MIS

Need for IS

 The information system is very important for the internet technology and the
traditional business concerns and is really the latest phase in the ongoing
evolution of business. All the companies need to update their business,
infrastructure and change way they work to respond more immediately to
customer need.
 A first step in designing and developing an MIS is to assess the information
needs for decision making of management at different hierarchical levels,
so that the requisite information can be made available in both timely and
usable form to the people who need it. Such assessment of information
needs is usually based on personality, positions, levels and functions of
management
Uses of IS

 Information system and technology including E-business and E-commerce

technology and application has become vital component of successful
business and organization.
 It is a study of business administration and management. For a manager or
a business professional it is just as important to have basic understanding of
information system and any other functional area in business.
Roles of Information Systems in business

 An Information system supports the business Organizations in the following ways.

a) Support the Business Process: Treats inputs as a request from the customer
and outputs as services to customer. Supports current operations and use the
system to influence further way of working.
b) Support Operation of a Business Organization: An IS supports operations of a
business organization by giving timely information, maintenance and
enhancement which provides flexibility in the operation of organizations.
c) Support Decision Making: An IS supports the decision making by employee in
their daily operations. It also supports managers in decision making to meet the
goals and objectives of the organization. Different mathematical models and IT
tools are used for the purpose evolving strategies to meet competitive needs.
d) Strategies for an Organization: Today each business is running in a
competitive market. An IS supports the organization to evolve appropriate
strategies for the business to assent in a competitive environment
Process of generation of information:

 Data processing can be defined as the processing of data to make it more usable and meaningful and
thus converting into information. It covers all activities required for generating information from data.
 Step1: Origination: The main source of records used in data processing is sales orders, purchase
orders or employee time cards stored in magnetic tapes, disks and terminals.
Step 2: Input: The input of data stored on these source documents into the data processing
system. The data records stored in secondary devices is now fed into the computer for processing.
Step3: Processing: Computer and other electronic devices are used for processing data. Data
should be sorted and verified before processing. Processing involves calculation, comparison,
filtering and modification of data according to user’s requirements.
Step4: Storing: The result of processing of data must be kept for future reference. This function
is called storage.
Step5: Data Retrieving: With the introduction of information technology users will be able to
search and retrieve files records on-line with direct access devices.
 Step6: Production of documents: Copies of documents and reports are prepared as an output of
the information system.
Step7: Data Communication: On-line transmission of information is possible in electronic data
processing system.
Evolution of MIS

 The older version of MIS was Electronic Data Processing (EDP) systems. The main activity of EDP
was record keeping under accounting department of an organisation. One example of EDP is
the payroll software package used by any organisation.
 The philosophical shift from data to information developed the concept of MIS. The main aim of
EDP was to compile a chunk of data, whereas MIS took the responsibility to process those data
and generate fine tuned information.
 With the revolution in personal computing, the management could directly access the
information base instead of depending on the EDP or MIS departments. This enhanced the
decision making capabilities of management and gave birth to Decision Support Systems (DSS).
 The direct use of information base created the ‘What-if’ analysis capability with the help of
modern software packages like Spreadsheet, Word Processing and Database Management
Systems (DBMS), etc.
 The spectacular growth in Artificial Intelligence and Expert Systems generated Knowledge Based
System (KBS). Combined with DSS, the expert systems could supply a superior class of MIS by
providing software packages having self-learning capabilities.
Nature and Scope of MIS

 The following diagram shows the nature and scope of MIS:

Challenges in the development of MIS:

