Chapter 5

Management Information
System
Management Information System

• Use of Computing and Communication technology

• Study of how individuals, groups and organization evaluates,
designs, implement, manage and utilize systems to generate
information to improve efficiency and decision making
• MIS can collect, analyze and organize information from both
internal and external sources so that managers can use it to make
decisions
• All organizations have some sort of system, either simple or
sophisticated for getting the information they need
• A good MIS gives managers information on past and present
activities and help make projections about future activities
• Helps managers performs its functions: Planning, Organizing,
Directing, Coordinating and Controlling
Management Information System

• MIS consists of three separate concepts

• Management
• Information
• System

• Data and Information

• Data refers to unanalyzed facts about an organization operations
• Data becomes information only when used for some sort of analysis
• Information is anything that is relevant and useful for managers
• An effective MIS helps managers convert and process data into relevant
information and help in decision making
Importance of MIS

• Can be compared with the heart of the body

• Managers rely on information in their decision making, information that
has been processed from data provided to them
• Measures Performance against Goals
• Production managers need information related with production costs,
labor costs or if there is a need to expand the plant due to higher
demand
• Marketing managers need information on sales trend, market analysis,
new product development
• Personnel mangers need information on workforce turnover, skills and
knowledge level, wages, incentives
Functions of MIS

• Data Capturing
• Collecting data from various internal and external sources
• Data Processing
• Collected data are processed and turned into useful information. Calculation,
comparison
• Function of Prediction
• Helps predict the future situation by applying modern calculations, statistics
• Function of Planning
• Help make future planning, set targets and create goals and objectives
• Function of Controlling
• Helps decide whether a problem exists and decide what action should be taken
• Function of Assistance
• MIS is a technique that provides managers with timely accurate and useful information to assist in
the decision making
Evolution of MIS

• MIS can be recorded as old as human history

• With revolution in industrial world, business started growing and
with that the complexity increased as well
• Accounting system, development of computing technology,
organization size, have lead to the fast growth in information system
• Before the computers, use of Punch Cards and ledger systems
• MIS is the system of generating useful information by using data
• The evolution of MIS can be attributed to following factors
• Growth of Management theory and techniques
• Change in the production and distribution method and changes in
Organizational structure
• Development of Management science
• Introduction of computer into business data processing and the
developments in information technologies
Organizational Structure and MIS

• Strategic Management

Policies Plans Budgets Objectives

Revenues Profits Costs

Tactical Management

Measurements Schedules

Operational Management

Goods Service Performances

• Managers at different level in the organization needs different kinds
if information, and they usually need it at different time intervals
• Operational Management (Lower Level Management)
• Deals with the actual production of services and goods
• They use MIS to determine what raw materials they need, to develop work
schedules, and to make sure the materials and people are at right place at
right time
• Because these activities are very detailed, operational management may
need information on an hourly or daily basis
• The information most useful at this level centers on whether goods and
services have been produced on schedule and whether it reaches the
expectations of customers
• Tactical Management (Middle Level Management)
• Middle managers put into operation the overall plan and strategies that top level
management has developed
• They use MIS to setup control procedures and to allocate resources towards organization
objective
• Need information on weekly or monthly basis
• Most useful to indicate whether operational systems put into places can reach top manager’s
overall objectives
• At tactical level of management, information concerns schedules, revenue measurements,
profits, costs and other economical factors
• Strategic Management (Upper/Top Level Management)
• Top level managers uses the MIS to set overall corporate policies and strategy to ensure
organizational growth and survival
• Information generally needed on a quarterly or yearly basis
• Most useful information at strategic level deals with confirmation whether the goals and
objectives of the organization are accomplished, the organization is profitable
• Information useful for the executives often come sources outside the organization such as
suppliers, competitors, information services and media, hired consultants and others
• Strategic management focuses on the future and work is more creative that other level of
managements and are concerned with plans. Policies, budgets and objective of organization
Information support for functional areas of
Management
• Information system for Planning Process
• Planning is concern with the future consequences of actions that are
undertaken today
• Planning is
• Where are we?
• Where do we want to go?
• How do we get there?
• When will it be done?
• Who will do it?
• How much will it cost?
• Planning is long term perspective
• Forecasting future programme
• Fully utilizing resources
• Information system support to planner for long range influencing plan
• MIS should help managers to accurately forecast demand for timely
production of their product
• Information system for Decision Making Process
• MIS is a technique that provide managers with useful information to assist in
the decision making process
• Decision making is choosing best alternative
• More information help to choose best alternative
• Strategic level: decision are characterized
• Future Oriented
• Long range plan
• Tactical Level: decision making relates to
• Short term activities
• Formulation of budget, funds flow, personnel problem, product improvement
• Operational Level:
• Inventory, scheduling, allocating workers
Classification of Information System

• Information system Model

Management
Users IS
Professional
Other User
Business
Sources
Programming

Source Processing End User

Feedback
Computer and MIS

• MIS today is a computer based system

• Computer provide accurate timely and relevant useful information to
managers
• Computer converts raw data into meaningful information as required
format quickly
• Before the advent of computers, MIS suffered from several problems:
• Information arrived too late to be of much value for decision making
• Information was not as complete as needed
• Information cost more than it’s worth
• Information lacked a clear focus
• Information was not relevant to particular decision
• Computer is a major factor in helping managers to obtain meaningful
information or reliable data for appropriate decision
• Quick response systems emphasize the timeliness of the information
or reliable data for appropriate decision
• Online Processing: Manager interact directly with computer or central
processing unit
• Real time Processing: Information system work simultaneously with an
ongoing organizational activities
Database and Networking

• Database is a collection of data and use it for different purpose

• Collection of data organized to serve many applications effectively at
the same time by storing and managing data so that they appear to
be in one location
• Different components of the telecommunications network can be
communicated with each other
• Data are transmitted throughout a telecommunication network
• In order to play in the interconnect world, companies must integrate
and develop the IS architecture
 The End

•End of Course