Unit-2

MIS
To the managers, Management Information System is an implementation of the
organizational systems and procedures. To a programmer it is nothing but file
structures and file processing. However, it involves much more complexity.
The three components of MIS provide a more complete and focused definition,
where System suggests integration and holistic view, Information stands for
processed data, and Management is the ultimate user, the decision makers.
Management information system can thus be analysed as follows −

Management
Management covers the planning, control, and administration of the operations of a
concern. The top management handles planning; the middle management
concentrates on controlling; and the lower management is concerned with actual
administration.

Information
Information, in MIS, means the processed data that helps the management in
planning, controlling and operations. Data means all the facts arising out of the
operations of the concern. Data is processed i.e. recorded, summarized, compared
and finally presented to the management in the form of MIS report.

System
Data is processed into information with the help of a system. A system is made up of
inputs, processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to
the management for performing its functions.

Definition
Management Information System or 'MIS' is a planned system of collecting, storing, and
disseminating data in the form of information needed to carry out the functions of
management.

Objectives of MIS
The goals of an MIS are to implement the organizational structure and dynamics of
the enterprise for the purpose of managing the organization in a better way and
capturing the potential of the information system for competitive advantage.
Following are the basic objectives of an MIS −
 Capturing Data − Capturing contextual data, or operational information that
will contribute in decision making from various internal and external sources of
organization.
 Processing Data − The captured data is processed into information needed
for planning, organizing, coordinating, directing and controlling functionalities
at strategic, tactical and operational level. Processing data means −
 o making calculations with the data
o sorting data
o classifying data and
o summarizing data
 Information Storage − Information or processed data need to be stored for
future use.
 Information Retrieval − The system should be able to retrieve this
information from the storage as and when required by various users.
 Information Propagation − Information or the finished product of the MIS
should be circulated to its users periodically using the organizational network.

Characteristics of MIS
Following are the characteristics of an MIS −
 It should be based on a long-term planning.
 It should provide a holistic view of the dynamics and the structure of the
organization.
 It should work as a complete and comprehensive system covering all
interconnecting sub-systems within the organization.
 It should be planned in a top-down way, as the decision makers or the
management should actively take part and provide clear direction at the
development stage of the MIS.
 It should be based on need of strategic, operational and tactical information of
managers of an organization.
 It should also take care of exceptional situations by reporting such situations.
 It should be able to make forecasts and estimates, and generate advanced
information, thus providing a competitive advantage. Decision makers can
take actions on the basis of such predictions.
 It should create linkage between all sub-systems within the organization, so
that the decision makers can take the right decision based on an integrated
view.
 It should allow easy flow of information through various sub-systems, thus
avoiding redundancy and duplicity of data. It should simplify the operations
with as much practicability as possible.
 Although the MIS is an integrated, complete system, it should be made in such
a flexible way that it could be easily split into smaller sub-systems as and
when required.
 A central database is the backbone of a well-built MIS.

Characteristics of Computerized MIS

Following are the characteristics of a well-designed computerized MIS −
 It should be able to process data accurately and with high speed, using
various techniques like operations research, simulation, heuristics, etc.
 It should be able to collect, organize, manipulate, and update large amount of
raw data of both related and unrelated nature, coming from various internal
and external sources at different periods of time.
 It should provide real time information on ongoing events without any delay.
  It should support various output formats and follow latest rules and regulations
in practice.
 It should provide organized and relevant information for all levels of
management: strategic, operational, and tactical.
 It should aim at extreme flexibility in data storage and retrieval.

Nature and Scope of MIS

The following diagram shows the nature and scope of MIS −

MIS - Decision Support System

Decision support systems (DSS) are interactive software-based systems intended to
help managers in decision-making by accessing large volumes of information
generated from various related information systems involved in organizational
business processes, such as office automation system, transaction processing
system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the
analytical models. A decision support system helps in decision-making but does not
necessarily give a decision itself. The decision makers compile useful information
from raw data, documents, personal knowledge, and/or business models to identify
and solve problems and make decisions.

Programmed and Non-programmed Decisions

There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work,
where −
  These decisions have been taken several times.
 These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations, so −
 It would be a new decision.
 There will not be any rules to follow.
 These decisions are made based on the available information.
 These decisions are based on the manger's discretion, instinct, perception and
judgment.
For example, investing in a new technology is a non-programmed decision.
Decision support systems generally involve non-programmed decisions. Therefore,
there will be no exact report, content, or format for these systems. Reports are
generated on the fly.

