Management Information System

1st Chapter Rapid developments in information technology led to a change in the concept of information systems in organizations, At present, knowledge is referred to as the object that is manipulated by information systems or as the result of using them. The use of computers in organizations has been growing since the appearance of the first applications of this information processing technology to support organizational work in the 1950s. This growth is specially related to the diversity of organizational activities where computer-based information technology is being used. The applications of computer-based information technology are currently unavoidable in modern organizations. Regardless of their dimension, the business domain they operate in, and even if they do not aim for profit, information systems are highly essential to support organizational activities. Early information systems were quite easy to describe and explain. There were several organizational activities that involved carrying out some combination of arithmetic operations. Although the calculations that had to be done were normally quite simple, the large amounts of information to be processed made these procedures repetitive and error prone when carried out by human beings even though they used calculating machines to a limited extent. This situation constituted the introduction of computers in organizations: machines capable of processing large amounts of information without committing errors and becoming tired. Formerly the use of computers was confined to data processing. They were later applied to other situations like producing management reports.

With the subsequent developments of information technology and its use and the consequent widespread presence of information system in organizations, it became more difficult to explain what information system does and what roles they play in those organizations. Information system evolved from computer applications built to automatise the processing of some well defined information and to produce some well identified result to more complex uses. Information is a valuable resource to any organisation. Information is intangible asset, but all the other resources are tangible. Economic resources such as manpower resource, monetary resource, material resource, machine resource are the basic ingredients of business. Business organisations manage, control and efficiently use one or more

of these resources. These resources have to be managed effectively to ensure that an organisation survives. If they are strategically managed, a competitive edge can be created. In the present environment, quick decision and speedy action are the keys for businesses to remain competitive. Information is the resource that will enable organisations to attain this new requirement. Information not only creates value but binds together the
organisation as well. Amajor challenge of today's business organisation is to manage its information resources for the benefit of organisation. Therefore Management Information System (MIS) enjoys much practical significance in the management of highly complicated business enterprises. It is concerned with the utilisation of well organised information system for managerial decision making, All managerial functions are performed through decision making and the decision making is in turn, depends on information supplied by the Management Information System. Information technology has become a vital component of the information systems of all kinds of organisations. It facilitates the smooth functioning of all sections of an organisation to achieve its predetermined objectives. Technology guarantees a competitive edge in planning and executing the activities of management. The survival of modern business heavily depends on the4 effectiveness of information system coupled with the use of information technology.' Modern business organisations require large volume of data such as financial, personnel, legal and marketing to find solutions to various managerial problems. A well structured Management Information System provides accurate, relevant and timely information to the management. However, information system is not a new device in the hands of the management to arrive rational judgements. It was in use by the business managers even before the introduction of computers and information technology. Business firms in USA were making use of the management information system during the eighteenth century itself; But the system existed at that time was not much complex as it today. Before the: industrial revolution the size of the business organisations were essentially small and hence their information requirement was also limited. The industrial revolution gave birth to gigantic corporations and consequently the need was felt to enlarge the MIS to satisfy the growing needs of these big business houses to deal with the complex and multi dimensional issues. As pointed out earlier! MIS is not a new tool in the hands of the management. The new aspect concerned with the modern information system is the wide spread use of information technology to collect and process data. Now, computers have become an integral part of the information system of all organisations because of the power of the technology to handle large volume of data. The application of computers to information processing began in 1954 when one of the first computers was programmed to process pay roll. At present computers are widely used not only for processing routine transactions but also for managerial decision making.. MEANING AND DEFINITION OF MIS

An information system is a set of people, procedures, and resources that collect, transform, and disseminate=distribute information in an organisation. Information systems can play a vital role in business success. They can provide the information that a business needs for efficient operations, effective management, and competitive advantage. An Information System is a combination of work practices, information, people and information technologies organized to accomplish goals in an organization. Management
_Management Information System

Information System supports all management levels in the conduct of their functions, such as operations, administration, or planning and programming. The users of information systems are managers of all levels who would require that data be processed, collated and analyzed before it can be useful for making decisions. Types of decisions made arethose that range from everyday transactions, longer ranging tactical or monthly reports to longer ranging strategic types that are useful in making projections typically in years. MIS provides for thelidentification of relevant information needs, the collection of relevant information, processing the same to become useable by the business managers, and timely dissemination of processed information to the users of information for properly managing the affairs of the enterprise.

fit is a system to covert data from internal and external into information and to communicate that information, in an appropriate form, to managers at all levels in all functions to enable them to make timely and effective decisions for planning, directing and controlling the activities for which they are responsible, /Jerome Kanter defines management information system as "a system that aids management in making, carrying out and controlling decisions".^ \Prince Thornas.R defines management information system as "a computer based network, containing two or more operating systems which feed relevant data to the management for decision making purposes." (Kenneth.Laudon and Jane P. Laudon defines management information system "a set of interrelated components that collect, process, store and distribute information to support decision making, coordination, and control in an organisation"..' In addition to supporting decision making, coordination and control, information systems are also help managers and workers analyse problems, visualise complex subjects, and create new products. Thus information system contains information relating to people, place and things with in the organisation or in the environment surrounding it. Here information means data that have been shaped into a form that is meaningful and useful to human beings. On the other hand data are raw facts representing events takes place in organisations or the physical environment before they have been organised and arranged into a form that

people can understand and use. According to them three activities are involved in ah information system to produce information. These activities are input, processing and output. Input collects raw data from with in organisation or from external environment. Processing helps to convert the raw data into meaningful information. Output transfers the processed information to the people who use it. Robert G. Murdick defines Management information system as "It provides the information for making decisions regarding the integration of the organisation through the process of management." A comprehensive definition on management information system was given by Gordon B. Davis and Margerethe H.Olson. They define management information system as "an integrated, user- machine system for providing information to support operations, management, and decision making functions in an organisation. The system utilises computer hardware and software; manual procedures: models for analysis, planning, control and decision making; and a database." In the light of the above definitions, the basic concepts of information systems can be summarised as follows.
1. User-Machine System

