Chapter 18 - Establishing a management information system

A. Ramesh Babu, Y. P. Singh, and R.K. Sachdeva

A. Ramesh Babu is Senior Scientist (Agriculture Extension); Y. P. Singh is Professor, Division of Agricultral
Extension, Indian Agricultural Research Institute, New Delhi; and R. K. Sachdeva is Professor of
Management and Head, Computer Centre, Indian Institute of Public Administration, New Delhi, India.

Basic concepts
Role of MIS in the management of agricultural extension programmes
Design of a MIS in an agricultural extension organization
Need for automation
Organization of a database
Networking and interactive processing
System alternatives and evaluation: Centralization versus decentralization
End-user computing
Illustrative computer-based MIS
Summary
References

Information is a critical resource in the operation and management of organizations. Timely availability of
relevant information is vital for effective performance of managerial functions such as planning,
organizing, leading, and control. An information system in an organization is like the nervous system in
the human body: it is the link that connects all the organization's components together and provides for
better operation and survival in a competitive environment. Indeed, today's organizations run on
information.

The term information system usually refers to a computer-based system, one that is designed to support
the operations, management, and decision functions of an organization. Information systems in
organizations thus provide information support for decision makers. Information systems encompass
transaction processing systems, management information systems, decision support systems, and
strategic information systems.

Information consists of data that have been processed and are meaningful to a user. A system is a set of
components that operate together to achieve a common purpose. Thus a management information
system collects, transmits, processes, and stores data on an organization's resources, programmes, and
accomplishments. The system makes possible the conversion of these data into management information
for use by decision makers within the organization. A management information system, therefore,
produces information that supports the management functions of an organization (Davis & Olson, 1985;
Lucas, 1990; McLeod, 1995).
Basic concepts

Data versus Information

Data refers to raw, unevaluated facts, figures, symbols, objects, events, etc. Data may be a collection of
facts lying in storage, like a telephone directory or census records.

Information is data that have been put into a meaningful and useful context and communicated to a
recipient who uses it to make decisions. Information involves the communication and reception of
intelligence or knowledge. It appraises and notifies, surprises and stimulates, reduces uncertainty, reveals
additional alternatives or helps eliminate irrelevant or poor ones, and influences individuals and
stimulates them to action. An element of data may constitute information in a specific context; for
example, when you want to contact your friend, his or her telephone number is a piece of information;
otherwise, it is just one element of data in the telephone directory.

Computers have made the processing function much easier. Large quantities of data can be processed
quickly through computers aiding in the conversion of data to information. Raw data enter the system
and are transformed into the system's output, that is, information to support managers in their decision
making.

Characteristics of Information

The characteristics of good information are relevance, timeliness, accuracy, cost-effectiveness, reliability,
usability, exhaustiveness, and aggregation level. Information is relevant if it leads to improved decision
making. It might also be relevant if it reaffirms a previous decision. If it does not have anything to do with
your problem, it is irrelevant. For example, information about the weather conditions in Paris in January
is relevant if you are considering a visit to Paris in January. Otherwise, the information is not relevant.

Timeliness refers to the currency of the information presented to the users. Currency of data or
information is the time gap between the occurrence of an event in the field until its presentation to the
user (decision maker). When this amount of time is very short, we describe the information system as
a real-time system.

Accuracy is measured by comparing the data to actual events. The importance of accurate data varies
with the type of decisions that need to be made. Payroll information must be exact. Approximations
simply will not suffice. However, a general estimate of how much staff time was devoted to a particular
activity may be all that is needed.

Value of Information

Information has a great impact on decision making, and hence its value is closely tied to the decisions that
result from its use. Information does not have an absolute universal value. Its value is related to those
who use it, when it is used, and in what situation it is used. In this sense, information is similar to other
commodities. For example, the value of a glass of water is different for someone who has lost his way in
Arctic glaciers than it is to a wanderer in the Sahara Desert.

Economists distinguish value from cost or price of a commodity incurred to produce or procure the
commodity. Obviously, the value of a product must be higher than its cost or price for it to be cost-
effective.
The concept of normative value of information has been developed by economists and statisticians and is
derived from decision theory. The basic premise of the theory is that we always have some preliminary
knowledge about the occurrence of events that are relevant to our decisions. Additional information
might modify our view of the occurrence probabilities and consequently change our decision and the
expected payoff from the decision. The value of additional information is, hence, the difference in
expected payoff obtained by reduced uncertainty about the future event.

Information supports decisions, decisions trigger actions, and actions affect the achievements or
performance of the organization. If we can measure the differences in performance, we can trace the
impact of information, provided that the measurements are carefully performed, the relationships among
variables are well defined, and possible effects of irrelevant factors are isolated. The measured difference
in performance due to informational factors is called the realistic value or revealed value of information.

For most information systems, particularly those supporting middle and top management, the resulting
decisions often relate to events that are not strictly defined and involve probabilities that cannot be
quantified. The decision-making process often is obscure and the outcomes are scaled by multiple and
incomparable dimensions. In such cases, we may either attempt to perform a multiattribute analysis or
derive an overall subjective value. The subjective value reflects people's comprehensive impression of
information and the amount they are willing to pay for specific information (Ahituv, Neumann, & Riley,
1994).

Information as an Aid to Decision Making

Simon (1977) describes the process of decision making as comprising four steps: intelligence, design,
choice, and review. The intelligence stage encompasses collection, classification, processing, and
presentation of data relating to the organization and its environment. This is necessary to identify
situations calling for decision. During the decision stage, the decision maker outlines alternative solutions,
each of which involves a set of actions to be taken. The data gathered during the intelligence stage are
now used by statistical and other models to forecast possible outcomes for each alternative. Each
alternative can also be examined for technological, behavioural, and economic feasibility. In
the choice stage, the decision maker must select one of the alternatives that will best contribute to the
goals of the organization. Past choices can be subjected to review during implementation and monitoring
to enable the manager to learn from mistakes. Information plays an important role in all four stages of
the decision process. Figure 1 indicates the information requirement at each stage, along with the
functions performed at each stage and the feedback loops between stages.

