MIS for Management Decisions

UNIT I
Management Information System
Unit I
Definition of Management information system-MIS support for planning organizing and controllingstructure of MIS-Information for decision making
Concept of system-Characteristic of system-System classifications-Categories of information system
strategic information system and competitive advantage
Unit II
Computers and information processing-Classification of computer-Input device-Output device-Storage
device-Batch and online Processing-Hardware, Software Date base Management system
Unit III
System analysis and design-SDLC-Role of system analysis-Functional information system-Personnel,
Production, Material and marketing
Decision support system-Definitions-group decisions support system-Business process out sourcesdefinition and functions
Unit IV
Introduction to Tally - Introduction to software accounting. Computer Application through Accounting
Package Tally - (Latest Version) Preparation of following records on Tally (with inventory) (A)
Creation of company, Group, Ledger Accounts, Feeding of Accounting data Receipts, Payments,
Purchase, Sale, Contra, Journal, Credit Note and Debit Note. (B) Inventory Information Groups, Items
and Valuation. (C) Generation of various Accounting Reports - Creating accounts - Feeding opening
balances - Chart of accounts - Capital Current assets Current liabilities Investments Loans
Miscellaneous Sales Purchase Direct / Indirect income / expenses
Unit V
Purchase and Sales - Purchase / Sales order - Receipt note - Purchase / Sales bills - Debit / Credit note
Journal, Voucher , VAT Bills, service tax , FBT applications,
Reference:
1. Management Information System Sadagopan
2. 2)Management Information System CSV Murthy
3. Tally Financial Accounting Program Current Volume Tally Press
4. Tally for Beginners Tally Press
5. Tally9-Slef Study Training Kit www.swayam-education.com
K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Faculty, SRM Vivekanada College, Mylapore
UNIT I

The term Management Information Systems can be bifurcated into 3 Like Management,
Information, and systems.
What is Management? What are the needs for good Management?
Management is an important activity of an organisation which controls the entire
organisation and is an art of getting things done by others. It involves Planning,
Organising, Staffing, Controlling, Decision making, Directing, and Co-ordinating the
entire activities of an organisation. Without proper management, efficient performance of
an organization is not at all possible. Attainment of ultimate goal of Maximising the profit
and attaining at most efficiency in all activities will not be possible.
What is Information?
Information/Data is automatically generated with the day to day functioning of an
organisation. They will be recorded properly for future reference. So, Information/Data
and Organisation are inseparable. Information is the life blood of an organisation.
Without proper information no activity can be performed in an organisation and ultimate
control is not at all possible.
What is the difference in between Data and Information?
Data is the generated information in an organisation. It is the Basic information and just
by seeing the data we cannot infer anything. Mere salary particulars will not be sufficient
to know the Gross pay, Net Pay, Allowances, Taxable Income etc. Some more details of
calculation etc are essential. Information is a full-fledged data which will be in a detailed
report form. By seeing the information or report one can come to various conclusions.
So, Information is the processed data whereas the data is the raw information by seeing
that one cannot understand anything.
Data
Processing
Information
Professor Ray R. Larson of the School of Information at the University of California, Berkeley
provides an Information Hierarchy, which is:
w Data - The raw material of information
w Information - Data organized and presented by someone
w Knowledge - Information read, heard, or seen, and understood
w Wisdom - Distilled and integrated knowledge and understanding
Scott Andrews' explains Information Continuum as follows:
w Data - A Fact or a piece of information, or a series thereof
w Information - Knowledge discerned from data
UNIT I
w Business Intelligence - Information Management pertaining to an organization's policy or

decision-making, particularly when tied to strategic or operational objectives
Information Vs Data:
w Data is 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.
w Data is defined as 'groups of nonrandom symbols in the form of text, images, voice
representing quantities, action and objects'.
w Information is interpreted data; created from organized, structured and processed data
in a particular context
The peculiarity of the information available to us:
w The information we have is not what we want,
w The information we want is not the information we need,
w The information we need is not available.
Information is a Resource because
w It is scarce
w It has a cost
w It has alternative uses
w There is an opportunity cost factor involved if one does not process information
What is a System?
A system is a set of components (subsystems or elementary parts) that operate together to
achieve a common objective (or multiple objective). A transport system consists of components
like road transport, rail transport, airways transport, seaway transport etc. Road Transport
system consists of Two Wheeler, Three Wheeler (Autos), four wheeler like car/delivery
vans/taxi etc, six wheelers like Bus, Lorry and Heavy trucks etc. Nervures System, Digestion
System, Computer System, Payroll System, Inventory System, Economic System etc.
Systems are created to solve problems. Systems approach is an organized way of dealing with a
problem.
What is Management Information System?
Using of Information System (either manual or automated (Computerised)) for
Management is called as Management Information System
A management information system (MIS) is a system or process that provides the
information necessary to manage an organization effectively.
MIS and the information it generates are generally considered essential components of
prudent and reasonable business decisions.

UNIT I
MIS assist managers in decision making and problem solving. They use the data resulting
from Transaction Processing System along with some other information that are developed
internally or externally.
MIS can be defined as follows:
1. The MIS is defined as a system which provides information support for decision making in
the organization.
2. The MIS is defined as an integrated system of man and machine for providing the
information to support the operations, the management and the decision making function in
the organization.
3. The MIS is defined as a system based on the database of the organization evolved for the
purpose of providing information to the people in the organization.
4. The MIS is defined as a Computer based Information System.
Thought there are a number of definitions, all of them converge on one single point, i.e., the MIS
is a system to support the decision making function in the organization. The difference lies in
defining the elements of the MIS. However, in todays world MIS a computerized .business
processing system generating information for the people in the organization to meet the
information needs decision making to achieve the corporate objective of the organization.
Management Information System or Management Information Services is pronounced as
separate letters, MIS which refers broadly to a computer-based system that provides managers
with the tools for organizing, evaluating and efficiently running their departments. In order to
provide past, present and prediction information, an MIS can include software that helps in
decision making, data resources such as databases, the hardware resources of a system, decision
support systems, people management and project management applications, and any
computerized processes that enable the department to run efficiently.
Within companies and large organizations, the department responsible for computer systems is
sometimes called the MIS department. Other names for MIS include IS (Information Services)
and IT (Information Technology).
For further understanding
A management information system (MIS) is a subset of the overall internal controls of a
business covering the application of people, documents, technologies, and procedures by
management accountants to solving business problems such as costing a product, service or a
business-wide strategy. Management information systems are distinct from regular
information systems in that they are used to analyze other information systems applied in
operational activities in the organization.
Academically, the term is commonly used to refer to the group of information management
methods tied to the automation or support of human decision making, e.g. Decision Support
Systems, Expert systems, and Executive information systems.

UNIT I
Various Definitions for MIS

?
An 'MIS' is a planned system of the collecting, processing, storing and disseminating data
in the form of information needed to carry out the functions of management. In a way it is
a documented report of the activities those were planned and executed.
According to Philip Kotler

ystem consists of people,
equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed,
timely, and accurate information to marketing decision makers."
The terms MIS and information system are often confused. Information systems include
systems that are not intended for decision making. The area of study called MIS is
sometimes referred to, in a restrictive sense, as information technology management.
That area of study should not be confused with computer science. IT service management
is a practitioner-focused discipline. MIS has also some differences with Enterprise
Resource Planning (ERP) as ERP incorporates elements that are not necessarily focused
on decision support.
"...research in the information systems field examines

more than the technological system, or just the social system, or even the two side by
side; in addition, it investigates the phenomena that emerge when the two interact."
A Management Information System is used to transform data into useful information as

needed to support managerial decision making with structured decisions (formerly called
programmed decisions) which are those that are based on predictable pattern of activity.
The typical MIS is based on 4 major component (M

a. Data Gathering
b. Data Entry
c. Data Transformation
d. Information Utilisation.
MIS is Right Information, To the right person, At the right place, At the right time, In the
right form, At the right cost
? A MIS is a network of communication channels and information processing centers
collecting information from its sources of origin.
a. Storing, updating, collecting and processing it.
b. Supplying the processed information to the various users managing the
organisation.
? It is an IS that displays two characteristics.
a. At least one level of vertical integration and
b. Feed back and control.
Misconception about MIS
1. Any computer based information system is MIS
2. Any reporting system is an MIS
3. MIS ia a philosophy and not any specific entity.
UNIT I
4.
5.
6.
7.
MIS ia a management technique

MIS is a bunch of technologies
MIS is an implementation of organizational systes and procedures.
MIS is a course on file structures.
Any computer based information system is MIS.

This is not true. MIS is the Information System used exclusively for taking some managerial
decisions. MIS is a tool to the management. So, we cannot call all IS as MIS.
? Any reporting system is an MIS

No. Reports generated generally may be used by all or by both external and internal users.
They need not be based on structured processing whereas MIS has certain fixed rules and
regulations and procedures based on scientific principles to generate its information.
? MIS is a philosophy and not any specific entity.
No. It is not just a philosophy alone. It provides necessary information to the management for
taking effective decisions. It involves data gathering, Processing and reporting activities
actually taking place.
? MIS is a management technique.
MIS is not a management technique but acts as an aid to the management to take right decision
at right time.
? MIS is a bunch of technologies
MIS is not a bunch of techniques but uses various techniques used by Financial Accounting,
Cost Accounting, Management Accounting and some other techniques to present the
information to the management to take correct decision.
? MIS is an implementation of organizational systems and procedures.
MIS is in no way connected to the organizational systems and procedures but uses them to
present meaningful and needy information to various levels of management.
? MIS is a course on file structures.
MIS is not at all a course on file structures. It uses TPS where the information will be recorded
on a day to day basis which is handled by Operational Level staffs. It does not directly deals
with files structures but uses the File Handling System or DBMS or RDBMS concepts for it
processing.
For further reading
Need for information and information processing in an Organisation.
?
Major portion of the official time in any organization, small or big, goes in data collection,
processing, documenting it to the people who are in need of it i.e., the Management.

UNIT I
That is why, a major portion of the overheads goes into this kind of unproductive work in
the organization. Every individual in an organization is continuously looking for some
information which is needed to perform his/her task.
The information is people-oriented and it varies with the nature of the people in the
organization. The difficulty in handling this multiple requirement of the people is due to a
couple of reasons.
1. The information is a processed product to fulfill an imprecise need of the people.
2. It takes time to search the data and may require a difficult processing path.
3. It has a time value and unless processed on time and communicated, it has no value.
4. The scope and the quantum of information is individual-dependent and it is difficult
to conceive the information as a well-defined product for the entire organization.
5. Since the people are instrumental in any business transaction, a human error is
possible in conducting the same. Since a human error is difficult to control, the
difficulty arises in ensuring a hundred per cent quality assurance of information in
terms of completeness, accuracy, validity, timeliness and meeting the decision
making needs.
In order to get a better grip on the activity of information processing, it is necessary to have a
formal system which should take care of the following points:
? Handling of a voluminous data.
? Confirmation of the validity of data and transaction.
? Complex processing of data and multidimensional analysis.
? Quick search and retrieval.
? Mass storage.
? Communication of the information system to the user on time.
? Fulfilling the changing needs of the information.
The management information system uses computers and communication technology to deal
with these points of supreme importance.
Need for MIS
MIS is based on structured decisions generated from TPS.
Without MIS, Management may be finding it very difficult to take various day to
day decisions and some strategic decisions because now a days business has
become global and there is hectic competition from both internal as well as from
external. The management is in tire need of taking correct decision at correct
timing. Otherwise, it may loose its competitive edge and thrown out of the market
which may affect so many persons connected to the organization. So, to keep
itself in the market and to face competitions, a management has to take various
decisions based on right data available at right time from right sources.
Decision making is very important for various managerial functions like Planning,
Organising, Staffing, Coordinating & Directing, and Controlling. The management
UNIT I

has to take decision with regard to financing, marketing, production, personnel,
facing the competitors, planning for future course of action etc.
ROLE OF THE MANAGEMENT INFORMATION SYSTEM IN AN ORGANISATION

?
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 works
faster and supplies more blood when needed. It regulates and controls the incoming impure
blood, processes 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 sent 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 the top management.
The MIS satisfies the diverse needs through a variety of systems such as Query Systems,
Analysis Systems, Modeling Systems and Decision Support Systems
The MIS helps in Strategic Planning, Management Control, Operational Control and
Transaction Processing.
The MIS helps the clerical personnel in the transaction processing and answers their
queries on the data pertaining to the transaction, the status of a particular record and
references on a variety of documents.
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
operations level to correct an out of control situation.
The MIS helps the middle management in short them planning, target setting and
controlling the business functions. It is supported by the use of the management tools of
planning and control.
The MIS helps the top management in goal setting, strategic planning and evolving the
business plans and their Implementation.
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 operations of an
organization.
IMPACT OF THE MANAGEMENT INFORMATION SYSTEM
?
Since the MIS plays a very important role in the organization, it creates an impact on the
organizations functions, performance and productivity.
The impact of MIS on the functions is in its management.

UNIT I

w With a good support, the management of marking, finance, production and personnel
become more efficient.
w The tracking and monitoring of the functional targets becomes easy.
w The functional, managers are informed about the progress, achievements and shortfalls
in the probable trends in the various aspects of business. This helps in forecasting and
long- term perspective planning.
w The managers attention is brought to a situation which is exceptional in nature,
inducing him to take an action or a decision in the matter.
w A disciplined information reporting system creates a structured data and a knowledge
base for all the people in the organization. The information is available in such a form
that it can be used straight away or by blending analysis, saving the managers valuable
time.
The MIS creates another impact in the organization which relates to the understanding of
the business itself. The MIS begins with the definition of a data entity and its attributes. It
uses a dictionary if data, entity and attributes, respectively, designed for information
generation in the organization. Since all the information system use the dictionary, there is
common understanding of terms and terminology in the organization brining clarity in the
communication and a similar understanding an even of the organization.
The MIS calls for a systemization of the business operation for an affective system design.
A well designed system with a focus on the manger makes an impact on the managerial
efficiency. The fund of information motivates an enlightened manger to use a variety of
tools of the management. It helps him to resort to such exercises as experimentation and
modeling. The use of computers enables him to use the tools techniques which are
impossible to use manually. The ready-made packages make this task simpler. The impact
is on the managerial ability to perform. It improves the decision making ability
considerably.
Since the MIS works on the basic systems such as transaction processing and databases, the
drudgery of the clerical work is transferred to the computerized system, relieving the human
mind for better work. It will be observed that a lot of manpower is engaged in this activity
in the organization. It you study the individuals time utilization and its application; you
will find that seventy per cent of the time is spent in recording, searching, processing and
communication. This is a large overhead in the organization. The MIS has a direct impact
on this overhead. It creates an information- based work culture in the organization.
MANAGEMENT INFORMATION SYSTEM AND COMPUTER

?
Translating the real concept of the MIS into reality is technically, an infeasible
proposition unless computers are used. The MIS relies heavily on the hardware and
software capacity of the computer and its ability to process, retrieve communicate with no
serious limitations.

UNIT I
The variety of the hardware having distinct capabilities makes it possible to design the
MIS for a specific situation. For example, if the organization needs a large database and
very little processing, a computer system is available for such a requirement. Suppose the
organization has multiple business location at long distances and if the need is to bring the
data at one place, process, and then send the information to various location, it is possible to
have a computer system with a distributed data processing capability. If the distance is too
long, then the computer system can be hooked through a satellite communication system.
The ability of the hardware to store data and process it at a very fast rate helps to deal with
the data volumes, its storage and access effectively. The ability of the computer to sort and
merge helps to organize the data in a particular manner and process it for complex lengthy
computations. Since the computer is capable of digital, graphic, word image, voice and text
processing, it is exploited to generate information and present it in the form which is easy to
understand for the information user.
The ability of a computer system to provide security of data brings a confidence in the
management in the storage o data on a magnetic media in an impersonal mode. The
computer system provides the facilities such as READ ONLY where you cannot delete to
UPDATE. It provides an access to the selected information through a password and layered
access facilities. The confidence nature of the data and information can be maintained in a
computer system. With this ability, the MIS become a safe application in the organization.
The software, an integral part of a computer system, further enhances the hardware
capability. The software is available to handle the procedural and nonprocedural data
processing. For example, if you want to use a formula to calculate a certain result, an
efficient language is available to handle the situation. If you are not use a formula but has to
resort every time to a new procedure, the nonprocedural languages are available.
The software is available to transfer the data from one computer system to another.
Hence, you can compute the results at one place and transfer them to a computer located at
another place for some other use. The computer system being able to configure to the
specific needs helps to design a flexible MIS.
The advancement in computers and the communication technology has the distance,
speed, volume and complex computing an easy task. Hence, designing the MIS for a
specific need and simultaneously designing a flexible and open system becomes possible,
thereby saving a lot of drudgery of development and maintenance and maintenance of the
system. The concept of user . friendly systems and the end user computing is possible,
making information processing a personalized function. However, the application of the
management principles and practices in todays complex business world is possible only
when the MIS is based on computer system support.
MANAGEMENT INFORMATION SYSTEM AND ACADEMICS

The managements information system draws a lot of support from other academic disciplines too.