Management Information System may operate even with out the use of computers. However, the capability of the computer to handle large volume of data makes the system more attractive and practical. There are two types of tasks in an organisation. Certain tasks will be performed well by the people while certain other tasks are well performed by computers. Any person who input, process and utilise the generated information from the system is treated as the user. The computer and users together makes the management information system. To make this system more effective, a sort of interaction between these two elements is highly essential. Such interactions can be achieved through input and output devices. Thus the system becomes a user machine system.
2. Integrated System

MIS is a panned federation small systems. Integrated MIS is a system of information obtained after integrating all the management and operational subsystems of an organisation. A basic and fundamental idea of the system approach to organisation and management is the interrelationship of the parts or subsystems of the organisation. Integrated MIS keeps the entire data at one particular place. This is achieved through the creation of a suitable database.
3. Need for a Database

Even though information and data are used interchangeably, the information is generally defined as data that is meaningful or useful to the recipient. Data can be compared with the raw material and it can be used for producing required information. Database is a super file where a bundle of data can be stored and the same can be retrieved as and when the user needs it.
4. Utilisation of Models.

Both raw data and data in summary form may not satisfy' the information requirements of a user. The user likes to get information in such a format that helps him to take proper decisions. To get the desired output, data should be processed using suitable decision models. Models can be used to identify and analyse possible solutions.

HISTORIC DEVELOPMENT OF MIS

The modem digital computer was primarily designed for scientific calculations. Ever since the use of computer for the American Census work in 1954, the commercial application of computers far exceeds the scientific applications. It is estimated that the commercial applications amount for as high as 80% of the investment in hardware and software. A significant portion of such commercial applications aims at providing the management of an enterprise, some form of information system support. The broad area that deals with such an information support came to be widely known as Management Information System (MIS). The concept of Management Information System has changed substantially over the years. In the 50's and 60's the management saw the potential of computers to process large amounts of data speedily and accurately. The speed and accuracy of such data processing equipment far exceeded that of human clerks, who used to undertake data processing in those days. The departments that were involved with such activities were known as Electronic Data Processing (EDP) departments. The focus of EDP was Record Keeping - an activity statutorily required in many organizations. The majority items whose records need to be kept were primarily accounting data - symbolically described as Payroll data. So, many EDP departments fell in the administrative control of accounting Departments. A classic example in the Indian context is the extensive use of EDP by Indian Railways. The next stage of development was concerned more with the insight and analysis that can possibly be provided by the routine availability of such accurate and timely data. In the 70's, when many organizations took to EDP with the availability of more powerful computers, there was a visible shift for data to information. The focus was not on data but on the analysis of corporate data. There was a shift in the philosophy..Such a concept came to be widely known as 'Management Information System'. The use of MIS in contemporary world goes much beyond the MIS of the 70's but we retain the word as such. While many new jargon words are being proposed we find the term MIS more widely accepted and well understood. Without an excellent record keeping mechanism provided by EDP, no meaningful analysis of data would be possible. As such the, MIS assume, even today, an excellent record keeping function, even though it is no longer fashionable to use the term EDP. The very effort of such large data processing made it impossible to process the data in a timely manner. This was in spite of spectacular progress made in the processing capabilities of the computer of 70's. Probably what went wrong with the EDP was their lack of focus on levels of management. Particularly the top management had neither the time nor the interest to understand the large volumes of data presented by EDP departments. What was in fact needed was a mechanism of filtering the data to suit the level of the management. But the aim of MIS was to provide right information in right time to-needy people rather than supplying all information to all people. Introduction of personal computers brought about a revolution in the field of information processing. In the 70 's the top

management relied on the staff departments of EDP and MIS to supply the necessary information. Their access to information was always indirect. The Personal Computer and the desktop devices changed the picture completely. With new generation software consisting of Word Processing, Database and Spreadsheet opened a new avenue of direct interaction with corporate data to executives. Some managers find it extremely useful to use Personal Computers to get valuable information for decision making. Their requirements for information were much higher, they were no longercontent with indirect information support. The biggest pay-off for such direct use was the "what-if" analysis capability. Suddenly, the executives realized the "decision support" capability of the Personal Computer. This led to the emergence of Decision Support System - a new generation of systems with a new philosophy. Such DSS had to be more flexible, demanded a better user-interface and adaptable to the decision style of the decision marker. The emergence of business graphics provided further boost to the development of such systems. The spectacular growth, in the Artificial Intelligence area, particularly in the Expert Systems sub-area (in the 60's and 70's) had to wait for the SO's for the arrival of powerful machines. Until then the theoretical developments could not be translated into useful, value adding products. The information and decision needs of managers saw a huge potential in the expert systems area. Combined with DSS philosophy the expert systems could supply a superior class of managerial information support. Such systems generally come to be known as Knowledge Based Systems (KBS). The exciting results of Operation Research and Management Science, in a similar element, had to await the arrival of PC revolution. Without the power of desk top computing and the subsequent easy access to information, tangible benefits from the models could not be derived. The philosophy of DSS, combined with the power of the OR models, working behind the screen are transforming the "What-If" capability to "What-Is-Best" capability in the past few year. Such systems that truly integrate Management Information Systems, DSS philosophy and OR/MS models came to be known as Model Management Systems (MMS).
COMPONENTS OF MIS

A management information system is used to transform data into useful information as needed to support managerial decision making with structured decisions. Thus the typical MIS is based on four major components.
1. Data Gathering

Data relating to the operations of the organisation are collected from both internal and external sources.
2. Data Entry

The data so collected is fed and stored in databases for the purpose of processing. 3. Data Transformation Data stored in databases are to be processed with the help of computer software and transformed it into useful and meaningful; information.
4. Information Utilisation

