UNIT I

INTRODUCTION

1.1
1.2
1.3
1.4
1.5
1.5.1
1.5.2.
1.6
1.7
1.8
1.9
1.10

CONCEPTS OF DATA AND INFORMATION

DEFINITION OF A MANAGEMENT INFORMATION SYSTEM
CONCEPTS OF DECISION MAKING
CONCEPTS OF SYSTEM
INFORMATION SYSTEMS AS A SYSTEM
ORGANIZATIONAL FUNCTION SUBSYSTEMS
ACTIVITIES SUBSYSTEMS
MIS AND OTHER DISCIPLINES
NEED FOR COMPUTER-BASED INFORMATION SYSTEM
THE ROLE OF A SYSTEMS ANALYST
EVOLUTION OF MANAGEMENT INFORMATION SYSTEMS
BUSINESS CASES

SUMMARY
REVIEW QUESTIONS
After reading this unit you could able to understand,
The distinction between data and information
Concepts of system and its classification
Concepts of information
Definitions of management information systems
Need for computer based information system
Functional and hierarchy levels of management
Evolution of Management information system

1.1 CONCEPTS OF DATA AND INFORMATION

Data the raw material for information is defined as groups of non random symbols
such as and which represent quantities, actions, objects etc. data items in information
systems are formed from characters. These alphabetic, numeric or special symbols are
organized for processing purposes into data structures, file structures and databases. Data
relevant to processing of information and decision making may also be in the form of text
images or voice. However, information generally defined as data that is meaningful or useful
to the recipient Data items are therefore the raw material for producing information.
For instance when I want to take decision of purchasing of bike mileages, pickup is
information where as kilometre from destination1 to destination 2 will be useful in
calculating the mileage and helps in taking decision termed data. The terms information
and data are frequently used interchangeably.
1.2 DEFINITION OF A MANAGEMENT INFORMATION SYSTEM
A definition of management information system, as the term is generally understood,
is an integrated, user machine system for providing information to support operations,
management, and decision making functions in an organization. The system utilizes
computer hardware and software; manual procedures; models for analysis, planning, control
and decision making; and a database. The fact that it is an integrated system does not mean
that it is a single, monolithic structure; rather, it means that the parts fit into an overall
design. The elements of the definition are highlighted below:
A management information system is an integrated user machine system for providing
information. To support the operation, management, analysis, and decision making function
in an organization
The system utilizes computer hardware and software manual procedures model for analysis,
planning, control and decision making and a database.
INTEGRATED SYSTEMS
Management information system is an integrated base for organizational individual
subsystems which is developed for and by users of various levels of organization. If the
system is not integrated, the individual applications may be inconsistent and incompatible.
Data may not be compatible across applications that same data may be specified differently.
There may be chance for redundant modules when actually a single application serves more
than one need. A user wanting to perform analysis using data from two difficult applications
may find the task very difficult any sometimes impossible.
The first step to integrate diverse information system applications is to prepare an
overall information system plan which determines how they fit in with other functions. In
sort, the information system is designed as a planned federation of small individual sub
systems.
Information system integration is also achieved through standards, guidelines, and
procedures set by the MIS functions. The enforcement of such standards and procedures

