Management comprises the processes or activities that describe what

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1 1.2. MANAGEMENT INFORMATION SYSTEMS (MIS) An overview of MIS is shown in Pig t MANAGEMENT INFORAMATION SYSTEM Fig. 1s: An overview of MIS Management comprises the processes or activities that describe what managers do in the operation of their organizations: plan, organize, initiate, and control operations. They plan by setting strategies and goals and selecting the best course of action to achieve the plan. Because decision-making is such a fundamental prerequisite to each of the foregoing processes, the job of an MIS becomes that of 'facilitating decisions' necessary for planning, organizing and controlling the work and functions of the business. Information is data that have been put into a meaningful and useful context. This gives the information value for specific persons and meets their particular information needs. Thus, information is a basic resource that survives and succeeds in today's society. Information means 'Power'.

2 System can be described simply as a set of elements joined together for a common objective. MIS is "an integrated, user-machine system for providing information to support operations, management and decision-making functions in an organization. The system utilizes computer hardware and software, manual procedures, models for analysis, planning, control and decision-making, and a database. Management Information System can also be called as 'Information Processing system' or 'Information and Decision System' or 'Organizational Information System' or simply 'Information System' MIS as an Evolving Concept When the concept of MIS was first introduced, many proponents envisioned a single, highly integrated system that would bring together processing for all organizational functions. Others questioned whether it was possible to design adequate computer-based information systems to support management planning and decision making functions, especially strategic planning. They questioned the value of applying advanced information technology to an ill-defined judgmental process. Over time, the concept of a single, highly integrated system was demonstrated to be too complex to implement. The MIS concept is now that of a federation of subsystems developed and implemented as needed but conforming to the over all plan, standards, and procedures for the MIS. Thus, rather than a single, global MIS, an

3 organization may have many related information systems which serve managerial needs in various ways. MIS as a concept continues to evolve. It is related to, but not equivalent with, data processing and other information systems-related concepts Objectives of MIS The main objectives of the MIS are: 9 TO make available information in the right form at the right time, > To provide information at a reasonable cost. > To keep information up to date. 9 To store information properly Elements of Management information System in Fig The elements required for organizational information systems are shown n Hardware Software Ptmnnel Imformntion System Fig. 1.2: Elements of Information System D D Procedures

4 Characteristics of Management Information Systems The various Information System Quality Characteristics and their implementation concepts are shown in the Table 1.1. Table 1.1: Characteristics of Management Information Systems Information system Quality characteristic Implementation of quaiity Concepts I Complete data I All data items are captured and stored for use. Data items are properly identified with time Periods Accurate data The correct data values are recorded Precise data Measurement of variables meets user needs for precision Understandable The output of the system is understandable to the outvut users. ( Timely output I The output of the application is available in time for I - - Relevant output Meaningfwl output actions and decisions The outputs are relevant to the actions and decisions to be taken The format, labeling, data provided, and context in I 1 which data is presented makes the output meaningful 1 User friendly operation - Error resistant operations Authorized use Protected system and Operations for actions and decision making The system provides user interfaces that are understandable-and designed to conform to human capabilities Suitable error prevention and detection procedures are in place. There are procedures for reporting and correcting errors. Various audit procedures are applied. Only authorized personnel have access to facilities, applications and data. The system and its operations are protected from various environmental and operational risks. There are provisions for recovery in the event of failure or destruction of part or all of the system

5 Applications of MIS The information and other data are collected from various sources in order to provide help in taking decisions by the management in the following applications: To know market potential. To know about liking of the customer. To know about supplies of raw material for future availability, price quality etc. To know about new process and technology available. To have knowledge as regards to product problems, costs, and for processing operations. 4 To know about government policies related with the concern. To prepare long range plans. To be warned for major troubles those are likely to come. To assess new opportunities. To allocate capital resources. To exercise the necessary control over day-today operations. To permit management by exception. Inventory management. Forecasting.

6 Idormation Requirements By Level Of Management Activity Decisions vary as to the degree of structure within each level of management activity although the majority of decisions at the operational control level are relatively structured and the majority of decisions at the strategic planning decisions are relatively unstructured. The management information System can be described as a pyramid structure and the data requirements for various levels are shown in the Fig. 1.3 Unstructured Decisions Less accuracy External data Summarized Tactical Management Operations Management Operations Management (Transaction Processing) Well defined Fig. 1.3: Data Requirement for Various Levels of Management The various activity subsystems of any organization with their time frame and some of their typical uses are shown in Table 1.2.

