Management Information System (Text and Cases)

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2 Management Information System (Text and Cases) Dr. Debasish Biswas M.Com., M.B.A., M.Phil., DLL, PGDHM, GDCA, PGDMM, Ph.D. Assistant Professor, Dept. of Business Administration, Vidyasagar University. Dipanjan Moitra MCA Assistant Professor, Dept. of Management, University of North Bengal. MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR KOLKATA

3 Authors No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the publishers. First Edition : 2016 Published by : Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd., Ramdoot, Dr. Bhalerao Marg, Girgaon, Mumbai Phone: / , Fax: himpub@vsnl.com; Website: Branch Offices : New Delhi : Pooja Apartments, 4-B, Murari Lal Street, Ansari Road, Darya Ganj, New Delhi Phone: , ; Fax: Nagpur : Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur Phone: , ; Telefax: Bengaluru : Plot No , 2nd Main Road Seshadripuram, Behind Nataraja Theatre, Bengaluru Phone: , , Hyderabad : No , Lingampally, Besides Raghavendra Swamy Matham, Kachiguda, Hyderabad Phone: , Chennai : New-20, Old-59, Thirumalai Pillai Road, T. Nagar, Chennai Mobile: Pune : First Floor, "Laksha" Apartment, No. 527, Mehunpura, Shaniwarpeth (Near Prabhat Theatre), Pune Phone: / ; Mobile: Lucknow : House No. 731, Shekhupura Colony, Near B.D. Convent School, Aliganj, Lucknow Phone: ; Mobile: Ahmedabad : 114, SHAIL, 1st Floor, Opp. Madhu Sudan House, C.G. Road, Navrang Pura, Ahmedabad Phone: ; Mobile: Ernakulam : 39/176 (New No.: 60/251) 1st Floor, Karikkamuri Road, Ernakulam, Kochi Phone: , Mobile: Bhubaneswar : 5 Station Square, Bhubaneswar (Odisha). Phone: , Mobile: Kolkata : 108/4, Beliaghata Main Road, Near ID Hospital, Opp. SBI Bank, Kolkata , Phone: , Mobile: DTP by : Sanhita Printed at : M/s. Aditya Offset Process (I) Pvt. Ltd., Hyderabad. On behalf of HPH.

4 PREFACE We feel great pleasure in placing the first edition of this book before our esteemed readers. It is the outcome of a great deal of encouragement from our colleagues and request from students. This book is appropriate for Commerce, Management and Engineering students at graduate and post- graduate level of different Indian Universities. Our sincere and deliberate efforts have been devoted to give the book a comprehensive form. All chapters have been discussed in a very simple and lucid language so as to make the subject easily understandable to our beloved students. We have also incorporated relevant case study at the end of each chapter. We are grateful to the esteemed teachers who always provided us with their valuable suggestions from time-to-time. We are thankful to our students who always shown a keen interest in our publication. We offer our heartfelt congratulations to Himalaya Publishing House Pvt. Ltd., for quick publication of the book. We welcome suggestions from esteemed teachers and our students for enrichment and improvement of the book. We are confident; this edition will prove all the more useful to Commerce, Management and Engineering students at graduate and postgraduate level of different Indian Universities as well as Foreign Universities. Dr. D. Biswas and D. Moitra

5 ACKNOWLEDGEMENTS First of all, we would like to express our sincere gratitude to Dr. Debasish Sur, Professor of Commerce, University of Burdwan, who has been our motivator since the beginning of our write-up. He provided us with many helpful suggestions, important advice and constant encouragement during the course of this work. We are grateful to Prof. Katrick Chandra Paul, Department of Business Administration, Vidyasagar University for his valuable suggestions. We are also indebted to all of our beloved students and colleagues for their wholehearted cooperation for this book. We also thank to Prof. Debabrata Mitra and Dr. Amlan Ghosh for extending their help in conducting the task. We owe a deep gratitude to the authorities of the Vidyasagar University, different librarians and all those who inspired and helped us in this work. We must thank Mr. Subhasish Khan and Somnath Ghosh for preparing a neat typed copy of the book. Finally, our sincere thanks to our publisher, Himalaya Publishing House Pvt. Ltd., for their untiring effort and support in bringing out this book. The responsibility for errors remains us alone. Dr. D. Biswas and D. Moitra

