MIS as a communication process

The communication can be defined as the process through which two or more persons come
to exchange ideas and understanding among them.

Two aspects in communication

First, there is something, which is transmitted such as, facts, feelings, ideas, etc. It implies
that there must be a receiver if communication is to occur. When the receiver is not
considered , there is either no response or there is wrong response.

Second, the definition emphasizes the understanding element in the communication. Sharing
of understanding would be possible only when the person, to whom the message is meant,
understands it in the same sense in which the sender of the message wants him to understand.

Concept of Data and information

Data: Data are non-random symbols that represent the values of attributes or events. Hence,
data are facts, events and transactions stored according to an agreed code. Data are facts
obtained through reading, observation, calculation, measurement, etc. The amounts and other
details on an organization's invoices, cheques or pay slips, an employee’s name and number
of hours worked in week, inventory part numbers etc, are referred to as data. Data are
obtained automatically, the result of a routine procedure such as invoicing or measurement
processes.

Information: Information can be defined as the data which is organized and presented at a
time and place so that the decision maker may take necessary action. Information in other
words is the result/product of processing data.

Fig.

Information costs can be estimated by taking the following into account:

• The information content required

• How urgently the information is needed

• The amount of information needed.

 • How accessible the information is.

Data versus Information:

Data: Streams of raw facts representing events such as business transactions. Once,
enterprises get their data into shape, that data can more easily be turned into information.

Information: Data that has been put into a meaningful and useful context. Usually, help to
make a decision. Information is a cluster of facts that are meaningful and useful to human
beings in the processes such as making decisions. “Information is power”: Mission of the
information system is put the right information, in the right hands, at the right time, in the
right format.

Characteristics of Information

Following are the essential characteristics features:

1. Timeliness: For effective decision-making, information must reach the decision-

maker at the right time, ie. Recipients must get information when they need it. Delays
destroys the value of information.

2. Accuracy: Information should be accurate. It means that information should be free

from mistakes, errors and clear Accuracy also means that the information is free from
bias. Wrong information given to management would result in wrong decisions. As
managers decisions are based on the information supplied in MIS reports, all
managers need accurate information.

3. Relevance: Information is said to be relevant if it answers especially for the recipient

what, why, where, when, who and why? The MIS should serve reports to managers
which is useful and the information helps them to make decisions.

4. Adequacy: Adequacy means information must be sufficient in quantity. i.e. MIS must
provide reports containing information which is required in the deciding processes of
decision-making. The report should not give inadequate or for that matter, more than
adequate information, which may create a difficult situation for the decision-maker.

5. Completeness: The information which is given to a manager must be complete and

should meet all his needs. Incomplete information may result in wrong decisions and
thus may prove costly to the organization.

6. Explicitness: A report is said to be of good quality if it does not require further

analysis by the recipients for decision making.

7. Impartiality: Impartial information contains no bias and has been collected without
any distorted view of the situation.
Types of Information

The information can be classified in a number of ways.

1. Action verses No-Action Information: The information which induces action is

called action Information. ‘No stock’ report calling a purchase action is an action
information. The information which communicates only the status is No-Action
Information. The stock balance is no-action information.

2. Recurring Verses No-Recurring Information: The information generated at regular

intervals is Recurring Information. The monthly sales reports, the stock statement, the
trial balance, etc are recurring information. The financial analysis or the report on the
market research study is no recurring information.

3. Internal and external information: The information generated through the internal
sources of the organization is termed as Internal Information, while the information
generated through the govt. reports the industry survey etc., termed as External
Information, as the sources of the data are outside the organization.

The information can be also be classified, in terms of its application:

1. Planning information: Certain standard norms and specifications are used in planning
of any activity. Hence such information is called the planning information. E.g. Time
standard, design standard.

2. Control information: Reporting the status of an activity through a feedback

mechanism is called the controlling information. When such information shows a
deviation from the goal or the objective, it will induce a decision or an action leading
to control.

3. Knowledge information: A collection of information through the library records and

the research studies to build up a knowledge base as an information is known as
knowledge information.

4. Organization Information: When the information is used by everybody in the

organization, it is called Organization Information. Employee and payroll information
is used by a number of people in an organization.

5. Functional/operational information: when the information is used in the operation of

a business it is called functional/operational information.

6. Database information: when the information has multiple use and application, it is
called as database information. Material specification or supplier information is stored for
multiple users.