Attributes of a DSS
 Adaptability and flexibility
 High level of Interactivity
 Ease of use
 Efficiency and effectiveness
 Complete control by decision-makers
 Ease of development
 Extendibility
 Support for modeling and analysis
 Support for data access
 Standalone, integrated, and Web-based
Characteristics of a DSS
 Support for decision-makers in semi-structured and unstructured problems.
 Support for managers at various managerial levels, ranging from top executive
to line managers.
 Support for individuals and groups. Less structured problems often requires
the involvement of several individuals from different departments and
organization level.
 Support for interdependent or sequential decisions.
 Support for intelligence, design, choice, and implementation.
 Support for variety of decision processes and styles.
 DSSs are adaptive over time.
Benefits of DSS
 Improves efficiency and speed of decision-making activities.
 Increases the control, competitiveness and capability of futuristic decision-
making of the organization.
 Facilitates interpersonal communication.
 Encourages learning or training.
 Since it is mostly used in non-programmed decisions, it reveals new
approaches and sets up new evidences for an unusual decision.
  Helps automate managerial processes.
Components of a DSS
Following are the components of the Decision Support System −
 Database Management System (DBMS) − To solve a problem the necessary
data may come from internal or external database. In an organization, internal
data are generated by a system such as TPS and MIS. External data come
from a variety of sources such as newspapers, online data services,
databases (financial, marketing, human resources).
 Model Management System − It stores and accesses models that managers
use to make decisions. Such models are used for designing manufacturing
facility, analyzing the financial health of an organization, forecasting demand
of a product or service, etc.
Support Tools − Support tools like online help; pulls down menus, user
interfaces, graphical analysis, error correction mechanism, facilitates the user
interactions with the system.

Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as
follows −
 Text Oriented DSS − It contains textually represented information that could
have a bearing on decision. It allows documents to be electronically created,
revised and viewed as needed.
 Database Oriented DSS − Database plays a major role here; it contains
organized and highly structured data.
 Spreadsheet Oriented DSS − It contains information in spread sheets that
allows create, view, modify procedural knowledge and also instructs the
system to execute self-contained instructions. The most popular tool is Excel
and Lotus 1-2-3.
 Solver Oriented DSS − It is based on a solver, which is an algorithm or
procedure written for performing certain calculations and particular program
type.
 Rules Oriented DSS − It follows certain procedures adopted as rules.
 Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export
system is the example.
 Compound DSS − It is built by using two or more of the five structures
explained above.
Types of DSS
Following are some typical DSSs −
 Status Inquiry System − It helps in taking operational, management level, or
middle level management decisions, for example daily schedules of jobs to
machines or machines to operators.
 Data Analysis System − It needs comparative analysis and makes use of
formula or an algorithm, for example cash flow analysis, inventory analysis
etc.
  Information Analysis System − In this system data is analyzed and the
information report is generated. For example, sales analysis, accounts
receivable systems, market analysis etc.
 Accounting System − It keeps track of accounting and finance related
information, for example, final account, accounts receivables, accounts
payables, etc. that keep track of the major aspects of the business.
 Model Based System − Simulation models or optimization models used for
decision-making are used infrequently and creates general guidelines for
operation or management.

MIS - Managerial Decision-Making

Concept of Decision-Making
Decision-making is a cognitive process that results in the selection of a course of
action among several alternative scenarios.
Decision-making is a daily activity for any human being. There is no exception about
that. When it comes to business organizations, decision-making is a habit and a
process as well.
Effective and successful decisions result in profits, while unsuccessful ones cause
losses. Therefore, corporate decision-making is the most critical process in any
organization.
In a decision-making process, we choose one course of action from a few possible
alternatives. In the process of decision-making, we may use many tools, techniques,
and perceptions.
In addition, we may make our own private decisions or may prefer a collective
decision.
Usually, decision-making is hard. Majority of corporate decisions involve some level
of dissatisfaction or conflict with another party.
Let's have a look at the decision-making process in detail.

Decision-Making Process
Following are the important steps of the decision-making process. Each step may be
supported by different tools and techniques.
Step 1 − Identification of the Purpose of the Decision
In this step, the problem is thoroughly analyzed. There are a couple of questions one
should ask when it comes to identifying the purpose of the decision.

