MANAGEMENT INFORMATION SYSTEMS

Chapter One: Introduction

Meaning and Role of Information Systems

As a consumer, you have instant access to millions of pieces of data. With a few clicks of the mouse
button, you can find anything from current stock prices and video clips of current movies. You can get
product descriptions, pictures, and prices from thousands of companies across India and around the
world. Trying to sell services and products? You can purchase demographic, economic, consumer
buying pattern, and market-analysis data. Your firm will have internal financial, marketing,
production, and employee data for past years. This tremendous amount of data provides opportunities
to managers and consumers who know how to obtain it and analyse it to make better decisions. Today
information systems are everywhere; from supermarkets to airline reservations, libraries and banking
operations they have become part of our daily lives. The first step in learning how to apply
information technology to solve problems is to get a broader picture of what is meant by the term
Information system

Computers are only one component of an information system. A computer information system (CIS)
consists of related components like hardware, software, people, procedures, and collections of data.
The goal of Information System is to enable managers to make better decisions by providing quality
information. The term information technology (IT) represents the various types of hardware and
software used in an information system, including computers and networking equipment. The
physical equipment used in computing is called hardware. The set of instructions that controls the
hardware is known as software. In the early days of computers, the people directly involved in are
tended to be programmers, design analysts, and a few external users. Today, almost everyone in the
firm is involved with the information system.

Procedures are instructions that help people use the systems. They include items such as user
manuals, documentation, and procedures to ensure that backups are made regularly.

Databases are collections of related data that can be retrieved easily and processed by the computers.

Quality is an important issue in business today, particularly as it relates to information systems. The
quality of an information system is measured by its ability to provide exactly the information needed
by managers in a timely manner. The information must be accurate and up-to-date. Users should be
able to receive the information in a variety of formats: tables of data, graphs, summary statistics, or
even pictures or sound:

Framework for Business End Users

The field of information systems encompasses many complex technologies, abstract behavioural
concepts, and specialized applications in countless business and non-business areas. Thus, you should
concentrate your efforts in five areas of knowledge:

 Foundation Concepts: Fundamental behavioural and technical concepts

 Technology: Major concepts, developments, and Management issues in IT – software,
hardware, network, database management etc…
 Applications: Using emails for fast communication, internet, intranet, & extranet to gather the
information, for operations and management.
  Development: How end users or information specialists develop information systems
solutions to business problems using fundamental problem – solving and development
methodologies.
 Management: Effectively managing the resources and business strategies involved in using IT
at end user, enterprise and global level of business.

Key Terms Used In Information System

Data, Information, Knowledge, and Wisdom

Let us consider the case of a retail store that is trying to increase sales. Some of the Data available
includes sales levels for the last 36 months, advertising expenses, and customer comments from
surveys. By itself, this data may be interesting, but it must be organized and analyzed to be useful in
making a decision. For example, a manager might use economic and marketing models to forecast
patterns and determine relationships among various advertising expenses and sales. The resulting

Information (presented in equations, charts, and tables) would clarify relationships among the data
and would be used to decide how to proceed. It requires knowledge to determine how to analyze data
and make decisions. Education and experience create knowledge in humans. A manager learns which
data to collect, the proper models to apply, and ways to analyze results for making better decisions. In
some cases, this knowledge can be transferred to specialized computer programs (expert systems).

Wisdom is more difficult to define but represents the ability to learn from experience and adapt to
changing conditions. In this example, wisdom would enable a manager to spot trends, identify
potential problems, and develop new techniques to analyze the data.

Characteristics of Information

Now, let us discuss about the characteristics of good information

 Timeliness: Information must reach the user in a timely manner, just when it isneeded; not
too early, because by the time it is used it would be out-of-date; not toolate because the user
will not be able to incorporate it into his/her decision-making.
 Appropriateness: Information must be relevant to the person who is using it. Itmust be
within the sphere of his/her activities so that it can be used to reduceuncertainty in his/her
decision-making.
 Conciseness: Information should always contain the minimum amount of detail thatis
appropriate for the user. Too much detail causes information overload
 Frequency: Frequency is related to timeliness. Too often the information presented is linked
to the calendar (end of the week, beginning of the month); its frequency should be
synchronized with the timing of the decision making of the user.
 Understand-ability: The format and presentation of information are very important. Some
people prefer tabular information, whereas others may need it in a graphical form. Also the
use of colours enhances the understand-ability of what is presented.
 Relevant: It pertains to the particular problem. What data is relevant depends on the decision-
making model used. E.g. university admissions officials may choose to consider the results of
some high-school test irrelevant, if they believe that it does not improve the chances of some
applicant later becoming a successful student.
 Complete: All the relevant parts are included. E.g. marketing data about household incomes
may lead to bad decisions, if not accompanied by consumption habits of the target population.
  Current: Decisions are often based on the latest information available
 Economical: The costs of gathering information should be justified by the overall benefits

Chapter two:

What is a System?

A system is a group of interrelated components working together toward a common goal by accepting
inputs and producing outputs in an organized transformation process. System will have the following
basic interacting components (functions):

1. Input
2. Processing
3. Output
4. Feedback
5. Control

What is an Information System?