The information processed is now retrievable to executives and managers so that they can be applied for decision making purposes.
CHARACTERISTICS OF MIS

The important characteristics of MIS as given by Jerom Kanter are explained below.
1. Management Oriented

This is the most important characteristics of MIS. MIS is designed and developed to assist the management in their decision making process. The needs and requirements of the management and the over all objectives of the business is identified and the system is finally developed to satisfy the needs of management and to achieve organisational obj ectives.
2. Management Directed

It is the prime obligation of management to give proper leadership in the design and development of MIS. Managers have to play an active role and involvement through out the planning and executing stages of MIS. The system is to be developed in the managerial perspective since they are the final beneficiaries of the system. Their mere involvement is not enough. They should participate actively in all phases of system development. Management must determine their information requirements to improve the over all activities of the business concern. Hence information system is management directed.
3. Integrated Concept

Management information system is viewed as a federation of so many sub systems. All smaller systems in an organisation should be properly integrated in order to produce maximum results. Integrated concept of MIS gives us a comprehensive view in respect of various subsystems operating with in an organisation. Thus, an integrated system that combines information from various subsystems is an essential aspect of MIS.
4. Common Database

Time, effort and money involved in the process of gathering, storing and distributing of duplicate and unnecessary information can be avoided if a well integrated information system is available in the organisation. The information is stored in a common database so that it becomes the common property of the business. Now the information is retrievable to all beneficiaries of the system.
5. Avoids Redundancy in Data Storage

MIS is an integrated system. In an integrated system many small systems are integrated to achieve the goals of the organisation. As a result of integration, unnecessary duplication and redundancy in data gathering and storage can be avoided.
6. Heavy Planning

Management Information system cannot be introduced in an organisation on a fine morning. It takes long time to design and implement the system in an organisation. It involves the element of detailed planning. Planning is needed in the acquisition of
^Management Information System

hardware, software, human ware, data processing operations, information presentation and feed back.
7. Subsystem Concept

A big system is very difficult to manage and it seldom brings the desired results. Even though the system is viewed as single entity, it must be broken down into various manageable systems known as subsystems. The process of dividing a big system into small subsystems can be continued until the smallest subsystem is easily manageable. This can be based on the activities and functions in an organisation.
8. Common Data Flow

In order to achieve the objectives of integration and to avoid duplication and redundancy in data gathering, storage and retrieval, data gathering is usually confined to original source and it is done only once. Most of the information may flow through out the organization and it may affect all functional areas. Therefore it is advisable to gather such data only once and thus avoid the duplication of source data in several areas. This practice is not only economical but also logical.
9. Flexibility and Ease of Use

Fast changes are taking place in the business environment. Therefore steps should be taken to incorporate sufficient element of flexibility in the Management Information system. It should be designed in such a way as to effect required changes whenever and wherever necessary.
10. Distributed Data Processing

There are many divisions in an organisation and sometimes each of these divisions is geographically isolated. Certain divisions may operate in an independent style and does not form as a part of the integrated system. In order to create an effective Management Information system with geographic boundaries, some form of distributed data processing is highly essential. Distributed data processing means two or more subsystems in different locations are operating in a cooperative manner.
11. Information as a Resource

Information is very vital to an organization and it is considered to be a valuable resource also, information resource is utilised in an extensive scale in the strategic planning and management control areas. Information is also needed by the people operating at the bottom level management to discharge their functions effectively. Thus, management information system is used to describe an information system that provides information in the form of standard reports to managers. In a broader sense, management information system can be viewed as a broad class of-information that is designed to provide information required by managers for effective decision making.
INFORMATION SYSTEMS AND ORGANISATIONS

Information is a valuable resource to an organization. It should be effectively managed to get maximum results. The success of an organization depends on the availability of the latest information from both the internal and external sources. A business organization is operating in a complex and fast changing environment. Organizations rely on information systems to provide different types of information necessary for their efficient operations and effective management. The information must be accurate, timely and satisfy the information needs of end users.

Information system helps the organization to achieve a strategic advantage over their competitors. If the information system is not properly managed, it will damage the entire organisation. The proper management information system is thus an important challenge faced by organisations. Hence it is highly essential to have the following qualities for information system in an organisation.
1. Timeliness

To simplify prompt decision making, an institution's MIS should be capable of providing and distributing current information to appropriate users. Information systems should be designed to expedite reporting of information. The system should be able to quickly collect and edit data, summarize results, and be able to adjust and correct errors promptly.
2. Accuracy

A sound system of automated and manual internal controls must exist throughout all information systems processing activities. Information should receive appropriate editing, balancing, and internal control checks. A comprehensive internal and external audit program should be employed to ensure the adequacy of internal controls.
3. Consistency

To be reliable, data should be processed and compiled consistently and uniformly. Variations in how data is collected and reported can distort information and trend analysis. In addition, because data collection and reporting processes will change over time, management must establish sound procedures to allow for systems changes. These procedures should be well defined and documented, clearly communicated to appropriate employees, and should include an effective monitoring system.
4. Completeness

Decision makers need complete and relevant information in a summarized form. Reports should be designed to eliminate confused and huge detail, thereby avoiding "information overload."
5. Relevance

Information provided to management must be relevant. Information that is inappropriate, unnecessary, or too detailed for effective decision making has no value. MIS must be suitable to support the management level using it. The relevance and level of detail provided through MIS systems directly correlate to what is needed by the board of directors, executive management, departmental or area mid-level managers, etc. in the performance of their
END USERS AND INFORMATION SYSTEM

