Unit2 - MIS

Management Information Systems are typically organized around the functional areas of an
organization. Learn about some of the most common applications of Management Information
Systems.

MIS Applications
Many organizations are structured based on functional areas. This is often reflected in an
organizational chart. Typically, functional areas include finances, human resources, marketing,
etc. Many of these functional areas have their own Management Information System, or MIS.

However, what if a manager has to oversee more than 100 sales

reps in 12 different offices around the nation? A specialized
information system that provides regular updates in a meaningful
format will make it a lot easier for the manager to make effective
decisions.

Financial MIS
A financial MIS provides financial information for managers to make daily decisions on
operations within the organization. Most systems provide these functions:

 Integrate financial information from multiple sources

 Provide easy access to financial information in summarized form
 Enable financial analysis using easy-to-use tools
 Compare historic and current financial activity

A financial MIS often has a number of subsystems, depending on the type of organization. These
include systems to analyze revenues, costs and profits, auditing systems for both internal and
external purposes and systems to manage funds. A financial MIS can also be used to prepare
reports for third parties, such as external auditors or shareholders.

Marketing MIS
A marketing MIS supports activities throughout the many
activities of marketing departments. Some of the typical
subsystems of a marketing MIS are marketing research, product
development and delivery, promotion and advertising, product
pricing and sales analysis.
One of the most common uses of a marketing MIS is to produce
sales reports. These are typically produced on a regular schedule,
such as by week, month and quarter. Reports can be organized by
sales representative, product, customer or geographic area. Such
reports allow managers to see which aspects of sales are doing
well and which ones need attention.
Perhaps one sales representative has suddenly experienced a drop in sales by losing one major
customer and needs some support to develop some new leads. If there are only a handful of sales
reps sharing one office, a manager might be able to pick up on this just by talking to everyone.
However, what if a manager has to oversee more than 100 sales reps in 12 different offices
around the nation? A specialized information system that provides regular updates in a
meaningful format will make it a lot easier for the manager to make effective decisions .

Manufacturing MIS
Manufacturing is one of the areas where information systems have
made a major impact. A typical manufacturing MIS is used to
monitor the flow of materials and products throughout the
organization. In a manufacturing process, raw materials or parts are
transformed to finished products, and a manufacturing MIS is used
at every stage. Some of the common subsystems in a
manufacturing MIS include: design and engineering, production
scheduling, inventory control, process control and quality control.
Manufacturing plants control encompasses many tactical and operational functions, addressing
several types of manufacturing related operations from receipt of raw material to shipping of
finished goods, from production itself to equipment maintenance through inventory movements
and material quality tests, from customer order lines to work dispatching in addition to
controlling the manufacturing operations themselves. These functions fall under different
responsibilities, though they must operate collaboratively under effective business management
directions.

The role of information in a manufacturing company can be simply summarized by the figure
below. Considering the 3 main flows (Material, money, information) crossing an enterprise
system, one can immediately point out the specific importance of information:

- material flow constrains money flow (no payment until delivery)

- information flow constraints
o material flow (no delivery until shipment documentation is issued)
o money flow (no payment until invoice is issued)

Figure 1, Critical Manufacturing Enterprise Flows

A manufacturing information system is thus an enabler to reaching higher levels in financial

performance. On the contrary, a poorly designed and tuned information system definitely hurts
the plant’s ability to serve the Company’s goal of sustaining and increasing profits.

Attaining such an ideal situation implies reaching the highest level of maturity in developing and
maintaining such information systems that allow with minimized effort to:

 Adding new capabilities, cancelling, extending, improving

existing capabilities in real time
 Capturing existing constraints impacting the bottom line as
user requirements
  Implementing or supporting continuously improving
manufacturing and business processes
 Allowing to take benefit of the technology as it is available,
when and where appropriate

Information management and information modelling

Information management is related to information science, which

has been defined as the science that is concerned with the
gathering, manipulation, classification, storage, and retrieval of
recorded. Within this work, information management is used
instead, defined as follows:

• Definition: Information management denotes activities various

activities related to defining, creating, structuring, classifying,
using, manipulating, storing, organising and communicating
information.

Information management as defined above thereby includes the

whole process from defining information needs for different
activities to the design of computer applications and its
manipulation of information. Within the information management
area, the main focus of this work is information modelling which is
here defined as follows:

• Definition: Information modelling is the activity of identifying,

relating, and structuring the information types that need to be
managed into an information model.

