Chapter 1- Intro to MIS

Chapter 1 Introduction
Before one can explain management information systems, the terms
systems, information, and management must briefly be defined.

A system is a combination or arrangement of parts to form an integrated whole

according to some common principles or rules. A system is a plan or method
of doing something.
A s ys t e m i s a n a s s e m b l y o f e l e m e n t s a r r a n g e d i n a l o c a l o r d e r t o achieve
certain objectives. The organization is also a system of people where people are selected on
the basis of number, quality and ability and are placed t h e t e s t i n g o f t h a t i d e a ,
a n d t h e a p p l i c a t i o n o f t h e r e s u l t s . T h e s c i e n t i f i c m e t h o d o f problem solving
is systems analysis in its broadest sense. Data are facts and figures. H o w e v e r , d a t a
h a v e n o v a l u e u n t i l t h e y a r e c o m p i l e d i n t o a s ys t e m a n d c a n p r o v i d e
information for decision making.

Information i s w h a t i s u s e d i n t h e a c t o f i n f o r m i n g o r t h e s t a t e o f b e i n g
i n f o r m e d . Information includes knowledge acquired by some means.
It is processed data which in turn is collection of raw facts, observations and figures.

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

Definition of MIS

Management information systems are those systems that allow managers to make
decisions for the successful operation of businesses.

MIS refers broadly to a computer- b a s e d s ys t e m t h a t p r o v i d e s m a n a g e r s w i t h t h e

t o o l s f o r o r g a n i z i n g , e v a l u a t i n g a n d efficiently running their departments. In
order to provide past, present and prediction in formation, an MIS 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 computerized processes that enable the department to run efficiently.
thin companies an-large organizations, the department responsible for
computer s ys t e m s i s s o m e t i m e s c a l l e d t h e M I S d e p a r t m e n t . O t h e r n a m e s f o r
MIS include
 IS (Information Services) and IT (Information Technology).
'MIS' is a planned system of collecting, processing, storing and disseminating data in the form
of information needed to carry out the functions of management. According to
Phillip Kotler "A marketing information system consists of people, equipments,
and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate
information to marketing decision makers. "The terms MIS and information system are often
confused. Information systems include systems that are not intended for decision making.
MIS is sometimes referred to, in are strictive sense, as information technology
management. That area of study should not be confused with computer science. IT
service management is a practitioner-focused discipline. MIS has also some
differences with Enterprise Resource Planning (ERP) as ERP incorporates elements that
are not necessarily focused on decision support. M a n a g e m e n t i n f o r m a t i o n s ys t e m
w o u l d m e a n a s e t o f c o m p u t e r b a s e d s y s t e m s a n d procedures implemented to
help managers in their crucial job of decision making. The actual process of MIS will
involve the collection, organization, distribution and storage of organization-wide information
for managerial analysis and control. It is better understood if these components are understood.
Management Information Systems (MIS), sometimes r e f e r r e d t o a s I n f o r m a t i o n
M a n a g e m e n t a n d S y s t e m s , i s t h e d i s c i p l i n e c o v e r i n g t h e application of
people, technologies, and procedures — collectively called information systems — to
solving business problems. Management Information Systems are distinct f r o m r e g u l a r
i n f o r m a t i o n s ys t e m s i n t h a t t h e y a r e u s e d t o a n a l yz e o t h e r i n f o r m a t i o n
systems applied in operational activities in the organization. Academically, the term
is commonly used to refer to the group of information management methods tied to
the automation or support of human decision making, Business computers were used for
the practical business of computing the payroll and keeping track of accounts
payable and receivable. As applications were developed that provided managers
with information about sales, inventories, and other data that would help in
managing the enterprise, the term "MIS" arose to describe these kinds of applications.
Today, the term is used broadly in a number of contexts and includes (but is not limited
to): decision support systems, r e s o u r c e a n d p e o p l e m a n a g e m e n t a p p l i c a t i o n s ,
p r o j e c t m a n a g e m e n t , a n d d a t a b a s e retrieval application.
Management information systems consist of computer resources, people, and
procedures used in the modern business enterprise.