Anyone who uses information produced by the information system or information system itself is called an end user. An end user must know how information system can be effectively used in a competitive business environment. The people who know the technical aspects- of information system can play a very important role in information resource management. Such persons can effectively manage information system personnel, hardware, software, data and information

resources of an organization. Then it becomes possible to utilize all these resources for the benefit of the entire organisation. To what extend the end users to know the technicalities of information system is still remain as a matter of debate. The information system itself is fast changing and dynamic and hence answer to this question also becomes difficult. Like other areas of management and business administration, the field of information system is based on other related academic disciplines and requires a great amount of technological and behavioural knowledge. The constant changes taking place in the information technology makes the information system so dynamic and challenging. ELEMENTS OF MANAGEMENT INFORMATION SYSTEM MIS is a system that composed of various elements. In order to understand the concept of Management Information system clearly, it is necessary to understand its basic elements. Management, Information and System are the three important elements of MIS.
1. Management

Management is usually defined as planning, organizing, directing, and controlling the business operation. This definition, which evolved from the work of Henri Fayol in the early 1900s, defines what a manager does, but it is probably more appropriate to define what management is rather than what management does. Management is the process of allocating an organization's inputs, including human and economic resources, by planning, organizing, directing, and controlling for the purpose of producing goods or sendees desired by customers so that organizational objectives are accomplished. If management has knowledge of the planning, organizing, directing, and controlling of the business, its decisions can be made on the basis of facts, and decisions are more accurate and timely as a result. To perform different functions, a manager has to take a variety of decisions. Thus, decision making is the fundamental element of management process
2. Information

Information is the second element in the management information system. Information refers to an input of data that has been processed into a form that is meaningful to the recipient. Information is what is used in the act of informing or the state of being informed. Information includes knowledge acquired by some means. Data must be distinguished from information. Data are the facts and figures that are not currently being used in decision making process and usually take the form of historical records. Data are equivalent to raw material while information is considered as finished goods useful to the ultimate users. To get the finished output a set of operations to be _Management Information System performed in a predetermined sequence. Similarly to get the meaningful message data are to be processed. Data becomes information when they are organised, reduced and presented in a meaningful form for decision making. For example, name, quantity and amount represent data about sales transactions. However this is not information to the sales manager. When such facts are properly

organised and manipulated it becomes meaningful information. When the sales data is arranged into sales by product, type, salesperson etc. it becomes information. Different levels of management utilise different types of information because different levels of management perform different functions in an organisation.
3. System

The word system indicates plan, method, order and arrangement. A system can be described as a set of elements joins together for a common objective. Each system is composed of subsystems, which in turn are made up of other subsystems. Each subsystem sis defined through its boundary. Thus every system becomes the part of a larger system. In short, a system is a set of interacting elements, interacting with each other to achieve a predetermined obj ective. A system is a scientific method of inquiry, that is, observation, the formulation of an idea, the testing of that idea, and the application of the results. The scientific method of problem solving is systems analysis in its broadest sense. Data are facts and figures. However, data have no value until they are compiled into a system and can provide information for decision making. Management information systems are those systems that allow managers to make decisions for the successful operation of businesses. Management information systems consist of computer resources, people, and procedures used in the modern business enterprise. The term MIS stands for management information systems. MIS also refers to the organization that develops and maintains most or all of the computer systems in the enterprise so that managers can make decisions. The goal of the MIS organization is to deliver information systems to the various levels of corporate managers.
EVOLUTION OF MIS

In the beginning stage of MIS, many people believed that it is a highly integrated system and it has the capability to satisfy the information requirements of an entire organisation. However, certain group of people questioned the capability of MIS to handle and support the planning and decision making functions of management. In course of time it was proved that the concept of a single and highly integrated information system was too complex to design and implement. But, at present the MIS is recognized as a federation of various subsystems. Today, MIS is not viewed as a single big system, instead, it is viewed as a federation of related information systems which will suit to the information requirements of management. MIS as a concept continue to evolve. It can be compared to data processing. But in reality MIS is not equivalent to data processing. A data processing system simply process transactions and produces report. It represents the automation of fundamental and routine processing of transactions. But an MIS fetches wide coverage and it is more comprehensive too. MIS is not only used for processing data, but also assist the management in planning and decision making. However every MIS will also include transaction processing as one of the functions. As a result of industrial revolution large size business enterprises came into existence. The evolution of business organisation starts from the sole trader type of business. A

sole trader business is owned and managed by a single person. He himself maintains all the records and accounts for his own purpose and to comply with legal formalities. The next stage in the organisation development is the cottage and small scale industries. These organisations were operated by family members and small group of people. Then, the next stage is the era of large size business houses. They are incorporated as public limited companies owned by large number of people. The evolution of large size corporations gave rise to new problems of communication and coordination. The chief executives of such big business concern have to depend on various reports for their information requirements. It is only through a well established system he will be keeping informed of the activities. The art of management has also developed to meet the new challenges created by these new corporations. The world entered a second industrial revolution with the introduction of electronic computers in 1950's. The development of operations research, electronic computers and the computer based algorithms for problem solving and decision making made the system approach in management a practical reality. The organisations then viewed as a federation of subsystems. An information system process data and generate meaningful information which are highly useful to the managers for decision making. The evolution of MIS and its fast development is mainly due to the following. 1. Development in the field of management theory. 2. Growth of management accounting and its application to the internal management ofbusiness. 3. Fast developments in the field of management science and its application to solve business problems. 4. Fast growth and developments in the field of information technology and its wide spread application in the business data processing. MIS should not be understood as a mere computer system. The information system can exist even with out computers. It is the power of the computer which influences the information system. Information technology makes the system more effective and efficient. MIS is said to be evolved from the following academic disciplines in management.
1. Managerial Accounting

MIS is an extension managerial accounting. There are two branches in accounting namely financial accounting and management accounting. Financial accounting deals with the historic data which is little relevant to the management for decision making purposes. But management accounting is concerned with cost analysis and its behavior which is highly useful for managerial decision making. It employs techniques such as capital budgeting, break even analysis, profit volume analysis etc. Management accounting is concerned with the internal management and control and has closely associated with MIS. Managerial accounting knowledge is much useful to provide valuable information to management.