• Definition: An information model is a formal map of required

information together with interpretation rules of the used
information concepts.
WHAT IS HRIS
This is recognized as an effective method in the management of HR information it refers to a
system that makes available the right information to the right person at the right time. Accurate
and up-to-date data is relevant to the objective of this system which is to ensure a free flow of
such information throughout the organization.

It consists of:

 Networks through which the information is made available such as intranets;

 Personal computers (PCs);
 The right software;
 Automated telephone systems, and so on
Surveys have shown that the adoption of an HRIS is not widespread among organizations.
Payroll systems are fairly common. And UBS is implemented by many organizations.

This new way of managing information is to ensure that the system can facilitate the positioning
of people as an organization's "most important asset."

HRIS MODEL
First of all, HRIS model consists of 3 set of components which is Input Subsystem, HRIS
Database, and Output Subsystem. I think is quite hard for us to understand without the graphic of
the HRIS model. Below is the graphic showed the HRIS model.

The figure 2 shows the resource flow of HRIS model by Raymond (1995). As you can observe
through the HRIS model, it has three set of components which are Input subsystem, HRIS
database, and Output subsystem. In Input subsystem, there are three main subsystems which are
data processing, human resource research, and human resource intelligence. Some input data
might include software that can transform the data into the format that needed and required. The
second one is HRIS database, all the data and information can be store in computer storage. The
software such as Database management system (DBMS) can help to perform the maintenance
processes. The last one is output subsystem which contain all the output related to HR consists of
workforce planning subsystem, recruiting subsystem, workforce management system,
compensation subsystem, benefit subsystem, and environmental reporting subsystem.

MAIN PURPOSE OF HUMAN RESOURCES

INFORMATION SYSTEM
The main and ultimate purpose of an HRIS is to help HR Managers and line managers in making
decisions that "add value".

 HRIS facilitates HR Managers to become strategic partners.

 It helps in making analysis of important matters such as the HR costs.
 It is an effective communication channel, complementing the employee manual or written
HR polices.
 HRIS facilitates better decision making.
  It can contribute to employee satisfaction and productivity.
 It implements "paperless" HR initiatives.
 It is fairly clear that your organization can benefit from implementing HRIS.

The system is effective and beneficial if employees can have access to accurate, timely and
relevant information that are linked to the accomplishment of your organization's mission and
strategic objectives.

A well-designed Human Resources Information System must satisfy the needs of your
employees and organization.

FUNCTION OF HUMAN RESOURCE

INFORMATION SYSTEM
The function of human resources (HR) departments is generally administrative and common to
all organizations. Organizations may have formalized selection, evaluation, and payroll
processes. Efficient and effective management of "human capital progressed to an increasingly
imperative and complex process. The HR function consists of tracking existing employee data
which traditionally includes personal histories, skills, capabilities, accomplishments and salary.
To reduce the manual workload of these administrative activities, organizations began to
electronically automate many of these processes by introducing specialized human resource
management systems. HR executives rely on internal or external IT professionals to develop and
maintain an integrated HRMS. Currently human resource management systems encompass

 Payroll
 Time and attendance
 Performance appraisal
 Benefits administration
 HR management information system
 Recruiting/Learning management
 Performance record
 Employee self-service
  Scheduling
 Absence management

The payroll module automates the pay process by gathering data on employee time and
attendance, calculating various deductions and taxes, and generating periodic pay cheques and
employee tax reports. Data is generally fed from the human resources and time keeping modules
to calculate automatic deposit and manual cheque writing capabilities.

The time and attendance module gathers standardized time and work related efforts. The most
advanced modules provide broad flexibility in data collection methods, labor distribution
capabilities and data analysis features. Cost analysis and efficiency metrics are the primary
functions.

The benefits administration module provides a system for organizations to administer and track
employee participation in benefits programs. These typically encompass insurance,
compensation, profit sharing and retirement.

The HR management module is a component covering many other HR aspects from application
to retirement. The system records basic demographic and address data, selection, training and
development, capabilities and skills management, compensation planning records and other
related activities. Leading edge systems provide the ability to "read" applications and enter
relevant data to applicable database fields, notify employers and provide position management
and position control. Human resource management function involves the recruitment, placement,
evaluation, compensation and development of the employees of an organization. Initially,
businesses used computer based information systems to:

 produce pay checks and payroll reports;

 maintain personnel records;
 pursue talent management

Online recruiting has become one of the primary methods employed by HR departments to
garner potential candidates for available positions within an organization. Talent management
systems typically encompass:
  analyzing personnel usage within an organization;
 identifying potential applicants;
 recruiting through company-facing listings;

Recruiting through online recruiting sites or publications that market to both recruiters and
applicants.

