Topic 1: Introduction to Management Information System

Learning Objectives
 Define term management information systems
 Describe the components of the information systems
 Explain the dimensions of the information systems
 Explain the importance of Systems concept in organization

System
A System is a group of interrelated components working together toward a common goal by
accepting inputs and producing outputs in an organized transformation process.
The study of systems concepts, then, has three basic implications:
 A system must be designed to achieve a predetermined objective.
 Interrelationships and interdependence must exist among the components.
 The objectives of the organization as a whole have a higher priority than the objectives of
its subsystems.
A system can assume one of the forms:
Schematic system: A two dimensional representation
Flow system: An abstraction oaf a real world e.g. PERT chart
Static System: Exhibits one relationship e.g. GANNT chart
Dynamic system: Model that approximates the business organization

Systems Concept and organization

 Organizations are complex systems that consists of inter-related and interlocking
subsystems such that changes in one subsystem has anticipated consequences in other parts
of the systems.
 Systems analysis concerns the application of the system approach to the study and finding
solution of problems using computer based systems.
 Systems analysis provides a frame work for visualizing the organizational and
environmental factors that operate on system.
  Computerizing operations of an organization improves performance, efficiency,
effectiveness, satisfaction, quality information processing and results. However,
automating operations has negative impact such as
 Possible threat to employees’ job,
 A decreased morale of personnel due to back of involvement
 A feeling of intimidation by users due to computer illiteracy.

System Theory
 The system theory is concerned with tendency towards the fragmentation of knowledge
and increasing complexity of the organizations.
 System concepts relate to the organizations by viewing an ongoing system /operations as a
processor of the information for making decisions, in which information and the
communication provide connecting links for unifying various components.
 Generally, system theory is concerned with developing a systematic, theoretical framework
upon which to make decisions by considering all the activities of the organization and its
external environment

Importance of the system theory

Classification of Systems
Systems are classified into:
 Physical: Systems are tangible entities that we can feel and touch. These may be static or
dynamic in nature. For example, take a computer center. Desks and chairs are the static
parts, which assist in the working of the center. Static parts don't change. The dynamic
systems are constantly changing. Computer systems are dynamic system. Programs, data,
and applications can change according to the user's needs.
 Abstract System: Conceptual entities implemented as models that help to visualize
relationships of the system under study. These are not physical entities. They may be
formulas, representation or model of a real system.

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  Open System: Systems that interact with their environment. It can receive inputs from,
and delivers output to the outside of system. An information system is an example of this
category
 Closed System: Systems that don't interact with their environment. Closed systems exist
in concept only.
 Man-made Information System: Are various IS in a business that are designed for a
purpose and accommodate data flow, communications, decision making, control and
effectiveness. These are:
 Formal Information Systems: It deals with the flow of information from top
management to lower management. Information flows in the form of memos,
instructions, etc. But feedback can be given from lower authorities to top
management.
 Informal Information systems: Informal systems are employee based. These are
made to solve the day to day work related problems.
 Computer-Based Information Systems: This class of systems depends on the use
of computer for managing business applications.
 Deterministic: Also mechanistic system is one whose outputs can be predicted by
examining its inputs e.g. accuracy of the electronic calculator
 Probabilistic: Also stochastic system is one whose outputs cannot be predicted with
complete accuracy but mainly by chance.
 Adaptive: Also Cybernetic is a system that responds to changes in the environment and
modifies its operations accordingly.
 Hard System: has explicit objectives and is governed by fixed rules and procedures
 Soft system: Operates in a relatively unpredictable environment where conditions may be
uncertain or liable to rapid changes.

Components of a System
A system has distinct components namely:
 Input: Input involves capturing and assembling elements that enter to the system to be
processed. Some of the inputs are raw materials, energy, data etc.
 Processes: It involves transformation process that converts input to output.

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  Output: It involves transforming element that has been produced by a transformation
process to their ultimate destination.
 Feedback: Data about the performance of a system. For example: data about sales
performance is feedback to a sales manager. Data about the speed, attitude, and direction
of an aircraft is feedback to the aircraft’s pilot or autopilot.
 Control: involves monitoring and evaluating feedback to determine whether a system is
moving toward the achievement of its goal. The control function then makes the necessary
adjustments to a system’s input and processing components to ensure that it produces
proper output. For example: An airline pilot, makes minute adjustments after evaluating
the feedback from the instruments to ensure the plane is exactly where the pilot wants it to
be.
 Boundary: Physical/ non-physical confinement that separates a system from its
environment.
 Environment: Comprises elements outside a system that can impact on a systems
performance. E.g. Business environments includes competitors, suppliers, customers,
regulation agencies, demographic, social and economic conditions.