2. Management Science

Management science refers to the application of scientific method and quantitative analysis techniques to management problems. It utilises mathematical and statistical techniques for analysing management problems. Management science is important to MIS because it has developed procedures for the analysis and computer based solution of many types of decision problems. The systematic approach to problem solving, use of models and computer based solution algorithms are generally incorporated in MIS.
3. Management Theory

The field of management and organisation theory provide some of the important concept which is highly essential to understand the function of MIS in an organisation. Lot of theories have been developed in the field of management to provide a concrete theoretical base to executives to find answers to complicated managerial problems. Moreover management is considered to be a process. According to this concept, management perform the functions of planning, organising, staffing, directing and controlling. All these process require information. In short, management theoiy provides invaluable contribution to the area of Management information system of an enterprise.
4. Information Technology

The growth of information technology also contributed much to the development of MIS. Computers are considered to be the part and parcel of modern information system. It is used to collect, process, store and retrieve required data. The speed, accuracy, storage capacity etc. of computers make MIS so effective and feasible. However the academic aspect of management information system is not an extension of information technology. MIS is actually an extension of management and organisational theory and it amounts to a small constituent of information system. The vital element of MIS is human, that is, the managerial talent that designs and operate the system.
NEED AND IMPORTANCE OF MIS

All business organisations are operating in a dynamic and competitive business environment. When a business organisation grows, the complexity of the business also increases which in turn necessitates for an effective information system. An executive may have bundle of data with him, but the problem being faced by him is how to effectively manage the information system according to his requirements. MIS helps executives in providing only suitable information so that he can take appropriate decisions. Therefore the need and importance of management information system can be further understood from the discussion to follow.
1. Management Oriented

Management Information System is primarily meant for management people. The system provides valuable information to every level of management.
2. Integrated System

MIS is not developed as an isolated system serving only a section of an organisation. The objective of MIS is to provide information to all subsystems of an organisation

with view to achieve the managerial goals. Thus the information system is designed as an integrated system taking the information requirements of entire organisation. 3. To make Plans MIS is also useful in making plans. Every business makes short term and long term planning based on past and present information. MIS has the ability to offer information relating to production, marketing, finance and personnel so that executives concerned can make future plans in their areas.
4. To achieve Control

MIS is also helpful in achieving control in organisation because it provides information regarding deviations of actual performance from standard so that management can take suitable remedial action to control such variations in future.
5. Latest Information

All records and files used in management information system are continuously updated. This enables managers to rely on latest information for taking right decisions.
6. Greater Accuracy

Information provided by management information system will be accurate because the system employs computer hardware and software to process data. Human intervention in a computerised information system is minimum and hence the chance for committing mistakes is also reduced.
7. Fulfilment of Statutory Obligations

A business firm is required to comply certain statutory formalities in the distribution of information. Information is not only distributable to managers and executives for their decision making purposes, but also a firm has to provide published information to share holders, creditors and other government departments. MIS helps in providing information both to the internal people and outside agencies.
8. Decision Making

Another important use of information is to take decisions. Decision making is process of selecting best alternative from a group of alternatives. At each stage of decision making process, information is needed. All managers in an organisation are required to take decision relating to his area of operation. Since decisions made by different managers differ, their information requirement also differs. A well designed information system may meet the information needs of all mangers.
9. Strategic Planning

Information is also needed for strategic planning. In the present day competitive business environment, only those firms which make strategic planning will be successful. The strategic planning requires more external infonnation because these plans are usually made in the context of environmental variables. In addition to the external infonnation, internal information about the organisation's current and prospective capabilities is also needed. In short, a well integrated management information system can provide both internal and external information needed for making strategic planning.
10. To practice Management by Exception

Management by Exception is relatively a new concept in management which says that the top level management in an organisation need not interfere in the routine activates. Rather they can devote their time and energy to attend unusual and complicated problems. Agood information system helps the management in concentrating on complex problems leaving routine affairs to bottom level management.
INFORMATION MANAGEMENT

Information is a valuable resource and it should be effectively managed to get maximum results. The role of a management information system is to convert data from internal and external sources into information that can be used to aid in making effective decisions for planning, directing and controlling. The success of an organization depends on the availability of the latest information from both the internal and external sources. Organisations rely on information systems to provide different types of information necessary for their efficient operations and effective management. The infonnation must be accurate, timely and satisfy the information needs of end users. Information system helps the organization to achieve a tactical advantage over their competitors. If the information is not properly managed, it will damage the entire organisation. The proper management information system is thus an important challenge faced by organisations. Information management consists of the following operations.
1. Receiving of Information

As said earlier infonnation is a valuable asset of any organisation. Information may receive both from internal and external sources. Internal records kept by an organisation give some routine information which is highly essential for the day to day operations of an undertaking. The internal information can be got quite easily from the various systems on the company network, e.g. sales figures for each product line. Infonnation received from external sources may be sometimes more important and critical in decision making. There should be proper equipments and devices to receive external information with out losing its true meaning. Computers, fax machines, telephones and telex are some of the devices used widely for receiving information. The external information is gathered from: 1. Intelligence about competitors' activities. This can come through reading articles in the press, leaks, or even industrial spying. 2. Information about population shifts. As the population gets older, the less likely they are to be interested in pop-music or customising cars, but are more likely to be interested in weight-loss products or holidays for the over 50s. 3. Economic and social factors. S ales of cars would go down in an area where a major employer had just closed down a plant. 4. Government Legislation. Financial forecasts would change if the minimum wage rose.
2. Sending of Information

Sending of information is also equally important in the organisational context. An office has to send information to various outside parties who have regular business contact with the company. Various kinds of reports and documents need to send to the outsiders like customers, suppliers, creditors, shareholders etc. all these reports have to be sent with out delay. Here also concern can make use of all communicational devices.
3. Storage of Information

Not only the receiving and sending of information, but its proper storage is also an important consideration in information management. Many of the information received has to be stored properly for future reference. If office system is automated, it is possible to avoid paper records and files for information storage. Instead all valuable data can be stored in various secondary storage devices like floppy disks, CD's, hard disks etc. As a result much convenience is achieved in storage of large volume of business information.
FRAMEWORK OF MIS