T h e t e r m MIS s t a n d s f o r management information systems. MIS also refers to the

organization that develops and maintains most or all of the computer systems in the
enterprise so that managers can make decisions.

The goal of the MIS organization is to deliver information systems to the various levels of corporate
managers. MIS professionals create and support the computer system throughout the
company. Trained and educated to work with corporate computer systems, these
professionals are responsible in some way for nearly all of the computers, from the
largest mainframe to the desktop and portable PCs.

Components of MIS
The three components of MIS are:
1. Concept of Management
2. Information
3. Information system

A. Concept of Management

Management information Systems (MIS), sometimes referred to as

Information Management and Systems, are the discipline covering
t h e a p p l i c a t i o n o f p e o p l e , technologies, and procedures — collectively
called information systems — to solving b u s i n e s s p r o b l e m s . M a n a g e m e n t
I n f o r m a t i o n S y s t e m s a r e d i s t i n c t f r o m r e g u l a r information systems in that
they are used to analyze other information systems applied in operational activities in the
organization. Academically, the term is commonly used to refer to the group of
information management methods tied to the automation or support o f h u m a n d e c i s i o n
making, e.g. Decision Support Systems, Expert systems, and
Executive information systems. M I S - M a n a g e m e n t i n f o r m a t i o n S y s t e m - a
m o n t h l y ( u s u a l l y ) g e n e r a t e d b y b i g companies to find out where they are
standing out in the business. For example each department viz., Production,
Marketing, HR, and Finance etc. will report & submit their reports according the
requirement of the management as below Production: No. of Units reduced, Wastages,
Target for the month vs achieved, Reason & justification of any d o w n f a l l , A t
last backlog & proposed date of shipment. Marketing: No.
O r d e r s procured/executed/lost - Reason viz price high or Discount could not be
extended, A detailed report on pros & cons of marketability. HR: Monthly
Manpower turnout with reasons Finance: Interest recd/paid, Interest Lost due to delayed
receipts. Finance charges incurred and so on

B. Information

It is other way considered as collection of data. In fact the words are different. Data refers to
facts. These facts may be expressed in numerical, text, image or voice. Data usually
take the form of historical records. As businesses have evolved, the need for both fast
access to quality intelligence and i n d e p e n d e n c e a t t h e b u s i n e s s u n i t l e v e l h a v e
m a d e i t i m p e r a t i v e a n d c h a l l e n g i n g t o manage information assets more
effectively, efficiently and wisely. Developing and i m p l e m e n t i n g a c o m p l e t e
strategy for how information about suppliers, customers, competitors and
g l o b a l m a r k e t s i s o b t a i n e d , v a l i d a t e d , s t o r e d , m a n a g e d , a c c e s s e d , analyzed
and distributed is now central to organizational survival and profitability. To make the most of
opportunities, organizations must maximize the business value of information and
leverage investments made in all data management technologies. The rewards will
go beyond survival to quickness, compliance, innovation, and in the end, competitive
advantage. The following are the several common ideas of information system in MIS
a. It is the processed date
b. It has an element of surprise value
c . I t h a s a v a l u e i n decision making process.
C. Information System:

T h e n e x t c o m p o n e n t o f M I S i s i n f o r m a t i o n s ys t e m w h i c h i s m o s t l o o s e l y
u s e d i n m a n a g e m e n t l i t e r a t u r e . T h e i n f o r m a t i o n s ys t e m i s a s ys t e m o f
g r o u p o f i n t e r r e l a t e d components working together towards a common goal by accepting
inputs and producing o u t p u t s i n a n o r g a n i z e d t r a n s f o r m a t i o n p r o c e s s . I n t h i s
s ys t e m t h e r e a r e t h r e e b a s i c components or functions are involved. i.e., Input,
Processing and Output.

Input: I t i n v o l v e s c a p t u r i n g a n d a s s e m b l i n g e l e m e n t s t h a t e n t e r t h e
s y s t e m t o b e processed. In general whatever the date after collection to
e n t e r i n t o t h e c o m p u t i n g system for further processing is called input. For
example. Raw Material, energy, data and human efforts must be secured and organized for
further processing.

Processing: After successful of input and involves transformation processes that convert into
output. Example: Manufacturing process, human breathing process and mathematical
calculations

Output: After successful of the processing and it involves transferring elements that have been
produced by transformation process to their ultimate destination. Example: Finished products,
human services and management information.

Role of MIS
A m a n a g e m e n t i n f o r m a t i o n s ys t e m i s a s ys t e m t h a t h a s i m p o r t a n t t o o l s t o
s u p p o r t , analyze, deliver and add reliability to any organization. It ensures that appropriate
data is collected from various sources, processed and sent to needy destinations. Also this helps
to solve businesses problems. The term MIS is often used to submit to a
g r o u p o f information management methods tied to the support of human decision
making, e.g. Decision Support Systems, Expert systems, and Executive information systems.
MIS stands for management information system. MIS is a mainframe or minicomputer- based
system that provides predefined periodic reports on an organization's performance in formats
tailored to the informational needs of different management levels: strategic ,tactical, and
operational. At its basic level, MIS monitors day-to-day activities and distributes information on
those activities to middle management to support and enhance tactical decision-
making. For e x a m p l e , M I S n o t o n l y g i v e s m i d d l e m a n a g e r s t h e i n f o r m a t i o n
t h e y n e e d t o m a k e informed decisions on how to best organize resources to
achieve their division's goals, but also reports on whether those goals are being met. At the
most senior levels of management, MIS provides the information necessary to m a k e
informed strategic decisions. Upper management uses MIS output to
e v a l u a t e performance, manage resources, comply with regulatory requirements, and manage
risk-including assessing the effectiveness of existing risk management controls.

Impact of MIS

MIS provides several advantages to the organization:

• Ability to link and enable employees

Electronic communication increases the overall amount of communication within a firm. The
most important aspect is that people from the various units of a corporation can interact
with each other and t h u s h o r i z o n t a l c o m m u n i c a t i o n i s p r o m o t e d . A l l t h e
o b v i o u s a d v a n t a g e s o f quicker information availability is the outcome of this
function of IT but it must also be remembered that too much electronic
communication leads to increased alienation of employees due to increased impersonality.

•Increases boundary spanning

An individual can access any information in any part of the organization with the aid of the
appropriate technology. This eliminates the need for the repetition of information and
thus promotes non-redundancy. If information provided is adequate, one can deal with
factors like business risk and uncertainties effectively.

•Ability to store and retrieve information at any instance- m e a n s t h a t t h e

organization does not have to rely solely on the fallibility of human error, which is s u b j e c t
to error and erosion. Information can be stored, retrieved
a n d communicated far more easily and effectively. The information support improves t h e
l a c k o f k n o w l e d g e , e n r i c h e s e x p e r i e n c e a n d i m p r o v e s a n a l yt i c a l a b i l i t y
leading to better business judgment. It helps managers to act decisively.

•Helps in forecasting and database and knowledge base for all people in the
organization. The information available in such a form that it can be used either
straight away or using blending and analysis thereby saving manager’s valuable time.

Disadvantage of MIS:
•However, IT can often lead to information overload, meaning that managers have to sift through
an insurmountable amount of stored data and thus hindering timely d e c i s i o n - m a k i n g .
T h i s p r o b l e m i s n o t a s s e r i o u s a s f i r s t t h o u g h t . Information overload is not
an IT problem but more of a documentation problem. Furthermore, management tends to
adapt to IT problems once it gets used to the idea of the new technologies.
Inaccurate reporting can lead to flawed decision-making and planning. MIS
typically extracts data from many different financial and transaction systems running on
various computer platforms, which can often lead to inaccurate and inconsistent reports unless
appropriate control procedures are in place. Even if the information is accurate, the predefined
reports generated by MIS may not always anticipate the information needs of individual manager
sat all times; or the correct information is not available when needed, or is simply hard to
access. Because of these deficiencies in MIS, managers are increasingly turning to
interactive decision support systems to obtain the information they need for planning and control.