The significant cost incurred in maintaining an organized recruitment effort, cross-posting within
and across general or industry-specific job boards and maintaining a competitive exposure of
availabilities has given rise to the development of a dedicated applicant tracking system. The
training module provides a system for organizations to administer and track employee training
and development efforts. The system, normally called a "learning management system" (LMS) if
a stand alone product, allows HR to track education, qualifications and skills of the employees,
as well as outlining what training courses, books, CDs, web based learning or materials are
available to develop which skills. Courses can then be offered in date specific sessions, with
delegates and training resources being mapped and managed within the same system.
Sophisticated LMS allow managers to approve training, budgets and calendars alongside
performance management and appraisal metrics.

The employee self-service module allows employees to query HR related data and perform some
HR transactions over the system. Employees may query their attendance record from the system
without asking the information from HR personnel. The module also lets supervisors approve
O.T. requests from their subordinates through the system without overloading the task on HR
department.

Many organizations have gone beyond the traditional functions and developed human resource
management information systems, which support recruitment, selection, hiring, job placement,
performance appraisals, employee benefit analysis, health, safety and security, while others
integrate an outsourced applicant tracking system that encompasses a subset of the above

10 REASONS HR IS IMPORTANT TO AN
ORGANIZATION
Human resources is important to organizations in 10 specific areas, ranging from strategic
planning to company image. HR practitioners in a small business who have well-rounded
expertise provide a number of services to employees. The areas in which HR maintains control
can enhance employees’ perception of HR throughout the workforce when they believe HR
considers employees to be its internal customers and renders services with that in mind .

STRATEGY
HR improves the company's bottom line with its knowledge of how human capital affects
organizational success. Leaders with expertise in HR strategic management participate in
corporate decision-making that underlies current staffing assessments and projections for future
workforce needs based on business demand.

COMPENSATION
HR compensation specialists develop realistic compensation structures that set company wages
competitive with other businesses in the area, in the same industry or companies competing for
employees with similar skills. They conduct extensive wage and salary surveys to maintain
compensation costs in line with the organization's current financial status and projected revenue.

BENEFITS
Benefits specialists can reduce the company’s costs associated with turnover, attrition and hiring
replacement workers. They are important to the organization because they have the skills and
expertise necessary to negotiate group benefit packages for employees, within the organization's
budget and consistent with economic conditions. They also are familiar with employee benefits
most likely to attract and retain workers.

SAFETY
Employers have an obligation to provide safe working conditions. Workplace safety and risk
management specialists from the HR area manage compliance with U.S. Occupational Safety
and Health Administration regulations through maintaining accurate work logs and records, and
developing programs that reduce the number of workplace injuries and fatalities. Workplace
safety specialists also engage employees in promoting awareness and safe handling of dangerous
equipment and hazardous chemicals.

LIABILITY
HR employee relations specialists minimize the organization's exposure and liability related to
allegations of unfair employment practices. They identify, investigate and resolve workplace
issues that, left unattended, could spiral out of control and embroil the organization in legal
matters pertaining to federal and state anti-discrimination and harassment laws .

TRAINING AND DEVELOPMENT

HR training and development specialists coordinate new employee orientation, an essential step
in forging a strong employer-employee relationship. The training and development area of HR
also provides training that supports the company's fair employment practices and employee
development to prepare aspiring leaders for supervisory and management roles.

EMPLOYEE SATISFACTION
Employee relations specialists in HR help the organization achieve high performance, morale
and satisfaction levels throughout the workforce, by creating ways to strengthen the employer-
employee relationship. They administer employee opinion surveys, conduct focus groups and
seek employee input regarding job satisfaction and ways the employer can sustain good working
relationships.

RECRUITMENT
HR recruiters manage the employment process from screening resumes to scheduling interviews
to processing new employees. Typically, they determine the most effective methods for
recruiting applicants, including assessing which applicant tracking systems are best suited for the
organization's needs.

SELECTION
HR professionals work closely with hiring managers to effect good hiring decisions, according to
the organization's workforce needs. They provide guidance to managers who aren't familiar with
HR or standard hiring processes to ensure that the company extends offers to suitable candidates.