Characteristics of a System
 Organization: Organization implies structure and order. It is the arrangement of
components that helps to achieve predetermined objectives.
 Interaction: It is defined by the manner in which the components operate with each other.
For example, in an organization, purchasing department must interact with production
department and payroll with personnel department.
 Interdependence: Interdependence means how the components of a system depend on one
another. For proper functioning, the components are coordinated and linked together
according to a specified plan. The output of one subsystem is the required by other
subsystem as input.
 Integration: Integration is concerned with how a system components are connected
together. It means that the parts of the system work together within the system even if each
part performs a unique function.

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  Central Objective: The objective of system must be central. It may be real or stated. It is
not uncommon for an organization to state an objective and operate to achieve another. The
users must know the main objective of a computer application early in the analysis for a
successful design and conversion.

Data and information

Data: Are the facts or figures representing an object, place or the events occurring in the
organization. Data themselves are fairly useless, but when these data are interpreted and processed
to determine its true meaning, they become useful.
Characteristics of Data
 They are facts obtained by reading, observation, counting, measuring and weighing etc.
which are then recorded
 Data are derived from external and internal sources (activities with firm).
 Data may be produced as an automatic by-product of some routine but essential operation
such as the production of an invoice or alternative a special counting or measuring
procedure must be introduced and the result recorded.
 The source of data need be given considerable attention because if the sources of the data
flawed, any resulting information will be worthless.
Data Processing: Involves collecting and organizing the data items or symbols for the purpose of
converting the into data structures and databases. Data processing is necessary to ensure that the
day-to-day activities of the organization are processed, recorded and acted upon. Files are
maintained which provide both the current data for transaction, for example the amount invoiced
and cash received during the month for statement preparation, and which also serve as a basis for
operational and tactical control and for answering enquiries.
Information: The data have been shaped into a meaningful form, which may be useful for human
beings. So, when data are processed, interpreted, organized, structured or presented so as to make
them meaningful or useful, they are called information. Information provides context for data.
Information is created from organized structured and processed data in a particular context,
“information can be recorded as signs, or transmitted as signals. Information is any kind of event
that affects the state of a dynamic system that can interpret the information. Conceptually,
information is the message (utterance or expression) being conveyed. Therefore, in a general sense,

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information is ‘knowledge communicated or received concerning a particular fact or
circumstance”.
Knowledge: Implies “understanding” of information

Characteristics of Good Information

Good information is that which is used and which create value. Experience and
research shows that good information has numerous qualities which are:
 Relevance: Information must be relevant to the problem being considered. Too often
reports, messages, tabulations etc. contain irrelevant parts which most prevent the user of
the information to get the actual meaning of what the sender wants.
 Accuracy: Information should be sufficiently accurate for it to be relied upon by the
manager and for the purpose for which it is intended.
 Completeness: Ideally, all the information required for a decision should be available.
However, in practice, this is not often obtainable. What is required is that the information
is complete in respect of the key elements of the problem. This suggests that there should
be interaction between information providers and users to ensure that the key factors are
identified.
 Confidence in the source: For information to have value it must be used. For it to be used
managers must have confidence in the source. Confidence is enhanced during data
processes output the source has been reliable in the past; and there is good communication
between the information producer and the manager.
 Communication to the right person: All persons have a defined sphere of activity and
responsibility and should receive information to help them carry out their designated tasks.
In practice this is not always as easy as it sounds. It is quite common for information to be
supplied to the wrong level in the organization. A superior may not pass it on the person
who needs it whilst subordinates may hold onto information in an attempt to make
themselves seem indispensable.

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Functions of Information
 Reduction of Uncertainty: Uncertainty exist where there is less than perfect knowledge.
Rarely, if ever is there perfect knowledge but relevant information helps to reduce the
unknown.
 An aid to monitoring and control: By providing information about performance and the
extent of deviations from planned level of performance, management are better able to
control operation.
 As a means of communication: Managers need to know about developments, plans,
forecasts, impending changes and so on.
 As a memory supplement: By having historical information about performance,
transactions, results of past actions and decisions available for reference, personal
memories are supplemented.
 As aid to simplification: By reducing uncertainty and enhancing understanding, problems
and situations are simplified and become more manageable.

