wapter BM Introduction to MIS Ya 44 MANAGEMENT INFORMATION SYSTEM (wis) information system, oF MIS, is defined asa computer-based em that provides managers withthe lools 0 organize, eralate and "ysis basically concerned with processing data into information which Jsthen communicated to the various departments in an organization Tppropiste decsonmaling In order to provide past pecan el information, MIS can include software that helps in decane “Miking, data resources such as databases, the hardware resources of » sm, decision support systems, people management and project panagement applications, and any computerized processes that enable {he department to run efficiently. Management Information , rocessod organsing ‘Stating + Diecing + Controting 3 Prosentabie = Meaningtl form ofdata Figure: Management Information System 4.1.1 CHARACTERISTICS OF MIS ‘A management information system has the following characteristics: (a) System approach: The information system follows a System's approach. The system's approach implies a holistic approach to the study of the system and its performance to achieve the objective for which it has been formed. (6) Management oriented: For designing of MIS top-down approach should be followed. Top-down approach suggests that the system. development starts from the determination of the management needs and overall business objectives. The focus of the system ismation System Management Infor management. The MIS is such | 1.4 — rt ws ; ; i x nformation needs Oo} AIS is suc i Pe iii the levels of management in an organization ie that it serves a ‘and lower level - t directed: Since MIS is ‘for the’ management it is men jat it also should have a very strong ‘by the’ management initiative. Management is involved in the designing process of MIS and also in its continuous reve and up gradation B develop a good qualitative system. The system is structured as per directions factored by management. This helps in minimizing | the gap between expectations of management from the system | and the actual system. (d) Need based: MIS design and d information needs of managers a top, middle evelopment should be as per the t different levels that are strategic planning level, management control leveland operational control level | (e) Exception based: MIS should be developed on the exception based reporting principle, which means an abnormal situation, that is the maximum, minimum or expected values vary beyond the limits, In such cases there should be exception reporting to the decision-maker at the required level. (f) Future oriented: Besides exception based reporting, MIS should also look at the future. In other words MIS should not merely provide past or historical information, rather it should provide information on the basis of projections based on which actions may be initiated. (@) Integrated: It means a comprehensive or complete view of all | the sub systems in the organization. MIS is an integrated system. It is integrated with all’ operational and functional activities of management. This is an important characteristic and- requirement for a system to qualify as MIS. The reason for having an integrated system is that information in the managerial context for decision-making may be required from different areas from within the organization. If MIS remains a collection of isolated systems and each satisfying a small objective, then the integrated information need of managers will not be fulfilled. In order to provide a complete picture of the scenario, complete information is needed which only an integrated system can provide. For example, in order to develop an effective production scheduling system, it is necessary to balance such factors as: set- up costs, work force, overtime rates, production capacity, inventory level, capital requirements and customer services. | | }ipteodvet ————__—_—___ ns taking a comprehe , dnleer erate yothin the company. V6 VIEW ofthe sub systems wn data flows: Through MIS the data (Common data os th MI te dt eng sored no the Grprocessed by the system can be handled in an integrated manner. Beeause of this integration concept of MIS, there is an opportunity to avoid duplication and redundancy in data gathering, storage and dissemination. System designers are aware that few ke gource documents account for much of the information flow. For example, customer's orders are the basis for billing tho customer for the goods ordered, setting up accounts receivables, initiating production activity, sales analysis, sales forecasting etc, () Strategic planning: MIS cannot be designed overnight. It requires very high degree of planning which goes into creating an effective organization. The reason for this kind of planning is to ensure that the MIS being built not only satisfies the information need of the managers today but can also serve the organization for the next five to ten years with modifications. Sometimes when the planning part is done away with, systems tend to perform well in the present but they tend to become obsolete with time. Planning helps to avoid this problem. () Heavy planning-element: The preparation of MIS is not a one or two day exercise. It usually takes 3 to 5 years and sometimes a much longer period. So the system expert has fo keep 2 things in mind - one is that he has to keep future objectives as well as the firm's information well in advance and also he has to keep in mind that his MIS will not be obsolete before it gets into action. (k) Computerized: MIS can be used without a computer. But the use of computers increases the effectiveness and the efficiency of the system. The queries can be handled more quickly and efficiently with the computerized MIS. The other benefits are accuracy, storage capacity and timely information. ()) User friendly/Flexibility: An MIS should be flexible i.e. there should be room for further modification because the MIS takes: much time in preparation and our environment is dynamic in nature. MIS should be such that it should be used independently by the end user so that they do not depend on the