Management Information System

MANAGEMEN T INFORMATIO N SYSTEM

Information System

Information System

An information system (IS) collects, processes, stores, analyzes, and disseminates information for a specific purpose “Application”.

• • • • • •

Hardware Software Data Network Procedures People

Hardware Software

Application Data

People

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Information System Resources

(Management) Information Systems

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Different information for different users KIND OF SYSTEM STRATEGIC LEVEL

MANAGEMENT LEVEL

GROUPS SERVED SENIOR

MANAGERS

MIDDLE

MANAGERS

KNOWLEDGE LEVEL

OPERATIONAL OPERATIONAL MANAGERS SALES & MARKETING

KNOWLEDGE & DATA WORKERS

LEVEL MANUFACTURING

FINANCE

ACCOUNTING

HUMAN RESOURCES

Information System

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Classification By Support Function

Executive Support System Management Information System Decision Support System Intelligent Support Systems Knowledge Management System Office Automation System Transaction Processing System

•5-year sales trend •Profit Planning •5-year budget forecasting •Product development •Sales Management •Inventory Control •Annual budget •Production Scheduling •Cost Analysis •Pricing Analysis •System support •Word Processing •Desktop Publishing

•Order Processing •Fulfillment •Material Movement •A/R, A/P, GL •Payroll •POS 6

Types of Information Systems 0

Management Information System (M.I.S.) is basically concerned with processing data into information. Which is then communicated to the various Departments in an organization for appropriate decision-making. Data Information Communication Decisions Data collection involves the use of Information Technology (IT) comprising: computers and telecommunications networks (E-Mail, Voice Mail, Internet, telephone, etc.) Computers are important for more quantitative, than qualitative, data collection, storage and retrieval; Special features are speed and accuracy,

Management Information Function: Produce reports Systems (MIS)

summarized from transaction data, usually in one functional area. Example: Report on total sales of each customer. Supports: Primarily for middle managers, sometimes for lower MANAGEMENT LEVEL • INPUTS: HIGH VOLUME DATA • PROCESSING: SIMPLE MODELS • OUTPUTS: SUMMARY REPORTS • USERS: MIDDLE MANAGERS

Management Information Systems (MIS)

Feature • STRUCTURED & SEMI-STRUCTURED s:DECISIONS • • • •

REPORT CONTROL ORIENTED PAST & PRESENT DATA INTERNAL ORIENTATION LENGTHY DESIGN PROCESS

Characteristics of a Management Information System

• Provides reports with fixed and standard formats – Hard-copy and soft-copy reports

• Uses internal data stored in the computer system • End users can develop custom reports • Requires formal requests from users

INTERRELATIONSHIPS AMONG

FAS Managem ent informati

Manufacturi ng and production

MIS

MPS

Finance and accouting

HRS

Human Resourc e

SMS

Sales and marketin

An Organization’s MIS Financial MIS

Business transactions Transactio n processing systems

Business transactions

Databases of valid transactions

Databases of external data

Accounting MIS

Drill down reports Exception reports Demand reports

Marketing MIS

Human Resources MIS Etc.

Key-indicator reports Scheduled reports

Etc.

Employees Corporate databases of internal data

Business transactions

Transaction processing systems

Databases of valid transactions

Databases of external data

Managemen t information systems

Corporate intranet Decision support systems

Application databases

Drill-down reports Exception reports

Operational databases

Demand reports Key-indicator reports

Input and error list

Scheduled reports

Executive support systems

Expert systems

Schematic of MIS Marketing managemen t information system

Financial managemen t Information system

Manufacturin g management Information system Common databases

TPS

Order managemen t information system

Risks Associated With MIS Risk reflects the potential, the likelihood, or the expectation of events that could adversely affect earnings or capital. Management uses MIS to help in the assessment of risk within an institution. Management decisions based upon ineffective, inaccurate, or incomplete MIS may increase risk in a number of areas such as credit quality, liquidity, market/pricing, interest rate, or foreign currency. A flawed MIS causes operational risks and can adversely affect an organization's monitoring of its fiduciary, consumer, fair lending, Bank Secrecy Act, or other compliance-related activities. Since management requires information to assess and monitor performance at

Assessing Vulnerability To MIS Risk To function effectively as an interacting, interrelated, and interdependent feedback tool for management and staff, MIS must be "useable." The five elements of a useable MIS system are:

Timeliness: To simplify prompt decision making, an institution's MIS should be capable of providing and distributing current information to appropriate users. Information systems should be designed to expedite reporting of information. The system should be able to quickly collect and edit data, summarize results, and be able to adjust and correct