Information Systems
Information system can be defined as a set of interrelated components that collect (or retrieve),
process, store and distribute information to support decision making, coordination and control in
an organization. An information system can be any organized combination of people, hardware,
software, communication software and data resource that collects transformation or screening the
information in an organization.
Information architecture: focuses on organizing, structuring, and labeling content in an effective
and sustainable way. The goal is to help users find information and complete tasks.
Information infrastructure: Consists of the hardware and software that supports the information
architecture, plus the personnel and services dedicated primarily to maintaining and developing
that hardware and software

Components of Information System

 People Resources
 People are required for the operation of all information system.
 People Resources divided into two types

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 i). End-Users: These are the people who use an information system or the information it
produces. Ex: Accounts, Sales Persons, Customers and Managers.
ii). Information system specialist: These are the people who develop and also operate
Information system. Ex: System Managers, Programmers, Computer Operation.

 Data Resources:
Data resources of an Information system are typically organized in two parts:
 Database: holds processed and organized data.
 Knowledge Base: holds knowledge in a variety of forms such as facts, rules, and case
examples.
 Software Resources
It includes all sets of information processing instruction. It is also in two types:
 Program: Set of operating instructions the direct and computer hardware.
 Procedure: Set of Information processing instructions needed by people. Ex: Operating
System, Spreadsheet Programs, and Word processor Programs.
 Hardware Resources
Include all physical devices and materials used in information processing. It has also two
types
 Machines Ex: Computer, Video Monitor, Scanner.

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  Media: Hardware in computer based Information system. Ex: Floppy Disk, Magnetic
Tape and Optical Disk; Computer System-Ex: Microcomputers, Midrange Computers
System, Large Mainframe; Computer Peripheral: Ex: Mouse, Key Board.
 Network Resources:
These are the fundamental resource components of all information Systems. It has also two
types:
 Communication Media: Ex: Co-axial Cable, Twisted Paired Wire, Fiber Optics Cable,
Microwave System and Communication Satellite System.
 Network Support: Generally used for the operation and use of a communication
network. Ex: Modems, Internet Browser and Communication Control Software.

Information System activities

Input of Data Resource
Data about business transactions and other events must be captured and prepared for processing
by the input activity. Input typically takes the form of data entry activities such as recording and
editing. End uses typically record data about transactions on some type of physical medium such
as paper form, or enter it directly into a computer system. This usually includes a variety of editing
activities to ensure that they have recorded data correctly. Once entered, data may be transferred
onto a machine-readable medium such as a magnetic disk until needed for processing.
Processing of Data into Information
Data is typically subjected to processing activities such as calculating, comparing, sorting,
classifying, and summarizing. These activities organize, analyze and manipulate data, thus
converting them into information for end users. The quality of any data stored in an information
system must also be maintained by a continual process of correcting and updating activities.
Output of Information Products
Information in various forms is transmitted to end-users and made available to them in the output
activity. The goal of information systems is the production of appropriate information products for
end users. Common information products messages, reports, forms, and graphic images, which
may be provided by video displays, audio responses, paper products, and multimedia. For example,
a sales manager may view a video display to check on the performance of a salesperson, accept a
computer-produced voice message by telephone, and receive a printout of monthly sales results.

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Storage of Data Resource
Storage is a basic system component of information systems. Storage is the information system
activity in which data and information are retained in an organized manner for later use. For
example, just as written text material is organized into words, sentences, paragraphs, and
documents, stored data is commonly organized into fields, records, files, and database. This
facilitates its later use in processing or its retrieval as output when needed by users of a system.
Control of System Performance
An important information system activity is the control of its performance. An information system
should produce feedback about its input, processing, output, and the system is meeting established
performance standards. Then appropriate system activities must be adjusted so that proper
information products are produced for end users.

Management information system

Management Information System refers broadly to a computer-based system that provides
manager with the tools for organizing, evaluating and efficiently running their departments. To
provide past, present, future information an MIS can include software that helps in decision
making, data resources such as databases, the hardware resources of a system, decision support
system, people management and project management applications and any computerized processes
that enable the department to run efficiently.