Classification of Management Information Systems

There are various types of management information systems. Mason and Swanson (1981) describe four
categories of management information systems: (1) databank information system, (2) predictive
information system, (3) decision-making information system, and (4) decision-taking information system.
The classification is based on the level of support that the information system provides in the process of
decision making. Sachdeva (1990) comprehensively presents these four types of systems:

Databank Information System. The responsibility of this information system is to observe, classify, and
store any item of data which might be potentially useful to the decision maker. Examples of the kind of
data that might be recorded in such a database for a given village, region, or area are as follows:
· Number of farms
· Number of units of arable land (hectares, fedans, acres)
· Average farm size
· Amounts of selected farm inputs applied annually
· Production per year on a unit of land for selected crops

A second example of data that might be recorded in a database (this time involving data internal to the
organization) is as follows:

· Number of extension staff by category and assigned to a particular village, region, or area

· Number of work hours devoted by staff to selected concerns for a particular village, region, or area

· Total extension salary costs and other expenses by village, region, or area

· Number of demonstrations conducted for selected farm technologies by village, region, or area

· Number of on-farm trials conducted for selected farm technologies by region or area

· Number of radio, TV, and print media releases regarding selected farm technologies by time period and
region or area

Figure 1. Role of information in the decision process.

Each of these databases can be summarized and converted to single tabular presentations of information
of interest to management. When information from two or more time periods is compared, trends can be
observed.

Predictive Information System. This system moves beyond pure data collection and the determination of
trends over time. Predictive information systems provide for the drawing of inferences and predictions
that are relevant to decision making. If data from the above examples were to be used in this way, it is
possible to obtain information useful for making predictions or for drawing inferences. For example, tables
containing the following information for a given village, region, or area might be produced:

· The ratio between the number of farms and the various categories of extension staff members

· The ratio between the amount of farmland and the various categories of extension staff members
· Amount of extension financial operating resources allocated per year to selected farmer problems or
concerns

· Amount of extension financial resources, both salary and operating expenses, allocated per year to
selected extension approaches to solving different farmer problems or concerns

Information obtained from these kinds of analyses is normally summarized in a two-way tabular format.
And likewise, the information often is compared over time. Managers can then use such information to
make predictions, for example to forecast costs of particular undertakings for budgeting purposes or as a
basis for predicting results if a given change is made, such as change in the number of demonstrations
with a given change in staffing.

Decision-Making Information System. This system goes one step further in the process of decision making
and incorporates the value system of the organization or its criteria for choosing among alternatives. An
extension organization's values are many and varied. They include concerns for resolving farmer
problems, increasing and providing for stability of farmer incomes, and improving the quality of farm life.
But they also including and providing for stability of farmer incomes, and improving the quality of farm
life. But they also include an intent to provide well for staff members (training, adequate salaries, etc.)
and to aid in the process of bringing about rural economic development.

Table 1. Information Groups in India's Agricultural Extension System.

Levels Groups Types of Information Needed

Central Extension commissioner, joint (1) Information on human resources, plans,

commissioners, directors, joint directors, etc. and budgets for various extension services
of the directorate of extension, ministry of (2) Statewide monitoring and evaluation of
agriculture activities completed

State Director of agriculture, additional director, (1) Districtwide information on extension

joint directors, etc. of the state department programmes, activities, expenditures, etc
of agriculture (2) Research-extension linkages and
coordination with other allied departments
such as animal husbandry and horticulture

District District agricultural officers (DAOs) (1) Information on extension resources and
constraints at subdivision and block levels
(2) Training requirements of staff at
subdivision and block levels

Subdivision Subdivisional agricultural officers (1) Field demonstration programmes,

activities planned and implemented by
subject-matter specialists (SMSs) (zone) at
the block level
(2) Technical programme and constraints
identified at the block level
Block Agricultural extension officers (1) Performance of VEWs in terms of
(county) achievements in extension activities
(2) Field-level problem of assessment of
beneficiaries' response to various extension
programmes

Information regarding these various attributes helps managers to make more enlightened decisions.
Examples of ways that an extension organization uses information from a decision-making information
system are as follows:

· Change in specific farm outputs (yields, practices) following selected extension activities

· Change in staff productivity following selected interventions (in-service training, better transport, etc)

· Comparison of relative costs and relative effectiveness of alternative extension delivery methods

· Analysis of economic returns to farmers who adopt recommended practices as compared to those who
do not

Decision-Taking Information System. Examples of decision-taking information systems are not usually
found in an extension organization. This is a decision

system in which the information system and the decision maker are one and the same. Management is so
confident in the assumptions incorporated in the system that it basically relegates its power to initiate
action to the system itself. Airplanes carry automatic pilot systems, which are an example of a decision-
taking system. Once activated, the system itself keeps the plane on course and at the proper speed and
altitude (according to parameters determined by the pilot). Another example of decision-taking
information systems is found in modem factory production. In automobile production, continuous
inventories of parts are maintained by computer as cars move down an assembly line. Orders are placed
automatically by the computer when additional parts are needed. This is done without the intervention
of a manager.

The choice of an appropriate management information system (MIS) category primarily depends on the
nature of the decisions it supports. While unstructured decisions may use MIS-category (I), the highly
structured ones, such as production schedules in an industry, may use MIS-category (iv). Further, Banerjee
and Sachdeva (1995) observe that "as the deep structure of the decision problem becomes more and
more understood, we may move to higher level of MIS i.e., from MIS-category (I) to MIS-category (ii); and
MIS-category (ii) to MIS-category (iii); and so on."

Role of MIS in the management of agricultural extension programmes

National agricultural extension systems, especially in developing countries, tend to be very large. For
example, in India, the national agricultural extension system employs about 125,000 people. Extension
managers at various levels need relevant information in order to make effective decisions. In the absence
of such information, they act only on the basis of their intuition and past experience. Data that have been
processed, stored, and presented properly will aid them in analysing situations and to make effective
decisions.
As suggested above, at every phase of the management process, managers need information in order to
make effective decisions. This we call management information. It does not include purely functional
information or technical information, such as packages of practices for rice or wheat cultivation.
Management information is the information required by managers as they make their decisions, such as
the number of extension personnel employed by category, their training requirements, career
development plans, job descriptions, budgets, forecasts, benchmark surveys, reports on socioeconomic
conditions of people served, and existing facilities (Ramesh Babu & Singh, 1987).