Relevance: Information provided to management must be relevant. Information that is inappropriate, unnecessary, or too detailed for effective decision making has no value. MIS must be appropriate to support the management level using it. The relevance and level of detail provided through MIS systems directly correlate to what is needed by the board of directors, executive management,

Accuracy: A sound system of automated and manual internal controls must exist throughout all information systems processing activities. Information should receive appropriate editing, balancing, and internal control checks. A comprehensive internal and external audit program should be employed to ensure the

Consistency To be reliable, data should be processed and compiled consistently and uniformly. Variations in how data is collected and reported can distort information and trend analysis. In addition, because data collection and reporting processes will change over time, management must establish sound procedures to allow for systems changes. These procedures should be well defined and documented, clearly communicated to appropriate employees, and should include an effective monitoring system.

Completene ss Decision makers need complete and pertinent information in a summarized form. Reports should be designed to

An Overview of Management Information Systems: • A management information system (MIS) provides managers with information that supports effective decision making and provides feedback on daily operations • The use of MISs spans all levels of management Fundamentals of Information Systems, Third Edition

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Inputs to a Management Information System • Internal data sources – TPSs and ERP systems and related databases; data warehouses and data marts; specific functional areas throughout the firm

• External data sources – Customers, suppliers, competitors, and stockholders, whose data is not already captured by the TPS; the Internet; extranets Fundamentals of Information Systems, Third Edition

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Outputs of a Management Information System • Scheduled report: produced periodically, or on a schedule • Key-indicator report: summary of the previous day’s critical activities • Demand report: developed to give certain information at someone’s request • Exception report: automatically produced when a situation is unusual or requires management action • Drill-down report: provides increasingly detailed data about a Fundamentals of Information Systems, Third Edition

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Functional Aspects of the MIS • Most organizations are structured along functional lines or areas • The MIS can be divided along functional lines to produce reports tailored to individual functions

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Functional Aspects of the MIS (continued)

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Financial Management Information Systems • Financial MIS: provides financial information to all financial managers within an organization • Profit/loss and cost systems • Auditing • Uses and management of funds

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Manufacturing Management Information Systems • The manufacturing MIS subsystems and outputs monitor and control the flow of materials, products, and services through the organization • Design and engineering • Production scheduling • Inventory control

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Marketing Management Information Systems • Marketing MIS: supports managerial activities in product development, distribution, pricing decisions, promotional effectiveness, and sales forecasting • Marketing research • Product development • Promotion and advertising • Product pricing Fundamentals of Information Systems, Third Edition

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Human Resource Management Information Systems • Human resource MIS: concerned with activities related to employees and potential employees of an organization • Needs and planning assessments • Recruiting • Training and skills development • Scheduling and assignment • Employee benefits • Outplacement Fundamentals of Information Systems, Third Edition

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Order Management Information System • This software facilitates the entering of an order, whether via a web-site shopping cart or a data entry system (for orders received via phone and mail). It typically captures customer proprietary information and account level information. Credit verification or payment processing is done to check for validity and/or availability of funds. Once entered, valid orders are processed for warehouse fulfillment, such picking/packing/shipping. • Orders can be received from businesses, consumers, or a mix of both, depending on the products. Offers and pricing may be done via catalogs or web sites or

An integrated order management system may encompass these modules: • Product Information (descriptions, attributes, locations, quantities) • Inventory Availability (ATP) and Sourcing • Vendors, Purchasing, and Receiving • Marketing (Catalogs, promotions, pricing) • Customers and Prospects • Order Entry and Customer Service (including Returns and Refunds) • Financial Processing (credit cards, billing, payment on account) • Order Processing (selection, printing, picking, packing, shipping) • Data Analysis and Reporting • Financials (Accounts Payable, Accounts Receivable, General Ledger)

Other Management Information Systems • Accounting MIS: provides aggregate information on accounts payable, accounts receivable, payroll, and many other applications • Geographic information system (GIS): capable of assembling, storing, manipulating, and displaying geographic information Fundamentals of Information Systems, Third Edition

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A Comparison of DSS and MIS

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Managing Information Systems • Information Systems (IS) have enormous strategic value so when they are not working even for a short time, an organization cannot function. Furthermore, the Life Cycle Costs (acquisition, operation, security, and maintenance) of these systems is considerable. Therefore, it is essential to manage them properly. The planning, organizing, implementing, operating, and controlling of the infrastructures and the organization’s portfolio of applications must be done with great skill. • The responsibility for the management of information resources is divided between two organizational entities: – The information systems department (ISD), which is a corporate entity

– the end users, who are scattered throughout the 41

CLASSIFICATION OF MIS REPORTS MIS reports can be classified into two types: 1) CONTENT 2) TIME