35 Management Information System

Dr.Shafali Nagpal

37.1 Learning Objective

37.2 Introduction

37.3 Origin and Evolution

37.4 Concept and Need of MIS

37.5 Components of MIS

37.6 Types of MIS

37.7 Advantages and Disadvantages

37.8 Role and Impact of MIS

37.9 Summary

1.1 Learning Objectives

After completing this module, you will be able to:

1. To know about MIS
2. To know the process of MIS
3. To understand the applications of MIS

Introduction

MIS is the use of information technology, people, and business processes to record, store and process data to produce information that decision makers can use to make day to day decisions. MIS is not new; only the computerization is new before computers MIS techniques existed to supply managers with the information that would permit them to plan and control business operations. The computer has added on more dimensions such as speed, accuracy and increased volume of data that permit the consideration of more alternatives in the decision-making process.

Management information system is an integrated set of component or entities that interact to achieve a particular function, objective or goal. Therefore it is a computer-based system that provides information for decision-making in planning, organizing and controlling the operation of the sub-system of the firm and provides a synergistic organization in the process.

ORIGINS AND EVOLUTION

The MIS represents the electronic automation of several different kinds of counting, tallying, record-keeping, and accounting techniques of which the by far oldest, of course, was the ledger on which the business owner kept track of his or her business. Automation emerged in the 1880s in the form of tabulating cards which could be sorted and counted. These were the punch-cards still remembered by many: they captured elements of information keyed in on punch-card machines; the cards were then processed by other machines some of which could print out results of tallies. Each card was the equivalent of what today would be called a database record, with different areas on the card treated as fields. World-famous IBM had its start in 1911; it was then called Computing-Tabulating-Recording Company. Before IBM there was C-T-R. Punch cards were used to keep time records and to record weights at scales. The U.S. Census used such cards to record and to manipulate its data as well. When the first computers emerged after World War II, punch-card systems were used both as their front end (feeding them data and programs) and as their output (computers cut cards and other machines printed from these). Card systems did not entirely disappear until the 1970s. They were ultimately replaced by magnetic storage media (tapes and disks). Computers using such storage media speeded up tallying; the computer introduced calculating functions. MIS developed as the most crucial accounting functions became computerized.

Waves of innovation spread the fundamental virtues of coherent information systems across all corporate functions and to all sizes of businesses in the 1970s, 80s, and 90s. Within companies major functional areas developed their own MIS capabilities; often these were not yet connected: engineering, manufacturing, and inventory systems developed side by side sometimes running on specialized hardware. Personal computers (“micros,” PCs) appeared in the 70s and spread widely in the 80s. Some of these were used as free-standing “seeds” of MIS systems serving sales, marketing, and personnel systems, with summarized data from them transferred to the “mainframe.” In the 1980s networked PCs appeared and developed into powerful systems in their right in the 1990s in many companies displacing midsized and small computers. Equipped with powerful database engines, such networks were in turn organized for MIS purposes. Simultaneously, in the 90s, the World Wide Web came of age, morphed into the Internet with a visual interface, connecting all sorts of systems to one another.

Concept

Information isn’t worth much if it doesn’t serve a purpose. MIS students learn how businesses use the information to improve the company’s operations. Students also learn how to manage various information systems so that they best serve the needs of managers, staff and customers. MIS students learn how to create systems for finding and storing data, and they learn about computer databases, networks, computer security, and lots more. The component of an information system includes: a hardware which is used for input/output process and storage of data, software used to process data and also to instruct the hand-ware component, databases which is the location in the system where all the organization data will be automated and procedures which is a set of documents that explain the structure of that management information system.

There are various driving factors of management information system for example-Technological revolutions in all sectors make new managers need to have access to a large amount of particular information for the complex tasks and decisions.

The lifespan of most product has continued getting shorter and shorter, and therefore the challenge to the manager is to design product that will take a longer shelf life, and in order to do this, the manager must be able to keep abreast of the factors that influence the organization product and services thus, management information system comes in handy in supporting the process.

There is a huge amount of information available to today’s manager, and this had, therefore, meant that managers are increasingly relying on management information system to access the exploding information. Management information services help the manager to access relevant, accurate, up-to-date information which is the more sure way of making accurate decisions. It also helps in automation and incorporation of research and management science techniques into the overall management information system for example probability theory. The management information services are capable of taking advantage of the computational ability of the company like processing, storage capacity among others. Based on this relevancy, management information system should be installed and upgraded in various organizations since today’s managers need them to access information for managerial decision making and also management functions.