The main purpose of management information systems is to provide management information to decision
makers at various levels in the organization. Specifically, in an agricultural extension organization, MIS is
needed:

1. To plan the most effective allocation of resources, for example, the allocation of extension personnel
under a T & V extension system, the need for communications and training equipment and facilities,
mobility, the amounts of required operational resources

2. To choose between alternative courses of action, whether to conduct a study on the impact of the T &
V system with the resources on hand or hire an expert to investigate

3. To control day-to-day operations, for example, comparing the actual results achieved and those
planned under the T & V system.

Design of a MIS in an agricultural extension organization

The following are suggested steps to follow when designing a MIS for a national agricultural extension
system.

Step One: Assessing Information Needs for Planning, Monitoring, and Evaluation

An investigation needs to be conducted into the types of decisions that extension managers have to make.
For example, village extension workers (VEWs) seek solutions to their problems from their supervisors. In
turn, supervisors need to be in a position to resolve these problems and to document how problems were
solved for future reference.

State-level managers also need information to resolve problems. They are concerned with implementing
extension programmes district by district. They need information on staffing, transport, research-
extension linkages, staff training activities, and successes (or lack of them) in solving technical problems.
Feedback is needed from field staff and farmers on farmer problems and on which recommended
practices are helpful. State-level managers need to know something about the amounts, kinds, and
combinations of media support (i.e., print, radio, television) that have been used for various efforts. They
need to know if external factors have limited the success of particular efforts such as supply of credit or
farm inputs and they need some assessment of farmers' responses to extension programmes (Raheja &
Jai Krishna, 1991, p. 84).

Step Two: Deciding the Levels of Information Groups, Information Frequency, and Content

The number of information groups within an agricultural extension organization has to be decided
because each group potentially will require a different type of information. As an example, in India, the
reorganized national agricultural extension system can be grouped as shown in Table 1.
Data processing consists of identifying each item of data and systematically placing it within a scheme
that categorizes data items on the basis of some common characteristic or feature. Data not organized
into a meaningful pattern can serve almost no useful purpose to those who must use them to make
decisions. A computer can help in processing the data effectively. Rao (1985) suggested the use of
computers in agricultural extension in India. He proposed that computer programmes be focused on
district and subdivisional levels. In that way, information collected can be viewed in terms of the crops
that are likely to be grown, agroclimatic conditions, soil types, irrigation facilities, resources of the farmers,
and availability of various farm inputs.

Documentation (storage and retrieval) involves storing items of information in an orderly manner. Storing
information means recording it on storage media from which it can be made available when needed.

Storage media are materials such as ordinary office paper, magnetic tapes, magnetic disks, microfilms,
film strips, and a few other devices. Once the information is recorded on these storage media, the system
can generate, on demand, information required for making decisions, solving problems, or performing
analyses and computations. Information retrieval refers to the ability to take different types of data in the
storage media and to array information in some desired and meaningful format. A properly designed
storage and retrieval system matches the related variables efficiently and accurately. In some cases, it
even suggests alternative courses of action for management to take.

Presentation of information should be in a form and format suitable to the needs of extension managers.
Generally, information is presented in reports, statistical summaries, analyses, and so forth in the form of
text, figures, charts, tables, and graphs. The presentation of information should be precise, clear, and
appealing.

Step Three: Ensuring System Flexibility and Adaptability

Flexibility means the ability to retrieve information from a system in whatever form it may be needed by
decision makers. Therefore, data need to be collected in some detail so that they can be rearranged or
summarized according to the needs of managers. But system design should not be too complex because
it must first serve the needs of the lowest levels of management (i.e., subdistrict) that are likely to be
instrumental in collecting important components of the original data. In addition, the system also must
serve the needs of the district, regional, state or provincial, and national levels. Therefore, considerable
care must be taken in assessing what types of information are required by management at the different
levels. At the same time, effort must be made to ensure that the information collected meets acceptable
standards of accuracy, timeliness, and coverage for each level.

Need for automation

An automated MIS system contains data just as a manual system does. It receives input, processes input,
and delivers the processed input as output. Some input devices allow direct human-machine
communication, while others require data to be recorded on an input medium such as a magnetizable
material (specially coated plastic flexible or floppy disks and magnetic tapes). The keyboard of a
workstation connected directly to a computer is an example of a direct input device. Use of automation
makes it possible to store immense quantities of information, to avoid many of the errors that find their
way into manual records, and to make calculations and comparisons that would be practically impossible
in a manual system.
Organization of a database

Data are usually generated at the field level through transaction-processing systems, but once the data
are captured, any echelon along the organizational hierarchy may use them, provided that information
requirements have been well defined, appropriate programmes have been implemented, and a means
has been arranged for the sharing of the data. This would imply that the same data can be used by
different sets of programmes; hence we distinguish between the database (a set of data) and the
applications (a set of programmes). In a decision support system (DSS), this set of programmes is
the model base (Keen & Morton, 1978).

The term database may refer to any collection of data that might serve an organizational unit. A database
on a given subject is a collection of data on that subject that observes three criteria: comprehensiveness
(completeness), nonredundancy, and appropriate structure. Comprehensiveness means that all the data
about the subject are actually present in the database. Nonredundancy means that each individual piece
of data exists only once in the database. Appropriate structure means that the data are stored in such a
way as to minimize the cost of expected processing and storage (Awad & Gotterer, 1992).

The idea of a large corporate database that can be flexibly shared by several applications or model bases
has been realized by means of software packages specially devised to perform such tasks. These packages,
called database management systems (DBMSs), are available in the market under different trade names
such as ORACLE, SYBASE, INGRES, FOXBASE, and dBASE.

Networking and interactive processing

The two principal blocks that facilitate development and use of MIS are DBMS
and telecommunications. The former makes data integration possible, while the latter brings information
closer to the end users, who constitute nodes in a telecommunication network. The notion of
telecommunications implies that some geographical distance exists between the computer site and the
users' locations and that data are electronically transmitted between them. Remote applications may be
executed between two floors in the same building, two offices in the same city, two offices on the same
continent, or two places on opposite sides of the globe (Martin, 1990).

System alternatives and evaluation: Centralization versus decentralization

A completely centralized information system handles all processing at a single computer site, maintains a
single central database, has centralized development of applications, provides central technical services,
sets development priorities centrally, and allocates computer resources centrally. The system's remote
users are served by transporting input and output data physically or electronically.

A completely decentralized system may have no central control of system development, no

communication links among autonomous computing units, and stand-alone processors and databases at
various sites. Each unit funds its own information-processing activities and is totally responsible for all
development and operation.