COMPLIANCE
HR workers ensure that the organization complies with federal state employment laws. They
complete paperwork necessary for documenting that the company's employees are eligible to
work in the U.S. They also monitor compliance with applicable laws for organizations that
receive federal or state government contracts, through maintaining applicant flow logs, written
affirmative action plans and disparate impact analyses.

HOW TO IMPLEMENT HUMAN RESOURCE

INFORMATION SYSTEM SUCCESSFULLY IN
THE ORGANIZATION
Effective implementation is indicated by the following:

HR Managers are playing their role as "a human resource strategic partner", not content in
merely performing administrative duties;

The HRIS that your organization has implemented is aligned to HR objectives;

 Your overall business objectives are linked to the HR strategies under the HRIS that your
organization has implemented;
 The right technology is chosen based on effective assessment of what the HRIS can help
to achieve;
  The workforce is ready for the new technology and accepts it, and
 Senior management provides full support for the HRIS and makes use of it in decision
making.

LIMITATIONS
 Lack of management commitment
 Satisfaction with the status quo
 No or poorly done needs analysis
 Failure to include key people
 Failure to keep project team intact
 Politics / hidden agendas
 Failure to involve / consult significant groups
 Lack of communication
 Bad timing (time of year and duration)
What Is the Role of Information Technology in Finance?

The finance department in a corporation is in charge of taking accounting

data and creating reports that the managers within the company -- all the
way up to the CEO -- need for decision making purposes. Information
technology or IT refers to the software tools and computer systems the
company uses to automate these functions and organize the data flow
to improve the management team’s decision making capabilities.

Enterprise Resource Planning

Even very small companies use accounting software packages that

generate financial reports such as income statements and cash flow
statements. This simple form of IT allows a small business owner to save
accounting time and have management reports available on a more timely
basis. Mid size and larger companies use more sophisticated IT systems
called enterprise resource planning or ERP, which are groups of
software modules that serve the needs of all functional areas of the
company. As its name suggests, ERP helps the company plan the use of
its resources, a process that the finance department oversees.

Faster Flow of Information

IT systems allow a company to link up every department within the

organization. Information generated by the manufacturing, marketing and
finance divisions can be shared for example. This information is available
real-time, meaning as soon as it is created on the system. Accessing it
does not require a great deal of research or manual effort. The time
finance staff used to devote to “digging” for the numbers they needed can
now be devoted to analyzing and interpreting the information -- finance’s
primary role in the organization.

Customized Reporting

The IT systems used by the finance department have a report

generating functionality that speeds up the process of producing
management reports. The system provides a certain degree of
customization -- the reports can be configured based on the specific
needs of the management team. Automation of these reporting systems
means that routinely generated reports, such as those produced at the
end of each month, can be created quickly. With many of the decisions
management has to make, time is of the essence. IT systems address this
need for rapid, customized reporting capability.

Collaboration

Many organizations take advantage of collaborative effort across

departments, the concept of each department benefiting from other
departments’ expertise. The finance team acts as in-house consultants to
other departments within the organization. When all departments use a
centralized IT system, it drops the barriers that formerly blocked the flow
of information. The company now has a centralized database that all
team members can access -- subject to certain security rules. In the
case of a company with multiple offices or international divisions, this
ability to access the same information from around the globe saves time
and improves efficiency. If finance requires manufacturing cost data to
create a report for an upcoming board meeting, operations personnel can
quickly transmit the data in the format the finance department requires
and understands.

Better Forecasting

Better forecasting means producing a forecast that is a more accurate

prediction of what the company’s financial results are likely to be.
Finance staff members need access to in-depth information to create
forecasting models that depict how the organization actually works.
Having access to information from all segments of the company makes
accurate forecasting much easier. Finance has real information and does
not have to rely on guesswork when creating assumptions for the forecast.

Uses of Management Information System in Finance

Management Information Systems (MIS) in Finance have been widely

adopted both by corporations as well as governments. They are
information systems with capacity to maintain large data bases enabling
organizations to store, organize and access financial information easily.
These systems are primarily used for accounting operations and
generation of financial reports.. Increasingly they are also used to support
budgetary, planning and decision making processes. These systems are
credited with increasing financial transparency, efficiency and
accountability.
General Ledger
The main use of a management information System (MIS) in finance is
that it automatically updates all the transactions in the General Ledger.
The General Ledger is the core component of all financial information
systems. Financial transactions are simultaneously posted on the various
accounts that comprise the organization's "Chart of Accounts".
Simultaneous updating of accounts such as sales, inventory and accounts
receivable, reduces errors. It also provides an accurate and permanent
record of all historical transactions.
Cash Management
Cash flow management is an important use of MIS in Finance. Cash
Management refers to the control, monitoring and forecasting of cash
for financing needs. Use of MIS in Finance helps companies track the
flow of cash through accounts receivable and accounts payable
accurately. Accurate records also help in monitoring cost of goods sold.
This can help pin point areas that eat up cash flow such as inventory
costs, high raw material costs or unreliable sales.