A framework is a conceptual model that helps to understand and communicate about information system. A user or designer requires some conceptual model of an information system in order to design and implement the system. A framework provides a way to organise our thoughts and analyse a problem. Different approaches to the frame work of MIS are suggested and the use of these approaches are depends up on the circumstances of each case. The important approaches to the framework of MIS are discussed below. 1. Anthony's Framework 2. Simon's Framework 3. Gorry-Scott Morton Framework 4. Rockart's Framework 1. ANTHONY'S FRAMEWORK Robert Anthony has developed a framework which distinguishes between different types of planning and control process that occur in organisations. Anthony's Framework is considered to be one of the widely accepted approaches in designing management information system. It provides for a deep analysis of various decisions in an organisation. Anthony's concept of managerial planning and control (Anthony, 1965) was a pyramid with three horizontal sections consisting of operational control at the bottom, management control in the middle, and strategic planning at the top. He divided the entire area of planning and control into three levels as follows. 1. Strategic planning 2. Management control 3. Operational control
1. Strategic Planning

The first decision area of management is strategic planning level or top level management. It is the process of deciding on changes in the objectives of the organization, in the resources that are to be used in attaining these objectives, and in the policies that are to govern the acquisition and use of these resources.

Here the decision maker develops objectives and allocates resources to attain these objectives. Decisions of this type are made over a long period of time and usually involve huge investments. Developing and introducing a new product in the market is an example for strategic decisions.
2. Management Control

Management control level or middle level management decisions involve financial or personal consideration. It is the process of assuring that resources are obtained and used effectively and efficiently in the accomplishment of the organization's objectives. They develop medium range plans and defining objectives of departments. They make plans and compare the actual performance with standard. Then they determine variances if any and takes remedial measures to avoid them in future. 3. Operation Control It is the process of assuring the efficient acquisition and use of resources, with respect to activities for which the optimum relationship between outputs and resources can be approximately determined. 1. Operation control level or lower level of management deals with routine activities. They makes short term plans to carry out day-to-day activities more effectively and efficiently. Preparation of pay roll and inventory management are examples of operation control level decisions

The above table clearly shows the characteristics of information associated with different types of decisions. For example strategic planning level needs more external information than operational control level Considering the above three levels of management, it is interesting to think of the way in which managers arrive decisions on various issues. It is true that top managers spend more time on strategic decisions than supervisors in the bottom level of management. While top mangers spend veiy little time, operational supervisors spend more time to take operational decisions. Anthony's framework helps the designer to study the information requirements of different levels of management. 2. SIMON'S FRAMEWORK Another popular approach towards MIS framework is contributed by Herbert A. Simon. The model proposed by him will be used as the basis for describing the decision making process. Herbert A. Simon, a well-known economist and scholar of management decision-making, divided the managerial decision-making process into three activity types, namely intelligence, design and choice. Other researchers have emphasised that, since managerial decision-making is typically a problem solving process, the implementation of a decision is as important to its success as a last step. The decision making process involves the following four phases.

1.Intellligent Phase Intelligence involves identifying the problems in the organisation: why and where they occur with what effects. During this phase managers tries to scan the environment to locate problems and opportunities. Data inputs are obtained, processed and examined to get an idea to identify problems and opportunities. The identified problems are communicated to mangers for decision making. Management information systems that deliver a wide variety of detailed information can be useful, especially if they are designed to report exceptions. For instance, consider a commercial organisation marketing a large number of different products and product variations. Management want to know at frequent intervals, whether sales targets are being achieved. Ideally, the information system will report

only those products/product variations which are performing substantially above or below target.
2. Design Phase

This phase of decision making is concerned with the task of developing alternative course of action to solve the problem identified in the design phase. This involves processes to understand the problem, to generate solutions and test the solutions for feasibility. This phase may require more intelligence to decide if a particular solution is appropriate. Here, more carefully specified and directed information activities and capabilities focused on specific designs are required.
3. Choice Phase

During this phase all the alternative course of actions will be thoroughly examined considering the merits and demerits of each case and the most appropriate alternative is finally selected and implemented. Here a manager needs an information system which can estimate the costs, opportunities and consequences of each alternative problem solution. The information system required at this stage is likely to be fairly complex, possibly also fairly large, because of the detailed analytic models required to calculate the outcomes of the various alternatives. Of course, human beings are used to making such calculations for themselves, but without the aid of a formal information system, we rely upon generalisation and/or intuition.
4. Implementation

Implementing is the final stage in the decision making process. Here, managers can install a reporting system that delivers routine reports on the progress of a specific solution, some of the difficulties that arise, resource constraints, and possible remedial actions. Figure 1.4 illustrates a four-stage decision-making model that incorporates both the three initiating stages and the implementation function. The model includes the

ability to cycle back to a previous stage if the decision-maker is dissatisfied with the intelligence gathered, the alternatives developed or chosen, or the success of implementation activities.