Process of management
Management in all business and human organization activity is simply the act of getting people
together to accomplish desired goals and objectives. Management
comprises planning, organizing, staffing, leading or directing, and controlling an
organization (a group of one or more people or entities) or effort for the purpose of accomplis
Management can also refer to the person or people who
p e r f o r m t h e a c t ( s ) o f management. The various decisions in management are:

Organization structure
Every organization is composed of certain parts. These parts then have their various
functions and are interdependent on each other for a smooth
f u n c t i o n i n g o f t h e organization
. An organization’s structure is a framework that allots a particular space for a
particular department or an individual and shows its relationship to the other.
An organizational structure is a mostly hierarchical concept of subordination
of entities that collaborate and contribute to serve one common aim.
An organization’s structure may be of many types, the most common of these being:
•The hierarchical organizational structure
•The flat organizational structure.

A horizontal organizational structure is what we call the traditional junior and the senior most
employees. This helps in proper distribution of work but can be harmful in terms of efficiency
and decision making.
A flat . This could provide greater speed in the decision making process but then the boss ends up
taking care of a lot of things thus making delegation difficult. O r g a n a l organization will
determine the modes in which it shall operate and will perform.

The various elements of organization as per H.J. Lewitt are:

1 P e o p l e
2 T a s k
3Technology
4 S t r u c t u r e
5 C u l t u r e

An effective organizational structure shall facilitate working

r e l a t i o n s h i p s b e t w e e n various entities in the organization and may improve the
working efficiency within the o r g a n i z a t i o n a l u n i t s . O r g a n i z a t i o n s h a l l
r e t a i n a s e t o r d e r a n d c o n t r o l t o e n a b l e monitoring the processes.
Organization shall support command for coping with a mix of orders and a change of conditions
while performing work. Organization shall allow for application of individual skills to enable
high flexibility and apply creativity. When a business expands, the chain of command will
lengthen and the spans of control will widen. When an organization comes to age, the flexibility
will decrease and the creativity will fatigue. Therefore organizational structures shall be altered
from time to time to enable recovery. If such alteration is prevented internally, the final escape is
to turn down the organization to prepare for a re-launch in an entirely new set up. It should be an
open system capable of adjusting itself to the changing environment.

Organizational behavior

Organizational behavior can be termed as the behavior of persons in an organization.

It is an important aspect to understand others behavior in a by external and internal forces. The
appropriate analysis of these forces proves useful in understanding the behavior of other persons
in the organization. The understanding of behavior has proved useful for the managers. It helps
them in directing human energy in accomplishing the set goals of the organization. The concept
and study of organizational behavior delivers guidelines for influencing the behavior of persons
in the organization. According to Keith Davis, it is an academic discipline that is concerned with
understanding and relating human behavior in an organizational behavior. It focuses on the
complex human factor in the organizations. It is done through identifying the causes and effects
of the observed particular behavior. According to Joe Kelly, behavior can be explained as the
systematic study of the nature of the organizations. It thoroughly focuses on factors such as the
origination of organization, its growth and development and organization effect on its members
and other relative organizations. The study of OB has proved beneficial in many ways. The
benefits of studying OB are as follows:

1. OB is a systematic study of the actions and attitudes that people exhibit within the
organization. It also helps any individual to understand his behavior.

2. OB has proved instrumental for managers in getting their work done effectively.

3. OB lays emphasis on the interaction and relations between organization and individual
behavior.

4. OB delivers job satisfaction to employees and helps in developing work-related behavior in

the organization.

5. OB helps in building motivating climate in the organization.

6. OB helps in building cordial industrial relations.

7. OB smoothes the progress of marketing by providing deeper insight of consumer behavior and
motivating and managing field employees.
8. OB helps in predicting behavior and its application in meaningful way delivers effectiveness
in the organization.

9. OB implies effective management of human resources.

10. OB helps in improving functional behavior within the organization. It helps in attaining
higher productivity, effectiveness, efficiency, organizational citizenship. It works effectively in
reducing dysfunctional behavior at work place like absenteeism, employee turnover,
dissatisfaction, tardiness etc.