 What exactly is the problem?

 Why the problem should be solved?
 Who are the affected parties of the problem?
 Does the problem have a deadline or a specific time-line?
Step 2 − Information Gathering
A problem of an organization will have many stakeholders. In addition, there can be
dozens of factors involved and affected by the problem.
In the process of solving the problem, you will have to gather as much as information
related to the factors and stakeholders involved in the problem. For the process of
information gathering, tools such as 'Check Sheets' can be effectively used.
Step 3 − Principles for Judging the Alternatives
In this step, the baseline criteria for judging the alternatives should be set up. When
it comes to defining the criteria, organizational goals as well as the corporate culture
should be taken into consideration.
As an example, profit is one of the main concerns in every decision making process.
Companies usually do not make decisions that reduce profits, unless it is an
exceptional case. Likewise, baseline principles should be identified related to the
problem in hand.
Step 4 − Brainstorm and Analyze the Choices
For this step, brainstorming to list down all the ideas is the best option. Before the
idea generation step, it is vital to understand the causes of the problem and
prioritization of causes.
For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool.
Cause-and-Effect diagram helps you to identify all possible causes of the problem
and Pareto chart helps you to prioritize and identify the causes with the highest
effect.
Then, you can move on generating all possible solutions (alternatives) for the
problem in hand.
Step 5 − Evaluation of Alternatives
Use your judgment principles and decision-making criteria to evaluate each
alternative. In this step, experience and effectiveness of the judgment principles
come into play. You need to compare each alternative for their positives and
negatives.
Step 6 − Select the Best Alternative
Once you go through from Step 1 to Step 5, this step is easy. In addition, the
selection of the best alternative is an informed decision since you have already
followed a methodology to derive and select the best alternative.
Step 7 − Execute the decision
Convert your decision into a plan or a sequence of activities. Execute your plan by
yourself or with the help of subordinates.
Step 8 − Evaluate the Results
Evaluate the outcome of your decision. See whether there is anything you should
learn and then correct in future decision making. This is one of the best practices
that will improve your decision-making skills.

Process and Modeling in Decision-Making

There are two basic models in decision-making −

 Rational models
 Normative model
The rational models are based on cognitive judgments and help in selecting the most
logical and sensible alternative. Examples of such models include - decision matrix
analysis, Pugh matrix, SWOT analysis, Pareto analysis and decision trees, selection
matrix, etc.
A rational decision making model takes the following steps −
 Identifying the problem,
 Identifying the important criteria for the process and the result,
 Considering all possible solutions,
 Calculating the consequences of all solutions and comparing the probability of
satisfying the criteria,
 Selecting the best option.
The normative model of decision-making considers constraints that may arise in
making decisions, such as time, complexity, uncertainty, and inadequacy of
resources.
According to this model, decision-making is characterized by −
 Limited information processing - A person can manage only a limited amount
of information.
 Judgmental heuristics - A person may use shortcuts to simplify the decision
making process.
 Satisfying - A person may choose a solution that is just "good enough".
Dynamic Decision-Making
Dynamic decision-making (DDM) is synergetic decision-making involving
interdependent systems, in an environment that changes over time either due to the
previous actions of the decision-maker or due to events that are outside of the
control of the decision-maker.
These decision-makings are more complex and real-time.
Dynamic decision-making involves observing how people used their experience to
control the system's dynamics and noting down the best decisions taken thereon.

Sensitivity Analysis
Sensitivity analysis is a technique used for distributing the uncertainty in the output of
a mathematical model or a system to different sources of uncertainty in its inputs.
From business decision perspective, the sensitivity analysis helps an analyst to
identify cost drivers as well as other quantities to make an informed decision. If a
particular quantity has no bearing on a decision or prediction, then the conditions
relating to quantity could be eliminated, thus simplifying the decision making
process.
Sensitivity analysis also helps in some other situations, like −

 Resource optimization
 Future data collections
 Identifying critical assumptions
 To optimize the tolerance of manufactured parts
Static and Dynamic Models

Static models:
 Show the value of various attributes in a balanced system.
 Work best in static systems.
 Do not take into consideration the time-based variances.
 Do not work well in real-time systems however, it may work in a dynamic
system being in equilibrium
 Involve less data.
 Are easy to analyze.
 Produce faster results.
Dynamic models −

 Consider the change in data values over time.