Information flow: Information flows through an organization through both formal and
informal information systems. Informal ways of gathering information include face-to-face
conversations, meetings, telephone conversations, reading newspapers and magazines,
listening to radio and television and surfing the internet.

Information is also circulated through company newsletters, memos and notice boards. The
problem with newsletters and memos is that readers often have so much information to
absorb that they quickly forget it.

Formal methods of disseminating information around an organization include the following:

1. Computerized information systems which allow users to query databases over a company-
wide network. Internal data is often collected in the first instance through transaction
processing systems. External data can be collected, for example, through agencies, which
produces an on-line electronic data service called ‘DataStream’ to both business and
academic organizations.

2. Software packages such as Lotus Notes enable people at different locations to have the
same document on their screens and work on it together. Appointments can be held on the
systems so that meetings can be arranged at a time when everyone is free.

3. E-mail allows correspondence and files to be transmitted throughout an organization as

well as to others outside the organization.

4. Information can be disseminated throughout an organization via the Intranet.

Information in an organization flows in four directions: up, down,horizontally, and

inward/outward.

Most people view a traditional organization as a pyramid with four levels and many sides.

f ig .

From top to bottom, the levels are:

1. Strategic management, which provides an organization with overall direction and

guidance.
 2. Tactical management, which develops the goals and strategies outlined by strategic
management.

3. Operational management, which manages and directs the day-to-day operations and
implementations of the goals and strategies.

4. Non-management employees, who actually perform daily activities, such as order

processing, developing and producing goods and services, and serving customers.

If you consider collage as an example, strategic management might include the chancellor,
president, and various vice presidents. Tactical management would include the deans.
Operational management would include the department chairs and directors of academic
programs. The final level would include instructors who are responsible for teaching your
classes.

Information that flows upward,or the upward flow of information, describes the current state
of the organization based on its daily transactions. When a sale occurs, for example, that
information originates at the lowest level of the organization that then is passed up through
various levels of management. Information that is gathered as a part of everyday operations is
consolidated by information technology and passed upward to decision makers who monitor
and respond to problems and opportunities .

The downward flow of information consists of the strategies, goals, and directives that
originate at one level and are passed to lower levels. Many organizations are taking
advantage of collaborative technologies and systems to share and move this type of
information.

Information that flows horizontally, or the horizontal flow of information, is between

functional business units and work teams. For example, at your school various departments
are responsible for scheduling courses. That information is passed horizontally to the
registras’s office, which creates a course schedule for your entire campus..

Finally, the outward and inward flows of information consists of information that is
communicated to customers, suppliers, distributors, and other partners for the purpose of
doing business.

Fig.
The contents of an information system:

The content of information systems varies concerning the purpose and nature of a system.

The concept of content can be divided into the following categories: facts, functionality and
form.

Facts are data, manipulated by an information system throughout its lifetime. An example of
facts in the online movie system above is a title of a movie, names of actors and other facts
about the movie. Each movie itself is a fact in this respect according to the system.

Functionality refers to the functioning of a system. It is the code that realizes the application
functions including things such as data integrity and navigation in the graphical user
interface. Examples in the system above are for instance functions such as downloading and
searching.

Form are various means such as text, sound, still graphics images, motion graphics and
animations that are used and arranged in order to present facts and to visualize available
functions. The form is expressed in the user interface and constitutes the ‘stage setting’ of the
system.

Examples of the form in the video on demand example above are menus and dialogues
presenting the facts and the functionality of the system to the user.

Facts must be processed by the functionality of a system in order to be expressed in a form

suitable for the system users.

The nature of information systems

An information system can be defined as a system that manages information by: collection,
manipulation, storage, transmission and display of information.

“Organization are human systems, ie. Structured groups of people possibly using
machines(including computers), co-ordinating their efforts towards certain goals.”
Organizations as systems are ordered in different hierarchy levels depending on the type of
work carried out at each level.

Fig. illustrates the main hierarchical levels of an ordinary business organization.

Fig.
Each of the levels below the leadership of an organization is ordered in various functions,
specialized towards specific tasks. The strategic management level is the one where the
organization as a whole is directed. At the middle management level, tactical management
such as planning and coordination is carried out. The direct value adding work of the
organization is carried out at the operational management level. The information need of each
level differ a lot. Decisions are primarily made at the strategic management level. Broad and
comprehensive information from the whole organization is needed for decision-making at
that level. On the lower organizational levels, the information needs get more specialised and
detailed.