An advantage of centralized information systems is that they provide for standardization in the collection
of data and the release of information. There also are some economies of scale. A centralized system
reduces the need for multiple hardware, software, space, personnel, and databases. It may be possible to
recruit more qualified personnel in a central facility.
Observations indicate that user motivation and satisfaction are increased under a decentralized
environment. This is attained because users feel more involved and more responsible, systems are better
customized to their specific needs, and they usually get better response time in routine operations as well
as in requests for changes.

It is likely that for national agricultural extension systems, neither a completely centralized nor a
completely decentralized system is desirable. While it may be useful to decentralize hardware and
software resources at different locations, the development of applications and provision of technical
services may better be centralized.

End-user computing

The widespread use of personal computers and computer-based workstations has brought with it the age
of end-user computing. End-user computing is a generic term for any information-processing activity
performed by direct end users who actually use terminals or microcomputers to access data and
programmes. The manager as end user may be provided with powerful software (like DBMS) for accessing
data, developing models, and performing information processing directly. This has brought computing
directly under the control of the end users and eliminates their dependence on the information systems
specialist and the rigidities of predesigned procedures. They may now make ad hoc queries of information
and analyse it in various ways. They may write programmes, or may often use ready-made programmes
stored in the computer, using the computing power of a local PC or the mainframe to which it is
connected.

Figure 2. A typical MIS for a national extension system.

Illustrative computer-based MIS

A national agricultural extension system is a nationwide system managed by the national government. In
India, agriculture is a state subject under the division of powers between the national and the state levels.
Nevertheless, the national government supplements the financial resources of the states and provides
coordination at the national level. The state's administrative machinery is divided into districts, districts
into subdivisions, subdivisions into blocks. A block is a group of villages and the basic unit for the
administration of an agricultural extension programme. Data collected at the block level need to be
integrated at higher administrative levels to provide an integrated view at the district and state levels to
support planning, monitoring, and decision making.

Keeping in view the requirements of the extension system and the budget constraints of the states, a
typical design of the computer-based MIS is shown in Figure 2.
However, the actual design may vary with the size of the state and other considerations. An integrated
database for the entire state may be supported by a mainframe/minicomputer at the state headquarters.
Suitable programmes for the analysis of data may be designed to provide an interactive decision support
system at the state level. Each district and subdivision may be provided with a mini/micro computer,
depending on the volume of data to be handled. The computers in the districts and subdivisions may be
networked with the state computer. The local data may be stored and processed in the
district/subdivision, and the shared data with appropriate level of aggregation may be transmitted to the
state headquarters to update the integrated database. The districts and subdivisions would have direct
access to the integrated database with proper authorizations assigned to them through their passwords.
The blocks may have only the input-output terminals connected to the subdivision computer to feed data
to the subdivision and make on-line inquiries as and when necessary.

Summary

In this chapter, we have defined and described the basic concepts of a management information system.
The characteristics of good information, namely, relevance, timeliness, accuracy, cost-effectiveness,
reliability, usability, exhaustiveness, and aggregation level, have been described. The role of information
systems in the process of decision making and the value of information have been explained. Four types
of MIS, namely, databank information system, predictive information system, decision-making
information system, and decisiontaking information system, have been presented. The role of MIS in
management of agricultural extension programmes and the conceptual design of a MIS in an agricultural
extension organization have been described.

Basic computer concepts have been explained. The advantages and disadvantages of centralized versus
decentralized systems have been examined. The need for organizing databases and their integration and
the need for programmes for decision analysis to evolve a decision support system have been explained.
An assessment of hardware, software, and networking requirements for a typical computer-based MIS
for a national agricultural extension system have been illustrated

DESIGNING AN MIS
In This Section
Section Overview
A management information systems must be flexible and
RIMS
adaptive and must have the capacity to accommodate
Implementation Plan
Advisory Group deficiencies as the system evolves. Procedures should be
 Background developed to detect these deficiencies and to make
GAMS adjustments in the system so as to eliminate or reduce them.
Objectives Managers, as well as information specialists and operations
Training researchers, should participate in each phase of the design of
Status Report an MIS.
More about GAMS
GRANTS The design of an MIS should begin with an identification of the
Objectives important types of strategic, managerial, and operational
Status Report decisions required by the organization. Relationships among
BPR decisions should be defined and the flow of decisions should
Objectives be determined. Such a decision-flow analysis often reveals
Initiative that important decisions are being made by default. For
More about BPR example, past decisions often may still be binding on the
PRISM/BEST-Michigan operations of an organization even though they are no longer
applicable to current problems and procedures. When asked:
"Why do you follow these procedures," all-too-often the
answer is: "Well, that's the way we have always done it."

An analysis of decision flows may also uncover situations in

which interdependent decisions are being made
independently. Frequently changes can be identified that
should be made in the flow of decisions to correct information
deficiencies which may involve (a) the responsibilities of
management, (b) the organizational structure, or (c) measures
of performance.

The next step in the design of an MIS involves an analysis of

the information requirement of the major classes of decisions.
Ackoff has suggested that organizational decisions can be
grouped into three types: (1) decisions for which adequate
models exist or can be developed and from which optimal
solutions can be derived; (2) decisions for which models can
be constructed but from which optimal solutions cannot be
readily extracted; and (3) decisions for which adequate
models cannot be constructed. [1]

In response to the first type of decisions, the model should

have the capacity to identify the relevant information required
for a solution to the problem. The decision process should be
readily incorporated into the MIS (thereby converting it, at
least partially, to a management control system). In the
second case, while the model may specify what information is
required, a further search process may be necessary,
including the examination of alternative approaches, to fully
explicate these information requirements.

Further research is required in the third situation to determine

what information is relevant and how this information can be
organized to address the decision situation. It may be
possible through such research, to make more explicit the
implicit models used by decision makers and in so doing, to
treat such models as type-2 decision situations.

In each of these categories it is appropriate to provide

feedback by comparing actual decision outcomes with those
predicted by the models. It is important that the MIS have the
capacity not only to answer the questions that might be
addressed to it, but also to report any deviations from
expectations (that is, actual decision outcomes that differ from
those predicted). Each decision made, along with its predicted
outcome, should become an input to a management control
system. [2]

As Rapoport has noted, the first step in solving a problem is to

state it.

