FOURTH SEMESTER

MANAGEMENT INFORMATION SYSTEMS

Objective: To offer in depth knowledge on information systems in business and their

management
Unit I Management Information System – Concept, Need, Strategic role – Evolution of
Management Information System – Components of Management Information System –
Information flow

Unit II Data base management systems – Objectives and Components – Database design –
Creation and control – Recent trends in database

Unit III Developing information system – Planning, Designing and redesigning – Approaches for
system development – System analysis and Design – system Implementation and Maintenance

Unit IV Transaction processing and Support system – Transaction processing system – Office
automation systems – Decision support systems – Executive information systems – Artificial
intelligence and Expert systems

Unit V Functional Information systems – Production, Finance, Human resource and Marketing –
Managing information resources – Information Security – Control & Audit of Information
Systems
 UNIT I
MANAGEMENT INFORMATION SYSTEM

An Information System is a system that gathers data and disseminates information with the
sole purpose of providing information to its users.
The main object of an information system is to provide information to its users. Information
systems vary according to the type of users who use the system.
A Management Information System is an information system that evaluates, analyzes, and
processes an organization's data to produce meaningful and useful information based on which
the management can take right decisions to ensure future growth of the organization.

Information Vs Data
Data can be described as unprocessed facts and figures. Plain collected data as raw facts cannot
help in decision-making. However, data is the raw material that is organized, structured, and
interpreted to create useful information systems.
Data is defined as 'groups of non-random symbols in the form of text, images, voice
representing quantities, action and objects'.
Information is interpreted data; created from organized, structured, and processed data in a
particular context.

What is MIS?
MIS is the use of information technology, people, and business processes to record, store and
process data to produce information that decision makers can use to make day to day decisions.
MIS is the acronym for Management Information Systems. In a nutshell, MIS is a collection of
systems, hardware, procedures and people that all work together to process, store, and produce
information that is useful to the organization.
The three components of MIS provide a more complete and focused definition,
where Systemsuggests integration and holistic view, Information stands for processed data,
andManagement is the ultimate user, the decision makers.
Management information system can thus be analyzed as follows −

Management

Management covers the planning, control, and administration of the operations of a concern.
The top management handles planning; the middle management concentrates on controlling;
and the lower management is concerned with actual administration.

Information

Information, in MIS, means the processed data that helps the management in planning,
controlling and operations. Data means all the facts arising out of the operations of the concern.
Data is processed i.e. recorded, summarized, compared and finally presented to the management
in the form of MIS report.

System

Data is processed into information with the help of a system. A system is made up of inputs,
processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.

Definition

Management Information System or 'MIS' is a planned system of collecting, storing, and

disseminating data in the form of information needed to carry out the functions of management.

CONCEPT
The scope and purpose of MIS is better understood if each part of them is defined individually,
thus 
1. MANAGEMENT: Management has been define in process or activities that describe
what managers do in the operation for their organization plan, organize, initiate and
control operations. They plan by setting strategies and goals and selecting the best course
of action to achieve the goals. They organize the necessary tasks for the operational plan,
set these tasks up into homogenous groups and assign authority delegation; they control
the performance standards and avoiding deviation from standard.
The decision-making is a fundamental prerequisite of each of the foregoing process, the job of
MIS is facilitating decisions necessary for planning, organizing and controlling the work and
functions of the business so that specified goals of business are achieved. 
1. INFORMATION: Data must be distinguished from information and the distinction is
clear and important for present purpose. Data are facts and figures that are not currently
being used in a decision-making process and usually are taken from the historical records
that are recorded and filled without immediate intent to retrieve for decision-making. 
Information consists of data that have been retrieved, processed or otherwise used for
information or interference purpose, argument or as a basis forecasting or decision-making
regarding any business unit. Information is knowledge that one derives from facts for effective
functioning of systems placed in the right context with the purpose of reducing uncertainty
regarding the alternative courses of action as they are based on description and measurement of
attributes of various entities associated with the enterprise.
 
1. 3.       SYSTEM: The system can be described as a set of elements joined together for a
common objective. A subsystem is a part of a larger system with which one is concerned.
All systems for our purpose the organization is the system and the parts (divisions,
departments, functions, unit etc) are the subsystem.
 
The system concept of MIS is, therefore one of optimizing the output of the organization by
connecting the operating subsystems through the medium of information exchange.
 