Business information systems are created in order to support the organization they belong to.
The information provided by the information system can be used for efficient operations,
support to business analyses and monitoring of goals and goals achievement.

Information systems comprise both formal and non-formal aspects. The non-formal aspects
are primarily oriented towards phenomena and activities that are hard to formalize, such as
social skills, experience and knowledge about different people’s reactions in different
situations.

An information system can be divided in a computerized part and a non-computerized part.

The computerized part of an information system consists of mainly of those aspects of the
system that can easily be formalized and by that are possible to automate. This concerns
mainly repetitive operations that can be rationalized by automation. This means that an
information system is not a single and simple object, but has several components and
stakeholders. The relation a stakeholder has to an information system depends on the view of
interest at each time.

Type of Information Required by Top Management

Seven types of information are necessary for top-level managers.

1. Comfort information: informs about current situation or achievement levels that are
tuned to expectations.

2. Status information or progress information: keeps abreast of current problem and

crises and changes.

3. Warning information: signals that change for good or worse are occurring

4. Planning information : descriptions of projects/programs due in future, knowledge

of anticipated developments.

5. Internal operations information: indicators on how organization/program is

performing.
 6. External intelligence: information, gossip, and opinions about activities in the
environment of the agency. Competition, funding policies, political changes,
emerging social politics, etc.

7. Externally distributed information: annual report before release, quarterly progress

report for donors, press releases about the agency, publicity material before printing,
etc.

MIS Planning

The management information system needs good planning. This system should deal with the
management information not with data processing alone. It should provide support for the
management planning, decision making and action. It should provide support to the changing
needs of business management. A long range MIS plan provides direction for the
development of the system and provides a basis for achieving the specific targets or tasks
against time frame.

Following are the contents of MIS planning:

It is necessary to develop the goals and objectives for the MIS which will support the
business goals. The MIS goals and objectives will consider management philosophy, policy
constraints, Business risk, internal and external environment of the organization and business.

The designer has to take a number of strategic decisions for the achievement of MIS goals
and objectives.

They are:

a. Development strategy: ex. an online, batch, a real time.

b. System development strategy: designer selects an approach to system development

like operational verses functional, accounting verses analysis.

c. Resources for the development: designer has to select resources. Resources' can be
in-house verses external, customized or use of packages.

d. Manpower composition: the staff should have the staffs of an analyst, and
programmer.

The architecture of MIS: the architecture of the MIS plan provides a system and subsystem
structure and their input, output and linkage. It spells out in details the subsystem from the
data entry to processing, analysis to modeling and storage to printing.

The system development schedule: A schedule is made for development of the system.
While preparing a schedule due consideration is given to importance of the system in the
overall information requirements.
Hardware and software plan: Giving due regards to the technical and operational
feasibility, the economics of investment is worked out. Then the plan of procurement is made
after selecting the hardware and software.

Factors responsible for development of MIS

Both inter and external factors must be taken into account when trying to understand and
organizations criteria for deciding about technology. The following are the factors which are
responsible for development of MIS:

1. External

2. Internal

External Factors: external factors are conditions that exist in organizations external
environment. The factors can be found at the industry level or in national policies.

a. Industry level: At the industry level, we are looking at characteristics as degree of

diffusion of certain technologies, the availability of external know-how, for example,
technology suppliers, the degree of innovativeness of the industry, the requirements
imposed by major customers and external markets and overall levels of competition
and technology sophistication in the industry.

b. National policies: For the external factors the national policies also affect the
organization that indirectly affects the subsystems of the organization.

Internal factors: internal factors internal of the firm that may affect the development of MIS
can be grouped into three categories:

i) Past experience with technology: the organizations past experience about the
technology in terms of exposure and organizational learning ultimately affects its
future in developing technology.

ii) Organizational characteristics: an organization’s characteristic like size, influence the

adoption of MIS application in organization. The adoption of certain technologies
may appear more appropriate for the larger firms because of the larger capital
investments and the skilled human resources involve in the implementation and
operation of such technologies. Smaller firms are less affected by organizational
intertia and they show a greater degree of involvement of organizational member’s
especially top management during implementation.

iii) Organizational pursued strategy: Internal factors deal with the organizations' pursued
strategy on both orientation and technology policy. An organization’s strategy reflects
its action with markets and technology, which ultimately modify its experience and
consequently its overall characteristics and capabilities. The need for a strong
 technology has been advocated by a number of authors and investments in MIS
should therefore be closely aligned with overall corporate strategy.