10
UNIT I
?
The foundation of MIS is the management theory. It uses the principles and practices of
management while designing the system, ant gives due regard to the theory of
organizational behavior.
It considers the human mind as a processor of information. While designing the report
format and forming communication channels, MIS takes into account the behavior of the
manager as an individual and in a group. It gives due regard to the personal factors such as
bias, thinking with a fixed frame of reference, risk aversion, strengths and weaknesses.
Another area of academics is operational research. The operational research is used for
developing the models of management and they are then incorporated in the MIS as
decision support systems. The inventory control, queuing theory, and resource
programming are used in the MIS as decision support systems. The network theory is used
for planning and controlling large projects. The application of PER / CPM to a project
planning is now easily possible through the MIS support.
In the area of accounting application, it uses the accounting principles to ensure that
the data is correct and valid. It uses the principles of double entry bookkeeping for
balancing the accounts. It uses the accounting methodology for generating a trial balance
sheet and other books of accounts.
The MIS uses the communication theory in a significant manner. The principle of
feedback is used while designing analysis. While designing the report format, attention is
paid to avoid noise and distortions in the communication process.
The MIS relies heavily on the decision methodology. It uses different mathematical
techniques to handle the situation of decision making uses the method of decision- making
under certainty for decision- making and action.
The MIS is based on database structures, viz .hierarchical, network and relational
database have roots in the mathematics and the set theory.
The MIS becomes rich in content and more useful when it becomes more and more a
decision- making or decision- support system. This is possible when it builds decision
making systems in MIS which in turn is possible if it draws tools, techniques, methods,
rules and principles from pure and application science, and use them as an integral part of
the system. The MIS draws data from its own source and uses it in the application of a
variety of tools and techniques to solve the management, mathematics, and accounting.
Psychology, communication theory, operations research and probability theory for building
processes, methods, and decision support systems in designing business application.
MIS AND THE USER

Every person in the organization is a user of the MIS. The people in the organization operate at all
levels in the hierarchy. A typical user is a clerk, an assistant, an officer, an executive or a manager.
Each of them has a specific task and a role to play in the management of business. The MIS caters
to the needs of all persons.
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UNIT I
The main task of a clerk is to search the data, make a statement and submit it to the higher level. A
clerk can use the MIS for a quick search and reporting the same to higher level. An assistant has
the task of collecting and organizing the data, and conducting a rudimentary analysis of integrating
the data from different and disciplines to analyze it and make a critical comment if anything
adverse is found.
The MIS offers the methods and facilities to integrate the data and report the same in a proper
format. An executive plays the role of a decision maker. He is in of responsibility and
accountability a position of a planner and a decision maker. He is responsible for achieving the
target and goals of the organization. The MIS provides facilities to analyze the data and offers the
decision support systems to perform the task of execution. The MIS provides an action oriented
information.
The manager has a position of responsibility and accountability for the business results. His
management role expands beyond his management function. He is a strategist and a long-term
planner. He is a person with a foresight, an analytical ability and is expected to use these abilities
in the functions of top management. The MIS provides information in a structured or unstructured
format for him to react. The MIS caters to his constant changing needs of information. The user of
the MIS is expected to be a rational person and the design of the MIS is based on this assumption.
However, in reality the impact created on individuals by MIS is difficult to explain. The nature of
the impact in a few cases is negative. However, this negative impact can be handled with proper
training and counseling.
It is observed that at lower level, is a sense of insecurity. As the MIS takes away the drudgery of
search, collection, writing and reporting the data, the work vacuum, so created is not easily filled,
thus creating a sense of insecurity. To some extent the importance of the person is also lost, giving
rise to a fear of non-recognition in the organization.
At the level of an officer and an executive, the MIS does the job the of data manipulation and
integration. It analyses the data in a predetermined manner. This means that the knowledge of
business is transferred from an individual to the MIS and is made available to all in the
organization. This change arising out of the MIS creates a sense of being neglected for knowledge,
information and advice. The psychological impact is larger if the person is not able to cope up with
this change by expanding or enriching the job and the position held by him.
The manager holding a position in the top or middle management suffers from fear of challenge
and exposure. The MIS makes these competitors more effective as they have access to the
information and have an ability to interpret. This leads to a situation where he is afraid that that his
position, decision and defense will be challenged and may be proved wrong sometime. The risk of
adverse exposure to the higher management also increases. The effects so far pointed out are all
negative and they are seen only in few cases.
The positive effects on the individuals at all levels are that they have become more effective
operators. The time and energy which was spent earlier in unproductive work is now applied for a
productive work. Some are able to use their analytical skills and knowledge with the in formation
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UNIT I
support for improving their position in the organization. Managers, having improved their decision
. making ability, are able to handle the complex situations with relative ease. Some are benefited
by improving their performance and being held in high esteem by the higher management.
The enterprising managers are able to use the systems and the models for trying out a Number of
alternatives in a given problem situation. The impact of the MIS on people
Of the organization is phenomenal as it has made the same body of people collectively more
effective and productive.
The recent major technological advances in communication such as Multimedia, Imaging.
Graphical User Interfaces (GUI), Internet, Web etc. and the ability to access the data stored at
different locations on the variety hardware of platforms would make MIS more attractive and
efficient proposition. An intelligent user of information can demonstrate the ability of decision
making, since his manipulative capability is considerably increased, with the information now
being available on his desktop.
Through the MIS, the information can be used as a strategic weapon to counter the threats to
business, make business more competitive, and bring about the organizational transformation
through integration. A good MIS also makes an organization seamless by removing all the
communication barriers.
The Role of MIS Executive

The role of the MIS Executive:
Systems Planning
Data Center Management & Operations
Management of Remote Equipment
Identification of Opportunities for New Systems
Systems Analysis, Design, and Construction of New Systems
Distributed Systems:
The migration of equipment to user areas and control

(selection, purchase, and ownership). Standards sometimes set by IS department
Knowledge Users: Users take on increased responsibility. Identify applications,

and conduct systems analysis and design.
Better Applications: More specific, user friendly, functional, lower price, readily
available, and self training. Results: less need for programmers, IS head count
and budget decrease as a result.
Outsourcing:
Other, external organizations taking over the management and

control of the data centers. Results:
cost reductions
head count reductions
budget reductions.

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UNIT I
Objectives of MIS
To provide requisite information support for managerial functions within the

organization.
To make available, right information at the right place at the right time at the lower
cost.
To ensure that wrong and unwanted information is not generated.

Each MIS objective must be back to a company objective i.e., everything done by the MIS
department is in support of the company business.
Basic components of a Computer-based Information System are:
& People
& Computer Network
& Process
& Data
& Hardware
& Software
Basic Components of MIS
The Operating Components of an MIS
A Physical Components Hardware, Software, Database, Procedures, Operating

Personnel, Processing Functions.
A Process Functions Process Transaction, Master File Maintenance, Report

Producing, Inquiries processing and Interactive Support Applications
A Output for Users Transaction documents or screens, preplanned reports, Pre

planned inquiry responses, ad hoc reports and inquiry responses, user machine
dialog results.
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UNIT I
Functions of MIS
MIS can be classified as performing three functions:
1. To generate reports-for example, financial statements,
inventory status reports, or performance reports needed for
routine or non-routine purposes by collecting data, Storing
and processing data and presenting the information to
mangers.
2. To answer what-if questions asked by management. For
example, questions such as "What would happen to cash
flow if the company changes its credit term for its
customers?" can be answered by MIS. This type of MIS can
be called Simulation.
3. To support decision making. This type of MIS is
appropriately called Decision Support System (DSS). DSS attempts to integrate the
decision maker, the data base, and the quantitative models being used.
Manual Vs. Computerised MIS
Manual MIS
Computerised MIS
Oldest and earliest form of processing data.

Still, this dominates.
Modern form of data processing using

computer hardware and software.
People receive data by seeing or hearing,

Stored in bring and Output in the form of oral
or writing the reports or by physical actions.
Computer receives data from input

storage devices, processes with
powerful micro processors and output
are supplied through various storage
devices or printers.
Human brain is having powerful storage

capacity but tend to forget when not used
frequently. Retrival of information is also
some what slower but having individuality.
Computers doesnt have that amout of

storage capcity but is very fast in
retrieving
the
information
and
presenting. The computers are artificial
and you must instruct the computer to
do any activity for you.
Brain is doing all processing job, Comparing

and outputting the results in a pre-assigned
manner.
Central Processing unit I doing all

processing
job,
comparing
and
outputting the results as given in the set
of instructions ie., programs
Processing is very slow and not free from

errors due to fatigue and mental strain.
Processing and information retrieval is

very fast. Computer will never mistake
while processing data so long your
software is accurate and solves your

15
UNIT I

need. So, prior to use software you
must do through testing of your
software, then only the results can be
presented to the management.
Human participation in data processing is inevitable. For making the decision on the basis of the
computer supplied data, only human brain has to take the decision because the computers lack
individuality and reasoning. It cannot choose in between different alternatives. For faster
processing only we can use computers. More over computerized reports and report through
printers will have nice appearance which is lacking in manual system. So, both human brain and
computers are complimentary in nature.
Different MIS Processes?
The MIS implementation process involves a number of sequential steps (Murdick and Ross,
1975):
1. First establish management information needs and formulate broad systems objectives
so as to delineate important decision areas (e.g., general management, financial
management or human resources management). Within these decision areas there will be
factors relevant to the management decision areas, e.g., general management will be
concerned about its relationship with the managing board, institute-client relationships and
information to be provided to the staff. This will then lead the design team to ask what
information units will be needed to monitor the identified factors of concern. Positions or
managers needing information for decision making will be identified.
2. Develop a general description of a possible MIS as a coarse design. This design will
have to be further refined by more precise specifications. For efficient management of
information processing, the MIS should be based on a few databases related to different
sub-systems of the organization.
3. Once the information units needed have been determined and a systems design developed,
decide how information will be collected. Positions will be allocated responsibility for
generating and packaging the information.
4. Develop a network showing information flows.
5. Test the system until it meets the operational requirements, considering the
specifications stipulated for performance and the specified organizational constraints.
6. Re-check that all the critical data pertaining to various sub-systems and for the
organization as a whole are fully captured. Ensure that information is generated in a timely
manner.
7. Monitor actual implementation of the MIS and its functioning from time to time.
The strategies for determining MIS design
MIS design should be specific to an organization, respecting its age, structure, and operations.
Six strategies for determining MIS design have been suggested by Blumenthal (1969):
1. Organization-chart approach
Using this approach, the MIS is designed based on the traditional functional areas, such as
finance, administration, production, R&D and extension. These functional areas define
current organizational boundaries and structure.
2. Integrate-later approach
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UNIT I
3.
4.
5.
6.
Largely a laissez faire approach, it does not conform to any specified formats as part of an
overall design. There is no notion of how the MIS will evolve in the organization. Such an
MIS becomes difficult to integrate. In today's environment - where managers demand quick
and repeated access to information from across sub-systems - the integrate-later approach is
becoming less and less popular.
Data-collection approach
This approach involves collection of all data which might be relevant to MIS design. The
collected data are then classified. This classification influences the way the data can be
exploited usefully at a later stage. The classification therefore needs to be done extremely
carefully.
Database approach
A large and detailed database is amassed, stored and maintained. The database approach is
more and more accepted for two main reasons: first, because of data independence it allows
for easier system development, even without attempting a complete MIS; and, second, it
provides management with immediate access to information required.
Top-down approach
The top-down approach involves defining the information needs for successive layers of
management. If information required at the top remains relatively stable in terms of level of
detail, content and frequency, the system could fulfil MIS requirements (Zani, 1970). The
usefulness of this approach depends on the nature of the organization. It can be suitable for
those organizations where there is a difference in the type of information required at the
various levels.
Total-system approach
In this approach the interrelationships of the basic information are defined prior to
implementation. Data collection, storage and processing are designed and done within the
framework of the total system. This approach can be successfully implemented in
organizations which are developing.
Structure of MIS
Since there is no universally accepted demarcation/definition for structure of MIS, it is very
difficult to lay down the structure of MIS clearly. There are different approaches to define the
structure. Preciously we can infer the structure of MIS using following approaches.
Physical Components Approach like Hardware, Software, Database, Procedures,

Operating personnel, Input and Output.
Information System processing functions Approach like Master data

maintenance, Transaction Processing, Report Generation, Enquiry Processing and
processing, Interactive Support Applications
Output for Users Approach like Transaction output/Documents, Preplanned

reports, preplanned inquiry responses, Adhoc reports and inquiry responses &
User-Machine dialog results.
Decision Support Approach like Structured Decisions, Unstructured Decisions

and Semi-Structured Decisions.
Management Levels Activity Approach like Opersational Control, Management

Control, Strategic Planning.

17
UNIT I
Organisational Functional Approach like Sales & Marketing, Production,

Logistics, Personnel, Information Processing etc.,
Contemporary/Modern Approach for MIS
1. Technical Approaches of computer science, management science and operations

research with a practical orientation towards building systems and applications.
This approach emphasizes mathematically based models to study information
systems as well as the physical technology and formal capabilities of these
systems. Computer science is concerned with establishing methods of
computation, storage and access. Management science emphasizes on development
of models for decision making and management practices.
2. Behavioural Approach which is concerned with behavioural issues (raised by

society, economics, & psychology) that arise in the development of long term
maintenance of information systems, It is concerned with the issues like strategic
business integration, design, implementation, utilization and management. It
majorly focuses on the cognitive style of an individual. It also focuses on technical
solutions, changes in attitudes, management and organizational policies.
Contemporary approach found in MIS

Why Does Management Need Information?
Management needs to get information for:
Activity forecasting
Monitoring Performance
Customer satisfaction
Setting revenue goals
Market penetration
Cost
The information aids in decision making:
Setting earnings targets
Making business continuity plans
Compensation plans
Performance measures

18
UNIT I
w Now a days, the organization is becoming more and more complex

w Business is facing hectic competition from both national and international
w Since an organization is growing bigger and becoming complex, management
needs lot of information with utmost accuracy within the shortest duration or
by pressing a button.
w The management has to take timely action otherwise that organization will be
thrown out of the business.
w Internal and external forces also play an important role for the need of
information.
w Different levels of management need different types of information which are
to be provided in useful form.
w The advent of higher configuration and powerful systems and efficient
software, information can be processed and submitted to the management very
quickly.
How MIS helps the Managers?
MIS assist managers in decision making and problem solving. They use the data resulting from
Transaction Processing System along with some other information that are developed internally
or externally.
Impacts of MIS on the functioning of an organization.
MIS has a major impact on the functions of any organization. The organization derives benefits
from the systems in the following form:
? speedy access to information,
? interpretation of data,
? quick decisions,
? speedy actions,
? increased productivity and thereby increase in the profit
? reduced transaction cost
Since the MIS plays a very important role in the organization, it creates an impact on the
organizations functions, performance and productivity.
The impact of MIS on the functions is in its management.
With a good support, the management of marking, finance, production and personnel become
more efficient.

19
UNIT I
The tracking and monitoring of the functional targets becomes easy. The functional, managers
are informed about the progress, achievements and shortfalls in the probable trends in the
various aspects of business. This helps in forecasting and long- term perspective planning.
The managers attention is brought to a situation which is exceptional in nature, inducing him
to take an action or a decision in the matter.
A disciplined information reporting system creates a structured data and a knowledge base for
all the people in the organization. The information is available in such a form that it can be
used straight away or by blending analysis, saving the managers valuable time.
The MIS creates impact in the organization
MIS helps to understand the business itself.

The MIS begins with the definition of a data files/tables with their fields/columns.
It uses a dictionary of data, entity(File/Table) and attributes(Fields/Columns) designed for
information generation in the organization. Since all the information system use the dictionary,
there is common understanding of terms and terminology in the organization brining clarity in
the communication and a similar understanding an event of the organization.
The MIS calls for a systemization of the business operation for an effective system design.
A well designed system with a focus on the manger makes an impact on the managerial
efficiency.
The fund of information motivates an enlightened manger to use a variety of tools of the
management.
It helps the management to resort to such exercises as experimentation and modeling.

The use of computers enables the management to use the tools techniques which are impossible
to use manually. The ready-made packages make this task simpler.
The impact is on the managerial ability to perform.
It improves the decision making ability considerably.