6 Pune University Syllabus of MBA III rd Semester Management Information Systems 1. Management Information Systems: Need, Purpose and Objectives Contemporary Approaches to MIS Information as a Strategic Resource Use of Information for Competitive Advantage MIS as an Instrument for the Organisational Change (8) 2. Information, Management and Decision Making: Models of Decision Making Classical, Administrative and Herbert Simon s Models Attributes of Information and its Relevance to Decision Making Types of Information (8) 3. Information Technology: Definition, IT Capabilities and their Organisational Impact Telecommunication and Networks Types and Topologies of Networks IT Enabled Services such as Call Centres, Geographical Information Systems, etc. (6) 4. Database Management Systems: Data Warehousing and Data Mining (6) 5. Systems Analysis and Design: Systems Development Life Cycle Alternative System Building Approaches Prototyping Rapid Development Tools CASE Tools Object Oriented Systems (Only Introduction to These Tools and Techniques) (8) 6. Decision Support Systems: Group Decision Support Systems Executive Information Systems Executive Support Systems Expert Systems and Knowledge Based Expert Systems Artificial Intelligence (8) 7. Management Issues in MIS: Information Security and Control Quality Assurance Ethical and Social Dimensions Intellectual Property Rights as related to IT Services/IT Products Managing Global Information Systems (8) 8. Applications of MIS in functional areas as well as in the service sector should be covered with the help of minimum five case studies (8) Shivaji University Management Information Systems 1. Scope and Objectives of MIS: The role and Importance of Information Systems, the Place of Information Systems in the Organisation, the Power of MIS, Strategic role of Information Systems, Uses of MIS. 2. The Challenge of Information System: Difference between computer literacy and information system literacy. Information needs of different organisation levels. Major types of information system in organisation and relationship between them, enhancing management decision making, decision support systems (DSS) understanding DSS, characteristics components, major DSS applications. Group decision support systems (GDSS) elements, characteristics, how GDSS can enhance group decision making.

7 Unit I: Executive support systems (ESS) role of ESS in the organisation, developing ESS, benefits of ESS. 3. Foundations of Information System: Devices and tools for interacting with MIS hardware, software and telecommunication. Managing data resources organising data in a traditional file environment and problems, modern database environment, logical and physical view of data, advantages of database management system. Designing database 3 models: Hierarchical data model, Network data model, Relational data model, advantages and disadvantages of this model, database trends distributed processing and distributed databases, object oriented and hypermedia databases, management requirements for database systems data administration, data planning and modelling methodology, challenges in database management. 4. Strategic Role of Information Systems and Building Information Systems: Information as a strategic resources and concept of strategic information system. Contribution of information systems to pursue competitive strategies. Building information systems: Contemporary approaches. Systems as a planned organisational change. System development and organisational change, Overview of system development System analysis, system design, completing this system development process. Alternative system building methods system life cycle, prototyping, application of software packages, end user development and outsourcing. 5. Information System Success and Failure: Major problem areas in information system, causes of information system success and failure, evolution of success of information systems. Principle causes of information system failure, appropriate strategies to implement the process. 6. Application of MIS in Various Functional Areas: Marketing information systems, financial information systems, human resource information systems, production information systems. Jawaharlal Nehru Technological University Management Information Systems MCA III rd Semester The meaning and role of MIS: What is MIS? Decision support systems, systems approach, the systems view of business, MIS organisation within the company, Managers view of information systems. Unit II: Management organisational theory and the systems approach, Development of organisational theory, management and organisational behaviour, management, information and the systems approach, using information systems for feedback.

8 Unit III: Information systems for decision making: Evolution of an information system, Basic information systems, decision making and MIS, MIS as a technique for making programmed decisions, decision assisting information systems, Communication systems basics. Unit IV: Strategic and project planning for MIS: General business planning, appropriate MIS response, MIS planning general, MIS planning details. Unit V: Conceptual system design: Define the problems, set system objectives, establish system constraints, determine information needs, determine information sources, develop alternative conceptual designs and select one, document the system concept, prepare the conceptual design report. Unit VI: Detailed system design: Inform and involve the organisation, aims of detailed design, project management of MIS detailed design, identify dominant and trade-off criteria, define the subsystems, sketch the detailed operating subsystems and information flows, determine the degree of automation of each operation, inform and involve the organisation, inputs, outputs, and processing, early system testing, software, hardware and tools, propose an organisation to operate the system, document the detailed design, revisit the manager-user. Unit VII: Implementation, evaluation and maintenance of the MIS: Plan the implementation, acquire floor space and plan space layouts, organise for implementation, develop procedures for implementation, train the operating personnel, computer related acquisitions, develop forms for data collection and information dissemination, develop the files, test the system, cutover, document the system, evaluate the MIS, control and maintain the system. Unit VIII: Pitfalls in MIS development: Fundamental weaknesses, soft spots, in planning, design problems, implementation: the TAR PIT. Applications of information systems to business. Security and ethical issues of information systems.