NEED
The need for MIS
The following are some of the justifications for having an MIS system
 Decision makers need information to make effective decisions. Management
Information Systems (MIS) make this possible.
 MIS systems facilitate communication within and outside the organization –
employees within the organization are able to easily access the required information for
the day to day operations. Facilitates such as Short Message Service (SMS) & Email
make it possible to communicate with customers and suppliers from within the MIS
system that an organization is using.
 Record keeping – management information systems record all business transactions of
an organization and provide a reference point for the transactions.

ROLE OF MANAGEMENT INFORMATION SYSTEM (STRATEGIC ROLE)

The role of the MIS in an organization can be compared to the role of heart in the body. The
information is the blood and MIS is the heart. In the body the heart plays the role of supplying
pure blood to all the elements of the body including the brain. The heart work faster and supplies
more blood when needed. It regulates and controls the incoming impure blood, processed it and
sends it to the destination in the quantity needed. It fulfills the needs of blood supply to human
body in normal course and also in crisis.
The MIS plays exactly the same role in the organization. The system ensures that an appropriate
data is collected from the various sources, processed and send further to all the needy
destinations. The system is expected to fulfill the information needs of an individual, a group of
individuals, the management functionaries: the managers and top management.
Here are some of the important roles of the MIS:
i. The MIS satisfies the diverse needs through variety of systems such as query system, analysis
system, modeling system and decision support system.
ii. The MIS helps in strategic planning, management control, operational control and transaction
processing. The MIS helps in the clerical personal in the transaction processing and answers the
queries on the data pertaining to the transaction, the status of a particular record and reference on
a variety of documents.
iii. The MIS helps the junior management personnel by providing the operational data for
planning, scheduling and control , and helps them further in decision-making at the operation
level to correct an out of control situation.
iv. The MIS helps the middle management in short term planning, target setting and controlling
the business functions. It is supported by the use of the management tools of planning and
control.
v. The MIS helps the top level management in goal setting, strategic planning and evolving the
business plans and their implementation.
vi. The MIS plays the role of information generation, communication, problem identification and
helps in the process of decision-making. The MIS, therefore, plays a vital role in the
management, administration and operation of an organization.

EVOLUTION OF MANAGEMENT INFORMATION SYSTEM

The Five Eras of MIS

In order to make sense of the evolution of management information systems, it's helpful to
break down the history into four or five eras.
First Era (mid-1960s to mid-1970s)
During the first years of computerized MIS, information systems were centralized and
concerned solely with governance and the needs of management. Most information systems
and their reports were under the control of accounting departments. Technology included third-
generation mainframe computers, like the IBM 360. Languages included Assembler, Fortran,
COBO and, Database e. Ethernet networks were developed during this time.
Second Era (mid-1970s to mid-1980s)
While MIS was still mainly concerned with governance and the needs of management, more
departments were beginning to benefit from the technology. In many companies, steering
committees and user-led initiatives determined the shape and scope of additional IS projects.
Technology included the first personal computers (PCs), minicomputers and mid-range
computers.
Third Era (mid-1980s to late 1990s)
During the third era, centralized information systems began to spread out and information
became decentralized. Each department had its own computer system. Managing information
was often referred to as "herding cats." It was during this era that a new position emerged in
many companies to oversee the acquisition and management of multiple information systems:
the Chief Information Officer, or CIO. Technology during this era included internetworking
and the beginning of the internet.
Fourth Era (late 1990s to today)
During the current era, information systems are still tightly tied to governance and
management, however the systems are widely distributed, within the reach of nearly every
employee who needs it across multiple platforms. Many information systems are integrated
between different companies, so that a client business can readily access supplier information
and their customers, in turn, can access that information. Technology now includes social
media, search engines and ubiquitous computing through a variety of platforms including
laptops, tablets and smartphones.
Fifth Era (today forward)
The increase in internet bandwidth over recent years has led to a substantial reliance on cloud
computing. As a result, some maintain that this marks a new era in worker's ascendancy and
that we are now in a fifth era for management information systems. Today, practically any
employee is now in a position to make informed decisions with tools that are readily available
across multiple platforms. Furthermore, the line between who produces and who consumes
MIS information is increasingly blurred.
Evolution of Management due to Technology
This could mark the end of controlling top-down management styles, which are being replaced
by more autonomy of employees. Management expert Peter Druker predicted this as an
inevitable back in 1954 in his theory on Management by Objectives. In this paradigm, top-
down management can actually harm a company because, being in the trenches, employees are
more and more likely to understand customer needs better than their supervisors and, being in
specialized fields, may have more understanding of the nuts and bolts behind a business than
those supervisors.
“Knowledge workers have to manage themselves,” Drucker said. “They have to have
autonomy.”
COMPONENTS OF MANAGEMENT INFORMATION SYSTEM
Components of MIS
The major components of a typical management information system are;
 People – people who use the information system
 Data – the data that the information system records
 Business Procedures – procedures put in place on how to record, store and analyze data
 Hardware – these include servers, workstations, networking equipment, printers, etc.
 Software – these are programs used to handle the data. These include programs such as
spreadsheet programs, database software, etc.