The statement usually involves a description of an existing

state and desirable state of affairs where the factors involved
in the discrepancy are explicitly pointed out. The success with
which any problem is solved depends to a great extent on the
clarity with which it is stated. In fact, the solution of the
problem is, in a sense, a clarification (or concretization) of the
objectives. [3]

Vague problem statements lead to vague methods, where

success is erratic and questionable. The more a given
problem can be extended through the examination of timely
information about the situation, the greater the promise of a
successful solution.

A distinction should be made among four different types of

problem sets. Most problems that confront complex
organizations represent generic events, of which the specific
occurrence is only a symptom. As a general rule, such
generic situations require adaptive decisions, that is,
decisions which may require considerable reconstruction of
programmed details before they are applicable to a given
problem situation. Adaptive decisions alleviate built-up
pressures by removing the more immediate sources of
demand or by providing satisfactory alternative solutions to
that which is sought. Until the generic problem is identified,
however, significant amounts of time and energy may be
spent in the piecemeal application of adaptive decisions to the
symptoms without ever gaining control of the generic
situation.

The second type of occurrence is one that, although unique in

a given organization, is actually a generic event. For example,
a company's decision on the location of new processing plant
may be a unique situation as far as the present company
officials are concerned. It is, however, a generic situation that
has confronted many other companies in the past. Some
general rules exist for deciding on the best location for such
facilities, and the decision makers can turn to the experience
of others for these guidelines.
The third possible problem classification is the truly unique
situation. Here, the event itself may be unique or the
circumstances in which the event has occurred may be
unique. The huge power failure of November, 1965, for
example, which plunged northeastern North America into
darkness, was a truly exceptional or unique event, at least
according to first explanations. On the other hand, the
collision of two airplanes miles from any air terminal is a
unique situation, not because airplanes do not run the risk of
collision, but because of the unique circumstances under
which the event occurred.

The fourth type of event confronting the decision process is

the early manifestation of a new generic problem. Both the
power failure and the collision of two airplanes, for example,
turned out to be only the first occurrence of what are likely to
become fairly frequent events unless generic solutions are
found to certain problems of modern technology.

As illustrated in Exhibit 1, the relationship among these four

categories can be described in terms of (1) the availability of
rules and principles (information) for dealing with such
problems and (2) the frequency of encounter of these
situation. General principles, rules, or procedures usually can
be developed or adapted to deal with generic situations. Once
an appropriation problem classification has been found, all
manifestations of the same generic situation can be handled
fairly pragmatically by adapting the rules or principles to the
concrete circumstances of the problem situation. In short,
such problems can be handled through adaptive decision
making. The unique problem and the first manifestation of a
generic problem, however, often require greater innovation in
the search for successful solutions.

By far the most common mistake in decision making is to treat

a generic problem as if it were a series of unique events.
Treating a unique event as if it were just another example of
the same old problem to which the same old rules can be
applied can have equally negative repercussions.

The role of the experienced manager is to avoid incomplete

solutions to problems that are only partially understood. The
technical expertise of those individuals closest to the situation
should be used to classify the problem. Settling on a plausible
albeit incomplete definition of the problem is also a danger. A
well-developed management information system can provide
safeguards against an incomplete definition by providing
mechanisms to reject such definitions if an when they fail to
encompass the observed facts regarding the problem.

The outcome of this analysis should be a clear definition of

the problem. If the problem cannot be stated specifically--
preferable in one interrogative sentence, including one or
more objectives--the analysis has been inadequate or of
insufficient depth. Emotional bias, habitual or traditional
behavior, and the human tendency to seek the path of least
resistance may contribute to a superficial analysis, followed
by a statement of the apparent rather than the real problem.
An excellent solution to an apparent problem will not work in
practice, because it is the solution to a problem that does not
exist in fact. Short-circuiting this phase in the process may
actually result in more time spent later to get at the real
problem when it becomes painfully evident that further
analysis is required.

Exhibit 1Problem Definition and Classification

Availability of Rules & PrinciplesHigh Nonrecurrent Generic

Problem Generic Problem Adaptive Decision Process Unique
Problem First Manifestation of a Generic Problem Innovative
Decision Process Low High Frequency of Encounter

The basic components of an MIS applicable to the information

needs of financial planning and management control are
illustrated in Exhibit 2. Three specific data areas provide
inputs for the formulations of strategic decisions: (1)
environmental intelligence--data about the broader
environment of which the organization is a part, including
assessments of client needs; (2) auto intelligence--data about
the component elements of the particular organization,
including an evaluation of organizational resources and its
capacity to respond to client needs; and (3) historic data,
which bring together and analyze the lessons of past
experience. These data are stored in the memory banks of
the organization to be retrieved when particular decision
situations arise or when a broader assessment of the overall
goals and objectives of the organization is appropriate.

Basic research and analysis are essential to effective fiscal

planning and management control. Data must be
systematically collected and stored for future use and
reference. Data can be generated externally (e.g., relevant
national data, macro-trend analyses, etc.) or internally (e.g.,
accounting and other fiscal management data). Basic analysis
can be carried out using various modeling programs available
in a well-constructed MIS. The results can be stored in the
data base for reference and updating. The diagnosis of trends
can be aided, in part, by the modeling and simulation
programs and statistical analysis packages.

Forecasts of the probable outcomes of events can be

developed on these data foundations. Probable happenings
are outlined by assuming the continuance of existing trends
into hypothetical futures. These forecasts provide an
important inputs in determining organizational objectives--an
initial impetus for strategic planning.
While computer-based data have not been used extensively
in the formulation of goals and objectives, an MIS can aid in
the development and evaluation of such statements.
Objectives can be written so as to take fuller advantage of
available information in the system. Addition-ally, written
objectives can be stored, permitting easy access, change,
and output. Once objectives have been determined (at least in
preliminary fashion), the planning process can begin to
suggest possible directions that the organization can take in
response to client needs in the broader environment. Two
important initiatives are important in this regard: (1) the search
for possible new courses of action to improve the overall
performance of the organization; and (2) a framework for
resource management and control.

The same system components used in the basic research and

analysis phase can be applied in the formulation and analysis
of alternatives. The analysis of alternative must build on the
basic analyses previously carried out, and therefore,
significant use must be made of the storage and query
capabilities of the DBMS. The results of previous decisions
and program actions are combined through policy and
resource recommendations. In this capacity, the MIS can be
useful in the storage and retrieval of needed information and
in report generation.