 If all the existing barriers are divided into humanistic, organizational and
environmental factors, the major drawbacks and the reasons of failure and
using MIS in public organizations are as following:
 Humanistic factors
 The lack of information of the managers and users as they don’t know exactly
what they want and what their information needs are.
• The lack of understanding of the needs of the users by designers (the lack of
correct
definition of the needs and their analysis)
• The lack of information of the managers and users about the collaboration
method with the designer team.
 The lack of participation of the managers and users in system design.
• The lack of understanding of the managers of software and information systems.
• The lack of information of most of the analysts and programmers (designers) with new
system work environment.
• The lack of acceptance of the system executers and resistance against the change.
• The lack of accuracy in the data collected Organizational factors
• The lack of good conditions for participation and collaboration of the managers, users
and system directors
• The lack of consistency and complexity of the existing manual systems.
• The lack of existing systems and methods analysis before the system design
• The lack of evaluation of the existing power
• Bad condition of educating the specialized forces
 The lack of human resources with management and computer fields and other required
specializations (the problems of absorbing human resources)
• Inadequate education of the users
• Inadequate and incomplete documentation
• Unsuitable implementation of the system
 Environmental factors
• The lack of suitable consultants for designing the system and software
• The lack of procedures and methodology and stages of creating the system
• The lack of evaluation of environmental aspects in management information
systems
• The lack of suitable use of mass media to develop the culture of using
computer and
information systems.
• The lack of holding suitable MA training courses in the universities and the lack
of suitable
education of human resources in this regard.
• The lack of ratification of the suitable rules in Islamic council parliament and
government
board and the considerable problem in this regard.
• The lack of serious consideration and adequate investment in this regard.
2. MIS function in an organization:

 The structure of an information system can also be described in terms of the

organizational functions which use information. There is no standard
classification of functions, but a typical set of functions in a manufacturing
organization includes Production, sales & marketing, finance and
accounting, logistics, personnel, and information system. Top management
is also consider as a separate management
 The conceptual structure of MIS is defined as a federation of functional
subsystems each of which is divide in to four major information processing
components like Transaction processing, Operational control information
system, Management control information and Strategic planning.
Organizational Functions:

 1. Sales & Marketing

2. Production
3. Logistics
4. Personnel
5. Finance & Accounting
6. Information Processing
7. Top Management
 Sales and Marketing Subsystem: the sales and Marketing includes al
activities related to the
promotion and sales of products or services.
• The Transactions are sales order, promotion orders, etc.
• The Operational control activities include the hiring and training of the
sales force, the day-day scheduling of sales and promotion efforts etc.
• Management control concerns comparisons of overall performance
against a marketing plan. Information for management control may
include data on customers, competitors, competitors products and sales
force requirement
Strategic Planning for the marketing function involves consideration of new
markets and new marketing strategies.
 Production Subsystem: The production functions includes product
engineering, planning of production facilities, scheduling and operation of
production facilities, employment and training of production personnel and
quality control and inspection.
• The typical transaction to be processed is production orders, assembly
order, finished parts tickets, scarp tickets and time keeping tickets.
• Operational control requires detailed reports comparing actual
performance to the production schedule and highlighting areas.
• Management control requires summary reports comparing overall
planned performance to actual performance
• Strategic planning for manufacturing approaches and alternatives
approach to automation.
 Logistics Subsystem: The logistics function encompasses such activities as
purchasing, receiving, inventory control and distribution.
• The transaction to be processed includes purchase requisition, purchase
order, manufacturing orders.
• The Operational control function uses information contained in reports
such as past due purchase, past due shipments to customers etc.
• Managerial control information for logistics consists of overall comparisons
between planned and actual inventory levels.
• Strategic control involves the analysis of new distribution strategies, new
policies with required to vendors
 Personnel subsystem: includes hiring, training, record keeping, payment and
termination of personnel.
• The transaction result in documents describing employment requisition, job
descriptions, training, personal data.
• Operational control for personnel requires decision procedures for action such
as hiring, training, termination, changing pay rates, and issuing benefits.
• Management control of the personnel function decision is supported by
reports and analysis showing the variances between actual and planned
performance.
• Strategic planning fro personnel is involved with evaluating alternatives for
recruiting, salary, training, benefits and building location to ensure that the
organization obtained and retains personnel.
 Finance & Accounting subsystem: Finance function covers granting of credit to customer,
collection process, cash management and financing arrangements. Accounting covers
the classification of financial transaction and summarization in to the standard financial
reports, preparation of budgets.
• Transaction associated with finance and accounting are credit applications, sales,
billing, collection documents, payment vouchers etc.
• Operational control over the function itself require daily error and exception report,
records of processing delays etc.
• Managerial control level for accounting and finance utilizes information on budgeted
versus actual cost of financial resources and error rates.
• Strategic planning level for accounting finance involves a long run strategy to ensure
adequate financing, a long range tax accounting policy to minimize the impact of taxes.
 Information processing subsystem: The information processing function is responsible fro
ensuring that the other functions are provided the necessary information processing
services and resources.
• Typical transaction for information processing service and resources, requests fro
corrections or changes in data and programs, reports of hardware and program
performance and projects proposals.
• Operational control of information processing operations requires information on the
daily schedule of jobs, error rates and equipment failures, for new projects development
it requires daily or weekly schedules.
• Managerial control over information processing requires data on planned versus actual
utilization, equipment cost, overall programmer performance and progress.
• Strategic planning for information system involves the organization of the function, the
overall information system plan, selection of strategic uses of information and the
general structure of the hardware and software environment.
3. Types of information systems:

 A typical organization is divided into operational, middle, and upper level. The
information requirements for users at each level differ. Towards that end, there
are number of information systems that support each level in an organization.
 Businesses tend to have several "information systems" operating at the same
time. This study note highlights the main categories of information system and
provides some examples to help you distinguish between them.
 For most businesses, there are a variety of requirements for information:
• Senior managers need information to help with their business planning
• Middle management need more detailed information to help them monitor
and control business activities
• Employees with operational roles need information to help them carry out
their duties
 The different types of date / information / knowledge that are processed at
different levels in the organization, we can create a five level model.
A. Transaction Processing System

 Information systems that process data generated from business transactions

are known as transaction processing systems. In other words, the main job
of a transaction processing system is to collect data generated from the
transactions, store it, and, at times, control the decisions that are taken
arising out of the transactions. Such transactions can be in the form of
purchases, sales,
deposits, withdrawals, etc. For instance, booking an airline ticket,
withdrawing money from an ATM, depositing cash in the bank, etc are all
example of transactions.
 Generally, these transactions occur on a day-to-day-basis. A sale or
purchase of an item triggers many other transactions like credit checks,
billing, and changes in the inventory. Thus, transactions generate additional
data.
 Definition: A Transaction Processing System is a set of information which
processes the data transaction in database system that monitors transaction
programs. The system is useful when something is sold over the internet. It allows
for a time delay between when an item is being sold to when it is actually sold.
An example is that of a sporting event ticket. While the customer is filling out
their information to purchase the seat ticket; the transaction processing system
is holding the ticket so that another customer cannot also buy it. It allows for a
ticket not to be sold to two different customers.
• An Information system that processes data arising from the occurrence of
business transactions. Transaction processing systems (TPS) are aimed at
improving the routine business activities on which all organizations depend.
• A transaction is any event or activity that affects the organization which occur
as part of doing business, such as sales, purchases, deposit, withdrawals, refunds
and payments.
• Common transactions include placing orders, billing customers, hiring
employees, and depositing cheques.
 • The types of transactions that occur vary from organization to
organization.
• Transaction processing, the set of procedures for handling the
transactions, often includes the activities like calculation, storage and
retrieval, classification, summarization, sorting.
• Transaction processing procedures are often called standard operating
procedures.
Example: The routines associated with general banking transactions typify
the use of standard operating procedures for the handling of deposits and
withdraws, cashing of cheques, and other
processes.
 Types of TPS:
1. Batch processing: Processes several transactions at the same time, with a time delay.
2. Real-time processing: Deals with one transaction at a time and does not have a time delay
 Features
 Rapid Response: The response time of a transaction processing system (TPS) is important
because a business cannot afford to have their customers waiting for long periods of time
before making a transaction.
 Reliability: A good TPS must be very reliable because if it were to break down businesses
could lose a huge portion of revenue because customers would not be able to purchase
their
products
 Inflexibility: The TPS must work the same way for every transaction as long as the TPS is
being used. The formality and structure should never change.
 Controlled processing: The TPS must be able to allow authorized employees to be able to
access it at any time.