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.
People – these are the users who use the information system to record the day to day business
transactions. The users are usually qualified professionals such as accountants, human resource
managers, etc. The ICT 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 procedures are developed by the people i.e.
users, consultants, etc.
Data – the recorded day to day business transactions. For a bank, data is collected from activities
such as deposits, withdrawals, etc.
Hardware – hardware is made up of the computers, printers, networking devices, etc. The
hardware provides the computing power for processing data. It also provides networking and
printing capabilities. The hardware speeds up the processing of data into information.
Software – these are programs that run on the hardware. The software is broken down into two
major categories namely system software and applications software. System software refers to
the operating system i.e. Windows, Mac OS, and Ubuntu, etc. Applications software refers to
specialized software for accomplishing business tasks such as a Payrollprogram, banking system,
point of sale system, etc.

INFORMATION FLOW
An Information System is a system that gathers data and disseminates information with
the sole purpose of providing information to its users.
The main object of an information system is to provide information to its users. Information
systems vary according to the type of users who use the system.
A Management Information System is an information system that evaluates, analyzes,
and processes an organization's data to produce meaningful and useful information based on
which the management can take right decisions to ensure future growth of the organization.
Information is interpreted data; created from organized, structured, and processed data in a
particular context.

Information can be classified in a number of ways

Classifiication by Characteristic
Based on Anthony's classification of Management, information used in business for
decisionmaking is generally categorized into three types:
 Strategic Information: Strategic information is concerned with long term policy
decisions that defines the objectives of a business and checks how well these
objectives are met. For example, acquiring a new plant, a new product, diversification
of business etc., comes under strategic information.
 Tactical Information: Tactical information is concerned with the information needed
for exercising control over business resources, like budgeting, quality control, service
level, inventory level, productivity level etc.

Operational Information: Operational information is concerned with plant/business