Since the MIS works on the basic systems such as transaction processing and databases, the
laborious clerical work is transferred to the computerized system, relieving the human mind for
better work. It will be observed that a lot of manpower is engaged in this activity in the
organization. Nearly seventy per cent of the time is spent in recording, searching, processing
and communication. This is a large overhead in the organization. The MIS has a direct impact
on this overhead.
It creates an information- based work culture in the organization.

In short, The organization derives benefits from the systems in the following form:
1. Speedy access to information,
20
UNIT I
2.
3.
4.
5.
6.
Interpretation of data,
Quick decisions,
Speedy actions,
Increased productivity and thereby increase in the profit
Reduced transaction cost
Management
Management is the process of designing and maintaining an environment in which
individuals, working together in groups, efficiently accomplish selected aims.
Explanation
1. As Managers, people carry out the management functions of
a. Planning
b. Organising
c. Staffing
d. Leading or Directing &
e. Controlling
2. Management applies to any kind of organizations
3. It applies to managers at all organization levels.
4. The aim of all managers is the same; to create a surplus or attaining maximum profit.
5. Management is concerned with the productivity; this implies effectiveness and
efficiency.
Information
w Data
Represents something in the real world

The raw materials in the production of information
w Information
Data that have meaning within a context
Data in relationships
Data after manipulation
In short, Data is the raw information or fact from which you cannot arrive at any conclusions
without having any further information. Information is a full fledged data from which you
can arrive at conclusion.
System
A set of components that work together to achieve a common goal is called as a System
Information System
A set of people, procedures and resources that collects, transforms, and disseminates
information in an organization.

21
UNIT I
It is a system, that accepts data resources as input and process them into information
products as output.
Generating Information
Computer-based ISs take data as raw material, process it, and produce information as output.
Characteristics of Good Information System

Characcteristics
Relevant
Explanation
Information must pertain to the problem at hand.
Example: the total number of years of education may not

22
UNIT I
be relevant to a persons qualifications for a new job.

Relevant information might be that the person has so
many years of education in mechanical engineering, and
so many years of experience. %The information must
also be presented in a way that helps a person understand
it in a specific contect.
Complete
Partial information is often worse than no information.

Example: Marketing data about household incomes may
lead to bad decisions if not accompanied by vital
information on the consumption habits of the targeted
population
Accurate
Erroneous information may lead to disastrous decisions.

Example: an accurate record of a patients reaction to
penicillin may lead a doctor to harm the patient while
believing that she is helping him.
Current
Decisions are often based upon the latest information

available, but what was a fact yesterday may no longer be
one today.
Example: a short term investment decision to purchase a
stock based on yesterdays stock prices may be a costly
mistake if thestocks price has risen in the interim.
Economical
In a business setting, the cost of obtaining information

must be considered as one cost element involved in any
decision.
Example: Demand for a new product must be researched
to reduce risk of marketing failure, but if market research
is too expensive, the cost of obtaining the information
may diminish profit from sales.
Three Dimension of Information System

Information Systems provide a competitive edge by facilitating operations inside the
orgaisation and by improving the quality or the delivery of the organizations product.
Internal benefits include support for operational control, management control and strategic
planning information. System can support both tructutred and unstructured processes. But
the nature of the supporting systems is different.
Information systems improve product quality by enhancing the products information
component through better documentation, better customer supporting systems is different.
Such systems can also improve product delivery by making the products
informationcomponentthrough better documentation, better customer support and better
service.
Information systems are creating a new arena for competition.
Information systems support.
Strategic planning
23
UNIT I
Tactical planning, Management control

Operational control
Improved product quality
Improved product delivery.
The WHY dimension concerns the benefits of information system to organizations,
workgroups and individuals.
The WHAT dimension concerns the components of information systems at each of the
three levels.
The HOW dimension will consider tge activities required to create information systems.
Three Dimensions of Information Systems

Information System Levels
There are 4 Levels of information system that exist in a typical business of moderate to large
size are:
24
UNIT I
Operational
Lower Management
Middle management and
Top Management
At the operational level, known as Functional Level, routine production or clerical

operation are performed . Operational systems provide little feedback directly to the
employees e.g., The materials clerk receives a material requisition, fills the
requisition, and files a report of action taken. A supervisor evaluates the employees
performance. However, records of transactions occurring at the operational level
constitute data that when collected, organized and processed, becomes the basis for
higher level management actions.
Lower Management performs supervisory functions that are short-term relative to
the higher levels of management. Eg: day to day job scheduling, cross checking the
results of operations and taking corrective actions.
Middle Management functions are known to be tactical in nature. This level is
responsible for allocating and controlling resources necessary to accomplish the
objectives that support the strategic goals of the business. Planning is performed;
hence known as tactical planning; authority is delegated to the supervisory level and
performance is measured.
Top Management functions are strategic. These include establishment of the goals
and acquisitions, and major policy decisions. Appropriate authority is delegated to the
middle management.
Horizontal and vertical Integration of an Information System
The nine internal functional systems are collected vertically as major systems and they are:
i. Marketing System include
Sale, Distribution
ii. Product Development System

includes
Purchsing,
Production
iii. Financial System include
Billing, Collection, Paying
iv. Administrative
System includes
Personnel, Contracts
Support
Receiving,
Inventory,
Horizontal Integration may occur within or between major systems, An exampleof

horizontal integration, internal to a major system, is the combination of purchasing,
receiving, inventory ( within product development) into a procurement system on the
basis of a shared database An example of horizontal integration, between manor
systems (between Finance and administrative support) is a personnel payroll system
based on edmployee related data element common to both personnel and payroll.
Vertical Integration of an information system within production occurs as follows:
25
UNIT I
i.
ii.
iii.
iv.
Machine assignment and job time reporting Functional.

Machine scheduling Supervisory.
Make (in own shop) pr buy (from vendor) decision Middle management.
New product design Top Management.
All managemtn level positions require decisions to be made. These decisions range
from the routine to the complex. All management decisions involve two elements:
a) A process that include objectives, measurement of performance against
objectives and corrective action and
b) The availability of appropriate information, on which to base decisions.
The first of these elements establishes management as a feedback and control process.
The second leads to distinction between the characteristics of information required at
each management level.
Feedback and Control
Theses are essential to the design of any management system.
a) Feedback is the process of comparing an actial output with a desired output
for the purpose of improving the performance of a system and
b) Control is the action taken to bring the difference between an actual output
and a desired output within an acceptable range.
Information Generation
There are 2 types of Information Generators & they are :
a) Internal and
b) External Generators

26
UNIT I
Information system developed in an organization is for satisfying the information needs of

Internal like needs of Sales, Market, HR, Finance, Production etc., functions needs as well as
external needs which are generated from external environments like Suppliers, Customers,
Various Governmental Bodies, Share holders, Advertising, Unions etc.,. Different type of
reports are to be prepared to satisfy different levels of information need.
In short, MIS is nothing but the processed information using various techniques of cost
accounts, variances and statistics which are used by the management as a ready reckoner
using the Transaction Data Processing System.
Note:
Transaction Data Processing System is day to day transactions that are entered and kept
safely for further processing and to supply the information to the needed people both internal
& external.
Evolution of Management Information System
Information System started in a modest way of recording receipts and issues of grains to
individuals out of temple stores in a clay tablets by Sumerians which was the oldest recorded IS.
At that time, data storage requirement was very low.
With the industrial revolution in Great Briton, there was need for heavy information storage needs.
Thereafter the business started growing bigger and become more complex. This called for
recording of day to day transactions which was called as Accounting System. So many
legislations were enacted to make the accounting system more effective and foolproof. This gave
birth to Transaction Processing System, where in day to day transactions are entered and the birth
27
UNIT I
of Cost accounts and ratio analysis etc., tools facilitated the management to obtain various
information that are needed in its day to day management. The MIS preparation was carried on
manually and the advent of low cost powerful PCs, Networking system and the development of
various high speed storage devices with incredible higher capacity, Internet facilities etc.,
stimulated the growth of Computerised IS.
Now, the business houses have become very big and their activities have become vide spread and
thery by becoming more complex. There is cut throat competition from both internal and global.
There was financial crises which forced to select the best alternative from the available alternatives
and rationing of investments etc. Due to all these, the management was in need of lot of
information otherwise its business will be thrown out of the market and ceased to exit in the
business. This developed Structured IS which is called as MIS without which the management
will find it very difficult to run the business even for a single day. So, Management information
system is a system which comprises people, data, hardware, software, & communication network
to facilitate the management in taking structured decisions.
The evolution of MIS, and its fast growth in the last few decades, can be attributed to the
following factors:
? Growth of management theory and techniques.
? Growth of management accounting and its applications in business.
? Changes in the production and distribution methods and the consequent changes in the
organizational structure.
? Development of management science (Operations Research).
? Introduction of computer into business data processing and the developments in information
technology.
Achieving Sound MIS
? The development of sound MIS is the result of the development and enforcement of a
culture of system ownership.
? An "owner" is a system user who knows current customer and constituent needs and also
has budget authority to fund new projects. Building "ownership" promotes pride in
institution processes and helps ensure accountability.
? Although MIS does not necessarily reduce expenses, the development of meaningful
systems, and their proper use, will lessen the probability that erroneous decisions will
be made because of inaccurate or untimely information. Erroneous decisions
invariably misallocate and/or waste resources. This may result in an adverse impact
on earnings and/or capital.
? MIS which meets the five elements of usability is a critical ingredient to an
institution's short- and long-range planning efforts.
? To achieve sound MIS, the organization's planning process should include
consideration of MIS needs at both the tactical and strategic levels. For example, at a
tactical level MIS systems and report output should support the annual operating plan
and budgetary processes. They should also be used in support of the long term
28
UNIT I
strategic MIS and business planning initiatives.

? Without the development of an effective MIS, it is more difficult for management to
measure and monitor the success of new initiatives and the progress of ongoing
projects. Two common examples of this would be the management of mergers and
acquisitions or the continuing development and the introduction of new products and
services.
Management needs to ensure that MIS systems are developed according to a sound methodology
that encompasses the following phases:
Appropriate analysis of system alternatives, approval points as the system is developed
or acquired, and task organization.Program development and negotiation of contracts
with equipment and software vendors.
Development of user instructions, training, and testing of the system.
Installation and maintenance of the system.
Management should also consider use of "project management techniques" to monitor progress as
the MIS system is being developed. Internal controls must be woven into the processes and
periodically reviewed by auditors.
Management also should ensure that managers and staff receive initial and ongoing training in
MIS. In addition, user manuals should be available and provide the following information:
A brief description of the application or system:.
Input instructions, including collection points and times to send updated information.
Balancing and reconciliation procedures.
A complete listing of output reports, including samples.
Depending on the size and complexity of its MIS system, an institution may need to use different
manuals for different users such as first-level users, unit managers, and programmers.
Support to the Management: MIS report for Planning, Organizing and Controlling
Planning
This is the first and most basic of all functions of management.

The function of planning is to make the people to understand what they are expected
to deliver to achieve the group effort.
Planning involves
?
Selecting vision, Missions, Objectives and goals and the actions taken to
achieve them.
It requires decision making, which is, choosing from among various alternative
course of action.
Planning bridges the gap from where we are to where we want to go.
Need of MIS:
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UNIT I
1. For effective planning, the management, should have some relevant data or
information about past, present and future performance of the organization as
well as internal and external happenings in an organization.
2. To detect any deviation from the objective or goal set and to cap it effectively.
3. Forecasting , an essence of planning, can be effectively done with the help of
processed data.
4. To understand the efficiency of different levels of management
5. Effective planning is the key factor for growth, survival and prosperity of an
organization which is not possible without effective MIS.
6. Effective Decision making can be done with the help of data showing the past
performance, current climate prevailing and the future trends and expectations.
For all above said information with regard to Planning, MIS is very important
Organizing
? Organization is the detailed arrangement of work and work conditions in order to

perform the assigned tasks in an effective manner. The task of such detailed
arrangement is called as Organizing.
? Organising
involves division of labour, delegation

departmentalization, span of control, coordination etc.,
of
authority,
? An organization consists of different departments or systems and subsystems

whose co-ordinated integration is very essential for the success of the
organizations objective of Maximization of profit.
? If any one system is not performing well, the entire organization will collapse.
Need of MIS:
MIS provides valuable information to the management
1. With regard to performance of various departments & units to decide their
profitability and to decide their existence.
2. The profitability of movement of men and material and selecting best method
from various alternatives.
3. Deciding to Line of communication like formal or informal.
4. Cost worthiness of a particular branch or department or centre.
5. to decide whether centralization or decentralization is suitable fr an
organization by using the available data.
6. To choose effective line of communication.
Staffing
30
UNIT I
? Staffing is nothing but filling, and keeping filled positions in the organizational
structure. This done by identifying the workforce requirements, inventorying the
people available, and recruiting, selecting, placing, promoting, appraising,
planning the careers of, compensating and training or otherwise developing both
the candidates and current jobholders so that they can accomplish their tasks
effectively and efficiently.
Need of MIS:
1. MIS facilitates the HR department to do performance monitoring, Promotions,
awarding compensation and other benefits, amount of training to be provided,
cost control of training programmes, evaluation and feedback of employees
performance, benefit offered to the organization for the training programmes
given, Promotional schemes, Retaining the existing staffs from attrition
(leaving of efficient staffs from organization), to understand the cause for lower
performance and to motivate the staffs etc.
Controlling
This is also another important function of the management where adequate control
will be exercised to see whether the management is having effective control over the
entire organization. Normally standards will be set and the actual will be compared
with the standards or budgets.
Need of MIS:
By using MIS techniques, the management can understand easily about the deviation
of the actual performance over the standards set. With the available facts it will
analyse the reasons for positive or negative deviations. In the case of positive
deviation also it is very important to analyse the reason for sudden improvement and
must know the reason for that then only it can take necessary actions to sustain that
trend. If it is due to temporary reasons, or highly volatile, the management can vey
well understand the situation. If it is negative deviation, the management can fix up
the responsibility on the employees if they are the reason for that negative deviation.
So, to have effective control over the entire factors affecting an organization, the
management is in need of .certain information provided by MIS.
PLANNING
Importance of Planning
@ Planning is basic to all managerial functions.
@ Planning is a process of selecting one course of action from different alternatives, for
achieving the stated goals, objective and targets.
@ It is a decision making process determining in advance what to do, when to do, how to do
what is to do.
31
UNIT I
@ Planning creates a frame of activity and events which are to happen or a runway for
achieving corporate goals, objective and targets.
@ Planning process demands resource allocation through decision making. The organization
may have a plan; but question is how effective the plan is.
Efficiency of Planning
@ The efficiency of a plan is measured by the amount it contributes towards achievement of
goals.
@ The plan is efficient if the goals are with less investment or with less resources Therefore,
efficient planning involves selecting a plan among several alternative plans.
@ An efficient plan enables the management to handle uncertainty and risk in the business.
@ It helps to handle the change occurring in the environment and affecting the plan itself.
@ Planning helps to make operations economical as it continuously evaluates the costs and
outputs and forces optimum use resources.
@ It helps to control business operations at all levels with Common reference to goals,
objectives and targets.
Nature of Planning
@ Planning is a process and hence it has a methodology.
@ The first step in planning is forecasting the environment, in which the plan is to be made
and operated. Forecasting provides information on population, growth price trends, market
changes, and new opportunities, changes in technology the plan will be developed and
implemented.
@ The second step in planning is determining alternative courses of action. The management.s
ability lies in creating a number of alternatives. The effective way of creating a number of
alternatives is to build models of the situation and use it as a tool for the generation of
alternatives. These models. Are known as system models, operational research model and
mathematical models. Consequent o the development of alternative courses of actions, the
necessity is to analyze the feasibility of each. As, a modek can give infinite alternatives,
only some of them can be feasible in the given conditions and constraints. The constraints
may be man-made or environmental; but they affect the feasibility of the action. Evaluating
the feasibility of each alternative brings the infinite number of alternatives to a limited
number.
@ The third step in the planning process is to evaluate the best among all the feasible
alternatives. The analysis and evaluation is done with reference to the objectives such as,
minimization of cost, maximization of profit, yield, and productivity, etc. The right choice
of an objective is a crucial factor in the selection process. The planning begins with the
setting of goals and objectives and ends up in selecting the most rational course of action.
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UNIT I
@ The organization has a network of goals, objectives and targets. It is necessary to develop
the network of plans corresponding to this network. The process leads to the development
of corporate plans, investment plans, marketing plans, and advertising plans. Normally, the
corporate plans are for a longer period and the derived plans are for shorter periods. Since
the plan has a commitment to time, it is necessary to build a flexible plan capable of
undergoing a suitable change to alter the goals and objectives within the same time. The
flexibility, as possible, should be built in, so that the cost of changes is not very high and
the implementation is still possible without loss of time. The implementation of plans is
made through developing the strategies, policies, systems, rules, procedures, programmers
and the budgets. The strategy shows the direction, focus, emphasis and development of
resources. Many a time.s good plans fail because of strategic failure. The purpose of the
strategy is not to outline a precise method of implementation; but to provide a boost or
thrust to the plans of implementation. An appropriate strategy helps to cut down the use of
resources and accelerates the process of achieving the goals.
The policy is a statement of management which stands on the top of all plans or courses of action.
A rational plan or a decision can be rejected on the premise of policy .The policies are evolved in
the wider frame of strategies and are generally not questionable but these can be changed. For
example, the organization can have a policy of recruiting personnel only with the qualification of
MBA or it may have a policy of changing the prices once a year and not too frequently. The
policy, therefore, is a general guideline and is to be followed by all.
The system is a vehicle for the implementation of a plan. The system provides pathways, gates and
structures for communication and control. The strategies and policies are important for successful
implementation of the plans. Depending upon the plans, systems will be built as closed or open
systems. The rules, procedures and programmers help to implement the operational plans. They
provide a common basis and an understanding of conducting business operations. A strict
adherence to the rules and the procedures builds discipline in the organization. A smooth
implementation of the plan calls for the rules, procedures and programmers to be observed
properly. When the organization becomes bigger, the adherence to rules procedures and systems
brings a higher degree of formalization in the process of implementation.
The effectiveness of the plan depends on how it is implemented. A successful implementation
requires appropriate timing of launching the basic plan and its derivatives. Lack of knowledge
creates the problems of going away in a totally different direction. The plan must be evolved by
people who are going to implement it. Their participation brings their involvement and
commitment to the plan. For effective planning, participation should be encouraged.
An effective planning should begin at the top and flow down the line. The effectiveness is brought
in by taking a series of decisions, committing resources, giving directions, and executing controls
to achieve the goals and objectives. The process planning, therefore, is to develop the alternatives
based on some choice about goals. It the situation is that of uncertainty, then the evaluation is done
through risk analysis ad preference theory using utility as criteria.
3.3 ORGANISING
33
UNIT I
Organizing is an important step in the managerial process and relates to the people in an
enterprise. It deals with a quantitative and a qualitative aspect of manpower in terms of
placement, the roles they and the relations amongst them, with the aim that they work
together effectively towards accomplishing the goals, objectives and the targets of the
organization. In essence, it deals with organizing the manpower resources for a given
plan of execution.
The organization could be formal or informal. The organization is formal when the roles,
the relations of the people and the objectives they should achieve well defined. In an
informal organization, it is left to the people to understand and evolve suitable roles and
relationships to achieve the objectives.
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While creating the organization is given to an appropriate splitting of the enterprise
activities, by way of function, and grouping them in such a way that they form a division,
a department, a section or a formal group. The people heading these entities should have
enough authority to decide, and should exercise a discretion in using the authority. The
people should and the members of the structure of roles and relationships that it is
designed to work effectively and the members of the structure are able to contribute
substantially towards the achievement of goals. The structure would be productive, if it is
manned properly. The process of manning involves selecting people in right number and
placing them at appropriate levels.
Peter Drucker recommends three ways to determine the structure:
Activity analysis,
Decision analysis, and
Relations analysis
Organizing is a process by which the manager can bring a smoothness of operations, by
way of conflict resolution, assigning work responsibility, and creating appropriate work
environment of teamwork while deciding on the process of organizing. There are certain
important factors to which attention should be paid and which are discussed as follows.
34
UNIT I
Organisation Levels and the Span of Control