 Following are the objectives of a transaction processing system:
• Carrying out the day-to-day transactions of the organization on a regular
basis.
• Collecting, processing, editing, updating, storing the data, and
generating the required
reports or documents.
• Supplying the necessary information to the organization, this would
enable proper functioning of the business.
• Providing reports and documents which would help in making timely
decisions.
• Supplying data to other information systems.
B.Decision Support System:

 Decision support systems (DSS) are interactive software-based systems intended

to help managers in decision-making by accessing large volumes of information
generated from various related information systems involved in organizational
business processes, such as office automation system, transaction processing
system, etc.
 DSS uses the summary information, exceptions, patterns, and trends using the
analytical models.
A decision support system helps in decision-making but does not necessarily
give a decision
itself. The decision makers compile useful information from raw data,
documents, personal
knowledge, and/or business models to identify and solve problems and make
decisions.
 Attributes of a DSS
• Adaptability and flexibility
• High level of Interactivity
• Ease of use
• Efficiency and effectiveness
• Complete control by decision-makers
• Ease of development
• Extendibility
• Support for modeling and analysis
• Support for data access
• Standalone, integrated, and Web-based
 Characteristics of a DSS
• Support for decision-makers in semi-structured and unstructured
problems.
Support for managers at various managerial levels, ranging from top
executive to line managers.
• Support for individuals and groups. Less structured problems often requires
the involvement of several individuals from different departments and
organization level.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for variety of decision processes and styles.
• DSSs are adaptive over time.
 Components of a DSS
Following are the components of the Decision Support System:
• Database Management System (DBMS): To solve a problem the necessary data may
come from internal or external database. In an organization, internal data are generated
by a
system such as TPS and MIS. External data come from a variety of sources such as
newspapers, online data services, databases (financial, marketing, human resources).
• Model Management System: It stores and accesses models that managers use to make
decisions. Such models are used for designing manufacturing facility, analyzing the
financial health of an organization, forecasting demand of a product or service, etc.
• Support Tools: Support tools like online help; pulls down menus, user interfaces, graphical
analysis, error correction mechanism, facilitates the user interactions with the system.
 Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows:
• Text Oriented DSS - It contains textually represented information that could have a
hearing on decision. It allows documents to be electronically created, revised and viewed
as needed.
• Database Oriented DSS - Database plays a major role here; it contains organized and
highly structured data.
 Spreadsheet Oriented DSS - It contains information in spread sheets that allows create,
view, modify procedural knowledge and also instructs the system to execute self-
contained
instructions. The most popular tool is Excel and Lotus 1-2-3.
• Solver Oriented DSS - It is based on a solver, which is an algorithm or procedure written
for performing certain calculations and particular program type.
• Rules Oriented DSS - It follows certain procedures adopted as rules.
• Rules Oriented DSS - Procedures are adopted in rules oriented DSS. Export system is the
example.
• Compound DSS - It is built by using two or more of the five structures explained above.
 Types of DSS:
Following are some typical DSSs:
• Status Inquiry System: It helps in taking operational, management level, or middle level
management decisions, for example daily schedules of jobs to machines or machines to
operators.
• Data Analysis System: It needs comparative analysis and makes use of formula or an
algorithm, for example cash flow analysis, inventory analysis etc.
• Information Analysis System: In this system data is analyzed and the information report is
generated. For example, sales analysis, accounts receivable systems, market analysis etc.
• Accounting System: It keeps track of accounting and finance related information, for
example, final account, accounts receivables, accounts payables, etc. that keep track of
the
major aspects of the business.
• Model Based System: Simulation models or optimization models used for decision-making
are used infrequently and creates general guidelines for operation or management.
Role of Decision Support System in MIS:

 Decision support system is a special class of system which facilitate decision making. As in an
organisation, at each and every point and time, decisions are to be taken irrespective of their
nature. Some decisions may be routine and programmed decisions while other may be strategic,
and non-programmed decisions.

 But one thing is certain that decision making is done at all level of management. Decision support
system involves the packages which help the managers to take right and timely decisions.

 Decision support systems use data from the general management information system and they
are used by a manager or a decision maker for decision support. The basic characteristic of the
decision support system is that it is based on some tool, technique or model. These systems are
used sometimes for testing new alternatives, training and learning. They are also used for
sensiting the various parameters of the model.