A Management Information System is a set of combined procedures that gathers and produces
reliable, relevant, and properly organized data that supports the decision making process of an
organization. It is regarded as a subset of the overall internal controls of a business covering the
application of people, documents, technologies, and procedures by management accounts to solve
business problems such as costing a product, service or a business wide strategy. As a discipline it
is defined as the study of information systems focusing on their use in business and management.

Perspective of Information System

Information systems can be best be understood by looking at them from both a technology and a
business perspective. An information system can be defined technically as a set of interrelated
components that collect (or retrieve), process, store, and distribute information to support decision
making and control in an organization. In addition to supporting decision making, coordination,
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and control, information systems may also help managers and workers analyze problems, visualize
complex subjects, and create new products. Information systems contain information about
significant people, places, and things within the organization or in the environment surrounding it.

Interest in this course is formal information systems can be either computer based or manual.
Manual systems use paper-and-pencil technology. These manual systems serve important needs,
but they too are not the subject of this text. Computer-based information systems (CBIS), in
contrast, rely on computer hardware and software technology to process and disseminate
information. From this point on, when we use the term information systems, we are referring to
computer-based information systems—formal organizational systems that rely on computer
technology.

Formal systems rest on accepted and fixed definitions of data and procedures for collecting,
storing, processing, disseminating, and using these data unlike Informal information systems (such
as office gossip networks) rely, by contrast, on unstated rules of behavior and there is no agreement
on what is information or on how it will be stored and processed. Such systems are essential for
the life of an organization, but an analysis of their qualities is beyond the scope of this course.

Business Perspective on Information Systems

From a business perspective, an information system is an organizational and management solution,
based on information technology, to a challenge posed by the environment. To fully understand
information systems, a manager must understand the broader organization, management, and

information technology dimensions of systems. This broader understanding of information

systems, which encompasses an understanding of the management and organizational dimensions

of systems as well as the technical dimensions of systems, is referred to as information systems
literacy. Information systems literacy includes a behavioral as well as a technical approach to
studying information systems. Computer literacy, in contrast, focuses primarily on knowledge of
information technology.

Dimensions of Information Systems

An information system represents a combination of management, organization and technology
elements. The management dimension of information systems involves leadership, strategy and

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management behaviour. The technology dimension consists of computer hardware, software, data
management technology, and networking/telecommunication technology (including the internet).
The organization dimension of the information system involves the organization’s hierarchy,
functional specialties, business processes, culture and political interest groups.

Contemporary Approaches
The study of information systems is a multidisciplinary field. No single theory or perspective
dominates. In general, the field can be divided into technical and behavioral approaches.
Information systems are sociotechnical systems. Though they are composed of machines, devices,
and “hard” physical technology, they require substantial social, organizational, and intellectual
investments to make them work properly.
Technical Approach
The technical approach to information systems emphasizes mathematically based models to study
information systems, as well as the physical technology and formal capabilities of these systems.
The disciplines that contribute to the technical approach are computer science, management
science, and operations research. Computer science is concerned with establishing theories of
computability, methods of computation, and methods of efficient data storage and access.
Management science emphasizes the development of models for decision-making and
management practices. Operations research focuses on mathematical techniques for optimizing
selected parameters of organizations, such as transportation, inventory control, and transaction
costs.
Behavioral Approach
Deals with Issues such as strategic business integration, design, implementation, utilization, and
management cannot be explored in the technical approach. The discipline that contributes to this
approach includes sociology, psychology and economics. For instance, sociologists study
information systems with an eye toward how groups and organizations shape the development of
systems and also how systems affect individuals, groups, and organizations. Psychologists study
information systems with an interest in how human decision makers perceive and use formal
information. Economists study information systems with an interest in what impact systems have
on control and cost structures within the firm and within markets.

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Socio-Technical Systems Approach
MIS study combined both technical and behavioral approaches. This helps to avoid a purely
technological approach to information systems. System performance optimized when technology
and organization adjust to each other for a satisfactory fit. For instance, the fact that information
technology is rapidly declining in cost and growing in power does not necessarily or easily
translate into productivity enhancement or bottom-line profits. In this approach, technical and

behavioral components need attention. This means that technology must be changed and designed
in such a way as to fit organizational and individual needs. At times, the technology may have to
be “de-optimized” to accomplish this fit. Organizations and individuals must also be changed
through training, learning, and planned organizational change to allow the technology to operate
and prosper

Reference
1. Laudon K, Laudon J, Management Information Systems, Managing the digital firm (Eleventh
Edition).

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