Tactical and technical innovations must be sought to improve

the overall responsiveness of the organization (in the private
sector, these innovations also improve the competitive
position of the organization). Various "what if" scenarios may
be tested through the analytical subroutines contained within
the MIS.

Management plans must translate the overall intent of

strategic plans into more specific programs and activities.
Management plans are both information demanding and
information producing. The budget process provides important
managerial feedback in terms of evaluations of prior program
decisions and actions. Feedforward information emerges from
the various projections and forecasts that are required by
financial analysis and budgeting processes.

Management control activities draw on the memory banks of

the organization in search for programmed decisions--
decisions that have worked successfully in the past. Timely
resource evaluations also provide important inputs into the
process. These evaluations include information regarding the
current fiscal status of the organization (accounting data), as
well as the overall response capacity of other organizational
resources (systems readiness). The process should provide
critical feedback to the further refinement of objectives. In
some cases, this feedback will require a recycling before
proceeding to the next phase.
Program development involves the activities of task
identification and budgeting. Specific operations are detailed
within the framework provided by the strategic plan and fiscal
planning decisions. Responsibilities for carrying out these
operations are assigned, as are the resources required by
these operations. Specific operations may be further detailed
through the procedures of operations planning and control
(which may include such techniques as Program Evaluation
Review Technique (PERT) and Critical Path Method (CPM)).
Programming and scheduling procedures usually require
further information regarding resource capabilities. They also
may precipitate a recycling of the fiscal planning process.

The final component of the MIS involves the information

derived from performance evaluations. Performance
evaluation draws data from the broader environment
regarding the efficiency and effectiveness with which client
needs are met, problems are solved, opportunities are
realized, and so forth. Some writers view performance
evaluation as a separate process outside the management
information system. Others recognize the importance of
incorporating the data and information developed through
such evaluations by referring to a management information
and program evaluation system [4]

A basic problem of organizations today--whether in the public

or private sectors--is to achieve an appropriate balance in
programs and decisions to ensure systems readiness.
Systems readiness defines the response capacity of the
organization in the short-, mid-, and long-range futures.
Sufficient flexibility is required to meet a wide range of
possible competitive actions. The development and
maintenance of an MIS that includes the basic components
outlined herein can contribute significantly to meeting this
challenge.

Feedback is a basic requirement of any MIS. Feedback must

be obtained in terms of quality (effectiveness), quantity
(efficiency of service levels), cost, and so on. Programs must
be monitored to maintain process control. Evaluations of
resources (inputs) provide feedback at the earliest stages of
program implementation.

Feedback data must be collected and analyzed at various

stages in the implementation of programs and the
maintenance of ongoing operations. These analyses involve
processing data, developing information, and comparing
actual results with plans and expectations. Routine
adjustments may be programmed into the set of ongoing
procedures, and instructions can be provided to those
individuals who must carry out specific tasks. Feedback from
the operating systems provides an information flow within the
management control procedures to initiate and implement
program changes in a more timely basis. Thus, procedures
 are modified and files updated simultaneously with routine
decision making and program adjustments.

Summary and exception reports may be generated by the

MIS and become part of higher-level reviews and evaluations.
These evaluations, in turn, may lead to adaptations or
innovations of goals and objectives. Subsequent management
activities should reflect such feedback, and the entire process
is recycled.

Managers must seek data and information that will permit

actions to be taken before problems reach crisis proportions.
Historic data provided by conventional accounting systems
may be insufficient to meet these decision needs (even when
the time lag is only a few weeks). Resource evaluations on
the input side and resource monitoring as programs or
projects progress can provide the more timely information
required to anticipate rather than merely to react to problems.

An information system appropriate for fiscal planning and

management control must use feedforward as well as control
based on feedback. Feedforward anticipates lags in feedback
systems by monitoring inputs and predicting their effects on
output variables. In so doing, action can be taken to change
inputs and, thereby, to bring the outputs into equilibrium with
desired results before the measurement of outputs discloses
a deviation from accepted standards.

In time, an organization "learns" through the processes of

planning, implementation, and feedback. [5] Approaches to
decision making and the propensity to select certain means
and ends change as the value system of the organization
evolves.

Endnotes [1] Russell L. Ackoff, "Management Misinformation

Systems," Management Science (Application Series) 14
(December 1967), reprinted in Donald H. Sanders and
Stanley J. Birkin, Computers and Management in a Changing
Society (New York: McGraw-Hill, 1980), p. 44. [2] Ibid., p. 45.
[3] Anatol Rapoport, "What Is Information?" ETC: A Review of
General Semantics Vol. 10 (Summer, 1953), p. 252. [4] For a
further discussion of the concepts of MIPES, see: Alan Walter
Steiss, Public Budgeting and Management (Lexington, Mass.:
Lexington Books, D.C. Heath, 1972), chap. 10 [5] Richard M.
Cyert and James G. March, A Behavioral Theory of the Firm
(Englewood Cliffs, N.J.: Prentice-Hall, 1963), p. 123.

Management Information System Notes | Study Material for Management

Information System
Management Information System Projects, Notes for Management Information
System, MBA Subject Management Information System
 Contents Sample Questions

Management Information System Topics:

» Definition of Management Information System
» Purpose of Management Information System
» Advantages of Management Information System
» Objectives of Management Information System
» Characteristics Management Information System
» Models/ types of Management Information Systems
» Management Information System Planning, Controlling and Limitations

Definition of Management Information

System
Management Information System can be defined as a formal method of collecting
timely information in a presentable form. in order to facilitate effective decision
making and implementation, in order to carry out organizational operations for the
purpose of achieving the organizational goal. A management information system is
a system design to provide selected decision –orientation information needed by
management plan, control and evaluate the activities of the corporation. It is
designed within the frame work that emphasizes profit, planning, performance
planning and control at all levels. It complements the ultimate integration of
required business information sub system both financial with in the company.

According to Philip kolter- A marketing information system consist of people,

equipment and procedures together,sort,analyse,evaluate and distribute the needed
timely and accurate information and marketing decision makers.

Professor Allen S. Lee states that research in the information system 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.
An information system can be any organized combination of people, hardware,
software, communication network and data resources that collects, transforms and
disseminates information in an organization.