This factor deals with grouping the people in hierarchical form, determining the levels in
the organization. The levels get determined by the spa of control, i.e., in the organization
how many subordinates a superior can mange. This number can vary anywhere between
four to eight in higher levels of management and eight to fifteen in lower levels of
management to be taken, and the strengths and weaknesses of the people and the degree
of the delegation of the responsibilities that a superior is willing to attain. The span of
control can be increased and the number the levels can be brought down by training the
subordinates, precise planning, use of objective standards, effective communications and
formalizing the administration by way of rules, programmers and policies.
Departmentation
Departmentaton is a process of breaking an enterprise into smaller groups and levels.
There is a number of ways t break the enterprise. A widely accepted is by functions of the
enterprise, viz., Marking , Production, Finance, Personnel, Materials, etc. The second
method is based on geographic area distribution. This method is resorted to when the
distances are long, the activities are many and the decision making is decentralized.
Many organizations have divisions, branches and territories through which the business
operations are conducted.
The third method to department is by way of the product or the services the organization
is providing. The department of the organization brings operational convenience, creates
appropriate responsibility centers, facilitates a formal and an informal communication,
permits an evaluation of activities by a smaller group, and provides control and decision
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points for the top management. Each method of a departmentalizing has advantages and
disadvantages and, therefore, it is to be chosen based on the needs of the management.
Relations of Line and Staff Functions
The function of a department can be as a line or a staff. The functions which have a direct
responsibility of achieving the targets for production or sales are line functions. The staff
35
UNIT I
functions are those which do not participate directly in the activity but aid line functions
to achieve the targets. Production Planning, Marketing, Purchasing, etc, are staff
functions. The distinction is more clear and precise at higher levels. The staff function is
advisory but owns the responsibility for the results and is accountable for nonperformance.
The relationship between the line and the staff functions is always strained. The
performance of the line function depends upon how the staff function has planned the
activities. Deficient planning leads to an initialization of line capacity and non attainment
of targets. A line function does not have resources, leverages and powers to overcome the
problems arising out of the staff functions.
Delegation of Authority
The function either is a line function a staff function; but still it requires decision making.
As one person cannot plan, execute and control all the tasks in the functions, owing to the
limitations of time and capacity, it is necessary that the decision making is not centralized
at one point.
Handing over limited authority of decision making to the subordinated is called
delegation. The concept of delegation is based on the premise that an individual can take
decision if supported by information, knowledge and guidance, and is motivated enough
to perform. The concept of delegation accepts the responsibility of non-performance of
the delegated person or the mistakes made by him. Hence, most routine types of decisions
are delegated with the support of rules, conditions and the method of decision making.
The failures in delegation occur not because of the lack of understanding of the principle
of delegation, but because of the inability to implement it into practice. A lot depends
upon the ability of the manager to delegate and upon the capabilities of the subordinates
to use the authority. The manager is not able to delegate, if he does not have a positive
attitude towards delegation, if e is not receptive to the subordinates. ideas and is not
welling to accept the risk of failure or mistake of his subordinates. A failure to use the
delegated authority emanates from a lack communication, guidance, training and
motivation.
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36
UNIT I
Towards Effective Organisation
Organisation is an activity of building a structure of roles and relations of the people to
secure coordination of individual efforts to achieve common stated goals, objectives and
targets. The failure in organization occurs due to the failure to plan properly, to delegate
the authority and due to the confusion of relation and authority. The failure also occurs on
account of imbalance in the line and staff function and their relation. Organisation
becomes effective, if it is designed for the unity of goals and objectives with precise
planning and optimum span of control. It becomes further effective, if it works on the
principle of command, delegation and parity of authority and responsibility. It becomes
productive if it flexible enough to change and is headed by a manager with leadership
qualities.
3.4 STAFFING
The function of staffing deals with manning the enterprise as per the organization
structure so that they together implement the process of the management. Staffing
involves not only selection of a person but also appraisal and development so that they
perform their designated roles. The selection of a person is a difficult task. However, the
chances of selecting a wrong person are very less if a proper method is used. Since
people cannot be easily replaced because of socio-political and legal reasons, their
selection, in terms of quality and, is of paramount importance.
Staffing of enterprise should be for todays as well as that of the future. The requirement
of the future is difficult to predict in precise and this requirement needs to be forecasted
for more than five to six years. So the purpose of staffing is not manning for the current
plan of business but to create a manpower potential capable of undergoing development,
so that the same manpower is able to perform the changed roles in the future.
Hence the selection of a person in terms of age, qualification and potential becomes an
important task in human resource development.
The selection of individuals for line functions is not that difficult because the role and the
asks are well defined and do not undergo any significant change over a period of time.
The difficult lies in the selection of management positions. The manager is a multifaceted
personality. A person is said to have good managerial potential, if he has the
37
UNIT I
following qualities apart from the function knowledge.

The person must have the desire to manage.
He must have the necessary drive and self- motivation to manage.
He must be able t identify himself with the corporate goals and be committed to
them.
The person must have the capability of applying knowledge to real life situations
in the right perspective, locating the problem areas and generating a number of
alternate courses of action. In short, he must be a person with analytical ability.
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The person must be able to perform effectively. This is possible only if he has the
ability to communicate effectively. If not properly communicated, his ideas and
management plans cannot take off. For good communication skills, the person
must have a good command but due to the psychological barriers he cannot
communicate. These barriers come on account of personality conflicts, power
game and dissatisfaction on rewards and promotion.
The manager must be a person of integrity.
He should be honest, trustworthy and high achiever. This can be judged by the
track record of the person and his work experience and the extra curricular
activities he may be performing.
The staffing, therefore, deals with creation of human resource in the enterprise to achieve
goals, objectives and targets set by the top management.
3.5 COORDINATING AND DIRECTING
After organizing the resources and staffing the planned activities, the business plan is
launched. The process of implementing the plan is dynamic. It calls upon the manager to
perform a number of things in a coordinated manner so that the plan remains valid and
the development takes place as per the plan.
The process meets with a number of difficulties and the manager is supposed to resolve
them. There will be a lag and lead in many activities. There could be shortfalls and
38
UNIT I
overruns. There could be sudden developments which may disturb the plans and the
process of implementation. The manager.s role, in this situation, is to coordinate all the
activities and provide leadership to the group to keep the plan moving. Directing and
leading are the methods, whereby the subordinates are lead to understand the purpose of
the activity, and by way of guidance, a direction is given to them to march towards the
goals. Their difficult and conflicts are resolved, bottlenecks removed and a clear path is
created to progress on plan achievement.
The task of directing and leading becomes more effective if the human side of the
enterprise is taken care of by motivating the people. The manager is required to create an
environment in which everybody can perform their best. The work environment becomes
conducive to good performance if work becomes satisfying and provides an opportunity
to expand the scope of work and his influence.
The manager is a leader if he possesses the art of influencing the subordinates in such a
way that they willingly perform towards the achievement of the goals, objectives and
targets. The process of coordinating and directing takes place through communication.
Good communication has been defined by the American Society of Training Directives
as an interchange of thought or information to bring about mutual understanding and
confidence or good human relations. The coordinating and directing effect is more
effective if the manger is able to motivate the subordinates and provide leadership by way
of an affective communication.
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3.6 CONTROLLING
The last but the most important step in the process of management is controlling, the
successful execution of management plan. Without control, the process becomes
unproductive. The purpose of control is to regulate the process in such a way that the
management process continuously strives for the achievement of the goals, objectives and
targets.
The control is exercised through a system. The system measures the performance of the
39
UNIT I
management in terms of some predefined measures of output. It compares the output with
the standard, identifies the deviations from the standard, and corrects the management
process to ensure that the plan continues to be effective in terms of achieving goals,
objectives and targets.
The control system work on the principle of feedback. The feedback on the performance
should be quick without any loss of time, that corrective action can be taken immediately.
The process of correction involves change in the plan, reallocation of resources,
application of new system, procedures and rules. The best control is the one which brings
the process back into operation on the main track without outside intervention. The
control system must get into action automatically to correct the midstream adverse
development.
Time is the essence of control. If the corrective action is taken late on account of delayed
feedback, it is ineffective and may result in heavy losses. Most of the managers look for
real time control system, a system which provides an instant negative feedback from the
standard and an instantaneous corrective action without any time delay.
Since the management control systems are not physical system, where one can desire real
time control mechanism, the managers look for feed forward control. The feed forward
control gives an advance warning, an indication that the deviations are likely to occur in
near future calling for a corrective action. The techniques used in the feed forward
control are forecasting, trend analysis and judging the performance from the standpoint of
input versus output.
Auditing is also a tool of control. There are several types of audits possible in a business
organization. Managerial audit deals with how effectively the plans are made and
implemented. It is addressed to the managerial performance to judge whether it was up to
the mark, and whether there are any lapses, failures or weaknesses. The operational audit
deals with an adherence to the rules and the policies of the management. It identifies
whether the operations of the organization are being carried out as per the managerial
directives, rules and policies. The financial audit addresses the business and financial
transactions to find out whether they are carried out with due regard to the accounting
principle and statutes. It also examines whether all the transactions are covered
completely and for the year.
40
UNIT I
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With the advancement of information technology and computers, a variety of planning
and control tools have been developed. Planning and budget models, financial models,
risk analysis models, PERT/ CPM, operations research models are some of the examples
of the control tools.
3.7 MIS: A TOOL FOR MANAGEMENT PROCESS
The process of management requires a lot of data and information for execution of the
plan. This requirement arises on account of that in each step of management, a variety of
decisions are taken to correct the course of development. The decisions or actions are
prompted due to the feedback given by the control system incorporated in the
management system. The control of overall performance is made possible by way of
budget summaries and reports. The summary showing sales, costs, profit and return on
investment throws light on the direction the organization is moving to. The exception
reports identify the weaknesses in the system of management.
If effective management system is to be assured, it has to rest on business information.
The management performance improves if the business risk and uncertainties are handled
effectively. If the information provided is adequate, one can deal with these factors
squarely. The information support improves the lack of knowledge, enriches experience
and improves analytical abilities leading to better business judgment. So, if efficient
information support is to be provided, it calls for a system with the goals of generating
management information. A good MIS must furnish information to the managers to
expand their knowledge base. He must know the adverse trends in business, the shortfalls
and failures in the management process.
The MIS should provide the support to act and decisively. It should support management
in terms of basic business information at the corporate level and meet the specific needs
of the managers. It should highlight on the critical success factors and support key areas
of management. MIS should have, wherever possible, support systems to help the
manager in decision making.
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UNIT I
Modern management systems rely on MIS. The complexity of business operations with
skill and foresight to avert the crisis. Modern business management requires shift from
the traditional controls to managerial control. The shift requires the manager to become
more efficient in handling the he is entrusted with. The manager becomes more efficient
if he is well informed, made richer in knowledge, experience and analytical skills and is
able to face the uncertainties and the risk of business. This is possible only if he is
supported by MIS in his specific task of management of business.
Modern business has business has become more technology- oriented wherein the
manager is required to be up- to- date on technological advancement not only in his field
of operations but also in the other technologies . The emerging new technologies are
posing threats to current business and are opening new opportunities for new business
ventures. The manager has to keep himself abreast on the information of how these
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technologies affect his business prospects. A good MIS designed for such a support is
Information System Architecture

42
UNIT I
An Information System (including MIS) is an organized combination People, Hardware,

Software, Communication Networks and data resource technologies to perform input
processing, output, storage and control activities that transform data resources into
information products.
Major areas of information systems knowledge that are needed by managerial end
users.
The three major roles of information systems.