permits diverse applications to share data, meet audit and control requirements, and be shared
by multiple users. For instance an application may be developed to run on a particular small
computer. Standards for integration may dictate that the equipment selected be compatible
with existing computers and that the application be designed for communication with the
centralized database.
In the design of information system data and application is aparted. The separate
database is maintained while the integration is across many applications and to a variety of
users.
IMPORTANCE OF A DATABASE
The underlying concept of a database is that data needs to be managed in order to be
available for, processing and have appropriate quality. This data management includes both
software and organization. The software to create and manage a database is a database
management system.
When all access to and use of the database is controlled through a database
management system. All applications utilizing a particular data item access the same data
item which is stored in only one place. A single updating of the data item updates it for all
uses. Integration through a database management system requires a central authority for the
database. The data can be stored in one central computer or dispersed among several
computers; the overriding requirement is that there be an organizational function to exercise
control.
UTILIZATION OF MODELS
Data need to be processed to attain the decision in the business. To do this, processing
of data items is based on a decision model. For instance, an investment decision relative to
new capital expenditures might be processed in terms of capital expenditure decision model.
Decision model can be used to support different stages in the decision-making
process. Intelligence models can be used to search for problems and / or opportunities.
Models can be used to identify and analyze possible solution. Choice models such as
optimization models may be used to find the most desirable solution.
1.3 CONCEPTS OF DECISION MAKING
The word decision has been derived form the Latin word decidere which means a
cutting away or a cutting off. Thus, a decision involves a cut of alternatives between those
that are desirable and those that are not desirable. The decision is a kind of choice of a
desirable alternative. Decision making is a process to arrive at a decision; the process by
which an individual or organisation selects one position or action from several alternatives.
Shull et al have defined decision making as follows:
Decision making is a conscious process involving both individual and social
phenomena based upon factual and value premises which conclude with a choice of one
behavioural activity from among one or more alternatives with the intention of moving
toward some desired state of affairs.

Managers life is filled with making decisions after decisions. Looking at the role of
decision making in management, William Moore has equated it with management when he
says that management means decision making. In fact, decision making permeates all
managerial functions and classical management theorists have viewed it as the centre of
managerial activities. Though this classical view on decision making is not exactly true,
decision making is one of managers more challenging roles. This is the reason why
information systems designers have focused their maximum attention on designing systems
that help managers communicate and distribute information for decision making.
Decisions may be classified into various categories, which are,
Routine and non routine.
Programmed and non programmed
Strategic and tactical or operational decisions.
Programmed / structured and non - programmed / unstructured are mutually
exclusive. Strategic decisions are non - programmed and non - routine while tactical or
operational decisions are mostly routine and programmed. Therefore, understanding of
programmed and non - programmed decisions is important.

PROGRAMMED DECISION OR STRUCTURED DECISION

Is routine decision which is made within the organizational system governing
policies and rules. These policies and rules are established well in advance to solve recurring
problems in the organisation. The factors affecting decision making are static and well
structured. For example, the problem relating to recruitment of employees is solved by
recruiting those employees who meet selection criteria. These criteria are established by
recruitment policy and the managers have just to decide which employees meet selection
criteria and the decision is made accordingly. Programmed decisions are comparatively
easier to make as these relate to the problems which are solved by considering internal
organizational factors. Decisions are made by lower levels managers in the organization.
NON - PROGRAMMED DECISION OR UNSTRUCTURED DECISION
Is relevant for solving unique / unusual problem in which various alternatives cannot
be decided in advance. For such a decision, the situation is not well - structured and the
outcomes of various alternatives cannot be arranged in advance. For instance if an
organisation wants to take actions for expansion, it may have several alternative routes like
going for a taking over or acquisition of an existing company. In each situation, the managers
evaluate the likely outcomes of each alternative to arrive at a decision consider ing various
factors, many of which lie outside the organisation. Non - programmed decisions are novel
and non-recurring. Therefore, readymade solutions are not available. Since these decisions
are of high importance because of their long - term consequences, these are made by
managers at higher levels in the organisation.
DECISION - MAKING CONDITIONS
The decision maker makes todays decision for future conditions whose Impact is
known in future period. The future conditions for a decision vary along a continuum ranging
from criteria of perfect certainty to condition of complete uncertainty.

In each of these conditions, knowledge of outcome of the decision differs. An

outcome defines what will happen if a particular alternative or course of action is chosen and
implemented. Knowledge of outcome of each decision alternative is important when there
are multiple alternatives and only one alternative is to be chosen. In the analysis for decision
making, three types of knowledge with respect to outcomes are usually distinguished as
shown in Table.
TABLE 1.1
Conditions

Outcome

Certainty

Only one outcome of each Complete

and
accurate
alternative.
knowledge of the outcome of
each alternative
Multiple outcomes for each Probability of occurrence can
alternative
be attached to each outcome.

Risk
Uncertainty

Knowledge of outcome

Multiple outcomes
alternative

for

each No
knowledge
of
the
probability to be attached to
each outcome.

Table :-OUTCOMES IN DIFFERENT DECISION - MAKING CONDITIONS

Decision making strategy differs, based on the variation in the knowledge of
outcomes of different alternatives in different decision making conditions. The degree of
structuring in a decision can be seen in terms of continuum in which degree of structuring
varies as shown in table.
TABLE 1.2
Management
level

Nature
decision

Top

Strategic

of Level
structuring
Low

of Support systems required

Strategic information systems

Expert systems
Executive support systems
Decision Support System
Management
information
systems

Lower

Operational

High
Transaction
processing
systems
Office Automation system

TABLE: - MANAGERIAL DECISIONS, LEVEL OF STRUCTURING AND

SUPPORT SYSTEMS
As we move upward in managerial hierarchy, we find that the degree of structuring in
decision making gets gradually reduced and support systems required for decision making
gradually tend to be unstructured. After clarifying the concept of decision and decision
making as well as type of decisions, let us understand the decision making process by which
a decision is arrived.

DECISION - MAKING PROCESS

Decision is the outcome of a dynamic process which is
consist of various steps and involves various factors. Process of
decision making process has been shown in Figure.
Process presented is more relevant for non - programmed
decisions. Problems that occur infrequently are unstructured
and are characterized by a great deal of uncertainty regarding
the outcomes of various alternatives; require the managers to
utilize the entire process. For frequently occurring structured
problems, it is not necessary to consider the entire process
because decision rules are developed to handle such problems
and it is not necessary to develop and evaluate various
alternatives each time such a problem arises.

PHASES IN DECISION - MAKING PROCESS

FIGURE 1.1

Problem
identification

Alternative
generation

Choosing an
alternative

Implementation

PROBLEM IDENTIFICATION
In this phase of decision-making process involves searching the environment for
conditions calling for decisions. the problem is identified and formulated. A problem is the
difference between current state of affairs and expected state of affairs on the subject matter
of decision.
For instance, in organizational scenario, a problem will be found when there is
diversion outcome from the desired results. Manager develop the suitable model and tries to
identify the problem existence.
Without formulating the problem the identified problem seems to vague. At this
stage, the problem identified earlier, is more precisely defined and complexity get clarified.
MacGrimmon and Taylor have suggested four strategies for reducing complexity and
formulating a problem:
1. Determining the boundaries (clearly identifying what is included in the
problem).

2. Examining changes that may have precipitated the problem.

3. Factoring the problem into smaller sub-problems.
4. Focusing on controllable elements.

ALTERNATIVE GENERATION
In this phase, decision maker generates possible alternatives through which the
problem can be solved. If there is only one way of solving a problem, no question of decision
arises. So, the decision maker must try to find out the various alternatives available in order
to get the most satisfactory result of a decision. Identification of various alternatives not only
serves the purpose of selecting the most satisfactory one, but It also avoids bottlenecks in
operation as alternatives are available if a particular decision goes wrong. However, it should
be borne in mind that it may not be possible to consider all alternatives either because some
of the alternatives cannot be considered for selection because of obvious limitations of the
decision maker or information about all alternatives may not be available. Therefore, while
generating alternatives, the concept of limiting, factor should be applied.
A decision maker can use several sources for identifying alternatives - his own past
experience; practices followed by others, using creative forecasting and statistical techniques,
research.
CHOOSING AN ALTERNATIVE
In this phase, the best alternative is chosen to solve the problem. Evaluation of
various alternatives presents a clear picture as to how each of these contributes to solution of
the problem. A comparison is made among likely outcomes of the various alternatives and
the most appropriate one is chosen. Choice aspect of decision making is, thus, related to
deciding the most acceptable alternative which fits with the organisational objectives. It may
be seen that the chosen alternative should be acceptable in the light of organisational
objectives, and it is not necessary that the chosen alternative is the best one. However, all
alternatives available for decision making will not be taken for detailed evaluation because of
the obvious limitations of managers in evaluating all alternatives.
IMPLEMENTATION
Even though the actual process of decision making ends with the choice of an
alternative through which the objectives can be achieved, this phase will help manager to r
know what way their choice has contributed. The implementation of decision may be seen as
an integral aspect of decision.
Implementation of a decision requires the communication to subordinates, getting
acceptance of subordinates over the matters involved in the decision, and getting their
support for putting the decision into action. The decision should be effected at appropriate
time and in proper way to make the implementation more effective. The effectiveness of
implementation is important because it is only effective action through which organisational
objectives can be achieved. When a decision is put into action, it brings certain results. These
results provide indication whether decision making and its implementation is proper.
Therefore, managers should take follow-up action in the light of feedback received from the
results. If there is any deviation between objectives and results, this should be analyzed and

factors responsible for this deviation should be located. The feedback may also help in
reviewing the decision when conditions change which may require change in the decision.
METHODS OF DECIDING AMONG ALTERNATIVES
There are different methods to evaluate various alternatives through which a problem
can be solved. In evaluating alternatives, an attempt is made to find out the likely outcome of
each alternative so that the alternative which is likely to provide maximum outcome is
chosen. In evaluating the likely outcomes of various alternatives, generally, following
methods are used:
1.
2.
3.
4.
5.
6.
7.

Optimization techniques.
Pay-off matrices.
Decision tree.
Decision table.
Game theory.
Elimination by aspects.
Decisional balance sheet

1.4 CONCEPTS OF SYSTEM

DEFINITION
Systems can be abstract or physical. An abstract system is an orderly arrangement of
interdependent ideas or constructs. For example, a Weapons system is an orderly
arrangement of the equipment, procedures, and personnel which make it possible to use a
Weapon. Accounting system consists of the records, rules, procedures, equipment, and
personnel which operate to record data, measure income, and prepare reports. Circulatory
system involves the heart and blood vessels which move blood through the body.
A physical system is a set of elements which operate together to accomplish an
objective. Computer system consists of several subsystems which functions together to
accomplish computer processing. Computer system is demonstrated as a simple system
model in the following figures.

FIGURE 1.2
Output

Input

Process
System model

Storage Subsystem

FIGURE 1.3

memory
units

Input Subsystem

Processing

Input

Subsystem
Output Subsystem

CPU

Output

External
Interfaces

Figure: Computer as system

DETERMINISTIC AND PROBABILISTIC SYSTEMS
A deterministic system produces output in a predictable in nature. The interaction
between the subsystems will have the elements with certainty. When you describe system
based on the state of the system at a given point in time its and operation, the next state of the
system will be produced exactly, without error. An example is a correct combination of
elements and solution in the specified constraint will produce exactly known output.
The probabilistic system is named based on it probabilistic nature; so there are chance
for error on the prediction of the output of the system. A pricing system (for instance share
market price) is a probabilistic system which involves prediction of demand and market. But
the exact value at any given time is not known.

CLOSED AND OPEN SYSTEMS

A closed system is defined as a system of self-contained which does not exchange
material, information, or energy with its external environment. For instance, atom
radioactivity reaction in a insulated sealed, container is a closed systems will become
disorganized at the end.

Open systems exchange information, material, energy with the environment. For
instance, humans and organizational systems are examples of open systems. Open system
will react to the changes in the external environment and surveys in the environment.
SUBSYSTEMS
The system is integration of various subsystems and interfaces between them. This is
a basic concept in analysis and development of systems. A development of complex system
is tedious, so the system is decomposed into subsystems. This process of decomposition of
system is continued until subsystems could be of independent in behaviour and manageable
in size. For instance the funds management system is described in the figure as a combination
of subsystems.
FIGURE 1.4
Funds
Management
system

Internal fund
flow
processing

Cash flow
system
processing

Check
Printing

Working
capital
processing

1.5 INFORMATION SYSTEM AS A SYSTEM

The information system processes the received inputs of data and produces the
outputs. The basic system model consists of input, process, and output as well as the data
storage. Instead of collecting data and transforming data to information, keeping the storage
will help in subsequent use. This basic information processing model is useful in
understanding not only the overall information processing system but also the individual
information processes applications. Each application may be analyzed in terms of input,
storage. Processing and output. The information processing system has functional subsystems
and activities based subsystem.

FIGURE: 1.5

Unstructured
Higher
Level
Management

Strategic
Planning

Management
Control
Lower
Level
Management
and

Operational
Control

clerical
Transaction processing

Structured
decisions

The management information system has been described as a pyramid structure in

which the bottom layer consists of information for transaction processing, status inquiries,
etc; the next level consists of information recourses in support of day to day operation
and control; the third level consists of information system resources to aid in tactical
planning and decision making for management control; and the top level consists of
information resources to support strategic planning and policy making by higher levels of
management. Each level of information processing may make use of data provided for
lower levels; but new data about activities external to the organization may also be
introduced.

Integrated database

Figure: Conceptual frame work of Management Information Systems

SUBSYSTEMS OF AN MIS
Management Information System is comprehension of subsystem. There are two
categories of subsystems. One is based on the organizational functions which they support
and another one is based on managerial activities for which they are used.

1.5.1 ORGANIZATIONAL FUNCTION SUBSYSTEMS

The organizational functions are separable in nature based on the managerial
responsibility. Each functional subsystem has its own characteristic, procedure and models,
etc. Some of the support systems and data used for the subsystem is common for more than
one subsystems Typical major subsystems for a business organization engaged in
manufacturing are:

FINANCE AND ACCOUNTING SUBSYSTEM

Transaction processing & DM(TPS,OAS)

PERSONNEL SUBSYSTEM

Operational Control & DM

(MIS,DSS)

PRODUCTION SUBSYSTEM

Management
Control & DM
(DSS,EIS)

LOGISTICS SUBSYSTEM

Strategi
c
Plannin

SALES AND MARKETING SUBSYSTEMS

FIGURE 1.6

TABLE 1.3
Functional subsystem
Marketing

Manufacturing

Logistics
Personnel

Finance and accounting

Functionality of the subsystem

Market research
Market testing
Demand forecasting
Sales planning
Material resource planning
Scheduling
Resource allocation
Cost control
Stock analysis
Inventory control
Distribution
Human resource Planning
Performance appraisal
Administrative control
Payroll
Financial control
Cost analysis
Capital budgeting
Income measurement

1.5.2. ACTIVITIES SUBSYSTEMS

Another approach to understanding the structure of an information system is in terms
of the subsystems which perform various activities. Some of the activities subsystems will be
useful for more than one organizational function subsystem; others will be useful for only
one function. Examples of major activities subsystems are:
TABLE 1.4
Activity subsystem

Some typical applications

Processing of orders shipments and
Transaction processing Receipts
Operational control

Scheduling, analysis of performance reports

Management control

Budget preparation and resource allocation

Strategic planning

Formulation of objectives and strategic plans

TABLE 1.5

Level of
management
Strategic
planning

Tactical
planning

Operations
planning

Definition

Comments

What will the organization serve

and what will it be like after five
years and beyond? Strategic plan
should include business to be in,
market it should sell to, etc.
Physical
implementation
of
strategic plans from one to five
years.
Reflected
in
capital
expenditure budget and long - range
staffing plan. What is the optimal
product pricing pattern?
Allocation of tasks to each
organizational unit in order to
achieve objectives of tactical plan
between one to twelve months.
Yearly budget.

Definition of goals, policies,

and
general
guidelines
charting
course
for
organization. Determination
of organizational objectives.
Acquisition of resources
Acquisition tactics, plant
location, new products.
Establishment and monitoring
of budgets.
Effective and efficient use of
existing
facilities
and
resources to carry out
activities
within
budget
constraints.

TRANSACTION PROCESSING SYSTEM AND OFFICE AUTOMATION SYSTEM

TPS serve the need of operational level of the organization. It is defined as recording
the daily day to day transactions basis for the conduct of business. It is highly structured.
Transaction processing is performed manually or with mechanical machines; computer-based
data processing has altered the speed and complexity of transaction processing, but not the
basic function.
TPS are major producers of information for other types of systems available in
various other level of management. Without transaction processing, normal organizational
functioning would be impossible, and the data for management activities would not be
available. For instance, in banking the transaction processing systems supply data to the
organizations ledger which are responsible for maintaining records of the organization for
analyzing the performance of the organization through balance sheet and so on. TPS can
connect the organization with its stake holders (customers and suppliers).
The transaction processing cycle begins with a transaction which is recorded in some
way. Although hand-written forms are still very common, transactions are often recorded
directly to a computer by the use of an online terminal. Recording of the transaction is
generally the trigger to produce a transaction document. Data from the transaction is
frequently required for the updating of master files; this updating may be performed
concurrently with the processing of transaction document or by a subsequent computer run.

FIGURE 1.7

Sales or purchase
transactions entry

Transactions form

Assemble hatch

Conversion
from
Form to
Records

Correction

Input
Validation

Invalid
Records

Valid
Transaction
records

Transactions report

Control
log

Figure: Transaction processing cycle.

Office automation is a popular term for the application of computer and
communications technology to office functions. It supports not only clerical office work but
also the work of management and professionals. Document preparation, message and
document communications, and public data services are some of the examples of OAS.

Office automation has a number of applications ranging from internal communication to

long-distance external communication. The major applications of office automation are in
following areas:
Word processing.
Desktop publishing.
Videotex.
Document imaging.
Electronic mail.
Electronic calendaring.
Video & Audio conferencing.
Facsimile transmission.
Decision support system and executive information system and expert system are
used in middle and top level of management which will be discussed in unit 3.
1.6 MIS AND OTHER DISCIPLINES
Concepts of MIS are found in management accounting, management and organization
theory, operations research, and computer science.
MANAGEMENT ACCOUNTING
Financial accounting and management accounting are the broader categories of
management accounting. Financial accounting deals with the measurement of profit for
accounting period and analysing the financial status at the end of the period. This will be
helpful for the stakeholders. It will have limited decision content towards management. In
contrast management accounting consists methods and concepts which is necessary for
planning, choosing among alternative business actions and control through the evaluation and
interpretation of performances. Here, the management accounting provides inputs for
decision making in the areas of planning and control.
BEHAVIOURAL THEORY
MIS helps in effective functioning of the organization. The fields of management and
behavioural theory helps in understanding the functions of a MIS and behaviour of the
managers in each level of the organization such individual decision making and group
decision making, individual and team motivation, leadership styles and traits of leader,
organizational change management and group dynamics, and organisation structure and
culture and so on. The knowledge of these concepts helps the designer of MIS to understand
the behaviour pattern and the types of decisions made by manager at each level of the
organization.
OPERATIONS RESEARCH
Operations research is a quantitative technique in managerial decision theory where
the managers search for the optimum result. In operations research, various mathematical and
decisive models are used for solving the problems. Operations research concepts are helpful
in development of models for what if analysis mainly used in DSS, MIS and helps in
computer - based solutions of many types of decision problems. In other word the systematic

approach to problem solving, use of models, and computer-based solutions are generally
incorporated in the decision support system.
COMPUTER SCIENCE
Computer science deals with the hardware and software of computer systems. The
knowledge of computer science enables information storage, processing, and retrieval faster.
Computer science covers the concepts of algorithms, computation and data structures which
are important in development of MIS. However, modern MIS is not merely an extension of
computer science but the emphasis in MIS is on the application of the technical capabilities
that computer science has made available. The fundamental processes of management
information systems are more related to organizational processes and organizational
effectiveness then computer algorithms.
Various academic disciplines are contributing to the development of MIS and it is
considered a separate field of study. Other academic disciplines help in designing and
developing MIS.
1.7 NEED FOR COMPUTER-BASED INFORMATION SYSTEM
As long as organizations are small and have limited operational goals manual
information systems are satisfactory. Many trends in the development of industry and
commerce have made computer -based information systems essential to efficiently run
organizations. These are: The size of organizations is becoming larger. This is particularly true in India due to
increase in population and rapid rate of industrial development.
Computer - based processing enables the same data to be processed in many ways,
based on needs, thereby allowing managers to look at the performance of an organization
from different angles.
As the volume of data has increased and the variety of information and their
timeliness is now of great importance, computer based information processing has now
become essential for efficiently managing organizations.
Organizations are now distributed with many branches.Markets are becoming
competitive. To maintain favorable balance of payments in a country, organizations have to
be internationally competitive.
The general socio - economic environment demands more up-to-date and accurate
information. Human systems are changing faster than ever before. Governmental regulations
have become complex. Organizations have to interact with many other interested parties such
as consumer groups, environmental protection groups, financial institutions, etc., which did
not exist before.
All the above developments demand decision making based on up-to-date, well
analyzed and presented information rather than thumb rules and hunches of an earlier era.

1.8 THE ROLE OF A SYSTEMS ANALYST

MIS is possible without computer too. When the organization goes for the computer
based information system the role of the system analyst plays a vital role. A systems
analysts primary responsibility is to identify information needs of an organization and obtain
a logical design of an information system which will meet these needs. Such an information
system will be a combination of manual and computer - based procedures to process a
collection of data, useful to the managers in taking decisions. He must have the knowledge of
the data flow and process of the organization.
The personnel involved in the management information systems are: end users (clerical,
operational and top level managers); professionals (database administrator, programmers).
The systems analyst coordinates the efforts of all these personnel to effectively develop and
operate computer - based information systems.
The requirement must be collected from the users of the system. Users may not be
very familiar with coding terminology. The system analyst must collect the requirement from
the users of the information systems. This is best achieved by having a common meeting with
all the users and arriving at a consensus.
The systems analyst requires good interpersonal relations and diplomacy. He must be able to
convince all the users about the soundness of the group decision and obtain their cooperation.
An analyst studies the problem in depth and helps in choosing the best solutions and the
relative difficulties in implementing each of other alternatives.
An analyst is responsible in obtaining the functional specification; it must be precise and
detailed. it must be non - technical so as users ,clerks, middle level managers and top
managers of organization able to understand.
He is also responsible to design the system which must be understandable, accommodate
changes easily. The analyst must know the latest design tools to assist him in his task. As part
of the design he must also create a system test plan.
A systems analyst must be familiar with all the functions of the organizations. He
must aware of new technological changes since he is responsible for the feasibility analyses.
He must be a good listener,a good communicator, a good diplomat, conflict revolver
,motivator, influencer.
1.9 EVOLUTION OF MANAGEMENT INFORMATION SYSTEMS
Based on the needs and requirements of the organization MIS has been evolving
though the period of time. MIS was manually operational before the invention of computer
application in this area. The following table illustrates the evolution of information system.

