mail
correspondence. Finally the expected outcomes of interactive marketing are a
rich mixture of vital marketing data, new product ideas, volume sales & strong
customer relation.
Targeted marketing:

Targeted marketing has become an important tool in

advertising and promotion strategies for a company’s electronic commerce
websites

• Community – Customizing the advertising and promotion

methods to appeal to people in specific community ( Community
of interests such as Virtual community)
• Context – Electronic billboards or banners placed on the website
pages
• Content – Advertising relevant to the content of products and
services
• Demographic\Psychographic – Specific types or classes of people
• Online behavior – Tailoring each visit to a site by an individual

Sales force automation:

• Sales force is outfitted with notebook computers, sales mgt

software and web browser
• It connect them to marketing websites, intranets and extranets
• Dramatic improvement in personal productivity
• Speeds up the capture and analysis of data
Manufacturing Information System:
 Computer integrated
manufacturing

Simplify – Production processes,

product design and factory
organization
Automate – Production process and
the business function
Integrate - All production and support
processes
Goal of CIM
To create
Flexible Manufacturing system
Agile Manufacturing system
Total quality management