Information systems provide an organization with support for business operations,
managerial decision making, and strategic advantage.
Information Resource Management [IRM]

The major dimensions to the job of managing information systems resources are:
The major dimensions to the job of managing information systems resources are:
Techniques of managing information will be sharing the organizational resources. IRM
includes (1) identification of information sources, (2) type and value of
information they provide, and (3) ways of classification, valuation, processing, and storage of
that information.
Information Resources Management is a discipline that enables managers to assess and
exploit their information assets for the purpose of developing the business. The method
43
UNIT I
utilizes the techniques of information science and information systems to substantially

improve the business situation.
IRM provides an integrated view for managing the entire life-cycle of information, from
generation, to dissemination, to archiving and/or destructionfor maximizing the overall
usefulness of information, and improving service delivery and program management.
IRM views information and Information Technology as an integrating factor in the
organisation,
that is, the various
organisational positions that manage information are
coordinated and work together toward common ends. Further, IRM looks for ways in
which the management of information and the management of Information Technology
are interrelated, and fosters that interrelationship and organisational integration.
IRM includes the management of (1) the broad range of information
resources,
e.g.,
printed materials, electronic information, and microforms, (2) the various technologies and
equipment that manipulate these resources, and (3) the people who generate, organize,
and disseminate those resources. Ex. Overall the intent of IRM is to increase
the usefulness of government information both to the government and to the public.
IT must be managed to contribute to firms strategic
objection and competitive advantages, not just for
operational efficiency or decision support
IT & IS can be managed by functional and process based
organizational structures and managerial techniques
commonly used throughtout other business unit.
Data and information, hardware software, telecommunication and IS personnel are vital organizational
resources that must be managed like other business assets.
All technologies that process, store and communicate data

information throughout the enterprises should be managed
as integrated systems of organizational resources.
Managing the use of IT and IS resources in business units

and working groups is a key responsibility of their
managers, no matter what their function or level in the
organization.
Evolution of Management Information System (MIS)
Information System started in a modest way of recording receipts and issues of grains to
individuals out of temple stores in a clay tablets by Sumerians which was the oldest
recorded IS. At that time, data storage requirement was very low.
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UNIT I
With the industrial revolution in Great Briton, there was need for heavy information
storage needs. Thereafter the business started growing bigger and become more complex.
This called for recording of day to day transactions which was called as Accounting
System. So many legislations were enacted to make the accounting system more
effective and foolproof. This gave birth to Transaction Processing System, where in day
to day transactions are entered and the birth of Cost accounts and ratio analysis etc., tools
facilitated the management to obtain various information that are needed in its day to day
management. The MIS preparation was carried on manually and the advent of low cost
powerful PCs, Networking system and the development of various high speed storage
devices with incredible higher capacity, Internet facilities etc., stimulated the growth of
Computerised IS.
Now, the business houses have become very big and their activities have become vide
spread and thery by becoming more complex. There is cut throat competition from both
internal and global. There was financial crises which forced to select the best alternative
from the available alternatives and rationing of investments etc. Due to all these, the
management was in need of lot of information otherwise its business will be thrown out
of the market and ceased to exit in the business. This developed Structured IS which is
called as MIS without which the management will find it very difficult to run the business
even for a single day. So, Management information system is a system which comprises
people, data, hardware, software, & communication network to facilitate the management
in taking structured decisions.
The evolution of MIS, and its fast growth in the last few decades, can be attributed to the
following factors:
? Growth of management theory and techniques.
? Growth of management accounting and its applications in business.
? Changes in the production and distribution methods and the consequent
changes in the organizational structure.
? Development of management science (Operations Research).
? Introduction of computer into business data processing and the developments in
information technology.
The strategies for determining MIS design?
MIS design should be specific to an organization, respecting its age, structure, and operations.
Six strategies for determining MIS design have been suggested by Blumenthal (1969):
7. Organization-chart approach
Using this approach, the MIS is designed based on the traditional functional areas, such as
finance, administration, production, R&D and extension. These functional areas define
current organizational boundaries and structure.
45
UNIT I
8. Integrate-later approach
Largely a laissez faire approach, it does not conform to any specified formats as part of an
overall design. There is no notion of how the MIS will evolve in the organization. Such an
MIS becomes difficult to integrate. In today's environment - where managers demand quick
and repeated access to information from across sub-systems - the integrate-later approach is
becoming less and less popular.
9. Data-collection approach
This approach involves collection of all data which might be relevant to MIS design. The
collected data are then classified. This classification influences the way the data can be
exploited usefully at a later stage. The classification therefore needs to be done extremely
carefully.
10. Database approach
A large and detailed database is amassed, stored and maintained. The database approach is
more and more accepted for two main reasons: first, because of data independence it allows
for easier system development, even without attempting a complete MIS; and, second, it
provides management with immediate access to information required.
11. Top-down approach
The top-down approach involves defining the information needs for successive layers of
management. If information required at the top remains relatively stable in terms of level of
detail, content and frequency, the system could fulfil MIS requirements (Zani, 1970). The
usefulness of this approach depends on the nature of the organization. It can be suitable for
those organizations where there is a difference in the type of information required at the
various levels.
12. Total-system approach
In this approach the interrelationships of the basic information are defined prior to
implementation. Data collection, storage and processing are designed and done within the
framework of the total system. This approach can be successfully implemented in
organizations which are developing.
Establishing the Framework
What is a Framework?
A Framework is a conceptual model that helps us to understand and communicate
about Information Systems.
The framework facilitates future discussions about different types of decisions, their
information requirements and different kinds of computer based information systems.
A framework provides a way to organize your thoughts and analyse a problem.
Popular Frameworks are:
46
UNIT I
? Simons Framework
? Robert Antonys Framework
? Gorry and Scott Mortons Framework.
Simons Frame Work
Simon Herbert A in his book, The New Science of Management Decision, page no. 40,
1960 has indicated as follows:
An organization can be pictured as a three layered cake as shown in Fig. mentioned below.
In the bottom layer, we have the basic work processes. In the case of a manufacturing
organization, the processes are as
under:
Layer 3: The non-programmed
(unstructured)
decision-making
processes are found here that are
required to design and redesign the
entire system, to provide it with its
basic goals and objectives and to
monitor its performance. Long term
planning and strategic planning are
needed.
Layer
2:
We
have
the
programmed/non-programmed
(Structured or semi structured) decision
makingprocess; the process that govern
the short term operations of the
Different Layers in an Organisation
manufacturing and distribution system.
Here tactical planning and management control are needed.
Layer 1: Here, the processes procure raw materials, Manufacture the physical product, store
them in warehouses and ship it.
Robert Anthonys Framework.
Robert Anthony identified 3 levels in a subsequent publication as:
1. Operational Control,
2. Management Control, and
3. Strategic Planning in his book Planning and Control System A framework
for Analysis Written for Harward University Press in 1965, Page 69.
Robert Anthony has delineated (ie., described) a framework which distinguishes between
the different types of planning and control process that typically occur in organization. His
basic thesis is that thinking of planning and control as two separate and homogeneous
47
UNIT I
activities in an organization is not only meaningless but positively dysfunctional. Instead of

this segment of management planning and control activities into two categories of planning
and control, he segmented it into three categories resiting the natural temptation to use as the
two main divisions
(1) Planning (roughly), deciding, what to do? And

(2) Control (roughly), assuring that desired results are obtained.
The 3 categories suggested by Anthony are :
(1) Strategic Planning,
(2) Management Control and
(3) Operational Control.
Anthonys definition in relation to these are:
Strategic Planning is the process of deciding on objectives of the organization, on changes
in these objectives, on the resources used to attain these objectives, and on the policies that
are to govern the aqusition, use and disposition of these resources.
Management Control is the process by which managers assure that these resources are
obtained and used effectively and efficiently in the accomplishment of the organizations
objectives.
Operational Control is the process of assuring that specific tasks are carried out effectively
and efficiently.

48
UNIT I
How Anthonys framework of planning and contrl in different functional areas work are as
shown below:
Functions
Levels
Production
Marketing
Finance
Personnel
Strategic Planning Location of a new Entering

the Raising capital Deciding changes
factory
export Market
with issue of new required in the
shares
organisation
structure.
Management
Control
Determining
Media planning
product mix for a for
advertising
monthly
expenditure
production
programme
Determining
maximum levels
of credit for
customers
Determining who
will be promoted
to fill a vacant
post.
Operational
Control
Scheduling
specific jobs on
specific
machinesduring a
shift.
Decide
what
action to be taken
against default in
payment by a
specific
customer.
Determine which
of the workers
will be on each
shift.
Planning
sales
contacts to be
made
by
a
salesman in the
immediate future
Anthonys Framework of Planning and Control

49
UNIT I
Gorry & Scott-Mortons Framework

Classification
Operational Control
Management Control
Strategic Planning
Structured
Order
Processing,
Accounts
Payable
Budgets, Personnel
Reports
Warehouse/location.
Transportation
mode mix.
Semi-Structuted
Inventory
Control,
Production
Planning
Analysis of variance
Introduction of new
product
Unsructured
Cash
Management
Management of
personnel
Planning for R & D
Gorry & Scott-Morton Framework
? In a structured decision, the 3 phases of intelligence, design ad choice are fully structured.
? In an unstructured decision, all three phases are unstructured
? Any decisions in between the two is semistructuired.
As in Simons Framework, the line between structured and unstructured decisions shifts over
time as new decision techniques are developed and applied to unstructured robles.
A framework such as the Gorry & Scott-Morton model helps instudying different kinds of
systems. We can consider what kind of management support the system provides or what the
nature of the problem is. A manager should not be particularly surprised when a structured
operational control or transaction processing system fails to rocide much information that is
of interest for deision making. Depending on the type of system, we may also find that our
implementation strategies will differ. The task of designing a structured transation
processing system is different from the task of building a model for a manager to use in
making plans for the corporation.
It appears that many information systems have attached problems in the strured operational
control cell. These problems are similar in many organization and are among the most easily
understood. It is easier to mechanise these decisions and to predict and achieve cost savings
from them than it is for less structured decisions or for strategic planning decisions. Since
operational systems are important to the daily functioning of the firm, they are high-priority
applications.

50
UNIT I
Tremendous advances in hardware and software have provided a variety of ways to apply
computer support to a problem area. We are limited only by our imagination and our
knowledge of the technology and the organization in applying ISs to solve problems or
improve the competitive position of the firm.
End User Development
End User is any one who uses an information system or the information it produces.
End User Computing Systems are computer based information system that directly supports
both the operational and managerial applications and end user. Traditionally, the only people
who have direct contact with customers are:
? The system professionals like IT programmers, system analysts comprising of

system builders, system users, system designers, system construction people.
Personal computers, terminals, networks, user friendly software, databases etc. have brought
in enormous range of packages. The applications include:
Modeling and simulation

Expert ystems
Regression modeling
Executive Information System
End user programming
Computer based training
Search and retrieval of information
Text handling and publishing
Decision support systems
End user computing system involves:
The direct, hands-on approach to computers by users-not indirect use through system
professionals.
End users include in an organization people like:
Managers
Sales People
Office Staff
Production Workers etc.
End user development benefits and limitations
1. Shortended lead times:
Users
End User
Development

1.People Developed applications:

51
Systems are simpler in design
2. Good fit to needs: Users know
their specific business needs than

anybody else; Hence develop on
application to satisfy their needs.
Skill wise, user developers are not

so much skilled a IS personnel.
Hence develops lower quality
applications; users are tempted to
developed too complex applications
for their skills and tools result is
difficult to use and maintain.
LIMITATIONS
almost
always
develop
applications more quickly than IS
personnel because they are higly
motivated (they will benefit from
the new system)
BENEFITS
UNIT I
2.Islands
of
Information:
Organization relying on user
development have to risk of
creating islands of informations;
private database are not under the
control of organizations IS
managers. This makes difficult to
achieve the benefits of integrated
ISs.
3. Compliance with culture: User developed 3. Duplication : Resources wasted by
software closely conforms to an individual

units subculture; Hence transition to a new
system is easier.
enduser
developers
developing
applications identical or similar to
already existing.
4. Security Problems : End users access to

organizational database for creating
5. Acquisition of Skills: Skill inventory is high
systems result in violations of security
in the organization, if more employees know
policies e.g. clients/server, environments,
how to develop applications.
creation of private databases known to
the individual user is risky. This data
may not be classified under an
organisation policy.
4. Efficient utilization of resources
6. Free IS staff time: IS staff to develop and 5. Poor
maintain an organizations more complex and

sophisticate system.

Documentation: May be a
misnomer users not well versed in
creating documentation and to develop
the application on their own quickly and
even if done, do not document it. Lack
of documentation results in System
maintenance difficult at best and
52
UNIT I
impossible at worst. Applications are

patched together by new users and
nobody knows how to iron out bugs or
modify programs.
Difference between TPS and MIS
TPS is concentrating on day to day recording of information generated in an
organisation.
TPS is the basis for further information generation without which MIS,DSS etc.
are not possible.
This is mostly used and generated by operational staffs and the management is not
concerned about TPS because they are voluminess and the management may not
have adequated time to investigate TPS.
TPS will not be is a rteport format which will be useful to the management.
MIS is supplying the needed information to the management using TPS system.
MIS is mostly used by various levels of management and especially by Lower
level of management mostly.
MIS is helpful to take structured and programmed decisions as they are followng
certain rules and regulations for their generation.
How MIS Works?
Plus Other Internal Information resources
MIS applications process process data that is generated by TPS and other internal
information sources. MIS users will request for reports and the same is takenm by
MIS programs. The TPS daa is processed by aggregating and reformatting it, to
53
UNIT I

produce reports, which will be either printed or displayed. MIS programs also produce
exception reports.
Sometimes, the MIS application doe not read the operational TRS data. Instead, an
extract of the TPS data is made, and the MIS application processes the extract. Ths is
done for a variety of reasons:
1) To provide security for the TPS data.
2) To transfer data across computers (When TPS and MIS operate on different
machines) or
3) To consolidate data to make MIS processing more efficient.
Exception Reports and Ad Hoc Reports.

? MIS produces exception reports. These reports are produced only when exceptional
conditions occur, or reports produced periodically which contain information only about
exceptional conditions. In some cases, the reports are automatically generated. For
example: A report is required to be printed in advance to state that the names of the
participants of a seminar and the location where a minimum of ten participants are not
participating is required two weeks prior to the start of the seminar. A credit manager is
provided with a report which only contains information on customers who exceed their
credit limits. Such exception reporting promotes management by exception, instead of
overwhelming managers with periodic detailed reports.
? Ad Hoc reports and inquiry responses occur at irregular intervals and require analysis
of data whose format has not been preplanned. Ad Hoc reports are unique, unscheduled,
situation specific reports.
? User machine dialogue is a way in which a user can interact with a model to arrive at a
solution.
Structure of MIS
Information System Structure comes under four separate but related classifications as shown
below:

54
UNIT I
Operating Elements if an Information System

These are classified as:
a) Physical Components
b) Processing Functions
c) Outputs for users
(a) Physical Components
i. Operating People
ii. Computer Network
iii. Process
iv. Data
v. Hardware
vi. Software

55
UNIT I
(b) Processing Functions

i. Processing a Transaction
ii. Maintaining Masters
iii. Produce Reports
iv. Process inquiries
v. Process interactive support applications.
Processing a Transaction
Transactions are daily events happened in an organization and they are to be

processed and stored regularly on day to day basis. They are vital source of the
information for an organization. Normally they will be entered, processed,
stored in a file or database for future use and if any report is to be taken reports
will be taken. Transaction information are stored in a transaction file which
will be frequently updated and contains all frequent, day to day and recurring
data where uniqueness of records will not be maintained
Maintenance of Master files

56
UNIT I
Master files will be containing the information which are permanent and semi
permanent information which will not be frequently changing. They are fixed
and semi fixed information which may change once in a while.

Here, Master file will be updated when there I any change that is influenced by
a transaction entry. For ex., If a customer purchase any material, his balance of
payment to us is to be incremented by the amount of transaction. If there is any
change in any other information rarely, they should also be changed to have the
changed effect.
The old master file data is to be processed to make it a updated master file
using the transaction data and master file changes as input.
Produce Reports
Reports are significant products of an Information System.

Reports produced are:
Scheduled Reports (on a regular basic)
Ad hoc report (on unscheduled }
Exception Reports (Last 2 are special reports)
Process Inquiries

57
UNIT I
Users Inquires are processed to receive reports. These may be regular inquiries
with a present format or ad hoc inquiries
Process Interactive Support Applications
Information system contains applications designed to support systems for:
Planning
Analysis
Decision Making.
(c) Outputs for the Users
Here, the users will process the master data file and transaction data files and try to get
necessary outputin any desired format.
There are mainly 5 major types of output:
Transaction Documents
Reports, Inquiry and dialog results provide 4 types of information:
o Monitoring Information - information confirms that actions have been taken on
reports status on financial or other terms.
o Problem Finding Information : Information is presented in a format that
promotes identification of problems.