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10 CONTENTS 1. Introduction to MIS Definition to MIS 1.2 Evolution of MIS 1.3 Logical Foundations of MIS 1.4 MIS Personnel 1.5 Management of MIS 1.6 The MIS Function in Organisation 1.7 Role of MIS 1.8 Objectives of MIS 1.9 Limitations of MIS 1.10 Future of MIS 1.11 Summary 1.12 Key Terms 1.13 Exercises 1.14 Project Assignments 1.15 Case Study 2. Structure of MIS Elements of MIS 2.2 MIS and Organisational Hierarchy 2.3 MIS and Control Process 2.4 Issues of MIS 2.5 Summary 2.6 Key Terms 2.7 Exercises 2.8 Project Assignments 2.9 Case Study 3. System and Models Concept of System 3.2 Components of System 3.3 Environment

11 3.4 Open System 3.5 Closed System 3.6 System Concepts and Organisations 3.7 Types of Models 3.8 Strategic Planning Model Model One Vision-based or Goals-based Strategic Planning Model Two Issues-based Planning Model Three Alignment Model Model Four Scenario Planning Model Five Organic (or Self-organising) Planning Model Six Real-time Planning 3.9 Models of Organisation 3.10 System Analysis and Design Role of System Analyst Users of System System Development Life Cycle (SDLC) Models SDLC Activities 3.11 Application of System Concepts to Management 3.12 Summary 3.13 Key Terms 3.14 Exercises 3.15 Project Assignments 3.16 Case Study 4. Transaction Processing Concept of Transaction Processing 4.2 Features of Transaction Processing 4.3 Transaction Processing Cycle 4.4 Methods of Processing Transaction 4.5 Transaction Processing Models 4.6 Controls for Transaction Processing 4.7 Retrieval in Transaction Processing 4.8 Transaction Processing Subsystems 4.9 Transaction Processing Activities

12 4.10 Role of IT and Transaction Processing 4.11 Summary 4.12 Key Terms 4.13 Exercises 4.14 Project Assignments 4.15 Case Study 5. Management and Decision Making Levels of Management Top Level Management Middle Level Management Lower Level Management 5.2 Managerial Roles 5.3 Concept of Organisational Planning 5.4 MIS and Planning Process 5.5 Control Process in Organisation 5.6 Managerial Styles 5.7 Concept of Decision Making 5.8 Types of Decisions 5.9 Phases of Decision Making 5.10 Models of Decision Making 5.11 Evaluating Decision Making 5.12 Application of Model of Decision Making 5.13 Summary 5.14 Key Terms 5.15 Exercises 5.16 Project Assignments 5.17 Case Study 6. Decision Support System Decision Support System 6.2 Characteristics of DSS 6.3 Types of DSS 6.4 Components of DSS

13 6.5 Functions of DSS 6.6 Expert System 6.7 DSS Models 6.8 Development of DSS 6.9 Applications of DSS 6.10 Approaches to DSS 6.11 Summary 6.12 Key Terms 6.13 Exercises 6.14 Project Assignments 6.15 Case Study 7. Management Reporting System Concept of Management Reporting System 7.2 Characteristics of Management Reporting System 7.3 Types of Report 7.4 Contents of Report 7.5 Summary 7.6 Key Terms 7.7 Exercises 7.8 Project Assignments 7.9 Case Study 8. Database Management System Database and Database Management System 8.2 Objectives of Database 8.3 Data Model Concepts 8.4 Requirement of Database 8.5 Limitations of Database 8.6 Summary 8.7 Key Terms 8.8 Exercises 8.9 Project Assignments 8.10 Case Study