 Consider effect of system behavior over time.
 Re-calculate equations as time changes.
 Can be applied only in dynamic systems.
Simulation Techniques
Simulation is a technique that imitates the operation of a real-world process or
system over time. Simulation techniques can be used to assist management
decision making, where analytical methods are either not available or cannot be
applied.
Some of the typical business problem areas where simulation techniques are used
are

 Inventory control
 Queuing problem
 Production planning
Operations Research Techniques
Operational Research (OR) includes a wide range of problem-solving techniques
involving various advanced analytical models and methods applied. It helps in
efficient and improved decision-making.
It encompasses techniques such as simulation, mathematical optimization, queuing
theory, stochastic-process models, econometric methods, data envelopment
analysis, neural networks, expert systems, decision analysis, and the analytic
hierarchy process.
OR techniques describe a system by constructing its mathematical models.

Heuristic Programming
Heuristic programming refers to a branch of artificial intelligence. It consists of
programs that are self-learning in nature.
However, these programs are not optimal in nature, as they are experience-based
techniques for problem solving.
Most basic heuristic programs would be based on pure 'trial-error' methods.
Heuristics take a 'guess' approach to problem solving, yielding a 'good enough'
answer, rather than finding a 'best possible' solution.

Group Decision-Making
In group decision-making, various individuals in a group take part in collaborative
decision-making.
Group Decision Support System (GDSS) is a decision support system that provides
support in decision making by a group of people. It facilitates the free flow and
exchange of ideas and information among the group members. Decisions are made
with a higher degree of consensus and agreement resulting in a dramatically higher
likelihood of implementation.
Following are the available types of computer based GDSSs −
 Decision Network − This type helps the participants to communicate with
each other through a network or through a central database. Application
software may use commonly shared models to provide support.
 Decision Room − Participants are located at one place, i.e. the decision
room. The purpose of this is to enhance participant's interactions and
decision-making within a fixed period of time using a facilitator.
 Teleconferencing − Groups are composed of members or sub groups that
are geographically dispersed; teleconferencing provides interactive connection
between two or more decision rooms. This interaction will involve transmission
of computerized and audio visual information.

Data Processing
Collection, manipulation, and processing collected data for the required use is known
as data processing. It is a technique normally performed by a computer; the process
includes retrieving, transforming, or classification of information.
However, the processing of data largely depends on the following −

 The volume of data that need to be processed

 The complexity of data processing operations
 Capacity and inbuilt technology of respective computer system
 Technical skills
 Time constraints
Methods of Data Processing
Let us now discuss the different methods of data processing.

 Single user programming

  Multiple programming
 Real-time processing
 On-line processing
 Time sharing processing
 Distributed processing
Single User Programming
It is usually done by a single person for his personal use. This technique is suitable
even for small offices.
Multiple Programming
This technique provides facility to store and execute more than one program in the
Central Processing Unit (CPU) simultaneously. Further, the multiple programming
technique increases the overall working efficiency of the respective computer.
Real-time Processing
This technique facilitates the user to have direct contact with the computer system.
This technique eases data processing. This technique is also known as the direct
mode or the interactive mode technique and is developed exclusively to perform one
task. It is a sort of online processing, which always remains under execution.
On-line Processing
This technique facilitates the entry and execution of data directly; so, it does not
store or accumulate first and then process. The technique is developed in such a
way that reduces the data entry errors, as it validates data at various points and also
ensures that only corrected data is entered. This technique is widely used for online
applications.
Time-sharing Processing
This is another form of online data processing that facilitates several users to share
the resources of an online computer system. This technique is adopted when results
are needed swiftly. Moreover, as the name suggests, this system is time based.
Following are some of the major advantages of time-sharing processing −

 Several users can be served simultaneously

 All the users have almost equal amount of processing time
 There is possibility of interaction with the running programs
Distributed Processing
This is a specialized data processing technique in which various computers (which
are located remotely) remain interconnected with a single host computer making a
networof computer.
All these computer systems remain interconnected with a high speed communication
network. This facilitates in the communication between computers. However, the
central computer system maintains the master data base and monitors accordingly.