58
UNIT I
o Action Information: Information presented with action specified or implied.

o Decision support: The report, inquiry , result or dialog is oriented to performing
anlaysis and making a decision.
Preplanned reports
These have a regular content and format, usually run on a regularly scheduled
basis. They describe status or condition at a point of time.
They summarise what has occurred during a period such as a week, month or
year.
They present results to date and project to the end of the period.
Preplanned inquiry responses

These are generally associated with limited output. Inquiries are handled on line
i.e., the inquiry is entered and responses received immediately via terminal.
Ad hoc reports and inquiry responses

Thee occur at irregular and require data or analysis whose format has not been
preplanned. Ad hoc reports are unique, unscheduled, situation specific
information reports. User machine dialog differs from reports or inquires. It is
essentially a way a user can interact with a model to arrive at an analysis or a
solution e.g., site planning models, capital investment analysis models, and
portfolio management models.
Management Information for Decision Support System

There are two types of decision and the information can be provided for the following:
Structured Programmable Decisions used to take decision with some
structured or set of rules & regulations or fixed formulae. The decisions taken
in this mostly will be materializing and successful. MIS is based on structured
or Programmable decision. MIS is mostly uses TPS for gathering information
for the management. Mostly the results will be unambiguous because they are
drawn out of real data happened using some well defined rules or procedures.
This is mostly used by low level management.
Unstructured Programmable Decision is taken by the top management
mostly when an abnormal situation is arising wherein they have to relay mostly
ambiguous and sometimes unknown facts. Mostly the decisions will be taken
on non structured data where in we may not have any fixed rules and
procedures. Mostly the decisions will be taken by the top management based
on their intuition or experience or knowledge. At times the decisions taken may
be wrong also.
Decision Making
59
UNIT I
? Decision Making is an integral part of human life. One has to take decision in
ones day-to-day life.
? In business organizations, the managers have always to decide which option is

to be exercised and decide
Decision Making Process
Intelligence
It is searching the environment for conditions calling for decisions. Data inputs
are obtained, processed and examined for clues that may identify problems or
opportunities.
Invention
It is inventing, developing and analyzing possible course of action. This
involves processes to understand the problem, to generate solutions, and the test
solutions for feasibility.
Choice
It is Selecting an alternative course of action from those available. A choice is
made and implemented.
Nature of Problems and Decision-Making in the Organisation
? A Decision is a choice which involves allotment of resources to a course of

action. Decision Making involves setting of premises about future events.
Wrong decisions may mislead the decision maker. It is the information that
guides him to the right action and hence the information system focuses on
organizational decision making.
? Decision can be classified into:

Structured, Programmable Decision. MIS belong to this category. MIS
helps the management to take correct decisions by giving structured
information ie., to some extent the results are practicable and can be
60
UNIT I

obtained from the available data. The Middle & Low level managements
use this MIS mostly. A program is defined as a plan for the automatic
solution of a problem. Programs are nothing but a set of instructions to do a
particular activity. Even for taking non-programmable decisions,
Programmable decisions are very important. In the case of Lathe Operators,
the have specification a dn rules that tell tehem whether the part they made
is acceptable, has to be discarded, or should ne reworked. In the case of
Inventory control, Reordering of inventories will be based on certain rules
his kind of decision
is used for routine and repetitive work, It relies primarily on previously
e4stablished criteria. It is in effect, decision-making by precedent.
Unstructured Non-programmed Decision. Here, there is no prestablished decision procedure, either because the decision is too infrequent
to justify the organizational cost of preparing a decision procedure (event
though it may be partly programmable) or because the decision process is
not understood well enough or is changeable to aloow stable pre-established
decision procedure. There is no structured way of making decisions and
decisions will be taken mostly for an unexpected event. This may occur
once in a while and mostly taken by Top Management on the basis of
Decision Support System. Advertising Budget, new product decisions,
acquisition and merger considerations, board member selection, and similar
problems illustrate the non-programmed type of decisions that cannot be
automated. Non-programmed decisions are used for unstructured, novel
and ill-defined situations of a non-recurring nature. Examples are
Introduction of Macintosh computer by Apple Computer Inc., Introduction
of Windows Operating System Microsoft, Introduction of small video
camera by Kodak, Introduction of Pendrives, introduction of MP3 and
MP4 players and so on.
? Most of the decisions are neither completely programmed or non-programmed

but a combination of both. Most non-programmed decisions are made by
upper level, managers, since they have to deal with unstructured problems.
Problems of lower levels of the organization are ofthen routine and well
structured, requiring less decision by managers and others. Most of the routine
decisions can be handled by the information system, thereby considerably
reducing the load of managers at lower levels. Such routine decisions mostly
require past data internally generated by TPS.
The type of information needed by decision makers is related to:
? Level of management of decision making

? Amount of structure in the decision situations they face
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UNIT I
The three levels of management are:
&
Strategic Management
&
Tactical Management &
&
Operastional Management
Types of Management, Information, Decisions
Strategic
Tactical
Generally Board of
Directors, Executive
Committee of the CEO,
Top Executives
Self directed teams,

Business unit Managers
Develop overall organisational goals, strategies,

policies, objectives of a
strategic planning process
Develop short and medium Develop short range plans

range plans, schedules, such as weekly production
budgets,
specify
the schedules
policies, procedures and
business objectives for their
subunit
of
the
organizations.
Monitor the strategic

performance of the organisation and its overall directions in the political,
economic and competitive
business environment.
Allocate resources and

monitor the performance of
their organizational sub
units, including
departments, divisions,
process teams, project
teams and other work
groups

Operational
Members of self directed
teams, Operating Managers
Direct the use of resources

and the performance of
tasks according to
procedures and within
budgets and schedules.
They establish it for the
teams and other work
groups of the organization.
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UNIT I
MANAGEMENT INFORMATION SYSTEM STRUCTURE BASED ON

MANAGEMENT ACTIVITIES
There are 3 levels of Inormation need in an organization and they are:
Strategic Planning Top Level
Management control and tactical planning Middle Level and
Operational Planning and control Low level .
Information requirements vary with the level of management activity supported.

Planning and Control
Information broadly falls into two classes on the basis f intrinsic nature and
organizational are:
1. Planning Information
2. Control Information

63
UNIT I
Information, Planning and Control in the Management System

(Source: Siegfried How Information Technology is Transforming Corporate Planning, Logn Range Planning (August 1986) P
19 in the book Essentials of Management, Fifthe Edition by Harold Koontz, Heizweihrich)
The strategic level management is mostly concerned with planning information and
its requirement for control information is very limited as most of the control function
is exercised at lower levels.
On the other hand, the operational level management requires substantial control
information and small amount of planning information.
Difference between Planning and Control Information

Planning information cuts across organisational; divisions and provides information
about a few divisions or the entire organisation
It covers a wider time span whereas the control information relates to a short time
span; say a shift to a few months at the most.
Trends and patterns are more important in planning information. Finer details are
important in control information.
In case of planning information, the purpose is to guide planning by projecting trends
and patters whereas that of control information is to invite managerial intervention to
correct a deviation if any.
Different Levels and Activities
Levels
Activities
64
UNIT I
Strategic Planning
Definition of goals, policies and general

guidelines
charting
course
for
organization.
Determination
of
organizational objective, choice of
business direction, market strategy,
product mix.
Management Control
and Tactical Planning
Acquisition of resources, acquisition

tatcis, plant location, new products
establishment and monitorig of budgets,
structuring of work, training of personnel.
Operational Planning
and Control
Effective and efficient use of existing

facilities and resources to carry out
activities within budget constraints.
Hierarchy of Management Activity

The following categorie of management planning and control were defined by R.W.Anthony
in his book Planning and Control Systems, a framework for analysis published by Harvard
University Press, Cambridge in 1965.
? Information Systems for Strategic Planning
? Information Systems for Management Control
? Information Systems for Operation Control
(a) Information Systems for Strategic Planning
Strategic Information Systems are computer systems at any level of the organization
that change goals, operations, products, services, or environmental relationships to
help the organization gain a competitive advantage.
Strategic Information Systems provides a firm with competitive products and serices
that give a strategi advantage over it competitors in the market place. Also,
information systems promote business innovation, improve operational efficiency and
build strategic information resources for a firm.
Strategic planning deals with the developments of an organizations
Missions
Goals
Strategies
Policies
Corporations may begin the process by developing a shared vision using a variety of
techniques, including team building, scenario modeling and consensus creating
components adopting strategic IS planning have four main objectives.

65
UNIT I
Strategic planning activities do not have to occur on a periodic, regular cycle to do

management control activities. Data requirements for strategic planning are generally
for processed, summarized data from a variety of sources,
There is need for
considerable external data.
Stategic information systems (SIS) should
be
distinguished from strategic level systems for senior managers that focus on long
term, decision making problems. SIS are more far reaching and deep routed than the
other kinds of systems.
(b) Information systems for Management Control
Management control information is required by managers of various departments,
profit centres etc., for the purpose of:
E Measuring performance
E Decide on control actions.
E Formulate new decision rules to be applied by operating personnel.
E Allocate resources
Summary information is required and processed so that trends may be observed,
reasons for performance variances amy be understood and solutions may be
suggested.
IS for management control needs the following information like:
E Planned performance (Standard, expected, budgeted etc)
E Variance from planned performance
E Reasons for variance
E Analysis for possible decisions or courses of action.
This level is called tactical planning involves the design tatics, the setting of
objectives and the development of procedures, rules, schedules and budgets.
Hence the database needed for management control has 2 major elements.
66
UNIT I

E The database provided by operations.
E The plans, standards, budgets etc., which defie management expectations
about performance. These may include some external data for comparison with
other industries and cost indices.
(c) Information Systems for Operational Control

Operational control is the process of deciding how to carry out specific tasks specified
by upper and middle management and establishing criteria for completion and
resources allocation. Further, it is the rocess of ensuring that operational activities are
carried out effectively. It makes use of prestablished procedures and decision rules. It
may be noted that a large percentage of decisions are programmable and the
procedures to follow are quite stable. Further, the operating decisions and results
achieved are of short time periods from a day to a week.
The following fig. shows three types of processing done which contain various
decision making routines. The implementation may involve any one of the following:
1. Transaction Processing
2. Control Report

67
UNIT I

3. Inquiry processing
Processing Support for Operational Control

The database for operational control and operational decision making contains primarily
internal data generated by transactions. It is important to interpret data recorded from
operations as the sequence of processing is significant.
MIS Based on Organisational Functions
MIS introduced as a broad concept referring to as a Federation of subsystems. Two
approaches to defining the subsystems of an MIS are on the following:
Organisational functional subsystems.
Managerial activities subsystems.

Organisational functions subsystems:
Major organizational functions subsystems are:
Marketing
Manufacturing
Logistics
Top Management
Personnel
Finance and Accounting
Information processing.
(These classifications are shown differently by various authors. But many are common.
MIS may be viewed as a Federation of Information Systems one for each major
organizational function. There may be common support systems used by more than one
subsystem, but each functional subsystem is unique in its procedures, programs, models etc.

SYSTEM
Concept of a system
What is a System?
Simply a set of components that interact to accomplish some purpose

Example :
Transport System where in you will so many mode of transport like Rail, Road,
Airway,& Shipping. In the case of Road transport system you will have two wheeler,
Three wheeler, Four Wheeler (like car, van or mini lorry), Busses, Lories, Trucks Etc.
which are used to transport men and materials from one place to another.
Nervous System includes various parts of your body like brain, spinal cord, nerves,
and special sensitive cells under your skin, that work together.
Digestive System includes various parts which are digesting what your food.
Communication System consists of Telephones, Cells, Radio transmission etc.
A business is also a system with its components like Marketing, Manufacturing,
Sales, Finance, Research, Shipping etc. all working together to create a profit that
benefits the employees and stockholders of the firm. Each of these components itself
is a system The Accounts department ,for example, may consist of accounts payable,
accounts receivable, billing, auditing, and so on.
Some definitions for the term SYSTEM:
1. A regularly interacting or interdependent group of items forming a unified whole.

2. An organized set of doctrines, ideas, or principles, usually intended to explain the
arrangements or working of a systematic whole.
3. An organized or established procedure.
4. Harmonious arrangement or pattern: order.
5. An organized society or social situation regarded as stultifying establishment.
What is Information System?
? A set of people, procedures and resources that collects, transforms, and disseminates
information in an organization.
? It is a system that accepts data resources as input and processes them into information
products as output.
Important System Characteristics
The systems purpose is for its existing like Legal System, Ignition System, Digestion System
etc.
Systems must interact with their environment which is entities outside the boundaries of
systems.
Open systems are the systems that receive input and produce output with other
systems.
Systems which are not interacting with other systems are Closed System. They exist
in theory only.
The element of control must be there.
Systems may have several subsystems.
Characteristics of Good Information System
Characcteristics
Relevant
Explanation
Information must pertain to the problem at hand.
K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil

Example: the total number of years of education may not
be relevant to a persons qualifications for a new job.
Relevant information might be that the person has so
many years of education in mechanical engineering, and
so many years of experience. %The information must
also be presented in a way that helps a person understand
it in a specific contect.
Complete
Partial information is often worse than no information.

Example: Marketing data about household incomes may
lead to bad decisions if not accompanied by vital
information on the consumption habits of the targeted
population
Accurate
Erroneous information may lead to disastrous decisions.

Example: an accurate record of a patients reaction to
penicillin may lead a doctor to harm the patient while
believing that she is helping him.
Current
Decisions are often based upon the latest information

available, but what was a fact yesterday may no longer be
one today.
Example: a short term investment decision to purchase a
stock based on yesterdays stock prices may be a costly
mistake if thestocks price has risen in the interim.
Economical
In a business setting, the cost of obtaining information

must be considered as one cost element involved in any
decision.
Example: Demand for a new product must be researched
to reduce risk of marketing failure, but if market research
is too expensive, the cost of obtaining the information
may diminish profit from sales.
Aspects of control in systems

o
o
o
o
A Standard for acceptable percormance

A method of measuring actual performance
A means for comparing actual performance against the standard
A method for feedback
Systems that can adjust their activities to the acceptable levels continue to function.
Otherwise they cannot cease to exist.
Different types of Information?

There are five types of information:
?
?
?
?
?
Facts:
A unique bit of information that identifies an object, person, place, or date.
Concepts: A category of items or ideas that share comon features.
Procedures: A series of steps that show how to make or do something.
Processes: A description of how something works or operates and
Principles: Rules, heuristics, guidelines, criteria that predict an outcome
Business System Concept
F Human body system is the best example for a system which in itself consists of various
sub-systems like digestive system, respiratory system, nerves system etc. These subsystems have further sub-parts. All sub-systems of the human body system must function in
a closely coordinated way. The interrelated sub-systems form a unitary whole i.e., a human
being who is himself a part of the environment and the society in which he lives.
F A sub-system, in a business organisation, may be defined as a departmental activity within
the framework of a functional activity like production, inventory, Finance, Sales,
Marketing, HR etc. Respective departments set their objectives within the framework of
functional objectives and accordingly this may be defined as sub-objectives. Like a human
body system, a business system too consists of various sub-systems like production,
financing, marketing, HR etc., which operate in unison to make the unitary whole i.e. a
business system. These sub-systems may have further sub-systems. For example, HR subsystem is divided into other sub-systems like selection, training, remuneration, promotion
etc. The success of any business system as a unitary whole depends on the close
coordination of these sub-systems.
F Another way of distinguishing sub-systems is according to activities and accordingly each

business may have the following sub-systems :
a) A decision making sub-system to produce plans and shape the activities of the enterprise
as a whole.
b) A processing sub-system which procures information, materials, energy etc. and
converts these into salable products.
c) An information handling sub-system specially concerned with the use of accounting
data.
d) A control sub-system to ensure that actual performance is according to plans.
e) A memory sub-system to store information and make it available as and when required.
f) A sensory sub-system to measure significant changes in both, the system and its
environment.
F A business house as a system is a part of the broader system i.e. the industry to which it
belongs and the industry is a part of the entire industrial set up and that industrial set up is a
part of the national economic situation. Thus, there is a chain of complicated relationships
each affecting the other.
F A business can be regarded, from the angle of the system approach as an entity or a system
functioning in the social, economic and political environment of the country or even the
world.
F The use of the system theory in the study of a business enterprise is really quite
complicated because it is difficult to know where to draw a line of distinction that separates
a firm as a unique entity from its environment. Present day business cannot function in
vacuum. It has to take a serious note of the social, political and economic environment in
which it functions. It has the social responsibility and unless it proves its commercial
viability and its concern towards the interest of consumers, employees, creditors and the
society in general, it simply cannot survive for long.
F When undertaking the study of a business system, we are concerned not only with the
structure of the business system but also with its environment because these environmental
factors have a direct bearing on the smooth functioning of a business system and its
environment.
How the environment affects a business system?.