System development life cycle: The system development life cycle have following steps of
development:

1. Systems planning

2. Systems analysis

3. Systems design

4. Systems implementation

5. Systems operation and support (system maintenance)

Systems planning: A classical systems and software engineering approach is recommended

to assure the development of a management information system that is fully responsive to a
client’s performance objectives and resource constraints.

System Analysis: System analysis includes a review of the present information system to
assess its capabilities and shortcomings; specification of system goals, objectives, and
constraints, a survey of potential system users to assess their information needs; identification
and analysis of alternative system concepts; specification a system concept; and system
requirements analysis and specification.

System design: The system design phase is generally broken into two sub phases, top-level
design and detailed design. Top-level design consists of the identification of the major system
components and their functions. In order to specify the top-level design, a number of
alternative system design concepts are synthesized and evaluated in terms of a variety of
selection criteria, which include cost , performance, satisfaction of requirements,
development risk, flexibility for expansion/upgrading , and political acceptability.

Detailed design consists of specifying all of the system components and functions in detail.
In the detailed design phase, decisions are made concerning what data elements are to be
collected, how they are to be coded, how frequently they are to be collected, and at what
levels of detail they are to be aggregated.

System implementation: System implementation, which includes forms development,

specification of data collection and entry procedures, development of editing and quality
control procedures, software coding and testing, development of training materials and
training, integration of the software components with other system components, and system-
level testing.

System operation and support: system operation and support, which includes not only
routine operating procedures but also provision for on-going system financing and
management, quality control, software maintenance and updating, personnel training, and
system maintenance and improvement, including periodic review of system performance and
diagnosis and correction of problems.

System support includes all of the resources required to operate, maintain, and improve the
system.

MIS and Decision Making

Decision-making is a process in which the decision-maker uses to arrive at a decision. The

core of this process is described by Herbert Simon in a model. He describes the model in
three phases as shown in the figure below:

1. intelligence: raw data collected, processed and examined, identifies a problem calling
for a decision.

2. Design : inventing, developing and analyzing the different decision alternatives and
testing the feasibility of implementation. Assess the value of the decision outcome.

3. Choice: select one alternative as a decision, based on the selection criteria.

In this intelligence phase, the MIS collects the data. The data is scanned, examined, checked
and edited. Further, the data is sorted and merged with other data and computations are made,
summarized and presented. In this process, the attention of the manager is drawn to all
problem situations by highlighting the significant differences between the actual and the
expected, the budgeted or the targeted.

In the design phase, the manager develops a model of the problem situation on which he can
generate and test the different decision alternatives, he then further moves into phase of
selection called as choice.

In the phase of choice, the manager evolves selection criteria such as maximum profit, least
cost, minimum wastage, least time taken and highest utility. The criterion is applied to the
various decision alternatives and the one which satisfies the most is selected.

Fig.

It is necessary to understand the concepts of decision making as they are relevant to the
design of the MIS. The Simon model provides a conceptual design of the MIS and decision
making, wherein the designer has to design the system in such a way that the problem is
identified in precise terms. That means the data gathered for data analysis should be such that
it provides diagnostics and also provides a path to bring the problem to surface.

The methods of decision making can be used directly in the MIS provided the method to be
applied has been decided. A number of decision making problems call for optimization, and
OR models are available which can be made a part of the system. The optimization models
are static and dynamic, and both can be used in the MIS. Some of the problems call for a
competitive analysis, such as a payoff analysis. In these problems, the MIS can provide the
analysis based on the gains, the regrets and the utility.

The concepts of the organizational and behavioral aspects of decision making provide an
insight to the designer to handle the organizational culture and the constraints in the MIS. The
concepts of the rationality of a business decision, the risk averseness of the managers and the
tendency to avoid an uncertainty, makes the designer conscious about the human limitations,
and prompts him to provide a support in the MIS to handle these limitations.

The reliance on organizational learning makes the designer aware of the strength of the MIS
and makes him provide the channels in the MIS to make the learning process more efficient.

The relevance of the decision making concepts is significant in the MIS design. The
significance arises out of the complexity of decision making, the human factors in the
decision making, the organizational and behavior aspects, and the uncertain environments.
The MIS design addressing these significant factors turns out to be the best design.