MIS is the acronym for Management Information Systems. In a nutshell, MIS is a collection of systems, hardware, procedures and people that all work together to process, store, and produce information that is useful to the organization.

The need for MIS

MIS brings into play what we know as Hawthorne Effect to ensure that the administrative machinery does not get away with negligence of duty by creating a platform for the monitoring of the handling of those jobs and responsibilities; and more than that it provides space to build a robust database on issues concerning law and order and security that serve as institutional memory for better planning to cope with the challenges on these fronts. The second theory is known as ‘Management process’ is the widest spread approach to management. Under this management is defined regarding what managers do. According to this, management performs the functions of planning, organizing, staffing, directing and controlling.

The following are some of the justifications for having an MIS system

Decision makers need information to make effective decisions. Management Information Systems (MIS) make this possible.

MIS systems facilitate communication within and outside the organization – employees within the organization can easily access the required information for the day to day operations. Facilitates such as Short Message Service (SMS) & Email make it possible to communicate with customers and suppliers from within the MIS system that an organization is using.

Record keeping – management information systems record all business transactions of an organization and provide a reference point for the transactions.

Components of MIS

It means the application of scientific method and quantitative analysis techniques (or Operations Research Techniques) to management problems. The use of management science methods emphasizes the use of the systematic approach to problem solving and application of scientific method to the investigation. It utilizes mathematical and statistical procedures for analysing problems. Finally, it aims at achieving an optimal decision.

Management techniques were incorporated in the MIS design to make quantitative and analytical information available to the users of MIS. The information system so designed promoted quantitative information and procedures, to facilitate model building for plans and activities and to simulate the real situations even before they occur.

The major components of a typical management information system are;

People – people who use the information system

Data – the data that the information system records

Business Procedures – procedures put in place on how to record, store and analyze data Hardware – these include servers, workstations, networking equipment, printers, etc.

Software – these are programs used to handle the data. These include programs such as spreadsheet programs, database software, etc.

Types of Information Systems

The type of information system that a user uses depends on their level of an organization. The following diagram shows the three major levels of users in an organization and the type of information system that they use.

Transaction Processing Systems (TPS)

This type of information system is used to record the day to day transactions of business. An example of a Transaction Processing System is a Point of Sale (POS) system. A POS system is used to record the daily sales.

Management Information Systems (MIS)

Management Information Systems are used to guide tactic managers to make semi-structured decisions. The output from the transaction processing system is used as input to the MIS system.

Decision Support Systems (DSS)

Decision support systems are used by top-level managers to make semi-structured decisions. The output from the Management Information System is used as input to the decision support system.DSS systems also get data input from external sources such as current market forces, competition, etc.

Manual Information Systems VS Computerized Information Systems (MIS)

Data is the bloodstream of any business entity. Everyone in an organization needs information to make decisions. An information system is an organized way of recording, storing data, and retrieving information.

In this section, we will look at manual information systems vs computerized information systems.

Manual Information System

A manual information system does not use any computerized devices. The recording, storing and retrieving of data is done manually by the people, who are responsible for the information system.

The following are the major components of a manual information system

People –people are the recipients of information system

Business Procedures –these are measures put in place that define the rules for processing data, storing it, analyzing it and producing information

Data –these are the recorded day to day transactions

Filing system – this is an organized way of storing information

Reports –the reports are generated after manually analyzing the data from the filing system and compiling it.

Advantages and Disadvantages of a computerized information system (MIS) The following are some of the disadvantages of a computerized information system.

Advantages:

The following are the advantages of computerized information systems

Fast data processing and information retrieval – this is one of the biggest advantages of a computerized information system. It processes data and retrieves information at a faster rate. This leads to improved client/customer service

Improved data accuracy – easy to implement data validation and verification checks in a computerized system compared to a manual system.

Improved security – in addition to restricting access to the database server, the computerized information system can implement other security controls such as user’s authentication, biometric authentication systems, access rights control, etc.

Reduced data duplication – database systems are designed in such a way that minimized duplication of data. This means updating data in one department automatically makes it available to the other departments

Improved backup systems – with modern day technology, backups can be stored in the cloud which makes it easy to recover the data if something happened to the hardware and software used to store the data

Easy access to information – most business executives need to travel and still be able to make a decision based on the information. The web and Mobile technologies make accessing data from anywhere possible.