The environment may be:
1. Economic environment No business exists in a vacuum and cannot independently control
its destiny, as it is subjected to external influences over which it has no direct control. A
business must suitably react to these external influences in order to survive. A business firm
may belong to a particular industry like manufacturing, banking, insurance, mining and so on.
These industries are the essential element of national economic system. The national
economic system cannot exist in isolation either, as it is an integral part of the world
economic system. Both national and international economic forces influence the demand for
the product of a particular business. Production programmme of business firms are affected
by these economic forces and the production programmes in turn determine the resources
required in the shape of raw materials. The availability of these resources is also dependent
on political, economic and social circumstances prevailing within the countries supplying raw
materials like what has happened in Iraq now (ISIS an Islam fundamentalist and terrorist
organisation, has taken charge of some oil firms which has escalated the price of petroleum
products in India and world).
Demand affects the level of employment at home and abroad. Increase in demand at home for
consumer goods creates additional demand for new plant and machinery, in order to expand
its production which may be purchased from home capital goods industry or from abroad. It
may create balance of payment problems, if purchased from abroad which have to be
financed either by additional exports or by loans from international financial institutions.
2. Technological environment The demand for a product is affected by the technological
changes. Consumers respond to technological changes and demand for products incorporating
the latest technology. A business must be quick to respond to these technological
developments. Examples of this include transistorised radios and changeover from metal
products to plastic or fiberglass products. A business can retain its share of production or
increase only by quick response to technological developments and for this market research is
a must.
3. Financial environment A business unit cannot remain unaffected by the financial
environment existing in the country. For instance, the economic crisis in a country may be
reflected in the financial position of those business houses that have to suffer from deficiency
of liquid funds. Economic crisis, leading to lower level of demand cause fall in production
which in turn leads to increase in fixed cost per unit thus reducing profit margin of per unit
sold. Even where a business can obtain some short-term finance in the form of loans, the
interest rate is quite high which further increases the financial overhead burden.
4. Sociological environment The employees of today are developing a new sociological
outlook. The present-day employees cannot be effectively controlled in an autocratic fashion.
They want to participate in the management process. This calls for democratic approach in
management and for that management has to change its traditional approach towards the
personnel or labour.
5. Legislative environment A large number of government legislations like the Companies
Act, the Industries Development and Regulation Act, Income Tax Act, Sales Tax Act etc.
affect the activities of business. From the above discussion it is clear that a business manager
has not only to integrate the men, machine, material, information and money into the business
system but he has also to coordinate these with the environment in which these exist. A
business system has to adapt to the changes in environment like the change in the economic
policy, change in demand, and other political and social changes. Above all this, he has to
take into account the international market situation.
A Business system is an open system because it recognizes the existence of external environment
which affects its performance and which in turn is also affected by the business system. It is not at

all a closed system which is a self-contained unit completely detached from its external
environment. Like a human body system, which constantly adjusts itself to the external
environment, an open system too is characterised by its capacity of self repair.
Business Organisation is the hub or the central part of any business system. It has the usual
features of a system:
1. Plansobjectives, policies, procedures etc.
2. Inputsmen, machine, material, money etc.
3. Processingactivities concerning producing, financing, marketing, personnel, etc.
4. Outputgoods and services to society.
5. Feedbackalteration and modification of plans and activities if needed.
The Feedback Concept
The feedback concept is concerned with the process of increase or decrease in the support to a
business unit in response to its performance. In our study, it refers to the arrangement by which
society gets various outputs from business in return for the inputs and the society increases or
decreases the inputs provided to the business system depending upon the satisfaction derived from
the output of business. Feedback is necessary to feed the various sub-systems in the organisation
with the requisite information. For instance, if the results of any business unit reveal that the
quality of its products is not up to the mark, it will necessitate the steps for higher quality
production. But suppose the results as such are not acceptable, it will call for modification of the
plans. This may be described as the systems approach to business organisation. This approach
highlights the integrated complex, each sub-system inter-related and well co-ordinated with each
other so that the whole firm functions in unison.
Need for Systems approach in a business organisation
F Systems approach is always goal oriented.
F The systems approach is the most appropriate method of organising and evaluating a
business house and its performance.
F An organisation has to continuously work to bring the best balance between a mass of
conflicting objectives like service to society and dividend to shareholders.
F It has to reconcile the various objectives of business in such a way that will provide the
maximum satisfaction to the total system.
F A business system on the whole is something more than just the aggregation of all subsystems in it.
F It is responsible for transforming the inputs into outputs to satisfy consumer demands.
F An organisation has to develop sensitivity to know the changes in its environment and
adaptiveness to the demands of its environments, if it has to accept the challenges and also
ensure its survival and growth. Feedback is necessary to achieve this objective.
F The systems approach to a business organisation draws the attention towards the integrated
complex system, each functional part integrated with others so that the whole moves in
unison.
F The interesting feature of a business system is that its various parts are inter-related and
interact with each other, while the business system on the whole, interacts with its
environment. The business system affects its environment by its output and is itself
dependent on its environment which increases or decreases the inputs according to the
satisfaction to the society. So, an efficient business system should not only be a suitable mix
of its various sub-systems but it should also be in tune with the changing environment.
Thus a systems approach highlights the fact that the business system and its environment are
inseparable and feed-back is necessary from one sub-system to another subsystem so that the
process of providing goods and services to the society continues smoothly and efficiently.
INFORMATION AS A CORPORATE RESOURCE

Information is considered to be life blood of an organization. Without proper information, it is very
difficult to run a modern business due to hectic competition from national and international competitors,
Government restriction, frequent change in the tastes and preference of the customers, the influence of
electronic media and internet, fast growth in information technology etc.
For taking appropriate decisions affecting the entire or any part of the organization, to take competitive
advantage over competitors, Price fixation, Quality management, Personnel/Financial/Organizational
management, Administration etc. require information.
So, information is considered as a corporate resource due to the following:
? Security as Part of the Total Organization

Information about an organization should not be revealed to others especially to the competitors. So,
the information should be a secured one. Information security is not simply software or hardware
security alone, and it covers the entire organization. An organizations policies, plans and procedures
may affect security needs, and security practices may affect those policies, plans or procedures. The
important point is that a secure system is integral to the total organization. This calls for lot of
information to take right decision.
? Understanding The Organization

If a secure system is part of the total organization, then one must understand the organization, its goals,
objectives, policies and procedures. If the objectives of an organization are unclear, then implementing
new technology will not help. If procedures are not secure, then new technology will not make them
secure. Understanding the organization is the first step in planning for a secure system.
? Identifying Sensitive Data

After establishing a clear understanding of the organizations function and how it is to complete its
objectives, the first step in planning for and developing a secure system is to identify sensitive data.
Recognize specific levels of security and that each may not be equally valuable. Identifying sensitive
data and determining their value before the fact is a most difficult task for any organization.
Unfortunately for most Management Information Systems (MIS) directors, management will more
easily recognize the true value of data after the data have been disclosed to unauthorized individuals
and are compromised.
? Controlled Sharing of Information and Resources

Sharing of information and resources is increasingly possible through increased networking,
communications and connectivity. As this data sharing increases, the problem of information security
increases exponentially. The problem for management is one of encouraging increased productivity
through technology while maintaining what will probably be an increasingly insecure system.
System Interfaces
Various types of systems
Open Systems
Close Systems
Sub-systems
Open System
Open Systems are the systems which are interacting with the environments
For ex., some of the information of Finance Department is input for purchase
department or inventory department or HR department. Receiving and evaluating
feedback allows a system to determine how well it is operating. If a business,
produce as output products or services that are high-priced and of low quality,
people probably w8ill not continue to buy them. Low sales figures are feedback,
telling the management that it needs to adjust the products and the way they are
produced to improve performance and bring it to the line of expectation.
Closed Systems
Closed systems will never interact with the environment.
Closed systems sustain as long as they are having adequate regulatory

information.
They do not need any thing from the environment. Since this condition cannot exit
for a long, there are no closed systems.
Sub-System
Normally each department of an orgainsation is called as a System or

Functionality.
Each system will be further subdivided into small systems according to their
nature of activities in that system. This bifurcation of a system into smaller
systems will be called as sub-system. For ex., an accounts system is bifurcated
into small units like accounts payable, accounts receivable, billing, auditing, and
so on. Each one of these sub-systems will be called as sub-system like billing
sub-system, internal audit sub-system, accounts sub-system etc.
Sub systems can handle complexities of a system in a simple way and improves
the understanding of the system.
Each sub system carries a part of the objectives of the system.
A good system will be further divided in to highly independent subsystems with

minimal flow between them, to minimise the complexity and then simplifying the
sytem.
Each subsystem can further be subdivided in to further subsystems or modules.
Decomposition into subsystem is used to analyse the existing system and to design
and implement a new system.
The decomposition of systems into subsystems is an important step in simplifying

the design of systems.
The use of subsystems usually requires some
decomposing/lossly coupled/mechanisms to reduce the complexities of
coordination and communication among them. This will be illustrated as under:
Design Objectives
Self regulation and self adjustment are design objectives in all systems.
Benefits of (Business) System Concept
E
E
E
E
E
An organization consists of many business systems like Finance, Marketing, Sales, Inventory
control, Manufacturing etc.
The purpose of Finance Department is to cater the Financial needs of an organization. It has
to manage various financial activities. It has to do proper financial planning. It has to
mobilize the funds from various sources at lesser cost etc. So also, each and every system is
having their own objectives for their existence like Marketing system to market the goods
produced, Sales system to sell the finished products, Inventory system to have control over
the materials, Manufacturing system to manufacture the necessary goods according to
cutomers specifications and taste etc.
There will be control in each and every system for its efficient performance which will be
contrinuosly monitored by Managers and Employees and necessary actions will be taken in
case if there is any adverse situations.
Every System will have sub-systems which will be contributing to the success of a system..
The general features of all systems are identical. Any system can be examined with this
framework in mind and specific details added as necessary. It is this flexibility that makes

systems concepts so useful to business in general and to information system designs in
particular.
Business Information System

An organ or a department or a sub system that provides various information that are needed
for a business system is called as Information System.
Information systems consist of subsystems like Hardware, Software, and data storage for
Files and Databases.
Information System supports other systems of an organization.

While designing a system, Systems Analyst should first consult the Organization Chart which
tells the hierarchy of an organization.
This organization chart gives an idea to the systems analyst about
Informal Channels
Interdependences
Key People and Functions
Critical Communication Link
Various types of systems.
Open Systems & Close Systems
Sub-systems
Conceptual & Empherical
Natural & Manufactured.
Stationary & Non-stationary System
Social, People-Machine, & Pure Machine
Adaptive & Non-adaptive system
Deterministic nad probabilistic Systems.
Permanent & Temporary Systems.
Subsystems and super-systems
Open & Close Systems:

Open System
Open Systems are the systems which are interacting with the environments
For ex., some of the information of Finance Department is input for purchase
department or inventory department or HR department. Receiving and evaluating
feedback allows a system to determine how well it is operating. If a business,
produce as output products or services that are high-priced and of low quality,
people probably w8ill not continue to buy them. Low sales figures are feedback,
telling the management that it needs to adjust the products and the way they are
produced to improve performance and bring it to the line of expectation.
10

Closed Systems
Closed systems will never interact with the environment.
Closed systems sustain as long as they are having adequate regulatory

information.
They do not need any thing from the environment. Since this condition cannot exit
for a long, there are no closed systems.
Sub-System & Super System

Sub-System
Normally each department of an orgainsation is called as a System or

Functionality.
Each system will be further subdivided into small systems according to their
nature of activities in that system. This bifurcation of a system into smaller
systems will be called as sub-system. For ex., an accounts system is bifurcated
into small units like accounts payable, accounts receivable, billing, auditing, and
so on. Each one of these sub-systems will be called as sub-system like billing
sub-system, internal audit sub-system, accounts sub-system etc.
Sub systems can handle complexities of a system in a simple way and improves
the understanding of the system.
Each sub system carries a part of the objectives of the system.
A good system will be further divided in to highly independent subsystems with

minimal flow between them, to minimise the complexity and then simplifying the
system.
Each subsystem can further be subdivided in to further subsystems or modules.

Decomposition into subsystem is used to analyze the existing system and to
design and implement a new system.
The decomposition of systems into subsystems is an important step in simplifying
the design of systems.
The use of subsystems usually requires some
decomposing/lossly coupled/mechanisms to reduce the complexities of
coordination and communication among them. This will be illustrated as under:
Super System
11

Super System is just opposite to sub-system. It is a part of the larger system and
extremely large & complex one.
Physical or Abstract System
Physical systems are tangible entities that we can feel and touch. These may be static or dynamic
in nature. For example, take a computer center. Desks and chairs are the static parts, which assist in
the working of the center. Static parts don't change. The dynamic systems are constantly changing.
Computer systems are dynamic system. Programs, data, and applications can change according to
the user's needs.
Abstract systems are conceptual. These are not physical entities. They may be formulas,
representation or model of a real system.
Man made Information System
The main purpose of information systems is to manage data for a particular organization.
Maintaining files, producing information and reports are few functions. An information system
produces customized information depending upon the needs of the organization. These are usually
formal, informal, and computer based.
Formal Information Systems: It deals with the flow of information from top management to
lower management. Information flows in the form of memos, instructions, etc. But feedback can be
given from lower authorities to top management.
Informal Information systems: Informal systems are employee based. These are made to solve
the day to day work related problems.
Computer-Based Information Systems: This class of systems depends on the use of computer for
managing business applications. These systems are discussed in detail in the next section.
Different information system Categories
Transaction Processing Systems

Management Information Systems
Decision Support Systems
Executive Information System
Expert System
Office System.
12
Transaction Processing System

TPS is processing of day to day transactions.
This is the most fundamental computer based processing
Activities of TPS will be aimed to improve the routine business activities on which the
organization depend.
What is a Transaction?
A Transaction is an event or activity that affect the organization. Common transactions
including placing orders, billing customers, hiring employees, and depositing cheques are
called as Transactions..
F The type of transactions will vary from organization to organization.
F This is mostly a major daily process in an organization.
F The activities of TPS
Calculation
Classification
Sorting
Storage and Retrieval &
Summarization
F It is occurring at operations level.
Characteristics of TPS
There is heavy volume of transactions
Each transaction is similar
The procedures for processing the transactions are well understood and can
be described in detail.
Few exceptions to the normal procedures occur.
TPS processing procedures are often Standard Operating Procedures
The heavy volume of transactions per day calls for computerization of TPS.
MIS are decision oriented.
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Utilizing the Transaction Data and other information that are developed internally or externally
to provide necessary information to the management time to time to take various decisions of
normal in natute or to take care of day to day affairs of the management.
This will support the decision often occur.
It is possible to analyze the decision factors and variables and develop reports that will be
useful in formulating future decisions.
MIS will be supplying information for structured decision-making and the problems are highly
predictable.
MIS will be using some pre-defined rules and regulations for generating information or will be
using formulae for generating information requied bu management.
Decision Support System

Aimed at assisting managers who are faced with unique (non-occurring) decision problems.
They occur only once.
Here the decisions are not structured.
Often called as unstructured or semi-structured decisions.
Here it it very difficult to identify the information need.
Example is launching a new line of activity or service say, Launching ATMs. Initially no data
will be available. Launching a new line of product say Black berry Cell phone or cell phone
with camera facility.
Here managers judgement plays a vital role in decision making where the problem is not
sturctured.
The DSS supports, but does not replace, manager judgment
An information system is a collection of hardware, software, data, people and procedures that are
designed to generate information that supports the day-to-day, short-range, and long-range activities of
users in an organization. Information systems generally are classified into five categories: office
information systems, transaction processing systems, management information systems, decision support
systems, and expert systems. The following sections present each of these information systems.
Office Information Systems
An office information system, or OIS (pronounced oh-eye-ess), is an information system that uses
hardware, software and networks to enhance work flow and facilitate communications among employees.
Win an office information system, also described as office automation; employees perform tasks
electronically using computers and other electronic devices, instead of manually. With an office
information system, for example, a registration department might post the class schedule on the Internet
and e-mail students when the schedule is updated. In a manual system, the registration department would
photocopy the schedule and mail it to each students house.
An office information system supports a range of business office activities such as creating and distributing
graphics and/or documents, sending messages, scheduling, and accounting. All levels of users from
executive management to nonmanagement employees utilize and benefit from the features of an OIS.
The software an office information system uses to support these activities include word processing,
spreadsheets, databases, presentation graphics, e-mail, Web browsers, Web page authoring, personal
information management, and groupware. Office information systems use communications technology
such as voice mail, facsimile (fax), videoconferencing, and electronic data interchange (EDI) for the
electronic exchange of text, graphics, audio, and video. An office information system also uses a variety of
14

hardware, including computers equipped with modems, video cameras, speakers, and microphones;
scanners; and fax machines.
Decision Support Systems
Transaction processing and management information systems provide information on a regular basis.
Frequently, however, users need information not provided in these reports to help them make decisions. A
sales manager, for example, might need to determine how high to set yearly sales quotas based on
increased sales and lowered product costs. Decision support systems help provide information to support
such decisions.
A decision support system (DSS) is an information system designed to help users reach a decision when a
decision-making situation arises. A variety of DSSs exist to help with a range of decisions.
A decision support system uses data from internal and/or external sources.
Internal sources of data might include sales, manufacturing, inventory, or financial data from an
organizations database. Data from external sources could include interest rates, population trends, and
costs of new housing construction or raw material pricing. Users of a DSS, often managers, can
manipulate the data used in the DSS to help with decisions.
Some decision support systems include query language, statistical analysis capabilities, spreadsheets, and
graphics that help you extract data and evaluate the results. Some decision support systems also include
capabilities that allow you to create a model of the factors affecting a decision. A simple model for
determining the best product price, for example, would include factors for the expected sales volume at
each price level. With the model, you can ask what-if questions by changing one or more of the factors
and viewing the projected results. Many people use application software packages to perform DSS
functions. Using spreadsheet software, for example, you can complete simple modeling tasks or what-if
scenarios.
A special type of DSS, called an executive information system (EIS), is designed to support the
information needs of executive management. Information in an EIS is presented in charts and tables that
show trends, ratios, and other managerial statistics. Because executives usually focus on strategic issues,
EISs rely on external data sources such as the Dow Jones News/Retrieval service or the Internet. These
external data sources can provide current information on interest rates, commodity prices, and other
leading economic indicators.
To store all the necessary decision-making data, DSSs or EISs often use extremely large databases, called
data warehouses. A data warehouse stores and manages the data required to analyze historical and
current business circumstances.
5. Expert Systems
An expert system is an information system that captures and stores the knowledge of human experts and
then imitates human reasoning and decision-making processes for those who have less expertise. Expert
systems are composed of two main components: a knowledge base and inference rules. A knowledge
base is the combined subject knowledge and experiences of the human experts. The inference rules are a
set of logical judgments applied to the knowledge base each time a user describes a situation to the expert
system.
Although expert systems can help decision-making at any level in an organization, nonmanagement
employees are the primary users who utilize them to help with job-related decisions. Expert systems also
15

successfully have resolved such diverse problems as diagnosing illnesses, searching for oil and making
soup.
Expert systems are one part of an exciting branch of computer science called artificial intelligence.
Artificial intelligence (AI) is the application of human intelligence to computers. AI technology can sense
your actions and, based on logical assumptions and prior experience, will take the appropriate action to
complete the task. AI has a variety of capabilities, including speech recognition, logical reasoning, and
creative responses.
Experts predict that AI eventually will be incorporated into most computer systems and many individual
software applications. Many word processing programs already include speech recognition.
Integrated Information Systems
With todays sophisticated hardware, software and communications technologies, it often is difficult to
classify a system as belonging uniquely to one of the five information system types discussed. Much of
todays application software supports transaction processing and generates management information.
Other applications provide transaction processing, management information, and decision support.
Although expert systems still operate primarily as separate systems, organizations increasingly are
consolidating their information needs into a single, integrated information system.
Major Functional Areas of a Business.