level information and is used to ensure proper conduction of specific operational tasks
as planned/intended. Various operator specific, machine specific and shift specific jobs
for quality control checks comes under this category.
Classification by Application
In terms of applications, information can be categorized as:
 Planning Information: These are the information needed for establishing standard
norms and specifications in an organization. This information is used in strategic,
tactical, and operation planning of any activity. Examples of such information are time
standards, design standards.
 Control Information: This information is needed for establishing control over all
business activities through feedback mechanism. This information is used for
controlling attainment, nature and utilization of important processes in a system. When
such information reflects a deviation from the established standards, the system
should induce a decision or an action leading to control.
 Knowledge Information: Knowledge is defined as "information about information".
Knowledge information is acquired through experience and learning, and collected
from archival data and research studies.
 Organizational Information: Organizational information deals with an
organization's environment, culture in the light of its objectives. Karl Weick's
Organizational Information Theory emphasizes that an organization reduces its
equivocality or uncertainty by collecting, managing and using these information
prudently. This information is used by everybody in the organization; examples of such
information are employee and payroll information.
 Functional/Operational Information: This is operation specific information. For
example, daily schedules in a manufacturing plant that refers to the detailed
assignment of jobs to machines or machines to operators. In a service oriented
business, it would be the duty roster of various personnel. This information is mostly
internal to the organization.
 Database Information: Database information construes large quantities of
information that has multiple usage and application. Such information is stored,
retrieved and managed to create databases. For example, material specification or
supplier information is stored for multiple users.
Information is a vital resource for the success of any organization. Future of an organization
lies in using and disseminating information wisely. Good qality information placed in right
context in right time tells us about opportunities and problems well in advance.
Good quality information: Quality is a value that would vary according to the users and uses
of the information.
According to Wang and Strong, following are the dimensions or elements of Information
Quality:
 Intrinsic: Accuracy, Objectivity, Believability, Reputation
 Contextual: Relevancy, Value-Added, Timeliness, Completeness, Amount of
information
 Representational: Interpretability, Format, Coherence, Compatibility
 Accessibility: Accessibility, Access security
Various authors propose various lists of metrics for assessing the quality of information. Let
us generate a list of the most essential characteristic features for information quality:
 Reliability - It should be verifiable and dependable.
 Timely - It must be current and it must reach the users well in time, so that important
decisions can be made in time.
 Relevant - It should be current and valid information and it should reduce
uncertainties.
 Accurate - It should be free of errors and mistakes, true, and not deceptive.
 Sufficient - It should be adequate in quantity, so that decisions can be made on its
basis.
 Unambiguous - It should be expressed in clear terms. In other words, in should be
comprehensive.
 Complete - It should meet all the needs in the current context.
 Unbiased - It should be impartial, free from any bias. In other words, it should have
integrity.
 Explicit - It should not need any further explanation.
 Comparable - It should be of uniform collection, analysis, content, and format.
 Reproducible - It could be used by documented methods on the same data set to
achieve a consistent result.
3. MIS ─ Quality of Information
Information processing beyond doubt is the dominant industry of the present century.
Following factors states few common factors that reflect on the needs and objectives of the
information processing:
 Increasing impact of information processing for organizational decision making.
 Dependency of services sector including banking, financial organization, health care,
entertainment, tourism and travel, education and numerous others on information.
 Changing employment scene world over, shifting base from manual agricultural to
machine-based manufacturing and other industry related jobs.
 Information revolution and the overall development scenario.
 Growth of IT industry and its strategic importance.
 Strong growth of information services fuelled by increasing competition and reduced
product life cycle.
 Need for sustainable development and quality life.
 Improvement in communication and transportation brought in by use of information
processing.
 Use of information processing in reduction of energy consumption, reduction in
pollution and a better ecological balance in future.
 Use of information processing in land record managements, legal delivery system,
educational institutions, natural resource planning, customer relation management
and so on.
 Information is needed to survive in the modern competitive world.
 Information is needed to create strong information systems and keep these systems
up to date.
Implications of Information in Business
Information processing has transformed our society in numerous ways. From a business
perspective, there has been a huge shift towards increasingly automated business processes
and communication. Access to information and capability of information processing has helped
in achieving greater efficiency in accounting and other business processes.
A complete business information system accomplishes the following functionalities:
4. Collection and storage of data.
 Transform these data into business information useful for decision making.
 Provide controls to safeguard data.
 Automate and streamline reporting.
The following list summarizes the five main uses of information by businesses and other
organizations:
 Planning - At the planning stage, information is the most important ingredient in
decision making. Information at planning stage includes that of business resources,
assets, liabilities, plants and machineries, properties, suppliers, customers,
competitors, market and market dynamics, fiscal policy changes of the Government,
emerging technologies, etc.
 Recording - Business processing these days involves recording information about
each transaction or event. This information is collected, stored, and updated regularly
at the operational level.
 Controlling - A business need to set up an information filter, so that only filtered data
is presented to the middle and top management. This ensures efficiency at the
operational level and effectiveness at the tactical and strategic level.
 Measuring - A business measures its performance metrics by collecting and analyzing
sales data, cost of manufacturing, and profit earned.
 Decision-making - MIS is primarily concerned with managerial decision-making,
theory of organizational behavior, and underlying human behavior in organizational
context. Decision-making information includes the socio-economic impact of
competition, globalization, democratization, and the effects of all these factors on an
organizational structure.
In short, this multi-dimensional information evolves from the following logical foundations:
 Operations research and management science
 Theory of organizational behavior
 Computer science:
o Data and file structure
o Data theory design and implementation
o Computer networking
o Expert systems and artificial intelligence
 Information theory
Following factors arising as an outcome of information processing help speed up of business
events and achieve greater efficiency:
 Directly and immediate linkage to the system
 Faster communication of an order
 Electronic transfer of funds for faster payment
 Electronically solicited pricing (helps in determining the best price)
MIS Need for Information Systems
Managers make decisions. Decision-making generally takes a four-fold path:
 Understanding the need for decision or the opportunity,
 Preparing alternative course of actions,
  Evaluating all alternative course of actions,
 Deciding the right path for implementation.
MIS is an information system that provides information in the form of standardized reports
 and displays for the managers. MIS is a broad class of information systems designed to
 provide information needed for effective decision making.
Data and information created from an accounting information system and the reports
generated thereon are used to provide accurate, timely and relevant information needed for
effective decision making by managers.
Management information systems provide information to support management decision
making, with the following goals:
 Pre-specified and preplanned reporting to managers.
 Interactive and ad-hoc support for decision making.
 Critical information for top management.
MIS is of vital importance to any organization, because:
 It emphasizes on the management decision making, not only processing of data
generated by business operations.
 It emphasizes on the systems framework that should be used for organizing
information systems applications.