Management Information System

MBA Batch 11

Management Information systems Lecture notes for module I Abstract This document starts off with the introduction to basics concepts of MIS. We also discuss on the evolution and significance of information systems. We shall try to understand the components and types of information systems. Balakrishnan Unny Raghavan 3/20/2014

Management Information systems 2014 CONTENTS Why should I learn about Management Information System (MIS)? ..................................................................... 3 Introduction ............................................................................................................................................................ 3 Data and information ......................................................................................................................................... 3 System ................................................................................................................................................................ 3 Information system ................................................................................................................................................ 3 Relevence of information system in an orgnaization ............................................................................................. 4 Components of IS ................................................................................................................................................... 5 Types of IS ............................................................................................................................................................... 5 Operational support systems ............................................................................................................................. 6 Management support systems ........................................................................................................................... 6 Specialist systems ............................................................................................................................................... 7 Additional reading .................................................................................................................................................. 7

Management Information systems 2014 WHY SHOULD I LEARN ABOUT MANAGEMENT INFORMATION SYSTEM (MIS)? Before we start to understand MIS, we need to answer a thorny question.

structure that consists of interrelated and interdependent components. Every system has input transformation, output and feedback. The input is transformed into the output and the feedback from the output then controls the input.

“I am not planning for a career in IT, so why should I study MIS?” The answer to this question resides in the way information is treated in the modern business environment. Information is considered as a vital resource for the existence of any organization. Firms are going to great depths not only to collect data, but also are trying to find new ways to utilize the data / information. The study of MIS provides the modern manager with a greater understanding about the way in which the organizations manage their information resource. Every part of the organization is covered with Information Systems that help the employees in their daily tasks. Hence the study of information systems is vital for any management student.

INTRODUCTION Before we start the discussion on management information systems, we need to understand few terms.

DATA AND INFORMATION In crude words data is defined as the collection raw facts and figures and information is often referred to as processed data. Extending this definition information can be considered as data that is transformed or modified for a specific purpose. In an organization, data is transformed to information for a specific objective which can be simple or complex. Fundamentally information is created from data to assist the employees perform certain tasks.

SYSTEM There is a conception among many that system means a computer, however this is incorrect. System can be defined as an organized, purposeful

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Figure 1: Representation of a system

INFORMATION SYSTEM Based on prior descriptions, let us try to understand the term information system. Information system can be defined as the collection of people, processes and technology that used to retrieve, transform and disseminate information in an organization. The term technology covers the hardware, software, networks and data resources. In other words, information system is not just a piece of software. Organizations that are in the process of creating an information system for retrieving, transforming and disseminating information must decide on the following. For retrieval stage 1. 2. 3.

What to collect? Where the data should be collected from? How should it be collected?

For transformation stage 1. 2. 3.

What is the desired output? How to modify the data? Who is going to modify the data?

And for dissemination stage 1. 2. 3.

Whom to share it with? Do we need to protect information? How do we share the information?

Though the technology may be a required at each of the above stages, people and process also play a pivotal role in the information system.

Management Information systems 2014 RELEVENCE OF INFORMATION SYSTEM IN AN ORGNAIZATION As discussed information systems (IS) have become a vital part of any organization regardless to their size of nature of business. IS has the following 3 major roles within an organization 1. 2. 3.

Support business processes and operations Support decision making Support strategies for competitive advantage

Figure 3: Trends of IS

Figure 2: Role of IS

The primary role of IS within an organization is to support business processes and operations. Taking the example of core banking system used in a bank, the daily operations will come to a grinding stop if this system where to fail. With the advent of technology, many organizations have replaced their manual systems with IS to achieve speed, efficiency and accuracy.

Based on trends of IS, it is futile to consider thinking of IS projects as merely technology projects. IS projects have moved into the realm of business projects. Now organizations are investing in IS for various reasons which include the following 1. 2. 3.

Supporting decision making has been the natural progression of IS, wherein advanced systems are developed to assist the management in making decisions that are based on information that is timely, accurate and usable. Lately IS has also donned the role of supporting the competitive strategies of organizations. Firms and developing IS systems to gain advantage over its competitors. The finest example that comes to mind is Dell, using its e-business system to gain advantage over its rivals. This evolution of IS can be understood by taking a look at the following figure

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4. 5. 6.