There are four basic types of CSFs according to Rockart. They are: 1. Industry CSFs resulting from specific industry characteristics; 2. Strategy CSFs resulting from the chosen competitive strategy of the business; 3. Environmental CSFs resulting from economic or technological changes; and 4. Temporal CSFs resulting from internal organizational needs and changes. Each CSF should be measurable and associated with a target goal. It is not necessary to measure exactly the CSF to manage. Primary measures that should be listed include critical success levels such as number of transactions per month or, in cases where specific measurements are more difficult, general goals should be specified such as moving up in an industry customer service survey The advantages of identifying CSFs are that they are simple to understand. They help focus attention on major concerns; they are easy to communicate to cqworkers; they are easy to monitor; and they can be used in performance with strategic planning methodologies. Using critical success factors as an isolated event does not represent critical strategic thinking. But when used in conjunction with a planning process, identifying CSFs is extremely important because it keeps people focused. Clarifying the priority order of CSFs. measuring results, and rewarding superior performance will improve the odds for long-term success as well. There are differences between objectives and CSFs. Objectives represent goals or end points. But CSFs are the driving forces or means to achieve goals. CSFs with in a company are hierarchical and determined by a number of factors. Companies are operating in a society or environment and also within an industry. Fast changes are taking place in the environment. The competition from the industry has been intensified. An analysis of the factors both in the environment and in the industry is to be considered to fix critical success factors. A company has an over all set of CSFs that should guide every department an individual in the company. In addition to that there are specific CSFs connected to the objectives of the individual departments and the objectives of the individual. There is also temporary or short term CSFs. These factors are arising out of current or temporary situations and that is to be faced and resolved to attain the long term objectives.
DATA PROCESSING AND MIS

There is always a confusion regarding the two terms; data processing and MIS. Of course, there are some basic differences between the two terms. A data processing system process transactions and produce reports. It involves the computerisation of the fundamental and routine processing of transactions. But an MIS is more

comprehensive. It provides necessary information to the managers at various levels to do the management activity more efficiently and effectively. However, Computer Systems provide only the technology component and successful MIS calls for understanding of the organizational systems and procedures. While the importance of good Computer Systems for the success of MIS cannot be under estimated, one should not make the mistake of over-emphasizing Computer Systems component in the design of MIS systems. Computer Systems (CS) and Information Systems (IS) are two disciplines that sufficiently overlap and yet have quite independent existence. While the Information System (IS) is man-centric, Computer Systems (CS) is machine-centric, IS is an applied area while CS has a strong theoretical foundation, IS is specific to managerial and organizational context, while CS is far more generic. The intellectual challenge is very high in CS discipline while IS calls for a very high conceptual challenge. While many of the tools of IS are context specific, the concepts of CS are by and large context independent. MIS AND OTHER RELATED DISCIPLINES Many of the ideas and concepts discussed in Management Information System have been taken from other related academic disciplines. The important areas from the idea were borrowed includes are management accounting, computer science, operation research, organisational behaviour and management. ,,~=s=^-., 1. MIS and Management Accounting x^" ^ _ J^ //. vi^"~ ~"-\ '</-. MIS greatly owes to management accounting. There'ate two branches-in-accounting namely financial accounting and management accounting. Financial accounting deals with the historic data and which produce reports lilf e income:statement and balance sheet at the end of the accounting period. These reports are not much useful to the management for decision making purposes. These reports are mainly meant for outsiders like investors and creditors. But management accounting is primarily developed and implemented in an organisation to achieve planning and control in all spheres of activities. Management accounting is concerned with cost analysis and its behaviour which is highly useful for managerial decision making and internal management of an organisation. It employs techniques such as capital budgeting, break even analysis, profit volume analysis etc. Thus management accounting provides valuable information for decision making in the areas of planning and control. Management accounting is concerned with the internal management and control and has closely associated with MIS. Managerial accounting knowledge is much useful to provide valuable information to management. The present practice followed by organisation is to retain the cost and budge analysis with in the management accounting function and MIS provides data and model support to achiever greater efficiency and productivity in decision making. 2. MIS and Computer Science The discipline, computer science also contributed many ideas and concepts in designing and operating MIS. Today's management information system will not be a reality unless we use the knowledge of computer science. Computer science deals

with hardware and software of computer systems. Computers are used to collect, process, store and retrieve required data. The speed, accuracy, storage and capacity of computers enabled organisation to make MIS so effective and practical. Computer science is important for MIS because it covers topics such as algorithms, computations, software and data structures. However the academic aspect of management information system is not an extension of information technology. MIS is actually an extension of management and organisational theory and it amounts to a small constituent of information system. The vital element of MIS is human, that is, the managerial talent that designs and operate the system.
3. MIS and Operation Research

There is much relation between MIS and Management science. Management science refers to the application of scientific method and quantitative analysis techniques to management problems. It utilises mathematical and statistical techniques for analysing management problems. Management science is important to MIS because it has developed procedures for the analysis and computer based solution of many types of decision problems. The systematic approach to problem solving, use of models and computer based solution algorithms are generally incorporated in MIS. Operation research is one of the important aspects of management science. Operation research is much useful to mangers because it deals with applied decision theory with which they can find solutions to various managerial problems through the use of scientific, logical or mathematical means. In operation research, various elements of a problem on which decision is to be made are expressed quantitatively, the relationships among these elements are established and the decision is made on the basis of analysis of these relationships. Operation research is of great significance to MIS because it has developed procedures for the analysis and computer based solutions to many types of managerial problems. The systematic approach to problem solving, use of models and computer based solutions are generally discussed in the decision supports system concept of MIS.
4. MIS and Organisational Behaviour

Many ideas of organisational behaviour influence the concept of MIS. Some of these important concepts are behavioural theory of organisational and individual decision making, group dynamics and group decision making, motivation concepts, leadership styles, organisational change process and organisation structure design. These concepts bring light to the designer of MIS to determine the types of decision made by executives at different levels of management hierarchy. This in turn helps to develop an appropriated MIS that will provide required information for making these decisions. Thus it is clear that there is a strong relation between organisational behaviour and management information system.
5. MIS and Management Theory