Purpose of Management Information System

Information processing is a major social activity. A significant part of an individual’s
working and personal time is spent in recording, searching for, and absorbing
information, as much as 80% of a typical executive’s time is spent on processing and
communication information. Their duties involve the production and use of
information outputs documents, reports, analysis, plans, etc.

The system provides information on past, present, and project future and on
relevant events inside and outside the organization in the society. it may be define as
planned and integrated system for gathering relevant data,coverting it in to right
time. The main purpose of management information system is to provide the right
and correct information to the right people at right time.

Another important purpose of management information system is that it is needed

by all business organization because of increased complexity and rate of change of
today’s business environment foe example marketing manager needs information
about sales performance and trends financial manager needs information on returns,
production manager needs information analyzing resources requirement and
workers productivity and personnel manager needs information analyzing resources
requirements and workers productivity and personnel manager needs information
concerning employee compensation and professional development. thus effective
managers with the specific marketing,financial,production and personnel
information, and products they require to support their decision making
responsibilities.

Management information system concept is a vital to effective computer use in

business of two or major reason:

1- It serves as a system framework for organizing business computer applications.

business application of computer should be viewed as interrelated and integrated
computer based information system and not as independent data processing job.

2- It emphasized the management orientation of electronics information processing

in business the primary goal of computer based information should be the
processing of data generated by business operations.

Advantages of Management Information

System
1. Management information system helps the managers to make planning and
control decision.

2. Facilitated planning- management information system improves the quality of

plants by providing relevant information for sound decision making due to increase
in size and complexity of organization managers have lost personal contact with the
scenes of operations.

3. Minimize information overload- management information system changes the

larger amount of data into summarized form and thereby avoids the confusion which
may arise when manager are flooded with detailed facts.

4. Bring coordination-management information system facilities integration of

specialized activities by keeping each department aware of the problem and
requirement of their department. it connect all decision centers in the organization.

5. Make control easier-it serves as a link between managerial planning and control. It
improves the ability of management to evaluate and improve performance. The use
of computers has increased the data processing and storage capability and reduces
the cost.

6. Management information system assembles, processes.stores, retrie, evaluate,

and disseminate the information.
7. It insure that appropriate data is collected from the various sources, processed,
and sent further to all the needy destinations.

8. Management information system helps in strategic planning, management

control, operational control and transaction processing.

9. It helps the clerical personnel in the transaction processing and answer their
queries on the data pertaining to the transaction the status of a particular record and
reference on a variety of documents.

Objectives of Management Information

System
1. Management information system main objective is to attain the transaction
processing of data of an organization effectively. Transaction processing is applied in
conversion and analysis of raw data.

2. Management information system is the management of marketing, fiancé,

production, and the personnel becomes better trained which result in his efficiency.

3. Management information system is in making the forecasting and long term

prospective planning more effective.

4. It tries to create a structured database in knowledge base for all the people in the
organization.

Characteristics of Management Information

System
Management information system and top management - management information
system is a comprehensive and coordinated set of information subsystems which are
rationally integrated and which transform data information in a variety of a ways to
enhance productivity in conformity with the manager’s style and characteristics on
the basis of established quality.
1. Management oriented - the system is designed from top to bottom. This does not
mean that the system will be geared to providing information directly to top
management rather it means that the system development starts from an appraisal
of management needs and overall business objectives it is possible that top
management is the focus of the system such as their needs cornerstone on which the
system is built for example- a marketing information system basic sales order
processing the shipment of goods to the customers and the billing of the goods are
fundamental operation control activities. however if the system is designed properly
this transaction information can be traced by salesman, sales territory, size of order,
geography and product line furthermore if designed with strategic management
needs in mind external competition market and economic data can be created to
give a picture of how well the company’s product are faring in their marketing
environment and to serve as a basic of new product or marketplace introduction the
initial application can be geared to the operational and management control areas
but in such a way as not preclude its integration into a strategic planning subsystem
for upper management.

2. Management directed - because of the management information system it is

imperative that management actively directs the system development efforts to
determine what information is necessary to improve its control of operation it is rare
to find an management information system where the manager himself or a high
level representative of his department is not spending a good deal of time in system
design it it not a non time involvement for continued review and participation are
necessary to ensure that the implemented system meets the specification of the
system that designed therefore management is responsible for setting system
specification and it must play a major role in subsequent trade off decision that
inevitably occur in system development. An important element of effective system
planning is the process for determining the priority of application development.
Management must control this process if a management information system is the
objectives. A company without a formal application approval cycle and a
management steering to determine priorities will never develop an management
information system.

3. Integrated - integration is significant because of the ability to produce more

meaningful management information for example in order to develop an effective
production scheduling system we must balance such factors as:
A. Set up cost.
B. Work force.
C. Overtime rates.
D. Production capacity.
E. Capital requirement
D. Customer service.

4. Common data flows - Because of the integration concept of management

information system there is an opportunity to avoid duplication and redundancy in
data gathering storage and dissemination for example customer orders are the basic
for billing the customer for goods ordered setting up the accounts receivable
initiating production activity sales analysis sales forecasting and so on it is prudent to
capture this data closest to the source where the event occur and use it throughout
the functional area it is also prudent to capture it once and thus avoid the duplicate
entry of sources data into several system.

5. Heavy planning elements - Management information system do not occur

overnight they take from three to five years and longer to get established firmly
within a company a heavy planning element must be present in management
information system development the management information system designer
must have the future objectives and needs of the company firmly in mind. the
designer must avoid the possibility of system obsolescence before the system
planning is an essential ingredient to successful management information
system the management information systemprovides meaningful direction towards
which one strives.

6. Sub-system concept - In tackling a project as broad and complex in scope as

a management information system, one just avoid losing sight both the forest and
the trees. Even though the system is viewed as a single entity, it must be broken
down into digestible sub-system that can be implemented one at a time. The
breakdown of management information system into meaningful subsystems set the
stage for prioritized implementation. The subsystem analysis is essential for applying
boundaries to the problem, thus enabling the designer to focus on manageable
entities that can be assigned and computerized by selected system and programming
team.
7. Flexibility and ease of use - Despite a careful analysis of the future management
information needs it is impossible to predict what is desire their to five year hence.
This is true in most industries and especially in industries with rapid change patterns,
it is naïve to think that if anyone possesses the omniscience to predict the future
with this aa a premise, the next best thing an management information
system developer can do is to built in the flexibility to incorporate as many
manufacture nuances as possible.