To achieve operational excellence To introduce new products, services and business models To provide a better experience of their customers and understand their needs better To improve their decision making To create a competitive advantage Survival; organizations late to adopt technologies often find themselves in a situation where in they are chasing their rivals in order to keep their company afloat

Thus information systems have become the cornerstone for any business plan. To achieve any advantage over their competitions, organizations are turning to their information systems.

Management Information systems 2014 COMPONENTS OF IS

Figure 4: Components of IS

The above diagram depicts the various components of an information system. Starting with inner core of an IS, we have the input, processing and output of information. These are critical components of any IS, as they are responsible for collecting, transforming and disseminating the information. The storage of data resources is also vital, as the data / information must be stored to ensure that it can be utilized by the organization. Another vital component is the control of the system performance. Here is where the IS team of an organization comes into picture. IS team is responsible for controlling, monitoring and management of the various technology assets used for input, processing and output of information resources. Controlling deals with ensuring that the access to the technology assets is provided to authorized members of the organization. Monitoring deals with ensuring the operational conditions of the technology assets, which means the IS team must ensure that they are available for use on a day-to-day basis. Management deals with activities for governing the technology assets. Thus the IS team are a vital component of any information system. For the IS to be completely operational, resources are required. Without the resources the other components will fail to function. Page 5 of 7

People Resources  IS Specialists- system analysts, s/w developers, system operators  End Users- anyone who use IS Hardware Resources  Machinescomputers, monitor, magnetic disk drivers, printers, scanners  Media- magnetic tape, optical disks, plastic cards, hard copies Software resources  Programs,  Procedures- data entry procedure, error correction procedure, functionality Data Resources  Product descriptions, customer records, employee files, inventory DB Network Resources  Communication media, processors, network access & control s/w Information Products  Management reports, biz docs, graphical display, printed reports Table 1: Resources of IS

All the above mentioned components have to function together in unison for the smooth functioning of the IS.

TYPES OF IS IS systems are broadly classified on the basis of their use into the following 3 major categories.

Operational support systems

Management support systems

Specialist systems

Supports the business operations

Supports that decision making of management

Specialized use

Figure 5: Type of IS

Management Information systems 2014 OPERATIONAL SUPPORT SYSTEMS

MANAGEMENT SUPPORT SYSTEMS

Operational support systems (OSS) as the name suggests assist the employees of an organizations to execute the day to day activities such as;

The modern day managers have to make decisions that may profoundly affect the organizations and managers are looking at the information systems that can assist them.

1. 2. 3.

Process business transactions Control business processes Support collaboration and communication

The OSS can be broadly classified into the following categories.

Enterprise collaboration system

Management Support Systems provide information and support for effective decision making by managers. The management support systems are broadly classified into the following.

Transaction processing system

Management information system

OSS

MSS Process control system

Executive information system

Decision support system

Figure 6: Types of OSS Figure 7: Types of MSS

The transaction processing systems record and process the business transactions of an organization. Business transactions may be anything from a simple sales transaction to complex transactions that involve multiple entities. Examples of transaction processing systems are sales processing, inventory systems and accounting systems.

Management information systems provide the information support to management. The Reports and Displays assist the managers to gain an understanding of the current state of the organization.

Process control systems control and monitor the business processes. The business processes may include people, machines and detailed process.

Decision support systems provide the Interactive and ad hoc support to the management to take effective decisions. Modern day DSS have the capability to interpret the information based on predefined business rules.

The current business environment is built on collaborative working. There are no more individual projects, employees have to work together to achieve successes. Enterprise collaboration systems help team and workgroup communicate better. Email, video conferencing can be considered as collaboration system.

Executive information systems (EIS) are systems that are designed to provide the executives with relevant and timely information. Unlike the management information systems the EIS are designed to provide information not only about the organization about but also provide information from outside the organization.

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Management Information systems 2014 SPECIALIST SYSTEMS

Expert systems

Functional Business Systems

Specialist system

Knowledge Management Systems

Strategic Information Systems

Expert Systems provide expert advice to the management and they are designed to make complex calculations. Modern day systems are built to be intelligent and they can reason and provide the information to the management. Knowledge Management Systems support creation, organization, & dissemination of business knowledge throughout the organization. Strategic Information Systems help get a strategic advantage over customer. Functional Business Systems focus on operational and managerial applications of basic business functions.

ADDITIONAL READING 1.

Chapter 1 and 2- Management Information systems, James A O’Brien and George M Marakas.

2.

Chapter 1 and 2 - Efraim Turban, Dorothy Leidner, Ephraim McLean and James Wetherbe, Information Technology for Management Transforming Organizations in the Digital Economy.

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