14 9. MIS in Functional Areas of Business Financial Information System 9.2 Manufacturing Information System 9.3 Marketing Information System 9.4 Human Resource Information System (HRIS) 9.5 Summary 9.6 Key Terms 9.7 Exercises 9.8 Project Assignments 9.9 Case Study 10. Enterprise Resource Planning (ERP) Concept of ERP 10.2 Evolution of ERP 10.3 Features of ERP 10.4 Functional Architecture of ERP 10.5 Benefits of ERP 10.6 BPR and ERP 10.7 Material Requirements Planning 10.8 Manufacturing Resource Planning 10.9 ERP Implementation SAP R/3 Solution Supply Chain Planning Summary Key Terms Exercises Project Assignments Case Study 11. Supply Chain Management Concept of SCM 11.2 Features of SCM 11.3 Types of SCM 11.4 Stages of SCM

15 11.5 Benefits and Challenges of SCM 11.6 Development of Logistics 11.7 Logistics-Marketing Interface 11.8 Summary 11.9 Key Terms Exercises Project Assignments Case Study 12. Future of Information Technology on Organisation and Society 12.1 Development in Telecommunications 12.2 Impact of Information Technology on Individual Jobs 12.3 Impact of IT on Organisation Structure 12.4 Impact on Lifestyle 12.5 Summary 12.6 Key Terms 12.7 Exercises 12.8 Project Assignments 12.9 Case Study 13. Data Warehousing and Data Mining Introduction The Data Warehouse Components and Processes 13.2 Multidimensional Data Modelling 13.3 Business Intelligence and Data Warehousing Decision Support Systems (DSS) Online Analytical Processing (OLAP) 13.4 Building of Data Warehouse 13.5 Data Marts 13.6 Data Mining 13.7 Summary 13.8 Key Terms

16 13.9 Exercises Project Assignments Case Study 14. Data Communication and Network Introduction 14.2 Fundamentals of Communication Concepts Data Communication Terminology Types of Data Transmission Signals Comparison between Analogue and Digital Signal Modes of Transmission Types of Data Transmission Methods of Data Transmission Transmission Medium Communication Channel Configuration Multiplexers 14.3 Network Basics Components of a Network Types of Network 14.4 Network Structures OSI Model TCP/IP Model 14.5 Network Management 14.6 Applications of Network 14.7 Summary 14.8 Key Terms 14.9 Exercises Project Assignments Case Study 15. Computer Fundamentals Introduction 15.2 Components of a Computer History of Computer

17 Storage and Storage Devices Input Devices Output Devices Plug and Play Devices 15.3 Types of Computers 15.4 Software Operating Systems Language Translators Utility Programmes Application Software Programming Languages Open Source Software 15.5 Applications of Computers 15.6 Computer Threats History of Viruses Classification of Viruses Types of Viruses Computer Security 15.7 Summary 15.8 Key Terms 15.9 Exercises Project Assignments Case Study Glossary Index Bibliography Abbreviations Question Papers

18 1 Introduction to MIS CHAPTER HIGHLIGHTS 1.1 Definition to MIS 1.2 Evolution of MIS 1.3 Logical Foundations of MIS 1.4 MIS Personnel 1.5 Management of MIS 1.6 MIS Function in Organisation 1.7 Role of MIS 1.8 Objectives of MIS 1.9 Limitations of MIS 1.10 Future of MIS 1.11 Summary 1.12 Key Terms 1.13 Exercises 1.14 Project Assignments 1.15 Case Study Authors Definition Management Information System (MIS) refers to the computer-based information processing system which supports the operations, management, and decision-making functions of an organisation. Learning Objectives After reading and studying this chapter, you should be able to: 1. Understand the concept, evolution, logical foundation and management of MIS. 2. Explain the function of MIS, role, objective and future of MIS in organisation. 3. Identify the basic functions of MIS personnel.