Budget Planning
Financial budget planning uses proforma or projected financial statements
that serve as as formal documents of management's expectations
regarding sales, expenses and other financial transactions. Thus financial
budgets are tools used both for planning as well as control. MIS in finance
helps organizations evaluate "what if" scenarios. By modifying the
financial ratios, management can foresee the effects of various scenarios
on the financial statements. MIS thus serves as a decision making tool,
helping in choosing appropriate financial goals.

Financial Reporting
The use of MIS systems in Finance enables companies to generate
multiple financial reports accurately and consistently. Generation of
financial statements both for internal reports as well as for shareholder
information takes less effort because of the automatic updating of the
General Ledger. Compliance with Government regulations as well as
auditing requirements is also easier because the records are accurate and
provide a permanent historical map of transactions that can be verified.

Financial Modeling
A financial model is a system that incorporates mathematics, logic and
data in the form of a large database. The model is used to manipulate the
financial variables that affect earnings thus enabling planners to view the
implications of their planning decisions. MIS in Finance enables
organizations to store a large amount of data. This helps managers
develop accurate models of the external environment and thus incorporate
realistic "what if" scenarios into their long-range planning goals.
Production Information System
Production is some process through which goods and services are created. Production/Operations
is the heart for an organisation and add value to some object enhancing its usefulness. This is
done by bringing men, machines and materials together as inputs to get the desired output.

In modern times the formulation of production strategy has become a complicated and difficult
activity. In one man organisation/enterprise, like retail shops, owner can himself formulate
operational plans, review the progress and can make modifications in his plans and method of
work.

The production department performs the function of transferring input into some desired output.
In other words, the role of production department is to manufacture the company’s products in
accordance with quality specifications and to produce goods at minimum cost. The production
department performs a number of operations/activities carried out by a number of sections.

Each section performs some specialised activity and tries to optimize its level of performance.
The common denominator related to the various activities of these sections of any type of
production system is the flow of materials. A production organisation is characterised by the
nature of inputs, transformation process and the output.

Production information system performs an integrating role within the production system of any
organisation. Management of activities/operations in a production system is concerned with
decision making related to different components of the system so as to accomplish the desired
output.

These decisions can be divided as periodic-decisions viz. selection, design and updating of
resources, transformation process and methods, and continual decisions about day-to-day
operation and control of various activities/operations in the system. These decisions can also be
divided in planning, implementation and control categories.

Production information system is a network to generate necessary information and process it to

make various decisions related to some production system. It consists of communication
channels and information processing centres collecting information from its sources of origin,
storing, updating, collating and processing it and then supplying the processed information to the
various users of the system.

A production information system can be viewed as an independent group of sub-systems each

related to its successor, each performing a different function though yet united with others for
achievement of the overall objective. It interacts with both its internal and external environments.

The components of the system can be described as:

Thus production information system is a matter of planning and generating records for decision-
making.

A. Records of Basic Information:

(i) Blue Prints,

(ii) Bill of materials,

(iii) Time value of fundamental operations and

(iv) Production routing.

B. Records showing what is available:

(i) Raw material records,

(ii) Work in process,

(iii) Semi-processed stock,

(iv) Finished goods stock,

(v) Information about tools, jigs, fixtures, gauges and personnel available,
(vi) Machinery and equipment details

C. Historical Records:

(i) Records of production,

(ii) Records of waste and reject,

(iii) Records of machine performance,

(iv) Records of sales and

(v) Records of absenteeism.

The nature of these records can vary for different type of plants and production systems as well
as according to the situation and needs of the management. In a small organisation the
preparation and maintenance of these records is the job of shop floor.

But it becomes an important function in medium and large scale organisations having separate
section for collection and preservation of such records. Usually this Work is done by dispatchers
who continually observe the actual implementation and compare it with the programme
previously intimated.

The flow of information for production planning can be explained by the following chart: