MANAGEMENT

INFORMATION SYSTEM
What is an information system? What activities does it perform?
An information system is a set of interrelated components that work together
to collect, process, store, and disseminate information to support decision
making, coordination, control, analysis, and visualization in an organization.
In addition to supporting decision making, coordination, and control,
information systems may also help managers and workers analyze problems,
visualize complex subjects, and create new products.
Define an information systems from both a technical and a
business perspective.
From a technical perspective, an information system collects, stores, and
disseminates information from an organizations environment and internal
operations to support organizational functions and decision making,
communication, coordination, control, analysis, and visualization. Information
systems transform raw data into useful information through three basic
activities: input, processing, and output. From a business perspective, an
information system provides a solution to a problem or challenge facing a
firm and provides real economic value to the business.

Need for Information Systems

MIS is an information system that provides information in the form of standardized
reports and displays for the managers. MIS is a broad class of information systems
designed to provide information needed for effective decision making.
Data and information created from an accounting information system and the
reports generated thereon are used to provide accurate, timely and relevant
information needed for effective decision making by managers.
Management information systems provide information to support management
decision making, with the following goals:
Pre-specified and preplanned reporting to managers.

Interactive and ad-hoc support for decision making.

Critical information for top management.

MIS is of vital importance to any organization, because:

It emphasizes on the management decision making-not only by processing of
data generated by business operations but also collect and process external
information through knowledge processing and business intelligence.

It emphasizes on the systems framework that should be used for organizing

information systems applications.
Enterprise applications are specifically designed for the sole purpose of promoting
the needs and objectives of the organizations.
Enterprise applications provide business-oriented tools supporting electronic
commerce, enterprise communication and collaboration, and web-enabled business
processes both within a networked enterprise and with its customers and business
partners.

Three dimensions of information systems.

An information system represents a combination of management,
organization, and technology elements. The management dimension of
information systems involves leadership, strategy, and management
behavior. The technology dimensions consist of computer hardware,
software, data management technology, and
networking/telecommunications technology (including the Internet). The
organization dimension of information systems involves the organizations
hierarchy, functional specialties, business processes, culture, and political
interest groups.

Fundamentals of Information System

System concept
The word systems refer to as the arrangement or the way of organizing some specific
things in a particular way. It is a set of interrelated elements /components functioning
together on a regular basis to produce a common goal/output. So now a system can be
defined as the regularly interacting interdependent group of the items ultimately
leading to the formation of a united whole.
Each system is further made of the sub systems, which further consist of the other
subsystems and all of these subsystems are defined specifically by its boundaries.
Each subsystem itself actually acts as the system. The Interconnections and the
various interactions that generally take place between the various subsystems are
referred to as the interfaces.
These interfaces are generally known to occur at the boundary and usually take the
form of the inputs and the outputs. A system is not at all arranged randomly but is
arranged with the help of certain logic, which are governed by the rules, the
regulations, the principles, the policies etc. Such an arrangement of a system is
generally influenced by the objective which the system always desires to achieve.

What are the Characteristics of the System

A System must be having or possessing the following characteristics
1. System receives inputs with the help of the information, energy or the materials.
2. System processes inputs and also produces outputs or the results.
3. System has a particular structure.
4. System is very much interdependent in the nature.
5. System has an objective orientation.
Types of systems
Conceptual Systems
a. Are theoretical and explanatory in the nature.
b. Provide the much needed clarification.
c. Provide theoretical framework for which there may or may not be any real life
counterpart.
d. E.g. of such systems can be philosophy, theology etc.
2. Empirical Systems
a. Are very practical, specific and also very operational in the nature.
b. Can be based on the conceptual system.
c. Examination system, surgery act as very good examples of the empirical systems.
3. Open Systems
a. Involve continuous interaction with the environment.
b. So exchanges the information, material, energy with the environment.
c. Is open and also self organizing in the nature.
d. Is also adoptive or adaptive to the changing environment as it is flexible.
4. Closed Systems
a. Shuns any kind of the exchange with the environment.
b. Is rigid in nature.
c. Is not at all amenable to the change.
d. Is also self contained.
e. Is somewhat isolated in the nature.

f. Is having a well defined boundary.

g. Is not at all adaptive in the nature.
5. Natural Systems
a. Such Systems exist and also abound in the nature.
b. Are also not at all the results of the human endeavors.
c. Rivers, mountains, minerals etc. are the major examples of the natural Systems.
6. Artificial Systems
a. Are manufactured (man made).
b. Examples of such Systems are dams, canals, roads, machines, factories etc.
7. Probabilistic Systems
a. Based on the predictability of the behavior or the outcome.
8. Deterministic Systems
a. In such Systems, the interaction of the elements is known.
b. As the behavior of the elements is pre determined, it becomes possible to work
upon the reaction well in the advance.

STRUCTURE OF IS
1.Physical Components
2.Information System Processing Functions
3. Decision Support
4. Levels of Management Activities
5. Organizational Functions
1.Based on Physical Components
Hardware: E.g. CPU, Monitor, Keyboard, Printer etc.
Software: E.g. System and Application S/W.
Database: E.g. Data stored in files.
Procedures: E.g. Manuals etc.
Operating Personnel: E.g. Computer Operators,
Programmers, System Analysts, System Manager etc.
Input & Output: E.g. Printouts, Reports etc.

2.Based on Processing Functions

a)To Process Transactions: E.g. Making a purchase or a sale of a product.
b)To Maintain Master Files: E.g. For preparing an
employee's salary, required data items are Basic Pay,
Allowances, Deductions etc.
c)To Produce Reports: For e.g. Specific or Adhoc reports
d)To Process Enquiries: For e.g. Regular or Adhoc
enquiry.
e)To Process interactive Support Applications: E.g.
Applications designed for planning, analysis and decision
making.
3)Based on Output For Users
a)Transaction Documents or Screens
b)Preplanned Reports
c)Preplanned Inquiry Responses
d)Adhoc Reports & Inquiry Responses
e)User-machine Dialog Results
4)MIS Support for Decision Making
a)Structured / Programmable Decisions:
Decisions that are repetitive, routine and have a definite
procedure for handling them.
For e.g. Inventory reorder formula, Rules for granting
Credit.
b)Unstructured / Non-Programmable Decisions:
Non-routine decision in which the decision maker must
provide judgment, evaluation, and insights into the
problem definition.
For e.g.
c)Semi-Structured Decisions:
Decision where only part of the problem has a clear cut
answer provided by an accepted procedure.
5)organization functions
a. Financial information system
b. Marketing information system
c. HR information system
d. Production and operation information system

System Control
Since the systems are designed to achieve specific objectives, ensuring the
achievement of the objectives through system control, becomes the integral
part of the system design. The control calls for, in the first place, a
measurement of the output in some terms. The device that measures the
output is called a sensor. The next step is to set the standard or norm of the
output as an index of the system performance. The sensor measures the
output the compares it with the standard. If the measured output compares
well with the standard, the system provides a feedback to continue the
operations.
If the measured output does not compare well with the standard, then a
feedback is provided to the system to stop the operations. The process of
comparison of a measured output with the standard is done by a unit called
as comparison unit.
The mechanism, which provides a signal to the system, about the quality of
performance, favorable or adverse, is called a feedback mechanism.
Many times, the system may not have an appropriate mechanism to act on
the signal which it receives. It is, therefore, necessary to provide an in-built
mechanism which will decide, based on the feedback, to stop, regulate or
continue the system operations. Such as mechanism is called a corrective
unit and it is responsible for ensuring the system performance. The
corrective unit, in its performance, will act on inputs and processes to bring
the system under control.
The process of measuring the output, comparing with the standard, sending
the signal to the corrective unit and the corrective unit action upon it, is
called a control. Any breakdown in this path will affect the system
performance adversely.
A system set for a specific objective, devoid of any control, will perform in a
disorderly manner and can disturb the system equilibrium. The role of a
control is to regulate the system operations and performance, and keep it in
an equilibrium condition. The control, therefore, is the heart and brain of the
system.
The control could either be internal or external to the system. For example,
in an air conditioning system, switching on and off the compressor is
automatic and hence it is an internal control. In the roads and traffic system,
the traffic policeman acts as a control system, which is external to the traffic

system? Most of the modern systems have in-built automatic control

systems.
The information system can be understood in terms of system concepts. The
information system receives the inputs of the data and the instructions (a set
of the Computer Programmes), processes the data according to the give
instruction, and gives the output of the processed results.
The information systems are designed in a particular environment of
business, industry and management. When the environmental factors or the
inputs change, the system process is under a stress. Stress beyond a limit
affects the other system elements which in turn affects the achievements of
the goal. A system may have the ability to manage the stress and still be in a
condition to achieve the desired goal. Unmanageable stress leads to a
system failure.
The concept of control is based on the condition of a feedback. If the
feedback is positive, i.e., the measure of the output compares favorably with
the standard or norm, the control will keep the system operating in the same
condition. However, if the feedback is negative, i.e., the measure of the
output is unfavorable when compared to the standard or norm, the control
will act on the input or process to bring back the system to the state of
equilibrium.
Handling System Complexity
Information Systems are relatively complex as compared to physical
systems, and therefore, they should be handled properly enabling the
system designer to understand, design, develop and implement.
To handle the complexity, the system can be viewed as an assembly of
subsystem each with a clear definition of the boundaries, interfaces and their
connectivity. The subsystems then are put in the hierarchical order to provide
a structural view showing the developmental path to the designer.
The process of simplification provides a way to handle these interconnections
and reduce the complexity. The method of simplification is as follows:

Identify the subsystems which have to be together for the functional `cohesion'.

Form a cluster of these subsystems and identify interconnections in this cluster.

Form clusters of the remaining subsystems.

Connect the clusters with an interface.

MIS and System Concepts

The MIS is an arrangement of data processing and information systems in
an orderly manner to support the management in achieving the business
objectives. The MIS boundaries cross the limits of the organization and
draw the data from the source external to the organization. MIS follows a
generalized model of a system as stipulated into the theory and performs
on the principle of feedback and control. It works on the principle of
control by exception.
MIS is designed to provide the information which is exceptional
in nature form the point of view of business. The exceptions
could be abnormal events, surprising developments, shocking
news, or something that was not consistent with the
exceptions. The MIS must catch all such points and reports
then to the concerned management. It must, therefore,
recognize all such possible points and provide a measure for
comparison with the actual performance. Unless such a feature
is included, the MIS will be supplying merely data and not
information.
The MIS, initially, concentrates on the quality of in put
satisfying the parameters, viz., impartiality, validity, reliability,
consistency and age. A large amount of system effort is spent
in this area to ensure the quality of the input.
The MIS provides a system for data processing and data
analysis. It uses a number of applications and business
models, operational research models and applications and
business models, operational research models and application
packages to produce the information. The MIS has a provision
to display the information and also print it in a report format. It
also provides a facility to store the intermediate results, which
are used in a number of other systems. The MIS is a
combination of the deterministic and the closed systems, and
the probabilistic and the open systems.
By nature, the MIS is an open system interfacing continuously
with the internal and the external environment and is self
organizing to meet the ever increasing and changing
information needs of the organization.

Objectives/Functions of the information system

Companies or organisations develop information systems to help to perform

the tasks they are specifically designed to do. For instance, a hospital will
have
a medical records system, police departments will hold criminal records, all
companies will have a payroll system, supermarkets will use inventory
systems,
offices will have office automation systems, etc.
All information systems carry out a series of functions that may be classified
as
follows:
Data capture and collection.
Storage.
Information processing.
Distribution or dissemination of information.

1. Data capture and collection

This function consists of capturing both external (related to the environment)
and
internal (generated within the company) information and sending it through
the
communication system to the entities within the information system
responsible
for organising it to avoid duplication and useless information (noise). The
person
or people who capture the information will depend on what type of company
they
work for. Sales staff, purchasers, managers at different levels in the hierarchy
or
members of the company in direct contact with organisations in the
environment
can all act as information gatherers. The data capture and collection process
should
be more intense in the areas or sectors of the environment and the company
that
are subject to the greatest changes.
Once the information has been collected and filtered, and redundant
information
removed, it is stored.

2. Storage

The information may be stored in different services and departments, or in a

single location to which all users have access. The company will decide
which of these two options is most appropriate, depending on how specific
the information is. Access to or retrieval of the information can take many

forms; for example passwords may be used to access a database, enabling

only authorised personnel to access the information when required.

3. Information processing

The purpose of information processing is to transform the stored information

into useful information that will be meaningful to the person who requires
it. This is a key function of all information systems. Information processing is
essentially carried out by the computer subsystem. The spectacular
development
of computers has meant that on the one hand, the volume of stored and
processed
data is constantly increasing, and on the other hand, the falling cost of
hardware
has led to a generalised use of computers.

4. Distribution and dissemination of information

Not only must the information system provide the information each user
requires, but it must also disseminate information to other people within the
company.
Different members of the company need to be aware of certain information
about the company and the environment in order to respond more quickly
and efficiently to everyday situations that require problems to be solved or
decisions to be taken.

Information system components

Information systems comprise hardware and software, telecommunications,

databases, human resources and procedures (Garca Bravo, 2000).

1. Hardware
Nowadays all companies use computers, usually personal computers (pcs).
Large organisations employ diverse computer systems including mainframes,
minicomputers and most commonly, pcs. However, recent advances in the
technical specifications of pcs now means that they perform many of the
tasks initially done by minicomputers, and the difference between these two
categories is becoming increasingly blurred.
The three computer types have a similar arrangement. The component
controlling all the systems units is the central processor, which carries out
the instructions given by a program. Other devices are used to introduce
data (keyboard and mouse) and produce the systems output (printers).

2. Software

There are two types of computer programs: system software and application
software. System software programs are used to manage the computer
systems resources and simplify programming. Applications, like
spreadsheets or word processors, directly help the user to do his or her work.

3. Databases
Many company information systems are used as a vehicle for delivering
databases.

A database is a collection of interrelated data, such as an organisations

human resource or product databases.
The customer database is extremely valuable to the company since it can be
used to inform clients of new products or to develop new products that meet
their needs. A database must be organised so it can be accessed according
to its content; for example an order may be given to retrieve the names and
addresses of customers that were invoiced for totals in excess of one million
in the previous year. Databases are managed by software systems known as
database management systems (dbms).

4. Telecommunications

Telecommunications are the means by which information is transmitted

electronically over long distances. Nowadays, computer systems are
generally connected by telecommunications networks. Various network
connections are available to suit the needs of different companies. In a small
company, pcs are connected by local area networks (lan), enabling their users
to communicate and share data, tasks and equipment. Wide area networks
(wan) are used to connect computers at greater distances, either within the
company or in a different location. Internet, the network of networks, links
up an immense variety of networks from diverse fields worldwide. These
connections enable pc users to access the companys databases and other
computerised resources.

5. Human resources
Two types of human resources can be distinguished: information systems
specialists and end users. Information systems specialists include systems
analysts, programmers and operators. End users are the people who use the
information system or the output they generate, in other words, the large
majority of an organisations members.

6. Procedures

Procedures are the policies and methods that must be followed when using,
operating and maintaining an information system. Procedures must be used,
for example, to establish when to run the companys payroll program, to
determine how many times it should be run, who is authorised to do so and
who has access to the reports it produces.
Global business scenario and Information system
Information systems are the foundation for conducting business today. In
many industries, survival and even existence without extensive use of IT is
inconceivable, and IT plays a critical role in increasing productivity. Although
information technology has become more of a commodity, when coupled
with complementary changes in organization and management, it can
provide the foundation for new products, services, and ways of conducting
business that provide firms with a strategic advantage.
Six reasons why information systems are so important for business today
include:
Operational excellence

New products, services, and business models

Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival

Difference between data and information

Data are streams of raw facts representing events occurring in organizations
or the physical environment before they have been organized and arranged
into a form that people can understand and use. Information is data that
have been shaped into a form that is meaningful and useful to human
beings.

Characteristics of Computerized MIS

Following are the characteristics of a well-designed computerized MIS:

It process data accurately and with high speed, using various techniques like
operations research, simulation, heuristics, etc.
It collect, organize, manipulate, and update large amount of raw data of both
related and unrelated nature, coming from various internal and external
sources at different periods of time.
It provides real time information on ongoing events without any delay.
It support various output formats and follow latest rules and regulations in
practice.
It provides organized and relevant information for all levels of management:
strategic, operational, and tactical.
It aims at extreme flexibility in data storage and retrieval.

IS Resource Activities
1. Transaction processing: Operational data processing(TPS)
Examples: Manufacturing systems, order processing,
accounts receivable, payroll
2. Management Reporting: Produce reports for specific time
periods; designed for managers responsible for specific
functions in a firm.(MRS)
Examples: Departmental expense reports, performance
reports
3. Decision Support: Support individual and collective decision
making.(DSS&ES)
4. Executive Information Support: Support the work of senior
executives (via themselves or an analyst) with access to
company data and general information on the industry and
economy (EIS).

5. Office Management &Information Support: Support and

coordinate knowledge work in an office environment by
handling documents and messages in a variety of forms- text,
image, voice, multimedia, video, fax, etc (OAS)

Levels of management and Information need

1. Lower level management makes decisions that affect day to day
operations.
Programmed decisions that are predetermined by rules and
procedures. They lead to a desired result.
The information needs of lower-level mgrs. can be met by
administrative data processing activities.

2. Middle-level mgrs. plan working capital, schedule production,

formulate budgets, and make short-term forecasts.
Mid-level managers make tactical decisions that usually involve
time periods of up to two years.
Many Mid-level mgmt decisions are non-programmed decisions. No
specific predetermined steps can be followed to each solution.
The information needs of Mid-level mgrs. must be specific.
3. Top-level mgrs. provide direction for the company by planning
for the next five years +.
Top-level mgrs. make strategic decisions that involve a great deal
of uncertainty.
Top-level mgt. decisions are non-programmed decisions.

4. Today Strategic and Management levels are combined.

Role played by systems serving the various levels of management in

a business and their relationship
There are four major types of information systems in contemporary
organizations serving operational, middle, and senior management. Systems
serving operational management are transaction processing systems (TPS),
such as payroll or order processing, that track the flow of the daily routine
transactions necessary to conduct business. MIS and DSS provide middle
management with reports and access to the organizations current
performance and historical records. Most MIS reports condense information
from TPS and are not highly analytical. DSS support management decisions
when these decisions are unique, rapidly changing, and not specified easily
in advance. They have more advanced analytical models and data analysis
capabilities than MIS and often draw on information from external as well as
internal sources. ESS support senior management by providing data of
greatest importance to senior management decision makers, often in the
form of graphs and charts delivered via portals. They have limited analytical
capabilities but can draw on sophisticated graphics software and many
sources of internal and external information.

STUMBLING BLOCKS
MIS System though boon to the corporate world is again not foolproof.
However,
this system suffers a number of problems including:

Confusing and difficult: MIS Softwares are a gigantic package and consists of
nnumber
of module, so it is very difficult to understand its characteristics but
once you understand it becomes easier to work.

Customization is costly: Customization is obviously costly, for instance when

report is needed to configure, one person expected from the MIS vendors side
has to come and give support. Hence more the customization /configuration
greater should be the service cost charged by vendor.

Customization is time consuming and in many cases impractical: MIS is not a

one or two day job it is a regular process it requires years to complete as many
things have to be incorporated into it i.e. mindset, office automation, etc. There is
clause of hidden cost which always pinches the user.

Decline of an individuals monopoly over information monopoly: As

information can be put into the server and rights and authority can be given to
appropriate people who can access it i.e. production department data can not be
confined to production department people. It can be shared by marketing
department people with the help of login name and password thus cutting short
time and reducing paper work.

MIS engenders a host of fears. One of them is job redundancy: There is

misconception among the employees that MIS can be a threat as for upcoming
employment, this is not absolutely true because the persons who are not working
hard have to be more cautious as performance appraisal chart is regularly
maintained and monitored. Therefore for people who take no pain there is no
gain.

Geographic Restriction: The MIS packages are readymade packages made by

the MIS vendors and can be customized according to the user need, thus

sometimes not suits individual persons who are geographically away.

Implementation of an MIS project is a long process: Like customization

implementation is also a long process because there is ample number of

departments and MIS can come in fullflow
or to get its full flavour, the entire
department should be fully compatible with MIS integration.

Platform restrictions.: Platform restricts could be the another obstacles up to

some extent as they are using different operating systems.