19 2 Chapter DEFINITION OF MIS Management Information System (MIS) is a set of computer-based systems and procedures designed to improve the managerial decision-making process that involves collection, organisation and storage of information for analysis and control. The term System is evolved from the ancient Greek word Systema means an orderly integration of interdependent components in order to perform a certain task. Information is a refined form of data. In isolation, data (e.g., Ram, 32, etc.) does not bear any useful meaning. But after processing of data we can get some meaningful information like Ram is 32 years old. Processed data is called information. Management is the decision-making curriculum by using information system. As a whole, MIS may be seen as supply of right information, in right time, at right level. MIS gives information support to the management of any organisation with the help of commercial computer applications. MIS only deals with the formal decisions that can be codified in the form of systems and procedures. Informal decisions like innovative or emotional or personal decisions are beyond the scope of MIS so far. MIS can be defined as a system that: (a) (b) (c) Provides information to support managerial functions like planning, organising, directing, controlling. Collects information in a systematic and a routine manner which is in accordance with a well defined set of rules. Includes files, hardware, software and operations research models of processing, storing, retrieving and transmitting information to the users. 1.2 EVOLUTION OF MIS The older version of MIS was Electronic Data Processing (EDP) systems. The main activity of EDP was record keeping under accounting department of an organisation. One example of EDP is the payroll software package used by any organisation. The philosophical shift from data to information developed the concept of MIS. The main aim of EDP was to compile a chunk of data, whereas MIS took the responsibility to process those data and generate fine tuned information. With the revolution in personal computing, the management could directly access the information base instead of depending on the EDP or MIS departments. This enhanced the decision making capabilities of management and gave birth to Decision Support Systems (DSS) pioneered by Keen. The direct use of information base created the What-if analysis capability with the help of modern software packages like Spreadsheet, Word Processing and Database Management Systems (DBMS), etc.

20 Introduction to MIS 3 The spectacular growth in Artificial Intelligence and Expert Systems generated Knowledge Based System (KBS). Combined with DSS, the expert systems could supply a superior class of MIS by providing software packages having self-learning capabilities. The philosophy of DSS, combined with the power of the Operation Research models together with Management Science transformed the What-if capability to What-is-best. This came to be known as Model Management Systems (MMS) help the management to take the optimal decision from several available alternatives. The EDP targeted the lower level of management. The MIS/DSS/MMS targeted the middle level of management. The Executive Information System (EIS) or Executive Support System (ESS) serves the top level of management whose time value is extremely high. Here the user interface must be superior such as, Natural Language Interface, Voice Processing and Response, Multi-Media (Graphics, Sound and Video), etc. 1.3 LOGICAL FOUNDATIONS OF MIS With the refinement of data processing into MIS and later DSS, there was increasing demand for What-if capability or evaluation of different scenarios. Such a demand necessitates the extensive use of mathematical, statistical, optimisation and simulation models collectively known as the models of Operations Research and Management Science. Thus the quantitative tools of Operations Research and Management Science form the first logical foundation of MIS. Since MIS is primarily concerned with managerial decision making, the theory of organisational behaviour and the underlying understanding of human behaviour in the organisational context form the second logical foundation of MIS. As every major MIS developed today is built around some computational device, a clear understanding of the various facets of computing becomes an essential pre-requisite for a successful MIS implementation. Thus Computer Science would form the third logical foundation of MIS. Information theory would form the fourth logical foundation of MIS. It provides insight into the fundamental aspects of information processing at an abstract level. This area has also developed related areas like noise reduction, error detection, signal processing, image processing, compression schemes, optical character recognition, etc. The related areas of system analysis, system design and system engineering provide further theoretical framework for structuring the information. 1.4 MIS PERSONNEL An organisation has a separate MIS function which is responsible for acquiring and operating system hardware, developing software, and managing the entire MIS resources. Individuals from various disciplines have joined the MIS profession and have been successful in varying degrees. The field is now expanding in different divergent areas where some formal education is required for a bright career in information systems.