 The MIS designer has to look for all such situations and design the decision support system for
integration in the system. The management information system would become more useful if the
decision making is made person independent and executed with well designed decision support
system
Role of Decision Support System in MIS:

 All such embedded systems cover the normal variety of decision situations.
If anything outside the considered variety crops up, decision support system
will bring to the notice of the decision makers that action is called for in the
situation.
The decision support system plays a dominant role in the management
information system as a support to decision making.
C.Executive Support System:

 Executive support systems are intended to be used by the senior managers

directly to provide support to non-programmed decisions in strategic
management.
These information are often external, unstructured and even uncertain.
Exact scope and context of such information is often not known
beforehand.
This information is intelligence based:
• Market intelligence
• Investment intelligence
Technology intelligence
 Examples of Intelligent Information
Following are some examples of intelligent information, which is often the
source of an ESS:
• External databases
• Technology reports like patent records etc.
• Technical reports from consultants
• Market reports
• Confidential information about competitors
• Speculative information like market conditions
• Government policies
• Financial reports and information
D. Enterprise Resource Planning (ERP)
system:

 ERP is an integrated, real-time, cross-functional enterprise application, an

enterprise-wide transaction framework that supports all the internal business
processes of a company.
It supports all core business processes such as sales order processing,
inventory management and control, production and distribution planning,
and finance
 Why of ERP?
ERP is very helpful in the following areas:
• Business integration and automated data update
• Linkage between all core business processes and easy flow of integration
• Flexibility in business operations and more agility to the company
• Better analysis and planning capabilities
• Critical decision-making
• Competitive advantage
• Use of latest technologies
 Advantages of ERP
• Reduction of lead time
• Reduction of cycle time
• Better customer satisfaction
• Increased flexibility, quality, and efficiency
• Improved information accuracy and decision making capability
• Onetime shipment
• Improved resource utilization
• Improve supplier performance
• Reduced quality costs
• Quick decision-making
• Forecasting and optimization
Better transparency
Disadvantage of ERP
• Expense and time in implementation
• Difficulty in integration with other system
• Risk of implementation failure
• Difficulty in implementation change
• Risk in using one vendor
E: Business expert system:

 Expert systems (ES) are one of the prominent research domains of AI. It is
introduced by the researchers at Stanford University, Computer Science
Department.
What are Expert Systems?
The expert systems are the computer applications developed to solve
complex problems in a particular domain, at the level of extra-ordinary
human intelligence and expertise.
Characteristics of Expert Systems
• High performance
• Understandable
• Reliable
• Highly responsive
 Capabilities of Expert Systems
The expert systems are capable of:
• Advising
• Instructing and assisting human in decision making
• Demonstrating
• Deriving a solution
• Diagnosing
• Explaining
• Interpreting input
• Predicting results
• Justifying the conclusion
• Suggesting alternative options to a problem
 They are incapable of:
• Substituting human decision makers
Possessing human capabilities
• Producing accurate output for inadequate knowledge base
• Refining their own knowledge
Benefits of Expert Systems
• Availability: They are easily available due to mass production of software.
• Less Production Cost: Production cost is reasonable. This makes them affordable.
• Speed: They offer great speed. They reduce the amount of work an individual puts in.
• Less Error Rate: Error rate is low as compared to human errors.
• Reducing Risk: They can work in the environment dangerous to humans.
• Steady response: They work steadily without getting motional, tensed or fatigued
The following table shows where ES can be applied.

Application Description
Camera lens design, automobile design.
Design Domain

Domain Diagnosis Systems to deduce cause

of disease from observed
Medical data, conduction medical operations on
humans.

Comparing data continuously with observed

system or with prescribed behavior such as
Monitoring Systems leakage monitoring in long
petroleum pipeline.

Controlling a physical process based on

Process Control Systems
monitoring.
Finding out faults in vehicles, computers.
Knowledge Domain

Detection of possible fraud, suspicious

transactions, stock
Finance/Commerce
market trading, Airline scheduling, cargo
scheduling
F: Office Automation Systems:

 Office automation systems endow with electronic

mail, word processing, electronic filing, scheduling, calendaring, and other
kinds
of support to office workers. First introduced with personal computers, these
“groupware” applications became essential with the extensive use of
personal
digital assistants. It combines word processing, telecommunications and
data
processing to computerize office information, draws on stored data as a
result of
data processing and comprise handling of correspondence, reports and
documents.