Difference between MIS and DPS

1. Management Information System (MIS) :

MIS is an application of computer related technology to programs. It
provides managers with information and support for effective
decision-making and provides the feedback on daily operations. The
outputs or reports are usually generated through accumulation of
transaction processing data.
It ensures that appropriate data is collected from the valid sources,
processed and passed to needy destinations. It satisfies the needs
through query systems, analysis systems, modelling systems.

The main characteristics of MIS are :

 It supports data processing functions.
 It uses an integrated database and supports a variety of
functional areas.
 It provides operational, tactical and strategic levels of
organization.
 It is flexible
 It can adapt to the changing needs of the organization which is a
big advantage of MIS.
For Example: Human resource management systems, sales and
marketing systems etc.
2. Data Processing System (DPS):
DPS is the manipulation of data by computers. It represents the
automation of routines processing to support operations. Basically, it
converts raw data into readable format which can be easily utilized
by the people in the organization.
The data processing functions are data collection, manipulation, and
storage as used to report and analyse business activities. It is
oriented primarily to processing transaction data for day-to-day
transactions.
There are six stages of data processing:
 Data Collection
 Data Preparation
 Data Input
 Processing
 Data Output
 Data Storage
For Example: Typing sales numbers into an inventory control
software program.

Difference between MIS and DPS:

MIS DPS

It uses an integrated database. It does not use integrated databases.

It provides greater flexibility to the

It provides no such flexibility.
management.

It integrates the information flow It tends to support a single functional

between functional areas. area.

It focus on information needs of all level It focuses on departmental level

of management. support.

Output is in the form of graph. Output is in the form of the table.

Sometimes, the model becomes

The model is simple.
complex.

It focuses on converting data to

Focuses on operational functionality.
another form or language.

INFORMATION RESOURCE MANAGEMENT (MANAGEMENT

INFORMATION SYSTEM)

Information Resource Management, abbreviated as IRM, is a belief of

management that identifies and calls for the creation, identification,
capture and management of information resource as a corporate
asset to support in devising policy and decision making. IRM is a
theoretical and practical approach to manage government
information. Information is regarded as a important resource which
should be managed like other resources, and should contribute to
accomplishing organisational goals and objectives. IRM offers an
integrated view for managing the complete life-cycle of information,
from creation, to distribution, to archiving and/or destruction, for
maximising the overall usefulness of information, and improving
service delivery and program management (Jack Rabin, 1987)

Information Resource Management is rooted in historical time.

Theorists had elaborated three disciplines in IRM since its evolution
that included database management, records management, and data
processing management. IRM also grew and developed in two
societal sectors: the private sector and Federal agencies.

Database Management: The database management is important

element of Information Resource Management has which uses the
terms data administration and database administration. This
standpoint is concerned with establishing and enforcing standards to
support a worldwide view and integrated use of enterprise data. From
the beginning, the need for the coordination and control of
organizational data was recognized. Bulk of literature denotes the in
the development of more competent information storage and retrieval
methods in the 1960’s (Gillenson, 1985). Both the government and
the private sector contributed to this effort. In the beginning of 1970’s,
documents describing the appropriate database environment
explained a staff function: data administration (GUIDE International
Corporation, 1973). The management scope was almost entirely
technical. Usual functions were those necessary to synchronize
database management system activities and application programs.
However, this function provided less control over data redundancy or
planning across multiple systems (Durell, 1985). The main
qualifications for workers to execute this function were technical. In
the decade of the 1970’s and 1980’s, there was an increased growth
in the use of databases and database management systems, with a
steady change toward data management as database management
systems and these were recognized as only one part of the
management of data. The concept of treating data as a true
organizational resource had emerged along with a new business
position: database administrator. The role of the database
administrator was to describe the rules that control the database and
to determine the manner in which the data would be stored. The
capacity of responsibility was the creation, design, and operation of
databases. In the 1970’s, as database usage grew and became more
incorporated, the issues of ownership of data and programs and
stewardship over the data required to be addressed (Sibley, 1973).
The data administration function interacted with the data processing
department in one of numerous ways such as from a small
independent recommended group to a larger support group with
technical expertise in data base applications development, database
definition, and data dictionaries..

Records Management: The records management approach to

Information Resource Management has evolved from in library
science, records management, administrative management, and other
disciplines concerned with the effective storage, retrieval, and
utilization of documents in organizations. Basically, Records
management is a process of ensuring the proper creation,
maintenance, use and disposal of records to achieve efficient,
transparent and accountable governance. This was the first area to
use the term IRM to describe a consistent and comprehensive
approach to manage information.