Now, it is time to see the real meaning and concept of Information Systems. Too often you hear
someone say, "Oh yeah, I know how to use a computer. I can surf the Web with the best of them and I
can play Solitaire for hours. I'm really good at computers. "Okay. So that person can pound a
keyboard, use a mouse at lightning speed, and has a list of favorite Web sites a mile long. But the real
question is "Is that person information literate?" Just because you can pound the keyboard doesn't
necessarily mean you can leverage the technology to your advantage or the advantage of
your organization. An organization can gather and keep all the data on its customers that a hard drive
can hold. You can get all the output reports that one desk can physically hold. You can have the
fastest Internet connection created to date. But if the organization doesn't take advantage of customer
data to create new opportunities, then all it has is useless information. If the output report doesn't tell
the management that it has a serious problem on the factory floor, then all that's been accomplished is
to kill a few more trees. If you don't know how to analyze the information from a Web site to take
advantage of new sales leads, and then what have you really done for yourself today? Most of us think
only of hardware and software when we think of an Information System. There is another component
of the triangle that should be considered, and that's the people side, or "persware." Think of it this
way: We talk about the input, processing, output and feedback processes. Most important is the
feedback process; unfortunately it's the one most often overlooked. Just as in the triangle above, the
hardware (input and output) and the software (processing) receive the most attention. With those two
alone, you have computer literacy. But if you don't use the "persware" side of the triangle to complete
the feedback loop, you don't accomplish much. Add the "persware" angle with good feedback and you
have the beginnings of information literacy. An information system differs from other kinds
of systems in that its objective is to monitor/document the operations of some other system, which we
can call a target system. An information system cannot exist without such a target system. For
example, production activities would be the target system for a production scheduling system, human
resources in the business operations would be the target system of a human resource information
system, and so on. It is important to recognise that within a vending machine there is a
component/sub-system that can be considered an information system. In some sense, every reactive
system will have a subsystem that can be considered an information system whose objective is to
monitor and control such a reactive system.

Information Systems are more than computers. Using Information Systems effectively requires an
understanding of the management, organization, and information technology for shaping the systems.

Management

Managers perceive business challenges in the

environment; set the organizational strategy for
responding, allocate human and financial resources to
achieve the strategy and coordinate the work.
Information Different levels of managers are:
Systems
 Senior Managers: make long-range strategic
decisions about products and services to produce.
 Middle Managers: Carry out the programs
Management
and plans of Senior Managers
 Operational Managers: Responsible for
monitoring the firm’s daily activities.

Organization

The key elements of an organization are its people, structure, and operating procedures, politics, and
culture. Major functions of an organization are:

Function Purpose
Sales and Selling the organisation’s products and services
marketing
Manufacturing Producing products and services
Finance Managing the organisation’s financial assets (cash, stocks, bonds, e.t.c)
Accounting Maintaining the organisation’s financial records(receipt, paychecks, etc)
accounting for flow of funds
Human resources Attracting, developing, and maintaining the organization’s labour force;
maintaining employee records.

An organization requires many different kinds of skills and people:

 Managers: Decision Makers

 Knowledge Workers: (Engineers, architects, or scientists) Design products of services.
 Data Workers: (Secretaries, Bookkeepers, and Clerks) Process the organization’s paperwork.
 Production or Service Workers: (Machinists, Assemblers, or Packers) Produce the products or
services of the organization.

Technology

Computer Based Information Systems (CBIS) utilize the following IT technologies:

 Computer Hardware: Various physical equipment.

 Computer Software: Pre-programmed instructions, system software, application software,
etc..
  Storage Technology: Using media for storage such as hard disk, tape drives, CD,DVD, etc..
 Telecommunication Technology: Consists of both physical devices and software, links the
various pieces of hardware and transfers data from one physical location to another.

An End User Perspective of Information System

Anyone who uses the information system or the information it produces is an end user. They are

 People of the organization

 Information System Specialist: System Analysts or Professional Computer Programmer.
 Managerial End User: Managers, Entrepreneur, or Managerial level Professional. The
managerial end users use spread sheets, emails. It is desired today that every person in the
organization must be able to use internet and emails, spread sheets, database management
packages, and the business software to support specific work activity.

An Enterprise Perspective of Information Systems

From an enterprise perspective, an information system offers an organizational and management

solution, based on information technology to a challenge possessed by the environment. Today the
success of any enterprise not only depends on the efficiency on minimizing costs, time, and use of
information resources but also depends on the effectiveness of the information technology in
supporting the organization business. The Information Systems function represents:

 A major functional area of business that is as important to business success as the functions of
accounting, finance, operations management, marketing, and human resource management.
 An important contribution to operational efficiency, employee productivity and morale, and
customer service and satisfaction.
 A major source of information and support needed to promote effective decision making by
managers.
 An important ingredient in developing competitive products and services that give an
organization a strategic advantage in the global marketplace.
 A major part of the resources of an enterprise and its cost of doing business, thus posing a
major resource management challenges.
 A vital, dynamic, and challenging career opportunity for millions of men and women