21 4 Chapter 1 MIS stands for management information systems that is used for the computer systems in any enterprise that provide information about its business operations; the person who is responsible for all these information is known as MIS professional who collects data from multiple sources in an organisation, compiles it, organises it and then does the calculations as per organisation s needs. In other words, the post of MIS is to make easier campus-wide business service through the appropriate application of information technology. Earlier, the profession is used for calculating the payroll and keeping track of accounts payable and receivable and also for collecting the information about sales, inventories and other data that would help in managing the enterprise. Now the term is used widely for number of contexts like: resource and people management applications, project management, decision support systems and database retrieval applications. Management Information Systems (MIS) professionals contribute to and interact with internal customers at every level in an organisational structure. MIS professionals translate business needs into technology-based solutions and translate new technology advances into business capabilities. As an MIS professional, you will become a valued partner helping your organisation to achieve its most important goals. MIS encompasses analysis, design, implementation and management of information systems. Information systems support decision making and business processes in all functional areas of an organisation. Successful information system professionals need excellent communication skills, excellent analytical and problem-solving skills, technical expertise, business knowledge and the ability to work well with technical and non-technical people. Knowledge of Computer Science as well as basic understanding of organisational functions are the essential skills of MIS professional in order to perform the MIS function in an efficient and effective way. Different business houses follow different methods in establishing an MIS/EDP (Electronic Data Processing) within the organisation. Three forms of setups are very popular: (a) Part of the Financial Department: EDP personnel headed by an EDP Manager are engaged under the supervision of the finance officer or the chief accounts officer or the audit and accounts officer. As EDP is the elementary stage of MIS, organisations involve MIS personnel along with the accounts and clerical personnel. Usually small organisations follow this type of structure. (b) EDP/MIS as a Separate Entity: Officers having separate designations like EDP Manager or Director of MIS, enjoy the status equal to any other chief of any functional division within the organisation. Normally, business giants who give MIS/EDP extreme importance, adopt this kind of setup. (c) Third Party MIS/EDP Support: Consultancy units or subsidiaries of conglomerate of companies go for MIS/EDP outsourcing. This approach is very useful for the speedy and rapid growth of systems design and other data processing tasks.

22 Introduction to MIS MANAGEMENT OF MIS Management should try to design the MIS for their enterprise with utmost care. If they allow the MIS to develop without any formal planning, the MIS will almost certainly be inefficient because data will be obtained and processed in a random and disorganised way and the communication of information will also be random and hit and miss. Whether a MIS is formally or informally constructed, it should have certain essential characteristics: (a) (b) (c) The functions of the individuals and their areas of responsibility in achieving company objectives should be well defined. Areas of control within the company should also be clearly defined. Information required for an area of control should flow to the manager responsible for it. 1.6 THE MIS FUNCTION IN ORGANISATION The structure of MIS can also be described in terms of organisational functions which make use of information. The term organisational function information systems is used to describe a variety of information system that support an organisational function such as accounting, finance, production, marketing, human resource management, etc. Each of these functions has its own information needs. MIS is a typically an integrated combination of functional information systems that is designed to meet the information requirements of the functional subdivisions of an organisation. Each of these functions is considered as a subsystem. These subsystems have information application related to that function only. In addition, there are common programmes applicable to all functional subsystems. With in each of these functional subsystems, there will be application for transaction processing, operation control, managerial control and strategic planning. In a nutshell, we can say that the whole gamut of the functional areas of MIS consist of organisational function subsystems and activities subsystems. Organisational subsystems include accounting, finance, production, marketing, human resource management, logistics, information processing, etc. On the other hand, activities subsystems include transaction processing, operation control, managerial control and strategic planning. Functional Subsystems The important functional subsystems are the following: 1. Production Subsystem Production information system supports the production function which includes all activities concerned with the planning and control of the processes that produce goods or service. In the production subsystem, there are transaction processing, operation control, managerial control and

23 6 Chapter 1 strategic planning. The typical information required at the transaction processing level is production order. The production order is generally based on the sales orders required by the company. At the same time operational control level requires detailed reports comparing actual performance with the production schedule and identifies the weak areas. However, management control requires a summary report which compares the overall performance to actual performance. Strategic planning is concerned with simplifying, automating, integrating many of the activities needed to produce goods. 2. Marketing Subsystem Marketing is another important function of an organisation. The success of an organisation depends on the efficiency of marketing. The marketing function of an organisation is concerned with the planning, promotion and sale of existing products in existing markets and the development of new products and new markets to satisfy existing and potential customers. Thus marketing performs a vital function in the operation of the business enterprise. MIS helps to analyse demand for different products in different regions. It is mainly concerned with the marketing right product to target customers. Marketing information system provides information for planning, control and transaction processing in the marketing function. Strategic and operational information system assists marketing managers in product planning, pricing decisions, advertising and sales promotion strategies. MIS provides information that helps management to decide the number of sales executives to assign specific products in specific geographical areas. The basic transaction is to be processed at transaction processing level is customer s orders and prepares invoice and bills. The operational control activity includes the day-to-day scheduling of sales and promotional activities. Managerial control level is concerned with comparison of overall performance with the marketing plan. They require information relating to customers, competitors, etc. Consideration of new markets and new product marketing strategies are the issues dealt at the strategic planning level. 3. Human Resource Subsystem The HRM function is concerned with the recruitment, placement, compensation and development of employees in an organisation. It mainly helps in record keeping and employee evaluation. Every organisation must maintain correct record of its employees. Produce pay cheques and pay reports, maintain personal records and analyse the use of personnel in business operation are the important activities done at the transaction processing level. Management control level conducts budget analysis, turnover analysis, etc., and showing the variances resulting from planned and actual performance. Strategic planning of personnel involved with the planning of alternative strategies for recruiting, training and compensating employees. In this regard, they have to collect different types of information from external sources.