experts. (m) Information as a resource: Information is the major ingredient of any MIS. So, an MIS should be treated as a resource and managed properly.1.6 __ Information System Management \ (od 1.1.2 PURPOSE / OBJECTIVES OF MIS. 7 (a) = ebony) information - Management information sey eos summary information of some organizational Euccee ene aT ie Intervals. MIS combines information from multiple data resources into a struétured report that enables mat i . em win to monitor and organise the organization in a better, / (0) Operational control and efficiency - Summarized MIS reports also contain information such as Budgeted figures, previous year's figures, year to date figures etc. These figures enable the managers to study the actual performance against the planned performance and analyse the reasons for variances. This analysis helps in operational control and in improving the efficiency of operations. (©) To provide internal information - In general, inputs to MIS are transaction processing data produced by Transaction Processing System, other internal data from databases, and ad hoc requests for special reports or summaries. As the input to MIS is generally the internal data, MIS generally focuses on internal environment. As decision-making in the managerial process requires a lot of information from external environment also, MIS has very limited applications in the managerial process. MIS focuses primarily on the information needs of low to middle level managers with regard to current and past operation of the enterprise. (a) To provide structured decisions - As MIS focuses generally on internal information and the input to MIS is the internal data, MIS is more useful mainly for making structured decisions. Structured decisions are those decisions which are predictable in nature and are pre-planned and pre-specified. (e) To provide strategic support - Computers cannot create business | strategies by themselves. They can assist management in 4 understanding the effects of their strategies, and help enable effective decision-making. MIS provides a valuable function; they 1 can collate into coherent reports unmanageable volumes of data } | that would otherwise be broadly useless to decision makers. By studying these reports decision-makers can identify patterns and trends that would have remained unseen if the raw data were | consulted manually. MIS can be used to transform data into | information useful for decision making Computers can provide financial statements and performance reports to assist in the planning, monitoring and implementation of strategy.1.7 tn also use these raw data to, run simulations - hypothetical scenarios that answer a range of ‘what if’ questions regarding alterations in strategy: For instance, MIS can provide predictions about the effect on sales that an alteration in price would have ona product. Mite To act a5 Management by Objectives - MIS is extremely useful in generating statistical reports and data analysis and can also be of use as a Management by Objectives (MBO) tool. MBO is a management process by which managers and subordinates agree uponaseries of objectives for the subordinate to attempt to achieve within a set time frame. Objectives are set using the SMART ratio, thatis, objectives should be Specific, Measurable, Agreed, Realistic and Time-Specific. . The aim of these objectives is to provide a set of key performance indicators by which an enterprise can judge the performance of an employee or project. The success of any MBO objective depends upon the continuous tracking of progress. In: tracking this erformance it can be extremely useful to make use of the MIS. Since all SMART objectives are by definition measurable they can be tracked through the generation of management reports to be analysed by decision-makers. (g) For processing the data - Not only do MIS allow for the collation of vast amounts of business data, but they also provide a valuable time saving benefit to the workforce. Where in the past business information had to be manually processed for filing and analysis it can now be entered quickly and easily onto a computer by a data processor, allowing for faster decision making and quicker reflexes for the enterprise as a whole.jon to MIS jntroduet a" x. problems that necessitate the system, the ce Pipe nature of the system, reasons why thig cone Eetives, the genera s, and time and resources required tg na Was selected over ign other: se and implement the s) 16 PRE-REQUISITES FOR EFFECTIVE MiSi(RéAiin) The pre-requisites are: 1. Qualified systems ang ma », Control and maincenance of MIS. 3. Common data base is 5 Support of top management. 4. Qualified systems and management staff, re-requisite of effective MIS is that qualified otticesat These officers (coeaeeaeg Clearly the Views Of their fellow officers. For this, Oren cerstand management base should comprise of two eategoaee nn tot 1. Systems and computer experts; and a. 2. Management experts. Systems and computer experts in addition ti i Chr theit subject area, they should also be capable orton management concepts to facilitate the understanding of ‘problems faced by the concern. They should also be clear about the process of decision making and information requirements for planning and control functions. Management experts should also understand quite-clearly the concepts and operations of a computer. This basic knowledge of computers will be useful to experts and will place them in comfortable position, while working with systems, technicians in designing or otherwise, of the information system. The pre-requisite is confronted with a problem of procurement of suitable experts. This problem is dealt by recruiting fresh candidates and developing them to meet specific requirements. Also, it is difficult to retain such experts on long term basis as their status in the job market is quite high, 2. Control and maintenance of MIS: Control of the MIS means the operations of the system as. it was designed to operate. Sometimes, users develop their own procedure or short cut methods to'use the ystem Which Tedtices tondilin ) nagement staff 4. Evolution of manned byInformation System Management 16 _ - ; 2 — ffectiveness. To check such habits of users, the management scch level in the organisation should device checks for at ea information system control. 