8. Data base - The data is the mortar that holds the functional system together each
system requires access to a master file or data covering inventory, personnel,
vendors, customers, general ledger, work in progress and so on. If the data is stored
efficiently and with common usages in mind one master file can provide the data
needed by any of the functional system. It seems logical to gather data once,
properly validate it and place it on a central storage medium that can be accessed by
any system. However it is not unusual to find a company with multiple data files, one
serving one functional system and another serving another system.

9. Distributed data processing - The majority of the companies

implementing management information system have a geographic network of sale
office, distribution channel, manufacturing plants,divison,subdivision and so on some
of these entities are operated in a completely independent fashion and therefore
may not be part of the integrated management information system more often than
not, the remote site to have the connection with each other and with a host of
operation in order to create a effective management information system with
geographical boundaries some from of distributed data processing is necessary.
Distributed data processing can be thought of as the delivery system, placing
information in the hands of those who need it when they need it.

10. Information as a resource - Providing the entire organization must be a concept

that information is a valuable resource particularly in the management control and
strategic planning areas must be properly managed. This is a subtle but important
change in thinking. It was a common in the past to view the data processing.
Models/ Types of Management Information
Systems
1. Accounting management information systems - All levels of accounting managers
share all accounting reports. 2. Financial management information systems - It
provide financial information to all financial managers within an organization include
the chief financial officer. The chief financial officer. The chief financial officer
analyzes historical and current financial activity.

3. Manufacturing management information systems - More than any functional

area great advance in technology have impacted operations, as a result
manufacturing operations have changed. For instance, inventories are provided just
in time so that great amounts of money are not spent for warehousing huge
inventories in some instance raw material are even proceeds on rail load cars waiting
to be sent directly to the factory thus there is no need for warehousing.

4. Marketing management information system - A marketing management

information system support managerial activity in the area of product development,
distribution, pricing decision, promotional effectiveness and sales forecasting more
than any other functional area.

5. Human resource management information system - It concern with activity

related workers, managers and other individual employed by an organization
because the personnel function relates to all other areas in business the human
resource management information system playa a valuable role in ensuring
organization system include work-force analysis and planning, hiring, training, and
job assignment.

6. Structure of management information system - The management information

system has been described in terms of support for decision making management
activity and organization functions.

7. Conceptual structure - The conceptual structure of a management information

system is defined as a federation of functional subsystem each of which is divided
into four major information processing components transaction processing,
operational control information system support, managerial control information
system, managerial control information system and strategic planning information
system which has some unique data files which are used by only that sub system.

8. Physical structure - The physical structure of an management information

system would be identical to the conceptual structure of all applications consisting of
completely separate programs used by only one function but this is frequently not
the case substantial information can be achieved from

1 - Integrated processing
2 - Use of common modules

Integrated processing is achieved by designing several related applications as a single

system in order to simplify the interconnection and reduce the duplication of input.
A good example is an order entry system. The recording of an order initiates a
sequence of processing. Each step using new data but also most of the data from
prior processing. In other words, an integrated order entry system crosses functional
boundaries.

Management Information System Planning,

Controlling and Limitations
Planning - The top level management is mainly concerned with strategic planning for
example the strategic planning activities of top management involve future
interaction between the organization and its external environment.

Computational support for planning:

1. An analysis of historical data to obtain relationship useful for projection.

2. Various projection and forecasting techniques to estimate future value.

4. Computations internal to the plan and computation required for outputs.

5. Output of the results in a meaningful planning format.

Historical data analysis techniques
Historical data analyzed to discover pattern or relation that will be useful in
projecting the future value of significance variables. Even when the quantitative
relations are not sufficiently stable to use in forecasting data analysis is useful for
input into the judgmental forecast.

Historical extrapolation techniques

Historical data describes the past planning that involve the future estimating is
generally based on analysis of past history combined with various technique to
generate data for planning purposes.

Financial planning computation

Models that involve financial plan need to provide for various computation and
analyses commonly required for measuring or evaluating profitability example are
depreciation computation rate of return analysis and break even analysis.
Depreciation is a significant computation in most financial planning it affect profit
computation because it is an expense and it effect cash flow because of its impact on
taxes. There are several methods for computing deprecation all of which should be
available to the planner. These methods are straight line double declining balance
sum of the year digits and production or use basis.

Controlling - At the middle level management, information is management control.

Middle level managers such as departmental heads are concerned with the current
and future performance of their units. Therefore they need aggregate information
on the sales, profit etc.of their units such information is available from both within
the organization as well as outside the organization, for example, financial data for
budgets and ratio analysis are available from the company’s records. However
market data can be collected through special surveys and reports from outside the
organization. Top level managers also require management control information. But
these information must be more detailed narrower in scope and more accurate than
information required for strategic planning. It should also generate at more frequent
because the time horizon of decision is shorter.

At the supervisory level of management operational control is exercised production

scheduling, cost and credit control, etc. are examples of operational control.
Therefore a detailed report on a daily and weekly basis is required, inventory report,
operating cost, production rate, etc are examples of such information. Such
information available from with in the organization.

The control feedback loop is basic to system design. The computer can improve the
control process in several ways:

1. The standard can be complex. Computational simplifications are not necessary.

2. The computation of deviation and identification of cause can be more

sophisticated.

3. Reporting with computers can use irregular time interval which is very difficult
with manual processing and can be done more frequently.

Limitation

1. Aggression - The people may hit back at the system and may even sabotage it by
using equipment incorrectly by putting incomplete information into the system or
buy actual destruction of hardware or software.

2. Projection - It is a psychological mechanism of blaming difficulties on someone or

something else. When employees blame the management information system for
problems caused by human error or other factors unrelated to the system,
projection is taking place.

3. Avoidance - It occurs when individuals defend themselves by withdrawing from or

avoiding a frustrating situation. Managers may avoid the system by ignoring its
output, in favour of their own information sources.

Management Information System Planning - Management information

system general business planning initiates from the following concepts :

1. Mission of the corporate.

2. Objectives and goals for the corporate in all key performance areas. These are in
 line with the mission of the corporate.

3. Strategic planning for general approach on how to achieve long term objectives.

4. Operational planning for specific guideline on how to transverse short term

milestones.
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