24 Introduction to MIS 7 4. Finance and Accounting Subsystem Financial subsystem undertakes the function of arranging adequate finance to the business at minimum cost. This function includes granting credit to customers, cash management and financial arrangement. Accounting information system records and reports the flow of funds through the organisation on a historical basis and prepares important financial statements like profit and loss account and balance sheet. Transaction processing system engaged in the legal and historical record keeping and produces financial statements. They undertake activities like order processing, inventory control, payroll and general ledger systems. Management control level focuses on planning and control of business operations and they compare the actual cost of financial resources with the targeted cost. The strategic planning level for accounting and finance involves in the long-term strategies connected with financial and accounting matters. 5. Logistics Subsystem The logistic subsystem includes activities like purchasing, receiving, inventory control and distribution. The transactions to be processed are purchase requisitions, manufacturing orders, receiving reports and shipping orders. The operational control function makes use of information contained in reports like out of stock items, over stocked items, inventory turnover reports, etc. Managerial control level compares the planned and actual inventory levels, cost of purchased items, stock outs, etc. Analysis of new distribution strategies, adoption of new policy towards the sellers are some of the common tasks dealt at the strategic planning level. 6. Information Processing Subsystem It is the responsibility of the information processing subsystem to provide the necessary information processing services and resources. Typical transactions for information processing are requests for processing, changes in data and programme. Managerial control over information processing requires data on planned and actual performance. Acquisition of hardware and software and automation of information processing, etc., are some of the strategic decision to be taken at the top level management. 1.7 ROLE OF MIS The role of MIS in an organisation can be compared to the role of the heart in the body. The information is the blood and MIS in the heart. In the body, the heart plays the role of supplying pure blood to all the elements of the body including the brain. The heart works faster and supplies more blood when needed. It fulfils the needs of blood supply to human body in normal course and also in crisis. MIS plays exactly the same role in the organisation. The system ensures that an inappropriate data is collected from various sources, processed and sent further to all the needy destinations. The system is expected to fulfil the information needs of an individual, group of individuals, managers, etc. MIS satisfies diverse needs through a variety of systems such as query system, analysis system,

25 8 Chapter 1 modelling systems, decision support systems. MIS also helps in strategic planning, management control, operational control and transaction processing. MIS helps junior management by providing operational data for planning, scheduling, controlling, and also helps them further in decision making at the operational level to correct an out of control situation. MIS helps middle management in shortterm planning, target setting and controlling the business functions. MIS also helps top management in goal setting, strategic planning and also evolving the business planning in addition to their implementation. MIS in fact plays the role of information generation, communication, problem identification and helps in the process of decision making. Thus, MIS plays a vital role in management, administration and operations of an organisation. 1.8 OBJECTIVES OF MIS An effective MIS has the following objectives: (a) (b) (c) (d) (e) Facilitate the decisions-making process by furnishing information in the proper timeframe. This helps the decision maker to select the best course of action. Provide requisite information at each level of management to carry-out their function. Help in the highlighting the critical factors to closely monitored for successful functioning of the organisation. Support decision making in both structured and unstructured problem environments. Provide a system of people, computers, procedures, interactive query facilities, documents for collecting, storing, retrieving and transmitting information to the users. 1.9 LIMITATIONS OF MIS (a) (b) (c) (d) (e) (f) (g) (h) MIS cannot replace managerial judgements in decision making. It is merely an effective tool for the managers in decision making and problem-solving. The quality of output of MIS is directly proportional to the quality of input processes. MIS cannot provide tailor-made information packages. It is required to analyse the available information before decision making. In a fast changing and complex environment, MIS may not have enough flexibility to update itself quickly. MIS considers only quantitative factors into account. MIS is less useful for making non-programmed decision. MIS is less effective in organisations where information is not being shared with others. MIS is less effective due to frequent changes in top management, organisational structure and operational staff.