Information Resource Management represents a comprehensive view

of the enterprise and does not focus on the requirements of a
particular group or department. Information Resource Management is
the management of data and information that includes management
of such information resources as computer hardware, software,
communication, internal and external databases, planning and review
as well as the integration of these resources for the support of
managing information for organization as a whole (Jack Rabin, 1987).
An efficient strategic Information Resource Management plan
explains an organization’s information requirements and strategies to
satisfy them. There are two facts responsible for the evolution of
Information Resource Management. The notion of knowledge work
was introduced in the 1960’s followed by the concept of the “post-
industrial society” in the beginning of 1970’s. Information economics
contributed the argument for treating information as a resource.
These categorizations were widely described in the 1970’s as “the
information age” and the “information economy”. Such expressions
recognize that information processing has become a basic component
of industrialized nations (Mendenhall, 1979). Venkatakrishnan
proposed IRM as “the discipline of comprehensively managing an
enterprise’s information requirements” (1983, p.175). He presented
IRM in the form of an Information Cycle which provided the basis for a
strategy for bringing together the several components of information
resource management. Connell (1981b), Stonecash has defended
IRM as “a response to the increased complexity of today’s
organizations and to the increased complexity of the environment in
which today’s organizations operate” (1981). There was a debate on
the concept of Information Resource Management among theorists.
Connell (1981) has argued that In point of fact, the Information
Resource Management theory is full of holes. Its strident support by
the sages of information processing lend credence to the belief that
IRM is an ill-disguised attempt to provide a sinecure for aging data
processing managers. In theoretical literature, King and Kraemer
(1987, p.1) raised concerned the validity of the Information Resource
Management concept and argued that Information is not a resource in
the conventional sense of the term, and economic techniques for
dealing with information as a resource are lacking.

Information Resource Management as the management of

information as a resource: The intent of Information Resource
Management is to manage Information. King and Kraemer (1987)
stated that “within the federal government, the most influential recent
articulation of the IRM theory is found in the reports of the President’s
Commission on Federal Paperwork,” which tackles how the federal
government might modernize its management of information. The
authors offer outlines of definitions leading toward the IRM concept in
the form of three propositions that include organizations are systems
agreeable to systematic controls, information is an organization
resource and should be treated as such and an organization can
enhance its effectiveness and efficiency by managing information as a
resource. The authors then proceed with a dialogue of the great
difficulties to be encountered when one attempts to operationalize
these three propositions in practice.

Information Resource Management as a way to boost information

systems quality: This view represents that Information Resource
Management deals with the enhancement of information systems
(applications) quality, their development, maintenance, and evolution,
and to improve the quality of the information produced by specific
systems.

Information Resource Management as the management of

computing resources: In this area, Information Resource
Management characterizes the management of information
technology in an organization. These resources include computers,
associated technology such as communication systems, and human
resources and methodologies for systems development for the
planning and control of the resources. These resources are used to
obtain, store, manipulate, recover and distribute data resources which
expectantly will be helpful to end-users, thus becoming information for
the particular end-users at that point in time.

The definitive goal of an effective IRM strategic plan is the design,

delivery and maintenance of a seamless, integrated information
resource environment that responds effectively to the need for cross-
functional flows of information while providing the flexibility and
adaptability to respond to incessant business and technological
change. The requirement is for a set of data transport capabilities and
data management interfaces that are usable by each business
function, but unique to and owned exclusively by none of them.
Without a plan there are no objectives, no measures and, ultimately,
no results. There are three major steps involved in planning for the
introduction of IRM practices into an organization:

Determine strategic information resource requirements.

Baseline the existing environment.

Design the IRM.

IRM has Numerous Benefits

1. IRM assists in development of systems that are targeted to

support strategic and operational objectives;
2. In IRM , there is increased integration of technologies,
which improves the sharing of information across the
organization and makes it easier to obtain information for
changing decision-making needs;
3. IRM Assist in identification and adoption of appropriate
information technology standards, minimizing dependence
on specific suppliers of hardware or software;
4. IRM helps in identification of opportunities to improve the
relevance and adequacy of information provided and
activities performed;
5. IRM offers a technological infrastructure that will support
the strategic business plan;
6. IRM helps in minimization of duplicate, and possibly
inconsistent, data and processing capabilities within the
organization’s portfolio of information systems;
7. There is prioritization of projects to be implemented and
greater cost-justification of system development and
maintenance activities.
The future achievement of IRM will depend upon an organization’s
ability to change its management focus from the information
professionals to end users. The objective will be to achieve the
benefits of end user computing without losing data consistency and
integrity that information managers have worked so hard to establish.