Sales and marketing information systems help the firm identify customers for the organizations
products and services, develop products and services to meet customers needs, promote the
products and services, sell the products and services, and provide ongoing customer support.
Specific sales and marketing information systems include order processing, pricing analysis, and
sales trend forecasting.
Manufacturing and production information systems provide information for planning, product
development, production or service scheduling, and controlling the flow of products and services.
Specific manufacturing and production information systems include machine control, production
planning, and facilities location.
Finance and accounting information systems track the organizations financial assets and fund
flows. Financial and accounting systems include accounts receivable, budgeting, and profit
planning.
Human resources information systems maintain employee records; track employee skills, job
performance, and training; and support planning for employee compensation, including pensions
and benefits, legal and regulatory requirements, and career development. Systems include training
and development, compensation analysis, and human resources planning.
Characteristics of Transaction Processing Systems and the Role they play in a business
Transaction processing systems (TPS) are computerized systems that perform and record the daily
routine transactions necessary to conduct the business; they serve the organizations operational
level. The principal purpose of systems at this level is to answer routine questions and to track the
flow of transactions through the organization.
@ At the operational level, tasks, resources, and goals are predefined and highly structured.
@ Managers need TPS to monitor the status of internal operations and the firms relations with
the external environment.
@ TPS are also major producers of information for the other types of systems.
@ Transaction processing systems are often so central to a business that TPS failure for a few
hours can lead to a firms demise and perhaps that of other firms linked to it.
Examples of transaction processing systems for a university include a registration system,
student transcript system, curriculum class control systems, and an alumni benefactor system.
Characteristics of MIS
16

Middle management needs systems to help with monitoring, controlling, decision-making,and
administrative activities.
@ MIS provide middle managers with reports on the organizations current performance. This
information is used to monitor and control the business and predict future performance.
@ MIS summarize and report the companys basic operations using data supplied by TPSs. The
basic transaction data from TPS are compressed and usually presented in reports that are
produced on a regular schedule.
@ MIS serve managers primarily interested in weekly, monthly, and yearly results, although some
MIS enable managers to drill down to see daily or hourly data if required.
@ MIS generally provide answers to routine questions that have been specified in advance and
have a predefined procedure for answering them.
@ MIS systems generally are not flexible and have little analytical capability.
@ Most MIS use simple routines, such as summaries and comparisons, as opposed to
sophisticated mathematical models or statistical techniques.
Examples include sales and profit per customer and per region, relocation summary and analysis,
inventory control, capital investment analysis, and even a report on students who were here in the
autumn but did not to return in the spring.
How does MIS differ from TPS and DSS?
@ MIS differs from TPS in that MIS deals with summarized and compressed data from the
TPS and sometimes analysis of that summarized data.
@ While MIS have an internal orientation, DSS will often use data from external sources, as
well as data from TPS and MIS.
@ DSS supports right now analysis rather than the long-term structured analysis of MIS.
MIS are generally not flexible and provide little analytical capabilities. In contrast, DSS are
designed for analytical purposes and are flexible.
Characteristics of DSS
Decision-support systems (DSS) support non-routine decision making for middle managers.
@ DSS provide sophisticated analytical models and data analysis tools to support semi-structured
and unstructured decision-making activities.
@ DSS use data from TPS, MIS, and external sources, provide more analytical power than other
systems, combine data, and are interactive.
@ DSS focus on problems that are unique and rapidly changing, for which the procedure for
arriving at a solution may not be fully predefined in advance.
@ DSS use a variety of models to analyze data, or they condense large amounts of data in a form
in which decision makers can analyze them. Typically, they provide the ability to do what if
analysis.
@ DSS use data from TPS, MIS, and external sources, provide more analytical power than other
systems, combine data, and are interactive.
@ DSS are designed so that users can work with them directly; these systems explicitly include
user-friendly software.
How does DSS differ from ESS?
Executive support systems help senior managers address strategic issues and longterm trends, both
in the firm and in the external environment.
@ ESS address nonroutine decisions requiring judgment, evaluation, and insight because there is
no agreed-on procedure for arriving at a solution.
@ ESS provide a generalized computing and communications capacity that can be applied to a
changing array of problems.
17
@ ESS are designed to incorporate data about external events, such as new tax laws or
competitors, but they also draw summarized information from information from internal MIS
and DSS.
@ DSS filter, compress, and track critical data, displaying the data of greatest importance to
senior managers.
@ ESS may be less analytical than DSS with less use of models such as linear programming or
forecasting. However, they often rely on external data and rely heavily on graphics.
Relationship between TPS, MIS, DSS, and ESS.
The various types of systems in the organization exchange data with one another. TPS are typically
a major source of data for other systems, especially MIS and DSS. TPS are operational-level
systems that collect transaction data. Examples of these are payroll or order processing that track
the flow of the daily routine transactions that are necessary to conduct business. TPS provide data
that are required by MIS and DSS, although these systems may also use other data. DSS not only
use data from TPS but also from MIS. MIS rely heavily on data from TPS. ESS are primarily a
recipient of data from lower- level systems. They obtain most of their internal data from MIS and
DSS.
Participants to system development

Users
Management
Auditors, quality assurance people, and standards bearers
Systems analysts
Systems designers
Programmers
Operations Personnel
Users
The user, the most important player in the systems game, is the person (or group of people) for whom the
system is being built. He or she is the person whom will be interviewed, often in great detail, to learn what
features the new system must have to be successful. The user is the owner in the sense that he or she
receives, or inherits-and thus owns- the system when it is finally built. And the user is the customer in at
least two important respects:
1.
As in so many other professions, the customer is always right, regardless of how demanding,
unpleasant, or irrational he or she may seem.
2.
The customer is ultimately the person paying for the system and usually has the right and/or the
ability to refuse to pay if he or she is unhappy with the product received.
In most cases, it is fairly easy to identify the user: the user is typically the person who makes a formal
request for a system. In a small organization, this is usually a very informal process. In a large
organization, the initiation of a systems development project is usually much more formalized.
Whenever possible, the systems analyst should try to establish direct contact with the user. Even if
other people are involved as intermediaries, it is important to have regular, face-to-face meeting with the
person who will ultimately inherit the system.
If it is not possible to communicate directly with the user, then the documentation produced by the
systems analyst becomes even more crucial.
18

The heterogeneity of Users
One mistake often made by computer programmers, and sometimes by systems analysts is to
assume that all users are the same. User implies that the systems analyst will only have to interact with
one person, even when it is obvious that more than one user is involved, there is a tendency to think of
them as a formless, shapeless, homogeneous group of humans. Here are two ways of categorizing users:
Job category or level of supervision.
Level of experience with data processing.
Categorizing Users by Job category

On a typical systems analysis project, we can usually count on interacting with three main job categories:
(a) Operational users: are the clerical, operational, and administrative people most likely to have the
most day-to-day contact with the new system. There are three things should be kept in mind when
working with operational-level users:
@
Operational users are very much concerned with the functions that the system will perform,
but they are likely to be even more concerned with the human interface issues.
Operational users tend to have a local view of the system, they tend to be knowledgeable
about the specific job that they do and the people with whom they have immediate contact.
But they often are unfamiliar with the big picture, that is, they may have trouble
describing how their activity fits into the overall organization or what the overall
organizations charter really is.
Operational users tend to think of systems in very physical terms, that is, in terms of the
implementation technology currently used to implement the system or in terms of
technology that they imagine could be used.
(b) Supervisory users are employed in a supervisory capacity: they usually manage a group of
operational users and are responsible for their performance. The significant things to remember
about supervisory users are these:
@
Many of them are former operational users who have been promoted to their current
position.
@
One reason that the supervisory user may be perceived as out of touch with the operational
user is that he or she is often measured and motivated by performance against a budget.
@
It is usually the supervisory user who thinks of a new system as a way of reducing the
number of operational users or avoiding further increases in their numbers as the volume of
work increases.
@
The supervisory user will often act as a middleman between the systems analyst and the
operational user.
@
The supervisory user often thinks in the same physical terms as the operational user, and
this perspective is often just as local as that of the operational user.
@
Finally, the supervisory user will be contacted day-to-day. He or she is the one who will
typically define the requirements and detailed business policy that the system must
implement. He or she may be a passive member of the team, a full-time member of the
team, or even the project manager.
(c) Executive-level users: are generally not directly involved in a systems development project, unless
the project is so large and so important that it has a major impact on the organization.
19

To summarize, there are three different types, or levels, of users. Keep in mind that they have different
perspectives, different interests and priorities, and different backgrounds. These three types of users can
be characterized as shown below:
Operational: Usually has local view. Carries out the function of the system. Has a
physical view of the system.
Supervisory user: May or may not have local view. Generally familiar with operation.
Driven by budget considerations. Often acts as a middleman between users and higher
levels of management.
Executive user: Has a global view. Provides initiative for the project. No direct
operating experience. Has a strategic concern.
Categorizing Users by Level of Experience

Different users will have different levels of experience. Today, we can distinguish between rank amateurs,
cocky novices, and a small (but rapidly growing) number of true computer experts.
The amateur is the one who has never seen a computer and who exclaims loudly and
frequently that he or she doesnt understand all this computer stuff. The real problem with
the amateur user is somewhat more subtle: he or she may find it difficult to understand the
language that the systems analyst uses to describe the features, functions and
characteristics of the system to be built, even though that language avoids obvious
computer-related terminology.
The second type of user is the cocky novice, the person who has been involved in one or
two systems development projects, or the user who has a personal computer and who has
written one or two basic programs. This user often claims to know exactly what he or she
wants the system to do and is prone to point out all the mistakes that the systems analyst
made on the last project.
Of course, there are some users who really understand systems analysis, as well as the
underlying technology of computers. It is a pleasure working with these people. The only
problem may be that the user and the systems analyst derive so much pleasure talking about
the tools and techniques of systems analysis that they forget that their true objective is to
build a functioning system.
Management
Management is a rather loose term. The systems analyst is likely to come into contact with several
different kinds of managers:
User managers: managers in charge of several people in the operational area where the new
system will be used. These are usually middle-level managers who want systems that will
produce a variety of internal reports and short-term trend analyses.
Executive development project (EDP)/MIS managers: the person in charge of the systems
development project itself, and the higher-level managers who are concerned with the overall
management and allocation of resources of all the technical staff in the systems development
organization.
20
General management: top-level managers who are not directly involved in the EDP
organization or in the user organization. This might include the president and/ or chairman of
the organization.
The primary interaction between the systems analyst and all these managers has to do with the
resources that will be assigned to the project. It is the systems analysts job to identify and document the
users requirements and the constraints within which the system must be built.
Auditors
Depending on the size of the project and the nature of the organization you work in, you may or may not
have auditors.
Systems analysts
The system analyst is a key member of any systems development project. In a boarder sense, the systems
analyst plays several roles:
Archaeologist and scribe: As a systems analyst, one of the main jobs is to uncover detail and
to document business policy that may exist only as tribal folklore, passed down from
generation to generation of users.
Innovator: The systems analyst must separate the symptoms of the users problem from the
true causes. With his or her knowledge of computer technology, the analyst must help the user
explore useful, new applications of computers.
Mediator: The systems analyst who often finds himself in the middle of users, managers,
programmers, auditors, and various other players, all of whom frequently disagree with one
another.
Project leader: Because the systems analyst is usually more experienced than the
programmers on the project, and since he is assigned to the project before the programmers
begin working, there is a natural tendency to assign project management responsibilities to the
analyst.
Systems designers
The systems designer is the person (or group of people) who will receive the output of the systems
analysis work. His or her job is to transform a technology-free statement of user requirements into a highlevel architectural design that will provide the framework within which the programmer can work. In
many case, the systems analyst and the systems designer are the same person, or member of the same
unified group of people. It is important for the systems analyst and systems designer to stay in close touch
throughout the project.
Programmers
Particularly on large systems development projects, the systems designers are likely to be a buffer
between the systems analysts and the programmers. The systems analysts deliver their product to the
system designers, and the system designers deliver their product to the programmer. There is another
reason why the systems analyst and the programmer may have little or no contact with each other: work is
often performed in a strictly serial sequence in many systems development projects. Thus, the work of
systems analysis takes place first and is completely finished before the work of programming begins.
21

Operations personnel
The operations personnel who are responsible for the computer center, telecommunications network,
security of the computer hardware and data, as well as the actual running of computer programs,
mounting of disk packs, and handling of output from computer printers. All this happens after a new
system has not only been analyzed and designed, but has also been programmed and tested.
Strategic Information System and Competitive Advantage

The information system must be highly reliable and timely available. Then only it will be benefiting the
management in taking correct decisions at a correct time. Otherwise it may not be useful to the
management and probably the entire business may collapse because of wrong decisions. So you can use
the IS as a strategic weapon to have an edge over the business of others, to succeed competition or at
least to face the stiff competition. This calls for Strategic Information System.. So, Strategic Information
System is the information system which enables the management to take strategic decision by giving
fitting reply to the existing cut-throat competition. Now there is acute global competition and stiff
internal competition from other players and MNCs. This calls for Strategic Information System which
will facilitate the management to have strategic advantage over others.
22

MIS for Management Decisions

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UNIT I

Management Information System

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

Management Information System

Management Information System

w Business Intelligence - Information Management pertaining to an organization's policy or

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

Various Definitions for MIS

According to Philip Kotler

"...research in the information systems field examines

A Management Information System is used to transform data into useful information as

The typical MIS is based on 4 major component (M

Management Information System

MIS ia a management technique

Any computer based information system is MIS.

? Any reporting system is an MIS

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

Management Information System

ROLE OF THE MANAGEMENT INFORMATION SYSTEM IN AN ORGANISATION

The MIS plays the role of information generation, communication, problem

The impact of MIS on the functions is in its management.

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

MANAGEMENT INFORMATION SYSTEM AND COMPUTER

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

MANAGEMENT INFORMATION SYSTEM AND ACADEMICS

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

MIS AND THE USER

Management Information System

Management Information System

The Role of MIS Executive

The migration of equipment to user areas and control

Knowledge Users: Users take on increased responsibility. Identify applications,

Other, external organizations taking over the management and

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

To provide requisite information support for managerial functions within the

To ensure that wrong and unwanted information is not generated.

The Operating Components of an MIS

A Physical Components Hardware, Software, Database, Procedures, Operating

A Process Functions Process Transaction, Master File Maintenance, Report

A Output for Users Transaction documents or screens, preplanned reports, Pre

Management Information System

Oldest and earliest form of processing data.

Modern form of data processing using

People receive data by seeing or hearing,

Computer receives data from input

Human brain is having powerful storage

Computers doesnt have that amout of

Brain is doing all processing job, Comparing

Central Processing unit I doing all

Processing is very slow and not free from

Processing and information retrieval is

K.S.Kunkuma Balasubramanian, B.com, MBA, MPhil, Cell: 7812020411

Management Information System

Management Information System