TABLE 1.6

Decade
1951-60

Information systems
Electronic data processing

Characteristics of information systems

Collecting, manipulating, storing of data.
No scope for decision making
information Pervasive in all level of the management

1961-70

Management

system

1971-80

decisions.
Solution for structured decisions.
Decision Support System, Analytical models for semi structured
expert system
decisions

1981 and Artificial

intelligence,
above
Executive
information
system
1985 and Knowledge
management
above
system,end user computing

Solution for unstructured decision making

through advanced graphics
Intelligence workstation for knowledge
work which involves thinking, processing
information and formulating analyses ,
recommendations and procedures

1.10 BUSINESS CASES

All organizations are divided into many departments or sections with each department
having an assigned functional responsibility. Consider for example, an educational institute
such as Anna University. It will typically have besides academic departments a central
administrative office. The administrative office will be divided in to many sections each with
an assigned function. Typically the functions will be student section which will normally deal
with student records, students admission etc. an accounts section, purchase section stores
section, personnel section, medical section and student hostel office. A hierarchical chart of
the sections is shown in figure and their functions in table. A manufacturing organization for
instance will have the functions shown in table division of an organization in to departments
with specified functions is mainly intended to let each department focus on an area of
responsibility. All departments will have to coordinate their activities to meet the overall
objectives of the organization. This coordination normally provided by higher level
management in the organization.Functions of various departments of a University.
TABLE 1.7
Sections

Functions

Student section

Students admission records

Administering admission tests
Students academic records
Students registration information
Placement

Accounts section

University budget
Payroll
General ledger of receipts/ payments

Purchase section

Scholarships
Order processing

Stores

Vendor selection
Stock register maintenance
Issues

Hostel office

Receipts
Mess records
Hostel purchases / stores
Room assignment

Medical centre

Residents data
Medical records

Works department

Medicine purchase/ stores

Building construction
Building maintenance

Supply

Maintenance
of
installations, water

Personnel

Maintenances of roads, gardens

Personnel records (leave, tenure)
Personnel assessment

Miscellaneous

Personnel recruitment
Mailing
Telephones
Transport

electrical

We looked at two diverse organizations in this section a University and

manufacturing organization. Functions of various departments of a manufacturing
organization.
TABLE 1.8

Sections
Production

Marketing

Finance

Personnel

Functions
Production planning and
control
Maintenance management
Bill of materials processing
Order processing
Advertising
Customer records/follow up
Sales analyses
Billing, payments
Payroll
Costing
Share accounting
Budget and finance planning
Tax planning
Resource mobilization
Recruitment
Records
Training
Deployment of labor
Assessment/promotions

Stores

Purchase
Maintenance
Research and
development

Stock ledger keeping

Issues/reorder
Receipts
Enquiry processing
Order processing
Vendor development
Vendor selection
Physical facilities
Communication facilities
Electricity and water supply
Production improvement
Product development
Product testing
Product design

We see that there are some common functions such as personnel, purchase, stores and
accounts and there are organization specific functions such as students section in a university
and production section in a manufacturing organization. This is a general observation.
Information processing methods, however, have general features regardless of the
organization for which they are designed.
SUMMARY
The vital role of information in an organization has been discussed. how the
manager should react to the information of external environment and internal environment.
The information systems have become essential for helping organizations deal with changes
in global economies and the business. The kinds of systems built today are very important for
the organizations overall performance, especially in todays highly globalize and
information- based economy. Information systems are driving both daily operations and
organizational strategy. Powerful computers, software and networks, including the internet ,
have helped organizations become more flexile , eliminate layers of management , separate
work from location , coordinate with suppliers and customers, and restructure work flows ,
giving new powers to both line workers and management. Information technology provides
managers with tools for more precise planning forecasting and monitoring of the business. To
maximize the advantages of information technology, there is a much greater need to plan the
organizations information architecture and information technology infrastructure.
REVIEW QUESTIONS
1.
2.
3.
4.

Define Management Information systems.

What is system? Discuss some systems you know.
Discuss the types of subsystem in each level of the management.
Explain the subsystem based on the functionality of the organization.