Disadvantages:

It is expensive to set up and configure – the organization has to buy hardware and the required software to run the information system. In addition to that, business procedures will need to be revised, and the staff will need to be trained on how to use the computerized information system.

Heavy reliance on technology – if something happens to the hardware or software that makes it stop functioning, then the information cannot be accessed by the required hardware or software has been replaced.

Risk of fraud – if proper controls and checks are not in place, an intruder can post unauthorized transactions such as an invoice for goods that were never delivered, etc.

ROLE OF MANAGEMENT INFORMATION SYSTEM

The role of the MIS in an organization can be compared to the role of the heart in the body. The information is the blood and MIS are the heart. In the body, the heart plays the role of supplying pure blood to all the elements of the body including the brain. The heart works faster and supplies more blood when needed. It regulates and controls the incoming impure blood, processed it and sends it to the destination in quantity needed. It fulfils the needs of blood supply to the human body in the normal course and also in crisis.

The MIS plays the same role in the organization. The system ensures that appropriate data is collected from the various sources, processed and send further to all the needy destinations. The system is expected to fulfil the information needs of an individual, a group of individuals, the management functionaries: the managers and top management.

Here are some of the important roles of the MIS:

The MIS helps in strategic planning, management control, operational control and transaction processing. The MIS helps in the clerical person in the transaction processing and answers the queries on the data about the transaction, the status of a particular record and reference on a variety of documents.

The MIS helps the middle management in short-term planning, target setting and controlling the business functions. It is supported by the use of the management tools of planning and control.

The MIS plays the role of information generation, communication, problem identification and helps in the process of decision-making. The MIS, therefore, plays a vital role in the management, administration and operation of an organization.

The MIS helps the top level management in goal setting, strategic planning and evolving the business plans and their implementation.

The role of the management information system (MIS) manager is to focus on the organization’s information and technology systems. The MIS manager typically analyzes business problems and then designs and maintains computer applications to solve the organization’s problems. Management information system, or MIS, broadly refers to a computer-based system that provides managers with the tools to organize, evaluate and efficiently manage departments within an organization. To provide past, present and prediction information, a management information system can include software that helps in decision-making, data resources such as databases, the hardware resources of a system, decision support systems, people management and project management applications, and any electronic processes that enable the department to run efficiently.

IMPACT OF THE MANAGEMENT INFORMATION SYSTEM

MIS plays a significant role in the organization; it creates an impact on the organization’s functions, performance and productivity.

The impact of MIS on the functions is in its management with a good MIS supports the management of marketing, finance, production and personnel become more efficient. The tracking and monitoring of the functional targets become easy. The functional managers are informed about the progress, achievements and shortfalls in the activity and the targets.

The manager is kept alert by providing certain information indicating and probable trends in the various aspects of the business. This helps in forecasting and long-term perspective planning. The manager’s attention is brought to a situation which is expected in nature, inducing him to take action or a decision in the matter.

Disciplined information reporting system creates structure database and a knowledge base for all the people in the organization. The information is available in such a form that it can be used straight away by blending and analysis, saving the manager’s valuable time.

The MIS creates another impact in the organization which relates to the understanding of the business itself. The MIS begins with the definition of data, entity and its attributes. It uses a dictionary of data, entity and attributes, respectively, designed for information generation in the organization. Since all the information systems use the dictionary, there is a common understanding of terms and terminology in the organization bringing clarity in the communication and a similar understanding of an event in the organization.

The MIS calls for a systematization of the business operations for an effective system design. This leads to streaming of the operations which complicates the system design. It improves the administration of the business by bringing a discipline in its operations as everybody is required to follow and use systems and procedures. This process brings a high degree of professionalism in the business operations.

Summary:

It goes without saying that all managerial functions are performed through decision-making; for taking a rational decision, timely and reliable information is essential and is procured through a logical and well-structured method of information collecting, processing and disseminating to decision makers. Such a method in the field of management is widely known as MIS. It plays a significant role in the organization; it creates an impact on the organization’s functions, performance and productivity. People, Data, Business procedure, hardware, software are the components which are managed either manually or through computerized system. In computerized MIS manager typically analyzes business problems and then designs and maintains computer applications to solve the organization’s problems.

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