3 Maintenance is closely related to control. There are times when the need for improvementto the system will be discovered. Formal ; methods for changing and documenting changes must be _ provided. 3. Common data base: It is an integrated collection of data and information which is utilised by several information sub-systems of an organisation. A common data base may be defined as a super-file which consolidates and integrates data records formerly stored in memory separate data files. Such a data base can be organised as an integrated collection of data records into a single super-file or it can be organised as an integrated collection of several data files. The organisation of a common data base allows it to be accessed by several information sub-systems and thus, eliminates the necessity of duplication in data storage, updating, deletion and protection.The problems which are usually observed during the stages of creating a common data base in an existing organisation are as follows: (@) Maintenance of common data base performance. (i) Maintenance at data records and accessibility of common data base. (iii) Keeping the common data base adoptable. (iv) Organizing data in common data base. (v) Maintenance of common data base security. Normally, the data base is sub-divided into the major information sub-sets needed to run a business. These sub-sets are: (i) Vendor file (ii) Personnel file (ii) Inventory file (iv) General ledger account of file (v) Container and sales fileon to MIS. introduction 47 The @ (i)_Itis available to authorised persons only, (ai) It is controlled by a separate authority established for th e (iv) Itis users-oriented. 4. ‘the main characteristics of data base are ptizes same data and information kept in jts information needs, other important characteristics of data base ar its act of being used as a common data so e as follows: pelps in avoiding duplication of efforts in stor to various users, of data and information. age and retrieval that each sub-system the same file to satisfy known, as data base management system, The maintenance of data in data base requi hardware, software and experienced compte In addition, it requires a good data collection system Sic ed. with experts who have first-hand knowledge of the ec of the company and its information needs. ‘The data base structured on above lines is capable of providing/ meeting information requirements of its executives, which is necessary for planning, organizing and controlling the operations of the business concer. But it has been observed that such a data base meets the information needs of control. Evolution of MIS: ‘Aneffective MIS should be capable of meeting the information requirements ‘of its exe future as well. This capability can be maintained by the MIS and taking appropriate timely action. The evolution of MIS should take into account the following point ’ 1. Ascertaining the views of usérsand the designers about the capabilities and deficiencies of the system. 2. Guiding the appropriate authority about the steps to be taken to keep the effectiveness of MIS alive. 3. Examining whether enough flexibility exists in the sys! to cope up with any expected information requirement i future.J |nformation System Management, 4.18 —_——— —— support of top manageme management information system to be effective, it is For a manaj , At it must receive the full Support Of top | essential th management. — ‘the reasons for this are as follows: 1, Subordinate managers are usually lethargic about activities which do not receive the support of their superiors (top management). 2. The resources involved in computer-based information system are large and are growing larger and larger in view of importance gained by management information system. To gain the support of top management, the officers should. place, before top management, all the supporting facts and state clearly the benefits which will accrue from it to the organisation. This step will certainly enlighten management and will change their attitude towards MIS. Their whole hearted support and co-operation will help in making MIS an effective and successful one. 4.7 COMPONENTS OF MIS AND THEIR RELATIONSHIP A management information system is made up of five major components namely people, business processes, data, hardware, and software. All of these components must work together to achieve business objects. 3 "People - These are the users who use the information system to record. day to day business transactions. The users are usually qualified professionals such as accountants, human resource managers, etc. The [ department usually has the support staff who ensure that the system is running properly. Business Procedures ~ These are agreed upon best practices that guide the users and all other components on how to work efficiently. Business lures are developed by the people i.e. users, consultants, etc. Data - The recorded day to day business transactions are data for the organisation. For a bank, data is collected from activities such as deposits, withdrawals, etc.troduction to MIS ena eae To é .e — Hardware is made up of the aed “omputers 4 ices, etc. The hardware provid, yi ing devices pI es the computing power petworking © data. It also provides networking and Baha POW for pro’ os speeds up the processing of data into Pierre Be ae These are programs that run on the 7 re is broken down into two major categories namely Printers, hardware. The “oft System softwa: goftware ! re. System software refe re ions software. Sys! fers to the operat a Mac OS, and Ubuntu, ete. Applications fan Yet avs Software refers to ii lized software for accomplishing business tasks such as Poo program. banking, system, point of sale system, etc, Information for Design development decision making and documentation