7 Table 1.2: Managerial Activities I Activity subsystem I Some typical uses I I Transaction processing (Few seconds to hours) Processing orders, shipments, and receipts Operational control (Few hours to days) Scheduling of activities and performance reports. Management control (Few days to months) Formulation of budgets and resource allocation. Strategic planning (Few months to years) Formulation of objectives and strategic plans Sources of Information include Various channels of communication are used by the organization. These Face - to -face communications - Interviews -Talks and discussion groups etc., Written communications - External mail by letter - Booklets and manuals - Reports - Company magazines, newsletter and bulletins etc.,

8 r Visual communications - Films and slides - Charts etc., r Oral communications: - Telephone - Electronic communications etc., Classification of Information Sygtems Information systems directly support both the operations and management of business functions of accounting, finance, human resource management, marketing and operations management. The classification of Information Systems is shown in Fig OpemUons lnformatlon systems - I Transaction processing systems I Process Control systems Automation lnfortnatlon systems System System System Fig. 14 Classification of information systems

9 Operations Information Systems - process data generated by and used in business operations. The following roles are played by major categories of such systems: Transaction-Processing Systems record and process data resulting from business transactions, update databases, and produce a variety of documents and reports. Operational decisions that control physical processes are produced by Process Control Systems. a Office communications and productivity are supported by Office Automation Systems, Management Information Systems - provide information to support management decision-making. Major types of Management Information Systems have the following goals: Pre-specified and preplanned reporting to managers is accomplished by Information Reporting Systems. Interactive and adhoc support for decision making by managers is accomplished by Decision Support Systems (DSS). Critical information for top management is provided by Executive Information Systems (EIS).

10 DSS are interactive, computer-based information systems, which uses of decision models and specialized databases to test the decision-making processes of managerial end users. DSS provide managerial end users with information in an interactive basis. A DS provides analytical modeling, data retrieve and information presentation capabilities that allow managers to generate the information, they need to make more unstructured types of decisions in an interactive, computer-based process. EIS are Management Information Systems tailored to strategic information needs of top management. Top executives get the information from many sources, including letters, memos, periodicals, and reports produced manually as well as by computer systems. Other sources of executive information are meetings, telephone calls, and social activities. The main aim of the computerbased executive irdormation systems is to provide top management with immediate and easy access to selective information about strategic objectives Information Flows In Organization The flow of information in an Organizational Information System reflect internal and external resources i.e. men, money, and material. External Information in an organizational Information System originates from the customers, suppliers, and environment. The flow of information in any Organization is shown in Fig. 1.5.

11 Operations Fig. 1.5: Information Flows In Organization

12 1.3. DECISION MAKING Management information systems provide information to support management in decision-making, Major types of management information systems have the following goals: Pre-specified and preplanned reporting to managers is accomplished by information reporting systems. Interactive and adhoc support for decision making by managers is accomplished by decision support systems. Expert advice for operational or managerial decision making is provided by expert systems and other knowledge based information systems. Direct hands on support for both the operational and managerial applications of end users are provided by end user computing systems. Decisions vary with respect to the structure that can be provided for making them. A highly structured decision can be preplanned or pre specified, whereas a highly unstructured decision cannot. A structured decision can be said to be programmable, in the sense that unambiguous decision rules can be specified in advance. The term does not necessarily mean that the decision is said to be non-programmable. The structured, programmable decisions tend to the routine and frequently repeated; the unstructured decision tends to be nonroutine. The different types of decisions are shown in the Table 1.3.

13 Table 1.3: Types of Decisions Type of decision Examples of Problem areas Characteristics How Decisions are Made Structured Order validation, ~nventory Availability of an algorithm (standard Fully Computerized (transaction processing Reorder operating procedure) systems) Semi structured Sales forecasting, Budgeting, Risk Programmable aspects present Human decision maker supported by computer Analysis Unstructured Promotion of Personnel, Introducing new No Standard procedures of aspects available Principally by a human with some computer support technology