Management is basically a process of getting things done through and with people in formally organised groups. Many theories have been developed in the field of management to provide an insight to the managers to reach appropriate decisions. These include behavioural, empirical, decision, quantitative and management

process theories. Among these theories decision theory and the concept of management process are more important to management information system. According to decision theory, management is defined as decision making. According to this concept the prime duty of managers is arriving at right decision at the right time. Peter Drucker, a well known management thinker, observes that the life of a manger is a perpetual decision making activity. He does every thing through decision making. Moreover management is considered as a process. Function based definitions give stress on the various functions performed by managers in organisations. Henry Fayol, the renowned management authority defines management as "to manage is to forecast and to plan, to organise, to coordinate and to control." According to this concept, management perform the functions of planning, organising, staffing, directing and controlling. All these process require information. In short, management theory provides invaluable contribution to the area of Management information system of an enterprise. ROLE OF COMPUTERS IN MIS Management information system can be manual or computerised. Manual systems use paper and pencil technology. The manual information system is not much popular now even though it may serve the information needs of an organisation. If information technology is used in information system, it is called Computer based Information System (CBIS). Computer based information system use computer hardware and software technology to process and distributes information. With the introduction of fast developments in information technology, many firms find it useful to computerise their information system. At present we cannot imagine an information system with out using the potential capabilities of computer resources. The introduction computers increased the speed and accuracy of processing and distribution of information. Consequently managers can take quick decisions, which is highly essential in the fast changing business environment. Thus the role computers in the field of information system can be summed up as follows. 1. Speed and Accuracy The ability of the computer to process data with speed and accuracy can be exploited in the information systems of organisations. Manual processing of data is generally slow and in accurate. But computerised information system offers speed and accuracy. Even complicated computation can be done with greater accuracy. 2. High Storage Capacity Computerised information system enjoys greater storage facilities because of high memory of computers. Information can be retrieved quickly as and when needed. 3. Distribution of information in different formats The data stored in a computer memory can be processed according to user's requirements. There may be different types of users in an organisation and computers can distribute information in different formats suitable to different users. 4. Limited Time for Information Management Time needed for information storing, processing and retrieving is shortened so that users can access information quickly

5. Minimum Infrastructure

Computerised information system requires lesser physical infrastructures for the operation of MIS. No building or other physical place is necessary to run present day offices because of the introduction of virtual offices. A virtual office works just like an ordinary office, but one cannot find any physical space such as buildings, rooms and other facilities in such offices. BENEFITS OF MIS The management information system provides the following benefits to an organisation. 1. Capture information and store it. 2. Access stored information easily and manipulate it for orgnisation's needs, their clients' needs and flinders' needs. 3. Control flow of information into, around and out of systems. 4. Manage resources. 5. Produce reports for the company and outside organisations, such as suppliers and customers.. 6. Maintain records needed for quality control. 7. Record and track outcomes. 8. Manage marketing information. 9. And a host of other information related functions. LIMITATIONS OF MIS In spite having lot of advantages that bring MIS to an organisation, MIS have its own limitations. The important limitations are outlined below.
1. Quality of Output

Quality of outputs of MIS depends on the quality of inputs and processes. If the quality of input is poor, output obtained from the system will also be poor.
2. Not a substitute for Judgements

MIS cannot be recognised as a substitute for effective management. It means that it cannot replace managerial judgement in making decisions in different functional areas. It is to be noted that MIS is as mere tool in the hands of management for decision making and problem solving.
3. Lack of Flexibility

MIS is somewhat rigid in nature. It is difficult to incorporate changes in information system due to changes happening in the complex business environment. 4. No Tailor made Packages It is practically difficult to provide tailor made information packages suitable for every type of decision made by managers. 5.Ignoring of Non-quantitative Factors MIS considers quantitative factors only. It does not take in to account non quantitative factors like morale, attitudes of members of the organisation, team spirit etc. which also influence to a considerable extend in the decision making process of managers.
6. Not suitable for Non-Programmed Decisions

MIS is not much helpful in making non programmed decisions because these decisions are not of routine and repetitive in nature. Managers require information

which may not be available in the existing information system to make non programmed decisions.
7. Costly Affair

Development and implementation of MIS in an organisation is a costly affair. It involves the commitment of huge financial investment in acquiring hardware, software and recruiting and training personnel. Therefore, before installing the system, its benefit should be measured against its costs.
8. Greater Chance for Failures

The failures of one sub system may cause the total collapse of the entire information system which is so dangerous as far as a business is concerned.
9. Frequent Changes in Top Management

The effectiveness of information system is seriously affected due to the frequent changes in top management. The new management people may introduce entirely new styles of functioning different from the policy followed by their predecessors.
10. Hoarding of Information

The effectiveness of information system is adversely affected in those organisations where the culture of hoarding of information is followed rather than sharing of information to all members concerned.
REVIEW QUESTIONS
1. Define Management Information system? 2. What do you mean by information (Calicut- Sept-2005) 3. Explain the main characteristics of information system? 4. What is an integrated system? 5. How information is valuable to an organization? 6. Explain how information s useful to the end users? 7. Explain the elements of Management Information System. 8. What do you mean by information? How it is distinguish from data? 9. Briefly explain the evolution of management information system. 10. What are the processes of information generation? (Calicut- Nov-2006) 11. What do you mean by the framework of MIS? 12. Explain Anthony's framework of MIS. 13. Explain Simon's framework of MIS. 14. Discuss the Gorry-Scott Motion's framework of MIS. 15. Explain the characteristic features of structured and unstructured decisions. 16. What are the salient features of Rockart's framework of MIS? 17. Distinguish between data processing and MIS. 18. Explain the meaning and nature of Manage met Information Systems. What are the basic functions of an information system? (Calicut- March-1996) 19. What is meant by use machine interaction in information system? Why is it desirable? (Calicut-March-1999) 20. Discuss the evolution of MIS concepts as support to managerial activities. (Calicut-March-2000). 21. Explain the feature of computer based information system. (Calicut- March- 2002). 22. Discuss the need and importance of management Information system. 23. Explain the relation of MIS with other academic disciplines. 24. Enumerate the important limitations of management Information System. 25. What is MIS? Explain the characteristics of MIS. (Calicut- March- 2004). 26. Explain the role of computers in MIS. (Calicut- March- 2004). 27. Examine the frame work required for understanding and designing MIS in an organisation. (Calicut-Jan-2008) 28. Discuss the role of MIS in Management Accounting? (Calicut- Nov-2006)