26 Introduction to MIS FUTURE OF MIS The dominant profession of mankind used to be agriculture for many centuries. After the industrial revolution, there was a substantial growth in manufacturing oriented jobs. With the onset of Information Revolution the fastest growing sector is now the service sector which includes banking, financial organisations, health care institutions, entertainment, travel and tourism and education. The workers in this category are generally known as knowledge workers who depend heavily on the information service. Consequently, the share of total business by Information Technology (IT) industry is likely to foreshadow the oil and automobile industry in near future. The recent trend in the world scene also suggests a strong growth pattern for the information services. In near future, information management can substantially improve the quality of life in the Indian context in the following manner: (a) (b) (c) (d) (e) Better land record management leading to less litigation in the rural areas. Better natural resource planning leading to optimum utilisation of water, oil, electricity, etc. Better banking and financial services will lead to better money management and better service to the customers. Improved legal delivery system will help common people by speedy disposal of cases. Networked educational and health care institutions will lead to better sharing of resources among larger number of countrymen SUMMARY Information Systems Management (ISM) is the application of information technology to support the major functions and activities of either a private sector business or public sector institution. In the past, organisations recognised the importance of managing resources such as labour, capital, and raw materials. Today, it is widely accepted that managing the information resource is very often equally important. ISM supports the process of collection, manipulation, storage, distribution and utilisation of an organisation s information resources KEY TERMS The page number of their first explanation is in parentheses. 1. EDP (3) 2. Evolution of MIS (3) 3. Finance and Accounting subsystem (9) 4. Foundation of MIS (4) 5. Future of MIS (11) 6. Human Resource subsystem (8)

27 10 Chapter 1 7. Information processing (9) 8. Limitations of MIS (11) 9. Logistic subsystem (9) 10. Marketing subsystem (8) 11. MIS function (6) 12. MIS personnel (5) 13. MIS (2) 14. Objectives of MIS (10) 15. Productive subsystem (7) 16. Role of MIS (10) 1.13 EXERCISES 1. What is MIS? Briefly describe the evolution of MIS. 2. Write down the qualities of MIS personnel. 3. State the objectives and role of MIS. 4. What are the limitations of MIS? 5. Mention the major functional areas of MIS. 6. Describe the future prospect of MIS PROJECT ASSIGNMENTS 1. You have applied for a job as an MIS Manager for a large Government department and have been invited to attend an interview. All applicants are required to make a presentation to the interview panel in order to display their knowledge of the three main requirements of the job, namely an understanding of: The ideal personal qualities needed for a MIS Manager; The role of the end-user during a traditional development life cycle; How project success can be achieved. Prepare one slide for each of the above and provide appropriate speaker notes CASE STUDY Read the case given below and answer the questions given at the end. A waiter takes an order at a table, and then enters it online via one of the six terminals located in the restaurant dining room. The order is routed to a printer in the appropriate preparation area: the cold item printer if it is a salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink.

28 Introduction to MIS 11 A customer s meal check-listing (bill) the items ordered and the respective prices are automatically generated. This ordering system eliminates the old three-carbon-copy guest check system as well as any problems caused by a waiter s handwriting. When the kitchen runs out of a food item, the cooks send out an out of stock message, which will be displayed on the dining room terminals when waiters try to order that item. This gives the waiters faster feedback, enabling them to give better service to the customers. Other system features aid management in the planning and control of their restaurant business. The system provides up to the minute information on the food items ordered and breaks out percentages showing sales of each item versus total sales. This helps management plan menus according to customers tastes. The system also compares the weekly sales totals versus food costs, allowing planning for tighter cost controls. In addition, whenever an order is voided, the reasons for the void are keyed in. This may help later in management decisions, especially if the voids consistently related to food or service. Acceptance of the system by the users is exceptionally high since the waiters and waitresses were involved in the selection and design process. All potential users were asked to give their impressions and ideas about the various systems available before one was chosen. Questions 1. In the light of the system, describe the decisions to be made in the area of strategic planning, managerial control and operational control. What information would you require to make such decisions? 2. What would make the system a more complete MIS rather than just doing transaction processing? 3. Explain the probable effects that making the system more formal would have on the customers and the management.