Structure of Management Information System

The structure of MIS can be described in terms of its operating elements,

decision support, managerial activity, and organizational function.

1. Operating elements of MIS: The operational elements of MIS are:

(a) Physical components: The physical components of an

information system include:

(i) Hardware - which refers to the physical computer instrument

and related devices performing various functions like input,
output, secondary storage, CPU and Communication.
(ii) Software - which refers to the instructions given to the
hardware to perform various operations.
(iii) Database - which is the collection of logically related and
centrally controlled records containing various stored data
(iv) . Procedures - which include the set of instructions to the users,
data preparation group, operating personnel, etc.
(v) Operating personal - they may be computer operators system
analysts, programmers, data administrators, or data preparation
personnel.

(b) Processing functions: On the basis of processing functions,

information system consists of the following:

(i) Processing transactions - transaction is an activity, which acts as

the source of data. The information system functions include the
recording and measurement of these transactions.

(ii) Maintaining master files - it involves the creation and

maintenance of master files for permanent storage of data.
(iii) Producing reports - one of the major jobs of the information
system is to generate and provide Structure of Management
Information System 131 reports to the user at various levels of
management.

(iv) Processing inquiries - information systems provide responses to

inquiries from various levels.

(v) Process interactive support applications information systems

provide interactive facilities to end-user and facilitate system
planning, analysis, and decision-making. They enable the user to ask
questions and receive immediate results.

(c) Output for users: The output provided by an information system

to the end-user may take any of the following forms:

(i) Transaction documents or screen - examples are purchase order,

payroll, sales invoice, etc.

(ii) Preplanned reports containing regular contents.

(iii) Preplanned inquiry responses.

(iv) User-machine dialog results - which refers to the way in which a

user can interact with a system to arrive at a solution.

(vi) Ad hoc reports and enquiry responses - which occur at regular

intervals and receive data for analyses whose format cannot be
preplanned

2. Decision support: One of the major roles of managers in an

organization is decision-making; and, as a tool to the managers, the
purpose of information systems is to facilitate the decision making
process. As a decision support tool, MIS consists of two types of
decisions - structured and unstructured.

(a) Structured decisions (Programmable decisions): These are well-

defined, repetitive and routine deciSions, having predetermined
deciSion models or rules. It does not mean that the decisions are
automated. In simple words, programmable decisions can be made
within a framework, specifying the steps to be adopted, in a flow
chart, decision table, or a formula. The decision model will specify the
information requirements and can be used by the lower level
personnel in the organization who do not possess specialized
knowledge or skill. Giving purchase order, preparation of pay rolls,
etc., are examples. The guidelines and rules required for taking such
decisions are made available in the form of procedure manuals, which
help the users to 132 Management Information System understand
them. The important features of these decisions are:

(1) These decisions can be delegated since they do not require any
specialized knowledge.

(2) Programmable decisions can be automated,

(3) The cost involved is very low when compared to non-

programmable decisions.

(b) Unstructured decisions (Non-programmable decisions): These

decisions are occasional in nature. They have no pre-established
decision models or procedures, necessitating a new solution for each
unique problem. The information requirements cannot be predicted in
advance, so that the retrieval may be ad hoc in nature. Moreover, due
to the absence of decision rules, these decisions are subject to human
judgment, and involve very high risk. Capital budget preparation,
introduction of a new product in the market, etc. are examples of non-
programmable decisions.

