Management Information System : An Overview

As we discussed in last lectures about System, System Analysis and Design and System Analysis Tools. Now our topic of discussion is Information Systems. Lets Start

Management Information System deals with the systems which produce information for the management at different levels for their proper functioning. Although it is not absolutely essential for MIS, yet it is the computer which has made a reality of the fundamental concepts of MIS. Its assets are speed, accuracy, consistency and the ability to handle large volumes of data. It however lacks judgement for which the human beings can complement it. The general term system, is more specifically applicable to the information systems, are going to be of our main interest. Thus the term MIS may be defined as an integrated man-machine system in producing information to support the operations, management planning & control and decision making functions in an organisation.

Man and machine are thus complimentary to each other and the question really is to what extent computers should be employed. Before we begin the detailed discussion on the various factors to be analysed for the design of a detailed MIS, it will be worthwhile to have a look at the computer technology as it has changed over the last few years which has affected the very design of MIS.

DATA Vs.  INFORMATION

The word data is the plural of datum, which means fact. Data, then, are facts, the raw material of information. Data are represented by symbols, but they are not information except in a limited sense. As used in data processing, information is data arranged in an order and form useful to the people who receive it. However, information is relevant knowledge, produced as the output of data processing operations and acquired by people to enhance understanding and to achieve specific purpose. Figure illustrate the differences between data and information.

           Data (Input)                                         Information (After Processing)

INFORMATION

Information is one of the most vital tools for the management. Modern industrial society is faced with Information Explosion. Information has been regarded as an important resource since companies spend major chunk of their costs towards collecting, processing and transmitting the information to various levels of management for their proper.

Information may be defined in simple words as the processed data on which decisions are taken. For the decisions to be meaningful, the processed data must possess the characteristics of being in time, accurate, complete and given to the right person to get qualified as information.

Since the decisions are based on the information and actions are based upon decisions, data gets further generated from our actions. Data is the facts, observations and assumptions. In a production environment, the marketing personnel collect the market data. It may consists of actual facts regarding the sales made and the market demands or a forecast made by their observation of the market demands their assumptions for the expected increase in sales, which is passed on the production department. The data is analysed, processed and detailed working plans are worked out. Management decisions are taken and plans are issued out for the actual production. The work being done generates another set of data which is the progress status which is continuously being collected and processed to generate exception reports for corrective action by the management.

The people having information are the people having the power because information is regarded as a powerful tool for the success of a manager. However, planners, forecasters, managers, supervisors, system designers and even the workers are becoming aware of the heavy amount of data which they need to generate and get to discharge their functions properly. All these functionaries have a great and complex deal of interactions in their work invading a good communication system.

DATA PROCESSING ACTIVITIES

Data processing consists of three basic activities : capturing the input data, manipulating the data, and managing the output results.

1. Capturing the input data. You can recorded or capture in some form before they can be processed. they may initially be recorded on paper source documents, or they may be capture by a direct input device, such as an automated teller machine, in a paperless, machine – readable form.
2. Manipulating the data. One or more of the following operation may then have to be perform on the gathered data

a) Classifying : organizing similar items into groups or classes is called classifying. Classifying is usually accomplished by assigning predetermined abbreviations or codes to the items being arranged. The types of codes used are numeric (Postal  Zip codes used for geographic classification), alphabetic (persons A,B, and C in Figure 8.4), and alphanumeric (the letters and  numbers of the product code in the invoice).

b) Arithmetic manipulation of the data is called calculating and is a common processing activity.

c) Usually, it’s easier to work with data with if they are arranged in a logical sequence. Examples include first to last, biggest to smallest, oldest to newest. Arranging  classified data in such a sequence is called sorting.

d) Reducing masses of data to a more concise and usable form is called summarizing. The pi chart is one of the many types of computer- generated graphs and charts that are frequently produced for this purpose.

3. Managing the output results. Once data have been captured and manipulated, one or more of the following operations may be needed :

a) Storing and retrieving. Retaining data for future reference is storing. Recovering stored data and/or  information is the retrieving activity.

b) Communicating and reproducing. Transferring data from one location or operation to another, for use or for further processing, is data communication – a process that continues until information in a usable form reaches the final user. Sometimes, of course, it’s necessary to copy or duplicate data. This reproduction activity is done by a machine.

TYPES OF INFORMATION

The information can be divided into the following three categories :

• Strategic Information
• Tactical Information and
• Operational Information

Strategic Information  : This is the information needed for long term planning and directing the course the business should take. For example, The store owner may like to decide to work on small profit margins to expand sales, whether to open a new branch etc.

Tactical Information  : This type of information is needed to take short term decision to run the organisation efficiently For instance, the information on fast and slow moving items may be used to take the tactical decision to stock more of the former and give discount on the latter. or in other words,  How much inventory of each item?. Mostly, this information obtained from day-to -day collection of routine data.

Operational Information  : This type of  information is needed for day-to-day operation of  an organisation. e.g. List of items to be reordered, list of defaulters. This form of information is obtained from straightforward clerical processing of data.

MANAGEMENT STRUCTURE

In management structure we have three levels.