3. Management Activity (Levels of Management and Information

Requirements): On the basis of managerial activities MIS consists of
three activities, such as strategic planning, tactical planning and
operational planning, which constitute a hierarchy. Tactical Planning
and Management Control Operational Planning and Control
Hierarchy of Planning The functions of strategic planning level
include the fixation of goals, policies, general guidelines, setting up of
organizational objectives, etc., which involve long-range
considerations. Decisions made at this level are connected with the
choice of business directions, market strategy, product mix, etc.
Strategic level of management (top management) requires aggregate,
not much accurate, wide, future-oriented and largely external
information for decision making. Structure of Management
Information System 133 At the tactical planning level, the emphasis is
on managerial control, and it is concerned with raising and utilization
of resources effectively and effiCiently. The activities at these levels
include acquisition of resources, tactics, plant location, new product
development, establishment and monitoring of budgets, etc. This level
of management requires information about the targets, budgets and the
actuals corresponding to the target performance, because at this stage
control measures are adopted, if the actual and targets vary
significantly. The causes for such variation are analyzed and a report
is submitted to managers of this level for controlling activity.
Management control and tactical planning level have a medium-term
planning horizon. It involves activities like reusing of resources,
structuring of works, acquisition and training of personnel. Tactical
planning is reflected in areas like capital expenditure, budget, and
three-year staffing plan. The responsibilities of management at the
operational, planning and control levels include effective and efficient
use of resources, and the execution of the day-to-day activities of the
organization. They relate also to short-term decisions or current
decisions like pricing, production levels, stock level, etc. The pieces of
information required at this level of management are well defined and
restricted. But detailed, historical, highly current, accurate, frequent
and largely internal information is also required at this stage for proper
functioning. Even though the three levels of management activity can
be differentiated on the, basis of the planning horizon, the activities
and information processing for these three levels are interrelated. For
instance, the inventory control at the operational level depends on
accurate processing of transactions at the management control and
tactical planning levels, which, in turn, depend on correct
summarization of results of operations at the strategic level.
 4. Organizational Functions (organizational functions and
information requirements): The structure of MIS can also be explained
in terms of organizational functions. These functions do not have a
standard classification, The normal functions in a manufacturing
organization include, purchase, production, marketing, personnel,
finance and accounting. Each of these functions requires unique items
of information and must have a separate 134 Management Information
System information system. MIS is developed to support the
functional . subsystems of the organization. With in each functional
subsystem, there will be four levels of managerial activities, such as
trqnsaction processing, operational control, managerial control, and
strategic planning. The various subsystems are: Purchase Subsystem
The transactions to be processed consist of purchase requisition,
purchase orders, manufacturing orders, receiving reports etc. The
operational control level uses information contained in the reports,
like under stock items, over stock items, vender performance, etc.
Managerial control information consists of overall comparisons
between planned and actual inventory levels, cost for purchased items,
stock outs, inventory turnover, etc. Strategic planning involves
analysis of new distribution strategies, new polices with regard to
venders and making or buying decisions. Production Subsystem The
functions of this subsystem include planning of production, facilities,
scheduling of production activities, engineering of product,
employment and training of production personnel, and quality control
and inspection. Operational control requires detailed reports
comparing actual performance with production schedule. Management
control requires summary reports comparing overall planned
performance with actual performance. StrategiC planning includes
alternative manufacturing approach or approach to automation.
Marketing Subsystem Transactions in marketing subsystem are sales
orders, promotion orders etc. The operational control of the marketing
subsystem performs hiring and training of sales force, dayto-day
scheduling of sales and promotion efforts, etc. The managerial level
compares overall performance against the standard marketing plan.
StrategiC planning considers the problem"s of new markets and new
marketing strategies. The information required at this level relates to
customer analysis, competitor analysis, income projection, etc.
Personnel Subsystem This subsystem is concerned with employment
requisitions, job description, training specification, personnel
Structure of Management Information System 135 data, pay rate
changes, hours worked, benefits, termination notices, etc. Operational
control level requires decision procedures for actions, such as hiring,
training, termination, etc. Management control level requires
information about cost of recruiting, composition of skills, cost of
training, salary paid, wage rates, etc. Strategic planning requires
information about alternative strategies for recruiting, salary, training,
and benefits and about retaining personnel. Finance and Accounting
subsystem Transactions involved in finance subsystem are processing
of credit applications, sales, billing, collection payment vouchers,
cheques, journal vouchers, ledgers, stock transfers and so on.
Operational control requires information about daily error and
exception reports, records of processing delays, records of
unprocessed transactions etc. Management control requires
information on budgeted and actual resources, cost of processing
accounting data, error rates, and so forth. Strategic planning requires
information to evolve alternative strategy to adequately finance the
firm, long range tax planning policy, systems for cost accounting and
budgeting, etc.