• Top Level
• Middle Level and
• Line Managers(Operating Management)

A graphical representation of management structure is known as organisation chart.

The management structure is a pyramid as shown in figure

 

Top Level : Top Management performs the strategic planning processes. The basic function in strategic planning are to establishes the polices, plans, and objectives of the company, as well as a general budget framework under which the various departments will operate. These factors are passes down to middle level or management.

Middle Level :  Middle Management manages the management control processes (tactical planning processes). The middle level translate the factors passed by top management into specific revenue, cost, and profit goals using tactical planning. These are reviewed, analysed and modified in accordance with the overall planes and policies untill agreement is reached. Then middle management, issues the specific schedules and measurement scales to operating level.

Line Managers : Line managers manages the operational planning process. This level has the job of producing the goods and services required to meet the revenue and profit goals, which in turn will enable the company to reach its overall plans and objectives.

Hence, we can say in simple words the middle level managers reports to the top level manager who is the overall incharge of the organisation. The middle level managers have many assistants who are responsible for specific day to day operations. They are known as line managers.

TYPES OF INFORMATION SYSTEM

With the understanding of three kinds of process that take place in a business, we can view the nature of information systems that support these processes. We have three types of information system, which satisfy the information needs of each level.

• Transaction Processing System(TPS)
• Management Information System(MIS) and
• Decision Support System(DSS)

Transaction Processing System(TPS) : The information system that support the operational control processes are called transaction processing systems.  TPS supports day to day operations. All of these systems help a company to conduct its operations and keep track of its activities. These systems are often termed the bread and butter applications means those systems that process incoming orders for a company’s product and develop the information required to deliver the items and then bill the customers for the cost of their orders. Some other TPS are ticket selling system and accounts payable system etc.

Management Information System(MIS) : The information system that support the middle level process are called Management Information system i.e. The system required to obtain tactical information is known as MIS. These systems mainly center on providing managers with information to control operations and make decisions to optimise the delivery of products to customers. For example, in ticket selling system, a TPS is used to take orders and print tickets. MIS is used to measure and report the performance of each of the agents who sell tickets. Such a MIS keep track of the number and amount of each agents sales and it regularly produces reports about agents effectiveness.

Decision Support System(DSS) : The information system that support the top level process are called Decision Support system i.e. The system required to obtain strategic information is known as DSS. The strategic planning information systems are more elusive than the other  systems. With the help of this system top level manages the policies, plans, objectives and budgets etc. Unlike MIS, which are regular and recurring, the need for DSS can be irregular.

CHARACTERISTICS OF MIS

• Avoid GIGO (Garbage In Garbage Out) : The correct input of a system always gives accurate information. So, GIGO must be avoided.
• Information produced should be trust worthy. The processing should not hide vital information which may point out the efficiency of some individuals.
• The information should be complete it should include all data, not partial data.
• The information should be timely. Delayed information may sometimes be of no use. So, whenever it should be required it should be available.
• The information should be presented in such a way that manager may immediately perceives its significance. The graphical presentation of information is a very effective way.
• Information should be designed according to the needs of the user and be relevant to him. Because irrelevant information always waste a lot of managers time.

EFFECTS ON MIS

The rapid growth of the hardware and software tools have compelled the users to have a rethinking in their working methodology. More and more people are coming forward to use these technologies to solve their data processing needs and build a strong MIS. The most important aspects in the success of such an application is a well planned system analysis design.

BUSINESS ORGANISATION  & INFORMATION NEEDS

Business organisation may be manufacturing goods, providing services or trading the goods. Broadly speaking business refers to industry and commerce, however the term business is often used to denote a large number of organisations, including hospitals, government agencies, universities etc.

Whatever its line of business, the organisation has certain functions that it performs, and an organisational structure to support these functions.  Different business organisations perform various types of functions. The types of functions within an organisation and their importance depends on the business the organisation is in and the environment in which it operates.

Typically, an organisation performs function such as business planning, finance, accounting, product planning, materials management, production, marketing, sales, distribution, personnel management, R & D etc.

In the business organisation the data processed for different departments are different. They all have there own setup having interaction with each other.

Business organisations work towards a mission or aim. To achieve this mission, organisations set up various short and long-term objectives covering the numerous activities and functions performed by them.  The attainment of objectives in key performance areas ensures that the organisation is heading towards the mission. All the business strategies and operations are geared towards meeting these objectives. These business strategies and operations need to be supported by information.

All organisations have a lot of data available to them. When this data processed and presented in a format in which it can be used for operations and decisions, it becomes information. Functions in an organisation are performed at various levels. The need of information very at each level and also very with the type of function.

Information needs for strategic decision making  will differ from information needs for tactical decision making.

With the growing competition and fast paced technology, organisations need to be able to work faster and better so that they can achieve their objectives and fulfill their mission. Organisations may face problems with their current system which adversely affect their ability to achieve their objectives. This has lead to an increased use of computer based information system in business. The use of computers enables business organisations performs their business better.

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Lecture taken from Book Fundamentals of Computer Vol. II by Gagan Deep